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.
Learn more about the rules of taxable gifts and get answers from the tax experts at H&R Block.
Learn more about the myRA retirement planning account by the U.S Treasury Department from the tax experts at H&R Block.
Is pension income taxable? Find out if pension income, which is a source of retirement income from an employer, is taxed in this post from H&R Block.
Are scholarships and grants considered taxable income by the IRS? Learn more from the tax experts at H&R Block.