Here's how to enter a Qualified small business stock exclusion (Section 1202):
Although the below steps involve editing an existing stock sale entry, you may do well to delete the sale and start fresh.
- With your return open, search for 1099-B (upper- or lower case, with or without the dash) in your program's search box.
- Click the Jump to 1099-B link in the search results.
- On the Did you sell any investments? screen, answer Yes.
- If you land on the Summary of All Accounts screen instead, click Edit
- “If you have additional info about this sale, you can enter it on your own, or we can guide you.”, Select Guide me step-by-step (See the attached screenshot below. Click to enlarge.)
- Click My sale involves one of these uncommon situations. (See the attached screenshot below. Click to enlarge.)
- On Choose the type of investment you sold, choose "Stock" (See the attached screenshot below. Click to enlarge.)
- Review Some Basic Info About this Sale, Click Continue
- Click through several screens
- On "Do Any Special Situations Apply to This Sale?", select "Small business stock" click Continue (See the attached screenshot below. Click to enlarge.)
- On "What Kind of Small Business Stock?" select the appropriate section 1202 type, click Continue
Continue through the interview
If you qualify, you'll see a “Net adjustments to gain.” (See the attached screenshot below. Click to enlarge.)
Specialized Small Business Investment Company (SSBIC)
If you invest the proceeds from the sale of publicly traded securities in an SSBIC, you may be able to roll over, or postpone, the gain on your securities sale, if you qualify.
Qualified small business stock
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.
If you did not buy other qualified stock, you may qualify to treat 50%, 60%, 75% or 100% of the gain as tax-free under section 1202 if you held the stock longer than five years.
Section 1244 Stock
Losses on sales of section 1244 stock qualify for special treatment when sold. Instead of a capital loss, section 1244 losses are considered ordinary losses and can reduce your taxable income up to $50,000, or up to $100,000 if you're married filing jointly. (No more than $3,000 of net capital losses can be used to reduce other income each year.
This answer was provided by
MichaelDC
