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Section 1045 and QSBS, one question at a time

Short, direct answers on rollovers, deadlines, and the QSBS rules that decide whether they work.

• What is a Section 1045 rollover?Section 1045 lets you defer the gain on qualified small business stock (QSBS) you’ve held for more than six months by reinvesting the proceeds in other QSBS within 60 days of the sale.
• Do you have to reinvest all of your proceeds in a Section 1045 rollover?No.
• When does the 60-day rollover window start?On the date of the sale.
• Can you roll QSBS proceeds into a SAFE?It’s uncertain.
• Do stock options and RSUs qualify for QSBS?Not until they become stock.
• Can you roll QSBS proceeds into your own new startup?Often, yes.
• How is a Section 1045 rollover different from a 1031 exchange?Both let you sell and reinvest without paying tax now.
• Can you split a Section 1045 rollover across several companies?Yes.
• What happens to your holding period after a 1045 rollover?It generally carries over.
• Does California follow federal QSBS and Section 1045 rules?No.
• What changed for QSBS in 2025?The One Big Beautiful Bill Act, enacted in July 2025, expanded QSBS for stock issued after July 4, 2025: partial exclusions at three and four years, a higher $15M per-company cap, and a $75M gross asset limit.
• How do you report a Section 1045 rollover on your tax return?You report the sale on Form 8949 and Schedule D for the year of the sale, then elect the rollover by entering the postponed gain as an adjustment with code R.
• Can you roll gain above the QSBS exclusion cap?Generally, yes.
• What happens if you miss the 60-day rollover deadline?Any proceeds you didn’t reinvest in qualifying stock within 60 days are taxed as gain for the year of the sale.