Does California recognize the QSBS exclusion?

No, California does not conform to IRC Section 1202. Gains from QSBS are fully taxed as ordinary California state income (up to 13.3%).

Updated: August 2026 • Verified v1.2

Section 1202 QSBS Capital Gain Exclusion Cap Calculator

Finance & MathNew

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Exclusion_Cap = max($10,000,000, 10 * Basis); Excluded_Gain = min(Gross_Gain, Exclusion_Cap) * Tier_Pct

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Understanding Your Results

Computes statutory maximum exclusion cap using the greater of $10,000,000 or 10 times adjusted basis, applies acquisition date percentage tiers (100%, 75%, 50%), calculates federal capital gains and NIIT tax savings, and models state tax liabilities.

Practical Guidance & Next Steps

Stock acquired after September 27, 2010 held for at least 5 years qualifies for 100% federal capital gain exclusion. States like California do not conform and tax all gains as ordinary income.

What is this?

A tax and wealth planning utility that models Section 1202 Qualified Small Business Stock (QSBS) gain exclusions and federal tax savings.

How does it work?

1. Enter total realized capital gain and original stock tax basis. 2. Select acquisition date (post-2010 for 100% exclusion) and filing status. 3. View statutory exclusion cap, tax-free gain, federal tax saved, and state tax impact.

Why use it?

Empowers startup founders and investors to accurately estimate tax-free exit proceeds under Section 1202 rules.

Technical Scope & Calculation Limitations

IRS Section 1202 statutory rules for C-Corporation stock.

Frequently Asked Questions

The statutory cap allows taxpayers to exclude capital gains up to the greater of $10,000,000 or 10 times the taxpayer's original adjusted tax basis in the stock.

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