source:
  type: guide
  id: fnma-sel-b3-3.6-04
  authority: Fannie Mae Selling Guide B3-3.6-04 — Income or Loss Reported on IRS Form
    1040, Schedule D
  description: Fannie Mae Selling Guide B3-3.6-04 — Income or Loss Reported on IRS
    Form 1040, Schedule D.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-3.6-04-full
  canonical_id: fnma-sel-b3-3.6-04-full
  section: Fannie Mae Selling Guide B3-3.6-04 — Income or Loss Reported on IRS Form
    1040, Schedule D
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-3.6-04 — Income or Loss Reported on IRS
      Form 1040, Schedule D
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B3-3.6-04, Income or Loss Reported on IRS Form 1040, Schedule
      D (11/13/2012) Introduction This topic contains information on income or loss
      reported on IRS Form 1040, Schedule D, including: Overview Calculating Borrower
      Cash Flow from Schedule D and Required Documentation Overview IRS Form 1040,
      Schedule D, is used to report capital gains and losses. Income received from
      a capital gain is generally a one-time transaction; therefore, it should not
      usually be considered part of the borrower’s stable monthly income. Calculating
      Borrower Cash Flow from Schedule D and Required Documentation Published May
      6, 2026 377 If the income calculated on the Schedule D shows that the borrower
      has realized capital gains for the last two years, as may be the case when the
      borrower’s business has a constant turnover of assets that produces regular
      gains, the recurring gains can be considered in determining the borrower’s stable
      monthly income. In this case, the borrower must provide evidence of ownership
      of additional property or assets that can be sold if extra income is needed
      to make future mortgage payments. The table below provides the requirements
      for calculating cash ﬂow from Schedule D and the associated required documentation.
      If … Then … recurring capital gains relate to the sale of business property,
      lenders must obtain a copy of the applicable Sale of Business Property (IRS
      Form 4797) to support the recurring nature of the capital gains. Schedule D
      includes principal payments on an installment sales contract, lenders must obtain
      a copy of • the Installment Sale Income (IRS Form 6252), and • the note or contract
      to verify that the borrower will continue to receive the payments for at least
      three years. the capital gain on the principal payment and interest income from
      an installment sales contract is determined to be nonrecurring, the amount must
      be deducted from the borrower’s cash ﬂow. Note: Capital losses identiﬁed on
      IRS Form 1040, Schedule D, do not have to be considered when calculating income
      or liabilities, even if the losses are recurring. Recent Related Announcements
      There are no recently issued Announcements related to this topic.'
  judgment: false
