Use this tool to estimate your potential QSBS tax savings.
This calculator is intended for the following:
- Individual taxpayers (i.e. non-corporate) who own the shares directly
- No prior sales of QSBS stock
- Did not acquire the stock through a purchase or transfer from another person or entity
- Empowerment Zone rules do not apply
Proceed if you can answer “Yes” to both questions below:
- The company is a domestic C Corporation with less than $50,000,000 in gross assets immediately before and after your shares were issued.
- At all times since your shares were issued, at least 80% of the company’s assets were used in the conduct of a qualified active trade or business, defined as anything except the following:
- Any business whose principal asset is the reputation or skill of one or more employees. This includes firms of any size whose output is dependent upon the service of the individual(s) providing the expertise, such as consulting, architecture, financial advice, brokerage services, law, accounting, etc.
- Businesses that specifically excluded under 1202(e)(3), including banking, insurance, financing, leasing, investing, farming, hotels, motels, restaurants, and the extraction of natural resources.
Proceed if you can answer “No” to all questions below:
- The company is a foreign corporation, DISC, former DICS, regulated investment company, real estate investment trust, REMIC, FASIT, cooperative, or a corporation that has made (or that a subsidiary has made) a section 936 election.
- At any time two years prior and two years after your shares were acquired, the corporation purchased (directly or indirectly) any of its stock from you or a related person.
- At any time since your shares were issued, 10% or more of the company’s assets consisted of stock in non-subsidiaries, or real estate not used in the active conduct of a qualified trade or business.
- During the 2-year period beginning on the date 1 year before the issuance of such stock, the corporation made 1 or more purchases of its stock with an aggregate value (as of the time of the respective purchases) exceeding 5% of the aggregate value of all of its stock as of the beginning of such 2-year period.
Select the date acquired from the ranges below. If none apply, do not proceed with this calculator.
Tax Calculations
If you have met all the criteria in the items above, enter the value and cost basis of your shares below. If you do not know the cost basis, enter zero:
Eligible Gain
Your eligible gain for the tax year is $0
Capital Gains Taxes
Capital Gain Exclusion
Gain Subject to 28% Capital Gains Rate (plus NIIT if applicable)
Gain Subject to Regular Capital Gains Rate (plus NIIT if applicable)
Total Gain.
Alternative Minimum Tax:
In addition to above, $0 is considered an AMT preference item, subject to a maximum tax rate of 28%.
Tax Savings
Assuming a capital gains rate of 20%, an AMT rate of 28%, and NIIT of 3.8%, here is an estimate of your QSBS tax savings:
Tax liability if QSBS treatment didn’t apply (23.8% of Total Gain)
Capital Gains taxes under QSBS treatment
AMT under QSBS treatment
Total tax savings
The estimates above assume you meet all criteria outlined under IRC section 1202. The accuracy of the information provided cannot be guaranteed and shall not be construed as tax advice. Consult with your tax and legal advisors for your individual situation.
Next Steps:
- Consult with your tax advisor to ensure you meet all criteria outlined in section 1202.
- Read about some of the applications of QSBS in our financial planning articles.