Jeff - additional tax incentives for individuals and venture capital firms to invest in emerging growth companies.
Regards,
Phil
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techlawjournal.com
Venture Capitalists Win Big Tax Break in IRS Restructuring and Reform Bill
"The bill, which passed the House June 25, and the Senate yesterday, will allow anyone who invests via a venture capital partnership, to roll over tax free a gain from the sale of a qualified small business stock" when the proceeds are reinvested in another small business stock. This new provision is attached to the IRS restructuring and reform bill."
"Capital gains taxes are paid on profits made on investments in stocks, bonds, real estate and collectibles. Section 1045 currently provides that individual taxpayers may rollover tax-free any gain realized on a sale of "qualified small business stock" when the sale proceeds are reinvested in another qualified small business stock. The rationale for this provision is to encourage individuals to invest in emerging growth companies, and also to encourage them to reinvest any profits once the original investments mature. However, the "rollover" benefits of õ1045 is currently limited to individuals."
"What the new tax bill does is extend the benefits õ1045 to noncorporate investors, including venture capital partnerships. It will encourage people to invest in venture capital funds, which are a traditional source of seed money for high-tech computer and Internet industry companies."
"While there is not yet any statistical data on who is actually availing themselves of the existing rollover provision, or who would use the new provision, Mark Heesen of the National Venture Capital Association predicted that the types of companies most likely to benefit would be "Internet, telecommunications, software, biotech, and medical devices.""
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