QSBS - How can Founders save up to $10M on taxes? | Rob.CPA

In this video, I will walk-through Section 1202, also known as the Qualified Small Business Stock (QSBS).

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If you are a start-up founder looking to sell your company and you meet the criteria discussed in this video, you’ll be able to exclude up to $10,000,000 in gains from that sale on your personal tax return. THAT’S HUGE!!!!

In the video, I will also show you where to report this gain exclusion in your personal tax return. Hint: its tax form 8949.

The following are some of the important requirements you need to meet:

1. Establish a C-Corp - taxed as a C-Corp from day one. - have to have made this election from the start;
2. You have to have acquired the stock directly from the company - not from someone else;
3. The assets can’t be greater than $50M;
4. You have to hold the stock for at least 5 years;
5. Some industries, unfortunately, don’t qualify: personal services (architecture, consulting, legal), financial services, oil/gas, farming;
6. Finally, you need to exit in a stock sale, not asset sale - this is very important. Buyers want to buy the assets - in small transactions so they can depreciate the assets to reduce the cost of the acquisition and not incur any liabilities.

If you have any questions, please leave them in the comments below.

Thank you for watching my video.

About my channel:
Rob CPA channel was created with a mission to provide viewers with accurate content so they can be proactive in their tax planning strategies and build financial wealth. The video topics I selected reflect real-world issues that I’ve seen our clients experience relating to their personal tax returns, retirement plans, and accounting.

The channel allows me to share my passion for taxes, personal finance, and accounting. I create content I wish schools and entrepreneurship programs/accelerators would teach their students and companies. I take complex topics and simplify them for the viewers as well as show examples.

I will be covering the following topics:

Personal & business tax planning tips;
Personal finance;
Accounting;
Investing;
Entrepreneurship

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