QSBS Section 1045 Rollover Calculator 2026 β Defer Capital Gains
Calculate deferred gain, basis carryover, and holding period tacking in a Section 1045 QSBS rollover. Compare with Section 1202 exclusion and model multi-rollover chains.
Must be original issuance from a qualifying C-corp
Holding period must exceed 6 months for Sec. 1045
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Must be within 60 days of original sale
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Total proceeds reinvested β determines amount of gain deferred $0
Original Gain
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Deferred Gain (Β§1045)
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Basis in Replacement QSBS
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Tax Deferred
Section 1045 Rollover Analysis
How Section 1045 Works
Section 1045 allows owners of QSBS held more than 6 months to defer capital gain by rolling proceeds into new qualifying QSBS within 60 days. The gain is not excluded β it attaches to the replacement stock through a reduced basis. If the replacement stock is eventually held for a combined 5 years (including tacked holding period), Section 1202 may exclude the entire gain.
Key Formulas
Original Gain = Sale Proceeds β Adjusted Basis
Deferred Gain = Lesser of (Original Gain) or (Amount Reinvested)
Recognized Gain = Original Gain β Deferred Gain (recognized immediately)
Basis of Replacement QSBS = Cost of Replacement β Deferred Gain
Holding Period: Tacked from original QSBS purchase date
60-Day Window: Replacement must be purchased within 60 days of original sale
Deferred Gain = Lesser of (Original Gain) or (Amount Reinvested)
Recognized Gain = Original Gain β Deferred Gain (recognized immediately)
Basis of Replacement QSBS = Cost of Replacement β Deferred Gain
Holding Period: Tacked from original QSBS purchase date
60-Day Window: Replacement must be purchased within 60 days of original sale
Sources and References (click to expand)
- IRC Section 1045 β Rollover of Gain from Empowerment Zone Assets to Other Empowerment Zone Assets (QSBS rollover)
- IRC Section 1202 β Partial Exclusion for Gain from Certain Small Business Stock (5-year hold, 100% exclusion)
- Rev. Proc. 98-48 β Section 1045 Safe Harbor Procedures for Rollover of Gain from Small Business Stock
- IRS Publication 550 β Investment Income and Expenses (QSBS sections)
- Treasury Regulation 1.1045-1 β Rollover of Gain from Qualified Small Business Stock
- IRS Schedule D β Capital Gains and Losses (reporting QSBS rollover deferral)
Extended
Multi-Rollover Chain + Section 1045 vs 1202 Comparison
Track multiple consecutive rollovers, cumulative deferred gain, basis evolution, and side-by-side Section 1045 vs Section 1202 tax comparison with timeline SVG
Add each rollover event to track basis and deferred gain across a chain of Section 1045 transactions.
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| # | Event | Proceeds | Cost Basis Before | Gain | Deferred | Recognized | New Basis | Cumul. Deferred |
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No rollovers added. Add rollover events above to build a chain.
Compare the tax outcome of a Section 1045 rollover (deferral) versus waiting to qualify for Section 1202 exclusion (5-year hold).
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| Strategy | Tax Paid Now | Tax Paid Later | Total Tax | NPV of Tax | Net Advantage |
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Visual timeline showing holding periods, rollover windows, and Section 1202 eligibility dates from your inputs.
Frequently Asked Questions
What is the Section 1045 rollover and how does it differ from Section 1202?
Section 1045 allows a taxpayer who has held Qualified Small Business Stock (QSBS) for more than 6 months but less than 5 years to defer capital gain by reinvesting the proceeds into replacement QSBS within 60 days. The gain is not excluded β it is deferred, and the basis carryover to the replacement stock is reduced by the deferred gain. Section 1202, by contrast, excludes up to 100% of capital gain on QSBS held for more than 5 years (for stock acquired after September 27, 2010). A Section 1045 rollover can be used to keep the holding period clock running toward the 5-year Section 1202 exclusion.
What is the 60-day replacement window for Section 1045?
Under IRC Section 1045, you must reinvest the proceeds from the sale of qualifying QSBS into new QSBS within 60 days of the sale. The replacement stock itself must also qualify as QSBS at the time of purchase. The 60-day window is strict β there are no extensions available, unlike a 1031 exchange. The replacement stock must be purchased from a qualifying C-corporation with aggregate gross assets that did not exceed $50 million at any time before issuance. Original stock purchased from secondary markets (e.g., trading existing shares) does not qualify as QSBS.
How is the holding period tacked in a Section 1045 rollover?
Under the holding period tacking rules, when you roll over gain from original QSBS to replacement QSBS under Section 1045, the replacement stock is treated as having been held since the date the original QSBS was acquired. This means the holding period of the original stock counts toward the 5-year Section 1202 exclusion threshold. For example: you hold original QSBS for 2 years, then roll over under Section 1045 to replacement QSBS. The replacement QSBS is treated as having a 2-year holding period immediately, and only needs 3 more years to qualify for the Section 1202 100% exclusion.
How is the basis of replacement QSBS calculated after a 1045 rollover?
The basis of replacement QSBS in a Section 1045 rollover is calculated as: Cost of Replacement QSBS β Deferred Gain. The deferred gain equals the lesser of (a) the original QSBS gain or (b) the amount reinvested in replacement QSBS. If you reinvest less than the full gain, only the reinvested amount is deferred; the remainder is recognized immediately. The carryover basis means the built-in gain follows the replacement stock. If you ultimately sell the replacement QSBS after 5 years and it qualifies for Section 1202, the entire accumulated gain (original + appreciation) may be excluded.
Can you chain multiple Section 1045 rollovers?
Yes. Treasury Regulation 1.1045-1 and Rev. Proc. 98-48 permit multiple successive Section 1045 rollovers. Each rollover must satisfy the same requirements: holding period over 6 months, reinvestment in qualifying QSBS within 60 days, and the replacement stock must itself qualify as QSBS. In each rollover, the basis carryover continues to reduce, and the holding period tacking continues from the original purchase date. Chains of rollovers are commonly used by early-stage investors who exit pre-IPO but want to preserve potential Section 1202 exclusion eligibility.