SOLUTIONS
Introduction
Qualified Small Business Stock (QSBS) refers to stock in a qualified small business that has met certain requirements set forth by the Internal Revenue Service (IRS).
Eligibility
To be considered QSBS, the following criteria must be met:
- The stock must be issued by a domestic C corporation.
- The corporation must have less than $50 million in assets.
- The stock must be acquired by the taxpayer at original issuance, either directly or through an underwriter.
- The corporation must use at least 80% of its assets in the active conduct of one or more qualified trades or businesses.
Tax Benefits
Holders of QSBS may be eligible for a number of tax benefits, including:
- Exclusion of 100% of the gain from the sale of QSBS, up to $10 million or 10 times the taxpayer’s basis in the stock, whichever is greater.
- The exclusion is available to both individuals and corporations, but there are some limitations for corporations.
Limitations
It’s important to note that there are some limitations and restrictions to QSBS, including:
- The exclusion is only available for stock held for more than five years.
- The exclusion may be limited for corporations, depending on the size and type of the corporation.
- QSBS must be designated as such by the corporation and the IRS before the exclusion can be claimed.
TOOLS AND SOLUTIONS
Qualified Small Business Stock Calculator
What’s Next?
Tax planning is an important aspect of personal finance, and there are many strategies you can use to reduce your tax liability.
Call us today for a consultation with our tax experts!