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  6. Formulario 1120-S Instrucciones para la Lista D

Formulario 1120-S Instrucciones para la Lista D

Instrucciones para la Lista D (formulario 1120-S), ganancias de capital y pérdidas y ganancias incorporadas

Rev. 2023

Formularios relacionados

  • Cuadro 1120-S - Ganancias de capital y pérdidas y ganancias incorporadas
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Department of the Treasury  
Internal Revenue Service  
2023  
Instructions for Schedule D  
(Form 1120-S)  
Capital Gains and Losses and Built-in Gains  
Section references are to the Internal Revenue Code unless  
otherwise noted.  
Election to defer a qualified section 1231 gain invested in a  
qualified opportunity fund (QOF).  
Use Form 4684, Casualties and Thefts, to report  
Future Developments  
involuntary conversions of property due to casualty or theft.  
Use Form 6781, Gains and Losses From Section 1256  
Contracts and Straddles, to report gains and losses from  
section 1256 contracts and straddles.  
Additional information. For more information, see the  
instructions for the forms listed above. Also, see Pub. 544,  
Sales and Other Dispositions of Assets, and Pub. 550,  
Investment Income and Expenses.  
For the latest information about developments related to  
Schedule D (Form 1120-S) and its instructions, such as  
legislation enacted after they were published, go to IRS.gov/  
General Instructions  
Purpose of Schedule  
Capital Assets  
Use Schedule D to report the following.  
Each item of property the corporation held (whether or not  
connected with its trade or business) is a capital asset except  
the following.  
The overall capital gains and losses from transactions  
reported on Form 8949, Sales and Other Dispositions of  
Capital Assets.  
Stock in trade or other property included in inventory or  
Certain transactions the corporation doesn't have to report  
held mainly for sale to customers. However, see the Note  
on Form 8949.  
below.  
Capital gains from Form 6252, Installment Sale Income.  
Capital gains and losses from Form 8824, Like-Kind  
Accounts or notes receivable acquired in the ordinary  
course of the trade or business for services rendered or from  
the sale of stock in trade or other property included in  
inventory or held mainly for sale to customers.  
Exchanges.  
Gains on distributions to shareholders of appreciated  
capital assets.  
Depreciable or real property used in the trade or business,  
Capital gain distributions.  
even if it is fully depreciated.  
Tax on built-in gains. See Part III. Built-in Gains Tax, later.  
Certain copyrights; literary, musical, or artistic  
compositions; letters or memoranda; or similar property.  
Other Forms the Corporation May  
Have To File  
However, see the Note below.  
Certain patents, inventions, models, or designs (whether  
or not patented); secret formulas or processes; or similar  
property.  
Use Form 8949 to report the sale or exchange of a capital  
asset (defined later) not reported on another form or  
schedule and to report the deferral or exclusion of capital  
gains. See the Instructions for Form 8949. Complete all  
necessary pages of Form 8949 before you complete line 1b,  
2, 3, 8b, 9, or 10 of Schedule D. See Lines 1a and  
information about when to use Form 8949.  
U.S. Government publications, including the  
Congressional Record, that the corporation received from the  
government, other than by purchase at the normal sales  
price, or that the corporation got from another taxpayer who  
had received it in a similar way, if the corporation's basis is  
determined by reference to the previous owner's basis.  
Certain commodities derivative financial instruments held  
Use Form 4797, Sales of Business Property, to report the  
following.  
by a dealer in connection with its dealer activities.  
Certain identified hedging transactions entered into in the  
The sale, exchange, or distribution of real property used in  
normal course of the trade or business.  
a trade or business.  
The sale, exchange, or distribution of depreciable and  
Supplies regularly used in the trade or business.  
For details, see section 1221(a).  
amortizable property.  
The sale or other disposition of securities or commodities  
Note. The corporation can elect to treat as capital assets  
certain musical compositions or copyrights in musical works  
it sold or exchanged. See section 1221(b)(3) and Pub. 550  
for details.  
held in connection with a trading business, if the corporation  
made a mark-to-market election.  
The involuntary conversion (from other than casualty or  
theft) of property used in the corporation's trade or business  
and capital assets held in connection with a trade or business  
or a transaction entered into for profit.  
Short- or Long-Term Gain or Loss  
Report short-term gains or losses in Part I. Report long-term  
gains or losses in Part II. The holding period for short-term  
capital gains and losses is generally 1 year or less. The  
holding period for long-term capital gains and losses is  
The disposition of noncapital assets other than inventory  
or property held primarily for sale to customers in the ordinary  
course of the corporation's trade or business.  
Jan 4, 2024  
Cat. No. 64419L  
 
generally more than 1 year. However, an exception applies  
for certain sales of applicable partnership interests. See  
later.  
checked). Enter “X” in column (f). Enter the amount of the  
exclusion as a negative number (in parentheses) in column  
(g). Complete all remaining columns. See the Instructions for  
Form 8949 for details.  
Report the sale or exchange of DC Zone business  
property on Form 4797. See the Instructions for Form 4797  
for details.  
For more information about holding periods, see the  
Instructions for Form 8949.  
Items for Special Treatment  
Exclusion of gain from qualified community assets. If  
the corporation sold or exchanged a qualified community  
asset acquired after 2001 and before 2010, it may be able to  
exclude any qualified capital gain that the corporation would  
otherwise include in income. The exclusion applies to an  
interest in, or property of, certain renewal community  
businesses.  
Note. For more information, see Pub. 544.  
Gain from installment sales. If the corporation sold  
property at a gain and it will receive a payment in a tax year  
after the year of sale, it must generally report the sale on the  
installment method unless it elects not to. However, the  
installment method may not be used to report sales of stock  
or securities traded on an established securities market.  
Use Form 6252 to report the sale on the installment  
method. Also, use Form 6252 to report any payment received  
during the tax year from a sale made in an earlier year that  
was reported on the installment method. Enter gain from the  
installment sales on Schedule D, line 4 or line 11, as  
applicable. See the instructions for Form 6252.  
To elect out of the installment method, report the full  
amount of the gain on Form 8949 for the year of the sale on a  
return filed by the due date (including extensions). If the  
original return was filed on time without making the election,  
the corporation can make the election on an amended return  
filed no later than 6 months after the original due date of the  
return (excluding extensions). Enter “Filed pursuant to  
section 301.9100-2” at the top of the amended return.  
Gain on distributions of appreciated property. Generally,  
gain (but not loss) is recognized on a nonliquidating  
distribution of appreciated property to the extent that the  
property's fair market value (FMV) exceeds its adjusted  
basis. See section 311.  
Qualified community asset. A qualified community  
asset is any of the following.  
Qualified community stock.  
Qualified community partnership interest.  
Qualified community business property.  
Qualified capital gain. Qualified capital gain is any gain  
recognized on the sale or exchange of a qualified community  
asset, but doesn't include any of the following.  
Gain treated as ordinary income under section 1245.  
Section 1250 gain figured as if section 1250 applied to all  
depreciation rather than the additional depreciation.  
Gain attributable to real property, or an intangible asset,  
that isn't an integral part of a renewal community business.  
Gain from a related-party transaction. See Sales and  
Exchanges Between Related Persons in chapter 2 of Pub.  
544.  
Gains attributable to periods after December 31, 2014.  
See section 1400F (as in effect before its repeal) for more  
details and special rules.  
How to report. If applicable, report the sale or exchange  
on Form 8949, Part II, as the corporation otherwise would  
without regard to the exclusion (with the appropriate box  
checked). Enter “X” in column (f) and enter the amount of the  
excluded gain as a negative number (in parentheses) in  
column (g). Complete all remaining columns. See the  
Instructions for Form 8949.  
Report the sale or exchange of qualified community  
business property on Form 4797. See the Instructions for  
Form 4797 for more details.  
Gain on the constructive sale of certain appreciated fi-  
nancial positions. Generally, the S corporation must  
recognize gain (but not loss) on the date it enters into a  
constructive sale of any appreciated position in stock, a  
partnership interest, or certain debt instruments as if the  
position were disposed of at FMV on that date.  
The S corporation is treated as making a constructive sale  
of an appreciated position when it (or a related person, in  
some cases) does one of the following.  
Exclusion of gain from DC Zone assets. If the corporation  
sold or exchanged a District of Columbia Enterprise Zone  
(DC Zone) asset acquired after 1997 and before 2012, and  
held for more than 5 years, it can exclude any qualified  
capital gain that the corporation would otherwise include in  
income. The exclusion applies to an interest in, or property of,  
certain businesses operating in the District of Columbia.  
DC Zone asset. A DC Zone asset is any of the following.  
DC Zone business stock.  
DC Zone partnership interest.  
DC Zone business property.  
Qualified capital gain. Qualified capital gain is any gain  
recognized on the sale or exchange of a DC Zone asset, but  
doesn't include any of the following.  
Gain attributable to periods before 1998 and after 2016.  
Gain treated as ordinary income under section 1245.  
Gain attributable to unrecaptured section 1250 gain on the  
sale of an interest in a partnership that is a DC Zone  
business. See the instructions for Form 1120-S, Schedule K,  
line 8c, for information on how to report unrecaptured section  
1250 gain.  
Enters into a short sale of the same or substantially  
identical property (that is, a “short sale against the box”).  
Enters into an offsetting notional principal contract relating  
to the same or substantially identical property.  
Enters into a futures or forward contract to deliver the  
Gain on the sale or exchange of an interest in a  
partnership attributable to real property or an intangible asset  
that isn't an integral part of a DC Zone business.  
same or substantially identical property.  
Acquires the same or substantially identical property (if the  
Gain from a related-party transaction. See Sales and  
appreciated position is a short sale, an offsetting notional  
principal contract, or a futures or forward contract).  
Exception. Generally, constructive sale treatment doesn't  
apply if:  
Exchanges Between Related Persons in chapter 2 of Pub.  
544.  
How to report. If applicable, report the sale or exchange  
on Form 8949, Part II, as the corporation otherwise would  
without regard to the exclusion (with the appropriate box  
2
Instructions for Schedule D (Form 1120-S) (2023)  
The S corporation closed the transaction before the end of  
the noncontingent bond method may be treated as an  
ordinary loss rather than as a capital loss. See Regulations  
section 1.1275-4(b) and Pub. 1212, Guide to Original Issue  
Discount Instruments, for more information on contingent  
payment debt instruments subject to the noncontingent bond  
method. See the Instructions for Form 8949 for detailed  
information about how to report the disposition of a  
contingent payment debt instrument.  
Loss from a sale or exchange between the corporation  
and a related person. Except for distributions in complete  
liquidation of a corporation, no loss is allowed from the sale  
or exchange of property between the corporation and certain  
related persons. See section 267.  
Loss from a wash sale. A wash sale occurs if the  
corporation acquires (by purchase or exchange), or has a  
contract or option to acquire, substantially identical stock or  
securities within 30 days before or after the date of the sale or  
exchange. The corporation can’t deduct a loss from a wash  
sale of stock or securities (including contracts or options to  
acquire or sell stock or securities) unless the corporation is a  
dealer in stock or securities and the loss was sustained in a  
transaction made in the ordinary course of the corporation's  
trade or business. For more information on wash sales, see  
section 1091 and Pub. 550.  
The wash sale rules don’t apply to a redemption of shares  
in a floating-NAV (net asset value) money market fund  
(MMF). For redemptions of shares in any MMF after October  
2, 2023, the wash sale rules don't apply.  
Report the transaction as the corporation otherwise would  
on Form 8949, Part I or II (depending on how long the  
corporation owned the stock or securities). Check the  
appropriate box. Enter “W” in column (f). Enter the  
nondeductible loss as a positive number in column (g).  
Complete all remaining columns. See the Instructions for  
Form 8949.  
Loss from securities that are capital assets that become  
worthless during the year. Except for securities held by a  
bank, treat the loss as a capital loss as of the last day of the  
tax year. See section 582 for the rules on the treatment of  
securities held by a bank. Also see section 165(g).  
Undistributed long-term gains from a regulated invest-  
ment company (RIC) or real estate investment trust (RE-  
IT). Report the corporation's share of long-term gains from  
Form 2439, Notice to Shareholder of Undistributed  
Long-Term Capital Gains, on Form 8949, Part II (with box F  
checked). Enter “From Form 2439” in column (a). Enter the  
gain in column (h). Leave all other columns blank. See the  
Instructions for Form 8949.  
the 30th day after the end of the tax year in which it was  
entered into,  
The S corporation held the appreciated position to which  
the transaction relates throughout the 60-day period starting  
on the date the transaction was closed, and  
At no time during that 60-day period was the S  
corporation's risk of loss reduced by holding certain other  
positions.  
For details and other exceptions to these rules, see Pub.  
550.  
Gain from certain constructive ownership transactions.  
Gain in excess of the net underlying long-term gain the  
corporation would have recognized if it had held a financial  
asset directly during the term of a derivative contract must be  
treated as ordinary income. See section 1260.  
Gain on disposition of market discount bonds. In  
general, a capital gain upon the disposition of a market  
discount bond is treated as interest income to the extent of  
accrued market discount as of the date of disposition. See  
sections 1276 through 1278 and Pub. 550 for more  
information on market discount. See the Instructions for Form  
8949 for detailed information about how to report the  
disposition of a market discount bond.  
Gain or loss on distribution of property in complete liq-  
uidation. Generally, gain or loss is recognized on property  
distributed in a complete liquidation. Treat the property as if it  
had been sold at its FMV. See section 336.  
Gain or loss on an option to buy or sell property. See  
sections 1032 and 1234 for the rules that apply to a  
purchaser or grantor of an option or a securities futures  
contract (as defined in section 1234B). See Pub. 550 for  
details.  
Gain or loss from a short sale of property. Report the  
gain or loss on Form 8949 to the extent that the property  
used to close the short sale is considered a capital asset in  
the hands of the taxpayer. Report any short sale in the year  
the sale closes.  
If a short sale closed in 2023 but the corporation didn’t get  
a 2023 Form 1099-B (or substitute statement) for it because  
the corporation entered into it before 2011, report it on Form  
8949 in Part I with box C checked or Part II with box F  
checked (whichever applies). In column (a), enter (for  
example) “100 sh. XYZ Co.—2010 short sale closed.Fill in  
the other columns according to their instructions. Report the  
short sale the same way if the corporation received a 2023  
Form 1099-B (or substitute statement) that doesn't show the  
proceeds (sales price).  
NAV method for money market funds. Report capital gain  
or loss determined under the NAV method with respect to  
shares in a money market fund on Form 8949, Part I, with box  
C checked. Enter the name of each fund followed by “(NAV)”  
in column (a). Enter the net gain or loss in column (h). Leave  
all other columns blank. See the Instructions for Form 8949.  
Gain on certain short-term federal, state, and municipal  
obligations (other than tax-exempt obligations). If a  
short-term governmental obligation (other than a tax-exempt  
obligation) that is a capital asset is acquired at an acquisition  
discount, a portion of any gain realized is treated as ordinary  
income and any remaining balance is treated as a short-term  
capital gain. See section 1271.  
Deferral of gain invested in a qualified opportunity fund  
(QOF). If the corporation realized gain from an actual, or  
deemed, sale or exchange with an unrelated person and  
during the 180-day period beginning on the date the  
Contingent payment debt instruments. Any gain  
recognized on the sale, exchange, or retirement of a  
contingent payment debt instrument subject to the  
corporation realized the gain, invested an amount of the gain  
in a QOF, the corporation may be able to elect to temporarily  
defer part or all of the gain that would otherwise be included  
in income. If the corporation makes the election, the gain is  
included in income only to the extent, if any, the amount of  
noncontingent bond method is generally treated as interest  
income rather than as capital gain. In certain situations, all or  
a portion of a loss recognized on the sale, exchange, or  
retirement of a contingent payment debt instrument subject to  
3
Instructions for Schedule D (Form 1120-S) (2023)  
realized gain exceeds the aggregate amount invested in a  
QOF during the 180-day period beginning on the date gain is  
realized. The corporation may also be able to permanently  
exclude the gain from the sale or exchange of any investment  
in a QOF if the investment is held for at least 10 years. For  
more information, see section 1400Z-2.  
Qualified opportunity fund (QOF). A QOF is any  
investment vehicle that is organized as either a corporation or  
partnership for the purpose of investing in eligible property  
that is located in a qualified opportunity zone and that  
satisfies the ownership requirements of section 1400Z-2.  
Eligible gain. Gain that is eligible to be deferred if it is  
invested in a QOF includes any amount treated as a capital  
gain for federal income tax purposes. See section 1400Z-2  
for more details on QOFs and the special rules. Also, see  
How to report. If applicable, report the eligible gain on  
Schedule D as it would otherwise be reported if the  
corporation were not making the election. See the  
Real estate subdivided for sale. Certain lots or parcels  
that are part of a tract of real estate subdivided for sale may  
be treated as capital assets. See section 1237.  
Rollover of gain from qualified small business (QSB)  
stock. If the corporation sold QSB stock (defined below) it  
held for more than 6 months, it can postpone gain if it  
purchased other QSB stock during the 60-day period that  
began on the date of the sale. The corporation must  
recognize gain to the extent the sale proceeds exceed the  
cost of the replacement stock. Reduce the basis of the  
replacement stock by any postponed gain.  
If the corporation chooses to postpone gain, report the  
entire gain realized on the sale on Form 8949, Part I or II (with  
the appropriate box checked). Enter “R” in column (f). Enter  
the amount of the postponed gain as a negative number (in  
parentheses) in column (g). Complete all remaining columns.  
See the Instructions for Form 8949.  
The corporation must also separately state the  
Instructions for Form 8949 for information on how to report  
the deferral. You will also need to annually attach to your tax  
return Form 8997, Initial and Annual Statement of Qualified  
Opportunity Fund (QOF) Investments, until you dispose of the  
QOF investment. For more information, see Form 8997 and  
its instructions.  
amount of the gain rolled over on qualified stock  
!
CAUTION  
under section 1045 on Form 1120-S, Schedule K,  
line 10. Each shareholder must determine if they qualify for  
the rollover at the shareholder level. Also, the corporation  
must separately state on that line (and not on Form 8949) any  
gain that could qualify for the section 1045 rollover at the  
shareholder level instead of the corporate level (because a  
shareholder was entitled to purchase replacement stock). If  
the corporation had a gain on qualified stock that could  
qualify for the exclusion under section 1202, report that gain  
on Form 8949 (and on Form 1120-S, Schedule K, line 10).  
Bonds and other debt instruments. See Pub. 550.  
Collectibles gain (28% rate gain) or loss. Report any  
28% rate gain or loss on Form 1120-S, Schedule K, line 8b  
(and each shareholder's share in box 8b of Schedule K-1  
(Form 1120-S)). A collectibles gain or loss is any long-term  
gain or deductible long-term loss from the sale or exchange  
of a collectible that is a capital asset.  
Collectibles include works of art, rugs, antiques, metals  
(such as gold, silver, and platinum bullion), gems, stamps,  
coins, alcoholic beverages, and certain other tangible  
property.  
Report any 28% rate gain or loss from a sale or exchange  
of a collectible on Form 8949, Part II (with the appropriate box  
checked). See the Instructions for Form 8949.  
Also include gain (but not loss) from the sale or exchange  
of an interest in a partnership or trust held more than 1 year  
and attributable to unrealized appreciation of collectibles.  
See Regulations section 1.1(h)-1. Also, attach the statement  
required under Regulations section 1.1(h)-1(e).  
Disposition of converted wetland or highly erodible  
cropland. Any loss on the disposition of converted wetland  
or highly erodible cropland that is first used for farming after  
March 1, 1986, is reported as a long-term capital loss on  
Form 8949, but any gain on such a disposition is reported as  
ordinary gain on Form 4797. See section 1257 for details.  
Nonbusiness bad debts. A nonbusiness bad debt must be  
treated as a short-term capital loss and can be deducted only  
in the year the debt becomes totally worthless. See section  
166(d) and Nonbusiness Bad Debts in Pub. 550 for details.  
Nonrecognition of gain on sale of stock to an employee  
stock ownership plan (ESOP) or an eligible cooperative.  
See section 1042 and Temporary Regulations section  
1.1042-1T for rules under which the corporation can elect not  
to recognize gain from the sale of certain stock to an ESOP  
or an eligible cooperative.  
To be QSB stock, the stock must meet all of the following  
tests.  
It must be stock in a C corporation.  
It must have been originally issued after August 10, 1993.  
As of the date the stock was issued, the corporation was a  
qualified small business. A qualified small business is a  
domestic C corporation with total gross assets of $50 million  
or less (a) at all times after August 9, 1993, and before the  
stock was issued; and (b) immediately after the stock was  
issued. Gross assets include those of any predecessor of the  
corporation. All corporations that are members of the same  
parent-subsidiary controlled group are treated as one  
corporation.  
The corporation must have acquired the stock at its  
original issue (either directly or through an underwriter),  
either in exchange for money or other property or as pay for  
services (other than as an underwriter) to the corporation. In  
certain cases, the corporation may meet the test if it acquired  
the stock from another person who met this test (such as by  
gift or inheritance) or through a conversion or exchange of  
QSB stock held by the corporation.  
During substantially all the time the corporation held the  
stock:  
1. The issuer was a C corporation;  
2. At least 80% of the value of the issuer's assets were  
used in the active conduct of one or more qualified  
businesses (defined below); and  
3. The issuing corporation wasn't a foreign corporation,  
domestic international sales corporation (DISC), former  
DISC, corporation that has made (or that has a subsidiary  
that has made) a section 936 election, RIC, REIT, real estate  
mortgage investment conduit (REMIC), financial asset  
securitization investment trust (FASIT), or cooperative.  
4
Instructions for Schedule D (Form 1120-S) (2023)  
Note. A specialized small business investment company  
Schedule K, line 12b; and in box 12 of Schedule K-1 (Form  
1120-S) using code H.  
(SSBIC) is treated as having met test 2 above.  
A qualified business is any business other than the  
Transactions with respect to applicable partnership in-  
terests. The long-term holding period for gains and losses  
with respect to applicable partnership interests is more than 3  
years. If the holding period is 3 years or less, gains and  
losses with respect to applicable partnership interests are  
treated as short term. An applicable partnership interest is  
any interest in a partnership that, directly or indirectly, is  
transferred to (or is held by) the taxpayer in connection with  
the performance of substantial services by the taxpayer, or  
any other related person, in any applicable trade or business.  
See section 1061 and Pub. 541 for details.  
following.  
One involving services performed in the field of health, law,  
engineering, architecture, accounting, actuarial science,  
performing arts, consulting, athletics, financial services, or  
brokerage services.  
One whose principal asset is the reputation or skill of one  
or more employees.  
Any banking, insurance, financing, leasing, investing, or  
similar business.  
Any farming business (including the raising or harvesting  
of trees).  
Figure gains and losses with respect to the applicable  
partnership interest on Form 8949 by applying the special  
holding period rules discussed above. See the Instructions  
for Form 8949.  
Any business involving the production of products for  
which percentage depletion can be claimed.  
Any business of operating a hotel, motel, restaurant, or  
similar business.  
For more details about limits and additional requirements  
Specific Instructions  
that may apply, see Pub. 550 or section 1202.  
Sale of a partnership interest. A sale or other disposition  
of an interest in a partnership owning unrealized receivables  
or inventory items may result in ordinary gain or loss. See  
Pub. 541, Partnerships.  
Complete all necessary pages of Form 8949 before  
completing line 1b, 2, 3, 8b, 9, or 10 of Schedule D.  
Rounding Off to Whole Dollars  
Cents can be rounded to whole dollars on Schedule D. If  
cents are rounded to whole dollars, all amounts must be  
rounded. To round, drop amounts under 50 cents and  
increase amounts from 50 to 99 cents to the next dollar. For  
example, $1.49 becomes $1 and $2.50 becomes $3.  
Special rules for traders in securities. Traders in  
securities are engaged in the business of buying and selling  
securities for their own account. To be engaged in a business  
as a trader in securities, the corporation:  
Must seek to profit from daily market movements in the  
prices of securities and not from dividends, interest, or capital  
appreciation;  
If two or more amounts have to be added to figure the  
amount to enter on a line, include cents when adding the  
amounts and round off only the total.  
Must be involved in a trading activity that is substantial;  
and  
Must carry on the activity with continuity and regularity.  
Disposal of QOF Investment  
If you disposed of any investment in a QOF during the tax  
year, check the box on the top of Schedule D and see the  
Instructions for Form 8949 for additional reporting  
requirements.  
The following facts and circumstances should be  
considered in determining if a corporation's activity is a  
business.  
Typical holding periods for securities bought and sold.  
The frequency and dollar amounts of the corporation's  
Parts I and II  
Lines 1a and 8a—Transactions Not Reported on  
Form 8949  
The corporation can report on line 1a (for short-term  
transactions) or line 8a (for long-term transactions) the  
aggregate totals from any transactions (other than sales of  
collectibles) for which:  
trades during the year.  
The extent to which the shareholders pursue the activity to  
produce income for a livelihood.  
The amount of time devoted to the activity.  
Like an investor, a trader must generally report each sale  
of securities (taking into account commissions and any other  
costs of acquiring or disposing of the securities) on Form  
8949 unless one of the exceptions described under  
Exceptions to reporting each transaction on a separate row in  
the Instructions for Form 8949 applies. However, if a trader  
made the mark-to-market election (see the Instructions for  
Form 4797), each transaction is reported in Part II of Form  
4797 instead of on Form 8949.  
The corporation received a Form 1099-B (or substitute  
statement) that shows basis was reported to the IRS and  
doesn't show any adjustments in box 1f or box 1g;  
The Ordinary checkbox in box 2 of Form 1099-B (or  
substitute statement) isn't checked;  
The QOF checkbox in box 3 of Form 1099-B (or substitute  
The limitation on investment interest expense that applies  
to investors doesn't apply to interest paid or incurred in a  
trading business. A trader reports interest expense and other  
expenses (excluding commissions and other costs of  
acquiring and disposing of securities) from a trading business  
on page 1 of Form 1120-S.  
A trader may also hold securities for investment. The rules  
for investors will generally apply to those securities. If they  
apply, allocate interest and other expenses between the  
corporation's trading business and investment securities.  
Report investment interest expense on Form 1120-S,  
statement) isn’t checked; and  
The corporation doesn't need to make any adjustments to  
the basis or type of gain or loss reported on Form 1099-B (or  
substitute statement), or to its gain or loss.  
See How To Complete Form 8949, Columns (f) and (g) in  
the Instructions for Form 8949 for details about possible  
adjustments to the corporation's gain or loss.  
If the corporation chooses to report these transactions on  
lines 1a and 8a, don’t report them on Form 8949. Also, the  
corporation doesn’t need to attach a statement to explain the  
entries on lines 1a and 8a.  
5
Instructions for Schedule D (Form 1120-S) (2023)  
   
Figure gain or loss on each line. Subtract the cost or other  
basis in column (e) from the proceeds (sales price) in column  
(d). Enter the gain or loss in column (h). Enter negative  
amounts in parentheses.  
1. An S corporation that was a C corporation before it  
elected to be an S corporation.  
2. An S corporation that acquired an asset with a basis  
determined (in whole or in part) by reference to its basis (or  
the basis of any other property) in the hands of a C  
corporation (a transferred-basis acquisition). See section  
1374(d)(8).  
Example 1—basis reported to the IRS. The  
corporation received a Form 1099-B reporting the sale of  
stock held for 3 years, showing proceeds (in box 1d) of  
$6,000 and cost or other basis (in box 1e) of $2,000. Box 12  
is checked, meaning that basis was reported to the IRS. The  
corporation doesn't need to make any adjustments to the  
amounts reported on Form 1099-B or enter any codes. This  
was the corporation's only 2023 transaction. Instead of  
reporting this transaction on Form 8949, the corporation can  
enter $6,000 on Schedule D, line 8a, column (d); $2,000 in  
column (e); and $4,000 ($6,000 − $2,000) in column (h).  
An S corporation may owe the tax if it has net recognized  
built-in gain during the applicable recognition period. For  
computation details, see Regulations section 1.1374-1(a).  
The applicable recognition period is the 5-year period  
beginning:  
For an asset held when the S corporation was a C  
corporation, on the first day of the first tax year for which the  
corporation is an S corporation; or  
If the corporation had a second transaction that was the  
same except that the proceeds were $5,000 and the basis  
was $3,000, combine the two transactions. Enter $11,000  
($6,000 + $5,000) on Schedule D, line 8a, column (d); $5,000  
($2,000 + $3,000) in column (e); and $6,000 ($11,000 −  
$5,000) in column (h).  
Example 2—basis not reported to the IRS. The  
corporation received a Form 1099-B showing proceeds (in  
box 1d) of $6,000 and cost or other basis (in box 1e) of  
$2,000. Box 12 isn't checked, meaning that basis wasn't  
reported to the IRS. Don’t report this transaction on line 1a or  
line 8a. Instead, report the transaction on Form 8949.  
Complete all necessary pages of Form 8949 before  
completing line 1b, 2, 3, 8b, 9, or 10 of Schedule D.  
For a transferred-basis acquisition, on the date the asset  
was acquired by the S corporation.  
A corporation described in both (1) and (2) above must  
figure the built-in gains tax separately for the group of assets  
it held at the time its S election became effective and for each  
group of transferred-basis acquisitions. For details, see  
Regulations section 1.1374-8.  
Certain transactions involving the disposal of timber, coal,  
or domestic iron ore under section 631 aren’t subject to the  
built-in gains tax. See Rev. Rul. 2001-50, which is on  
page 343 of Internal Revenue Bulletin 2001-43 at  
Line 16  
Example 3—adjustment. The corporation received a  
Form 1099-B showing proceeds (in box 1d) of $6,000 and  
cost or other basis (in box 1e) of $2,000. Box 12 is checked,  
meaning that basis was reported to the IRS. However, the  
basis shown in box 1e is incorrect. Don’t report this  
transaction on line 1a or line 8a. Instead, report the  
transaction on Form 8949. See the instructions for Form  
8949, columns (f), (g), and (h). Complete all necessary  
pages of Form 8949 before completing line 1b, 2, 3, 8b, 9, or  
10 of Schedule D.  
Generally, enter the amount that would be the taxable income  
of the corporation for the tax year if only recognized built-in  
gains (including any carryover of gain under section 1374(d)  
(2)(B)) and recognized built-in losses were taken into  
account.  
Generally, recognized built-in gain includes the following  
items.  
1. Any gain recognized during the applicable recognition  
period on the sale, distribution, or other disposition of any  
asset, except to the extent the corporation establishes that:  
Lines 1b, 2, 3, 8b, 9, and 10, Column  
(h)—Transactions Reported on Form 8949  
Figure gain or loss on each line. First, subtract cost or other  
basis in column (e) from proceeds (sales price) in column (d).  
Then, combine the results with any adjustments in column  
(g). Enter the results in column (h). Enter negative amounts in  
parentheses.  
a. The asset wasn't held by the corporation as of the  
beginning of the applicable recognition period, or  
b. The gain exceeds the excess of the FMV of the asset  
as of the beginning of the applicable recognition period over  
the adjusted basis of the asset at that time.  
2. Any item of income that is properly taken into account  
during the applicable recognition period but is attributable to  
periods before the applicable recognition period.  
Example 1—gain. Column (d) is $6,000 and column (e)  
is $2,000. Enter $4,000 in column (h).  
Example 2—loss. Column (d) is $6,000 and column (e)  
Generally, recognized built-in loss includes the following  
items.  
is $8,000. Enter ($2,000) in column (h).  
Example 3—adjustment. Column (d) is $6,000, column  
(e) is $2,000, and column (g) is ($1,000). Enter $3,000  
($6,000 − $2,000 − $1,000) in column (h).  
1. Any loss recognized during the applicable recognition  
period on the disposition of any asset to the extent the  
corporation establishes that:  
a. The asset was held by the corporation as of the  
Line 13. Capital Gain Distributions  
beginning of the applicable recognition period; and  
Enter the total capital gain distributions paid to the  
corporation during the year.  
b. The loss doesn't exceed the excess of the adjusted  
basis of the asset as of the beginning of the applicable  
recognition period, over the FMV of the asset as of that time.  
2. Any amount that is allowed as a deduction during the  
applicable recognition period (determined without regard to  
any carryover) but is attributable to periods before the  
applicable recognition period.  
Part III. Built-in Gains Tax  
Section 1374 provides for a tax on built-in gains. The built-in  
gains tax may apply to the following S corporations.  
6
Instructions for Schedule D (Form 1120-S) (2023)  
 
For details, see section 1374(d) and Regulations section  
1.1374-4.  
The corporation must show on an attachment its total net  
recognized built-in gain and list separately any capital gain or  
loss and ordinary gain or loss.  
carryforward (to the extent of net capital gain included in  
recognized built-in gain for the tax year) either arising in tax  
years for which the corporation was a C corporation or  
acquired in a transferred-basis acquisition (defined earlier).  
The section 1374(b)(2) deduction must be figured and  
applied separately for each separate group of assets. See  
section 1374(b)(2) and Regulations section 1.1374-5.  
Line 17  
Figure taxable income by completing lines 1 through 28 of  
Form 1120. Follow the Instructions for Form 1120. Enter the  
amount from line 28 of Form 1120 on line 17 of Schedule D.  
Attach to Schedule D the Form 1120 computation or other  
worksheet used to figure taxable income.  
For corporations figuring the built-in gains tax for separate  
groups of assets, taxable income must be apportioned to  
each group of assets in proportion to the net recognized  
built-in gain for each group of assets. For details, see  
Regulations section 1.1374-8.  
Line 22  
Enter the section 1374(b)(3) credit. Generally, this is any  
general business credit arising in tax years for which the  
corporation was a C corporation or acquired in a  
transferred-basis acquisition (defined earlier). The section  
1374(b)(3) credit must be figured and applied separately for  
each separate group of assets. Section 1374(b)(3) business  
credit and minimum tax credit carryforwards from C  
corporation years are subject to the business credit limitation  
in section 38(c) and the alternative minimum tax (AMT) credit  
limitation in section 53(c), as modified by Regulations section  
1.1374-6(b).  
Note. Taxable income is figured as provided in section  
1375(b)(1)(B) and is generally figured in the same manner as  
taxable income for line 9 of the Excess Net Passive Income  
Tax Worksheet for Line 22a in the Instructions for Form  
1120-S.  
The AMT refundable credit provisions do not apply to  
S corporations. See sections 1371(b)(1) and 1374(b)  
!
CAUTION  
(3)(B).  
Line 18  
Line 23  
If, for any tax year in the recognition period, the amount on  
line 16 exceeds the taxable income on line 17, the excess is  
treated as a recognized built-in gain in the succeeding tax  
year. This carryover provision applies only in the case of an S  
corporation that made its election to be an S corporation after  
March 30, 1988. See section 1374(d)(2)(B).  
The built-in gains tax is treated as a loss sustained by the  
corporation during the same tax year. The character of the  
deemed loss is determined by allocating the loss  
proportionately among the net recognized built-in gains  
giving rise to the tax and attributing the character of each net  
recognized built-in gain to the allocable portion of the loss.  
Deduct the tax attributable to the following.  
For corporations figuring the built-in gains tax for separate  
groups of assets, don’t use the amount from Form 1120-S,  
Schedule B, line 8. Instead, figure the amount of net  
Short-term capital gain as short-term capital loss on  
Schedule D, line 6.  
Long-term capital gain as long-term capital loss on  
unrealized built-in gain separately for each group of assets.  
Schedule D, line 14.  
Ordinary income as a deduction for taxes on Form 1120-S,  
Line 19  
Enter the section 1374(b)(2) deduction. Generally, this is any  
net operating loss (NOL) carryforward or capital loss  
line 12.  
7
Instructions for Schedule D (Form 1120-S) (2023)