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IRS.gov Website
Publication 550
taxmap/pubs/p550-028.htm#en_us_publink1000250076

Comprehensive Example(p71)

rule
Deposit
For more information on Form 8949 and Schedule D, see Reporting Capital Gains and Losses in chapter 4. See also Schedule D, Form 8949, and the 2011 Instructions for Schedule D.
Emily Jones is single and, in addition to wages from her job, she has income from stocks and other securities. For the 2011 tax year, she had the following capital gains and losses, which she reports on Form 8949 and Schedule D. Her filled-in Form 8949 and Schedule D are 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.
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Mutual Fund Record.(p71)
She 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 exempt-interest 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 reconcile her 2011 sale of Mutual Fund S.
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Capital gains and losses—Form 8949 and Schedule D.(p71)

rule
Emily 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. 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. She reports these short-term transactions on line 1 in Part I of Form 8949.
Emily had other stock sales that she reports as long-term transactions on line 3 in Part II of Form 8949.
In June, she sold 500 shares of Furniture Co. stock for $5,000. She bought 100 of those shares in 1999, for $1,000. She bought 100 more shares in 2001 for $2,200, and an additional 300 shares in 2004 for $1,500. Her total basis in the stock is $4,700. She reports this transaction on line 3 in Part II of Form 8949.
In December, she sold 20 shares of Toy Co. stock for $4,100. This was qualified small business stock that she bought in September 2006. Her basis is $1,100. She enters this information on line 3 in Part II of Form 8949.
In October, Emily sold 200 shares of Mutual Fund S for $3,200. She purchased these shares in 1997 at $10 each. She received some nondividend distributions in 1999, 2000, and 2008 that reduced her basis in the shares. In 2009 and 2010, Emily reported undistributed capital gains that increased her basis in her shares. She received no distributions in 2011 before the sale. She reports the sale in Part II on line 3 of her Form 8949. She uses the information from her Form 1099-B to complete columns (a) and (c) through (f). After adjustment for her nondividend distributions and her undistributed capital gains, her basis is $1,996 ($9.98 per share). This is the same basis shown in her personal records and on her Form 1099-B.
She received a Form 1099-B (not shown) from her broker for each of these transactions. Each Form 1099-B contains the correct information for the transaction, including the basis shown in box 3. She will check box A in Part I of Form 8949 where she reports her short-term transactions. She will also check box A in Part II of Form 8949 where she reports her long-term transactions. The entries shown in box 2 of these forms total $15,200.
Emily held her qualified small business stock for more than 5 years, so she can exclude 50% ($1,500) of the gain. She takes the exclusion by reporting the gain realized on the sale on Form 8949, line 3, as if she were not taking the exclusion. She completes all columns on Form 8949. She enters "S" in column (b) and the amount of the excluded gain as a negative number (in parentheses) in column (g). She also enters the exclusion as a positive number on line 2 of the 28% Rate Gain Worksheet.
Emily completes her Form 8949 and then transfers the amounts from her Form 8949 to Schedule D. She enters the amounts from her short-term transactions from columns (e) and (f) of line 2 of Form 8949, in columns (e) and (f) of line 1 of Schedule D. She has a short-term capital loss of $250 that she enters in column (h) of line 1 of Schedule D. She enters the amounts from her long-term transactions from columns (e), (f), and (g) of line 4 of Form 8949, in columns (e), (f), and (g) of line 8 of Schedule D. She has a long-term capital gain of $3,004 that she enters in column (h) of line 8 of Schedule D.
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Other 1099s.(p72)
In 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 1099-DIV showing these amounts. On December 29, 2011, 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.
In April 2009, Emily invested $2,600 in Mutual Fund X and received 87.54 shares at $29.70 per share. She received exempt-interest dividends of $92 in 2009, $107 in 2010, and $101 in 2011. She chose not to reinvest these and instead received a cash payment. She received Form 1099-INT from Fund X showing this nontaxable amount, which she reports on Form 1040, line 8b.
In 1997, Emily bought 100 shares of common stock in Green Publishing Co. at $10.29 per share. In 2011, she received $237 in ordinary dividends, including $220 of qualified dividends, as a cash payment that was not reinvested. She received Form 1099-DIV showing this amount. She reports the ordinary dividends on Form 1040, line 9a, and the qualified dividends on Form 1040, line 9b.
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Form 6781.(p72)
On June 2, 2011, 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 2011. She reported an unrealized marked-to-market gain of $1,000 on her 2010 tax return. (This $1,000 must be subtracted from her 2011 profit.) These amounts are shown in boxes 10, 11, and 12 of the Form 1099-B she received from her broker for these transactions. Box 13 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 short-term gain on line 4 of Schedule D and 60% ($9,000) as long-term gain on line 11 of Schedule D.
The Form 1099-B that Emily received from her broker, XYZ Trading Co., is shown later.
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Capital loss carryover from 2010.(p72)
Emily has a capital loss carryover to 2011 of $800, of which $300 is short-term capital loss, and $500 is long-term capital loss. She enters these amounts on lines 6 and 14 of Schedule D. She also enters the $500 long-term capital loss carryover on line 5 of the 28% Rate Gain Worksheet.
She kept the completed Capital Loss Carryover Worksheet in her 2010 edition of Publication 550 (not shown), so she could properly report her loss carryover for the 2011 tax year without refiguring it.
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Tax computation.(p72)

rule
Because 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 of Schedule D 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 $2,421. This is less than the tax she would have figured without the capital gain tax rates, $4,079.

Table 4-5. Mutual Fund Record for Emily Jones

Mutual FundAcquired1Adjustment to Basis Per ShareAdjusted2 Basis Per Share Sold or Redeemed
DateNumber of SharesCost Per ShareDateNumber of Shares
MUTUAL FUND S7-12-9720010.0012-31-9912-31-0012-31-0812-30-098-30-109.9810-5-11200
(.05)(.02)(.04).03.06
            
MUTUAL FUND X4-19-0987.5429.70        
            
MUTUAL FUND R6-12-11153.1624.81        
 12-29-1113.0325.01        
            
            
            
            
            
1 Include share received from reinvestment of distributions.
2 Cost plus or minus adjustments.
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Emily's 2011 Form 8949, page 1

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Emily's 2011 Form 8949, page 2

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Emily's 2011 Schedule D (Form 1040), page 1

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Emily's 2011 Schedule D (Form 1040), page 2

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Pencil

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 2555-EZ (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 4g3.   
 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 910. 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 1013. 11,035 
 14. Subtract line 13 from line 1. If zero or less, enter -0-14. 18,965 
 15. Enter: 
   
• $34,500 if single or married filing separately;
• $69,000 if married filing jointly or qualifying widow(er); or
• $46,250 if head of household
Right brace15. 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 1926.   
 27. Enter the amount from line 1 above27.   
 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 2931.   
 32. Subtract line 31 from line 132.   
 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. 2,421 
 35. Add lines 24, 30, 33, and 3435. 2,421 
 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. 4,079 
 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 2555-EZ, 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. 2,421 
        
   *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 2555-EZ, see the footnote in the Foreign Earned Income Tax Worksheet in the Instructions for Form 1040, line 44, before completing this line.                  
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28% Rate Gain Worksheet—Line 18

1.Enter the total of all collectibles gain or (loss) from items you reported on Form 8949, line 31. 
2.Enter as a positive number the amount of any section 1202 exclusion you reported in column (g) of Form 8949, line 3, with code "S" in column (b), for which you excluded 50% of the gain, plus 2/3 of any section 1202 exclusion you reported in column (g) of Form 8949, line 3, with code "S" in column (b), 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 1099-DIV, box 2d;
  • Form 2439, box 1d; and
  • Schedule K-1 from a partnership, S corporation, estate, or trust.
Right brace 4. 
5.Enter your long-term capital loss carryovers from Schedule D, line 14, and Schedule K-1 (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 
 
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Emily's Form 1099-B from XYZ Trading Co.

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