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Department of the Treasury 2020 Internal Revenue Service Instructions for Schedule D (Form 1065) Gains and Losses

Section references are to the Internal Revenue Use Form 4797, Sales of received it in a similar way, if the Code unless otherwise noted. Property, to report the following. partnership's basis is determined by • Sales or exchanges of property used in reference to the previous owner. Future Developments a trade or business. • Certain commodities derivative financial • Sales or exchanges of depreciable or instruments held by a dealer. See section For the latest information about amortizable property. 1221(a)(6). developments related to Schedule D • Sales or other dispositions of securities • Certain hedging transactions entered (Form 1065) and its instructions, such as or commodities held in connection with a into in the normal course of the trade or legislation enacted after they were trading business, if the partnership made a business. See section 1221(a)(7). published, go to IRS.gov/Form1065. mark-to-market election (see • Supplies regularly used in the trade or Mark-to-market accounting method in the business. General Instructions Instructions for Form 1065). • Involuntary conversions (other than - or Long-Term Gain from casualties or thefts). Purpose of Schedule • The disposition of noncapital or Loss Use Schedule D (Form 1065) to report the (other than inventory or property held Report short-term gains or losses in Part I. following. primarily for sale to customers in the Report long-term gains or losses in Part II. • The total capital gains and losses from ordinary course of a trade or business). The holding period for short-term capital transactions reported on Form 8949, • Election to defer a qualified section gains and losses is generally 1 year or Sales and Other Dispositions of Capital 1231 gain invested in a qualified less. The holding period for long-term Assets. opportunity fund (QOF). capital gains and losses is generally more • Certain transactions the partnership than 1 year. However, an exception doesn't have to report on Form 8949. Use Form 6781, Gains and Losses applies for certain sales of applicable • Capital gains from installment sales From Section 1256 Contracts and partnership . See Transactions from Form 6252, Installment Sale Income. Straddles, to report gains and losses from with respect to applicable partnership • Capital gains and losses from like-kind section 1256 contracts and straddles. If interests under Items for Special exchanges from Form 8824, Like-Kind there are limited partners, see section Treatment below. Exchanges (and section 1043 1256(e)(4) for the limitation on losses from conflict-of- sales). hedging transactions. For more information about holding • Partnership's of net capital gains periods, see the Instructions for Form and losses, including specially allocated What Are Capital Assets? 8949. capital gains and losses, from Each item of property the partnership held partnerships, estates, and trusts. (whether or not connected with its trade or Items for Special • Capital gain distributions. business) is a capital except the Treatment following. • Transactions with respect to applicable Note. For more information, see Pub. • in trade or other property partnership interests. The long-term 544, Sales and Other Dispositions of included in inventory or held mainly for holding period for gains and losses with Assets, and the Instructions for Form sale to customers. respect to applicable partnership interests 8949. • Accounts or notes receivable acquired is more than 3 years. If the holding period in the ordinary course of the trade or is 3 years or less, gains and losses with Other Forms the business for services rendered or from the respect to applicable partnership interests Partnership May Have To sale of stock in trade or other property are treated as short term. An applicable held mainly for sale to customers. partnership interest is any interest in a File • Depreciable or real property used in the partnership that, directly or indirectly, is Use Form 8949 to report the sale or trade or business, even if it is fully transferred to (or is held by) the taxpayer exchange of a capital asset (defined later) depreciated. in connection with the performance of not reported on another form or schedule • Certain copyrights; literary, musical, or substantial services by the taxpayer, or and to report the income deferral or artistic compositions; letters or any other related person, in any applicable exclusion of capital gains. See the memoranda; or similar property. See trade or business. See section 1061 and Instructions for Form 8949. Complete all section 1221(a)(3). Pub. 541 for details. necessary pages of Form 8949 before you • Certain patents, inventions, models, or • Transactions by a securities dealer. complete line 1b, 2, 3, 8b, 9, or 10 of designs (whether or not patented); secret See sections 475 and 1236, and Rev. Rul. Schedule D. See Lines 1a and 8a, later, formulas or processes; or similar property. 97-39, 1997-39 I.R.B. 4. for more information about when to use • U.S. Government publications, • Bonds and other debt instruments. See Form 8949. including the Congressional Record, that Pub. 550, Income and the partnership received from the Expenses. Use Form 4684, Casualties and Thefts, government, other than by purchase at the • Gain on disposition of market discount to report involuntary conversions of normal sales price, or that the partnership bonds. In general, a capital gain upon the property due to casualty or theft. got from another taxpayer who had

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disposition of a market discount is • Transfer of partnership assets and If the partnership wants to elect out of treated as interest income to the extent of liabilities to a newly formed in the installment method for installment gain accrued market discount as of the date of exchange for all of its stock. See Rev. Rul. that isn’t specially allocated among the disposition. See sections 1276 through 84-111, 1984-2 C.B. 88. partners, it must report the full amount of 1278 and Pub. 550 for more information • Disposition of foreign investment in a the gain on Form 8949 on a timely filed on market discount. See the Instructions U.S. real property interest. See section return (including extensions) for the year for Form 8949 for detailed information 897. of the sale. about how to report the disposition of a • Any loss from a sale or exchange of market discount bond. property between the partnership and If the partnership wants to elect out of • Contingent payment debt instruments. certain related persons isn’t allowed, the installment method for installment gain Any gain recognized on the sale, except for distributions in a complete that is specially allocated among the exchange, or retirement of a contingent liquidation of a corporation. See sections partners, it must do the following on a payment debt instrument subject to the 267 and 707(b) for details. timely filed return (including extensions). noncontingent bond method is generally • Any loss from securities that are capital 1. For a short-term capital gain, report treated as interest income rather than as assets that become worthless during the the full amount of the gain on Schedule K, capital gain. In certain situations, all or a year is treated as a loss from the sale or line 8 or 11. portion of a loss recognized on the sale, exchange of a capital asset on the last day For a long-term capital gain, report the exchange, or retirement of a contingent of the year. full amount of the gain on Schedule K, payment debt instrument subject to the Nonrecognition of gain on sale of stock • line 9a or 11. Report the collectibles gain noncontingent bond method may be to an employee stock ownership plan (28% rate gain) on Schedule K, line 9b. treated as an ordinary loss rather than as (ESOP) or an eligible cooperative. See a capital loss. See Regulations section section 1042 and Temporary Regulations 2. Enter each partner's share of the 1.1275-4(b) and Pub. 1212 for more section 1.1042-1T for rules under which full amount of the gain on Schedule K-1, information on contingent payment debt the partnership may elect not to recognize box 8 or 9a, or in box 11 using code I, instruments subject to the noncontingent gain from the sale of certain stock to an whichever applies. Report the collectibles bond method. See the Instructions for ESOP or an eligible cooperative. gain (28% rate gain) on Schedule K-1, Form 8949 for detailed information about • A nonbusiness bad debt must be box 9b. how to report the disposition of a treated as a short-term capital loss and If the partnership filed its original return contingent payment debt instrument. can be deducted only in the year the debt on time without making the election, it may • Gain on certain short-term federal, becomes totally worthless. See Pub. 550 make the election on an amended return state, and municipal obligations (other for more details. filed no later than 6 months after the due than tax-exempt obligations). If a • Any loss from a wash sale of stock or date of the return (excluding extensions). short-term governmental obligation (other securities (including contracts or options Write “Filed pursuant to section than a tax-exempt obligation) that is a to acquire or sell stock or securities) 301.9100-2” at the top of the amended capital asset is acquired at an acquisition cannot be deducted unless the return. discount, a portion of any gain realized is partnership is a dealer in stock or • A sale or other disposition of an interest treated as ordinary income and any securities and the loss was sustained in a in a partnership owning unrealized remaining balance as a short-term capital transaction made in the ordinary course of receivables or inventory items may result gain. See section 1271. the partnership's trade or business. A in ordinary gain or loss. See Pub. 541, • Certain real estate subdivided for sale wash sale occurs if the partnership Partnerships, for more details. that may be considered a capital asset. acquires (by purchase or exchange), or • Gain from certain constructive See section 1237. has a contract or option to acquire, ownership transactions. Gain in excess of • Gain on the sale of depreciable substantially identical stock or securities the net underlying long-term gain the property to a more-than-50%-owned within 30 days before or after the date of partnership would have recognized if it entity, or to a trust in which the partnership the sale or exchange. See section 1091 had held a financial asset directly during is a beneficiary, is treated as ordinary for more information. Report a wash sale the term of a derivative contract must be gain. See section 1239. transaction on Form 8949, Part I or II (with treated as ordinary income. See section • Liquidating distributions from a the appropriate box checked), depending 1260 for details. corporation. See Pub. 550 for details. on how long the partnership owned the • Gain from the sale of collectibles. • Gain on the sale or exchange of stock stock or securities. Enter “W” in column (f) Report any collectibles gain (28% rate in certain foreign . See and enter as a positive number in column gain) (loss) included on lines 8a through section 1248. (g) the amount of the loss not allowed. 14 on line 9b of Schedule K (and each • Gain or loss on options to buy or sell, Complete all remaining columns. See the partner's share in box 9b of including closing transactions. See Pub. Instructions for Form 8949. Schedule K-1). A collectibles gain (28% 550 for details. • Gain from installment sales. If the rate gain) (loss) is any long-term gain or • Gain or loss from a short sale of partnership sold property at a gain and it deductible long-term loss from the sale or property. See Pub. 550 for details. will receive a payment in a tax year after exchange of a collectible that is a capital • Transfer of property to a political the year of sale, it must generally report asset. organization if the fair market (FMV) the sale on the installment method unless of the property exceeds the partnership's it elects not to. However, the installment Collectibles include works of art, rugs, adjusted basis in such property. See method may not be used to report sales of antiques, metals (such as gold, silver, and section 84. stock or securities traded on an platinum bullion), gems, stamps, coins, • Any loss on the disposition of converted established securities market. Use Form alcoholic beverages, and certain other wetland or highly erodible cropland that is 6252 to report the sale on the installment . first used for farming after March 1, 1986, method. Also use Form 6252 to report any is reported as a long-term capital loss on payment received during the tax year from Report any 28% gain or loss from a Form 8949/Schedule D, but any gain on a sale made in an earlier year that was sale or exchange of a collectible on Form such a disposition is reported as ordinary reported on the installment method. 8949, Part II (with the appropriate box gain on Form 4797. See section 1257 for checked). See the Instructions for Form details. 8949.

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Also include gain (but not loss) from the on line 13b of Schedule K and in box 13 of computation of the adjustment to the sale or exchange of an interest in a Schedule K-1 using code H. partnership's basis in the replacement partnership or trust held more than 1 year stock for the amount of any postponed Constructive sale treatment for certain and attributable to unrealized appreciation gain under section 1045, and (c) shows appreciated positions. Generally, the of collectibles. For details, see the dates on which the replacement stock partnership must recognize gain (but not Regulations section 1.1(h)-1. Also, attach was acquired by the partnership. loss) on the date it enters into a the statement required under Regulations constructive sale of any appreciated The partnership must also section 1.1(h)-1(e). position in stock, a partnership interest, or ! separately state the amount of the Special rules for traders in securities. certain debt instruments as if the position CAUTION gain rolled over on qualified stock Traders in securities are engaged in the were disposed of at FMV on that date. under section 1045 on Form 1065, business of buying and selling securities The partnership is treated as making a Schedule K, line 11. Each partner must for their own account. To be engaged in constructive sale of an appreciated determine if he or she qualifies for the business as a trader in securities: position when it (or a related person, in rollover at the partner level or if he or she • The partnership must seek to from some cases) does one of the following. wants to opt out of the section 1045 daily market movements in the prices of • Enters into a short sale of the same or election. Also, the partnership must securities and not from , interest, substantially identical property (that is, a separately state on that line any gain that or capital appreciation; “short sale against the box”). would qualify for the section 1045 rollover • The partnership's trading activity must • Enters into an offsetting notional at the partner level instead of the be substantial; and principal contract relating to the same or partnership level (because a partner was • The partnership must carry on the substantially identical property. entitled to purchase replacement stock) activity with continuity and regularity. • Enters into a futures or forward contract and any gain on qualified stock that could The following facts and circumstances to deliver the same or substantially qualify for an exclusion under section should be considered in determining if a identical property. 1202. partnership's activity is a business. • Acquires the same or substantially To be qualified small business stock, • Typical holding periods for securities identical property (if the appreciated the stock must meet all of the following bought and sold. position is a short sale, offsetting notional tests. • The frequency and dollar amount of the principal contract, or a futures or forward • It must be stock in a C corporation (that partnership's trades during the year. contract). is, not S corporation stock). • The extent to which the partners pursue Exception. Generally, constructive sale • It must have been originally issued after the activity to produce income for a treatment doesn't apply if: August 10, 1993. livelihood. • The partnership closed the transaction • As of the date the stock was issued, the The amount of time devoted to the • before the end of the 30th day after the corporation was a qualified small activity. end of the tax year in which it was entered business. A qualified small business is a Like an , a trader must into, domestic C corporation with total gross generally report each sale of securities • The partnership held the appreciated assets of $50 million or less (a) at all times (taking into account commissions and any position to which the transaction relates after August 9, 1993, and before the stock other costs of acquiring or disposing of the throughout the 60-day period starting on was issued, and (b) immediately after the securities) on Form 8949 unless one of the the date the transaction was closed, and stock was issued. Gross assets include exceptions described in the Instructions • At no time during that 60-day period those of any predecessor of the for Form 8949 applies. However, if a was the partnership's risk of loss reduced corporation. All corporations that are trader made the mark-to-market election by holding certain other positions. members of the same parent-subsidiary (see Mark-to-market accounting method in For details and other exceptions to controlled group are treated as one the Instructions for Form 1065), each these rules, see Pub. 550. corporation. transaction is reported in Part II of Form Rollover of gain from qualified stock. • The partnership must have acquired the 4797 instead of Form 8949. If the partnership sold qualified small stock at its original issue (either directly or Regardless of whether a trader reports business stock (defined below) it held for through an underwriter), either in its gains and losses on Form 8949 or more than 6 months, it may postpone gain exchange for or other property or Form 4797, the gain or loss from the if it purchased other qualified small as pay for services (other than as an disposition of securities isn’t taken into business stock during the 60-day period underwriter) to the corporation. In certain account when figuring net earnings from that began on the date of the sale. The cases, the partnership may meet the test if self-employment on Schedules K and K-1. partnership must recognize gain to the it acquired the stock from another person See section 1402(i) for an exception that extent the sale proceeds exceed the cost who met this test (such as by gift or at applies to section 1256 contracts. of the replacement stock. Reduce the death) or through a conversion or exchange of qualified small business The limitation on investment interest basis of the replacement stock by any stock by the holder. expense that applies to doesn't postponed gain. apply to interest paid or incurred in a • During substantially all the time the If the partnership chooses to postpone partnership held the stock: trading business. A trader reports interest gain, report the sale on Form 8949, Part I expense and other expenses (excluding or II (with the appropriate box checked), 1. The corporation was a C commissions and other costs of acquiring as it would be reported if the election was corporation; or disposing of securities) from a trading not made. Then enter “R” in column (f). 2. At least 80% of the value of the business on page 1 of Form 1065. Enter the amount of the postponed gain as corporation's assets were used in the A trader may also hold securities for a negative number (in parentheses) in active conduct of one or more qualified investment. The rules for investors will column (g). See the Instructions for Form (defined below); and generally apply to those securities. 8949. 3. The corporation was not a foreign Allocate interest and other expenses Attach a statement to Form 1065 that corporation, domestic international sales between the partnership's trading (a) identifies the replacement qualified corporation (DISC), former DISC, business and its investment securities. small business stock, (b) shows the corporation that has made (or that has a Investment interest expense is reported

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subsidiary that has made) a section 936 • Gain from a related-party transaction. exchanged a District of Columbia election before March 23, 2018, regulated See Sales and Exchanges Between Enterprise Zone (DC Zone) asset that it investment (RIC), real estate Related Persons in chapter 2 of Pub. 544. held for more than 5 years, it may be able investment trust (REIT), real estate See section 1400F (as in effect before to exclude the qualified capital gain. The mortgage investment conduit (REMIC), its repeal on March 23, 2018) for more DC Zone asset must have been acquired financial asset securitization investment details and special rules. after 1997, and before 2012, to qualify as trust (FASIT), or cooperative. an asset for which the partnership may be How to report. If applicable, report able to take the exclusion. The sale or Note. A specialized small business the sale or exchange on Form 8949, Part II exchange of DC Zone capital assets investment company (SSBIC) is treated as (with the appropriate box checked), as it reported on Form 8949 and Schedule D having met test 2 above. would be reported if the exclusion was not includes the following. taken. Enter “X” in column (f) and enter the • Stock in a domestic corporation that A qualified business is any business amount of the exclusion as a negative was a DC Zone business. other than the following. number (in parentheses) in column (g). • Interest in a partnership that was a DC • One involving services performed in the See the Instructions for Form 8949. Zone business. fields of health, law, engineering, Report the sale or exchange of tangible architecture, accounting, actuarial Deferral of gain invested in a Qualified Opportunity Fund. If the partnership property used in the partnership's DC science, performing arts, consulting, Zone business on Form 4797. athletics, financial services, or brokerage realized gain from an actual, or deemed, services. sale or exchange with an unrelated person Gains not qualified for exclusion. • One whose principal asset is the and during the 180-day period beginning The following gains don’t qualify for the reputation or skill of one or more on the date realizing the gain, invested an exclusion of gain from DC Zone assets. employees. amount of the gain in a Qualified • Gain attributable to periods after • Any banking, insurance, financing, Opportunity Fund, the partnership may be December 31, 2016. leasing, investing, or similar business. able to elect to temporarily defer part or all • Gain on the sale of an interest in a • Any farming business (including the of the gain that would otherwise be partnership, which is a DC Zone business, raising or harvesting of trees). included in income. If the partnership attributable to unrecaptured section 1250 • Any business involving the production makes the election, the gain included in gain. See the instructions for line 9c of of products for which percentage income is only to the extent, if any, the Schedule K for information on how to depletion can be claimed. amount of realized gain exceeds the report unrecaptured section 1250 gain. • Any business of operating a hotel, aggregate amount invested in a Qualified • Gain on the sale of an interest in a motel, restaurant, or similar business. Opportunity Fund during the 180-day partnership or S corporation attributable to period beginning on the date gain is real property or an intangible asset which Rollover of gain from empowerment realized. The partnership may also be able isn’t an integral part of the DC Zone zone assets. If the partnership sold a to permanently exclude the gain from the business. qualified empowerment zone asset it held sale or exchange of any investment in a • Gain from a related-party transaction. for more than 1 year, it may be able to Qualified Opportunity Fund if the See Sales and Exchanges Between elect to postpone part or all of the gain. investment is held for at least 10 years. Related Persons in chapter 2 of Pub. 544. For details, see section 1397B. For more information, see section See section 1400B (as in effect before 1400Z-2. Exclusion of gain from qualified com- its repeal on March 23, 2018) for more munity assets. If the partnership sold or Qualified Opportunity Fund (QOF). details on DC Zone assets and special exchanged a qualified community asset A QOF is any investment vehicle that is rules. acquired after 2001 and before 2010, it organized as either a corporation or How to report. If applicable, report can exclude any qualified capital gain. The partnership for the purpose of investing in the sale or exchange of a DC Zone asset exclusion applies to an interest in, or eligible property that is located in a on Form 8949, Part II (with the appropriate property of, certain qualified community Qualified Opportunity Zone. assets. box checked), as it would be reported if Eligible gain. Gain that is eligible to the exclusion was not taken. Enter “X” in Qualified community asset. A be deferred if it is invested in a QOF column (f) and enter the amount of the qualified community asset is any of the includes any amount treated as a capital exclusion as a negative number (in following. gain for federal income tax purposes. See parentheses) in column (g). See the • Qualified community stock. section 1400Z-2 for more details on QOFs Instructions for Form 8949. • Qualified community partnership and the special rules. Also, see IRS.gov/ Undistributed long-term gains from a interest. Newsroom/Opportunity-Zones- • Qualified community business property. regulated investment company (RIC) Frequently-Asked-Questions. or real estate investment trust (REIT). Qualified capital gain. Qualified How to report. Report the eligible Report the partnership's share of capital gain is any gain recognized on the gain on Schedule D (Form 1065) as it long-term gains from Form 2439, Notice to sale or exchange of a qualified community would otherwise be reported if the Shareholder of Undistributed Long-Term asset, but doesn't include any of the partnership were not making the election. Capital Gains, on Form 8949, Part II (with following. See the Instructions for Form 8949 for how box F checked). Enter “From Form 2439” • Gain attributable to periods after to report the deferral. You will need to in column (a). Enter the gain in column (h). December 31, 2014. attach Form 8997, Initial and Annual Leave all other columns blank. See the • Gain treated as ordinary income under Statement of Qualified Opportunity Fund Instructions for Form 8949. section 1245. (QOF) , annually until you NAV method for certain money market • Section 1250 gain figured as if section dispose of the QOF investment. For more funds. Report capital gain or loss 1250 applied to all depreciation rather information, see Form 8997 and its determined under the net asset value than the additional depreciation. instructions. (NAV) method with respect to shares in a • Gain attributable to real property, or an NAV money market fund on Form 8949, intangible asset, that isn’t an integral part Exclusion of gain from DC Zone as- Part I, with box C checked. Enter the of a qualified community business. sets. If the partnership sold or

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name of each fund followed by “(NAV)” in adjustments to the partnership's gain or showing proceeds (in box 1d) of $6,000 column (a). Enter the net gain or loss in loss. and cost or other basis (in box 1e) of column (h). Leave all other columns blank. $2,000. Box 12 is checked, meaning that See the Instructions for Form 8949. If the partnership chooses to report basis was reported to the IRS. However, these transactions on lines 1a and 8a, the basis shown in box 1e is incorrect. Do Specific Instructions don’t report them on Form 8949. not report this transaction on line 1a or Complete all necessary pages of Form Figure gain or loss on each line. line 8a. Instead, report the transaction on 8949 before completing line 1b, 2, 3, 8b, Subtract the cost or other basis in column Form 8949. See the instructions for Form 9, or 10 of Schedule D. (e) from the proceeds (sales price) in 8949, columns (f), (g), and (h). Complete column (d). Enter the gain or loss in all necessary pages of Form 8949 before Rounding Off to Whole Dollars column (h). Enter negative amounts in completing line 1b, 2, 3, 8b, 9, or 10 of Cents can be rounded to whole dollars on parentheses. Schedule D. Schedule D. If cents are rounded to whole Example 1—basis reported to the Lines 1b, 2, 3, 8b, 9, and 10, dollars, all amounts must be rounded. To IRS. The partnership received a Form Column (h)—Transactions round, drop cent amounts under 50 and 1099-B reporting the sale of stock held for increase cent amounts over 49 to the next 3 years, showing proceeds (in box 1d) of Reported on Form 8949 dollar. For example, $1.49 becomes $1 $6,000 and cost or other basis (in box 1e) Figure gain or loss on each line. First, and $1.50 becomes $2. of $2,000. Box 12 is checked, meaning subtract cost or other basis (column (e)) If two or more amounts have to be that basis was reported to the IRS. The from proceeds/sales price (column (d)). added to figure the amount to enter on a partnership doesn't need to make any Then combine the result with any line, include cents when adding the adjustments to the amounts reported on adjustments in column (g). Enter the gain amounts and round only the total. Form 1099-B or enter any codes. This was or loss in column (h). Enter negative your only 2020 transaction. Instead of amounts in parentheses. Lines 1a and 8a—Transactions reporting this transaction on Form 8949, Example 1—gain. Column (d) is Not Reported on Form 8949 the partnership can enter $6,000 on $6,000 and column (e) is $2,000. Enter The partnership can report on line 1a (for Schedule D, line 8a, column (d); $2,000 in $4,000 in column (h). short-term transactions) or line 8a (for column (e); and $4,000 ($6,000 − $2,000) in column (h). Example 2—loss. Column (d) is long-term transactions) the aggregate $6,000 and column (e) is $8,000. Enter totals from any transactions (except sales If you had a second transaction that ($2,000) in column (h). of collectibles) for which: was the same except that the proceeds • The partnership received a Form were $5,000 and the basis was $3,000, Example 3—adjustment. Column 1099-B (or substitute statement) that combine the two transactions. Enter (d) is $6,000, column (e) is $2,000, and shows basis was reported to the IRS and $11,000 ($6,000 + $5,000) on column (g) is ($1,000). Enter $3,000 doesn't show any adjustment in box 1f or Schedule D, line 8a, column (d); $5,000 ($6,000 − $2,000 − $1,000) in column (h). 1g; ($2,000 + $3,000) in column (e); and Lines 6 and 13. Capital Gains $6,000 ($11,000 − $5,000) in column (h). • The Ordinary checkbox in box 2 of (Losses) From Other Form 1099-B (or substitute statement) Example 2—basis not reported to isn’t checked; the IRS. The partnership received a Form Partnerships, Estates, and • The QOF checkbox in box 3 of Form 1099-B showing proceeds (in box 1d) of Trusts 1099-B (or substitute statement) isn’t $6,000 and cost or other basis (in box 1e) See the Schedule K-1 or other information checked; and of $2,000. Box 12 isn’t checked, meaning supplied to the partnership by the other • The partnership doesn't need to make that basis was not reported to the IRS. partnership, estate, or trust. any adjustments to the basis or type of Don’t report this transaction on line 1a or gain or loss (short term or long term) line 8a. Instead, report the transaction on Line 14. Capital Gain reported on Form 1099-B (or substitute Form 8949. Complete all necessary pages Distributions statement), or to its gain or loss. of Form 8949 before completing line 1b, 2, Enter on line 14 the total capital gain See How To Complete Form 8949, 3, 8b, 9, or 10 of Schedule D. distributions paid to the partnership during Columns (f) and (g) in the Instructions for the year. Form 8949 for details about possible Example 3—adjustment. The partnership received a Form 1099-B

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