Investor-Ready QSBS Attestation Letters

409.AI helps companies prepare a clear QSBS attestation letter for diligence, shareholder requests, and advisor review.

What the attestation supports

  • Investor diligence
  • Shareholder tax-prep conversations
  • Financing or transaction readiness
  • Internal recordkeeping

Frequently asked questions

What is QSBS?

QSBS stands for Qualified Small Business Stock under IRC Section 1202. When stock meets the Section 1202 requirements, eligible shareholders may be able to exclude a portion of the capital gain when they sell it. Whether stock qualifies depends on company and shareholder facts that should be confirmed with a tax advisor.

What are the QSBS requirements under Section 1202?

Section 1202 generally requires that the issuer be a domestic C corporation, that the company gross assets did not exceed the applicable threshold at issuance, that the company runs a qualified active trade or business, and that the shareholder acquired the stock at original issuance and meets the holding period. Exact qualification is fact-specific and should be reviewed with a tax advisor.

What is the QSBS tax treatment and exemption?

Qualifying QSBS can allow a shareholder to exclude eligible capital gain from federal tax, subject to per-issuer limits and the holding period. The specific exclusion percentage and caps depend on when the stock was acquired, so confirm current figures and eligibility with a qualified tax advisor.

How long do you have to hold QSBS?

Section 1202 has generally required a minimum holding period (historically five years) for the full gain exclusion. Confirm the current holding-period rules and any recent changes with a tax advisor before relying on them.

Is a QSBS attestation legally required?

No. The letter is supporting documentation for diligence and advisor conversations; it is not legally required to claim QSBS.

Does a QSBS attestation guarantee eligibility?

No. The attestation letter organizes company-provided facts to support diligence and advisor review; it does not create or guarantee QSBS eligibility.