Founders, investors, and CFOs: when the IRS, an acquirer, or a transfer agent asks you to prove your Section 1202 exclusion, a one-page PDF on company letterhead isn't going to cut it. I write defensible attestation letters that hold up under audit and survive M&A diligence.
What you get
A bespoke legal opinion letter that documents — share class by share class, tranche by tranche — that the stock satisfies every prong of IRC §1202:
- Issuer eligibility (domestic C-corp, gross assets test at issuance)
- Original issuance (money, property, or services — properly characterized)
- Active business requirement (80% test) with substantiation across the holding period
- Qualified trade or business analysis (industry-specific carve-outs addressed)
- Redemption and recapitalization analysis
- Holding period analysis (3/4/5-year tiers post-OBBBA, including the $75M gross-assets transition)
- Documentary record: cap table, board consents, financials, and Form 8949 alignment
The letter is built to be handed directly to an auditor, a buyer's tax counsel, or a §1045 rollover purchaser — without you having to translate it.
When you need one
| Situation | What I deliver |
|---|---|
| At issuance | Clean original-issuance letter — cheapest and strongest version |
| Annual refresh | Updated letter confirming the active business test stayed satisfied (recommended for portfolio companies) |
| Pre-sale / pre-rollover | Full-holding-period letter covering issuance through sale date — required by most acquirers |
| Retroactive | Reconstruction letter when documentation is scattered or the company is gone |
| Trust / gifting | Letter analyzing whether the §1202 cap survives stacking |
How I price it
Most engagements fall in the $3,500–$15,000 range, depending on company complexity, number of tranches, and how much documentation already exists. Retroactive reconstructions and pre-sale letters are at the higher end. I'll quote a flat fee after the intro call — no hourly surprises.
For context: Carta charges $2,500–$4,500 for software-generated letters and $12,000 for retroactive ones. My letters are individually drafted legal opinions, not templated — which matters when the facts are anything other than textbook.
Why founders and investors hire me for this
- 25+ years on §1202. I co-authored Angel Investing: Start to Finish (Holloway) and chair the Angel Capital Association's Legal Advisory Committee.
- LL.M. in Taxation (NYU). Tax-trained, not just corporate-trained — most startup lawyers can't say that.
- I write about this every week. The deep-dive guides on this site (what the letter needs to say, required or smart planning, the active business test after 5 years) are the same analysis I apply in every letter.
- Post-OBBBA fluency. The 2025 changes to §1202 (tiered holding periods, $75M asset test, expanded exclusion cap) reset the analysis. I track the changes and the state conformity in real time.
Process
- 20-minute intro call. I scope the situation and quote a flat fee.
- Document request. Cap table, charter, financials at issuance and annually, board consents, any prior tax positions.
- Draft in 2–3 weeks. Faster on rush.
- Final letter + supporting memo. Yours to hand to auditors, buyers, or the IRS.
FAQ
Is an attestation letter legally required?
No. §1202 itself doesn't require one. But the IRS, acquirers, and §1045 rollover buyers will all ask for substantiation — and the time to build the record is before they ask, not after. (Full analysis here.)
How much does a QSBS attestation letter cost?
Most engagements fall in the $3,500–$15,000 range, depending on company complexity, number of tranches, and how much documentation already exists. Retroactive reconstructions and pre-sale letters are at the higher end. (See pricing detail above.)
How much does a QSBS attestation letter cost?
Most engagements fall in the $3,500–$15,000 range, depending on company complexity, number of tranches, and how much documentation already exists. Retroactive reconstructions and pre-sale letters are at the higher end. (See pricing detail above.)
Can my CPA write it?
A good CPA can document the financial facts, but the §1202 legal conclusions — qualified trade or business analysis, redemption rules, recapitalization treatment — are legal opinions. Auditors and buyers want them signed by tax counsel.
What if the company has been sold or wound down?
I do retroactive letters. They're harder and more expensive, but better than nothing when an audit notice arrives.
Do you work with companies outside Washington?
Yes. §1202 is federal. I write letters for companies and shareholders nationwide.
Book a 20-minute call → | wallin@carneylaw.com