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What is a qsbs?
A qualified small business stock (QSBS) is the stock, or share, of a qualified small business (QSB), as defined by the Internal Revenue Code (IRC).
Is Your Small Business stock qualified as qsbs?
Stock of a small business may qualify as QSBS if a number of requirements are met, including: the stock is issued to a non-corporate stockholder (individual or pass-through, including an LLC taxed as a partnership or S-corporation);
What is the basis-is-not-less-than-value rule for qsbs?
The general purpose of the basis-is-not-less-than-value rule is to ensure that inherent built-in gain for any property contributed to a corporation in exchange for QSBS does not qualify for the §1202 benefits.
What are the requirements for qualifying as qsbs?
QSBS Eligibility Requirements Stock of a small business may qualify as QSBS if a number of requirements are met, including: the stock is issued to a non-corporate stockholder (individual or pass-through, including an LLC taxed as a partnership or S-corporation);
What are the tax benefits of qsbs?
QSBS allows up to 100% tax exclusion of gain from the sale of stock in certain small businesses, including many technology start-ups. Gain is excluded from income for both federal regular tax and alternative minimum tax (AMT).
How long do I have to hold qsbs?
Operating a hotel, motel, restaurant, or similar business “Exclusion” (Section 1202): Individual must hold QSBS for at least five years from the date he/she acquires the shares (if shares are from stock options acquisition date is the exercise date, not the date of grant) “Rollover” (Section 1045): Individual must hold QSBS for at least six months
Should I exercise my qsbs stock options?
The QSBS income tax exclusion is an important consideration when deciding whether to exercise your stock options. The potential to not pay federal and state income tax on the gain when you sell your shares is obviously highly important.