What’s a qualified small business for the 100% gain exclusion?

The sale of qualified small business stock (QSBS) held more than 5 years is 100% tax free up to $10 million. There are many conditions for QSBS, including that a C corporation not be engaged in the performance of services in such fields as health care, law, accounting, and consulting. In a private letter ruling the IRS said that a C corporation involved in the retail sale of a limited number of drugs was not considered to be performing services in the field of health care because they don’t provide diagnostic services or medical care. The result: shareholders’ gain could qualify for the QSBS exclusion. #IdeaoftheDay

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