A Section 1045 rollover allows a stockholder to defer capital gains taxes when they sell qualified small business stock (QSBS) and reinvest the proceeds into new QSBS within 60 days of the sale. The capital gains from the original sale of stock are not taxed at the time of the sale; instead, the tax basis of the old stock is transferred to the new stock, i.e, the replacement QSBS. This rollover aims to encourage continued investment in small businesses by offering tax relief in the form of a deferral. However, to qualify, the original stock must have been held for more than six months. If the new QSBS is eventually sold, the deferred gains from the original stock are recognized along with any additional gains or losses.
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Post Categories
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