Problem 4-3

1. PR .04-03 Problem 4-3 What is a Capital Asset?, Holding Period, Calculation of Gain or Loss, Net Capital Losses (L0 4.1, 4.2, 4.3, 4.5) Charu Khanna received a Form 1099-8 showing the following stock transactions and basis during 2019: Date Sales Cost stock Purchased Date sold Price Basis 4,000 shares Green Co. 06/04/08 08/05/19 $12,000 $3,000 500 shares Gold Co. 02/12/19 09/05/19 54,000 62,000 5,000 shares Blue Co. 02/04/09 10/08/19 18,000 22,000 100 shares Orange Co. 11/15/18 07/12/19 19,000 18,000 None of the stock is qualied small business stock. The stock basis was reported to the IRS. Calculate Charu's net capital gain or loss using Schedule D and Form 8949. Note: Enter all amounts as positive numbers except for "loss". If required, enter a "loss" as a negative number on the tax form. If an amount ls zero, enter "0". If the answer Is "Not applicable", select "MA" from the drop-down list. . . OMB No. 1545-0074 SCHEDULE D Capital Gains and Losses (Form 1040 or 1040-SR) 20 19 P Attach to Form 1040, 1040-SR, or 1040-NR. Department Of the Treasury > Go to www.irs.gov/scheduleD for instructions and the latest information. Attachment Internal Revenue Service (99) > Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9, and 10. Sequence No. 12 Name(s) shown on return Your social security number Charu Khanna Did you dispose of any investment(s) in a qualied opportunity fund during the tax year? III Yes D No If "Yes," attach Form 8949 and see its instructions for additional requirements for reporting your gain or loss. m Short-Term Capital Gains and LossesGenerally Assets Held One Year or Less (see instructions) See instructions for how to figure the amounts to enter on the ( ) (h) Gain or 9 lines below. (loss) Subtract Adjustments to column (e) from (d) (e) gain or loss from column (d) and This form may be easier to complete if you round off cents to Proceeds (sales COSt (or other Form(s) 8949, Part combine the ' b is I line 2 column whole dollars. price) as ) ' ' result with (9) column (9) 1a Totals for all shortterm transactions reported on Form 1099-3 for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b . . . . 1b Totals for all transactions reported on Form(s) 8949 with Box A checked ............................... 2 Totals for all transactions reported on Form(s) 8949 with Box B checked ............................... 3 Totals for all transactions reported on Form(s) 8949 with Box C checked ............................... 4 Short-term gain from Form 6252 and short-term gain or (loss) from Forms 4684, 6781, and 8824 ........ 5 Net short-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedule(s) K1 6 Short-term capital loss carryover: Enter the amount, if any, from line 8 of your Capital Loss Carryover Worksheet in the instructions ........................................................ ( 7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). If you have any long-term capital gains or losses, go to Part 11 below. Otherwise, go to Part III on the back .................... 7 m Long-Term Capital Gains and LossesGenerally Assets Held More Than One Year (see instructions) See instructions for how to figure the amounts to enter on the lines (h) Gain or below. This form may be easier to complete if you round off cents to whole dollars. 8a Totals for all long-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b. . . . (d) Proceeds (sales price) (6) Cost (or other basis) (9) Adjustments to gain or loss from Form(s) 8949, Part II, line 2, column (9) (loss) Subtract column (e) from column (d) and combine the result with column (9) 8b Totals for all transactions reported on Form(s) 8949 with Box D checked ............................... 9 Totals for all transactions reported on Form(s) 8949 with Box E checked ............................... 10 Totals for all transactions reported on Form(s) 8949 with Box F checked ............................... 11 Gain from Form 4797, Part I; long-term gain from Forms 2439 and 6252; and long-term gain or (loss) from Forms 4684, 6781, and 8824 ......................................................... 12 Net long-term gain or (loss) from partnerships, S corporations, estates, and trusts from Schedu|e(s) K1 13 Capital gain distributions. See the instructions ............................................. 14 Long-term capital loss carryover. Enter the amount, if any, from line 13 of your Capital Loss Carryover Worksheet in the instructions ........................................................ 15 Net long-term capital gain or (loss). Combine lines 8a through 14 in column (h). Then go to Part III on the back ........................................................................... For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 11338H Schedule D (Form 1040 or 1040-SR) 2019 E Summary 16 17 18 19 20 Combine lines 7 and 15 and enter the result ...................................... I If line 16 is a gain, enter the amount from line 16 on Form 1040 or 1040-SR, line 6; or Form 1040-NR, line 14. Then go to line 17 below. I If line 16 is a loss, skip lines 17 through 20 below. Then go to line 21. Also be sure to complete line 22. I If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040 or 1040-SR, line 6; or Form 1040-NR, line 14. Then go to line 22. Are lines 15 and 16 both gains? D Yes. Go to line 18. D No. Skip lines 18 through 21, and go to line 22. If you are required to complete the 28% Rate Gain Worksheet (see instructions), enter the amount, if any, from line 7 of that worksheet .................................................. D If you are required to complete the Unrecaptured Section 1250 Gain Worksheet (see instructions), enter the amount, if any, from line 18 of that worksheet ................................... D Are lines 18 and 19 both zero or blank? D Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040-SR, line 12a (or in the instructions for Form 1040-NR, line 42). Don't complete lines 21 and 22 below. D No. Complete the Schedule D Tax Worksheet in the instructions. Don't complete lines 21 and 22 below. 21 If line 16 is a loss, enter here and on Form 1040 or 1040-SR, line 6; or Form 1040-NR, line 14, the smaller of: - The loss on line 16; or - ($3,000), or if married ling separately, ($1,500) } """"""""""""" Note: When figuring which amount is smaller, treat both amounts as positive numbers. 22 Do you have qualied dividends on Form 1040 or 1040-SR, line 3a; or Form 1040-NR, line 10b? D Yes. Complete the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Forms 1040 and 1040-SR, line 12a (or in the instructions for Form 1040-NR, line 42). In No. Complete the rest of Form 1040, 1040-SR, or 1040-NR. Schedule D (Form 1040 or 1040-SR) 2019 OMB No. 1545-0074 Form 8949 Sales and Other Dispositions of Capital Assets Department Of the D Go to www.irs.g(Form8949 for instructions and the latest information. 20 19 Treasury Internal > File with your Schedule D to list your transactions for lines 1b, 2, 3, 8b, 9, and 10 of Attachment Revenue Service Schedule D. Sequence No. 12A Name(s) shown on return Social security number or taxpayer identication number Charu Khanna Before you check Box A, B, or C below, see whether you received any Form(s) 1099-3 or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-5. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. m Short-Term. Transactions involving capital assets you held 1 year or less are generally short-term (see instructions). For longterm transactions, see page 2. Note: You may aggregate all short-term transactions reported on Form(s) 1099-8 showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 1a; you aren't required to report these transactions on Form 8949 (see instructions). You must check Box A, B, or C below. Check only one box. If more than one box applies for your short-term transactions, complete a separate Form 8949, page 1, for each applicable box. If you have more short-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. D (A) Short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) D (B) Short-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS D (C) Short-term transactions not reported to you on Form 1099-B (a) Description of property (Example: 100 sh. XYZ Co.) (M Date acquired (Mo., day, yr.) (C) Date sold or disposed of (Mo., day, yr.) (CD Proceeds (sales price) (see instructions) (e) Cost or other basis. See the Note below and see Column (e) in the separate instructions Adjustment, if any, to gain or loss. If you enter an amount in column (9), enter a code in column (f). See the (f) Code(s) (9) Amount of from . adjustment instructions separate instructions. ('1) Gain or (loss). Subtract column (e) from column (d) and combine the result with column (9) 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 1b (if Box A above is checked), line 2 (if Box B above is checked), or line 3 (if Box C above is checked) b Note: If you checked Box A above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (9) to correct the basis. See Column (9) in the separate instructions for how to gure the amount of the adjustment. For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 377682 Form 8949 (2019) Form 8949 (2019) Attachment Sequence No. 12A Page 2 Name(s) shown on return. Name and SSN or taxpayer identication no. not Social security number or taxpayer identification required if shown on other side number Charu Khanna Before you check Box D, E, or F below, see whether you received any Form(s) 1099-8 or substitute statement(s) from your broker. A substitute statement will have the same information as Form 1099-3. Either will show whether your basis (usually your cost) was reported to the IRS by your broker and may even tell you which box to check. m Long-Term. Transactions involving capital assets you held more than 1 year are generally long-term (see instructions). For short- term transactions, see page 1. Note: You may aggregate all long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on Schedule D, line 8a; you aren't required to report these transactions on Form 8949 (see instructions). You must check Box D, E, or F below. Check only one box. If more than one box applies for your long-term transactions, complete a separate Form 8949, page Z, for each applicable box. If you have more long-term transactions than will fit on this page for one or more of the boxes, complete as many forms with the same box checked as you need. I: (D) Long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS (see Note above) D (E) Long-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS III (F) Long-term transactions not reported to you on Form 1099-B Adjustment, if any, (h) to gain or loss. If you Gain or enter an amount in (loss). column (9), enter a Subtract (e) code in column (f). See column (d) Cost or other the separate (e) from 1 Descriptiofiazf property (b) Date(::|d or Proceeds basis. See the instructions. column Date acquired _ (sales price) Note below and (d) and (Example: 100 sh. XYZ disposed of _ _ Co.) (Mo., day, yr.) (Mo., day, yr.) (see see Column (e) In (f) (g) combine instructions) the sepa late Code(s) the result instructions from Amount or with instructions adjustment column (9) 2 Totals. Add the amounts in columns (d), (e), (g), and (h) (subtract negative amounts). Enter each total here and include on your Schedule D, line 8b (if Box D above is checked), line 9 (if Box E above is checked), or line 10 (if Box F above is checked) b Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (9) to correct the basis. See Column (9') in the separate instructions for how to gure the amount of the adjustment. Form 8949 (2019)