Q: Under Part II at Line 8a on Schedule D cash flow proceeds are reported as $18,285. Would it be the same treatment under Part I - Short Term Capital Gains?
A: Since the amounts listed at Line 8a represent long-term transactions, the 2015 cash component was $18,285 – the cash proceeds from the transaction. The cash cost of the assets occurred prior to 2015 and, therefore, played no role in the 2015 cash flow to McPherson from the sale of these long-term assets.
However, if McPherson had purchased the assets in 2015 and then sold them in the same year, the net cash inflow to him in 2015 would only be $4,241, which is identical to the capital gain.
The key to identifying the 2015 cash flow impact from this transaction and reported gain is to identify the year in which the assets were purchased.
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