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  6. Obrazac 1040 Upute za raspored D

Obrazac 1040 Upute za raspored D

2021 Upute za raspored D

2021 Upute za raspored D, kapitalni dobici i gubici

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Department of the Treasury  
Internal Revenue Service  
2023 Instructions for Schedule D  
These instructions explain how to complete Schedule D (Form 1040). Complete Form  
8949 before you complete line 1b, 2, 3, 8b, 9, or 10 of Schedule D.  
Capital Gains  
Use Schedule D:  
and Losses  
To figure the overall gain or loss from transactions reported on Form 8949;  
To report certain transactions you don't have to report on Form 8949;  
To report a gain from Form 2439 or 6252 or Part I of Form 4797;  
To report a gain or loss from Form 4684, 6781, or 8824;  
To report a gain or loss from a partnership, S corporation, estate, or trust;  
To report capital gain distributions not reported directly on Form 1040 or  
1040-SR, line 7 (or effectively connected capital gain distributions not reported direct-  
ly on Form 1040-NR, line 7); and  
To report a capital loss carryover from 2022 to 2023.  
Additional information. See Pub. 544 and Pub. 550 for more details.  
Section references are to the Internal  
Revenue Code unless otherwise noted.  
er, for more information about when  
Form 8949 is needed and when it isn't.  
with your trading business, if you previ-  
ously made a mark-to-market election.  
See Traders in Securities, later.  
Use Form 4797 to report the follow-  
ing.  
Future Developments  
Use Form 4684 to report involuntary  
conversions of property due to casualty  
or theft.  
For the latest information about devel-  
opments related to Schedule D and its  
instructions, such as legislation enacted  
after they were published, go to IRS.gov/  
1. The sale or exchange of:  
a. Real property used in your trade  
or business;  
Use Form 6781 to report gains and  
losses from section 1256 contracts and  
straddles.  
b. Depreciable and amortizable tan-  
gible property used in your trade or  
business (but see Disposition of Depre-  
ciable Property Not Used in Trade or  
Business in the Form 4797 instructions);  
What’s New  
Use Form 8824 to report like-kind  
exchanges. A like-kind exchange occurs  
when you exchange business or invest-  
ment property for property of a like  
kind.  
Deferral of gain invested in a qualified  
opportunity fund (QOF). Taxpayers  
who made a deferral election in a QOF  
that meets the 5-year holding period  
threshold shall be eligible for the 10%  
stepped up basis. See Form 8997 and its  
instructions for additional information  
regarding QOFs.  
c. Oil, gas, geothermal, or other  
mineral property; and  
d. Section 126 property.  
Use Form 8960 to figure any net in-  
vestment income tax relating to gains  
and losses reported on Schedule D, in-  
cluding gains and losses from a securi-  
ties trading activity.  
2. The involuntary conversion (other  
than from casualty or theft) of property  
used in a trade or business and capital  
assets held more than 1 year for business  
or profit. But see Disposition of Depre-  
ciable Property Not Used in Trade or  
Business in the Form 4797 instructions.  
General  
Use Form 8997 to report each QOF  
investment you held at the beginning  
and end of the tax year and the deferred  
gains associated with each investment.  
Also, use Form 8997 to report any capi-  
tal gains you are deferring by investing  
in a QOF during the tax year and any  
QOF investment you disposed of during  
the tax year.  
Instructions  
3. The disposition of noncapital as-  
sets other than inventory or property  
held primarily for sale to customers in  
the ordinary course of your trade or  
business.  
Other Forms You May Have  
To File  
Use Form 461 to figure your excess  
business loss.  
4. Ordinary loss on the sale, ex-  
change, or worthlessness of small busi-  
ness investment company (section 1242)  
stock.  
Use Form 8949 to report the sale or  
exchange of a capital asset (defined lat-  
er) not reported on another form or  
schedule and to report the income defer-  
ral 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 8a, lat-  
Capital Asset  
Most property you own and use for per-  
sonal purposes or investment is a capital  
asset. For example, your house, furni-  
ture, car, stocks, and bonds are capital  
assets. A capital asset is any property  
owned by you except the following.  
5. Ordinary loss on the sale, ex-  
change, or worthlessness of small busi-  
ness (section 1244) stock.  
6. Ordinary gain or loss on securi-  
ties or commodities held in connection  
D-1  
Cat. No. 24331I  
Oct 30, 2023  
1. Stock in trade or other property  
included in inventory or held mainly for  
sale to customers in the ordinary course  
of your trade or business. But see the  
TIP about certain musical compositions  
or copyrights, later.  
8. Certain hedging transactions en-  
tered into in the normal course of your  
trade or business. See section 1221(a)(7)  
and (b)(2).  
For more information about holding  
periods, see the Instructions for Form  
8949.  
Capital Gain Distributions  
9. Supplies regularly used in your  
trade or business.  
These distributions are paid by a mutual  
fund (or other regulated investment  
company) or real estate investment trust  
from its net realized long-term capital  
gains. Distributions of net realized  
short-term capital gains aren't treated as  
capital gains. Instead, they are included  
on Form 1099-DIV as ordinary divi-  
dends.  
2. Accounts or notes receivable:  
You can elect to treat as capital  
a. For services rendered in the ordi-  
nary course of your trade or business,  
assets certain musical composi-  
tions or copyrights you sold or  
TIP  
b. For services rendered as an em-  
ployee, or  
exchanged. See Pub. 550 for details.  
Basis and Recordkeeping  
c. From the sale of stock in trade or  
other property included in inventory or  
held mainly for sale to customers.  
Basis is the amount of your investment  
in property for tax purposes. The basis  
of property you buy is usually its cost.  
There are special rules for certain kinds  
of property, such as inherited property.  
You need to know your basis to figure  
any gain or loss on the sale or other dis-  
position of the property. You must keep  
accurate records that show the basis and,  
if applicable, adjusted basis of your  
property. Your records should show the  
purchase price, including commissions;  
increases to basis, such as the cost of  
improvements; and decreases to basis,  
such as depreciation, nondividend distri-  
butions on stock, and stock splits.  
Enter on Schedule D, line 13, the to-  
tal capital gain distributions paid to you  
during the year, regardless of how long  
you held your investment. This amount  
is shown in box 2a of Form 1099-DIV.  
3. Depreciable property used in your  
trade or business, even if it is fully de-  
preciated.  
4. Real estate used in your trade or  
business.  
If there is an amount in box 2b, in-  
clude that amount on line 11 of the Un-  
sheet in these instructions if you com-  
plete line 19 of Schedule D.  
5. A patent, invention, model, or de-  
sign (whether or not patented); a secret  
formula or process; a copyright; a liter-  
ary, musical, or artistic composition; a  
letter or memorandum; or similar prop-  
erty that is:  
If there is an amount in box 2c, see  
a. Created by your personal efforts;  
b. Prepared or produced for you (in  
the case of a letter, memorandum, or  
similar property); or  
If there is an amount in box 2d, in-  
clude that amount on line 4 of the 28%  
Rate Gain Worksheet in these instruc-  
tions if you complete line 18 of Sched-  
ule D.  
If you received a Schedule A to Form  
8971 from an executor of an estate or  
other person required to file an estate tax  
return, you may be required to report a  
basis consistent with the estate tax value  
of the property.  
c. Received under circumstances  
(such as by gift) that entitle you to the  
basis of the person who created the  
property or for whom the property was  
prepared or produced. See section  
1221(a)(3).  
If you received capital gain distribu-  
tions as a nominee (that is, they were  
paid to you but actually belong to some-  
one else), report on Schedule D, line 13,  
only the amount that belongs to you. At-  
For more information on consistent  
basis reporting and basis generally, see  
Column (e)—Cost or Other Basis in the  
Instructions for Form 8949, and the fol-  
lowing publications.  
But see the TIP about certain musical  
compositions or copyrights below.  
tach  
a
statement showing the full  
6. A U.S. Government publication,  
including the Congressional Record, that  
you received:  
amount you received and the amount  
you received as a nominee. See the In-  
structions for Schedule B to learn about  
the requirement for you to file Forms  
1099-DIV and 1096.  
Pub. 551, Basis of Assets.  
Pub. 550, Investment Income and  
Expenses.  
a. From the U.S. Government (or  
any governmental agency) for an  
amount other than the normal sales  
price, or  
Short- or Long-Term Gain or  
Loss  
Sale of Your Home  
You may not need to report the sale or  
exchange of your main home. If you  
must report it, complete Form 8949 be-  
fore Schedule D.  
b. Under circumstances (such as by  
gift) that entitle you to the basis of  
someone who received the publication  
for an amount other than the normal  
sales price.  
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 pe-  
riod for long-term capital gains and los-  
ses is generally more than 1 year. How-  
ever, beginning in 2018, the long-term  
holding period for certain gains with re-  
spect to “applicable partnership inter-  
ests” is more than 3 years. See Pub. 541  
for more information.  
Report the sale or exchange of your  
main home on Form 8949 if:  
7. Certain commodities derivative  
financial instruments held by a dealer  
and connected to the dealer's activities  
as a dealer. See section 1221(a)(6) and  
(b)(1).  
You can't exclude all of your gain  
from income, or  
You received a Form 1099-S for  
the sale or exchange.  
Any gain you can't exclude is taxable.  
Generally, if you meet the following two  
D-2  
   
tests, you can exclude up to $250,000 of  
gain. If both you and your spouse meet  
these tests and you file a joint return,  
you can exclude up to $500,000 of gain  
(but only one spouse needs to meet the  
ownership requirement in Test 1).  
Example. Tamara buys a house in  
Virginia in 2011 that she uses as her  
main home for 3 years. For 8 years,  
from 2014 through 2022, Tamara serves  
on qualified official extended duty as a  
member of the uniformed services in  
Kuwait. In 2023, Tamara sells the house.  
Tamara didn't use the house as her main  
home for at least 2 of the 5 years before  
the sale. To meet Test 1, Tamara elects to  
suspend the 5-year test period during her  
8-year period of uniformed service in  
Kuwait. Because that 8-year period  
won't be counted in determining if she  
used the house as her main home for 2  
of the 5 years before the sale, she meets  
the ownership and use requirements of  
Test 1.  
More information. See Pub. 523 for  
additional details, including how to fig-  
ure and report any taxable gain if:  
You (or your spouse if married)  
used any part of the home for business  
or rental purposes after May 6, 1997; or  
Test 1. During the 5-year period ending  
on the date you sold or exchanged your  
home, you owned it for 2 years or more  
(the ownership requirement) and lived in  
it as your main home for 2 years or more  
(the use requirement).  
There was a period of time after  
2008 when the home wasn't your main  
home.  
Partnership Interests  
A sale or other disposition of an interest  
in a partnership may result in ordinary  
income, collectibles gain (28% rate  
gain), or unrecaptured section 1250  
gain. For details on 28% rate gain, see  
the instructions for line 18. For details  
on unrecaptured section 1250 gain, see  
the instructions for line 19.  
Test 2. You haven't excluded gain on  
the sale or exchange of another main  
home during the 2-year period ending on  
the date of the sale or exchange of your  
home.  
Reduced exclusion. Even if you don't  
meet one or both of the above two tests,  
you can still claim an exclusion if you  
sold or exchanged the home because of  
a change in place of employment,  
health, or certain unforeseen circumstan-  
ces. In this case, the maximum amount  
of gain you can exclude is reduced. For  
more information, see Pub. 523.  
Qualified extended duty. You are on  
qualified extended duty if:  
Capital Assets Held for  
Personal Use  
You are called or ordered to active  
duty for an indefinite period or for a pe-  
riod of more than 90 days; and  
Generally, gain from the sale or ex-  
change of a capital asset held for person-  
al use is a capital gain. Report it on  
Form 8949 with box C checked (if the  
transaction is short term) or box F  
checked (if the transaction is long term).  
However, if you converted depreciable  
property to personal use, all or part of  
the gain on the sale or exchange of that  
property may have to be recaptured as  
ordinary income. Use Part III of Form  
4797 to figure the amount of ordinary  
income recapture. The recapture amount  
is included on line 31 (and line 13) of  
Form 4797. Don't enter any gain from  
this property on line 32 of Form 4797. If  
you aren't completing Part III for any  
other properties, enter “N/A” on line 32.  
If the total gain is more than the recap-  
ture amount, enter “From Form 4797” in  
column (a) of Part I of Form 8949 (if the  
transaction is short term) or Part II of  
Form 8949 (if the transaction is long  
term), and skip columns (b) and (c). In  
column (d) of Form 8949, enter the ex-  
cess of the total gain over the recapture  
amount. Leave columns (e) through (g)  
blank. Complete column (h). Be sure to  
check box C at the top of Part I or box F  
at the top of Part II of this Form 8949  
(depending on how long you held the as-  
set).  
You are serving at a duty station at  
least 50 miles from your main home, or  
you are living in government quarters  
under government orders.  
Sale of home by surviving spouse. If  
your spouse died before the sale or ex-  
change, you can still exclude up to  
$500,000 of gain if:  
Sale of home acquired in a like-kind  
exchange. You can't exclude any gain  
if:  
You acquired your home in a  
like-kind exchange in which all or part  
of the gain wasn't recognized, and  
The sale or exchange is no later  
than 2 years after your spouse's death;  
Just before your spouse's death,  
You sold or exchanged the home  
during the 5-year period beginning on  
the date you acquired it.  
both spouses met the use requirement of  
Test 1, at least one spouse met the own-  
ership requirement of Test 1, and both  
spouses met Test 2; and  
How to report the sale of your main  
home. If you have to report the sale or  
exchange, report it on Form 8949. If the  
gain or loss is short term, report it in  
Part I of Form 8949 with box C  
checked. If the gain or loss is long term,  
report it in Part II of Form 8949 with  
box F checked.  
You didn't remarry before the sale  
or exchange.  
Exceptions to Test 1. You can choose  
to have the 5-year test period for owner-  
ship and use in Test 1 suspended during  
any period you or your spouse serves  
outside the United States as a Peace  
Corps volunteer or serves on qualified  
official extended duty as a member of  
the uniformed services or Foreign Serv-  
ice of the United States, as an employee  
of the intelligence community, or out-  
side the United States as an employee of  
the Peace Corps. This means you may  
be able to meet Test 1 even if, because  
of your service, you didn't actually use  
the home as your main home for at least  
the required 2 years during the 5-year  
period ending on the date of sale. The  
5-year period can't be extended for more  
than 10 years.  
If you had a gain and can exclude  
part or all of it, enter “H” in column (f)  
of Form 8949. Enter the exclusion as a  
negative number (in parentheses) in col-  
umn (g) of Form 8949. See the instruc-  
tions for Form 8949, columns (f), (g),  
and (h). Complete all columns.  
If you had a loss but have to report  
the sale or exchange because you got a  
Form 1099-S, see Nondeductible Losses,  
later, for instructions about how to re-  
port it.  
Loss from the sale or exchange of a  
capital asset held for personal use isn't  
deductible. But if you had a loss from  
the sale or exchange of real estate held  
for personal use for which you received  
D-3  
   
a Form 1099-S, you must report the  
transaction on Form 8949 even though  
the loss isn't deductible. Also, if you had  
a loss from the sale or exchange of per-  
sonal property for which you received a  
Form 1099-K, you must report the trans-  
action on Form 8949 or on Schedule 1  
(Form 1040) even though the loss isn’t  
deductible.  
A fiduciary of a trust and a fiducia-  
ductible, enter “L” in column (f) and  
$4,000 (the difference between $1,000  
and $5,000) in column (g). In column  
(h), enter -0- ($1,000 − $5,000 +  
$4,000).  
ry (or beneficiary) of another trust if  
both trusts were created by the same  
grantor.  
An executor of an estate and a ben-  
eficiary of that estate, unless the sale or  
exchange was to satisfy a pecuniary be-  
quest (that is, a bequest of a sum of  
money).  
At-risk rules. If you disposed of (a) an  
asset used in an activity to which the  
at-risk rules apply, or (b) any part of  
your interest in an activity to which the  
at-risk rules apply, and you have  
amounts in the activity for which you  
aren't at risk, see the Instructions for  
Form 6198.  
An individual and a tax-exempt or-  
Example. You have a loss on the  
sale of a vacation home that isn't your  
main home and you received a Form  
1099-S for the transaction. Report the  
transaction in Part I or Part II of Form  
8949, depending on how long you  
owned the home. Complete all columns.  
Because the loss isn't deductible, enter  
“L” in column (f). Enter the difference  
between column (d) and column (e) as a  
positive amount in column (g). Then  
complete column (h). (For example, if  
you entered $5,000 in column (d) and  
$6,000 in column (e), enter $1,000 in  
column (g). Then enter -0- ($5,000 −  
$6,000 + $1,000) in column (h). Be sure  
to check box C at the top of Part I or box  
F at the top of Part II of this Form 8949  
(depending on how long you owned the  
home).)  
ganization controlled directly (or indi-  
rectly) by the individual or the individu-  
al's family.  
Passive activity rules. If the loss is al-  
lowable under the at-risk rules, it may be  
subject to the passive activity rules. See  
Form 8582 and its instructions for de-  
tails on reporting capital gains and los-  
ses from a passive activity.  
See Pub. 544 for more details on  
sales and exchanges between related  
parties.  
Report a transaction that results in a  
nondeductible loss in Part I or Part II of  
Form 8949 (depending on how long you  
held the property). Unless you received  
a Form 1099-B for the sale or exchange,  
check box C at the top of Part I or box F  
at the top of Part II of this Form 8949  
(depending on how long you owned the  
property). Complete all columns. Be-  
cause the loss isn't deductible, enter “L”  
in column (f). Enter the amount of the  
nondeductible loss as a positive number  
in column (g). Complete column (h).  
See the instructions for Form 8949, col-  
umns (f), (g), and (h).  
Items for Special Treatment  
Transactions by a securities dealer.  
See section 475 and Rev. Rul. 97-39,  
which begins on page 4 of Internal Rev-  
enue Bulletin 1997-39 at IRS.gov/pub/  
Bonds and other debt instruments.  
See Pub. 550.  
Certain real estate subdivided for  
sale that may be considered a capital as-  
set. See section 1237.  
Capital Losses  
You can deduct capital losses up to the  
amount of your capital gains plus $3,000  
($1,500 if married filing separately).  
You may be able to use capital losses  
that exceed this limit in future years. For  
details, see the instructions for line 21.  
Be sure to report all of your capital gains  
and losses even if you can't use all of  
your losses in 2023.  
Gain on the sale of depreciable  
property to a more-than-50%-owned en-  
tity or to a trust of which you are a bene-  
ficiary. See Pub. 544.  
Example 1. You sold land you held  
as an investment for 5 years to your  
brother for $10,000. Your basis was  
$15,000. On Part II of Form 8949, check  
box F at the top. Enter $10,000 on Form  
8949, Part II, column (d). Enter $15,000  
in column (e). Because the loss isn't de-  
ductible, enter “L” in column (f) and  
$5,000 (the difference between $10,000  
and $15,000) in column (g). In column  
(h), enter -0- ($10,000 − $15,000 +  
$5,000). If this is your only transaction  
on this Form 8949, enter $10,000 on  
Schedule D, line 10, column (d). Enter  
$15,000 in column (e) and $5,000 in  
column (g). In column (h), enter -0-  
($10,000 − $15,000 + $5,000).  
Gain on the disposition of stock in  
domestic international sales corpora-  
tions. See section 995(c).  
Gain on the sale or exchange of  
stock in certain foreign corporations.  
See section 1248.  
Certain Nondeductible  
Losses  
You can’t deduct a loss from a sale or  
exchange between certain related par-  
ties. This includes a direct or indirect  
sale or exchange of property between  
any of the following.  
Transfer of property to a partner-  
ship that would be treated as an invest-  
ment company if it were incorporated.  
See Pub. 541.  
Sales of stock received under a  
qualified public utility dividend rein-  
vestment plan. See Pub. 550.  
Transfer of appreciated property to  
a political organization. See section 84.  
Members of a family.  
A corporation and an individual  
who directly (or indirectly) owns more  
than 50% of the corporation's stock (un-  
less the loss is from a distribution in  
complete liquidation of a corporation).  
Example 2. You received a Form  
1099-B showing proceeds (sales price)  
of $1,000 and basis of $5,000. Box 7 on  
Form 1099-B is checked, indicating that  
your loss of $4,000 ($1,000 − $5,000)  
isn't allowed. On the top of Form 8949,  
check box A or box B in Part I or box D  
or box E in Part II (whichever applies).  
Enter $1,000 in column (d) and $5,000  
in column (e). Because the loss isn't de-  
Transfer of property by a U.S. per-  
son to a foreign estate or trust. See sec-  
tion 684.  
If you give up your U.S. citizen-  
ship, you may be treated as having sold  
all your property for its fair market val-  
ue on the day before you gave up your  
citizenship. This also applies to  
long-term U.S. residents who cease to be  
A grantor and a fiduciary of a  
trust.  
A fiduciary and a beneficiary of  
the same trust.  
D-4  
 
lawful permanent residents. For details,  
exceptions, and rules for reporting these  
deemed sales, see Pub. 519 and Form  
8854.  
ownership transaction was open in any  
prior year, you may have to pay interest.  
See section 1260(b) for details, includ-  
ing how to figure the interest. Include  
the interest as an additional tax on  
Schedule 2 (Form 1040), line 17z. In the  
space provided, enter “Section 1260(b)  
interest” and the amount of the interest.  
This interest isn't deductible.  
bond method and the Ordinary box in  
box 2 is checked, an adjustment may be  
required. Report the transaction on Form  
8949 and complete the form’s Work-  
sheet for Contingent Payment Debt In-  
strument Adjustment in Column (g) to  
figure the adjustment to enter in column  
(g) of Form 8949.  
In general, no gain or loss is recog-  
nized on the transfer of property from an  
individual to a spouse or a former  
spouse if the transfer is incident to a di-  
vorce. See Pub. 504.  
See Pub. 550 or Pub. 1212 for more  
details on any special rules or adjust-  
ments that might apply.  
Amounts received on the retire-  
Gain or loss from the disposition  
of stock or other securities in an invest-  
ment club. See Pub. 550.  
ment of a debt instrument are generally  
treated as received in exchange for the  
debt instrument. See Pub. 550.  
Certain virtual currencies, such as  
Bitcoin. See the Instructions for Form  
Wash Sales  
Any loss on the disposition of con-  
verted wetland or highly erodible crop-  
land that is first used for farming after  
A wash sale occurs when you sell or  
otherwise dispose of stock or securities  
(including a contract or option to acquire  
or sell stock or securities) at a loss and,  
within 30 days before or after the sale or  
disposition, you:  
If you are deferring eligible gain  
March 1, 1986, is reported as  
a
by investing in a QOF, report the gain on  
the form on which you normally report  
the gain and report the deferral on Form  
8949. See How To Report an Election to  
Defer Tax on Eligible Gain Invested in a  
QOF in the Form 8949 instructions.  
long-term capital loss on Form 8949, but  
any gain is reported as ordinary income  
on Form 4797.  
1. Buy substantially identical stock  
or securities,  
If qualified dividends that you re-  
ported on Form 1040, 1040-SR, or  
1040-NR, line 3a, include extraordinary  
dividends, any loss on the sale or ex-  
change of the stock is a long-term capi-  
tal loss to the extent of the extraordinary  
dividends. An extraordinary dividend is  
a dividend that equals or exceeds 10%  
(5% in the case of preferred stock) of  
your basis in the stock.  
2. Acquire substantially identical  
stock or securities in a fully taxable  
trade,  
Market Discount Bonds  
In general, a capital gain from the dispo-  
sition of a market discount bond is trea-  
ted 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 in-  
formation on market discount. See the  
Instructions for Form 8949 for detailed  
information about how to report the dis-  
position of a market discount bond.  
3. Enter into a contract or option to  
acquire substantially identical stock or  
securities, or  
4. Acquire substantially identical  
stock or securities for your individual re-  
tirement arrangement (IRA) or Roth  
IRA.  
Amounts received by shareholders  
in corporate liquidations. See Pub. 550.  
Cash received in lieu of fractional  
shares of stock as a result of a stock split  
or stock dividend. See Pub. 550.  
You can't deduct losses from wash  
sales unless the loss was incurred in the  
ordinary course of your business as a  
dealer in stock or securities. The basis of  
the substantially identical property (or  
contract or option to acquire such prop-  
erty) is its cost increased by the disal-  
lowed loss (except in the case of (4) ear-  
lier).  
Contingent Payment Debt  
Instruments  
Load charges to acquire stock in a  
regulated investment company (includ-  
ing a mutual fund), which may not be  
taken into account in determining gain  
or loss on certain dispositions of the  
stock if reinvestment rights were exer-  
cised. See Pub. 550.  
Any gain recognized on the sale, ex-  
change, or retirement of a taxable con-  
tingent payment debt instrument subject  
to the noncontingent bond method is  
treated as interest income rather than as  
capital gain, even if you hold the debt  
instrument as a capital asset. If you sell  
a taxable contingent payment debt in-  
strument subject to the noncontingent  
bond method at a loss, your loss is an or-  
dinary loss to the extent of your prior  
original issue discount (OID) inclusions  
on the debt instrument. If the debt in-  
strument is a capital asset, treat any loss  
that is more than your prior OID inclu-  
sions as a capital loss. See Regulations  
section 1.1275-4(b) for exceptions to  
these rules.  
The sale or exchange of S corpora-  
These wash sale rules don't apply to a  
redemption of shares in a floating-NAV  
(net asset value) money market fund.  
tion stock or an interest in a partnership  
or trust held for more than 1 year, which  
may result in collectibles gain (28% rate  
gain). See the instructions for line 18.  
If you received a Form 1099-B (or  
substitute statement), box 1g of that  
form will generally show whether there  
was any nondeductible wash sale loss  
and its amount if:  
Gain or loss on the disposition of  
securities futures contracts. See Pub.  
550.  
Gain on the constructive sale of  
certain appreciated financial positions.  
See Pub. 550.  
The stock or securities sold were  
covered securities (defined in the in-  
structions for Form 8949, column (e)),  
and  
Certain constructive ownership  
transactions. Gain in excess of the gain  
you would have recognized if you had  
held a financial asset directly during the  
term of a derivative contract must be  
treated as ordinary income. See section  
1260. If any portion of the constructive  
The substantially identical stock or  
If you received a Form 1099-B (or  
substitute statement) reporting the sale  
of a taxable contingent payment debt in-  
strument subject to the noncontingent  
securities you bought had the same CU-  
SIP number as the stock or securities  
you sold and were bought in the same  
account as the stock or securities you  
D-5  
sold. (CUSIP numbers are security iden-  
tification numbers.)  
4797 instead of on Form 8949. Regard-  
less of whether a trader reports his or her  
gains and losses on Form 8949 or Form  
4797, the gain or loss from the disposi-  
tion of securities isn't taken into account  
when figuring net earnings from  
self-employment on Schedule SE. See  
the Instructions for Schedule SE for an  
exception that applies to section 1256  
contracts.  
Internal Revenue Bulletin 1999-7 at  
However, you can't deduct a loss from a  
wash sale even if it isn't reported on  
Form 1099-B (or substitute statement).  
For more details on wash sales, see Pub.  
550.  
If you hold securities for investment,  
you must identify them as such in your  
records on the day you acquired them  
(for example, by holding the securities  
in a separate brokerage account). Securi-  
ties that you hold for investment aren't  
marked to market.  
Report a wash sale transaction in Part  
I or Part II (depending on how long you  
owned the stock or securities) of Form  
8949 with the appropriate box checked.  
Complete all columns. Enter “W” in col-  
umn (f). Enter as a positive number in  
column (g) the amount of the loss not al-  
lowed. See the instructions for Form  
8949, columns (f), (g), and (h).  
Short Sales  
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 inter-  
est expense and other expenses (exclud-  
ing commissions and other costs of ac-  
quiring or disposing of securities) from a  
trading business on Schedule C (instead  
of Schedule A).  
A short sale is a contract to sell property  
you borrowed for delivery to a buyer. At  
a later date, you either buy substantially  
identical property and deliver it to the  
lender or deliver property that you held  
but didn't want to transfer at the time of  
the sale.  
Traders in Securities  
You are a trader in securities if you are  
engaged in the business of buying and  
selling securities for your own account.  
To be engaged in business as a trader in  
securities, all of the following state-  
ments must be true.  
Example. You think the value of  
XYZ stock will drop. You borrow 10  
shares from your broker and sell them  
for $100. This is a short sale. You later  
buy 10 shares for $80 and deliver them  
to your broker to close the short sale.  
Your gain is $20 ($100 − $80).  
A trader may also hold securities for  
investment. The rules for investors will  
generally apply to those securities. Allo-  
cate interest and other expenses between  
your trading business and your invest-  
ment securities.  
You must seek to profit from daily  
market movements in the prices of se-  
curities and not from dividends, interest,  
or capital appreciation.  
Holding period. Usually, your holding  
period is the amount of time you actual-  
ly held the property eventually delivered  
to the broker or lender to close the short  
sale. However, your gain when closing a  
short sale is short term if you (a) held  
substantially identical property for 1  
year or less on the date of the short sale,  
or (b) acquired property substantially  
identical to the property sold short after  
the short sale but on or before the date  
you close the short sale. If you held sub-  
stantially identical property for more  
than 1 year on the date of a short sale,  
any loss realized on the short sale is a  
long-term capital loss, even if the prop-  
erty used to close the short sale was held  
1 year or less.  
Mark-to-Market Election for  
Traders  
Your activity must be substantial.  
You must carry on the activity with  
continuity and regularity.  
A trader may make an election under  
section 475(f) to report all gains and los-  
ses from securities held in connection  
with a trading business as ordinary in-  
come (or loss), including those from se-  
curities held at the end of the year. Se-  
curities held at the end of the year are  
“marked to market” by treating them as  
if they were sold for fair market value  
on the last business day of the year.  
Generally, the election must be made by  
the due date (not including extensions)  
of the tax return for the year prior to the  
year for which the election becomes ef-  
fective. To be effective for 2023, the  
election must have been made by the  
due date of your 2022 return (not count-  
ing extensions).  
The following facts and circumstan-  
ces should be considered in determining  
if your activity is a business.  
Typical holding periods for securi-  
ties bought and sold.  
The frequency and dollar amounts  
of your trades during the year.  
The extent to which you pursue the  
activity to produce income for a liveli-  
hood.  
The amount of time you devote to  
the activity.  
Reporting a short sale. Report any  
short sale on Form 8949 in the year it  
closes.  
You are considered an investor, and  
not a trader, if your activity doesn't meet  
the above definition of a business. It  
doesn't matter whether you call yourself  
a trader or a “day trader.”  
If a short sale closed in 2023 but you  
didn't get a 2023 Form 1099-B (or sub-  
stitute statement) for it because you en-  
tered into it before 2011, report it on  
Form 8949 in Part I with box C checked  
or Part II with box F checked (whichev-  
er applies). In column (a), enter (for ex-  
ample) “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 you re-  
ceived a 2023 Form 1099-B (or substi-  
Starting with the year the election be-  
comes effective, a trader reports all  
gains and losses from securities held in  
connection with the trading business, in-  
cluding securities held at the end of the  
year, in Part II of Form 4797. If you pre-  
viously made the election, see the In-  
structions for Form 4797. For details on  
making the mark-to-market election for  
2023, see Pub. 550 or Rev. Proc. 99-17,  
which starts on the bottom of page 52 of  
Like an investor, a trader must gener-  
ally report each sale of securities (taking  
into account commissions and any other  
costs of acquiring or disposing of the se-  
curities) on Form 8949 unless one of the  
exceptions described in the Instructions  
for Form 8949 applies. However, if a  
trader previously made the mark-to-mar-  
ket election (explained below), each  
transaction is reported in Part II of Form  
D-6  
 
tute statement) that doesn't show pro-  
ceeds (sales price).  
If there is an amount in box 1b of  
Form 2439, include that amount on  
1250 Gain Worksheet if you complete  
line 19 of Schedule D.  
gain or loss is recognized on the ex-  
change of your equity interest in the mu-  
tual company for stock. The company  
can advise you if the transaction is a  
tax-free reorganization. Your holding  
period for the new stock includes the pe-  
riod you held an equity interest in the  
mutual company. If you received cash in  
exchange for your equity interest, you  
must recognize any capital gain. If you  
held the equity interest for more than 1  
year, report the gain as a long-term capi-  
tal gain in Part II of Form 8949. If you  
held the equity interest for 1 year or less,  
report the gain as a short-term capital  
gain in Part I of Form 8949. Be sure the  
appropriate box is checked at the top of  
Form 8949.  
Gain or Loss From Options  
Report on Form 8949 gain or loss from  
the closing or expiration of an option  
that isn't a section 1256 contract but is a  
capital asset in your hands. If an option  
you purchased expired, enter the expira-  
tion date in column (c) and enter “EX-  
PIRED” in column (d). If an option that  
was granted (written) expired, enter the  
expiration date in column (b) and enter  
“EXPIRED” in column (e). Fill in the  
other columns according to their instruc-  
tions. See Pub. 550 for details.  
If there is an amount in box 1c of  
later.  
If there is an amount in box 1d of  
Form 2439, include that amount on  
if you complete line 18 of Schedule D.  
Include on Schedule 3 (Form 1040),  
line 13a, the tax paid as shown in box 2  
of Form 2439. Add to the basis of your  
stock the excess of the amount included  
in income over the amount of the credit  
for the tax paid. See Pub. 550 for details.  
If a call option you sold after 2013  
was exercised, the option premium you  
received will be reflected in the pro-  
ceeds shown in box 1d of the Form  
1099-B (or substitute statement) you re-  
ceived. If you sold the call option before  
2014, the option premium you received  
may not be reflected on Form 1099-B. If  
it isn't, enter the premium as a positive  
number in column (g) of Form 8949.  
Enter “E” in column (f).  
If the demutualization transaction  
doesn't qualify as a tax-free reorganiza-  
tion, you must recognize a capital gain  
or loss. If you held the equity interest for  
more than 1 year, report the gain or loss  
as a long-term capital gain or loss in Part  
II of Form 8949. If you held the equity  
interest for 1 year or less, report the gain  
or loss as a short-term capital gain or  
loss in Part I of Form 8949. Be sure the  
appropriate box is checked at the top of  
Form 8949. Your holding period for the  
new stock begins on the day after you  
received the stock.  
Installment Sales  
If you sold property (other than publicly  
traded stocks or securities) at a gain and  
you will receive a payment in a tax year  
after the year of sale, you must generally  
report the sale on the installment method  
unless you elect not to. Use Form 6252  
to report the sale on the installment  
method. Also, use Form 6252 to report  
any payment received in 2023 from a  
sale made in an earlier year that you re-  
ported on the installment method.  
Example. For $10 in 2013, you sold  
Joe an option to buy one share of XYZ  
stock for $80. Joe later exercised the op-  
tion. The Form 1099-B you get shows  
the proceeds to be $80. Enter $80 in col-  
umn (d) of Form 8949. Enter “E” in col-  
umn (f) and $10 in column (g). Com-  
plete the other columns according to the  
instructions.  
Small Business (Section  
1244) Stock  
To elect out of the installment meth-  
od, report the full amount of the gain on  
Form 8949 on a timely filed return (in-  
cluding extensions) for the year of the  
sale. If your original return was filed on  
time, you can make the election on an  
amended return filed no later than 6  
months after the due date of your return  
(excluding extensions). Enter “Filed pur-  
suant to section 301.9100-2” at the top  
of the amended return.  
Report an ordinary loss from the sale,  
exchange, or worthlessness of small  
business (section 1244) stock on Form  
4797. However, if the total loss is more  
than the maximum amount that can be  
treated as an ordinary loss for the year  
($50,000 or, on a joint return, $100,000),  
also report the transaction on Form 8949  
as follows.  
NAV Method for Money  
Market Funds  
If you have a capital gain or loss deter-  
mined under the net asset value (NAV)  
method with respect to shares in an NAV  
money market fund, report the capital  
gain or loss 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.  
1. In column (a), enter “Capital por-  
tion of section 1244 stock loss.”  
Demutualization of Life  
Insurance Companies  
2. Complete columns (b) and (c) as  
you normally would.  
Demutualization of a life insurance  
company occurs when a mutual life in-  
surance company changes to a stock  
company. If you were a policyholder or  
annuitant of the mutual company, you  
may have received either stock in the  
stock company or cash in exchange for  
your equity interest in the mutual com-  
pany.  
3. In column (d), enter the entire  
sales price of the stock sold.  
Undistributed Capital Gains  
4. In column (e), enter the entire ba-  
sis of the stock sold.  
Include on Schedule D, line 11, the  
amount from box 1a of Form 2439. This  
represents your share of the undistrib-  
uted long-term capital gains of the regu-  
lated investment company (including a  
mutual fund) or real estate investment  
trust.  
5. Enter “S” in column (f). See the  
instructions for Form 8949, columns (f),  
(g), and (h).  
6. In column (g), enter the loss you  
claimed on Form 4797 for this transac-  
tion. Enter it as a positive number.  
If the demutualization transaction  
qualifies as a tax-free reorganization, no  
D-7  
7. Complete column (h) according  
to its instructions.  
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 in-  
clude those of any predecessor of the  
corporation. All corporations that are  
members of the same parent-subsidiary  
controlled group are treated as one cor-  
poration.  
A business involving the produc-  
tion of products for which percentage  
depletion can be claimed.  
A business of operating a hotel,  
motel, restaurant, or similar business.  
Report the transaction in Part I or  
Part II of Form 8949 (depending on how  
long you held the stock) with the appro-  
priate box checked.  
For more details about limits and ad-  
ditional requirements that may apply,  
see Pub. 550 or section 1202.  
Example. You sold section 1244  
stock for $1,000. Your basis was  
$60,000. You had held the stock for 3  
years. You can claim $50,000 of your  
loss as an ordinary loss on Form 4797.  
To claim the rest of the loss on Form  
8949, check the appropriate box at the  
top. Enter $1,000 on Form 8949, Part II,  
column (d). Enter $60,000 in column  
(e). Enter “S” in column (f) and $50,000  
(the ordinary loss claimed on Form  
4797) in column (g). In column (h), en-  
Acquisition date of stock acquired af-  
ter February 17, 2009. When you are  
determining whether your exclusion is  
limited to 50%, 75%, or 100% of the  
gain from QSB stock, your acquisition  
date is considered to be the first day you  
held the stock (determined after apply-  
ing the holding period rules in section  
1223).  
4. You must have acquired the stock  
at its original issue (either directly or  
through an underwriter), either in ex-  
change for money or other property  
(other than stock) or as pay for services  
(other than as an underwriter) to the cor-  
poration. In certain cases, you may meet  
this test if you acquired the stock from  
another person who met the test (such as  
by gift or inheritance) or through a con-  
version or exchange of QSB stock you  
held.  
Empowerment Zone Business  
Stock  
You can generally exclude up to 60% of  
your gain from the sale or exchange of  
QSB stock held for more than 5 years if  
you meet the following additional re-  
quirements.  
ter ($9,000) ($1,000  
$60,000  
+
$50,000). Put it in parentheses to show it  
is a negative amount.  
Exclusion of Gain on  
Qualified Small Business  
(QSB) Stock  
5. During substantially all the time  
you held the stock:  
a. The corporation was a C corpora-  
tion;  
1. The stock you sold or exchanged  
was stock in a corporation that qualified  
as an empowerment zone business dur-  
ing substantially all of the time you held  
the stock.  
Section 1202 allows you to exclude a  
portion of the eligible gain on the sale or  
exchange of QSB stock. The section  
1202 exclusion applies only to QSB  
stock held for more than 5 years. If you  
acquired the QSB stock on or before  
February 17, 2009, you can exclude up  
to 50% of the qualified gain. However,  
you can exclude up to 60% of the quali-  
fied gain on certain empowerment zone  
business stock for gain attributable to  
periods on or before December 31,  
2018. The 60% exclusion doesn’t apply  
to gain attributable to periods after De-  
cember 31, 2018. See Empowerment  
b. At least 80% of the value of the  
corporation's assets were used in the ac-  
tive conduct of one or more qualified  
businesses (defined next); and  
c. The corporation wasn't a foreign  
corporation, DISC, former DISC, regu-  
lated investment company, real estate in-  
vestment trust, REMIC, FASIT, or coop-  
erative, or a corporation that has made  
(or that has a subsidiary that has made) a  
section 936 election.  
2. You acquired the stock after De-  
cember 21, 2000, and before February  
18, 2009.  
3. The gain from the sale or ex-  
change of the stock is attributable to pe-  
riods on or before December 31, 2018.  
Requirement 1 will still be met if the  
corporation ceased to qualify after the  
5-year period that began on the date you  
acquired the stock. However, the gain  
that qualifies for the 60% exclusion can't  
be more than the gain you would have  
had if you had sold the stock on the date  
the corporation ceased to qualify.  
SSBIC. A specialized small  
business investment company  
(SSBIC) is treated as having  
TIP  
met test 5b.  
If you acquired the QSB stock after  
February 17, 2009, and before Septem-  
ber 28, 2010, you can exclude up to 75%  
of the qualified gain.  
Definition of qualified business. A  
qualified business is any business that  
isn't one of the following.  
A business involving services per-  
Stock acquired after February 17,  
2009. You can exclude up to 75% of  
your gain if you acquired the stock after  
February 17, 2009, and before Septem-  
ber 28, 2010.  
formed in the field of health, law, engi-  
neering, architecture, accounting, actua-  
rial science, performing arts, consulting,  
athletics, financial services, or brokerage  
services.  
If you acquired the QSB stock after  
September 27, 2010, you can exclude up  
to 100% of the qualified gain.  
To be QSB stock, the stock must  
meet all of the following tests.  
You can exclude up to 100% of your  
gain if you acquired the stock after Sep-  
tember 27, 2010.  
A business whose principal asset is  
the reputation or skill of one or more  
employees.  
1. It must be stock in a C corpora-  
tion (that is, not S corporation stock).  
More information. For more informa-  
tion about empowerment zone business-  
es, see section 1397C.  
A banking, insurance, financing,  
leasing, investing, or similar business.  
2. It must have been originally is-  
sued after August 10, 1993.  
A farming business (including the  
raising or harvesting of trees).  
3. As of the date the stock was is-  
sued, the corporation was a domestic C  
D-8  
   
gain (box 1a) on Schedule D, line 11. In  
column (a) of Form 8949, Part II, enter  
the name of the corporation whose stock  
was sold. In column (f), enter “Q,” and  
in column (g), enter the amount of the  
excluded gain as a negative number. See  
the instructions for Form 8949, columns  
(f), (g), and (h). If you are completing  
line 18 of Schedule D, enter as a posi-  
tive number the amount of your allowa-  
ble exclusion on line 2 of the 28% Rate  
Gain Worksheet; if you excluded 60% of  
you can elect to postpone gain if you  
buy other QSB stock during the 60-day  
period that began on the date of the sale.  
A pass-through entity can also make the  
election to postpone gain. The benefit of  
the postponed gain applies to your share  
of the entity's postponed gain if you held  
an interest in the entity for the entire pe-  
riod the entity held the QSB stock. If a  
pass-through entity sold QSB stock held  
for more than 6 months and you held an  
interest in the entity for the entire period  
the entity held the stock, you can also  
elect to postpone gain if you, rather than  
the pass-through entity, buy the replace-  
ment QSB stock within the 60-day peri-  
od. If you were a partner in a partnership  
that sold or bought QSB stock, see  
box 11 of the Schedule K-1 (Form 1065)  
sent to you by the partnership; also, see  
Regulations section 1.1045-1.  
Pass-Through Entities  
If you held an interest in a pass-through  
entity (a partnership, S corporation,  
common trust fund, or mutual fund or  
other regulated investment company)  
that sold QSB stock, to qualify for the  
exclusion you must have held the inter-  
est on the date the pass-through entity  
acquired the QSB stock and at all times  
thereafter until the stock was sold.  
How To Report  
2
the gain, enter /3 of the exclusion; if  
1
Report the sale or exchange of the QSB  
stock on Form 8949, Part II, with the ap-  
propriate box checked, as you would if  
you weren't taking the exclusion. Then  
enter “Q” in column (f) and enter the  
amount of the excluded gain as a nega-  
tive number in column (g). Put it in pa-  
rentheses to show it is negative. See the  
instructions for Form 8949, columns (f),  
(g), and (h). Complete all remaining col-  
umns. If you are completing line 18 of  
Schedule D, enter as a positive number  
the amount of your allowable exclusion  
on line 2 of the 28% Rate Gain Work-  
sheet; if you excluded 60% of the gain,  
you excluded 75% of the gain, enter /3  
of the exclusion; if you excluded 100%  
of the gain, don't enter an amount.  
Gain from an installment sale of QSB  
stock. If all payments aren't received in  
the year of sale, a sale of QSB stock that  
isn't traded on an established securities  
market is generally treated as an install-  
ment sale and is reported on Form 6252.  
Report the long-term gain from Form  
6252 on Schedule D, line 11. Figure the  
allowable section 1202 exclusion for the  
year by multiplying the total amount of  
the exclusion by a fraction, the numera-  
tor of which is the amount of eligible  
gain to be recognized for the tax year  
and the denominator of which is the to-  
tal amount of eligible gain. In column  
(a) of Form 8949, Part II, enter the name  
of the corporation whose stock was sold.  
In column (f), enter “Q,” and in column  
(g), enter the amount of the allowable  
exclusion for the year as a negative  
number. See the instructions for Form  
8949, columns (f), (g), and (h). If you  
are completing line 18 of Schedule D,  
enter as a positive number the amount of  
your allowable exclusion for the year on  
line 2 of the 28% Rate Gain Worksheet;  
if you excluded 60% of the gain, enter  
2/3 of the allowable exclusion for the  
year; if you excluded 75% of the gain,  
You must recognize gain to the extent  
the sale proceeds are more than the cost  
of the replacement stock. Reduce the ba-  
sis of the replacement stock by any post-  
poned gain.  
You must make the election no later  
than the due date (including extensions)  
for filing your tax return for the tax year  
in which the QSB stock was sold. If  
your original return was filed on time,  
you can make the election on an amen-  
ded return filed no later than 6 months  
after the due date of your return (exclud-  
ing extensions). Enter “Filed pursuant to  
section 301.9100-2” at the top of the  
amended return.  
2
enter /3 of the exclusion; if you exclu-  
1
ded 75% of the gain, enter /3 of the ex-  
clusion; if you excluded 100% of the  
gain, don't enter an amount.  
Gain from Form 1099-DIV. If you re-  
ceived a Form 1099-DIV with a gain in  
box 2c, part or all of that gain (which is  
also included in box 2a) may be eligible  
for the section 1202 exclusion. Report  
the total gain (box 2a) on Schedule D,  
line 13. In column (a) of Form 8949,  
Part II, enter the name of the corporation  
whose stock was sold. In column (f), en-  
ter “Q,” and in column (g), enter the  
amount of the excluded gain as a nega-  
tive number. See the instructions for  
Form 8949, columns (f), (g), and (h). If  
you are completing line 18 of Sched-  
ule D, enter as a positive number the  
amount of your allowable exclusion on  
line 2 of the 28% Rate Gain Worksheet;  
if you excluded 60% of the gain, enter  
2/3 of the exclusion; if you excluded  
To make the election, report the sale  
in Part I or Part II (depending on how  
long you, or the pass-through entity, if  
applicable, owned the stock) of Form  
8949 as you would if you weren't mak-  
ing the election. Then enter “R” in col-  
umn (f). Enter the amount of the post-  
poned gain as a negative number in col-  
umn (g). Put it in parentheses to show it  
is negative. See the instructions for  
Form 8949, columns (f), (g), and (h).  
Complete all remaining columns.  
1
enter /3 of the allowable exclusion for  
the year; if you excluded 100% of the  
gain, don't enter an amount.  
Alternative minimum tax. If you qual-  
ify for the 50%, 60%, or 75% exclusion,  
enter 7% of your allowable exclusion for  
the year on line 13 of Form 6251. If you  
qualify for the 100% exclusion, leave  
line 13 of Form 6251 blank.  
1
75% of the gain, enter /3 of the exclu-  
Exclusion of Gain From DC  
Zone Assets  
If you sold or exchanged a District of  
Columbia Enterprise Zone (DC Zone)  
asset that you acquired after 1997 and  
before 2012 and held for more than 5  
years, you may be able to exclude the  
amount of qualified capital gain that you  
sion; if you excluded 100% of the gain,  
don't enter an amount.  
Gain from Form 2439. If you received  
a Form 2439 with a gain in box 1c, part  
or all of that gain (which is also included  
in box 1a) may be eligible for the sec-  
tion 1202 exclusion. Report the total  
Rollover of Gain From QSB  
Stock  
If you sold QSB stock (defined earlier)  
that you held for more than 6 months,  
D-9  
would otherwise include in income. The  
exclusion applies to an interest in, or  
property of, certain businesses operating  
in the District of Columbia.  
during the 180-day period beginning on  
the date the gain was realized. You 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.  
Qualified community asset. A quali-  
fied community asset is any of the fol-  
lowing.  
Qualified community stock.  
Qualified community partnership  
DC Zone asset. A DC Zone asset is any  
of the following.  
interest.  
DC Zone business stock.  
DC Zone partnership interest.  
DC Zone business property.  
Qualified community business  
property.  
If you elect to defer tax on an  
eligible gain by investing in a  
QOF, you will need to complete  
!
CAUTION  
Qualified capital gain. Qualified capi-  
tal gain is any gain recognized on the  
sale or exchange of a qualified commun-  
ity asset but doesn't include any of the  
following.  
Gain attributable to periods after  
December 31, 2014.  
Gain treated as ordinary income  
under section 1245.  
a Form 8997 for each year you hold the  
investment and for the year you dispose  
of the investment. If you have held that  
investment for more than 5 years, see  
the instructions for Form 8997 for addi-  
tional information regarding the basis of  
that investment.  
Qualified capital gain. Qualified capi-  
tal gain is any gain recognized on the  
sale or exchange of a DC Zone asset that  
is a capital asset or property used in a  
trade or business. It doesn't include any  
of the following gains.  
Gain attributable to periods after  
December 31, 2016.  
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 inte-  
gral part of a DC Zone business.  
QOF. A QOF is any investment vehicle  
that is organized as either a corporation  
or partnership for the purpose of invest-  
ing in eligible property that is located in  
a qualified opportunity zone.  
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 inte-  
gral part of a renewal community busi-  
ness.  
How to report. Report the eligible gain  
as you normally would on Schedule D.  
See the Form 8949 instructions for how  
to report the deferral. See the Form 8997  
instructions for additional reporting in-  
structions.  
Gain from a related-party transac-  
Gain from a related-party transac-  
tion. See Sales and Exchanges Between  
Related Persons in chapter 2 of Pub.  
544.  
tion. See Sales and Exchanges Between  
Related Persons in chapter 2 of Pub.  
544.  
How to report. Report the sale or ex-  
change of qualified community stock or  
a qualified community partnership inter-  
est on Form 8949, Part II, with the ap-  
propriate box checked, as you would if  
you weren't taking the exclusion. Then  
enter “X” in column (f) and enter the  
amount of the exclusion as a negative  
number in column (g). Put it in paren-  
theses to show it is negative. See the in-  
structions for Form 8949, columns (f),  
(g), and (h). Complete all remaining col-  
umns.  
Rollover of Gain From Stock  
Sold to ESOPs or Certain  
Cooperatives  
You can postpone all or part of any gain  
from the sale of qualified securities, held  
for at least 3 years, to an employee stock  
ownership plan (ESOP) or eligible  
worker-owned cooperative, if you buy  
qualified replacement property. See Pub.  
550. Also, see the instructions for Form  
8949, columns (f), (g), and (h).  
How to report. Report the sale or ex-  
change of DC Zone business stock or a  
DC Zone partnership interest on Form  
8949, Part II, as you would if you  
weren't taking the exclusion. Then enter  
“X” in column (f). Enter the amount of  
the exclusion as a negative number in  
column (g). Put it in parentheses to show  
it is negative. See the instructions for  
Form 8949, columns (f), (g), and (h).  
Complete all remaining columns.  
Report the sale or exchange of DC  
Zone business property on Form 4797.  
See the Form 4797 instructions for de-  
tails.  
Report the sale or exchange of quali-  
fied community business property on  
Form 4797. See the Form 4797 instruc-  
tions for details.  
Specific  
Instructions  
Exclusion of Gain From  
Qualified Community Assets  
Deferral of Gain Invested in  
a QOF  
Rounding Off to Whole  
Dollars  
If you sold or exchanged a qualified  
community asset that you acquired after  
2001 and before 2010 and held for more  
than 5 years, you may be able to exclude  
the qualified capital gain that you would  
otherwise include in income. The exclu-  
sion applies to an interest in, or property  
of, certain renewal community business-  
es.  
If you have an eligible gain, you can in-  
vest that gain in a QOF and elect to de-  
fer part or all of the gain that you would  
otherwise include in income until you  
sell or exchange the investment in the  
QOF or December 31, 2026, whichever  
is earlier. If you make the election, you  
only include gain to the extent, if any,  
the amount of realized gain is more than  
the aggregate amount invested in a QOF  
You can round off cents to whole dollars  
on your Schedule D. If you do round to  
whole dollars, you must round all  
amounts. To round, drop amounts under  
50 cents and increase amounts from 50  
to 99 cents to the next dollar. For exam-  
ple, $1.39 becomes $1 and $2.50 be-  
comes $3.  
If you have to add two or more  
amounts to figure the amount to enter on  
D-10  
Capital Loss Carryover Worksheet—Lines 6 and 14  
Keep for Your Records  
Use this worksheet to figure your capital loss carryovers from 2022 to 2023 if your 2022 Schedule D, line 21, is a loss and (a) that loss is a smaller loss  
than the loss on your 2022 Schedule D, line 16; or (b) if the amount on your 2022 Form 1040 or 1040-SR, line 15, (or your 2022 Form 1040-NR,  
line 15, if applicable) would be less than zero if you could enter a negative amount on that line. Otherwise, you don't have any carryovers.  
If you and your spouse once filed a joint return and are filing separate returns for 2023, any capital loss carryover from the joint return can be deducted  
only on the return of the spouse who actually had the loss.  
If you excluded canceled debt from income in 2023, see Pub. 4681.  
1. Enter the amount from your 2022 Form 1040 or 1040-SR, line 15; or your 2022 Form 1040-NR, line 15. If  
the amount would have been a loss if you could enter a negative number on that line, enclose the amount in  
parentheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
1.  
2.  
3.  
2. Enter the loss from your 2022 Schedule D, line 21, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . .  
3. Combine lines 1 and 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
4. Enter the smaller of line 2 or line 3 . . . . . . . . . . . . . . . . . . . . . .  
4.  
If line 7 of your 2022 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9.  
5. Enter the loss from your 2022 Schedule D, line 7, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . .  
5.  
6. Enter any gain from your 2022 Schedule D, line 15. If a loss,  
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
6.  
7. Add lines 4 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
7.  
8.  
8. Short-term capital loss carryover for 2023. Subtract line 7 from line 5. If zero or less, enter -0-. If more  
than zero, also enter this amount on Schedule D, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
If line 15 of your 2022 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13.  
9. Enter the loss from your 2022 Schedule D, line 15, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . .  
9.  
10. Enter any gain from your 2022 Schedule D, line 7. If a loss,  
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
10.  
11.  
11. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . .  
12. Add lines 10 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
12.  
13.  
13. Long-term capital loss carryover for 2023. Subtract line 12 from line 9. If zero or less, enter -0-. If more  
than zero, also enter this amount on Schedule D, line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
a line, include cents when adding the  
amounts and round off only the total.  
The Ordinary box in box 2 isn’t  
checked;  
The QOF box in box 3 isn’t  
from the proceeds (sales price) in col-  
umn (d). Enter the gain or loss in col-  
umn (h). Enter negative amounts in pa-  
rentheses.  
checked;  
Disposal of QOF investment. If you  
disposed of any investment in a QOF  
during the tax year, check the box on  
page 1 of Schedule D and see the In-  
structions for Form 8949 for additional  
reporting requirements. You must also  
complete Part III of Form 8997. See the  
instructions for Form 8997 for details.  
You aren’t electing to defer income  
Example 1—basis reported to the  
IRS. You received a Form 1099-B re-  
porting the sale of stock you held for 3  
years. It shows proceeds (in box 1d) of  
$6,000 and cost or other basis (in  
box 1e) of $2,000. Box 3 is checked,  
meaning that basis was reported to the  
IRS. You don't need to make any adjust-  
ments to the amounts reported on Form  
1099-B or enter any codes. This was  
your only 2023 transaction. Instead of  
reporting this transaction on Form 8949,  
you can enter $6,000 on Schedule D,  
line 8a, column (d); $2,000 in column  
(e); and $4,000 ($6,000 − $2,000) in col-  
umn (h).  
due to an investment in a QOF and  
aren’t terminating deferral from an in-  
vestment in a QOF; and  
You don't need to make any adjust-  
ments to the basis or type of gain or loss  
reported on Form 1099-B (or substitute  
statement), or to your gain or loss.  
See How To Complete Form 8949, Col-  
umns (f) and (g) in the Form 8949 in-  
structions for details about possible ad-  
justments to your gain or loss.  
Lines 1a and 8a—  
Transactions Not Reported  
on Form 8949  
You can report on line 1a (for short-term  
transactions) or line 8a (for long-term  
transactions) the aggregate totals from  
any transactions (except sales of collec-  
tibles) for which:  
If you choose to report these transac-  
tions on lines 1a and 8a, don't report  
them on Form 8949. You don't need to  
attach a statement to explain the entries  
on lines 1a and 8a and, if you e-file your  
return, you don't need to file Form 8453.  
You received a Form 1099-B (or  
If you 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  
substitute statement) that shows basis  
was reported to the IRS and doesn't  
show any adjustments in box 1f or 1g;  
Figure gain or loss on each line. Sub-  
tract the cost or other basis in column (e)  
D-11  
 
$11,000 ($6,000 + $5,000) on Sched-  
ule D, line 8a, column (d); $5,000  
($2,000 + $3,000) in column (e); and  
$6,000 ($11,000 − $5,000) in column  
(h).  
ness (QSB) Stock, earlier).  
Lines 1b, 2, 3, 8b, 9, and 10,  
Column (h)—Transactions  
Reported on Form 8949  
Figure gain or loss on each line. First,  
subtract the cost or other basis in col-  
umn (e) from the proceeds (sales price)  
in column (d). Then combine the result  
with any adjustments in column (g). En-  
ter the gain or loss in column (h). Enter  
negative amounts in parentheses.  
You reported in Part II of Form  
8949 a collectibles gain or (loss). A col-  
lectibles 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.  
Example 2—basis not reported to  
the IRS. You 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 3 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.  
Collectibles include works of art,  
rugs, antiques, metals (such as gold, sil-  
ver, and platinum bullion), gems,  
stamps, coins, alcoholic beverages, and  
certain other tangible property.  
Example 1—gain. Column (d) is  
$6,000 and column (e) is $2,000. Enter  
$4,000 in column (h).  
Include on the worksheet any gain  
(but not loss) from the sale or exchange  
of an interest in a partnership, S corpora-  
tion, or trust held for more than 1 year  
and attributable to unrealized apprecia-  
tion of collectibles. For details, see Reg-  
ulations section 1.1(h)-1. Also, attach  
the statement required under Regula-  
tions section 1.1(h)-1(e).  
Example 2—loss. Column (d) is  
$6,000 and column (e) is $8,000. Enter  
($2,000) in column (h).  
Example 3—adjustment. You re-  
ceived a Form 1099-B showing pro-  
ceeds (in box 1d) of $6,000 and cost or  
other basis (in box 1e) of $2,000. Box 3  
is checked, meaning that basis was re-  
ported to the IRS. However, the basis  
shown in box 1e is incorrect. Don't re-  
port 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.  
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).  
Line 19  
Line 13  
If you checked “Yes” on line 17, com-  
Gain Worksheet in these instructions if  
any of the following apply for 2023.  
Line 18  
If you checked “Yes” on line 17, com-  
these instructions if either of the follow-  
ing applies for 2023.  
You sold or otherwise disposed of  
section 1250 property (generally, real  
property that you depreciated) held more  
than 1 year.  
You reported in Part II of Form  
8949 a section 1202 exclusion from the  
You received installment payments  
for section 1250 property held more than  
eligible gain on QSB stock (see Exclu-  
28% Rate Gain Worksheet—Line 18  
Keep for Your Records  
1. Enter the total of all collectibles gain or (loss) from items you reported on Form 8949, Part II . . . . . . . . . . . . . . . . . . . . . . .  
1.  
2. Enter as a positive number the total of:  
Any section 1202 exclusion you reported in column (g) of Form 8949, Part II, with  
code “Q” in column (f), that is 50% of the gain;  
2/3 of any section 1202 exclusion you reported in column (g) of Form 8949, Part II,  
. . . . . . . . . . . . . . . . . . . . . . 2.  
with code “Q” in column (f), that is 60% of the gain; and  
1/3 of any section 1202 exclusion you reported in column (g) of Form 8949, Part II,  
with code “Q” in column (f), that is 75% of the gain.  
Don’t make an entry for any section 1202 exclusion that is 100% of the gain.  
3. Enter the total of all collectibles gain or (loss) from Form 4684, line 4 (but only if Form 4684, line 15, is more than zero); Form  
6252; Form 6781, Part II; and Form 8824 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.  
4. Enter the total of any collectibles gain reported to you on:  
Form 1099-DIV, box 2d;  
Form 2439, box 1d; and  
Schedule K-1 from a partnership, S corporation, estate, or trust.  
. . . . . . . . . . . . . . . . . . . . 4.  
5. Enter your long-term capital loss carryovers from Schedule D, line 14; and Schedule K-1 (Form 1041),  
(
(
)
)
5.  
box 11, code D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
6. If Schedule D, line 7, is a (loss), enter that (loss) here. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
6.  
7. Combine lines 1 through 6. If zero or less, enter -0-. If more than zero, also enter this amount on  
Schedule D, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.  
D-12  
 
1 year for which you are reporting gain  
on the installment method.  
installment sale of trade or business  
property held more than 1 year.  
has been used in full. Figure the amount  
of gain treated as unrecaptured section  
1250 gain for installment payments re-  
ceived in 2023 as the smaller of (a) the  
amount from line 26 or line 37 of your  
2023 Form 6252, whichever applies; or  
(b) the amount of unrecaptured section  
1250 gain remaining to be reported. This  
amount is generally the total unrecap-  
tured section 1250 gain for the sale re-  
duced by all gain reported in prior years  
(excluding section 1250 ordinary in-  
come recapture). However, if you chose  
not to treat all of the gain from payments  
received after May 6, 1997, and before  
August 24, 1999, as unrecaptured sec-  
tion 1250 gain, use only the amount you  
chose to treat as unrecaptured section  
1250 gain for those payments to reduce  
the total unrecaptured section 1250 gain  
remaining to be reported for the sale. In-  
clude this amount on line 4.  
You received a Schedule K-1 from  
Step 1. Figure the smaller of (a) the  
depreciation allowed or allowable, or (b)  
the total gain for the sale. This is the  
smaller of line 22 or line 24 of your  
2023 Form 4797 (or the comparable  
lines of Form 4797 for the year of sale)  
for the property.  
an estate or trust, a partnership, or an S  
corporation that shows “unrecaptured  
section 1250 gain.”  
You received a Form 1099-DIV or  
Form 2439 from a real estate investment  
trust or regulated investment company  
(including a mutual fund) that reports  
“unrecaptured section 1250 gain.”  
Step 2. Reduce the amount figured in  
Step 1 by any section 1250 ordinary in-  
come recapture for the sale. This is the  
amount from line 26g of your 2023  
Form 4797 (or the comparable line of  
Form 4797 for the year of sale) for the  
property. The result is your total unrec-  
aptured section 1250 gain that must be  
allocated to the installment payments re-  
ceived from the sale.  
You reported a long-term capital  
gain from the sale or exchange of an in-  
terest in a partnership that owned section  
1250 property.  
Instructions for the Unrecaptured  
Section 1250 Gain Worksheet  
Lines 1 through 3. If you had more  
than one property described on line 1,  
complete lines 1 through 3 for each  
property on a separate worksheet. Enter  
the total of the line 3 amounts for all  
properties on line 3 and go to line 4.  
Step 3. Generally, the entire amount  
of gain from the sale of trade or business  
property included in each installment  
payment is treated as unrecaptured sec-  
tion 1250 gain until the total unrecap-  
tured section 1250 gain figured in Step 2  
Line 4. To figure the amount to enter on  
line 4, follow the steps below for each  
D-13  
Unrecaptured Section 1250 Gain Worksheet—Line 19  
Keep for Your Records  
If you aren't reporting a gain on Form 4797, line 7, skip lines 1 through 9 and go to line 10.  
1. If you have a section 1250 property in Part III of Form 4797 for which you made an entry in Part I of Form 4797 (but  
not on Form 6252), enter the smaller of line 22 or line 24 of Form 4797 for that property. If you didn't have any such  
property, go to line 4. If you had more than one such property, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.  
2. Enter the amount from Form 4797, line 26g, for the property for which you made an entry on line 1 . . . . . . . . . . . . .  
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
4. Enter the total unrecaptured section 1250 gain included on line 26 or line 37 of Form(s) 6252 from installment sales  
2.  
3.  
of trade or business property held more than 1 year. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.  
5. Enter the total of any amounts reported to you on a Schedule K-1 from a partnership or an S corporation as  
“unrecaptured section 1250 gain” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.  
6. Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
6.  
7. Enter the smaller of line 6 or the gain from Form 4797, line 7 . . . . . . . . . . . . . . . . . . . . .  
8. Enter the amount, if any, from Form 4797, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
7.  
8.  
9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
9.  
10. Enter the amount of any gain from the sale or exchange of an interest in a partnership attributable to unrecaptured  
section 1250 gain. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.  
11. Enter the total of any amounts reported to you as “unrecaptured section 1250 gain” on a Schedule K-1, Form  
1099-DIV, or Form 2439 from an estate, a trust, a real estate investment trust, or a mutual fund (or other regulated  
investment company) or in connection with a Form 1099-R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.  
12. Enter the total of any unrecaptured section 1250 gain from sales (including installment sales) or other dispositions of  
section 1250 property held more than 1 year for which you didn't make an entry in Part I of Form 4797 for the year of  
sale. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.  
13. Add lines 9 through 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
13.  
14. If you had any section 1202 gain or collectibles gain or (loss), enter the total of lines 1  
through 4 of the 28% Rate Gain Worksheet. Otherwise, enter -0- . . . . . . . . . . . . . . . . . 14.  
15. Enter the (loss), if any, from Schedule D, line 7. If Schedule D, line 7, is zero or a gain,  
(
(
)
)
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.  
16. Enter your long-term capital loss carryovers from Schedule D, line 14; and Schedule K-1  
(Form 1041), box 11, code D* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.  
17. Combine lines 14 through 16. If the result is a (loss), enter it as a positive amount. If the result is zero or a gain,  
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.  
18. Unrecaptured section 1250 gain. Subtract line 17 from line 13. If zero or less, enter -0-. If more than zero, enter the  
result here and on Schedule D, line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.  
* If you are filing Form 2555 (relating to foreign earned income), see the footnote in the Foreign Earned Income Tax  
Worksheet in the Instructions for Form 1040 before completing this line.  
Installment sales. To figure the  
amount to include on line 12, follow the  
steps below for each installment sale of  
property held more than 1 year for  
which you didn't make an entry in Part I  
of your Form 4797 for the year of sale.  
is treated as unrecaptured section 1250  
Line 10. Include on line 10 your share  
of the partnership's unrecaptured section  
1250 gain that would result if the part-  
nership had transferred all of its section  
1250 property in a fully taxable transac-  
tion immediately before you sold or ex-  
changed your interest in that partnership.  
If you recognized less than all of the re-  
alized gain, the partnership will be trea-  
ted as having transferred only a propor-  
tionate amount of each section 1250  
property. For details, see Regulations  
section 1.1(h)-1. Also, attach the state-  
ment required under Regulations  
gain until the total unrecaptured section  
1250 gain figured in Step 2 has been  
used in full. Figure the amount of gain  
treated as unrecaptured section 1250  
gain for installment payments received  
in 2023 as the smaller of (a) the amount  
from line 26 or line 37 of your 2023  
Form 6252, whichever applies; or (b)  
the amount of unrecaptured section 1250  
gain remaining to be reported. This  
amount is generally the total unrecap-  
tured section 1250 gain for the sale re-  
duced by all gain reported in prior years  
(excluding section 1250 ordinary in-  
come recapture). However, if you chose  
not to treat all of the gain from payments  
received after May 6, 1997, and before  
August 24, 1999, as unrecaptured sec-  
tion 1250 gain, use only the amount you  
chose to treat as unrecaptured section  
1250 gain for those payments to reduce  
the total unrecaptured section 1250 gain  
remaining to be reported for the sale. In-  
clude this amount on line 12.  
Step 1. Figure the smaller of (a)  
the depreciation allowed or allowable, or  
(b) the total gain for the sale. This is the  
smaller of line 22 or line 24 of your  
2023 Form 4797 (or the comparable  
lines of Form 4797 for the year of sale)  
for the property.  
Step 2. Reduce the amount figured  
in Step 1 by any section 1250 ordinary  
income recapture for the sale. This is the  
amount from line 26g of your 2023  
Form 4797 (or the comparable line of  
Form 4797 for the year of sale) for the  
property. The result is your total unrec-  
aptured section 1250 gain that must be  
allocated to the installment payments re-  
ceived from the sale.  
section 1.1(h)-1(e).  
Line 12. An example of an amount to  
include on line 12 is unrecaptured sec-  
tion 1250 gain from the sale of a vaca-  
tion home you previously used as a rent-  
al property but converted to personal use  
prior to the sale. To figure the amount to  
enter on line 12, follow the applicable  
instructions below.  
Step 3. Generally, the amount of  
capital gain on each installment payment  
D-14  
 
Other sales or dispositions of section  
1250 property. For each sale of proper-  
ty held more than 1 year (for which you  
didn't make an entry in Part I of Form  
4797), figure the smaller of (a) the de-  
preciation allowed or allowable, or (b)  
the total gain for the sale. This is the  
smaller of line 22 or line 24 of Form  
4797 for the property. Next, reduce that  
amount by any section 1250 ordinary in-  
come recapture for the sale. This is the  
amount from line 26g of Form 4797 for  
the property. The result is the total un-  
recaptured section 1250 gain for the  
sale. Include this amount on line 12.  
zero if you could enter a negative  
amount on that line.  
To figure any capital loss carryover  
to 2024, you will use the Capital Loss  
Carryover Worksheet in the 2024 In-  
structions for Schedule D. If you want to  
figure your carryover to 2024 now, see  
Pub. 550.  
Line 21  
You have a capital loss carryover from  
2023 to 2024 if you have a loss on  
line 16 and either:  
That loss is more than the loss on  
line 2; or  
The amount on Form 1040 or  
1040-SR, line 15, (or Form 1040-NR,  
line 15, if applicable) would be less than  
You will need a copy of your  
2023 Form 1040 or 1040-SR  
and Schedule D to figure your  
TIP  
capital loss carryover to 2024.  
D-15  
Schedule D Tax Worksheet  
Keep for Your Records  
Complete this worksheet only if line 18 or line 19 of Schedule D is more than zero and lines 15 and 16 of Schedule D are gains or  
if you file Form 4952 and you have an amount on line 4g, even if you don’t need to file Schedule D. Otherwise, complete the  
Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040, line 16, (or in the instructions for Form  
1040-NR, line 16) to figure your tax. Before completing this worksheet, complete Form 1040, 1040-SR, or 1040-NR through  
line 15.  
Exception: Don’t use the Qualified Dividends and Capital Gain Tax Worksheet or this worksheet to figure your tax if:  
Line 15 or line 16 of Schedule D is zero or less and you have no qualified dividends on Form 1040, 1040-SR, or 1040-NR, line 3a;  
or  
Form 1040, 1040-SR, or 1040-NR, line 15, is zero or less.  
Instead, see the instructions for Form 1040, line 16 (or Form 1040-NR, line 16).  
1. Enter your taxable income from Form 1040, 1040-SR, or 1040-NR, line 15. (However, if you are filing Form  
2555 (relating to foreign earned income), enter instead the amount from line 3 of the Foreign Earned Income  
Tax Worksheet in the instructions for Form 1040, line 16.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.  
2. Enter your qualified dividends from Form 1040,  
1040-SR, or 1040-NR, line 3a . . . . . . . . . . . . . . . . . 2.  
3. Enter the amount from Form 4952  
(used to figure investment interest  
expense deduction), line 4g . . . . . . . 3.  
4. Enter the amount from Form 4952,  
line 4e* . . . . . . . . . . . . . . . . . . . . . . . 4.  
5. Subtract line 4 from line 3. If zero or less,  
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.  
6. Subtract line 5 from line 2. If zero or less, enter -0-** . . . . . . . . . . . . . . .  
6.  
9.  
7. Enter the smaller of line 15 or line 16  
of Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.  
8. Enter the smaller of line 3 or line 4 . . . . . . . . . . . .  
8.  
9. Subtract line 8 from line 7. If zero or less, enter -0-** . . . . . . . . . . . . . . .  
10. Add lines 6 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
10.  
12.  
11. Add lines 18 and 19 of Schedule D** . . . . . . . . . . . . . . . . . . . . . . . . . . .  
11.  
12. Enter the smaller of line 9 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
13. Subtract line 12 from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
14. Subtract line 13 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
15. Enter:  
13.  
14.  
• $44,625 if single or married filing  
separately;  
• $89,250 if married filing jointly or  
qualifying surviving spouse; or  
• $59,750 if head of household.  
. . . . . . . . . . . . . . 15.  
16. Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.  
17. Enter the smaller of line 14 or line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . .  
17.  
18. Subtract line 10 from line 1. If zero or less,  
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.  
19. Enter the smaller of line 1 or:  
$182,100 if single or married filing  
separately;  
$364,200 if married filing jointly or  
. . . . .19.  
qualifying surviving spouse; or  
$182,100 if head of household.  
20. Enter the smaller of line 14 or line 19 . . . . . . . . . . .  
20.  
21. Enter the larger of line 18 or line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
21.  
22.  
22. Subtract line 17 from line 16. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . . . .  
If lines 1 and 16 are the same, skip lines 23 through 43 and go to line 44. Otherwise, go to line 23.  
23. Enter the smaller of line 1 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . .  
24. Enter the amount from line 22. (If line 22 is blank, enter -0-.) . . . . . . . . .  
25. Subtract line 24 from line 23. If zero or less, enter -0- . . . . . . . . . . . . . . .  
26. Enter:  
23.  
24.  
25.  
• $492,300 if single;  
• $276,900 if married filing separately;  
• $553,850 if married filing jointly or  
qualifying surviving spouse; or  
• $523,050 if head of household.  
. . . . . . . . . . . . . . 26.  
27. Enter the smaller of line 1 or line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
28. Add lines 21 and 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
29. Subtract line 28 from line 27. If zero or less, enter -0- . . . . . . . . . . . . . . .  
30. Enter the smaller of line 25 or line 29 . . . . . . . . . . . . . . . . . . . . . . . . . . .  
27.  
28.  
29.  
30.  
D-16  
Keep for Your Records  
Schedule D Tax Worksheet—Continued  
31. Multiply line 30 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 .  
32. Add lines 24 and 30 . . . . . . . . 32.  
If lines 1 and 32 are the same, skip lines 33 through 43 and go to line 44. Otherwise, go to line 33.  
33. Subtract line 32 from line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
33.  
34. Multiply line 33 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
34.  
If Schedule D, line 19, is zero or blank, skip lines 35 through 40 and go to line 41. Otherwise, go to line 35.  
35. Enter the smaller of line 9 above or Schedule D, line 19 . . . . . . . . . . .  
35.  
36. Add lines 10 and 21 . . . . . . . . . . . . . . . . . . . . . . .  
37. Enter the amount from line 1 above . . . . . . . . . . .  
36.  
37.  
38. Subtract line 37 from line 36. If zero or less, enter -0- . . . . . . . . . . . . .  
38.  
39. Subtract line 38 from line 35. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
39.  
40. Multiply line 39 by 25% (0.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
If Schedule D, line 18, is zero or blank, skip lines 41 through 43 and go to line 44. Otherwise, go to line 41.  
40.  
41. Add lines 21, 22, 30, 33, and 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
42. Subtract line 41 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
41.  
42.  
43. Multiply line 42 by 28% (0.28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
43.  
44. Figure the tax on the amount on line 21. If the amount on line 21 is less than $100,000, use the Tax Table to  
figure the tax. If the amount on line 21 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . 44.  
45. Add lines 31, 34, 40, 43, and 44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
45.  
46. Figure the tax on the amount on line 1. If the amount on line 1 is less than $100,000, use the Tax Table to  
figure the tax. If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . . 46.  
47. Tax on all taxable income (including capital gains and qualified dividends). Enter the smaller of line 45  
or line 46. Also, include this amount on Form 1040, 1040-SR, or 1040-NR, line 16. (If you are filing Form  
2555, don't enter this amount on Form 1040 or 1040-SR, line 16. Instead, enter it on line 4 of the Foreign  
Earned Income Tax Worksheet in the Instructions for Form 1040.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.  
* If applicable, enter instead the smaller amount you entered on the dotted line next to line 4e of Form 4952.  
** If you are filing Form 2555, see the footnote in the Foreign Earned Income Tax Worksheet in the  
instructions for Form 1040, line 16, before completing this line.  
D-17