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What is Qualified Small Business Stock?

Definition

Qualified Small Business Stock

Qualified Small Business Stock (QSBS) is a US tax provision (Section 1202) that allows early startup investors and employees to exclude up to 100% of capital gains from federal taxes upon sale.

Detailed Deep Dive

Qualified Small Business Stock (QSBS) is a US tax provision (Section 1202) that allows early startup investors and employees to exclude up to 100% of capital gains from federal taxes upon exit.

Frequently Asked Questions

Q:What are the main requirements for QSBS?

The company's gross assets must not exceed $50M at the time of stock issuance, and the shares must be held for at least 5 years.

Q:How much tax can be excluded under QSBS?

Up to $10 million in capital gains, or 10 times the taxpayer's basis in the stock (whichever is greater).

Quick Facts

  • CategoryFunding
  • Key ApplicationTax optimization on startup exits

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