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Department of the Treasury
Internal Revenue Service
2023

Instructions for Schedule D

(Form 1041)

Capital Gains and Losses

Section references are to the Internal Revenue Code unless
Purpose of Schedule
otherwise noted.
These instructions explain how to complete Schedule D
Future Developments (Form 1041). Complete Form 8949 before you complete
For the latest information about developments related to line 1b, 2, 3, 8b, 9, or 10 of Schedule D.
Schedule D and its instructions, such as legislation enacted Use Schedule D to report the following.
after they were published, go to IRS.gov/Form1041. • The overall capital gains and losses from transactions
reported on Form 8949.
What's New • Certain transactions that the estate or trust doesn't have
Capital gains and qualified dividends. For tax year 2023, to report on Form 8949.
the 20% maximum capital gain rate applies to estates and • Gain from Part I of Form 4797, Sales of Business
trusts with income above $14,650. The 0% and 15% rates Property.
continue to apply to certain threshold amounts. The 0% rate • Capital gain or loss from Form 4684, Casualties and
applies up to $3,000. The 15% rate applies to amounts over Thefts.
$3,000 and up to $14,650. • Capital gain from Form 6252, Installment Sale Income.
• Capital gain or loss from Form 6781, Gains and Losses
Deferral of gain invested in a qualified opportunity fund From Section 1256 Contracts and Straddles.
(QOF). If you made a deferral election in a QOF that meets • Capital gain or loss from Form 8824, Like-Kind
the 5-year holding period threshold, you will be eligible for a Exchanges.
10% stepped-up basis. See Form 8997 and its instructions • Undistributed long-term capital gains from Form 2439,
for additional information regarding QOFs. Notice to Shareholders of Undistributed Long-Term
Capital Gains.
Reminders • Capital gain or loss from partnerships, S corporations, or
Disposal of qualified opportunity fund (QOF) invest- other estates or trusts.
ment. If you disposed of any investment in a QOF during the • A capital loss carryover from 2022 to 2023.
tax year, you will need to check the box on Schedule D and For more information, see Pub. 544, Sales and Other
attach Form 8949, Sales and Other Dispositions of Capital Dispositions of Assets; Pub. 551, Basis of Assets; and the
Assets. You will also need to report the disposal on Form Instructions for Form 8949.
8997, Initial and Annual Statement of Qualified Opportunity
Fund (QOF) Investments. See the Instructions for Form 8949 Other Forms You May Have To File
and the Instructions for Form 8997 for additional reporting
requirements. Form 8949. Use Form 8949 to report the sale or exchange
of a capital asset (defined later) not reported on another form
Form 8971. Form 8971, Information Regarding Beneficiaries or schedule. See Lines 1a and 8a, later, for more information
Acquiring Property From a Decedent, along with its about when Form 8949 is and isn't needed.
Schedule A, is used to comply with the filing requirements
regarding consistent basis reporting between an estate and a Form 4797. Use Form 4797 to report the following.
person acquiring property from an estate. 1. The sale or exchange of:
For more information, see Consistent basis reporting a. Real property used in a trade or business;
between estate and person acquiring property from a
decedent, later. b. Depreciable and amortizable tangible property used
in a trade or business (but see Disposition of
Form 1041 e-filing. When e-filing Form 1041, U.S. Income Depreciable Property Not Used in Trade or Business
Tax Return for Estates and Trusts, use either Form 8453-FE, in the Instructions for Form 4797);
U.S. Estate or Trust Declaration for an IRS e-file Return, or
Form 8879-F, IRS e-file Signature Authorization for Form c. Oil, gas, geothermal, or other mineral property; and
1041. If Form 1041 is e-filed, then any Schedule D (Form d. Section 126 property.
1041) and Form 8949 that are part of the return must also be
e-filed. 2. The involuntary conversion (other than from casualty or
theft) of property used in a trade or business and capital
assets held more than 1 year for business or profit. But
General Instructions see Disposition of Depreciable Property Not Used in
Trade or Business in the Instructions for Form 4797.
Any reference in these instructions to “you” means the
fiduciary of the estate or trust. 3. The disposition of noncapital assets other than inventory
or property held primarily for sale to customers in the
ordinary course of a trade or business.

Nov 29, 2023 Cat. No. 11378R

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4. Ordinary loss on the sale, exchange, or worthlessness of tax liability, the beneficiary must use a basis consistent with
small business investment company (section 1242) the final estate tax value of the property to determine the
stock. beneficiary’s basis in that property. Calculate a basis
consistent with the final estate tax value by starting with the
5. Ordinary loss on the sale, exchange, or worthlessness of
reported value and then making any allowed adjustments.
small business (section 1244) stock.
For more information, see sections 1014(f), 6035, the
6. Election to defer a qualified section 1231 gain invested in Instructions for Form 8971 and Schedule A and Column
a Qualified Opportunity Fund (QOF). (e)—Cost or Other Basis in the Instructions for Form 8949.
Form 4684. Use Form 4684 to report involuntary Basis of property acquired from a decedent who died in
conversions of property due to casualty or theft. 2010. See Pub. 4895, Tax Treatment of Property Acquired
From a Decedent Dying in 2010 for details about determining
Form 6781. Use Form 6781 to report gains and losses from the basis of property acquired from a decedent who died in
section 1256 contracts and straddles. 2010.
Form 8824. Use Form 8824 if the estate or trust made one Basis of assets held on January 1, 2001, where an elec-
or more like-kind exchanges. A like-kind exchange occurs tion to recognize gain was made. If you elected on behalf
when the estate or trust exchanges business or investment of an estate or trust to recognize gain on an asset held on
real property for real property of a like kind. January 1, 2001, the basis in the asset is its closing market
Form 8971. Use Form 8971 (including Schedule(s) A) to price or FMV, whichever applies, on the date of the deemed
report basis between an estate and a person acquiring sale and reacquisition, whether the deemed sale resulted in a
property from a decedent. gain or an unallowed loss.
Carryover basis. Carryover basis determined under
Special Rules for Determining Basis of Estate repealed section 1023 applies to property acquired from a
and Trust Property decedent who died after December 31, 1976, and before
Basis of trust property. Generally, the basis of property November 7, 1978, only if the executor made a timely filed
acquired by gift is the same as its basis in the hands of the election on Form 5970-A, Election of Carryover Basis.
donor. However, if the fair market value (FMV) of the property Property received from an Alaska Native Corporation.
at the time it was transferred to the trust is less than the The basis of property received by an Alaska Native
transferor's basis, then the FMV is used to determine any Settlement Trust from an Alaska Native Corporation is the
loss upon disposition. lesser of the basis of the Native Corporation in the property or
If the property was transferred to the trust after 1976, and the FMV immediately before the contribution of the property
a gift tax was paid under Chapter 12, then increase the to the trust. The basis and FMV of the property are shown on
donor's basis as follows: the statement provided by the Native Corporation to the
Multiply the amount of the gift tax paid by a fraction, the Settlement Trust.
numerator of which is the net appreciation in value of the gift
(defined below), and the denominator of which is the amount Capital Asset
of the gift. For this purpose, the net appreciation in value of Each item of property held by the estate or trust (whether or
the gift is the amount by which the FMV of the gift exceeds not connected with a trade or business) is a capital asset,
the donor's adjusted basis. except the following.
• Stock in trade, inventory, or property held primarily for
Basis of decedent's estate property. Generally, the basis sale to customers.
of property acquired by a decedent's estate is the FMV of the • Depreciable or real property used in a trade or business,
property at the date of the decedent's death, or the alternate even if it's fully depreciated.
valuation date if the executor elected to use an alternate • Certain patents, inventions, models, or designs (whether
valuation under section 2032. or not patented); secret formulas or processes; or similar
See Pub. 551 and the Instructions for Form 706, United property. See section 1221(a)(3).
States Estate (and Generation-Skipping Transfer) Tax Return, • Copyrights; literary, musical, or artistic compositions;
for a discussion of the valuation of qualified real property letters or memoranda; or similar property eligible for
under section 2032A. copyright protection that the trust received from someone
Consistent basis reporting between estate and person whose personal efforts created them or for whom they
acquiring property from a decedent. An executor of an were created in a way (such as by gift) that entitled the
estate (or other person) required to file an estate tax return trust to the basis of the previous owner. In the case of
after July 31, 2015, must provide a Form 8971 with attached letters, memoranda, or similar property, such property
Schedules A to the IRS, and a copy of the beneficiary’s may also be prepared or produced for the trust.
Schedule A to each beneficiary who receives or is to receive Note. Under section 1221(b)(3), the trust can elect to
property from the estate. The Schedule A must show the final treat musical compositions and copyrights in musical
estate tax value of the property received or to be received by works as capital assets if it acquired the assets under
the beneficiary. An executor (or other person) who files an circumstances entitling it to the basis of the person who
estate tax return only to make an election regarding the created the property or for whom it was prepared or
generation-skipping transfer tax or portability of the deceased produced.
spousal unused exclusion (DSUE) is not required to provide • Accounts or notes receivable acquired in the ordinary
Form 8971 and Schedule A. course of a trade or business for services rendered or
from the sale of inventoriable assets or property held
If Part 2, column C of the Schedule A, received by the primarily for sale to customers.
beneficiary indicates that the property increases the estate

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• Certain U.S. Government publications not purchased at pecuniary bequest (that is, a bequest of a sum of
the public sale price. money).
• Certain “commodities derivative financial instruments”
held by a dealer (see section 1221(a)(6)). Items for Special Treatment
• Certain hedging transactions entered into in the normal • Bonds and other debt instruments. See Pub. 550,
course of a trade or business (see section 1221(a)(7)). Investment Income and Expenses (Including Capital
• Supplies regularly used in a trade or business. Gains and Losses).
• Gain on the disposition of a market discount bond. In
Short-Term or Long-Term general, the gain is recharacterized as interest income to
Separate the capital gains and losses according to how long the extent of accrued market discount as of the date of
the estate or trust held or owned the property. The holding disposition. See sections 1276 through 1278 and Pub.
period for short-term capital gains and losses is generally 1 550 for more information on market discount. See the
year or less. The holding period for long-term capital gains Instructions for Form 8949 for detailed information about
and losses is generally more than 1 year. Property acquired how to report the disposition of a market discount bond.
from a decedent is treated as held for more than 1 year. • Gain or loss recognized on the disposition of a
contingent payment debt instrument subject to the
To figure the length of the period the estate or trust held noncontingent bond method. The gain is generally
property, begin counting on the day after the estate or trust treated as interest income rather than as capital gain. In
acquired the property and include the day it was disposed. certain situations, all or a portion of a loss recognized on
Use the trade dates for the dates of acquisition and sale of the disposition of a contingent payment debt instrument
stocks and bonds traded on an exchange or over-the-counter subject to the noncontingent bond method may be
market. treated as an ordinary loss rather than as a capital loss.
The holding period for property received by an Alaska See Regulations section 1.1275-4(b) and Pub. 550 for
Native Settlement Trust from an Alaska Native Corporation more information on contingent payment debt
includes the period the Native Corporation held the property. instruments subject to the noncontingent bond method.
The date the Native Corporation acquired the property is • A nonbusiness bad debt must be treated as a short-term
shown on the statement provided by the Native Corporation capital loss and can be deducted only in the year the
to the Settlement Trust. debt becomes totally worthless. See Pub. 550 for details.
• Wash sales of stock or securities (including contracts or
Beginning in 2018, the long-term holding period for certain options to acquire or sell stock or securities) (section
gains with respect to “applicable partnership interests” is 1091).
more than 3 years. See Pub. 541, Partnerships, for more • Gain or loss on options to buy or sell. See Pub. 550.
information. • Certain real estate subdivided for sale that may be
considered a capital asset (section 1237).
For more information about holding periods, see the Gain on disposition of stock in a domestic international
Instructions for Form 8949. •
sales corporations (DISC) or former DISC (section
Section 643(e)(3) Election 995(c); see also section 996(g)).
• Gain on the sale or exchange of stock in certain foreign
For in-kind noncash property distributions, a fiduciary may corporations (section 1248).
elect to have the estate or trust recognize gain or loss in the • Sales of stock received under a qualified public utility
same manner as if the distributed property had been sold to dividend reinvestment plan. See Pub. 550 for details.
the beneficiary at its FMV. The distribution deduction is the • Transfer of appreciated property to a political
property's FMV. This election applies to all distributions made organization (section 84).
by the estate or trust during the tax year. Once the election is • Amounts received by shareholders in corporate
made, it may only be revoked with IRS consent. liquidations. See Pub. 550.
Note. Section 267 doesn't allow a trust or a decedent's • Cash received in lieu of fractional shares of stock as a
result of a stock split or stock dividend. See Pub. 550.
estate to claim a deduction for any loss on property to which
a section 643(e)(3) election applies. In addition, when a trust • Load charges to acquire stock in a regulated investment
company (including a mutual fund), which may not be
or a decedent's estate distributes depreciable property,
taken into account in determining gain or loss on certain
section 1239 applies to deny capital gains treatment for any
dispositions of the stock if reinvestment rights were
gain on property to which a section 643(e)(3) election
exercised. See Pub. 550.
applies.
• The sale or exchange of S corporation stock or an
Related Persons interest in a trust held for more than 1 year, which may
result in collectibles gain (28% rate gain). See the
A trust can't deduct a loss from the sale or exchange of instructions for line 18c, later.
property directly or indirectly between any of the following. • The sale or other disposition of a partnership interest
• A grantor and a fiduciary of a trust; may result in ordinary income, collectibles gain, or
• A fiduciary of a trust and a fiduciary (or beneficiary) of unrecaptured section 1250 gain.
another trust created by the same grantor; • Gain or loss on the disposition of securities futures
• A fiduciary and a beneficiary of the same trust; contracts. See Pub. 550.
• A trust fiduciary and a corporation of which more than • Gains from certain constructive ownership transactions.
50% in value of the outstanding stock is owned directly or Gain in excess of the gain the estate or trust would have
indirectly by or for the trust or by or for the grantor of the recognized if the estate or trust held a financial asset
trust; or directly during the term of a derivative contract must be
• An executor of an estate and a beneficiary of that estate, treated as ordinary income. See section 1260 for details.
except when the sale or exchange is to satisfy a

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• If qualified dividends include extraordinary dividends, any QSB stock acquired after February 17, 2009, and before
loss on the sale or exchange of the stock is a long-term September 28, 2010. The exclusion is increased to 100% on
capital loss to the extent of the extraordinary dividends. the sale of QSB stock acquired after September 27, 2010.
An extraordinary dividend is a dividend that is at least
10% (5% in the case of preferred stock) of the basis in To be QSB stock, the stock must meet all of the following
the stock. tests.
• Gain or loss from a sale, exchange, or other disposition 1. It must be stock in a C corporation (that is, not S
of virtual currency if held as a capital asset. See Notice corporation stock).
2014-21, 2014-16 I.R.B. 938, as modified by Notice
2023-34, 2023-19 I.R.B. 837. 2. It must have been originally issued after August 10,
• NAV method for money market funds. Report capital gain 1993.
or loss determined under the net asset value (NAV) 3. As of the date the stock was issued, the corporation was
method with respect to shares in a money market fund on a QSB. A QSB is a domestic C corporation with total
Form 8949, Part I, with box C checked. Enter the name of gross assets of $50 million or less (a) at all times after
each fund followed by “(NAV)” in column (a). Enter the August 9, 1993, and before the stock was issued, and (b)
net gain or loss in column (h). Leave all other columns immediately after the stock was issued. Gross assets
blank. See the Instructions for Form 8949. include those of any predecessor of the corporation. All
corporations that are members of the same
Constructive Sales Treatment for Certain
parent-subsidiary controlled group are treated as one
Appreciated Positions corporation.
Generally, the estate or trust must recognize gain (but not
loss) on the date it enters into a constructive sale of any 4. The estate or trust acquired the stock at its original issue
appreciated position in stock, a partnership interest, or (either directly or through an underwriter), either in
certain debt instruments as if the position were disposed of at exchange for money or other property or as pay for
FMV on that date. services (other than as an underwriter) to the
corporation. In certain cases, the estate or trust may
The estate or trust is treated as making a constructive sale meet the test if it acquired the stock from another person
of an appreciated position when it (or a related person, in who met this test (such as by gift or inheritance) or
some cases) does one of the following. through a conversion or exchange of QSB stock the
• Enters into a short sale of the same or substantially estate or trust held.
identical property (that is, a “short sale against the box”); 5. During substantially all the time the estate or trust held
• Enters into an offsetting notional principal contract the stock:
relating to the same or substantially identical property;
• Enters into a futures or forward contract to deliver the a. The corporation was a C corporation;
same or substantially identical property; or b. At least 80% of the value of the corporation's assets
• Acquires the same or substantially identical property (if was used in the active conduct of one or more
the appreciated position is a short sale, offsetting qualified businesses (defined below); and
notional principal contract, or a futures or forward
contract). c. The corporation wasn't a foreign corporation, DISC,
former DISC, corporation that has made (or that has
Exception. Generally, constructive sale treatment doesn't a subsidiary that has made) a section 936 election,
apply if: regulated investment company, real estate
• The estate or trust closed the transaction before the end investment trust, real estate mortgage investment
of the 30th day after the end of the year in which it was conduit, financial asset securitization investment
entered into, trust, or cooperative.
• The estate or trust held the appreciated position to which
the transaction relates throughout the 60-day period Note. A specialized small business investment company
starting on the date the transaction was closed, and (SSBIC) is treated as having met test 5b above.
• At no time during that 60-day period was the estate's or
trust's risk of loss reduced by holding certain other Qualified business. A qualified business is any business
positions. other than the following.
• One involving services performed in the fields of health,
For details and other exceptions to these rules, see Pub. law, engineering, architecture, accounting, actuarial
550. science, performing arts, consulting, athletics, financial
services, or brokerage services;
Exclusion of Gain on Qualified Small Business • One whose principal asset is the reputation or skill of one
(QSB) Stock (Section 1202) or more employees;
Section 1202 allows you to exclude a portion of the eligible • Any banking, insurance, financing, leasing, investing, or
gain on the sale or exchange of QSB stock held for more than similar business;
5 years. You can exclude up to 50% of the qualified gain if • Any farming business (including the raising or harvesting
you acquired the QSB stock on or before February 17, 2009. of trees);
You can exclude up to 60% of the qualified gain on certain • Any business involving the production of products for
empowerment zone business stock for gain attributable to which percentage depletion can be claimed; or
periods on or before December 31, 2018. The 60% exclusion • Any business of operating a hotel, motel, restaurant, or
doesn't apply to gain attributable to periods after December similar business.
31, 2018. See Empowerment zone business stock, later. The For more details about limits and additional requirements
exclusion is increased to 75% on the sale or exchange of that may apply, see Pub. 550 or section 1202.

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Acquisition date of stock acquired after February 17, the exclusion; if you excluded 75% of the gain, enter / of the 1 3
2009. When determining whether the exclusion is limited to exclusion; if you excluded 100% of the gain, don't enter an
50%, 75%, or 100% of the gain from the QSB stock, the amount.
acquisition date is considered to be the first day the stock is Gain from Form 2439. If the estate or trust received a
held (determined after applying the holding period rules in Form 2439, Notice to Shareholder of Undistributed
section 1223). Long-Term Capital Gains, with a gain in box 1c, part or all of
that gain (which is also included in box 1a) may be eligible for
Empowerment zone business stock. Generally, the estate the section 1202 exclusion. Report the total gain (box 1a) on
or trust can exclude up to 60% of its gain on certain QSB Schedule D, line 11. In column (a) of Form 8949, Part II, enter
stock if it meets the following additional requirements. the name of the corporation whose stock was sold. In column
1. The stock sold or exchanged was stock in a corporation (f), enter “Q” and in column (g), enter the amount of the
that qualified as an empowerment zone business during excluded gain as a negative number. See the Instructions for
substantially all of the time the estate or trust held the Form 8949, columns (f), (g), and (h). If you are completing
stock. line 18c of Schedule D, enter as a positive number the
amount of your allowable exclusion on line 2 of the 28% Rate
2. The estate or trust acquired the stock after December Gain Worksheet, later; if you excluded 60% of the gain, enter
21, 2000, and before February 18, 2009. 2/ of the exclusion; if you excluded 75% of the gain, enter /3 1 3
3. The gain from the sale or exchange of the stock is of the exclusion; if you excluded 100% of the gain, don't enter
attributable to periods on or before December 31, 2018. an amount.
Gain from an installment sale of QSB stock. If all
Requirement 1 will still be met if the corporation ceased to payments aren't received in the year of sale, a sale of QSB
qualify after the 5-year period that began on the date the stock that isn't traded on an established securities market is
estate or trust acquired the stock. However, the gain that generally treated as an installment sale and is reported on
qualifies for the 60% exclusion can't be more than the gain Form 6252. Part or all of any gain from the sale that is
the estate or trust would have had if it had sold the stock on reported on Form 6252 for the current year may be eligible for
the date the corporation ceased to qualify. the section 1202 exclusion. Report the long-term gain from
See section 1397C for more details. Form 6252 on Schedule D, line 11. In column (a) of Form
Stock acquired after February 17, 2009. The estate or 8949, Part II, enter the name of the corporation whose stock
trust can exclude up to 75% of the gain if it acquired the stock was sold. In column (f), enter “Q” and in column (g), enter the
amount of the allowable exclusion as a negative number. See
after February 17, 2009, and before September 28, 2010.
the Instructions for Form 8949, columns (f), (g), and (h). If you
The estate or trust can exclude up to 100% of the gain if it are completing line 18c of Schedule D, enter as a positive
acquired the stock after September 27, 2010. number the amount of your allowable exclusion for the year
Pass-through entities. If the estate or trust held an interest on line 2 of the 28% Rate Gain Worksheet, later; if you
in a pass-through entity (a partnership, S corporation, mutual excluded 60% of the gain, enter / of the exclusion; if you 2 3
fund, or other regulated investment company) that sold QSB excluded 75% of the gain, enter / of the exclusion; if you 1 3
stock, the estate or trust must generally have held the interest excluded 100% of the gain, don't enter an amount.
on the date the pass-through entity acquired the QSB stock Alternative minimum tax. Enter 7% of the estate's or
and at all times thereafter until the stock was sold to qualify trust's allowable exclusion for the year on line 8 of Schedule I
for the exclusion. (Form 1041), Alternative Minimum Tax—Estates and Trusts.
How to report. Report the sale or exchange of the QSB However, if the estate or trust qualifies for the 100%
stock on Form 8949, Part II, with the appropriate box exclusion, leave line 8 of Schedule I (Form 1041) blank.
checked, as you would if you weren't taking the exclusion. Rollover of gain from QSB stock. If the estate or trust held
Enter “Q” in column (f) and enter the amount of the excluded QSB stock (as defined earlier) for more than 6 months, it may
gain as a negative number in column (g). Put it in elect to postpone gain if it purchased other QSB stock during
parentheses to show it is negative. See the Instructions for the 60-day period that began on the date of the sale.
Form 8949, columns (f), (g), and (h). Complete all remaining
columns. If you are completing line 18c of Schedule D, enter The estate or trust must recognize gain to the extent the
as a positive number the amount of your allowable exclusion sale proceeds exceed the cost of the replacement stock.
on line 2 of the 28% Rate Gain Worksheet, later; if you Reduce the basis of the replacement stock by any postponed
excluded 60% of the gain, enter / of the exclusion; if you 2 3 gain.
excluded 75% of the gain, enter / of the exclusion; if you 1 3 The estate or trust must make the election no later than
excluded 100% of the gain, don't enter an amount. the due date (including extensions) for filing Form 1041 for
Gain from Form 1099-DIV. If the estate or trust received the tax year in which the stock was sold. If the original Form
a Form 1099-DIV, Dividends and Distributions, with a gain in 1041 was filed on time, the election may be made on an
box 2c, part or all of that gain (which is also included in amended return filed no later than 6 months after the due
box 2a) may be eligible for the section 1202 exclusion. date of the original return (excluding extensions). Write “Filed
Report the total gain (box 2a) on Schedule D, line 13. In pursuant to section 301.9100-2” at the top of the amended
column (a) of Form 8949, Part II, enter the name of the return, and file it at the same address used for the original
corporation whose stock was sold. In column (f), enter “Q” Form 1041.
and in column (g), enter the amount of the excluded gain as a How to report. To make the election, report the sale on
negative number. See the Instructions for Form 8949, Part I or Part II of Form 8949 (depending on how long the
columns (f), (g), and (h). If you are completing line 18c of estate or trust owned the stock), as it would be reported if the
Schedule D, enter as a positive number the amount of your election wasn't made. Then, enter “R” in column (f) and the
allowable exclusion on line 2 of the 28% Rate Gain amount of the postponed gain from the section 1045 rollover
Worksheet, later; if you excluded 60% of the gain, enter / of 2 3 as a negative number in column (g). Put it in parentheses to

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show it is negative. Complete all remaining columns. See the How to report. Report the sale or exchange of qualified
Instructions for Form 8949, columns (f), (g), and (h). community stock or a qualified community partnership
interest on Form 8949, Part II, with the appropriate box
Exclusion of gain from DC Zone assets. If the estate or
checked, as you would if you weren't taking the exclusion.
trust sold or exchanged a District of Columbia Enterprise
Then, enter “X” in column (f) and enter the amount of the
Zone (DC Zone) asset that it acquired after 1997 and before
exclusion as a negative number in column (g). Put it in
2012 and held for more than 5 years, it may be able to
parentheses to show it is negative. See the instructions for
exclude the amount of qualified capital gain that it would
Form 8949, columns (f), (g), and (h). Complete all remaining
otherwise include in income. The exclusion applies to an
columns.
interest in, or property of, certain businesses operating in the
District of Columbia. Report the sale or exchange of qualified community
DC Zone asset. A DC Zone asset is any of the following. business property on Form 4797. See the Form 4797
• DC Zone business stock. instructions for details.
• DC Zone partnership interest. Deferral of gain invested in a Qualified Opportunity
• DC Zone business property. Fund (QOF). If the estate or trust has an eligible gain
Qualified capital gain. Qualified capital gain is any gain (defined below), it can invest that gain in a QOF and elect to
recognized on the sale or exchange of a DC Zone asset that defer part or all of the gain that it would otherwise include in
is a capital asset or property used in a trade or business. It income until the estate or trust sells or exchanges the
doesn't include any of the following gains. investment in the QOF or December 31, 2026, whichever is
• Gain attributable to periods after December 31, 2016. earlier. If the election is made, only include gain to the extent,
• Gain treated as ordinary income under section 1245. if any, that the amount of realized gain is more than the
• Section 1250 gain figured as if section 1250 applied to all aggregate amount invested in a QOF during the 180-day
depreciation rather than the additional depreciation. period beginning on the date the gain was realized. The
• Gain attributable to real property, or an intangible asset, estate or trust may also be able to permanently exclude the
that isn't an integral part of a DC Zone business. gain from the sale or exchange of any investment in a QOF if
• Gain from a related-party transaction. See Sales and the investment is held for at least 10 years.
Exchanges Between Related Persons in chapter 2 of If you elect to defer tax on an eligible gain by
Pub. 544. ! investing in a QOF, you will need to complete a Form
How to report. Report the sale or exchange of DC Zone CAUTION 8997 for each year you hold the investment and for
business stock or a DC Zone partnership interest on Form the year you dispose of the investment. If you have held that
8949, Part II, as you would if you weren't taking the exclusion. investment for more than 5 years, see the Instructions for
Then, enter “X” in column (f). Enter the amount of the Form 8997 for additional information regarding the basis of
exclusion as a negative number in column (g). Put it in that investment.
parentheses to show it is negative. See the instructions for
Form 8949, columns (f), (g), and (h). Complete all remaining QOF. A QOF is any investment vehicle that is organized as
columns. either a corporation or partnership for the purpose of
Report the sale or exchange of DC Zone business investing in eligible property that is located in a Qualified
property on Form 4797. See the Form 4797 instructions for Opportunity Zone.
details. Eligible gain. Gain that is eligible to be deferred if it is
Exclusion of gain from qualified community assets. If invested in a QOF includes any amount treated as a capital
the estate or trust sold or exchanged a qualified community gain for federal income tax purposes. See section 1400Z-2
asset that it acquired after 2001 and before 2010 and held for for more details on Opportunity Zones and the special rules.
more than 5 years, it may be able to exclude the qualified Also, see IRS.gov/credits-deductions/Opportunity-Zones-
capital gain that it would otherwise include in income. The Frequently-Asked-Questions.
exclusion applies to an interest in, or property of, certain How to report. Report the eligible gain as you normally
renewal community businesses. would on Schedule D (Form 1041). See the Form 8949
Qualified community asset. A qualified community instructions for how to report the deferral. You also need to
asset is any of the following. attach Form 8997 annually until you dispose of the QOF
• Qualified community stock. investment. See the Instructions for Form 8997.
• Qualified community partnership interest.
• Qualified community business property. Specific Instructions
Qualified capital gain. Qualified capital gain is any gain The instructions below assume the estate or trust is a
recognized on the sale or exchange of a qualified community ! cash basis calendar-year taxpayer.
asset but doesn't include any of the following. CAUTION
• Gain attributable to periods after December 31, 2014.
• Gain treated as ordinary income under section 1245. Rounding Off to Whole Dollars
• Section 1250 gain figured as if section 1250 applied to all
You can round off cents to whole dollars on your Schedule D
depreciation rather than the additional depreciation.
(Form 1041). If you do round to whole dollars, you must
• Gain attributable to real property, or an intangible asset,
round all amounts. To round, drop amounts under 50 cents
that isn't an integral part of a renewal community
and increase amounts from 50 to 99 cents to the next dollar.
business.
For example, $1.39 becomes $1 and $2.50 becomes $3.
• Gain from a related-party transaction. See Sales and
Exchanges Between Related Persons in chapter 2 of If you have to add two or more amounts to figure the
Pub. 544. amount to enter on a line, include cents when adding the
amounts and round off only the total.

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If you are entering amounts that include cents, make sure          box 1d) of $6,000 and cost or other basis (in box 1e) of 
to include the decimal point. There is no cents column on the      $2,000. Box 12 isn't checked, meaning that basis wasn't 
form.                                                              reported to the IRS. Don't report this transaction on line 1a or 
                                                                   line 8a. Instead, report the transaction on Form 8949. 
Disposal of QOF investment                                         Complete all necessary pages of Form 8949 before 
If you disposed of any investment in a QOF during the tax          completing line 1b, 2, 3, 8b, 9, or 10 of Schedule D (Form 
year, check the box on page 1 of Schedule D and see the            1041).
Instructions for Form 8949 for additional reporting                Example 3—adjustment. The estate or trust received a 
requirements. You must also complete Part III of Form 8997.        Form 1099-B showing proceeds (in box 1d) of $6,000 and 
See the Instructions for Form 8997 for details.                    cost or other basis (in box 1e) of $2,000. Box 12 is checked, 
Lines 1a and 8a—Transactions Not Reported on                       meaning that basis was reported to the IRS. However, the 
                                                                   basis shown in box 1e is incorrect. Don't report this 
Form 8949                                                          transaction on line 1a or line 8a. Instead, report the 
The estate or trust can report on line 1a (for short-term          transaction on Form 8949. See the Instructions for Form 
transactions) or line 8a (for long-term transactions) the          8949, columns (f), (g), and (h). Complete all necessary 
aggregate totals from any transactions (except sales of            pages of Form 8949 before completing line 1b, 2, 3, 8b, 9, or 
collectibles) for which:                                           10 of Schedule D (Form 1041).
• The estate or trust received a Form 1099-B, Proceeds 
  From Broker and Barter Exchange Transactions (or                 Lines 1b, 2, 3, 8b, 9, and 10, Column 
  substitute statement), that shows basis was reported to          (h)—Transactions Reported on Form 8949
  the IRS and doesn't show any adjustments in boxes 1f or          Figure gain or loss on each line. First, subtract the cost or 
  1g;                                                              other basis in column (e) from the proceeds (sales price) in 
• The Ordinary checkbox in box 2 of Form 1099-B is not             column (d). Then, combine the result with any adjustments in 
  checked;                                                         column (g). Enter the gain or loss in column (h). Enter 
• The QOF checkbox in box 3 of Form 1099-B is not                  negative amounts in parentheses.
  checked;
• The estate or trust isn't electing to defer income due to an     Example 1—gain. Column (d) is $6,000 and column (e) is 
  investment in a QOF and isn't terminating deferral from          $2,000. Enter $4,000 in column (h).
  an investment in a QOF; and
• The estate or trust doesn't need to make any                     Example 2—loss. Column (d) is $6,000 and column (e) is 
  adjustments to the basis or type of gain or loss (short          $8,000. Enter ($2,000) in column (h).
  term or long term) reported on Form 1099-B (or                   Example 3—adjustment. Column (d) is $6,000, column 
  substitute statement), or to its gain or loss.                   (e) is $2,000, and column (g) is ($1,000). Enter $3,000 
See How To Complete Form 8949, Columns (f) and (g), in             ($6,000 − $2,000 − $1,000) in column (h).
the Form 8949 instructions for details about possible 
adjustments to your gain or loss.                                  Lines 4 and 11
If the estate or trust chooses to report these transactions        Undistributed capital gains. Include on line 11, column 
on lines 1a and 8a, don't report them on Form 8949. You            (h), the amount from box 1a of Form 2439. This amount 
don't need to attach a statement to explain the entries on         represents the estate's or trust's share of undistributed 
lines 1a and 8a.                                                   long-term capital gains from a regulated investment company 
                                                                   (mutual fund) or real estate investment trust.
Figure gain or loss on each line. First, subtract the cost or      If there is an amount in box 1b of Form 2439, include that 
other basis in column (e) from the proceeds (sales price) in       amount on line 11 of the Unrecaptured Section 1250 Gain 
column (d). Enter the gain or loss in column (h). Enter            Worksheet, later, if you are required to complete line 18b, 
negative amounts in parentheses.                                   column (2), of the schedule. If there is an amount in box 1c of 
Example 1—basis reported to the IRS. The estate or                 Form 2439, see Exclusion of Gain on Qualified Small 
trust received a Form 1099-B reporting the sale of stock held      Business (QSB) Stock (Section 1202), earlier. If there is an 
for 3 years. It shows proceeds (in box 1d) of $6,000 and cost      amount in box 1d of Form 2439, include that amount on line 4 
or other basis (in box 1e) of $2,000. Box 12 is checked,           of the 28% Rate Gain Worksheet, later.
meaning that basis was reported to the IRS. The estate or          Enter on Form 1041, Schedule G, Part II, line 16, the tax 
trust doesn't need to make any adjustments to the amounts          paid as reported in box 2 of Form 2439. Increase the basis of 
reported on Form 1099-B or enter any codes. This was the           the stock by the excess of the amount included in income 
estate’s or trust's only 2023 transaction. Instead of reporting    over the amount of the credit for tax paid. See Pub. 550 for 
this transaction on Form 8949, the estate or trust can enter       more details.
$6,000 on Schedule D, line 8a, column (d); $2,000 in column 
(e); and $4,000 ($6,000 – $2,000) in column (h).                   Installment sales. If the estate or trust sold property (other 
                                                                   than publicly traded stocks or securities) at a gain during the 
If you had a second transaction that was the same except           tax year and will receive a payment in a later tax year, you 
that the proceeds were $5,000 and the basis was $3,000,            generally report the sale on the installment method and file 
combine the two transactions. Enter $11,000 ($6,000 +              Form 6252, unless you elect not to do so.
$5,000) on Schedule D, line 8a, column (d); $5,000 ($2,000 +       Also, use Form 6252 to report any payment received in 
$3,000) in column (e); and $6,000 ($11,000 – $5,000) in            2023 from a sale made in an earlier tax year that was 
column (h).                                                        reported on the installment method.
Example 2—basis not reported to the IRS. The estate                To elect out of the installment method, report the full 
or trust received a Form 1099-B showing proceeds (in               amount of the gain on Form 8949 on a timely filed return 

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(including extensions) for the year of the sale. If the original line 17. However, don't take the section 1202 exclusion on
return was filed timely, the election may be made on an gain from the sale or exchange of qualified small business
amended return filed no later than 6 months after the due stock into account when figuring net long-term capital gain or
date of the original return (excluding extensions). Write “Filed loss allocable to the beneficiaries.
pursuant to section 301.9100-2” at the top of the amended
return, and file it at the same address as the original Form Line 18b—Unrecaptured Section 1250 Gain
1041. Complete the Unrecaptured Section 1250 Gain Worksheet,
Exchange of “like-kind” property. Generally, no gain or later, if any of the following apply.
loss is recognized when real property held for productive use • During the tax year, the estate or trust sold or otherwise
in a trade or business or for investment is exchanged solely disposed of section 1250 property (generally, real
for real property of a like kind to be held either for productive property that was depreciated) held more than 1 year.
use in a trade or business or for investment. However, if a • The estate or trust received installment payments during
trust exchanges like-kind real property with a related person the tax year for section 1250 property held more than 1
(see Related Persons, earlier) and within 2 years of the last year and is reporting gain on the installment method.
transfer that was part of the exchange, the related person • The estate or trust received a Schedule K-1 from an
disposes of the real property, or the trust disposes of the real estate or trust, partnership, or S corporation that reports
property received in exchange from the related person, then “unrecaptured section 1250 gain” for the tax year.
the original exchange will not qualify for nonrecognition. See • The estate or trust received a Form 1099-DIV or Form
section 1031(f) for exceptions. 2439 from a real estate investment trust or regulated
investment company (including a mutual fund) that
Complete and attach Form 8824 to Form 1041 for each reports “unrecaptured section 1250 gain” for the tax year.
exchange. The estate or trust reported a long-term capital gain from
•
the sale or exchange of an interest in a partnership that
Line 13—Capital Gain Distributions
owned section 1250 property.
Enter as a long-term capital gain on line 13, column (h), the
total capital gain distributions paid during the year, regardless
of how long the estate or trust held its investment. This Instructions for the Unrecaptured Section 1250
amount is reported in box 2a of Form 1099-DIV. If there is an Gain Worksheet
amount in box 2b, include that amount on line 11 of the Lines 1 through 3. If the estate or trust had more than one
Unrecaptured Section 1250 Gain Worksheet, later, if the property, complete lines 1 through 3 for each property on a
worksheet is required. If there is an amount in box 2c, see separate worksheet. Next, enter the total amount for all
Exclusion of Gain on Qualified Small Business (QSB) Stock properties on line 3; then, go to line 4.
(Section 1202), earlier. If there is an amount in box 2d of
Form 1099-DIV, include the amount on line 4 of the 28% Rate Line 4. To figure the amount to enter on line 4, follow the
Gain Worksheet, later. steps below for each installment sale of trade or business
property held more than 1 year.
Line 17, Column (1)—Beneficiaries' Net Step 1. Figure the smaller of (a) the depreciation allowed
Short-Term Capital Gain or Loss or allowable, or (b) the total gain for the sale. This is the
smaller of line 22 or line 24 of the 2023 Form 4797 (or the
Enter the amount of net short-term capital gain or loss
comparable lines of Form 4797 for the year of sale) for that
allocable to the beneficiary or beneficiaries. Include only
property.
those short-term capital losses that are taken into account in
determining the amount of gain from the sale or exchange of Step 2. Reduce the amount figured in step 1 by any
capital assets that is paid, credited, or required to be section 1250 ordinary income recapture for the sale. This is
distributed to any beneficiary during the tax year. See the amount from line 26g of the 2023 Form 4797 (or the
Regulations section 1.643(a)-3 for more information about comparable line of Form 4797 for the year of sale) for that
allocation of capital gains and losses. property. The result is the total unrecaptured section 1250
gain that must be allocated to the installment payments
If the losses from the sale or exchange of capital assets received from the sale.
are more than the gains, the net loss must be allocated to the Step 3. Generally, the amount of section 1231 gain on
estate or trust and not to the beneficiaries. each installment payment is treated as unrecaptured section
1250 gain until the total unrecaptured section 1250 gain
Line 17, Column (2)—Estate's or Trust's Net figured in step 2 has been used in full. Figure the amount of
Short-Term Capital Gain or Loss gain treated as unrecaptured section 1250 gain for
installment payments received during the tax year as the
Enter the amount of the net short-term capital gain or loss smaller of (a) the amount from line 26 or line 37 of the 2023
allocable to the estate or trust. Include any capital gain paid Form 6252, whichever applies; or (b) the amount of
or permanently set aside for a charitable purpose specified in unrecaptured section 1250 gain remaining to be reported.
section 642(c). This amount is generally the total unrecaptured section 1250
gain for the sale reduced by all gain reported in prior years
Line 17, Column (3)—Total
(excluding section 1250 ordinary income recapture).
Enter the total of the amounts entered in columns (1) and (2). However, if you chose not to treat all of the gain from
The amount in column (3) should be the same as the amount payments received after May 6, 1997, and before August 24,
on line 7. 1999, as unrecaptured section 1250 gain, use only the
amount you chose to treat as unrecaptured section 1250 gain
Line 18a—Net Long-Term Capital Gain or Loss for those payments to reduce the total unrecaptured section
Allocate the net long-term capital gain or loss on line 18a in
the same manner as the net short-term capital gain or loss on

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Unrecaptured Section 1250 Gain Worksheet—Line 18b                                                                                             Keep for Your Records
    If the estate or trust isn't reporting a gain on Form 4797, line 7, skip lines 1 through 9 and go to line 10.
1. If the estate or trust has a section 1250 property in Part III of Form 4797 for which you made an entry in 
    Part I of Form 4797 (but not on Form 6252), enter the smaller of line 22 or line 24 of Form 4797 for that 
    property. If the estate or trust didn't have any such property, go to line 4. If it had more than one such 
    property, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              1.   

2. Enter the amount from Form 4797, line 26g, for the property for which you made an entry on 
    line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2.   

3. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                3.   

4. Enter the total unrecaptured section 1250 gain included on line 26 or line 37 of Form(s) 6252 from 
    installment sales of trade or business property held more than 1 year (see instructions) . . . . . . . . . . . .                                                        4.   

5. Enter the total of any amounts reported to the estate or trust on a Schedule K-1 from a partnership or 
    an S corporation as “unrecaptured section 1250 gain” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                    5.   

6. Add lines 3 through 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              6.   

7. Enter the smaller of line 6 or the gain from Form 4797, line 7 . . . . . . . . . . . . . . . .                                      7.   

8. Enter the amount, if any, from Form 4797, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . .                              8.   

9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            9.   

10. Enter the amount of any gain from the sale or exchange of an interest in a partnership attributable to 
    unrecaptured section 1250 gain (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 10.  

11. Enter the total of any amounts reported to the estate or trust on a Schedule K-1, Form 1099-DIV, or 
    Form 2439 as “unrecaptured section 1250 gain” from an estate, trust, real estate investment trust, or 
    mutual fund (or other regulated investment company) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                     11.  

12. Enter the total of any unrecaptured section 1250 gain from sales (including installment sales) or other 
    dispositions of section 1250 property held more than 1 year for which you didn't make an entry in Part I 
    of Form 4797 for the year of sale (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                              12.  

13. Add lines 9 through 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              13.  

14. If the estate or trust had any section 1202 gain or collectibles gain or (loss), enter 
    the total of lines 1 through 4 of the 28% Rate Gain Worksheet. Otherwise, 
    enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14.                                  

15. Enter the (loss), if any, from Schedule D, line 7. If Schedule D, line 7, is zero or a 
    gain, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      15.  (                              )

16. Enter the estate's or trust's long-term capital loss carryovers from Schedule D, 
    line 15, and from Schedule K-1 (Form 1041), box 11, code D, from another estate 
    or trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.  (                              )

17. Combine lines 14 through 16. If the result is a (loss), enter it as a positive amount. If the result is zero or 
    a gain, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         17.  

18. Unrecaptured section 1250 gain. Subtract line 17 from line 13. If zero or less, enter -0-. Enter the 
    result here and in the appropriate columns of Schedule D, line 18b . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                            18.  

1250 gain remaining to be reported for the sale. Include this        Line 12. An example of an amount reported on line 12 as an 
amount on line 4.                                                    “other disposition” includes unrecaptured section 1250 gain 
Line 10.  Include on line 10 the estate's or trust's share of the    from the sale of a vacation home previously used as a rental 
partnership's unrecaptured section 1250 gain that would              property that was converted to personal use before the sale. 
result if the partnership had transferred all of its section 1250    To figure the amount to enter on line 12, follow the applicable 
property in a fully taxable transaction immediately before the       instructions below.
estate or trust sold or exchanged its interest in that               Installment sales.                                                    To figure the amount to include on 
partnership. If the estate or trust recognized less than all of      line 12, follow the steps below for each installment sale of 
the realized gain, the partnership will be treated as having         property held more than 1 year for which you didn't make an 
transferred only a proportionate amount of each section 1250         entry in Part I of Form 4797 for the year of sale.
property.                                                            Step 1.  Figure the smaller of (a) the depreciation allowed 
                                                                     or allowable, or (b) the total gain for the sale. This is the 

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28% Rate Gain Worksheet—Line 18c                                                                Keep for Your Records
1. Enter the total of all collectibles gain or (loss) from items reported on Form 8949, Part II . . . . . . . . . . . . . . . .                        1.      
2. Enter as a positive number the total of:
   • Any section 1202 exclusion you reported in column (g) of Form 8949, Part II, with code “Q” in 
     column (f), for which you excluded 50% of the gain;
   • 2/  of any section 1202 exclusion you reported in column (g) of Form 8949, Part II, with code 3
                                                                                                              . . . . . 2.                                     
     “Q” in column (f), for which you excluded 60% of the gain; and
   • 1/  of any section 1202 exclusion you reported in column (g) of Form 8949, Part II, with code 3
     “Q” in column (f), for which you excluded 75% of the gain.
   Don't make an entry for any section 1202 exclusion that is 100% of the gain.
3. Enter the total of all collectibles gain or (loss) from Form 4684, line 4 (but only if Form 4684, line 15, is more 
   than zero); Form 6252; Form 6781, Part II; and Form 8824 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            3.      
4. Enter the total of any collectibles gain reported to the estate or trust on: 
   • Form 1099-DIV, box 2d;                                                                                                                                    
                                                                                                           . . . . .                                   4.
   • Form 2439, box 1d; and
   • Schedule K-1 from a partnership, S corporation, estate, or trust.
5. Enter the estate's or trust's long-term capital loss carryovers from Schedule D, line 15, and from box 11, 
   code D of Schedule K-1 (Form 1041) from another estate or trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               5. (   )
6. If Schedule D, line 7 is a (loss), enter that (loss) here. Otherwise, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . .               6. (   )
7. Combine lines 1 through 6. If zero or less, enter -0-. If more than zero, also enter this amount in the 
   appropriate columns of Schedule D, line 18c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.      

smaller of line 22 or line 24 of the 2023 Form 4797 (or        Line 18c—28% Rate Gain
comparable lines of Form 4797 for the year of sale) for that   Complete the 28% Rate Gain Worksheet, above, if lines 18a 
property.                                                      and 19 of column (3) are both greater than zero and at least 
Step 2.   Reduce the amount figured in step 1 by any           one of the following applies.
section 1250 ordinary income recapture for the sale. This is        • The estate or trust reported in Part II of Form 8949 a 
the amount from line 26g of the 2023 Form 4797 (or the                section 1202 exclusion from the eligible gain on qualified 
comparable line of Form 4797 for the year of sale) for that           small business stock (as discussed earlier), or
property. The result is the total unrecaptured section 1250         • The estate or trust reported in Part II of Form 8949 a 
gain that must be allocated to the installment payments               collectibles gain or loss.
received from the sale.
Step 3.   Generally, the amount of capital gain on each             A collectibles gain or loss is any long-term gain or 
installment payment is treated as unrecaptured section 1250    deductible long-term loss from the sale or exchange of a 
gain until the total unrecaptured section 1250 gain figured in collectible that is a capital asset.
step 2 has been used in full. Figure the amount of gain             Collectibles include works of art, rugs, antiques, metals 
treated as unrecaptured section 1250 gain for installment      (such as gold, silver, and platinum bullion), gems, stamps, 
payments received during the tax year as the smaller of (a)    coins, alcoholic beverages, and certain other tangible 
the amount from line 26 or line 37 of the 2023 Form 6252,      property.
whichever applies; or (b) the amount of unrecaptured section 
1250 gain remaining to be reported. This amount is generally        Also include gain (but not loss) from the sale or exchange 
the total unrecaptured section 1250 gain for the sale reduced  of an interest in a partnership, S corporation, or trust held for 
by all gain reported in prior years (excluding section 1250    more than 1 year that is attributable to the unrealized 
ordinary income recapture). However, if you chose not to       appreciation of collectibles. For details, see Regulations 
treat all of the gain from payments received after May 6,      section 1.1(h)-1. Attach the statement required under 
1997, and before August 24, 1999, as unrecaptured section      Regulations section 1.1(h)-1(e) to Schedule D.
1250 gain, use only the amount you chose to treat as 
unrecaptured section 1250 gain for those payments to           Line 19
reduce the total unrecaptured section 1250 gain remaining to                    Trusts filing Schedule D (Form 1041) with Form 
be reported for the sale. Include this amount on line 12.           !           990-T, Exempt Organization Business Income Tax 
Other sales or dispositions of section 1250 property.          CAUTION          Return (and proxy tax under section 6033(e)), that 
For each sale of property held more than 1 year (for which an  have more than one unrelated trade or business must 
entry wasn't made in Part I of Form 4797), figure the smaller  compute unrelated business taxable income separately for 
of (a) the depreciation allowed or allowable, or (b) the total each trade or business. The separate amount from each 
gain for the sale. This amount is the smaller of line 22 or    unrelated trade or business must be reported on line 4a of 
line 24 of Form 4797 for that property. Then, reduce that      Part I of the Schedule A (Form 990-T), Unrelated Business 
amount by any section 1250 ordinary income recapture for       Taxable Income From an Unrelated Trade or Business, 
the sale. This is the amount from line 26g of Form 4797 for    completed for the specific trade or business.
that property. The result is the total unrecaptured section 
1250 gain for the sale. Include this amount on line 12.

                                                               -10-             2023 Instructions for Schedule D (Form 1041)

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Capital Loss Carryover Worksheet                                                                                                                 Keep for Your Records
Use this worksheet to figure the estate's or trust's capital loss carryovers from 2023 to 2024 if Schedule D, line 20, is a loss and 
(a) the loss on Schedule D, line 19, column (3), is more than $3,000; or (b) Form 1041, page 1, line 23, is a loss.

1.  Enter taxable income or (loss) from Form 1041, line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 1.   
2.  Enter the loss from line 20 of Schedule D as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                     2.   
3.  Enter the amount from Form 1041, line 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         3.   
4.  Adjusted taxable income. Combine lines 1, 2, and 3. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . .                                             4.   
5.  Enter the smaller of line 2 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                5.   
    Note: If line 7 of Schedule D is a loss, go to line 6; otherwise, enter -0- on line 6 and go to 
    line 10.
6.  Enter the loss from Schedule D, line 7, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                   6.   
7.  Enter the gain, if any, from Schedule D, line 16. If that line is blank or shows a loss, 
    enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.   
8.  Add lines 5 and 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        8.   
9. Short-term capital loss carryover to 2024. Subtract line 8 from line 6. If zero or less, enter -0-. If this 
    is the final return of the estate or trust, also enter on Schedule K-1 (Form 1041), box 11, using 
    code C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.   
    Note: If line 16 of Schedule D is a loss, go to line 10; otherwise, skip lines 10 through 14.
10. Enter the loss from Schedule D, line 16, as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                    10.  
11. Enter the gain, if any, from Schedule D, line 7. If that line is blank or shows a loss, 
    enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.  
12. Subtract line 6 from line 5. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         12.  
13. Add lines 11 and 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          13.  
14. Long-term capital loss carryover to 2024. Subtract line 13 from line 10. If zero or less, enter -0-. If 
    this is the final return of the estate or trust, also enter on Schedule K-1 (Form 1041), box 11, using 
    code D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.  

Part IV—Capital Loss Limitation                                      691(c) deduction was claimed, you must reduce the amount 
If the sum of all capital losses is more than the sum of all         on Form 1041, page 1, line 2b(2), or Schedule D, line 22 
capital gains, the capital losses are allowed as a deduction,        (line 7 of the Schedule D Tax Worksheet, if applicable), by the 
but only to the extent of the smaller of the net loss or $3,000.     portion of the section 691(c) deduction claimed on Form 
                                                                     1041, page 1, line 19, that is attributable to the estate's or 
For any year (including the final year) in which capital             trust's portion of qualified dividends or capital gains.
losses exceed capital gains, the estate or trust may have a 
capital loss carryover. Use the Capital Loss Carryover 
Worksheet, above, to figure any capital loss carryover. A            Line 45
capital loss carryover may be carried forward indefinitely. 
                                                                     If the tax using the maximum capital gains rates is less than 
Capital losses keep their character as either short-term or 
                                                                     the regular tax, enter the amount from line 45 on line 1a of 
long-term when carried over to the following year.
                                                                     Form 1041, Schedule G, Part I.
Line 20
                                                                     Schedule D Tax Worksheet
        Trusts filing Schedule D (Form 1041) with Form 
!       990-T that have more than one unrelated trade or             If you completed the Schedule D Tax Worksheet next instead 
CAUTION business must compute unrelated business taxable 
                                                                     of Part V of Schedule D, be sure to enter the amount from 
income separately for each trade or business. The separate           line 44 of the worksheet on line 1a of Form 1041, 
amount from each unrelated trade or business must be                 Schedule G, Part I.
reported on line 4c of Part I of the Schedule A (Form 990-T) 
completed for the specific trade or business.

Part V—Tax Computation Using Maximum 
Capital Gains Rates
Line 26

If the estate or trust received qualified dividends or capital 
gains as income in respect of a decedent and a section 

2023 Instructions for Schedule D (Form 1041)                     -11-

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Schedule D Tax Worksheet                                                                                                                                Keep for Your Records
Complete this worksheet only if:
• On Schedule D, line 18b, column (2), or line 18c, column (2), is more than zero, or 
• Both line 2b(1) of Form 1041 and line 4g of Form 4952, Investment Interest Expense Deduction, are more than zero, or
• There are amounts on lines 4e and 4g of Form 4952.
Exception: Don't use this worksheet to figure the estate's or trust's tax if line 18a, column (2), or line 19, column (2), of Schedule D or Form 
1041, line 23, is zero or less; instead, see the Instructions for Form 1041, Schedule G, Part I, line 1a. 
  1. Enter the estate's or trust's taxable income from Form 1041, line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   1.  
  2. Enter qualified dividends, if any, from Form 1041, line 2b(2) . . . . . . . .                 2.  
  3. Enter the amount from Form 4952, line 4g . . . . . . . . . . 3.  
  4. Enter the amount from Form 4952, line 4e* . . . . . . . . .  4.  
  5. Subtract line 4 from line 3. If zero or less, enter -0- . . . . . . . . . . . . . . .         5.  
  6. Subtract line 5 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              6.  
  7. Enter the smaller of line 18a, column (2), or line 19, column (2), 
     from Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.  
  8. Enter the smaller of line 3 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . .     8.  
  9. Subtract line 8 from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              9.  
10. Add lines 6 and 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 
11. Add lines 18b, column (2), and 18c, column (2), from Schedule D     . . . . . . . . . . . . . . . . .                           11.  
12. Enter the smaller of line 9 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        12. 
13. Subtract line 12 from line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.  
14. Subtract line 13 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        14.  
15. Enter the smaller of line 1 or $3,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             15.  
16. Enter the smaller of line 14 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             16.  
17a. Subtract line 10 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . .          17a.  
17b. Enter the smaller of line 1 or $10,550 . . . . . . . . . . . . . . . . . . . . . . . .        17b.  
17c. Enter the smaller of line 14 or line 17b . . . . . . . . . . . . . . . . . . . . . . . .      17c.  
18. Enter the larger of line 17a or line 17c  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             18. 
19. Subtract line 16 from line 15. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       19. 
     If lines 1 and 15 are the same, skip lines 20 through 40 and go to line 41. Otherwise, go to line 20.
20. Enter the smaller of line 1 or line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    20.  
21. Enter the amount from line 19 (if line 19 is blank, enter -0-) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            21.  
22. Subtract line 21 from line 20. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 22. 
23. Enter the smaller of line 1 or $14,650 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              23.  
24. Add lines 18 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24.  
25. Subtract line 24 from line 23. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . .                 25.  
26. Enter the smaller of line 22 or line 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             26. 
27. Multiply line 26 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27.  
28. Reserved    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.  
29. Add lines 19 and 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       29.  
     If lines 1 and 29 are the same, skip lines 30 through 40 and go to line 41. Otherwise, go to line 30.
30. Subtract line 29 from line 20. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 30. 
31. Multiply line 30 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31.  
32. Enter the smaller of line 9 (above) or line 18b, column (2) (from Schedule D) . . . . . . . . .                                 32.  
33. Add lines 10 and 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33.  
34. Enter the amount from line 1 above . . . . . . . . . . . . . . . . . . . . . . . . . .         34.  
35. Subtract line 34 from line 33. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . .                 35.  
36. Subtract line 35 from line 32. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 36. 
37. Multiply line 36 by 25% (0.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37.  
     If Schedule D, line 18c, column (2), is zero or blank, skip lines 38 through 40 and go to line 41. Otherwise, 
     go to line 38.
38. Add lines 18, 19, 26, 30, and 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        38. 
39. Subtract line 38 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    39. 
40. Multiply line 39 by 28% (0.28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40.  
41. Figure the tax on the amount on line 18. Use the 2023 Tax Rate Schedule in the Instructions for Form 1041 . . . . . . . . . .                                         41.  
42. Add lines 27, 31, 37, 40, and 41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    42.  
43. Figure the tax on the amount on line 1. Use the 2023 Tax Rate Schedule in the Instructions for Form 1041 . . . . . . . . . . .                                        43.  
44. Tax on all taxable income (including capital gains and qualified dividends). Enter the smaller of line 42 or line 43 
     here and on Form 1041, Schedule G, Part I, line 1a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             44.  
*If applicable, enter instead the smaller amount entered on the dotted line next to line 4e of Form 4952.

                                                                        -12-                             2023 Instructions for Schedule D (Form 1041)

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