Complete Advisors · Valuation Advisory

QSBS / §1202 Conversion-Timing Calculator

Model the LLC-to-C-corporation conversion decision and estimate your potential capital-gains exclusion under Section 1202. Tests eligibility gates, the gross-assets ceiling, the §1202(i) bifurcation, the per-issuer cap, and the post-OBBBA tiered holding period.

1 · Regime & Eligibility Gates

Stock issuance (conversion) date regime

Stock is in a domestic C corporation (or will be after conversion) Qualified trade or business (not health, law, accounting, consulting, financial/brokerage, hospitality, farming, etc.) Stock received at original issuance (not bought from another holder) ≥80% of assets used in active conduct of the business No disqualifying redemptions in the anti-abuse windows (§1202(c)(3))

2 · Gross-Assets Test (at issuance, tax basis)

Aggregate gross assets immediately after issuance Cash + adjusted tax basis of property. NOT valuation.

3 · Conversion Economics & §1202(i)

FMV of business at conversion stock value when issued

Cash basis contributed cash put in for stock

§1202 basis of non-cash contributed property is floored at FMV at contribution. Appreciation earned while an LLC is not QSBS-eligible; the calculator strands that pre-conversion gain.

4 · Exit Assumptions

Expected exit / sale value founder's stock

Holding period at sale (years)

QSBS holders (stacking) founder + trusts/donees

Federal LTCG + NIIT rate (%)

State does not conform to §1202 (e.g., CA) — federal benefit only

Verdict

Exclusion Result

Excluded gain (federal)

—

Federal tax saved

—

Taxable gain remaining

—

Effective exclusion %

—

■ Excluded■ Taxable

Gain Waterfall

Component	Amount	Eligible?

Holding-Period Status

Timing Guidance

Want this run on your real numbers?

Complete Advisors models conversions with the §357(c) check, basis planning, and stacking strategy your exit actually needs.

Request a modeled analysis