QSBS Eligibility Navigator

Interactive checklist for founders and shareholders to quickly gauge whether their stock likely qualifies as Qualified Small Business Stock (QSBS) — under both pre-OBBBA rules and the expanded post-OBBBA regime.

Focus: high-level QSBS eligibility (structure & activity tests)
Not tax or legal advice — always confirm with counsel
Post-OBBBA: tiered 3/4/5-year exclusions & higher caps baked in

Step 1 — Stock timing & basic context

These dates drive which QSBS regime applies (pre-OBBBA vs post-OBBBA) and your current holding-period status.

Add acquisition and sale dates to see holding period and which QSBS regime applies.
—

Step 2 — Company-level QSBS requirements

These questions mirror the core corporate-level tests in Section 1202 and standard QSBS checklists.

Is the issuer a U.S. C corporation (not an LLC taxed as a partnership or an S corporation)?
QSBS only applies to stock of a domestic C corporation. REITs, RICs, S-corps, partnerships, and other pass-through entities do not qualify.
At all times before and immediately after issuance, were the corporation’s gross assets under the QSBS cap?
For stock issued before July 4, 2025, the cap is $50M in aggregate gross assets (tax basis). For stock issued after July 4, 2025, OBBBA increases this cap to $75M (indexed starting 2027).
During your holding period, has the company used at least 80% (by value) of its assets in an active trade or business?
This is the "80% active business" test — portfolio assets and excessive idle cash can cause issues. Look through to >50% owned subsidiaries when testing.
Is the company’s core business a qualified trade or business (i.e., not in an excluded field)?
Excluded fields include health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage, banking, insurance, leasing, investing, farming, mining, and hotels/restaurants.
Since issuance, have non-business real estate and portfolio securities each stayed below roughly 10% of asset value?
QSBS rules generally require that no more than about 10% of the value of assets be (i) real estate not used in the business and (ii) portfolio stock/securities (other than >50%-owned subs and certain working-capital investments).
Have there been no significant redemptions, conversions, or reorganizations that might taint QSBS?
Large redemptions around issuance, certain recapitalizations, or entity conversions can disqualify QSBS or reset the clock. Complex fact patterns should be reviewed by tax counsel.

Step 3 — Stock & shareholder-level requirements

Now confirm how you acquired the shares and who the taxpayer is.

Did you (or your transferor) acquire the shares at original issuance for cash, property, or services (not as an underwriter)?
Secondary purchases from another shareholder generally do not qualify, but gifts, inheritances, and certain tax-free exchanges can preserve QSBS status via "tacked" holding periods.
Is the taxpayer claiming QSBS a non-corporate holder (individual, estate, partnership, S-corp, or qualifying trust)?
Corporations generally cannot claim the Section 1202 exclusion; partners and S-corp shareholders look through to the entity’s QSBS.
Is this stock common or preferred equity (not options, RSUs, or pure debt)?
Options and RSUs generally are not QSBS themselves; the underlying stock may be QSBS once exercised/settled, starting a holding period from that date. There is an ongoing debate about whether SAFE notes qualify. Feel free to contact us for clarification on whether your holding period begins at the time of the SAFE or upon conversion to equity.
Your QSBS snapshot
Status: Incomplete

Answer the questions on the left to see whether your shares are likely QSBS-eligible and how the OBBBA changes apply.

Not sure what your answers mean for your exit? We can walk through your QSBS facts and exit timing together.
Talk to us about your QSBS/Deal
1. Core QSBS eligibility (structure & activity tests)
    2. Holding period & OBBBA regime
    Add acquisition and sale dates to see whether you have met the relevant holding period (5-year under prior law, 3/4/5-year tiers for post-OBBBA stock).
    3. Key OBBBA upgrades (for stock acquired after July 4, 2025)
    • •Tiered exclusions: 50% after 3 years, 75% after 4 years, and 100% after 5 years for qualifying QSBS.
    • •Higher exclusion cap: greater of $15M or 10× basis for post-OBBBA QSBS, with the cap applying proportionally where only 50% or 75% of gain is excluded (for example, 7.5M or 11.25M of excluded gain for the 50% and 75% tiers).
    • •Higher asset threshold: gross asset cap increased from $50M to $75M for defining a "qualified small business", for stock issued after July 4, 2025.
    4. Suggested next steps
    • →Use this checklist as a screening tool only — not a final QSBS opinion.
    • →Copy or download this summary (or take a screenshot) and provide it to tax counsel for a formal QSBS review, especially if any items are "Not sure" or "No".
    This tool simplifies complex QSBS rules under Section 1202 (as amended by the One Big Beautiful Bill Act). It is for educational and planning use only and does not constitute tax, legal, or investment advice, nor does it address state income-tax conformity, AMT consequences on older QSBS, or advanced strategies such as QSBS stacking or Section 1045 rollovers. Law and guidance change over time. Always confirm QSBS treatment with qualified tax and legal advisors before relying on it for any transaction.