What the Form Is For

Schedule D is the IRS form you attach to your regular Form 1040 tax return to report profits and losses from selling investments and other capital assets. Think of it as the summary sheet where all your buying and selling activity gets calculated to determine whether you made or lost money during 2017.

You'll use Schedule D to report transactions like selling stocks, bonds, mutual funds, real estate (including your home in certain cases), or cryptocurrency. The form also captures capital gain distributions from mutual funds, gains from installment sales, and certain transactions passed through from partnerships or S corporations. Schedule D works hand-in-hand with Form 8949 (Sales and Other Dispositions of Capital Assets), which provides the detailed transaction-by-transaction breakdown before the totals flow to Schedule D.

The form distinguishes between short-term gains and losses (assets held one year or less) and long-term gains and losses (assets held more than one year), because the IRS taxes these differently. Understanding this distinction is crucial because long-term capital gains generally receive preferential tax treatment with lower rates than ordinary income. IRS.gov

When You’d Use It (Late Filing/Amended Returns)

Original and Extended Deadlines

You must file Schedule D with your 2017 Form 1040 by the original deadline—April 17, 2018 for most taxpayers (extended to April 18 due to the Emancipation Day holiday in Washington, D.C.). If you requested an extension, your deadline moved to October 15, 2018.

Late Filing

If you missed the deadline entirely and owed taxes, you'll face penalties and interest. The IRS charges a failure-to-file penalty of 5% of unpaid taxes per month (up to 25% maximum) plus interest on the unpaid amount. You should file as soon as possible to minimize penalties—Schedule D would still be required if you had capital gains or losses to report.

Amended Returns

If you discover errors after filing—such as forgetting to report a stock sale or incorrectly calculating your basis—you'll need to file Form 1040X (Amended U.S. Individual Income Tax Return) with a corrected Schedule D attached. You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to file an amended return and claim a refund. For the 2017 tax year, this means you had until April 2021 to amend in most cases. If you're amending to report additional income that increases your tax liability, file as soon as possible to minimize interest charges. IRS.gov

Key Rules or Details for 2017

Tax Rates

For 2017, long-term capital gains were taxed at 0%, 15%, or 20% depending on your income bracket—significantly lower than ordinary income tax rates which reached up to 39.6%. Short-term capital gains were taxed as ordinary income at your regular tax rate. Most taxpayers fell into the 15% long-term capital gains bracket. IRS.gov

Capital Loss Limitations

You could deduct capital losses against capital gains dollar-for-dollar. If your losses exceeded your gains, you could deduct up to $3,000 of net capital loss ($1,500 if married filing separately) against your ordinary income. Any excess loss beyond this limit could be carried forward to future tax years indefinitely.

Wash Sale Rules

If you sold a security at a loss and purchased substantially identical securities within 30 days before or after the sale, the loss was disallowed. This prevented taxpayers from claiming artificial losses while maintaining their investment positions. The disallowed loss gets added to the basis of the replacement securities.

Home Sale Exclusion

Single taxpayers could exclude up to $250,000 of gain from selling their primary residence ($500,000 for married couples filing jointly), provided they owned and lived in the home for at least two of the five years before the sale.

Consistent Basis Reporting

For securities purchased after January 1, 2011, brokers were required to report your cost basis to the IRS on Form 1099-B, reducing calculation errors and disputes. IRS.gov

Step-by-Step (High Level)

Step 1: Gather Your Documents

Collect all Forms 1099-B from brokers showing sales of stocks, bonds, and mutual funds. Gather Forms 1099-DIV showing capital gain distributions. Compile records of real estate sales, partnership K-1 forms, and documentation of your cost basis (what you originally paid plus improvements or adjustments).

Step 2: Complete Form 8949 First

Before touching Schedule D, you must fill out Form 8949, which lists each individual transaction. Report short-term transactions in Part I and long-term transactions in Part II. For each sale, you'll enter the description, dates acquired and sold, proceeds (sales price), cost basis, and any adjustments. Form 8949 has different boxes to check depending on whether the transaction was reported to the IRS and whether you have basis adjustments.

Step 3: Transfer Totals to Schedule D

Once Form 8949 is complete, transfer the column totals to the appropriate lines on Schedule D. Part I captures short-term gains and losses (lines 1-7), while Part II handles long-term gains and losses (lines 8-15). Add in any capital gain distributions, carryover losses from previous years, and gains from other forms like Form 4797.

Step 4: Calculate Net Gain or Loss

Part III of Schedule D combines your short-term and long-term results. If you have a net loss, you can deduct up to $3,000 against ordinary income. If you have a net gain, you'll complete either the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet (for more complex situations) to calculate your tax at the appropriate rates.

Step 5: Attach and File

Attach Schedule D and all pages of Form 8949 to your Form 1040 and file by the deadline. IRS.gov

Common Mistakes and How to Avoid Them

Forgetting to Report All Transactions

Many taxpayers accidentally omit transactions, especially if they didn't receive a Form 1099-B. Remember that the IRS receives copies of all Forms 1099-B, so unreported sales will trigger a notice. Keep your own records of all sales, including cryptocurrency transactions, which became reportable capital assets in 2017.

Incorrect Cost Basis

One of the most frequent errors is misreporting what you paid for an asset. Don't forget to include broker commissions, reinvested dividends that increased your basis, and inherited property basis step-ups. For inherited property, your basis is generally the fair market value on the date of death, not what the deceased person paid.

Wrong Holding Period

Miscalculating whether an asset is short-term or long-term can result in paying too much tax. The holding period is more than one year (not "one year exactly") for long-term treatment. Count from the day after you acquired the asset to the day you sold it.

Missing Form 8949

You cannot just complete Schedule D alone. The IRS requires Form 8949 to see transaction details. Submitting Schedule D without the supporting Form 8949 will likely trigger an IRS inquiry.

Ignoring Wash Sales

Taxpayers often fail to recognize wash sales when they automatically reinvest in the same or similar securities. Your broker may identify wash sales on Form 1099-B, but you're ultimately responsible for applying the rules correctly, especially across multiple brokerage accounts. IRS.gov

What Happens After You File

IRS Matching

Once you submit your 2017 return with Schedule D, the IRS processes it through their systems, typically within a few weeks for e-filed returns or several months for paper returns. The IRS uses an automated system to match the transactions you reported against Forms 1099-B submitted by brokers and mutual fund companies. If the IRS finds discrepancies—such as unreported sales or basis mismatches—you'll receive a CP2000 notice proposing changes to your return. You'll have the opportunity to respond with explanations or additional documentation.

Refunds

If your capital losses resulted in a tax refund, expect to receive it within 21 days for e-filed returns with direct deposit, or up to six weeks for paper returns. The IRS will pay interest on any refund delayed beyond 45 days from the filing deadline.

Additional Taxes

If you owed tax on capital gains, ensure you paid enough through withholding or estimated payments. Underpayment can trigger penalties and interest. For 2017, the IRS also assessed the Net Investment Income Tax—an additional 3.8% tax on investment income including capital gains for high-income earners (single filers with modified adjusted gross income over $200,000 or joint filers over $250,000).

Carryforward Tracking

If you had net capital losses exceeding the $3,000 annual deduction limit, track the carryforward amount carefully. You'll use the Capital Loss Carryover Worksheet to calculate what carries to 2018 and beyond. The IRS doesn't automatically track this for you—maintaining accurate records is your responsibility.

Audit Potential

Returns with significant capital gains or losses, especially from real estate or business property, may face higher audit scrutiny. Keep all supporting documents for at least three years (six years if you underreported income by more than 25%). IRS.gov

FAQs

Q: Do I need to report the sale of my primary home on Schedule D?

A: Only if you can't exclude all the gain (over $250,000 for single filers or $500,000 for married filing jointly) or if you received Form 1099-S reporting the sale. If the entire gain qualifies for exclusion and you didn't get a Form 1099-S, you don't need to report it.

Q: What if I forgot to report a stock sale on my 2017 return?

A: File an amended return using Form 1040X with a corrected Schedule D as soon as you discover the error. If the forgotten sale resulted in additional tax owed, you'll also owe interest and possibly penalties from the original due date. If it was a loss that would reduce your tax, file the amendment to claim a refund (within the three-year window).

Q: Can I claim a loss on the sale of my personal car or vacation home?

A: No. Losses on personal-use property aren't deductible. Only gains on personal property are taxable. However, if you converted the vacation home to rental property before selling, different rules may apply.

Q: How do I handle capital losses that exceed my gains?

A: First, use all losses to offset all gains. Then deduct up to $3,000 ($1,500 if married filing separately) from your ordinary income on Form 1040, line 13. Any remaining loss carries forward indefinitely to future years using the Capital Loss Carryover Worksheet. You can use these carryforward losses against future gains and claim the $3,000 deduction each year until exhausted.

Q: What's the difference between Form 8949 and Schedule D?

A: Form 8949 is where you list every individual transaction with dates, proceeds, basis, and adjustments. Schedule D is the summary form where you total everything from Form 8949 and combine it with other capital items like carryover losses and capital gain distributions. You must complete Form 8949 first, then transfer the totals to Schedule D.

Q: Are cryptocurrency sales reported on Schedule D?

A: Yes. The IRS treats virtual currencies like Bitcoin as property, not currency. Any sale or exchange is a capital transaction that must be reported on Form 8949 and Schedule D. This includes using cryptocurrency to purchase goods or services—the IRS considers that a taxable disposition.

Q: What documentation should I keep?

A: Maintain purchase confirmations showing acquisition date and price, sale confirmations, brokerage statements, Forms 1099-B, records of reinvested dividends, inheritance documents for inherited property, home improvement receipts for real estate sales, and all Forms 8949 and Schedule D filed. Keep these records for at least three years after filing, or six years if you substantially underreported income. IRS.gov

Official IRS Resources

2017 Schedule D Form (PDF)
2017 Schedule D Instructions (PDF)
2017 Capital Gains Tax Rates
IRS Schedule D Information Page