Capital gains and capital gains distribution

Forum|Forum|2 months ago
April 7, 2026
2 replies
19 views

On Schedule D line 16, TTax adds the capital gain distribution (line 13) and the net capital gain. That sum appears on form 1040 line 7a as the total capital gain, which is false, and leads to an erroneously high tax. How do I prevent TTax from adding cap gain distribution to the capital gain?

Hi Palms

Level 7

Capitsl gain distributions ARE capital gains. They're proceeds from funds that sell securities, mutual funds mostly, and are distributed to shareholders of the funds. Caoital gain distributions are almost always long term capital gains.

tradeAuthor

Level 2

Thanks for your reply; here is more relevant detail.

I have a Mutual Fund Account (MFA) and a Stock Market Account (SMA). MFA has a capital gain distribution of $47K; SMA has a net capital loss of $37K, which TurboTax shows on Schedule D lines 8b and 9. The two accounts combined therefore have a net capital gain of $8K. Values are approximate and rounded for arithmetical ease.

SMA also has a capital gain distribution of $15K, which is not used in the capital gain calculation.

Schedule D shows the total distribution of $62K on line 13, and adds that value to the $8K capital gain to show $70K on lines 15 and 16. That $70K also shows on 1040 line 7a. So I am being taxed for the net capital gain AND the entire capital gain distribution. That is wrong. What must I do in TurboTax to prevent this serious double taxation? If I override Schedule D line 13 to zero the $62K distribution, I am not allowed to e-file, which is a huge disadvantage. Thanks for any advice and words of wisdom.

baldietax

Level 12

line 13 sounds correct if you have a cap gain distribution from the MFA for 47k and from the SMA for 15k = 62k

are you also including the 47k as a capital gain in the lines above? - "The two accounts combined therefore have a net capital gain of $8K" (do you mean 10k) - how was this input into Turbotax?

JamesG1

Level 15

In most cases, capital gain distributions are reported on IRS form 1099-DIV box 2a.

As stated correctly above, these are capital gains which are netted against net short-term capital gain or loss and flow to the IRS form 1040 line 7a.

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Mike9241

Level 15

@JamesG1

@trade

They are first netted against long-term capital losses, which can appear on lines 10, 11, 12, and 14 to arrive at line 15. If 15 is a gain, it's netted against net short-term capital losses on line 7 or added to net short-term capital gains to arrive at line 16. If line 15 is a loss, it is netted against net short-term capital gains or added to net short-term capital loss to arrive at line 16

Mike9241