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Rollover of Gains From Sales of Qualified Small Business Stock
Q:
I have found your website very helpful. I had a quick question regarding the sale of QSBS. I was wondering if it is possible to roll over the proceeds into a another small business shell that I have created? Would that be legal? I have not found any documentation stating that this is not possible.
Thank You,
A:
What you are referring to is an IRC Section 1045 rollover of gain, which requires that you reinvest the proceeds of the stock sale into new qualified small business stock within 60 days.
The key thing is that you need to actually purchase the stock from someone else. You can't just use the money to set up a new company. You can't buy the stock from yourself, unless you want to show that sale as a taxable event.
To follow the chain of events, somebody else will need to report the sale of his/her stock to you in order to make this a legitimate deal. That person will then have the ability to do a Sec. 1045 rollover, and so on.
I'm sorry to burst your bubble here.
Good luck.
Kerry Kerstetter
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/30/2004 09:55:00 AM Send this post:
