QSBS Sec. 1244 - The Impact Incentive.
TLDR: Passed in 1958, QSBS Sec. 1244 was passed to stimulate investments into early stage startups. It allows early stage investors to write off losses in early stage venture investing against ordinary income. And this deduction is a better write off than a 501c3 deduction.
The need for more capital to support the expanding diversity of entrepreneurship across the country is clear. There have been numerous attempts to use Fiscal Policy tools to incentivize investors decisions to invest in more innovation.
But QSBS Sec. 1244 has been overlooked and forgotten about.
Due to inflation, in the Revenue Act of 1978, the Govt. updated the levels/limits of QSBS Sec. 1244 by applying the CPI inflation adjustment factor.
However, it has been overlooked since and needs to be indexed again to inflation to mobilize more private capital into startups.
There is a detailed paper on the law and the legislative language from the last time it was updated linked - DocSend.