Under Section 1202(h)(1) inherited QSBS is considered a tax-free transfer, which maintains QSBS qualification to the transferee. If the inherited stock qualified for QSBS when it was acquired by the precedent holder than the stock will qualify for section 1202 QSBS. The transferor’s holding period and basis in the QSBS will pass to the transferee. The inheritor of the QSBS will maintain the holding period whether it is 6 months or 4 years.

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