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What is Schedule D?

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  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 14 September 2016
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Schedule D is a tax form issued by the United States Internal Revenue Service (IRS). Taxpayers in the United States are required to complete and submit this form when they have made a profit or suffered a loss from the sale or exchange of personally held investments such as mutual funds and stocks. It may also be used to report profit and losses from the sale or exchange of other assets as well as losses because of bad debts that are not related to the taxpayer’s business. This form is usually filed to report gains and losses from the previous tax year.

If a person who is liable for federal taxes in the United States sells a stock or other type of personally held asset, he has to file a Schedule D with the IRS. Typically, a taxpayer has to file this schedule without regard to whether he made money on the deal or suffered a financial loss. The form is two pages long and includes a number of computations.

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Capital gains are typically reported using Schedule D. In order to have a capital gain, a person must sell or exchange a capital asset and earn a profit on the transaction. A capital asset is a type of property that a person owns for non-business use. Examples of capital assets include such things as homes, stocks, mutual funds, and cars. For example, if a person buys a car for personal use at a price of $10,000 US dollars (USD) and later sells it at a price of $12,000 USD, he has realized a capital gain and may have to report it on a Schedule D form.

Sometimes people experience capital losses on the sale or exchange of capital assets. These losses have to be reported using Schedule D as well. For example, a person may spend $5,000 USD on stocks and later sell them for $4,000 USD. In such a case, the person has suffered a loss. Likewise, a person suffers a loss if he exchanges property held for personal use for another asset that has less value than the asset he exchanged.

Besides the sale or exchange of assets, there are other situations that require a taxpayer to report gains or losses on Schedule D. For example, the involuntary conversion of an asset, which is the forced loss of an asset, may result in gains that must be reported on Schedule D. Likewise, bad debts that are not related to a person’s business or trade are reported on this form as well.

Filling out a Schedule D, completing the required calculations, and understanding the rules and exceptions can be complex. Some taxpayers need help or advice when it comes to completing it. A tax account may provide such help.

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