1040 Schedule-D Form

Individuals must record and report any investments or assets sold and pay taxes on the profits from the same. If the sale of investments or assets incurs a loss, the individual can deduct the capital losses from their income tax bill. Schedule D distinguishes between short-term capital gains or losses and long-term capital gains or losses. Long-term capital gains are generally taxed at lower rates than short-term capital gains.

Schedule D dictates how an individual should collect, assess, and report information about capital asset sales and prior year capital loss carry-forwards. To properly fill out Schedule D, individuals may need to reference information from other tax forms. The capital gain or loss taxes computed on Schedule D are combined with other income and loss as part of the taxpayer’s adjusted gross income, which is reported on Form 1040.