It is May 2, 2026. The IRS has shifted its focus to Section 1202 (QSBS) exclusions, as many tech LLCs from the 2021-2022 era are now hitting their 5-year holding period and looking to sell.
- The $10 Million Trap: To exclude 100% of your capital gains, your LLC must meet the “Active Business Requirement” for the entire holding period.
- Asset Testing: If your LLC holds too much cash or passive investments (over 20%), you could lose your QSBS status and face millions in unexpected taxes.
- The Shark Insight: “Don’t celebrate your $10M tax-free exit too early. The IRS is checking if your LLC became an ‘Investment Company’ by accident. Rebalance your balance sheet now to ensure your assets are ‘active’ enough to satisfy the 2026 audit criteria.”