OMB No. 1545-0123

free atsoy Capital Gains and Losses

Department of th To be filed with Forms 1120, 1120-DISC, 1120F, 1120-H, 1982
Internal Revenue 1120L, 1120M, 1120—POL, 990-C, and certain Forms 990-T

Name ‘Employer Identification number

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

. Kind of property and description b, Date acquired c. Date sold 4. Gross sales price ; 1 Gain (loss
(Example, 100' shares of "2" Co.) (mo., day, yr.) (mo., day, yt.) less expense of sale © Cost or other basis ais

2 Short-term capital gain from installment sales from Form 6252, line2lor29  . . . - - 2 se +
3 Unused capital loss carryover (attach computation) . 2. 6. 6 ee ee ee ee eee
4 Net short-term capital gain or (loss)... - + + . . -.,... 5, 4

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

5 Enter gain from Form 4797, line 5(a)(1). . -

7 Long-term capital gain from installment sales from Form 6252, line 2lor29. . . - + « «© « =
8 Net long-term capital gain or (loss). «ee ew ee ee 8

Summary of Schedule D Gains and Losses (Form 1120L filers omit line 11)

9 Enter excess of net short-term capital gain (line 4) over net long-term capital loss (line 8). . . |
10 Net capital gain. Enter excess of net long-term capital gain (line 8) over net short-term capital loss (line

11 Total of lines 9 and 10. Enter here and on Form 1120, line 8, page 1; Form 1120-H, line 5, page 1;
Form 1120-POL, line 5, page 1; or the proper line on other returns. . . « woe ee ee LAD

Note: /f there is no entry on line 11, see instructions on capital losses for explanation ‘of capital loss carrybacks. ZY
Alternative Tax Computation (Forms 1120-H and 1120-DISC filers omit Part IV)
(Fiscal year filers, do not complete Part IV, but instead see the instructions for the applicable return
to figure the tax for fiscal year 1982-83)

(a) Form 1120, line 30, pagel . . . . . e

. (b) Form 1120-POL, line19,pagel . . . . « :
12 Taxable income. Enter the amount from ) (c) Others—Enter amount from the proper line of | *
other returns. 2. ee ew we ee
13 Net capital gain from line 10. ©. 6. ee ee ee ee ee ee

14 Subtract line 13 from line12. 2 1 1 6 we ew ee woe oe see
(a) Form 1120—In accordance with the instructions for Form 1120,

Schedule J
15 Partial tax. Compute the | (b) In accordance with the instructions for Form 1120-POL, General
tax on line 14 as follows Instruction B. . .
(c) Others—In accordance with the tax computation’ instructions for
applicablereturn. . 2 1 6 6 ee ew we ew we ee
16 28% ofline 13... 6... eee ee res BP (:)

17 Alternative tax—total of lines 15 and 16. If less than amount of tax fi figured by regular method, enter
here and on Form 1120, Schedule J, line 3; Form 1120-POL, page 1, line 21; or the proper line on other
returns. Also check box for Schedule D. . . _. -| 17

For Paperwork Reduction Act Notice, see page 1 of Form “Ti20 instructions. 363-123-1



Instructions

(References are to the Internal Revenue
Code.)

Purpose

Schedule D should be used by a taxpayer
who files either Forms 1120, 1120-DISC,
1120F, 1120-H, 1120L, 1120M, _1120-
POL, 990-C, or certain Forms 990-T, to re-
port sales or exchanges of capital assets.
Sales or exchanges of property other than
capital assets, including property used in a
trade or business, involuntary conversions
(other than casualties or thefts), and gain
from the disposition of interest in oil, gas,
or geothermal property, should be reported
on Form 4797, Supplemental 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 II

Generally, you should report the sales
and exchanges, including “‘like-kind” ex-
changes, even though there is no gain
or loss. No loss is allowed for a wash sale
of stock or securities or from a transaction
between related persons. (Sections 1091
and 267.)

In Part | 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 you held (whether or not con-
nected with your 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, State,
and municipal obligations acquired
on or before June 23, 1981.

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.

Exchange of “‘like-kind” property.—Re-
port the exchange of “‘like-kind’’ property
on Schedule D or on Form 4797, which-
ever applies. You must report it even
though no gain or loss is recognized when
you exchange business or investment prop-
erty for property of “‘like-kind.” (This does
not include stock in trade or other prop-
erty held primarily for sale. It also does
not include stocks, bonds, notes, choses
in action, certificates of trust or beneficial
interest, or other securities or evidences of
indebtedness or interest.)

If you use Schedule D, identify in col-
umn a, the property you disposed of.
Enter the date you acquired it in column b,
and the date you exchanged it in column c.

Write ‘“‘like-kind exchange” in column d.
Enter the cost or other basis in column e.
Enter zero in column f.

Special Rules for the Treatment of
Certain Gains and Losses

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

@ Gains and losses on commodity fu-
tures and straddle positions.—Generally,
regulated future contracts open at the end
of the year, or terminated during the year,
are treated as 60% long-term and 40%
short-term regardless of how long the con-
tracts were held. In addition, losses from
straddle positions are not allowed if the
wash sale rules apply or are deferred to the
extent of any unrealized gains on open
offsetting positions. Use Form 6781, Gains
and Losses From Commodity Futures Con-
tracts and Straddle Positions, to report
gains and losses from regulated futures
contracts and straddles.

@ Gain or loss on certain short-term Fed-
eral, State, and municipal obligations.—
Such obligations acquired after June 23,
1981, are treated as capital assets in de-
termining gain or loss. On any gain real-
ized, a portion is treated as ordinary in-
come and the balance is considered as a
short-term capital gain. See section 1232
(a)(4).

© Gain from installment sales.—lf you
sold property at a gain this year and are to
receive any payment in a later tax year,
you must use the installment method and
file Form 6252, Computation of Install-
ment Sale Income.

However, you may elect out of the in-
stallment method by doing the following
on a_ timely filed return (including
extensions):

(1) Enter in the margin of Schedule D,
next to the sale, “I elect out of the install-
ment method.”

(2) If you received a note or other obli-
gation and are reporting it at less than face
value, state that fact in the margin and give
the percentage of valuation.

Also use Form 6252 if you received a
payment in 1982 from a sale made in
an earlier year on the installment basis.
@ 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 of foreign corpora-
tions from the disposition of investment in
United States real property.—Foreign cor-
porations are required to report gains and
losses from the disposition of U.S, real
property interests. See section 897 for
details.

@ Gains on certain insurance property.—
Form 11201 filers with gains on property
held on December 31, 1958, and certain
substituted property acquired after 1958
should see section 817(b) and related
regulations.

© 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.

#¢ US. GOVERNMENT PRINTING OFFICE : 1982—O-363-123

@ 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 you acquired the property by divi-
dend, liquidation of a corporation, transfer
from a shareholder, reorganization, contri-
bution or gift, bequest, bankruptcy, tax-
free exchange, involuntary conversion, or
wash sale of stock, see sections 301, 334,
362 (or 358), 1015, 1014, 372 (or 374),
1031, 1033, and 1091, respectively. At-
tach an explanation if you use a basis
other than actual cash cost of the prop-
erty.
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 you
sold or exchanged an asset used in an ac-
tivity to which the at risk rules apply, com-
bine the gain or loss on the sale or ex-
change with the profit or loss from the
activity. If you have a net loss from the
activity, it may be subject to the at risk
rules.

Part Ill—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

@ Forms 1120-H and 1120-DISC filers
omit Part IV.

@ Form 1120L filers see Form 1120L in-
structions for line 6 before figuring the
alternative tax.

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 C of Form 1120).

,_ If the alternative tax amount on line 17
is less than the tax figured by the regular
method, enter the amount of alternative
tax on Form 1120, Schedule J, line 3; Form
1120-POL, page 1, line 21, or the proper
line on other returns. Also 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-

ion.

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