QSBS (Qualified Small Business Stock)
A US federal tax provision that can exclude up to $10M of gain on the sale of qualified C-corp stock.
The longer version
Section 1202 of the IRC allows founders and early shareholders of qualifying C-corps to exclude federal capital gains tax on a meaningful portion of the gain when they sell. The asset must be held for at least five years, the company must be a domestic C-corp at issuance with under $50M in gross assets, and there are excluded business types.
Why it matters in your books
QSBS is one of the most valuable founder tax structures in the US. Whether you qualify depends on entity history, timing, and the activity test — your books and stock-issuance records have to support it. We document QSBS readiness as part of the close.
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