Blue Biofuels qualifies as a Qualified Small Business Stock (QSBS) under Section 1202 of the Internal Revenue Code (IRC), creating a powerful potential tax advantage for investors. This means that eligible shareholders who hold their stock for at least five years may exclude up to 100% of capital gains from federal taxes upon sale, subject to certain limits.
Stock acquired after July 4, 2025, a tiered exclusion applies: 50% for a 3-year hold, 75% for a 4-year hold, and 100% for a hold of 5 years or more.
For investors, this can significantly enhance after-tax returns, effectively reducing risk and improving overall investment performance. In practical terms, QSBS status rewards long-term commitment by allowing investors to keep more of their upside, making an investment in Blue Biofuels not only a play on sustainable energy innovation, but also a highly tax-efficient opportunity.
Blue Biofuels, Inc. Qualified Small Business Status
This letter is being provided to Blue Biofuels, Inc. (“Company”), which has engaged Eqvista Inc. (“Eqvista”) to provide certain information to help the Company determine whether its shares qualify as “qualified small business stock” (“QSBS”) under Section 1202 of the Internal Revenue Code (“IRC”). The information below has been provided to the best of Eqvista and Company’s knowledge and belief.
Based on our review, we believe that the Company is a qualified small business (“QSB”) and that primary shares issued by the Company between January 1, 2015, and December 31, 2025 (the “Qualification Period”) meet the company-level qualifications for Qualified Small Business Stock (“QSBS”) within the meaning of Internal Revenue Code (“IRC”) Section 1202(c)(1).
Thus, Company shareholders who acquired original issuance shares during this period may hold QSBS, and such may be able to exclude gain on the sale of their shares from federal gross income (capital gains taxes). The specific amount of the exclusion and the required holding period are dependent on the date the shares were acquired, pursuant to recent legislative amendments enacted on July 4, 2025. For shares acquired on or before this date, the gain exclusion is generally limited to the greater of $10 million or ten times the applicable shareholder’s cost basis, subject to a holding period of more than 5 years.
This analysis is based on Company’s audited public financial statements and corporate documents filed with the SEC. Where public filings do not explicitly detail statutory QSBS micro-requirements (such as but not limited to, the specific absence of disqualifying stock redemptions under § 1202(c)), Eqvista has relied upon specific representations provided by Management. While Eqvista has analyzed this combined information for the purpose of this QSBS assessment, we have not audited or independently verified the underlying data provided by Management and, accordingly, express no opinion or other form of assurance on its accuracy.
