Clear Form
                                                          STATE OF HAWAII—DEPARTMENT OF TAXATION
   SCHEDULE D
     FORM N-35                           Capital Gains and Losses and Built-in Gains
     (REV. 2023)                                                              
                                                                                                                                                                                                   2023
                                                                  To be filed with Form N-35

Name                                                                                                                                                                         Federal Employer I.D. No.

PART I — Short-Term Capital Gains and Losses — Assets Held One Year or Less
 a.  Kind of property and description    b.  Date acquired   c.  Date sold            d.  Gross sales   e. Cost or other basis,                                            f.  Gain or (loss)          g.  Gain or (loss) 
 (Example: 100 shares of “Z” Co.)         (mo., day, yr.)    (mo., day, yr.)              price         plus expense of sales                                                (d minus e)           Attributable to Hawaii
 1

 2   Short-term capital gain from installment sales. (From federal Form 6252.) ..........................................................                               2
 3   Short-term capital gain or (loss) from like-kind exchanges. (From federal Form 8824.) .......................................                                      3
 4   Short-term capital gain from stock acquired through stock options from qualified high technology businesses ...                                                    4  (                       ) (                    )
 5   Add lines 1, 2, 3, and 4.  Enter here ......................................................................................................................       5
 6   Tax on short-term gain included on line 21 below. (Enter same amount in cols. f and g.) ....................................                                       6
 7   Net short-term capital gain or (loss). Line 5 minus line 6. Enter this amount here and on Form N-35, 
     Schedule K, line 7 or line 10 ..................................................................................................................................   7
PART II — Long-Term Capital Gains and Losses — Assets Held More Than One Year
 8

 9   Long-term capital gain from installment sales. (From federal Form 6252.) ...........................................................                               9
 10  Long-term capital gain or (loss) from like-kind exchanges. (From federal Form 8824.) ........................................                                      10
  11 Capital gain distributions ....................................................................................................................................... 11
 12  Long-term capital gain from stock acquired through stock options from qualified high technology businesses ...                                                     12 (                       ) (                    )
 13  Add lines 8, 9, 10, 11, and 12.  Enter here ............................................................................................................           13
 14  Tax on long-term gain included on line 21 below. (Enter same amount in cols. f and g.) ......................................                                      14
 15 Net long-term capital gain or (loss). Line 13 minus line 14.  Enter this amount here and on  
     Form N-35, Schedule K, line 8 or line 10 ..............................................................................................................            15
PART III — Built-in Gains Tax (See Instructions before completing this part.)
 16  Excess of recognized built-in gains over recognized built-in losses. (See Instructions and attach computation schedule.)                                               ..................   16
 17  Taxable income. (See Instructions and attach computation schedule.) .................................................................................................                       17
 18  Net recognized built-in gain—Enter smaller of line 16 or line 17. (See Instructions.) ............................................................................                          18
 19  IRC section 1374(b)(2) deduction. ......................................................................................................................................................... 19
 20  Subtract line 19 from line 18. (If zero or less, enter zero here and on line 21.) ......................................................................................                    20
 21  Enter 6.4% of line 20.  Enter here and on Form N-35, page 2, line 22b ................................................................................................                      21

Purpose of Schedule                                       directly assist the shareholders of the corporation in          Sales, exchanges, and distributions of property oth-
                                                          properly reporting such gains for the period.                   er than capital assets, including property used in a 
   Schedule D (Form N-35) is used by S corpora-                                                                           trade  or  business,  involuntary  conversions  (other 
tions to report sales or exchanges of capital assets      Generally, if the corporation has net recognized 
and gains on distributions to shareholders of appre-      built-in gain as defined in section 1374(d)(2) on as-           than casualties or thefts), and gain from the dispo-
ciated assets that are capital assets (hereafter re-      sets attributable to Hawaii, it is liable for the built-in      sition of an interest in oil, gas, or geothermal prop-
ferred to as distributions).  In addition, this schedule  gains  tax. Assets  are  attributable  to  Hawaii  if  they     erty should be reported on Schedule D-1, Sales of 
is intended to partition the “flow-through” of an S cor-  are physically located in Hawaii, are used in a Ha-             Business Property, see the instructions for Schedule 
poration’s net capital gain to its shareholders and to    waii business, or if, in the case of intangible assets,         D-1.  If property is involuntarily converted because 
attribute the gain applicable to Hawaii sources.  It will the S corporation has its commercial domicile in Ha-            of a casualty or theft, use federal Form 4684, Casu-
                                                          waii.   The  tax  is  figured  in  Part  III  of  Schedule  D.  alties and Thefts.

                                                                                                                                                                                                           FORM N-35 
                                                                                                                                                                             SCHEDULE D (REV. 2023)

 N35SCHD_I 2023A 01 VID01                                    ID NO 01

SCHEDULE D (FORM N-35)                                                                                                                                                   
(REV. 2023)                                                                                                                                        PAGE 2 
INSTRUCTIONS                                            Enter the gain or loss from federal Form 8824            to its basis (or the basis of any other property) in 
                                                        in column (f) and in column (g) if the property trad-    the hands of a C corporation. See section 1374(d)
Section references  are to the Internal Revenue         ed was Hawaii property.  Write in the top margin         (8)(A) and (B) for important  details and modifica-
Code, unless otherwise noted.                           of Schedule D “Like-Kind Exchange” or if the ex-         tions for the latter.
NOTE:  The  special  federal election  for  capital     change involved a related party, write “Related Par-
assets acquired in tax years beginning before           ty Like-Kind Exchange.”                                  Transitional Relief from Built-In Gains 
January 1, 2001 (election under section 311 of                                                                   Tax
the Taxpayer Relief Act of 1997) was not avail-         Special Rules for the Treatment of                       See the  instructions for  federal Schedule D 
able for Hawaii tax purposes.                           Certain Gains and Losses                                 (Form 1120S) for a discussion of special transition-
Capital Asset                                           All income earned and proceeds derived from              al relief from the built-in gains tax for qualified cor-
                                                        stock  options or stock,  including  stock  issued       porations.
Each item of property  the corporation  held            through the exercise of stock options or warrants,       Line 16—Enter the amount that would be the tax-
(whether  or not connected  with its trade or busi-     from a qualified high technology business or from        able income of the corporation for the tax year if 
ness) is a capital asset except:                        a holding company of a qualified high technology         only recognized built-in gains (including any car-
- Stock in trade or other property included in inven-   business by an employee, officer or director of the      ryover of gain under section 1374(d)(2)(B)) attrib-
tory or held mainly for sale to customers.              qualified high technology business, or investor who      utable to Hawaii  and recognized  built-in  losses 
- Accounts or notes receivable acquired in the ordi-    qualifies  for  the  high  technology  business  invest- attributable to Hawaii were taken into account.
nary course of the trade or business for services       ment tax credit is excluded from income.  Sales of 
rendered or from the sale of stock in trade or oth-     this stock should  be reported  on line  1 or line  8,   See the  instructions for  federal Schedule D 
er property held mainly for sale to customers.          as appropriate. Total capital gains are then reduced     (Form 1120S) for definitions of recognized built-in 
- Depreciable or real property used in the trade or     by the qualifying capital gains on line 4 or line 12.    gain and recognized built-in loss.
business.                                               Capital losses on the sale of this stock do not need     A qualified corporation must show on an attach-
- Certain  copyrights,  literary, musical,  or artistic to be added back to income.                              ment to Schedule D its total net recognized built-in 
                                                                                                                 gain attributable to Hawaii and also list separate-
compositions; letters or memorandums; or simi-          How to Determine the Cost or Other                       ly the gain or loss attributable to Hawaii that is: (1) 
lar property. See section 1221(a)(3).                                                                            gain or loss from capital assets held six months or 
                                                        Basis of the Property
- U.S. Government publications, including the Con-                                                               less and (2) gain or loss from assets for which the 
gressional Record, that the corporation received        In determining gain or loss, the basis of proper-
from the Government, other than by purchase             ty is generally its cost (see section 1012 and related   disposition  results in ordinary  income  or loss.  A 
at the normal sales price, or that the corporation      regulations). Special rules for determining basis are    nonqualified corporation must show on an attach-
got from another taxpayer who had received it in        provided in sections in subchapters C, K, O, and P       ment its total net recognized built-in gain attribut-
a similar way, if the corporation’s basis is deter-     of the Code. These rules may apply to the corpo-         able to Hawaii and list separately any capital gain 
mined by reference to the previous owner.               ration on the receipt of certain distributions with re-  or loss and ordinary gain or loss.
                                                        spect to stock (section 301), liquidation of another     Line  17—Figure taxable income by completing 
- Certain  commodities  derivative  financial  instru-  corporation (section 334), transfer to another cor-      lines 1 through 10 and 1 through 12 of Schedule J 
ments held by a dealer.  See section 1221(a)(6).        poration (section 358), transfer from a sharehold-       of Form N-30, Hawaii Corporation Income Tax Re-
- Certain hedging transactions entered into in the      er or reorganization (section 362), bequest (section     turn. Enter the amount from Schedule J, line 12 that 
normal course of the trade or business.  See sec-       1014), contribution or gift (section 1015), tax-free     is attributable to Hawaii on line 17 of Schedule D. 
tion 1221(a)(7).                                        exchange (section 1031), involuntary  conversion         Attach to Schedule D the Form N-30 computation 
- Supplies regularly used in the trade or business.     (section 1033), certain asset acquisitions (section      or other worksheet used to figure taxable income.
                                                        1060), or wash sale of stock (section 1091). Attach      Line 18—Do not enter on line 18 more than the ex-
Parts I and II                                          an explanation if you use a basis other than actual      cess (if any) of the net unrealized built-in gain at-
Generally, report sales and exchanges (includ-          cash cost of the property.                               tributable to Hawaii over the net recognized built-in 
ing like-kind exchanges) even if there is no gain or    If the corporation  is allowed  a charitable con-        gain attributable to Hawaii for prior years.  This is 
loss.  In Part I, report the sale, exchange, or distri- tribution  deduction  because  it sold  property  to a   the amount that should have been entered in item 
bution of capital assets held one year or less.  In     charitable  organization,  figure  the  adjusted  basis  7, Schedule B, on Form N-35, page 2.  See section 
Part II, report the sale, exchange, or distribution of  for determining gain from the sale by dividing the       1374(c)(2).  If, for any tax year, the amount on line 
capital assets held more than one year.  Use the        amount realized by the fair market value and multi-      16 exceeds the taxable income on line 17, the ex-
trade dates for the dates of acquisition  and sale      plying that result by the adjusted basis.                cess is treated as a recognized built-in gain attrib-
                                                                                                                 utable to Hawaii in the succeeding tax year.  This 
of stocks and bonds on an exchange or over-the-         See section 852(f) for the treatment of certain          carryover provision applies only in the case of an 
counter market.                                         load charges incurred in acquiring stock in a mutu-      S corporation that made its election to be an S cor-
For more information, see federal  Publication          al fund with a reinvestment right.                       poration on or after March 31, 1988.  See section 
544, Sales and Other Dispositions of Assets.            Before making an entry in column (e), increase           1374(d)(2)(B).
Exchange of  like-kind  property.—Complete              the cost or other basis by any expense of sale, such     Line 19—Enter the section 1374(b)(2) deduction.  
and attach federal Form 8824, Like-Kind Exchang-        as  broker’s  fees,  commissions, option premiums,       Generally, this is any net operating  loss carryfor-
es, to the corporation’s return for each exchange.      and state and local transfer taxes.                      ward attributable to Hawaii or capital loss carryfor-
Also, report the exchange of like-kind property on                                                               ward (to the extent of net capital gain included in 
Schedule D or on Schedule D-1, whichever applies.       Part III—Built-In Gains Tax                              recognized built-in gain for the tax year) attributable 
Report it even if no gain or loss is recognized when    Section 1374 provides for a tax on built-in gains        to Hawaii arising in tax years for which the corpo-
business or investment property is exchanged for        recognized  during the recognition  period and on        ration was a C corporation.  For details, see sec-
property of  like-kind. For  exceptions,  see federal   built-in gains attributable to any asset the corpora-    tion 1374(b)(2).
Publication 544.                                        tion acquired with a basis determined by reference