Tax & Compliance
Qualified Small Business Stock (QSBS)
Collated by Aparna Devalla, CPA
Curated by Rubric Financial
1 / 4
What QSBS Is and Why It Matters
- Section 1202 of the Internal Revenue Code allows shareholders of qualified small businesses to exclude up to $10M (or 10x their cost basis, whichever is greater) in capital gains from federal tax
- The exclusion applies to stock in C-corporations acquired at original issuance and held for at least 5 years
- At a 23.8% federal capital gains rate (including NIIT), QSBS can save a shareholder up to $2.38M in taxes on a $10M gain
- Most VC-backed Delaware C-corps qualify if structured correctly from incorporation — but the requirements must be met continuously
Related Resources
Tax & Compliance
R&D Tax Credits for Startups
Discover how your startup can claim R&D tax credits to offset payroll taxes or reduce income tax liability by up to $500K per year.
Tax & ComplianceSeed-Stage Tax Return Guide
Why pre-revenue startups must still file tax returns, the key forms involved, and how to claim the R&D payroll tax credit even before generating income.
Tax & ComplianceState Annual Report Filings
Beyond Delaware franchise tax, every state where your startup is registered requires annual report filings — with different deadlines, fees, and penalties for each.
