As many advisors, founders, and investors in the middle-market growth-company space are aware, the “Qualified Small Business Stock” rules of Code Section 1202 are an enormous boon to eligible shareholders. Generally, investors in qualifying small businesses (valued at $50 million or less when the stock is issued) who have held their shares for at least 5 years can sell such stock and be exempt from all or a part of federal capital gains taxes (and very often state capital gains taxes, too).

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