What is QSBS and why does it matter?

Qualified Small Business Stock (Section 1202) lets holders of original-issue C-corp stock — acquired when the company's gross assets were under the statutory threshold — exclude up to $10M (or 10x basis) of gain from federal tax after a five-year hold.

For founders and early employees the exclusion can be worth millions, shaping choices like incorporating as a Delaware C-corp and the timing of stock issuance and sales. Rules are intricate; specific advice belongs with a tax professional.