Last Updated : January 14, 2009
  AutoEfile Home  Sitemap  Contact us   Print this page  Bookmark this page
Call for Support : 732.606.4476 7326988881 - SUPPORT
Schedule D

Schedule D

Capital Gains And Losses

Purpose of the Form:
Use Schedule D (Form 1040) to report the following:

  • The sale or exchange of a capital asset not reported on another form or schedule.
  • Gains form involuntary conversions of capital assets (other than casualty or theft) of capital assets not held for business or profit.
  • Capital Gain Distributions not reported directly on Form 1040 line 13 or Form 1040NR line 14.
  • Nonbusiness bad debts.

The other forms which you might have to file with Schedule D include Form 4797, Form 4684, Form 6781, Form 8824 etc.

Capital Asset:
Most property owned and used for personal purposes, pleasure, or investment is a capital Asset. For example, a house, Furniture , car and stock .
For more details regarding asset to be treated as a capital asset or not refer schedule D instructions.

Short term or Long Term:
An asset to be treated as short term or long term depends upon how long you held or owned the property. The holding period for short-term capital Gains and losses is 1 year or less. The holding period for long term capital gain or losses is more than 1 year. Holding period is counted from the date after you received the property and include the date you disposed of the property.
For more details refer instructions.

Sale of your home:
The taxpayer need not report the gain from sale or exchange of main home unless such gain is more than the exclusion amount. Most of the taxpayers can exclude unto $250000 of gain if your filing status is other than married filing jointly but for married filing jointly return the gain can be excluded up to $500000.
 
For computing maximum amount of exclusion you can use schedule D wkst- 3 sale of your home given in our package.

Even in certain cases if the sale of home was due to change in place of employment, health or certain unforeseen circumstances then the maximum amount of gain that can be excluded is reduced. For more details refer publication 523.

Wash Sales:
A wash sale occurs when you sell or otherwise dispose of the stock or securities (including a contract or a option to acquire or sell stock or securities) at a loss and within 30 days before or after the sale or disposition , you :

  • Buy substantially identical stock or securities.
  • Acquire substantially identical stock or securities in a fully taxable trade, or
  • Enter in to a contract or option to acquire substantially identical stock or securities.

For deduction of loss the transaction must have been done in ordinary course as a dealer.
For more details, refer publication 550.

Short Sales:
A short sale is a contract to sell property you borrowed for delivery to a buyer. At a later date, you either buy substantially identical property and deliver it to the lender or deliver property that you held but did not want to transfer at the time of the sale. Usually, its holding period is the amount of time you actually held the property eventually delivered to the lender to close the short sale.
For information to decide whether such sale is short term or long term refer instructions.

Installment Sales:
If the taxpayer sold property (other than publicly traded stocks or securities) at a gain and he or she will receive a payment in a tax year after the year of sale, the sale on the installment method must be reported unless the taxpayer elects not to.  Use Form 6252 to report the sale on the installment method.

For treatment and reporting of capital gains and losses on various other items refer instructions of schedule D.

Part I – Short Term Capital Gains and Losses

Line 1 – Reporting of short term transactions
On line 1 the user has to enter manually the various details of his transactions from which the gain or loss has arisen due to short term holding of property, stock or securities.

Line 1a: Description of the property
The taxpayer should enter details of each transaction on a separate line. For general property, equipment etc the taxpayer can use name of the property for description but for dealer in stock or securities he can use the no. of stock or block of stock or security as descriptions and might use abbreviations also. Like for example, he can write as 2550 shares of PQR ltd., 100 bonds of XYZ ltd. etc.

Line 1b: Date Acquired
Enter on this column the date you acquired the asset. Use the trade date for stocks and bonds traded on an exchange. For stock or other property sold short, enter the date the stock or property was delivered to the broker or lender to close the short sale.
However Inherited property is always considered as long term.
Here date format is specified as MM/DD/YYYY. Only enter the numeric portion of dates, no need to type slashes.

Line 1c: Date Sold
Enter in this column the date you sold the asset. Use the trade date for stocks and bonds traded on an exchange. For stock or other property sold short, enter the date you sold the stock or property you borrowed to open the short sale transaction.
Here date format is specified as MM/DD/YYYY. Only enter the numeric portion of dates, no need to type slashes.

T S J column:
Use this column to indicate the owner of each item.
Enter T for taxpayer, S for spouse or J for jointly holding of the asset sold.

Line 1d –Sale Price
Enter in this column either the gross sales price or the net sales price from the sale.
If the client sold stocks or bonds and received Form 1099-B (or substitute statement) from the broker that shows gross sales price, type that amount. But if Form 1099-B (or substitute statement) indicates that gross proceeds minus commissions and option premiums were reported to the IRS, type that net amount. If you enter the net amount in column d, do not include the commissions and option premiums from the sale in column e.

Line 1e– Costs or Basis
Enter in this column cost of the property .In general, the cost or other basis is the cost of the property plus purchase commissions and improvements, minus depreciation, amortization, and depletion.

If you inherited the property, got it as a gift, or received it in a tax free exchange, involuntary conversion or wash sale of stock actual cost may not be used as the basis.if actual cost is not used as basis you need to attach an explanation.

Increase the cost or other basis by any expense of sale, such as broker’s fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). For more information refer instructions of schedule D and publication 551, publication 564, publication 544, publication 550.

Line 1f – Gain or Loss
This line is automatically calculated in our package. Here gain or loss is the difference between the amount entered on column d and column e for each line taken separately.
On this line loss is displayed as a negative number.

Line 3 – Total short term sale price amounts
This line is automatically calculated in our package.
On this line in inner box addition of all lines of column d (total sale price amounts) is done and entered.
On this line in outer box addition of all lines of column f (total Gain / Loss amounts) is done and entered.

Line 4 – Short term capital gains or loss from Form 6252, 4684, 6781, 8824
This line is automatically calculated in our package. If any of these Forms are added in the list then value flows on this box from specific lines given below. If none of these forms are added then the user has to manually enter the gain or loss amount.

  • For Form 6252: If checkbox for schedule D and checkbox for short term is checked on form 6252 then sum from Form 6252 line 26 and line 37 flows here. If checkbox for schedule D and checkbox for long term is checked on Form 6252 then sum from Form 6252 line 25 and line 36 flows here.
  • For Form 8824: If checkbox for schedule D and checkbox for short term is checked on Form 8824 line 14 then value from Form 8824 line 14 flows here. If checkbox for schedule D and checkbox for short term is checked on Form 8824 line 22 then value from Form 8824 line 22 flows here.
  • For Form 4684: If checkbox for short term is checked on Form 4684 line 14 then value From Form 4684 line 15 flows here.
  • For form 6781: Here net amount that flows is sum of line 8 and line 13a (f) less Line 11a (h) from Form 6781.

Line 5 – Short term capital gains or loss from Partnerships, S Corporations, Estates And Trusts

This line is automatically calculated in our package. If any of these Forms are added in the list then value flows on this box from specific lines given below. If none of these forms are added then the user has to manually enter the gain or loss amount.

  • Schedule K-1P/S: value flows here from line 8 of the schedule.
  • Schedule K-1ET: value flows here from line 3 of the schedule.

Line 6 – Short Term Capital Loss Carryover
This line is automatically calculated in our package. If schedule D wkst -3 capital loss carryover wkst is added in the list then value flows from line 10 of the worksheet.

Line 7 –Net Short Term Capital Gain or Loss
This line is automatically calculated in our package. On this line sum of line 1 to line 6 column f is entered by the package.

 

Part II– Long Term Capital Gains and Losses

Line 8 – Reporting of Long term transactions
On line 8 the user has to enter manually the various details of his transactions from which the gain or loss has arisen due to long term holding of property, stock or securities.

Line 8a: Description of the property
The taxpayer should enter details of each transaction on a separate line. For general property, equipment etc the taxpayer can use name of the property for description but for dealer in stock or securities he can use the no. of stock or block of stock or security as descriptions and might use abbreviations also. Like for example, he can write as 2550 shares of PQR ltd., 100 bonds of XYZ ltd. etc.

Line 8b: Date Acquired
Enter on this column the date you acquired the asset. Use the trade date for stocks and bonds traded on an exchange. For stock or other property sold short, enter the date the stock or property was delivered to the broker or lender to close the short sale. However inherited property is always considered as long term. Here date format is specified as MM/DD/YYYY. Only enter the numeric portion of dates, no need to type slashes.

Line 8c: Date Sold
Enter in this column the date you sold the asset. Use the trade date for stocks and bonds traded on an exchange. For stock or other property sold short, enter the date you sold the stock or property you borrowed to open the short sale transaction. Here date format is specified as MM/DD/YYYY. Only enter the numeric portion of dates, no need to type slashes.

T S J column:
Use this column to indicate the owner of each item. Enter T for taxpayer, S for spouse or J for jointly holding of the asset sold.

28% Rate Gain:
Check the checkbox for a particular asset if the maximum tax rate on this asset is 28%. This information is helpful for calculation of gain to be taxed at lower rate of 28% on the Schedule D wkst-2.

Line 8d –Sale Price
Enter in this column either the gross sales price or the net sales price from the sale. If the client sold stocks or bonds and received Form 1099-B (or substitute statement) from the broker that shows gross sales price, type that amount. But if Form 1099-B (or substitute statement) indicates that gross proceeds minus commissions and option premiums were reported to the IRS, type that net amount. If you enter the net amount in column d, do not include the commissions and option premiums from the sale in column e.

Line 8e– Costs or Basis
Enter in this column cost of the property .In general, the cost or other basis is the cost of the property plus purchase commissions and improvements, minus depreciation, amortization, and depletion.

If you inherited the property, got it as a gift, or received it in a tax free exchange, involuntary conversion or wash sale of stock actual cost may not be used as the basis. If actual cost is not used as basis you need to attach an explanation.

Increase the cost or other basis by any expense of sale, such as broker’s fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). For more information refer instructions of schedule D and publication 551, publication 564, publication 544, publication 550.

Line 8f – Gain or Loss
This line is automatically calculated in our package. Here gain or loss is the difference between the amount entered on column d and column e for each line taken separately. On this line loss is displayed as a negative number.

Line 10 – Total Long term sale price amounts
This line is automatically calculated in our package. On this line in inner box addition of all lines of column d (total sale price amounts) is done and entered. On this line in outer box addition of all lines of column f (total Gain / Loss amounts) is done and entered.

Line 11 – Long term capital gains or loss from Form 6252, 4684, 6781, 8824
This line is automatically calculated in our package. If any of these Forms are added in the list then value flows on this box from specific lines given below. If none of these forms are added then the user has to manually enter the gain or loss amount.

  • For form 4797: On this line value flows from Form 4797 line 9.
  • For Form 2439: On this line value flows from Form 2439 line 1.
  • For Form 6252: If checkbox for schedule D and checkbox for long term is checked on Form 6252 then sum from Form 6252 line 26 and line 37 flows here. If checkbox for schedule D and checkbox for long term is checked on Form 6252 then sum from Form 6252 line 25 and line 36 flows here.
  • For Form 8824: If checkbox for schedule D and checkbox for long term is checked on Form 8824 line 14 then value from Form 8824 line 14 flows here. If checkbox for schedule D and checkbox for long term is checked on Form 8824 line 22 then value from Form 8824 line 22 flows here.
  • For Form 4684: If checkbox for long term is checked on Form 4684 line 14 then value From Form 4684 line 15 flows here.
  • For form 6781: Here net amount that flows is sum of line 8 and line 13b (f) less Line 11b (h) from Form 6781.

Line 12 – Long term capital gains or loss from Partnerships, S Corporations, Esates and Trusts

This line is automatically calculated in our package. If any of these Forms are added in the list then value flows on this box from specific lines given below. If none of these forms are added then the user has to manually enter the gain or loss amount.

  • Schedule K-1P/S: value flows here from line 9a of the schedule.
  • Schedule K-1ET: value flows here from line 4a of the schedule.

Line 13 – Capital Gain Distributions
If the client has capital gain distributions reported on Form 1099-DIV, box 2a, enter that amount on the Schedule B .The package carries that amount to this line of Schedule D. However, if the taxpayer is not required to file Schedule D, The package carries the capital gain distributions to Form 1040, line 13, or Form 1040A, line 10, and selects the check box labeled Schedule D not required.

The taxpayer may not be required to file Schedule D if no amounts are shown in boxes 2c-2d of Form 1099-DIV and the taxpayer's only capital gains and losses are capital gain distributions. For more information see IRS instructions for Forms 1040 and 1040A.

If the client has capital gain distributions from Form 8814, Parents’ Election to Report Child’s Interest and Dividends if the Child was Under Age 14 as of January 2, 2006, line 10 of Form 8814 flows on the inner box of this line.

Line 14 – Long Term Capital Loss Carryover
This line is automatically calculated in our package. If schedule D wkst -3 capital loss carryover wkst is added in the list then value flows from line 15 of the worksheet.

Line 15 –Net Long Term Capital Gain or Loss
This line is automatically calculated in our package. On this line sum of line 8 to Line 14 column f is entered by the package.

Part III– Summary

Line 16 – Net Capital Gain or Loss
This line is automatically calculated in our package. Line 7 and line 15 from Schedule D pg-1 are combined and entered on this line.

Line 17 – Are lines 15 & 16 Both Gains
The checkboxes on this line are automatically checked by the package. Here comparison of line 15 and line 16 of schedule D is done by the package and checkboxes are checked.

Line 18 – Amount of 28% rate Gain
This line is automatically calculated in our package. If on line 17 checkbox yes is checked then only value flows here from schedule D wkst-2 28% gain wkst line 7.

Line 19 – Unrecaptured section 1250 Gain
This line is automatically calculated in our package. If on line 17 checkbox yes is checked then only value flows here from schedule D wkst-2 Unrecaptured Section 1250 gain Wkst line 18.

Line 20 – Are lines 18 & 19 both Zero?
The checkboxes on this line are automatically checked by the package. Here comparison of line 18 and line 19 of schedule D is done by the package and checkboxes are checked.

Based on the checkboxes it is decided whether which wkst is used to figure the tax on these gains.

  • If checkbox Yes is checked then schedule D wkst-4 Qualified Dividends and capital Gains wkst is used to figure the tax which flows from wkst -4 line 19 on Form 1040 Line 44 (Or Form 1040NR line 41).
  • If checkbox No  is checked then schedule D wkst-1 Schedule D tax wkst is used to figure the tax which flows from wkst -1 line 37 on Form 1040 Line 44 (Or Form 1040NR line 41).

Line 21 – If line 16 is a loss?
If line 16 is a loss, the package enters the smaller of the amount of loss or $3000 ($1500 if married filing separately). This is the maximum amount of capital loss deduction the client can claim for this year. The package carries this amount to Form 1040, line 13.

If the client has a total net loss on line 16 of Schedule D that is more than the yearly limit on capital loss deductions, the client can carry over the unused part to the next year and treat it as if it were incurred in that next year. If part of the loss is still unused, it can be carried over to later years until it is completely used up.

The package calculates the amount to carry over to next year on Schedule D Wkt -3 capital loss carryover wkst.

Line 22 – Do you have Qualified dividends on Form 1040 line 9b or Form 1040NR Line 10b?
The checkboxes on this line are automatically checked by the package. The checkbox yes will get checked if on Form 1040 line 9b is greater than zero (or on Form 1040NR line 10b is greater than zero.

Supported States

Supported States

Federal CA CO CT GA
IL MD MI NC NM NJ
NY OH PA SC VT
     

Authorized IRS E-file Provider

Checkout with PayPal - FAST, EASY and SECURE