Qualified Small Business Stock (QSBS) is stock in an eligible U.S. C-corporation that, under IRC Section 1202, can allow a holder to exclude a substantial amount of capital gains from federal tax if held for at least five years and other conditions are met.
QSBS is a powerful incentive for U.S. angel and venture investors and a reason many startups incorporate as Delaware C-corps. Turkish founders considering a U.S. flip should understand QSBS, as the timing and structure of the flip can affect eligibility.