Loss from a sale or exchange between the corporation and a related person.   Except for distributions in complete liquidation of a corporation, no loss is allowed from the sale or exchange of property between the corporation and certain related persons. See section 267 for details.

Loss from a wash sale.   The corporation cannot deduct a loss from a wash sale of stock or securities (including contracts or options to acquire or sell stock or securities) unless the corporation is a dealer in stock or securities and the loss was sustained in a transaction made in the ordinary course of the corporation's trade or business. A wash sale occurs if the corporation acquires (by purchase or exchange), or has a contract or option to acquire, substantially identical stock or securities within 30 days before or after the date of the sale or exchange. See section 1091 for more information.

Gain on distribution of appreciated property.   Generally, gain (but not loss) is recognized on a nonliquidating distribution of appreciated property to the extent that the property's fair market value exceeds its adjusted basis. See section 311 for details.

Gain or loss on distribution of property in complete liquidation.   Generally, gain or loss is recognized by a corporation upon the liquidating distribution of property as if it had sold the property at its fair market value. See section 336 for details and exceptions.

Gain or loss on certain short-term Federal, state, and municipal obligations.   Such obligations are treated as capital assets in determining gain or loss. On any gain realized, a portion is treated as ordinary income and the balance is considered as a short-term capital gain. See section 1271.

Gain from installment sales.   If the corporation sold property at a gain and it will receive a payment in a tax year after the year of sale, it generally must report the sale on the installment method unless it elects not to. However, the installment method may not be used to report sales of stock or securities traded on an established securities market.

  Use Form 6252, Installment Sale Income, to report the sale on the installment method. Also use Form 6252 to report any payment received during the tax year from a sale made in an earlier year that was reported on the installment method. To elect out of the installment method, report the full amount of the gain on Schedule D for the year of the sale on a return filed by the due date (including extensions). If the original return was filed on time, the corporation may make the election on an amended return filed no later than 6 months after the original due date (excluding extensions). Write “Filed pursuant to section 301.9100-2” at the top of the amended return.

Gain or loss on an option to buy or sell property.   See sections 1032 and 1234 for the rules that apply to a purchaser or grantor of an option or a securities futures contract (as defined in section 1234B). For details, Pub. 550, Investment Income and Expenses.

Gain or loss from a short sale of property.   Report the gain or loss to the extent that the property used to close the short sale is considered a capital asset in the hands of the taxpayer.

Loss from securities that are capital assets that become worthless during the year.   Except for securities held by a bank, treat the loss as a capital loss as of the last day of the tax year. See section 582 for the rules on the treatment of securities held by a bank.

Nonrecognition of gain on sale of stock to an employee stock ownership plan (ESOP) or an eligible cooperative.   See section 1042 and Temporary Regulations section 1.1042-1T for rules under which a taxpayer may elect not to recognize gain from the sale of certain stock to an ESOP or an eligible cooperative.

Disposition of market discount bonds.   See section 1276 for rules on the disposition of any market discount bonds.

Capital gain distributions.   Report the total amount of capital gain distributions (for the entire year) as long-term capital gain on line 10, column (f), regardless of how long the corporation held the investment. Enter on line 10, column (g) capital gain distributions from column (f) that were attributed to periods after May 5, 2003.

Nonbusiness bad debts.   A nonbusiness bad debt must be treated as a short-term capital loss and can be deducted only in the year the debt becomes totally worthless. For each bad debt, enter the name of the debtor and “schedule attached” in column (a) of line 1 and the amount of the bad debt as a loss in column (f). Also attach a statement of facts to support each bad debt deduction.

Real estate subdivided for sale.   Certain lots or parcels that are part of a tract of real estate subdivided for sale may be treated as capital assets. See section 1237.

Sale of a partnership interest.   A sale or other disposition of an interest in a partnership owning unrealized receivables or inventory items may result in ordinary gain or loss. See Pub. 541, Partnerships, for more details.

Special rules for traders in securities.   Traders in securities are engaged in the business of buying and selling securities for their own account. To be engaged in a business as a trader in securities the corporation:

  The following facts and circumstances should be considered in determining if a corporation's activity is a business:

  Like an investor, a trader must report each sale of securities (taking into account commissions and any other costs of acquiring or disposing of the securities) on Schedule D or on an attached statement containing all the same information for each sale in a similar format. However, if a trader made the mark-to-market election (see page 4 of the Instructions for Form 1120S), each transaction is reported in Part II of Form 4797 instead of Schedule D.

  The limitation on investment interest expense that applies to investors does not apply to interest paid or incurred in a trading business. A trader reports interest expense and other expenses (excluding commissions and other costs of acquiring and disposing of securities) from a trading business on page 1 of Form 1120S.

  A trader also may hold securities for investment. The rules for investors generally will apply to those securities. Allocate interest and other expenses between a trading business and investment securities. Investment interest expense is reported on line 11a of Schedules K and K-1.

Certain constructive ownership transactions.   Gain in excess of the gain the corporation would have recognized if it had held a financial asset directly during the term of a derivative contract must be treated as ordinary income. See section 1260 for details.

Constructive sale treatment for certain appreciated positions.   Generally, the corporation must recognize gain (but not loss) on the date it enters into a constructive sale of any appreciated interest in stock, a partnership interest, or certain debt instruments as if the position were disposed of at fair market value on that date.

  The corporation is treated as making a constructive sale of an appreciated position if it (or a related person, in some cases) does one of the following:

  For details and other exceptions to these rules, see Pub. 550.

Gain from qualified stock.   If the corporation sold qualified small business stock (defined below) that it held for more than 6 months, it may postpone gain if it purchased other qualified small business stock during the 60-day period that began on the date of the sale. The corporation must recognize gain to the extent the sale proceeds exceed the cost of the replacement stock. Reduce the basis of the replacement stock by any postponed gain.

  If the corporation chooses to postpone gain, report the entire gain realized on the sale on line 1 or 7. Directly below the line on which the corporation reported the gain, enter in column (a) “Section 1045 Rollover” and enter as a (loss) in column (f) the amount of the postponed gain.

  

  The corporation also must separately state the amount of the gain rolled over on qualified stock under section 1045 on Form 1120S, Schedule K, line 6, because each shareholder must determine if he or she qualifies for the rollover at the shareholder level. Also, the corporation must include on Schedule D, line 1 or 7 (and on Form 1120S, Schedule K, line 6), any gain that could qualify for the section 1045 rollover at the shareholder level instead of the corporate level (because a shareholder was entitled to purchase replacement stock). If the corporation had a gain on qualified stock that could qualify for the 50% exclusion under section 1202, report that gain on Schedule D, line 7 (and on Form 1120S, Schedule K, line 6).

  To be qualified small business stock, the stock must meet all of the following tests:

  A qualified business is any business other than the following:

Rollover of gain from empowerment zone assets.   If the corporation sold a qualified empowerment zone asset it held for than one year, it may be able to elect to postpone part or all of the gain. For details, see Pub. 954, Tax Incentives for Distressed Communities, and section 1397B.

28% rate gain or (loss).   Report any 28% gain or loss (i.e., collectibles gain or loss) on a statement attached to line 21 of Schedule K (and each shareholder's share on line 23 of Schedule K-1). A collectibles gain or loss is any long-term gain or deductible long-term loss from the sale or exchange of a collectible that is a capital asset.

  Collectibles include works of art, rugs, antiques, metals (such as gold, silver, and platinum bullion), gems, stamps, coins, alcoholic beverages, and certain other tangible property.

  Also include gain (but not loss) from the sale or exchange of an interest in a partnership or trust held more than 1 year and attributable to unrealized appreciation of collectibles. For details, see Regulations section 1.1(h)-1. Also, attach the statement required under Regulations section 1.1(h)-1(e).