In 2012, ABC Corp raised $20 million in funding with an investor leading the round with a $5 million investment. The newly issued stock qualified as QSBS. Three years later the ABC Corp was acquired under a Section 351(a) tax-free stock exchange transaction. The acquirer exchanged newly issued non-QSBS for 100% … Read More
In a merger, the QSBS qualification and holding period will be maintained if the merger is considered a tax-free stock transfer as (1) a section 351 stock exchange or (2) a section 368 reorganization. The entity or individual receiving QSBS in a tax-free transfer will keep the prior holders’ holding period. For example, if an … Read More
Gains on stock sold in under five years would not be considered “eligible” for QSBS tax treatment, and the capital gains will be taxed at the individuals capital gains rate. However, an alternative is to roll the sale proceeds into another company qualifying for QSBS, electing section 1045. More … Read More
The required holding period for Section 1202 QSBS starts the day the stock is acquired/issued. If stock was acquired through other securities such as convertible debt or stock options, the holding period for QSBS generally starts on the date the securities are converted to the stock. The following list shows … Read More
The stock has to be held for more than 5 years in order to qualify as “eligible gains” for QSBS purposes. (as per Section 1202(b)(2)). Although this is true it is possible to maintain your timeline if the stock is sold early using Section 1045. There … Read More
