Business Founder Asks California Court to Allow Stock Tax Break

A $5 million gain from the sale of an engineering design firm qualified for a California income tax deduction for small business stock, the company’s cofounder told a state appeals court.

Charles Harper claimed a deduction on his 2009 state returns for proceeds he earned from selling stock in Sierra Monolithics Inc., which he cofounded in the 1980s. He wants the California Court of Appeal, Second Appellate District, to void the Franchise Tax Board’s assessment of an additional $547,000, which he paid under protest.

California’s “qualified small business stock” applies to stock in a C corporation originally issued after 1993. ...