5 ms·

For me a loophole is something that requires a certain amount of work to benefit from. Much more than ticking in a box in a standard form.

• zaroth 7y ago
  For what it’s worth, QSBS is just a matter of filling in the dollar amount and writing “Section 1202 exclusion”. To me a loophole is something where you have to perform some sort of otherwise unnecessary accounting procedure in order to qualify. For example, forming an S Corp to funnel contracting income through, solely for the purpose of avoiding the 3.8% payroll surtax.
  • betterunix2 7y ago
    A classic example of "we didn't intend for people to do that when we wrote the law!" One of the costs of living in a rule-of-law society is that sometimes the law winds up working in unexpected ways.
    • zaroth 7y ago
      What do you mean? Section 1202 was very explicitly amended as written to stimulate investment in small business. It is a huge incentive for Series AA and A investment, particularly for smaller early stage investors where it can effectively double the return. It’s a fantastic policy to help small business raise money and also retain top talent versus the Goliaths. There is nothing unintentional about Section 1202. The value of the tax break was strengthened during the Bush stimulus, and then extended and eventually made permanent under Obama. It is a nice bit of tax policy with bipartisan support.
      • betterunix2 7y ago
        I was referring to your definition of what a loophole is and the example of that (forming an S corp to avoid payroll taxes).