Question

What is QSBS and can women founders use it to reduce taxes?

Answer

Qualified Small Business Stock (QSBS) refers to shares in an eligible C corporation held for at least five years. Under Section 1202 of the tax code, a qualifying founder may be able to exclude up to $10 million — or 10 times their adjusted cost basis — in capital gains from a business sale from federal income tax. Women founders who have structured their businesses as C corporations and meet the eligibility criteria may be able to use QSBS to significantly reduce their tax liability at exit. Consulting with a qualified tax professional can help you confirm eligibility and plan accordingly.

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