Your mutual fund company might send you a Form 1099-DIV showing an amount in box 2c (Section 1202 gain). If so, the mutual fund you own sold qualified small-business stock. If this applies, you can usually exclude up to 50% of the capital gain from your income. You can do this if you held the stock for more than 5 years. You’re taxed on the remaining capital gain at whichever is lower: 28% or your marginal tax rate.
Your mutual fund company will send you a statement with the information you need to report this gain.
To learn more, see IRS Form 8949 and Schedule D instructions.