D-1 Cat. No. 24331I 1999 Instructions for Schedule D, Capital Gains and Losses Use Schedule D (Form 1040) to report:   The sale or exchange of a capital asset (defined on this page).   Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit.   Capital gain distributions not reported directly on Form 1040, line 13.   Nonbusiness bad debts. Additional Information. See Pub. 544 and Pub. 550 for more details. For a comprehensive filled-in example of Schedule D, see Pub. 550. Section references are to the Internal Revenue Code unless otherwise noted. General Instructions A Change To Note If your only capital gains are capital gain distributions  from  mutual  funds  (or  other regulated   investment   companies)   or   real estate investment trusts, you may not need to complete Schedule D. See the instructions for Form 1040, line 13, on page 21 to find out if you can report your capital gain dis- tributions directly on Form 1040, line 13, and use the new Capital Gain Tax Work- sheet  to figure your tax instead of filing Schedule D. Other Forms You May Have To File Use Form 4797 to report the following:   The sale or exchange of property used in a trade or business; depreciable and amor- tizable   property;   oil,   gas,   geothermal,   or other   mineral   property;   and   section   126 property.   The involuntary conversion (other than from casualty or theft) of property used in a trade or business and capital assets held for business or profit.   The   disposition   of   noncapital   assets other than inventory or property held pri- marily for sale to customers in the ordinary course of your trade or business.   Ordinary loss on the sale, exchange, or worthlessness of small business investment company (section 1242) stock.   Ordinary loss on the sale, exchange, or worthlessness   of   small   business   (section 1244) stock. Use Form 4684 to report involuntary con- versions of property due to casualty or theft. Use Form 6781 to report gains and losses from section 1256 contracts and straddles. Use Form 8824 if you made one or more “like-kind” exchanges. A    like-kind    ex- change occurs when you exchange business or investment property for property of a like kind. For exchanges of capital assets, in- clude the gain or (loss) from Form 8824, if any, on line 4 or line 11. Capital Asset Most property you own and use for personal purposes, pleasure, or investment is a capital asset. For example, your house, furniture, car, stocks, and bonds are capital assets. A capital asset is any property held by you except the following: 1. Stock in trade or other property includ- ed in inventory or held for sale to customers. 2. Accounts or notes receivable for serv- ices  performed  in  the  ordinary  course  of your trade or business or as an employee, or from the sale of any property described in 1. 3. Depreciable property used in your trade or business even if it is fully depreciated. 4. Real estate used in your trade or busi- ness. 5. Copyrights, literary, musical, or artistic compositions, letters or memoranda, or sim- ilar property:  (a)  created by your personal efforts; (b) prepared or produced for you (in the case of letters, memoranda, or similar property);   or   (c)   that   you   received   from someone  who  created  them  or  for  whom they were created, as mentioned in  (a)  or (b), in a way (such as by gift) that entitled you to the basis of the previous owner. 6. U.S. Government publications, includ- ing the Congressional Record, that you re- ceived from the government, other than by purchase at the normal sales price, or that you got from someone who had received it in a similar way, if your basis is determined by reference to the previous owner’s basis. Capital Assets Held for Personal Use Generally, gain from the sale or exchange of a capital asset held for personal use is a capital gain. Report it on Schedule D, Part I or Part II. However, if you converted de- preciable property to personal use, all or part of the gain on the sale or exchange of that property may have to be recaptured as or- dinary income. Use Part III of Form 4797 to  figure  the  amount  of  ordinary  income recapture. The recapture amount is included on line 31 (and line 13) of Form 4797. Do not enter any gain for this property on line 32 of Form 4797. If you are not completing Part III for any other properties, enter“N/A” on line 32. If the total gain is more than the recapture amount, enter  “From  Form 4797” in column (a) of line 1 or line 8 of Schedule D,   skip   columns   (b)   through   (e),   and   in column (f), enter the excess of the total gain over the recapture amount. Loss from the sale or exchange of a cap- ital asset held for personal use is not deduct- ible. But if you had a loss from the sale or exchange of real estate held for personal use for which you received a Form 1099-S, you must report the transaction on Schedule D even though the loss is not deductible. For example, you have a loss on the sale of a vacation home that is not your main home and received a Form 1099-S for the transaction. Report the transaction on line 1 or 8, depending on how long you owned the home. Complete columns (a) through (e). Because the loss is not deductible, enter zero in column (f). Short Term or Long Term Separate your capital gains and losses ac- cording to how long you held or owned the property. The holding period for short-term capital gains and losses is 1 year or less. The holding period for long-term capital gains and losses is more than 1 year. To figure the holding period, begin counting on the day after you received the property and in- clude the day you disposed of it. If you disposed of property that you ac- quired by inheritance, report the disposition as a long-term gain or loss, regardless of how long you held the property. A nonbusiness bad debt must be treated as a short-term capital loss. See Pub. 550 for what qualifies as a non-business bad debt and how to enter it on Schedule D. Capital Gain Distributions Enter on line 13, column (f), the total capital gain  distributions  paid  to  you  during  the year, regardless of how long you held your investment. This amount should be shown in box 2a of Form 1099-DIV. Enter on line 13,  column  (g),  the  total  of  the  amounts reported to you as the 28% rate gain portion of your total capital gain distributions. This