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The 28 percent gain is the sum of collectib!es gain and Section 1202 gain (gain on the sale of small business stock}1 over the sum of collectibles loss, the net shorHerm capital loss and the amount of the long-~erm loss carried to the succeeding tax ye~r under Section 1212~b}(1}(B}. In addition to the limitations of the Section 1(h) definition, qualified dividends are not treated as adjusted net capital gain income for purposes of applying the 40 percent exclusion. 32 V,S.A. § 5811{21}(8), Reg. §1.5811{21)(B)(ii) - 3 Real Estate Exclusion (A) The 40 percent exclusion extends to all real estate that is owned more than 3 years except primary or non-primary residences. Examples of real estate the gain from the sale of which qualifies for the 40 p_ercent exclusion include the following: (1) Real estate in which a business is operated, such as a retail store, office, factory or warehouse and the parcel 2 of land on which the structure is located, (2) Real estate held for investment purposes, such as an apartment building or raw land, (3) Real estate used for farming, whether or not the owner is a farmer, including farm buildings, (4) Real estate that is logged. (B) Examples of real estate the· gain from the sale of which does not qualify the 40 percent exclusion include the following: (1) A taxpayer's primary residence, second home, camp, cottage, ski condominium or vacation property unless, under federal law, the property is not considered to be used as a home, (2) A taxpayer's timeshare in a ski condominium, (3) Land that was part of a residential parcel at the time of sale even if it was subdivided prior to sale. (C) Part-time Rental Gain from a sale of a primary or non-pr.imary residence does not qualify for the 40 percent exclusion even if the property is rented for a ·significant portion of the year. Under 1 The general rule in the case of a non-corporate taxpayer is that gross income_ does not include 50 percent of any gain from the sale or exchange of qualified small business stock. 26 U.S.C. §1202. Special rules for 2009 through 2013 provided for even more favorable tre·atment - the exclusion of 75 or 100 percent of the gain from gross income - depending on the date of acquisition. For purposes of the Vermont exclusion, since this gain ls not part of adjusted net capital gain it is not eligible for the40 percent exclusion. 2 For purposes of this regulation, 11parcel" has the same meaning as in 32 V.S.A. §4152(a)(3) wh~re it is defined as 11all contiguous land in the same ownership, together with all improvements thereon." 2