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Capital Gains and Losses


Table of Contents

Introduction

These instructions explain how to complete Form 8949 and Schedule D (Form 1040). Form 8949 is new. Many transactions that, in previous years, would have been reported on Schedule D or D-1 must be reported on Form 8949 if they occur in 2011. Complete Form 8949 before you complete line 1, 2, 3, 8, 9, or 10 of Schedule D.

Use Form 8949 to report:

  • The sale or exchange of a capital asset (defined below) not reported on another form or schedule,

  • Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit, and

  • Nonbusiness bad debts.

Use Schedule D:

  • To figure the overall gain or loss from transactions reported 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, line 13 (or effectively connected capital gain distributions not reported directly on Form 1040NR, line 14), and

  • To report a capital loss carryover from 2010 to 2011.

Additional information.   See Pub. 544 and Pub. 550 for more details. For a comprehensive filled-in example of both Form 8949 and Schedule D, see Pub. 550.

What's New

The IRS has created a page on IRS.gov for information about Form 8949 and Schedule D at www.irs.gov/form8949. Information about any tax law changes or other new developments affecting Schedule D or Form 8949 will be posted on that page.

Form 8949.   Form 8949 is new. Many transactions that, in previous years, would have been reported on Schedule D or D-1 must be reported on Form 8949 if they occur in 2011. Complete all necessary pages of Form 8949 before completing line 1, 2, 3, 8, 9, or 10 of Schedule D. Instructions for how to complete Form 8949 are included in these instructions.

Basis on Form 1099-B.   If you sold a covered security in 2011, your broker will send you a Form 1099-B (or substitute statement) that shows your basis. This will help you complete Form 8949. Generally, a covered security is a security you acquired after 2010, with certain exceptions explained in the instructions for Form 8949, column (f).

Adjustments to gain or loss on Form 8949.   In certain situations, you must put a code in column (b) of Form 8949 and report an adjustment to your gain or loss in column (g). See the instructions for Form 8949, columns (b) and (g).

Short sales.   Some instructions for reporting short sales have changed. See the instructions for Form 8949, columns (c) and (d).

Schedule D-1.   For 2011 transactions, Schedule D-1 is no longer in use. Form 8949 replaces it.


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