QSBS (§1202)

Only a domestic C corporation can issue QSBS (§1202(c)(1)). The page appears in the navigation for C-corps only; opened for an LLC, it says §1202 does not apply.

Open the QSBS page

Go to Compliance & Tax → QSBS in the left navigation. Every member of the workspace can read it. It lists one row per outstanding stock holding, with a filter across the top for Eligible, Not yet, At-risk and Ineligible. Options and other unexercised instruments are not listed, because the clock starts when stock is issued.

Each row has a QSBS memo link that downloads a PDF summarizing the §1202 analysis for that holder’s holdings, for the holder or their tax adviser.

Stock acquired after July 4, 2025

The July 2025 amendments to §1202 changed three numbers, each depending on when the stock was acquired. Tenacap applies the rule that matches each holding’s date:

Tenacap uses the issue date as the acquisition date. Stock whose holding period carries over from an earlier holding (a conversion, a gift, an inheritance, a §1045 rollover) can have an earlier acquisition date under the tax rules, which can put it on the other side of July 4, 2025. Tenacap does not detect this; check it with your tax adviser.

What each column means

• Holding period: days left until the five-year mark, with a progress bar. A holding acquired after July 4, 2025 also shows when it has reached the 50% or 75% tier.
• Asset test: whether the company’s aggregate gross assets were within the ceiling ($50M or $75M, by issue date) under §1202(d)(1), read from the gross-asset snapshot described below. It shows Pass, At-risk (above 90% of the ceiling), Fail or Unknown.
• Active business: Pass when an admin has attested that the company met the active-business test (§1202(c)(2) and (e)) for every tax year from the holding’s issue year through the current year, and Needs attestation when any of those years is missing or attested “no”.
• Eligibility: one roll-up, worked in this order. A failed asset test makes the holding Ineligible. Otherwise, a holding still inside its holding period is Not yet. Past the holding period, any Unknown, At-risk or Needs-attestation result makes it At-risk. Only a holding past its period with every test passed shows Eligible.
• Est. exclusion cap: the greater of the per-issuer floor ($10M or $15M) and 10 times the holding’s basis, under §1202(b)(1). Basis is the price paid per share times the number of shares.

The two inputs an admin records

Only a workspace Admin sees these forms, at the bottom of the QSBS page.

• Aggregate gross-asset snapshots: a measurement date and a dollar figure. For each holding, Tenacap uses the highest snapshot dated on or before its issue date, however old: the statute asks whether assets stayed under the ceiling at all times before the issuance, so one earlier figure over it fails the holding even if assets later fell. The statute also tests assets immediately after the issuance, including the money raised, so a snapshot taken before a large round can understate assets. To test a round, record a snapshot dated on the issue date that includes the round’s proceeds.
• Active-business attestations: a tax year, a yes or no for “active qualified trade/business” (at least 80% of assets by value used in a qualified trade or business), and optional notes. Record one for every year since your earliest issuance.

How missing inputs are shown

A missing input never counts as a pass. A holding with no snapshot on or before its issue date shows Unknown for the asset test; a gap in the attestations shows Needs attestation. When either appears, an Inputs needed to complete the analysis card says what to record.

Shares that changed hands

QSBS has to be acquired from the company at original issue (§1202(c)(1)). When shares move between holders, Tenacap reads the reason recorded on the transfer:

• Secondary sale, tender offer, or a move to a partnership, multi-member LLC or corporation: the shares are not QSBS for the new holder. The holding shows Ineligible.
• Gift, death, divorce, or a move to the holder’s own grantor trust or single-member LLC: the new holder keeps the giver’s QSBS status and acquisition date (§1202(h)). The Acquired column shows the giver’s date with “via transfer”. For divorce, no IRS ruling says so outright; it follows from divorce transfers being treated as gifts (§1041(b)(1)).
• Distribution from a partnership to a partner: status carries over only if the partner held their interest when the partnership acquired the shares. Tenacap cannot check that.
• No reason recorded, or Other: QSBS status is unknown, so the holding shows At-risk and never Eligible. An admin can record the reason from the holding’s row on the QSBS page, once. The transfer itself is not changed.

Every new transfer asks for its reason. A connected assistant can propose the reason for an older transfer (set_transfer_reason); an admin confirms it. Transfers imported from Carta come in as new issuances for now, so their QSBS status reads as original issue until that is fixed.

What Tenacap does not check

These all affect whether stock is QSBS, and none of them is modeled:

• Holding periods carried over from converted stock (§1202(f)) and §1045 rollovers.
• Stock received back in exchange for QSBS in an incorporation or reorganization (§1202(h)(4)).
• Redemptions: a company buy-back from the holder or a related person, or a large buy-back from anyone, around the issue date can disqualify stock (§1202(c)(3)).
• The asset test at every point before the issuance. Tenacap reads one snapshot per holding.
• The excluded businesses listed in §1202(e)(3), such as consulting, finance and health.
• The halved caps for married taxpayers filing separately.
• S-corporation status. Eligibility relies on the entity type recorded in Tenacap, which is C-corp or LLC; a company taxed as an S corporation but recorded as a C-corp would show results it cannot have.

The Compliance page carries a short QSBS count; this page is the full view.