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My First Million

My First Million

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Maximize tax-free gains on startup exit beyond the standard $10M QSBS limit

Startup founders expecting exits above $10M who can plan 5+ years in advance

5+ years (QSBS holding period requirement)

What Success Looks Like

$30M+ in tax-free gains instead of $10M limit through strategic distribution to family members and trusts

Steps to Execute

1

Form C-Corporation and complete 83(b) election within 30 days

2

Gift shares early to family members (parents, siblings, spouse) to start their 5-year clocks

3

Set up irrevocable trusts for future children/beneficiaries

4

Transfer shares to each trust (each gets separate $10M limit)

5

Ensure each recipient holds shares for full 5 years before exit

6

Structure exit to maximize QSBS treatment for all shareholders

Checklist

C-Corp formation documents filed
83(b) election mailed to IRS with certified receipt
Gift tax returns filed for share transfers
Trust documents executed with qualified attorney
5-year holding period tracked for each shareholder
Exit structure reviewed for QSBS compliance

Inputs Needed

  • Estate planning attorney familiar with QSBS
  • Tax advisor for gift tax implications
  • Family members willing to be shareholders
  • Business projecting $30M+ exit value

Outputs

  • Potential tax savings of $5-15M+ vs single shareholder
  • Complex shareholder structure requiring ongoing management
  • Irrevocable gifts that cannot be unwound

Example

“Founder expects $50M exit. Gifts shares to parents, spouse, sibling, and sets up 2 trusts. Instead of $10M tax-free, potentially $60M+ tax-free across 6 entities, saving $12M+ in taxes.”