2018 Tax Reform impact for Angels and Startups
As you know the tax reform bill, the Tax Cut and Jobs Act, was signed into law by the President just before the Christmas holiday. It has some considerable positive impact on businesses and investments.
Here are few things to know about tax reform that affect angel investors and new companies:
• Gains on Qualified Small Business Stock (also known as 1202) will continue to be 100% exempted.
• The R&D Tax Credit also continues, as does the ability for startups to take up to $250,000 of the credit against their employment taxes. It doesn’t include an initial proposal to tax stock options and restricted stock units when they vest instead of when they are exercised.
• Carried interest can be taxed as long-term capital gains if they are held for three years or more. This appears to be a nice compromise that might help some early-stage investors like angels and VCs.
Here is also the link to a Tax Comparison Chart from Bloomberg: (We believe some of the items may have been tweak after the Tax Reform Act was launched, so as always, do check with your financial tax professional for details and proper advise)