Schedule D (Form 1040)

When a taxpayer sells a capital asset, i.e., property owned and used for personal or investment purposes, the sale will result in either a capital gain or a capital loss and is generally reported on Schedule D (Form 1040). The following items are not capital assets:

Inventory for sale to customers in the ordinary course of business;
Accounts receivable or notes receivable arising in the ordinary course of business for sales of inventory or services rendered;
Depreciable property used in business
Real estate used in business
A patent, invention, model, or design; a secret formula or process; an artistic work, including a literary or musical composition; a letter or memorandum; created or owned by the taxpayer; (exception: a taxpayer can elect to treat a musical composition or copyright as a capital asset and report it on Schedule D);
A U.S. government publication received for free or less than the usual price;
A commodities derivative financial instrument held by a commodities derivatives dealer, except for instruments unconnected to the dealer’s normal activities;
A hedging transaction;
Supplies used in the ordinary course of business.

Use Schedule D (Form 1040) to report the following:

The sale or exchange of a capital asset not reported on another form or schedule.
Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit.
Capital gain distributions not reported directly on Form 1040 (or effectively connected capital gain distributions not reported directly on Form 1040-NR).
Nonbusiness bad debts.

Schedule D isn’t required when the only capital gain distribution reported is on Form 1099-DIV box 2a, and boxes 2b, 2c, and 2d are zero. In that case, the check box on Form 1040 Line 6 indicating that Schedule D isn’t required will be checked (in 2018, the check box is on Schedule 1 (Form 1040) Line 13), and Schedule D won’t print with the print sets. It will still be available for printing under View Results, if desired.

To enter a transaction on Schedule D in Keystone Tax Solutions Pro, from the Main Menu of the tax return (Form 1040) select:

Income Menu
Capital Gain/Loss (Sch D)
New
Enter a description of the property, the date the property was acquired, the date the property was sold or disposed of, the sales price, and the cost.

There are certain transactions that may require a nonstandard answer for the acquisition date, the sale date, the sales price, or the cost:

A summary entry may include numerous acquisition dates, or the property may have been inherited;
There may be no sale date as the property has become worthless, or if it’s a QOF investment the gain is being deferred, or transactions with multiple sale dates are grouped together;
There may be no selling price due to the property being considered worthless;
The property may be a call option that has expired;

If any of the above apply for a particular entry field, with the field selected press the F8 key on your keyboard (or click the drop down menu to the right of the field) and select the appropriate option. Note: the IRS does not allow a return to be e-filed if the sales date for any transaction is indicated as “VARIOUS”.

Wash sales require special treatment. See here for more information about entering a wash sale in Keystone Tax Solutions Pro.

To edit a Schedule D transaction, from the Main Menu of the tax return (Form 1040) select:

Income Menu
Capital Gain/Loss (Sch D)
Select the entry, then Edit (or double-click the entry)

To delete a Schedule D transaction, from the Main Menu of the tax return (Form 1040) select:

Income Menu
Capital Gain/Loss (Sch D)
Select the entry, then Edit (or press the Delete key on the keyboard)

If you have a “net capital gain”, the amount by which your net long–term capital gain for the year is more than your net short–term capital loss, that gain may be taxed at a lower rate than the ordinary income tax rates.

If your capital losses exceed your capital gains, the amount of the excess loss that can be claimed is the lesser of $3,000 ($1,500 if you are married filing separately) or your total net loss as shown on Form 1040, Schedule D. If your net capital loss is more than this limit, you can carry the loss forward to later years.

Because of the difference in the taxability of capital gains and losses in certain situations, the tax on a return that includes these items cannot be determined simply by looking at the tax tables. To see the impact of capital gains and losses on the tax calculation in a return, from the Main Menu of the tax return (Form 1040) select: