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10 Oddball Tax Deductions

Updated for 2011

To qualify as QSB stock:

The stock must have been issued by a C-corporation, not an S-corporation.
The gross assets of the corporation must have been no more than $50 million at all times after August 9, 1993, and before issuance of the stock, as well as immediately after issuance of the stock.
The corporation must be an active business, it cannot be a holding company.

Lifetime limit:

There is a lifetime limit on the Section 1202 exclusion for qualified small business stock or empowerment zone business stock from any one issuer:

The amount of gain from any one issuer that is eligible for the 50% (or 60%) exclusion is limited to the greater of:

Ten (10) times your basis in the qualified stock that you disposed, or
$10 million ($5 million if married filing separately) MINUS any gain on stock from the same issuer that you excluded in prior years.

Report the entire gain as a long-term gain on Line 8 of Schedule D.
Enter the allowable exclusion as a loss below the entry for the gain.
Label the the entry for the allowable exclusion as follows:
- Section 1202 exclusion

To qualify as qualified small business stock for the purpose of deferring or excluding gain:

The stock must be stock in a C-corporation (not an S-corporation)
The stock was originally issued after August 10, 1993.
The gross assets of the corporation must have been no more than $50 million at all times after August 9, 1993, and before issuance of the stock, as well as immediately after issuance of the stock.
The corporation must be an active business, it cannot be a holding company.