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

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2019
Department of the Treasury
Internal Revenue Service
Instructions for Schedule D
(Form 1065)
Capital Gains and Losses
Use Form 4797, Sales of Business
partnership's basis is determined by
Section references are to the Internal Revenue
Code unless otherwise noted.
Property, to report the following.
reference to the previous owner.
Sales or exchanges of property used in
Certain commodities derivative financial
Future Developments
a trade or business.
instruments held by a dealer. See section
Sales or exchanges of depreciable or
1221(a)(6).
For the latest information about
amortizable property.
Certain hedging transactions entered
developments related to Schedule D
Sales or other dispositions of securities
into in the normal course of the trade or
(Form 1065) and its instructions, such as
or commodities held in connection with a
business. See section 1221(a)(7).
legislation enacted after they were
trading business, if the partnership made a
Supplies regularly used in the trade or
published, go to IRS.gov/Form1065.
mark-to-market election (see
business.
Mark-to-market accounting method in the
General Instructions
Short- or Long-Term Gain
Instructions for Form 1065).
Involuntary conversions (other than
or Loss
from casualties or thefts).
Purpose of Schedule
Report short-term gains or losses in Part I.
The disposition of noncapital assets
Use Schedule D (Form 1065) to report the
Report long-term gains or losses in Part II.
(other than inventory or property held
The holding period for short-term capital
following.
primarily for sale to customers in the
The total capital gains and losses from
gains and losses is generally 1 year or
ordinary course of a trade or business).
transactions reported on Form 8949,
less. The holding period for long-term
Use Form 6781, Gains and Losses
Sales and Other Dispositions of Capital
capital gains and losses is generally more
From Section 1256 Contracts and
Assets.
than 1 year. However, an exception
Straddles, to report gains and losses from
Certain transactions the partnership
applies for certain sales of applicable
section 1256 contracts and straddles. If
partnership interests. See
Transactions
doesn't have to report on Form 8949.
there are limited partners, see section
with respect to applicable partnership
Capital gains from installment sales
1256(e)(4) for the limitation on losses from
from Form 6252, Installment Sale Income.
interests
under Items for Special
hedging transactions.
Capital gains and losses from like-kind
Treatment below.
exchanges from Form 8824, Like-Kind
What Are Capital Assets?
For more information about holding
Exchanges (and section 1043
periods, see the Instructions for Form
Each item of property the partnership held
conflict-of-interest sales).
8949.
(whether or not connected with its trade or
Partnership's share of net capital gains
business) is a capital asset except the
and losses, including specially allocated
Items for Special
following.
capital gains and losses, from
Treatment
Stock in trade or other property
partnerships, estates, and trusts.
included in inventory or held mainly for
Capital gain distributions.
Transactions with respect to applicable
sale to customers.
partnership interests. The long-term
Note. For more information, see Pub.
Accounts or notes receivable acquired
holding period for gains and losses with
544, Sales and Other Dispositions of
in the ordinary course of the trade or
respect to applicable partnership interests
Assets, and the Instructions for Form
business for services rendered or from the
is more than 3 years. If the holding period
8949.
sale of stock in trade or other property
is 3 years or less, gains and losses with
held mainly for sale to customers.
respect to applicable partnership interests
Other Forms the
Depreciable or real property used in the
are treated as short term. An applicable
trade or business, even if it is fully
Partnership May Have To
partnership interest is any interest in a
depreciated.
File
partnership that, directly or indirectly, is
Certain copyrights; literary, musical, or
transferred to (or is held by) the taxpayer
artistic compositions; letters or
Use Form 8949 to report the sale or
in connection with the performance of
memoranda; or similar property. See
exchange of a
capital asset
(defined later)
substantial services by the taxpayer, or
section 1221(a)(3).
not reported on another form or schedule
any other related person, in any applicable
Certain patents, inventions, models, or
and to report the income deferral or
trade or business. See section 1061 and
designs (whether or not patented); secret
exclusion of capital gains. See the
Pub. 541 for details.
formulas or processes; or similar property.
Instructions for Form 8949. Complete all
Transactions by a securities dealer.
See section 1221(a)(3), as revised by
necessary pages of Form 8949 before you
See sections 475 and 1236, and Rev. Rul.
Public Law 115-97, section 13314.
complete line 1b, 2, 3, 8b, 9, or 10 of
97-39, 1997-39 I.R.B. 4.
U.S. Government publications,
Schedule D. See
Lines 1a and 8a,
later,
Bonds and other debt instruments. See
including the Congressional Record, that
for more information about when to use
Pub. 550, Investment Income and
the partnership received from the
Form 8949.
Expenses.
government, other than by purchase at the
Gain on disposition of market discount
Use Form 4684, Casualties and Thefts,
normal sales price, or that the partnership
bonds. In general, a capital gain upon the
to report involuntary conversions of
got from another taxpayer who had
disposition of a market discount bond is
property due to casualty or theft.
received it in a similar way, if the
Dec 23, 2019
Cat. No. 51610S
2019
Department of the Treasury
Internal Revenue Service
Instructions for Schedule D
(Form 1065)
Capital Gains and Losses
Use Form 4797, Sales of Business
partnership's basis is determined by
Section references are to the Internal Revenue
Code unless otherwise noted.
Property, to report the following.
reference to the previous owner.
Sales or exchanges of property used in
Certain commodities derivative financial
Future Developments
a trade or business.
instruments held by a dealer. See section
Sales or exchanges of depreciable or
1221(a)(6).
For the latest information about
amortizable property.
Certain hedging transactions entered
developments related to Schedule D
Sales or other dispositions of securities
into in the normal course of the trade or
(Form 1065) and its instructions, such as
or commodities held in connection with a
business. See section 1221(a)(7).
legislation enacted after they were
trading business, if the partnership made a
Supplies regularly used in the trade or
published, go to IRS.gov/Form1065.
mark-to-market election (see
business.
Mark-to-market accounting method in the
General Instructions
Short- or Long-Term Gain
Instructions for Form 1065).
Involuntary conversions (other than
or Loss
from casualties or thefts).
Purpose of Schedule
Report short-term gains or losses in Part I.
The disposition of noncapital assets
Use Schedule D (Form 1065) to report the
Report long-term gains or losses in Part II.
(other than inventory or property held
The holding period for short-term capital
following.
primarily for sale to customers in the
The total capital gains and losses from
gains and losses is generally 1 year or
ordinary course of a trade or business).
transactions reported on Form 8949,
less. The holding period for long-term
Use Form 6781, Gains and Losses
Sales and Other Dispositions of Capital
capital gains and losses is generally more
From Section 1256 Contracts and
Assets.
than 1 year. However, an exception
Straddles, to report gains and losses from
Certain transactions the partnership
applies for certain sales of applicable
section 1256 contracts and straddles. If
partnership interests. See
Transactions
doesn't have to report on Form 8949.
there are limited partners, see section
with respect to applicable partnership
Capital gains from installment sales
1256(e)(4) for the limitation on losses from
from Form 6252, Installment Sale Income.
interests
under Items for Special
hedging transactions.
Capital gains and losses from like-kind
Treatment below.
exchanges from Form 8824, Like-Kind
What Are Capital Assets?
For more information about holding
Exchanges (and section 1043
periods, see the Instructions for Form
Each item of property the partnership held
conflict-of-interest sales).
8949.
(whether or not connected with its trade or
Partnership's share of net capital gains
business) is a capital asset except the
and losses, including specially allocated
Items for Special
following.
capital gains and losses, from
Treatment
Stock in trade or other property
partnerships, estates, and trusts.
included in inventory or held mainly for
Capital gain distributions.
Transactions with respect to applicable
sale to customers.
partnership interests. The long-term
Note. For more information, see Pub.
Accounts or notes receivable acquired
holding period for gains and losses with
544, Sales and Other Dispositions of
in the ordinary course of the trade or
respect to applicable partnership interests
Assets, and the Instructions for Form
business for services rendered or from the
is more than 3 years. If the holding period
8949.
sale of stock in trade or other property
is 3 years or less, gains and losses with
held mainly for sale to customers.
respect to applicable partnership interests
Other Forms the
Depreciable or real property used in the
are treated as short term. An applicable
trade or business, even if it is fully
Partnership May Have To
partnership interest is any interest in a
depreciated.
File
partnership that, directly or indirectly, is
Certain copyrights; literary, musical, or
transferred to (or is held by) the taxpayer
artistic compositions; letters or
Use Form 8949 to report the sale or
in connection with the performance of
memoranda; or similar property. See
exchange of a
capital asset
(defined later)
substantial services by the taxpayer, or
section 1221(a)(3).
not reported on another form or schedule
any other related person, in any applicable
Certain patents, inventions, models, or
and to report the income deferral or
trade or business. See section 1061 and
designs (whether or not patented); secret
exclusion of capital gains. See the
Pub. 541 for details.
formulas or processes; or similar property.
Instructions for Form 8949. Complete all
Transactions by a securities dealer.
See section 1221(a)(3), as revised by
necessary pages of Form 8949 before you
See sections 475 and 1236, and Rev. Rul.
Public Law 115-97, section 13314.
complete line 1b, 2, 3, 8b, 9, or 10 of
97-39, 1997-39 I.R.B. 4.
U.S. Government publications,
Schedule D. See
Lines 1a and 8a,
later,
Bonds and other debt instruments. See
including the Congressional Record, that
for more information about when to use
Pub. 550, Investment Income and
the partnership received from the
Form 8949.
Expenses.
government, other than by purchase at the
Gain on disposition of market discount
Use Form 4684, Casualties and Thefts,
normal sales price, or that the partnership
bonds. In general, a capital gain upon the
to report involuntary conversions of
got from another taxpayer who had
disposition of a market discount bond is
property due to casualty or theft.
received it in a similar way, if the
Dec 23, 2019
Cat. No. 51610S
treated as interest income to the extent of
Transfer of partnership assets and
If the partnership wants to elect out of
accrued market discount as of the date of
liabilities to a newly formed corporation in
the installment method for installment gain
disposition. See sections 1276 through
exchange for all of its stock. See Rev. Rul.
that is not specially allocated among the
1278 and Pub. 550 for more information
84-111, 1984-2 C.B. 88.
partners, it must report the full amount of
on market discount. See the Instructions
Disposition of foreign investment in a
the gain on Form 8949 on a timely filed
for Form 8949 for detailed information
U.S. real property interest. See section
return (including extensions) for the year
about how to report the disposition of a
897.
of the sale.
market discount bond.
Any loss from a sale or exchange of
If the partnership wants to elect out of
Contingent payment debt instruments.
property between the partnership and
the installment method for installment gain
Any gain recognized on the sale,
certain related persons is not allowed,
that is specially allocated among the
exchange, or retirement of a contingent
except for distributions in a complete
partners, it must do the following on a
payment debt instrument subject to the
liquidation of a corporation. See sections
timely filed return (including extensions).
noncontingent bond method is generally
267 and 707(b) for details.
treated as interest income rather than as
Any loss from securities that are capital
1. For a short-term capital gain, report
capital gain. In certain situations, all or a
assets that become worthless during the
the full amount of the gain on Schedule K,
portion of a loss recognized on the sale,
year is treated as a loss from the sale or
line 8 or 11.
exchange, or retirement of a contingent
exchange of a capital asset on the last day
For a long-term capital gain, report the
payment debt instrument subject to the
of the tax year.
full amount of the gain on Schedule K,
noncontingent bond method may be
Nonrecognition of gain on sale of stock
line 9a or 11. Report the collectibles gain
treated as an ordinary loss rather than as
to an employee stock ownership plan
(28% rate gain) on Schedule K, line 9b.
a capital loss. See Regulations section
(ESOP) or an eligible cooperative. See
2. Enter each partner's share of the
1.1275-4(b) and Pub. 1212 for more
section 1042 and Temporary Regulations
full amount of the gain on Schedule K-1,
information on contingent payment debt
section 1.1042-1T for rules under which
box 8 or 9a, or in box 11 using code I,
instruments subject to the noncontingent
the partnership may elect not to recognize
whichever applies. Report the collectibles
bond method. See the Instructions for
gain from the sale of certain stock to an
gain (28% rate gain) on Schedule K-1,
Form 8949 for detailed information about
ESOP or an eligible cooperative.
box 9b.
how to report the disposition of a
A nonbusiness bad debt must be
contingent payment debt instrument.
treated as a short-term capital loss and
If the partnership filed its original return
Gain on certain short-term federal,
can be deducted only in the year the debt
on time without making the election, it may
state, and municipal obligations (other
becomes totally worthless. See Pub. 550
make the election on an amended return
than tax-exempt obligations). If a
for more details.
filed no later than 6 months after the due
short-term governmental obligation (other
Any loss from a wash sale of stock or
date of the return (excluding extensions).
than a tax-exempt obligation) that is a
securities (including contracts or options
Write “Filed pursuant to section
capital asset is acquired at an acquisition
to acquire or sell stock or securities)
301.9100-2” at the top of the amended
discount, a portion of any gain realized is
cannot be deducted unless the
return.
treated as ordinary income and any
partnership is a dealer in stock or
A sale or other disposition of an interest
remaining balance as a short-term capital
securities and the loss was sustained in a
in a partnership owning unrealized
gain. See section 1271.
transaction made in the ordinary course of
receivables or inventory items may result
Certain real estate subdivided for sale
the partnership's trade or business. A
in ordinary gain or loss. See Pub. 541,
that may be considered a capital asset.
wash sale occurs if the partnership
Partnerships, for more details.
See section 1237.
acquires (by purchase or exchange), or
Gain from certain constructive
Gain on the sale of depreciable
has a contract or option to acquire,
ownership transactions. Gain in excess of
property to a more-than-50%-owned
substantially identical stock or securities
the net underlying long-term gain the
entity, or to a trust in which the partnership
within 30 days before or after the date of
partnership would have recognized if it
is a beneficiary, is treated as ordinary
the sale or exchange. See section 1091
had held a financial asset directly during
gain. See section 1239.
for more information. Report a wash sale
the term of a derivative contract must be
Liquidating distributions from a
transaction on Form 8949, Part I or II (with
treated as ordinary income. See section
corporation. See Pub. 550 for details.
the appropriate box checked), depending
1260 for details.
Gain on the sale or exchange of stock
on how long the partnership owned the
Gain from the sale of collectibles.
in certain foreign corporations. See
stock or securities. Enter “W” in column (f)
Report any collectibles gain (28% rate
section 1248.
and enter as a positive number in column
gain) (loss) included on lines 8a through
Gain or loss on options to buy or sell,
(g) the amount of the loss not allowed.
14 on line 9b of Schedule K (and each
including closing transactions. See Pub.
Complete all remaining columns. See the
partner's share in box 9b of
550 for details.
Instructions for Form 8949.
Schedule K-1). A collectibles gain (28%
Gain or loss from a short sale of
Gain from installment sales. If the
rate gain) (loss) is any long-term gain or
property. See Pub. 550 for details.
partnership sold property at a gain and it
deductible long-term loss from the sale or
Transfer of property to a political
will receive a payment in a tax year after
exchange of a collectible that is a capital
organization if the fair market value (FMV)
the year of sale, it must generally report
asset.
of the property exceeds the partnership's
the sale on the installment method unless
adjusted basis in such property. See
it elects not to. However, the installment
Collectibles include works of art, rugs,
section 84.
method may not be used to report sales of
antiques, metals (such as gold, silver, and
Any loss on the disposition of converted
stock or securities traded on an
platinum bullion), gems, stamps, coins,
wetland or highly erodible cropland that is
established securities market. Use Form
alcoholic beverages, and certain other
first used for farming after March 1, 1986,
6252 to report the sale on the installment
tangible property.
is reported as a long-term capital loss on
method. Also use Form 6252 to report any
Form 8949/Schedule D, but any gain on
payment received during the tax year from
Report any 28% gain or loss from a
such a disposition is reported as ordinary
a sale made in an earlier year that was
sale or exchange of a collectible on Form
gain on Form 4797. See section 1257 for
reported on the installment method.
8949, Part II (with the appropriate box
details.
checked). See the Instructions for Form
8949.
Instructions for Schedule D (Form 1065) 2019
-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 is not 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) 2019
-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. Report the sale or
able to take the exclusion. The sale or
Note. A specialized small business
exchange on Form 8949, Part II (with the
exchange of DC Zone capital assets
investment company (SSBIC) is treated as
appropriate box checked), as it would be
reported on Form 8949 and Schedule D
having met test 2 above.
reported if the exclusion was not taken.
includes the following.
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 do not 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
is not 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. Report the sale or
can exclude any qualified capital gain. The
partnership for the purpose of investing in
exchange of a DC Zone asset on Form
exclusion applies to an interest in, or
eligible property that is located in a
8949, Part II (with the appropriate box
property of, certain qualified community
Qualified Opportunity Zone.
checked), as it would be reported if the
assets.
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.
Investments, annually until you dispose of
NAV method for certain money market
Section 1250 gain figured as if section
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 is not 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) 2019
-4-
name of each fund followed by “(NAV)” in
If the partnership chooses to report
$2,000. Box 12 is checked, meaning that
column (a). Enter the net gain or loss in
these transactions on lines 1a and 8a, do
basis was reported to the IRS. However,
column (h). Leave all other columns blank.
not report them on Form 8949.
the basis shown in box 1e is incorrect. Do
See the Instructions for Form 8949.
not report this transaction on line 1a or
Figure gain or loss on each line.
line 8a. Instead, report the transaction on
Subtract the cost or other basis in column
Specific Instructions
Form 8949. See the instructions for Form
(e) from the proceeds (sales price) in
8949, columns (f), (g), and (h). Complete
Complete all necessary pages of Form
column (d). Enter the gain or loss in
all necessary pages of Form 8949 before
8949 before completing line 1b, 2, 3, 8b,
column (h). Enter negative amounts in
completing line 1b, 2, 3, 8b, 9, or 10 of
9, or 10 of Schedule D.
parentheses.
Schedule D.
Rounding Off to Whole Dollars
Example 1—basis reported to the
Lines 1b, 2, 3, 8b, 9, and 10,
IRS. The partnership received a Form
Cents can be rounded to whole dollars on
Column (h)—Transactions
1099-B reporting the sale of stock held for
the Schedule D. If cents are rounded to
3 years, showing proceeds (in box 1d) of
Reported on Form 8949
whole dollars, all amounts must be
$6,000 and cost or other basis (in box 1e)
rounded. To round, drop cent amounts
Figure gain or loss on each line. First,
of $2,000. Box 12 is checked, meaning
under 50 and increase cent amounts over
subtract cost or other basis (column (e))
that basis was reported to the IRS. The
49 to the next dollar. For example, $1.49
from proceeds/sales price (column (d)).
partnership doesn't need to make any
becomes $1 and $1.50 becomes $2.
Then combine the result with any
adjustments to the amounts reported on
adjustments in column (g). Enter the gain
If two or more amounts have to be
Form 1099-B or enter any codes. This was
or loss in column (h). Enter negative
added to figure the amount to enter on a
your only 2019 transaction. Instead of
amounts in parentheses.
line, include cents when adding the
reporting this transaction on Form 8949,
amounts and round only the total.
Example 1—gain. Column (d) is
the partnership can enter $6,000 on
$6,000 and column (e) is $2,000. Enter
Lines 1a and 8a—Transactions
Schedule D, line 8a, column (d); $2,000 in
$4,000 in column (h).
column (e); and $4,000 ($6,000 − $2,000)
Not Reported on Form 8949
in column (h).
Example 2—loss. Column (d) is
The partnership can report on line 1a (for
If you had a second transaction that
$6,000 and column (e) is $8,000. Enter
short-term transactions) or line 8a (for
was the same except that the proceeds
($2,000) in column (h).
long-term transactions) the aggregate
were $5,000 and the basis was $3,000,
Example 3—adjustment. Column
totals from any transactions (except sales
combine the two transactions. Enter
(d) is $6,000, column (e) is $2,000, and
of collectibles) for which:
$11,000 ($6,000 + $5,000) on
column (g) is ($1,000). Enter $3,000
The partnership received a Form
Schedule D, line 8a, column (d); $5,000
($6,000 − $2,000 − $1,000) in column (h).
1099-B (or substitute statement) that
($2,000 + $3,000) in column (e); and
shows basis was reported to the IRS and
Lines 6 and 13. Capital Gains
$6,000 ($11,000 − $5,000) in column (h).
doesn't show any adjustment in box 1f or
(Losses) From Other
Example 2—basis not reported to
1g;
Partnerships, Estates, and
the IRS. The partnership received a Form
The Ordinary checkbox in box 2 of
1099-B showing proceeds (in box 1d) of
Form 1099-B (or substitute statement)
Trusts
$6,000 and cost or other basis (in box 1e)
isn’t checked;
See the Schedule K-1 or other information
of $2,000. Box 12 is not checked,
The QOF checkbox in box 3 of Form
supplied to the partnership by the other
meaning that basis was not reported to the
1099-B (or substitute statement) isn’t
partnership, estate, or trust.
IRS. Do not report this transaction on
checked; and
line 1a or line 8a. Instead, report the
The partnership doesn't need to make
Line 14. Capital Gain
transaction on Form 8949. Complete all
any adjustments to the basis or type of
Distributions
necessary pages of Form 8949 before
gain or loss (short term or long term)
Enter on line 14 the total capital gain
completing line 1b, 2, 3, 8b, 9, or 10 of
reported on Form 1099-B (or substitute
distributions paid to the partnership during
Schedule D.
statement), or to its gain or loss.
the year.
See How To Complete Form 8949,
Example 3—adjustment. The
Columns (f) and (g) in the Instructions for
partnership received a Form 1099-B
Form 8949 for details about possible
showing proceeds (in box 1d) of $6,000
adjustments to the partnership's gain or
and cost or other basis (in box 1e) of
loss.
Instructions for Schedule D (Form 1065) 2019
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