Instructions for Schedule D (Form 1120) (2008)

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Specific Instructions

Table of Contents

Parts I and II

In Part I, report the sale, exchange, or distribution of capital assets held 1 year or less. In Part II, report the sale, exchange, or distribution of capital assets held more than 1 year. Use the trade dates for the dates of acquisition and sale of stocks and bonds traded on an exchange or over-the-counter market.

Column (b). Date acquired. A RIC or REIT's acquisition date for an asset it held on January 1, 2001, for which it made an election to recognize any gain under section 311 of the Taxpayer Relief Act of 1997, is the date of the deemed sale and reacquisition.

Column (d). Sales price. Enter either the gross sales price or the net sales price. If the net sales price is entered, do not increase the cost or other basis in column (e) by any expenses reflected in the net sales price.

Column (e). Cost or other basis. In general, the basis of property is its cost. See section 1012 and the related regulations. Special rules for determining basis are provided in sections in subchapters C, K, O, and P of the Code. These rules may apply to the:

Receipt of certain distributions with respect to stock (section 301 or 1059),
Liquidation of another corporation (section 334),
Transfer to another corporation (section 358),
Transfer from a shareholder or reorganization (section 362),
Bequest (section 1014),
Contribution or gift (section 1015),
Tax-free exchange (section 1031),
Involuntary conversion (section 1033),
Certain asset acquisitions (section 1060), or
Wash sale of stock (section 1091).

Attach an explanation if the corporation uses a basis other than actual cost of the property.

Before making an entry in column (e), increase the cost or other basis by any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless the net sales price was reported in column (d).

A RIC or REIT's basis in an asset it held on January 1, 2001, for which it made an election to recognize any gain under section 311 of the Taxpayer Relief Act of 1997, is the asset's closing market price or FMV, whichever applies, on the date of the deemed sale and reacquisition, whether the deemed sale resulted in a gain or unallowed loss.

If the corporation is allowed a charitable contribution deduction because it sold property in a bargain sale to a charitable organization, figure the adjusted basis for determining gain from the sale by dividing the amount realized by the FMV and multiplying that result by the adjusted basis. No loss is allowed in a bargain sale to a charity.

See section 852(f) for the treatment of certain load charges incurred in acquiring stock in a RIC with a reinvestment right.

Line 10. Enter the total capital gain distributions paid by a RIC or REIT during the year, regardless of how long the corporation owned stock in the RIC or REIT.

Also enter any amount received from a RIC or REIT that qualifies as a distribution in complete liquidation under section 332(b) and is designated by the RIC or REIT as a capital gain distribution. See section 332(c).

Part IV

If the corporation has both a net capital gain on line 13 and a qualified timber gain, complete Part IV to determine the alternative tax. For this purpose, a qualified timber gain means the net gains described in section 631(a) and (b), determined by taking into account only trees held more than 15 years. Only qualified timber gains allocable to the period that begins after May 22, 2008, and ends before May 23, 2009, are eligible for the alternative tax.

Enter the amount from Part IV, line 26, on Form 1120, Schedule J, line 2, or the applicable line of the corporation's tax return.

Filers of Form 1120-RIC do not use Schedule D (Form 1120) to figure the alternative tax. These filers figure the tax on Part II of Form 1120-RIC.

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