How Entrepreneurs Overturned California's Retroactive Tax On Startup Founders

waderoush writes "Startup founders in California can breathe a little easier today — they won't be getting bills from the state for up to $120 million in back taxes. On Friday California Governor Jerry Brown signed a bill prohibiting the state from levying retroactive taxes on founders and other small-business investors who took advantage of a tax break invalidated last year by a state appeals court. California Business Defense, a coalition of entrepreneurs, spent most of 2013 trying to reverse the California Franchise Tax Board's interpretation of the court ruling, under which it planned to hit Californians with new tax bills on the sale of small-business stock going back to 2008 (a story that Slashdot picked up in January). Two bills on the matter reached Governor Brown's desk in September, one fully restoring the investment incentive through 2016, the other partially restoring it. Brown signed AB1412, the bill granting full relief. 'For a bunch of political greenhorns operating in an environment where political partisanship is at an all-time high, we did all right,' writes Brian Overstreet, one of the co-founders of California Business Defense. 'But it should never have been this hard.'"

Re:uh, yeah...

[AK Marc]

Sure. you buy a house for $50,000 in 1973, then 40 years later sell it for $250,000, an inflation calculator will indicate an almost imperceptible change in "value" (in 2013 dollars), but you'll be taxed on the inflation (on not, if you live there as a homestead, and meet other rules).

Capital gains is a tax on the inflation. They don't calculate the capital gains on the "real" gain, but the dollar gain.

You are obviously the person that doesn't understand it. If I don't understand it, explain how I'm wrong. Go ahead. I'll be waiting.