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

General Instructions Purpose of Schedule

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 page 1 of the Instructions for Forms 1120 and 1120-A. Cat. No. 11460M Schedule D (Form 1120) 2000

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 below.

Note: For more information, see

Pub. 544, Sales and Other

Dispositions of Assets, and Pub.

542, Corporations.

Other Forms the Corporation

May Have To File

2000

10 Capital gain distributions (see instructions) 10

A Change To Note

Fiscal year regulated investment

companies (RICs) and real estate

investment trusts (REITs) may be

able to elect to recognize gain on

certain assets held on January 1,

2001. The election allows future gain

on the assets to be eligible for a

lower capital gain tax rate at the

shareholder level. See Election by

RICs and REITs To Recognize Gain

on Assets Held on January 1,

2001, on page 4.

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 4684, Casualties and

Thefts, to report involuntary

conversions of property due to

casualty or theft.
Schedule D (Form 1120) 2000 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.

● Gain from constructive sales

treatment for 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.

● Rollover of publicly traded

securities gain into specialized

small business investment

companies (SSBICs). If the

corporation sold publicly traded

securities, it may elect 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.

● 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 11. Write

“Section 1260(b) interest” and the

amount of the interest to the left of

line 11, Schedule J.

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 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.

Capital assets. Each item of

property the corporation held

(whether or not connected with its

trade or business) is a capital asset

except:

● 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 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 10 years. A net capital loss

of a RIC is carried forward 8 years.

Items for Special Treatment

● Gain from installment sales. A

corporation generally uses the

installment method and files Form

6252, Installment Sale Income, if it:

● 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 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.

1. Has a gain this year from the

casual sale of real or personal

property (other than inventory) and is

to receive any payment in a later

year or

2. A payment is received this year

from a sale reported in an earlier

year on the installment basis.

1. If the corporation elects out of

the installment method by reporting

the full amount of the gain on a

timely filed return (including

extensions). See Regulations section

301.9100-2 to make the election on

an amended return within 6 months

of the due date (excluding

extensions).

2. For sales of stock or securities

(or certain other property described

in the regulations) traded on an

established securities market. See

section 453(k).

3. If the corporation is an accrual

basis taxpayer and the income from

a sale of property after December

16, 1999, would otherwise be

reported using the accrual method

of accounting. See section 453(a)(2)

for exceptions.

Do not use the installment

method or file Form 6252:
Schedule D (Form 1120) 2000 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.

● 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.

● 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.

● 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.

● 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.

● 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.

● 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.

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, 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.

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.

The gain a corporation may

postpone each tax year is limited to

the smaller of (a) $250,000 or (b) $1

million, reduced by the gain

previously excluded under section

1044. Reduce the basis of the

SSBIC stock or partnership interest

by any postponed gain.
Schedule D (Form 1120) 2000 Page 4

Line 10. Enter the total capital gain

distributions paid by a RIC or a REIT

during the year, regardless of how

long the corporation owned stock in

the RIC or REIT.

Specific Instructions

Column (e)—Cost or other basis.

In general, the basis of property is

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.

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.

If the gross sales price is reported

in column (d), 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, before entering an

amount in column (e).

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).

Election by RICs and REITs

To Recognize Gain On Assets

Held on January 1, 2001

RICs and REITs may elect to treat

certain assets held on January 1,

2001, as having been sold and then

reacquired on the same date. The

purpose of the election is to make

future gain on the asset eligible for

an 18% (instead of 20%) capital

gain tax rate at the shareholder level

to the extent the gain is designated

under section 852(b)(3) or 857(b)(3)

by the RIC or REIT as a capital gain

distribution. The 18% rate is

applicable to the extent the gain

would otherwise be taxed to the

shareholder at 20% if the holding

period of the asset begins after

December 31, 2000, and the asset

is held for more than five years. The

holding period of any asset for

which this election is made begins

on the date of the deemed sale and

reacquisition.

Any readily tradable stock (that is

a capital asset) not sold before

January 2, 2001, for which the

election is made is deemed to have

been sold on January 2, 2001, at its

closing market price on that date

and reacquired on that date for the

same amount. For this purpose,

readily tradable stock includes

shares issued by an open-end

mutual fund. Any other capital asset

held on January 1, 2001, for which

the election is made is deemed to

have been sold and reacquired on

January 1, 2001, for its fair market

value on that date. Any gain on a

deemed sale must be recognized. A

loss from a deemed sale is not

allowed in any tax year, but the

asset will be eligible for the 18%

rate on future gain. The basis in the

reacquired asset is its closing

market price or fair market value,

whichever applies, on the date of

the deemed sale, whether the

deemed sale results in a gain or

unallowed loss.

If the RIC or REIT makes the

election with respect to an interest

in another pass-through entity and

To make the election, report the

deemed sale(s) on Schedule D for

the tax year that includes the date

of the deemed sale (calendar year

RICs and REITs make the election

on their 2001 tax returns). If the

deemed sale results in a loss, enter

zero instead of the amount of the

loss. Make the election on a

share-by-share or asset-by-asset

basis. Attach a statement to the

return stating that the RIC or REIT is

making an election under section

311 of the Taxpayer Relief Act of

1997 and specifying the assets for

which the election is being made.

File Form 1120-RIC or 1120-REIT no

later than its due date (including

extensions). However, if the return

was timely filed without making the

election for any asset, the election

can still be made by filing an

amended return within 6 months of

the original return due date

(excluding extensions). Write

"Election Under Section 311 of the

Taxpayer Relief Act of 1997" at the

top of the amended return and file it

where the original return was filed.

Once made, an election for any

asset is irrevocable.

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 corporation on the

receipt of certain distributions with

respect to stock (section 301 or

1059), liquidation of another

corporation (334), transfer to another

corporation (358), transfer from a

shareholder or reorganization (362),

bequest (1014), contribution or gift

(1015), tax-free exchange (1031),

involuntary conversion (1033),

certain asset acquisitions (1060), or

wash sale of stock (1091). Attach an

explanation if the corporation uses a

basis other than actual cost of the

property.

that pass-through entity makes the

election with respect to assets it

holds, that pass-through entity’s

election will be considered to

immediately precede the RIC’s or

REIT’s election for deemed sales

that occur on the same day.

Pass-through entities include mutual

funds (or other regulated investment

companies), real estate investment

trusts, S corporations, partnerships,

estates, trusts, and common trust

funds.