Greetings pros.
A client of mine sold investment in qualified small business in 2018. In 2019, they got $50k as earnout from this sale and invested the entire amount to another QSBS. Can this be treated as section 1045 rollover?
From my understanding according to the code if the gain is treated as ordinary income it does not qualify (https://www.law.cornell.edu/uscode/text/26/1045). So consider two scenarios here: a) the earnout was part of purchase price, and b) the earnout was both purchase price and compensation of service.
Thanks a lot.