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taxmap/pubs/p564-004.htm#en_us_publink1000177662

Comprehensive  
Example(p10)


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Robert and Janice Martin have the following four sources of investment income to report on their 2009 tax return. Page 1 of their Schedule D (Form 1040) is shown later. Page 2 is not illustrated.
  1. $1,204 gain from the sale of 200 shares of Mutual Fund S on October 5, 2009. They received Form 1099-B, and they report the sale on Schedule D (Form 1040).Robert and Janice purchased these shares in 1995 at $10 each. They received some nondividend distributions in 1997, 1998, and 2006 that reduced their basis in the shares. In 2007 and 2008, the Martins reported undistributed capital gains that increased their basis in their shares. They received no distributions in 2009 before the sale.
  2. $265 of ordinary dividends, including $250 of qualified dividends, and $61 of capital gain distributions from Mutual Fund R. The Martins received Form 1099-DIV showing these amounts. They report the ordinary dividends on Form 1040, line 9a. They report the qualified dividends on Form 1040, line 9b. They do not report the ordinary dividends on Schedule B (Form 1040A or 1040) because their total ordinary dividends were not over $1,500. They report the capital gain distributions on Schedule D (Form 1040) because they have other capital transactions.Robert and Janice invested $3,800 in this fund in June 2009 and received 153.16 shares that cost $24.81 per share. They requested that all of their distributions be reinvested in more shares of the fund. On December 29, 2009, they acquired an additional 13.03 shares at $25.01 per share from their reinvested dividends.
  3. $101 of exempt-interest dividends from Mutual Fund X. They chose not to reinvest these exempt-interest dividends and instead received a cash payment. They received a Form 1099-INT from the fund showing this nontaxable amount, which they report on Form 1040, line 8b.The Martins invested $2,600 in this fund in April 2007 and received 87.54 shares at $29.70 per share. They received exempt-interest dividends of $92 in 2007 and $107 in 2008.
  4. $237 in ordinary dividends, including $220 of qualified dividends, from 100 shares of common stock in Green Publishing Company. These were received as a cash payment and not reinvested. They received Form 1099-DIV, and they report the ordinary dividends on Form 1040, line 9a, and the qualified dividends on Form 1040, line 9b.Robert and Janice bought this stock in 1995 for $10.29 per share.
taxmap/pubs/p564-004.htm#en_us_publink1000177663

Mutual Fund Record.(p11)


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Robert and Janice keep track of all their basis adjustments on their Mutual Fund Record, shown later. They show the nondividend distributions and the undistributed capital gains from Mutual Fund S and the reinvested dividends from Mutual Fund R. They do not show the exempt-interest dividends from Mutual Fund X because those dividends do not change their basis in the shares.
The Martins keep this record with their mutual fund documents, and they use it to report their 2009 sale of Mutual Fund S.
taxmap/pubs/p564-004.htm#en_us_publink1000177664

Preparing Schedule D (Form 1040).(p11)


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The Martins use their Form 1099-B and their Mutual Fund Record to figure the gain from the sale of Mutual Fund S to report on Schedule D (Form 1040).
Robert and Janice enter the $61 capital gain distribution from Mutual Fund R (from Form 1099-DIV, box 2a) on line 13, column (f).
They report the sale of their shares in Mutual Fund S on line 8 because they owned the shares for more than 1 year. They use the information from their Mutual Fund Record to complete columns (a), (b), and (e). After adjustment for their nondividend distributions and their undistributed capital gains, their basis is $1,996 ($9.98 per share). They use their Form 1099-B to complete columns (c) and (d). Their sales price in column (d) (the gross proceeds from Form 1099-B, box 2) is $3,200 ($16 per share). They enter their gain of $1,204 in column (f).
Robert and Janice add the amounts in column (f) of lines 8 and 13 and enter their net long-term capital gain of $1,265 on line 15. They also enter that amount on line 16. They check the "Yes" box for line 17, leave lines 18 and 19 blank, and check the "Yes" box for line 20. They follow the line 20 instructions and they compute their tax on Form 1040 using the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions. They enter their taxable income of $36,505 (from Form 1040, line 43) on line 1 of the worksheet and their qualified dividends of $470 ($250 from Mutual Fund R and $220 from Green Publishing Co.) (from Form 1040, line 9b) on line 2.

Table 5. Mutual Fund Record for Robert and Janice Martin

Mutual FundAcquired1 Adjustment to Basis Per ShareAdjusted2 Basis Per ShareSold or Redeemed
DateNumber of SharesCost Per ShareDateNumber of Shares
MUTUAL FUND S7-12-9520010.0012-31-9712-31-9812-31-0612-31-078-29-089.9810-5-09200
(.05)(.02)(.04).03.06
            
MUTUAL FUND X4-19-0787.5429.70        
            
MUTUAL FUND R6-12-09153.1624.81        
 12-29-0913.0325.01        
            
            
            
            
            
1 Include share received from reinvestment of distributions.
2 Cost plus or minus adjustments.
taxmap/pubs/p564-004.htm#en_us_publink1000243165taxmap/pubs/p564-004.htm#en_us_publink1000177667
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Schedule D, page 1 Text DescriptionSchedule D, page 1  
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Pencil

Qualified Dividends and Capital Gain Tax Worksheet—Line 44

  • See the instructions for line 44 that begin on page 37 to see if you can use this worksheet to figure your tax.
  • If you do not have to file Schedule D and you received capital gain distributions, be sure you checked the box on line 13 of Form 1040.
1.  Enter the amount from Form 1040, line 43. However, if you are filing Form 2555 or Form 2555-EZ (relating to foreign earned income), enter the amount from line 3 of the worksheet on page 381.  36,505   
2.  Enter the amount from Form 1040, line 9b*2.  470   
3. Are you filing Schedule D?*    
   Box Yes. Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or line 16 is a loss, enter -0- Right brace3.  1,265   
   Box No. Enter the amount from Form 1040, line 13    
4.  Add lines 2 and 34.  1,735   
5.  If you are claiming investment interest expense on Form 4952, enter the amount from line 4g of that form. Otherwise, enter -0-5.  -0-   
6.  Subtract line 5 from line 4. If zero or less, enter -0-6.  1,735   
7. Subtract line 6 from line 1. If zero or less, enter -0-7.  34,770   
8. Enter the smaller of:  
  • The amount on line 1, or  
  • $33,950 if single or married filing separately, Right brace 8.  36,505   
   $67,900 if married filing jointly or qualifying widow(er),
 $45,500 if head of household. 
  
9.  Is the amount on line 7 equal to or more than the amount on line 8?  
   Box Yes. Skip lines 9 and 10; go to line 11 and check the "No" box.  
   Box No. Enter the amount from line 79.  34,770   
10.  Subtract line 9 from line 810.  1,735   
11. Are the amounts on lines 6 and 10 the same?  
   Box Yes. Skip lines 11 through 14; go to line 15.  
   Box No. Enter the smaller of line 1 or line 611.                 
12. Enter the amount from line 10 (if line 10 is blank, enter -0-)12.                 
13. Subtract line 12 from line 1113.                 
14. Multiply line 13 by 15% (.15)14.                
15. Figure the tax on the amount on line 7. Use the Tax Table or Tax Computation Worksheet, whichever applies15.  4,381  
16. Add lines 14 and 1516.  4,381  
17. Figure the tax on the amount on line 1. Use the Tax Table or Tax Computation Worksheet, whichever applies17.  4,644  
18.  Tax on all taxable income. Enter the smaller of line 16 or line 17. Also include this amount on Form 1040, line 44. If you are filing Form 2255 or 2555-EZ, do not enter this amount on Form 1040, line 44. Instead, enter it on line 4 of the worksheet on page 3818.  4,381  
*If you are filing Form 2555 or Form 2555-EZ, see the footnote in the worksheet on page 38 before completing this line.