What is the minimum holding period for QSBS?

The stock must be held continuously for at least 5 years from the date of issuance (or option exercise date) to qualify for Section 1202 capital gains exclusion.

Updated: August 2026 • Verified v1.2

IRS Section 1202 Qualified Small Business Stock (QSBS) Tax Exemption Calculator

Finance & MathPopular

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Exclusion_Cap = Max(10000000, 10 * Basis); Tax_Free = Min(Gain, Exclusion_Cap) * Pct; Taxes_Saved = Tax_Free * 23.8%

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Understanding Your Results

Calculates gross capital gains, determines the statutory exclusion ceiling (greater of $10M or 10x Basis), applies acquisition date percentage rules (100% after 2010), verifies the 5-year holding period, and estimates total federal taxes saved.

Practical Guidance & Next Steps

For stock acquired after September 27, 2010, the federal exclusion is 100% and is completely exempt from both Alternative Minimum Tax (AMT) and the 3.8% Net Investment Income Tax (NIIT).

What is this?

A wealth and tax planning utility that calculates the federal capital gains tax exclusion under Section 1202 Qualified Small Business Stock (QSBS) rules.

How does it work?

1. Enter original share cost basis and total exit sale proceeds. 2. Enter holding period in years and select acquisition date bracket. 3. View 100% tax-free capital gains, statutory exclusion ceiling, and federal taxes saved.

Why use it?

Maximizes legal tax-free exit wealth for tech founders, early startup hires, and angel investors.

Technical Scope & Calculation Limitations

Models federal IRC Section 1202 statutory rules. Note that certain states (notably California) do not conform to federal QSBS exemptions.

Frequently Asked Questions

Under IRC Section 1202, the maximum tax-free capital gain per taxpayer per company is the GREATER of $10,000,000 OR 10 times the taxpayer's adjusted aggregate cost basis in the stock.

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