Adam Tarleton Explains the OBBBA’s Expansion of the Section 1202 Exclusion in Tax Notes

In an article published by Tax Notes, Brooks Pierce partner Adam Tarleton discusses the recent One Big Beautiful Bill Act (OBBBA) and its impact on small business corporations under section 1202.   

The Act increased the maximum per shareholder exclusion by 50 percent, from $10 million to $15 million, and expanded the definition of a qualified small business, but beyond these expansions, the structure of section 1202 was left essentially intact.

Tarleton went on to breakdown section 1202’s requirements, which have remained fairly static since the statutes adoption in 1993. Its expansion this year likely occurred to encourage investment in startups and small businesses, but may also simply be attributed to an overdue inflation adjustment to key features of the statute that had been unchanged since its origin.

“Congress appears to have concluded that the section 1202 exclusion is a good thing, and more of a good thing must be a better thing,” Tarleton wrote. “As a result, post-OBBBA, startup founders and investors in C corporations have the opportunity to achieve an even greater tax savings in an exit event by virtue of the expanded QSBS exclusion.”

Tarleton provides counsel on tax, estate planning, and business matters to help clients protect and preserve their wealth and achieve their personal and financial goals. He is certified as a specialist in Estate Planning and Probate Law by the North Carolina Board of Legal Specialization.

For the full article, Tax Notes members may click here.