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Publication 544

Gains on Sales of Qualified Small Business Stock(p21)

If you sell qualified small business stock, you may be able to roll over your gain tax free or exclude part of the gain from your income. Qualified small business stock is stock originally issued by a qualified small business after August 10, 1993, that meets all seven tests listed in chapter 4 of Publication 550.
The election to roll over gain or to exclude part of the gain from income is not allowed to C corporations.

Rollover of gain.(p21)

You can elect to roll over a capital gain from the sale of qualified small business stock held longer than 6 months into other qualified small business stock. If you make this election, the gain from the sale generally is recognized only to the extent the amount realized is more than the cost of the replacement qualified small business stock bought within 60 days of the date of sale. You must reduce your basis in the replacement qualified small business stock by the gain not recognized.

Exclusion of gain.(p21)

You may be able to exclude from your gross income 50% of your gain from the sale or exchange of qualified small business stock you held more than 5 years. The exclusion can be up to 75% for stock acquired after February 17, 2009, and up to 100% for stock acquired after September 27, 2010, and before January 1, 2015. The exclusion can be up to 60% for certain empowerment zone business stock.
Your gain from the stock of any one issuer that is eligible for the exclusion is limited to the greater of the following amounts.

More information.(p21)

For more information on sales of small business stock, including stock held by a partnership, S corporation, regulated investment company, or common trust fund, see section 1202 of the Internal Revenue Code, and chapter 4 of Publication 550. See the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949 for information on how to report the gain.