The section 1202 qualified small business stock (QSBS) gain exclusion is one of the most overlooked tax breaks for long-term investors. The QSBS gain exclusion allows noncorporate taxpayers to exclude up to 100% of capital gains earned when they sell QSBS that they held for more than five years.
Staff Accountant Heena Patel explains the basics of the QSBS gain exclusion during this video overview.
The QSBS gain that can be excluded should be the greater of $10 million per corporation or 10 times the taxpayer’s cost basis in the stock, which is an annual limit.
Up to 50%, 75%, or 100% of capital gains can be excluded based on the acquisition date of qualified small business stock.
There are certain conditions that must be met to claim this exclusion:
Qualifications can vary based on individual circumstances.
For help claiming the QSBS gain exclusion, or understanding whether you qualify, please contact your Chugh CPAs, LLP tax professional.
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