Capital gains and losses Personal income types

Capital gains and losses

Generally, capital gains and losses occur when you sell something for more or less than you spent to purchase it.

  • Capital gains occur on any asset sold for a price higher than the purchase price
  • Capital losses occur on any asset sold for a price less than the purchase price

All taxpayers must report gains and losses from the sale or exchange of capital assets.

California does not have a lower rate for capital gains. All capital gains are taxed as ordinary income.

How to report

Federal return

To report your capital gains and losses, use U.S. Individual Income Tax Return (IRS Form 1040 or 1040-SR) and Capital Gains and Losses, Schedule D (IRS Form 1040 or IRS Form 1040-SR).

California return

If you have a difference in the treatment of federal and state capital gains, file California Capital Gain or Loss Schedule D (540).

Visit Instructions for California Schedule D (540) for more information.