Answer

Greetings,

 

Although your intent is admirable to reduce the tax on the sale of the company the provision to which you are referring will not help unless you intend to hold the stock of the C coporation at least five years.

 

From http://www.irs.gov/newsroom/article/0,,id=208318,00.html :

"Business Provisions of the American Recovery and Reinvestment Act of 2009 (ARRA)

Exclusion of Gain on the Sale of Certain Small Business Stock (Section 1241): ARRA provides an extra incentive for investment in small businesses. The new law provides an increase in the Section 1202 exclusion from 50 percent (60 percent for enterprise zone qualified business entity stock) to 75 percent for any gain from the sale or exchange of qualified small business stock acquired after Feb. 17, 2009 and before Jan. 1, 2011, and held for more than five years. This provision is limited to individual investors and not available to corporations."

So the measure passed this year allows 75% of the gain to be excluded, up from 50%, but does not change the holding period or other requirements of qualified small business stock.

I hope this helps to understnad the new provisions even though it is not the answer that you would have liked to hear.

Best regards.