If a mutual fund you own invests in qualified small business company stock, 50% of the gain from the sale of that stock (so called Section 1202 stock) can be excluded from your income. Rather than being taxed at the 15% long-term gain rate, this gain is taxed at 28%. . .but since only half of it is taxed, your effective rate is 14%. If your 1099 shows 1202 gain, report it in the dividend section of the interview and we'll take care of the rest.