Section 1202 Gain – Small Business Stocks

 

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 rate is lower:

  • 28%
  • Your marginal tax rate

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

  • 50% — Jan. 1, 2015 and later
  • 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.

To learn more, see Form 8949 and Schedule D instructions at www.irs.gov.

Related Topics

Related Resources

Should You Pay Kiddie Tax on Unearned Income?

Learn more about using form 8615 and 8814 to file child’s unearned income with help from H&R Block.

How To Report Self-Employment Income

Can you create a W-2 for self-employed income? Learn more from the tax experts at H&R Block.

Reporting Child Care Income

Learn more about reporting child care income with help from the tax experts at H&R Block.

Reporting Loss On Rental Property

Learn more about reporting loss on a rental property with help from the tax experts at H&R Block.