Qualified Small Business Stock Can Be Sold With No Taxes

Qualified Small Business Stock (QSBS) has special tax rules which can result in no taxes when sold. To qualify, a business needs to be an active C Corporation, less than $50MM in assets, not in an excluded category, acquired directly (not second-hand), and the stock must be held for 5 years or more and have documentation of the stock. The excluded (not taxed) gain is limited up to $10MM or 10 times the adjusted basis of the investment (after that it gets the normal capital gains treatment).

What about vesting schedules? Wouldn’t that make for the holding period starting on each vest?

According to this blog post, filing an 83(b) election would start the 5 year holding period at the time of grant rather than the time of vesting.