What is QSBS and how can the Section 1202 exclusion save me taxes?

Qualified small business stock (QSBS) under Section 1202 can let you exclude a large portion – potentially up to 100% – of the capital gain when you sell shares in an eligible C-corporation startup. To qualify, you generally must acquire the stock at original issuance, hold it more than five years, and the company must have had gross assets at or under $50 million when the stock was issued and be in a qualifying business. The exclusion is capped at the greater of $10 million or 10× your basis, per company. For early employees and founders, this can mean millions of gain tax-free. The rules are technical, so confirm eligibility carefully and keep documentation of your acquisition date and the company's asset level when you bought in.