Form 1120 Schedule D - Capital Gains and Losses
- Updated March 27, 2025 - 11.00 AM - Admin, Tax990
Table of Contents
What is Form 1120 Schedule D?
Form 1120 Schedule D, Capital Gains and Losses, is a supplementary form filed with Form 1120 and Form 990-T by corporations, including tax-exempt organizations, to report the details of capital gains and losses incurred during the tax year. This form is used to calculate the net capital gain or loss, which is essential for determining the amount of taxable income.
Form 1120 Schedule D tracks sales or exchanges of capital assets, such as stocks, bonds, real estate, or other investments. It provides a detailed breakdown of proceeds, costs, and adjustments for each asset. The form is divided into sections to report short-term and long-term capital gains and losses, which are taxed differently.
When Should I Attach Form 1120 Schedule D with Form 990-T?
Tax-exempt organizations must attach Form 1120 Schedule D with Form 990-T when they are needed to detail capital gains and losses from unrelated business income (UBI).
Unrelated business income refers to any revenue a nonprofit generates from activities unrelated to their primary exempt purposes. Nonprofits must file 990-T when their unrelated business income is $1000 or more during the respective tax year.
How to Complete IRS Form 1120 Schedule D?
The IRS Form 1120 Schedule D (Sales of Business Property) consists of three parts, and here are the instructions for completing each part.
Part I - Short-Term Capital Gains and Losses—Assets Held One Year or Less
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This part requires you to provide information on the short-term capital gains and losses of the organization's assets held for a year or less. Provide a breakdown of the proceeds and costs, specify any adjustments made to them, and determine the gain or loss.
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Furthermore, you must report short-term capital gain or (loss) from installment sales and like-kind exchanges, unused capital loss carryover, and total short-term capital gain or loss.
Specific to Form 990-T Filers : For tax-exempt organizations filing Form 990-T, short-term capital gains or losses must be included in the calculation of unrelated business taxable income (UBTI). These transactions affect the tax-exempt organization’s overall tax liability and need to be accurately reported to ensure proper tax treatment.
Part II - Long-Term Capital Gains and Losses—Assets Held More Than One Year
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This part requires all the details similar to part I but for assets held for more than one year. Provide a breakdown of proceeds, costs or basis, and any adjustments and determine the gain or loss.
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Further, include long-term capital gain or (loss) from installment sales, like-kind exchanges, and capital gain distribution. Finally, calculate and report the total long-term capital gain or loss for the reporting period.
Specific to Form 990-T Filers : For Form 990-T filers, long-term capital gains or losses must also be included in the UBTI calculation. These gains or losses directly impact the unrelated business income and should be reported accordingly to ensure accurate tax reporting.
Part III - Summary of Parts I and II
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Here, you need to summarize the information provided in both parts. Calculate the net capital gain or loss by combining the excess of short-term and long-term gains or losses and reporting the total.
Specific to Form 990-T Filers : The net capital gain or loss from this section will be used in the UBTI calculation on Form 990-T. Ensure that the total capital gain or loss is accurately included to determine the amount of unrelated business taxable income subject to tax.
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