Schedule D: capital gains and losses

• Author: Nicholas L. Bourdeau
• Pages: 63-78

6-1

6-1

Chapter 6

Schedule D

Capital Gains and Losses

TABLE OF CONTENTS

§6:00 THEORY

§6:10 CAPITAL GAINS - GENERAL

§6:20 CAPITAL LOSSES - GENERAL

§6:20.1 Battle Lines

§6:30 LINE BY LINE

§6:30.1 Part I Short-Term Capital Gains and Losses - Assets Held One Year or Less

§6:30.2 Schedule D

§6:30.3 Form 8949 Line 1 Column(a) Description of Property

§6:30.4 Form 8949 Line 1 Column(b) Code for Column(g) and Form 8949 Line 1 Column(g)

Adjustments to Gain or Loss

§6:30.5 Form 8949 Line 1 Column(b) & (c) Date Acquired / Date Sold

§6:30.6 Form 8949 Line 1 Column(d) Sales Price

§6:30.7 Form 8949 Line 1 Column(e) Cost or Other Basis

§6:30.8 Form 8949 Line 2 Totals

§6:30.9 Form 8949 Line 3

§6:30.10 Form 8949 Line 4 Totals

§6:30.11 Line 4 Short-Term Gain From 6252 and Short-Term Gain or (Loss) From Forms 4684, 6781,

and 8824

§6:30.12 Line 5 Net Short-Term Gain or (Loss) From Partnerships, S Corporations, Estates, and Trusts

From Schedule(s) K-1

§6:30.13 Line 6 Short-Term Capital Loss Carryover

§6:30.14 Line 7 Net Short-Term Capital Gain or (Loss)

§6:30.15 Battle Lines

§6:30.16 Part II Long-Term Capital Gains and Losses—Assets Held More Than One Year

§6:30.17 Lines 8(a) Through 8(f)

§6:30.18 Line 9

§6:30.19 Line 10

§6:30.20 Line 11 Gain From Form 4797, Part I; Long-Term Gain From Forms 2439 and 6252 and Long-

Term Gain or (Loss) From Forms 4684, 6781, and 8824

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§6:00 The Determination of Income for Child Support 6-2

§6:00 THEORY

Parents sometimes own assets that can be sold

to generate income. If the parent is regularly buying

and selling assets that generate capital gains, then

that income should be taken into account in the child

support calculation. Investigators are faced with

the challenge of not only identifying the nature of

the capital gains and losses reported, but assessing

whether they will continue in the future.

§6:10 CAPITAL GAINS - GENERAL

When we speak of capital gains, we are talk-

ing about assets that are defined as investments,

such as stocks or bonds, or capital assets such as

buildings and real estate. When parents sell these

assets, they incur gains or losses.

§6:30.21 Line 12 Net Long-Term Gain or Loss From Partnerships, S Corporations, Estates, and Trusts

From Schedule(s) K-1

§6:30.22 Line 13 Capital Gain Distributions

§6:30.23 Line 14 Long-Term Capital Loss Carryover

§6:30.24 Line 15 Net Short-Term Capital Gain or (Loss)

§6:30.25 Lines 16 Through 22

§6:40 THE INVESTIGATION

FORMS

QUICK TAKE

Schedule D of Form 1040 reports the results from the sale of capital assets. Capital assets

include land, buildings, stocks, and virtually any asset that has value. If the sale of an asset

results in an amount which is greater than the purchase price (basis) of the asset, a capital

gain is incurred. If the sale price is less than the purchase price, then a capital loss is incurred.

Capital gains in excess of capital losses provide income that is available for child support.

WHAT YOU SEEK

Schedule D (Form 1040)

Schedule D – 1 (Form 1040)

(Continuation Sheet for Schedule D)

Other Form 1040 forms as required

Documentation supporting property basis

Documentation supporting property sales price

Summary of capital assets

Financial expert opinions

RESOURCES

Instructions for Schedule D (Form 1040)

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