The QSBS
File.

You sold stock in a small company — or you're about to. Someone told you the gain might be tax-free, but only if you can prove it. This is the tool that builds that proof: answer a few questions, and we'll assemble the evidence file that protects your exit — then walk you through filling it, one document at a time.

Start my file — it's free

The tax break, in plain English

What is “QSBS,” and why is everyone telling you to keep records?

Qualified Small Business Stock is a federal tax rule — Section 1202 of the tax code — that can make the profit from selling startup stock partly or entirely free of federal capital-gains tax, up to $10 million or more per company. It exists to reward people who fund and build small American businesses.

To qualify, a few things generally have to be true:

You got your shares directly from the company — not by buying them from another person. §1202(c)(1)(B)
The company was a U.S. C corporation with modest total assets when you invested. §1202(d)
The company spent those years running a real operating business — not holding investments. §1202(e)
You held the shares long enough — the full exclusion arrives at five years(stock issued after July 4, 2025 also gets partial exclusions at three and four years). §1202(a), (b)

Sold early? There's a second rule

The “rollover” — Section 1045

Selling beforethe five-year mark doesn't have to end the story. For stock that meets the §1202 tests — something only your advisor can determine — §1045 may let the tax break stay alive if the money is rolled into a new small company's stock. The rules are strict: you must have held the original shares more than six months, the new purchase must happen within 60 days of the sale — the money moved, not just promised — and the choice must be reported on the tax return for the year you sold. §1045(a); Form 8949 code R; Rev. Proc. 98-48

Do it right and your ownership clock keeps running across both companies. Do it a day late and the deferral is gone.

The part nobody explains

The IRS can ask you to prove all of it

The tax break isn't granted by anyone — you claim it, and the burden of proving it falls on you, sometimes years after the sale. Federal law requires taxpayers to keep records that support what's on their returns (§6001), and in an audit the question isn't whether your stock was qualified — it's whether you can showit: the purchase agreement, the proof of payment, the company's balance sheet at issuance, the closing statement, the wire that beat the 60-day clock.

Most people find out what was needed only when it's asked for. By then companies have merged, lawyers have moved on, and inboxes have been purged.

Who this is for

Founders, early employees, and angels

If you own — or just sold — shares you got directly from a startup, this is for you. The QSBS File interviews you in plain English, figures out which rules apply, and opens a personalized evidence file: every document that proves your case, what each one looks like, where it usually hides, and every statutory deadline translated into a plain sentence with a date.