SCHEDULE D . .
(Form 1120) Capital Gains and Losses

Department of the Treasury

Internal Revenue Service D> Attach to your income tax return.

1975

Name Employer Identification Number

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

a, Kind of property and de b, Date acquired c. Date sold i e. Cost or other basis
(example, 100 shares of *'Z'" Co.) (mo., day, ye.) (mo., day, yf.) 4: Gross sales price ‘and expense of sale

f. Gain or (loss)
(d less e)

2 Unused capital loss carryover (attach computation) « as
3 Net short-term capital gain or (loss). - . + = . . . . wee ee

[EZTUIEE Long-term Capital Gains and Losses—Assets Held More Than 6 Months

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

let long-term capital gain or (loss)... + En

MGZEM Summary of Schedule D Gains and Losses

7 Enter excess of net short-term capital gain (line 3) over net long-term capital loss (line 6) - . . - + +
8 Enter excess of net long-term capital gain (line 6) over net short-term capital loss (line > see eee
9 Total of lines 7 and 8. Enter here and on Form 1120, page 1, line 9(a)_. -¥ - . wet

EEE Alternative Tax Computation
(Fiscal Year 1975-76 Corporations, Omit Part IV and See Form 1120-FY 1975-76)

10 Taxable income (line 30, page 1, Form 1120) . . . a
11 Excess of net long-term capital gain over net short-term ‘capital loss. 6 ew ee ee ee
12 LinelOlesslinell. . . .  ]
13 Enter line 12 or $25,000, whichever i is lesser. (Members of a controlled group, see instructions). . . . «
14 Linel2lessline13 . . . . 1 ee ee ee eee ee ey
15 Enter line 14 or $25,000, whichever is lesser. (Members of a controlled group, see instructions) ee
16 Linel4lesslinel5 . 1 ww ee
17 20% oflinelB ww
18 22% oflineIB . ww

19 48% oflinel16 © ww we
20 30% oflinel1 . : . « . oe ee

21 Alternative tax—total of lines v7 through 20. If applicable, enter here and on line 9, Schedule J, Form 1120,
and write “ALT.” in the margin to the right of the entry... : a

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Instructions
(References are to the Internal Revenue Code.)

This schedule provides for the reporting of sales
or exchanges of capital assets. Every sale or ex-
change of property must be reported 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 in-
voluntary conversions (section 1231), see Form 4797
and related instructions.

PARTS | and II

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) inventoriable assets or
property held primarily for sale to
customers; (2) depreciable or real
property used in the trade or busi-
ness; (3) certain copyrights, literary,
musical, or artistic compositions, let-
ters or memorandums, or similar
property; (4) accounts or notes re-
ceivable acquired in the ordinary
course of trade or business for serv-
ices rendered or from the sale of
Property described in (1) above;
and (5) certain short-term Federal,
State, and municipal obligations.

Exchange of “Like Kind” Prop-
erty.—Although no gain or loss is rec-
ognized when property held for pro-
ductive use in a trade or business or
for investment (not including stock
in trade or other property held pri-
marily for sale, nor stocks, bonds,
notes, choses in action, certificates
of trust or beneficial interest, or other
securities or evidences of indebted-
ness or interest) is exchanged solely
for property of a “like kind’ to be
held either for productive use in a
trade or business or for investment,
you must report the transaction on
Schedule D (Form 1120) or Form
4797, whichever is applicable. If
Schedule D is applicable, identify the
property disposed of in column (a).
Enter the date of acquisition in col-
umn (b) and write the date of ex-
change in column (c). Write “‘like kind
exchange” in column (d) and enter
the adjusted basis in column (e).
Enter zero in column (f). (See section
1031.)

Capital Losses.—Capital losses are
allowed only to the extent of capital
gains. A net capital loss, however,
may be carried back three years and
forward five as a short-term capital
loss. The capital loss may be carried
back only to the extent it does not
increase or produce a net operating
loss in the taxable year to which it is
being carried. 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 tax over-
payment created by the capital loss
carryback may be obtained by filing
Form 1139. If a net capital loss carry-
back creates an unused investment
credit or an unused work incentive
(WIN) credit in a preceding year, the
unused credit may be carried back to
the three preceding years (however,
the WIN credit cannot be carried back
to years beginning before 1972), and,
under the provisions of section 6411,
a quick refund of the tax overpayment
may likewise be obtained by filing
Form 1139.

Short Sales of Capital Assets.—For
rules relating to certain short sales of
stock or other securities, and trans-
actions in commodity futures, see sec-
tion 1233.

Worthless Securities.—Except for
banks, if securities which are capital
assets become wholly worthless dur-
ing 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
allowed for wash sales of stock or se-
curities. (See section 1091.) No loss
is allowed (distributions in liquidation
excepted) on transactions between re-
lated persons. (See section 267.)

Basis.—In determining gain or
loss, the basis of property will gener-
ally be its cost. If property was ac-
quired by bequest, gift, tax-free ex-
change, involuntary conversion, or
wash sale of stock, see sections 1014,
1015, 1031, 1033, and 1091, respec-
tively. Attach an explanation if the
basis used is other than actual cash
cost of the property.

If a charitable ‘contribution deduc-
tion 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. — Compa-
nies taxable under section 831 having
losses from capital assets sold or ex-
changed to obtain funds to meet ab-
normal insurance losses, etc., shall
attach a schedule corresponding to
Schedule A-3 of Form 1120M. For
companies taxable under section 821,
all references to line numbers on
Form 1120 are to be considered as
references to the appropriate line on
Form 1120M.

‘Ye US, GOVERNMENT PRINTING OFFICE : 1975-O-575-102

PART IV

Alternative Tax Computation.—If
you have a “‘net section 1201 gain”
(excess of net long-term capital gain
over net short-term capital loss) com-
pute the tax using the alternative
method (section 1201) to determine
if the resulting tax is less than the tax
computed using the regular method.

The alternative tax is the sum of
(1) a partial tax computed at the nor-
mal tax and surtax rates on the tax-
able income decreased by the net
section 1201 gain, plus (2) 30% of
the net section 1201 gain.

In computing the alternative tax,
deductions subject to a limitation
based upon taxable income (such as
contributions and the special deduc-
tions in Schedule I) do not have to be
recomputed.

If your taxable year is a fiscal year
beginning in 1975 and ending in
1976, compute your alternative tax in
Part Il, Form 1120-FY 1975-76. Do
not complete Part IV, Schedule D
(Form 1120).

Members of a Controlled Group.—
For members of a controlled group,
the $50,000 surtax exemption is to
be divided equally unless the group
consents to split up the exemption in
accordance with an apportionment
plan. Accordingly, for purposes of
lines 13 and 15, members of a con-
trolled group will enter one-half of
their surtax exemption on line 13 and
the remaining one-half on line 15.
For example, if there are 5 members
and they allocate the $50,000 surtax
exemption equally (i.e. $10,000
each), each member will enter on line
13, one-half of $10,000, i.e. $5,000,
and on line 15, the remaining one-half
of the surtax exemption, i.e. $5,000.

Minimum Tax on Tax Preference
Items.—lf the net long-term capital
gain exceeds the net short-term cap-
ital loss, you may be liable for mini-
mum tax. See Form 4626.

Installment Sales

If you sold personal property for
more than $1,000 or real property re-
gardless of amount, you may be eli-
gible 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,
with at least one payment being made
in each of two taxable years.

For treatment of a portion of pay-
ments as “‘unstated interest’ on de-
ferred payment sales, see section
483.

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