Schedule D
Also: Schedule D, capital gains schedule
The IRS form that summarizes total short-term and long-term capital gains and losses from Form 8949, applies the loss netting rules, and produces the net capital gain flowing into Form 1040.
Schedule D summarizes capital gains and losses. Part I holds short-term transactions totaled from Form 8949, Part II holds long-term transactions, and Part III nets the two. Short-term losses first offset short-term gains, long-term losses first offset long-term gains, then any remaining losses offset the other category. Net capital losses up to $3,000 reduce ordinary income each year, and the rest carries forward indefinitely.
Example: an employee has $120,000 of long-term gains from ISO qualifying dispositions, $45,000 of short-term gains from a same-year RSU sale, and $18,000 of short-term losses from tax-loss harvesting. Schedule D nets the short-term gains and losses to $27,000, adds $120,000 of long-term gain, and produces $147,000 of net capital gain. The long-term portion is taxed at 15% or 20%; the short-term at ordinary rates.
Common mistake: ignoring prior-year loss carryforwards. A filer with $50,000 of unused 2023 losses can apply them in full against 2025 gains. Check the prior-year Schedule D line 15 or 16 for the carryforward.
Schedule D matters at every year with stock sales, at tax-loss harvesting planning, and when sizing large sales that affect NIIT and AMT.