First of all, much of this involves a legal interpretation that we cannot render. The one red flag I can see however is that John use the rollover to purchase QSBS in a corporation he owns and not in a corporation in which he is a passive investor. Rather or not this is permissible is a legal opinion that we cannot further speculate on but is something that you may need to do legal research on or pay for legal advice.
John is correct in stating that the holding period for the stock is 7 years since he performed a qualified 1045 section rollover. The seven-year window ended in 2023, so if he sells, he can defer the gain. Again though, the issue may be this is a corporation he owns and the fact that he used some of the money for personal expenses. You may need to consult with legal counsel for further advice if this is an issue of concern.
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