Section 1202 Attorneys in California

Published September 3, 2026  ·  5 min read  ·  By Abboud Chaballout, Managing Attorney

Vide Law is a California boutique law firm with a focused Section 1202 practice. The firm handles QSBS eligibility analysis, trust stacking, gift tax coordination, and California state-tax jurisdiction strategy for founders and early employees. Engagements are defined-scope with clear deliverables at each phase, and every engagement begins with a complimentary 15-minute scoping call. Our comprehensive QSBS planning guide covers the substantive framework the firm applies across every engagement.

This page is written for three audiences: founders evaluating counsel for a Section 1202 matter, CPAs looking for a legal referral partner they can send Section 1202 work to without losing the client relationship, and financial and wealth advisors coordinating pre-exit planning for a client with QSBS holdings.

The engagement model

A full Section 1202 stacking engagement follows four phases. Each phase has defined deliverables and a defined coordination pattern with the client's other advisors.

Phase 1: Section 1202 qualification analysis

Confirms the corporate issuer's QSBS eligibility at issuance and continuously through the holding period: gross assets under the $50M (pre-OBBBA) or $75M (post-OBBBA) threshold, 80% active qualified trade or business, no disqualifying redemptions under Section 1202(c)(3), no excluded industries, original issuance status. Clients often start with the QSBS Eligibility Checklist before engagement. Deliverable: written qualification memorandum, usable by the client's CPA for both planning and audit substantiation.

Phase 2: Trust structure design and drafting

Determines number of trusts based on anticipated gain and per-issuer cap; selects trust type (non-grantor irrevocable, CRT, or ING) based on client access and control preferences; identifies beneficiary and trustee structure; drafts the actual trust instruments, including substantive differences between trusts to support the separate-taxpayer position under Section 643(f). Deliverable: trust structure memorandum plus full draft instruments, one per trust.

Phase 3: Gift tax and valuation coordination

Coordinates independent qualified appraisal from a gift tax appraiser (not a 409A valuation, not a last-round price); structures and documents the gift; calibrates against the client's remaining lifetime gift tax exemption; prepares IRS Form 709 with valuation exhibits. Deliverable: executed gift documentation, coordinated appraisal, prepared Form 709. Filing typically executed by the client's CPA under the coordinated framework.

Phase 4: State jurisdiction implementation and trustee coordination

For California-resident founders, establishes genuine trust situs in Nevada; coordinates with trustees who administer with real substance in Nevada; structures distribution rules to minimize California throwback exposure. For clients in other non-conforming states, our state conformity map is the starting point for the jurisdiction analysis. Deliverable: fully implemented, funded, operational trust structure ready to hold QSBS through the remaining holding period.

Working with CPAs, financial advisors, and other counsel

Section 1202 planning sits at the intersection of legal, tax, and financial planning work. Each advisor on the client's team owns a piece of the picture, and Vide Law engagements are structured around that division.

The CPA typically handles ongoing tax reporting, the eventual Section 1202 exclusion position at exit, and annual trust income tax returns. Vide Law's qualification memorandum, trust structure documentation, and Form 709 supporting materials are prepared to hand off cleanly to the CPA for both compliance and audit substantiation.

The financial or wealth advisor typically owns portfolio management, liquidity timing, and post-exit deployment. QSBS planning affects each of these: trust stacking changes the shape of what's available at exit; California jurisdiction planning changes the state-tax posture on distributions; timing decisions on trust funding interact with market conditions on the underlying stock. Vide Law loops the financial advisor in on structural decisions that will affect the client's investment picture and post-exit planning.

Independent trustees for the non-grantor trusts administer them in Nevada. Vide Law coordinates trustee selection with the client and their advisor team, and works with established Nevada trust companies.

The gift tax appraiser produces the independent qualified appraisal supporting the gift tax valuation. Selected in coordination with the client. Vide Law can introduce firms where the client doesn't have an existing relationship.

Local counsel is engaged where a matter includes state-law-specific work outside the federal QSBS framework (residency establishment in a specific state, state-specific probate, state tax controversy).

For CPAs and financial advisors who occasionally encounter Section 1202 matters that exceed the scope of their own practice, Vide Law is set up to handle the legal engagement while the referring advisor retains the underlying client relationship for all other work. Referral disclosure is standard, no fee splitting, no cross-solicitation.

Kovel agreements: extending attorney-client privilege to your other advisors

One structural feature worth calling out for CPAs and appraisers: where the analysis benefits from it, Vide Law engages the client's CPA and gift tax appraiser under a Kovel agreement. Named after United States v. Kovel, a Kovel arrangement is one in which the attorney formally retains a non-lawyer professional (a CPA, an appraiser, sometimes a financial advisor) to assist in providing legal advice to a client. When the arrangement is set up properly, the non-lawyer's work product and communications with the client fall under the attorney-client privilege, rather than being freely discoverable.

For QSBS planning, this matters most in three places: the gift tax valuation (where the appraiser's analysis and working notes become privileged), the qualification analysis (where the CPA's review of financial records supporting the Section 1202 position is privileged), and pre-litigation posture generally (where the client's team can develop the analysis with candor without creating a discoverable paper trail). Not every QSBS engagement needs a Kovel arrangement, but for matters with real audit exposure or IRS scrutiny risk, structuring the advisor coordination this way from the start is often the difference between a defensible position and a costly one to defend.