Contributed by Elizabeth D. Sigety and Michael S. Goodman
The tax compromise law between the Obama Administration and Republican Leadership in Congress, officially known as 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 extension of the deadline contained in a similar provision signed into law in September 2010 by President Obama as part of the Small Business Jobs Act of 2010. In that law, 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 blog entry 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.
If you have questions about the applicability of the provision to your franchised business, please contact Elizabeth D. Sigety at 215.918.3554 or esigety@foxrothschild.com or any other member of Fox Rothschild’s Franchising, Licensing & Distribution Practice.