What Is Section 1202 Stock

A qualified small business stock is any stock acquired from a qualified small business after aug.

What is section 1202 stock. Qualified small business stock is a provision in the tax code u s. This section shall apply to gain from the sale or exchange of stock treated as qualified small business stock by reason of subparagraph a only to the extent of the gain which would have been recognized at the time of the transfer described in subparagraph a if section 351 or 368 had not applied at such time. The provision has been in our tax code since 1993.

Code section 1202 that provides some tax benefits for individuals that invest in early stage companies. It s only become well known in the last year or so because historically it didn t provide a material tax benefit. If so the mutual fund you sold qualified as small business stock.

Section 1202 was enacted in 1993 as an incentive for taxpayers to start and invest in certain small businesses. This could show an amount in box 2c section 1202 gain. Section 1202 gain small business stocks your mutual fund company might send you a form 1099 div.

Under section 1202 the capital gains from qualified small businesses are exempt from. 2 however the amount of gain that is excludible from income depends on when the qsbs was originally issued. 1 currently the statute provides an exclusion from income for any gain from the sale or exchange of qualified small business stock qsbs acquired after the effective date of the statute and held for more than five years.

Small business stock capital gains exclusion. This site uses cookies to store information on your computer.