Qualifying QSBS Businesses

The QSBS regulation (IRC Section 1202) outlines what a qualified small business is in terms of its industry type, size, industry / business focus, and dedication of its resources to its stated business purpose.

Criteria for Qualifying QSBS Businesses

Was the corporation’s stock issued by a Domestic C Corporation?
Yes
Does the corporation pass the “Gross Assets Test”?
Yes
Does the corporation operate within a Qualified Industry?
Yes
Does the corporation pass the Active Trade or Business Test?
Yes
Next: Is your QSBS eligible for capital gains tax exclusions?
No
No
No
No
If your stock does not meet the QSBS criteria, there may be some alternatives to consider.

 

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QSBS has implications for different stakeholders.
Explore the nuances.

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Individual Investor

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Investment Fund

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Founder

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Employee

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Service Provider

Additional resources

Frequently asked questions regarding which businesses qualify for QSBS
 Read More
Use our calculator to determine your eligibility Read More
Case Study: Section 1202 QSBS Potential Impact on Startup to IPO Investment Read More

This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.