Small Business Stock Exclusion for Corporation Performing Medical Tests

There’s a highly favorable tax rule for qualified small business stock (explained in the instructions to schedule D of Form 1040): A shareholder in a C corporation may be able to exclude all of the gain on the sale of this stock if certain conditions are met. One condition is that the corporation can’t be in the business of providing medical services. The IRS ruled that a corporation performing medical tests ordered by customers’ physicians was not considered to be providing medical services. It couldn’t change or supplement the orders and cannot diagnose customers or provide medical advice to them. #IdeaoftheDay