Pennsylvania Schedule D Instructions

PA SCHEDULE D (LINE 5)

Do not submit a federal Schedule D. A taxpayer and spouse must complete separate schedules to report their gains or losses or if any amounts are reported on Lines 3 through 10. However, if all the gains and losses were realized on a joint basis, one schedule may be completed. Complete the oval to indicate whether the gains and losses included on the schedule are from the taxpayer, spouse or joint.

IMPORTANT: One spouse may not use a loss to reduce the other spouse's gains. In the case where separate Schedule Ds are required and spouses must also report the sale of jointly owned property, each spouse must show his/her share of the sale on their separate PA Schedule D.

Report all sales, exchanges, and dispositions of property using PA income tax rules, and your PA income tax basis, in the year in which the transaction occurred. If a federal election allows a deferral to a different tax year or a deemed sale, you may not use that election for PA purposes.

Unless the specific instructions require a different Pennsylvania schedule, report each sale, exchange, or disposition of property on PA Schedule D.

Columns (a) through (f)
1. List and describe the property sold or otherwise disposed of for cash or for other property.
2. Enter the month, day, and year acquired. If you acquired properties over time, you may enter VARIOUS.
3. Enter the month, day, and year sold.
4. Enter the gross sales price or fair market value of cash and property received less the applicable expenses of sale.
5. Enter the cost or adjusted basis of the property sold.
6. Determine whether your property was either I or II, and follow the appropriate instructions:
  1. If your property was income-producing property, such as stock, bonds, an ownership interest in a business, a rental property, a patent or copyright, or you held your property in connection with a business, profession, or occupation (but not inventory or an operational asset), then:
  2. If your property was other than income-producing property (a personal automobile or furniture), then:
    - If the adjusted basis is less than or equal to Column (d), enter the gain or zero in Column (f).
    - If the adjusted basis is greater than Column (d), enter zero in Column (f). You cannot report a loss on the sale of personal property.
  3. IMPORTANT: You may only deduct losses from transactions you entered into for profit. Indicate a loss by filling in the oval.
CAUTION: For taxpayers reporting the sales of exempt obligations:

DO: Include the issue or DTD date of the exempt obligation in the description of the items sold.

DO NOT: Include the sales of any exempt obligations issued prior to Feb. 1, 1994. See Page 16 of the instructions for additional information regarding exempt obligations.
Net Gain (Loss). Total Column (f) and enter the net amount. You may offset gains (losses) for Line 2.
Gain from Installment Sales. Enter your taxable gain from each PA Schedule D-1, Form REV-1689, Computation of Installment Sale Income.
CAUTION: You may not elect the installment sales method for:
- Reporting gains from the sale of intangible personal property, such as stocks, bonds, partnership or other ownership interests; or
- Reporting transactions where the object is the lending of money or the rendering of services.
Taxable Distributions from C Corporations. As a shareholder in a C corporation, you must report as taxable gain the excess of the fair market value of a distribution (other than a dividend) in excess of current or accumulated earnings and profits over your adjusted basis of your stock. You must decrease the basis of your stock or shares, but not below zero, by any distribution that is not taxable as a dividend on Line 3 of your PA-40. EXAMPLE: B Corp distributes from its capital account$100,000 to Karen, the only stockholder. Her adjusted basis in her stock is $75,000. The distribution is not from the C corporation's earnings and profits, so it is not ataxable dividend. Karen must reduce her basis from $75,000 to zero. She reports $100,000 on the Enter total distribution line, and $75,000 on the Minus adjusted basis line. She reports the remaining $25,000 as a gain on Line 4 of her PA Schedule D.
Net Gain (Loss) from the Sale of Property acquired before June 1, 1971. Determine your gain (loss) on the sale of June 1, 1971 property on Form REV-1742, PA Schedule D-71.
Net Partnership and PA S Corporation Gain (Loss). Report the taxable gain or loss from your PA Schedules RK-1 or NRK-1. If PA Schedules RK-1 or NRK-1 are not provided, enter the amount from the federal Schedule K-1. Include a statement providing the entity name and FEIN along with the gain (loss) by entity if gain (loss) from any pass-through entity is reported on this line.
Taxable Gain from the Sale of Your Principal Residence. PA law excludes the qualifying gain from the sale of your principal residence. Generally, if you owned and used property as your principal residence for at least two of the five years preceding the sale, your gain is exempt. However, you must report a gain if you do not meet the requirements. For more information request theSale of Your Principal Residence brochure (REV-625). If you do not qualify to exclude the gain from the sale of your principal residence, report your taxable gain, if any, on this line. If you realized a loss from the sale of your principal residence, enter a zero. If you used any portion of your principal residence for business or rental purposes, you must complete and submit PA Schedule 19 with your return. Report the gain or loss on the business or rental portion of the sale of your principal residence on Line 1 of PA Schedule D.
Taxable Distributions from Partnerships. Report any gain you realize from other partnership distributions that exceed your ownership basis in the partnership. You must obtain, complete and submit REV-999, Partner PA Outside Tax Basis in a Partnership Worksheet.
Taxable Distributions from PA S Corporations. Report any gain you realize from other PA S corporation distributions that exceed your ownership basis in the PAS corporation. You must obtain, complete and submit REV-998, Shareholder Tax Basis in PA S Corporation Stock Worksheet.
Taxable Gain from Exchange of Insurance Contracts. If you have a sale, exchange, or disposition of an insurance contract that does not qualify as tax-exempt under IRC Section 1035, report the taxable exchange of any insurance contracts you reported for federal income tax purposes. If you have more than one taxable exchange of contracts, report the total gain you realized. See the instructions on Page 16 for a description of the tax-exempt exchanges covered under IRC Section 1035.
Total PA-Taxable Gain (Loss). Add Lines 2 through 10.