QSBS Qualification Study (IRC §1202)
A QSBS qualification study is a signed analysis of whether a company's stock qualifies as qualified small business stock under IRC §1202. FMV applies each test to the company's records, measures gross assets at each issuance, and quantifies the exclusion.
Signed by a credentialed analystFairMarketValue
Northline Software, Inc.
At a glance
- Basis
- IRC §1202
- Prepared by
- A credentialed FMV valuation analyst
- Deliverable
- Signed report (PDF)
- Used by
- Accounting firms, financial advisors
- Delivered to
- The ordering bank's or firm's vault and the client's vault
When it is needed
- At issuance, so the gross asset test is documented while the records are fresh.
- Before a sale, to quantify the exclusion against the gain.
- When a holder needs to know whether a §1045 rollover is available.
What the report contains
- Test-by-test findings, each citing the supporting document
- Gross asset test at each issuance: $75 million for stock issued after July 4, 2025, and $50 million before
- Exclusion quantified against current gain, by issuance date
- Remediation options where tests fail: §1045 rollover, gifting, and stacking
Last updated October 24, 2026
Standards and sources
- IRC §1202
- Qualified small business stock
- IRC §1045
- Rollover of gain
Documents we need
- Articles of incorporation
- Cap table with issuance dates
- Gross assets at each issuance
- Redemption history
How an engagement works
Scope
We confirm the purpose, standard of value, valuation date, and addressee, then issue the engagement letter.
Intake
You or your client upload documents against a checklist. Open items stay visible until the file is complete.
Analysis
A credentialed analyst prepares the valuation and signs the conclusion.
Delivery
The signed PDF goes to your vault and your client's. We keep the workfile for later questions.
QSBS qualification study questions
What is a QSBS qualification study?
A QSBS qualification study is a signed analysis applying the requirements of IRC §1202 to a company's records to determine whether its stock is qualified small business stock. FairMarketValue (FMV) cites the supporting document for each test and quantifies the gain exclusion.
What are the main QSBS requirements?
QSBS must be stock of a domestic C corporation, acquired at original issuance, from a company whose aggregate gross assets did not exceed $75 million for stock issued after July 4, 2025, or $50 million for earlier stock. At least 80 percent of the company's assets must be used in a qualified active business during substantially all of the holding period.
How much gain can QSBS exclude?
For stock issued after July 4, 2025, the exclusion is 50 percent after three years, 75 percent after four years, and 100 percent after five years, up to the greater of $15 million or 10 times basis per issuer. Stock issued earlier generally needs a five-year hold, with a cap of the greater of $10 million or 10 times basis.
Is a QSBS qualification study a legal opinion?
No. A QSBS qualification study is a signed analysis of the facts and figures behind each §1202 test. Counsel may rely on it when forming a legal opinion.
What if a holder sells QSBS before the holding period is met?
A holder may defer gain under IRC §1045 by reinvesting the proceeds in other qualified small business stock within 60 days, provided the original stock was held more than six months.
What documents does a QSBS qualification study require?
A QSBS qualification study requires the articles of incorporation, the cap table with issuance dates, the company's gross assets at each issuance, and its redemption history.
How is the fee for a QSBS qualification study set?
FMV quotes the fee for a QSBS qualification study after reviewing the scope. The fee is fixed before work starts and does not depend on the conclusion of value.
Trust and reliability
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Get a fixed-fee quote
Tell us the purpose, the company, and the valuation date. We confirm scope and quote a fixed fee before work begins.