Page 5 of 12 Fileid: … 1041-sch-d/2023/a/xml/cycle03/source 9:32 - 1-Dec-2023
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Acquisition date of stock acquired after February 17,
2009. When determining whether the exclusion is limited to
50%, 75%, or 100% of the gain from the QSB stock, the
acquisition date is considered to be the first day the stock is
held (determined after applying the holding period rules in
section 1223).
Empowerment zone business stock. Generally, the estate
or trust can exclude up to 60% of its gain on certain QSB
stock if it meets the following additional requirements.
1. The stock sold or exchanged was stock in a corporation
that qualified as an empowerment zone business during
substantially all of the time the estate or trust held the
stock.
2. The estate or trust acquired the stock after December
21, 2000, and before February 18, 2009.
3. The gain from the sale or exchange of the stock is
attributable to periods on or before December 31, 2018.
Requirement 1 will still be met if the corporation ceased to
qualify after the 5-year period that began on the date the
estate or trust acquired the stock. However, the gain that
qualifies for the 60% exclusion can't be more than the gain
the estate or trust would have had if it had sold the stock on
the date the corporation ceased to qualify.
See section 1397C for more details.
Stock acquired after February 17, 2009. The estate or
trust can exclude up to 75% of the gain if it acquired the stock
after February 17, 2009, and before September 28, 2010.
The estate or trust can exclude up to 100% of the gain if it
acquired the stock after September 27, 2010.
Pass-through entities. If the estate or trust held an interest
in a pass-through entity (a partnership, S corporation, mutual
fund, or other regulated investment company) that sold QSB
stock, the estate or trust must generally have held the interest
on the date the pass-through entity acquired the QSB stock
and at all times thereafter until the stock was sold to qualify
for the exclusion.
How to report. Report the sale or exchange of the QSB
stock on Form 8949, Part II, with the appropriate box
checked, as you would if you weren't taking the exclusion.
Enter “Q” in column (f) and enter the amount of the excluded
gain as a negative number in column (g). Put it in
parentheses to show it is negative. See the Instructions for
Form 8949, columns (f), (g), and (h). Complete all remaining
columns. If you are completing line 18c of Schedule D, enter
as a positive number the amount of your allowable exclusion
on line 2 of the 28% Rate Gain Worksheet, later; if you
excluded 60% of the gain, enter
2
/3 of the exclusion; if you
excluded 75% of the gain, enter
1
/3 of the exclusion; if you
excluded 100% of the gain, don't enter an amount.
Gain from Form 1099-DIV. If the estate or trust received
a Form 1099-DIV, Dividends and Distributions, with a gain in
box 2c, part or all of that gain (which is also included in
box 2a) may be eligible for the section 1202 exclusion.
Report the total gain (box 2a) on Schedule D, line 13. In
column (a) of Form 8949, Part II, enter the name of the
corporation whose stock was sold. In column (f), enter “Q”
and in column (g), enter the amount of the excluded gain as a
negative number. See the Instructions for Form 8949,
columns (f), (g), and (h). If you are completing line 18c of
Schedule D, enter as a positive number the amount of your
allowable exclusion on line 2 of the
28% Rate Gain
Worksheet, later; if you excluded 60% of the gain, enter
2
/3 of
the exclusion; if you excluded 75% of the gain, enter
1
/3 of the
exclusion; if you excluded 100% of the gain, don't enter an
amount.
Gain from Form 2439. If the estate or trust received a
Form 2439, Notice to Shareholder of Undistributed
Long-Term Capital Gains, with a gain in box 1c, part or all of
that gain (which is also included in box 1a) may be eligible for
the section 1202 exclusion. Report the total gain (box 1a) on
Schedule D, line 11. In column (a) of Form 8949, Part II, enter
the name of the corporation whose stock was sold. In column
(f), enter “Q” and in column (g), enter the amount of the
excluded gain as a negative number. See the Instructions for
Form 8949, columns (f), (g), and (h). If you are completing
line 18c of Schedule D, enter as a positive number the
amount of your allowable exclusion on line 2 of the 28% Rate
Gain Worksheet, later; if you excluded 60% of the gain, enter
2
/3 of the exclusion; if you excluded 75% of the gain, enter
1
/3
of the exclusion; if you excluded 100% of the gain, don't enter
an amount.
Gain from an installment sale of QSB stock. If all
payments aren't received in the year of sale, a sale of QSB
stock that isn't traded on an established securities market is
generally treated as an installment sale and is reported on
Form 6252. Part or all of any gain from the sale that is
reported on Form 6252 for the current year may be eligible for
the section 1202 exclusion. Report the long-term gain from
Form 6252 on Schedule D, line 11. In column (a) of Form
8949, Part II, enter the name of the corporation whose stock
was sold. In column (f), enter “Q” and in column (g), enter the
amount of the allowable exclusion as a negative number. See
the Instructions for Form 8949, columns (f), (g), and (h). If you
are completing line 18c of Schedule D, enter as a positive
number the amount of your allowable exclusion for the year
on line 2 of the 28% Rate Gain Worksheet, later; if you
excluded 60% of the gain, enter
2
/3 of the exclusion; if you
excluded 75% of the gain, enter
1
/3 of the exclusion; if you
excluded 100% of the gain, don't enter an amount.
Alternative minimum tax. Enter 7% of the estate's or
trust's allowable exclusion for the year on line 8 of Schedule I
(Form 1041), Alternative Minimum Tax—Estates and Trusts.
However, if the estate or trust qualifies for the 100%
exclusion, leave line 8 of Schedule I (Form 1041) blank.
Rollover of gain from QSB stock. If the estate or trust held
QSB stock (as defined earlier) for more than 6 months, it may
elect to postpone gain if it purchased other QSB stock during
the 60-day period that began on the date of the sale.
The estate or trust must recognize gain to the extent the
sale proceeds exceed the cost of the replacement stock.
Reduce the basis of the replacement stock by any postponed
gain.
The estate or trust must make the election no later than
the due date (including extensions) for filing Form 1041 for
the tax year in which the stock was sold. If the original Form
1041 was filed on time, the election may be made on an
amended return filed no later than 6 months after the due
date of the original return (excluding extensions). Write “Filed
pursuant to section 301.9100-2” at the top of the amended
return, and file it at the same address used for the original
Form 1041.
How to report. To make the election, report the sale on
Part I or Part II of Form 8949 (depending on how long the
estate or trust owned the stock), as it would be reported if the
election wasn't made. Then, enter “R” in column (f) and the
amount of the postponed gain from the section 1045 rollover
as a negative number in column (g). Put it in parentheses to
2023 Instructions for Schedule D (Form 1041)
-5-