Where gain is actually computed. A 1099-B or 1099-DA reports what you sold for, not what you made; Form 8949 reconciles each disposal and its subtotals carry here. Digital assets held as investments run this route. Received as payment for work, they do not.

Who files it, and who should not

Schedule D figures "the overall gain or loss from transactions reported on Form 8949," and a few kinds of gain that come from other forms. Its starting point is the capital asset: "Most property you own and use for personal purposes or investment is a capital asset."

What makes this page worth reading for a self-employed person is the list of things that are not capital assets, because each of them belongs somewhere else:

  • Inventory, "or held mainly for sale to customers in the ordinary course of your trade or business." Its sale is business income on Schedule C.
  • Depreciable property used in your trade or business, even if it is fully depreciated, and real estate used in the business. These go on Form 4797.
  • Work you created. A copyright, or a literary or artistic composition, "created by your personal efforts" is not a capital asset. The writer, designer or photographer selling their own work has ordinary income.
  • Supplies regularly used in your trade or business.

Digital assets follow the same line. Held as an investment and sold, they run through Form 8949 and Schedule D. Received as payment for your work, they are business income on Schedule C first. See paid in crypto.

Proceeds are not gain

A Form 1099-B or Form 1099-DA reports what you sold for. Gain is that figure less your basis, which the instructions describe as "the amount of your investment in property for tax purposes," usually its cost. The broker may or may not have reported the basis, and you must keep records that show it either way. Your 1099-DA reports proceeds, not gain and basis wallet by wallet work through the digital asset case.

Most sales are listed one by one on Form 8949, and its totals carry to Schedule D. From 2025 Form 8949 has its own boxes, G to L, for digital asset transactions, alongside boxes A to F for everything else. Sales whose basis was reported to the IRS and need no adjustment can skip Form 8949 and go straight onto line 1a or 8a as totals.

Short term or long term

"The holding period for short-term capital gains and losses is generally 1 year or less. The holding period for long-term capital gains and losses is generally more than 1 year." Part I takes the short-term sales and Part II the long-term ones.

The difference is the rate. Topic 409: "Net short-term capital gains are subject to taxation as ordinary income at graduated tax rates." A net long-term gain may be taxed at a lower rate than ordinary income. Holding an investment for more than a year can change the rate on its gain. Neither kind of gain is subject to self-employment tax.

The lines

Line What it takes
1a Short-term sales with basis reported and no adjustments, as totals
1b–3 Short-term totals from Form 8949
6 Short-term capital loss carried over from last year
7 Net short-term gain or loss
8a Long-term sales with basis reported and no adjustments, as totals
8b–10 Long-term totals from Form 8949
11 Gain from Form 4797, Part I, and certain other forms
14 Long-term capital loss carried over from last year
15 Net long-term gain or loss
16 The two combined. A gain goes to Form 1040, line 7a
21 The loss you can take this year

Not every line on the schedule is covered here.

Losses: $3,000 a year

"You can deduct capital losses up to the amount of your capital gains plus $3,000 ($1,500 if married filing separately)." Anything above that is not lost: it carries to the next year through the Capital Loss Carryover Worksheet and comes back on lines 6 and 14.

Two losses count for nothing. A loss on something you owned for personal use "isn't deductible," although a gain on one is taxable. And a loss on a sale to a member of your family is not deductible either. A personal sale that reached you on a Form 1099-K still has to be reported, on Form 8949 or in the space at the top of Schedule 1.

Everything on this site that lands here

Each article declares the sheet its number ends up on, so this list is the writing itself rather than a summary of it.

ReadWhere it lands
1099-DA: proceeds, not gain gain rather than proceeds, via Form 8949
Your coins stopped being one pile Form 8949 — basis per wallet or account, not per pool
Moving coins between your own wallets gain rather than proceeds, via Form 8949

Common questions

My Form 1099-DA shows $12,000. Is that my gain?
No. The form reports proceeds, what you sold for. Gain is proceeds less your basis, usually what you paid. The instructions: "Subtract the cost or other basis in column (e) from the proceeds (sales price) in column (d)."
I sold a camera I used in my business. Does it go on Schedule D?
No. Depreciable property used in your trade or business is not a capital asset, even when it is fully depreciated. The sale goes on Form 4797, which works out how much of any gain is treated as capital gain; only that part reaches Schedule D, on line 11.
I sold prints of my own photographs. Is that a capital gain?
No. An artistic composition "created by your personal efforts" is not a capital asset. If selling your work is your business, the income belongs on Schedule C.
How much of a capital loss can I deduct?
Your capital gains plus $3,000 ($1,500 if married filing separately) each year. The instructions: "You may be able to use capital losses that exceed this limit in future years." The rest carries forward.
I sold my own car for less than I paid. Can I deduct the loss?
No. "Loss from the sale or exchange of a capital asset held for personal use isn't deductible." A gain on a personal item, though, is taxable.

The official page

Everything here is written from the IRS's own material, and the place to check it is Schedule D on irs.gov. Figures and rules change; the source is what settles them.

This is educational material, not tax advice. Your own situation may turn on facts this page does not know about.