§1045 Rollover of Gain From Qualified Small Business Stock to Another Qualified Small Business Stock

Summary

You can choose to delay reporting gain when you sell qualified small business stock if you are not a corporation, you owned the stock more than 6 months, and you make the election to use this rule. The part of the gain that becomes taxable is only the amount by which what you got from the sale is more than the cost of any qualified small business stock you buy within 60 days after the sale, minus any of that cost you already used under this rule. This rule does not apply to gain that is treated as ordinary income. “Qualified small business stock” is the type defined in section 1202(c). Any gain you defer reduces the tax basis of the replacement stock you buy (applied in the order you bought it). Special rules change how holding periods are counted, and other rules like subsections (f)–(k) of section 1202 also apply.