Introducing QSBS Attestation

Author:
The Carta Team
Read time: 4 minutes
Published date: November 27, 2023

Carta's new offering makes it simple for companies to help their shareholders take advantage of potential tax savings.

Editor’s note (updated May 2026): Since this article was first published in 2023, Carta has updated its QSBS resources and product. A QSBS attestation letter is not legally required to claim the federal QSBS exclusion—eligibility is determined by whether you meet the IRS requirements under Section 1202, not by possessing an attestation letter.

Because QSBS eligibility can be lost if certain requirements are not met for “substantially all” of a shareholder’s holding period, it’s not enough to confirm status once at exit. As a best practice, companies should complete a QSBS eligibility review and refresh their attestation letter at least once per year. Annual QSBS attestation letters create a year‑by‑year record of the company’s status, helping shareholders, tax advisors, and investors substantiate QSBS claims and address potential issues early if eligibility changes. In addition, companies should complete an eligibility review after major events like large financings, stock repurchases, or business model changes.

Carta’s QSBS Attestation service is intended to provide this ongoing, third‑party documentation and review. It automatically performs a QSBS eligibility review every 12 months, tagging eligible securities and providing updated company‑ and shareholder‑level letters to support ongoing compliance. This service is meant to make it easier to document and substantiate QSBS eligibility, but it does not itself create or guarantee QSBS status.

Take advantage of QSBS tax savings

Get your attestation letter and ongoing expert QSBS guidance, so you can save on taxes.

QSBS Attestation includes three core features designed to help shareholders pay less in taxes and attract more investors:

QSBS eligibility review and attestation letter

An attestation letter is important because it confirms QSBS eligibility and provides proper documentation for investor and employee shareholders to use when filing taxes upon sale of shares. Plus, many investors investing in Seed to Series B companies will ask for proof that the stock they are buying is QSBS-eligible, since the designation can save them up to 10X their investment in capital gains taxes.

With QSBS Attestation, you’ll always have the proper documentation on hand for investor and employee shareholder requests. Carta checks if you are QSBS eligible every year, and if you qualify, we’ll automatically provide you with an attestation letter. Since we already manage your cap table and conduct your 409A, our QSBS specialists have the information they need to assess your company’s QSBS eligibility without any extra lift on your part.

Personalized QSBS advisory sessions

With Carta, you're not just getting a service—you’re gaining a partner. With QSBS Attestation, you’ll get a one-on-one session with our valuations team when you receive your letter. These sessions are tailored to address crucial issues like the implications of QSBS for your company, best practices for maintaining compliance, and events that could disqualify QSBS eligibility.

Ongoing compliance support

There are nuances to the QSBS exemption that can make it easy to unknowingly disqualify your company’s QSBS status. That’s why we provide continuous support to help you navigate questions and decisions that could impact your QSBS status—like evaluating the effects of raising another round, cash management strategies, or structuring secondary transactions.

Why choose Carta for QSBS attestation?

Effortless: Since Carta has direct access to your cap table, you won’t have to spend hours compiling documents and financial records. We’ll automatically check for QSBS eligibility every time your company gets a 409A valuation and send you an attestation letter within 10 business days.
Accurate: As your cap table's system of record, we have the most accurate and up-to-date equity holdings and transaction dates, helping to confirm that your QSBS eligibility is both accurate and defensible.
Cost-effective: QSBS attestation letters typically cost between $10,000-$15,000. For companies nearing IPO, they can cost as much as $25,000. Carta provides the same documentation for a fraction of the cost.
Proactive: We’ll alert you if your company could be QSBS-eligible. Once we’ve confirmed your company’s QSBS status, we’ll automatically mark all QSBS-verified and QSBS-eligible shares for you and your employees, so you can make informed decisions with your equity.

With Carta QSBS Attestation, you’ll get the attestation letter and expert guidance you need to pay potentially zero federal capital gains taxes when you, your investors, and your employees sell shares. And the best part is that with Carta, the process is seamless. We’ll automatically check your QSBS eligibility when you request your 409A.

In this episode of Startup Essentials, learn the basics of QSBS.

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Author: The Carta Team

Carta's best-in-class software, services, and resources are designed to promote clarity and connection in the private capital ecosystem. By combining industry experience with proprietary data and real customer stories, our content offers expert guidance and clear, actionable insights for companies and investors.