Desktop: Schedule D (Form 1040) – Support

When a taxpayer sells a capital asset, i.e., property owned and used for personal or investment purposes, the sale will result in either a capital gain or a capital loss and is generally reported on Schedule D (Form 1040).

What items are reported on Schedule D?

Some items of income or loss are reported directly on Schedule D:

The aggregated totals for all short-term and long-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which there are no adjustments. (If not aggregated, they are reported on Form 8949.)

Many items of income or loss flow into Schedule D from the following forms, schedules, and worksheets:

Form 1099-DIV Box 2a, Total capital gain distributions (long-term)
Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains
Form 4684, Casualties and Thefts
Form 4797, Sales of Business Property
Form 6252, Installment Sale Income
Form 6781, Gains and Losses From Section 1256 Contracts and Straddles
Form 8824, Like-Kind Exchanges
Form 8949, Sales and other Dispositions of Capital Assets
Schedules K-1 from an estate or trust (Form 1041), a partnership (Form 1065), or an S corporation (Form 1120-S)
Capital Loss Carryover Worksheet in the Schedule D instructions
28% Rate Gain Worksheet in the Schedule D instructions
Unrecaptured Section 1250 Gain Worksheet in the Schedule D instructions

When is Schedule D not required?

Schedule D is not required when the only capital gain distribution reported in the tax return is on Form 1099-DIV box 2a, and boxes 2b, 2c, and 2d are zero. In that case, the check box on Form 1040 Line 7 indicating that Schedule D isn't required will be checked and Schedule D won't print with the print options. It will still be available for printing under View Results however, if desired.

Entering a capital gain/loss transaction in TaxSlayer Pro

To enter a capital gain/loss transaction in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:

Income
Capital Gain/Loss (Sch D) - Click New. This brings up the menu for entering a transaction on Form 8949, Sales and other Dispositions of Capital Assets.

Description of Property - Enter a description, e.g. if real property its address, or if stock the ticker symbol and number of shares.
Form 1099-B Type - This drop down menu corresponds to check boxes A, B, and C on Form 8949 Part I or D, E, and F on Form 8949 Part II.

Form 1099-B Cost Basis Reported to the IRS - Choose this if 1099-B Box 12 is checked, or if the taxpayer has a brokerage statement that indicates the basis was reported to the IRS.
Form 1099-B Cost Basis NOT Reported to the IRS - Choose this if 1099-B Box 12 is not checked, or if the taxpayer has a brokerage statement that indicates the basis was not reported to the IRS.
Form 1099-B Not Received - Choose this if this transaction was not reported on Form 1099-B.

Date Acquired - Enter the date the asset was acquired. If there are multiple acquisition dates, select the drop down menu to the right of the entry field and choose the correct option:

Various - Short-Term - Choose this if you are aggregating multiple transactions purchased in the same year on different dates but sold on the same day.
Various - Long-Term - Choose this if you are aggregating multiple transactions purchased in prior years but sold on the same day.
Inherited - Long-Term - Choose this if the property was acquired by inheritance, regardless of how long the taxpayer held the property.

Date Sold - Enter the date the asset was sold or otherwise disposed of. There are certain scenarios where a specific date isn't entered that you can choose from the drop down menu to the right of the entry field:

Bankrupt - Short Term - Choose this if the taxpayer is writing off nonbusiness bad debt that has become totally worthless. Be sure to attach a statement to the return about the debt being written off. (See here for more information about this statement.)
Worthless - Short Term - Choose this for stocks, stock rights, and bonds that have become worthless or that have been abandoned and were acquired in the same year. (Worthless securities are treated as if sold on the last day of the year.)
Deferred QOF - Short-Term - Choose this if reporting the deferral of the capital gain from a QOF acquired in the same year.
Worthless - Long Term - Choose this for stocks, stock rights, and bonds that have become worthless or that have been abandoned and were acquired in a prior year. (Worthless securities are treated as if sold on the last day of the year.)
Deferred QOF - Short-Term - Choose this if reporting the deferral of the capital gain from a QOF acquired in a prior year.
Various - Short-Term - Choose this when aggregating multiple short-term transactions sold at various dates during the year. Note that you will not be allowed to electronically file the return if you make this choice.
Various - Long-Term - Choose this when aggregating multiple long-term transactions sold at various dates during the year. Note that you will not be allowed to electronically file the return if you make this choice.

Sales Price - Enter the selling price, or select the drop down menu and choose one of the options if there is no sales price:

Expired - Choose this if the taxpayer purchased an option that expired.
Worthless - Choose this if you chose one of the worthless options for the date sold.

Cost - Enter the cost basis, or select the drop down box if there is no cost basis:

Expired - Choose this if an option that was written expired.

Note that the drop down menus for any of the last four items in this menu can be opened by pressing F8 on your keyboard rather than navigating with the mouse.

Wash Sales

Wash sales require special treatment. See here for more information about entering a wash sale in TaxSlayer Pro.

Editing or Deleting an entry

To edit or delete a Schedule D transaction, from the Main Menu of the tax return (Form 1040) select:

Income
Capital Gain/Loss (Sch D) - Select the entry, then click the Edit or Delete button as needed.

How Tax is Calculated

If the taxpayer has a net capital gain, the amount by which the net long–term capital gain for the year is more than the net short–term capital loss may be taxed at a lower rate than ordinary income tax rates.

If capital losses exceed capital gains, the amount of the loss that can be claimed is the lesser of $3,000 ($1,500 if married filing separately) or the total net loss as shown on Form 1040, Schedule D. If the net capital loss is more than this limit, it can be carried forward.

Because of the difference in the taxability of capital gains and losses in certain situations, the tax on a return that includes these items cannot be determined simply by looking at the tax tables. To see the impact of capital gains and losses on the tax calculation in a return, from the Main Menu of the tax return (Form 1040) select: