ram 1120) Capital Gains and Losses
Department of the Tessury For the calendar year 1971, or other taxable year beginning 1971

Internal Revenue Service , 1971, and ending .... + 19.

Name | Employer Identification Number

Short-term Capital Gains and Losses—Assets Held 6 Months or Less

‘a, Kind of property and description b, Date acquired c. Date sold sri e. Cost or other basis f. Gait (I
Céxample, 100 shares of "2"" G0.) | ‘mo. dayeyt) | (mo., day, ¥.) 4. Gross sales price | “na expense of Sale ies oe

2 Unused capital loss carryover (attach computation)
3__Net short-term capital _gain or (loss) : - se
Part Il Long-term Capital Gains and Losses—Assets Held “More Than 6 Months

4 Enter Section 1231 gain from line 4(a)(1), Form 4797

6 Net long-term capital gain or (loss) .
Genel 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 Enter excess of net long-term capital gain (line 6) over net short-term capital loss (line i)
9 Total of lines 7 and 8. Enter here and on Form 1120, page 1, line 9(a) . . .

Alternative Tax Computation (See instructions)

10 Taxable income (line 30, page 1,Form1120) . . . Doe kk ee

11 Excess of net long-term capital gain over net short-term ‘capital loss (line 8) see ee

12 Line10lesslinell . . - wee se ee oe

13 Surtax exemption—Enter line 120 or $25, 000, whichever i is lesser. (Component members ofa controlled
group—enter your surtax exemption or line 12, whichever is lesser) . . - / 1 1 ee ew ee

14 Linel2lesslinel3 . . ee ee ee ee

15 22% ofline12 ....-.-

16 26% of line14.. - oe

17 If multiple surtax exemption is elected. under section 1562, ¢ enter 6% ‘of line 13

18 Total of lines 15, 16, and 17

19 Enter amount from line 11. . - : —

20 Enter long-term gain from certain binding contracts and installment sales (referred to as , subsection

(d) gains""—see instructions) Lee

21 Line 19 less line 20 (if less than zero, enter i
22 25% ofthe lesser ofline19orline20 . . / eee ee ee

23 30% of line21 2 6 0
24 Total of lines 22 and 23. . . sone erry

25 Alternative tax—total of lines 18 and ‘24. If ‘applicable, enter here and on line 5, Schedule J, Form 1120,
and write “ALT.” in the margin to the right of the entry... . -

16—8178-1


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

For reporting sales or exchanges of property
other than capital assets including the sale or
exchange of property used in the trade or
business and involuntary conversions (section
1231), see Form 4797 and related instructions.

PARTS | and Il

Capital assets.—Each item of property
held by the corporation (whether or not
connected with its trade or business) is
a capital asset except: (1) inventoriable
assets or property held primarily 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 memo-
randums, or similar property; (4) ac-
counts 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; and (5)
certain short-term Federal, State, and
municipal obligations issued on or after
March 1, 1941, on a discount basis.

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

Under the provisions of section 6411,
a quick refund of the taxes affected by
the capital loss carryback may be ob-
tained by filing Form 1139. If a net capital
loss carryback creates an unused invest-
ment credit in a preceding year, the un-
used credit may be carried back to the
three preceding years, and, under the
provisions of section 6411, a quick re-
fund of the taxes affected may likewise
be obtained by filing Form 1139.

Instructions

(References are to the Internal Revenue Code)

Short sales of capital assets.—For
rules relating to certain short sales of
stock or other securities and transactions
in commodity futures, see section 1233.

Worthless securities.—Except for
banks, if securities which are capital as-
sets 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 al-
lowed for wash sales of stock or securi-
ties. (See section 1091.) No loss is
allowed (distributions in liquidation ex-
cepted) on transactions between related
persons. (See section 267.)

Basis.—In determining gain or loss,
the basis of property will generally be its
cost. If property was acquired by bequest,
gift, tax-free exchange, involuntary con-
version, or wash sale of stock, see sec-
tions 1014, 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 allowed by reason of a sale of property
to a charitable organization, the adjusted
basis for determining 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 tax-
able under section 831 having losses
from capital assets sold or exchanged to
obtain funds to meet abnormal insurance
losses, etc., shall attach a schedule cor-
responding to Schedule A-3 of Form
1120M. For companies taxable under sec-
tion 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.—lIf the
net long-term capital gain exceeds the
net short-term capital loss, or if there is
only a net long-term capital gain, com-
pute the tax using the alternative method
(section 1201) to determine if the result-
ing tax is less than the tax computed
using the regular method.

JeUS, GOVERNMENT PRINTING OFFICE: 1971—-O-418-077

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 excess of net long-term
capital gain over any net short-term capi-
tal loss and (2) 30% of such excess.

An alternative tax rate of 25%, how-
ever, is to apply to the lesser of (1) the
amount of “subsection (d) gain” or (2)
the excess of net long-term capital gain
over any net short-term capital loss.

Subsection (d) gain consists of:

(1) long-term capital gains (except
sections 631 and 1235 gains) received
before 1975 from sales or other disposi-
tions under binding contracts that were
entered into on or before October 9, 1969;
and

(2) installment proceeds consisting of
long-term capital gains (except gains
under sections 631 and 1235) received
before 1975 from sales made pursuant
to a binding contract that was entered
into on or before October 9, 1969.

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

Minimum tax on tax preference
items.—If the net long-term capital gain
exceeds the net short-term capital loss,
you may be liable for minimum tax. See
Form 4626.

Installment Sales

If you sold personal property for more
than $1,000 or real property regardless
of amount, you may be eligible to report
any gain under the installment method
if (1) there are no payments in the year
of sale or (2) the payments in the year
of sale do not exceed 30% of the selling
price. (See section 453.) Such sales must
provide for two or more payments, such
payments resulting in at least one pay-
ment being made in each of two taxable
years.

For treatment of a portion of payments
as “unstated interest’ on deferred pay-
ment sales, see section 483.

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