QSBS: how much of your exit is free of federal tax

• Federal long-term capital gain at the top 20% bracket plus the 3.8% net investment income tax. No alternative minimum tax, no ordinary income, no carried interest.
• The fixed cap is $10M per taxpayer and per company for stock issued on or before July 4, 2025, and $15M for stock issued after. All three calculators apply the greater of that fixed cap and ten times basis: calculator 1 for the regime you pick, calculators 2 and 3 for post-reform stock, since a conversion or an incorporation done today issues post-reform stock.
• Calculator 1 assumes the shares are held at least five years, so the full exclusion applies under either regime. Calculators 2 and 3 use your years to exit against the 3/4/5-year tiers; the unexcluded slice on the early tiers is taxed at the 28% rate of IRC 1(h)(4).
• Gain above the cap, and pre-conversion built-in gain, are taxed at 20% plus 3.8%.
• "Gross assets" at conversion is approximated by the company's fair market value. The statute uses adjusted tax basis plus contributed property at fair market value; for an operating LLC contributed whole, FMV is the right order of magnitude and the conservative one.
• Calculator 3 treats the IP as property contributed under §351 on the day of incorporation, at its fair market value: that value is the basis for the 10× test, the gain up to it is built-in and never excluded, your tax basis in the IP defaults to zero because you built it, and the round that follows is a separate transaction that leaves your cap where it is. Whether the IP is property rather than services, and whether its value holds, are questions for counsel and an appraiser, not for this page.
• Trusts split your stock, gain and basis equally. Each non-grantor trust is a separate taxpayer with its own dollar cap; the 10× cap splits with the basis, so stacking multiplies the floor and nothing else. Setting one up typically costs a few thousand dollars, plus an independent trustee and a fiduciary return every year; trusts with the same beneficiaries and no purpose beyond tax can be treated as one.
• Any conversion or incorporation done today issues post-reform stock. Inflation indexing of the post-reform $15M cap and $75M ceiling after 2026 is not modelled.

Sources. The statute itself, 26 U.S.C. §1202 (Cornell LII). On the July 2025 changes: Perkins Coie, Baker Tilly, Holland & Knight, Hanson Bridgett (timing after the OBBBA), Andersen (QSBS FAQ), Foley & Lardner and The Tax Adviser. On partnership conversions and §1202(i): Holland & Knight, Hanson Bridgett and MGO; Carta's founder guide for the company and shareholder requirements and the holding-period start dates; Cooley's QSBS cheat sheet; California Revenue & Taxation Code §18152, which states that Section 1202 does not apply for California income tax; FTB Publication 1001, the Franchise Tax Board’s guidelines to California adjustments, on the Section 1202 exclusion. Where the statute settles the point, it is cited directly: §1202(h) for transfers that carry QSBS status over (gifts, death, partnership distributions), §1202(i) for contributed property and basis, §643(f) for multiple trusts, §351 for the tax-free contribution of property to a corporation and §83 for stock issued for services. The statutory figures live in one shared file, qsbs-engine.js, and every number on this page reads from it.