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, 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 Privacy Act and Paperwork Reduction Act Notice, see the Instructions for Forms 1120 and 1120-A. Cat. No. 11460M Schedule D (Form 1120) 2005

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 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

● 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.

2005

Generally report every sale or

exchange of a capital asset (including

like-kind exchanges) on this schedule

even if there is no gain or loss.

ordinary course of the corporation’s

trade or business.
Schedule D (Form 1120) 2005 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 securities

traded on an established securities

market.

● 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.

Rollover of gain from empowerment

zone 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 replacement 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 enterprise 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.

Qualified empowerment 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 empowerment 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.

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://www.hud.gov/crlocator.

Exclusion of gain from DC Zone

assets. If the corporation sold or

exchanged a District of Columbia

Enterprise Zone (DC Zone) asset held for

more than 5 years, it may be able to

exclude any qualified capital gain. The

exclusion applies to an interest in, or

property of, certain businesses operating

in the District of Columbia.
Schedule D (Form 1120) 2005 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. See sections 336

and 337 for more information and other

exceptions to the general rules.

Gain on disposition of market

discount bonds. See section 1276 for

rules on the disposition of market

discount bonds.

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 must 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.

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

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 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.

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.

See Pub. 954 and section 1400B for

more details on DC Zone assets and

special rules.

● Gain treated as ordinary income under

section 1245.

● Gain from a related-party transaction.

See Sales and Exchanges Between

Related Persons in chapter 2 of Pub.

544.

How to report. Report the entire gain

realized from the sale or exchange as

the corporation otherwise would without

regard to the exclusion. On Schedule D,

line 6, enter “DC Zone Asset” in column

(a) and enter as a loss in column (f) the

amount of the allowable exclusion. If

reporting the sale directly on Schedule

D, line 6, use the line directly below the

line on which the corporation is reporting

the sale.

DC Zone asset. A DC Zone asset is

any of the following.

● DC Zone business stock.

● DC Zone partnership interest.

● DC Zone business property.

Qualified capital gain. Qualified

capital gain is any gain recognized on

the sale or exchange of a DC Zone

asset, but does not include any of the

following.

● Gain attributable to real property, or

an intangible asset, that is not an

integral part of a DC Zone business.

● Section 1250 gain figured as if section

1250 applied to all depreciation rather

than the additional depreciation.

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.

returns). Write “Section 1260(b) interest”

and the amount of the interest to the left

of Schedule J, line 10.
Schedule D (Form 1120) 2005 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).

● 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 it

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 FMV, whichever applies,

on the date of the deemed sale and

reacquisition, whether the deemed sale

resulted in a gain or unallowed loss.

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),

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 prechange 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 preaquisition capital losses.

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.

Specific Instructions

Parts I and II

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 stocks and bonds traded on

an exchange or over-the-counter market.

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 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.

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.

● Liquidation of another corporation

(section 334),

● Transfer to another corporation

(section 358),

● Transfer from a shareholder or

reorganization (section 362),

Gains and losses from partnerships.

Report the corporation’s share of capital

gains and losses from investments in

partnerships. Report a net short-term

capital gain (loss) in Part I. On line 1,

column (a), write “From Schedule K-1

(Form 1065).” Enter the amount of the

gain (loss) in column (f). Report net

long-term capital gains (losses) in Part II.

On line 6, column (a), enter “From

Schedule K-1 (Form 1065).” Enter the

amount of the gain (loss) in column (f).

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