U.S. Individual Income Tax Return

Department of the Treasury
Internal Revenue Service

2013 Instructions for Schedule D
Capital Gains
and Losses

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.
Use Schedule D:
To figure the overall gain or loss from transactions reported on Form 8949,
To report certain transactions you do not 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, line 13
(or effectively connected capital gain distributions not reported directly on Form
1040NR, line 14), and
To report a capital loss carryover from 2012 to 2013.
Additional information. See Pub. 544 and Pub. 550 for more details.

Section references are to the Internal
Revenue Code unless otherwise noted.

Lines 1a and 8a, later, for more information about when Form 8949 is needed
and when it is not.

Use Form 4684 to report involuntary
conversions of property due to casualty
or theft.

Use Form 4797 to report the following.
1. The sale or exchange of:
a. Property used in a trade or business;
b. Depreciable and amortizable
property;
c. Oil, gas, geothermal, or other
mineral property; and
d. Section 126 property.
2. The involuntary conversion (other
than from casualty or theft) of property
used in a trade or business and capital
assets held for business or profit.
3. The disposition of noncapital assets other than inventory or property
held primarily for sale to customers in
the ordinary course of your trade or
business.
4. Ordinary loss on the sale, exchange, or worthlessness of small business investment company (section 1242)
stock.
5. Ordinary loss on the sale, exchange, or worthlessness of small business (section 1244) stock.
6. Ordinary gain or loss on securities or commodities held in connection
with your trading business, if you previously made a mark-to-market election.
See Traders in Securities, later.

Use Form 6781 to report gains and
losses from section 1256 contracts and
straddles.

Future Developments
For the latest information about developments related to Schedule D and its
instructions, such as legislation enacted
after they were published, go to
www.irs.gov/scheduled.

What's New
Form 8949. For 2013, you can combine
certain transactions and report the totals
on line 1a or 8a of Schedule D without
completing Form 8949. For additional
information, see the instructions for
Lines 1a and 8a.
Tax rate on net capital gain and quali­
fied dividends. The maximum tax rate
of 15% on net capital gain and qualified
dividends has increased to 20% for some
taxpayers. The Schedule D Tax Worksheet in these instructions reflects this
new, higher rate.

General Instructions
Other Forms You 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. Complete all necessary pages of
Form 8949 before you complete line 1b,
2, 3, 8b, 9, or 10 of Schedule D. See

D-1
Dec 16, 2013

Cat. No. 24331I

Use Form 8824 to report like-kind
exchanges. A like-kind exchange occurs
when you exchange business or investment property for property of a like
kind.

Capital Asset
Most property you own and use for personal purposes or investment is a capital
asset. For example, your house, furniture, car, stocks, and bonds are capital
assets. A capital asset is any property
owned by you except the following.
1. Stock in trade or other property
included in inventory or held mainly for
sale to customers. But see the Tip about
certain musical compositions or copyrights, later.
2. Accounts or notes receivable for
services performed in the ordinary
course of your trade or business, for
services rendered as an employee, or
from the sale of stock in trade or other
property held mainly for sale to customers.
3. Depreciable property used in your
trade or business, even if it is fully depreciated.
4. Real estate used in your trade or
business.

5. A copyright, literary, musical, or
artistic composition, letter or memorandum, or similar property that is:
a. Created by your personal efforts,
b. Prepared or produced for you (in
the case of a letter, memorandum, or
similar property), or
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.
But see the Tip about certain musical
compositions or copyrights, later.
6. A U.S. Government publication,
including the Congressional Record, that
you received from the Government for
less than the normal sales price, or that
you received under circumstances that
entitle you to the basis of someone who
received the publication for less than the
normal sales price.
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).
8. Certain hedging transactions entered into in the normal course of your
trade or business. See section 1221(a)
(7).
9. Supplies regularly used in your
trade or business.

instructions for Form 8949, and the following publications.
Pub. 551, Basis of Assets.
Pub. 550, Investment Income and
Expenses (Including Capital Gains and
Losses).

Short Term or Long Term
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 1
year or less. The holding period for
long-term capital gains and losses is
more than 1 year.
For more information about holding
periods, see the instructions for Form
8949.

Capital Gain Distributions
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 are not treated
as capital gains. Instead, they are included on Form 1099-DIV as ordinary dividends.
Enter on Schedule D, line 13, the total 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.

You can elect to treat as capi­
tal assets certain musical com­
positions or copyrights you
sold or exchanged. See Pub. 550 for de­
tails.

If there is an amount in box 2b, include that amount on line 11 of the Un­
recaptured Section 1250 Gain Work­
sheet in these instructions if you complete line 19 of Schedule D.

Basis and Recordkeeping

If there is an amount in box 2c, see
Exclusion of Gain on Qualified Small
Business (QSB) Stock, later.

TIP

Basis is the amount of your investment
in property for tax purposes. The basis
of property you buy is usually its cost.
You need to know your basis to figure
any gain or loss on the sale or other disposition 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 distributions on stock, and stock splits.
For more information on basis, see
Column (e)–Cost or Other Basis in the

If there is an amount in box 2d, include that amount on line 4 of the 28%
Rate Gain Worksheet in these instructions if you complete line 18 of Schedule D.
If you received capital gain distributions as a nominee (that is, they were
paid to you but actually belong to someone else), report on Schedule D, line 13,
only the amount that belongs to you. Attach a statement showing the full
amount you received and the amount
you received as a nominee. See the Instructions for Schedule B to learn about
the requirement for you to file Forms
1099-DIV and 1096.

D-2

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 before Schedule D.
Report the sale or exchange of your
main home on Form 8949 if:
You cannot exclude all of your
gain from income, or
You received a Form 1099-S for
the sale or exchange.
Any gain you cannot exclude is taxable.
Generally, if you meet the two following
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).
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).
Test 2. You have not 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 do not
meet one or both of the above two tests,
you still can claim an exclusion if you
sold or exchanged the home because of
a change in place of employment,
health, or certain unforeseen circumstances. In this case, the maximum amount
of gain you can exclude is reduced. For
more information, see Pub. 523.
Sale of home by surviving spouse. If
your spouse died before the sale or exchange, you can still exclude up to
$500,000 of gain if:
The sale or exchange is no later
than 2 years after your spouse's death,
Just before your spouse's death,
both spouses met the use requirement of
Test 1, at least one spouse met the ownership requirement of Test 1, and both
spouses met Test 2, and
You did not remarry before the sale
or exchange.
Exceptions to Test 1. You can choose
to have the 5-year test period for ownership and use in Test 1 suspended during
any period you or your spouse serve outside the United States as a Peace Corps
volunteer or serve on qualified official

extended duty as a member of the uniformed services or Foreign Service of
the United States, as an employee of the
intelligence community, or outside 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 did not 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.
Sale of home acquired in a like­kind
exchange. You cannot exclude any gain
if:
You acquired your home in a
like-kind exchange in which all or part
of the gain was not recognized, and
You sold or exchanged the home
during the 5-year period beginning on
the date you acquired it.
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.
If you had a gain and can exclude
part or all of it, enter “H” in column (f).
Enter the exclusion as a negative number (in parentheses) in column (g). See
the instructions 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 report it.
More information. See Pub. 523 for
additional details, including how to figure 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
There was a period of time after
2008 when the home was not 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.

Capital Assets Held for
Personal Use
Generally, gain from the sale or exchange of a capital asset held for personal 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. Do not enter any gain from
this property on line 32 of Form 4797. If
you are not completing Part III for any
other properties, enter “N/A” on line 32.
If the total gain is more than the recapture 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), enter the excess 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 asset).
Loss from the sale or exchange of a
capital asset held for personal use is not
deductible. But if you had a loss from
the sale or exchange of real estate held
for personal use for which you received
a Form 1099-S, you must report the
transaction on Form 8949 even though
the loss is not deductible. For example,
you have a loss on the sale of a vacation
home that is not 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
is not 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

D-3

Part II of this Form 8949 (depending on
how long you owned the home).

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 cannot use all of
your losses in 2013.

Nondeductible Losses
Do not deduct a loss from a sale or exchange between certain related parties.
This includes a direct or indirect sale or
exchange of property between any of the
following.
Members of a family.
A corporation and an individual
owning more than 50% of the corporation's stock (unless the loss is from a
distribution in complete liquidation of a
corporation).
A grantor and a fiduciary of a trust.
A fiduciary and a beneficiary of the
same trust.
A fiduciary and a fiduciary or beneficiary of another trust created by the
same grantor.
An executor of an estate and a beneficiary of that estate, unless the sale or
exchange was to satisfy a pecuniary bequest (that is, a bequest of a sum of
money).
An individual and a tax-exempt organization controlled by the individual
or the individual's family.
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. Because the loss is not 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,
columns (f), (g), and (h).

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 is not
deductible, 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).
Example 2. You received a Form
1099-B showing proceeds (sales price)
of $1,000 and basis of $5,000. Box 2b
on Form 1099-B is checked, indicating
that your loss of $4,000 ($1,000 –
$5,000) is not 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 is not deductible, 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).
At­risk 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
are not at risk, see the Instructions for
Form 6198.
Passive activity rules. If the loss is allowable under the at-risk rules, it then
may be subject to the passive activity
rules. See Form 8582 and its instructions
for details on reporting capital gains and
losses from a passive activity.

Items for Special Treatment
Transactions by a securities dealer.
See section 475 and Rev. Rul. 97-39,
which begins on page 4 of Internal Revenue Bulletin 1997-39 at www.irs.gov/
pub/irs­irbs/irb97­39.pdf.
Bonds and other debt instruments.
See Pub. 550.
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 of which you are a beneficiary. See Pub. 544.
Gain on the disposition of stock in
an interest charge domestic international
sales corporation. See section 995(c).
Gain on the sale or exchange of
stock in certain foreign corporations.
See section 1248.
Transfer of property to a partnership that would be treated as an investment company if it were incorporated.
See Pub. 541.
Sales of stock received under a
qualified public utility dividend reinvestment plan. See Pub. 550.
Transfer of appreciated property to
a political organization. See section 84.
Transfer of property by a U.S. person to a foreign estate or trust. See section 684.
If you give up your U.S. citizenship, you may be treated as having sold
all your property for its fair market value on the day before you gave up your
citizenship. This also applies to
long-term U.S. residents who cease to be
lawful permanent residents. For details,
exceptions, and rules for reporting these
deemed sales, see Pub. 519 and Form
8854.
In general, no gain or loss is recognized on the transfer of property from an
individual to a spouse or a former
spouse if the transfer is incident to a divorce. See Pub. 504.
Amounts received on the retirement of a debt instrument generally are
treated as received in exchange for the
debt instrument. See Pub. 550.
Any loss on the disposition of converted wetland or highly erodible cropland that is first used for farming after
March 1, 1986, is reported as a
long-term capital loss on Form 8949, but
any gain is reported as ordinary income
on Form 4797.
If qualified dividends that you reported on Form 1040, line 9b, or Form
1040NR, line 10b, include extraordinary
dividends, any loss on the sale or exchange of the stock is a long-term capital 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.

D-4

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.
Load charges to acquire stock in a
regulated investment company (including 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 exercised. See Pub. 550.
The sale or exchange of S corporation 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.
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.
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
ownership transaction was open in any
prior year, you may have to pay interest.
See section 1260(b) for details, including how to figure the interest. Include
the interest as an additional tax on Form
1040, line 60. Check box c and in the
space next to that box, enter “Section
1260(b) interest” and the amount of the
interest. If you are filing Form 1040NR,
include the interest as an additional tax
on line 59. Check box b and, in the
space next to that box, enter “Section
1260(b) interest” and the amount of the
interest. This interest is not deductible.
Gain or loss from the disposition of
stock or other securities in an investment
club. See Pub. 550.

Wash Sales
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:
1. Buy substantially identical stock
or securities,

2. Acquire substantially identical
stock or securities in a fully taxable
trade,
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 retirement arrangement (IRA) or Roth
IRA.
You cannot 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 property) is its cost increased by the disallowed loss (except in the case of (4)
above).
If you received a Form 1099-B (or
substitute statement), box 5 of that form
will show any nondeductible wash sale
loss if:
The stock or securities sold were
covered securities (defined in the instructions for Form 8949, column (e)),
and
The substantially identical stock or
securities you bought had the same CUSIP number as the stock or securities
you sold and were bought in the same
account as the stock or securities you
sold.
However, you cannot deduct a loss from
a wash sale even if it is not reported on
Form 1099-B (or substitute statement).
For more details on wash sales, see Pub.
550.
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 column (f). Enter as a positive number in
column (g) the amount of the loss not allowed. See the instructions for Form
8949, columns (f), (g), and (h).

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 statements must be true.
You must seek to profit from daily
market movements in the prices of se-

curities and not from dividends, interest,
or capital appreciation.
Your activity must be substantial.
You must carry on the activity with
continuity and regularity.
The following facts and circumstances should be considered in determining
if your activity is a business.
Typical holding periods for securities bought and sold.
The frequency and dollar amount
of your trades during the year.
The extent to which you pursue the
activity to produce income for a livelihood.
The amount of time you devote to
the activity.
You are considered an investor, and
not a trader, if your activity does not
meet the above definition of a business.
It does not matter whether you call yourself a trader or a “day trader.”
Like an investor, a trader generally
must report each sale of securities (taking into account commissions and any
other costs of acquiring or disposing of
the securities) on Form 8949 unless one
of the three exceptions described in the
instructions to Form 8949 applies. However, if a trader previously made the
mark-to-market election (explained
next), each transaction is reported in
Part II of Form 4797 instead of on Form
8949. Regardless of whether a trader reports his or her 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
Schedule SE. See the Instructions for
Schedule SE for an exception that applies to section 1256 contracts.
The limitation on investment interest
expense that applies to investors does
not 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 Schedule C (instead
of Schedule A).
A trader also may hold securities for
investment. The rules for investors generally will apply to those securities. Allocate interest and other expenses between your trading business and your investment securities.

D-5

Mark-To-Market Election for
Traders
A trader may make an election under
section 475(f) to report all gains and losses from securities held in connection
with a trading business as ordinary income (or loss), including those from securities held at the end of the year. Securities held at the end of the year are
“marked-to-market” by treating them as
if they were sold (and reacquired) 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 effective. To be effective for 2013, the election must have
been made by April 15, 2013.
Starting with the year the election becomes effective, a trader reports all
gains and losses from securities held in
connection with the trading business, including securities held at the end of the
year, in Part II of Form 4797. If you previously made the election, see the Instructions for Form 4797. For details on
making the mark-to-market election for
2014, see Pub. 550 or Rev. Proc. 99-17,
1999-1 C.B. 503. You can find Rev.
Proc. 99-17 starting on the bottom of
page 52 of Internal Revenue Bulletin
1999-7 at www.irs.gov/pub/irs­irbs/
irb99­07.pdf.
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). Securities held for investment are not
marked-to-market.

Short Sales
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 did not want to transfer at the time
of the sale.
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).

Holding period. Usually, your holding
period is the amount of time you actually 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 substantially 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 property used to close the short sale was held
1 year or less.
Reporting a short sale. Report any
short sale on Form 8949 in the year it
closes.
If a short sale closed in 2013 but you
did not get a 2013 Form 1099-B (or substitute statement) for it because you entered into it before 2011, report it on
Form 8949 in Part I with box C checked
or Part II with box F checked (whichever applies). In column (a), enter (for example) “100 sh. XYZ Co.–2010 short
sale closed.” Fill in the other columns
according to their instructions. Report
the short sale the same way if you received a 2013 Form 1099-B (or substitute statement) that does not show proceeds (sales price).

Gain or Loss From Options
Report on Form 8949 gain or loss from
the closing or expiration of an option
that is not a section 1256 contract but is
a capital asset in your hands. If an option you purchased expired, enter the expiration date in column (c) and enter
“EXPIRED” 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 instructions. See Pub. 550 for details.
If a call option you sold was exercised and the option premium you received was not reflected in the proceeds
(sales price) shown on the Form 1099-B
(or substitute statement) you received,
enter the premium as a positive number
in column (g) of Form 8949. Enter “E”
in column (f).

Example. For $10, you sold Joe an
option to buy one share of XYZ stock
for $80. Joe later exercised the option.
The Form 1099-B you get shows the
proceeds to be $80. Enter $80 in column
(d) of Form 8949. Enter “E” in column
(f) and $10 in column (g). Complete the
other columns according to the instructions.

Undistributed Capital Gains
Include on Schedule D, line 11, the
amount from box 1a of Form 2439. This
represents your share of the undistributed long-term capital gains of the regulated investment company (including a
mutual fund) or real estate investment
trust.
If there is an amount in box 1b, include that amount on line 11 of the Un­
recaptured Section 1250 Gain Work­
sheet if you complete line 19 of Schedule D.
If there is an amount in box 1c, see
Exclusion of Gain on Qualified Small
Business (QSB) Stock, later.
If there is an amount in box 1d, include that amount on line 4 of the 28%
Rate Gain Worksheet if you complete
line 18 of Schedule D.
Include on Form 1040, line 71, or
Form 1040NR, line 67, the tax paid as
shown in box 2 of Form 2439. Also
check the box for 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.

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 generally must
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 2013 from a
sale made in an earlier year that you reported on the installment method.
To elect out of the installment method, report the full amount of the gain on
Form 8949 on a timely filed return (including 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

D-6

months after the due date of your return
(excluding extensions). Write “Filed
pursuant to section 301.9100-2” at the
top of the amended return.

Demutualization of Life
Insurance Companies
Demutualization of a life insurance
company occurs when a mutual life insurance 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 company.
If the demutualization transaction
qualifies as a tax-free reorganization, no
gain or loss is recognized on the exchange of your equity interest in the mutual 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 period you held an equity interest in the
mutual company. If you received cash in
exchange for your equity interest, you
may have to recognize a capital gain. If
you held the equity interest for more
than 1 year, report the gain as a
long-term capital 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.
If the demutualization transaction
does not qualify as a tax-free reorganization, 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.

Small Business (Section
1244) Stock
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, also report
the transaction on Form 8949 as follows.
1. In column (a), enter “Capital portion of section 1244 stock loss.”
2. Complete columns (b) and (c) as
you normally would.
3. In column (d), enter the entire
sales price of the stock sold.
4. In column (e), enter the entire basis of the stock sold.
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 transaction. Enter it as a positive number.
7. Complete column (h) according
to its instructions.

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), enter ($9,000) ($1,000 − $60,000 +
$50,000). Put it in parentheses to show it
is a negative amount.

3. As of the date the stock was issued, the corporation was 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.
4. You 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, 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 conversion or exchange of QSB stock you held.
5. During substantially all the time
you held the stock:
a. The corporation was a C corporation,
b. At least 80% of the value of the
corporation's assets were used in the active conduct of one or more qualified
businesses (defined next), and
c. The corporation was not a foreign
corporation, DISC, former DISC, regulated investment company, real estate investment trust, REMIC, FASIT, cooperative, or a corporation that has made (or
that has a subsidiary that has made) a
section 936 election.

Exclusion of Gain on
Qualified Small Business
(QSB) Stock

SSBIC. A specialized small
TIP business investment company
(SSBIC) is treated as having
met test 5b.

Section 1202 allows for an exclusion of
up to 50% 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. The
exclusion can be up to 60% for certain
empowerment zone business stock. See
Empowerment Zone Business Stock, later.

Definition of qualified business. A
qualified business is any business that is
not one of the following.
A business involving services performed in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting,
athletics, financial services, or brokerage
services.
A business whose principal asset is
the reputation or skill of one or more
employees.
A banking, insurance, financing,
leasing, investing, 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 appropriate box checked.

To be QSB stock, the stock must
meet all of the following tests.
1. It must be stock in a C corporation (that is, not S corporation stock).
2. It must have been originally issued after August 10, 1993.

D-7

A farming business (including the
raising or harvesting of trees).
A business involving the production of products for which percentage
depletion can be claimed.
A business of operating a hotel,
motel, restaurant, or similar business.
For more details about limits and additional requirements that may apply,
see Pub. 550 or section 1202.
Empowerment Zone Business
Stock
You generally can exclude up to 60% of
your gain if you meet the following additional requirements.
1. The stock you sold or exchanged
was stock in a corporation that qualified
as an empowerment zone business during substantially all of the time you held
the stock.
2. You acquired the stock after December 21, 2000.
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 cannot be more than the gain you would
have had if you had sold the stock on the
date the corporation ceased to qualify.
For more information about empowerment zone businesses, see section
1397C.
Pass-Through Entities
If you held an interest in a pass-through
entity (a partnership, S corporation, or
mutual fund or other regulated investment company) that sold QSB stock, to
qualify for the exclusion you must have
held the interest on the date the
pass-through entity acquired the QSB
stock and at all times thereafter until the
stock was sold.
How To Report
Report the sale or exchange of the QSB
stock on Form 8949, Part II, with the appropriate box checked, as you would if
you were not taking the exclusion. Then
enter “Q” in column (f) and enter the
amount of the excluded gain 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 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 Worksheet; if you excluded 60% of the gain,
enter 2 3 of the exclusion.
Gain from Form 1099­DIV. If you received 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. 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 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.
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 section 1202 exclusion. 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 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.
Gain from an installment sale of QSB
stock. If all payments are not received
in the year of sale, a sale of QSB stock
that is not traded on an established securities market generally is treated as an
installment sale and is reported on Form
6252. Figure the allowable section 1202
exclusion for the year by multiplying the
total amount of the exclusion by a fraction, the numerator of which is the
amount of eligible gain to be recognized
for the tax year and the denominator of
which is the total 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.
Alternative minimum tax. You must
enter 7% of your allowable exclusion for
the year on line 13 of Form 6251.

Rollover of Gain From QSB
Stock
If you sold QSB stock (defined earlier)
that you held for more than 6 months,
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 also can 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 period 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 also can
elect to postpone gain if you, rather than
the pass-through entity, buy the replacement QSB stock within the 60-day period. 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 and Regulations section 1.1045-1.
You must recognize gain to the extent the sale proceeds are more than the
cost of the replacement stock. Reduce
the basis of the replacement stock by
any postponed 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 amended return filed no later than 6 months
after the due date of your return (excluding extensions). Write “Filed pursuant to
section 301.9100-2” at the top of the
amended return.
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 were not mak-

D-8

ing the election. Then enter “R” in column (f). Enter the amount of the postponed gain 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.

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
held for more than 5 years, you may be
able to exclude the amount of qualified
capital gain that you would otherwise include in income. The exclusion applies
to an interest in, or property of, certain
businesses operating in the District of
Columbia.
DC Zone asset. A DC Zone asset is any
of the following.
DC Zone business stock.
DC Zone partnership interest.
DC Zone business property.
Qualified capital gain. Qualified capital gain is any gain recognized on the
sale or exchange of a DC Zone asset that
is a capital asset or property used in a
trade or business. It does not include any
of the following gains.
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 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 for more details.
How to report. Report the sale or exchange on Form 8949, Part II, as you
would if you were not 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.

Exclusion of Gain From
Qualified Community Assets
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 exclusion applies to an interest in, or property
of, certain renewal community businesses.
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 does not include any of the
following.
Gain treated as ordinary income
under section 1245.
Section 1250 gain figured as if section 1250 applied to all depreciation
rather than the additional depreciation.
Gain attributable to real property,
or an intangible asset, that 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 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 you would
if you were not 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 parentheses to show it is negative. See the
instructions for Form 8949, columns (f),
(g), and (h). Complete all remaining columns.

Rollover of Gain From
Publicly Traded Securities
You can postpone all or part of any gain
from the sale of publicly traded securities by buying common stock or a partnership interest in a specialized small
business investment company during the

60-day period that began on the date of
the sale. See Pub. 550. Also see the instructions for Form 8949, columns (f),
(g), and (h).

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).

Specific Instructions
Rounding Off to Whole
Dollars
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 example, $1.39 becomes $1 and $2.50 becomes $3.
If you have to add two or more
amounts to figure the amount to enter on
a line, include cents when adding the
amounts and round off only the total.

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 collectibles) for which:
You received a Form 1099-B (or
substitute statement) that shows basis
was reported to the IRS and does not
show a nondeductible wash sale loss in
box 5, and
You do not 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 your gain or loss.
See How To Complete Form 8949, Col­
umns (f) and (g), in the Form 8949 instructions for details about possible adjustments to your gain or loss.

D-9

If you choose to report these transactions on lines 1a and 8a, do not report
them on Form 8949. You do not need to
attach a statement to explain the entries
on lines 1a and 8a and, if you e­file your
return, you do not need to file Form
8453.
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. You received a Form 1099-B reporting the sale of stock you held for 3
years. It shows proceeds (in box 2a) of
$6,000 and cost or other basis (in box 3)
of $2,000. Box 6b is checked, meaning
that basis was reported to the IRS. You
do not need to make any adjustments to
the amounts reported on Form 1099-B
or enter any codes. This was your only
2013 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 column (h).
Example 2 – basis not reported to
the IRS. You received a Form 1099-B
showing proceeds (in box 2a) of $6,000
and cost or other basis (in box 3) of
$2,000. Box 6b 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 of Form 8949 before completing
line 1b, 2, 3, 8b, 9, or 10 of Schedule D.
Example 3 – adjustment. You received a Form 1099-B showing proceeds (in box 2a) of $6,000 and cost or
other basis (in box 3) of $2,000. Box 6b
is checked, meaning that basis was reported to the IRS. However, the basis
shown in box 3 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.

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 column (e) from the proceeds (sales price)
in 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).

Line 13
See Capital Gain Distributions, earlier.

Line 18
If you checked “Yes” on line 17, complete the 28% Rate Gain Worksheet in
these instructions if either of the following apply for 2013.
You reported in Part II of Form
8949 a section 1202 exclusion from the
eligible gain on qualified small business
stock (see Exclusion of Gain on Quali­
fied Small Business (QSB) Stock, earlier).
You reported in Part II of Form
8949 a collectibles gain or (loss). A collectibles gain or (loss) is any long-term
gain or deductible long-term loss from
the sale or exchange of a collectible that
is a capital asset.
Collectibles include works of art,
rugs, antiques, metals (such as gold, silver, and platinum bullion), gems,

stamps, coins, alcoholic beverages, and
certain other tangible property.
Include on the worksheet any gain
(but not loss) from the sale or exchange
of an interest in a partnership, S corporation, or trust held for 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).

Line 19
If you checked “Yes” on line 17, complete the Unrecaptured Section 1250
Gain Worksheet in these instructions if
any of the following apply for 2013.
You sold or otherwise disposed of
section 1250 property (generally, real
property that you depreciated) held more
than 1 year.
You received installment payments
for section 1250 property held more than

Capital Loss Carryover Worksheet—Lines 6 and 14

Keep for Your Records

Use this worksheet to figure your capital loss carryovers from 2012 to 2013 if your 2012 Schedule D, line 21, is a loss and (a) that loss is a
smaller loss than the loss on your 2012 Schedule D, line 16, or (b) the amount on your 2012 Form 1040, line 41 (or your 2012 Form 1040NR,
line 39, if applicable) is less than zero. Otherwise, you do not have any carryovers.
If you and your spouse once filed a joint return and are filing separate returns for 2013, 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 2013, see Pub. 4681.
1. Enter the amount from your 2012 Form 1040, line 41, or your 2012 Form 1040NR, line 39. If a loss,
enclose the amount in parentheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Enter the loss from your 2012 Schedule D, line 21, as a positive amount . . . . . . . . . . . . . . . . . . . . . .

1.

3. Combine lines 1 and 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

2.

4. Enter the smaller of line 2 or line 3 . . . . . . . . . . . . . . . . . . . .

4.
If line 7 of your 2012 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 2012 Schedule D, line 7, as a positive amount . . . . . . . . . . . . . . . . . . . . . . .

5.

6. Enter any gain from your 2012 Schedule D, line 15. If a loss,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
7. Add lines 4 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

8. Short­term capital loss carryover for 2013. 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 2012 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13.
9. Enter the loss from your 2012 Schedule D, line 15, as a positive amount . . . . . . . . . . . . . . . . . . . . . .
10. Enter any gain from your 2012 Schedule D, line 7. If a loss,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . .

8.
9.

10.

11.
12. Add lines 10 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12.

13. Long­term capital loss carryover for 2013. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13.

D-10

1 year for which you are reporting gain
on the installment method.
You received a Schedule K-1 from
an estate or trust, partnership, or 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.”
You reported a long-term capital
gain from the sale or exchange of an interest 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.
Line 4. To figure the amount to enter
on line 4, follow the steps below for
each installment sale of trade or business
property held more than 1 year.
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
2013 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 2013
Form 4797 (or the comparable line of
Form 4797 for the year of sale) for the
property. The result is your total unrecaptured section 1250 gain that must be
allocated to the installment payments received from the sale.
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 section 1250 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 2013 as the smaller of (a) the
amount from line 26 or line 37 of your
2013 Form 6252, whichever applies, or
(b) the amount of unrecaptured section
1250 gain remaining to be reported. This
amount is generally the total unrecaptured section 1250 gain for the sale reduced by all gain reported in prior years
(excluding section 1250 ordinary income 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 section 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. Include this amount on line 4.

28% Rate Gain Worksheet—Line 18

Line 10. Include on line 10 your share
of the partnership's unrecaptured section
1250 gain that would result if the partnership had transferred all of its section
1250 property in a fully taxable transaction immediately before you sold or exchanged your interest in that partnership.
If you recognized less than all of the realized gain, the partnership will be treated as having transferred only a proportionate amount of each section 1250
property. For details, see Regulations
section 1.1(h)-1. Also attach the statement required under Regulations
section 1.1(h)-1(e).
Line 12. An example of an amount to
include on line 12 is unrecaptured section 1250 gain from the sale of a vacation home you previously used as a rental property but converted to personal use
prior to the sale. To figure the amount to
enter on line 12, follow the applicable
instructions below.
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 did not make an entry in Part
I of your Form 4797 for the year of sale.
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
2013 Form 4797 (or the comparable
lines of Form 4797 for the year of sale)
for the property.

Keep for Your Records

1. Enter the total of all collectibles gain or (loss) from items you reported on Form 8949, Part II . . . . . . . . . . . . . . .
2. Enter as a positive number the amount of any section 1202 exclusion you reported in column (g) of Form 8949,
Part II, with code “Q” in column (f), for which you excluded 50% of the gain, plus 2 3 of any section 1202
exclusion you reported in column (g) of Form 8949, Part II, with code “Q” in column (f), for which you excluded
60% 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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.
5. Enter your long-term capital loss carryovers from Schedule D, line 14, and Schedule K-1 (Form 1041),
box 11, code C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. If Schedule D, line 7, is a (loss), enter that (loss) here. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

D-11

1.

2.
3.

4.

5. (

)

6. (

)

7.

Unrecaptured Section 1250 Gain Worksheet—Line 19

Keep for Your Records

If you are not 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 did
not have any such property, go to line 4. If you had more than one such property, see instructions . . . . . . . . . .
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 of trade or business property held more than 1 year (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Enter the smaller of line 6 or the gain from Form 4797, line 7 . . . . . . . . . . . . . . . . . . 7.
8. Enter the amount, if any, from Form 4797, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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, trust, real estate investment trust, or mutual fund (or other regulated
investment company) or in connection with a Form 1099-R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 did not make an entry in Part I of
Form 4797 for the year of sale (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Add lines 9 through 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 C* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.
2.
3.
4.
5.
6.

9.
10.
11.
12.
13.

17.
18.

*If you are filing Form 2555 or 2555-EZ (relating to foreign earned income), see the footnote in the Foreign
Earned Income Tax Worksheet in the Form 1040 instructions before completing this line.

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 2013
Form 4797 (or the comparable line of
Form 4797 for the year of sale) for the
property. The result is your total unrecaptured section 1250 gain that must be
allocated to the installment payments received from the sale.
Step 3. Generally, the amount of
capital gain on each installment payment
is treated as unrecaptured section 1250
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 2013 as the smaller of (a) the amount
from line 26 or line 37 of your 2013
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 reduced by all gain reported in prior years
(excluding section 1250 ordinary income 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 section 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. Include this amount on line 12.
Other sales or dispositions of section
1250 property. For each sale of property held more than 1 year (for which you
did not make an entry in Part I of Form
4797), 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 Form
4797 for the property. Next, reduce that
amount by any section 1250 ordinary income recapture for the sale. This is the

D-12

amount from line 26g of Form 4797 for
the property. The result is the total unrecaptured section 1250 gain for the
sale. Include this amount on line 12.

Line 21
You have a capital loss carryover from
2013 to 2014 if you have a loss on
line 16 and either:
That loss is more than the loss on
line 21, or
The amount on Form 1040, line 41
(or Form 1040NR, line 39, if applicable), is less than zero.
To figure any capital loss carryover
to 2014, you will use the Capital Loss
Carryover Worksheet in the 2014 Instructions for Schedule D. If you want to
figure your carryover to 2014 now, see
Pub. 550.

You will need a copy of your
2013 Form 1040 and Sched­
ule D to figure your capital
loss carryover to 2014.

TIP

D-13

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. Otherwise, complete the Qualified Dividends
and Capital Gain Tax Worksheet in the Instructions for Form 1040, line 44 (or in the Instructions for Form 1040NR, line 42) to
figure your tax. Before completing this worksheet, complete Form 1040 through line 43 (or Form 1040NR through line 41).
Exception: Do not 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, line 9b (or Form 1040NR,
line 10b); or
Form 1040, line 43 (or Form 1040NR, line 41) is zero or less.
Instead, see the instructions for Form 1040, line 44 (or Form 1040NR, line 42).
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

16.
17.
18.
19.
20.
21.
22.
23.
24.

25.
26.
27.
28.
29.
30.

Enter your taxable income from Form 1040, line 43 (or Form 1040NR, line 41). (However, if you are filing
Form 2555 or 2555-EZ (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 44) . . . . . . . . . . . . . . . . . . . . . 1.
Enter your qualified dividends from Form 1040,
line 9b (or Form 1040NR, line 10b) . . . . . . . . . . . . . 2.
Enter the amount from Form 4952
(used to figure investment interest
expense deduction), line 4g . . . . . . . 3.
Enter the amount from Form 4952,
line 4e* . . . . . . . . . . . . . . . . . . . . . . . 4.
Subtract line 4 from line 3. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
Subtract line 5 from line 2. If zero or less, enter -0-** . . . . . . . . . . . . . . .
6.
Enter the smaller of line 15 or line 16 of
Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Enter the smaller of line 3 or line 4 . . . . . . . . . . . . . 8.
Subtract line 8 from line 7. If zero or less, enter -0-** . . . . . . . . . . . . . . .
9.
Add lines 6 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
Add lines 18 and 19 of Schedule D** . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
Enter the smaller of line 9 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
Subtract line 12 from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
Subtract line 13 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
Enter:
• $36,250 if single or married filing
separately;
• $72,500 if married filing jointly or
. . . . . . . . . . . . . . . 15.
qualifying widow(er); or
• $48,600 if head of household
Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
Enter the smaller of line 14 or line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
Subtract line 10 from line 1. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
Enter the larger of line 17 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
Subtract line 17 from line 16. This amount is taxed at 0%. . . . . . . . . . . . . . . . . . . . . . . . . . 20.
If lines 1 and 16 are the same, skip lines 21 through 41 and go to line 42. Otherwise, go to line 21.
Enter the smaller of line 1 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
Enter the amount from line 20 (if line 20 is blank, enter -0-) . . . . . . . . . . 22.
Subtract line 22 from line 21. If zero or less, enter -0- . . . . . . . . . . . . . . . 23.
Enter:
• $400,000 if single;
• $225,000 if married filing separately;
• $450,000 if married filing jointly or
. . . . . . . . . . . . . . . 24.
qualifying widow(er); or
• $425,000 if head of household
Enter the smaller of line 1 or line 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
Add lines 19 and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
Subtract line 26 from line 25. If zero or less, enter -0- . . . . . . . . . . . . . . . 27.
Enter the smaller of line 23 or line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . .
28.
Multiply line 28 by 15% (.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.
Add lines 22 and 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.
If lines 1 and 30 are the same, skip lines 31 through 41 and go to line 42. Otherwise, go to line 31.

D-14

Schedule D Tax Worksheet—Continued
31.
32.
33.
34.

Subtract line 30 from line 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.
Multiply line 31 by 20% (.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.
If Schedule D, line 19, is zero or blank, skip lines 33 through 38 and go to line 39. Otherwise, go to line 33.
Enter the smaller of line 9 above or Schedule D, line 19 . . . . . . . . . . . 33.

35.

Add lines 10 and 19 . . . . . . . . . . . . . . . . . . . . . . . 34.
Enter the amount from line 1 above . . . . . . . . . . . 35.

36.

Subtract line 35 from line 34. If zero or less, enter -0- . . . . . . . . . . . . .

37.

Subtract line 36 from line 33. If zero or less, enter -0-

38.
39.
40.
41.
42.
43.
44.
45.

36.

37.
Multiply line 37 by 25% (.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.
If Schedule D, line 18, is zero or blank, skip lines 39 through 41 and go to line 42. Otherwise, go to line 39.
Add lines 19, 20, 28, 31, and 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.
Subtract line 39 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.
Multiply line 40 by 28% (.28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.
Figure the tax on the amount on line 19. If the amount on line 19 is less than $100,000, use the Tax Table to
figure the tax. If the amount on line 19 is $100,000 or more, use the Tax Computation Worksheet . . . . . . . . . 42.
Add lines 29, 32, 38, 41, and 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.
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 . . . . . . . . . . 44.
Tax on all taxable income (including capital gains and qualified dividends). Enter the smaller of line 43
or line 44. Also include this amount on Form 1040, line 44 (or Form 1040NR, line 42). (If you are filing
Form 2555 or 2555-EZ, do not enter this amount on Form 1040, line 44. Instead, enter it on line 4 of the
Foreign Earned Income Tax Worksheet in the Form 1040 instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.
*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 or 2555-EZ, see the footnote in the Foreign Earned Income Tax Worksheet in
the Instructions for Form 1040, line 44, before completing this line.

D-15