GACPA Information Sheet
Qualified Small Business Stock (QSBS)
§1202 lets founders and early investors exclude a substantial portion of the gain from selling qualifying C-corporation stock — one of the most powerful tax breaks in the code.
Client & prospect resource
Gideon Adler & Co., CPAs has researched and created this information sheet for clients and potential clients. Read the full sheet online, or download the PDF.
Key points
- Stock must be issued by a domestic C-corporation
- Corporation's gross assets must be at or below the §1202 threshold at issuance
- Stock must be held for more than five years to qualify for full exclusion
- Exclusion applies against a per-issuer cap (greater of a dollar cap or 10× basis)
- Corporation must meet the active-business requirement (qualified trade or business)
- Stock must be acquired at original issuance (directly from the company)
- Rollover under §1045 can preserve QSBS treatment when reinvesting proceeds