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Rather than entering the proceeds of the sale of qualified small business stock on line 9a of your K-1, enter the figure under stock sales in order to indicate that the sale was "qualified small business stock." [It's not going to matter that the entry is not on the K-1.] Please follow these steps (THESE STEPS WORK ONLY FOR TURBOTAX DESKTOP/CD VERSION):
[Edited | 3/19/2020 | 12:28 pm PDT]
Rather than entering the proceeds of the sale of qualified small business stock on line 9a of your K-1, enter the figure under stock sales in order to indicate that the sale was "qualified small business stock." [It's not going to matter that the entry is not on the K-1.] Please follow these steps (THESE STEPS WORK ONLY FOR TURBOTAX DESKTOP/CD VERSION):
[Edited | 3/19/2020 | 12:28 pm PDT]
I have a question about the solution described. What is the relationship between the steps you described and line 9a of the K-1. In other words, how does TurboTax know to adjust line 9a?
If I leave 9a blank and fill out the stock sales, dates, etc. and get the exclusion, do the total proceeds get adjusted so the proceeds will be the same as if you had entered the number in 9a?
If you are attempting to report Section 1202 gain exclusion in TurboTax Online, either as a workaround for Section 1202 gain reported on a K-1 or a Small Business Stock sale you make personally, the steps are different than TurboTax Download/CD. Here are the steps for TurboTax Online Premier and Self-Employed:
[Edited 3/29/20|12:48pm PST]
This does work for me. But pay attention to 2 things. (1) In different time periods of purchase, the exclusion percentages may differ. (2) The instructions say to just enter one transaction even if there are multiple purchases. To handle both of these, group your purchases into those at the same exclusion rate and make one entry for each group. (BTW my entry was on line 11i of the K-1, so you may see it in different places.)
Just had a TTOnline client that is going through this process for a 2nd time. Thanks for the entry . . . but 1202 gains via K-1 need to be included in future TTOnline so that this is a new "feature" not a bug for the software.
Thanks!
Thank you David, this was extremely helpful.
Question on this - should I keep the entries in the K-1 section in addition to doing what you suggested below to report the Section 1202 gain in the stock sales section. Or should I do this instead of filling out the K-1 section? Thanks for this comment.
No, you would not enter them twice. Enter it only through the Investment income section as Irene S explained above.
If the QSBS sale was only a portion of the total reported gain on the K-1 line 9a, is the correct way to report:
1. Report qsbs portion as a 1202 gain as outlined on this thread
2. report the K-1 but reduce the line 9a gain by the amount associated with the QSBS sale leaving all other fields unchanged?
For the 2022 TurboTax Desktop Home & Business edition - these instructions are not work - when you enter the stock sale manually (amounts/dates/etc) on the next screen you got a screen that says "Any of these less common items for this sale?" but it does NOT list QBS as an option. Not sure what to do here.
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