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Small-Business Stock

Your mutual fund company might send you a Form 1099-DIV. This could show an amount in Box 2c (Section 1202 gain). If so, the mutual fund you sold qualified as small-business stock. If this applies, you might be able to exclude up to 100% of the capital gain from your income. You can do this if you held the stock for more than five years. You’re taxed on the remaining capital gain at whichever is lower:

  • 28%
  • Your marginal tax rate

The amount of gain you can exclude is figured by the date you got the stock:

  • 100% -- Sept. 28, 2010, through Dec. 31, 2014
  • 75% -- Feb. 18, 2009, through Sept. 27, 2010
  • 50% -- Aug. 11, 1993, through Feb. 17, 2009

Your mutual fund company will send you a statement with the information you need to report this gain.

If you'd like to learn more, see Form 8949 and Schedule D instructions at www.irs.gov.

 

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