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Discovering the Benefits of Qualified Small Business Stock Estate Planning (QSBS) Stacking

Discovering the Benefits of Qualified Small Business Stock Estate Planning (QSBS) Stacking

November 23, 2023

As a business owner or investor, it's important to not only think about your business's success in the present but also in the future. When planning for the future, it's important to consider the tax implications of your decisions. One aspect of tax planning to consider is Qualified Small Business Stock (QSBS) Estate Planning Stacking. In this blog post, we'll explore what QSBS is, how it works, and the benefits of QSBS estate planning stacking.


Qualified Small Business Stock (QSBS) is a tax incentive created to encourage entrepreneurship and support small business owners. QSBS allows individuals to exclude up to 100% of their capital gains from tax if they invest in certain small businesses. This tax incentive has been expanded over time and now allows a significant amount of tax savings for investors and business owners.


QSBS Estate Planning Stacking takes this incentive a step further. With this strategy, investors and business owners can hold onto their QSBS investments after their death and pass them along to their heirs without incurring taxes. This stacking strategy can allow for multiple generations of tax-free ownership and is an excellent way to protect and maintain family wealth.


However, it's essential to note that not all small businesses qualify for QSBS. To be eligible, the small business must be a "Qualified Small Business" and meet certain requirements. For example, the business must be a C corporation, have gross assets of no more than $50 million, and meet specific industry qualifications. Be sure to consult with a qualified tax professional to see if your business qualifies for QSBS.


To take advantage of QSBS estate planning stacking, it's essential to have a plan in place. This plan should include a trust that holds QSBS shares, allowing them to be passed down to beneficiaries tax-free. A professional tax advisor can help you create a trust that will work for you and provide tax savings for your family.


Another benefit of QSBS estate planning stacking is that it aligns with long-term investment strategies. QSBS investments are typically higher-risk investments, but the tax savings and potential for long-term gains can be well worth the investment. By using QSBS estate planning stacking, investors are more likely to hold on to their investments, which has the potential to greater returns.


QSBS Estate Planning Stacking is an excellent way for business owners and investors to take advantage of tax savings and protect their family wealth. By holding onto QSBS shares and passing them down through a trust, individuals can avoid paying taxes on capital gains. It's important to work with a qualified tax professional to determine if your business qualifies for QSBS and to create an estate plan that works for your unique situation. With careful planning, QSBS estate planning stacking can help secure a thriving future for your business and your family.


Lincoln Financial Advisors Corp. and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances. CRN-6057228-102723