Active Business Requirement (IRS § 1202(c)(2)
During substantially all the taxpayer's holding period for the stock, at least 80% of the value of the corporation's assets must be used by the corporation in the active conduct of one or more “qualified trades or businesses.”
A qualified trade or business (“QTOB”) is any trade or business other than:
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One involving the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services;
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One where the principal asset of the trade or business is the reputation or skill of one or more of its employees;
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Any banking, insurance, financing, leasing, investing, or similar business;
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Any farming business, including the business of raising or harvesting trees;
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Any business involving the production or extraction of products of a character for which percentage depletion is allowable; and
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Any business of operating a hotel, motel, restaurant, or similar business.