Overview
Partner Lauren Azebu authored an article titled "Navigating the QSBS Rules in Pass-Through Structures" for The Tax Adviser. In the article, Azebu examines the qualified small business stock (QSBS) gain exclusion rules under Section 1202 and explores the additional complexities that arise when QSBS is held through pass-through entities, or when the corporation operates through one or more partnerships. She discusses the eligibility requirements for obtaining the exclusion, including corporate qualification, original issuance, holding period, active business, and aggregate gross asset requirements, as well as recent changes to the QSBS regime enacted by the One Big Beautiful Bill Act.
Azebu also analyzes a range of technical issues that taxpayers and advisors must consider when structuring investments through pass-through entities, including limitations tied to ownership percentages, transfers of QSBS and entity interests, the treatment of lower-tier partnerships, and entity conversion strategies. The article highlights areas where statutory and regulatory guidance remains limited and emphasizes the importance of proactive planning to preserve expected QSBS tax benefits from formation through exit.
Read the article at The Tax Adviser.
