What this line means
Short-term capital gains or losses reported on other IRS forms that flow to Schedule D. This is a catch-all line for gains and losses that do not come from Form 8949, installment sales, like-kind exchanges, or pass-through entities. Common sources include Form 4684 (casualties and thefts), Form 6781 (Section 1256 contracts), and Form 8824.
Does this apply to you?
- You traded futures contracts, options on futures, or foreign currency contracts taxed under Section 1256
- You had a casualty or theft loss on investment property reported on Form 4684
- You received a capital gain distribution from a qualified opportunity fund
- You had a short-term gain from the disposition of property under an involuntary conversion
Easy to overlook
Section 1256 contracts get the 60/40 split Futures and options on futures are taxed under a special rule: 60% of the gain is treated as long-term and 40% as short-term, regardless of how long you held the contract. Only the 40% short-term portion goes here. The 60% long-term portion goes on line 14. Filers who put the full gain on one line get the wrong tax rate. 1 IRS Schedule D instructions — Line 6
Insurance proceeds above basis on investment property If investment property (not your personal residence) is destroyed and the insurance payout exceeds your basis, the excess is a capital gain. This applies to rental properties, investment land, and business assets. The gain is taxable even though you just had property destroyed. 2 General filing pattern — overlooked involuntary conversion gains
Watch out for this
Reporting Section 1256 contract gains entirely as short-term. The mandatory 60/40 split applies to all Section 1256 contracts — you cannot elect out of it. Reporting the entire gain as short-term means you pay ordinary income rates on the portion that should be taxed at the lower long-term capital gains rate.
Footnotes
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IRS Schedule D (Form 1040) Instructions, Line 6. https://www.irs.gov/instructions/i1040sd ↩
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IRS Schedule D (Form 1040) Instructions. See also IRS Publication 17, Your Federal Income Tax. https://www.irs.gov/pub/irs-pdf/p17.pdf ↩