Can You Mark Stock Purchased at Various Times on a Schedule D?

You mark purchase dates on Form 8949, not Schedule D.

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You must tell the Internal Revenue Service about the stocks you sell. The correct form to use is Form 8949, and you then summarize the information on Schedule D. To figure your taxes correctly, you must separate your long- and short-term capital gains on Form 8949. You must report the precise date of sale, but the IRS gives you some latitude in marking your purchase dates.

Form 1099-B

Your broker sends you Form 1099-B in January to report your security sales for the previous year. You use Form 1099-B to fill out Form 8949. Form 1099-B lists the dates of your purchases and sales, along with the cost basis of the stocks you sell and the proceeds you collect. However, you might sell shares that you purchased through multiple transactions. Rather than mark each purchase as a separate transaction, your broker will mark the purchase date as “various.” If a sale contains a mix of long-term and short-term holdings, you’ll receive two different copies of Form 8949 reporting each category separately.

Form 8949

You treat stocks you've held for more than one year as long-term holdings. The reason you separately report the sale of short- and long-term holdings is the lower tax rate on long-term capital gains. You list each sale on a separate line on Form 8949. If you sell shares bought at different times, mark the “date acquired” column “various.” If the various purchase dates include short- and long-term holdings, enter the appropriate amounts in the short-term and long-term sections of Form 8949. Add up your capital gains and losses and transfer the totals to Schedule D.

Capital Gains Tax

As of 2013, the long-term capital gains rate tops out at 20 percent if your modified adjusted gross income, or MAGI, exceeds $400,000. If you file a joint return, the threshold is $450,000. The long-term capital gains rate for taxpayers with smaller MAGIs is 15 percent for tax brackets of 28 percent or higher. Otherwise, the long-term capital gains are tax free. You apply your normal tax rate to short-term capital gains. Capital losses offset capital gains and up to $3,000 of ordinary income. You can carry unused capital losses forward to reduce your tax bill in future years.

Tax Planning

Even if you don’t have to write down multiple purchase dates on Form 8949, it might be important for you to monitor those dates as the new year approaches. Knowing these dates might allow you to time the strategic sale of securities to reduce your current year taxes. For example, if the stock you wish to sell will shortly become a long-term holding, you might want to delay the sale so you can take advantage of long-term capital gains rates. If you defer the sale into the next year, you’ll avoid paying taxes on the gain in the current year. You can also couple the sale of winning and losing shares to reduce your net capital gains.