Schedule D

4 — Short-Term Gain or Loss From Partnerships, S Corps, Estates, and Trusts Updated for tax year 2025

What this line means

Your share of short-term capital gains or losses from partnerships, S corporations, estates, or trusts. These amounts are reported to you on Schedule K-1 (Form 1065, 1120-S, or 1041). The entity already determined the holding period and character of the gain — you report your allocated share here.

Does this apply to you?

  • You are a partner in a partnership that sold assets held one year or less
  • You are a shareholder in an S corporation that reported short-term capital gains on your K-1
  • You are a beneficiary of an estate or trust that distributed short-term capital gains to you
  • You invested in a hedge fund or private equity fund structured as a partnership

Easy to overlook

K-1s arrive late and get forgotten Partnerships and S corps have until March 15 to issue K-1s, and many request extensions pushing delivery to September. If you file your return in February based on your W-2 and 1099s, you will miss the K-1 entirely. You need to either wait for the K-1 or file an extension. 1 [SOURCE: General filing pattern — missing K-1 capital gains]

The entity determines the holding period, not you The short-term or long-term character is set at the entity level based on when the entity acquired and sold the asset. Your personal holding period in the partnership is irrelevant. If the partnership held a stock for six months and sold it, your share is short-term even if you have been a partner for ten years. 2 [SOURCE: IRS Schedule D instructions — Line 4]

Watch out for this

Omitting K-1 capital gains because the filer did not receive the K-1 before filing. The IRS receives a copy of every K-1 issued. If you file without reporting the income, the IRS automated matching system will flag the discrepancy and send a notice for the unreported gain plus interest.

  • Line 11 — Schedule D — Long-term gain or loss from partnerships, S corps, estates, and trusts
  • Line 7 — Schedule D — Net short-term capital gain or loss
  • Schedule K-1 — The form that reports your share of income from the entity

Footnotes

  1. IRS Schedule D (Form 1040) Instructions. See also IRS Publication 17, Your Federal Income Tax. https://www.irs.gov/pub/irs-pdf/p17.pdf ↩

  2. IRS Schedule D (Form 1040) Instructions, Line 4. https://www.irs.gov/instructions/i1040sd ↩

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