Enter capital gains and losses (Schedule D)
1. Determine whether your gains and losses are long- or short-term or an unrecaptured depreciation gain, or if you're subject to the alternative minimum tax.
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- Long-/Short-Term Gain or Loss: To calculate a short- or long-term gain or loss or an unrecaptured depreciation gain, determine your holding period. If you hold the capital asset 12 months or less, your gain or loss is short-term and taxed at your regular tax rate. If you hold the capital asset 12 months and one day or more, your gain or loss is long-term and taxed at 15 percent or 5 percent (depending on your tax bracket). Note that securities bought on the last day of the month must be held until the first day of the thirteenth month to receive long-term treatment. For more information about long-term and short-term capital gains, refer to IRS publication 544, Sales and Other Dispositions of Assets.
- Unrecaptured depreciation gain: An unrecaptured depreciation gain (there are no losses) is attributable to prior depreciation of real property. Capital gains on certain Section 1250 property are subject to a maximum capital gains tax rate of 25 percent on the amount attributable to the total depreciation taken on the asset before the sale, but not recaptured as ordinary income according to Section 1250 rules. This gain is called unrecaptured Section 1250 gain and exists only if Section 1250 property was sold at a gain and qualifies as long-term subject to the 20 percent rate. Section 1250 property most commonly is real property such as rental houses and commercial buildings. For more information see IRS publication 544, Sales and Other Dispositions of Assets.
- Alternative Tax (if different): If the gain or loss for any asset disposition on Schedule D is different for the alternative minimum tax (AMT) than for the regular tax, recalculate the amounts from Schedule D for the alternative minimum tax and enter them in the Alternative Tax (if different) column. Consult your IRS publications or consult your tax professional for more information.
2. In the Short-Term Gains and Losses field, enter the net value you get when you subtract your short-term losses from your short-term gains.
3. In the Unrecaptured Dep. Gains field, enter the net amount of the gain attributable to the sale of depreciable Section 1250 property that is currently taxed at a maximum rate of 25 percent.
4. In the Long-Term 28 % Gains and Losses field, enter the net value you get when you subtract your long-term 28 percent rate losses from your long-term 28 percent rate gains.
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The only amounts subject to the 28 percent capital gain rate are the gain or loss from the sale of collectibles and Section 1202 property.
5. In the Long-Term Gains and Losses field, enter the net value you get when you subtract your long-term losses from your long-term gains.
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Assets held for more than 12 months are currently taxed at the 15 percent or 5 percent rate.
6. In the Loss Carryovers from Prior Year area, in the Short Term and Long Term fields, enter any loss you have from prior years that you'd like to carry over to offset your capital gains. Be sure to enter each amount as a positive number in the appropriate field—for example, enter short-term loss in the Short-Term field, and so on. (The previous year's TurboTax data file can also provide this information.)
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Remember that you can deduct only up to $3000.00 of any losses from previous years from your current-year gain. In addition, losses from selling short-term holdings will first offset current short-term gains, losses from selling long-term holdings will first offset current long-term gain, and so on, and the entire gain of a particular type must be offset before any remaining loss is applied to another type of gain. For example, say you have $2500.00 in short-term losses from a previous year to apply to current gains. You want to apply these losses to $2000.00 in short-term gains and $1000.00 in long-term gains. You must offset the $2000.00 of short-term gain with your short-term losses first, leaving $500.00 remaining to offset half the amount of your $1000.00 in long-term gain and leaving you with a remaining $500.00 in long-term gain.
- Before relying on tax planning data from the Quicken Tax Planner, especially if you have sales of investments, we advise you consult your tax professional to accurately calculate the impact tax laws may have on your personal tax situation.
- You enter information for your Form 1040 Schedule D - Capital Gains and Losses on this page. You should use Schedule D:
- To report capital gains and losses from sales, exchanges, and other dispositions of investment property such as stocks, bonds, commodities, or real estate. You usually include capital gains distributions in long-term capital gains.
- If you had a taxable sale of your residence, installment sale income, or gain or loss on the sale of business property, you should consult a tax professional to determine your Schedule D amount.