What is Qualified Small Business Stock (QSBS)?

A Qualified Small Business (QSB) is any active domestic C corporation whose assets don’t exceed $50 million on or after the issuance of stock. Qualified small business stock (QSBS) refers to shares of a QSB as defined by the Internal Revenue Code (IRC). QSBS is treated favorably for capital gains purposes if both the investor and the company meet certain requirements. Investors who sell their QSBS before the end of the required holding period can defer capital gains by investing the proceeds in another company’s QSBS.