Our QSB is qualified small business.

Sounds very enticing.

I can sell my business and pay no tax. It requires a C-Corp. The only way you pull this tax strategy off is to have a C-Corp for at least five years. C-Corp, not good. We're going to pay tax along the way. Now, let me tell you why. Let's get really technical here. The reason why is EBITA. So if I'm shooting to save 10 million in tax, I want a 10

million dollar valuation, I better be showing at least $2 million in profit in the year before I

sell. That's my friends in federal and state corporate tax. That's going to be a half a million.

I'm going to have to pay a half a million close to 25% in taxes to get a

valuation of 10 million. Welcome everyone to another episode of the Main Street Business

podcast. Mark Kohler here with Matt Sorensen, excited to talk about a strategy that many of you

may think is the coolest thing since sliced bread or you've heard about it. We're going to impact that for you today, but it's not just strategies you should do. Maybe it's strategies you shouldn't do. Yeah, and I know there's a lot of buzz on there. Qualified small business stock, QSBS. You might have seen a TikTok or an Instagram or maybe even a YouTube video about it and someone hyping this up. For all you small business owners, and you hear it in there, QSB is qualified small

business.

Sounds very enticing.

I can sell my business and pay no tax.

Tell me more.

Is it true?

That sounds so good.

You may have heard that 1202 is the same thing.

QSBS and 1202 is the same strategy. 1202 is the IRS code section related to that. And yeah, there's a lot of influence, well, I should say, there's a few influencers out there that use this to say, you can save $10 million. Don't your accountant doesn't know about this. Your accountant is a dumbass. You know what? We do know about it. It's just it doesn't work for everybody. It's very, very limited. So today we're going to tell you why it doesn't work and where it does. And I'm going to choose we go why it doesn't work because for 98% of people, it doesn't. But we'll talk about the 2% where it can work. And some of you might be in that 2%. Yeah, well, let's just cut to the chase and talk about why it doesn't work. Now, there are some applications of this. So we're not going to cramp on it entirely. And that's how most tax strategies are over-promoted. There is a good use case for it. It just doesn't happen to work for most people.

So let me just say, and you guys know us, if you listen to the podcast, you know we're going to have a problem with this. It requires a C-C-Corp. The only way you pull this tax strategy off is to have a C-Corp for at least five years. Okay. And you guys know, C-corporation, when I'm operating that business, what have I decided to pay more taxes than if I had an S corporation?

Like, you're volunteering for the time you operate and own the business to pay more taxes, hoping that when you sell it, you will pay no taxes and that's going to be a better deal. So just know there's huge baggage up front as you're

actually running the business year to year. I love it. And some of you, and again, you can see,

we're going to tell you when a small business could really do well with this. Let's just think venture

capital, maybe a Silicon Valley deal that doesn't have a lot of income. They're not paying a lot of taxes.

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