SCHEDULE D . .
(Form 1120) Capital Gains and Losses

Pear eresohuy Scrace. D> Attach to your income tax return.

1979

on | Employer identification number

Short-term Capital Gains and Losses—Assets Held ONE YEAR or Less

Kind of property and descrition b, Date acquired . Date sold d. Gross sales price ‘¢. Cost or other basis

‘example, 100 shares of 2" (mo., day, yt.) (mo., day, yr.) less expense of sale

. Gain or (loss)
(d less e)

2 Unused capital loss carryover (attach computation). . 2 6 1 1 ee ee

3_Net short-term capital gain or (loss)... :

Part Il Long-term Capital Gains and ‘Losses—Assets Held More Than ONE YEAR

4 Enter section 1231 gain from Form 4797, line 6(a)(1). - « - . . . . ee ee ee ee

6 Net long-term capital gain or (loss)... + eee ee ee

GG Summary of Schedule D Gains and Losses

7 Enter excess of net short-term capital gain (line 3) over net long-term capital loss (line6). . . . . 6 e
& Net capital gain. Enter excess of net long-term capital gain (line 6) over net short-term capital loss (line 3) .

9 Total of lines 7 and 8. Enter here and on Form 1120, line 9(a), pagel. . . . . «. » . »

SGT Alternative Tax Computation

10 Taxable income (Form 1120, line 30, pagel). ©. . 2 6 6 ee ew ee ee ee ee ee

11 Net capital gain from line 8. .
Note: if Part | or Part II above includes ‘transactions entered into by conduits (partnerships, etc.) before
January 1, 1979, see instructions for line 12. If no such transactions are included, enter the amount
from line 11 on line 12.

12 Enter the net capital gain from all transactions entered into after December 31, 1978, but not more than the
amount entered on line 11 (see instructions). 2. 2. 6 6 ee ee ee ee ee ee ee

13 Subtract line 12fromlinell. 2 6 6 ee ee ee ee
14 Subtract line 11 fromlinelO. © 6 ee ee ee
15 Partial tax. Compute the tax on line 14 in accordance with the instructions for Form 1120, ScheduleJ. . .
16 28% of line 12. 2 1 we ee

17 30% of line 13... 6 ww ee ee .
18 Alternative tax—total of lines 15 through | 17. If applicable, enter here and on n Form 1120, line 3, Schedule i"
and_check box for Schedule D . oe :



Instructions

(References are to the Internal Revenue Code.)

This schedule provides for the reporting of
sales or exchanges of capital assets. Every sale
or exchange of property must be reported even
though no gain or loss is indicated.

See Form 4797 and related instructions for
reporting sales or exchanges of property other
than capital assets including the sale or ex-
change of property used in a trade or business
and involuntary conversions (section 1231);
also, gain from the disposition of interest in oil,
gas or geothermal property (section 1254).

Parts | and Il

For amounts received from any install-
ment sale, the holding period rule in
effect in the year of sale will determine the
treatment of the amounts received as long-
term or short-term gain.

Gains and losses on futures transactions
(but not options on futures transactions)
in any commodity subject to the rules of 2
board of trade or commodity exchange will
retain the more than 6-month holding
period rule for long-term treatment. See
section 1222.

Capital Assets.—Each item of property held
by a corporation (whether or not connected with
its trade or business) is a capital asset except:
(2) inventoriable assets or property held pri-
marily for sale to customers; (2) depreciable or
real property used in the trade or business; (3)
certain copyrights, literary, musical, or artistic
compositions, letters or memorandums, or sim-
ilar property; (4) accounts or notes receivable
acquired in the ordinary course of trade or busi-
ness for services rendered or from the sale of
property described in (1) above; (5) certain
short-term Federal, State, and municipal obli-
gations; and (6) a publication of the United
States Government (including the Congressional
Record) which is received from the United
States Government or any agency thereof, other
than by purchase at the price at which it is
offered for sale to the public, and which is
held by (a) a taxpayer who so received such
Publication, or (b) a taxpayer in whose hands
the basis of such publication is determined, for
Purposes of determining gain from a sale or
exchange, in whole or in part by reference to the
basis of such publication in the hands of a tax-
Payer described in 6(a).

Exchange of “Like Kind” Property.—Although
no gain or loss is recognized when property held
for productive use in a trade or business or for
investment is exchanged solely for property of
a ‘like kind” to be held either for productive
use in a trade or business or for investment,
you must report the transaction on Schedule D
(Form 1120) or Form 4797, whichever is ap-
plicable. This does not include property that is
stock in trade or other property held primarily
for sale, nor stocks, bonds, notes, choses in
action, certificates of trust or beneficial inter-
est, or other securities or evidence of indebt-
edness or interest. If Schedule D is applicable,
identify the property disposed of in column (a).
Enter the date of acquisition in column (b)

and write the date of exchange in column (c).
Write “like kind exchange" in column (d) and
enter the adjusted basis in column (e). Enter
zero in column (f). (See section 1031.)

Gain from Sale of Depreciable Property Be-
tween Certain Related Taxpayers.—Gain from
the sale or exchange of depreciable property
between related persons is ordinary income if
such property is, in the hands of the transferee,
subject to depreciation. “Related persons” in-
cludes: (1) an individual and a corporation 80
percent or more in value of the outstanding stock
of which is owned, directly or indirectly, by or for
such individual; or (2) two or more corporations
80 percent or more in value of the outstanding
stock of each of which is owned, directly or in-
directly, by or for the same individual. In gen-
eral, section 318 shall apply with respect to the
constructive ownership of stock. Item (2) only
applies to sales or exchanges made after Oc-
tober 4, 1976, unless the sale or exchange was
made pursuant to a binding contract entered into
on or before that date. (See section 1239.)

Capital Losses.—Capital losses are allowed
only to the extent of capital gains. A net capital
loss, however, may be carried back three years
and forward five as a short-term capital loss.
The capital loss may be carried back only to the
extent it does not increase or produce a net
operating loss in the taxable year to which it
is being carried, Foreign expropriation capital
losses may not be carried back but may be car-
ried forward ten years instead of five. A net
capital loss for a regulated investment company
may be carried forward eight years instead of
five.

Under the provisions of section 6411, a quick
refund of the tax overpayment created by the
capital loss carryback may be obtained by filing
Form 1139, If a net capital loss carryback cre-
ates an unused investment credit or an unused
work incentive (WIN) credit in a preceding year,
the unused credit may be carried back to the
three preceding years (however, the WIN credit
cannot be carried back to years beginning before
1972), and, under the provisions of section
6411, a quick refund of the tax overpayment
may likewise be obtained by filing Form 1139.

Short Sales of Capital Assets.—For rules re-
lating to certain short sales of stock or other
securities, and transactions in commodity fu-
tures, see section 1233.

Worthless Securities.—Except for banks, if
securities which are capital assets become
wholly worthless during the taxable year, the
loss is to be treated as a capital loss as of the
last day of the taxable year.

Losses Not Allowable.—No loss is allowed
for wash sales of stock or securities. (See sec-
tion 1091.) No loss is allowed (distributions in
liquidation excepted) on transactions between
related persons, (See section 267.)

Section 465 Asset.—If the corporation dis-
poses of an asset used in an activity to which
the “at risk” rules apply (see section 465), com-
bine the gain or loss on the disposition with the
profit or loss from the activity. If the corporation
has a net loss, it may be subject to the “at risk”
rules.

Options to Buy or Sell.—See section 1234 for
tules pertaining to the treatment of gain or loss in
the case of a purchaser or that of a grantor of an

U.S. GOVERNMENT PRINTING OFFICE:

1985  9444-103/20030

option in the case of stock, securities, or com:
modities granted after September 1, 1976.

Cost or Other Basis, As Adjusted.—In deter
mining gain or loss, the basis of property will
generally be its cost. If property was acquired
by bequest, gift, tax-free exchange, involuntary
conversion, or wash sale of stock, see sections
1014 (and 1023), 1015, 1031, 1033, and
1091, respectively. Attach an explanation if the
basis used is other than actual cash cost of the
property.

If a charitable contribution deduction is al-
lowed by reason of a sale of property to a char-
itable organization, the adjusted basis for deter-
mining gain from the sale is an amount which
is in the same ratio to the adjusted basis as the
amount realized is to the fair market value,

Insurance Companies.—Companies taxable
under section 831 having losses from capital
assets sold or exchanged to obtain funds to meet
abnormal insurance losses, etc., shall attach a
schedule corresponding to Schedule A-3 of Form
1120M. For companies taxable under section
821, all references to line numbers on Form
1120 are to be considered as references to the
appropriate line on Form 1120M.

Part IV

Alternative Tax Computation.—If there is a
net capital gain (which means an excess of net
long-term capital gain over net short-term capi-
tal loss), compute the tax using the alternative
method (section 1201) to determine if the re-
sulting tax is less than the tax computed using
the regular method.

The alternative tax is the sum of (1) a partial
tax computed at graduated tax rates on the tax-
able income decreased by the net capital gain,
and (2) 28% of the net capital gain from sales
or exchanges after 12/31/78 (or a combined
28% and 30% if the corporation has pre-1979
transactions. (See instructions for line 12.))

In computing the alternative tax, deductions
subject to a limitation based upon taxable in-
come (such as contributions and the special de-
ductions in Schedule 1) do not have to be
recomputed.

Instructions for Line 12.—Enter on line 12
the net capital gain which takes into account
all gain and loss transactions entered into after
December 31, 1978, including that portion of
any unused capital loss carryover that is attribut-
able to transactions entered into after December
31, 1978.

Minimum Tax on Tax Preference Items.—If
there is a net capital gain, you may be liable
for minimum tax. See Form 4626.

Installment Sales

If you sell property and receive payments in
two or more tax years, you may be able to report
the gain under the installment method. See sec-
tion 453. If you elect to report a sale under
the installment method, attach the computation.

For treatment of a part of each payment as
“unstated interest” on deferred payment sales,
see section 483. For additional information, get
Publication 537, Installment and Deferred-Pay-
ment Sales.

283-115-1