Qualified Small Business Stock (QSBS) is stock that may qualify for favorable U.S. tax treatment under Internal Revenue Code Section 1202, potentially allowing eligible holders to exclude a portion (or all) of capital gains if requirements are met (including holding period and issuer eligibility). In venture-backed startups, Qualified Small Business Stock (QSBS) planning is often discussed with founders and early employees, and QSBS eligibility can influence entity choice, asset tests, and timing of stock issuance.
