Taxes & QSBS

How do taxes work- especially QSBS?

The Qualified Small Business Stock (QSBS) exclusion (IRC §1202) can be extremely valuable: if you acquire original issue C‑corp stock in a qualifying company and hold it for the required period, you may exclude up to 100% of capital gains (subject to per‑issuer caps—generally the greater of $10M or 10× basis, among other requirements). Not all industries qualify, and there are guardrails (gross assets ≤$50M at issuance, active business tests, redemption rules, etc.). Historically, the holding period for 100% exclusion is 5 years; policy updates have discussed tiered exclusions/holding periods for stock issued after mid‑2025—stay current and get tax advice.
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QSBS is nuanced: SAFEs/notes generally don’t start the clock; equity needs to be original‑issue stock; secondary purchases don’t qualify. Keep records, and consider 1045 rollovers if exiting early.

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