SCHEDULE D

CAPITAL GAINS AND LOSSES

The sale or exchange of a capital asset is reported on Schedule D as Capital Gain transaction. Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset.
⦁ The sale or exchange of a capital asset not reported on another form or schedule.
⦁ Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit.
⦁ Capital gain distributions not reported directly on Form 1040 (or effectively connected capital gain distributions not reported directly on Form 1040-NR).
⦁ Nonbusiness bad debts.
Form 1099-B

Types of Terms
Short Term: The holding period for short-term capital gains and losses is 1 year or less.
Long Term: The holding period for long-term capital gains and losses is more than 1 year.


Conceptual Points:
Purchase/Acquisition Date – It is the date when the stocks or bonds are purchased.
Date or sold or disposed – The date when the stocks or bonds are sold.
Proceeds Amount – the amount of money received from a particular sale or event:
Cost basis amount – Cost basis means the at-cost purchase price of an asset, including the incidental expenses, which is used to calculate tax arising from the gain or loss of an asset due to differences between the cost and current market price.
Wash Sales – The wash-sale rule is an Internal Revenue Service (IRS) regulation that prevents a taxpayer from taking a tax deduction for a security sold in a wash sale. Wash sales occur when you sale or otherwise dispose of stock or securities (including a contract or option to acquire or sell stock or securities) at a loss and, within 30 days before or after the sale or disposition.


Form 8949
The IRS has substantially revised Form 1099-B to facilitate this cost basis reporting. The IRS has also substantially revised Schedule D and created a new Form 8949.
Investment sales transaction will fall into one of three categories:
⦁ Sales of covered securities for which cost basis is provided
⦁ Sales of non-covered securities for which no cost basis is provided on the 1099-B;
⦁ Sales of investments assets for which no 1099-B is received
Covered security – Covered security, in tax context, it refers to investment securities for which a broker is required to report the cost basis to the Internal Revenue Service and to the owner.
Non-covered Security – A non-covered security is any security that is not a covered security.


Short Term
⦁ Covered Transactions
⦁ Non-covered transactions
⦁ No 1099- B received
Long Term
⦁ Covered Transactions
⦁ Non-covered transactions
⦁ No 1099- B received

Schedule D

Leave a Comment

Your email address will not be published. Required fields are marked *