Michigan generally follows federal capital gain and loss reporting. However, certain adjustments may be required to determine the Michigan portion of capital gains, losses, and carryovers. Form MI-1040D, Adjustments of Capital Gains and Losses, is used to report these Michigan-specific adjustments.
Program Entry
Michigan Return → Income Subject to Tax → Adjustments of Capital Gains and Losses (MI-1040D)
What Is Form MI-1040D?
Form MI-1040D is used to calculate Michigan capital gains and losses when adjustments are needed to federal capital gain information. The form allows taxpayers to:
- Report Michigan capital loss carryovers from prior years.
- Adjust gains and losses reported on federal Schedule D.
- Adjust gains and losses reported from partnerships, S corporations, estates, and trusts.
- Calculate the Michigan portion of capital gains and losses included on the Michigan return.
Michigan Portion of Short-Term Capital Loss Carryover from 2024
Enter the Michigan portion of any unused short-term capital loss carryover from the prior tax year.
This amount represents any Michigan short-term capital loss that was not fully used in 2024 and is available to carry forward to the current year.
Michigan Portion of Long-Term Capital Loss Carryover from 2024
Enter the Michigan portion of any unused long-term capital loss carryover from the prior tax year.
This amount represents Michigan long-term capital losses that remain available after completing the prior year's Michigan return.
Do You Want to Pull Federal Schedule D Transactions to MI-1040D?
Choose:
- Yes if you want the program to transfer capital gain and loss information from your federal Schedule D.
- No if you will enter Michigan adjustments without using the federal Schedule D information.
For most taxpayers, selecting Yes allows the software to import federal Schedule D transactions and then apply any Michigan-specific adjustments.
Short-Term Capital Gain and Loss Adjustments
If you choose to pull Schedule D transactions, federal short-term gains and losses will transfer automatically.
Use the following fields only if Michigan adjustments are required.
Adjustment (+/-) to Michigan Portion of Short-Term Gain from Form 6252 and Short-Term Gain (Loss) from Forms 4684, 6781, and 8824
Enter any adjustment needed to the Michigan portion of short-term gains or losses reported on:
- Form 6252 (Installment Sale Income)
- Form 4684 (Casualties and Thefts)
- Form 6781 (Gains and Losses From Section 1256 Contracts and Straddles)
- Form 8824 (Like-Kind Exchanges)
Enter a positive amount to increase the Michigan gain or a negative amount to decrease it.
Adjustment (+/-) to Michigan Portion of Net Short-Term Gain (Loss) from Partnerships, S Corporations, and Fiduciaries from Schedule K-1(s)
Enter any adjustment to the Michigan portion of short-term gains or losses reported on Schedule K-1s.
This field is commonly used when Michigan gain or loss amounts differ from the amounts reported federally.
Long-Term Capital Gain and Loss Adjustments
If Schedule D transactions are transferred, federal long-term gains and losses will populate automatically.
Use the following entries when Michigan-specific adjustments are required.
Adjustment (+/-) to Michigan Portion of Gain from Form 4797, Long-Term Gain from Forms 2439 and 6252, and Long-Term Gain (Loss) from Forms 4684, 6781, and 8824
Enter any adjustment to the Michigan portion of long-term gains or losses reported from:
- Form 4797 (Sales of Business Property)
- Form 2439 (Notice to Shareholder of Undistributed Long-Term Capital Gains)
- Form 6252 (Installment Sale Income)
- Form 4684 (Casualties and Thefts)
- Form 6781 (Section 1256 Contracts and Straddles)
- Form 8824 (Like-Kind Exchanges)
Enter a positive amount to increase Michigan income or a negative amount to reduce it.
Adjustment (+/-) to Michigan Portion of Net Long-Term Gain (Loss) from Partnerships, S Corporations, and Fiduciaries from Schedule K-1(s)
Enter any adjustment to the Michigan portion of long-term gains or losses reported on Schedule K-1s.
These adjustments are typically necessary when the Michigan treatment differs from the federal treatment.
Adjustment (+/-) to Michigan Portion of Capital Gain Distributions Pulled from Federal
Enter any adjustment required to capital gain distributions automatically transferred from the federal return.
Examples may include situations where only a portion of the federally reported distribution is taxable by Michigan or where a Michigan-specific adjustment is required.
How Does This Affect My Return?
Amounts reported on MI-1040D may:
- Increase or decrease Michigan taxable income.
- Adjust Michigan capital gain or loss calculations.
- Affect capital loss carryovers to future years.
- Change the amount of Michigan tax due or refund received.
Notes
- Most taxpayers will allow federal Schedule D information to transfer automatically.
- Only enter adjustments when Michigan treatment differs from federal treatment.
- Keep records supporting all carryovers and adjustments entered on MI-1040D.
- Schedule K-1 recipients should review any Michigan-specific information provided by the partnership, S corporation, estate, or trust.
- Capital loss carryovers entered on MI-1040D should match the unused Michigan carryover from the prior year's Michigan return
For more information please see the MI-1040D instruction here.