Tax reform’s impact on Angels and Startups

The Angel Capital Association put out summary of the recent tax reform legislation’s impact on angel investors and startups.

Short Version: 

  • Gains on Qualified Small Business Stock (AKA 1202) will continue to be 100% exempted.  (The continuation happened by not being mentioned in the legislation.)
  • The R&D Tax Credit also continues, as does the ability for startups to take up to $250,000 of the credit against their employment taxes.  (This also happened by not being mentioned in the legislation.)
  • It doesn’t include an initial proposal to tax stock options and restricted stock units when they vest instead of when they are exercised.
  • Carried interest can be taxed as long-term capital gains IF they are held for three years or more.  This appears to be a nice compromise that might help some early-stage investors like angels and VCs.

Full article.

If you have interest in angel investing and are local to Western Massachusetts, check out the local angel group I have the privilege of running: the River Valley Investors.

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