How to Enter Short-Term Capital Gains

by David Sarokin, studioD

When you sell a capital asset such as shares of a stock, the profits are deemed capital gains. Capital assets also include mutual funds, bonds and real estate. If you hold a capital asset for a year or less before selling it for a gain, it is considered a short-term capital gain. If you hold it for more than a year, it is considered a long-term capital gain and the investor receives a more favorable tax treatment.

Download a copy of Schedule D, "Capital Gains and Losses," from the IRS' website. A copy is also included with tax-filing software programs such as TurboTax. You can also obtain a printed copy from IRS form distribution sites such as libraries and post offices.

Enter the description of the short-term holdings you sold during the prior year in the column, "Description of property." Make sure you are using the part of the form for short-term capital gains, which is usually Part I of Schedule D. A typical entry looks like "100 shares of XYZ Inc."

Enter the dates when you acquired the shares and when you sold them in the appropriate columns.

Enter the sales price of your shares and the original cost, which is also known as the cost basis. Enter the total for all shares bought or sold.

Subtract the cost from the sales price and enter the value as your short-term gain for the sale.

Repeat the process for all short-term stock transactions. Use Schedule D-1 to record additional transactions that don't fit on Schedule D.

Add up your capital gains from all short-term transactions and subtract any short-term losses to arrive at your total short-term gains for the year, and enter this amount on Shedule D.

About the Author

David Sarokin is a well-known specialist on Internet research. A former researcher with Google Answers, he has been profiled in the "New York Times," the "Washington Post" and in numerous online publications. Based in Washington D.C., he splits his time between several research services, writing content and his work as an environmental specialist with the federal government.

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