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Full-Text Articles in Law
A Critical Evaluation Of The Qualified Small Business Stock Exclusion, Gregg Polsky, Ethan Yale
A Critical Evaluation Of The Qualified Small Business Stock Exclusion, Gregg Polsky, Ethan Yale
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Section 1202 of the Internal Revenue Code grants a gain exclusion to certain shareholders who own "qualified small business stock." We describe the tortured history of this rule, explain how it works (and fails to work), and critically evaluate whether the rule serves any coherent policy objective. If Congress keeps the rule in place, significant revisions are necessary to align the rule with sound policy and tamp out the abusive manipulations arguably permitted by the law in its present form. We propose several improvements along these lines. We also make the case for eliminating the exclusion in its entirety.
Taxing Buybacks, Gregg Polsky, Daniel J. Hemel
Taxing Buybacks, Gregg Polsky, Daniel J. Hemel
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A recent rise in the volume of corporate share repurchases has prompted calls for changes to the rules governing stock buybacks. These calls for reform are animated by concerns that buybacks enrich corporate executives at the expense of productive investment. This emerging antibuyback movement includes prominent politicians as well as academics and Republicans as well as Democrats. The primary focus of buyback critics has been on securities-law changes to deter repurchases, with only passing mention of potential tax-law solutions. This Article critically examines the policy arguments against buybacks and arrives at a mixed verdict. On the one hand, claims that …