Preparing a Partnership tax return which has a QSB 1202 exclusion. I cannot get the exclusion to come through. Anyone have a suggestion how to handle?

[randyjonit]

Preparing a Partnership tax return with QSB Section 1202 exclusion.  Does anyone know how to handle this transaction in a Partnership Return? 

[PhoebeRoberts · Accepted solution]

QSB Stock - 1 if Qualified Small Business Stock Schedule D Screen 19; Code 154

IRC section 1202 allows an exclusion of up to 50% of the eligible gain on the sale of qualified business stock issued after August 10, 1993 and held more than five years.  Enter 1 to designate that this is a sale of qualified small business stock.  If the qualified small business is located in an empowerment zone and the stock was purchased after December 21, 2000 and held for at least five years, the exclusion is 60%. Enter a 2 to designate this stock transaction as eligible for the 60% exclusion.  This exclusion is applied at the partner level. The Partnership must provide information regarding the sale of qualified small business stock to each partner.

The program prints gains from the sale of qualified small business stock on Schedules K and K-1, line/box 11, Other Income. The program prints required information for each sale on each partner's Schedule K-1, Supplemental Information.

If the Partnership has held qualified small business stock for more than six months but less than five years, IRC section 1045 allows the eligible gain to be postponed if qualified replacement stock is purchased. See "QSB Stock: Section 1045 Rollover (1 To Postpone Entire Gain or Enter Amount)" (Screen 19, code 58). Refer to the Schedule D and Schedule K, line 11 instructions for a complete discussion of qualified small business stock.