How to Fill Out Schedule D: Capital Gains, Losses, and Form 8949

To fill out Schedule D, list every capital asset sale on Form 8949 first, sorted into short-term (held one year or less) and long-term (held more than a year), then carry those totals to Part I and Part II of Schedule D, combine them in Part III, and send the result to your Form 1040. If Part III shows a gain, you finish your tax using the worksheet the form points you to. If it shows a loss, you can deduct up to $3,000 this year ($1,500 if married filing separately) and carry the rest forward.¹

Check First Whether You Actually Need Schedule D

Not every capital gain requires this form. If your only capital gains for the year are distributions from a mutual fund or REIT shown on Form 1099-DIV, and boxes 2b, 2c, 2d, and 2f on that 1099-DIV are all blank, you can put the box 2a amount straight on Form 1040, line 7a, and skip Schedule D entirely.² You may also skip it if you sold your main home and the whole gain is excluded from income. Anyone who sold stocks, bonds, crypto, or other capital assets during the year has to work through the form.

Pull Your Documents and Nail Down Your Basis

Before you open Schedule D, collect Form 1099-B for asset sales and Form 1099-DIV for fund distributions, plus your own purchase records.

Form 1099-B lists the acquisition date (box 1b), sale date (box 1c), proceeds (box 1d), and cost basis (box 1e) for each transaction.³ For covered securities, the broker reports basis to both you and the IRS. For noncovered securities (usually older purchases), box 1e may be blank and the basis is on you to calculate.

Your cost basis generally starts as what you paid for the asset, including commissions and transfer fees.⁴ A few situations change that starting figure:

Stock splits don’t create a taxable event. Your total basis stays the same and gets spread over more shares. 100 shares with a $1,500 basis become 200 shares at $7.50 each after a 2-for-1 split.⁵
For inherited property, basis is generally the fair market value on the date the previous owner died, not what they paid. If the executor elected an alternate valuation date on the estate tax return, that value applies instead.⁶
For gifted property, your basis is typically the donor’s original basis, with specific IRS rules depending on whether the asset was worth more or less than that basis when it was given.

If the basis on your 1099-B looks wrong (reinvested dividends missing, a corporate reorganization not reflected), don’t fight with the broker on Schedule D itself. You correct it on Form 8949 with an adjustment code.

Fill Out Form 8949 Before You Touch Schedule D

Form 8949 is where each individual sale gets listed. Its totals feed Schedule D, so this is the real starting point.⁷ Part I holds short-term transactions (held one year or less), Part II holds long-term (held more than one year).⁸

At the top of each part, check one box:

Box A (short-term) or D (long-term): basis reported to the IRS.
Box B or E: basis reported to the IRS but you need to adjust it.
Box C or F: basis not reported to the IRS.

For each transaction, enter the asset description, dates, proceeds in column (d), basis in column (e), any adjustment code and amount in columns (f) and (g), and gain or loss in column (h).⁹

Wash Sales

If you sold at a loss and bought a substantially identical asset within 30 days before or after the sale, the wash sale rule disallows the loss.¹⁰ The broker flags it in box 1g of the 1099-B. On Form 8949, put code “W” in column (f) and the disallowed loss in column (g). That loss is added to the basis of the replacement shares, so it reappears when you sell those.

The Aggregate Shortcut

Straightforward transactions can skip 8949 entirely. If your 1099-B shows basis was reported to the IRS, no adjustments appear in boxes 1f or 1g, and you have no corrections of your own, you can enter aggregate totals directly on Schedule D line 1a (short-term) or line 8a (long-term).¹¹

Part I: Short-Term Gains and Losses

Transfer your Form 8949 Part I totals to Schedule D based on which box you checked:

Line 1a: totals for transactions where basis was reported and no adjustments were needed (or that qualify for the aggregate shortcut).
Line 1b: totals from box A transactions that needed adjustments (box B).
Line 2: totals for transactions where basis was not reported (box C).
Line 3: totals for Form 8949 transactions not fitting the categories above.

Lines 4 and 5 capture short-term gains or losses from other forms, such as installment sales or like-kind exchanges. Line 6 is where any short-term capital loss carryover from last year goes; you find that number on the Capital Loss Carryover Worksheet in the Schedule D instructions.¹¹ Line 7 is your net short-term result.

Part II: Long-Term Gains and Losses

Part II mirrors Part I. Lines 8a, 8b, 9, and 10 receive Form 8949 Part II totals in the same basis-reporting order.⁹

Line 13 is for capital gain distributions from mutual funds and REITs, taken from box 2a of Form 1099-DIV. Those go straight on line 13; don’t list them on Form 8949.² Line 14 holds any long-term capital loss carryover. Line 15 is the net long-term result.

One thing to remember for Part II: inherited property is automatically long-term, no matter how briefly you held it before selling, so it belongs in Part II even if you sold a week after inheriting.¹²

Part III: Combine and Send the Result to Form 1040

Line 16 adds line 7 (short-term) and line 15 (long-term). What you do next depends on whether that total is a gain or a loss.

If Line 16 Is a Gain

Answer the questions on lines 17 through 20. These check whether any of your gain sits in a category taxed at a higher maximum rate. Line 18 is 28% rate gain from collectibles: art, antiques, precious metals, gems, stamps, coins.¹³ Line 19 is unrecaptured Section 1250 gain, the portion of gain from depreciable real property tied to depreciation you previously claimed, capped at 25%.¹⁴

If line 17 gets a “Yes,” you finish your tax with the Schedule D Tax Worksheet in the Schedule D instructions. If “No,” use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions instead.¹¹

If Line 16 Is a Loss

Go to line 21 to figure the deductible amount. The cap is $3,000 per year, or $1,500 if you’re married filing separately.¹ Anything above the cap carries forward indefinitely for individuals.¹⁵ Short-term losses stay short-term next year, and long-term stay long-term.

Once Part III is done, the figure from line 16 (gain) or line 21 (loss) goes on the corresponding line of Form 1040.

Reporting Digital Assets

Crypto, NFTs, and other digital assets are property for tax purposes. Sales and exchanges go through the same Form 8949 to Schedule D pipeline as stocks. Starting in 2026, exchanges and brokers report digital asset transactions on the new Form 1099-DA, which shows gross proceeds and, for covered securities, cost basis.¹⁶ For assets bought before mandatory reporting began, the exchange may not have your basis, so hold onto your own records to calculate gain or loss when you sell.

What the Numbers Get Taxed At

Short-term gains are taxed as ordinary income at your regular bracket.¹⁴ Long-term gains use the 0%, 15%, or 20% brackets, with the 2026 thresholds set out in the IRS’s annual adjusted-items release, plus the 28% and 25% ceilings for collectibles and unrecaptured depreciation.¹⁷

On top of that, a 3.8% net investment income tax applies if your modified adjusted gross income exceeds $250,000 (married filing jointly), $200,000 (single or head of household), or $125,000 (married filing separately). The thresholds are not inflation-adjusted.¹⁸ The 3.8% hits the lesser of your net investment income or the amount your income runs over the threshold, and it’s reported on Form 8960 attached to your return.

1
Office of the Law Revision Counsel. 26 USC 1211 – Limitation on Capital Losses
2
Internal Revenue Service. Form 1099-DIV, Dividends and Distributions
3
Internal Revenue Service. Instructions for Form 1099-B (2026) – Section: Specific Instructions
4
Internal Revenue Service. Topic No. 703, Basis of Assets
5
Internal Revenue Service. Stocks (Options, Splits, Traders)
6
Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent
7
Internal Revenue Service. About Form 8949, Sales and Other Dispositions of Capital Assets
8
Office of the Law Revision Counsel. 26 USC 1222 – Other Terms Relating to Capital Gains and Losses
9
Internal Revenue Service. Instructions for Form 8949 (2025) – Section: Specific Instructions
10
Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities
11
Internal Revenue Service. Instructions for Schedule D (Form 1040) (2025) – Section: Specific Instructions
12
Office of the Law Revision Counsel. 26 USC 1223 – Holding Period of Property
13
Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed
14
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
15
Office of the Law Revision Counsel. 26 USC 1212 – Capital Loss Carrybacks and Carryovers
16
Internal Revenue Service. 2026 Instructions for Form 1099-DA
17
Internal Revenue Service. 2026 Adjusted Items
18
Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax