For founders and investors who want their §1202 exclusion documented, defended, and ready at exit.
Annual QSBS Review & Attestation (QSBS Sentinel) is an ongoing legal engagement with a fixed annual fee. Each year, I review the agreed Section 1202 issues, prepare an attestation letter, and hold a planning call. Coverage and fees depend on the tier below.
Request engagement → — five tiers from $2,000/yr (individual) to enterprise (200+ shareholders). You choose the month for your annual review.
This is a legal engagement, not a SaaS subscription. After you request engagement, we run conflicts and send an engagement letter. Payment follows.
Not sure which tier fits — or whether you need this at all? Book a 20-minute call first.
The problem
A QSBS claim can depend on records spanning the stock’s holding period. Reconstructing those records at sale can be difficult, especially after staff departures, business changes, or an acquisition.
The annual review brings together current records, analyzes the applicable Section 1202 requirements, and identifies changes or gaps that need attention. Each letter states the scope, supporting evidence, and unresolved issues. The conclusions depend on the facts; a letter does not establish eligibility by itself.
How it works
- You request engagement. Fill in the name of your company (or your individual name, if hiring us as an individual) and email us the pertinent details — entity type, formation date, rough cap table, and what you want covered.
- We run conflicts. Standard firm conflict check before any work begins.
- We send an engagement letter. A standard engagement letter scoped to QSBS Sentinel™ for your chosen tier, including your preferred attestation month.
- You sign and pay. Engagement letter signed; annual fee paid through our firm's secure payment system.
- Annual intake. Three weeks before your chosen month each year, you get a short questionnaire (financials, cap table changes, business activity).
- We run the analysis. Active business test, holding period, eligibility tests, anything new that could affect §1202 treatment.
- You get a signed attestation letter. Dated, on letterhead, ready to hand to your tax preparer or an examiner.
- You get a planning call. Cover anything you want — planning questions, upcoming events, exit timing. Call length scales with your tier.
- We do it again next year. Same month, every year, automatically.
Pick your timing
When you subscribe, you choose the month each year you want the attestation done. Two common patterns:
- Align with your fiscal year-end — the analysis lines up with your books, your accountant, and any year-end planning conversations
- Pick a quiet month — Q1 or late summer, when your team has bandwidth and you're not buried in close
Pricing tiers
The right tier depends on how many QSBS-holding shareholders you need covered.
Individual — $2,000 / year
For founders, employees, and early investors who hold QSBS in a single company. One shareholder.
- Annual §1202 eligibility attestation letter for your position
- Annual 30-minute planning call
- Email check-in if anything material changes during the year
- Includes one holding-period and active-business review
Best for: a founder, employee, or angel investor seeking an annual review of one QSBS position.
Startup — $5,000 / year (up to 10 shareholders)
For early-stage companies who want the analysis run at the entity level and provided to the cap table.
- Annual company-level §1202 attestation memo
- Annual Active Business Test (80%) calculation and supporting documentation
- Coverage extends to all current QSBS-holding shareholders (up to 10)
- Annual 30-minute call with CEO or CFO
- Notifications about events that may affect §1202 eligibility — the gross-assets limit for new issuances, redemptions within the §1202(c)(3) windows, business pivots affecting the active-business test, and reorganizations. Later growth above the applicable gross-assets limit does not by itself disqualify previously qualifying stock.
Growth — $10,000 / year (11–50 shareholders)
For seed- and Series A-stage companies with expanded cap tables.
- Everything in Startup tier
- Coverage for up to 50 QSBS-holding shareholders
- Annual 45-minute call (CEO/CFO plus optional finance lead)
- Periodic email updates covering any §1202-relevant developments
Scale — $20,000 / year (51–200 shareholders)
For venture-backed companies approaching or past Series B.
- Everything in Growth tier
- Coverage for up to 200 QSBS-holding shareholders
- Annual 60-minute call with CEO/CFO, plus a separate 30-minute call with outside counsel or CFO team
- Pre-issuance review of one financing round per year for §1202 impact
Enterprise — Custom quote (200+ shareholders or unusual structures)
For late-stage companies, holding-company structures, or companies with international subsidiaries that complicate the active business test.
Why pay for this every year?
Annual work can be useful when a company is issuing stock, raising capital, changing its business, or preparing for an eventual sale. It keeps the supporting records organized and creates regular opportunities to review events that could affect eligibility.
Choose the service based on the work needed. A QSBS Issue-Spotting Review identifies qualification issues and next steps. A QSBS Attestation Letter is a one-time engagement for specified shares and periods: at-issuance work starts at $3,500, retroactive reconstruction at $10,000, and comprehensive pre-exit work at $15,000. Annual QSBS Review & Attestation adds a recurring review schedule and planning call under the selected tier. The quality of the evidence and analysis matters more than the number of letters.
Why this is worth even more in Washington
Washington doesn't tax capital gains excluded under §1202 — the federal exclusion controls — so for Washington holders a documented exclusion eliminates both the federal tax and the state capital gains tax on the excluded gain. And with Washington's new income tax arriving January 1, 2028, the state-side value of a defensible §1202 position grows again. See Does QSBS avoid Washington's new 9.9% income tax? and the Washington Founder's QSBS Playbook.
Frequently asked questions
Who's the attorney? Joe Wallin is a startup and tax attorney at Carney Badley Spellman in Seattle. He has practiced for more than 25 years, holds an LL.M. in Taxation from NYU, chairs the Angel Capital Association's Legal Advisory Committee, and co-authored Angel Investing: Start to Finish (Holloway). He writes The Startup Law Blog.
Do you work with companies outside Washington? Yes — §1202 is federal. Sentinel serves founders, companies, and investors nationwide; Washington holders get the additional state-side payoff described above.
How is this different from calling a lawyer when I need a letter? A one-time letter can address a specific issuance, period, or transaction. The annual engagement schedules recurring reviews and includes a planning call, so material changes and documentation gaps can be considered as the holding period develops. Both approaches require reliable supporting evidence.
What happens if my §1202 status fails the analysis? I will identify the issue and explain whether any correction or mitigation is available, along with the potential tax treatment under alternative scenarios. Some defects cannot be cured.
Is the attestation letter binding on the IRS? No. The letter records counsel’s analysis of the available evidence for the agreed shares and periods. It does not bind the IRS or substitute for missing facts and records.
Do you guarantee the exclusion? No. The analysis identifies supported conclusions, assumptions, and unresolved issues; it cannot guarantee a tax outcome.
What if I sell mid-year? Existing subscribers get an updated final attestation as part of the exit work at no additional charge for that letter; standard hourly rates apply to the transactional work itself.
Cancellation? Cancel any time before annual renewal. No refunds on the current year's fee.
Engagement letter? Yes. A standard engagement letter executes after the conflict check and before any work product is delivered. This is a legal matter, not a SaaS subscription.
Founding members
The first 10 QSBS Sentinel™ subscribers get:
- Priority onboarding
- First pick of attestation month
- A direct line to me for the first year
- Recognition (with permission) on the founding members page
These founding-member benefits do not change the published fees.
Request engagement
To begin engagement, email wallin@carneylaw.com with the subject line "QSBS Sentinel Engagement Request" and include the following details:
- Engaging as — a company, or as an individual
- Name — the full legal name of the company, or your full name if engaging individually
- Your name and role — and the best email to reach you
- Entity type — C-Corp, LLC (and tax classification), or N/A if individual
- Approximate formation date
- Approximate number of QSBS-holding shareholders — 1, 2–10, 11–50, 51–200, or 200+
- Preferred tier — Individual, Startup, Growth, Scale, Enterprise, or "recommend one"
- Preferred attestation month — or "no preference"
- Brief description of the business
- Any material events in the past 12 months — financings, secondaries, redemptions, conversions, pivots (optional)
After we receive your request, we will:
- Run a standard conflict check (typically within 48 hours)
- Send you an engagement letter scoped to your chosen tier
- Once the letter is signed and the annual fee is paid, schedule your first attestation
Sending this email does not create an attorney-client relationship. A formal engagement begins only when both parties have signed an engagement letter. Please do not include confidential information beyond what is needed to run conflicts.
Not sure which tier fits — or whether you need this at all? Book a 20-minute call first.