Justin Miller (Golden Gate University School of Law) recently published QSBS 2.0: Opportunities and Pitfalls After OBBBA, 2026. The article is to be featured in ACTEC Law Journal, Volume 52 (forthcoming 2027). Provided below is the Abstract:
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly expanded the federal income tax benefits available for qualified small business stock (QSBS) under Internal Revenue Code section 1202. For qualifying stock acquired after July 4, 2025, OBBBA increased the shareholder-level gain exclusion from $10 million to $15 million, raised the qualified small business gross asset limitation from $50 million to $75 million, introduced new partial exclusions after three- and four-year holding periods, and provided for inflation adjustments to key statutory thresholds.
This Article examines the resulting “QSBS 2.0” planning landscape and technical requirements that can preserve, enhance or even inadvertently eliminate section 1202 benefits. It addresses original issuance and active business requirements, entity conversions, stock redemptions, partnership transactions, section 1045 rollovers, and advanced planning involving gifts to nongrantor trusts. The Article also considers unresolved interpretive questions and heightened scrutiny of trust-stacking strategies, while emphasizing the importance of contemporaneous documentation and pre-transaction due diligence. Ultimately, the Article demonstrates that OBBBA has transformed section 1202 into an even more powerful tax-planning tool that is dependent on careful planning throughout a company’s life cycle.