Qualified Small Business Stock (QSBS) Tax Exemption

The Pearl Fund uses two separate tax incentives: the Qualified Small Business Stock (QSBS) and the Opportunity Zone (OZ). The QSBS tax incentive begins after 5 years and the OZ after 10 years. Depending on when our investment gets acquired (or go public) we use the appropriate tax incentive. Below is more detail on the QSBS tax incentive.

  • Qualified small business stock (QSBS) tax benefits

    QSBS provides investors tax-advantaged returns of the greater of 10 times their investment or $10m tax-free. We use this incentive as a backup in case if any of our companies get acquired before the 10-year oz window is met or if investors invest non-capital gains into our fund.

    Rules: must be held for at least 5 years and the valuation must be less than $50m when the investment is made and it must be taxed as a corporation

    Ineligible companies: Professional services (such as health, law, engineering, architecture, and brokerage services), banking, insurance, financing & leasing , farming, mining or natural resource production or extraction, operating a hotel, motel, restaurant, or similar business