1120-S

Capital Gains and Losses and Built-In Gains

Agency
IRS
Revision
2025
Fillable fields
53
Pages
2
Official source
IRS form page
Checked
October 21, 2026
Fill 1120-S online
Page 1 of form 1120-S

Schedule D (Form 1120-S): Capital Gains and Losses and Built-in Gains

Schedule D (Form 1120-S) is the Capital Gains and Losses and Built-in Gains schedule for S corporations. The IRS page says corporations that elect to be S corporations use it to report capital gains and losses, sales or exchanges of capital assets, and gains on distributions to shareholders of appreciated capital assets. The form says "Attach to Form 1120-S."

The instructions say it also reports gains from installment sales on Form 6252, like-kind exchanges on Form 8824 and capital gain distributions, and figures the tax on built-in gains in Part III. Most individual sales are listed on Form 8949 first, and their totals carry to this schedule.

This is the 2025 schedule. You can fill out the PDF free in your browser on this page and download it without an account.

What's on Schedule D (Form 1120-S)

Header

The corporation's name and EIN, and a Yes or No question on whether it disposed of any investment in a qualified opportunity fund during the tax year.

Part I: Short-term, lines 1a to 7

Totals from Forms 1099-B or 1099-DA with basis reported, totals from Form 8949, gains from Forms 6252 and 8824, and the tax on short-term gain. Line 7 goes to Form 1120-S, Schedule K, line 7 or 10.

Part II: Long-term, lines 8a to 15

The same kinds of totals for assets generally held more than one year, plus capital gain distributions on line 13. Line 15 goes to Form 1120-S, Schedule K, line 8a or 10.

Part III: Built-in Gains Tax, lines 16 to 23

Recognized built-in gains over losses, taxable income, net recognized built-in gain, the section 1374(b)(2) deduction, 21% of line 20, credit carryforwards from C corporation years, and the tax.

Columns (d) to (h)

Proceeds, cost or other basis, adjustments from Form 8949, and the gain or loss, which is column (d) minus column (e) combined with column (g).

How to fill out Schedule D (Form 1120-S)

  1. 1

    Complete Form 8949 first

    The instructions say to complete all necessary pages of Form 8949 before completing line 1b, 2, 3, 8b, 9 or 10 of Schedule D.

  2. 2

    Lines 1a and 8a

    Enter aggregate totals for sales on Form 1099-B or Form 1099-DA that show basis reported to the IRS and need no adjustments. The instructions say not to also report those sales on Form 8949.

  3. 3

    Column (h)

    Subtract column (e) from column (d), then combine the result with any adjustment in column (g). The instructions say to enter negative amounts in parentheses.

  4. 4

    Lines 4, 5, 11, 12 and 13

    Enter installment sale gains from Form 6252, like-kind exchange results from Form 8824, and the total capital gain distributions paid to the corporation during the year.

  5. 5

    Part III

    Attach the computations for lines 16 and 17. The instructions say line 17 is figured by completing lines 1 through 28 of Form 1120. Line 21 is 21% of line 20, and line 23 goes to Form 1120-S, page 1, line 23b.

  6. 6

    Lines 6 and 14

    The instructions say the built-in gains tax is treated as a loss. The part from short-term gain goes on line 6 and the part from long-term gain on line 14, in parentheses.

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Where it goes and what to watch

Attach to Form 1120-S

The form says "Attach to Form 1120-S." Schedule D is filed with the S corporation's return, not on its own.

Where the totals go

Line 7 goes to Form 1120-S, Schedule K, line 7 or 10. Line 15 goes to Schedule K, line 8a or 10. Line 23 goes to Form 1120-S, page 1, line 23b.

Recognition period

The instructions say the applicable recognition period for the built-in gains tax is the 5-year period beginning on the first day of the first S corporation year, or on the date of a transferred-basis acquisition.

Digital assets

The instructions say codes G, H, I, J, K and L were added to lines 1b, 2, 3, 8b, 9 and 10 for digital asset transactions reported on Form 1099-DA.

Rounding

Cents can be rounded to whole dollars. The instructions say that if cents are rounded, all amounts are rounded.

Related forms

Who files Schedule D (Form 1120-S)?

  • S corporations with capital gains or losses

    The IRS page says corporations that elect to be S corporations use it to report capital gains and losses and sales or exchanges of capital assets.

  • Distributions of appreciated property

    It also reports gains on distributions to shareholders of appreciated capital assets. The instructions say gain, but not loss, is generally recognized on a nonliquidating distribution of appreciated property.

  • Former C corporations

    The instructions say the built-in gains tax in Part III may apply to an S corporation that was a C corporation before it elected to be an S corporation.

  • Transferred-basis acquisitions

    Part III may also apply to an S corporation that acquired an asset with a basis determined by reference to its basis in the hands of a C corporation.

  • Qualified opportunity fund investors

    A corporation that disposed of any investment in a qualified opportunity fund during the tax year checks Yes at the top and attaches Form 8949.

The S corporation completes the schedule and attaches it to its Form 1120-S. It is a corporate schedule, not a shareholder's form.

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Questions about Form 1120-S

Who uses Schedule D (Form 1120-S)?

The IRS page says corporations that elect to be S corporations use it to report capital gains and losses, sales or exchanges of capital assets, and gains on distributions to shareholders of appreciated capital assets.

What is the built-in gains tax?

The instructions describe it as the section 1374 tax on built-in gains. It may apply to an S corporation that was a C corporation, or that acquired an asset in a transferred-basis acquisition.

What rate does Part III use?

Line 21 says to enter 21% (0.21) of line 20. Credit carryforwards from C corporation years on line 22 are then subtracted.

Does every sale go on Form 8949?

No. The instructions say sales on a Form 1099-B or Form 1099-DA that show basis reported to the IRS and need no adjustments can be totaled on line 1a or 8a instead.

What is new for 2025?

The instructions say codes G through L were added to lines 1b, 2, 3, 8b, 9 and 10 for digital asset transactions, and point to Form 8997 for qualified opportunity fund basis adjustments.

Where do net gains and losses go?

Net short-term gain or loss on line 7 goes to Form 1120-S, Schedule K, line 7 or 10. Net long-term gain or loss on line 15 goes to Schedule K, line 8a or 10.