New Bill Would Provide Big Benefits To Small Business Investors


This law gives a way to win big by reducing taxes on capital gains by opening up the floodgates of investment in small business and contributing to job growth and American competitiveness – but people need to first be aware of the law and understand how it works.

How it Works

Bill HR 5297 offers individual investors a 100% reduction in capital gains taxes if they buy stock/bonds in a small qualifying business worth less than $50 million and then hold the stock for five years or more. The total value of the company before and after the investment must be $50 million or less. It must be a ‘C’ corporation and meet other requirements. It is highly focused towards manufacturing and high technology in the private sector, which are the investments that will create jobs.

Here are the highlights of the benefits of this bill:

  • 100% forgiveness of capital gains tax and alternative minimum tax for investors in small business stock
  • AMT tax relief

It is a big deal, because people with a lot of money will eventually have to cash in their stock in order to convert it to something else. By investing in a small business, the investor will obtain government sanctioned tax benefits, assuming that the investment appreciates in value.

The timetable for the 100% tax exclusion is that the investment must be made before January 1, 2012.

Who knows what the capital gains rate will be in five years regardless of whether Democrats or Republicans are in power? The stimulus that is currently helping to keep our economy afloat will have to be paid back from somewhere.

Small Businesses and Investors see Big Opportunities in Tax Incentives

As the CEO of a cloud computing company VirtuDataCenter, I feel so strongly about the benefits of these rules and this type of policy that I am speaking out through this article and other efforts.

My company makes it very easy to deploy virtual data centres. We have unique technology and customers. The USPTO has just granted us 21 claims for security on the Cloud.

Because I believe in choice for the customer, I intend to licence this patent to other Cloud providers (including current infringers) such as IBM, Oracle, Amazon, HP, MicroSoft, RackSpace, etc. For a small additional percentage of revenue, I will also make the software available to these giants so they will be able to operate at the same speed with the same level of security as VirtuDataCenter.

Cloud computing is a hot, high growth market opportunity right now. In short, we have everything we need to hire, select suppliers and grow sales. Partnering with us would be a significant opportunity for any qualified investor.

The individual qualified investor is very appealing because the benefits to them that are coded into law. We hope that more people learn about this law, and that it delivers on its intended promise – namely, to encourage investment in small businesses like VirtuDataCenter and promote job creation and economic growth.