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Page Last Reviewed or Updated: 13-Mar-2014

The File Form 1040x

File form 1040x 16. File form 1040x   Reporting Gains and Losses Table of Contents What's New Introduction Useful Items - You may want to see: Reporting Capital Gains and Losses Exception 1. File form 1040x Exception 2. File form 1040x File Form 1099-B or Form 1099-S with the IRS. File form 1040x Capital Losses Capital Gain Tax Rates What's New Maximum capital gain rates. File form 1040x . File form 1040x  For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. File form 1040x Introduction This chapter discusses how to report capital gains and losses from sales, exchanges, and other dispositions of investment property on Form 8949 and Schedule D (Form 1040). File form 1040x The discussion includes the following topics. File form 1040x How to report short-term gains and losses. File form 1040x How to report long-term gains and losses. File form 1040x How to figure capital loss carryovers. File form 1040x How to figure your tax on a net capital gain. File form 1040x If you sell or otherwise dispose of property used in a trade or business or for the production of income, see Publication 544, Sales and Other Dispositions of Assets, before completing Schedule D (Form 1040). File form 1040x Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses Form (and Instructions) 4797 Sales of Business Property 6252 Installment Sale Income 8582 Passive Activity Loss Limitations 8949 Sales and Other Dispositions of Capital Assets Schedule D (Form 1040) Capital Gains and Losses Reporting Capital Gains and Losses Generally, report capital gains and losses on Form 8949. File form 1040x Complete Form 8949 before you complete line 1b, 2, 3, 8b, 9, or 10 of Schedule D (Form 1040). File form 1040x Use Form 8949 to report: The sale or exchange of a capital asset not reported on another form or schedule; Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit; and Nonbusiness bad debts. File form 1040x Use Schedule D (Form 1040): To figure the overall gain or loss from transactions reported on Form 8949; To report a gain from Form 6252 or Part I of Form 4797; To report a gain or loss from Form 4684, 6781, or 8824; To report capital gain distributions not reported directly on Form 1040 or Form 1040A; To report a capital loss carryover from the previous tax year to the current tax year; To report your share of a gain or (loss) from a partnership, S corporation, estate, or trust; To report transactions reported to you on a Form 1099-B (or substitute statement) showing basis was reported to the IRS and to which none of the Form 8949 adjustments or codes apply; and To report undistributed long-term capital gains from Form 2439. File form 1040x On Form 8949, enter all sales and exchanges of capital assets, including stocks, bonds, etc. File form 1040x , and real estate (if not reported on Form 4684, 4797, 6252, 6781, 8824, or line 1a or 8a of Schedule D). File form 1040x Include these transactions even if you did not receive a Form 1099-B or 1099-S (or substitute statement) for the transaction. File form 1040x Report short-term gains or losses in Part I. File form 1040x Report long-term gains or losses in Part II. File form 1040x Use as many Forms 8949 as you need. File form 1040x Exceptions to filing Form 8949 and Schedule D (Form 1040). File form 1040x   There are certain situations where you may not have to file Form 8949 and/or Schedule D (Form 1040). File form 1040x Exception 1. File form 1040x   You do not have to file Form 8949 or Schedule D (Form 1040) if you have no capital losses and your only capital gains are capital gain distributions from Form(s) 1099-DIV, box 2a (or substitute statements). File form 1040x (If any Form(s) 1099-DIV (or substitute statements) you receive have an amount in box 2b (unrecaptured section 1250 gain), box 2c (section 1202 gain), or box 2d (collectibles (28%) gain), you do not qualify for this exception. File form 1040x ) If you qualify for this exception, report your capital gain distributions directly on line 13 of Form 1040 (and check the box on line 13). File form 1040x Also use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions to figure your tax. File form 1040x You can report your capital gain distributions on line 10 of Form 1040A, instead of on Form 1040, if none of the Forms 1099-DIV (or substitute statements) you received have an amount in box 2b, 2c, or 2d, and you do not have to file Form 1040. File form 1040x Exception 2. File form 1040x   You must file Schedule D (Form 1040), but generally do not have to file Form 8949, if Exception 1 does not apply and your only capital gains and losses are: Capital gain distributions; A capital loss carryover; A gain from Form 2439 or 6252 or Part I of Form 4797; A gain or loss from Form 4684, 6781, or 8824; A gain or loss from a partnership, S corporation, estate, or trust; or Gains and losses from transactions for which you received a Form 1099-B (or substitute statement) that shows the basis was reported to the IRS and for which you do not need to make any adjustments in column (g) of Form 8949 or enter any codes in column (f) of Form 8949. File form 1040x Installment sales. File form 1040x   You cannot use the installment method to report a gain from the sale of stock or securities traded on an established securities market. File form 1040x You must report the entire gain in the year of sale (the year in which the trade date occurs). File form 1040x Passive activity gains and losses. File form 1040x    If you have gains or losses from a passive activity, you may also have to report them on Form 8582. File form 1040x In some cases, the loss may be limited under the passive activity rules. File form 1040x Refer to Form 8582 and its instructions for more information about reporting capital gains and losses from a passive activity. File form 1040x Form 1099-B transactions. File form 1040x   If you sold property, such as stocks, bonds, or certain commodities, through a broker, you should receive Form 1099-B or substitute statement from the broker. File form 1040x Use the Form 1099-B or the substitute statement to complete Form 8949. File form 1040x If you sold a covered security in 2013, your broker should send you a Form 1099-B (or substitute statement) that shows your basis. File form 1040x This will help you complete Form 8949. File form 1040x Generally, a covered security is a security you acquired after 2010. File form 1040x   Report the gross proceeds shown in box 2a of Form 1099-B as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. File form 1040x However, if the broker advises you, in box 2a of Form 1099-B, that gross proceeds (sales price) less commissions and option premiums were reported to the IRS, enter that net sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. File form 1040x    Include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). File form 1040x If you include an expense of sale in column (g), enter “E” in column (f). File form 1040x Form 1099-CAP transactions. File form 1040x   If a corporation in which you own stock has had a change in control or a substantial change in capital structure, you should receive Form 1099-CAP or a substitute statement from the corporation. File form 1040x Use the Form 1099-CAP or substitute statement to fill in Form 8949. File form 1040x If your computations show that you would have a loss because of the change, do not enter any amounts on Form 8949 or Schedule D (Form 1040). File form 1040x You cannot claim a loss on Schedule D (Form 1040) as a result of this transaction. File form 1040x   Report the aggregate amount received shown in box 2 of Form 1099-CAP as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. File form 1040x Form 1099-S transactions. File form 1040x   If you sold or traded reportable real estate, you generally should receive from the real estate reporting person a Form 1099-S showing the gross proceeds. File form 1040x    “Reportable real estate” is defined as any present or future ownership interest in any of the following: Improved or unimproved land, including air space; Inherently permanent structures, including any residential, commercial, or industrial building; A condominium unit and its accessory fixtures and common elements, including land; and Stock in a cooperative housing corporation (as defined in section 216 of the Internal Revenue Code). File form 1040x   A “real estate reporting person” could include the buyer's attorney, your attorney, the title or escrow company, a mortgage lender, your broker, the buyer's broker, or the person acquiring the biggest interest in the property. File form 1040x   Your Form 1099-S will show the gross proceeds from the sale or exchange in box 2. File form 1040x See the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040) for how to report these transactions and include them in Part I or Part II of Form 8949 as appropriate. File form 1040x However, report like-kind exchanges on Form 8824 instead. File form 1040x   It is unlawful for any real estate reporting person to separately charge you for complying with the requirement to file Form 1099-S. File form 1040x Nominees. File form 1040x   If you receive gross proceeds as a nominee (that is, the gross proceeds are in your name but actually belong to someone else), see the Instructions for Form 8949 for how to report these amounts on Form 8949. File form 1040x File Form 1099-B or Form 1099-S with the IRS. File form 1040x   If you received gross proceeds as a nominee in 2013, you must file a Form 1099-B or Form 1099-S for those proceeds with the IRS. File form 1040x Send the Form 1099-B or Form 1099-S with a Form 1096, Annual Summary and Transmittal of U. File form 1040x S. File form 1040x Information Returns, to your Internal Revenue Service Center by February 28, 2014 (March 31, 2014, if you file Form 1099-B or Form 1099-S electronically). File form 1040x Give the actual owner of the proceeds Copy B of the Form 1099-B or Form 1099-S by February 18, 2014. File form 1040x On Form 1099-B, you should be listed as the “Payer. File form 1040x ” The other owner should be listed as the “Recipient. File form 1040x ” On Form 1099-S, you should be listed as the “Filer. File form 1040x ” The other owner should be listed as the “Transferor. File form 1040x ” You do not have to file a Form 1099-B or Form 1099-S to show proceeds for your spouse. File form 1040x For more information about the reporting requirements and the penalties for failure to file (or furnish) certain information returns, see the General Instructions for Certain Information Returns. File form 1040x If you are filing electronically see Publication 1220. File form 1040x Sale of property bought at various times. File form 1040x   If you sell a block of stock or other property that you bought at various times, report the short-term gain or loss from the sale on one row in Part I of Form 8949, and the long-term gain or loss on one row in Part II of Form 8949. File form 1040x Write “Various” in column (b) for the “Date acquired. File form 1040x ” Sale expenses. File form 1040x    On Form 8949, include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). File form 1040x If you include an expense of sale in column (g), enter “E” in column (f). File form 1040x   For more information about adjustments to basis, see chapter 13. File form 1040x Short-term gains and losses. File form 1040x   Capital gain or loss on the sale or trade of investment property held 1 year or less is a short-term capital gain or loss. File form 1040x You report it in Part I of Form 8949. File form 1040x   You combine your share of short-term capital gain or loss from partnerships, S corporations, estates, and trusts, and any short-term capital loss carryover, with your other short-term capital gains and losses to figure your net short-term capital gain or loss on line 7 of Schedule D (Form 1040). File form 1040x Long-term gains and losses. File form 1040x    A capital gain or loss on the sale or trade of investment property held more than 1 year is a long-term capital gain or loss. File form 1040x You report it in Part II of Form 8949. File form 1040x   You report the following in Part II of Schedule D (Form 1040): Undistributed long-term capital gains from a mutual fund (or other regulated investment company) or real estate investment trust (REIT); Your share of long-term capital gains or losses from partnerships, S corporations, estates, and trusts; All capital gain distributions from mutual funds and REITs not reported directly on line 10 of Form 1040A or line 13 of Form 1040; and Long-term capital loss carryovers. File form 1040x    The result after combining these items with your other long-term capital gains and losses is your net long-term capital gain or loss (Schedule D (Form 1040), line 15). File form 1040x Total net gain or loss. File form 1040x   To figure your total net gain or loss, combine your net short-term capital gain or loss (Schedule D (Form 1040), line 7) with your net long-term capital gain or loss (Schedule D (Form 1040), line 15). File form 1040x Enter the result on Schedule D (Form 1040), Part III, line 16. File form 1040x If your losses are more than your gains, see Capital Losses , next. File form 1040x If both lines 15 and 16 of your Schedule D (Form 1040) are gains and your taxable income on your Form 1040 is more than zero, see Capital Gain Tax Rates , later. File form 1040x Capital Losses If your capital losses are more than your capital gains, you can claim a capital loss deduction. File form 1040x Report the amount of the deduction on line 13 of Form 1040, in parentheses. File form 1040x Limit on deduction. File form 1040x   Your allowable capital loss deduction, figured on Schedule D (Form 1040), is the lesser of: $3,000 ($1,500 if you are married and file a separate return); or Your total net loss as shown on line 16 of Schedule D (Form 1040). File form 1040x   You can use your total net loss to reduce your income dollar for dollar, up to the $3,000 limit. File form 1040x Capital loss carryover. File form 1040x   If you have a total net loss on line 16 of Schedule D (Form 1040) that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year. File form 1040x If part of the loss is still unused, you can carry it over to later years until it is completely used up. File form 1040x   When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year. File form 1040x   When you carry over a loss, it remains long term or short term. File form 1040x A long-term capital loss you carry over to the next tax year will reduce that year's long-term capital gains before it reduces that year's short-term capital gains. File form 1040x Figuring your carryover. File form 1040x   The amount of your capital loss carryover is the amount of your total net loss that is more than the lesser of: Your allowable capital loss deduction for the year; or Your taxable income increased by your allowable capital loss deduction for the year and your deduction for personal exemptions. File form 1040x   If your deductions are more than your gross income for the tax year, use your negative taxable income in computing the amount in item (2). File form 1040x    Complete the Capital Loss Carryover Worksheet in the Instructions for Schedule D or Publication 550 to determine the part of your capital loss that you can carry over. File form 1040x Example. File form 1040x Bob and Gloria sold securities in 2013. File form 1040x The sales resulted in a capital loss of $7,000. File form 1040x They had no other capital transactions. File form 1040x Their taxable income was $26,000. File form 1040x On their joint 2013 return, they can deduct $3,000. File form 1040x The unused part of the loss, $4,000 ($7,000 − $3,000), can be carried over to 2014. File form 1040x If their capital loss had been $2,000, their capital loss deduction would have been $2,000. File form 1040x They would have no carryover. File form 1040x Use short-term losses first. File form 1040x   When you figure your capital loss carryover, use your short-term capital losses first, even if you incurred them after a long-term capital loss. File form 1040x If you have not reached the limit on the capital loss deduction after using the short-term capital losses, use the long-term capital losses until you reach the limit. File form 1040x Decedent's capital loss. File form 1040x    A capital loss sustained by a decedent during his or her last tax year (or carried over to that year from an earlier year) can be deducted only on the final income tax return filed for the decedent. File form 1040x The capital loss limits discussed earlier still apply in this situation. File form 1040x The decedent's estate cannot deduct any of the loss or carry it over to following years. File form 1040x Joint and separate returns. File form 1040x   If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. File form 1040x However, if you and your spouse once filed a joint return and are now filing separate returns, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss. File form 1040x Capital Gain Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. File form 1040x These lower rates are called the maximum capital gain rates. File form 1040x The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. File form 1040x For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. File form 1040x See Table 16-1 for details. File form 1040x If you figure your tax using the maximum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies. File form 1040x Example. File form 1040x All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%. File form 1040x If you are otherwise subject to a rate lower than 28%, the 28% rate does not apply. File form 1040x Investment interest deducted. File form 1040x   If you claim a deduction for investment interest, you may have to reduce the amount of your net capital gain that is eligible for the capital gain tax rates. File form 1040x Reduce it by the amount of the net capital gain you choose to include in investment income when figuring the limit on your investment interest deduction. File form 1040x This is done on the Schedule D Tax Worksheet or the Qualified Dividends and Capital Gain Tax Worksheet. File form 1040x For more information about the limit on investment interest, see Interest Expenses in chapter 3 of Publication 550. File form 1040x Table 16-1. File form 1040x What Is Your Maximum Capital Gain Rate? IF your net capital gain is from . File form 1040x . File form 1040x . File form 1040x THEN your  maximum capital gain rate is . File form 1040x . File form 1040x . File form 1040x a collectibles gain 28% an eligible gain on qualified small business stock minus the section 1202 exclusion 28% an unrecaptured section 1250 gain 25% other gain1 and the regular tax rate that would apply is 39. File form 1040x 6% 20% other gain1 and the regular tax rate that would apply is 25%, 28%, 33%, or 35% 15% other gain1 and the regular tax rate that would apply is 10% or 15% 0% 1 Other gain means any gain that is not collectibles gain, gain on qualified small business stock, or unrecaptured section 1250 gain. File form 1040x     Collectibles gain or loss. File form 1040x   This is gain or loss from the sale or trade of a work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage held more than 1 year. File form 1040x   Collectibles gain includes gain from sale of an interest in a partnership, S corporation, or trust due to unrealized appreciation of collectibles. File form 1040x Gain on qualified small business stock. File form 1040x    If you realized a gain from qualified small business stock that you held more than 5 years, you generally can exclude some or all of your gain under section 1202. File form 1040x The eligible gain minus your section 1202 exclusion is a 28% rate gain. File form 1040x See Gains on Qualified Small Business Stock in chapter 4 of Publication 550. File form 1040x Unrecaptured section 1250 gain. File form 1040x    Generally, this is any part of your capital gain from selling section 1250 property (real property) that is due to depreciation (but not more than your net section 1231 gain), reduced by any net loss in the 28% group. File form 1040x Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D (Form 1040) instructions to figure your unrecaptured section 1250 gain. File form 1040x For more information about section 1250 property and section 1231 gain, see chapter 3 of Publication 544. File form 1040x Tax computation using maximum capital gain rates. File form 1040x   Use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet (whichever applies) to figure your tax if you have qualified dividends or net capital gain. File form 1040x You have net capital gain if Schedule D (Form 1040), lines 15 and 16, are both gains. File form 1040x Schedule D Tax Worksheet. File form 1040x   Use the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions to figure your tax if: You have to file Schedule D (Form 1040); and Schedule D (Form 1040), line 18 (28% rate gain) or line 19 (unrecaptured section 1250 gain), is more than zero. File form 1040x Qualified Dividends and Capital Gain Tax Worksheet. File form 1040x   If you do not have to use the Schedule D Tax Worksheet (as explained above) and any of the following apply, use the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040 or Form 1040A (whichever you file) to figure your tax. File form 1040x You received qualified dividends. File form 1040x (See Qualified Dividends in chapter 8. File form 1040x ) You do not have to file Schedule D (Form 1040) and you received capital gain distributions. File form 1040x (See Exceptions to filing Form 8949 and Schedule D (Form 1040) , earlier. File form 1040x ) Schedule D (Form 1040), lines 15 and 16, are both more than zero. File form 1040x Alternative minimum tax. File form 1040x   These capital gain rates are also used in figuring alternative minimum tax. File form 1040x Prev  Up  Next   Home   More Online Publications