Eliminate QSBS stacking
Vieje Piauwasdy, Director of Equity Strategy at Secfi, on the future of QSBS
The real policy fault line is not QSBS itself, but the ability to multiply one taxpayer’s break across family members and trusts. QSBS was built to reward early risk in small companies, with a per taxpayer exclusion that is generally the greater of $10 million or 10 times basis after a five year hold. Stacking pushes that design further by spreading shares before a sale so each recipient can claim a separate exclusion, which is why it looks like the cleanest target for lawmakers who want to curb outsized benefits without scrapping the broader startup incentive.
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In practice, stacking usually means gifting QSBS to children or to non grantor trusts before an exit. Because the exclusion is applied per taxpayer, one holder can turn one company level gain into several separate exclusions if the transfers are respected for tax purposes.
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That is different from the basic employee or founder use case. The ordinary version is simpler, exercise or buy stock while the company is still under the asset threshold, hold for five years, then exclude gain on sale. Stacking is a second layer of tax planning on top of that core benefit.
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The interview also points to a second multiplier, Section 1045 rollovers. Those let an investor defer gain from one QSBS sale into new QSBS, and in some cases spread one successful outcome across several later bets. Together, stacking and rollovers explain why critics focus on abuse at the high end.
The likely direction is narrower reform, not elimination. The most durable path is to preserve QSBS as an incentive for founders, employees, and early investors, while shutting down ways to manufacture multiple exclusions from one windfall. If that happens, the regime becomes less of an estate planning tool and more of a straightforward startup formation incentive.