Andersen Global
QSBS Insights
If you own Qualified Small Business Stock (QSBS), you may be eligible to eliminate tax on all or a large portion of your gain when you sell.
Are You Aware of Potential QSBS Savings?
QSBS rules encourage investment in certain small businesses by offering tax breaks on gains from selling QSBS. We help entrepreneurs navigate all aspects of QSBS with solutions tailored to your unique needs.
Founders and entrepreneurs who are unaware of the existence and benefits of QSBS may be missing out on potential savings. Rules applying to QSBS were created to urge investment in certain small businesses by allowing investors the opportunity to avoid tax on some or all of their gain from the disposition of QSBS.
Andersen professionals focus on the unique circumstances of entrepreneurs and their companies. We are well-versed in the intricacies of QSBS, the associated filings and documentation, and steps that may be needed to meet the requirements.
Why QSBS is Important
For QSBS acquired prior to July 4, 2025, gains from the sale of QSBS may qualify for up to a 100% exclusion from federal income tax, provided certain requirements are met. This exclusion can apply to the greater of $10 million, or 10x the taxpayer’s basis in the stock.
Effective for QSBS acquired after July 4, 2025, the OBBBA modifies Sec. 1202 to implement a tiered exclusion structure:
- 50% exclusion after 3 years
- 75% exclusion after 4 years
- 100% exclusion after 5 years
The Act also increases the per-taxpayer, per-issuer exclusion cap from $10 million to $15 million (to be indexed for inflation), and raises the corporate-level asset ceiling from $50 million to $75 million (to be indexed for inflation).
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Basic Requirements of QSBS
Company is a domestic C corporation
Stock is issued after August 10, 1993.
Stock is acquired by taxpayer directly from the company for money, property (other than stock), or services (limited exceptions to this rule).
The tax basis of the total gross assets of the corporation at all times from August 10, 1993 until immediately after the issuance of the taxpayer's stock must be less than $50M (or $75M if stock is issued after July 4, 2025).
Company is a domestic C corporation
Stock is issued after August 10, 1993.
Stock is acquired by taxpayer directly from the company for money, property (other than stock), or services (limited exceptions to this rule).
The tax basis of the total gross assets of the corporation at all times from August 10, 1993 until immediately after the issuance of the taxpayer's stock must be less than $50M (or $75M if stock is issued after July 4, 2025).
