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IRS.gov Website
Publication 544
taxmap/pubs/p544-017.htm#en_us_publink100072631

Schedule D and Form 8949(p36)

rule
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Form 8949.(p36)

rule
Individuals, corporations, and partnerships, use Form 8949 to report the following.
Individuals, If you are filing a joint return, complete as many copies of Form 8949 as you need to report all of your and your spouse's transactions. You and your spouse may list your transactions on separate forms or you may combine them. However, you must include on your Schedule D the totals from all Forms 8949 for both you and your spouse.
Corporations and electing large partnerships also use Form 8949 to report their share of gain or loss from a partnership, S Corporation, estate or trust.
Business entities meeting certain criteria, may have an exception to some of the normal requirements for completing Form 8949. See the Instructions for Form 8949.
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Schedule D. (p36)

rule
Use Schedule D (Form 1040) to figure the overall gain or loss from transactions reported on Form 8949, and to report certain transactions you do not have to report on Form 8949. Before completing Schedule D, you may have to complete other forms as shown below.
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Personal-use property.(p36)

rule
Report gain on the sale or exchange of property held for personal use (such as your home) on Form 8949 and Schedule D (Form 1040), as applicable. Loss from the sale or exchange of property held for personal use is not deductible. But if you had a loss from the sale or exchange of real estate held for personal use for which you received a Form 1099-S, report the transaction on Form 8949 and Schedule D, even though the loss is not deductible. See the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949 for information on how to report the transaction.
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Long and Short Term(p36)

rule
Where you report a capital gain or loss depends on how long you own the asset before you sell or exchange it. The time you own an asset before disposing of it is the holding period.
If you received a Form 1099-B, (or substitute statement) box 1c may help you determine whether the gain or loss is short-term or long-term.
If you hold a capital asset 1 year or less, the gain or loss from its disposition is short term. Report it in Part I of Form 8949 and/or Schedule D, as applicable. If you hold a capital asset longer than 1 year, the gain or loss from its disposition is long term. Report it in Part II of Form 8949 and/or Schedule D, as applicable. 

Table 4-1. Do I Have a Short-Term
  or Long-Term Gain or Loss?

IF you hold the property...
 THEN you have a...
1 year or less, Short-term capital gain or
  loss.
More than 1 year, Long-term capital gain or
  loss.
These distinctions are essential to correctly arrive at your net capital gain or loss. Capital losses are allowed in full against capital gains plus up to $3,000 of ordinary income. See Capital Gains Tax Rates, later.
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Holding period.(p36)

rule
To figure if you held property longer than 1 year, start counting on the day following the day you acquired the property. The day you disposed of the property is part of your holding period.
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Example.(p36)

If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. If you sold the asset on June 19, 2013, your holding period is not longer than 1 year, but if you sold it on June 20, 2013, your holding period is longer than 1 year.
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Patent property.(p36)
If you dispose of patent property, you generally are considered to have held the property longer than 1 year, no matter how long you actually held it. For more information, see Patents in chapter 2.
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Inherited property.(p36)
If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it.
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Installment sale.(p36)
The gain from an installment sale of an asset qualifying for long-term capital gain treatment in the year of sale continues to be long term in later tax years. If it is short term in the year of sale, it continues to be short term when payments are received in later tax years.
Tax Tip
The date the installment payment is received determines the capital gains rate that should be applied not the date the asset was sold under an installment contract.
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Nontaxable exchange.(p36)
If you acquire an asset in exchange for another asset and your basis for the new asset is figured, in whole or in part, by using your basis in the old property, the holding period of the new property includes the holding period of the old property. That is, it begins on the same day as your holding period for the old property.
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Example.(p36)

You bought machinery on December 4, 2012. On June 4, 2013, you traded this machinery for other machinery in a nontaxable exchange. On December 5, 2013, you sold the machinery you got in the exchange. Your holding period for this machinery began on December 5, 2012. Therefore, you held it longer than 1 year.
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Corporate liquidation.(p36)
The holding period for property you receive in a liquidation generally starts on the day after you receive it if gain or loss is recognized.
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Profit-sharing plan.(p36)
The holding period of common stock withdrawn from a qualified contributory profit-sharing plan begins on the day following the day the plan trustee delivered the stock to the transfer agent with instructions to reissue the stock in your name.
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Gift.(p36)
If you receive a gift of property and your basis in it is figured using the donor's basis, your holding period includes the donor's holding period. For more information on basis, see Publication 551, Basis of Assets.
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Real property.(p36)
To figure how long you held real property, start counting on the day after you received title to it or, if earlier, the day after you took possession of it and assumed the burdens and privileges of ownership.
However, taking possession of real property under an option agreement is not enough to start the holding period. The holding period cannot start until there is an actual contract of sale. The holding period of the seller cannot end before that time.
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Repossession.(p36)
If you sell real property but keep a security interest in it and then later repossess it, your holding period for a later sale includes the period you held the property before the original sale, as well as the period after the repossession. Your holding period does not include the time between the original sale and the repossession. That is, it does not include the period during which the first buyer held the property.
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Nonbusiness bad debts.(p37)
Nonbusiness bad debts are short-term capital losses. For information on nonbusiness bad debts, see chapter 4 of Publication 550.
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Net Gain or Loss(p37)

rule
The totals for short-term capital gains and losses and the totals for long-term capital gains and losses must be figured separately.
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Net short-term capital gain or loss.(p37)

rule
Combine your short-term capital gains and losses, including your share of short-term capital gains or losses from partnerships, S corporations, and fiduciaries and any short-term capital loss carryover. Do this by adding all your short-term capital gains. Then add all your short-term capital losses. Subtract the lesser total from the other. The result is your net short-term capital gain or loss.
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Net long-term capital gain or loss.(p37)

rule
Follow the same steps to combine your long-term capital gains and losses. Include the following items. The result from combining these items with other long-term capital gains and losses is your net long-term capital gain or loss.
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Net gain.(p37)

rule
If the total of your capital gains is more than the total of your capital losses, the difference is taxable. Different tax rates may apply to the part that is a net capital gain. See Capital Gains Tax Rates, later.
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Net loss.(p37)

rule
If the total of your capital losses is more than the total of your capital gains, the difference is deductible. But there are limits on how much loss you can deduct and when you can deduct it. See Treatment of Capital Losses, next.
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Treatment of Capital Losses(p37)

rule
If your capital losses are more than your capital gains, you can deduct the difference as a capital loss deduction even if you do not have ordinary income to offset it. The yearly limit on the amount of the capital loss you can deduct is $3,000 ($1,500 if you are married and file a separate return).
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Table 4-2. Holding Period for Different Types of Acquisitions

Type of acquisition:When your holding period starts:
Stocks and bonds bought on a securities marketDay after trading date you bought security. Ends on trading date you sold security.
U.S. Treasury notes and bondsIf bought at auction, day after notification of bid acceptance. If bought through subscription, day after subscription was submitted.
Nontaxable exchangesDay after date you acquired old property.
GiftIf your basis is giver's adjusted basis, same day as giver's holding period began. If your basis is FMV, day after date of gift.
Real property boughtGenerally, day after date you received title to the property.
Real property repossessedDay after date you originally received title to the property, but does not include time between the original sale and date of repossession.
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Capital loss carryover.(p37)

rule
Generally, you have a capital loss carryover if either of the following situations applies to you. If either of these situations applies to you for 2013, see Capital Losses under Reporting Capital Gains and Losses in chapter 4 of Publication 550 to figure the amount you can carryover to 2014.
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Example.(p37)

Bob and Gloria Sampson sold property in 2013. The sale resulted in a capital loss of $7,000. The Sampsons had no other capital transactions. On their joint 2013 return, the Sampsons deduct $3,000, the yearly limit. They had taxable income of $2,000. The unused part of the loss, $4,000 ($7,000 − $3,000), is carried over to 2014.
If the Sampsons' capital loss had been $2,000, it would not have been more than the yearly limit. Their capital loss deduction would have been $2,000. They would have no carryover to 2014.
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Short-term and long-term losses.(p37)

rule
When you carry over a loss, it retains its original character as either long term or short term. A short-term loss you carry over to the next tax year is added to short-term losses occurring in that year. A long-term loss you carry over to the next tax year is added to long-term losses occurring in that year. A long-term capital loss you carry over to the next year reduces that year's long-term gains before its short-term gains.
If you have both short-term and long-term losses, your short-term losses are used first against your allowable capital loss deduction. If, after using your short-term losses, you have not reached the limit on the capital loss deduction, use your long-term losses until you reach the limit.
Tax Tip
To figure your capital loss carryover from 2013 to 2014 use the Capital Loss Carryover Worksheet in the 2013 Instructions for Schedule D (Form 1040).
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Joint and separate returns.(p37)

rule
On a joint return, the capital gains and losses of spouses are figured as the gains and losses of an individual. If you are married and filing a separate return, your yearly capital loss deduction is limited to $1,500. Neither you nor your spouse can deduct any part of the other's loss.
If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. However, if you and your spouse once filed jointly and are now filing separately, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss.
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Death of taxpayer.(p37)

rule
Capital losses cannot be carried over after a taxpayer's death. They are deductible only on the final income tax return filed on the decedent's behalf. The yearly limit discussed earlier still applies in this situation. Even if the loss is greater than the limit, the decedent's estate cannot deduct the difference or carry it over to following years.
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Corporations.(p37)

rule
A corporation can deduct capital losses only up to the amount of its capital gains. In other words, if a corporation has a net capital loss, it cannot be deducted in the current tax year. It must be carried to other tax years and deducted from capital gains occurring in those years. For more information, see Publication 542.
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Capital Gains Tax Rates(p37)

rule
The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. These lower rates are called the maximum capital gains rates.
The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. For 2013, the maximum tax rates for individuals are 0%, 15%, 20%, 25%, and 28%. Also, individuals, use the Qualified Dividends and Capital Gain Worksheet in the Instructions for Form 1040, or the Schedule D Tax Computation Worksheet in the Instructions for Schedule D (Form 1040) (whichever applies) to figure your tax if you have qualified dividends or net capital gain.
For more information, see chapter 4 of Publication 550. Also see the Instructions for Schedule D (Form 1040).
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Unrecaptured section 1250 gain.(p37)

rule
Generally, this is the part of any long-term capital gain on section 1250 property (real property) that is due to depreciation. Unrecaptured section 1250 gain cannot be more than the net section 1231 gain or include any gain otherwise treated as ordinary income. Use the worksheet in the Schedule D instructions to figure your unrecaptured section 1250 gain. For more information about section 1250 property and net section 1231 gain, see chapter 3.