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Qualified Small Business Stock: Maximizing the Section 1202 Exclusion for Startup Investors

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, January 23, 2024

Recorded event now available

or call 1-800-926-7926

This course will explain how a business and its shareholders meet Section 1202 eligibility requirements for qualified small business stock (QSBS) to eliminate or reduce taxation of capital gains. Our panel of tax experts will discuss the corporate requirements, shareholder requirements, and the substantial tax savings available for qualifying stocks.


Section 1202 offers taxpayers (other than corporations) the potential to permanently exclude from taxable income $10 million (and possibly much more) of capital gains recognized in connection with the sale of QSBS. For investors in certain startups, this can result in millions of cash-tax savings.

There are corporate qualifications, shareholder eligibility rules, and holding period requirements to qualify. Among other things, the business must have no more than $50 million in aggregate gross assets at the time the stock is issued, the company must be engaged in a qualified trade or business, and investors must hold the stock for five years. These are just a few of the many eligibility requirements. Shareholders not holding the stock for five years could preserve QSBS benefits by rolling over the sales proceeds under Section 1045.

Listen as our panel of tax veterans discusses who can benefit from Section 1202, its requirements, the many traps for the unwary, and planning opportunities available so shareholders achieve maximum tax savings.



  1. Qualified small business stock (Section 1202)
  2. Corporate requirements
    1. Defining a qualified small business
    2. Understanding the active business requirement
    3. Preventing eligibility foot faults
  3. Shareholder requirements
    1. Holding period requirements
    2. Ineligible share transfers
    3. Pass-through entities and QSBS
  4. Strategies to increase the exclusion
  5. Rolling over proceeds from the sale of QSBS (Section 1045)


The panel will review these and other critical issues:

  • How can an eligible investor maximize their QSBS exclusion?
  • What stock is and is not eligible for the QSBS exclusion?
  • What are best practices to avoid Section 1202 ineligibility?


Dobens, Ryan
Ryan Dobens

Senior Manager, National Tax Department
Ernst & Young

Mr. Dobens is a Senior Manager in Ernst & Young’s National Tax Department where he primarily focuses on the...  |  Read More

Mayo, Daniel
Daniel Mayo, J.D., LL.M.

Withum Smith+Brown

Mr. Mayo has more than 20 years of professional tax experience as well as experience in federal, international and...  |  Read More

Murphy, Emily
Emily Murphy, CPA

Partner, CPA
Plante & Moran

Ms. Murphy specialize's in federal tax consulting for businesses and their owners. She continuously monitors tax...  |  Read More

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