Explanation of QSBS - qualification for C Corps

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January 25, 2024

by a searcher from University of Virginia in Boston, MA, USA

Hi all,

Could someone walk me through how a QSBS works? From what I've read, it seems like QSBS-qualifications include actively running a company. Does this necessarily mean that only an acquisition could be set up as QSBS? Or are there ways to QSBS-qualify an investment vehicle that would purchase another company and become the parent?

Thanks!

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Reply by a searcher
from University of Southern California in Tampa, FL 33602, USA
I know this was posted about a year ago, but we structured our investment vehicle as a C Corp with the intention of obtaining the QSBS exemption down the road. The only activity in our C Corp is its ownership in two operating company LLCs, which should suffice (i.e. it's not owning real estate) We had our legal / tax advisors look at this and sign off on it, but QSBS is a pretty complex topic so definitely defer to experts.
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