Saturday, November 26, 2011

Small Biz Saturday - Investor Stimulus til end of 2011!

As I realized that today was Small Business Saturday, I thought there was no better way to support small businesses (and the economy) than investing in them. So I thought it would be useful to share some information with potential investors about the INVESTOR STIMULUS that is in effect until the end of the year that is worth taking advantage of. If you've been on the fence and have a couple of good companies you've been considering, NOW IS THE TIME to invest!

In September 2010, President Obama signed the Small Business Jobs Act of 2010 (H.R. 5297) which included a provision for an INVESTOR STIMULUS. This law enabled those who invest in small businesses and hold their stock for at least five years to pay NO CAPITAL GAINS tax up to $10 M (approximately). (Summary of Small Biz Jobs Act) The goal of the law was to help stimulate the economy by encouraging investors to invest in entrepreneurs and companies to create jobs. And yes, I said NO CAPITAL GAINS tax up to approximately $10 M!

Originally, the law expired at the end of 2011, but on December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Tax Relief Act and Summary).

The 2010 Tax Relief Act extended the favorable legislation to allow for 100% of capital gains (up to approximately $10M) on “qualified small business stock” (QSBS) investments held five years, but only for QSBS acquired between September 28, 2010 and before January 1, 2012. An additional explanation is available at Latham & Watkins.

It is not clear if this provision will be extended into 2012, and it is not looking promising. Therefore, if you are an investor, considering investing in a QSBS - or a small business, consider making that investment by the end of 2011 to reap the full benefits of this investor stimulus. Not only will you benefit, but your actions may help foster new entrepreneurs, start ups and our greater economy! Now that would be a GREAT way to do your part on Small Business Saturday!

You can find me at and twitter @pilarstella.

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