Qualified Small Business Stock (QSBS) refers to stock issued by a qualified small business, as defined by the Internal Revenue Code. This type of stock is eligible for certain tax benefits, such as an exclusion of up to 100% of the gain from the sale or exchange of the QSBS held for more than five years.
In order to qualify, the stock must meet specific requirements, including being issued by a domestic C corporation that has total gross assets of $50 million or less at the time of the stock issuance, and meeting certain active business requirements. The QSBS rules can be complex, and it is recommended that individuals consult with a tax professional before taking any action related to QSBS.
