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 is the cost basis of stock and other investments? Learn more about calculating the basis and get tax answers from H&R Block.
Learn more about IRS Form 2439 and get tax answers at H&R Block.
Learn more about the capital gains tax exemption on the sale of a home with the experts at H&R Block.
How much investment income can children earn before paying taxes? Learn more from the tax experts at H&R Block.