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
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.
•
Certain copyrights; literary, musical, or artistic
•
compositions; letters or memoranda; or similar property.
Other Forms the Corporation May
Have To File
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)