The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, signed into law on Dec. 18, 2010, contains a provision providing a 100 percent exemption for gains made on the sale or exchange of qualified small business stock acquired between Sept. 27, 2010, and Dec. 31, 2011. This represents a one-year deadline extension from a similar provision signed into law in September 2010 by President Obama as part of the Small Business Jobs Act of 2010, which noted the 100 percent exclusion applied to stock acquired between Sept. 27, 2010, and Dec. 31, 2010.
The gain exclusion was to revert to 50 percent as of Jan. 1, 2011, but the Tax Relief Act provision supersedes, and the temporary 100 percent exclusion is now available for another calendar year.
Please see our prior alert for a full outline of the benefits of this provision as they may apply to franchised businesses, both on the franchisor and franchisee side, as long as the investment satisfies certain conditions. The provision, however, does not apply to businesses that operate hotels or restaurants.