Michigan Adjustments of Capital Gains and Losses (MI-1040D)

If you sold investments, received capital gain distributions, or carried forward capital losses from a prior year, Michigan may require additional calculations beyond your federal return. Form MI-1040D, Adjustments of Capital Gains and Losses, is used to determine the Michigan portion of your capital gains, losses, and carryovers when Michigan tax treatment differs from federal reporting. 

Program Entry

In the program, go to:

Michigan Return → Income Subject to Tax → Adjustments of Capital Gains and Losses (MI-1040D)

What Is Form MI-1040D?

Form MI-1040D helps calculate Michigan capital gains and losses when adjustments are necessary. The form may be used to:

• Report Michigan capital loss carryovers from prior years.
• Adjust gains and losses reported on federal Schedule D.
• Adjust capital gains or losses reported from partnerships, S corporations, estates, and trusts.
• Determine the amount of capital gain or loss that is taxable by Michigan. 

Michigan generally follows federal capital gain and loss reporting, but certain transactions may require state-specific adjustments. Michigan instructions specifically reference adjustments involving:

• Property acquired before October 1, 1967, under Section 271 treatment.
• U.S. government obligations that are exempt from Michigan taxation.
• Property located outside Michigan. 

Michigan Portion of Short-Term Capital Loss Carryover From 2025

Enter any unused Michigan short-term capital loss carryover from your 2025 Michigan return.

This is the portion of a short-term capital loss that was not fully used on your prior-year Michigan return and can be carried forward to 2026.

Michigan Portion of Long-Term Capital Loss Carryover From 2025

Enter any unused Michigan long-term capital loss carryover from your 2025 Michigan return.

Only enter the Michigan carryover amount that remains available after completing your 2025 Michigan return.

Do You Want to Pull Federal Schedule D Transactions to MI-1040D?

Choose:

Yes

Select Yes if you want the program to transfer capital gain and loss information directly from your federal Schedule D.

No

Select No if you plan to enter only Michigan-specific adjustments manually.

For most taxpayers, choosing Yes is the easiest option because the federal Schedule D information is imported automatically and you only need to enter any Michigan differences.

Short-Term Capital Gain and Loss Adjustments

When Schedule D information is imported, federal short-term gains and losses transfer automatically. The following entries are only needed when Michigan amounts differ from the federal amounts.

Adjustment (+/-) to Michigan Portion of Short-Term Gain From Form 6252 and Short-Term Gain (Loss) From Forms 4684, 6781, and 8824

Enter any Michigan adjustment related to:

• 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 the Michigan gain.
• A negative amount to decrease the Michigan gain.

Adjustment (+/-) to Michigan Portion of Net Short-Term Gain (Loss) From Partnerships, S Corporations, and Fiduciaries From Schedule K-1s

Enter any adjustment needed to short-term gains or losses reported from:

• Partnerships
• S corporations
• Estates
• Trusts

This is commonly used when the Michigan amount reported on a Schedule K-1 differs from the federal amount.

Long-Term Capital Gain and Loss Adjustments

Federal long-term gains and losses transfer automatically when Schedule D information is imported. Enter adjustments only when Michigan treatment differs from federal treatment.

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 adjustments related to:

• Form 4797 (Sales of Business Property)
• Form 2439 (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.
• A negative amount to reduce Michigan income.

Adjustment (+/-) to Michigan Portion of Net Long-Term Gain (Loss) From Partnerships, S Corporations, and Fiduciaries From Schedule K-1s

Enter any Michigan adjustment to long-term gains or losses reported from:

• Partnerships
• S corporations
• Estates
• Trusts

These entries are generally only needed when the Michigan amount differs from the federal amount.

Adjustment (+/-) to Michigan Portion of Capital Gain Distributions Pulled From Federal

Enter any adjustment required to capital gain distributions that transferred from the federal return.

Examples include:

• Only part of a federally reported capital gain distribution is taxable to Michigan.
• A Michigan-specific subtraction or adjustment applies.

How Does MI-1040D Affect My Michigan Return?

Amounts entered on Form MI-1040D can:

• Increase or decrease Michigan taxable income.
• Change Michigan capital gain or loss calculations.
• Affect future Michigan capital loss carryovers.
• Increase or reduce your Michigan tax due or refund. 

Important Notes

• Most taxpayers should allow federal Schedule D information to transfer automatically.
• Enter adjustments only when Michigan treatment differs from federal treatment.
• Keep documentation supporting all capital loss carryovers and adjustments.
• Review any Michigan-specific information provided with Schedule K-1s.
• Capital loss carryovers entered on MI-1040D should match the unused carryover shown on your prior-year Michigan return. 

For most taxpayers with standard investment sales reported on federal Schedule D, no additional Michigan adjustments are required beyond importing the federal information.