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STATE OF HAWAII—DEPARTMENT OF TAXATION
(REV.20232023) Instructions for Schedule D-1
Sales of Business Property
(Also Involuntary Conversions and Recapture Amounts Under IRC Sections 179 and 280F(b)(2))
(Section references are to the Internal Revenue Code as adopted and incorporated in Chapter 235, HRS.)
(Publication references are to federal Publications.)
(NOTE: Reference to “married” is also a reference to “in a civil union.”)
CAUTION: Do not confuse this schedule with the federal Schedule D-1.
Who May File • The computation of recapture amounts under Special Rules
sections 179 and 280F(b)(2), when the busi-
Any individual, corporation, partnership, estate ness use of section 179 or listed property drops Allocation of Purchase Price.—If you ac-
or trust may file Schedule D-1, unless instructions to 50% or less. quire or dispose of assets that constitute a trade
for the form it relates to (Form N-15, N-30, etc.) pro- Do not use this form, unless otherwise stated, or business, the buyer and seller must allocate the
vides otherwise, such as Form N-11. to report gain or loss on the disposition of a capital total purchase price using the “residual method”
asset; instead, if applicable, use the Schedule D and must file federal Form 8594, Asset Acquisition
Purpose of Form associated with the return you are filing. (Refer to Statement.
Use Schedule D-1 to report: Schedule D instructions for the definition of a capi- At-Risk Rules.—If you report a loss on an as-
• The sale or exchange of property used in your tal asset.) set used in an activity for which you are not at-risk,
trade or business; depreciable and amortizable in whole or in part, see the instructions for federal
property; oil, gas, geothermal, or other mineral Other Forms To Use Form 6198, At-Risk Limitations. Also, see Publica-
tion 925, Passive Activity and At-Risk Rules. Loss-
properties; and section 126 property. • Use federal Form 4684, Casualties and Thefts, es from passive activities are first subject to the
• The involuntary conversion (from other than ca- to report involuntary conversions from casual- at-risk rules and then to the passive activity rules.
sualty or theft) of property used in your trade or ties and thefts.
Installment Sales.—If you sold property at a
business and capital assets held in connection • File federal Form 6198 if you are reporting a gain and you will receive a payment in a tax year
with a trade or business, or a transaction en- loss and have amounts invested in the activ- after the year of sale, you generally must report the
tered into for profit. ity for which you are not at risk. (See “At Risk sale on the installment method unless you elect not
• The disposition of noncapital assets other than Rules” below.) to do so.
inventory or property held primarily for sale to • Use federal Form 8824, Like-Kind Exchanges, Use federal Form 6252, Installment Sale In-
customers in the ordinary course of your trade for each exchange of qualifying business or come, to report the sale on the installment method.
or business. investment property for property of a like kind. Also use federal Form 6252 to report any payment
• The disposition of capital assets not reported on For exchanges of property used in a trade or received in 2023 from a sale made in an earlier
Schedule D. business (and other noncapital assets), enter year that you reported on the installment method.
the gain or (loss) from federal Form 8824, if any,
• The gain or loss (including any related recap- on line 5 or 17. To elect out of the installment method, report
ture) for partners and S corporation sharehold- the full amount of the gain on a timely filed return
ers from certain section 179 property disposi- • Complete federal Form 8582 before you com- (including extensions).
tions by partnerships and S corporations. plete Schedule D-1 if you are reporting a loss See Publication 537, Installment Sales, for
from a passive activity. (See “Passive Loss more details.
Limitations” below.)
Involuntary Conversion of Property.—You
may not have to pay tax on a gain from an invol-
Examples of Items Reportable on this Form.—Where to Make First Entry. untary or compulsory conversion of property. See
Publication 544, Sales and Other Dispositions of
Below are common examples of items reportable on this Assets, for details.
form. Columns (b) and (c) indicate where to make the first (b) (c)
entry on Schedule D-1. Held one year Held more than Exclusion on the Sale of a Home Used for
(a) or less one year Business.—If you rented or used part of your
Type of property home for business and meet certain requirements,
you may be able to exclude part or all of the gain
1 Depreciable trade or business property: figured on line 25. However, the exclusion may not
a Sold or exchanged at a gain ........................................... Part II Part III (sec. 1245, 1250) apply to the part of the gain that is allocated to any
b Sold or exchanged at a loss ............................................ Part II Part I period after December 31, 2008, during which the
2 Depreciable residential rental property: property was not used as your principal residence.
a Sold or exchanged at a gain ........................................... Part II Part III (sec. 1250) For details on the exclusion and allocating the sales
b Sold or exchanged at a loss ............................................ Part II Part I price, expenses of sale, and the adjusted basis of
3 Farmland held less than 10 years upon which soil, the home, see the instructions for Form N-103,
water, or land-clearing expenses were Sale of Your Home, and federal Publication 523,
deducted after December 31, 1976: Selling Your Home.
a Sold at a gain .................................................................. Part II Part III (sec. 1252) If the home was held for more than 1 year, fig-
b Sold at a loss .................................................................. Part II Part I ure the gain on the part that was rented or used for
4 Disposition of certain cost-sharing payment property business in Part III. Do not take the exclusion into
described in section 126 ........................................................ Part II Part III (sec.1255) account when figuring the gain on line 25. If you
qualify for and are claiming the exclusion for sales
after May 6, 1997, and line 23 includes deprecia-
5 Cattle and horses used in a trade or business for draft, Held less than Held 24 months tion for periods after that date, you cannot exclude
breeding, dairy, or sporting purposes: 24 months or more gain to the extent of that depreciation. On line 2 of
a Sold at a gain .................................................................. Part II Part III (sec. 1245) Part I, write “IRC Section 121 exclusion” and en-
b Sold at a loss .................................................................. Part II Part I ter the business part of the exclusion as a (loss) in
c Raised cattle and horses sold at a gain .......................... Part II Part I column (g). If the home was held for 1 year or less,
report the sale and business part of the exclusion in
6 Livestock other than cattle and horses used in a trade or Held less than Held 12 months a similar manner on line 11 of Part II.
business for draft, breeding, dairy, or sporting purposes: 12 months or more Passive Loss Limitations.—If you have an
a Sold at a gain .................................................................. Part II Part III (sec. 1245) overall loss from passive activities, and you report a
b Sold at a loss .................................................................. Part II Part I loss on an asset used in a passive activity, use fed-
c Raised livestock sold at a gain ........................................ Part II Part I eral Form 8582, Passive Activity Loss Limitations
or Form 8810, Corporate Passive Activity Loss and
