On Friday, December 18, Congress passed the PATH Act (Protecting Americans from Tax Hikes), a sweeping $1 trillion bill which, as part of an 887-page omnibus, would prove challenging for even the most astute of human beings to absorb, let alone many of those in Washington.
Nevertheless, page 813, Section 126, makes reference to a feature that’s now become a permanent part of the tax code — and it’s great news for entrepreneurs and other individuals financing startups and companies in the earliest stages of growth, as well as general partners and individual investors in venture capital funds. This is all part of Congress’ interest in encouraging long-term investing.
The impact this change will have on entrepreneurs, the lifeblood of the U.S. economy, is significant. This new code will enable a company’s founders and employees holding stock, including that obtained upon exercise of options, to save up to millions of dollars in taxes upon a company achieving a successful liquidation event. Read more: click image or title.
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