Newer stock is split off with a three year holding test
What the document says“except as provided in paragraphs (3) and (4), 50 percent of any gain from the sale or exchange of qualified small business stock acquired on or before the applicable date and held for more than 5 years, and”
The section rewrites section 1202(a)(1) of the Internal Revenue Code of 1986 so that for a taxpayer other than a corporation gross income leaves out 50 percent of gain on qualified small business stock acquired on or before the applicable date and held more than five years, and the applicable percentage of gain on stock acquired after the applicable date and held at least three years.
What the document actually says“except as provided in paragraphs (3) and (4), 50 percent of any gain from the sale or exchange of qualified small business stock acquired on or before the applicable date and held for more than 5 years, and”
Half the gain on older stock is left out of income. That stock must have been held more than five years.
Newer stock is treated under a second rule. It needs only three years of holding. Its share is set by a table.
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