The Qualified Small Business Stock (QSBS) exclusion remains one of the most valuable federal income tax benefits available to startup investors, founders, and early employees. Under Sec. 1202, a non-corporate taxpayer may exclude eligible gain from the sale or exchange of QSBS, subject to certain limitations. However, Treasury officials have recently signaled concern about so-called stacking arrangements that use trusts to multiply the per-taxpayer exclusion.

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