If you are a California founder or investor counting on the Qualified Small Business Stock exclusion, there is a trap you need to understand before you sell. The California QSBS rules do not follow the federal ones. You can qualify for a 100% federal exclusion under Section 1202, exclude every dollar of gain on your…
Continue reading ›Claiming the Qualified Small Business Stock exclusion on your tax return is not the finish line. It is the moment the position becomes reviewable. A QSBS audit is the IRS’s examination of whether a Section 1202 exclusion was actually earned, and because these claims routinely shelter seven- and eight-figure gains, they draw serious attention. When…
Continue reading ›The 2025 QSBS changes are the most significant expansion of the Qualified Small Business Stock rules in more than a decade. Enacted as part of the One Big Beautiful Bill Act, the new law rewrites key parts of Section 1202 for stock acquired after July 4, 2025. It shortens the wait for a partial exclusion,…
Continue reading ›Qualified Small Business Stock (QSBS) is one of the most powerful tax benefits available to founders, early employees, and investors. Under Section 1202 of the Internal Revenue Code, a taxpayer who holds qualifying stock in a small C corporation can exclude a large portion, and in many cases all, of the capital gain when the…
Continue reading ›If you have just received an IRS audit notice, the first question is almost always the same: why me? Did the IRS catch something specific? Did a software algorithm flag the return? Did someone report you? Was it random? The honest answer is that IRS audit selection is rarely random, and “why was I selected…
Continue reading ›Not all IRS audits are the same. The IRS conducts three distinct types of IRS audits: correspondence audits, office audits, and field audits. The differences among them are not cosmetic. Each type involves different procedures, different IRS personnel, different scope, and different stakes. Identifying which type of audit you are facing is the first defensive…
Continue reading ›For most taxpayers facing an IRS cryptocurrency examination, the defining problem is asymmetry of information. The Revenue Agent on the other side of the table has access to exchange records produced through John Doe summonses, blockchain analytics that trace transactions across wallet addresses, expanded broker reporting under digital asset rules, and dedicated IRS training programs…
Continue reading ›Most IRS audits are administrative exercises — civil examinations conducted by Revenue Agents who develop adjustments, propose additional tax, and eventually close the case. Most audits end with no change, with an agreed adjustment, or with an unagreed Revenue Agent’s Report that proceeds to Appeals. Some audits are something else entirely. An eggshell audit is…
Continue reading ›The Information Document Request (IDR) is the workhorse document of an IRS examination. It is the form IRS Revenue Agents use to ask for the records, statements, and information they need to develop adjustments, and it is, in practice, the document on which most audits are won or lost. For taxpayers who have just received…
Continue reading ›When an IRS Revenue Agent opens an examination, they are not approaching your return with an open mind looking for whatever happens to come up. They are approaching it with a defined set of issue categories they have been trained to develop, supported by analytical techniques the IRS teaches in formal examination training. Knowing what…
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