6 Tax Strategies Founders Should Know Before Selling Their Company
Sam's List Editorial | 2026-06-23
6 Tax Strategies Founders Should Know Before Selling Their Company The single largest tax event of a founder's life is the day the wire from the buyer hits. The decisions that determine the size of the tax bill on that wire were made years earlier. By the time the LOI lands, most of the levers are gone. Holding-period clocks have run. Entity structures are locked. Residency is sticky. The cleanest tax outcomes belong to founders who treated the exit as a planning event five years before it happened. Here are six strategies worth knowing — and the deadlines that decide whether they're available. 1. Qualified small business stock under IRC §1202 can exclude millions of gain The single biggest break in the founder tax code is qualified small business stock — QSBS — under Section 1202 of the Internal Revenue Code. Founders holding original-issue C-corporation stock that meets the qualification tests can exclude a large block of gain from federal capital gains tax on a sale. The size of the exclusion depends on when the stock was acquired. The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, rewrote the regime: For QSBS acquired after July 4, 2025 , the per-issuer exclusion is the greater of $15 million of gain or 10× basis. For stock acquired before that date, the older $10 million / 10× basis cap still applies. For pre-OBBBA stock, the founder generally has to hold for more than five years for the 100% exclusion. For stock acquired after July 4, 2025, OBBBA added a tiered holding period: a 50% exclusion at 3 years, 75% at 4 years, and 100% at 5 years. The other qualification tests still matter: The stock has to be C-corp stock , originally issued. LLC interests and S-corp stock don't qualify. The C-corp's gross assets had to be at or below the cap at the time of issuance — $50M for older stock, raised to $75M for stock issued after July 4, 2025. The corporation has to use at least 80% of its assets in an active qualified trade or business (most service businesses — law, health, consulting, financial services — are excluded). The holding-period clock is what kills most QSBS planning. A founder who flipped from LLC to C-corp last year and is exiting next year is at the bottom of the tier, if they qualify at all. A founder who set the C-corp up at incorporation and stayed disciplined can shelter eight figures of gain. The exact dollar figures, indexing, and tier mechanics turn on your stock's issuance date — confirm your specific position with an exit-experienced CPA. Either way, this is a strategy set up at the beginning, not the end. 2. An...
