Instructions for Schedule D

What's New

Schedule D has been revised to require additional reporting for certain dispositions of capital assets. These changes help taxpayers and the IRS match information reported on Forms 1099-B with information reported on tax returns.

General Instructions

Purpose of Schedule

Use Schedule D to report the following:

• The sale or exchange of a capital asset not reported on another form or schedule
• Gains from property held for personal use that are not reportable on Form 8949
• Gains from the disposition of nonbusiness bad debts
• Undistributed long-term capital gains from a trust or estate

Who Must File Schedule D

You must file Schedule D if you have:

• Capital gains or losses from property investments
• Gains from the sale of business property
• Gains from the sale of your main home if you qualify for the exclusion
• Capital loss carryovers from previous years

Parts of Schedule D

Part I - Short-Term Capital Gains and Losses

Report short-term capital gains and losses from:

• Form 8949, Part I
• Form 4797 (if applicable)
• Other short-term transactions not reported on Form 8949

Part II - Long-Term Capital Gains and Losses

Report long-term capital gains and losses from:

• Form 8949, Part II
• Form 2439 (if applicable)
• Form 4797 (if applicable)
• Other long-term transactions not reported on Form 8949

Part III - Summary

Combine the amounts from Parts I and II to determine your net capital gain or loss.

Column Instructions

Column (a) - Description of Property

Enter a brief description of the property. For example:

• "100 shares ABC Corp."
• "Bitcoin - 5 units"
• "123 Main St. (rental property)"

Column (b) - Date Acquired

Enter the date you acquired the property in MM/DD/YYYY format.

Column (c) - Date Sold

Enter the date you sold the property in MM/DD/YYYY format.

Column (d) - Sales Price

Enter the gross sales price. This should match Form 8949, column (d).

Column (e) - Cost or Other Basis

Enter your adjusted basis in the property. This should match Form 8949, column (e) plus column (g).

Column (f) - Gain or (Loss)

Subtract column (e) from column (d). Enter negative amounts in parentheses.

Net Capital Gain or Loss

Calculating Net Gain or Loss

To calculate your net capital gain or loss:

1. Combine short-term capital gains and losses from Part I
2. Combine long-term capital gains and losses from Part II
3. Subtract total losses from total gains

Capital Loss Limitation

If you have a net capital loss, you can deduct up to $3,000 ($1,500 if married filing separately) against your ordinary income. Any excess loss can be carried forward to future years.

Capital Gains Tax Rates

Capital gains are taxed at different rates depending on how long you held the asset:

• Short-term (held 1 year or less): Ordinary income tax rates
• Long-term (held more than 1 year): 0%, 15%, or 20% depending on income

Qualified Dividends and Capital Gains Tax Worksheet

If you have qualified dividends or capital gains, use the Qualified Dividends and Capital Gains Tax Worksheet in the Form 1040 instructions to figure your tax. This worksheet will help you determine which tax rate applies to your capital gains.

The worksheet considers your taxable income and filing status to determine the appropriate tax rate for your long-term capital gains and qualified dividends.

Reporting Cryptocurrency on Schedule D

Transferring from Form 8949

Transfer the totals from Form 8949 to the appropriate parts of Schedule D:

• Short-term transactions from Form 8949, Part I → Schedule D, Part I
• Long-term transactions from Form 8949, Part II → Schedule D, Part II

Direct Reporting

If you have cryptocurrency transactions not reported on Form 8949, report them directly on Schedule D with a description such as "Bitcoin - 2 units".

Cost Basis Reporting

Ensure your cost basis calculations are accurate. For cryptocurrencies, this includes:

• Purchase price
• Transaction fees
• Any adjustments for splits or forks

Additional Taxes

Net Investment Income Tax

If your modified adjusted gross income exceeds certain thresholds, you may be subject to the Net Investment Income Tax (NIIT) at 3.8% on capital gains.

Additional Medicare Tax

If your wages and self-employment income exceed $200,000 ($250,000 if married filing jointly), you may be subject to Additional Medicare Tax at 0.9% on capital gains.

Recordkeeping

Keep detailed records of all capital transactions for at least 3 years after filing your return. This includes:

• Confirmation statements from brokers
• Cost basis records
• Holding period documentation
• Any adjustments made to basis or gain

For cryptocurrency transactions, maintain records of:

• Exchange or wallet transaction history
• Fair market values at time of transaction
• Cost basis allocation methods used

Common Errors to Avoid

• Forgetting to report all capital transactions
• Incorrectly calculating holding periods
• Missing wash sale adjustments
• Not reporting foreign currency gains/losses
• Failing to carry forward capital losses

Additional Resources