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:
Click on Wages & Income>>Stock, Mutual Funds, Bonds, Other.
If you have already entered some investment sales, you will see a screen Your investment sales summary. Click on the Add More Sales box on the lower left.
If you haven't yet entered some investment sales, you will see a screen Did you sell stocks, mutual funds, bonds, or other investments in 2019? Click the Yes box.
On the next screen, choose the icon for Stocks, Bonds, Mutual Funds.
Continue through the Get ready to be impressed screen.
On the Let’s import your tax info screen choose I’ll type it in myself in the bottom right.
On the next screen, for the Broker name, type in something descriptive, like “Section 1202 from K-1” in the box, and leave the account number blank.
On the next screen, pick No to “sales include any employee stock”; A few sales; then No to “other type of investments”; then Yes to whether you purchased all the investments (assuming they weren’t received as a gift or inherited). At that point you can Continue.
On the next screen, choose Enter sales one by one and Continue and on the next screen Continue.
Now you are to the screen where you can actually enter the sale. Select Long-term did not receive 1099-B form in the first dropdown; then Stock (non-employee) in the next dropdown; then a description of the small business stock sold in the Box 1a field; then the date the stock was acquired in the Box 1b field; and the date it was sold in the Box 1c field;
If you know the proceeds and cost basis you can enter those in the 1d and 1e fields; if you don’t, then the gain reported on your K-1 in the Box 1d Proceeds field and just leave the 1e cost basis blank. Then Continue.
On the “special situations” screen, select the This was a small business stock box. Continue.
The next screen is very important to “triggering” the questions you need to calculate your Section 1202 exclusion. If you entered a cost basis the screen will be Let us know if you would like to make any changes to the cost basis. If you didn’t enter a cost basis the screen will be We noticed your cost basis was blank….Let us know if you would like to make any changes. Regardless of which of the two screens you get, you must select one of the first two options (“I need help figuring out my cost basis” or “I know my cost basis and need to make an adjustment”) to properly calculate your Section 1202 gain exclusion. Select one of the first two choices and Continue.
From there, follow the TurboTax Online interview to enter the specifics of your Section 1202 sale, and TurboTax will calculate the appropriate gain exclusion. Make good use of the Learn more links on these screens if you have questions. In particular, if you entered zero for the cost basis, and there is a chance that an exclusion limitation based on the cost basis of the stock applies to your transaction, you may have to obtain the cost basis of your stock to properly calculated the exclusion amount.
[Edited 3/29/20|12:48pm PST]
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