Aggregate Gross Assets Test

The Aggregate Gross Assets Test is a critical threshold under Section 1202 that determines whether a corporation's stock can qualify as QSBS. At the time of stock issuance—and immediately after, including the capital raised in the current round—the corporation's aggregate gross assets must not exceed $50 million. Gross assets are measured as the total amount of cash and the aggregate adjusted tax basis of other property held by the corporation. Importantly, the test includes the proceeds from the round itself, so a company that is at $45 million in gross assets raising a $10 million round would fail the test because post-money gross assets would be $55 million. Once a company exceeds the $50 million threshold, future stock issuances no longer qualify, though previously issued QSBS retains its status.