U.S. Individual Income Tax Return Forms

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TREASURY/IRS AND OMB USE ONLY DRAFT

2025

Instructions for Schedule D
(Form 1040)
Capital Gains and Losses
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments
For the latest information about
developments related to Schedule D and
its instructions, such as legislation
enacted after they were published, go to
IRS.gov/ScheduleD.

New codes to use for reporting digital
asset transactions. Codes G, H, I, J, K,
and L were added to lines 1b, 2, 3, 8b, 9,
and 10 to represent the reporting of digital
asset transactions. See Form 1099-DA
and Form 8949 and their instructions for
additional information regarding digital
assets.
Deferral of gain invested in a qualified
opportunity fund (QOF). Taxpayers who
made a deferral election in a QOF that
meets the 7-year holding period threshold
may be eligible for a basis adjustment.
See Form 8997 and its instructions for
additional information regarding QOFs.

General Instructions
These instructions explain how to
complete Schedule D (Form 1040).
Complete Form 8949 before you complete
line 1b, 2, 3, 8b, 9, or 10 of Schedule D.
Use Schedule D:
• To figure the overall gain or loss from
transactions reported on Form 8949;
• To report certain transactions you don't
have to report on Form 8949;
• To report a gain from Form 2439 or
6252 or Part I of Form 4797;
• To report a gain or loss from Form 4684,
6781, or 8824;
• To report a gain or loss from a
partnership, S corporation, estate, or trust;
• To report capital gain distributions not
reported directly on Form 1040 or
1040-SR, line 7a (or effectively connected
capital gain distributions not reported
directly on Form 1040-NR, line 7a); and
• To report a capital loss carryover from
2024 to 2025.
Additional information. See Pub. 544
and Pub. 550 for more details.

Sep 19, 2025

Use Form 461 to figure your excess
business loss.

Use Form 8949 to report the sale or
exchange of a capital asset (defined later)
not reported on another form or schedule
and to report the income deferral or
exclusion of capital gains. See the
Instructions for Form 8949. Complete all
necessary pages of Form 8949 before you
complete line 1b, 2, 3, 8b, 9, or 10 of
Schedule D. See Lines 1a and 8a, later,
for more information about when Form
8949 is needed and when it isn't.
Use Form 4797 to report the following.
1. The sale or exchange of:
a. Real property used in your trade or
business;
b. Depreciable and amortizable
tangible property used in your trade or
business (but see Disposition of
Depreciable Property Not Used in Trade or
Business in the Form 4797 instructions);
c. Oil, gas, geothermal, or other
mineral property; and
d. Section 126 property.
2. The involuntary conversion (other
than from casualty or theft) of property
used in a trade or business and capital
assets held more than 1 year for business
or profit. But see Disposition of
Depreciable Property Not Used in Trade or
Business in the Form 4797 instructions.
3. The disposition of noncapital
assets other than inventory or property
held primarily for sale to customers in the
ordinary course of your trade or business.
4. Ordinary loss on the sale,
exchange, or worthlessness of small
business investment company (section
1242) stock.
5. Ordinary loss on the sale,
exchange, or worthlessness of small
business (section 1244) stock.
6. Ordinary gain or loss on securities
or commodities held in connection with
your trading business, if you previously
made a mark-to-market election. See
Traders in Securities, later.
Use Form 4684 to report involuntary
conversions of property due to casualty or
theft.

Use Form 6781 to report gains and
losses from section 1256 contracts and
straddles.
Use Form 8824 to report like-kind
exchanges. A like-kind exchange occurs
when you exchange business or
investment property for property of a like
kind.
Use Form 8960 to figure any net
investment income tax relating to gains
and losses reported on Schedule D,
including gains and losses from a
securities trading activity.
Use Form 8997 to report each QOF
investment you held at the beginning and
end of the tax year and the deferred gains
associated with each investment. Also,
use Form 8997 to report any capital gains
you are deferring by investing in a QOF
during the tax year and any QOF
investment you disposed of during the tax
year.

Capital Asset

Most property you own and use for
personal purposes or investment is a
capital asset. For example, your house,
furniture, car, stocks, and bonds are
capital assets. A capital asset is any
property owned by you except the
following.
1. Stock in trade or other property
included in inventory or held mainly for
sale to customers in the ordinary course of
your trade or business. But see the TIP
about certain musical compositions or
copyrights, later.
2. Accounts or notes receivable:
a. For services rendered in the
ordinary course of your trade or business,
b. For services rendered as an
employee, or
c. From the sale of stock in trade or
other property included in inventory or
held mainly for sale to customers.
3. Depreciable property used in your
trade or business, even if it is fully
depreciated.
4. Real estate used in your trade or
business.
5. A patent, invention, model, or
design (whether or not patented); a secret
formula or process; a copyright; a literary,

Instructions for Schedule D (Form 1040) (2025) Catalog Number 24331I
Department of the Treasury Internal Revenue Service www.irs.gov

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What’s New

Other Forms You May Have
To File

TREASURY/IRS AND OMB USE ONLY DRAFT

But see the TIP about certain musical
compositions or copyrights below.
6. A U.S. Government publication,
including the Congressional Record, that
you received:
a. From the U.S. Government (or any
governmental agency) for an amount other
than the normal sales price, or
b. Under circumstances (such as by
gift) that entitle you to the basis of
someone who received the publication for
an amount other than the normal sales
price.
7. Certain commodities derivative
financial instruments held by a dealer and
connected to the dealer's activities as a
dealer. See section 1221(a)(6) and (b)(1).
8. Certain hedging transactions
entered into in the normal course of your
trade or business. See section 1221(a)(7)
and (b)(2).
9. Supplies regularly used in your
trade or business.
You can elect to treat as capital

TIP assets certain musical

compositions or copyrights you
sold or exchanged. See Pub. 550 for
details.

Basis and Recordkeeping

Basis is the amount of your investment in
property for tax purposes. The basis of
property you buy is usually its cost. There
are special rules for certain kinds of
property, such as inherited property. You
need to know your basis to figure any gain
or loss on the sale or other disposition of
the property. You must keep accurate
records that show the basis and, if
applicable, adjusted basis of your
property. Your records should show the
purchase price, including commissions;
increases to basis, such as the cost of
improvements; and decreases to basis,
such as depreciation, nondividend
distributions on stock, and stock splits.
If you received Schedule A (Form
8971) from an executor of an estate or
other person required to file an estate tax
return, you may be required to report a
basis consistent with the estate tax value
of the property.
2

For more information on consistent
basis reporting and basis generally, see
Column (e)—Cost or Other Basis in the
Instructions for Form 8949, and the
following publications.
• Pub. 551.
• Pub. 550.

Short- or Long-Term Gain
or Loss

Report short-term gains or losses in Part I.
Report long-term gains or losses in Part II.
The holding period for short-term capital
gains and losses is generally 1 year or
less. The holding period for long-term
capital gains and losses is generally more
than 1 year. However, beginning in 2018,
the long-term holding period for certain
gains with respect to “applicable
partnership interests” is more than 3
years. See Pub. 541 for more information.
For more information about holding
periods, see the Instructions for Form
8949.

Capital Gain Distributions

These distributions are paid by a mutual
fund (or other regulated investment
company) or real estate investment trust
from its net realized long-term capital
gains. Distributions of net realized
short-term capital gains aren't treated as
capital gains. Instead, they are included
on Form 1099-DIV as ordinary dividends.
Enter on Schedule D, line 13, the total
capital gain distributions paid to you
during the year, regardless of how long
you held your investment. This amount is
shown in box 2a of Form 1099-DIV.
If there is an amount in box 2b, include
that amount on line 11 of the
Unrecaptured Section 1250 Gain
Worksheet in these instructions if you
complete line 19 of Schedule D.
If there is an amount in box 2c, see
Exclusion of Gain on Qualified Small
Business (QSB) Stock, later.
If there is an amount in box 2d, include
that amount on line 4 of the 28% Rate
Gain Worksheet in these instructions if you
complete line 18 of Schedule D.
If you received capital gain distributions
as a nominee (that is, they were paid to
you but actually belong to someone else),
report on Schedule D, line 13, only the
amount that belongs to you. Attach a
statement showing the full amount you
received and the amount you received as
a nominee. See the Instructions for
Schedule B to learn about the requirement
for you to file Forms 1099-DIV and 1096.

Sale of Your Home

You may not need to report the sale or
exchange of your main home. If you must

report it, complete Form 8949 before
Schedule D.
Report the sale or exchange of your
main home on Form 8949 if:
• You can't exclude all of your gain from
income, or
• You received a Form 1099-S for the sale
or exchange.
Any gain you can't exclude is taxable.
Generally, if you meet the following two
tests, you can exclude up to $250,000 of
gain. If both you and your spouse meet
these tests and you file a joint return, you
can exclude up to $500,000 of gain (but
only one spouse needs to meet the
ownership requirement in Test 1).

Test 1

During the 5-year period ending on the
date you sold or exchanged your home,
you owned it for 2 years or more (the
ownership requirement) and lived in it as
your main home for 2 years or more (the
use requirement).

Test 2

You haven't excluded gain on the sale or
exchange of another main home during
the 2-year period ending on the date of the
sale or exchange of your home.

Reduced Exclusion
Even if you don't meet one or both of the
above two tests, you can still claim an
exclusion if you sold or exchanged the
home because of a change in place of
employment, health, or certain unforeseen
circumstances. In this case, the maximum
amount of gain you can exclude is
reduced. For more information, see Pub.
523.
Sale of home by surviving spouse. If
your spouse died before the sale or
exchange, you can still exclude up to
$500,000 of gain if:
• The sale or exchange is no later than 2
years after your spouse's death;
• Just before your spouse's death, both
spouses met the use requirement of Test
1, at least one spouse met the ownership
requirement of Test 1, and both spouses
met Test 2; and
• You didn't remarry before the sale or
exchange.

Exceptions to Test 1
You can choose to have the 5-year test
period for ownership and use in Test 1
suspended during any period you or your
spouse serves outside the United States
as a Peace Corps volunteer or serves on
qualified official extended duty as a
member of the uniformed services or
Foreign Service of the United States, as
an employee of the intelligence
community, or outside the United States

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musical, or artistic composition; a letter or
memorandum; or similar property that is:
a. Created by your personal efforts;
b. Prepared or produced for you (in
the case of a letter, memorandum, or
similar property); or
c. Received under circumstances
(such as by gift) that entitle you to the
basis of the person who created the
property or for whom the property was
prepared or produced. See section
1221(a)(3).

TREASURY/IRS AND OMB USE ONLY DRAFT
as an employee of the Peace Corps. This
means you may be able to meet Test 1
even if, because of your service, you didn't
actually use the home as your main home
for at least the required 2 years during the
5-year period ending on the date of sale.
The 5-year period can't be extended for
more than 10 years.

Qualified extended duty. You are on
qualified extended duty if:
• You are called or ordered to active duty
for an indefinite period or for a period of
more than 90 days; and
• You are serving at a duty station at least
50 miles from your main home, or you are
living in government quarters under
government orders.

Sale of Home Acquired in a
Like-kind Exchange

You can't exclude any gain if:
• You acquired your home in a like-kind
exchange in which all or part of the gain
wasn't recognized, and
• You sold or exchanged the home during
the 5-year period beginning on the date
you acquired it.

How To Report the Sale of Your
Main Home

If you have to report the sale or exchange,
report it on Form 8949. If the gain or loss is
short term, report it in Part I of Form 8949
with box C or box I checked. If the gain or
loss is long term, report it in Part II of Form
8949 with box F or box L checked.
If you had a gain and can exclude part
or all of it, enter “H” in column (f) of Form
8949. Enter the exclusion as a negative
number (in parentheses) in column (g) of
Form 8949. See the Instructions for Form
8949, columns (f), (g), and (h). Complete
all columns.
If you had a loss but have to report the
sale or exchange because you got a Form
1099-S, see Certain Nondeductible
Losses, later, for instructions about how to
report it.

Partnership Interests

A sale or other disposition of an interest in
a partnership may result in ordinary
income, collectibles gain (28% rate gain),
or unrecaptured section 1250 gain. For
details on 28% rate gain, see the
instructions for line 18. For details on
unrecaptured section 1250 gain, see the
instructions for line 19.

Capital Assets Held for
Personal Use

Generally, gain from the sale or exchange
of a capital asset held for personal use is a
capital gain. Report it on Form 8949 with
box C or box I checked (if the transaction
is short term) or box F or box L checked (if
the transaction is long term). However, if
you converted depreciable property to
personal use, all or part of the gain on the
sale or exchange of that property may
have to be recaptured as ordinary income.
Use Part III of Form 4797 to figure the
amount of ordinary income recapture. The
recapture amount is included on line 31
(and line 13) of Form 4797. Don't enter
any gain from this property on line 32 of
Form 4797. If you aren't completing Part III
for any other properties, enter “N/A” on
line 32. If the total gain is more than the
recapture amount, enter “From Form
4797” in column (a) of Part I of Form 8949
(if the transaction is short term) or Part II of
Form 8949 (if the transaction is long term),
and skip columns (b) and (c). In column
(d) of Form 8949, enter the excess of the
total gain over the recapture amount.
Leave columns (e) through (g) blank.
Complete column (h). Be sure to check
box C or box I at the top of Part I or box F
or box L at the top of Part II of Form 8949
(depending on how long you held the
asset).
Loss from the sale or exchange of a
capital asset held for personal use isn't
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, you must report the
transaction on Form 8949 even though the
loss isn't deductible. Also, if you had a loss
from the sale or exchange of personal
property for which you received a Form
1099-K, you must report the transaction
on Form 8949 or on Schedule 1 (Form
1040) even though the loss isn’t
deductible.
Example. You have a loss on the sale
of a vacation home that isn't your main

home and you received a Form 1099-S for
the transaction. Report the transaction in
Part I or Part II of Form 8949, depending
on how long you owned the home.
Complete all columns. Because the loss
isn't deductible, enter “L” in column (f).
Enter the difference between column (d)
and column (e) as a positive amount in
column (g). Then complete column (h).
(For example, if you entered $5,000 in
column (d) and $6,000 in column (e), enter
$1,000 in column (g). Then enter -0($5,000 − $6,000 + $1,000) in column (h).
Be sure to check box C or box I at the top
of Part I or box F or box L at the top of Part
II of Form 8949 (depending on how long
you owned the home).)

Capital Losses

You can deduct capital losses up to the
amount of your capital gains plus $3,000
($1,500 if married filing separately). You
may be able to use capital losses that
exceed this limit in future years. For
details, see the instructions for line 21. Be
sure to report all of your capital gains and
losses even if you can't use all of your
losses in 2025.

Certain Nondeductible Losses

You can’t deduct a loss from a sale or
exchange between certain related parties.
This includes a direct or indirect sale or
exchange of property between any of the
following.
• Members of a family.
• A corporation and an individual who
directly (or indirectly) owns more than 50%
of the corporation's stock (unless the loss
is from a distribution in complete
liquidation of a corporation).
• A grantor and a fiduciary of a trust.
• A fiduciary and a beneficiary of the
same trust.
• A fiduciary of a trust and a fiduciary (or
beneficiary) of another trust if both trusts
were created by the same grantor.
• An executor of an estate and a
beneficiary of that estate, unless the sale
or exchange was to satisfy a pecuniary
bequest (that is, a bequest of a sum of
money).
• An individual and a tax-exempt
organization controlled directly (or
indirectly) by the individual or the
individual's family.
See Pub. 544 for more details on sales
and exchanges between related parties.
Report a transaction that results in a
nondeductible loss in Part I or Part II of
Form 8949 (depending on how long you
held the property). Unless you received a
Form 1099-B or Form 1099-DA for the sale
or exchange, check box C or box I at the
top of Part I or box F or box L at the top of
Part II of Form 8949 (depending on how
long you owned the property). Complete
all columns. Because the loss isn't
deductible, enter “L” in column (f). Enter
3

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Example. You buy a house in Virginia
in 2013 and use it as your main home for 3
years. For 8 years, from 2016 through
2024, you served on qualified official
extended duty as a member of the
uniformed services in Kuwait. In 2025, you
sell the house. You didn't use the house as
your main home for at least 2 of the 5
years before the sale. To meet Test 1, you
elect to suspend the 5-year test period
during your 8-year period of uniformed
service in Kuwait. Because that 8-year
period won't be counted in determining if
you used the house as your main home for
2 of the 5 years before the sale, you meet
the ownership and use requirements of
Test 1.

More information. See Pub. 523 for
additional details, including how to figure
and report any taxable gain if:
• You (or your spouse if married) used
any part of the home for business or rental
purposes after May 6, 1997; or
• There was a period of time after 2008
when the home wasn't your main home.

TREASURY/IRS AND OMB USE ONLY DRAFT
the amount of the nondeductible loss as a
positive number in column (g). Complete
column (h). See the Instructions for Form
8949, columns (f), (g), and (h).

Example 2. You received a Form
1099-B or Form 1099-DA. It shows
proceeds (in box 1d on Form 1099-B or
box 1f on Form 1099-DA) of $1,000 and
basis (in box 1e on Form 1099-B or box 1g
on Form 1099-DA) of $5.000. Box 7 on
Form 1099-B or box 5 on Form 1099-DA is
checked, indicating that your loss of
$4,000 isn't allowed.
If you received a Form 1099-B, on the
top of Form 8949, check box A or box B in
Part I or box D or box E in Part II
(whichever applies). Enter $1,000 in
column (d) and $5,000 in column (e).
Because the loss isn’t deductible, enter “L”
in column (f) and $4,000 (the difference
between $1,000 and $5,000) in column
(g). In column (h), enter -0- ($1,000 $5,000 + $4,000).
If you received a Form 1099-DA, on the
top of Form 8949, check box G or box H in
Part I or box J or box K in Part II
(whichever applies). Enter $1,000 in
column (d) and $5,000 in column (e).
Because the loss isn’t deductible, enter “L”
in column (f) and $4,000 (the difference
between $1,000 and $5,000) in column
(g). In column (h), enter -0- ($1,000 $5,000 + $4,000).
At-risk rules. If you disposed of (a) an
asset used in an activity to which the
at-risk rules apply, or (b) any part of your
interest in an activity to which the at-risk
rules apply, and you have amounts in the
activity for which you aren't at risk, see the
Instructions for Form 6198.
Passive activity rules. If the loss is
allowable under the at-risk rules, it may be
subject to the passive activity rules. See
Form 8582 and its instructions for details
on reporting capital gains and losses from
a passive activity.

4

• Transactions by a securities dealer. See
section 475 and Rev. Rul. 97-39, which
begins on page 4 of Internal Revenue
Bulletin 1997-39 at IRS.gov/pub/irs-irbs/
irb97-39.pdf.
• Bonds and other debt instruments. See
Pub. 550.
• Certain real estate subdivided for sale
that may be considered a capital asset.
See section 1237.
• Gain on the sale of depreciable
property to a more-than-50%-owned entity
or to a trust of which you are a beneficiary.
See Pub. 544.
• Gain on the disposition of stock in
domestic international sales corporations.
See section 995(c).
• Gain on the sale or exchange of stock in
certain foreign corporations. See section
1248.
• Transfer of property to a partnership
that would be treated as an investment
company if it were incorporated. See Pub.
541.
• Sales of stock received under a
qualified public utility dividend
reinvestment plan. See Pub. 550.
• Transfer of appreciated property to a
political organization. See section 84.
• Transfer of property by a U.S. person to
a foreign estate or trust. See section 684.
• If you give up your U.S. citizenship, you
may be treated as having sold all your
property for its fair market value on the day
before you gave up your citizenship. This
also applies to long-term U.S. residents
who cease to be lawful permanent
residents. For details, exceptions, and
rules for reporting these deemed sales,
see Pub. 519 and Form 8854.
• In general, no gain or loss is recognized
on the transfer of property from an
individual to a spouse or a former spouse
if the transfer is incident to a divorce. See
Pub. 504.
• Amounts received on the retirement of a
debt instrument are generally treated as
received in exchange for the debt
instrument. See Pub. 550.
• Any loss on the disposition of converted
wetland or highly erodible cropland that is
first used for farming after March 1, 1986,
is reported as a long-term capital loss on
Form 8949, but any gain is reported as
ordinary income on Form 4797.
• If qualified dividends that you reported
on Form 1040, 1040-SR, or 1040-NR,
line 3a, include extraordinary dividends,
any loss on the sale or exchange of the
stock is a long-term capital loss to the
extent of the extraordinary dividends. An
extraordinary dividend is a dividend that
equals or exceeds 10% (5% in the case of
preferred stock) of your basis in the stock.
• Amounts received by shareholders in
corporate liquidations. See Pub. 550.

• Cash received in lieu of fractional
shares of stock as a result of a stock split
or stock dividend. See Pub. 550.
• Load charges to acquire stock in a
regulated investment company (including
a mutual fund), which may not be taken
into account in determining gain or loss on
certain dispositions of the stock if
reinvestment rights were exercised. See
Pub. 550.
• The sale or exchange of S corporation
stock or an interest in a partnership or
trust held for more than 1 year, which may
result in collectibles gain (28% rate gain).
See the instructions for line 18.
• Gain or loss on the disposition of
securities futures contracts. See Pub. 550.
• Gain on the constructive sale of certain
appreciated financial positions. See Pub.
550.
• Certain constructive ownership
transactions. Gain in excess of the gain
you would have recognized if you had held
a financial asset directly during the term of
a derivative contract must be treated as
ordinary income. See section 1260. If any
portion of the constructive ownership
transaction was open in any prior year, you
may have to pay interest. See section
1260(b) for details, including how to figure
the interest. Include the interest as an
additional tax on Schedule 2 (Form 1040),
line 17z. In the space provided, enter
“Section 1260(b) interest” and the amount
of the interest. This interest isn't
deductible.
• Gain or loss from the disposition of
stock or other securities in an investment
club. See Pub. 550.
• Certain virtual currencies, such as
Bitcoin. See the Instructions for Form 1040
and IRS.gov/VirtualCurrencyFAQs.
• If you are deferring eligible gain by
investing in a QOF, report the gain on the
form on which you normally report the gain
and report the deferral on Form 8949. See
How To Report an Election to Defer Tax on
Eligible Gain Invested in a QOF in the
Form 8949 instructions.

Market Discount Bonds

In general, a capital gain from the
disposition of a market discount bond is
treated as interest income to the extent of
accrued market discount as of the date of
disposition. See sections 1276 through
1278 and Pub. 550 for more information
on market discount. See the Instructions
for Form 8949 for detailed information
about how to report the disposition of a
market discount bond.

Contingent Payment Debt
Instruments

Any gain recognized on the sale,
exchange, or retirement of a taxable
contingent payment debt instrument
subject to the noncontingent bond method
is treated as interest income rather than as

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Example 1. You sold land you held as
an investment for 5 years to your brother
for $10,000. Your basis was $15,000. On
Part II of Form 8949, check box F or box L
at the top. Enter $10,000 on Form 8949,
Part II, column (d). Enter $15,000 in
column (e). Because the loss isn't
deductible, enter “L” in column (f) and
$5,000 (the difference between $10,000
and $15,000) in column (g). In column (h),
enter -0- ($10,000 − $15,000 + $5,000). If
this is your only transaction on this Form
8949, enter $10,000 on Schedule D,
line 10, column (d). Enter $15,000 in
column (e) and $5,000 in column (g). In
column (h), enter -0- ($10,000 − $15,000 +
$5,000).

Items for Special
Treatment

TREASURY/IRS AND OMB USE ONLY DRAFT
capital gain, even if you hold the debt
instrument as a capital asset. If you sell a
taxable contingent payment debt
instrument subject to the noncontingent
bond method at a loss, your loss is an
ordinary loss to the extent of your prior
original issue discount (OID) inclusions on
the debt instrument. If the debt instrument
is a capital asset, treat any loss that is
more than your prior OID inclusions as a
capital loss. See Regulations section
1.1275-4(b) for exceptions to these rules.

See Pub. 550 or Pub. 1212 for more
details on any special rules or adjustments
that might apply.

Wash Sales

A wash sale occurs when you sell or
otherwise dispose of stock or securities
(including a contract or option to acquire
or sell stock or securities) at a loss and,
within 30 days before or after the sale or
disposition, you:
1. Buy substantially identical stock or
securities,
2. Acquire substantially identical stock
or securities in a fully taxable trade,
3. Enter into a contract or option to
acquire substantially identical stock or
securities, or
4. Acquire substantially identical stock
or securities for your individual retirement
arrangement (IRA) or Roth IRA.
You can't deduct losses from wash
sales unless the loss was incurred in the
ordinary course of your business as a
dealer in stock or securities. The basis of
the substantially identical property (or
contract or option to acquire such
property) is its cost increased by the
disallowed loss (except in the case of (4)
earlier).
These wash sale rules don't apply to a
redemption of shares in a floating-NAV
(net asset value) money market fund.
The wash sale rules generally apply to
transactions involving digital assets that
are also stock or securities for tax
purposes (tokenized securities).
If you received a Form 1099-B or Form
1099-DA (or substitute statement), box 1g

Report a wash sale transaction in Part I
or Part II (depending on how long you
owned the stock or securities) of Form
8949 with the appropriate box checked.
Complete all columns. Enter “W” in
column (f). Enter as a positive number in
column (g) the amount of the loss not
allowed. See the Instructions for Form
8949, columns (f), (g), and (h).

Traders in Securities

You are a trader in securities if you are
engaged in the business of buying and
selling securities for your own account. To
be engaged in business as a trader in
securities, all of the following statements
must be true.
• You must seek to profit from daily
market movements in the prices of
securities and not from dividends, interest,
or capital appreciation.
• Your activity must be substantial.
• You must carry on the activity with
continuity and regularity.

The following facts and circumstances
should be considered in determining if
your activity is a business.
• Typical holding periods for securities
bought and sold.
• The frequency and dollar amounts of
your trades during the year.
• The extent to which you pursue the
activity to produce income for a livelihood.
• The amount of time you devote to the
activity.

previously made the mark-to-market
election (explained below), each
transaction is reported in Part II of Form
4797 instead of on Form 8949. Regardless
of whether a trader reports their gains and
losses on Form 8949 or Form 4797, the
gain or loss from the disposition of
securities isn't taken into account when
figuring net earnings from
self-employment on Schedule SE. See the
Instructions for Schedule SE for an
exception that applies to section 1256
contracts.
The limitation on investment interest
expense that applies to investors doesn't
apply to interest paid or incurred in a
trading business. A trader reports interest
expense and other expenses (excluding
commissions and other costs of acquiring
or disposing of securities) from a trading
business on Schedule C (instead of
Schedule A).
A trader may also hold securities for
investment. The rules for investors will
generally apply to those securities.
Allocate interest and other expenses
between your trading business and your
investment securities.

Mark-to-Market Election for
Traders

A trader may make an election under
section 475(f) to report all gains and
losses from securities held in connection
with a trading business as ordinary income
(or loss), including those from securities
held at the end of the year. Securities held
at the end of the year are “marked to
market” by treating them as if they were
sold for fair market value on the last
business day of the year. Generally, the
election must be made by the due date
(not including extensions) of the tax return
for the year prior to the year for which the
election becomes effective. To be effective
for 2025, the election must have been
made by the due date of your 2024 return
(not counting extensions).

You are considered an investor, and not
a trader, if your activity doesn't meet the
above definition of a business. It doesn't
matter whether you call yourself a trader or
a “day trader.”

Starting with the year the election
becomes effective, a trader reports all
gains and losses from securities held in
connection with the trading business,
including securities held at the end of the
year, in Part II of Form 4797. If you
previously made the election, see the
Instructions for Form 4797. For details on
making the mark-to-market election for
2025, see Pub. 550 or Rev. Proc. 99-17,
which starts on the bottom of page 52 of
Internal Revenue Bulletin 1999-7 at
IRS.gov/pub/irs-irbs/irb99-07.pdf.

Like an investor, a trader must
generally report each sale of securities
(taking into account commissions and any
other costs of acquiring or disposing of the
securities) on Form 8949 unless one of the
exceptions described in the Instructions
for Form 8949 applies. However, if a trader

If you hold securities for investment,
you must identify them as such in your
records on the day you acquired them (for
example, by holding the securities in a
separate brokerage account). Securities
that you hold for investment aren't marked
to market.
5

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If you received a Form 1099-B or Form
1099-DA (or substitute statement)
reporting the sale of a taxable contingent
payment debt instrument subject to the
noncontingent bond method and the
Ordinary box in box 2 on Form 1099-B is
checked or the Ordinary box in box 6 on
Form 1099-DA is checked, an adjustment
may be required. Report the transaction
on Form 8949 and complete the form’s
Worksheet for Contingent Payment Debt
Instrument Adjustment in Column (g) to
figure the adjustment to enter in column
(g) of Form 8949.

of Form 1099-B or box 1i of Form 1099-DA
will generally show whether there was any
nondeductible wash sale loss and its
amount if:
• The stock or securities sold were
covered securities (defined in the
Instructions for Form 8949, column (e)),
and
• The substantially identical stock or
securities you bought had the same
CUSIP number as the stock or securities
you sold and were bought in the same
account as the stock or securities you
sold. (CUSIP numbers are security
identification numbers.)
However, you can't deduct a loss from a
wash sale even if it isn't reported on Form
1099-B or Form 1099-DA (or substitute
statement). For more details on wash
sales, see Pub. 550.

Short Sales

TREASURY/IRS AND OMB USE ONLY DRAFT

A short sale is a contract to sell property
you borrowed for delivery to a buyer. At a
later date, you either buy substantially
identical property and deliver it to the
lender or deliver property that you held but
didn't want to transfer at the time of the
sale.

Holding period. Usually, your holding
period is the amount of time you actually
held the property eventually delivered to
the broker or lender to close the short
sale. However, your gain when closing a
short sale is short term if you (a) held
substantially identical property for 1 year
or less on the date of the short sale, or (b)
acquired property substantially identical to
the property sold short after the short sale
but on or before the date you close the
short sale. If you held substantially
identical property for more than 1 year on
the date of a short sale, any loss realized
on the short sale is a long-term capital
loss, even if the property used to close the
short sale was held 1 year or less.

Example. For $10 in 2013, you sold
Joe an option to buy one share of XYZ
stock for $80. Joe later exercised the
option. The Form 1099-B or Form
1099-DA you get shows the proceeds to
be $80. Enter $80 in column (d) of Form
8949. Enter “E” in column (f) and $10 in
column (g). Complete the other columns
according to the instructions.

Net Asset Value (NAV)
Method for Money Market
Funds

If you have a capital gain or loss
determined under the NAV method with
respect to shares in an NAV money market
fund, report the capital gain or loss on
Form 8949, Part I, with box C or box I
checked. Enter the name of each fund
followed by “(NAV)” in column (a). Enter
the net gain or loss in column (h). Leave all
other columns blank. See the Instructions
for Form 8949.

Reporting a short sale. Report any
short sale on Form 8949 in the year it
closes.
If a short sale closed in 2025 but you
didn't get a 2025 Form 1099-B or Form
1099-DA (or substitute statement) for it
because you entered into it before 2011,
report it on Form 8949 in Part I with box C
or box I checked or Part II with box F or
box L checked (whichever applies). In
column (a), enter (for example) “100 sh.
XYZ Co.—2010 short sale closed.” Fill in
the other columns according to their
instructions. Report the short sale the
same way if you received a 2025 Form
1099-B or Form 1099-DA (or substitute
statement) that doesn't show proceeds
(sales price).

Undistributed Capital
Gains

Gain or Loss From Options

If there is an amount in box 1d of Form
2439, include that amount on line 4 of the
28% Rate Gain Worksheet if you complete
line 18 of Schedule D.

Report on Form 8949 gain or loss from the
closing or expiration of an option that isn't
a section 1256 contract but is a capital
asset in your hands. If an option you
purchased expired, enter the expiration
date in column (c) and enter “EXPIRED” in
column (d). If an option that was granted
(written) expired, enter the expiration date
in column (b) and enter “EXPIRED” in
column (e). Fill in the other columns
according to their instructions. See Pub.
550 for details.
If a call option you sold after 2013 was
exercised, the option premium you
received will be reflected in the proceeds
6

Include on Schedule D, line 11, the
amount from box 1a of Form 2439. This
represents your share of the undistributed
long-term capital gains of the regulated
investment company (including a mutual
fund) or real estate investment trust.
If there is an amount in box 1b of Form
2439, include that amount on line 11 of the
Unrecaptured Section 1250 Gain
Worksheet if you complete line 19 of
Schedule D.
If there is an amount in box 1c of Form
2439, see Exclusion of Gain on Qualified
Small Business (QSB) Stock, later.

Include on Schedule 3 (Form 1040),
line 13a, the tax paid as shown in box 2 of
Form 2439. Add to the basis of your stock
the excess of the amount included in
income over the amount of the credit for
the tax paid. See Pub. 550 for details.

Installment Sales

If you sold property (other than publicly
traded stocks or securities) at a gain and
you will receive a payment in a tax year
after the year of sale, you must generally

report the sale on the installment method
unless you elect not to. Use Form 6252 to
report the sale on the installment method.
Also, use Form 6252 to report any
payment received in 2025 from a sale
made in an earlier year that you reported
on the installment method.
To elect out of the installment method,
report the full amount of the gain on Form
8949 on a timely filed return (including
extensions) for the year of the sale. If your
original return was filed on time, you can
make the election on an amended return
filed no later than 6 months after the due
date of your return (excluding extensions).
Enter “Filed pursuant to section
301.9100-2” at the top of the amended
return.

Demutualization of Life
Insurance Companies

Demutualization of a life insurance
company occurs when a mutual life
insurance company changes to a stock
company. If you were a policyholder or
annuitant of the mutual company, you may
have received either stock in the stock
company or cash in exchange for your
equity interest in the mutual company.
If the demutualization transaction
qualifies as a tax-free reorganization, no
gain or loss is recognized on the exchange
of your equity interest in the mutual
company for stock. The company can
advise you if the transaction is a tax-free
reorganization. Your holding period for the
new stock includes the period you held an
equity interest in the mutual company. If
you received cash in exchange for your
equity interest, you must recognize any
capital gain. If you held the equity interest
for more than 1 year, report the gain as a
long-term capital gain in Part II of Form
8949. If you held the equity interest for 1
year or less, report the gain as a
short-term capital gain in Part I of Form
8949. Be sure the appropriate box is
checked at the top of Form 8949.
If the demutualization transaction
doesn't qualify as a tax-free
reorganization, you must recognize a
capital gain or loss. If you held the equity
interest for more than 1 year, report the
gain or loss as a long-term capital gain or
loss in Part II of Form 8949. If you held the
equity interest for 1 year or less, report the
gain or loss as a short-term capital gain or
loss in Part I of Form 8949. Be sure the
appropriate box is checked at the top of
Form 8949. Your holding period for the
new stock begins on the day after you
received the stock.

Small Business (Section
1244) Stock

Report an ordinary loss from the sale,
exchange, or worthlessness of small

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Example. You think the value of XYZ
stock will drop. You borrow 10 shares from
your broker and sell them for $100. This is
a short sale. You later buy 10 shares for
$80 and deliver them to your broker to
close the short sale. Your gain is $20
($100 − $80).

shown in box 1d of Form 1099-B, box 1f of
Form 1099-DA (or substitute statement)
you received. If you sold the call option
before 2014, the option premium you
received may not be reflected on Form
1099-B or Form 1099-DA. If it isn't, enter
the premium as a positive number in
column (g) of Form 8949. Enter “E” in
column (f).

TREASURY/IRS AND OMB USE ONLY DRAFT

Report the transaction in Part I or Part II
of Form 8949 (depending on how long you
held the stock) with the appropriate box
checked.
Example. You sold section 1244 stock
for $1,000. Your basis was $60,000. You
had held the stock for 3 years. You can
claim $50,000 of your loss as an ordinary
loss on Form 4797. To claim the rest of the
loss on Form 8949, check the appropriate
box at the top. Enter $1,000 on Form
8949, Part II, column (d). Enter $60,000 in
column (e). Enter “S” in column (f) and
$50,000 (the ordinary loss claimed on
Form 4797) in column (g). In column (h),
enter ($9,000) ($1,000 − $60,000 +
$50,000). Put it in parentheses to show it
is a negative amount.

Exclusion of Gain on Qualified
Small Business (QSB) Stock

Section 1202 allows you to exclude a
portion of the eligible gain on the sale or
exchange of QSB stock. The section 1202
exclusion applies only to QSB stock held
for more than 5 years. If you acquired the
QSB stock on or before February 17,
2009, you can exclude up to 50% of the
qualified gain. However, you can exclude
up to 60% of the qualified gain on certain
empowerment zone business stock for
gain attributable to periods on or before
December 31, 2018. The 60% exclusion
doesn’t apply to gain attributable to
periods after December 31, 2018. See
Empowerment Zone Business Stock, later.
If you acquired the QSB stock after
February 17, 2009, and before September
28, 2010, you can exclude up to 75% of
the qualified gain.
If you acquired the QSB stock after
September 27, 2010, you can exclude up
to 100% of the qualified gain.

To be QSB stock, the stock must meet
all of the following tests.
1. It must be stock in a C corporation
(that is, not S corporation stock).
2. It must have been originally issued
after August 10, 1993.
3. As of the date the stock was
issued, the corporation was a domestic C
corporation with total gross assets of $50
million or less (a) at all times after August
9, 1993, and before the stock was issued;
and (b) immediately after the stock was
issued. Gross assets include those of any
predecessor of the corporation. All
corporations that are members of the
same parent-subsidiary controlled group
are treated as one corporation.
4. You must have acquired the stock
at its original issue (either directly or
through an underwriter), either in
exchange for money or other property
(other than stock) or as pay for services
(other than as an underwriter) to the
corporation. In certain cases, you may
meet this test if you acquired the stock
from another person who met the test
(such as by gift or inheritance) or through
a conversion or exchange of QSB stock
you held.
5. During substantially all the time you
held the stock:
a. The corporation was a C
corporation;
b. At least 80% of the value of the
corporation's assets were used in the
active conduct of one or more qualified
businesses (defined next); and
c. The corporation wasn't a foreign
corporation, DISC, former DISC, regulated
investment company, real estate
investment trust, REMIC, FASIT, or
cooperative, or a corporation that has
made (or that has a subsidiary that has
made) a section 936 election.
SSBIC. A specialized small

TIP business investment company
test 5b.

(SSBIC) is treated as having met

Definition of qualified business. A
qualified business is any business that
isn't one of the following.
• A business involving services
performed in the field of health, law,
engineering, architecture, accounting,
actuarial science, performing arts,
consulting, athletics, financial services, or
brokerage services.
• A business whose principal asset is the
reputation or skill of one or more
employees.
• A banking, insurance, financing,
leasing, investing, or similar business.
• A farming business (including the
raising or harvesting of trees).

• A business involving the production of
products for which percentage depletion
can be claimed.
• A business of operating a hotel, motel,
restaurant, or similar business.
A qualified business is any business
that isn't one of the following.
For more details about limits and
additional requirements that may apply,
see Pub. 550 or section 1202.
Acquisition date of stock acquired after February 17, 2009. When you are
determining whether your exclusion is
limited to 50%, 75%, or 100% of the gain
from QSB stock, your acquisition date is
considered to be the first day you held the
stock (determined after applying the
holding period rules in section 1223).

Empowerment Zone Business
Stock

You can generally exclude up to 60% of
your gain from the sale or exchange of
QSB stock held for more than 5 years if
you meet the following additional
requirements.
1. The stock you sold or exchanged
was stock in a corporation that qualified as
an empowerment zone business during
substantially all of the time you held the
stock.
2. You acquired the stock after
December 21, 2000, and before February
18, 2009.
3. The gain from the sale or exchange
of the stock is attributable to periods on or
before December 31, 2018.
Requirement 1 will still be met if the
corporation ceased to qualify after the
5-year period that began on the date you
acquired the stock. However, the gain that
qualifies for the 60% exclusion can't be
more than the gain you would have had if
you had sold the stock on the date the
corporation ceased to qualify.

Stock acquired after February 17,
2009. You can exclude up to 75% of your
gain if you acquired the stock after
February 17, 2009, and before September
28, 2010.
You can exclude up to 100% of your
gain if you acquired the stock after
September 27, 2010.
More information. For more information
about empowerment zone businesses,
see section 1397C.

Pass-Through Entities

If you held an interest in a pass-through
entity (a partnership, S corporation,
common trust fund, or mutual fund or other
regulated investment company) that sold
QSB stock, to qualify for the exclusion you
must have held the interest on the date the
pass-through entity acquired the QSB
7

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business (section 1244) stock on Form
4797. However, if the total loss is more
than the maximum amount that can be
treated as an ordinary loss for the year
($50,000 or, on a joint return, $100,000),
also report the transaction on Form 8949
as follows.
1. In column (a), enter “Capital portion
of section 1244 stock loss.”
2. Complete columns (b) and (c) as
you normally would.
3. In column (d), enter the entire sales
price of the stock sold.
4. In column (e), enter the entire basis
of the stock sold.
5. Enter “S” in column (f). See the
Instructions for Form 8949, columns (f),
(g), and (h).
6. In column (g), enter the loss you
claimed on Form 4797 for this transaction.
Enter it as a positive number.
7. Complete column (h) according to
its instructions.

TREASURY/IRS AND OMB USE ONLY DRAFT
stock and at all times thereafter until the
stock was sold.

How To Report

Report the sale or exchange of the QSB
stock on Form 8949, Part II, with the
appropriate box checked, as you would if
you weren't taking the exclusion. Then
enter “Q” in column (f) and enter the
amount of the excluded gain as a negative
number in column (g). Put it in
parentheses to show it is negative. See
the Instructions for Form 8949, columns
(f), (g), and (h). Complete all remaining
columns. If you are completing line 18 of
Schedule D, enter as a positive number
the amount of your allowable exclusion on
line 2 of the 28% Rate Gain Worksheet; if
you excluded 60% of the gain, enter 2/3 of
the exclusion; if you excluded 75% of the
gain, enter 1/3 of the exclusion; if you
excluded 100% of the gain, don't enter an
amount.

If you received a Form 1099-DIV with a
gain in box 2c, part or all of that gain
(which is also included in box 2a) may be
eligible for the section 1202 exclusion.
Report the total gain (box 2a) on
Schedule D, line 13. In column (a) of Form
8949, Part II, enter the name of the
corporation whose stock was sold. In
column (f), enter “Q,” and in column (g),
enter the amount of the excluded gain as a
negative number. See the Instructions for
Form 8949, columns (f), (g), and (h). If you
are completing line 18 of Schedule D,
enter as a positive number the amount of
your allowable exclusion on line 2 of the
28% Rate Gain Worksheet; if you
excluded 60% of the gain, enter 2/3 of the
exclusion; if you excluded 75% of the gain,
enter 1/3 of the exclusion; if you excluded
100% of the gain, don't enter an amount.

Gain from Form 2439
If you received a Form 2439 with a gain in
box 1c, part or all of that gain (which is
also included in box 1a) may be eligible for
the section 1202 exclusion. Report the
total gain (box 1a) on Schedule D, line 11.
In column (a) of Form 8949, Part II, enter
the name of the corporation whose stock
was sold. In column (f), enter “Q,” and in
column (g), enter the amount of the
excluded gain as a negative number. See
the Instructions for Form 8949, columns
(f), (g), and (h). If you are completing
line 18 of Schedule D, enter as a positive
number the amount of your allowable
exclusion on line 2 of the 28% Rate Gain
Worksheet; if you excluded 60% of the
gain, enter 2/3 of the exclusion; if you
excluded 75% of the gain, enter 1/3 of the
exclusion; if you excluded 100% of the
gain, don't enter an amount.
8

If all payments aren't received in the year
of sale, a sale of QSB stock that isn't
traded on an established securities market
is generally treated as an installment sale
and is reported on Form 6252. Report the
long-term gain from Form 6252 on
Schedule D, line 11. Figure the allowable
section 1202 exclusion for the year by
multiplying the total amount of the
exclusion by a fraction, the numerator of
which is the amount of eligible gain to be
recognized for the tax year and the
denominator of which is the total amount
of eligible gain. In column (a) of Form
8949, Part II, enter the name of the
corporation whose stock was sold. In
column (f), enter “Q,” and in column (g),
enter the amount of the allowable
exclusion for the year as a negative
number. See the Instructions for Form
8949, columns (f), (g), and (h). If you are
completing line 18 of Schedule D, enter as
a positive number the amount of your
allowable exclusion for the year on line 2 of
the 28% Rate Gain Worksheet; if you
excluded 60% of the gain, enter 2/3 of the
allowable exclusion for the year; if you
excluded 75% of the gain, enter 1/3 of the
allowable exclusion for the year; if you
excluded 100% of the gain, don't enter an
amount.

Alternative Minimum Tax
If you qualify for the 50%, 60%, or 75%
exclusion, enter 7% of your allowable
exclusion for the year on line 13 of Form
6251. If you qualify for the 100%
exclusion, leave line 13 of Form 6251
blank.

Rollover of Gain From QSB
Stock

If you sold QSB stock (defined earlier) that
you held for more than 6 months, you can
elect to postpone gain if you buy other
QSB stock during the 60-day period that
began on the date of the sale. A
pass-through entity can also make the
election to postpone gain. The benefit of
the postponed gain applies to your share
of the entity's postponed gain if you held
an interest in the entity for the entire period
the entity held the QSB stock. If a
pass-through entity sold QSB stock held
for more than 6 months and you held an
interest in the entity for the entire period
the entity held the stock, you can also
elect to postpone gain if you, rather than
the pass-through entity, buy the
replacement QSB stock within the 60-day
period. If you were a partner in a
partnership that sold or bought QSB stock,
see box 11 of the Schedule K-1 (Form

1065) sent to you by the partnership; also,
see Regulations section 1.1045-1.
You must recognize gain to the extent
the sale proceeds are more than the cost
of the replacement stock. Reduce the
basis of the replacement stock by any
postponed gain.
You must make the election no later
than the due date (including extensions)
for filing your tax return for the tax year in
which the QSB stock was sold. If your
original return was filed on time, you can
make the election on an amended return
filed no later than 6 months after the due
date of your return (excluding extensions).
Enter “Filed pursuant to section
301.9100-2” at the top of the amended
return.
To make the election, report the sale in
Part I or Part II (depending on how long
you, or the pass-through entity, if
applicable, owned the stock) of Form 8949
as you would if you weren't making the
election. Then enter “R” in column (f).
Enter the amount of the postponed gain as
a negative number in column (g). Put it in
parentheses to show it is negative. See
the Instructions for Form 8949, columns
(f), (g), and (h). Complete all remaining
columns.

Exclusion of Gain From DC
Zone Assets
If you sold or exchanged a District of
Columbia Enterprise Zone (DC Zone)
asset that you acquired after 1997 and
before 2012 and held for more than 5
years, you may be able to exclude the
amount of qualified capital gain that you
would otherwise include in income. The
exclusion applies to an interest in, or
property of, certain businesses operating
in the District of Columbia.

DC Zone Asset

A DC Zone asset is any of the following.
• DC Zone business stock.
• DC Zone partnership interest.
• DC Zone business property.

Qualified Capital Gain

Qualified capital gain is any gain
recognized on the sale or exchange of a
DC Zone asset that is a capital asset or
property used in a trade or business. It
doesn't include any of the following gains.
• Gain attributable to periods after
December 31, 2016.
• Gain treated as ordinary income under
section 1245.
• Section 1250 gain figured as if section
1250 applied to all depreciation rather
than the additional depreciation.
• Gain attributable to real property, or an
intangible asset, that isn't an integral part
of a DC Zone business.

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Gain from Form 1099-DIV

Gain from an Installment Sale of
QSB Stock

TREASURY/IRS AND OMB USE ONLY DRAFT

• Gain from a related-party transaction.
See Sales and Exchanges Between
Related Persons in chapter 2 of Pub. 544.

How To Report

Report the sale or exchange of DC Zone
business stock or a DC Zone partnership
interest on Form 8949, Part II, as you
would if you weren't taking the exclusion.
Then enter “X” in column (f). Enter the
amount of the exclusion as a negative
number in column (g). Put it in
parentheses to show it is negative. See
the Instructions for Form 8949, columns
(f), (g), and (h). Complete all remaining
columns.
Report the sale or exchange of DC
Zone business property on Form 4797.
See the Form 4797 instructions for details.

If you sold or exchanged a qualified
community asset that you acquired after
2001 and before 2010 and held for more
than 5 years, you may be able to exclude
the qualified capital gain that you would
otherwise include in income. The
exclusion applies to an interest in, or
property of, certain renewal community
businesses.

Qualified Community Asset

A qualified community asset is any of the
following.
• Qualified community stock.
• Qualified community partnership
interest.
• Qualified community business property.

Qualified Capital Gain

Qualified capital gain is any gain
recognized on the sale or exchange of a
qualified community asset but doesn't
include any of the following.
• Gain attributable to periods after
December 31, 2014.
• Gain treated as ordinary income under
section 1245.
• Section 1250 gain figured as if section
1250 applied to all depreciation rather
than the additional depreciation.
• Gain attributable to real property, or an
intangible asset, that isn't an integral part
of a renewal community business.
• Gain from a related-party transaction.
See Sales and Exchanges Between
Related Persons in chapter 2 of Pub. 544.

How To Report

Report the sale or exchange of qualified
community stock or a qualified community
partnership interest on Form 8949, Part II,
with the appropriate box checked, as you
would if you weren't taking the exclusion.
Then enter “X” in column (f) and enter the
amount of the exclusion as a negative
number in column (g). Put it in

Report the sale or exchange of
qualified community business property on
Form 4797. See the Form 4797
instructions for details.

Deferral of Gain Invested
in a QOF

If you have an eligible gain, you can invest
that gain in a QOF and elect to defer part
or all of the gain that you would otherwise
include in income until you sell or
exchange the investment in the QOF or
December 31, 2026, whichever is earlier. If
you make the election, you only include
gain to the extent, if any, the amount of
realized gain is more than the aggregate
amount invested in a QOF during the
180-day period beginning on the date the
gain was realized. You may also be able to
permanently exclude the gain from the
sale or exchange of any investment in a
QOF if the investment is held for at least
10 years.
If you elect to defer tax on an
eligible gain by investing in a QOF,
CAUTION you will need to complete a Form
8997 for each year you hold the
investment and for the year you dispose of
the investment. If you have held that
investment for more than 5 years, see the
Instructions for Form 8997 for additional
information regarding the basis of that
investment.

!

QOF. A QOF is any investment vehicle
that is organized as either a corporation or
partnership for the purpose of investing in
eligible property that is located in a
qualified opportunity zone.
How to report. Report the eligible gain
as you normally would on Schedule D.
See the Form 8949 instructions for how to
report the deferral. See the Form 8997
instructions for additional reporting
instructions.

Rollover of Gain From
Stock Sold to ESOPs or
Certain Cooperatives

You can postpone all or part of any gain
from the sale of qualified securities, held
for at least 3 years, to an employee stock
ownership plan (ESOP) or eligible
worker-owned cooperative, if you buy
qualified replacement property. See Pub.
550. Also, see the Instructions for Form
8949, columns (f), (g), and (h).

Specific Instructions
Rounding Off to Whole
Dollars

You can round off cents to whole dollars
on your Schedule D. If you do round to
whole dollars, you must round all amounts.
To round, drop amounts under 50 cents
and increase amounts from 50 to 99 cents
to the next dollar. For example, $1.39
becomes $1 and $2.50 becomes $3.
If you have to add two or more amounts
to figure the amount to enter on a line,
include cents when adding the amounts
and round off only the total.

Disposal of QOF
Investment

If you disposed of any investment in a
QOF during the tax year, check the box on
page 1 of Schedule D and see the
Instructions for Form 8949 for additional
reporting requirements. You must also
complete Part III of Form 8997. See the
Instructions for Form 8997 for details.

Lines 1a and 8a—
Transactions Not Reported
on Form 8949
You can report on line 1a (for short-term
transactions) or line 8a (for long-term
transactions) the aggregate totals from
any transactions (except sales of
collectibles) for which:
• You received a Form 1099-B or Form
1099-DA (or substitute statement) that
shows basis was reported to the IRS and
doesn't show any adjustments in box 1f or
1g (Form 1099-B) or box 1h or 1i (Form
1099-DA);
• The Ordinary box in box 2 on Form
1099-B isn’t checked;
• The Ordinary box in box 6 on Form
1099-DA isn’t checked;
• The QOF box in box 3 on Form 1099-B
isn’t checked;
• The QOF box in box 3b on Form
1099-DA isn’t checked;
• You aren’t electing to defer income due
to an investment in a QOF and aren’t
terminating deferral from an investment in
a QOF; and
• You don't need to make any
adjustments to the basis or type of gain or
loss reported on Form 1099-B or Form
1099-DA (or substitute statement), or to
your gain or loss.
See How To Complete Form 8949,
Columns (f) and (g) in the Form 8949
instructions for details about possible
adjustments to your gain or loss.

If you choose to report these
transactions on lines 1a and 8a, don't
report them on Form 8949. You don't need
to attach a statement to explain the entries
9

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Exclusion of Gain From
Qualified Community
Assets

parentheses to show it is negative. See
the Instructions for Form 8949, columns
(f), (g), and (h). Complete all remaining
columns.

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Capital Loss Carryover Worksheet—Lines 6 and 14

Keep for Your Records

Use this worksheet to figure your capital loss carryovers from 2024 to 2025 if your 2024 Schedule D, line 21, is a loss and (a) that loss is a
smaller loss than the loss on your 2024 Schedule D, line 16; or (b) if the amount on your 2024 Form 1040, 1040-SR or 1040-NR, line 15
would be less than zero if you could enter a negative amount on that line. Otherwise, you don't have any carryovers.
If you and your spouse once filed a joint return and are filing separate returns for 2025, any capital loss carryover from the joint return can be
deducted only on the return of the spouse who actually had the loss.
If you excluded canceled debt from income in 2025, see Pub. 4681.
1. Enter the amount from your 2024 Form 1040, 1040-SR, or 1040-NR, line 15. If the amount would
have been a loss if you could enter a negative number on that line, enclose the amount in
parentheses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Enter the loss from your 2024 Schedule D, line 21, as a positive amount . . . . . . . . . . . . . . . . . . . . .

1.

3. Combine lines 1 and 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

2.

4.
If line 7 of your 2024 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go
to line 9.
5. Enter the loss from your 2024 Schedule D, line 7, as a positive amount . . . . . . . . . . . . . . . . . . . . . .

5.

6. Enter any gain from your 2024 Schedule D, line 15. If a loss,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
7. Add lines 4 and 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

8. Short-term capital loss carryover for 2025. Subtract line 7 from line 5. If zero or less, enter -0-. If
more than zero, also enter this amount on Schedule D, line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If line 15 of your 2024 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13.
9. Enter the loss from your 2024 Schedule D, line 15, as a positive amount . . . . . . . . . . . . . . . . . . . . .
10. Enter any gain from your 2024 Schedule D, line 7. If a loss,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . .

8.
9.

10.

11.
12. Add lines 10 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12.

13. Long-term capital loss carryover for 2025. Subtract line 12 from line 9. If zero or less, enter -0-. If
more than zero, also enter this amount on Schedule D, line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13.

on lines 1a and 8a and, if you e-file your
return, you don't need to file Form 8453.

$2,000 in column (e); and $4,000 ($6,000
− $2,000) in column (h).

Figure gain or loss on each line.
Subtract the cost or other basis in column
(e) from the proceeds (sales price) in
column (d). Enter the gain or loss in
column (h). Enter negative amounts in
parentheses.

If you had a second transaction that
was the same except that the proceeds
were $5,000 and the basis was $3,000,
combine the two transactions. Enter
$11,000 ($6,000 + $5,000) on
Schedule D, line 8a, column (d); $5,000
($2,000 + $3,000) in column (e); and
$6,000 ($11,000 − $5,000) in column (h).

Example 1—Basis Reported to
the IRS

You received a Form 1099-B or Form
1099-DA reporting the sale of stock you
held for 3 years. It shows proceeds (in
box 1d on Form 1099-B or box 1f on Form
1099-DA) of $6,000 and cost or other
basis (in box 1e on Form 1099-B or box 1g
on Form 1099-DA) of $2,000. Box 12 on
Form 1099-B or box 2 on Form 1099-DA is
checked, meaning that basis was reported
to the IRS. You don't need to make any
adjustments to the amounts reported on
either Form 1099-B or Form 1099-DA or
enter any codes. This was your only 2025
transaction. Instead of reporting this
transaction on Form 8949, you can enter
$6,000 on Schedule D, line 8a, column (d);
10

Example 2—Basis Not
Reported to the IRS

You received a Form 1099-B or Form
1099-DA. It shows proceeds (in box 1d on
Form 1099-B or box 1f on Form 1099-DA)
of $6,000 and cost or other basis (in
box 1e on Form 1099-B or box 1g on Form
1099-DA) of $2,000. Box 12 on Form
1099-B or box 2 on Form 1099-DA isn't
checked, meaning that basis wasn't
reported to the IRS. Don't report this
transaction on line 1a or line 8a. Instead,
report the transaction on Form 8949.
Complete all necessary pages of Form
8949 before completing line 1b, 2, 3, 8b, 9,
or 10 of Schedule D.

Example 3—Adjustment

You received a Form 1099-B or Form
1099-DA. It shows proceeds (in box 1d on
Form 1099-B or box 1f on Form 1099-DA)
of $6,000 and cost or other basis (in
box 1e on Form 1099-B or box 1g on Form
1099-DA) of $2,000. Box 12 on Form
1099-B or box 2 on Form 1099-DA is
checked, meaning that basis was reported
to the IRS. However, the basis shown (in
box 1e on Form 1099-B or box 1g on Form
1099-DA) is incorrect. Don't report this
transaction on line 1a or line 8a. Instead,
report the transaction on Form 8949. See
the Instructions for Form 8949, columns
(f), (g), and (h). Complete all necessary
pages of Form 8949 before completing
line 1b, 2, 3, 8b, 9, or 10 of Schedule D.

Lines 1b, 2, 3, 8b, 9, and
10, Column
(h)—Transactions
Reported on Form 8949

Figure gain or loss on each line. First,
subtract the cost or other basis in column
(e) from the proceeds (sales price) in

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4. Enter the smaller of line 2 or line 3 . . . . . . . . . . . . . . . . . . . .

TREASURY/IRS AND OMB USE ONLY DRAFT
column (d). Then combine the result with
any adjustments in column (g). Enter the
gain or loss in column (h). Enter negative
amounts in parentheses.
Example 1—gain. Column (d) is
$6,000 and column (e) is $2,000. Enter
$4,000 in column (h).
Example 2—loss. Column (d) is
$6,000 and column (e) is $8,000. Enter
($2,000) in column (h).
Example 3—adjustment. Column (d)
is $6,000, column (e) is $2,000, and
column (g) is ($1,000). Enter $3,000
($6,000 − $2,000 − $1,000) in column (h).

Line 13

See Capital Gain Distributions, earlier.

Collectibles include works of art, rugs,
antiques, metals (such as gold, silver, and
platinum bullion), gems, stamps, coins,
alcoholic beverages, and certain other
tangible property.

Line 19

If you checked “Yes” on line 17, complete
the Unrecaptured Section 1250 Gain
Worksheet in these instructions if any of
the following apply for 2025.
• You sold or otherwise disposed of
section 1250 property (generally, real
property that you depreciated) held more
than 1 year.
• You received installment payments for
section 1250 property held more than 1
year for which you are reporting gain on
the installment method.
• You received a Schedule K-1 from an
estate or trust, a partnership, or an S
corporation that shows “unrecaptured
section 1250 gain.”
• You received a Form 1099-DIV or Form
2439 from a real estate investment trust or
regulated investment company (including
a mutual fund) that reports “unrecaptured
section 1250 gain.”
• You reported a long-term capital gain
from the sale or exchange of an interest in
a partnership that owned section 1250
property.

28% Rate Gain Worksheet—Line 18

Instructions for the
Unrecaptured Section 1250
Gain Worksheet
Lines 1 through 3. If you had more than
one property described on line 1,
complete lines 1 through 3 for each
property on a separate worksheet. Enter
the total of the line 3 amounts for all
properties on line 3 and go to line 4.
Line 4. To figure the amount to enter on
line 4, follow the steps below for each
installment sale of trade or business
property held more than 1 year.
Step 1. Figure the smaller of (a) the
depreciation allowed or allowable, or (b)
the total gain for the sale. This is the
smaller of line 22 or line 24 of your 2025
Form 4797 (or the comparable lines of
Form 4797 for the year of sale) for the
property.
Step 2. Reduce the amount figured in
Step 1 by any section 1250 ordinary
income recapture for the sale. This is the
amount from line 26g of your 2025 Form
4797 (or the comparable line of Form 4797
for the year of sale) for the property. The
result is your total unrecaptured section
1250 gain that must be allocated to the
installment payments received from the
sale.
Step 3. Generally, the entire amount of
gain from the sale of trade or business
property included in each installment
payment is treated as unrecaptured
section 1250 gain until the total
unrecaptured section 1250 gain figured in
Step 2 has been used in full. Figure the
amount of gain treated as unrecaptured
section 1250 gain for installment

Keep for Your Records

1. Enter the total of all collectibles gain or (loss) from items you reported on Form 8949, Part II . . . . . . . . . . . . . . . . . . .

1.

2. Enter as a positive number the total of:
• Any section 1202 exclusion you reported in column (g) of Form 8949, Part II,
with code “Q” in column (f), that is 50% of the gain;
• 2/3 of any section 1202 exclusion you reported in column (g) of Form 8949, Part
II, with code “Q” in column (f), that is 60% of the gain; and
• 1/3 of any section 1202 exclusion you reported in column (g) of Form 8949, Part
II, with code “Q” in column (f), that is 75% of the gain.
Don’t make an entry for any section 1202 exclusion that is 100% of the gain.

......................

2.

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.

....................

4.

5. Enter your long-term capital loss carryovers from Schedule D, line 14; and Schedule K-1 (Form 1041),
box 11, code D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. (

)

6. If Schedule D, line 7, is a (loss), enter that (loss) here. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. (

)

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.

11

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Line 18

If you checked “Yes” on line 17, complete
the 28% Rate Gain Worksheet in these
instructions if either of the following
applies for 2025.
• You reported in Part II of Form 8949 a
section 1202 exclusion from the eligible
gain on QSB stock (see Exclusion of Gain
on Qualified Small Business (QSB) Stock,
earlier).
• You reported in Part II of Form 8949 a
collectibles gain or (loss). A collectibles
gain or (loss) is any long-term gain or
deductible long-term loss from the sale or
exchange of a collectible that is a capital
asset.

Include on the worksheet any gain (but
not loss) from the sale or exchange of an
interest in a partnership, S corporation, or
trust held for more than 1 year and
attributable to unrealized appreciation of
collectibles. For details, see Regulations
section 1.1(h)-1. Also, attach the
statement required under Regulations
section 1.1(h)-1(e).

TREASURY/IRS AND OMB USE ONLY DRAFT
all gain reported in prior years (excluding
section 1250 ordinary income recapture).
However, if you chose not to treat all of the
gain from payments received after May 6,
1997, and before August 24, 1999, as
unrecaptured section 1250 gain, use only
the amount you chose to treat as

unrecaptured section 1250 gain for those
payments to reduce the total unrecaptured
section 1250 gain remaining to be
reported for the sale. Include this amount
on line 4.

DRAFT

DRAFT

payments received in 2025 as the smaller
of (a) the amount from line 26 or line 37 of
your 2025 Form 6252, whichever applies;
or (b) the amount of unrecaptured section
1250 gain remaining to be reported. This
amount is generally the total unrecaptured
section 1250 gain for the sale reduced by

12

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Unrecaptured Section 1250 Gain Worksheet—Line 19

Keep for Your Records

1. If you have a section 1250 property in Part III of Form 4797 for which you made an entry in Part I of Form
4797 (but not on Form 6252), enter the smaller of line 22 or line 24 of Form 4797 for that property. If you
didn't have any such property, go to line 4. If you had more than one such property, see instructions . . . . . . .
2. Enter the amount from Form 4797, line 26g, for the property for which you made an entry on line 1 . . . . . . . .
3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Enter the total unrecaptured section 1250 gain included on line 26 or line 37 of Form(s) 6252 from
installment sales of trade or business property held more than 1 year. See instructions . . . . . . . . . . . . . . . . .
5. Enter the total of any amounts reported to you on a Schedule K-1 from a partnership or an S corporation as
“unrecaptured section 1250 gain” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Enter the smaller of line 6 or the gain from Form 4797, line 7 . . . . . . . . . . . . . . . . . . 7.
8. Enter the amount, if any, from Form 4797, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Enter the amount of any gain from the sale or exchange of an interest in a partnership attributable to
unrecaptured section 1250 gain. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Enter the total of any amounts reported to you as “unrecaptured section 1250 gain” on a Schedule K-1, Form
1099-DIV, or Form 2439 from an estate, a trust, a real estate investment trust, or a mutual fund (or other
regulated investment company) or in connection with a Form 1099-R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Enter the total of any unrecaptured section 1250 gain from sales (including installment sales) or other
dispositions of section 1250 property held more than 1 year for which you didn't make an entry in Part I of
Form 4797 for the year of sale. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Add lines 9 through 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. If you had any section 1202 gain or collectibles gain or (loss), enter the total of lines
1 through 4 of the 28% Rate Gain Worksheet. Otherwise, enter -0- . . . . . . . . . . . . 14.
15. Enter the (loss), if any, from Schedule D, line 7. If Schedule D, line 7, is zero or a
)
gain, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. (
16. Enter your long-term capital loss carryovers from Schedule D, line 14; and
)
Schedule K-1 (Form 1041), box 11, code D* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. (
17. Combine lines 14 through 16. If the result is a (loss), enter it as a positive amount. If the result is zero or a
gain, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18. Unrecaptured section 1250 gain. Subtract line 17 from line 13. If zero or less, enter -0-. If more than zero,
enter the result here and on Schedule D, line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.
2.
3.
4.
5.
6.

9.
10.
11.
12.
13.

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If you aren't reporting a gain on Form 4797, line 7, skip lines 1 through 9 and go to line 10.

17.
18.

* If you are filing Form 2555 (relating to foreign earned income), see the footnote in the Foreign Earned
Income Tax Worksheet in the Instructions for Form 1040 before completing this line.

Line 10. Include on line 10 your share of
the partnership's unrecaptured section
1250 gain that would result if the
partnership had transferred all of its
section 1250 property in a fully taxable
transaction immediately before you sold or
exchanged your interest in that
partnership. If you recognized less than all
of the realized gain, the partnership will be
treated as having transferred only a
proportionate amount of each section
1250 property. For details, see
Regulations section 1.1(h)-1. Also, attach
the statement required under Regulations
section 1.1(h)-1(e).
Line 12. An example of an amount to
include on line 12 is unrecaptured section
1250 gain from the sale of a vacation
home you previously used as a rental
property but converted to personal use
prior to the sale. To figure the amount to
enter on line 12, follow the applicable
instructions below.
Installment sales. To figure the
amount to include on line 12, follow the
steps below for each installment sale of
property held more than 1 year for which

you didn't make an entry in Part I of your
Form 4797 for the year of sale.
• Step 1. Figure the smaller of (a) the
depreciation allowed or allowable, or (b)
the total gain for the sale. This is the
smaller of line 22 or line 24 of your 2025
Form 4797 (or the comparable lines of
Form 4797 for the year of sale) for the
property.
• Step 2. Reduce the amount figured in
Step 1 by any section 1250 ordinary
income recapture for the sale. This is the
amount from line 26g of your 2025 Form
4797 (or the comparable line of Form 4797
for the year of sale) for the property. The
result is your total unrecaptured section
1250 gain that must be allocated to the
installment payments received from the
sale.
• Step 3. Generally, the amount of capital
gain on each installment payment is
treated as unrecaptured section 1250 gain
until the total unrecaptured section 1250
gain figured in Step 2 has been used in
full. Figure the amount of gain treated as
unrecaptured section 1250 gain for
installment payments received in 2025 as
the smaller of (a) the amount from line 26
or line 37 of your 2025 Form 6252,
whichever applies; or (b) the amount of

unrecaptured section 1250 gain remaining
to be reported. This amount is generally
the total unrecaptured section 1250 gain
for the sale reduced by all gain reported in
prior years (excluding section 1250
ordinary income recapture). However, if
you chose not to treat all of the gain from
payments received after May 6, 1997, and
before August 24, 1999, as unrecaptured
section 1250 gain, use only the amount
you chose to treat as unrecaptured section
1250 gain for those payments to reduce
the total unrecaptured section 1250 gain
remaining to be reported for the sale.
Include this amount on line 12.
Other sales or dispositions of section
1250 property. For each sale of property
held more than 1 year (for which you didn't
make an entry in Part I of Form 4797),
figure the smaller of (a) the depreciation
allowed or allowable, or (b) the total gain
for the sale. This is the smaller of line 22 or
line 24 of Form 4797 for the property. Next,
reduce that amount by any section 1250
ordinary income recapture for the sale.
This is the amount from line 26g of Form
4797 for the property. The result is the total
unrecaptured section 1250 gain for the
sale. Include this amount on line 12.
13

Line 21

TREASURY/IRS AND OMB USE ONLY DRAFT
if you could enter a negative amount on
that line.
To figure any capital loss carryover to
2026, you will use the Capital Loss
Carryover Worksheet in the 2026
Instructions for Schedule D. If you want to
figure your carryover to 2026 now, see
Pub. 550.

You will need a copy of your 2025

TIP Form 1040 or 1040-SR and

Schedule D to figure your capital
loss carryover to 2026.

DRAFT

DRAFT

You have a capital loss carryover from
2025 to 2026 if you have a loss on line 16
and either:
• That loss is more than the loss on
line 21; or
• The amount on Form 1040, 1040-SR, or
1040-NR, line 15, would be less than zero

14

TREASURY/IRS AND OMB USE ONLY DRAFT
Schedule D Tax Worksheet

Keep for Your Records

Complete this worksheet only if line 18 or line 19 of Schedule D is more than zero and lines 15 and 16 of
Schedule D are gains or if you file Form 4952 and you have an amount on line 4g, even if you don’t need to file
Schedule D. Otherwise, complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for
Form 1040, line 16, (or in the instructions for Form 1040-NR, line 16) to figure your tax. Before completing this
worksheet, complete Form 1040, 1040-SR, or 1040-NR through line 15.
Exception: Don’t 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, 1040-SR, or 1040-NR,
line 3a; or
• Form 1040, 1040-SR, or 1040-NR, line 15, is zero or less.
Instead, see the instructions for Form 1040, line 16 (or Form 1040-NR, line 16).
1.
2.
3.

4.

6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

16.
17.
18.
19.

20.
21.
22.
23.
24.
25.
26.

27.
28.
29.
30.

DRAFT

DRAFT

5.

Enter your taxable income from Form 1040, 1040-SR, or 1040-NR, line 15. (However, if you are filing
Form 2555 (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 16.) . . . . . . . . . . . . . . . . . . . . . . . 1.
Enter your qualified dividends from Form 1040,
1040-SR, or 1040-NR, line 3a . . . . . . . . . . . . . . . 2.
Enter the amount from Form 4952
(used to figure investment interest
expense deduction),
line 4g . . . . . . . . . . . . . . . . . . . . . . . 3.
Enter the amount from Form 4952,
line 4e* . . . . . . . . . . . . . . . . . . . . . . 4.
Subtract line 4 from line 3. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
Subtract line 5 from line 2. If zero or less, enter -0-** . . . . . . . . . . . . . 6.
Enter the smaller of line 15 or line 16
of Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Enter the smaller of line 3 or line 4 . . . . . . . . . . . 8.
Subtract line 8 from line 7. If zero or less, enter -0-** . . . . . . . . . . . . . 9.
Add lines 6 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
Add lines 18 and 19 of Schedule D** . . . . . . . . . . . . . . . . . . . . . . . . . 11.
Enter the smaller of line 9 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
Subtract line 12 from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
Subtract line 13 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
Enter:
• $48,350 if single or married filing
separately;
• $96,700 if married filing jointly or
  . . . . . . . . . . . . . . 15.
qualifying surviving spouse; or
• $64,750 if head of household.
Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
Enter the smaller of line 14 or line 16 . . . . . . . . . . . . . . . . . . . . . . . . 17.
Subtract line 10 from line 1. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
Enter the smaller of line 1 or:
• $197,300 if single or married filing
separately;
. . . . .19.
• $394,600 if married filing jointly or
qualifying surviving spouse; or
• $197,300 if head of household.
Enter the smaller of line 14 or line 19 . . . . . . . . 20.
Enter the larger of line 18 or line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
Subtract line 17 from line 16. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . 22.
If lines 1 and 16 are the same, skip lines 23 through 43 and go to line 44. Otherwise, go to line 23.
Enter the smaller of line 1 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
Enter the amount from line 22. (If line 22 is blank, enter -0-.) . . . . . . 24.
Subtract line 24 from line 23. If zero or less, enter -0- . . . . . . . . . . . . 25.
Enter:
• $533,400 if single;
• $300,000 if married filing separately;
• $600,050 if married filing jointly or
. . . . . . . . . . . . . . 26.
qualifying surviving spouse; or
• $566,700 if head of household.
Enter the smaller of line 1 or line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
Add lines 21 and 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.
Subtract line 28 from line 27. If zero or less, enter -0- . . . . . . . . . . . . 29.
Enter the smaller of line 25 or line 29 . . . . . . . . . . . . . . . . . . . . . . . .
30.

15

TREASURY/IRS AND OMB USE ONLY DRAFT
Keep for Your Records

Schedule D Tax Worksheet—Continued
31.
32.

Add lines 24 and 30 . . . . . . .

33.

If lines 1 and 32 are the same, skip lines 33 through 43 and go to line 44. Otherwise, go to line 33.
Subtract line 32 from line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.

34.
35.
36.
37.
38.
39.
40.
41.
42.
43.

45.
46.
47.

32.

Multiply line 33 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.
If Schedule D, line 19, is zero or blank, skip lines 35 through 40 and go to line 41. Otherwise, go to line 35.
Enter the smaller of line 9 above or Schedule D, line 19 . . . . . . . 35.
Add lines 10 and 21 . . . . . . . . . . . . . . . . . . . . . . 36.
Enter the amount from line 1 above . . . . . . . . . 37.
Subtract line 37 from line 36. If zero or less, enter -0- . . . . . . . . . . 38.
Subtract line 38 from line 35. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . 39.
Multiply line 39 by 25% (0.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.
If Schedule D, line 18, is zero or blank, skip lines 41 through 43 and go to line 44. Otherwise, go to line 41.
Add lines 21, 22, 30, 33, and 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.
Subtract line 41 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.
Multiply line 42 by 28% (0.28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.
Figure the tax on the amount on line 21. If the amount on line 21 is less than $100,000, use the Tax
Table to figure the tax. If the amount on line 21 is $100,000 or more, use the Tax Computation
Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.
Add lines 31, 34, 40, 43, and 44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.
Tax on all taxable income (including capital gains and qualified dividends). Enter the smaller
of line 45 or line 46. Also, include this amount on Form 1040, 1040-SR, or 1040-NR, line 16. (If you
are filing Form 2555, don't enter this amount on Form 1040 or 1040-SR, line 16. Instead, enter it on
line 4 of the Foreign Earned Income Tax Worksheet in the Instructions for Form 1040.) . . . . . . . . . . . 47.
* 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, see the footnote in the Foreign Earned Income Tax Worksheet in the
Instructions for Form 1040, line 16, before completing this line.

16

DRAFT

44.

DRAFT

Multiply line 30 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 .