Instructions for F Capital Gains and Losses

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2018

Instructions for Schedule D
(Form 1065)

Department of the Treasury
Internal Revenue Service

DRAFT AS OF
September 13, 2018
Capital Gains and Losses
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Schedule D
(Form 1065) and its instructions, such as
legislation enacted after they were
published, go to IRS.gov/Form1065.

What’s New

Transactions with respect to
applicable partnership interests. For
tax years beginning after December 31,
2017, the long-term holding period for
gains and losses with respect to
applicable partnership interests is more
than 3 years. SeeTransactions with
respect to applicable partnership interests.
Special rules for capital gains invested
in qualified opportunity funds. Effective
December 22, 2017, section 1400Z-2
provides a temporary deferral of inclusion
in gross income for capital gains invested
in Qualified Opportunity Funds, and a
permanent exclusion of capital gains from
the sale or exchange of an investment in
the Qualified Opportunity Fund if the
investment is held for at least 10 years.
See the Instructions for Form 8949. For
additional information please see
Opportunity Zones Frequently Asked
Questions.
Capital Assets. For dispositions after
2017, certain patents, inventions, models,
or designs (whether or not patented);
secret formulas or processes; or similar
property are not capital assets. See What
Are Capital Assets?.

General Instructions
Purpose of Schedule

Use Schedule D (Form 1065) to report the
following.
• The total capital gains and losses from
transactions reported on Form 8949,
Sales and Other Dispositions of Capital
Assets.
• Certain transactions the partnership
doesn't have to report on Form 8949.
• Capital gains from installment sales
from Form 6252, Installment Sale Income.
• Capital gains and losses from like-kind
exchanges from Form 8824, Like-Kind

Sep 11, 2018

Exchanges (and section 1043
conflict-of-interest sales).
• Partnership's share of net capital gains
and losses, including specially allocated
capital gains and losses, from
partnerships, estates, and trusts.
• Capital gain distributions.
Note. For more information, see Pub.
544, Sales and Other Dispositions of
Assets, and the Instructions for Form
8949.

Other Forms The
Partnership May Have To
File

Use Form 8949 to report the sale or
exchange of a capital asset (defined later)
not reported on another form or schedule
and to report the deferral or exclusion of
capital gains. See the Instructions for
Form 8949. Complete all necessary pages
of Form 8949 before you complete line 1b,
2, 3, 8b, 9, or 10 of Schedule D. See Lines
1a and 8a, later, for more information
about when to use Form 8949.
Use Form 4684, Casualties and Thefts,
to report involuntary conversions of
property due to casualty or theft.

Use Form 4797, Sales of Business
Property, to report the following.
• Sales or exchanges of property used in
a trade or business.
• Sales or exchanges of depreciable or
amortizable property.
• Sales or other dispositions of securities
or commodities held in connection with a
trading business, if the partnership made a
mark-to-market election (see
Mark-to-market accounting method in the
Instructions for Form 1065).
• Involuntary conversions (other than
from casualties or thefts).
• The disposition of noncapital assets
(other than inventory or property held
primarily for sale to customers in the
ordinary course of a trade or business).
Use Form 6781, Gains and Losses
From Section 1256 Contracts and
Straddles, to report gains and losses from
section 1256 contracts and straddles. If
there are limited partners, see section
1256(e)(4) for the limitation on losses from
hedging transactions.

Cat. No. 51610S

What Are Capital Assets?

Each item of property the partnership held
(whether or not connected with its trade or
business) is a capital asset except the
following.
• Stock in trade or other property
included in inventory or held mainly for
sale to customers.
• Accounts or notes receivable acquired
in the ordinary course of the trade or
business for services rendered or from the
sale of stock in trade or other property
held mainly for sale to customers.
• Depreciable or real property used in the
trade or business, even if it is fully
depreciated.
• Certain copyrights; literary, musical, or
artistic compositions; letters or
memoranda; or similar property. See
section 1221(a)(3).
• Certain patents, inventions, models, or
designs (whether or not patented); secret
formulas or processes; or similar property.
See section 1221(a)(3) as revised by
Public Law 115–97, section 13314.
• U.S. Government publications,
including the Congressional Record, that
the partnership received from the
Government, other than by purchase at
the normal sales price, or that the
partnership got from another taxpayer who
had received it in a similar way, if the
partnership's basis is determined by
reference to the previous owner.
• Certain commodities derivative financial
instruments held by a dealer. See section
1221(a)(6).
• Certain hedging transactions entered
into in the normal course of the trade or
business. See section 1221(a)(7).
• Supplies regularly used in the trade or
business.

Short- or Long-Term Gain
or Loss

Report short-term gains or losses in Part I.
Report long-term gains or losses in Part II.
The holding period for short-term capital
gains and losses is generally 1 year or
less. The holding period for long-term
capital gains and losses is generally more
than 1 year. However, an exception
applies for certain sales of applicable
partnership interest. See Transactions
with respect to applicable partnership
interests.

For more information about holding
periods, see the Instructions for Form
8949.

Items for Special
Treatment
Transactions with respect to applicable partnership interests. For tax years
beginning after December 31, 2017, the
long-term holding period for gains and
losses with respect to applicable
partnership interests is more than 3 years.
If the holding period is 3 years or less,
gains and losses with respect to
applicable partnership interests are
treated as short-term. An applicable
partnership interest is any interest in a
partnership that, directly or indirectly, is
transferred to (or is held by) the taxpayer
in connection with the performance of
substantial services by the taxpayer, or
any other related person, in any applicable
trade or business. See section 1061 and
Pub. 541 for details.
• Transactions by a securities dealer.
See sections 475 and 1236, and Rev. Rul.
97-39, 1997-39 I.R.B. 4.
• Bonds and other debt instruments. See
Pub. 550, Investment Income and
Expenses.
• Gain on disposition of market discount
bonds. In general, a capital gain upon the
disposition of a market discount bond is
treated as interest income to the extent of
accrued market discount as of the date of
disposition. See sections 1276 through
1278 and Pub. 550 for more information
on market discount. See the Instructions
for Form 8949 for detailed information
about how to report the disposition of a
market discount bond.
• Contingent payment debt instruments.
Any gain recognized on the sale,
exchange, or retirement of a contingent
payment debt instrument subject to the
noncontingent bond method is generally
treated as interest income rather than as
capital gain. In certain situations, all or a
portion of a loss recognized on the sale,
exchange, or retirement of a contingent
payment debt instrument subject to the
noncontingent bond method may be
treated as an ordinary loss rather than as
a capital loss. See Regulations section
1.1275-4(b) and Pub. 550 for more
information on contingent payment debt
instruments subject to the noncontingent
bond method. See the Instructions for
Form 8949 for detailed information about
how to report the disposition of a
contingent payment debt instrument.
• Gain on certain short-term federal,
state, and municipal obligations (other
than tax-exempt obligations). If a
short-term governmental obligation (other
than a tax-exempt obligation) that is a
capital asset is acquired at an acquisition
discount, a portion of any gain realized is

treated as ordinary income and any
remaining balance as a short-term capital
gain. See section 1271.
• Certain real estate subdivided for sale
that may be considered a capital asset.
See section 1237.
• Gain on the sale of depreciable
property to a more than 50%-owned entity,
or to a trust in which the partnership is a
beneficiary, is treated as ordinary gain.
See section 1239.
• Liquidating distributions from a
corporation. See Pub. 550 for details.
• Gain on the sale or exchange of stock
in certain foreign corporations. See
section 1248.
• Gain or loss on options to buy or sell,
including closing transactions. See Pub.
550 for details.
• Gain or loss from a short sale of
property. See Pub. 550 for details.
• Transfer of property to a political
organization if the fair market value (FMV)
of the property exceeds the partnership's
adjusted basis in such property. See
section 84.
• Any loss on the disposition of converted
wetland or highly erodible cropland that is
first used for farming after March 1, 1986,
is reported as a long-term capital loss on
Form 8949/Schedule D, but any gain on
such a disposition is reported as ordinary
gain on Form 4797. See section 1257 for
details.
• Transfer of partnership assets and
liabilities to a newly formed corporation in
exchange for all of its stock. See Rev. Rul.
84-111, 1984-2 C.B. 88.
• Disposition of foreign investment in a
U.S. real property interest. See section
897.
• Any loss from a sale or exchange of
property between the partnership and
certain related persons is not allowed,
except for distributions in a complete
liquidation of a corporation. See sections
267 and 707(b) for details.
• Any loss from securities that are capital
assets that become worthless during the
year is treated as a loss from the sale or
exchange of a capital asset on the last day
of the tax year.
• Nonrecognition of gain on sale of stock
to an employee stock ownership plan
(ESOP) or an eligible cooperative. See
section 1042 and Temporary Regulations
section 1.1042-1T for rules under which
the partnership may elect not to recognize
gain from the sale of certain stock to an
ESOP or an eligible cooperative.
• A nonbusiness bad debt must be
treated as a short-term capital loss and
can be deducted only in the year the debt
becomes totally worthless. See Pub. 550
for more details.
• Any loss from a wash sale of stock or
securities (including contracts or options
to acquire or sell stock or securities)
cannot be deducted unless the
partnership is a dealer in stock or

securities and the loss was sustained in a
transaction made in the ordinary course of
the partnership's trade or business. A
wash sale occurs if the partnership
acquires (by purchase or exchange), or
has a contract or option to acquire,
substantially identical stock or securities
within 30 days before or after the date of
the sale or exchange. See section 1091
for more information. Report a wash sale
transaction on Form 8949, Part I or II (with
the appropriate box checked), depending
on how long the partnership owned the
stock or securities. Enter “W” in column (f)
and enter as a positive number in column
(g) the amount of the loss not allowed.
Complete all remaining columns. See the
Instructions for Form 8949.
• Gain from installment sales. If the
partnership sold property at a gain and it
will receive a payment in a tax year after
the year of sale, it generally must report
the sale on the installment method unless
it elects not to. However, the installment
method may not be used to report sales of
stock or securities traded on an
established securities market. Use Form
6252 to report the sale on the installment
method. Also use Form 6252 to report any
payment received during the tax year from
a sale made in an earlier year that was
reported on the installment method.

DRAFT AS OF
September 13, 2018

-2-

If the partnership wants to elect out of
the installment method for installment gain
that is not specially allocated among the
partners, it must report the full amount of
the gain on Form 8949 on a timely filed
return (including extensions) for the year
of the sale.
If the partnership wants to elect out of
the installment method for installment gain
that is specially allocated among the
partners, it must do the following on a
timely filed return (including extensions).
1. For a short-term capital gain, report
the full amount of the gain on Schedule K,
line 8 or 11.
For a long-term capital gain, report the
full amount of the gain on Schedule K,
line 9a or 11. Report the collectibles gain
(28% rate gain) on Schedule K, line 9b.
2. Enter each partner's share of the
full amount of the gain on Schedule K-1,
box 8 or 9a, or in box 11 using code I,
whichever applies. Report the collectibles
gain (28% rate gain) on Schedule K-1,
box 9b.
If the partnership filed its original return
on time without making the election, it may
make the election on an amended return
filed no later than 6 months after the due
date of the return (excluding extensions).
Write “Filed pursuant to section
301.9100-2” at the top of the amended
return.
• A sale or other disposition of an interest
in a partnership owning unrealized

Instructions for Schedule D (Form 1065) 2017

receivables or inventory items may result
in ordinary gain or loss. See Pub. 541,
Partnerships, for more details.
• Gain from certain constructive
ownership transactions. Gain in excess of
the net underlying long-term gain the
partnership would have recognized if it
had held a financial asset directly during
the term of a derivative contract must be
treated as ordinary income. See section
1260 for details.
• Gain from the sale of collectibles.
Report any collectibles gain (28% rate
gain) (loss) included on lines 8a through
14 on line 9b of Schedule K (and each
partner's share in box 9b of
Schedule K-1). A collectibles gain (28%
rate gain) (loss) is any long-term gain or
deductible long-term loss from the sale or
exchange of a collectible that is a capital
asset.

costs of acquiring or disposing of the
securities) on Form 8949 unless one of the
exceptions described in the Instructions to
Form 8949 applies. However, if a trader
made the mark-to-market election (see
Mark-to-market accounting method in the
Instructions for Form 1065), each
transaction is reported in Part II of Form
4797 instead of Form 8949.
Regardless of whether a trader reports
its gains and losses on Form 8949 or
Form 4797, the gain or loss from the
disposition of securities is not taken into
account when figuring net earnings from
self-employment on Schedules K and K-1.
See section 1402(i) for an exception that
applies to section 1256 contracts.
The limitation on investment interest
expense that applies to investors doesn't
apply to interest paid or incurred in a
trading business. A trader reports interest
expense and other expenses (excluding
commissions and other costs of acquiring
or disposing of securities) from a trading
business on page 1 of Form 1065.
A trader also may hold securities for
investment. The rules for investors
generally will apply to those securities.
Allocate interest and other expenses
between the partnership's trading
business and its investment securities.
Investment interest expense is reported
on line 13b of Schedule K and in box 13 of
Schedule K-1 using code H.

throughout the 60-day period starting on
the date the transaction was closed, and
• At no time during that 60-day period
was the partnership's risk of loss reduced
by holding certain other positions.
For details and other exceptions to
these rules, see Pub. 550.
Rollover of gain from qualified stock.
If the partnership sold qualified small
business stock (defined below) it held for
more than 6 months, it may postpone gain
if it purchased other qualified small
business stock during the 60-day period
that began on the date of the sale. The
partnership must recognize gain to the
extent the sale proceeds exceed the cost
of the replacement stock. Reduce the
basis of the replacement stock by any
postponed gain.
If the partnership chooses to postpone
gain, report the sale on Form 8949, Part I
or II (with the appropriate box checked),
as it would be reported if the election was
not made. Then enter “R” in column (f).
Enter the amount of the postponed gain as
a negative number (in parentheses) in
column (g). See the Instructions for Form
8949.
Attach a statement to Form 1065 that
(a) identifies the replacement qualified
small business stock, (b) shows the
computation of the adjustment to the
partnership's basis in the replacement
stock for the amount of any postponed
gain under section 1045, and (c) shows
the dates on which the replacement stock
was acquired by the partnership.

DRAFT AS OF
September 13, 2018
Collectibles include works of art, rugs,
antiques, metals (such as gold, silver, and
platinum bullion), gems, stamps, coins,
alcoholic beverages, and certain other
tangible property.
Report any 28% gain or loss from a
sale or exchange of a collectible on Form
8949, Part II (with the appropriate box
checked). See the Instructions for Form
8949.
Also include gain (but not loss) from the
sale or exchange of an interest in a
partnership or trust held more than 1 year
and attributable to unrealized appreciation
of collectibles. For details, see
Regulations section 1.1(h)-1. Also, attach
the statement required under Regulations
section 1.1(h)-1(e).
Special rules for traders in securities.
Traders in securities are engaged in the
business of buying and selling securities
for their own account. To be engaged in
business as a trader in securities:
• The partnership must seek to profit from
daily market movements in the prices of
securities and not from dividends, interest,
or capital appreciation;
• The partnership's trading activity must
be substantial; and
• The partnership must carry on the
activity with continuity and regularity.
The following facts and circumstances
should be considered in determining if a
partnership's activity is a business.
• Typical holding periods for securities
bought and sold.
• The frequency and dollar amount of the
partnership's trades during the year.
• The extent to which the partners pursue
the activity to produce income for a
livelihood.
• The amount of time devoted to the
activity.
Like an investor, a trader generally
must report each sale of securities (taking
into account commissions and any other

Constructive sale treatment for certain
appreciated positions. Generally, the
partnership must recognize gain (but not
loss) on the date it enters into a
constructive sale of any appreciated
position in stock, a partnership interest, or
certain debt instruments as if the position
were disposed of at FMV on that date.
The partnership is treated as making a
constructive sale of an appreciated
position when it (or a related person, in
some cases) does one of the following.
• Enters into a short sale of the same or
substantially identical property (that is, a
“short sale against the box”).
• Enters into an offsetting notional
principal contract relating to the same or
substantially identical property.
• Enters into a futures or forward contract
to deliver the same or substantially
identical property.
• Acquires the same or substantially
identical property (if the appreciated
position is a short sale, offsetting notional
principal contract, or a futures or forward
contract).
Exception. Generally, constructive sale
treatment doesn't apply if:
• The partnership closed the transaction
before the end of the 30th day after the
end of the tax year in which it was entered
into,
• The partnership held the appreciated
position to which the transaction relates

Instructions for Schedule D (Form 1065) 2017

-3-

The partnership also must
separately state the amount of the
CAUTION gain rolled over on qualified stock
under section 1045 on Form 1065,
Schedule K, line 11. Each partner must
determine if he or she qualifies for the
rollover at the partner level or if he or she
wants to opt out of the section 1045
election. Also, the partnership must
separately state on that line any gain that
would qualify for the section 1045 rollover
at the partner level instead of the
partnership level (because a partner was
entitled to purchase replacement stock)
and any gain on qualified stock that could
qualify for an exclusion under section
1202.

!

To be qualified small business stock,
the stock must meet all of the following
tests.
• It must be stock in a C corporation (that
is, not S corporation stock).
• It must have been originally issued after
August 10, 1993.
• As of the date the stock was issued, the
corporation was a qualified small
business. A qualified small business is a
domestic C corporation with total gross
assets of $50 million or less (a) at all times
after August 9, 1993, and before the stock

was issued and (b) immediately after the
stock was issued. Gross assets include
those of any predecessor of the
corporation. All corporations that are
members of the same parent-subsidiary
controlled group are treated as one
corporation.
• The partnership must have acquired the
stock at its original issue (either directly or
through an underwriter), either in
exchange for money or other property or
as pay for services (other than as an
underwriter) to the corporation. In certain
cases, the partnership may meet the test if
it acquired the stock from another person
who met this test (such as by gift or at
death) or through a conversion or
exchange of qualified business stock by
the holder.
• During substantially all the time the
partnership held the stock:
1. The corporation was a C
corporation,
2. At least 80% of the value of the
corporation's assets were used in the
active conduct of one or more qualified
businesses (defined below), and
3. The corporation was not a foreign
corporation, domestic international sales
corporation (DISC), former DISC,
corporation that has made (or that has a
subsidiary that has made) a section 936
election before March 23, 2018, regulated
investment company (RIC), real estate
investment trust (REIT), real estate
mortgage investment conduit (REMIC),
financial asset securitization investment
trust (FASIT), or cooperative.

At the time these instructions were
printed, the rollover gain provision
CAUTION expired at the end of 2017. To find
out if legislation was enacted to extend the
rollover gain provision and make it
available for 2018, go to IRS.gov/
Form1065.

!

Exclusion of gain from qualified community assets. If the partnership sold or
exchanged a qualified community asset
acquired after 2001 and before 2010, it
can exclude any qualified capital gain. The
exclusion applies to an interest in, or
property of, certain qualified community
assets.

Opportunity Fund during the 180–day
period beginning on the date realizing
gain. For more information, see section
1400Z-2.
How to report. Report the gain as
would otherwise be reported if the
partnership were not making the election.
Report the election for the amount
invested in a Qualified Opportunity Fund
(Fund) on Form 8949. Enter in column (a)
“QO Fund” and the name and taxpayer
identification number of the fund. Enter
date Fund acquired in column (b). Enter
“Z” in column (f). Enter the amount of the
deferred gain as a negative number (in
parentheses) in column (g). Complete the
remaining column (h). See the Instructions
for Form 8949.

DRAFT AS OF
September 13, 2018

Note. A specialized small business
investment company (SSBIC) is treated as
having met test 2 above.
A qualified business is any business
other than the following.
• One involving services performed in the
fields of health, law, engineering,
architecture, accounting, actuarial
science, performing arts, consulting,
athletics, financial services, or brokerage
services.
• One whose principal asset is the
reputation or skill of one or more
employees.
• Any banking, insurance, financing,
leasing, investing, or similar business.
• Any farming business (including the
raising or harvesting of trees).
• Any business involving the production
of products for which percentage
depletion can be claimed.
• Any business of operating a hotel,
motel, restaurant, or similar business.
Rollover of gain from empowerment
zone assets. If the partnership sold a
qualified empowerment zone asset it held
for more than 1 year, it may be able to
elect to postpone part or all of the gain.
For details, see section 1397B.

Qualified community asset. A
qualified community asset is any of the
following.
• Qualified community stock.
• Qualified community partnership
interest.
• Qualified community business property.

Qualified capital gain. Qualified
capital gain is any gain recognized on the
sale or exchange of a qualified community
asset, but doesn't include any of the
following.
• Gain attributable to periods after
December 31, 2014.
• 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 is not an integral part
of a qualified community business.
• Gain from a related-party transaction.
See Sales and Exchanges Between
Related Persons in chapter 2 of Pub. 544.
See section 1400F (as in effect before
its repeal on March 23, 2018) for more
details and special rules.
How to report. Report the sale or
exchange on Form 8949, Part II (with the
appropriate box checked), as it would be
reported if the exclusion was not taken.
Enter “X” in column (f) and enter the
amount of the exclusion as a negative
number (in parentheses) in column (g).
See the Instructions for Form 8949.
Deferral of gain invested in a Qualified
Opportunity Fund. If the partnership
realized gain from an actual, or deemed,
sale or exchange with an unrelated person
and during the 180–day period beginning
on the date realizing the gain, invested an
amount of the gain in a Qualified
Opportunity Fund, the partnership may be
able to elect to temporarily defer part or all
of the gain that would otherwise be
included in income. If the partnership
makes the election, the gain included in
taxable income is only to the extent, if any,
the amount of realized gain exceeds the
aggregate amount invested in a Qualified
-4-

Exclusion of gain from DC Zone assets. If the partnership sold or
exchanged a District of Columbia
Enterprise Zone (DC Zone) asset that it
held for more than 5 years, it may be able
to exclude the qualified capital gain. The
DC Zone asset must have been acquired
after 1997, and before 2012, to qualify as
an asset for which the partnership may be
able to take the exclusion. The sale or
exchange of DC Zone capital assets
reported on Form 8949 and Schedule D
includes:
• Stock in a domestic corporation that
was a DC Zone business.
• Interest in a partnership that was a DC
Zone business.
Report the sale or exchange of tangible
property used in the partnership's DC
Zone business on Form 4797.

Gains not qualified for exclusion.
The following gains do not qualify for the
exclusion of gain from DC Zone assets.
• Gain attributable to periods after
December 31, 2016.
• Gain on the sale of an interest in a
partnership, which is a DC Zone business,
attributable to unrecaptured section 1250
gain. See the instructions for line 9c of
Schedule K for information on how to
report unrecaptured section 1250 gain.
• Gain on the sale of an interest in a
partnership or S corporation attributable to
real property or an intangible asset which
is not an integral part of the DC Zone
business.
• Gain from a related-party transaction.
See Sales and Exchanges Between
Related Persons in chapter 2 of Pub. 544.
See section 1400B (as in effect before
its repeal on March 23, 2018) for more
details on DC Zone assets and special
rules.
How to report. Report the sale or
exchange of a DC Zone asset on Form
8949, Part II (with the appropriate box
checked), as it would be reported if the
exclusion was not taken. Enter “X” in
column (f) and enter the amount of the

Instructions for Schedule D (Form 1065) 2017

exclusion as a negative number (in
parentheses) in column (g). See the
Instructions for Form 8949.
Undistributed long-term gains from a
regulated investment company (RIC)
or real estate investment trust (REIT).
Report the partnership's share of
long-term gains from Form 2439, Notice to
Shareholder of Undistributed Long-Term
Capital Gains, on Form 8949, Part II (with
box F checked). Enter “From Form 2439”
in column (a). Enter the gain in column (h).
Leave all other columns blank. See the
Instructions for Form 8949.

• The Ordinary box in box 2 isn’t
checked; and
• The partnership doesn't need to make
any adjustments to the basis or type of
gain or loss (short term or long term)
reported on Form 1099-B (or substitute
statement), or to its gain or loss.
See How To Complete Form 8949,
Columns (f) and (g), in the Form 8949
instructions for details about possible
adjustments to the partnership's gain or
loss.

of Form 8949 before completing line 1b, 2,
3, 8b, 9, or 10 of Schedule D.
Example 3—adjustment. The
partnership 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 is checked, meaning that
basis was reported to the IRS. However,
the basis shown in box 1e is incorrect. Do
not report this transaction on line 1a or
line 8a. Instead, report the transaction on
Form 8949. See the instructions for Form
8949, columns (f), (g), and (h). Complete
all necessary pages of Form 8949 before
completing line 1b, 2, 3, 8b, 9, or 10 of
Schedule D.

DRAFT AS OF
September 13, 2018
NAV method for certain money market
funds. Report capital gain or loss
determined under the net asset value
(NAV) method with respect to shares in a
NAV money market fund on Form 8949,
Part I, with box C checked. Enter the
name of each fund followed by “(NAV)” in
column (a). Enter the net gain or loss in
column (h). Leave all other columns blank.
See the Instructions for Form 8949.

Specific Instructions

Complete all necessary pages of Form
8949 before completing line 1b, 2, 3, 8b,
9, or 10 of Schedule D.

Rounding Off to Whole Dollars

Cents can be rounded to whole dollars on
the Schedule D. If cents are rounded to
whole dollars, all amounts must be
rounded. To round, drop cent amounts
under 50 and increase cent amounts over
49 to the next dollar. For example, $1.49
becomes $1 and $1.50 becomes $2.
If two or more amounts have to be
added to figure the amount to enter on a
line, include cents when adding the
amounts and round only the total.

Lines 1a and 8a—Transactions
Not Reported on Form 8949

The partnership 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 collectibles) for which:
• The partnership received a Form
1099-B (or substitute statement) that
shows basis was reported to the IRS and
doesn't show any adjustment in box 1f or
1g;

If the partnership chooses to report
these transactions on lines 1a and 8a, do
not report them on Form 8949.

Figure gain or loss on each line.
Subtract the cost or other basis in column
(e) from the proceeds (sales price) in
column (d). Enter the gain or loss in
column (h). Enter negative amounts in
parentheses.

Example 1—basis reported to the
IRS. The partnership received a Form
1099-B reporting the sale of stock held for
3 years, showing proceeds (in box 1d) of
$6,000 and cost or other basis (in box 1e)
of $2,000. Box 3 is checked, meaning that
basis was reported to the IRS. The
partnership doesn't need to make any
adjustments to the amounts reported on
Form 1099-B or enter any codes. This was
your only 2018 transaction. Instead of
reporting this transaction on Form 8949,
the partnership can enter $6,000 on
Schedule D, line 8a, column (d), $2,000 in
column (e), and $4,000 ($6,000 − $2,000)
in column (h).
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
$11,000 ($6,000 + $5,000) on
Schedule D, line 8a, column (d), $5,000
($2,000 + $3,000) in column (e), and
$6,000 ($11,000 − $5,000) in column (h).
Example 2—basis not reported to
the IRS. The partnership 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 is not checked, meaning
that basis was not reported to the IRS. Do
not report this transaction on line 1a or
line 8a. Instead, report the transaction on
Form 8949. Complete all necessary pages

Instructions for Schedule D (Form 1065) 2017

-5-

Lines 1b, 2, 3, 8b, 9, and 10,
Column (h)—Transactions
Reported on Form 8949

Figure gain or loss on each line. First,
subtract cost or other basis (column (e))
from proceeds/sales price (column (d)).
Then combine the result with any
adjustments in column (g). Enter the gain
or loss in column (h). Enter negative
amounts in parentheses.
Example 1—gain. Column (d) is
$6,000 and column (e) is $2,000. Enter
$4,000 in column (h).
Example 2—loss. Column (d) is
$6,000 and column (e) is $8,000. Enter
($2,000) in column (h).

Example 3—adjustment. Column
(d) is $6,000, column (e) is $2,000, and
column (g) is ($1,000). Enter $3,000
($6,000 − $2,000 − $1,000) in column (h).

Lines 6 and 13. Capital Gains
(Losses) From Other
Partnerships, Estates, and
Trusts

See the Schedule K-1 or other information
supplied to the partnership by the other
partnership, estate, or trust.

Line 14. Capital Gain
Distributions

Enter on line 14 the total capital gain
distributions paid to the partnership during
the year.