How to Fill Out a Schedule D Tax Worksheet

by David Carnes

    Schedule D, designed to be submitted with Form 1040, is a form used to report your capital gains and losses during the tax year. A capital gain or loss occurs when you sell any property used for pleasure, personal use or investment at a profit or a loss. If you incur a net capital gain for the year, you will have to pay capital gains tax unless your income puts you in the lowest tax bracket. If you incur a net capital loss, you might be able to deduct some of it from your taxable income.

    Step 1

    Gather your financial records, including any Form 1099Bs issued by your stockbroker, and organize them to create a list of sales of capital assets that you made during the tax year. Nearly everything that can be sold is a capital asset – only certain property such as business inventory and accounts receivable are not considered capital assets. Your list should include the item sold, your original purchase price, your sales price, the value of any other investment you made into the asset (such as broker’s fees), the date you bought the asset and the date you sold it.

    Step 2

    Complete Form 8949, normally a prerequisite to completing Schedule D. Form 8949 requires you to list each capital asset you sold during the tax year, when you bought and sold it, the purchase price and sale price, and any other investment you made into each asset. The form is divided into two lists – short-term capital assets (owned for a year or less before sale) and long-term capital assets (owned for more than a year).

    Step 3

    Fill out Part I of Schedule D. Part I requires you to calculate your short-term capital gain or loss for the year based on the information you provided in Form 8949. You must include any capital loss carryover (net capital losses exceeding $3,000) from the previous tax year. You must also include any short-term capital gains from your association with partnerships, "S" corporations, estates, and trusts, and you must figure in gains or losses not directly related to the sale of assets such as installment sales, casualty losses, contracts and like-kind exchanges. Finally, you must report your net short-term capital gain or loss.

    Step 4

    Calculate your net long-term capital gain or loss in Part II in the same way you calculated your net short-term capital gain or loss.

    Step 5

    Add up your net short-term capital gain or loss and your net long-term capital gain or loss in Part III to come up with your net capital gain or loss for the year. If you enjoyed both short-term and long-term net capital gains, you must then figure in adjustments due to the sale of certain types of collectibles and installment sales of business property. If your net result is a loss, you can claim up to $3,000 as a deduction against your income and carry over the rest the following tax year.

    Items you will need

    • Form 8949
    • Schedule D

    Tip

    • You can skip Form 8949 under certain circumstances, such as when your only capital gain or loss is a capital loss carryover from a previous tax year.
    • Report your net capital gain or loss on Line 13 of Form 1040; submit Schedule D and Form 8949 together with Form 1040.

    Photo Credits

    • Photos.com/Photos.com/Getty Images

    About the Author

    David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.

    Zacks Investment Research

    is an A+ Rated BBB

    Accredited Business.