Many taxpayers in the United States use Form 1040 to file their income taxes, but if you have to file a tax return as a trustee for someone who is deceased, you must file Form 1041 instead. For either form, you must report capital gains or losses on Schedule D, but the Internal Revenue Service provides different versions for Forms 1040 and 1041.
According to IRS instructions for Form 1041, "the fiduciary of a domestic decedent's estate, trust or bankruptcy estate" uses the form to report several different types of incomes or losses from that estate. But it does not have spaces to enter information for capital gains or losses, which include a wide range of financial activities related to the sale or exchange of various types of properties. This information must be entered on Schedule D.
The upper left-hand corner of Schedule D shows for which form it applies, either 1040 or 1041. You may download both versions of the form and their individual instruction pamphlets from the IRS website at irs.gov. Once you download a form, you can fill in the information with your computer, then save it or print it. Schedule D versions for Forms 1040 and 1041 are not interchangeable.
Schedule D for Form 1040
Schedule D for Form 1040 has two pages and three parts. Part I is for short-term gains or losses for assets held for one year of less. Part II is for long-term gains or losses for assets held for more than one year. Part III summarizes all gains and losses to arrive at the sum total to record on Form 1040. The 13-page instruction booklet gives detailed information on how to fill it out, along with information for any additional forms you may need for your particular tax situation.
Schedule D for Form 1041
Schedule D for Form 1041 also has two pages and the same first three parts as for Form 1040, but adds Parts IV for recording a capital loss limitation and Part V for tax computation using maximum capital gains rates. Its instruction book also gives details and itemizes any additional forms. You may call the IRS at (800) 829-1040 for additional information on these and all other tax forms, or you may seek the advice of a tax professional.
Richard Asmus was a writer and producer of television commercials in Phoenix, Arizona, and now is retired in Peru. After founding a small telecommunications engineering corporation and visiting 37 countries, Asmus studied broadcasting at Arizona State University and earned his Master of Fine Arts at Brooklyn College in New York.