Most business owners think about the sale price first.
But what really matters is what you keep.
Because your outcome isn’t just “what you sell for.” It’s:
Sale price – taxes – deal friction = your net.
And here’s the part many owners miss until it’s too late:
Your “exit tax rate” is being set years before you sell.
The structure you choose, the way equity is issued, how clean your records are, and whether you qualify for powerful rules like Qualified Small Business Stock can change your end result dramatically.
Most owners assume the sale will trigger capital gains taxes.
Sometimes that’s true.
But for certain businesses structured the right way, an owner can exclude some, or potentially all, of the federal capital gains on a qualifying stock sale.
That isn’t a loophole, it's an incentive built into the tax code that you need to explore now if you haven't already.
It’s also highly technical and easy to ruin accidentally if you don’t plan early and get the right advice.
The One Big Beautiful Bill Act expanded QSBS benefits for stock issued after July 4, 2025, including:
Higher exclusion cap (reported as increased to $15M for post-OBBBA QSBS)
New tiered holding periods for post-OBBBA QSBS (reported as partial exclusion at 3 years, more at 4, and full at 5+)
Higher gross asset threshold (reported as increased to $75M for post-OBBBA QSBS)
In plain English: QSBS planning just became more flexible and potentially more valuable for founders and owners who are thinking about an exit.
QSBS generally requires (among other things):
the business is a C-Corporation issuing original stock (not just converting later and hoping)
the company meets the gross asset limit rules
the company is in a qualified trade or business (many service-heavy fields are excluded under §1202 rules)
you avoid certain actions that can break eligibility (like disqualifying redemptions/buybacks)
So yes, QSBS can be a “zero federal capital gains” outcome for the right facts, but it’s not something you bolt on at the end.
It’s something you design into the plan well before the deal is on the table.
If you’re thinking about selling in the next 2–5 years, the big questions aren’t just “How do we grow?”
They’re:
Are we structured in a way that gives us QSBS potential—or are we locked out?
If we could qualify, what would we need to do now to protect it?
If we don’t qualify, what’s the next-best approach to reduce capital gains exposure? (This is where overall strategy matters: structure, timing, state exposure, exit readiness.)
Even if QSBS isn’t on the table for your business, the OBBBA changes are still a reminder: the rules move and owners who review early keep more options.
If selling is even a “maybe,” you want answers to:
If I sold in 24–60 months, what’s my likely after-tax outcome?
Would my business even be eligible for QSBS based on what we do and how we’re structured?
Is any existing stock potentially treated under pre- vs post-OBBBA rules? (This can change planning.)
What actions could accidentally disqualify QSBS between now and exit?
Do state taxes change the story even if federal gains are reduced? (Some states don’t conform to QSBS rules.)
Scenario:
Two owners each sell their company for $12M after holding their equity long enough for long-term treatment.
Owner A (no planning):
Entity/stock history doesn’t qualify for QSBS
Sale triggers capital gains tax (plus potential NIIT and state tax depending on location)
Outcome: they keep “what’s left” after taxes.
Owner B (planned early):
Equity is structured and documented to qualify for QSBS (where eligible)
Sale may allow them to exclude a large portion, potentially all, of federal capital gains (facts matter)
Outcome: same sale price, but dramatically higher net proceeds.
Takeaway:
The sale price didn’t change. The structure and timing did. That’s why we say your “exit tax rate” is being set years before exit.
Scenario:
A founder is on track for QSBS. They’re 18–24 months from a likely sale. Everything looks good.
Then one of these happens:
the company does a stock redemption/buyback the wrong way
equity is restructured late without protecting the original issuance history
the business drifts into activities that raise eligibility questions
records don’t clearly support what a buyer’s tax team will want to see
Nothing seems like a big deal at the time.
But in diligence, the buyer’s advisors raise questions. The founder’s “QSBS confidence” turns into “QSBS uncertainty.” That can lead to:
losing the exclusion entirely, or
having to negotiate a lower price / different terms because the tax benefit is no longer clear, or
scrambling to fix things when it’s already late.
Takeaway:
QSBS isn’t something you “claim.” It’s something you protect. The easiest time to protect it is before the deal is on the table.
Not every business can qualify for QSBS (many service-heavy businesses can’t), and not every owner should convert to a C-Corp just to chase it.
But “no QSBS” doesn’t mean “no strategy.”
Scenario:
Owner isn’t QSBS-eligible, but they’re selling in 2–5 years. Planning focuses on:
making the business buyer-ready (clean financials, defensible add-backs)
minimizing state tax surprises
cleaning up entity/ownership issues early
timing major purchases and compensation decisions intentionally
aligning the sale structure with after-tax goals (not just headline price)
Takeaway:
Even without QSBS, owners who plan early often improve net proceeds simply by avoiding avoidable friction and “late-stage” tax surprises.
If you might sell in 2–5 years, don’t wait until a buyer shows up to learn your real exit tax rate - and don't wait for the time to be "right". Build your own timeline.
Because your exit tax rate is not a surprise. It’s a strategy outcome.
And with the OBBBA’s QSBS expansion, some owners may have a path to dramatically reduce, or potentially eliminate, federal capital gains with the right planning and the right facts.
If an exit is on your horizon, we offer a no-cost, no-obligation Tax Strategy Review AND a no-cost Estimation of Business Value to pressure-test your current structure and identify whether QSBS or other capital gains planning should be on your radar.