Startup Funding Espresso -- Gains and Losses
Gains and Losses Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. There\u2019s an old saying, it\u2019s not how much you make, it\u2019s how much you keep that counts.\xa0 Tax management is an important topic for angel investors.\xa0 There are specific laws that give tax breaks to investors for startup investments. The first is called Section 1244 which gives the investor the ability to take ordinary income deductions on losses rather than capital gains deductions.\xa0\xa0 Since many startup investments result in a loss, Section 1244 helps offset those losses. For successful exits, Section 1202 reduces or eliminates taxes on gains from an exit.\xa0 For stock acquired after 9/28/2010, there is a 100% exclusion on the gains for tax purposes.\xa0 Before that date, there is a 50%-75% exclusion depending on the date.\xa0 You must hold the stock for 5 years. Then there is the 1045 rollover which lets the investor rollover proceeds from the sale of stock from one startup to a new one without paying capital gains on the first one.\xa0\xa0 You must do so within 60 days. If you have restricted stock, then 83(b) election lets you pay the taxes when the options vest, rather than when you exercise them.\xa0 This lets you pay taxes when the value is lower and exercise the options later when the value is higher. These rules have been in place for a while now, so it\u2019s important to check with your accountant about any changes. Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.Let\u2019s go startup something today. ____________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out For Feedback please contact info@tencapital.group\xa0\xa0 Please , share, and leave a review. Music courtesy of .