Instructions for IRS Form 1065 Schedule D "Capital Gains and Losses"

This document contains official instructions for IRS Form 1065 Schedule D, Capital Gains and Losses - a tax form released and collected by the Internal Revenue Service (IRS), a subdivision of the U.S. Department of the Treasury. An up-to-date fillable IRS Form 1065 Schedule D is available for download through this link.

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2020
Department of the Treasury
Internal Revenue Service
Instructions for Schedule D
(Form 1065)
Capital Gains and Losses
Use Form 4797, Sales of Business
received it in a similar way, if the
Section references are to the Internal Revenue
Code unless otherwise noted.
Property, to report the following.
partnership's basis is determined by
Sales or exchanges of property used in
reference to the previous owner.
Future Developments
a trade or business.
Certain commodities derivative financial
Sales or exchanges of depreciable or
instruments held by a dealer. See section
For the latest information about
amortizable property.
1221(a)(6).
developments related to Schedule D
Sales or other dispositions of securities
Certain hedging transactions entered
(Form 1065) and its instructions, such as
or commodities held in connection with a
into in the normal course of the trade or
legislation enacted after they were
trading business, if the partnership made a
business. See section 1221(a)(7).
published, go to IRS.gov/Form1065.
mark-to-market election (see
Supplies regularly used in the trade or
Mark-to-market accounting method in the
business.
General Instructions
Instructions for Form 1065).
Short- or Long-Term Gain
Involuntary conversions (other than
from casualties or thefts).
Purpose of Schedule
or Loss
The disposition of noncapital assets
Use Schedule D (Form 1065) to report the
Report short-term gains or losses in Part I.
(other than inventory or property held
Report long-term gains or losses in Part II.
following.
primarily for sale to customers in the
The total capital gains and losses from
The holding period for short-term capital
ordinary course of a trade or business).
transactions reported on Form 8949,
gains and losses is generally 1 year or
Election to defer a qualified section
Sales and Other Dispositions of Capital
less. The holding period for long-term
1231 gain invested in a qualified
Assets.
capital gains and losses is generally more
opportunity fund (QOF).
Certain transactions the partnership
than 1 year. However, an exception
Use Form 6781, Gains and Losses
applies for certain sales of applicable
doesn't have to report on Form 8949.
From Section 1256 Contracts and
partnership interests. See
Transactions
Capital gains from installment sales
Straddles, to report gains and losses from
from Form 6252, Installment Sale Income.
with respect to applicable partnership
section 1256 contracts and straddles. If
Capital gains and losses from like-kind
interests
under Items for Special
there are limited partners, see section
exchanges from Form 8824, Like-Kind
Treatment below.
1256(e)(4) for the limitation on losses from
Exchanges (and section 1043
hedging transactions.
For more information about holding
conflict-of-interest sales).
periods, see the Instructions for Form
Partnership's share of net capital gains
What Are Capital Assets?
8949.
and losses, including specially allocated
Each item of property the partnership held
capital gains and losses, from
Items for Special
(whether or not connected with its trade or
partnerships, estates, and trusts.
Treatment
business) is a capital asset except the
Capital gain distributions.
following.
Transactions with respect to applicable
Note. For more information, see Pub.
Stock in trade or other property
partnership interests. The long-term
544, Sales and Other Dispositions of
included in inventory or held mainly for
holding period for gains and losses with
Assets, and the Instructions for Form
sale to customers.
respect to applicable partnership interests
8949.
Accounts or notes receivable acquired
is more than 3 years. If the holding period
in the ordinary course of the trade or
is 3 years or less, gains and losses with
Other Forms the
business for services rendered or from the
respect to applicable partnership interests
sale of stock in trade or other property
Partnership May Have To
are treated as short term. An applicable
held mainly for sale to customers.
File
partnership interest is any interest in a
Depreciable or real property used in the
partnership that, directly or indirectly, is
trade or business, even if it is fully
Use Form 8949 to report the sale or
transferred to (or is held by) the taxpayer
depreciated.
exchange of a
capital asset
(defined later)
in connection with the performance of
Certain copyrights; literary, musical, or
not reported on another form or schedule
substantial services by the taxpayer, or
artistic compositions; letters or
and to report the income deferral or
any other related person, in any applicable
memoranda; or similar property. See
exclusion of capital gains. See the
trade or business. See section 1061 and
section 1221(a)(3).
Instructions for Form 8949. Complete all
Pub. 541 for details.
Certain patents, inventions, models, or
necessary pages of Form 8949 before you
Transactions by a securities dealer.
designs (whether or not patented); secret
complete line 1b, 2, 3, 8b, 9, or 10 of
See sections 475 and 1236, and Rev. Rul.
formulas or processes; or similar property.
Schedule D. See
Lines 1a and
8a, later,
97-39, 1997-39 I.R.B. 4.
U.S. Government publications,
for more information about when to use
Bonds and other debt instruments. See
including the Congressional Record, that
Form 8949.
Pub. 550, Investment Income and
the partnership received from the
Expenses.
Use Form 4684, Casualties and Thefts,
government, other than by purchase at the
Gain on disposition of market discount
to report involuntary conversions of
normal sales price, or that the partnership
bonds. In general, a capital gain upon the
property due to casualty or theft.
got from another taxpayer who had
Sep 29, 2020
Cat. No. 51610S
2020
Department of the Treasury
Internal Revenue Service
Instructions for Schedule D
(Form 1065)
Capital Gains and Losses
Use Form 4797, Sales of Business
received it in a similar way, if the
Section references are to the Internal Revenue
Code unless otherwise noted.
Property, to report the following.
partnership's basis is determined by
Sales or exchanges of property used in
reference to the previous owner.
Future Developments
a trade or business.
Certain commodities derivative financial
Sales or exchanges of depreciable or
instruments held by a dealer. See section
For the latest information about
amortizable property.
1221(a)(6).
developments related to Schedule D
Sales or other dispositions of securities
Certain hedging transactions entered
(Form 1065) and its instructions, such as
or commodities held in connection with a
into in the normal course of the trade or
legislation enacted after they were
trading business, if the partnership made a
business. See section 1221(a)(7).
published, go to IRS.gov/Form1065.
mark-to-market election (see
Supplies regularly used in the trade or
Mark-to-market accounting method in the
business.
General Instructions
Instructions for Form 1065).
Short- or Long-Term Gain
Involuntary conversions (other than
from casualties or thefts).
Purpose of Schedule
or Loss
The disposition of noncapital assets
Use Schedule D (Form 1065) to report the
Report short-term gains or losses in Part I.
(other than inventory or property held
Report long-term gains or losses in Part II.
following.
primarily for sale to customers in the
The total capital gains and losses from
The holding period for short-term capital
ordinary course of a trade or business).
transactions reported on Form 8949,
gains and losses is generally 1 year or
Election to defer a qualified section
Sales and Other Dispositions of Capital
less. The holding period for long-term
1231 gain invested in a qualified
Assets.
capital gains and losses is generally more
opportunity fund (QOF).
Certain transactions the partnership
than 1 year. However, an exception
Use Form 6781, Gains and Losses
applies for certain sales of applicable
doesn't have to report on Form 8949.
From Section 1256 Contracts and
partnership interests. See
Transactions
Capital gains from installment sales
Straddles, to report gains and losses from
from Form 6252, Installment Sale Income.
with respect to applicable partnership
section 1256 contracts and straddles. If
Capital gains and losses from like-kind
interests
under Items for Special
there are limited partners, see section
exchanges from Form 8824, Like-Kind
Treatment below.
1256(e)(4) for the limitation on losses from
Exchanges (and section 1043
hedging transactions.
For more information about holding
conflict-of-interest sales).
periods, see the Instructions for Form
Partnership's share of net capital gains
What Are Capital Assets?
8949.
and losses, including specially allocated
Each item of property the partnership held
capital gains and losses, from
Items for Special
(whether or not connected with its trade or
partnerships, estates, and trusts.
Treatment
business) is a capital asset except the
Capital gain distributions.
following.
Transactions with respect to applicable
Note. For more information, see Pub.
Stock in trade or other property
partnership interests. The long-term
544, Sales and Other Dispositions of
included in inventory or held mainly for
holding period for gains and losses with
Assets, and the Instructions for Form
sale to customers.
respect to applicable partnership interests
8949.
Accounts or notes receivable acquired
is more than 3 years. If the holding period
in the ordinary course of the trade or
is 3 years or less, gains and losses with
Other Forms the
business for services rendered or from the
respect to applicable partnership interests
sale of stock in trade or other property
Partnership May Have To
are treated as short term. An applicable
held mainly for sale to customers.
File
partnership interest is any interest in a
Depreciable or real property used in the
partnership that, directly or indirectly, is
trade or business, even if it is fully
Use Form 8949 to report the sale or
transferred to (or is held by) the taxpayer
depreciated.
exchange of a
capital asset
(defined later)
in connection with the performance of
Certain copyrights; literary, musical, or
not reported on another form or schedule
substantial services by the taxpayer, or
artistic compositions; letters or
and to report the income deferral or
any other related person, in any applicable
memoranda; or similar property. See
exclusion of capital gains. See the
trade or business. See section 1061 and
section 1221(a)(3).
Instructions for Form 8949. Complete all
Pub. 541 for details.
Certain patents, inventions, models, or
necessary pages of Form 8949 before you
Transactions by a securities dealer.
designs (whether or not patented); secret
complete line 1b, 2, 3, 8b, 9, or 10 of
See sections 475 and 1236, and Rev. Rul.
formulas or processes; or similar property.
Schedule D. See
Lines 1a and
8a, later,
97-39, 1997-39 I.R.B. 4.
U.S. Government publications,
for more information about when to use
Bonds and other debt instruments. See
including the Congressional Record, that
Form 8949.
Pub. 550, Investment Income and
the partnership received from the
Expenses.
Use Form 4684, Casualties and Thefts,
government, other than by purchase at the
Gain on disposition of market discount
to report involuntary conversions of
normal sales price, or that the partnership
bonds. In general, a capital gain upon the
property due to casualty or theft.
got from another taxpayer who had
Sep 29, 2020
Cat. No. 51610S
disposition of a market discount bond is
Transfer of partnership assets and
If the partnership wants to elect out of
treated as interest income to the extent of
liabilities to a newly formed corporation in
the installment method for installment gain
accrued market discount as of the date of
exchange for all of its stock. See Rev. Rul.
that isn’t specially allocated among the
disposition. See sections 1276 through
84-111, 1984-2 C.B. 88.
partners, it must report the full amount of
1278 and Pub. 550 for more information
Disposition of foreign investment in a
the gain on Form 8949 on a timely filed
on market discount. See the Instructions
U.S. real property interest. See section
return (including extensions) for the year
for Form 8949 for detailed information
897.
of the sale.
about how to report the disposition of a
Any loss from a sale or exchange of
If the partnership wants to elect out of
market discount bond.
property between the partnership and
the installment method for installment gain
Contingent payment debt instruments.
certain related persons isn’t allowed,
that is specially allocated among the
Any gain recognized on the sale,
except for distributions in a complete
partners, it must do the following on a
exchange, or retirement of a contingent
liquidation of a corporation. See sections
timely filed return (including extensions).
payment debt instrument subject to the
267 and 707(b) for details.
noncontingent bond method is generally
Any loss from securities that are capital
1. For a short-term capital gain, report
treated as interest income rather than as
assets that become worthless during the
the full amount of the gain on Schedule K,
capital gain. In certain situations, all or a
year is treated as a loss from the sale or
line 8 or 11.
portion of a loss recognized on the sale,
exchange of a capital asset on the last day
For a long-term capital gain, report the
exchange, or retirement of a contingent
of the tax year.
full amount of the gain on Schedule K,
payment debt instrument subject to the
Nonrecognition of gain on sale of stock
line 9a or 11. Report the collectibles gain
noncontingent bond method may be
to an employee stock ownership plan
(28% rate gain) on Schedule K, line 9b.
treated as an ordinary loss rather than as
(ESOP) or an eligible cooperative. See
2. Enter each partner's share of the
a capital loss. See Regulations section
section 1042 and Temporary Regulations
full amount of the gain on Schedule K-1,
1.1275-4(b) and Pub. 1212 for more
section 1.1042-1T for rules under which
box 8 or 9a, or in box 11 using code I,
information on contingent payment debt
the partnership may elect not to recognize
whichever applies. Report the collectibles
instruments subject to the noncontingent
gain from the sale of certain stock to an
gain (28% rate gain) on Schedule K-1,
bond method. See the Instructions for
ESOP or an eligible cooperative.
box 9b.
Form 8949 for detailed information about
A nonbusiness bad debt must be
how to report the disposition of a
treated as a short-term capital loss and
If the partnership filed its original return
contingent payment debt instrument.
can be deducted only in the year the debt
on time without making the election, it may
Gain on certain short-term federal,
becomes totally worthless. See Pub. 550
make the election on an amended return
state, and municipal obligations (other
for more details.
filed no later than 6 months after the due
than tax-exempt obligations). If a
Any loss from a wash sale of stock or
date of the return (excluding extensions).
short-term governmental obligation (other
securities (including contracts or options
Write “Filed pursuant to section
than a tax-exempt obligation) that is a
to acquire or sell stock or securities)
301.9100-2” at the top of the amended
capital asset is acquired at an acquisition
cannot be deducted unless the
return.
discount, a portion of any gain realized is
partnership is a dealer in stock or
A sale or other disposition of an interest
treated as ordinary income and any
securities and the loss was sustained in a
in a partnership owning unrealized
remaining balance as a short-term capital
transaction made in the ordinary course of
receivables or inventory items may result
gain. See section 1271.
the partnership's trade or business. A
in ordinary gain or loss. See Pub. 541,
Certain real estate subdivided for sale
wash sale occurs if the partnership
Partnerships, for more details.
that may be considered a capital asset.
acquires (by purchase or exchange), or
Gain from certain constructive
See section 1237.
has a contract or option to acquire,
ownership transactions. Gain in excess of
Gain on the sale of depreciable
substantially identical stock or securities
the net underlying long-term gain the
property to a more-than-50%-owned
within 30 days before or after the date of
partnership would have recognized if it
entity, or to a trust in which the partnership
the sale or exchange. See section 1091
had held a financial asset directly during
is a beneficiary, is treated as ordinary
for more information. Report a wash sale
the term of a derivative contract must be
gain. See section 1239.
transaction on Form 8949, Part I or II (with
treated as ordinary income. See section
Liquidating distributions from a
the appropriate box checked), depending
1260 for details.
corporation. See Pub. 550 for details.
on how long the partnership owned the
Gain from the sale of collectibles.
Gain on the sale or exchange of stock
stock or securities. Enter “W” in column (f)
Report any collectibles gain (28% rate
in certain foreign corporations. See
and enter as a positive number in column
gain) (loss) included on lines 8a through
section 1248.
(g) the amount of the loss not allowed.
14 on line 9b of Schedule K (and each
Gain or loss on options to buy or sell,
Complete all remaining columns. See the
partner's share in box 9b of
including closing transactions. See Pub.
Instructions for Form 8949.
Schedule K-1). A collectibles gain (28%
550 for details.
Gain from installment sales. If the
rate gain) (loss) is any long-term gain or
Gain or loss from a short sale of
partnership sold property at a gain and it
deductible long-term loss from the sale or
property. See Pub. 550 for details.
will receive a payment in a tax year after
exchange of a collectible that is a capital
Transfer of property to a political
the year of sale, it must generally report
asset.
organization if the fair market value (FMV)
the sale on the installment method unless
of the property exceeds the partnership's
it elects not to. However, the installment
Collectibles include works of art, rugs,
adjusted basis in such property. See
method may not be used to report sales of
antiques, metals (such as gold, silver, and
section 84.
stock or securities traded on an
platinum bullion), gems, stamps, coins,
Any loss on the disposition of converted
established securities market. Use Form
alcoholic beverages, and certain other
wetland or highly erodible cropland that is
6252 to report the sale on the installment
tangible property.
first used for farming after March 1, 1986,
method. Also use Form 6252 to report any
is reported as a long-term capital loss on
payment received during the tax year from
Report any 28% gain or loss from a
Form 8949/Schedule D, but any gain on
a sale made in an earlier year that was
sale or exchange of a collectible on Form
such a disposition is reported as ordinary
reported on the installment method.
8949, Part II (with the appropriate box
gain on Form 4797. See section 1257 for
checked). See the Instructions for Form
details.
8949.
Instructions for Schedule D (Form 1065) 2020
-2-
Also include gain (but not loss) from the
on line 13b of Schedule K and in box 13 of
computation of the adjustment to the
sale or exchange of an interest in a
Schedule K-1 using code H.
partnership's basis in the replacement
partnership or trust held more than 1 year
stock for the amount of any postponed
Constructive sale treatment for certain
and attributable to unrealized appreciation
gain under section 1045, and (c) shows
appreciated positions. Generally, the
of collectibles. For details, see
the dates on which the replacement stock
partnership must recognize gain (but not
Regulations section 1.1(h)-1. Also, attach
was acquired by the partnership.
loss) on the date it enters into a
the statement required under Regulations
constructive sale of any appreciated
The partnership must also
section 1.1(h)-1(e).
position in stock, a partnership interest, or
separately state the amount of the
!
Special rules for traders in securities.
certain debt instruments as if the position
gain rolled over on qualified stock
CAUTION
Traders in securities are engaged in the
were disposed of at FMV on that date.
under section 1045 on Form 1065,
business of buying and selling securities
Schedule K, line 11. Each partner must
The partnership is treated as making a
for their own account. To be engaged in
determine if he or she qualifies for the
constructive sale of an appreciated
business as a trader in securities:
rollover at the partner level or if he or she
position when it (or a related person, in
The partnership must seek to profit from
wants to opt out of the section 1045
some cases) does one of the following.
daily market movements in the prices of
election. Also, the partnership must
Enters into a short sale of the same or
securities and not from dividends, interest,
separately state on that line any gain that
substantially identical property (that is, a
or capital appreciation;
would qualify for the section 1045 rollover
“short sale against the box”).
The partnership's trading activity must
at the partner level instead of the
Enters into an offsetting notional
be substantial; and
partnership level (because a partner was
principal contract relating to the same or
The partnership must carry on the
entitled to purchase replacement stock)
substantially identical property.
activity with continuity and regularity.
and any gain on qualified stock that could
Enters into a futures or forward contract
qualify for an exclusion under section
The following facts and circumstances
to deliver the same or substantially
1202.
should be considered in determining if a
identical property.
partnership's activity is a business.
Acquires the same or substantially
To be qualified small business stock,
Typical holding periods for securities
identical property (if the appreciated
the stock must meet all of the following
bought and sold.
position is a short sale, offsetting notional
tests.
The frequency and dollar amount of the
principal contract, or a futures or forward
It must be stock in a C corporation (that
partnership's trades during the year.
contract).
is, not S corporation stock).
The extent to which the partners pursue
Exception. Generally, constructive sale
It must have been originally issued after
the activity to produce income for a
treatment doesn't apply if:
August 10, 1993.
livelihood.
The partnership closed the transaction
As of the date the stock was issued, the
The amount of time devoted to the
before the end of the 30th day after the
corporation was a qualified small
activity.
end of the tax year in which it was entered
business. A qualified small business is a
into,
Like an investor, a trader must
domestic C corporation with total gross
The partnership held the appreciated
generally report each sale of securities
assets of $50 million or less (a) at all times
position to which the transaction relates
(taking into account commissions and any
after August 9, 1993, and before the stock
throughout the 60-day period starting on
other costs of acquiring or disposing of the
was issued, and (b) immediately after the
the date the transaction was closed, and
securities) on Form 8949 unless one of the
stock was issued. Gross assets include
At no time during that 60-day period
exceptions described in the Instructions
those of any predecessor of the
was the partnership's risk of loss reduced
for Form 8949 applies. However, if a
corporation. All corporations that are
by holding certain other positions.
trader made the mark-to-market election
members of the same parent-subsidiary
(see Mark-to-market accounting method in
For details and other exceptions to
controlled group are treated as one
the Instructions for Form 1065), each
these rules, see Pub. 550.
corporation.
transaction is reported in Part II of Form
The partnership must have acquired the
Rollover of gain from qualified stock.
4797 instead of Form 8949.
stock at its original issue (either directly or
If the partnership sold qualified small
through an underwriter), either in
Regardless of whether a trader reports
business stock (defined below) it held for
exchange for money or other property or
its gains and losses on Form 8949 or
more than 6 months, it may postpone gain
as pay for services (other than as an
Form 4797, the gain or loss from the
if it purchased other qualified small
underwriter) to the corporation. In certain
disposition of securities isn’t taken into
business stock during the 60-day period
cases, the partnership may meet the test if
account when figuring net earnings from
that began on the date of the sale. The
it acquired the stock from another person
self-employment on Schedules K and K-1.
partnership must recognize gain to the
who met this test (such as by gift or at
See section 1402(i) for an exception that
extent the sale proceeds exceed the cost
death) or through a conversion or
applies to section 1256 contracts.
of the replacement stock. Reduce the
exchange of qualified small business
basis of the replacement stock by any
The limitation on investment interest
stock by the holder.
postponed gain.
expense that applies to investors doesn't
During substantially all the time the
apply to interest paid or incurred in a
If the partnership chooses to postpone
partnership held the stock:
trading business. A trader reports interest
gain, report the sale on Form 8949, Part I
1. The corporation was a C
expense and other expenses (excluding
or II (with the appropriate box checked),
corporation;
commissions and other costs of acquiring
as it would be reported if the election was
or disposing of securities) from a trading
not made. Then enter “R” in column (f).
2. At least 80% of the value of the
business on page 1 of Form 1065.
corporation's assets were used in the
Enter the amount of the postponed gain as
active conduct of one or more qualified
a negative number (in parentheses) in
A trader may also hold securities for
businesses (defined below); and
column (g). See the Instructions for Form
investment. The rules for investors will
8949.
generally apply to those securities.
3. The corporation was not a foreign
Allocate interest and other expenses
Attach a statement to Form 1065 that
corporation, domestic international sales
between the partnership's trading
corporation (DISC), former DISC,
(a) identifies the replacement qualified
business and its investment securities.
corporation that has made (or that has a
small business stock, (b) shows the
Investment interest expense is reported
Instructions for Schedule D (Form 1065) 2020
-3-
subsidiary that has made) a section 936
Gain from a related-party transaction.
exchanged a District of Columbia
election before March 23, 2018, regulated
See Sales and Exchanges Between
Enterprise Zone (DC Zone) asset that it
investment company (RIC), real estate
Related Persons in chapter 2 of Pub. 544.
held for more than 5 years, it may be able
investment trust (REIT), real estate
to exclude the qualified capital gain. The
See section 1400F (as in effect before
mortgage investment conduit (REMIC),
DC Zone asset must have been acquired
its repeal on March 23, 2018) for more
financial asset securitization investment
after 1997, and before 2012, to qualify as
details and special rules.
trust (FASIT), or cooperative.
an asset for which the partnership may be
How to report. If applicable, report
able to take the exclusion. The sale or
Note. A specialized small business
the sale or exchange on Form 8949, Part II
exchange of DC Zone capital assets
investment company (SSBIC) is treated as
(with the appropriate box checked), as it
reported on Form 8949 and Schedule D
having met test 2 above.
would be reported if the exclusion was not
includes the following.
taken. Enter “X” in column (f) and enter the
Stock in a domestic corporation that
A qualified business is any business
amount of the exclusion as a negative
was a DC Zone business.
other than the following.
number (in parentheses) in column (g).
Interest in a partnership that was a DC
One involving services performed in the
See the Instructions for Form 8949.
Zone business.
fields of health, law, engineering,
Report the sale or exchange of tangible
Deferral of gain invested in a Qualified
architecture, accounting, actuarial
property used in the partnership's DC
Opportunity Fund. If the partnership
science, performing arts, consulting,
Zone business on Form 4797.
realized gain from an actual, or deemed,
athletics, financial services, or brokerage
sale or exchange with an unrelated person
Gains not qualified for exclusion.
services.
and during the 180-day period beginning
The following gains don’t qualify for the
One whose principal asset is the
on the date realizing the gain, invested an
exclusion of gain from DC Zone assets.
reputation or skill of one or more
amount of the gain in a Qualified
Gain attributable to periods after
employees.
Opportunity Fund, the partnership may be
December 31, 2016.
Any banking, insurance, financing,
able to elect to temporarily defer part or all
Gain on the sale of an interest in a
leasing, investing, or similar business.
of the gain that would otherwise be
partnership, which is a DC Zone business,
Any farming business (including the
included in income. If the partnership
attributable to unrecaptured section 1250
raising or harvesting of trees).
makes the election, the gain included in
gain. See the instructions for line 9c of
Any business involving the production
income is only to the extent, if any, the
Schedule K for information on how to
of products for which percentage
amount of realized gain exceeds the
report unrecaptured section 1250 gain.
depletion can be claimed.
aggregate amount invested in a Qualified
Gain on the sale of an interest in a
Any business of operating a hotel,
Opportunity Fund during the 180-day
partnership or S corporation attributable to
motel, restaurant, or similar business.
period beginning on the date gain is
real property or an intangible asset which
Rollover of gain from empowerment
realized. The partnership may also be able
isn’t an integral part of the DC Zone
zone assets. If the partnership sold a
to permanently exclude the gain from the
business.
qualified empowerment zone asset it held
sale or exchange of any investment in a
Gain from a related-party transaction.
for more than 1 year, it may be able to
Qualified Opportunity Fund if the
See Sales and Exchanges Between
elect to postpone part or all of the gain.
investment is held for at least 10 years.
Related Persons in chapter 2 of Pub. 544.
For details, see section 1397B.
For more information, see section
See section 1400B (as in effect before
1400Z-2.
Exclusion of gain from qualified com-
its repeal on March 23, 2018) for more
munity assets. If the partnership sold or
details on DC Zone assets and special
Qualified Opportunity Fund (QOF).
exchanged a qualified community asset
rules.
A QOF is any investment vehicle that is
acquired after 2001 and before 2010, it
organized as either a corporation or
How to report. If applicable, report
can exclude any qualified capital gain. The
partnership for the purpose of investing in
the sale or exchange of a DC Zone asset
exclusion applies to an interest in, or
eligible property that is located in a
on Form 8949, Part II (with the appropriate
property of, certain qualified community
Qualified Opportunity Zone.
box checked), as it would be reported if
assets.
the exclusion was not taken. Enter “X” in
Eligible gain. Gain that is eligible to
Qualified community asset. A
column (f) and enter the amount of the
be deferred if it is invested in a QOF
qualified community asset is any of the
exclusion as a negative number (in
includes any amount treated as a capital
following.
parentheses) in column (g). See the
gain for federal income tax purposes. See
Qualified community stock.
Instructions for Form 8949.
section 1400Z-2 for more details on QOFs
Qualified community partnership
and the special rules. Also, see
IRS.gov/
Undistributed long-term gains from a
interest.
Newsroom/Opportunity-Zones-
regulated investment company (RIC)
Qualified community business property.
Frequently-Asked-Questions.
or real estate investment trust (REIT).
Qualified capital gain. Qualified
Report the partnership's share of
How to report. Report the eligible
capital gain is any gain recognized on the
long-term gains from Form 2439, Notice to
gain on Schedule D (Form 1065) as it
sale or exchange of a qualified community
Shareholder of Undistributed Long-Term
would otherwise be reported if the
asset, but doesn't include any of the
Capital Gains, on Form 8949, Part II (with
partnership were not making the election.
following.
box F checked). Enter “From Form 2439”
See the Instructions for Form 8949 for how
Gain attributable to periods after
in column (a). Enter the gain in column (h).
to report the deferral. You will need to
December 31, 2014.
Leave all other columns blank. See the
attach Form 8997, Initial and Annual
Gain treated as ordinary income under
Instructions for Form 8949.
Statement of Qualified Opportunity Fund
section 1245.
(QOF) Investments, annually until you
NAV method for certain money market
Section 1250 gain figured as if section
dispose of the QOF investment. For more
funds. Report capital gain or loss
1250 applied to all depreciation rather
information, see Form 8997 and its
determined under the net asset value
than the additional depreciation.
instructions.
(NAV) method with respect to shares in a
Gain attributable to real property, or an
NAV money market fund on Form 8949,
Exclusion of gain from DC Zone as-
intangible asset, that isn’t an integral part
Part I, with box C checked. Enter the
sets. If the partnership sold or
of a qualified community business.
Instructions for Schedule D (Form 1065) 2020
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name of each fund followed by “(NAV)” in
adjustments to the partnership's gain or
showing proceeds (in box 1d) of $6,000
column (a). Enter the net gain or loss in
loss.
and cost or other basis (in box 1e) of
column (h). Leave all other columns blank.
$2,000. Box 12 is checked, meaning that
If the partnership chooses to report
See the Instructions for Form 8949.
basis was reported to the IRS. However,
these transactions on lines 1a and 8a,
the basis shown in box 1e is incorrect. Do
don’t report them on Form 8949.
Specific Instructions
not report this transaction on line 1a or
line 8a. Instead, report the transaction on
Figure gain or loss on each line.
Complete all necessary pages of Form
Form 8949. See the instructions for Form
Subtract the cost or other basis in column
8949 before completing line 1b, 2, 3, 8b,
8949, columns (f), (g), and (h). Complete
(e) from the proceeds (sales price) in
9, or 10 of Schedule D.
all necessary pages of Form 8949 before
column (d). Enter the gain or loss in
Rounding Off to Whole Dollars
completing line 1b, 2, 3, 8b, 9, or 10 of
column (h). Enter negative amounts in
Schedule D.
parentheses.
Cents can be rounded to whole dollars on
Schedule D. If cents are rounded to whole
Lines 1b, 2, 3, 8b, 9, and 10,
Example 1—basis reported to the
dollars, all amounts must be rounded. To
IRS. The partnership received a Form
Column (h)—Transactions
round, drop cent amounts under 50 and
1099-B reporting the sale of stock held for
Reported on Form 8949
increase cent amounts over 49 to the next
3 years, showing proceeds (in box 1d) of
dollar. For example, $1.49 becomes $1
Figure gain or loss on each line. First,
$6,000 and cost or other basis (in box 1e)
and $1.50 becomes $2.
subtract cost or other basis (column (e))
of $2,000. Box 12 is checked, meaning
from proceeds/sales price (column (d)).
that basis was reported to the IRS. The
If two or more amounts have to be
Then combine the result with any
partnership doesn't need to make any
added to figure the amount to enter on a
adjustments in column (g). Enter the gain
adjustments to the amounts reported on
line, include cents when adding the
or loss in column (h). Enter negative
Form 1099-B or enter any codes. This was
amounts and round only the total.
amounts in parentheses.
your only 2020 transaction. Instead of
Lines 1a and 8a—Transactions
reporting this transaction on Form 8949,
Example 1—gain. Column (d) is
Not Reported on Form 8949
the partnership can enter $6,000 on
$6,000 and column (e) is $2,000. Enter
Schedule D, line 8a, column (d); $2,000 in
$4,000 in column (h).
The partnership can report on line 1a (for
column (e); and $4,000 ($6,000 − $2,000)
short-term transactions) or line 8a (for
Example 2—loss. Column (d) is
in column (h).
long-term transactions) the aggregate
$6,000 and column (e) is $8,000. Enter
If you had a second transaction that
totals from any transactions (except sales
($2,000) in column (h).
was the same except that the proceeds
of collectibles) for which:
Example 3—adjustment. Column
were $5,000 and the basis was $3,000,
The partnership received a Form
(d) is $6,000, column (e) is $2,000, and
combine the two transactions. Enter
1099-B (or substitute statement) that
column (g) is ($1,000). Enter $3,000
$11,000 ($6,000 + $5,000) on
shows basis was reported to the IRS and
($6,000 − $2,000 − $1,000) in column (h).
Schedule D, line 8a, column (d); $5,000
doesn't show any adjustment in box 1f or
($2,000 + $3,000) in column (e); and
1g;
Lines 6 and 13. Capital Gains
$6,000 ($11,000 − $5,000) in column (h).
The Ordinary checkbox in box 2 of
(Losses) From Other
Form 1099-B (or substitute statement)
Example 2—basis not reported to
Partnerships, Estates, and
isn’t checked;
the IRS. The partnership received a Form
Trusts
The QOF checkbox in box 3 of Form
1099-B showing proceeds (in box 1d) of
1099-B (or substitute statement) isn’t
$6,000 and cost or other basis (in box 1e)
See the Schedule K-1 or other information
checked; and
of $2,000. Box 12 isn’t checked, meaning
supplied to the partnership by the other
The partnership doesn't need to make
that basis was not reported to the IRS.
partnership, estate, or trust.
any adjustments to the basis or type of
Don’t report this transaction on line 1a or
Line 14. Capital Gain
gain or loss (short term or long term)
line 8a. Instead, report the transaction on
reported on Form 1099-B (or substitute
Distributions
Form 8949. Complete all necessary pages
statement), or to its gain or loss.
of Form 8949 before completing line 1b, 2,
Enter on line 14 the total capital gain
See How To Complete Form 8949,
3, 8b, 9, or 10 of Schedule D.
distributions paid to the partnership during
Columns (f) and (g) in the Instructions for
the year.
Example 3—adjustment. The
Form 8949 for details about possible
partnership received a Form 1099-B
Instructions for Schedule D (Form 1065) 2020
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