US QSBS (IRC Section 1202): sourced answers
2 answers to specific questions — each with a verbatim quote from an official source and a link to it.
Every answer is checked against a verbatim quote from a stored copy of its source and has passed an independent review. This is reference information, not legal advice: rules change, and the outcome depends on your circumstances.
Tax regime
How is the regime's relief or obligation structured
§1202 excludes up to 100% of QSBS gain from U.S. federal tax
«SEC. 70431. EXPANSION OF QUALIFIED SMALL BUSINESS STOCK GAIN EXCLUSION. (a) Phased Increase in Exclusion for Gain From Qualified Small Business Stock.-- (1) In general.--Section 1202(a)(1) is amended to read as follows: ``(1) <<NOTE: Time periods.>> In general.-- In the case of a taxpayer other than a corporation, gross income shall not include-- ``(A) except as provided in paragraphs (3) and (4), 50 percent of any gain from the sale or exchange of qualified small business stock acquired on or before the applicable date and held for more than 5 years, and ``(B) the applicable percentage of any gain from the sale or exchange of qualified small business stock acquired after the applicable date and held for at least 3 years.''. (2) Applicable percentage.--Section 1202(a) is amended by adding at the end the following new paragraph: ``(5) Applicable percentage.--The applicable percentage under paragraph (1) shall be determined under the following table: Applicable ``Years stock held: percentage: 3 years................................................ 50% 4 years................................................ 75% 5 years or more........................................ 100%''. ''. …»
Source: govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm · source copy as of 2026-10-02
«Qualified small business stock. This is stock that meets all the following tests. It must be stock in a C corporation. It must have been originally issued after August 10, 1993. The corporation must have total gross assets of $50 million or less at all times after August 9, 1993, and before it issued the stock. Its total gross assets immediately after it issued the stock must also be $50 million or less. When figuring the corporation's total gross assets, you must also count the assets of any predecessor of the corporation. In addition, you must treat all corporations that are members of the same parent-subsidiary controlled group as one corporation. You must have acquired the stock at its original issue, directly or through an underwriter, in exchange for money or other property (not including stock), or as pay for services provided to the corporation (other than services performed as an underwriter of the stock). In certain cases, your stock may also meet this test if you acquired it from another person who met this test, or through a conversion or trade of qualified small business stock that you held. …»
Source: irs.gov · source copy as of 2026-10-03
§1202 excludes up to 100% of qualified small business stock gain from U.S. federal tax
«SEC. 70431. EXPANSION OF QUALIFIED SMALL BUSINESS STOCK GAIN EXCLUSION. (a) Phased Increase in Exclusion for Gain From Qualified Small Business Stock.-- (1) In general.--Section 1202(a)(1) is amended to read as follows: ``(1) <<NOTE: Time periods.>> In general.-- In the case of a taxpayer other than a corporation, gross income shall not include-- ``(A) except as provided in paragraphs (3) and (4), 50 percent of any gain from the sale or exchange of qualified small business stock acquired on or before the applicable date and held for more than 5 years, and ``(B) the applicable percentage of any gain from the sale or exchange of qualified small business stock acquired after the applicable date and held for at least 3 years.''. (2) Applicable percentage.--Section 1202(a) is amended by adding at the end the following new paragraph: ``(5) Applicable percentage.--The applicable percentage under paragraph (1) shall be determined under the following table: Applicable ``Years stock held: percentage: 3 years................................................ 50% 4 years................................................ 75% 5 years or more........................................ 100%''. ''. …»
Source: govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm · source copy as of 2026-10-02
«Qualified small business stock. This is stock that meets all the following tests. It must be stock in a C corporation. It must have been originally issued after August 10, 1993. The corporation must have total gross assets of $50 million or less at all times after August 9, 1993, and before it issued the stock. Its total gross assets immediately after it issued the stock must also be $50 million or less. When figuring the corporation's total gross assets, you must also count the assets of any predecessor of the corporation. In addition, you must treat all corporations that are members of the same parent-subsidiary controlled group as one corporation. You must have acquired the stock at its original issue, directly or through an underwriter, in exchange for money or other property (not including stock), or as pay for services provided to the corporation (other than services performed as an underwriter of the stock). In certain cases, your stock may also meet this test if you acquired it from another person who met this test, or through a conversion or trade of qualified small business stock that you held. …»
Source: irs.gov · source copy as of 2026-10-03
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