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Full Qualified Small Business Stock Capital Gain and AMT Exclusions Set to Expire at Year-End

A key component of the Small Business Jobs Act of 2010, as extended by the 2010 Tax Relief Act, which was designed to spur investment in emerging companies throughout the U.S., is set to expire on December 31, 2011. The Jobs Act amended Section 1202 of the Internal Revenue Code (Code) to allow non-corporate taxpayers the opportunity to exclude from gross income and Alternative Minimum Tax (AMT) up to 100% of the gain recognized from the sale or exchange of Qualified Small Business Stock (QSBS) purchased from September 28, 2010 through December 31, 2011. There has been no formal legislative proposal to extend the end-date or otherwise make the exclusions permanent. Accordingly, qualified small business issuers and their investors and employees should consider whether the current exclusions warrant taking certain actions by year-end.

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