Primer and Updates on Qualified Small Business Stock (QSBS)

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Primer and Updates on Qualified Small Business Stock (QSBS)

Program Originally Presented Monday, April 27, 2026

The Qualified Small Business Stock (QSBS) regime under IRC Section 1202 has undergone its most significant transformation in over a decade following the enactment of the 2025 tax legislation. These changes—effective for stock issued after July 4, 2025—reshape how startup founders, investors, and counsel approach entity formation, financing, and exit planning.

This CLE program provides startup attorneys with a practical, up-to-date analysis of the new QSBS framework heading into 2026, including expanded eligibility, enhanced gain exclusion opportunities, and newly flexible holding period rules. Under the revised law, practitioners must navigate a tiered exclusion structure (50% at 3 years, 75% at 4 years, and 100% at 5 years), increased per-issuer gain caps, and a broader definition of “qualified small business.”

Participants will examine key statutory changes, including:

• Expansion of the gain exclusion cap from $10M to $15M (indexed after 2026)
• Increase in the gross asset threshold from $50M to $75M, significantly widening eligibility
• Introduction of earlier liquidity incentives via shortened holding periods

The program will also address critical planning considerations for startup counsel, including:

• Structuring early-stage companies to preserve QSBS eligibility
• Timing stock issuances post-July 2025 vs. legacy stock treatment
• Coordination with venture financings and secondary transactions
• State conformity issues and audit risks
• Exit planning strategies in light of earlier partial exclusions

Designed for attorneys advising venture-backed companies, founders, and angel investors, this course equips practitioners with the tools to integrate QSBS planning into modern startup lifecycle counseling and to capitalize on the expanded benefits now available under the updated law.

Panelists:
Eric J. Kodesch, Esq.
Partner, Ballard Spahr LLP, Portland

Sharon Shachar, Esq.
Tax Partner, Ballard Spahr LLP, New York

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