Schedule D (Form 1120-POL)

Form 1120-POL & Schedule D

Certain filers of Form 1120-POL may also be required to complete and attach Schedule D with their return. Schedule D, Capital Gains and Losses, is used to report capital gain distributions that are not directly reported on line 8 of Form 1120-POL. It's also used to report effectively connected capital gain distributions not reported directly on other 1120 Forms, including Form 1120-F, 1120-C, or 1120-H.

Political Organization Capital Assets & Losses

Capital assets are considered to be each item of property the corporation held, whether or not the actual property is connected with the corporation's trade or business. For IRS purposes, some assets may not be considered capital assets including: stock in trade or other property, accounts or notes receivable acquired in the ordinary course of trade or business, depreciable or real property used in the trade or business, certain copyrights, US Government publications, certain commodities, certain identified hedging transactions, and supplies regularly used in the trade or business.

Capital losses for corporations are allowed in the current tax year but only to the extent of capital gains. A net capital loss, however, is carried back up to 3 years and carried forward up to 5 years as a short-term capital loss.

The Difference Between Net Capital Gain & Qualified Timber Gain

In past years, certain organizations have had to keep their net capital gain and qualified timber gain separate. But beginning with tax year 2016, if a corporation has both a net capital gain as well as a qualified timber gain, the IRS will allow up to 23.8% of the alternative tax to be applied to the qualified timber gain. Part IV of Schedule D is used to figure this alternative tax.

Short-Term Capital Gains & Losses

Organizations reporting on Form 1120-POL and Schedule D may experience capital gains and losses. Short-term gains and losses can occur on certain short-term federal, state, and municipal obligations, other than tax-exempt organizations. In the case that a short-term governmental obligation is a capital asset acquired at an acquisition discount, on any gain realized, a portion is treated as ordinary income while any remaing balance is treated as a short-term capital gain.

Long-Term Capital Gains & Losses

Long-term capital gains and losses come from qualifying investments owned for more than 12 months before being sold. In investments, the amount of an asset sale that counts toward a capital gain or loss is determined by the difference between the sale value and the purchase value. Long-term capital gains are typically assigned lower tax rates than short-term capital gains.

Click Here to know more about Schedule D.