Qualified Small Business Stock (QSBS) Section 1202 Calculator
Calculate startup equity tax savings under IRC Section 1202 QSBS, 100% federal capital gains exclusion up to $10M or 10x basis, and state conformity.
Calculated Results
Frequently Asked Questions
What is Qualified Small Business Stock (QSBS) Section 1202?
IRC Section 1202 provides an extraordinary federal tax exemption for startup founders, early employees, and angel investors who acquire original stock in a US C-Corporation with gross assets under $50 million and hold it for at least 5 years.
What is the maximum dollar limit for the QSBS tax exclusion?
An investor can exclude 100% of capital gains up to the greater of: (1) $10,000,000 per taxpayer per company, OR (2) 10 times the adjusted tax basis of the stock at original issuance.
Do all US states honor the Section 1202 QSBS tax exclusion?
No. While most states conform to federal tax code, key states like California, Pennsylvania, New Jersey, and Mississippi explicitly reject QSBS and levy full state income tax (up to 13.3% in California) on all startup equity gains.
Does Section 1202 eliminate the 3.8% Net Investment Income Tax (NIIT)?
Yes! For stock acquired after September 27, 2010, eligible QSBS gains are 100% exempt from federal income tax, the 3.8% Net Investment Income Tax (NIIT), and Alternative Minimum Tax (AMT).