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:
- 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.
What are at-risk limits, and how can they help you reduce your reported income? Learn more about at-risk rules and get tax answers at H&R Block.
Learn how to maximize your salary and benefits with more information on new job tax forms and deductions from the tax experts at H&R Block.
Do you need to know how to calculate a capital gain on inherited property that was later sold? Learn more from the tax experts at H&R Block.
Learn more about the average cost basis method of selling shares and get tax answers at H&R Block.