Does Your Stock Qualify for the
$15M QSBS Exclusion?
Answer 6 questions and find out in under 2 minutes. Built on the actual Section 1202 requirements — not a simplified summary.
Three possible outcomes
QSBS is binary — one missed requirement eliminates the entire exclusion. This tool tells you exactly where you stand.
You qualify
Your stock meets all six requirements. You get a full summary of what you confirmed and what to protect before you sell.
You don't qualify
You'll see exactly which requirement failed, why it matters, and whether there's any path to salvage part of the exclusion.
You're not sure
You'll see a plain-English explanation of what to verify — and why getting it wrong could be a multi-million dollar mistake.
The stakes are extremely high
Most founders assume they qualify. Many haven't actually checked all six boxes.
Up to $15M tax-free per issuer
Section 1202 can shelter your entire gain from federal tax. For a successful exit, that's potentially millions of dollars in your pocket vs. the IRS.
One missed requirement = zero exclusion
QSBS is all-or-nothing. Miss one of the six requirements and the exclusion disappears entirely — there's no partial credit for being close.
Documentation gaps cost you
The IRS can challenge QSBS claims years after a sale. If you can't prove every requirement was met at the time of issuance, you lose.
Washington & Oregon bonus
If your stock qualifies federally, it's also generally exempt from Washington's 7% capital gains tax and the new 9.9% income tax.
All 6 must be met
This tool checks every one — in order.
Domestic C Corporation
The issuing company must be a domestic C-corp at issuance. LLCs, S-corps, partnerships, and foreign entities don't qualify.
Original Issuance
You must receive the stock directly from the company — not purchased from another shareholder on the secondary market.
Gross Asset Cap
The company's gross assets must have been $75M or less (or $50M for pre-July 2025 stock) at the time your shares were issued.
Active Business Test
At least 80% of company assets must be used in a qualified active business. Law, medicine, consulting, finance, and hospitality are excluded.
5-Year Holding Period
You must hold the stock for at least 5 years for full exclusion. Shorter holds may qualify for partial exclusion or a §1045 rollover.
No Problematic Redemptions
The company must not have redeemed more than 5% of its stock in the year before or after your issuance, or redeemed your shares directly.
Get a Professional Review Before You Sell
This tool gives you a starting point — not a legal opinion. Before you make any decisions about your exit, talk to a startup attorney who knows QSBS inside and out.
Not Legal Advice. This tool is provided for general informational and educational purposes only. It does not constitute legal advice, tax advice, or the practice of law. The results generated by this tool are not a substitute for consultation with a qualified attorney or tax professional.
No Attorney-Client Relationship. Use of this tool does not create an attorney-client relationship between you and Joe Wallin, The Startup Law Blog, or any affiliated entity. Do not transmit any confidential information through this tool.
Accuracy Not Guaranteed. While this tool is based on the requirements of Section 1202 of the Internal Revenue Code as currently in effect, tax laws change frequently and individual circumstances vary significantly. The tool cannot account for all facts and circumstances relevant to your specific situation. Results should not be relied upon as a definitive determination of your QSBS eligibility.
Consult a Professional. Before making any decisions regarding the sale of stock, tax planning, or reliance on the Section 1202 exclusion, you should consult with a qualified attorney and tax advisor who can review your specific documentation and circumstances.
IRS Circular 230 Disclosure. To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this tool is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
© 2026 The Startup Law Blog · Joe Wallin · thestartuplawblog.com