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Get your taxes done using TurboTax
In order for you to be able to enter the information needed to report the QSBS Section 1202 transaction correctly, you can report the sale of qualified small business stock under stock sales to indicate that the sale was "qualified small business stock." You can follow these steps in the 2023 version of TurboTax:
- Click on Federal Taxes > Wages & Income> I'll choose what I work on
- In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other.
- If you have already entered some investment sales, you will see a screen Here's the investment sales info we have so far. Click on the Add More Sales link.
- If you haven't yet entered some investment sales, you will see a screen Did you sell any investments in 2023? Click the Yes box.
- Answer No to the question, Did you get a 1099-B...? if that is the case. If you received a different information return, enter that in TurboTax as well, but with a negative amount to counter a positive amount in the stock section.
- On the screen, Choose the type of investment you sold, mark the button for Stocks and click Continue.
- You will be asked questions about the date of sale and purchase and the cost and sales price.
- When you come to the screen, "Let us know if any of these situations apply to this sale", check the box next to Small Business Stock and click Continue.
Several more screens will appear with follow-up questions needed to determine whether the sale qualifies for the Section 1202 exclusion for small business stock.
The Learn More link for Qualified Small Business Stock explains:
When you sell qualified small business stock for a gain, you may be able to postpone paying income tax on the sale if you used the proceeds to purchase other qualified small business stock under section 1045 within 60 days.
If you didn't buy other qualified stock, you may qualify to treat 50%, 75%, or 100% of the gain as tax-free under section 1202 if you held the stock longer than five years, depending on when the stock was acquired.
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