Cory recently sold his qualified small business stock for $90,000 after holding it for 10 years. His basis in the stock is $40,000. Applying the rules as if the stock were acquired in 2019 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale?
As per Sec 1202 of Internal Revenue Code allows investors to take exemption of 100% of capital gains on qualified small business stock (QSBS)
THIS Exemption on capital gains has the limit of $10 million or 10 times the adjusted basis of stock which ever is greater the capital gains above the limit are taxable
sale proceeds of capital stock | $90,000 |
basis for the stock | $40,000 |
capital gains for the stock |
$50,000 |
as the capital gain below the limit of $10 million ,above capital gain Qualifies for the exemption u/s 1202
so the taxable payable on sale will be $0
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