Updated October 17, 2026. Quick answer: Code Q goes in column (f) of Form 8949 when you sold qualified small business (QSB) stock and can exclude part of the gain. You report the sale as if you were not taking the exclusion, then enter the amount of the exclusion as a negative number in column (g). Column (h) is then the taxable gain.
Foreign tax credit (Form 1116) and alternative minimum tax (Form 6251) for 2025, read line by line: Form 6251 lines 2d to 2h.
What code Q means
The column (f) table describes the situation this way: “You sold or exchanged QSB stock and can exclude part of the gain”. The instruction is “Report the sale or exchange on Form 8949 as you would if you weren’t taking the exclusion and enter the amount of the exclusion as a negative number (in parentheses) in column (g).”
The Schedule D instructions describe the exclusion itself: “Section 1202 allows you to exclude a portion of the eligible gain on the sale or exchange of QSB stock.” They add “The section 1202 exclusion applies only to QSB stock held for more than 5 years.” The qualification tests are covered on the QSBS requirements page and the holding period on the QSBS five year page.
How the IRS defines QSB stock
The Schedule D instructions say “To be QSB stock, the stock must meet all of the following tests.” Two of the tests are “It must be stock in a C corporation (that is, not S corporation stock).” and “It must have been originally issued after August 10, 1993.” Another is about the company: “A qualified small business is a domestic C corporation with total gross assets of $75 million ($50 million if the stock was issued on or before July 4, 2025) or less”. The instructions also say “For more details about limits and additional requirements that may apply, see Pub. 550 or section 1202.” The July 2025 changes are explained on the QSBS 2025 rule changes page.
How much can be excluded
The percentage depends on when you acquired the stock. The instructions give three tiers: “If you acquired the QSB stock on or before February 17, 2009, you can exclude up to 50% of the qualified gain.” “If you acquired the QSB stock after February 17, 2009, and before September 28, 2010, you can exclude up to 75% of the qualified gain.” “If you acquired the QSB stock after September 27, 2010, you can exclude up to 100% of the qualified gain.”
Those are the three main percentages the Schedule D instructions give. The same passage adds that up to 60% of the qualified gain can be excluded on certain empowerment zone business stock for gain attributable to periods on or before December 31, 2018, and that the 60% exclusion does not apply to gain attributable to periods after December 31, 2018. This page states no dollar cap, because the Form 8949 and Schedule D passages it quotes do not give one; the cap question is taken up on the QSBS cap page.
What to enter in column (g)
The Schedule D instructions give the steps: “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.” Then “enter the amount of the excluded gain as a negative number in column (g). Put it in parentheses to show it is negative.” Because column (h) combines the result with column (g), a negative number in column (g) lowers the gain that carries forward. Form 8949 boxes A to L explains how the box at the top is chosen.
Gain can also arrive on a form instead of a brokerage statement. For example, “If you received a Form 1099-DIV 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.” The instruction is “Report the total gain (box 2a) on Schedule D, line 13.” For an installment sale, the Form 8949 table sends you onward: “However, if the transaction is reported as an installment sale, see Gain from an Installment Sale of QSB Stock in the Instructions for Schedule D (Form 1040).”
Where it goes next
Column (h) is figured one row at a time. The instructions say “Figure gain (or loss) on each row. First, subtract the cost or other basis in column (e) from the proceeds (sales price) in column (d). Then take into account any adjustments in column (g).” The form’s own column heading says the same: “Subtract column (e) from column (d) and combine the result with column (g).”
The rows then roll up to Schedule D. The instructions say “Include on your Schedule D the totals from all your Parts I and II.” and “Complete Form 8949 before you complete lines 1b, 2, 3, 8b, 9, or 10 of Schedule D.” The overview is on Form 8949 instructions.
Edition and line numbers
This page reads the 2025 Form 8949 and its 2025 instructions, along with the 2025 Instructions for Schedule D (Form 1040), the current files irs.gov served on 2026-10-17. They are the forms for the tax year 2025 return, filed in 2026. Check the tax year printed on the form you are filling in and use the column letters and codes on that year’s form, because a different year’s form can word its columns and codes differently.
Common mistakes
- Reducing the proceeds or basis for the exclusion. The instructions say to “Report the sale or exchange on Form 8949 as you would if you weren’t taking the exclusion”, and the exclusion belongs in column (g).
- Entering the exclusion as a positive number. The instruction is to enter it “as a negative number (in parentheses) in column (g).”
- Skipping the installment rule. The instructions say “However, if the transaction is reported as an installment sale, see Gain from an Installment Sale of QSB Stock” before filling in column (g).
Related: QSBS qualification requirements, QSBS five year holding period, QSBS 2025 rule changes, QSBS cap, and Schedule D.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Talk to an advisor about selling business stock
For U.S. investors with $250,000 or more in investable assets. WiserAdvisor is an independent service matching you with 2 to 3 vetted advisers. Its form asks for your ZIP code and answers to a few questions; a match is not guaranteed.
Free to request, with no obligation to hire. By submitting, you consent to calls, texts and emails from WiserAdvisor and up to three advisers. Advisers pay for introductions.
Clear Money Guide may earn a referral payment for a qualifying completed form. An introduction is not a Clear Money Guide recommendation.
Opens on WiserAdvisor’s site in a new tab.
Get a free guide to stock sale taxes
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- Instructions for Form 8949 (2025): https://www.irs.gov/pub/irs-pdf/i8949.pdf
- Form 8949 (2025): https://www.irs.gov/pub/irs-pdf/f8949.pdf
- Instructions for Schedule D (Form 1040) (2025): https://www.irs.gov/pub/irs-pdf/i1040sd.pdf
Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.