QSBS (Qualified Small Business Stock)

QSBS is stock in a qualifying U.S. C-corporation that lets holders exclude large capital gains from federal tax under Section 1202 — historically up to $10M or 10x basis after a five-year hold, with 2025 legislation expanding the limits and adding shorter partial-exclusion holding periods. The exclusion can flow through a venture fund to its partners, making QSBS one of the most valuable tax attributes in early-stage investing. Eligibility depends on entity type, asset size at issuance, and holding period, so structure and paperwork matter from day one.