Qualified Small Business Stock: QSBS Tax Strategy
FBFK Law tax attorney Dan Baucum joined Sarah Florer and Roland Wiederaenders on their Alt Investing Made Easy podcast to explore a powerful yet often overlooked tax strategy, Qualified Small Business Stock (QSBS) under Section 1202, which can help founders and investors save millions in capital gains taxes.
This provision allows business owners to exclude up to $15 million, or 10 times their investment, from capital gains taxes when selling company stock. “Qualified Small Business Stock can be a game changer,” said Baucum. “It’s one of the most overlooked tax planning tools for growth companies.”
For entrepreneurs planning an exit, QSBS can mean keeping more of what they’ve built. C Corporations that meet specific criteria, gross assets under $75 million, and a five-year holding period, can qualify for this extraordinary exclusion. Families can even multiply the benefit through strategic gifting.
Private equity funds have taken notice, acquiring qualified small businesses to deliver tax-advantaged returns to investors. “You heard me right, exclude,” Baucum emphasized. “That means you don’t pay taxes on the greater of $15 million today.”
Before choosing an entity structure, Baucum poses one simple question: “What are you going to do with the profits?” If profits are reinvested in growth, the 21% corporate tax rate may make more sense than the top individual rate of 37%. With the right planning, even the concern of double taxation becomes far less significant.
Baucum’s perspective is shaped by decades across the IRS Chief Counsel’s Office, private practice, and academia at Georgetown University and SMU Dedman School of Law. His focus is on helping entrepreneurs turn tax strategy into long-term business value.
“Tax strategy should never be an afterthought; it’s part of building value,” he said.
The conversation underscores FBFK Law’s integrated approach to tax, corporate, and transactional strategy, helping clients reduce risk and maximize growth across its offices in Dallas, Austin, Houston, and Orange County.
Whether planning a business exit or scaling for the future, FBFK attorneys combine deep expertise with practical insight, hallmarks of The FBFK Way.
Watch the full episode of Alt Investing Made Easy featuring Dan Baucum or listen on Apple Podcasts to learn more about the critical requirements for QSBS.
