The 1031 exchange for startup equity.
Real estate investors have used Section 1031 for decades to sell, reinvest, and push the tax bill down the road. Section 1045 does the same for startup stock, and it’s how founders and early employees recover from an exit that came before year 5. Sell, put the proceeds into new startups within 60 days, and defer the gain.
What’s a rollover worth to you?
Estimate the federal tax you can defer and see your deadline.
- Days left
- -
- Deadline (day 60)
- -
- Fund by (day 45)
- -
Federal tax at 23.8% (20% plus 3.8% NIIT). Ignores state tax. An estimate, not tax advice.
Sixty days is short. We make it enough.
The tax law is the easy part. The hard part is finding qualifying rounds that close in time and getting the paperwork right while the clock runs.
Rounds that close inside your window
We line up rollover capital with companies raising priced rounds, sorted by when they can close and fund.
Paperwork that starts filled in
Sale details, deadlines, company QSBS representations, and election details, organized once and reused.
Planning before the sale closes
The best rollovers are lined up while the tender or acquisition is still being papered, not after the wire lands.
Exited too early? A rollover is your bailout.
QSBS pays off after five years. Acquisitions, tenders, and acquihires don’t care about your clock. A rollover carries the years you’ve already banked into new companies, so an early exit stops being a tax bill and becomes a pause.
Your first exit came early
Acquired at year 2, a tender at year 3, a secondary at year 4. Roll within 60 days and every year you’ve held carries into the new stock. You don’t start over.
Your next exit came early too
The company you rolled into gets bought 18 months later. Roll again. The clock carries through each rollover, so three short holds can add up to one five-year exclusion.
Your exit blew past the cap
Held five years but your gain is above the $10M cap ($15M for newer stock)? Roll the excess into new companies. Each one comes with its own cap.
One clock, three companies
A founder who exits early twice still reaches five years.
No rollovers
Federal tax paid along the way: $952K at the first exit, $714K at the second.
Two rollovers
Tax at either exit. The full $7M of gain becomes eligible for the QSBS exclusion once the clock hits five years, up to company C’s cap.
Illustrative. Each rollover has to meet every requirement on its own, including the 60-day window and the new company’s six-month active business test.
A real example: an early employee at an AI unicorn
One person, one QSBS-eligible company, three different tender dates.
- Joined an AI unicorn
- February 2021
- Grant
- $2M of stock at a $1.5B valuation
- Early exercised + 83(b)
- April 2021, cost $200K
- Vesting
- 4 years, done Feb 2025
Early exercise starts the QSBS clock in April 2021. At today’s $60B valuation the stake is worth about $80M before dilution.
- Nov 16, 2026 · day 0
A tender closes at a $60B valuation. You sell 20% of your $80M stake: $16M of proceeds on a $40K basis.
- Nov 19, 2026
The wire lands. Your stock is 5½ years old, so the first $10M of gain is excluded. That’s your lifetime cap in this company, used up in one sale.
- Dec 2026
You put $6M into three priced seed rounds at $2M each, closing before the holidays.
- Jan 15, 2027 · day 60
Deadline. Already funded, with three weeks to spare.
Take the cash
Federal tax on the $5.96M of gain above your $10M cap.
Roll the excess
Tax due now. Keep $10M tax free, defer the rest into three new companies.
After five years the rollover is about the cap. Your $10M exclusion in the company is a lifetime limit, so every dollar above it, now and at IPO, is taxable unless you roll it into companies that each carry their own cap.
Hypothetical company and employee. The company is assumed to have issued QSBS. Stake values ignore dilution. Valuations, grant size, exercise cost, tender dates, and participation limits are illustrative. Federal tax at 23.8%; state tax excluded.
How a rollover works
You sell, take cash, and use it to buy newly issued stock in other qualifying startups. The gain, and the years you’ve held, carry into the new shares.
- 6+ months in
Hold QSBS
Stock that qualifies in every way except the five-year holding period.
- Day 0
Sell
An acquisition, tender, or secondary closes. The clock starts.
- By day 60
Buy replacement stock
Newly issued shares in one or more qualifying startups. Gain is deferred to the extent you reinvest.
- Tax season
Elect on your return
Report the rollover on a timely filed return for the year of the sale.
Same idea as 1031. Better ending.
| Section 1031 (real estate) | Section 1045 (startup stock) | |
|---|---|---|
| What you sell | Investment or business real property | Qualified small business stock held more than 6 months |
| What you buy | Like-kind real property | Newly issued stock in other qualifying startups |
| Deadline | 45 days to identify, 180 to close | 60 days to buy, no extensions |
| Intermediary | Required to hold your cash | None. The cash comes to you, which makes the clock easy to forget |
| End state | Deferral | Deferral, plus a path to excluding the gain entirely |
QSBS Match vs. doing it alone
| With QSBS Match | On your own | |
|---|---|---|
| Finding rounds | Qualifying rounds sorted by close date | Whoever in your network is raising this month |
| Timing | Deadline tracked from closing day | A calendar reminder, if you set one |
| Company QSBS reps | Collected up front from every issuer | Ad hoc asks to each founder |
| Paperwork | Pre-filled packet for your CPA | Your preparer starts from scratch |
| Both sides of the deal | Companies raising know your clock | You explain the 60 days on every call |
The rules, and where people trip
Miss one and the rollover fails. Each rule below comes with the mistake we see most.
The stock you sold has to be QSBS held for more than six months.
The clock starts when you own shares, not at grant. Exercise options into a tender and you’ve held them zero days.
The company must have met the QSBS tests, including the gross asset limit, when your shares were issued.
For options, issuance is exercise day, not grant day. Get the company’s answer in writing before you plan.
Replacement stock must be bought within 60 days of the sale. No extensions.
Counting from the wire. Close Nov 2, wire Nov 6, and your deadline is Jan 1, not Jan 5. That’s a holiday, so fund by Dec 31.
Replacement shares must come directly from the company for cash.
Buying on a secondary doesn’t count. SAFEs are unsettled. Priced equity is the clean path.
A domestic C corp under the gross asset limit, in a qualifying business, active for your first six months as a holder.
Skipping diligence on the new company’s QSBS status because the deal moved fast.
Deferral is limited to what you reinvest. The shortfall is taxed now.
Reinvesting the gain instead of the proceeds and leaving part of it exposed.
Individuals, trusts, partnerships, and S corps. Not C corps.
Holding the stock in an entity that can’t elect.
Federal rules don’t bind your state.
California doesn’t follow federal QSBS treatment, so state tax is due either way.
What changed in July 2025
The One Big Beautiful Bill Act expanded QSBS for stock issued after July 4, 2025. The rollover rules didn’t change. The destination got better.
| Issued on or before July 4, 2025 | Issued after July 4, 2025 | |
|---|---|---|
| Exclusion by holding period | 100% at 5 years, nothing before | 50% at 3 years, 75% at 4, 100% at 5 |
| Per-company cap | Greater of $10M or 10x basis | Greater of $15M (indexed) or 10x basis |
| Company gross asset limit | $50M | $75M (indexed) |
Questions
What is QSBS?
Qualified small business stock: shares in a domestic C corporation, bought directly from the company while it was under the gross asset limit and running a qualifying business. Held long enough, the gain can be excluded from federal tax up to a per-company cap.
Is this only for founders?
No. Early employees, angels, and funds can all use it, as long as they hold actual shares. Unexercised options and unsettled RSUs don’t count until they become stock.
I sold more than 60 days ago. Is it too late?
For that sale, yes. Join the waitlist anyway if you expect another tender, an earnout payment, or a later exit, so the next window is planned before it opens.
Can I split proceeds across several companies?
Yes, as long as each purchase lands inside the window. Spreading across companies is also how you put more gain under more caps.
Can I roll into my own next company?
Often, yes. The new company has to be a qualifying C corp that issues you stock for cash inside the window and stays active for your first six months as a holder. Incorporate early so you’re not forming a company in week seven.
Do I need to be an accredited investor?
For most private rounds, yes. Rolling into your own company is the main exception, and that depends on how it’s structured.
How do I make the election?
You report the sale and the rollover on a timely filed federal return, including extensions, for the year of the sale. We hand your preparer a packet with the dates, amounts, and company details already organized.
How is this different from hiring a tax advisor?
Your advisor tells you what qualifies. We find rounds that close in time and do the organizing. You need both, and we’ll work alongside whoever you use.
Are you giving tax advice?
No. We handle timing, matching, and documentation. Every rollover should be reviewed by your own tax advisor and counsel.
Get on the list before your window opens
The best time to plan a rollover is before the sale closes. Tell us which side you’re on and when your clock starts.
We only ask what we need to line up timing. We don’t list or offer securities on this site.