SCHEDULE D 1954
Form 1120 SCHEDULE OF GAINS AND LOSSES FROM SALES
“Tntemel Revenve Seri OR EXCHANGES OF PROPERTY

Name and address

(1) CAPITAL ASSETS

pbate, | egbate 4. Gross Sate P Depreciation Allowed or| f, Goal or Other Basis and h. Gain or Loss (Column d

quire . Gross Sales Price | allowable) Since Acquisi- | Costof improvements Sub- 4

4. Description of Property 4 Contract price) Wionor March 1.1813" | Sequent to Acquation or | & ExenseofSale | plus eolumm e less the sum
Mo. Day Yr.|Mo. Day Yr. (Furnish details) March 1, 1913 ®

Short-Term Capital Gains and Losses—Assets Held for Not More Than 6 Months
1, $.. .|$... 8... $.

2. Unused net capital loss carry-over from five preceding taxable years (attach statement) ............
3, Total of short-term capital gains or losses or difference between short-term capital gains and losses

Long-Term Capital Gains and Losses—Assets Held for More Than 6 Months

$...,

. |S

5. Total of long-term capital gains or losses or difference between long-term capital gains and losses............ wee IS
Summary of Capital Gains and Losses

Gain of Loss To Be Taken Into Account

Classification

a. Gain b. Loss
6. Net short-term capital gain or loss from line 3. 8.
7. Net long-term capital gain or loss from line 5. 8.

8. Net short-term capital gain (line 6, col. a) reduced by any net long-term capital loss (line 7,
col. b), Enter here dnd as item 13 (a), page 1, Form 1120 8.
9, Net long-term capital gain (line 7, col. a) reduced by any net short-term capital loss (line 6,
col. b). Enter here and as item 13 (b), page 1, Form 1120..........
10. Excess of losses over gains in lines 6 and 7. This excess is not allowable.

Alternative Tax Computation for Calendar Year 1954 and Taxable Years Ending on or Before March 31, 1955
For other taxable years attach Form 1120FY

XXXXXXXXXX

XXXXXXKXXX

Xxxxxxxxxx [8

|S.

ML, Line 7, page 3, Form 1120. 5 ooo aug 7
(When deductions are allowable under sections 243, 244, 247, 922, and 94: 1
tr purposes of the alternative tax (line 13) according to the ‘Alternative tax” instructions on the reverse side.)
12. Net long-term capital gain reduced by any net short-term capital loss (line 9 of summary) .
18. Line 1] minus line 12.0.0... .00.. cece ceeeeeeeeeceeeaeeceeneeeeeeeeeeeeeneeeneeees .
14. If amount of line 13 is:
(a) Not over $25,000; enter 30 percen: of line 13 (32 percent if a consolidated return)...
(b) Over $25,000; enter 52 percent of line 13 (84 percent if a consolidated return)... .
Subtract $5,500 and enter difference......... 50. 0ecceeceeeeeeeceeeceeeneeeeees —_—_———_—__—__
18. Less: Adjustment for partially tax-exempt interest; enter 30 percent of line 1, Schedule K, Form 1120, but not in excess
of 30 percent of line 13
16. Partial tax. .
17, 26 percent of line 12 (25% for years beginning on or after April 1, 1954).
18. Alternative tax (line 16 plus line 17)
19, Normal tax and surtax (line 10, page 3, Form 1120)...... .
20. Tax liability (line 18 or 19, whichever is lesser). Enter here and as line 11, page 3, Form 1120..........-..,.0..- 8

(II) PROPERTY OTHER THAN CAPITAL ASSETS

b. Date | c, Date @, Depreciation Allowed (or | f. Cost or Other Basis and

i Acquired | Sold 4. Gross Sales Price | allowable) Since Acquisi- | Costoof !mprove - h, Gain or Loss (Column d
4. Description of Property a ‘Contract price) tion or March 1, 1913” | sequent to Acquisition or | & Expense of Sale| plus column e less the sum
Mo. Day Yr.|Mo. Day Yr. (Furnish details) March 1, 1913, of columns f and g)

Enter here and as item 13 (c), page 1, Form 1120.

Total net gain (or loss).

State with respect to each item of property reported in Schedule D (1) and (II); (1) How property was acquired
(2) Whether at time of sale or exchange—(Check appropriate block(s))

( () purchaser owned directly or indirectly (b) where purchaser was a corporation, more ( (c) where purchaser was a_ corporation,
more than SO percent in value of your than $0 percent in value of its capital stock whether more than 50 percent in value of its
outstanding stock, and 50 percent in value of your capital stock capital stock was owned directly or indirectly

was owned directly or indirectly by or for the by you.

same individual or his family, and

State name and address of purchaser ..



INSTRUCTIONS
(References are to the Internal Revenue Code)

Instructions For Insurance Companies Using This Schedule

Companies taxable under section 831 and having losses from capital assets
sold or exchanged in order to obtain funds to meet abnormal insurance losses,
etc., shall attach a schedule corresponding to Schedule E, Form 1120M.

For companies taxable under section 831 cr section 821 (a) (1) or (b),
“net capital loss” means the amount by whic the losses for the taxable year
from sales or exchanges of capital assets exceed the sum of the gains from
such sales or exchanges and the lesser of (1) the taxable income (computed
without regard to gains or losses from sales or exchanges of capital assets or
to the deduction for partially tax-exempt interest provided in section 242)

GENERAL IN

Gains and losses from sales or exchanges of capital assets and other
property.—Report sales or exchanges of capital assets and sales or exchanges
‘of property other than capital assets in Schedule D on other side. Every sale
‘or exchange of property, even though no gain or loss may be indicated, must
be reported in detail.

Losses from sales or exchanges of capital assets shall be allowed only to the
extent of gains from such sales or exchanges. However, the amount of a net
capital loss sustained in any taxable year may be carried over to each of the
five succeeding taxable years and treated in each such succeeding taxable year
as a short-term capital loss to the extent not allowed as a deduction against any
net capital gains of any taxable year intervening between the taxable year in
which the net capital loss was sustained and the taxable year to which carried.

Definition of capital assets-—The term “capital assets” means property held
by the taxpayer (whether or not connected with its trade or business), but
does not include (1) stock in trade of the taxpayer or other property of a
kind which would properly be included in the inventory of the taxpayer if
on hand at the close of the taxable year, or property held by the taxpayer
primarily for sale to customers in the ordinary course of its trade or business;
or (2) property used in the trade or business, of a character which is subject
to the allowance for depreciation provided in section 167, or real property
used in the trade or business of the taxpayer; or (3) certain copyrights, literary,
musical, or artistic compositions, or similar properties; or (4) accounts or
notes receivable acquired in the ordinary course of trade or business for services
rendered or from the sale of property described in (1) above; or (5) an obli-
gation of the United States or any of its possessions, or of a State or Territory,
or any political subdivision thereof, or of the District of Columbia, issued on
or after March 1, 1941, on a discount basis and payable without interest at a
fixed maturity date not exceeding 1 year from the date of issue.

Classification of capital gains and losses,—The phrase “short-term” applies
to the category of gains and losses arising from the sale or exchange of capital
assets held for 6 months or less, and the phrase “long-term' to the category
of gains and losses arising from the sale or exchange of capital assets held for
more than 6 months.

Enter full description of each item of property sold or exchanged, even
though no gain or loss may be indicated. Such description should include
the following facts: (a) For real estate, location and description. of land,
description of improvements, details explaining depreciation; (6) for bonds
or other évidences of indebtedness, name of issuing corporation, description
of the particular issue, denomination, and amount; (¢) for stocks, name of
issuing corporation, class of stock, number of shares, and capital changes
affecting basis (nontaxable stock dividends, other nontaxable distributions,
stock rights, etc.).

The “basis” for the property is not subject to the same rule for reporting
gains as for losses, if the property was acquired before March 1, 1913. If the
property sold or exchanged was acquired prior to March 1, 1913, the basis
for determining GAIN is the cost or the fair market value as of March 1, 1913,
adjusted as provided in section 1016, whichever is greater, but in determining
LOSS the basis is cost so adjusted. If property was acquired after February
28, 1913, basis for both gain and loss is the cost of such property, except as
otherwise provided. The exceptions arise chiefly where property was acquired
by bequest, gift, tax-free exchange, involuntary conversion, or wash sale of
stock; see sections 1014, 1015, 1031, 1033, and 1091, respectively. If the
amount shown as the basis is other than actual cash cost of the property sold
or exchanged, full details must be furnished regarding the acquisition of the
property.

Enter in column e, on other side, the amount of depreciation, exhaustion,
wear and tear, obsolescence, amortization, and depletion in respect of the prop-
erty. This amount shall be the sum of the following:

(4) The amount of depreciation, exhaustion, wear and tear, obsolescence,
amottization, and deplétion which has been allowed (but not less than the
amount allowable) in respect of such property since date of acquisition, or
since February 28, 1913, if the property was acquired before that date. For
any period after December 31, 1951, the amount of depreciation, etc., allowed
(and which is in excess of the amount allowable) shal! be disregarded to the
extent that such excess does not result in a reduction for any taxable year of
the taxpayer's income or excess profits taxes. In respect of any period after
February 28, 1913, and before January 1, 1952, the taxpayer may disregard
depreciation, etc., which was in excess of the amount allowable and which
did not result in reduction of income or excess profits taxes only if an election
is made in accordance with regulations. See section 1020; and

(4) The amount of depreciation, exhaustion, wear and tear, obsolescence,
amortization, and depletion actually sustained prior to March 1, 1913, if the
property was acquired before that date.

Subsequent improvements to be entered in column f. include expenditures
for additions, improvements, renewals, and replacements made to restore the
property or prolong its useful life. Do not include ordinary repairs, interest,
or taxes in column f. or elsewhere in computing gain or loss.

If emergency facilities are sold or exchanged, see section 1238.

Losses on securities becoming worthless—If any securities (as defined
below) become worthless within the taxable year and are capital assets, the
loss resulting therefrom shall, in the case of a taxpayer other than a bank, as
defined in section 581, be considered as a loss from the sale or exchange, on
the last day of such taxable year, of capital assets. Section 165 (g) (1).

Definition of security—Fot the purpose of determining capital losses under
section 165, the term “security” means a share of stock in a corporation; a
right to subscribe for, or to receive, a share of stock in a corporation; or a
bond, debenture, note, or certificate, or other evidence of indebtedness, issued
by a corporation or by a government or political subdivision thereof, with
interest coupons or in registered form. However, securitics issued by certain
affiliated corporations shali not be deemed capital assets. Section 165 (g) (3).

Losses not allowable —No loss shall be recognized in any sale or other dis-
position of shares of stock or securities where there has been acquired substan-
tially identical stock or securities or there has been entered into a contract or
option to acquire substantially identical stock or securities within 30 days
before or after the date of such sale or disposition, except in cases of dealers
in stocks and securities and with respect to transactions made in the ordinary
course of such business. Section 1091.

Except in the case of distributions in liquidation, no deduction shall be
allowed in respect of losses from sales or exchanges of property, directly or
indirectly, between an individual and a corporation in which such individual
‘owns, directly or indirectly, more than 50 percent in value of the outstanding
stock; or (except in the case of distributions in liquidation) between two

or (2) losses from the sale or exchange of capital assets sold or exchanged to
obtain funds to meet abnormal insurance losses and to provide for the pay-
ment of dividends and similar distributions to policyholders.

For companies taxable under section 821 (a) (1) or (b), all references to
” or “line” numbers, Form 1120, shall be considered as references to
the appropri: “line” in Form 1120M. It will be necessary for
such companies to substitute for lines 14, 15, and 16 on other side a computa-
tion conforming to that on pages 2 and 3 of Form 1120M.

ISTRUCTIONS

corporations more than 50 percent in value of the outstanding stock of each
of which is owned, directly or indirectly, by or for the same individual, if
either one of such corporations, with respect to the taxable year of the co:
poration preceding the date of the sale or exchange was, under the law appli-
cable to such taxable year, (1) a personal holding company, as defined in
section 542, or (2) a foreign personal holding company, as defined in section
552. (For the purpose of determining the ownership of stock, in applying
this paragraph, see section 267.)

Gain on sales by a “controlled” corporation.—In the case of a sale or ex-
change, directly or indirectly, of property between an individual and a cor-
poration more than 80 percent in value of the outstanding stock of which is
owned by such individual, his spouse, and his minor children and minor grand-
children, any gain recognized to the transferor from such sale or exchange
Shall be treated as gain from the sale or exchange of property which is neither
a capital asset nor property described in section 1231, if such property in the
hands of the transferee is depreciable under section 167. Section 1239.

Gains and losses from involuntary conversion and from the salé or exchange
of certain property used in the trade or business.—The term “property used
in the trade or business,” as used in section 1231, means property which has
been held more than 6 months, which is used in the trade or business, and
which is either real property or property subject to depreciation under section
167, and which is not (a) property of a kind which would properly be includi-
ble in the inventory of the taxpayer if on hand at the close of the taxable year,
(4) property held by the taxpayer primarily for sale to customers in the ordi-
nary course of its trade or business, or (c) certain copyrights or similar prop-
erties. Such term also includes timber and coal with respect to which section
631 applies as well as unharvested crops to which section 1231 (b) (4) applies.
Such term also includes livestock (but not poultry) held for draft, breeding,
or dairy purposes and held for 12 months or more from the date of acquisition.

Section 1231 provides special treatment for the gains and losses upon the
sale or exchange of “property used in the trade or business” and upon the
compulsory or involuntary conversion of (1) such property and (2) capital
assets held for more than 6 months. Such gains and losses during the taxable
year are treated as gains and losses from the sale or exchange of capital assets
held for more than 6 months, if the aggregate of such gains exceeds the
aggregate of such losses. If, however, such gains do not exceed such losses,
such gains and losses shall not be treated as gains and losses from the sale or
exchange of capital assets.

In determining whether gains do or do not exceed losses, it is necessary to
include the gains and losses to the extent that they would be included if they
were all ordinary gains and losses. The limitation of section 1211 on the
deductibility of capital losses does not operate to exclude any such losses from
the computation as to the excess of gains over losses, but all such losses are
included in full.

For special treatment of gain or loss upon the cutting of timber, or upon
the disposal of timber or coal under a contract by which the owner retains an
economic interest in such timber or coal, see section 631.

Alternative tax—If for any taxable year the net long-term capital gain
exceeds the net short-term capital loss, or if there is only a net long-term
capital gain, section 1201 imposes an alternative tax in lieu of the normal tax
and surtax imposed upon taxable income, if any, only if such tax is less than
the tax imposed by section 11 (relating to normal tax and surtax on corpora-
tions), sections 821 and 831 (relating to normal tax and surtax on insurance
companies, other than life insurance companies), or section 511 (a) (1)
(relating to taxation of business income of certain organizations described in
section 511 (a) (2)). The alternative tax is the sum of (1) a partial tax,
computed at the normal tax and surtax rates on the taxable income decreased
by the amount of the excess of the net long-term capital gain over the net
short-term capital loss, and (2) 26 percent of such excess for taxable years
beginning before April 1, 1954, determined without regard to section 21, or
25 percent for years beginning after March 31, 1954.

If the corporation computes an alternative tax under section 1201 and is
entitled to special deductions for dividends received (sections 243, 244, 245);
the special deduction for dividends paid (section 247); the special deduction
for a Western Hemisphere trade corporation (section 922); or the special
deduction for a China Trade Act corporation (section 941) the amount to be
entered on line 13 shall be computed as follaws:

(1) Add back to the taxable income (item 33, page 1, Form 1120) any
deductions claimed in item 29 or item 32 (b), page 1, Form 1120,
under the authority of sections 243, 244, 245, 247, 922, and 941.
Subtract from this total the excess of net long-term capital gain over
net short-term capital loss (line 9 of Schedule D).

Recompute the special deductions allowable under sections 243, 244,
245, 247, 922, and 941. For the purpose of this recomputation, the
term “taxable income” employed in these sections and in section 246
shall be considered to be the result in (2) above.

Subtract from the result in (2) above the special deductions recom-
puted in (3) above and enter the difference, plus line 1, Schedule K,
Form 1120, in line 13.

Bonds, etc., losses of banks.—In the case of a bank, as defined in section
581, if the losses in the taxable year from sales or exchanges of bonds, deben-
tures, notes, or certificates, or other evidences of indebtedness, issued by any
corporation’ (including one issued by 2 government or political subdivision
thereof) with interest coupons or in registered form, exceed the gains from
such sales or exchanges, such excess shall be considered as an ordinary loss
and deductible in full against other income. Section 582.

Dealers in securities. Capital gains and ordinary losses—Under the pro-
visions of section 1236, gain by a dealer in securities from the sale or exchange
of a security, as defined in section 1236, shall in no event be considered as gain
from the sale or exchange of a capital asset unless (a) the security was, before
the expiration of the thirtieth day after the date of its acquisition, clearly iden-
tified in the dealer's records as a security held for investment or, if acquired
before October 20, 1951, was so identified before November 20, 1951; and
(5) the security was not, at any time after the expiration of such thirtieth day,
held by the dealer primarily for sale to customers in the ordinary course of
trade or business. A loss from the sale or exchange of a security shall, if
section 582 (c) is not applicable, be considered a capital loss if at any time
after November 19, 1951, the security was clearly identified in the dealer's
records as a security held for investment.

Short sales of capital assets—For rules regarding tax consequences of cer-
tain short sales of stock or other securities (including those dealt with on a

“when issued” basis), and transactions in commodity futures, see section 1233.
U.S. GOVERNMENT PRINTING OFFICE: 1954—0-307326

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