How to Report Stock Options on Schedule D

An accurate Schedule D will properly calculate your tax liability.

The tax form Schedule D is used to report capital gains. Capital gains are any profit you made on an investment not related to your standard income. This can include all investments (401(k)s, IRAs, stocks, mutual funds) and all property you sold. You must accurately fill out this form in order to figure your tax liability. Usually you'll need 1098 interest and gains forms from all of your investment companies.

Things You'll Need

• 1098 interest statements
• 1099 DIV statements (stocks)
• Earnings statements

Instructions

1. Acquire a blank Schedule D. This is the form used only for stocks that you sold in the previous year. It is for capital gains and losses only. See Resource 1 for a blank Schedule D.

2. Collect all documents related to the sale of your stocks. You should have purchase agreements from your stock broker or investment company. These documents will show when the stock was acquired, its initial purchase price and the sale price.

3. Arrange these sale agreements into two categories: assets held more than one year and assets held less than one year. These must be filed in two separate sections on the Schedule D.

4. Fill out Part I of Schedule D. This is for assets you held and sold within one year. You must have the owning company name (or NYSE stock moniker), the date you bought the shares and the date you sold them (1a and 1b). Write the price at which you sold the assets (1c). Fill in the amount at which you originally acquired the assets (1e).

5. Report the capital gain or loss on line 1f. Simply subtract the original purchase price from the final sale price. Repeat Steps 4 and 5 for all assets sold that were held less than one year.

6. Add together the sale prices for all assets held less than one year. Report this figure on Line 3d. Next, calculate your total capital gain or loss and report this figure on Line 7f. (Skip Lines four through six if you do not own a business.)

7. Repeat Steps four through six for Part II on Schedule D. This is for assets held longer than one year. Report the final capital gain or loss on Line 15f.

8. Add together lines 7f and 15f. If you report a net gain, you must report this on your standard 1040 (for non-self-employed individuals) on Line 13. This will be figured in when calculating total tax liability.

9. Hire an accountant to double-check your paperwork, especially if you have multiple assets in both Parts I and II.

References

• IRS: Instructions, Schedule D

Resources

• Blank Schedule D