How to Report Realized Gains on Your Taxes
Realized gains are profits obtained from selling a financial asset. These assets can include anything from a stock or bond to a piece of real estate. With few exceptions, such as certain tax-exempt retirement plans, a realized gain is reportable to the IRS as income and taxable as such. Reporting is simple, though, requiring a single form and information covering both the purchase and sale of the property. With this information in hand, the IRS can then apply the capital gains tax to your realized gains in order to collect its share of the profits.
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Instructions
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Obtain a Form 1040 Schedule D, “Capital Gains and Losses” to report your realized gains to the IRS. You can get the form from your regional IRS office by calling the number listed on your 1040 instruction book and requesting that one be mailed to you.
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Place your name in the space provided at the top of the form. If filing jointly, then place both your name and the name of your spouse into the slot.
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Describe the property or financial instrument sold for a capital gain in box (a). Keep the description short but accurate -- for example, 1,000 shares IBM.
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List the date that you purchased or received the property in box (b) of the schedule, and list the date of the sale of the property in box (c).
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List the sales price of the property in box (d) of the schedule. Include any commissions price for selling the property with the sales price. List the purchase price in box (e). If the property was a gift, then use the market price of the property when bought for the purchase price; if the purchase date is unknown, list the market price of the property when received by you.
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List the realized gain or loss from the sale of the property in box (f) of the form. The gain or loss is the difference between the cost in box (e) and the sales price in box (d).
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References
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