QSBS is a federal tax provision, IRC Section 1202, that lets founders and early investors exclude some or all of their capital gain from taxes when they sell qualifying stock in a C-corporation, as long as it's been held long enough.
Eligibility is structural, not something fixed after the fact. The company generally has to be a domestic C-corp with gross assets under a set threshold at the time the stock was issued, and the stock has to come directly from the company, not be bought from another shareholder. The holding-period tiers and gain-exclusion caps depend on when the stock was issued, since federal rules changed for stock issued after July 4, 2025. That's a question for a CPA checking against the actual issuance date, not a single number worth memorizing.
The clock starts the moment stock is issued, at formation or at each later round, and nobody can go back and make earlier stock QSBS-eligible after the fact. Confirming eligibility early, long before an exit makes the number on the table real, is the entire point of tracking it.
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