Tidy Tax Services Logo

Blog Archives

Stock for Stock Exchanges Non-recognition – Paul Gaulkin CPA


No gain or loss will need to be recognized in the event a taxpayer exchanges common stock in a corporation solely for common stock in the same corporation, or if preferred stock is exchanged solely for preferred stock in the same corporation. It is important to note that voting rights are not a factor when determining non recognition. Non recognition will apply even though voting stock is exchanged for nonvoting stock or nonvoting stock is exchanged for voting stock. How … Read more

Capital Asset Definition – Paul Gaulkin CPA

Keyboard with keys saying stocks and bonds

The IRS does not actual define for taxpayer what it considers to be a capital asset. Instead, the IRS specifies what it considers not to be a capital asset. The IRS defines a capital asset as any property held by the taxpayer except: 1. Stock in trade or other inventory property or property held by the taxpayer primarily for sale to customers in the ordinary course of a trade or business. 2. Depreciable property used in a trade or business. … Read more

Qualified Small Business Stock Tax Free Transfer – Paul Gaulkin CPA

Small business front of store

There are many ways that qualified small business stock can be acquired that is not through original issuance. These include, gifts, transfers at death, transfers from a partnership, corporate reorganizations, stock conversions, options, warrants, or as convertible debt. There are certain transfers that warrant tax free treatment from the IRS. These include transfers by gift, death, and reorganization. Transfer by Gift or Death In the event of a transfer of qualified small business stock by gift or at death, the … Read more

Qualified Small Business Stock Gain Section 1202 – Paul Gaulkin CPA

blocks saying different financial items

Investing in qualified small business stock has many advantages, one of which is the ability to roll over proceeds from a sale into a new qualified small business and defer the gain under Section 1202. Recently, temporary qualified small business stock exclusion amounts have clients to 100% and incur a lower rate on gains subject to the alternative minimum tax. Benefits of Section 1202 The main advantage of Section 1202 is that the gain on any sale of qualified small … Read more