Maximize the Value of Your Stock. Minimize the Risk of Uncertainty.
Section 1202 of the Internal Revenue Code — the Qualified Small Business Stock (QSBS) exclusion — can be one of the most valuable tax benefits available to founders and investors. When the rules are met, gains from the sale of QSBS can be excluded from federal income tax — historically up to $10 million per taxpayer, per issuer.
Thanks to the One Big Beautiful Bill Act of 2025, for stock issued after July 4, 2025, the exclusion cap increases to $15 million (indexed for inflation). In addition, there are new early-exit partial exclusions (50% after 3 years, 75% after 4 years, 100% after 5 years).
That’s a once-in-a-lifetime opportunity for many founders and investors — but only if the requirements are satisfied.
Why You Need 1202 Confirmation
The QSBS rules are highly technical. Eligibility depends on:
- Entity Structure – Was the company organized and maintained as a C corporation?
- Gross Assets – Did the company stay under the $50M (pre-2025) / $75M (post-2025) gross assets threshold?
- Active Business Test – Is the company engaged in a qualified trade or business (not disqualified activities like professional services, finance, hospitality, etc.)?
- Stock Issuance & Holding Periods – Were shares properly issued for money, property, or services, and held for the required period?
- Transactions & Redemptions – Have there been events that could disqualify QSBS treatment?
These details matter. Mistakes or gaps in recordkeeping can cost millions in lost tax savings.
Our Services
We offer a comprehensive 1202 Confirmation Service designed to give founders, investors, and their advisors confidence:
- Detailed Review of Corporate History – Charter documents, capitalization tables, issuance records, and amendments.
- Business Activity & Asset Analysis – Confirming the company satisfies gross asset thresholds and active business requirements.
- Transaction Testing – Evaluating SAFEs, convertible notes, option exercises, redemptions, and other events for potential disqualification.
- Written Confirmation – We deliver a memorandum or opinion-style letter documenting QSBS eligibility that can be relied upon in planning, diligence, financings, and M&A.
- Exit Readiness – Ensuring that, when it comes time to sell, you are prepared to demonstrate QSBS eligibility to buyers, tax authorities, and advisors.
Why Clients Choose Us
- Startup Focus – We live and breathe early-stage companies and investors.
- Tax + Corporate Expertise – We combine deep tax knowledge with decades of corporate and startup law experience.
- Practical Guidance – Not just theory; actionable confirmation you can rely on.
- Peace of Mind – Avoid uncertainty when millions of dollars may be on the line.
Take the Next Step
If you’re a founder, investor, or advisor who wants to confirm whether stock qualifies for QSBS treatment under Section 1202, we can help.
📩 Contact us today to learn more about our 1202 Confirmation Services and how we can protect and maximize the value of your equity.