A Qualified Small Business (QSB) pertains to an active domestic C corporation that does not exceed $50 million in assets after issuing stocks. Only select categories of enterprises fall within this QSB classification. Technology firms, retail establishments, wholesalers, and manufacturers qualify as QSBs while businesses in hospitality services, personal services industry, financial sector operations as well as farming and mining ventures do not meet these criteria.

When referring to Qualified Small Business Stock (QSBS), it denotes shares possessed in accordance with a qualified small business (QSB) definition outlined by the Internal Revenue Code (IRC). Capital gains on QSBS receive preferential treatment if specific requirements are met by both investors and companies involved. The amount of tax relief an investor receives depends on their purchase timing and duration of holding onto these stocks. Investors who dispose of their QSBS prior to completing a mandated holding period can defer capital gains tax by reinvesting proceeds into QSBS issued by another company.