What is ‘QSBS (Qualified Small Business Stock)’
A qualified small business stock (QSBS) is simply the stock or share of a qualified small business (QSB). A qualified small business is defined as a domestic and active C-corporation whose gross assets (valued at original cost) do not exceed $50 million as of the date the stock was issued and immediately after issuance.
Explaining ‘QSBS (Qualified Small Business Stock)’
A qualified small business stock (QSBS) is specifically any stock that was acquired from a qualified small business after August 10, 1993. In order for the investor to claim the stock as qualified for tax purposes, s/he must have acquired the stock at its original issue (not the secondary market) with cash or property or as payment for a service. Also, it’s not enough to just purchase or acquire the stock; the investor has to have held the stock for at least five years to reap the tax benefits of a QSBS.
Further Reading
- … the deadline: Exclusion of 100% of QSBS gain: Take steps before the end of 2013 to apply favorable rules on gain from the sale of qualified small business stock – www.questia.com [PDF]
- Private equity and qualified small business stock: tax implications of various holding company structures for control investments – jpe.pm-research.com [PDF]
- Excluding 100 Percent of Gain from the Sale of Qualified Small Business Stock Acquired in 2013 – heinonline.org [PDF]
- A Limited-Time Opportunity for Small Business Stock – www.questia.com [PDF]
- 2011: A Boom Year for the Qualified Small Business – heinonline.org [PDF]
- Qualified Small Business Stock – www.questia.com [PDF]
- Qualified Small Business Stock Under Irc § 1202: Tax-Free Money for the Masses? – papers.ssrn.com [PDF]
- Incorporating a Partnership to Take Advantage of the Qualified Small Business Stock Rules – heinonline.org [PDF]
- How Private Equity Fund Managers Can Cash in on Tax Benefits of Qualified Small Business Stock – heinonline.org [PDF]
