- 1). Add up all of your short-term capital losses, which are investments held for a year or less, nd your long-term losses, which are held for more than a year to the day. Do the same for your long- and short-term capital gains.
- 2). Net your long-term gains against your long-term losses. For example, if you have a $10,000 long-term capital gain and a $6,000 long-term capital loss, then you have a net $4,000 capital gain. Do the same thing with your short-term gains and losses.
- 3). Net your net short-term gain against your net long-term gain. If you have a $4,000 net long-term gain and a net $6,500 short-term capital loss, then you will end up with a final net short-term loss of $2,500.
- 4). Report the net gain or loss of any publicly traded security on Schedule D of the 1040. List the short-term capital gains in Part I and the long-term gains in Part II. In each part, you will have to list the name of the security bought and sold, number of shares and the dates of the respective transactions, as well as the purchase and sale prices.
- 5). List the gain or loss of any business property, oil and gas interest, Section 126 property, depreciable or amortizable property or an involuntary conversion on Form 4797. Completing this form frequently involves more complex issues that may require extensive research or the use of a tax professional.
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