Conversion Of Partnership And LLC Interests Into Qualified Small Business Stock

Highlights

• Internal Revenue Code Section 1202 has been amended to provide additional benefits to those investing in qualified small business stock (QSBS), but the old rules may still apply to certain acquisitions of QSBS through exchanges of previously held property such as partnership interests.
• Built-in gain inherent in partnerships at the time of a conversion to a corporation will not be excludable under Section 1202.
• The method by which a partnership conversion is completed may impact the benefits of Section 1202.

Given the recent amendments to Internal Revenue Code Section 1202,¹ which increase the benefits of holding qualified small business stock (QSBS), many companies currently operating as tax partnerships may want to convert into C corporations. Though converting such businesses may provide tax benefits, the extent of those benefits may be limited depending on how long the partnership has been in existence prior to the conversion and the amount of built-in gain inherent in the partnership at the point of conversion.

Original Issuance

Section 1202 provides that noncorporate taxpayers may exclude certain gains on the disposition of QSBS held more than the minimum required holding period. One element of this exclusion is that the stock held by the taxpayer must have been acquired at its original issuance in exchange for cash, property (other than stock) or services.² A partnership interest is property that is not stock. Accordingly, a contribution of partnership interests in exchange for stock should be a qualifying acquisition of such stock at its original issuance.

If the partnership simply files a check-the-box election to treat the partnership as a C corporation, the partnership is deemed to have contributed its assets to a newly formed corporation, followed by a liquidating distribution of the stock to its partners.³ The stock in this case would, upon original issuance, be held by the partnership (not the partners) who received the stock in a deemed subsequent transfer of the stock by the partnership. Though the partners did not acquire the stock in an original issuance under these facts, Section 1202 provides that QSBS transferred by a partnership to its partners generally will retain its QSBS status.⁴ A check-the-box election to convert a tax partnership into a corporation, therefore, should result in the receipt by the partners of QSBS, assuming all other requirements of Section 1202 are satisfied.

In a second alternative, the partnership could distribute all of its assets to the partners, and the partners could then contribute those assets to a new C corporation. In a third alternative, the partners could contribute their partnership interests to a new C corporation. Each of these transactions also should qualify as an original issuance of stock. These transactions could, however, produce different basis and holding periods in the C corporation, which could impact the Section 1202 analysis. (See the section below regarding Application to Partnerships.)

Application of Section 1202 Holding Period vs. Acquisition Date

Section 1202 provides different benefits to taxpayers depending on when the QSBS is deemed to have been acquired, and it is the deemed acquisition date of the QSBS that determines which rules apply. Accordingly, it is imperative that the acquisition date of QSBS properly be determined.

The following chart shows the applicable rules for stock acquired during specific windows of time.

For purposes of Section 1202, the holding period of QSBS should be distinguished from the acquisition date of QSBS. The holding period is relevant in determining the minimum amount of time QSBS must be held in order to qualify for a gain exclusion, which ranges from three years to five years.⁶ But the "acquisition date" of QSBS, which is used to determine the exclusion percentage (of 50 percent, 75 percent or 100 percent), does not always represent the first day of a taxpayer's holding period for this purpose.

The term "holding period" is not defined in Section 1202. Instead, the statute generally refers to the length of time stock is "held." Given the absence of clear guidance, it is presumably correct to conclude the length of time stock is held, absent specific exceptions, begins on the date upon which the stock is acquired by a taxpayer and ends on the disposition date of such stock.⁷ Section 1223 modifies this conclusion in certain circumstances where stock is acquired in exchange for property and where the taxpayer takes a carryover basis in the stock by reference to the basis in the exchanged property.⁸ In other words, the stock received in a tax-free exchange is treated as having a holding period that includes the prior holding period of the exchanged property. This is called the tacking rule and, under Section 1223, it applies "for purposes of [subtitle A]," which includes Section 1202.

For example, if a taxpayer held an asset for three years and exchanges that asset for stock in a corporation in a Section 351 transaction, the taxpayer will have a basis in the stock equal to its basis in the exchanged property and, under the tacking rule, will therefore also have a holding period in the stock that begins on the day three years earlier when the taxpayer acquired the exchanged asset.⁹

Section 1202(i)(1)(A) sets forth a different rule for purposes of Section 1202 that when a taxpayer transfers property (other than money or other stock) in exchange for QSBS, such stock "shall be treated as having been acquired by the taxpayer on the date of such exchange..." This provision overrides the general tacking rule in Section 1223. But the story doesn't end there.

Section 1202(a)(3), which allows for a 75 percent exclusion of gain on QSBS acquired after Feb. 17, 2009, and until Sept. 27, 2010, provides:

In the case of any stock which would be described in [Section 1202(a)(3)] (but for this sentence), the acquisition date for purposes of [Section 1202(a)] shall be the first day on which such stock was held by the taxpayer determined after the application of section 1223. (Emphasis added.)

"But for" that sentence, a taxpayer that exchanged property for QSBS on Feb. 20, 2009, for purposes of Section 1202, would treat that date as the acquisition date of the QSBS under the general rule in Section 1202(i)(1)(A). One might assume that such an acquisition would entitle the holder to exclude 75 percent of any eligible gain upon disposition if the other requirements of Section 1202 were satisfied. But if the property exchanged for the QSBS on Feb. 20, 2009, was acquired by the taxpayer one year earlier, Section 1202(a)(3) would treat the acquisition date of the QSBS as including the holding period of the exchanged property under Section 1223, a time during which only a 50 percent exclusion of gain was allowed. Accordingly, the taxpayer would be limited to an exclusion of only 50 percent and not 75 percent.

This modification to the meaning of "acquisition date" in Section 1202(a)(3) applies only for purposes of Section 1202(a), meaning it does not apply to the remainder of the statute.¹⁰ Section 1202(b) limits the amount of gain that may be excluded under Section 1202(a) to the "eligible gain," which includes only gain on stock held for at least three years (and sometimes five years).¹¹ So, for purposes of calculating the holding period for eligible gain under Section 1202(b), the general rule of Section 1202(i)(1)(A) applies, and the Section 1223 tacked holding period is not included because the modification in Section 1202(a)(3) does not apply to Section 1202(b) (i.e., the date the property is exchanged for QSBS starts the clock on the three (or five) year holding period, but the first day of the tacked holding period will be used to determine the acquisition date solely for purposes of determining the exclusion percentage under Section 1202(a)(3), (4) and (5) and the base exclusion limit amount under new Section 1202(b)(4)).

An identical rule is found in Section 1202(a)(4), which allows for a 100 percent exclusion of gain on QSBS acquired after Sept. 27, 2010, and until July 3, 2025. And a similar, but slightly different, rule was added in 2025 in Section 1202(a)(6)(B), except that this new rule applies to the whole of Section 1202 and not just Section 1202(a). It likely includes errors unintended by its drafters. (See the next section – Unintended Conflation of Holding Periods and Acquisition Dates.)

The One Big Beautiful Bill Act of 2025 (OBBB) made several taxpayer-favorable changes to Section 1202. It increased the base exclusion limit amount from $10 million to $15 million. It also provided for a tiered holding period regime. Prior to the passage of the bill, only stock held for more than five years was eligible for gain exclusion. But after the passage of the bill, gain on stock is eligible for a 50 percent exclusion if held for three years, a 75 percent exclusion if held for four years and a 100 percent exclusion if held for five years.¹² These changes, however, apply only to stock deemed acquired after July 4, 2025. The Section 1202 rules for stock acquired on or before that date arguably remain unchanged.

Section 1202 now effectively includes two sets of rules: one for stock acquired on or before July 4, 2025 (i.e., the old rules) and another for stock acquired after that date (i.e., the new rules). Like Sections 1202(a)(3) and (4), new Section 1202(a)(6)(B) forces the use of Section 1223 tacked holding periods for determining the acquisition date of QSBS for purposes of determining whether the old rules or the new rules apply to the stock issuance. This prohibits taxpayers from taking advantage of the new favorable Section 1202 regime by exchanging old assets they owned prior to July 4, 2025, for QSBS. In such a case, the old rules would apply to stock acquired in the exchange, assuming the transaction was a tax-free exchange.

The Unintended Conflation of Holding Periods and Acquisition Dates

Historically, as discussed above, Section 1202 has been drafted in such a way so that the minimum holding period requirement was more than five years from the date the QSBS was actually acquired, regardless of whether the taxpayer had a tacked holding period for other purposes of the tax code including other purposes within Section 1202. Any adjustment within Section 1202 to the "acquisition date" to include Section 1223 tacked holding periods was merely used to determine the exclusion percentage for otherwise qualifying gains and for no other purpose. Taxpayers could not shorten the five-year holding requirement by contributing already-owned property to the corporation and then use the tacked holding period from that exchanged property.

The OBBB added new Section 1202(a)(6), which also purports to adjust the acquisition date of stock to include tacked holding periods for certain purposes. But, almost certainly by error, Congress seems to have used language that is far too broad if its intent was to maintain the existing framework of Section 1202. Section 1202(a)(6) states as follows:

(6) Applicable date; acquisition date. – For purposes of this section—

(A) Applicable date.—The term "applicable date" means the date of the enactment of this paragraph.

(B) Acquisition date.—In the case of any stock which would (but for this paragraph) be treated as having been acquired before, on, or after the applicable date, whichever is applicable, the acquisition date for purposes of this section shall be the first day on which such stock was held by the taxpayer determined after the application of section 1223. (Emphasis added.)

Section 1202(a)(6)(B) is drafted in such a way that an argument could be made that it does indeed impact the holding period and not just the acquisition date. The second clause of the sentence in Section 1202(a)(6)(B) provides that "the acquisition date for purposes of this section [Section 1202] shall be the first day on which such stock was held by the taxpayer determined after [applying the tacking rule] of section 1223."¹³ If that was a stand-alone sentence, it would seem that the Section 1223 tacked holding period would apply for all purposes of Section 1202 because this clause applies "to section 1202" and does not limit its application otherwise or include any qualifying language.

That second clause, however, is not the entire sentence. The immediately preceding clause provides "[i]n the case of any stock which would (but for this paragraph) be treated as having been acquired before, on, or after the applicable date, whichever is applicable..." Based on the structure of the sentence, the second clause should apply to any stock described in the first clause. The problem is that the first clause appears to describe all stock issuances.

Regardless of when stock is issued, it necessarily would be treated as acquired at some point in the history of the universe, which is fully described from start to finish by the time periods that include 1) any time before the applicable date (i.e., before July 4, 2025), 2) any time on the applicable date or 3) any time after the applicable date. Accordingly, if the second clause is to be applied to any stock described in the first clause, then the second clause would be applied to literally all stock regardless of when it was issued, which means that the acquisition date for any stock issuance relevant to Section 1202 is deemed to be the first day the stock was held by the taxpayer determined after the application of Section 1223 for all purposes of Section 1202.

This reading of Section 1202(a)(6) potentially is in direct conflict with Section 1202(i)(1)(A), which provides in its first clause "[i]n the case where the taxpayer transfers property (other than money or stock) to a corporation in exchange for stock in such corporation..." The following clause provides "such stock shall be treated as having been acquired by the taxpayer on the date of such exchange..."

The first clause in Section 1202(i)(1)(A) does not represent the entire universe of issued stock and therefore only applies its second clause to a subset of that universe (i.e., stock received in exchange for property other than money or other stock). But where it does apply, this provision would require that the stock be treated as though it was acquired on the date it was received in the exchange for property, instead of the first day of the taxpayer's holding period after the application of Section 1223 (i.e., the tacked holding period). Historically, prior to the OBBB amendments, because the tacked holding period rule in Section 1202(a)(3) and (4) applied only to Section 1202(a), this exchange date holding period rule in Section 1202(i)(1)(A) was left to apply to the rest of the statute.

Both Section 1202(a)(6) and Section 1202(i)(1)(A) apply "to this section," meaning to the whole of Section 1202. So when property is contributed to a corporation in exchange for stock, which provision applies? Is the stock treated as acquired on the exchange date, as provided in Section 1202(i)(1)(A) or on the first day of the taxpayer's tacked holding period, as provided in Section 1202(a)(6)? From a pure statutory construction perspective, it seems the latter should win the day.

Section 1202(a)(6) applies to "any stock which would (but for this paragraph)" be treated as having been acquired at any point in history (i.e., before, on or after the applicable date). The words "this paragraph" found in the parenthetical describe Paragraph 1202(a)(6) itself. So to analyze this "but for" mechanic, it should first be determined which shares of stock would be treated as acquired "before, on, or after the applicable date," as if Section 1202(a)(6) did not exist. Second, the second clause of Section 1202(a)(6) would be applied to those shares in lieu of whatever rule would have applied in the absence of Section 1202(a)(6).

As discussed above, if Section 1202(a)(6) did not exist, all shares of stock would be treated as acquired at some point along the continuum of time. More specifically, absent Section 1202(a)(6), shares acquired in a tax-free exchange for property (other than money or stock) would be treated for all purposes of Section 1202 as acquired on the exchange date, except as provided by Sections 1202(a)(3) and (4) in which case the tacked acquisition date would not impact the holding period, as discussed above.¹⁴ Regardless, the date that a share of stock would be treated as being acquired necessarily would be a date that occurred "before, on or after the applicable date." So all issuances of stock are described in the first clause of Section 1202(a)(6)(B). Finally, now that a share of stock that otherwise would have been treated one way in the absence of Section 1202(a)(6) has been identified, Section 1202(a)(6) is applied to that share of stock, overriding the attributes it would have possessed if Section 1202(a)(6) did not exist.

This reading of the statute could have the following effect. Assume a taxpayer owns property with a basis of $1 million and a fair market value (FMV) of $1 million. Assume further that the taxpayer has owned the property for five years and contributed the property in exchange for QSBS on July 5, 2025. One year later, the taxpayer disposes of the QSBS for $11 million. Under this reading of Section 1202(a)(6), the taxpayer would claim that its acquisition date of the QSBS was July 5, 2020, for all purposes of Section 1202 (i.e., six years ago). The taxpayer would then be entitled to exclude gain under the old rules (i.e., $10 million exclusion at 100 percent) because the taxpayer would argue the acquisition date not only determines the rules under which the exclusion amount is calculated, it determines the first day of the five year minimum holding period. This would be a material departure from the historic Section 1202 framework.

The more conservative approach is to read something into the statute that is not there. One could argue that the first clause of Section 1202(a)(6)(B) should be read to instead mean solely for the purpose of determining whether stock should be treated as being acquired before, on or after the applicable date (where the acquisition date is needed to determine both the exclusion percentage under Section 1202(a) and the base exclusion amount under Section 1202(b)), a taxpayer should use the tacked holding period under Section 1223. This more conservative reading applies the same approach whether the old rules or new rules apply. This would make more sense, and read within the context of the rest of the statute, it would employ a consistent usage of the tacked holding period (i.e., solely to determine which rules apply and not to adjust the minimum holding period requirements, similar to Sections 1202(a)(3) and (4)).

The words at the very end of the first clause in Section 1202(a)(6)(B), "whichever is applicable," could be read to limit this provision to this more conservative reading of the statute. There is no indication in the legislative history or otherwise that Congress intended to shorten the minimum required holding periods any more than it did explicitly by reducing the minimum holding period from five years to three years. But courts are generally hesitant to read words into a statute that aren't there, especially when the words of the statute itself are unambiguous.

Eligible Gain

Though Section 1202(a) and Section 1202(b)(2), which defines eligible gain, provide that "any gain" can be excluded up to the limitation amounts, the U.S. House of Representatives committee report from 1993 when Section 1202 was first enacted provides that:

If property (other than money or stock) is transferred to a corporation in exchange for its stock, the basis of the stock received is treated as not less than the fair market value of the property exchanged. Thus, only gains that accrue after the transfer are eligible for the exclusion.¹⁵

This implies that Section 1202(i)(1)(B) should be read to mean that the actual gain from the disposition of stock should be recalculated as if the adjusted basis utilized for purposes of Section 1202 is the FMV of the exchanged property at the time of contribution, instead of its carryover basis as used for other provisions in the tax code, and only that portion of the overall gain would be eligible for exclusion. This sets up an implied rule that is not clearly articulated in the statute, which is that the excluded gain will be the lesser of the limitation amount under Section 1202(b)(1) or the eligible gain, as recalculated using the special FMV basis rule.

This conclusion is supported by Section 1202(i)(1)(B) and Section 1202(i)(2), which provide that for purposes "of this section" (i.e., Section 1202), regardless of whether a contribution is made at original issuance or in a subsequent contribution, the basis of the QSBS includes the FMV of any property contributed in exchange for or in respect of such stock.¹⁶ Though this appears at first glance to apply to the entirety of Section 1202, it does not.

There are only three applications of basis within Section 1202. The rule in Section 1202(i) relating to stock basis is consistent with the rule for the calculation of gross assets in Section 1202(d)(2)(B), which also uses the FMV of contributed assets instead of the carryover basis. But solely for purposes of calculating the 10X basis exclusion limit, the flush language in Section 1202(b)(1) explicitly provides that additions to stock basis after the original issuance are ignored, overriding the general rule provided in Section 1202(i). This leaves only the calculation of eligible gain as a functional purpose for Section 1202(i) (i.e., eligible gain is equal to disposition proceeds minus a basis equal to the exchanged property FMV at the time of contribution so that pre-contribution gains are not included in the calculation of eligible gain). Reading the statute in this way achieves the intended outcome described in the legislative history: that pre-contribution built-in gains are not eligible for exclusion.¹⁷

For example, assume a taxpayer contributed an existing business operated as a sole proprietorship to a corporation after July 4, 2025, when that business had a FMV of $5 million and an adjusted basis of $1 million. More than five years later, the taxpayer sold all of its QSBS for $30 million. Under Section 1001, the taxpayer would have an overall realized gain of $29 million ($30 million of sales proceeds minus $1 million of carryover basis in the stock). But the eligible gain would be only $25 million ($30 million of sale proceeds minus $5 million, which was the FMV of the business at the time of contribution). Though the taxpayer would have a 10X basis exclusion limit of $50 million, more than enough to cover the entire gain, only $25 million would be excludable. The $4 million of additional gain, which represents the accrued built-in gain at the time of contribution, would still be taxable at capital gains rates and not excluded under Section 1202.

To illustrate the impact of subsequent contributions, assume the same facts above, except that the taxpayer contributed additional assets after the original issuance of the QSBS with a FMV of $4 million and an adjusted basis of $2 million. For purposes other than Section 1202, the taxpayer's basis in its stock would be $3 million ($1 million from the original contribution plus $2 million from the subsequent contribution). Also assume the sale price upon disposition is $53 million. Such a transaction would result in $50 million of realized gain ($53 million minus $3 million of basis). The 10X basis exclusion amount would also be $50 million because the subsequent contribution would not change the 10X basis exclusion amount established at the original issuance ($5 million of FMV times 10).¹⁸ The recalculated "eligible gain," however, would be only $44 million ($53 million minus $5 million of FMV basis for the original contribution minus $4 million of FMV basis for the subsequent contribution). The taxpayer would exclude the lesser of the recalculated gain of $44 million or the total realized gain of $50 million, leaving $6 million of the gain to be taxable at capital gains rates, which represents the built-in gains of the original contribution ($4 million) and the subsequent contribution ($2 million).

Application to Partnerships

A conversion of a partnership (or a limited liability company) treated as a partnership for U.S. federal income tax purposes) should result in the partners holding good QSBS, assuming all other requirements of Section 1202 are satisfied. Any built-in gain inherent in a partner's partnership interest at the time of conversion will not be eligible gain subject to exclusion because of the FMV basis rule in Section 1202(i). And, as explained above, because a partnership conversion is a tax free exchange subject to the tacking rule, the rules under which the available exclusion percentage and amount is calculated will be determined by reference to the partner's acquisition date of the stock under Section 1223. The method of the conversion, however, could produce differing results.

For example, assume Partner A is a one-third partner in partnership ABC, which checks the box to become a C corporation. Assume further that the assets of ABC include $100 in cash and $200 in capital assets that it has held since 2005. Upon conversion, ABC is deemed to have contributed all of its assets to a new corporation and will have a holding period in the stock that is split. Section 1223 will cause two-thirds of ABC's holding period in the stock to include the holding period of the capital assets. But the one-third of the stock that is acquired in exchange for cash will have a holding period that begins the following day.¹⁹ Upon the immediately subsequent deemed liquidation of ABC, Partner A will include ABC's holding period in the stock received (i.e., the split holding period).²⁰

Because Section 1202 looks to Section 1223 to determine the acquisition date for purposes of applying the various sets of rules, two-thirds of the QSBS will be treated as stock that is subject to a 50 percent limitation and one-third of the stock will be treated as newly issued and subject to the new tiered exclusion rules for holding periods between three years and five years (assuming the conversion happened after July 4, 2025). Also, the QSBS subject to the 50 percent limitation would be limited to $10 million (or ten times basis) when determining the base exclusion amount. Accordingly, a conversion of a partnership today does not necessarily mean that the post-July 4, 2025 rules will apply.

Notice that in the same example, if the partnership was newer and its goodwill and other capital assets had holding periods starting on or after Sept. 28, 2010, then the QSBS received for these assets would still be eligible for a 100 percent exclusion, but subject to the $10 million (or 10 times basis) base exclusion amount.

Contrast this transaction with one in which the partners contribute their partnership interests to a new C corporation. Under this construct, the partners will take a holding period in the stock equal to their holding period in the partnership (except to the extent of Section 751 "hot assets" in the partnership).²¹ If Partner A has been a partner since 2005, this means the entirety of Partner A's holding period in the QSBS will tack the holding period of Partner A in ABC, and the entire stock issuance will be subject to the 50 percent limitation and $10 million (or 10 times basis) exclusion rules.

Now consider a slight variation in the facts. Assume Partner A acquired his ABC partnership interest on July 5, 2025. Also, assume that Partner A acquired this interest for cash or as compensation for services, so that the tacking rule of Section 1223 does not apply. Then ABC is converted into a C corporation on Aug. 1, 2025. Under this example, ABC is still assumed to have a holding period in the capital assets that began in 2005. If a check-the-box election is made, the conclusion is the same as above: Partner A will take ABC's holding period under Section 1223(1) and will have a split basis in the QSBS (two-thirds at a 50 percent exclusion and one-third under the new rules). But if the partners contribute their interests in ABC to a new C corporation, Partner A would have a holding period in the QSBS that began on July 5, 2025 (his acquisition date of the partnership interest). Accordingly, the new Section 1202 rules would apply to the entire issuance.

The basis and holding period rules under Subchapter K are complex, and each conversion scenario could present different benefits and detriments in various scenarios. Tax counsel should be consulted to evaluate such transactions before they are undertaken.

Footnotes

1. All references to "Section" (§) in this article refer to the Internal Revenue Code of 1986, as amended, unless otherwise stated.

2. IRC § 1202(c)(1)(B).

3. Treas. Reg. § 301.7701-3(g)(1)(i). See also Rev. Rul. 84-111 (transfer to new corporation followed by partnership liquidation does not violate 80 percent control rule in §351).

4. IRC § 1202(h)(1)-(2).

5. One oddity of the § 1202 holding period rules is that the minimum holding period was always "more than five years." Thus, historically, QSBS needed to be held at least five years plus 1 day to receive the exclusion benefit. But for QSBS acquired after July 4, 2025, the minimum holding period is now stated as exactly three years (for a 50 percent exclusion), four years (for 75 percent) and five years (for 100 percent). Thus, § 1202 now reduces the minimum holding period requirements by one day, but only for QSBS acquired after July 4, 2025.

6. IRC § 1202(b)(2).

7. See Paul v. Commissioner, 206 F.2d 763, 765 (3d Cir. 1953), rev'g 18 T.C. 601 (1952). The U.S. Court of Appeals for the Third Circuit cites McFeely v. Commissioner, 296 U.S. 102, 107 (1935); and Helvering v. San Joaquin Fruit & Investment Co., 297 U.S. 496, 499 (1936) ("In common understanding, to hold property is to own it. In order to own or hold one must acquire. The date of acquisition is, then, that from which to compute the duration of ownership or the length of holding.").

8. IRC § 1223(1).

9. Id.

10. See the opening clause of IRC § 1202(a)(3).

11. § 1202(b)(1) provides for limitations on the amount of "such [eligible] gain" that may be taken into account for purposes of the exclusion under § 1202(a). Eligible gain is defined in § 1202(b)(2).

12. IRC § 1202(a)(5).

13. Emphasis added.

14. The "but for" language in § 1202(a)(3) and (4) applies only to § 1202(a), which has the effect of determining the exclusion percentage without impacting the holding period requirements under § 1202. The "but for" language in § 1202(a)(6), however, applies to the whole of § 1202, which has much broader implications. These likely are unintended consequences.

15. H. Rept. No. 103-111 (PL 103-66) p. 603.

16. § 1202(i)(1)(B) applies generally to any contribution in exchange for stock (other than money or other stock) and § 1202(i)(2) applies to contributions in respect of QSBS made after the original issuance.

17. H. Rept. No. 103-111 (PL 103-66) p. 603.

18. See the flush language at the bottom of § 1202(b)(1).

19. See Rev. Rul. 84-111, 1984-2 C.B. 88, Situation 1.

20. Id. See also IRC § 1223(1).

21. See Rev. Rul. 84-111, 1984-2 C.B. 88, Situation 3.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.