Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Capital Gain or Loss

Form 8949 and Schedule D

Parts of Schedule D

Schedule D was revised to allow for entries from the new Form 8949 and changes made to Form 1099-B. Generally, capital gain or loss transactions are not entered directly in Schedule D. Instead, transactions are entered in Form 8949 and subtotals transfer to Schedule D in aggregate along with other capital gain distributions.

Schedule D is divided into three parts:

  • Part I, Short-Term Capital Gains and Losses, for assets held one year or less.
  • Part II, Long-Term Capital Gains and Losses, for assets held more than one year.
  • Part III, Summary. Part III also identifies the portion of gains subject to the 28% tax rate.

There can potentially be carryover losses, both short and long term that must be considered before proceeding to Part III.

If the taxpayer's capital losses are more than the capital gains, claim a capital loss deduction on Form 1040, line 13. This deduction is limited to the lesser of $3,000 ($1,500 if Married Filing Separately) or the net loss as shown on Schedule D, line 16.

If there was a yearly net loss of more than $3,000, the unused part can be carried over to the next year and treated as if it were incurred in the next year. The losses retain their holding period status. This is covered in detail in the Capital Loss Carryovers topic.

Schedule D

Schedule D