Members Gregg Benson, Daniel DeWolf, and Associate David Salamon co-authored an article in ALI CLE’s The Practical Lawyer discussing the tax implications and strategies for converting a start-up organized as an LLC into a corporation. Their article specifically dives in on the potential benefits of the Qualified Small Business Stock (QSBS) rules under Section 1202 of the Internal Revenue Code. 

The authors wrote, “Because many businesses experience tax losses in their early years, one potential strategy is to operate through an LLC during the start-up years and convert into a corporation when and if it is determined that the business will be able to benefit from the QSBS rules. In addition, this strategy may permit founders to significantly enhance the 10X Basis Limitation, thereby maximizing the tax benefits available under the QSBS rules.”

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Source

The Practical Lawyer