2020 SCHEDULE IN-153 Instructions
                                 Capital Gains Exclusion

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                                 Who is Eligible to File?

Vermont allows a portion of net adjusted capital gains, as defined by I.R.C. § 1(h), to be excluded from Vermont 
taxable income.  Qualified dividends are not eligible for capital gains treatment for Vermont tax purposes. 
Taxpayers may elect either the   Flat Exclusion or the Percentage Exclusion.  The amount excluded under 
either method cannot exceed 40% of federal taxable income or $350,000, whichever is less.  If your 2020 federal 
Form 1040, U.S. Individual Income Tax Return, shows a capital loss, you are not eligible to complete this form.  
No Vermont exclusion is available when a net capital loss is reported, even if the sale of farm or standing timber 
resulted in a capital gain. 

                                 Part I  Flat Exclusion

The general exclusion amount for tax year 2020 is $5,000 or the actual amount of net adjusted capital gains, 
whichever is less.
Special instructions for Line 1.                                                                                       INSTR  (Place at FIRST page)
                                                                                                                       Instr. pages 
       If you did not file federal Form 1040, Schedule D, enter the Capital gain amount from Form 1040, 
       Line 6, on Line 1.

                                 Part II  Percentage Exclusion
Taxpayers may choose to exclude 40% of their adjusted net capital gain up to $350,000 (maximum Vermont                 1 - 1
exclusion $875,000) from the sale of assets held for more than three years.  Only certain categories of capital 
gain income are eligible for this exclusion.  Capital gains from the sale of the following assets are not eligible for 
exclusion under the Percentage Method even if they have been held for more than three years:
       1.         Real estate or a portion of real estate used as a taxpayer’s primary or nonprimary home
       2.         Depreciable personal property (except for farm or standing timber)
       3.         Stocks or bonds which are publicly traded or traded on an exchange
       4.         Any other financial instruments which are publicly traded or traded on an exchange

For more information on the Capital Gains Exclusion, please see Vermont Income Statute 32 V.S.A. § 5811(21)(B) 
at https://legislature.vermont.gov/statutes/section/32/151/05811, or Vermont Department of Taxes regulation 
Reg. § 1.5811.(21)(B)(ii) found on our website at www.tax.vermont.gov/regulations.

                            Part III Capital Gain Exclusion Amount 

Part III applies the limitation of 40% of federal taxable income and calculates your capital gain exclusion.  Enter 
the amount from Line 21 on Schedule IN-112, Part I, Line 7.

                                 Contacting the Department
                                                                                                                       INSTR  (Place at LAST page)
Mail: Vermont Department of Taxes                      Phone:   (866) 828-2865 (toll-free in Vermont)                  Instr. pages 
      133 State Street                                 Phone:   (802) 828-2865 (local and out-of-state) 
      Montpelier, VT  05633-1401                       Fax:     (802) 828-2720 
                                                       E-mail:  tax.individualincome@vermont.gov

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                                                                                                    Rev. 10/20