Definition of QSBS (Sec 1202(c)(1))
The term “qualified small business” means any domestic corporation which is a C corporation if:
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The aggregate gross assets of such corporation (or any predecessor thereof) always on or after the date of the enactment of the Revenue Reconciliation Act of 1993, and before the issuance did not exceed:
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$50M for stock issued before 7/4/25$
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75M for stock issued after 7/3/25(increased by OBBBA)
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The aggregate gross assets of such corporation immediately after the issuance (determined by considering amounts received in the issuance) does not exceed:
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$50M for stock issued before 7/4/25
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$75M for stock issued after 7/3/25 (increased by OBBBA)
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Such corporation agrees to submit such reports to the Secretary and to shareholders as the Secretary may require carrying out the purposes of this section.
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Meet the “Active Business Requirement”.
Options to Aquire Stock
The Tax Court has concluded that the term “stock” for purposes of the exclusion from gain on the sale of “qualified small business stock” (QSBS) in Code Sec. 1202 doesn't include options to acquire stock. (Natkunanathan, TC Memo 2010-15)