### Question
How is the "qualified securities" defined?


### Answer
The term **qualified securities** is defined in *26 U.S.C. § 1042* as follows -

> employer securities (as defined in section 409(l)) which—


(A) are issued by a domestic C corporation that has no stock outstanding that is readily tradable on an established securities market, and


(B) were not received by the taxpayer in—


(i) a distribution from a plan described in section 401(a), or


(ii) a transfer pursuant to an option or other right to acquire stock to which section 83, 422, or 423 applied (or to which section 422 or 424 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) applied)

#### Citation:
  - *26 U.S.C. § 1042*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter O-Gain or Loss on Disposition of Property > PART III-COMMON NONTAXABLE EXCHANGES**

