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Schedule D and Form 8949

Tax Year 2012

Capital Gains and Losses
This form is used to report any of the following transactions that occurred during the tax year:
  • The sale or exchange of a Capital Asset not reported on another form or schedule,
  • Gains from involuntary conversions, other than from casualty or theft, of Capital Assets not held for business or profit,
  • Capital gain distributions that cannot be reported on the Form 1099-DIV worksheet, and/or 
  • Nonbusiness bad debts.

Tip: Customers of GainsKeeper® may use the link in the upper left corner of the Schedule D worksheet to import up to 1000 short term transactions and 1000 long term transactions from their GainsKeeper account.

See the IRS 2011 Instructions for Schedule D and Form 8949, the IRS 2011 Form 8949, IRS Pub. 544, Sales and Other Dispositions of Assets, and IRS Pub. 550, Investment Income and Expenses for more information and details.

Information about the Sale of Investments
Owner Property Owner Identification
Select whether the property belongs or belonged to the taxpayer (T) or spouse (S) from the dropdown list.
Form 1099-B Info Dropdown List
Select from the dropdown lis the following information about Form 1099-B:
  • The Owner received a Form 1099-B and Box 3 shows the basis of the property.
  • The Owner received a Form 1099-B and Box 3 is blank.
  • The Owner did not receive a Form 1099-B for this property.

Checkbox
Check this box if the taxpayer received a Form 1099-B and the amount in Box 8 is incorrect.

Reported Cost Enter the amount from Box 3 of the Form 1099-B, or if the taxpayer did not receive a Form 1099-B, enter the original cost of the property or the taxpayer's basis in the property.

 

Special Entry for Wash Sales
Enter the cost or basis of the property for the first entry.
Enter 0.00 as the cost/basis for the second entry.

 

Cost and Basis defined
Generally, the taxpayer reports the original cost of the property including commissions and other costs of the purchase and sale. If the taxpayer did not purchase the property, or if the basis of the property is no longer the original cost of the property because of improvements, depreciation, amortization, and/or depletion, the taxpayer must report the basis (defined below) of the property on the date the property is sold.

 

Basis Defined
Basis is generally defined as the taxpayer's current cost in the property after certain adjustments have been made to the original cost. The following rules apply if the taxpayer did not purchase the property or if the taxpayer's basis changed from the purchase price while the taxpayer owned the property:

  • Inherited Property - The basis of inherited property is the Fair Market Value on the date of the decedent's death or a later alternate valuation if the estate is qualified and has elected to do so.
  • Gift - Many different factors are taken into consideration to determine the basis of property that was acquired as a gift. See Property Received as a Gift in IRS Pub. 550, Investment and Income and Expenses and IRS Pub. 551, Basis of Assets for further directions.
  • Tax-Free Exchange - If property is exchanged tax-free (no gain or loss is recognized or other conditions exist making the transaction tax-free), the basis of the property received is the basis of the property tendered in the original exchange on the date of the exchange. If other property or money was exchanged in the transaction, see Property Received in Nontaxable Trades for information in IRS Pub. 550, Investment and Income and Expenses for directions on calculating the basis.
  • Stock - Adjust the basis by subtracting all nontaxable distributions the taxpayer received before the sale. Also, adjust the taxpayer's basis if any stock splits occurred. See IRS Pub. 550, Investment and Income and Expenses for details.
  • Property Received for Services - The Fair Market Value of the property must be reported as income in the year the property is acquired, and the amount reported as income is the original basis of the property. If the property is subject to restrictions, the basis is the Fair Market Value on the date the property becomes either transferable or is no longer subject to risk of forfeiture. If the property received is a bargain for the services exchanged for the property, the income reported must be the value of the services, and this amount is the basis in the property.
  • Property Received from Spouse - The taxpayer adopts the spouse's basis in the property. The Fair Market Value on the date of the gift or any other date does not matter.
  • Unstated Interest and OID - Any interest included as part of the purchase price, in other words, unstated interest on a time-payment plan charging little or no interest, including an Original Issue Discount, must be subtracted from the basis of the property.
  • Bargain Sale to Charitable Organization - The basis of the property sold is allocated to the portion of the property that is sold as compared to the portion of the property that is donated. The basis is calculated by the following: Adjusted Basis of Entire Property multiplied by the Amount Realized (Fair Market Value of the part of the property sold) divided by the Fair Market Value of the Entire Property. See IRS Pub. 544, Sales and Other Dispositions of Assets for details.
Actual Cost Enter the actual cost of the property if the amount in Box 3 of the Form 1099-B is incorrect. Otherwise, enter the same amount as the "Reported Cost" above.

Acquired Date

Enter the date the asset was originally acquired by the taxpayer.

 

Acquired Date Defined
Use the trade date for stocks and bonds traded on an exchange or over-the-counter market. Use the closing date for real property.

 

Special Entry for Wash Sales
Enter the date the stock was acquired for both entries.

 

Special Entry for Short Sales
For stock or other property sold short and the date of the sale is before the date of the purchase, switch the dates. In other words, enter the date sold for the acquired date and enter the acquired date for the date sold. By doing so, the short term period between the purchase date and the sales date will be accurately calculated.

 

Example: John bought and sold stocks short through a day trader. The information from the 1099-B that he received showed the purchase date as 02/20/2010 and the sales date as 02/10/2010. John would simply switch the dates so that the date acquired is 02/10/2010, and the date sold is now 02/20/2010. The "Short term" tax treatment of this stock would still be valid.

 

Special Treatment for Dates that Vary
The date acquired is used to determine whether the long term or short term rate will apply to the asset. For this reason, the program cannot accept dates such as "Various" if the taxpayer sold a block of stock that was acquired through several different purchases or "Inherited" if the taxpayer disposed of a property that the taxpayer acquired by inheritance. Instead, use an acquired date that accurately reports the transaction(s) as Long Term (over one year) or Short Term (under one year).

 

However, this is only valid if the group of stocks had the same purchase price and sales price. If there are different purchase prices and/or sales prices, the separate purchases and sales must be listed separately.

 

Example 1: Jason bought and sold a block of stocks during the past summer. The 2008 1099-B he received has "Various" entered on date fields for the purchases. He knows that he bought the stocks in July. He enters the acquired date as 07/15/2008 and the sales date of 8/15/2008. The block of stocks were bought and sold in a time frame of under one year (short term), and the tax treatment will be valid.

 

Example 2: Craig inherited stock from his grandfather in May of 2000. Craig then sold the stock in June of 2010. Craig would enter 05/01/2000 as the date that he acquired the stock and enter 6/1/2010 as the date sold. However, Craig's basis in the stock will not be the value of the stock on 5/1/2000. See Cost/Basis below for more information.

 

Example 3: Maria purchased ABC stock in 2002. Maria purchased additional ABC stock in May 2010. She sold all of the ABC stock in a single transaction in July 2010. Maria must make separate entries for the purchase and sale of the stock that was purchased in 2002 and the purchase and sale of the stock purchased in May 2010. The first stock purchased will be treated as a long-term gain or loss and the second stock purchased will be treated as a short-term gain or loss.

Sold Date Enter the date the asset was sold or otherwise disposed of to a new owner.

 

Date Sold Defined
All of the same definitions and rules above for date acquired apply to date sold.

 

Special Entry for Wash Sales
Enter the date the stock was sold for both entries.

Sold For (Price) Enter the price the property was sold by the taxpayer to the new owner.

 

Special Entry for Wash Sales
Enter 0.00 as the sales price for the first entry. Enter the cost or basis of the property for the second entry - this is the same amount entered as the cost or basis in the first entry.

 

Special treatment for Form 1099-B
If the taxpayer sold stocks or bonds and received a Form 1099-B (or substitute statement) from the broker showing gross sales price in box 2, enter that amount for the sales price.

 

If the taxpayer sold stocks or bonds and received a Form 1099-B (or substitute statement) from the broker showing that gross proceeds minus commissions and option premiums were reported to the IRS, enter the net amount reflected on the statement as the sales price. However, if the taxpayer enters the net amount, do not include the commissions and option premiums from the sale in the Cost/Basis.

Description of Property Enter a short description of the asset that clearly identifies the asset.

 

Special Entry for Same Stock/Multiple Transactions
Multiple transactions of the same stock can be aggregated into one transaction as long as the transactions are reported correctly as a long or short term gain or loss.

 

Special Entry for Wash Sales
A wash sale transaction requires the entry of two separate lines. Enter "Wash Sale" to describe the property on both entries. See directions for each box on how to enter the remaining information.

 

Wash Sale Defined
A wash sale occurs when the taxpayer sells or otherwise disposes of stocks or securities, including option contracts to buy or sell stock or securities, at a loss, and within 30 days before or after the sale or disposition, the taxpayer does one of the following:

  • Buys substantially identical stock or securities,
  • Acquires substantially identical stock or securities in a fully taxable trade,
  • Enters into a contract or option to acquire substantially identical stock or securities, or
  • Acquires substantially identical stock or securities in his or her individual IRA or Roth IRA.
Type Select the type of transaction that occurred when the taxpayer sold or otherwise disposed of the property as follows (see descriptions of each below):
  • Regular Transaction
  • Collectible
  • Inherited

Special Entry for Wash Sales
Select Ordinary Gain/Loss unless special circumstances applies.

 

Tax Treatment of Transaction Types
The following tax treatments occur according to the type of transaction reported by the taxpayer as follows:

  • Regular Transaction
    This selection treats the transaction as an ordinary capital gain or loss.
  • Collectible
    If the property sold was a collectible, the higher 28% capital gains rate applies. Collectibles include works of art, rugs, antiques, award metals, gems, stamps, coins, alcoholic beverages, and other tangible property that people hold as collectibles.
  • Inherited
     
Adjustment Special Notation Select from the dropdown list any of the adjustments that are applicable to this transaction. This normally does not apply.
Adjustment Amount Enter the amount of the adjustment if a selection was made from above.
Making Additional Entries Click to add the transaction to the return when the entry of the data is complete.

 

Click to delete a transaction from the return that has already been added.

 

To edit a transaction, make changes to the transaction, and click to save the new data and the Schedule D worksheet.

Current Year Net Capital Gain or Loss The amount of the current year net capital gain or loss will be automatically calculated as the user enters transactions.
Federal Taxes Withheld Enter the amount, if any, of federal taxes withheld for the tax year when the transaction occurred.
Prior Year Schedule D Amounts
Use this portion of the worksheet if the taxpayer had any capital loss carryforward from a previous tax year.
2011 Schedule D, Line 7 Enter the taxpayer's short-term capital gain or loss from line 7 of the previous year's Schedule D. If reporting a loss, use a minus sign "-" in front of the amount.
2011 Schedule D, Line 15 Enter the taxpayer's long-term capital gain or loss from line 15 of the previous year's Schedule D. If reporting a loss, use a minus sign "-" to indicate a loss in front of the amount.
2011 Schedule D, Line 21 Enter the net long-term/short term loss carryover from line 21 of the previous year's Schedule D as a positive number, if there is any.

The amount of loss that can be deducted from the current year's return will be automatically calculated, and the amount left over for future years' returns will be reported on the current year Schedule D.

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