Computing Capital Gains

Generally, the proceeds of any stock, bond, or other securities you sold during 2002 will be reported to you on IRS Form 1099-B by the brokerage or financial institution that carried out the sale for you. The form will state the proceeds from the sale in Box 2 (except for certain futures contracts, reported in Boxes 6 ( 9).

The institution may choose to report the gross proceeds, or the net proceeds (gross proceeds minus any commissions, option premiums, state or local transfer taxes, brokers' fees, etc.), in Box 2. Next to the amount reported, the appropriate box for the method used should be checked. If the broker reported net proceeds, you can simply enter the amount shown for each item in column (d) of Part I or II, Schedule D; otherwise, you'll have to check the broker's statements or other notices or documents you've received to determine the amount of commissions and other transaction costs you can deduct.

In the most general terms, your net proceeds, minus your tax basis for the item, will be the amount of capital gains you must report.

For each item you sold, you'll be asked to give a short description of the item (such as "100 shares of IBM common stock"), the date purchased, the date sold, the sales price, the cost or other basis, and the gain or loss you realized. If you run out of space on Schedule D, you can use Schedule D-1, Continuation Sheet for Schedule D, or you can create your own continuation sheet by repeating all the column headings on another piece of paper.