Excludable gain from a QSBS sale is generally limited to $10 million or 10 times the stock basis
Internal Revenue Code section 1202 provides for a 100% exclusion from gain on the sale of qualified small business stock (QSBS) acquired on or after Sept. 27, 2010. For a summary of the key provisions of section 1202, see our article Understanding the qualified small business stock gain exclusion.
Although the Build Back Better Act, proposed by Congress in late 2021, included a provision that would have significantly curtailed the section 1202 exclusion benefit,1 that proposal was not passed into law.
The amount of gain a taxpayer may exclude under section 1202 is generally limited to the greater of $10 million or 10 times the aggregate adjusted basis of the QSBS that a shareholder sold during a taxable year, further detail below.
Example: John purchased QSBS for $2,000 from ABC…
