Reporting Stock Shares on Schedule D
Schedule is a tax form that you attach to your 1040 income tax return; it is used to report capital gains. The form itself is easy to understand, but the filing can become complicated when multiple transactions occur with a single equity.
Stock sales can be reported based on the actual value of specific shares or on a first in, first out (FIFO) basis. Investors can report capital gains in such a manner as to offset other gains or losses. Schedule D reports on stock sales, not current holdings.
The description of stock shares is entered on Line 1 (a) of Schedule D. List the number of shares and then, the name of the company.
The purchase and sale dates of the shares are entered on Line 1 (b) and 1 (c). If you do not have this information on hand, it can be obtained from the 1099 provided from your broker or by your broker upon request.
Enter the sale price of the stock shares on Line 1 (d). This amount is either the cost per share or the gross proceeds from the sale.
The cost basis of the stock is entered on Line 1 (e). This is the most complicated calculation of the process. You can get detailed information on calculating cost basis from the IRS at their website.
Subtract the figure on Line 1 (e) from the figure on Line 1 (d) to determine your capital gain. If you end up with a negative number, it is a loss as opposed to a gain. Losses are reported in (parenthesis). This amount, gain or loss, is to be entered on Line 1 (f).
Repeat the process for each stock sold. While sales in a single company can be aggregated onto a single entry, you must list every company in which you have sold stock during the year on Schedule D.
The example given above is for reporting on short-term assets. To report on long-term assets, follow the same process, but enter the numbers in the fields on Line 8 rather than Line 1.
If you sold shares in a single company, some of which were short-term assets and some of which were long-term, it will be necessary to separate and report these assets based upon duration.