Schedule D — Capital Gains and Losses
Schedule D is used to report capital gains and losses from the sale of capital assets — stocks, bonds, real estate, cryptocurrency, and other property. Short-term gains (held ≤1 year) are taxed as ordinary income; long-term gains (held >1 year) are taxed at preferential rates of 0%, 15%, or 20%. For tax professionals, Schedule D planning — tax-loss harvesting, wash sale rule management, and capital gain rate optimization — is a high-value advisory service for investment clients.
Key Rules and Authority
| Rule | Detail |
|---|---|
| LTCG Rate (0%) | Up to $96,700 taxable income (MFJ) |
| LTCG Rate (15%) | $96,700–$600,050 (MFJ) |
| LTCG Rate (20%) | Over $600,050 (MFJ) |
| Net Investment Income Tax | 3.8% on NII over $250K (MFJ) |
| Capital Loss Deduction | $3,000/year against ordinary income |
| Wash Sale Period | 30 days before and after sale |
Tax-Loss Harvesting — Turning Losses Into Tax Savings
Tax-loss harvesting is the strategy of selling investments at a loss to offset capital gains and reduce tax liability. Losses first offset gains of the same character (short-term losses offset short-term gains; long-term losses offset long-term gains). After netting, any remaining net capital loss can offset up to $3,000 of ordinary income per year. Excess losses carry forward indefinitely. The wash sale rule (IRC §1091) prohibits repurchasing the same or substantially identical security within 30 days before or after the sale — the disallowed loss is added to the basis of the repurchased security.
Frequently Asked Questions
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