Sales of qualified small business corporation (QSBC) stock may potentially be eligible for a gain exclusion. But that’s not all. There’s also a tax-free stock sale gain rollover privilege — similar to what happens with like-kind exchanges of real property.

Under the rollover provision, the amount of QSBC stock sale gain that you must recognize for federal income tax purposes is limited to the excess of the stock sales proceeds over the amount that you reinvest to acquire other QSBC shares during a 60-day period beginning on the date of the original sale. The rolled-over gain reduces the basis of the new shares. You must hold the original shares for over six months to qualify for the gain rollover privilege.

Essentially, the gain rollover deal allows you to sell your original QSBC shares without owing any federal income tax and without losing eligibility for the gain exclusion break when you eventually sell the replacement QSBC shares.