What is a QSBS attestation letter? Definition, how it works and examples
The company’s own statement that its shares qualified — what the letter confirms, what it cannot, and when a holder should ask for one.
The short answer
A QSBS attestation letter is a written statement from a company, signed by an officer, that its stock met the company-level tests of Section 1202 when it was issued to you — a domestic C corporation, gross assets within the ceiling, an active qualifying business. Holders keep it as evidence for the tax exclusion they claim themselves. It matters because the exclusion has no application and no advance ruling: you claim it on your return and must prove it if asked, years after the shares were issued. The letter is the company’s side of that proof.
What does a QSBS attestation letter state?
There is no prescribed form, so wording varies by company and counsel. A full letter usually identifies the holder, the share class, the number of shares and the issuance date, and then states, for that date and the period since: Entity The company was a domestic C corporation when the shares were issued and has been since. Gross assets Aggregate gross assets did not exceed the ceiling at any time before the issuance or immediately after it — often with the figure itself. Original issue The shares were issued by the company directly, for money, property other than stock, or services.
How does a QSBS attestation letter work?
The letter fills a gap the statute left open. To qualify at all, Section 1202(d)(1)(C) requires the company to agree to submit “such reports to the Secretary and to shareholders as the Secretary may require”. The IRS has never said what those reports are: a 2025 legal review found no guidance on their timing or content. So no company files a QSBS report, and holders ask for a letter instead. When you sell, you report the excluded gain on Form 8949 with code Q. Nothing is attached.
What a QSBS attestation can prove, and what it cannot
Three further limits. The letter is the company’s view, and the IRS may disagree with it — on what counts as an excluded service business, for example. It is often qualified “to the company’s knowledge”, which lowers its weight. And it is only as good as the records behind it: a statement with no balance sheet, signed by someone who was not there, may not survive questioning.
Example of a QSBS attestation letter’s gross-asset test
A software company raises two rounds. Its attestation letter has to answer one question for each: what were the company’s gross assets — cash plus the tax basis of everything else — before the round and immediately after it? The same company can therefore issue a clean letter to one class and a negative one — or none — to the next. A holder who exercised options between the two rounds needs the figure for the exercise date, which is why a letter should always name its date.
How to request a QSBS attestation and what to keep in the file
Ask early Request a letter after each purchase or exercise, while the people and records of that period are still there — not at the exit. Write to the right person The chief financial officer or general counsel. Name your shares, their class, and the issuance or exercise date. Ask for each test and the number Request a statement on every company-level test and the gross-asset figure before and after the issuance. Ask again before you sell The active-business test runs for substantially all of your holding period. A second letter brings the statement up to the sale.
Key risks and common mistakes with QSBS attestation letters
Treating the letter as a ruling It binds no one but, at most, the company’s credibility. The IRS reviews the facts, not the letter. A letter with no date or figure Gross assets are tested on each issuance date. A general statement does not answer the question for your shares. A letter for the wrong holder Shares bought from an employee or an earlier investor fail original issue whatever the letter says about the company. Asking only at the exit By then finance teams have changed and records from years earlier are hard to rebuild.
The terms this page uses
QSBS attestation letter A company’s signed statement that its stock met the company-level Section 1202 tests on a stated issuance date. Also called a representation letter. Section 1202(d)(1)(C) The condition that a qualified company agree to submit the reports the IRS may require. No such reports have been prescribed. Aggregate gross assets Cash plus the adjusted tax basis of the company’s other property, tested before and immediately after each issuance. Original issue Acquiring shares from the company itself, not from another holder.
Questions about QSBS attestation
Is a QSBS attestation required to claim the exclusion? No. Nothing is filed with the return beyond Form 8949. The letter is evidence you keep in case the claim is examined, and the strongest single document for the company-level tests. Who signs a QSBS attestation letter? An officer of the company, usually the chief financial officer, often after review by counsel or the company’s accountants. A letter from someone without access to the records carries little weight. Can a company refuse to give a QSBS attestation? Yes. No rule obliges it to issue one on request.
Is a QSBS attestation required to claim the exclusion?
No. Nothing is filed with the return beyond Form 8949. The letter is evidence you keep in case the claim is examined, and the strongest single document for the company-level tests.
Who signs a QSBS attestation letter?
An officer of the company, usually the chief financial officer, often after review by counsel or the company’s accountants. A letter from someone without access to the records carries little weight.
Can a company refuse to give a QSBS attestation?
Yes. No rule obliges it to issue one on request. Some companies give a narrower statement or share the underlying balance sheets instead; some decline because the work and the liability are theirs.
Does the IRS accept a QSBS attestation letter as proof?
It accepts it as evidence, weighed with the rest of the record. It is not a ruling and does not prevent the IRS from reaching a different view on the facts.
Do I need a new letter for each purchase?
Ideally, yes. Gross assets are tested on each issuance date, so shares bought or exercised on different dates can have different answers.
Where every rule on this page comes from
Every rule was checked against the US Code and the IRS on 2 October 2026 and reflects federal law as amended on 4 July 2025. The statement that no reports have been prescribed rests on a 15 April 2025 legal review; we found no later IRS form or regulation. The contents of a letter are common practice, not a requirement. The example is illustrative.