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Main Street Business

#457 The Reality Check for Small Business Owners Considering QSBS

Oct 17, 2023
18:11

In this episode of the Main Street Business podcast, hosts Mark J Kohler and Mat Sorensen discuss the complexities and potential pitfalls of the Qualified Small Business Stock (QSBS) tax strategy. Here are some of the key points they discussed:

  • An explanation of the QSBS strategy, its allure for small businesses, and the role of C Corporations in this strategy.
  • The three major problems associated with the QSBS strategy - The requirement of having a qualifying business, the need to show significant profit, and issues with potential buyers.
  • The significance of earnings before interest, taxes, depreciation, and amortization (EBITDA) in determining the value of a business.
  • The types of businesses that qualify for the QSBS strategy, and the potential roadblocks that could hinder a QSBS.
  • Real-world examples of situations where the QSBS strategy worked successfully, specifically in venture capital scenarios.

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