The $10 Million Tax Exemption
Qualified Small Business Stock (QSBS), under Section 1202, allows founders and early investors to exclude up to 100% of capital gains from federal taxes.
QSBS Savings Simulator
Estimate your potential tax savings. Section 1202 excludes the greater of $10 Million or 10x your cost basis from federal capital gains tax (typically 23.8%).
The cap is 10x this amount or $10M.
Standard Federal Cap Gains + 3.8% NIIT.
Total Savings: $2,380,300
By qualifying for Section 1202, you shield the majority of your gain from federal taxes.
Am I Eligible?
Eligibility is strict. Use this interactive checker to see if your stock meets the core Section 1202 requirements.
Common Mistakes & Exclusions
Not all C-Corps qualify. Certain industries are explicitly excluded ("Service Businesses"), and specific corporate actions can retroactively disqualify your stock. Click a card to reveal details.
Professional Services
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Excluded â
Health, Law, Engineering, Architecture, Accounting, Actuarial Science, Performing Arts, Consulting, Athletics.
Hospitality
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Excluded â
Hotels, Motels, Restaurants, or similar businesses are explicitly listed as non-qualified trades.
Finance & Investing
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Excluded â
Banking, Insurance, Financing, Leasing, Investing, or similar businesses do not qualify.
Stock Buybacks
Critical Mistake
Careful! â ī¸
Significant redemptions of stock from ANY shareholder within 1 year before/after issuance can taint ALL stock issued in that period.
The 5-Year Clock
To claim the 100% exclusion, you must hold the stock for at least 5 years. But what if the company is sold before then?
Select a milestone on the right â
Understanding the timeline is crucial for tax planning. Section 1045 provides a safety net for early exits.
Day 0: Issuance
Stock Acquired
Month 6 - Year 5: The "Rollover" Window
Section 1045 Active
Year 5+: The Finish Line
100% Exclusion Unlocked