How to Determine Long-Term Capital Gain
As a capital gain is a form of income, you must generally pay tax on your gains. However, your tax rate on those gains can vary depending on how long you have held the capital asset. If you sell an asset more than a year after you bought it, you are entitled to use the long-term capital gains rates. For shorter holding periods, you must treat the gain as a short-term capital gain. As of 2011, the top rate for long-term capital gains was just 15 percent, far below the highest federal income tax rate of 35 percent.
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Instructions
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Get a copy of IRS Form 1040 Schedule D and the form's instructions. You can get IRS forms from the IRS website or from your tax professional.
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Gather your investment transaction records for the year. If you don't keep your own records, your financial services firm will likely have a copy. You may also be able to locate this information on your monthly or annual statements.
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Highlight all of your transactions with a holding period of longer than one year. A one-year holding period is still considered a short-term transaction, so only work with sales you made more than one year after you made a purchase.
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Enter all of the transaction information as requested on Part II of Schedule D. List a description of the asset, the date acquired, the date sold, the sales price and the cost basis. For sales price, list the amount you actually received after any costs. Similarly, for cost basis include any fees or commissions you incurred to purchase the asset.
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Subtract the net cost from the net sales price for all of your listed assets. This will show you the gain or loss you have from each transaction.
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Add any gains you have from other tax forms as instructed on Schedule D. This includes distributions from partnerships and any other type of long-term capital gain distributions you received. Also, subtract any long-term loss carryover you have from previous tax years.
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Calculate your net long-term capital gain. After adding together all of your individual gains as instructed on Schedule D, you will be left with your net long-term capital gain on line 15.
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