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