Shares are eligible for Qualified Small Business Stock (QSBS) if they’re issued when a company has gross assets of $50 million or less. If you hold on to the stock for at least five years, you can avoid taxes on $10 million of any gains when you sell. But that $10 million is only a minimum—the law says you can instead shield as much as 10 times your initial investment, or basis, in the corporation. So a venture firm that put $10 million in an early startup could reap $100 million in tax-free gains. And QSBS’s benefit can be multiplied several-fold with clever planning.
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