Which form is used to report capital gains and losses from the sale of assets?

The correct form for reporting capital gains and losses from the sale of assets is Schedule D. This schedule is specifically designed for taxpayers to report transactions involving capital assets, which include stocks, bonds, real estate (not used for business purposes), and other investment properties.

When a taxpayer sells an asset, they must determine the gain or loss from the sale, which is the difference between the selling price and the asset's basis (what they initially paid for it, adjusted for improvements, depreciation, etc.). Schedule D collects this information, allowing the taxpayer to summarize their total capital gains or losses and report them properly on their Form 1040.

Other forms mentioned do not serve this specific purpose. For instance, Form 1040 is the main individual income tax return and does not detail capital gains and losses without being accompanied by Schedule D. Schedule C is used primarily for reporting income or loss from a business operated as a sole proprietorship, not from capital gains on asset sales. Form 8862 is related to claiming the Earned Income Credit or the Child Tax Credit and does not address capital gains or losses at all. Thus, Schedule D stands out as the key document for capturing and reporting capital asset transactions on tax returns.