How to Fill Out a Schedule D Tax Form
A Schedule D form is used for the reporting of short- and long-term capital gains and losses. It is usually filled out using tax preparation software by professional preparers, but with a little organization and some detailed instructions, you can fill this form out manually. The form is divided into three parts: one for short-term capital gains and losses, one for long-term capital gains and losses, and the summary of the totals, which are transferred to the taxpayer's 1040 form.
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Things You'll Need
- All broker statements
- All records of any capital asset you owned and have sold
- Schedule D worksheets and forms
- Schedule D instructions
- 28 Percent Rate Gain Worksheet
- Unrecaptured Section 1250 Gain Worksheet
- Qualified Dividends and Capital Gain Tax Worksheet
Instructions
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Gather all the brokers' statements and all documents relating to the sale of any capital assets. This would include stocks, houses and any objects used for investment purposes. One of the misconceptions about the Schedule D is that it pertains only to stocks or investments. This form, though, is for the reporting of the sale of any capital asset. The Internal Revenue Services defines a capital asset as "almost everything you own and use for personal purposes, pleasure or investment." If you have sold any asset answering this description, a Schedule D needs to be completed.
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Separate the capital assets sold by the amount of time you held on to them: either short term or long term. Short-term assets are defined as assets held for less than one year. Consequently, assets held for one year or longer are called long term. Some brokers' statements will make this distinction with separate sections for short and long term on their statements. If you have any assets other than those that come with convenient statements, separate them as well by amount of time you held them. Use this information to complete Part One of the Schedule D.
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Enter the information from the sales of your short-term assets into Part One of the Schedule D. There are six columns on the first line. Column A is for the description of the property sold. If it is stock, enter in the number of shares and the name of the stock sold. If this is a house, enter the legal description of the property, including the address of the property. If this is another type of asset, use a reasonable description.
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Part One's Column B asks for the date the asset was acquired. If the sale involved shares of stock acquired over a period of time, the IRS allows the use of the term "various" in this section as long as all acquisitions occurred in less than one year from the date of the sale. Column C is for the date sold. Column D asks for the amount that the asset was sold for. Column E asks for the cost (or other basis) of the purchase of these assets. There are specific rules for what may or may not count in the basis of an asset, depending on the type of asset it is. For instance, you may add sales commissions or brokers' fees to the basis for sales of stocks. Finally, Column F is the result of column E being subtracted from Column D for either a gain or a loss.
The rest of the Part One involves the transfer of totals from Form D-1, which is the form used when you have more than five transactions involving capital gains or losses. Line 7 of the form is the total of short-term capital gains or losses.
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Complete Part Two of the form for long-term capital gains and losses. The second part of this form is almost identical to Part One in terms of information about the sales. It also asks for gains and losses for corporations, partnerships and estates and trusts, as shown on other forms in your tax return.
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Complete Part Three of the form. This is a simple calculation of the short-term and long-term gains and losses. If the sum of lines 7 and 15 is a positive number, this is your capital gain. If it is a negative number, this is your capital loss.
If you have a capital gain, you will need to use the 28% Rate Gain Worksheet (see Page D-8 of the instructions for Schedule D). If you have a capital loss, remember that the maximum amount of a capital loss that can be claimed is $3,000. If this loss is greater, you can carry it over to following years and use it to offset future capital gains.
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