This lesson will help you assist taxpayers who must use Form 1040, Schedule D, Capital Gains and Losses, to report capital gains and/or losses on the sale of assets. This lesson includes topics on the sale of stock, mutual funds, and the sale of a personal residence. If the taxpayers have sold any other assets, refer them to a professional tax preparer. This lesson will help you identify the asset's holding period, adjusted basis, net short-term and long-term capital gains or losses, the taxable gain or deductible loss, the tax liability, and the amount of any capital loss carryover.
To determine if the taxpayer must report the sale of investments or the sale of a home, use the interview techniques and tools discussed in the lesson, Screening and Interviewing. The intake and interview sheet lists income from the sale of property such as stock, bonds, or real estate. It is important to ensure that all income is accurately reported on the return. Ask taxpayers if they sold any stock, securities, other investment property, or a home during the tax year.
For additional information on the topics discussed in this lesson, see Publication 544, Sales and Other Dispositions of Assets, Publication 551, Basis of Assets, Publication 550, Investment Income and Expenses, and Publication 523, Selling Your Home.