SCHEDULE D Capital Gains and Losses OMB No. 1545-0123

(Form 1120)  Attach to Form 1120, 1120-A, 1120-F, 1120-FSC, 1120-H,

1120-IC-DISC, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT,

1120-RIC, 1120-SF, 990-C, or certain Forms 990-T. Department of the Treasury

Internal Revenue Service

Name Employer identification number

Short-Term Capital Gains and Losses—Assets Held One Year or Less

(f) Gain or (loss)

(Subtract (e) from (d))

(e) Cost or other

basis (see

instructions)

(c) Date sold

(mo., day, yr.)

(b) Date acquired

(mo., day, yr.)

(a) Description of property

(Example: 100 shares of Z Co.)

(d) Sales price

(see instructions)

1

2 Short-term capital gain from installment sales from Form 6252, line 26 or 37 2

( )

3

Unused capital loss carryover (attach computation)

3

4

Net short-term capital gain or (loss). Combine lines 1 through 4

4

Long-Term Capital Gains and Losses—Assets Held More Than One Year

5

7 Enter gain from Form 4797, column (g), line 7 or 9 7

8 Long-term capital gain from installment sales from Form 6252, line 26 or 37 8

11 Net long-term capital gain or (loss). Combine lines 6 through 10

9

Summary of Parts I and II

12 Enter excess of net short-term capital gain (line 5) over net long-term capital loss (line 11) 12

13

Net capital gain. Enter excess of net long-term capital gain (line 11) over net short-term capital

loss (line 5)

13

14

Add lines 12 and 13. Enter here and on Form 1120, page 1, line 8, or the proper line on other

returns

14

Purpose of Schedule

General Instructions

Use Schedule D to report sales and

exchanges of capital assets and gains

on distributions to shareholders of

appreciated capital assets.

Section references are to the Internal

Revenue Code unless otherwise

noted.

For Paperwork Reduction Act Notice, see the Instructions for Forms 1120 and 1120-A. Cat. No. 11460M Schedule D (Form 1120) 2003

Short-term gain or (loss) from like-kind exchanges from Form 8824

5

6

9 Long-term gain or (loss) from like-kind exchanges from Form 8824

11

Part I

Part II

Part III

Note: If losses exceed gains, see Capital losses in the instructions on page 2.

Note: For more information, see Pub.

544, Sales and Other Dispositions of

Assets.

Other Forms the Corporation

May Have To File

10 Capital gain distributions (see instructions) 10

Use Form 4797, Sales of Business

Property, to report the following:

● The sale or exchange of:

1. Property used in a trade or

business;

2. Depreciable and amortizable

property;

3. Oil, gas, geothermal, or other

mineral property; and

4. Section 126 property.

● The involuntary conversion (other

than from casualty or theft) of property

and capital assets held for business or

profit.

● The disposition of noncapital assets

other than inventory or property held

primarily for sale to customers in the

ordinary course of the corporation’s

trade or business.

● The section 291 adjustment to

section 1250 property.

Use Form 6781, Gains and Losses

From Section 1256 Contracts and

Straddles, to report gains and losses

from section 1256 contracts and

straddles.

Use Form 8824, Like-Kind

Exchanges, if the corporation made

one or more “like-kind” exchanges.

A like-kind exchange occurs when the

corporation exchanges business or

investment property for property of a like

kind. For exchanges of capital assets,

include the gain or (loss) from Form

8824, if any, on line 3 or line 9.

Use Form 4684, Casualties and

Thefts, to report involuntary

conversions of property due to

casualty or theft.

2003
Schedule D (Form 1120) 2003 Page 2

Gain on distributions of appreciated

property. Generally, gain (but not loss)

is recognized on a nonliquidating

distribution of appreciated property to

the extent that the property’s fair

market value (FMV) exceeds its

adjusted basis. See section 311.

Capital Assets

● Stock in trade or other property

included in inventory or held mainly for

sale to customers.

● Depreciable or real property used in

the trade or business, even if it is fully

depreciated.

● Certain copyrights; literary, musical,

or artistic compositions; letters or

memoranda; or similar property. See

section 1221(a)(3).

● Accounts or notes receivable

acquired in the ordinary course of the

trade or business for services

rendered or from the sale of stock in

trade or other property included in

inventory or held mainly for sale to

customers.

Capital losses. Capital losses are

allowed only to the extent of capital

gains. A net capital loss is carried

back 3 years and forward up to 5

years as a short-term capital loss.

Carry back a capital loss to the extent

it does not increase or produce a net

operating loss in the tax year to which

it is carried. Foreign expropriation

capital losses cannot be carried back,

but are carried forward up to 10 years.

A net capital loss of a regulated

investment company (RIC) is carried

forward up to 8 years.

Items for Special Treatment

Gain from installment sales. If the

corporation sold property at a gain

and it will receive a payment in a tax

year after the year of sale, it generally

must report the sale on the installment

method unless it elects not to.

However, the installment method may

not be used to report sales of stock or

● Certain commodities derivative

financial instruments held by a dealer.

See section 1221(a)(6).

● Certain hedging transactions

entered into in the normal course of

the trade or business. See section

1221(a)(7).

● Supplies regularly used in the trade

or business.

● U.S. Government publications,

including the Congressional Record,

that the corporation received from the

Government, other than by purchase

at the normal sales price, or that the

corporation got from another taxpayer

who had received it in a similar way, if

the corporation’s basis is determined

by reference to the previous owner’s

basis.

Use Form 6252, Installment Sale

Income, to report the sale on the

installment method. Also use Form

6252 to report any payment received

during the tax year from a sale made

in an earlier year that was reported on

the installment method. To elect out of

the installment method, report the full

amount of the gain on Schedule D for

the year of the sale on a return filed

by the due date (including extensions).

If the original return was filed on time

without making the election, the

corporation may make the election on

an amended return filed no later than

6 months after the original due date

(excluding extensions). Write “Filed

pursuant to section 301.9100-2” at the

top of the amended return.

Each item of property the corporation

held (whether or not connected with

its trade or business) is a capital asset

except the following:

securities traded on an established

securities market.

Rollover of gain from empowerment

zones assets. If the corporation sold

a qualifed empowerment zone asset

held for more than 1 year, it may be

able to elect to postpone part or all of

the gain that would otherwise be

included on Schedule D. If the

corporation makes the election, the

gain on the sale generally is

recognized only to the extent, if any,

that the amount realized on the sale

exceeds the cost of qualified

empowerment zone assets

(replacement property) the corporation

purchased during the 60-day period

beginning on the date of the sale. The

following rules apply.

● No portion of the cost of the

replacement property may be taken

into account to the extent the cost is

taken into account to exclude gain on

a different empowerment zone asset.

● The replacement property must

qualify as an empowerment zone

asset with respect to the same

empowerment zone as the asset sold.

● The corporation must reduce the

basis of the replacment property by

the amount of postponed gain.

● This election does not apply to any

gain (a) treated as ordinary income or

(b) attributable to real property, or an

intangible asset, which is not an

integral part of an enterpise zone

business.

● The District of Columbia enterprise

zone is not treated as an

empowerment zone for this purpose.

● The election is irrevocable without

IRS consent.

See Pub. 954, Tax Incentives for

Distressed Communities, for the

definition of empowerment zone and

enterprise zone business. The

corporation can find out if its business

is located within an empowerment

zone by using the RC/EZ/EC Address

Locator at http://hud.esri.com/

locateservices/ezec.

Qualified emplowerment zone

assets are:

● Tangible property, if:

1. The corporation acquired the

property after December 21, 2000,

2. The original use of the property in

the empowermnet zone began with

the corporation, and

3. Substantially all of the use of the

property, during substantially all of the

time that the corporation held it, was

in the corporation’s enterprise zone

business; and

● Stock in a domestic corporation or a

capital or profits interest in a domestic

partnership, if:

1. The corporation acquired the stock

or partnership interest after December

21, 2000, solely in exchange for cash,

from the corporation at its original

issue (directly or through an

underwriter) or from the partnership;

2. The business was an enterprise

zone business (or a new business

being organized as an enterprise zone

business) as of the time the

corporation acquired the stock or

partnership interest; and

3. The business qualified as an

enterprise zone business during

substantially all of the time during

which the corporation held the stock

or partnership interest.

How to report. Report the entire

gain realized from the sale as the

corporation otherwise would without

regard to the election. On Schedule D,

line 6, enter “Section 1397B Rollover”

in column (a) and enter as a loss in

column (f) the amount of gain included

on Schedule D that the corporation is

electing to postpone. If the

corporation is reporting the sale

directly on Schedule D, line 6, use the

line directly below the line on which

the sale is reported.

See section 1397B for more details.
Schedule D (Form 1120) 2003 Page 3

Gains on certain insurance property.

Form 1120-L filers with gains on

property held on December 31, 1958,

and certain substituted property

acquired after 1958, should see

section 818(c).

Gain or loss on distribution of

property in complete liquidation.

Generally, gain or loss is recognized

on property distributed in a complete

liquidation. Treat the property as if it

had been sold at its FMV. An

exception to this rule applies for

liquidations of certain subsidiaries.

Gain or loss on certain short-term

Federal, state, and municipal

obligations. These obligations are

treated as capital assets in

determining gain or loss. On any gain

realized, a portion is treated as

ordinary income and the balance as a

short-term capital gain. See section

1271.

Gain on disposition of market

discount bonds. See section 1276 for

rules on the disposition of market

discount bonds.

At-risk limitations (section 465). If

the corporation sold or exchanged a

capital asset used in an activity to

which the at-risk rules apply, combine

the gain or loss on the sale or

exchange with the profit or loss from

the activity. If the result is a net loss,

complete Form 6198, At-Risk

Limitations. Report any gain from the

capital asset on Schedule D and on

Form 6198.

Gain or loss on an option to buy or

sell property. See sections 1032 and

1234 for the rules that apply to a

purchaser or grantor of an option or a

securities futures contract (as defined

in section 1234B). See Pub. 550 for

details.

Gain or loss from a short sale of

property. Report the gain or loss to

the extent that the property used to

close the short sale is considered a

capital asset in the hands of the

taxpayer.

Gains and losses from passive

activities. A closely held or personal

service corporation that has a gain or

loss that relates to a passive activity

(section 469) may be required to

complete Form 8810, Corporate

Passive Activity Loss and Credit

Limitation, before completing

Schedule D. A Schedule D loss may

be limited under the passive activity

rules. See Form 8810.

Gains and losses of foreign

corporations from the disposition of

investment in U.S. real property.

Foreign corporations are required to

report gains and losses from the

disposition of U.S. real property

interests. See section 897.

Gain or loss on certain asset

transfers to a tax-exempt entity. A

taxable corporation that transfers all or

substantially all of its assets to a

tax-exempt entity or converts from a

taxable corporation to a tax-exempt

entity in a transaction other than a

liquidation generally must recognize

gain or loss as if it had sold the assets

transferred at their FMV. For details,

see Regulations section 1.337(d)-4.

Loss from a sale or exchange

between the corporation and a

related person. Except for

distributions in complete liquidation of

a corporation, no loss is allowed from

the sale or exchange of property

between the corporation and certain

related persons. See section 267.

Loss from a wash sale. The

corporation cannot deduct a loss from

a wash sale of stock or securities

(including contracts or options to

acquire or sell stock or securities)

unless the corporation is a dealer in

stock or securities and the loss was

sustained in a transaction made in the

ordinary course of the corporation’s

Gain on the constructive sale of

certain appreciated financial

positions. Generally, if the corporation

holds an appreciated financial position

in stock or certain other interests, it

may have to recognize gain (but not

loss) if it enters into a constructive

sale (such as a “short sale against the

box”). See Pub. 550, Investment

Income and Expenses.

Gain from certain constructive

ownership transactions. Gain in

excess of the underlying net long-term

capital gain the corporation would

have recognized if it had held a

financial asset directly during the term

of a derivative contract must be

treated as ordinary income. See

section 1260. If any portion of the

constructive ownership transaction

was open in any prior year, the

corporation may have to pay interest.

See section 1260(b) for details,

including how to figure the interest.

Include the interest as an additional

tax on Form 1120, Schedule J, line 10

(or the applicable line for other income

tax returns). Write “Section 1260(b)

interest” and the amount of the interest

to the left of line 10, Schedule J.

To make the election, report the

entire gain realized on the sale on line

1 or 6, whichever applies, in column

(f). Directly below the line on which the

gain is reported, enter in column (a),

“SSBIC Rollover.” Enter the amount of

the postponed gain (in parentheses) in

column (f). Also attach a schedule

showing (a) how the postponed gain

was figured, (b) the name of the

SSBIC stock in which the common

stock or partnership interest was

purchased, (c) the date of that

purchase, and (d) the new basis in

that SSBIC stock or partnership

interest. For more details, see section

1044 and Regulations section

1.1044(a)-1.

Rollover of publicly traded securities

gain into specialized small business

investment companies (SSBICs). If

the corporation sold publicly traded

securities, it may elect under section

1044(a) to postpone all or part of the

gain on that sale if it bought common

stock or a partnership interest in an

SSBIC during the 60-day period that

began on the date of the sale. An

SSBIC is any partnership or

corporation licensed by the Small

Business Administration under section

301(d) of the Small Business

Investment Act of 1958. The

corporation must recognize gain to the

extent the sale proceeds exceed the

cost (not taken into account

previously) of its SSBIC stock or

partnership interest purchased during

the 60-day period that began on the

date of the sale. The gain a

corporation may postpone each tax

year is limited to the smaller of

(a) $1 million, reduced by the gain

previously excluded under section

1044(a) or (b) $250,000. Reduce the

basis of the SSBIC stock or

partnership interest by any postponed

gain.

The corporation must make the

election no later than the due date

(including extensions) for filing its tax

return for the year in which it sold the

securities or partnership interest. If the

corporation’s original return was filed

on time without making the election,

the corporation may make the election

on an amended return filed no later

than 6 months after the due date of

the corporation’s return (excluding

extensions). Write “Filed pursuant to

section 301.9100-2” at the top of the

amended return, and file it at the

same address used for the original

return.

See sections 336 and 337 for more

information and other exceptions to

the general rules.
Schedule D (Form 1120) 2003 Page 4

Line 10. Enter the total capital gain

distributions paid by a RIC or REIT

during the year, regardless of how

long the corporation owned stock in

the RIC or REIT.

If the corporation is allowed a

charitable contribution deduction

because it sold property in a bargain

sale to a charitable organization, figure

the adjusted basis for determining

gain from the sale by dividing the

amount realized by the FMV and

multiplying that result by the adjusted

basis. No loss is allowed in a bargain

sale to a charity.

See section 852(f) for the treatment

of certain load charges incurred in

acquiring stock in a RIC with a

reinvestment right.

Also enter any amount received

from a RIC or REIT that qualifies as a

distribution in complete liquidation

under section 332(b) and is

designated by the RIC or REIT as a

capital gain distribution. See section

332(c).

● Transfer from a shareholder or

reorganization (section 362),

● Contribution or gift (section 1015),

● Tax-free exchange (section 1031),

● Involuntary conversion (section

1033),

● Certain asset acquisitions (section

1060), or

● Wash sale of stock (section 1091).

Attach an explanation if the

corporation uses a basis other than

actual cost of the property.

● Bequest (section 1014),

Before making an entry in column

(e), increase the cost or other basis by

any expense of sale, such as broker’s

fees, commissions, state and local

transfer taxes, and option premiums,

unless the net sales price was

reported in column (d).

A RIC or REIT’s basis in an asset it

held on January 1, 2001, for which the

RIC or REIT made an election to

recognize any gain under section 311

of the Taxpayer Relief Act of 1997, is

the asset’s closing market price or fair

market value, whichever applies, on

the date of the deemed sale and

reacquisition, whether the deemed

sale resulted in a gain or unallowed

loss.

Specific Instructions

Column (e)—Cost or other basis. In

general, the basis of property is its

cost. See section 1012 and the related

regulations. Special rules for

determining basis are provided in

sections in subchapters C, K, O, and

P of the Code. These rules may apply

to the:

Column (d)—Sales price. Enter either

the gross sales price or the net sales

price. If the net sales price is entered,

do not increase the cost or other basis

in column (e) by any expenses

reflected in the net sales price.

● Receipt of certain distributions with

respect to stock (section 301 or 1059),

● Liquidation of another corporation

(section 334),

● Transfer to another corporation

(section 358),

Loss from the sale or exchange of

capital assets of an insurance

company taxable under section 831.

Capital losses of a casualty insurance

company are deductible to the extent

that the assets were sold to meet

abnormal insurance losses or to

provide for the payment of dividend

and similar distributions to

policyholders. See section 834(c)(6).

Loss from securities that are capital

assets that become worthless

during the year. Except for securities

held by a bank, treat the loss as a

capital loss as of the last day of the

tax year. See section 582 for the rules

on the treatment of securities held by

a bank.

Losses limited after an ownership

change or aquisition. If the

corporation has undergone an

“ownership change” as defined in

section 382(g), section 383 may limit

the amount of capital gains that may

be offset by pre-change capital losses.

Also, if a corporation acquires control

of another corporation (or acquires its

assets in a reorganization), section

384 may limit the amount of

recognized built-in capital gains that

may be offset by pre-aquisition capital

losses.

Parts I and II

Generally, a corporation must report

sales and exchanges even if there is

no gain or loss. Use Part I to report

the sale, exchange, or distribution of

capital assets held 1 year or less. Use

Part II to report the sale, exchange, or

distribution of capital assets held more

Column (b)—Date acquired. A RIC or

REIT’s acquisition date for an asset it

held on January 1, 2001, for which it

made an election to recognize any

gain under section 311 of the

Taxpayer Relief Act of 1997, is the

date of the deemed sale and

reacquisition.

Generally, report sales or exchanges

(including like-kind exchanges) even if

there is no gain or loss. In Part I,

report the sale, exchange, or

distribution of capital assets held 1

year or less. In Part II, report the sale,

exchange, or distribution of capital

assets held more than 1 year. Use the

trade dates for the dates of

acquisition and sale of stock and

bonds traded on an exchange or over

the counter.

trade or business. A wash sale occurs

if the corporation acquires (by

purchase or exchange), or has a

contract or option to acquire,

substantially identical stock or

securities within 30 days before or

after the date of the sale or exchange.

See section 1091.

than 1 year. Use the trade dates for

the dates of acquisition and sale of

stocks and bonds traded on an

exchange or over-the-counter market.