Tax & Compliance
Section 1045 Rollover: Selling QSBS Early Without Losing the §1202 Exclusion
Collated by Aparna Devalla, CPA
Curated by Rubric Financial
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Why §1045 Exists
- §1202 requires a 5-year hold (or 3/4/5 year tiers post-OBBBA) for the QSBS gain exclusion to apply.
- Many liquidity events happen before that 5-year mark: tender offers, secondary sales, M&A. Selling early normally means losing §1202 entirely.
- §1045 (Rollover of Gain From QSBS) lets you defer the gain by reinvesting proceeds in OTHER QSBS within 60 days of the sale.
- The reinvested amount's holding period 'tacks' from the original QSBS, so when you eventually sell the new QSBS at the 5-year mark (combining holding periods), the original gain is excludable.
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