The general intent of QSBS is to encourage development of companies that are created to drive new innovations and spur job creation, however not every type of C-Corp can qualify for issuing QSBS.
Companies incorporated in the U.S. as C-Corps are eligible for QSBS unless the corporation was formed as:
- Domestic International Sales Corporations (DISCs), which are entities designed to facilitate the US government to subsidize the export of US made goods
- Regulated Investment Companies (RICs), which are investment entities and can take the form of Mutual Funds, Exchange-Traded Funds (ETFs), Real Estate Investment Trust (REIT), or Unit Investment Trusts (UITs).
- Real Estate Mortgage Investment Conduits (REMICs), which are entities that hold a fixed pool of mortgages and issue multiple classes of interests in itself to investors.
- If the corporation or a subsidiary is electing a Section 936 tax exemption, which primarily provides a tax credit for certain kinds of businesses in Puerto Rico.
A C-Corp can conduct business internationally, but it has to be incorporated in the US to qualify for QSBS.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.