SCHEDULE D . .
(Form 1120) Capital Gains and Losses
Department of the Treasury > Attach to your income tax return.

Internal Revenue Service

| 1980

Name Employer identification number

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

Kind of Broperty and desertion b, Date acquired ©. Date sold d. Gross sales price e. Cost or other basis

shares of "2" Co.) (mo., day, yr.) (mo., day, yr.) less expense of sale

f. Galn oe (los)
(d less e)

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

3 Net short-term capital gain or (loss)... Pa _ . oe ee

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

4 Enter section 1231 gain from Form 4797, line 5(a)(1). 0. + + + + ee ee

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

GEMM 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). . . . + + +

8 Net capital gain. Enter excess of net long-term capital gain (line 6) over net short-term capital loss (line3). .

9 Total of lines 7 and 8. Enter here and on Form 1120, line 9(a), pagel. . - - - ee ee ee
Note: If there is no entry on line 9, see instructions on capital losses for explanation of capital loss carrybacks.

WMA,

[Zialae Alternative Tax Computation

10 Taxable income (Form 1120, line 30, pagel). . 2 6 6 8 ee ee ee ee ee et
11 Net capital gain from line 8. 6 we ee ee
12 Subtract line 11 fromline10. «6 6 ee ee ee ee
13 Partial tax. Compute the tax on line 12 in accordance with the instructions for Form 1120, ScheduleJ. . «
14 28% ofline1l. ee

15 Alternative tax—total of lines 13 and 14. If less than amount of tax figured by regular method, enter here
and on Form 1120, line 3, Schedule J, and check box for ScheduleD._. ee ee ee

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Instructions

(References are to the Internal Revenue
Code.)
Purpose

Schedule D should be used by corpora-
tions to report sales or exchanges of capi-
tal assets. Sales or exchanges of property
other than capital assets, including prop-
erty used in a trade or business, involun-
tary conversions (other than casualties or
thefts), and gain from the disposition of in-
terest in oil, gas, or geothermal property,
should be reported on Form 4797, Sup-
plemental Schedule of Gains and Losses.
See the instructions for Form 4797 for
more information.

If property is involuntarily converted be-
cause of a casualty or theft, use Form
4684, Casualties and Thefts.

Parts | and I!

Generally, you should report the sales
and exchanges even though there is no
gain or loss. No loss is allowed for a wash
sale of stock or securities or from a trans-
action between related persons. (Sections
1091 and 267.)

In Part I report the sale or exchange of
capital assets held one year or less. In
Part Il report the sale or exchange of capi-
tal assets held more than one year.

What are Capital Assets.—Each item of
property held by a corporation (whether or
not connected with its trade or business) is
a capital asset except:

1. Assets that can be inventoried or
property held mainly for sale to cus-
tomers.

2. Depreciable or real property used in
the trade or business.

3. Certain copyrights, literary, musical,
or artistic compositions, letters or
memorandums, or similar property.

4. Accounts or notes receivable ac-
quired in the ordinary course of trade
or business for services rendered or
from the sale of property described
in 1. above.

5. Certain short-term Federal,
and municipal obligations.

6. A U.S. Government publication (in-
cluding the Congressional Record),
received from the Government or any
of its agencies in a manner other
than by buying it at the price offered
for public sale, which is held by a
taxpayer who received the publica-
tion or by a second taxpayer in whose
hands the basis of the publication is
determined, for purposes of deter-
mining gain from a sale or exchange,
by referring to its basis in the hands
of the first taxpayer.

State,

Special Rules for the Treatment of
Certain Gains and Losses

Note: For more information, get Publica-
tion 544, Sales and Other Dispositions of
Assets.

© Gain from installment sales.—If you
sold property on the installment basis at
a gain, get Publication 537, Installment
and Deferred-Payment Sales. In addition,
attach a computation titled “Installment
Sale Computation.’

@ Gain or loss on an option to buy or sell
property.—See section 1234 for the rules
that apply to a purchaser or grantor of an
option.

© Gain or loss from a short sale of prop-
erty.—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 on futures transac-
tions.—Report the gain or loss on futures
transactions (but not options on futures
transactions) in any commodity subject to
the rules of a board of trade or commodity
exchange. These are subject to long-term
treatment under the more than 6-month
holding period rules. (Section 1222)

© Loss from the sale or exchange of an in-
surance company’s capital assets.—Re-
port the loss if the assets were sold or ex-
changed to get funds to meet abnormal
insurance losses. If you are an insurance
company taxed under section 831 and are
reporting a loss on Schedule D, also attach
a schedule similar to Schedule C of
Form 1120M. If you are an insurance com-
pany taxed under section 821, all refer-
ences to line numbers on Form 1120 are
to be considered as references to the ap-
propriate line on Form 1120M.

© Loss from securities that are capital as-
sets 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 se-
curities held by a bank.)

How to Determine the Cost or Other
Basis of the Property

In determining gain or loss, the basis of
property will generally be its cost (section
1012). The exceptions to the general rule
are provided in sections contained in sub-
chapters C, K, O, and P of the Code. For ex-
ample, if the corporation acquired the

property by dividend, liquidation of another
corporation, transfer from a shareholder,
be-

reorganization, contribution or gift,
quest, bankruptcy, tax-free exchange,

‘Yk US. GOVERNMENT PRINTING OFFICE: 1960—O-319-122

voluntary conversion, or wash sale of
stock, see sections 301, 334, 362 (or 358),
1015, 1014 (and 1023), 372 (or 374 or
1024), 1031, 1033, and 1091, respectively.
Attach an explanation if you use a basis
other than actual cash cost of the property.

If you are allowed a charitable contribu-
tion deduction because you sold property
to a charitable organization, figure the ad-
justed basis for determining gain from the
sale by dividing the amount realized by the
fair market value and multiplying that re-
sult by the adjusted basis.

Capital Losses.—The amount of capital
losses allowed may not be more than capi-
tal gains. A net capital loss may be 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 you carry it. You may not
carry back foreign expropriation capital
losses, but you may carry them forward 10
years instead of 5. A net capital loss for a
regulated investment company may be car-
ried forward 8 years instead of 5.

At risk limitations (section 465).—If the
corporation sold or exchanged an 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 corporation has a net
loss from the activity, it may be subject to
the at risk rules.

Part III—Summary of Schedule D
Gains and Losses

If the net long-term capital gain is more
than the net short-term capital loss, there
is a net capital gain. In that case, you may
want to complete Part IV to determine if
the resulting alternative tax is less than
the tax figured using the regular method.

Part IV—Alternative Tax
Computation

In figuring the alternative tax, you do
not have to refigure deductions limited by
the amount of taxable income (such as
contributions and the special deductions in
Schedule 1).

If the alternative tax amount on line 15
is less than the tax figured by the regular
method, enter the amount of alternative
tax on Form 1120, line 3, Schedule J and
check the box for Schedule D.

If there is a net capital gain, you may be
liable for minimum tax. See Form 4626,
Computation of Minimum Tax—Corpora-
tions and Fiduciaries, for more informa-
tion.

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