Qualified small business stock (QSBS)
The qualified small business stock (QSBS) tax incentive allows shareholders to exclude up to 100% of capital gains resulting from the share of qualifying stock from their taxable income.
Lawmakers established the QSBS incentive to encourage investment in small businesses, including startups. To be eligible for the incentive, the stock must have been issued by a U.S.-based C-corporation with $50 million or less in gross assets and primarily engaged in a qualifying business activity.
Learn more: Qualified small business stock (QSBS)
Shareholders must meet a five-year holding requirement for their shares to be eligible for QSBS treatment. But a lot can happen in five years: Many shareholders miss out on QSBS tax savings because they can’t produce adequate documentation for their shares’ QSBS status—or because they simply didn’t know their investments qualified for QSBS tax treatment.
Carta offers QSBS attestation to startups using our cap table management platform. Investors using Carta for fund administration can gain insights into QSBS attestation for eligible companies across their portfolios, using a set of features designed to help them take full advantage of this investor-friendly tax exclusion.
How your fund can benefit from Carta QSBS Attestation
QSBS Attestation features for fund administration clients include:
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Tags in the schedule of investments (SOI) and fund investment dashboard, showing which fund holdings already have QSBS attestation on file with Carta and how much time remains for the investor to reach the QSBS holding requirement
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Personalized attestation letters for those QSBS-eligible holdings that investors can request and download
These features minimize friction surrounding the QSBS process and ensure that investors and companies are able to take full advantage of a tax incentive that’s meant to support them.
If you’d like to discuss QSBS eligibility for companies across your fund’s portfolio, contact a member of our team:
