Capital Gains & Losses
- Capital Assets
- Investment Property
- Capital Losses versus Ordinary Losses
- Section 1244 Stock
- Personal Use Property
- Noncapital Assets
- Selling Business Property
- Section 1231 Gains and Losses
- Figuring Basis
- Amount Realized
- Holding Period
- Computing Capital Gains and Losses (the netting process)
- Schedule D and Form 8949
- Form 1099-B
- Capital Gains Rate Table
More Tax Topics
- Business Structures
- Start-up Costs
- Depreciation
- Car Expenses
- Home Office Deduction
- Travel Expenses
- Hiring Workers
- Meals and Entertainment
- Retirement
- Top Tax Myths
- Per Diem Rates - IRS Publication 1542 Oct 2011 for Travel Within the Continental U.S (for employers who pay a per diem allowance to employees)
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Updated for 2011
Capital Gains and Losses: Investment Property
Selling Investment Property
Property held for investment purposes may include:
- Stocks, bonds, mutual funds, land, art, gems, coins, and stamps.
1) Gains or losses on the sale of investment property are classified as:
- Capital gains or
- Capital losses
2) Holding period:
Your holding period determines whether a gain receives short-term or long-term capital gains tax treatment.
- Long-term capital gain or loss:
- Property held over one year before being sold receives long-term gain treatment.
- This means the lower capital gains rates apply to the gain.
- Short-term capital gain or loss:
- Property held one year or less before being sold receives short-term gain treatment.
- This means, ordinary income tax rates apply.
Ordinary income tax rates are the regular federal income tax rates that apply to ordinary income such as, wages, self-employment income, interest, dividends.
Qualified dividends are taxed at the capital gains rates. Qualified dividends are reported on Form 1099-DIV in box 1b.
3) Capital losses:
Capital losses are deducted from capital gains. If capital losses exceed capital gains, the excess loss is deductible up to a maximum of $3,000 per year ($1,500 if married filing separately).
A capital loss is deducted on Form 1040 from other sources of income.
4) Where to report capital gains and losses:
Schedule D:
- Report capital gains and losses on Schedule D.
Form 4797:
- A trader in securities who makes the mark-to-market election uses Form 4797 to report gains and losses.
Related Links
- What are Capital Assets?
- Nine Rules for Capital Losses.
- What is Section 1244 Stock?
- Special Tax Treatment for Personal Use Property
- Property Not Classified as a Capital Asset
- Inventory, Accounts Receivable, and Notes Receivable
- Depreciable Business Property
- Form 4797, Sale of Business Property
- What is Section 1231?
- What is Basis
- Unadjusted Basis
- Adjusted Basis
- Figuring Amount Realized
- What Is Your Holding Period?
- How to Determine Your Holding Period
- When the Holding Periods Begins for Certain Types of Items
- Selling Stock
- The Netting Procedure
- Transactions Reported on Schedule D
- Form 1099-B Explained
- Transactions Reported on Schedule D
- Form 1099-B Explained
- Transactions Reported on Schedule D
- Form 1099-B Explained
- Tax Planning Opportunity for Tax Years 2008 through 2010
- Gifting Appreciated Property
- Table: Capital Gains Rates
Copyright © 2008-2012 Larry Villano. All rights reserved.