June has been busy at VentureSouth so blogging has been light, but we hate to leave gaps between posts about taxes so here’s a second to follow the renewal of the South Carolina angel investor tax credit earlier this month.
As you hopefully know, several tax deadlines were extended – notably tax day moving from April 15th to July 15th – in response to the pandemic. But you may not know that the Section 1045 rollover window was lengthened too.
What does that mean and why does it matter?
First, back in our posts from December 2019 and January 2020 about angel investment tax issues, especially this one about Section 1045, we explained how you can defer (and eventually eliminate) capital gains from successful angel investment if you “rollover” proceeds into other investments. You have 60 days from the exit to make a rollover, so finding a suitable deal at the right time can be hard. (Unless you’re a member of an angel group with reliable deal flow, of course.)
The COVID rule change extended the rollover period. If your investment reached a successful exit in February or March, the roll-over deadline should have been in April or May. After the extension, the deadline for rollovers was pushed out to July 15 (or later if the 60-day window would be later anyway).
So if you were an investor in any recent angel deal exit and just realized you could avoid capital gains by doing a Section 1045 rollover:
-
Go discuss with your tax advisor now!
-
Find an interesting deal to roll proceeds into. Give us a call: we have plenty of open rounds under review. The tax savings will surely more than cover your VentureSouth membership!
Takeaway:
-
Taxpayers have until July 15, 2020 to complete the Section 1045 rollover if the 60-day deadline was on or after April 1 and before July 15.
-
Don’t have any relevant deals? Give us a call, we know some people.