Tax & Compliance
Section 1045 Rollover: Selling QSBS Early Without Losing the §1202 Exclusion
Collated by Aparna Devalla, CPA
Curated by Rubric Financial
1 / 4
Why §1045 Exists
- §1202 requires a 5-year hold (or 3/4/5 year tiers post-OBBBA) for the QSBS gain exclusion to apply.
- Many liquidity events happen before that 5-year mark: tender offers, secondary sales, M&A. Selling early normally means losing §1202 entirely.
- §1045 (Rollover of Gain From QSBS) lets you defer the gain by reinvesting proceeds in OTHER QSBS within 60 days of the sale.
- The reinvested amount's holding period 'tacks' from the original QSBS — so when you eventually sell the new QSBS at the 5-year mark (combining holding periods), the original gain is excludable.
Related Resources
Tax & Compliance
R&D Tax Credits for Startups
Discover how your startup can claim R&D tax credits to offset payroll taxes or reduce income tax liability by up to $500K per year.
Tax & ComplianceWhen to Transition Your LLC to an S-Corp
How electing S-corp status can reduce self-employment taxes for profitable startups — and when the transition makes financial sense.
Tax & ComplianceSection 754 Election: Step-Up Basis for Partnerships (and Why S-Corps Can't)
The §754 election is the mechanism that lets partnerships and LLCs step up the inside basis of their assets when a partner dies, transfers their interest, or takes a distribution. S-corps have no equivalent — a real cost founders often discover too late.
