Under section 1202 the gifting of QSBS is considered a tax-free transfer, which maintains QSBS qualification to the transferee. The transferor’s holding period and basis in the QSBS will pass to the trasferee. What that means is whoever is receiving the gifted QSBS will maintain the holding period whether it is 6 months or 4 years.
There is one instance where gifted stock does not qualify as QSBS. If the company directly gifts a partnership stock it will not qualify for section 1202 QSBS. Although QSBS can not be directly contributed to the partnership it can be purchased directly from the partnership.