Publication 550
taxmap/pubs/p550028.htm#en_us_publink1000250076Emily Jones is single and, in addition to wages from her job,
she has income from stocks and other securities. For the 2010 tax year, she had
the following capital gains and losses, which she reports on Schedule D. Her
filledin Schedule D is shown at the end of this example. She keeps track of all
her basis adjustments to her mutual funds on her Mutual Fund Record, shown
later.
taxmap/pubs/p550028.htm#en_us_publink1000250096She shows the nondividend distributions and the undistributed
capital gains from Mutual Fund S and the reinvested dividends from Mutual Fund
R. She does not show the exemptinterest dividends from Mutual Fund X because
those dividends do not change her basis in the shares. She keeps this record
with her mutual fund documents and uses it to report her 2010 sale of Mutual
Fund S.
taxmap/pubs/p550028.htm#en_us_publink1000250097Emily sold stock in two different companies that she held for
less than a year. In June, she sold 100 shares of Trucking Co. stock that she
bought in February. She had an adjusted basis of $1,150 in the stock and sold it
for $400, for a loss of $750. In July, she sold 25 shares of Computer Co. stock
that she bought in June. She had an adjusted basis in the stock of $2,000 and
sold it for $2,500, for a gain of $500. She reports these shortterm
transactions on line 1 in Part I of Schedule D.
Emily had other stock sales that she reports as longterm transactions
on line 8 in Part II of Schedule D.
In June, she sold 500 shares of Furniture Co. stock for $5,000.
She bought 100 of those shares in 1998, for $1,000. She bought 100 more shares
in 2000 for $2,200, and an additional 300 shares in 2003 for $1,500. Her total
basis in the stock is $4,700. She has a $300 ($5,000 − $4,700) gain on
this sale, which she enters in column (f) of line 8.
In December, she sold 20 shares of Toy Co. stock for $4,100.
This was qualified small business stock that she bought in September 2005. Her
basis is $1,100, so she has a $3,000 gain, which she enters in column (f) of
line 8. Because she held the stock more than 5 years, she has a $1,500 section
1202 exclusion. She claims the exclusion on the line below by entering $1,500 as
a loss in column (f). She also enters the exclusion as a positive amount on line
2 of the 28% Rate Gain Worksheet.
In October, Emily sold 200 shares of Mutual Fund S for $3,200.
She purchased these shares in 1996 at $10 each. She received some nondividend
distributions in 1998, 1999, and 2007 that reduced her basis in the shares. In
2008 and 2009, Emily reported undistributed capital gains that increased her
basis in her shares. She received no distributions in 2010 before the sale. She
reports the sale on line 8 because she owned the shares for more than 1 year.
She uses the information from her Mutual Fund Record to complete columns (a),
(b), and (e). After adjustment for her nondividend distributions and her
undistributed capital gains, her basis is $1,996 ($9.98 per share). She uses her
Form 1099B to complete columns (c) and (d). She enters her gain of $1,204 in
column (f).
She received a Form 1099B (not shown) from her broker for each
of these transactions. The entries shown in box 2 of these forms total $15,200.
taxmap/pubs/p550028.htm#en_us_publink1000250098Emily makes sure that the total of the amounts reported in column
(d) of lines 3 and 10 of Schedule D is not less than the total of the amounts
shown on the Forms 1099B she received from her broker. For 2010, the total of
lines 3 and 10 of Schedule D is $15,200, which is the same amount reported by
the broker on Forms 1099B (not shown).
taxmap/pubs/p550028.htm#en_us_publink1000250099In June, Emily invested $3,800 in Mutual Fund R and received
153.16 shares that cost $24.81 per share. She requested that all her
distributions be reinvested in more shares of the Fund. She then received $265
of ordinary dividends, including $250 of qualified dividends, and $61 of capital
gain distributions from the Fund. She received Form 1099DIV showing these
amounts. On December 29, 2010, she acquired an additional 13.03 shares at $25.01
per share from her reinvested dividends. She reports the ordinary dividends on
Form 1040, line 9a. She reports the qualified dividends on Form 1040, line 9b.
She does not report the ordinary dividends on Schedule B (Form 1040A or Form
1040) because her total ordinary dividends were not over $1,500. She reports the
capital gain distributions on Schedule D (Form 1040) because she has other
capital transactions. She enters the $61 capital gain distribution on line 13,
column (f).
In April 2008, Emily invested $2,600 in Mutual Fund X and received
87.54 shares at $29.70 per share. She received exemptinterest dividends of $92
in 2008, $107 in 2009, and $101 in 2010. She chose not to reinvest these and
instead received a cash payment. She received Form 1099INT from Fund X showing
this nontaxable amount, which she reports on Form 1040, line 8b.
In 1996, Emily bought 100 shares of common stock in Green Publishing
Co. at $10.29 per share. In 2010, she received $237 in ordinary dividends,
including $220 of qualified dividends, as a cash payment that was not
reinvested. She received Form 1099DIV showing this amount. She reports the
ordinary dividends on Form 1040, line 9a, and the qualified dividends on Form
1040, line 9b.
taxmap/pubs/p550028.htm#en_us_publink1000250100On June 2, 2010, Emily had a realized loss from a regulated futures
contract of $11,000. She also had an unrealized marked to market gain on open
contracts of $27,000 at the end of 2010. She reported an unrealized marked to
market gain of $1,000 on her 2009 tax return. (This $1,000 must be subtracted
from her 2010 profit.) These amounts are shown in boxes 8, 9, and 10 of the Form
1099B she received from her broker for these transactions. Box 11 shows her
combined profit of $15,000 ($27,000 − $1,000 − $11,000). She reports
this gain in Part I of Form 6781 (not shown). She shows 40% ($6,000) as
shortterm gain on line 4 of Schedule D and 60% ($9,000) as longterm gain on
line 11 of Schedule D.
The Form 1099B that Emily received from her broker, XYZ Trading
Co., is shown later.
taxmap/pubs/p550028.htm#en_us_publink1000250101Emily has a capital loss carryover to 2010 of $800, of which
$300 is shortterm capital loss, and $500 is longterm capital loss. She enters
these amounts on lines 6 and 14 of Schedule D. She also enters the $500
longterm capital loss carryover on line 5 of the 28% Rate Gain Worksheet.
She kept the completed Capital Loss Carryover Worksheet in her
2009 edition of Publication 550 (not shown), so she could properly report her
loss carryover for the 2010 tax year without refiguring it.
taxmap/pubs/p550028.htm#en_us_publink1000250102Because Emily has gains on both lines 15 and 16 of Schedule D,
she checks the "Yes" box on line 17 and goes to line 18. On line 18 she enters
$1,000 from line 7 of the 28% Rate Gain Worksheet. Because line 18 is greater
than zero, she checks the "No" box on line 20 and uses the Schedule D Tax
Worksheet to figure her tax.
After entering the gain from line 16 on line 13 of her Form 1040,
she completes the rest of Form 1040 through line 43. She enters the amount from
that line, $30,000, on line 1 of the Schedule D Tax Worksheet. After filling out
the rest of that worksheet, she figures her tax as $2,428. This is less than the
tax she would have figured without the capital gain tax rates, $4,085.
Table 45. Mutual Fund Record for Emily Jones
Mutual Fund  Acquired^{1}  Adjustment to Basis Per Share  Adjusted^{2} Basis Per Share
 Sold or Redeemed 
Date  Number of Shares  Cost Per Share  Date  Number of Shares 
MUTUAL FUND S  71296  200  10.00  123198  123199  123107  123008  83009  9.98  10510  200 
(.05)  (.02)  (.04)  .03  .06 
           
MUTUAL FUND X  41908  87.54  29.70         
           
MUTUAL FUND R  61210  153.16  24.81         
 122910  13.03  25.01         
           
           
           
           
           
^{1} Include share received from reinvestment of distributions.

^{2} Cost plus or minus adjustments.

taxmap/pubs/p550028.htm#en_us_publink1000255367  Schedule D Tax Worksheet  Complete this worksheet only if line 18 or line 19 of
Schedule D is more than zero. Otherwise, complete the Qualified Dividends and
Capital Gain Tax Worksheet in the Instructions for Form 1040, line 44 (or in the
Instructions for Form 1040NR, line 42) to figure your tax.    Exception: Do not use the Qualified Dividends and Capital Gain Tax Worksheet
or this worksheet to figure your tax if:
 Line 15 or line 16 of Schedule D is zero or less
and
you have no qualified dividends on Form 1040, line 9b (or Form 1040NR, line
10b);
or
 Form 1040, line 43 (or Form 1040NR, line 41) is zero
or less.
Instead, see the instructions for Form 1040, line 44 (or Form 1040NR, line 42).
    1.   Enter your taxable income from Form 1040, line 43 (or
Form 1040NR, line 41). (However, if you are filing Form 2555 or 2555EZ
(relating to foreign earned income), enter instead the amount from line 3 of the
Foreign Earned Income Tax Worksheet in the Instructions for Form 1040, line 44)
 1.   30,000    2.   Enter your qualified dividends from Form 1040, line 9b
(or Form 1040NR, line 10b)  2.   470     3.   Enter the amount from Form 4952 (used to figure investment
interest expense deduction), line 4g  3.       4.   Enter the amount from Form 4952, line 4e*  4.       5.   Subtract line 4 from line 3. If zero or less, enter 0  5.   0     6.   Subtract line 5 from line 2. If zero or less, enter 0**  6.   470     7.   Enter the
smaller of line 15 or line 16 of Schedule D
 7.   11,565     8.   Enter the
smaller of line 3 or line 4
 8.       9.   Subtract line 8 from line 7. If zero or less, enter 0**  9.   11,565     10.   Add lines 6 and 9  10.   12,035     11.   Add lines 18 and 19 of Schedule D**  11.   1,000     12.   Enter the
smaller of line 9 or line 11
 12.   1,000     13.   Subtract line 12 from line 10  13.   11,035    14.   Subtract line 13 from line 1. If zero or less, enter
0  14.   18,965    15.   Enter:      • $34,000 if single or married filing separately; • $68,000 if married filing jointly or qualifying
widow(er); or • $45,550 if head of household

  15.   34,000     16.   Enter the
smaller of line 1 or line 15
 16.   30,000       17.   Enter the
smaller of line 14 or line 16
 17.   18,965     18.   Subtract line 10 from line 1. If zero or less, enter
0  18.   17,965     19.   Enter the
larger of line 17 or line 18
 19.   18,965     20.   Subtract line 17 from line 16. This amount is taxed at
0%.  20.   11,035       If lines 1 and 16 are the same, skip lines 21 through
33 and go to line 34. Otherwise, go to line 21.    21.   Enter the
smaller of line 1 or line 13
 21.       22.   Enter the amount from line 20 (if line 20 is blank, enter
0)  22.       23.   Subtract line 22 from line 21. If zero or less, enter
0  23.       24.   Multiply line 23 by 15% (.15)  24.        If Schedule D, line 19, is zero or blank, skip lines
25 through 30 and go to line 31. Otherwise, go to line 25.    25.   Enter the
smaller of line 9 above or Schedule D, line 19
 25.       26.   Add lines 10 and 19  26.       27.   Enter the amount from line 1 above  27.       28.   Subtract line 27 from line 26. If zero or less, enter
0  28.       29.   Subtract line 28 from line 25. If zero or less, enter
0  29.       30.   Multiply line 29 by 25% (.25)  30.        If Schedule D, line 18, is zero or blank, skip lines
31 through 33 and go to line 34. Otherwise, go to line 31.    31.   Add lines 19, 20, 23, and 29  31.       32.   Subtract line 31 from line 1  32.       33.   Multiply line 32 by 28% (.28)  33.      34.   Figure the tax on the amount on
line 19.
If the amount on line 19 is less than $100,000, use the Tax Table to figure the
tax. If the amount on line 19 is $100,000 or more, use the Tax Computation
Worksheet
 34.   2,428    35.   Add lines 24, 30, 33, and 34  35.   2,428    36.   Figure the tax on the amount on
line 1.
If the amount on line 1 is less than $100,000, use the Tax Table to figure the
tax. If the amount on line 1 is $100,000 or more, use the Tax Computation
Worksheet
 36.   4,085    37.   Tax on all taxable income (including capital gains and
qualified dividends). Enter the
smaller
of line 35 or line 36. Also include this amount on Form 1040, line 44 (or Form
1040NR, line 42). (If you are filing Form 2555 or 2555EZ, do not enter this
amount on Form 1040, line 44. Instead, enter it on line 4 of the Foreign Earned
Income Tax Worksheet in the Form 1040 instructions)
 37.   2,428              *If applicable, enter instead the smaller amount you
entered on the dotted line next to line 4e of Form 4952.         **If you are filing Form 2555 or 2555EZ, see the footnote
in the Foreign Earned Income Tax Worksheet in the Instructions for Form 1040,
line 44, before completing this line.
    

taxmap/pubs/p550028.htm#en_us_publink1000250111
28% Rate Gain Worksheet—Line 18
1.  Enter the total of all collectibles gain or (loss) from
items you reported on line 8, column (f), of Schedules D and D1  1.    2.  Enter as a positive number the amount of any section
1202 exclusion you reported on line 8, column (f), of Schedules D and D1, for
which you excluded 50% of the gain, plus
2/3
of any section 1202 exclusion you reported on line 8, column (f), of Schedules D
and D1, for which you excluded 60% of the gain
 2.  1,500.00   3.  Enter the total of all collectibles gain or (loss) from
Form 4684, line 4 (but only if Form 4684, line 15, is more than zero); Form
6252; Form 6781, Part II; and Form 8824
 3.    4.  Enter the total of any collectibles gain reported to
you on:
 Form 1099DIV, box 2d;
 Form 2439, box 1d; and
 Schedule K1 from a partnership, S corporation, estate,
or trust.

  4.    5.  Enter your longterm capital loss carryovers from Schedule
D, line 14, and Schedule K1 (Form 1041), box 11, code C  5.  ( 500.00)   6.  If Schedule D, line 7, is a (loss), enter that (loss)
here. Otherwise, enter 0  6.  (0)   7.  Combine lines 1 through 6. If zero or less, enter 0.
If more than zero, also enter this amount on Schedule D, line 18  7.  1,000.00   
