QSBS 5-Year Holding Clock Tracker

The entire value of the Section 1202 exclusion — up to $15M tax-free per issuer — depends on when your clock started and when it expires. Enter your issuance date to see exactly where you stand, when each tier unlocks, and if a sale is coming before you reach 5 years, how long you have to execute a Section 1045 rollover.

How the QSBS holding clock works

IRC §1202 requires you to hold the stock for more than five years to claim any federal exclusion — with one exception introduced by the OBBBA (One Big Beautiful Bill Act, July 2025). The rule that applies to your stock depends on when it was issued.¹

When your clock actually starts

The clock starts at original issuance — when the company issues you the stock. Common mistakes:

• Stock options: the clock starts at exercise, not at grant. An option granted in 2020 that isn't exercised until 2026 has a QSBS clock that started in 2026. Early exercise is the tool employees use to start the clock before the gross-asset test becomes harder to satisfy.
• 83(b) election: for restricted stock subject to vesting, the clock starts at grant if you file an 83(b) election within 30 days. Without the 83(b), the clock restarts at each vest — an outcome that often kills the 5-year hold entirely by the time the company reaches a liquidity event.
• LLC or S-corp conversion: a company that converted from an LLC or S-corp to a C-corp cannot issue qualifying QSBS until the conversion is complete. Stock issued while the company was an LLC or S-corp does not qualify, and conversion restarts the original-issuance requirement.
• Secondary-market purchases: buying from a founder or prior holder is not original issuance. The clock does not carry over. Only original-issuance stock qualifies for §1202.

Section 1045 rollover — when a sale is forced before 5 years

If a tender offer, acquisition, or secondary sale closes before your 5-year mark, you are not necessarily locked out of the exclusion. IRC §1045 lets you roll the gain into new qualifying QSBS within 60 days of the sale and preserve the path to a full exclusion.³

Key mechanics:

• 60-day window: you must identify and purchase replacement QSBS within 60 calendar days of the sale. No extensions. The calculator above shows this deadline if you enter a sale date.
• Minimum hold to use §1045: you must have held the original QSBS for more than 6 months before the §1045 election is available. A sale at day 30 has no rollover option.
• Tacking: the replacement stock inherits the holding period from the original stock. If you held the original for 3 years and roll into new QSBS, you only need to hold the new stock for 2 more years to reach the 5-year mark — not 5 fresh years.
• Basis reduction: the deferred gain reduces the basis in the replacement stock. This keeps the math honest — you are deferring, not eliminating, until the replacement stock's own clock runs.
• Replacement stock must also qualify: the new company must be an original-issuance C-corp that meets the §1202 gross-asset, active-business, and qualified-business tests at the time you purchase. You are not rolling into just any private stock.