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

The IRS, Bitcoin, and Other Virtual Currencies | H&R Block

Have you found yourself wondering how the IRS classifies Bitcoin? Our tax pros discuss relevant IRS Bitcoin law and notices. Learn more with H&R Block.

What Is Cryptocurrency? | H&R Block

What is Cryptocurrency? Bitcoin, Litecoin, and the like leave many wondering how to classify this new form of investment. Find the answer at H&R Block.

Holiday Bonus Taxes

Congratulations on the Bonus! Learm more about the tax rate at H&R Block - whether you receive a holiday or cash bonus, it will apply to you.

Farmer’s Market Tax Tips

If you are selling items at a farmer's market, learn how to file your taxes with H&R Block. From cash income to bartering, these tax tips will help.