Highlights

Gifts of qualified small business stock (QSBS) to trusts may provide additional tax savings by increasing the amount of the gain subject to exclusion.

The classification of the trust for federal U.S. tax purposes will impact the amount of income tax exclusion and possibly any gift tax that may become due.

Given the nuances and overlap of the income tax and gift/estate tax regimes, careful planning with a qualified tax advisor should be undertaken prior to transferring QSBS.

In general, stock must be acquired at "original issuance" from the corporation in order to qualify for qualified small business stock (QSBS) treatment under Internal Revenue Code (IRC) Section 1202. As discussed in a previous Holland & Knight alert , there are certain exceptions to the requirement that

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