How do I indicate a QSBS section 1202 exclusion? I found an answer for how to do this for tax year 2019, but it doesn't seem to work in this year's version.

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.

1. With your return open, search for 1099-B (upper- or lower case, with or without the dash) in your program's search box.
2. Click the Jump to 1099-B link in the search results.
3. On the Did you sell any investments? screen, answer Yes.
4. If you land on the Summary of All Accounts screen instead, click Edit 
5. “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.)
6. Click My sale involves one of these uncommon situations. (See the attached screenshot below. Click to enlarge.)
7. On Choose the type of investment you sold, choose "Stock" (See the attached screenshot below. Click to enlarge.)
8. Review Some Basic Info About this Sale, Click Continue
9. Click through several screens
10. On "Do Any Special Situations Apply to This Sale?", select "Small business stock" click Continue  (See the attached screenshot below. Click to enlarge.)
11. 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

These instructions are outdated, and the screenshots you're referencing don't show up.

When I click the 1099-B link I don't see "Summary of All Accounts", I see "Your investment sales summary."

When I click edit there, there is no "guide me step by step flow" or any "My sales involves one of these uncommon situations" links.

Can you please share some instructions for the latest version of Turbotax online?

PLEASE UPDATE INFO ON THIS ARTICLE!

I'm having the same issue. I opened a case with support but they were unable to help. 

i too have tried this countless times - it is really frustrating - let us know if you get anywhere with your case

You're correct, QSBS stock sales are excluded per section 1202.  Normally it would be reported on form 1099-B, but if you didn't receive one, here is what to do:

1. On the Federal tab, search for 1099-B and hten Jump to form 1099-B.
2. Select "this is a small business stock"
3. When it asks you if you want to adjust the cost basis check the top box that says "Help me figure out my cost basis" 
4. Go through steps.
5. At the end, look for the "qualified small business 1202 exclusion" options

Here are screenshots:

@randomuser2249

i worked with a live expert on this - I was able to resolve the problem by deleting my investment and then re-adding it, but making sure to select the option for multiple sales 3+ and to put in the single individual sale. This then allowed me to set dates and options regarding section 1202

This once again no longer seems to work in 2022, no matter now many times I delete and try different flows for entry I never get the option to mark a stock as 1202

Yes, you may report the sale of Qualified Small Business stock eligible for Section 1202 exclusion as an investment sale following these steps in TurboTax Online 2021. Please note the Learn More links throughout this process that may answer questions you have about a particular choice.

1. Go to Federal >> Income >> Stocks, Cryptocurrency Mutual Funds, etc.
2. Click Start or Add more sales
3. Choose Stocks, Bonds, Mutual Funds (1099-B)
4. Choose I'll type it in myself and enter Bank or Brokerage name
5. Choose No for Employee Stock
6. Choose No (1-3) for More than three sales
7. Choose Yes for Other types of investments (this is most important for section 1202)
8. Choose Yes for Did you buy every investment?
9. Choose One-by-one for How to enter
10. Under Sales section title, choose Long term or Short term, did not receive 1099-B
11. Under Type of investment, choose Stock (non-employee)
12. Enter dates, proceeds, and basis for your sale
13. Under Let us know if any of these situations apply to this sale, choose This is a small business stock (see screenshot)
14. Under What kind of small business stock did you sell? choose Qualified Small Business (section 1202) (see screenshot)
15. Continue to back to the Investment Sales Summary page.

These instructions worked except I only see Exclusion 1245 not 1202. How do I find 1202 on that last screen?

Same issue as the above poster - I only see exclusion 1045 and need 1202

Desperately need support with this same issue!  The above walkthroughs do not work.  No option for a 1202 sale shows up.  

@PatriciaV : Please update this!  the 1202 selection option does not show up, even when I follow the instructions as written.  

Hey this happened to me too. Turns out I was entering my stock purchase date incorrectly.

The time between you purchasing and selling stock must be at least 5 years in order for it to be QSBS eligible, which is likely why that option isn't showing up for you

Where do I even put in a stock purchase date?  I havent put in a date at all, the system only asks for if I have held the stock for more than a year.  

All that is true for TT2022 but it doesn’t work in TT2023. Big problem.

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:

1. Click on Federal Taxes > Wages & Income> I'll choose what I work on
2. In the Investment Income section click on the Start/Revisit box next to Stocks, Mutual Funds, Bonds, Other. 
3. 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.
4. 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.
5. 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.
6. On the screen, Choose the type of investment you sold, mark the button for Stocks and click Continue.  
7. You will be asked questions about the date of sale and purchase and the cost and sales price.  
8. 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.

What you described is what I have been doing for the last few years. HOWEVER, TT2023 does not have the provision and questions for QSBS/1202 sales. Prior to TT2023, it would ask you questions about the stock: how many years, U.S. company, etc. I cannot find those questions in TT2023. This is a huge issue for me as I have several significant 1202-qualifying sales.

I have followed the steps mentioned in TurboTax Online and was able to generate the 1202 exclusion. If you check the box "small business stock" it asks "what kind". If you select 1202 eligible for exclusion, it asks if you previously sold small business stock from the same corporation and need to adjust the gain eligible for exclusion. It didn't specifically ask the number of years but it gets that from the acquisition and sale dates.

You can send us a “diagnostic” file that has your “numbers” but not your personal information.  

If you would like to do this, here are the instructions for TurboTax Online users: 

Go to the black panel on the left side of your program and select Tax Tools. 

1. Then select Tools below Tax Tools. 
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent. 
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number. 
5. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see what you are seeing and we can determine what is going on in your return and provide a resolution.

 Here are the instructions for TurboTax Desktop users:

1. From the black bar at the top of your screen, select Online
2. Click Send Tax File to Agent
3. Click Send on the message that pops up
4. TurboTax will create a "sanitized" copy of your return information with no personal info
5. Post the 7-digit token number here in this thread

How do I make a IRS Section 1202 exclusion in TurboTax 2023?  I was able to do that in TurboTax 2022 and previous versions!

The Desktop program offers Section 1045 which you must first select, 

after entering zero for replacement property, the program will default to section 1202. 

DESKTOP-

       Federal 

Wages & Income

Investment Income

Stocks, Cryptocurrency, Mutual Funds, Bonds. Other

Start or Update or “Add more sales” 

Select  “Stocks, Bonds, Mutual Funds (1099-B)”

Skip Import, Select I'll type it in myself and enter Bank or Brokerage and CONTINUE

Select No for Employee Stock

Select No (1-3) for More than three sales

Select Yes for “Other types of investments”

Select Yes for “Did you buy every investment?” and CONTINUE

Select One-by-one for “Now, choose how to enter your sales” and CONTINUE

For the Sales section drop-down choose “Short-term or Long-term did not receive 1099-B”

For Type of investment, Select Stock (non-employee)
Enter Description, Dates, Sale Proceeds, and Basis and CONTINUE 

Select “This is a small business stock” for the “Let us know if any of these situations apply to this sale”, screen and CONTINUE

Select “I don’t want to make any changes to my cost basis right now” and CONTINUE

Select Qualified Small Business (section 1045) on the “What kind of small business stock did you sell?” Screen and CONTINUE 

Enter zero for the cost of new qualified small business stock and CONTINUE

The next screen shows this as 1202 sales since no replacement was purchased. 

I imported my 1099-B directly from brokerage company.

In TT2022, it will my QSBS question and it will put 1202 exclusion and do the adjustment in the 8949 form to reflect QSBS deduction. 

In TT2023, it seems missing this automatic feature an adjustment for 1202 and 8949.

I have many QSBS sales, and I wish I can get this feature back on my TT2023 Premier. 

Will this be fixed SOON?

To be clear, you're saying that in previous years you imported the statement from your brokerage and it automatically generated a 1202 exclusion where applicable and that this year it is not automatically generating that exclusion.  

That feature should still exist in the 2023 software.  It does not appear to be disabled.  But a lot of features have some difficulty operating when importing large broker statements.  You should definitely go through and double check the automatic entries.

@ynliu 

I have been trying to enter a QSBS sec 1202 stock sale on 2023 Turbotax desktop on a Mac.

I searched this forum, and followed every instruction, but cannot get to the page that asks me what percentage is excluded.

I called the support line (twice) and they watched me on "screen share" and they could not understand why it wasn't working.

Here are the steps I take:

1) From Wages & Income -> Investment Income I click "Update" next to "Stocks, Crypto..."

2) I click "Add more sales"

3) I select "Stocks, Bonds..." and click Continue

4) I select "Skip this import"

5) I enter "Bank or brokerage" as Vanguard Group (leave other fields blank)

6) I select "No" for "Do these sales include and employee stock"

7) I select "No" for "Do you have more than three..."

😎 I select "Yes" for "Do these sales include..." (even though I don't I should - but previous post said to)

9) I select "Yes" for "Did you buy every investment..."

10) I click "Continue"

11) I select "One by one" and then click "Continue"

12) I click Continue on the useless page

13) I enter "Long-term did not receive 1099-B form", "Stock (non-employee), Description "100 Foo", acquire date "01/01/1999", Date sold "05/01/2023", proceeds "$1,000", Cost "$100" then click "Continue"

14) On the "Let us know if any of these..." screen I select only "This was a small business stock", then Continue

15) I select "I don't want to make an changes...", then Continue

16) I select "Qualified small business ... (section 1202), then Continue. [And I have also tried the section 1045 with a $0 purchase price].

17) $0 for previous sales of this stock - NOTE - this page is very ambiguous. Is it asking for the dollar amount that is eligible to exclude for this sale? Or is it asking how much I have sold in the past so it can determine if I have reached the $10,000,000 limit?

18) Now it kicks me to back to the "Review your Vanguard Group sales page (same as #2 above).

In Forms, the "Capital Gain (Loss) Adjustment Worksheet" in Part III has an X in "Gain from this Qualified..." and an X in "This QSB stock is eligible for 50% exclusion under section 1202", but the amount excluded is 0.

If I enter an amount here, it excludes half the amount, but it appears to include that amount somewhere else and my tax is not reduced by the correct amount. I have not tracked this part down.

Help???