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QSBS Free
Free tool to check your QSBS Eligibility
8 followers
Free tool to check your QSBS Eligibility
8 followers
Free tool for Founders and Investors to check the QSBS (Qualfied Small Business Stock) tax exclusion eligibility. The Section 1202 exclusion is one of the most valuable tax benefits in the U.S. tax code. It's also one of the most misunderstood — and easiest to lose. Eligibility needs to be confirmed through the entire life cycle of the startup - from the very beginning through exit. Our free tool allows founders to check eligibility as needed in under five min. Additional resources available.
How does the tool handle the gross asset test when there are convertible notes or SAFEs on the cap table? Curious whether that gets factored in at issuance or only at the next priced round.
@yeim7wjv Thanks for your comment. I purposely built the tool to be as simple as possible yet at the same time identify each of the requirements for QSBS eligibility. The hope is that users, particularly those unfamiliar with QSBS, learn those requirements and either seek out professional expertise or access the resources on my website.
With respect to the gross asset test, the cash raised through SAFEs or convertible debt would be included in the company's gross assets (subject to rules regarding working capital). However the holders of those instruments are not generally considered "stockholders" until those investments are converted into actual stock.
I hope that's helpful. Happy to continue the discussion.
How does the tool handle cap table changes over time, like when SAFE notes convert or new rounds come in with new investors?
@sultanrdm6 Thanks for your comment. The tool is purposely built to be easy to use yet also cover each the main categories for QSBS eligibility.
My hope is users can revisit the tool anytime they need to "check-in" on QSBS. Every funding round should include a QSBS compliance check-in.
I hope that's helpful. I've been posting about the need for on-going compliance: https://www.linkedin.com/feed/update/urn:li:activity:7478150092059746304/
As someone who has dealt with this stuff firsthand, one thing that would really help is a timeline view showing exactly when each eligibility milestone was met and when it could be at risk. Founders often don't realize they've accidentally broken a requirement by issuing the wrong type of stock or crossing an asset threshold, so a visual tracker over time would make those moments way easier to spot.
@remziyedin3h8y Thanks for your comment. I really like your idea of a timeline tracker. I've been posting about the need for compliance over time (https://www.linkedin.com/feed/update/urn:li:activity:7478150092059746304/)
I'll give some thought to such a tool.