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1040 Ez 2014

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1040 Ez 2014

1040 ez 2014 Publication 972 - Main Content Table of Contents Child Tax CreditQualifying Child Limits on the Credit Claiming the Credit Earned Income Additional Child Tax Credit How To Get Tax HelpLow Income Taxpayer Clinics Child Tax Credit This credit is for people who have a qualifying child as defined later. 1040 ez 2014 It is in addition to the credit for child and dependent care expenses (on Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46) and the earned income credit (on Form 1040, line 64a; or Form 1040A, line 38a). 1040 ez 2014 The maximum amount you can claim for the credit is $1,000 for each qualifying child. 1040 ez 2014 Qualifying Child A qualifying child for purposes of the child tax credit is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was under age 17 at the end of 2013, Did not provide over half of his or her own support for 2013, Lived with you for more than half of 2013 (see Exceptions to time lived with you , later), Is claimed as a dependent on your return, Does not file a joint return for the year (or files it only as a claim for refund), and Was a U. 1040 ez 2014 S. 1040 ez 2014 citizen, a U. 1040 ez 2014 S. 1040 ez 2014 national, or a U. 1040 ez 2014 S. 1040 ez 2014 resident alien. 1040 ez 2014 For more information, see Publication 519, U. 1040 ez 2014 S. 1040 ez 2014 Tax Guide for Aliens. 1040 ez 2014 If the child was adopted, see Adopted child , later. 1040 ez 2014 For each qualifying child, you must either check the box on Form 1040 or Form 1040A, line 6c, column (4); or Form 1040NR, line 7c, column (4). 1040 ez 2014 Example. 1040 ez 2014 Your 10-year-old nephew lives in Mexico and qualifies as your dependent. 1040 ez 2014 Because he is not a U. 1040 ez 2014 S. 1040 ez 2014 citizen, U. 1040 ez 2014 S. 1040 ez 2014 national, or U. 1040 ez 2014 S. 1040 ez 2014 resident alien, he is not a qualifying child for the child tax credit. 1040 ez 2014 Filers who have certain child dependents with an IRS Individual Taxpayer Identification Number (ITIN). 1040 ez 2014   If you are claiming a child tax credit or additional child tax credit for a child identified on your tax return with an ITIN, you must complete Part I of Schedule 8812 (Form 1040A or 1040). 1040 ez 2014   Although a child may be your dependent, you may only claim a child tax credit or additional child tax credit for a dependent who is a citizen, national, or resident of the United States. 1040 ez 2014 To be treated as a resident of the United States, a child generally will need to meet the requirements of the substantial presence test. 1040 ez 2014 For more information about the substantial presence test, see Publication 519, U. 1040 ez 2014 S. 1040 ez 2014 Tax Guide for Aliens. 1040 ez 2014 Adopted child. 1040 ez 2014   An adopted child is always treated as your own child. 1040 ez 2014 An adopted child includes a child lawfully placed with you for legal adoption. 1040 ez 2014   If you are a U. 1040 ez 2014 S. 1040 ez 2014 citizen or U. 1040 ez 2014 S. 1040 ez 2014 national and your adopted child lived with you all year as a member of your household in 2013, that child meets condition (7) above to be a qualifying child for the child tax credit. 1040 ez 2014 Exceptions to time lived with you. 1040 ez 2014    A child is considered to have lived with you for more than half of 2013 if the child was born or died in 2013 and your home was this child's home for more than half the time he or she was alive. 1040 ez 2014 Temporary absences by you or the child for special circumstances, such as school, vacation, business, medical care, military service, or detention in a juvenile facility, count as time the child lived with you. 1040 ez 2014   There are also exceptions for kidnapped children and children of divorced or separated parents. 1040 ez 2014 For details, see the instructions for line 6c in either the Form 1040 or Form 1040A instructions. 1040 ez 2014 Qualifying child of more than one person. 1040 ez 2014   A special rule applies if your qualifying child is the qualifying child of more than one person. 1040 ez 2014 For details, see the instructions for line 6c in either the Form 1040 or Form 1040A instructions. 1040 ez 2014 Limits on the Credit You must reduce your child tax credit if either (1) or (2) applies. 1040 ez 2014 The amount on Form 1040, line 46; Form 1040A, line 28; or Form 1040NR, line 44, is less than the credit. 1040 ez 2014 If this amount is zero, you cannot take this credit because there is no tax to reduce. 1040 ez 2014 But you may be able to take the additional child tax credit. 1040 ez 2014 See Additional Child Tax Credit, later. 1040 ez 2014 Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status. 1040 ez 2014 Married filing jointly – $110,000. 1040 ez 2014 Single, head of household, or qualifying widow(er) – $75,000. 1040 ez 2014 Married filing separately – $55,000. 1040 ez 2014 Modified AGI. 1040 ez 2014   For purposes of the child tax credit, your modified AGI is your AGI plus the following amounts that may apply to you. 1040 ez 2014 Any amount excluded from income because of the exclusion of income from Puerto Rico. 1040 ez 2014 On the dotted line next to Form 1040, line 38, enter the amount excluded and identify it as “EPRI. 1040 ez 2014 ” Also attach a copy of any Form(s) 499R-2/W-2PR to your return. 1040 ez 2014 Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income. 1040 ez 2014 Any amount on line 18 of Form 2555-EZ, Foreign Earned Income Exclusion. 1040 ez 2014 Any amount on line 15 of Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa. 1040 ez 2014   If you do not have any of the above, your modified AGI is the same as your AGI. 1040 ez 2014 AGI. 1040 ez 2014   Your AGI is the amount on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. 1040 ez 2014 Claiming the Credit To claim the child tax credit, you must file Form 1040, Form 1040A, or Form 1040NR. 1040 ez 2014 You cannot claim the child tax credit on Form 1040EZ or Form 1040NR-EZ. 1040 ez 2014 You must provide the name and identification number (usually a social security number) on your tax return for each qualifying child. 1040 ez 2014 Earned Income You will need to figure your earned income using one of the worksheets that appear later in this publication if you are completing the Line 11 Worksheet , later, or Schedule 8812. 1040 ez 2014 Form 1040 or Form 1040NR filers, use the 1040 and 1040NR Filers — Earned Income Worksheet , later, to figure your earned income. 1040 ez 2014 Form 1040A filers, use the 1040A Filers —- Earned Income Worksheet , later. 1040 ez 2014 For this purpose, earned income includes only: Taxable earned income, and Nontaxable combat pay. 1040 ez 2014 Additional Child Tax Credit This credit is for certain individuals who get less than the full amount of the child tax credit. 1040 ez 2014 The additional child tax credit may give you a refund even if you do not owe any tax. 1040 ez 2014 How to claim the additional child tax credit. 1040 ez 2014   To claim the additional child tax credit, follow the steps below. 1040 ez 2014 Make sure you figured the amount, if any, of your child tax credit. 1040 ez 2014 If you answered “Yes” on line 9 or line 10 of the Child Tax Credit Worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions (or on line 13 of the Child Tax Credit Worksheet in this publication), use Parts II through IV of Schedule 8812 to see if you can take the additional child tax credit. 1040 ez 2014 If you have an additional child tax credit on line 13 of Schedule 8812, carry it to Form 1040, line 65; Form 1040A, line 39; or Form 1040NR, line 63. 1040 ez 2014 Child Tax Credit Worksheet This image is too large to be displayed in the current screen. 1040 ez 2014 Please click the link to view the image. 1040 ez 2014 Child tax worksheet - page 1. 1040 ez 2014 Child Tax Credit Worksheet—Continued This image is too large to be displayed in the current screen. 1040 ez 2014 Please click the link to view the image. 1040 ez 2014 Child tax worksheet - page 2. 1040 ez 2014 Line 11 Worksheet This image is too large to be displayed in the current screen. 1040 ez 2014 Please click the link to view the image. 1040 ez 2014 Line 11 worksheet - page 1. 1040 ez 2014 Line 11 Worksheet—Continued This image is too large to be displayed in the current screen. 1040 ez 2014 Please click the link to view the image. 1040 ez 2014 Line 11 worksheet - page 2. 1040 ez 2014 1040 and 1040NR Filers — Earned Income Worksheet (for line 2 of the Line 11 Worksheet or line 4a of Schedule 8812, Child Tax Credit) Before you begin:    ✓Use this worksheet only if you were sent here from the Line 11 Worksheet earlier in this publication or line  4a of Schedule 8812, Child Tax Credit. 1040 ez 2014  ✓Disregard community property laws when figuring the amounts to enter on this worksheet. 1040 ez 2014  ✓If married filing jointly, include your spouse's amounts with yours when completing this worksheet. 1040 ez 2014     1. 1040 ez 2014 a. 1040 ez 2014 Enter the amount from Form 1040, line 7, or Form 1040NR, line 8 1a. 1040 ez 2014     b. 1040 ez 2014 Enter the amount of any nontaxable combat pay received. 1040 ez 2014 Also enter this amount on Schedule 8812, line 4b. 1040 ez 2014 This amount should be shown in Form(s) W-2, box 12, with code Q. 1040 ez 2014 1b. 1040 ez 2014       Next, if you are filing Schedule C, C-EZ, F, or SE, or you received a Schedule K-1 (Form 1065 or Form 1065-B), go to line 2a. 1040 ez 2014 Otherwise, skip lines 2a through 2e and go to line 3. 1040 ez 2014     2. 1040 ez 2014 a. 1040 ez 2014 Enter any statutory employee income reported on line 1 of Schedule C or C-EZ 2a. 1040 ez 2014     b. 1040 ez 2014 Enter any net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1. 1040 ez 2014 * Reduce any Schedule K-1 amounts as described in the instructions for completing Schedule SE in the Partner's Instructions for Schedule K-1. 1040 ez 2014 Do not include on this line any statutory employee income or any other amounts exempt from self-employment tax. 1040 ez 2014 Options and commodities dealers must add any gain or subtract any loss (in the normal course of dealing in or trading section 1256 contracts) from section 1256 contracts or related property 2b. 1040 ez 2014     c. 1040 ez 2014 Enter any net farm profit or (loss) from Schedule F, line 34, and from farm partnerships, Schedule K-1 (Form 1065), box 14, code A. 1040 ez 2014 * Reduce any Schedule K-1 amounts as described in the instructions for completing Schedule SE in the Partner's Instructions for Schedule K-1. 1040 ez 2014 Do not include on this line any amounts exempt from self-employment tax 2c. 1040 ez 2014         d. 1040 ez 2014 If you used the farm optional method to figure net earnings from self-employment, enter the amount from Schedule SE, Section B, line 15. 1040 ez 2014 Otherwise, skip this line and enter on line 2e the amount from line 2c 2d. 1040 ez 2014         e. 1040 ez 2014 If line 2c is a profit, enter the smaller of line 2c or line 2d. 1040 ez 2014 If line 2c is a (loss), enter the (loss) from line 2c. 1040 ez 2014 2e. 1040 ez 2014   3. 1040 ez 2014 Combine lines 1a, 1b, 2a, 2b, and 2e. 1040 ez 2014 If zero or less, stop. 1040 ez 2014 Do not complete the rest of this worksheet. 1040 ez 2014 Instead, enter -0- on line 2 of the Line 11 Worksheet or line 4a of Schedule 8812, whichever applies 3. 1040 ez 2014   4. 1040 ez 2014 Enter any amount included on line 1a that is:               a. 1040 ez 2014 A scholarship or fellowship grant not reported on Form W-2 4a. 1040 ez 2014         b. 1040 ez 2014 For work done while an inmate in a penal institution (enter “PRI” and this amount on the dotted line next to line 7 of Form 1040 or line 8 of Form 1040NR) 4b. 1040 ez 2014         c. 1040 ez 2014 A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan (enter “DFC” and this amount on the dotted line next to line 7 of Form 1040 or line 8 of Form 1040NR). 1040 ez 2014 This amount may be shown in box 11 of your Form W-2. 1040 ez 2014 If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. 1040 ez 2014 4c. 1040 ez 2014       5. 1040 ez 2014 a. 1040 ez 2014 Enter any amount included on line 3 that is also included on Form 2555, line 43, or Form 2555-EZ, line 18. 1040 ez 2014 Do not include any amount that is also included on line 4a, 4b, or 4c above 5a. 1040 ez 2014             b. 1040 ez 2014 Enter the portion, if any, of the amount from Form 2555, line 44 that you also included on Schedule E in partnership net income or (loss) or deducted on Form 1040, line 27, or Form 1040NR, line 27; Schedule C; Schedule C-EZ; or Schedule F. 1040 ez 2014 5b. 1040 ez 2014             c. 1040 ez 2014 Subtract line 5b from line 5a 5c. 1040 ez 2014       6. 1040 ez 2014 Enter the amount from Form 1040, line 27, or Form 1040NR, line 27 6. 1040 ez 2014       7. 1040 ez 2014 Add lines 4a through 4c, 5c, and 6 7. 1040 ez 2014   8. 1040 ez 2014 Subtract line 7 from line 3 8. 1040 ez 2014       If you were sent here from the Line 11 Worksheet, enter this amount on line 2 of that worksheet. 1040 ez 2014 If you were sent here from Schedule 8812, enter this amount on line 4a of that form. 1040 ez 2014     *If you have any Schedule K-1 amounts and you are not required to file Schedule SE, complete the appropriate line(s) of Schedule SE, Section A. 1040 ez 2014 Put your name and social security number on Schedule SE and attach it to your return. 1040 ez 2014                     1040A Filers — Earned Income Worksheet (for line 2 of the Line 11 Worksheet) Before you begin:   ✓Use this worksheet only if you were sent here from the Line 11 Worksheet earlier in this publication. 1040 ez 2014  ✓Disregard community property laws when figuring the amounts to enter on this worksheet. 1040 ez 2014               1. 1040 ez 2014 a. 1040 ez 2014 Enter the amount from Form 1040A, line 7 1a. 1040 ez 2014         b. 1040 ez 2014 Enter the amount of any nontaxable combat pay received. 1040 ez 2014 Also enter this amount on Schedule 8812, line 4b. 1040 ez 2014 This amount should be shown in Form(s) W-2, box 12, with code Q. 1040 ez 2014 1b. 1040 ez 2014         c. 1040 ez 2014 Add lines 1a and 1b. 1040 ez 2014     1c. 1040 ez 2014   2. 1040 ez 2014 Enter any amount included on line 1a that is:           a. 1040 ez 2014 A scholarship or fellowship grant not reported on Form W-2 2a. 1040 ez 2014         b. 1040 ez 2014 For work done while an inmate in a penal institution (enter “PRI” and this amount next to line 7 of Form 1040A) 2b. 1040 ez 2014         c. 1040 ez 2014 A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan (enter “DFC” and this amount next to line 7 of Form 1040A). 1040 ez 2014 This amount may be shown in box 11 of your Form W-2. 1040 ez 2014 If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity 2c. 1040 ez 2014       3. 1040 ez 2014 Add lines 2a through 2c 3. 1040 ez 2014   4. 1040 ez 2014 Subtract line 3 from line 1c. 1040 ez 2014 Enter the result here and on line 2 of the Line 11 Worksheet 4. 1040 ez 2014                 Additional Medicare Tax and RRTA Tax Worksheet (for line 6 of the Line 11 Worksheet) If your employer withheld or you paid Additional Medicare Tax or Tier 1 RRTA taxes, use this worksheet to figure the amount to enter on line 6 of the Line 11 Worksheet. 1040 ez 2014 Social security tax, Medicare tax, and Additional Medicare Tax on wages. 1040 ez 2014 1. 1040 ez 2014 Enter the social security tax withheld (Form(s) W-2, box 4) 1. 1040 ez 2014   2. 1040 ez 2014 Enter the Medicare tax withheld (Form(s) W-2, box 6). 1040 ez 2014 Box 6 includes any Additional Medicare Tax 2. 1040 ez 2014   3. 1040 ez 2014 Enter the Additional Medicare Tax, if any, on wages (Form 8959, line 7) 3. 1040 ez 2014   4. 1040 ez 2014 Add lines 1, 2, and 3 4. 1040 ez 2014   5. 1040 ez 2014 Enter the Additional Medicare Tax withheld (Form 8959, line 22) 5. 1040 ez 2014   6. 1040 ez 2014 Subtract line 5 from line 4 6. 1040 ez 2014   Additional Medicare Tax on Self-Employment Income. 1040 ez 2014 7. 1040 ez 2014 Enter one-half of the Additional Medicare Tax, if any, on self-employment income (one-half of Form 8959, line 13) 7. 1040 ez 2014   Tier 1 RRTA taxes as an employee of a railroad (enter amounts on lines 8, 9, 10, and 11) or employee representative (enter amounts on lines 12, 13, 14, and 15). 1040 ez 2014 Do not include amounts in Form W-2, box 14, that are identified as Additional Medicare Tax or Tier 2 tax. 1040 ez 2014 Do not include amounts shown on Form CT-2 on line 3 for Additional Medicare Tax or line 4 for Tier 2 tax. 1040 ez 2014 8. 1040 ez 2014 Enter the Tier 1 tax (Form(s) W-2, box 14) 8. 1040 ez 2014   9. 1040 ez 2014 Enter the Medicare tax (Form(s) W-2, box 14) 9. 1040 ez 2014   10. 1040 ez 2014 Enter the Additional Medicare Tax, if any, on RRTA compensation as an employee (Form 8959, line 17). 1040 ez 2014 Do not use the same amount from Form 8959, line 17, for both this line and line 14 10. 1040 ez 2014   11. 1040 ez 2014 Add lines 8, 9, and 10 11. 1040 ez 2014   12. 1040 ez 2014 Enter one-half of Tier 1 tax (one-half of Form(s) CT-2, line 1, for all 4 quarters of 2013) 12. 1040 ez 2014   13. 1040 ez 2014 Enter one-half of Tier 1 Medicare tax (one-half of Form(s) CT-2, line 2, for all 4 quarters of 2013) 13. 1040 ez 2014   14. 1040 ez 2014 Enter one-half of the Additional Medicare Tax, if any, on RRTA compensation as an employee representative (one-half of Form 8959, line 17). 1040 ez 2014 Do not use the same amount from Form 8959, line 17, for both this line and line 10 14. 1040 ez 2014   15. 1040 ez 2014 Add lines 12, 13, and 14 15. 1040 ez 2014   Line 6 amount 16. 1040 ez 2014 Add lines 6, 7, 11, and 15. 1040 ez 2014 Enter here and on line 6 of the Line 11 Worksheet. 1040 ez 2014 16. 1040 ez 2014   Paperwork Reduction Act Notice. 1040 ez 2014   We ask for the information on the worksheets in this publication to carry out the Internal Revenue laws of the United States. 1040 ez 2014 You are required to give us the information if requested. 1040 ez 2014 We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. 1040 ez 2014   You are not required to provide the information requested on a form (or worksheet in this publication) that is subject to the Paperwork Reduction Act unless the form (or publication) displays a valid OMB control number. 1040 ez 2014 Books or records relating to a form, its instructions, or this publication must be retained as long as their contents may become material in the administration of any Internal Revenue law. 1040 ez 2014 Generally, tax returns and return information are confidential, as required by section 6103. 1040 ez 2014   The average time and expenses required to complete these worksheets will vary depending on individual circumstances. 1040 ez 2014 For the estimated averages, see the instructions for your income tax return. 1040 ez 2014   If you have suggestions for making these worksheets simpler, we would be happy to hear from you. 1040 ez 2014 See Comments and suggestions , earlier. 1040 ez 2014 How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. 1040 ez 2014 Free help with your tax return. 1040 ez 2014   You can get free help preparing your return nationwide from IRS-certified volunteers. 1040 ez 2014 The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. 1040 ez 2014 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040 ez 2014 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 1040 ez 2014 In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. 1040 ez 2014 To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. 1040 ez 2014 gov, download the IRS2Go app, or call 1-800-906-9887. 1040 ez 2014   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040 ez 2014 To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040 ez 2014 aarp. 1040 ez 2014 org/money/taxaide or call 1-888-227-7669. 1040 ez 2014 For more information on these programs, go to IRS. 1040 ez 2014 gov and enter “VITA” in the search box. 1040 ez 2014 Internet. 1040 ez 2014    IRS. 1040 ez 2014 gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. 1040 ez 2014 Download the free IRS2Go app from the iTunes app store or from Google Play. 1040 ez 2014 Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. 1040 ez 2014 Check the status of your 2013 refund with the Where's My Refund? application on IRS. 1040 ez 2014 gov or download the IRS2Go app and select the Refund Status option. 1040 ez 2014 The IRS issues more than 9 out of 10 refunds in less than 21 days. 1040 ez 2014 Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. 1040 ez 2014 You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040 ez 2014 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 1040 ez 2014 Use the Interactive Tax Assistant (ITA) to research your tax questions. 1040 ez 2014 No need to wait on the phone or stand in line. 1040 ez 2014 The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. 1040 ez 2014 When you reach the response screen, you can print the entire interview and the final response for your records. 1040 ez 2014 New subject areas are added on a regular basis. 1040 ez 2014  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. 1040 ez 2014 gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. 1040 ez 2014 You can use the IRS Tax Map, to search publications and instructions by topic or keyword. 1040 ez 2014 The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. 1040 ez 2014 When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. 1040 ez 2014 Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. 1040 ez 2014 You can also ask the IRS to mail a return or an account transcript to you. 1040 ez 2014 Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. 1040 ez 2014 gov or by calling 1-800-908-9946. 1040 ez 2014 Tax return and tax account transcripts are generally available for the current year and the past three years. 1040 ez 2014 Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. 1040 ez 2014 Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. 1040 ez 2014 If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. 1040 ez 2014 Check the status of your amended return using Where's My Amended Return? Go to IRS. 1040 ez 2014 gov and enter Where's My Amended Return? in the search box. 1040 ez 2014 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 1040 ez 2014 It can take up to 3 weeks from the date you mailed it to show up in our system. 1040 ez 2014 Make a payment using one of several safe and convenient electronic payment options available on IRS. 1040 ez 2014 gov. 1040 ez 2014 Select the Payment tab on the front page of IRS. 1040 ez 2014 gov for more information. 1040 ez 2014 Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. 1040 ez 2014 Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040 ez 2014 gov. 1040 ez 2014 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. 1040 ez 2014 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040 ez 2014 gov. 1040 ez 2014 Request an Electronic Filing PIN by going to IRS. 1040 ez 2014 gov and entering Electronic Filing PIN in the search box. 1040 ez 2014 Download forms, instructions and publications, including accessible versions for people with disabilities. 1040 ez 2014 Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. 1040 ez 2014 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. 1040 ez 2014 An employee can answer questions about your tax account or help you set up a payment plan. 1040 ez 2014 Before you visit, check the Office Locator on IRS. 1040 ez 2014 gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. 1040 ez 2014 If you have a special need, such as a disability, you can request an appointment. 1040 ez 2014 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 1040 ez 2014 Apply for an Employer Identification Number (EIN). 1040 ez 2014 Go to IRS. 1040 ez 2014 gov and enter Apply for an EIN in the search box. 1040 ez 2014 Read the Internal Revenue Code, regulations, or other official guidance. 1040 ez 2014 Read Internal Revenue Bulletins. 1040 ez 2014 Sign up to receive local and national tax news and more by email. 1040 ez 2014 Just click on “subscriptions” above the search box on IRS. 1040 ez 2014 gov and choose from a variety of options. 1040 ez 2014    Phone. 1040 ez 2014 You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 1040 ez 2014 Download the free IRS2Go app from the iTunes app store or from Google Play. 1040 ez 2014 Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. 1040 ez 2014 gov, or download the IRS2Go app. 1040 ez 2014 Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040 ez 2014 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. 1040 ez 2014 Most VITA and TCE sites offer free electronic filing. 1040 ez 2014 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 1040 ez 2014 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 1040 ez 2014 Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. 1040 ez 2014 If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040 ez 2014 The IRS issues more than 9 out of 10 refunds in less than 21 days. 1040 ez 2014 Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040 ez 2014 Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. 1040 ez 2014 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. 1040 ez 2014 Note, the above information is for our automated hotline. 1040 ez 2014 Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. 1040 ez 2014 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 1040 ez 2014 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. 1040 ez 2014 It can take up to 3 weeks from the date you mailed it to show up in our system. 1040 ez 2014 Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). 1040 ez 2014 You should receive your order within 10 business days. 1040 ez 2014 Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. 1040 ez 2014 If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. 1040 ez 2014 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 1040 ez 2014 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 1040 ez 2014 These individuals can also contact the IRS through relay services such as the Federal Relay Service. 1040 ez 2014    Walk-in. 1040 ez 2014 You can find a selection of forms, publications and services — in-person. 1040 ez 2014 Products. 1040 ez 2014 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040 ez 2014 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 1040 ez 2014 Services. 1040 ez 2014 You can walk in to your local TAC for face-to-face tax help. 1040 ez 2014 An employee can answer questions about your tax account or help you set up a payment plan. 1040 ez 2014 Before visiting, use the Office Locator tool on IRS. 1040 ez 2014 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. 1040 ez 2014    Mail. 1040 ez 2014 You can send your order for forms, instructions, and publications to the address below. 1040 ez 2014 You should receive a response within 10 business days after your request is received. 1040 ez 2014 Internal Revenue Service 1201 N. 1040 ez 2014 Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. 1040 ez 2014 The Taxpayer Advocate Service (TAS) is your voice at the IRS. 1040 ez 2014 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 1040 ez 2014   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. 1040 ez 2014 We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. 1040 ez 2014 You face (or your business is facing) an immediate threat of adverse action. 1040 ez 2014 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 1040 ez 2014   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. 1040 ez 2014 Here's why we can help: TAS is an independent organization within the IRS. 1040 ez 2014 Our advocates know how to work with the IRS. 1040 ez 2014 Our services are free and tailored to meet your needs. 1040 ez 2014 We have offices in every state, the District of Columbia, and Puerto Rico. 1040 ez 2014   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. 1040 ez 2014   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 1040 ez 2014 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. 1040 ez 2014 Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. 1040 ez 2014 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 1040 ez 2014 Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. 1040 ez 2014 Prev  Up  Next   Home   More Online Publications
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Understanding Your CP60 Notice

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What you need to do

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Answers to Common Questions

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Tips for next year

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Page Last Reviewed or Updated: 04-Mar-2014

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How to get help

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The 1040 Ez 2014

1040 ez 2014 4. 1040 ez 2014   Sales and Trades of Investment Property Table of Contents IntroductionNominees. 1040 ez 2014 Topics - This chapter discusses: Useful Items - You may want to see: What Is a Sale or Trade?Dividend versus sale or trade. 1040 ez 2014 Worthless Securities Constructive Sales of Appreciated Financial Positions Section 1256 Contracts Marked to Market Basis of Investment PropertyCost Basis Basis Other Than Cost Adjusted Basis Stocks and Bonds How To Figure Gain or LossFair market value. 1040 ez 2014 Debt paid off. 1040 ez 2014 Payment of cash. 1040 ez 2014 Special Rules for Mutual Funds Nontaxable TradesLike-Kind Exchanges Corporate Stocks Exchange of Shares In One Mutual Fund For Shares In Another Mutual Fund Insurance Policies and Annuities U. 1040 ez 2014 S. 1040 ez 2014 Treasury Notes or Bonds Transfers Between Spouses Related Party TransactionsGain on Sale or Trade of Depreciable Property Capital Gains and LossesCapital or Ordinary Gain or Loss Holding Period Nonbusiness Bad Debts Short Sales Wash Sales Options Straddles Sales of Stock to ESOPs or Certain Cooperatives Rollover of Gain From Publicly Traded Securities Gains on Qualified Small Business Stock Exclusion of Gain From DC Zone Assets Reporting Capital Gains and LossesException 1. 1040 ez 2014 Exception 2. 1040 ez 2014 Section 1256 contracts and straddles. 1040 ez 2014 Market discount bonds. 1040 ez 2014 File Form 1099-B or Form 1099-S with the IRS. 1040 ez 2014 Capital Losses Capital Gain Tax Rates Special Rules for Traders in SecuritiesHow To Report Introduction This chapter explains the tax treatment of sales and trades of investment property. 1040 ez 2014 Investment property. 1040 ez 2014   This is property that produces investment income. 1040 ez 2014 Examples include stocks, bonds, and Treasury bills and notes. 1040 ez 2014 Property used in a trade or business is not investment property. 1040 ez 2014 Form 1099-B. 1040 ez 2014   If you sold property such as stocks, bonds, mutual funds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. 1040 ez 2014 You should receive the statement by February 15 of the next year. 1040 ez 2014 It will show the gross proceeds from the sale. 1040 ez 2014 The IRS will also get a copy of Form 1099-B from the broker. 1040 ez 2014   Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. 1040 ez 2014 If you sold a covered security in 2013, your broker will send you a Form 1099-B (or substitute statement) that shows your basis. 1040 ez 2014 This will help you complete Form 8949. 1040 ez 2014 Generally, a covered security is a security you acquired after 2010, with certain exceptions explained in the Instructions for Form 8949. 1040 ez 2014    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in this chapter. 1040 ez 2014 Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). 1040 ez 2014 Nominees. 1040 ez 2014   If someone receives gross proceeds as a nominee for you, that person will give you a Form 1099-B, which will show gross proceeds received on your behalf. 1040 ez 2014   If you receive a Form 1099-B that includes gross proceeds belonging to another person, see Nominees , later under Reporting Capital Gains and Losses for more information. 1040 ez 2014 Other property transactions. 1040 ez 2014   Certain transfers of property are discussed in other IRS publications. 1040 ez 2014 These include: Sale of your main home, discussed in Publication 523, Selling Your Home; Installment sales, covered in Publication 537; Various types of transactions involving business property, discussed in Publication 544, Sales and Other Dispositions of Assets; Transfers of property at death, covered in Publication 559; and Disposition of an interest in a passive activity, discussed in Publication 925. 1040 ez 2014 Topics - This chapter discusses: What Is a Sale or Trade? , Basis of Investment Property , Adjusted Basis , How To Figure Gain or Loss , Nontaxable trades , Transfers Between Spouses , Related Party Transactions , Capital Gains and Losses , Reporting Capital Gains and Losses , and Special Rules for Traders in Securities . 1040 ez 2014 Useful Items - You may want to see: Publication 551 Basis of Assets Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 6781 Gains and Losses From Section 1256 Contracts and Straddles 8582 Passive Activity Loss Limitations 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets See chapter 5, How To Get Tax Help , for information about getting these publications and forms. 1040 ez 2014 What Is a Sale or Trade? This section explains what is a sale or trade. 1040 ez 2014 It also explains certain transactions and events that are treated as sales or trades. 1040 ez 2014 A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. 1040 ez 2014 A trade is a transfer of property for other property or services, and may be taxed in the same way as a sale. 1040 ez 2014 Sale and purchase. 1040 ez 2014   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. 1040 ez 2014 The sale and purchase are two separate transactions. 1040 ez 2014 But see Like-Kind Exchanges under Nontaxable Trades, later. 1040 ez 2014 Redemption of stock. 1040 ez 2014   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. 1040 ez 2014 Dividend versus sale or trade. 1040 ez 2014   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. 1040 ez 2014 Both direct and indirect ownership of stock will be considered. 1040 ez 2014 The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend — see Dividends and Other Distributions in chapter 1, There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. 1040 ez 2014 Redemption or retirement of bonds. 1040 ez 2014   A redemption or retirement of bonds or notes at their maturity generally is treated as a sale or trade. 1040 ez 2014 See Stocks, stock rights, and bonds and Discounted Debt Instruments under Capital or Ordinary Gain or Loss, later. 1040 ez 2014   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. 1040 ez 2014 For details, see Regulations section 1. 1040 ez 2014 1001-3. 1040 ez 2014 Surrender of stock. 1040 ez 2014   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. 1040 ez 2014 The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. 1040 ez 2014 Trade of investment property for an annuity. 1040 ez 2014   The transfer of investment property to a corporation, trust, fund, foundation, or other organization, in exchange for a fixed annuity contract that will make guaranteed annual payments to you for life, is a taxable trade. 1040 ez 2014 If the present value of the annuity is more than your basis in the property traded, you have a taxable gain in the year of the trade. 1040 ez 2014 Figure the present value of the annuity according to factors used by commercial insurance companies issuing annuities. 1040 ez 2014 Transfer by inheritance. 1040 ez 2014   The transfer of property of a decedent to the executor or administrator of the estate, or to the heirs or beneficiaries, is not a sale or other disposition. 1040 ez 2014 No taxable gain or deductible loss results from the transfer. 1040 ez 2014 Termination of certain rights and obligations. 1040 ez 2014   The cancellation, lapse, expiration, or other termination of a right or obligation (other than a securities futures contract) with respect to property that is a capital asset (or that would be a capital asset if you acquired it) is treated as a sale. 1040 ez 2014 Any gain or loss is treated as a capital gain or loss. 1040 ez 2014   This rule does not apply to the retirement of a debt instrument. 1040 ez 2014 See Redemption or retirement of bonds , earlier. 1040 ez 2014 Worthless Securities Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. 1040 ez 2014 This affects whether your capital loss is long term or short term. 1040 ez 2014 See Holding Period , later. 1040 ez 2014 Worthless securities also include securities that you abandon after March 12, 2008. 1040 ez 2014 To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. 1040 ez 2014 All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. 1040 ez 2014 If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. 1040 ez 2014 Do not deduct them in the year the stock became worthless. 1040 ez 2014 How to report loss. 1040 ez 2014   Report worthless securities in Form 8949, Part I or Part II, whichever applies. 1040 ez 2014    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. 1040 ez 2014 See Form 8949 and the Instructions for Form 8949. 1040 ez 2014 Filing a claim for refund. 1040 ez 2014   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. 1040 ez 2014 You must use Form 1040X, Amended U. 1040 ez 2014 S. 1040 ez 2014 Individual Income Tax Return, to amend your return for the year the security became worthless. 1040 ez 2014 You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. 1040 ez 2014 (Claims not due to worthless securities or bad debts generally must be filed within 3 years from the date a return is filed, or 2 years from the date the tax is paid, whichever is later. 1040 ez 2014 ) For more information about filing a claim, see Publication 556. 1040 ez 2014 Constructive Sales of Appreciated Financial Positions You are treated as having made a constructive sale when you enter into certain transactions involving an appreciated financial position (defined later) in stock, a partnership interest, or certain debt instruments. 1040 ez 2014 You must recognize gain as if the position were disposed of at its fair market value on the date of the constructive sale. 1040 ez 2014 This gives you a new holding period for the position that begins on the date of the constructive sale. 1040 ez 2014 Then, when you close the transaction, you reduce your gain (or increase your loss) by the gain recognized on the constructive sale. 1040 ez 2014 Constructive sale. 1040 ez 2014   You are treated as having made a constructive sale of an appreciated financial position if you: Enter into a short sale of the same or substantially identical property, Enter into an offsetting notional principal contract relating to the same or substantially identical property, Enter into a futures or forward contract to deliver the same or substantially identical property (including a forward contract that provides for cash settlement), or Acquire the same or substantially identical property (if the appreciated financial position is a short sale, an offsetting notional principal contract, or a futures or forward contract). 1040 ez 2014   You are also treated as having made a constructive sale of an appreciated financial position if a person related to you enters into a transaction described above with a view toward avoiding the constructive sale treatment. 1040 ez 2014 For this purpose, a related person is any related party described under Related Party Transactions , later in this chapter. 1040 ez 2014 Exception for nonmarketable securities. 1040 ez 2014   You are not treated as having made a constructive sale solely because you entered into a contract for sale of any stock, debt instrument, or partnership interest that is not a marketable security if it settles within 1 year of the date you enter into it. 1040 ez 2014 Exception for certain closed transactions. 1040 ez 2014   Do not treat a transaction as a constructive sale if all of the following are true. 1040 ez 2014 You closed the transaction on or before the 30th day after the end of your tax year. 1040 ez 2014 You held the appreciated financial position throughout the 60-day period beginning on the date you closed the transaction. 1040 ez 2014 Your risk of loss was not reduced at any time during that 60-day period by holding certain other positions. 1040 ez 2014   If a closed transaction is reestablished in a substantially similar position during the 60-day period beginning on the date the first transaction was closed, this exception still applies if the reestablished position is closed before the 30th day after the end of your tax year in which the first transaction was closed and, after that closing, (2) and (3) above are true. 1040 ez 2014   This exception also applies to successive short sales of an entire appreciated financial position. 1040 ez 2014 For more information, see Revenue Ruling 2003-1 in Internal Revenue Bulletin 2003-3. 1040 ez 2014 This bulletin is available at www. 1040 ez 2014 irs. 1040 ez 2014 gov/pub/irs-irbs/irb03-03. 1040 ez 2014 pdf. 1040 ez 2014 Appreciated financial position. 1040 ez 2014   This is any interest in stock, a partnership interest, or a debt instrument (including a futures or forward contract, a short sale, or an option) if disposing of the interest would result in a gain. 1040 ez 2014 Exceptions. 1040 ez 2014   An appreciated financial position does not include the following. 1040 ez 2014 Any position from which all of the appreciation is accounted for under marked-to-market rules, including section 1256 contracts (described later under Section 1256 Contracts Marked to Market ). 1040 ez 2014 Any position in a debt instrument if: The position unconditionally entitles the holder to receive a specified principal amount, The interest payments (or other similar amounts) with respect to the position are payable at a fixed rate or a variable rate described in Regulations section 1. 1040 ez 2014 860G-1(a)(3), and The position is not convertible, either directly or indirectly, into stock of the issuer (or any related person). 1040 ez 2014 Any hedge with respect to a position described in (2). 1040 ez 2014 Certain trust instruments treated as stock. 1040 ez 2014   For the constructive sale rules, an interest in an actively traded trust is treated as stock unless substantially all of the value of the property held by the trust is debt that qualifies for the exception to the definition of an appreciated financial position (explained in (2) above). 1040 ez 2014 Sale of appreciated financial position. 1040 ez 2014   A transaction treated as a constructive sale of an appreciated financial position is not treated as a constructive sale of any other appreciated financial position, as long as you continue to hold the original position. 1040 ez 2014 However, if you hold another appreciated financial position and dispose of the original position before closing the transaction that resulted in the constructive sale, you are treated as if, at the same time, you constructively sold the other appreciated financial position. 1040 ez 2014 Section 1256 Contracts Marked to Market If you hold a section 1256 contract at the end of the tax year, you generally must treat it as sold at its fair market value on the last business day of the tax year. 1040 ez 2014 Section 1256 Contract A section 1256 contract is any: Regulated futures contract, Foreign currency contract, Nonequity option, Dealer equity option, or Dealer securities futures contract. 1040 ez 2014 Exceptions. 1040 ez 2014   A section 1256 contract does not include: Interest rate swaps, Currency swaps, Basis swaps, Interest rate caps, Interest rate floors, Commodity swaps, Equity swaps, Equity index swaps, Credit default swaps, or Similar agreements. 1040 ez 2014 For more details, including definitions of these terms, see section 1256. 1040 ez 2014 Regulated futures contract. 1040 ez 2014   This is a contract that: Provides that amounts which must be deposited to, or can be withdrawn from, your margin account depend on daily market conditions (a system of marking to market), and Is traded on, or subject to the rules of, a qualified board of exchange. 1040 ez 2014 A qualified board of exchange is a domestic board of trade designated as a contract market by the Commodity Futures Trading Commission, any board of trade or exchange approved by the Secretary of the Treasury, or a national securities exchange registered with the Securities and Exchange Commission. 1040 ez 2014 Foreign currency contract. 1040 ez 2014   This is a contract that: Requires delivery of a foreign currency that has positions traded through regulated futures contracts (or settlement of which depends on the value of that type of foreign currency), Is traded in the interbank market, and Is entered into at arm's length at a price determined by reference to the price in the interbank market. 1040 ez 2014   Bank forward contracts with maturity dates longer than the maturities ordinarily available for regulated futures contracts are considered to meet the definition of a foreign currency contract if the above three conditions are satisfied. 1040 ez 2014   Special rules apply to certain foreign currency transactions. 1040 ez 2014 These transactions may result in ordinary gain or loss treatment. 1040 ez 2014 For details, see Internal Revenue Code section 988 and Regulations sections 1. 1040 ez 2014 988-1(a)(7) and 1. 1040 ez 2014 988-3. 1040 ez 2014 Nonequity option. 1040 ez 2014   This is any listed option (defined later) that is not an equity option. 1040 ez 2014 Nonequity options include debt options, commodity futures options, currency options, and broad-based stock index options. 1040 ez 2014 A broad-based stock index is based on the value of a group of diversified stocks or securities (such as the Standard and Poor's 500 index). 1040 ez 2014 Warrants based on a stock index that are economically, substantially identical in all material respects to options based on a stock index are treated as options based on a stock index. 1040 ez 2014 Cash-settled options. 1040 ez 2014   Cash-settled options based on a stock index and either traded on or subject to the rules of a qualified board of exchange are nonequity options if the Securities and Exchange Commission (SEC) determines that the stock index is broad based. 1040 ez 2014   This rule does not apply to options established before the SEC determines that the stock index is broad based. 1040 ez 2014 Listed option. 1040 ez 2014   This is any option traded on, or subject to the rules of, a qualified board or exchange (as discussed earlier under Regulated futures contract). 1040 ez 2014 A listed option, however, does not include an option that is a right to acquire stock from the issuer. 1040 ez 2014 Dealer equity option. 1040 ez 2014   This is any listed option that, for an options dealer: Is an equity option, Is bought or granted by that dealer in the normal course of the dealer's business activity of dealing in options, and Is listed on the qualified board of exchange where that dealer is registered. 1040 ez 2014   An “options dealer” is any person registered with an appropriate national securities exchange as a market maker or specialist in listed options. 1040 ez 2014 Equity option. 1040 ez 2014   This is any option: To buy or sell stock, or That is valued directly or indirectly by reference to any stock or narrow-based security index. 1040 ez 2014  Equity options include options on a group of stocks only if the group is a narrow-based stock index. 1040 ez 2014 Dealer securities futures contract. 1040 ez 2014   For any dealer in securities futures contracts or options on those contracts, this is a securities futures contract (or option on such a contract) that: Is entered into by the dealer (or, in the case of an option, is purchased or granted by the dealer) in the normal course of the dealer's activity of dealing in this type of contract (or option), and Is traded on a qualified board or exchange (as defined under Regulated futures contract , earlier). 1040 ez 2014 A securities futures contract that is not a dealer securities futures contract is treated as described later under Securities Futures Contracts . 1040 ez 2014 Marked-to-Market Rules A section 1256 contract that you hold at the end of the tax year will generally be treated as sold at its fair market value on the last business day of the tax year, and you must recognize any gain or loss that results. 1040 ez 2014 That gain or loss is taken into account in figuring your gain or loss when you later dispose of the contract, as shown in the example under 60/40 rule, below. 1040 ez 2014 Hedging exception. 1040 ez 2014   The marked-to-market rules do not apply to hedging transactions. 1040 ez 2014 See Hedging Transactions , later. 1040 ez 2014 60/40 rule. 1040 ez 2014   Under the marked-to-market system, 60% of your capital gain or loss will be treated as a long-term capital gain or loss, and 40% will be treated as a short-term capital gain or loss. 1040 ez 2014 This is true regardless of how long you actually held the property. 1040 ez 2014 Example. 1040 ez 2014 On June 22, 2012, you bought a regulated futures contract for $50,000. 1040 ez 2014 On December 31, 2012 (the last business day of your tax year), the fair market value of the contract was $57,000. 1040 ez 2014 You recognized a $7,000 gain on your 2012 tax return, treated as 60% long-term and 40% short-term capital gain. 1040 ez 2014 On February 1, 2013, you sold the contract for $56,000. 1040 ez 2014 Because you recognized a $7,000 gain on your 2012 return, you recognize a $1,000 loss ($57,000 − $56,000) on your 2013 tax return, treated as 60% long-term and 40% short-term capital loss. 1040 ez 2014 Limited partners or entrepreneurs. 1040 ez 2014   The 60/40 rule does not apply to dealer equity options or dealer securities futures contracts that result in capital gain or loss allocable to limited partners or limited entrepreneurs (defined later under Hedging Transactions ). 1040 ez 2014 Instead, these gains or losses are treated as short term. 1040 ez 2014 Terminations and transfers. 1040 ez 2014   The marked-to-market rules also apply if your obligation or rights under section 1256 contracts are terminated or transferred during the tax year. 1040 ez 2014 In this case, use the fair market value of each section 1256 contract at the time of termination or transfer to determine the gain or loss. 1040 ez 2014 Terminations or transfers may result from any offsetting, delivery, exercise, assignment, or lapse of your obligation or rights under section 1256 contracts. 1040 ez 2014 Loss carryback election. 1040 ez 2014   An individual having a net section 1256 contracts loss (defined later), generally can elect to carry this loss back 3 years instead of carrying it over to the next year. 1040 ez 2014 See How To Report , later, for information about reporting this election on your return. 1040 ez 2014   The loss carried back to any year under this election cannot be more than the net section 1256 contracts gain in that year. 1040 ez 2014 In addition, the amount of loss carried back to an earlier tax year cannot increase or produce a net operating loss for that year. 1040 ez 2014   The loss is carried to the earliest carryback year first, and any unabsorbed loss amount can then be carried to each of the next 2 tax years. 1040 ez 2014 In each carryback year, treat 60% of the carryback amount as a long-term capital loss and 40% as a short-term capital loss from section 1256 contracts. 1040 ez 2014   If only a portion of the net section 1256 contracts loss is absorbed by carrying the loss back, the unabsorbed portion can be carried forward, under the capital loss carryover rules, to the year following the loss. 1040 ez 2014 (See Capital Losses under Reporting Capital Gains and Losses, later. 1040 ez 2014 ) Figure your capital loss carryover as if, for the loss year, you had an additional short-term capital gain of 40% of the amount of net section 1256 contracts loss absorbed in the carryback years and an additional long-term capital gain of 60% of the absorbed loss. 1040 ez 2014 In the carryover year, treat any capital loss carryover from losses on section 1256 contracts as if it were a loss from section 1256 contracts for that year. 1040 ez 2014 Net section 1256 contracts loss. 1040 ez 2014   This loss is the lesser of: The net capital loss for your tax year determined by taking into account only the gains and losses from section 1256 contracts, or The capital loss carryover to the next tax year determined without this election. 1040 ez 2014 Net section 1256 contracts gain. 1040 ez 2014   This gain is the lesser of: The capital gain net income for the carryback year determined by taking into account only gains and losses from section 1256 contracts, or The capital gain net income for that year. 1040 ez 2014  Figure your net section 1256 contracts gain for any carryback year without regard to the net section 1256 contracts loss for the loss year or any later tax year. 1040 ez 2014 Traders in section 1256 contracts. 1040 ez 2014   Gain or loss from the trading of section 1256 contracts is capital gain or loss subject to the marked-to-market rules. 1040 ez 2014 However, this does not apply to contracts held for purposes of hedging property if any loss from the property would be an ordinary loss. 1040 ez 2014 Treatment of underlying property. 1040 ez 2014   The determination of whether an individual's gain or loss from any property is ordinary or capital gain or loss is made without regard to the fact that the individual is actively engaged in dealing in or trading section 1256 contracts related to that property. 1040 ez 2014 How To Report If you disposed of regulated futures or foreign currency contracts in 2013 (or had unrealized profit or loss on these contracts that were open at the end of 2012 or 2013), you should receive Form 1099-B, or substitute statement, from your broker. 1040 ez 2014 Form 6781. 1040 ez 2014   Use Part I of Form 6781 to report your gains and losses from all section 1256 contracts that are open at the end of the year or that were closed out during the year. 1040 ez 2014 This includes the amount shown in box 10 of Form 1099-B. 1040 ez 2014 Then enter the net amount of these gains and losses on Schedule D (Form 1040), line 4 or line 11, as appropriate. 1040 ez 2014 Include a copy of Form 6781 with your income tax return. 1040 ez 2014   If the Form 1099-B you receive includes a straddle or hedging transaction, defined later, it may be necessary to show certain adjustments on Form 6781. 1040 ez 2014 Follow the Form 6781 instructions for completing Part I. 1040 ez 2014 Loss carryback election. 1040 ez 2014   To carry back your loss under the election procedures described earlier, file Form 1040X or Form 1045, Application for Tentative Refund, for the year to which you are carrying the loss with an amended Form 6781 and an amended Schedule D (Form 1040) attached. 1040 ez 2014 Follow the instructions for completing Form 6781 for the loss year to make this election. 1040 ez 2014 Hedging Transactions The marked-to-market rules, described earlier, do not apply to hedging transactions. 1040 ez 2014 A transaction is a hedging transaction if both of the following conditions are met. 1040 ez 2014 You entered into the transaction in the normal course of your trade or business primarily to manage the risk of: Price changes or currency fluctuations on ordinary property you hold (or will hold), or Interest rate or price changes, or currency fluctuations, on your current or future borrowings or ordinary obligations. 1040 ez 2014 You clearly identified the transaction as being a hedging transaction before the close of the day on which you entered into it. 1040 ez 2014 This hedging transaction exception does not apply to transactions entered into by or for any syndicate. 1040 ez 2014 A syndicate is a partnership, S corporation, or other entity (other than a regular corporation) that allocates more than 35% of its losses to limited partners or limited entrepreneurs. 1040 ez 2014 A limited entrepreneur is a person who has an interest in an enterprise (but not as a limited partner) and who does not actively participate in its management. 1040 ez 2014 However, an interest is not considered held by a limited partner or entrepreneur if the interest holder actively participates (or did so for at least 5 full years) in the management of the entity, or is the spouse, child (including a legally adopted child), grandchild, or parent of an individual who actively participates in the management of the entity. 1040 ez 2014 Hedging loss limit. 1040 ez 2014   If you are a limited partner or entrepreneur in a syndicate, the amount of a hedging loss you can claim is limited. 1040 ez 2014 A “hedging loss” is the amount by which the allowable deductions in a tax year that resulted from a hedging transaction (determined without regard to the limit) are more than the income received or accrued during the tax year from this transaction. 1040 ez 2014   Any hedging loss allocated to you for the tax year is limited to your taxable income for that year from the trade or business in which the hedging transaction occurred. 1040 ez 2014 Ignore any hedging transaction items in determining this taxable income. 1040 ez 2014 If you have a hedging loss that is disallowed because of this limit, you can carry it over to the next tax year as a deduction resulting from a hedging transaction. 1040 ez 2014   If the hedging transaction relates to property other than stock or securities, the limit on hedging losses applies if the limited partner or entrepreneur is an individual. 1040 ez 2014   The limit on hedging losses does not apply to any hedging loss to the extent that it is more than all your unrecognized gains from hedging transactions at the end of the tax year that are from the trade or business in which the hedging transaction occurred. 1040 ez 2014 The term “unrecognized gain” has the same meaning as defined under Loss Deferral Rules in Straddles, later. 1040 ez 2014 Sale of property used in a hedge. 1040 ez 2014   Once you identify personal property as being part of a hedging transaction, you must treat gain from its sale or exchange as ordinary income, not capital gain. 1040 ez 2014 Self-Employment Income Gains and losses derived in the ordinary course of a commodity or option dealer's trading in section 1256 contracts and property related to these contracts are included in net earnings from self-employment. 1040 ez 2014 See the Instructions for Schedule SE (Form 1040). 1040 ez 2014 In addition, the rules relating to contributions to self-employment retirement plans apply. 1040 ez 2014 For information on retirement plan contributions, see Publication 560 and Publication 590. 1040 ez 2014 Basis of Investment Property Basis is a way of measuring your investment in property for tax purposes. 1040 ez 2014 You must know the basis of your property to determine whether you have a gain or loss on its sale or other disposition. 1040 ez 2014 Investment property you buy normally has an original basis equal to its cost. 1040 ez 2014 If you get property in some way other than buying it, such as by gift or inheritance, its fair market value may be important in figuring the basis. 1040 ez 2014 Cost Basis The basis of property you buy is usually its cost. 1040 ez 2014 The cost is the amount you pay in cash, debt obligations, or other property or services. 1040 ez 2014 Unstated interest. 1040 ez 2014   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, minus the amount considered to be unstated interest. 1040 ez 2014 You generally have unstated interest if your interest rate is less than the applicable federal rate. 1040 ez 2014 For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. 1040 ez 2014 Basis Other Than Cost There are times when you must use a basis other than cost. 1040 ez 2014 In these cases, you may need to know the property's fair market value or the adjusted basis of the previous owner. 1040 ez 2014 Fair market value. 1040 ez 2014   This is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. 1040 ez 2014 Sales of similar property, around the same date, may be helpful in figuring fair market value. 1040 ez 2014 Property Received for Services If you receive investment property for services, you must include the property's fair market value in income. 1040 ez 2014 The amount you include in income then becomes your basis in the property. 1040 ez 2014 If the services were performed for a price that was agreed to beforehand, this price will be accepted as the fair market value of the property if there is no evidence to the contrary. 1040 ez 2014 Restricted property. 1040 ez 2014   If you receive, as payment for services, property that is subject to certain restrictions, your basis in the property generally is its fair market value when it becomes substantially vested. 1040 ez 2014 Property becomes substantially vested when it is transferable or is no longer subject to substantial risk of forfeiture, whichever happens first. 1040 ez 2014 See Restricted Property in Publication 525 for more information. 1040 ez 2014 Bargain purchases. 1040 ez 2014   If you buy investment property at less than fair market value, as payment for services, you must include the difference in income. 1040 ez 2014 Your basis in the property is the price you pay plus the amount you include in income. 1040 ez 2014 Property Received in Taxable Trades If you received investment property in trade for other property, the basis of the new property is its fair market value at the time of the trade unless you received the property in a nontaxable trade. 1040 ez 2014 Example. 1040 ez 2014 You trade A Company stock for B Company stock having a fair market value of $1,200. 1040 ez 2014 If the adjusted basis of the A Company stock is less than $1,200, you have a taxable gain on the trade. 1040 ez 2014 If the adjusted basis of the A Company stock is more than $1,200, you have a deductible loss on the trade. 1040 ez 2014 The basis of your B Company stock is $1,200. 1040 ez 2014 If you later sell the B Company stock for $1,300, you will have a gain of $100. 1040 ez 2014 Property Received in Nontaxable Trades If you have a nontaxable trade, you do not recognize gain or loss until you dispose of the property you received in the trade. 1040 ez 2014 See Nontaxable Trades , later. 1040 ez 2014 The basis of property you received in a nontaxable or partly nontaxable trade is generally the same as the adjusted basis of the property you gave up. 1040 ez 2014 Increase this amount by any cash you paid, additional costs you had, and any gain recognized. 1040 ez 2014 Reduce this amount by any cash or unlike property you received, any loss recognized, and any liability of yours that was assumed or treated as assumed. 1040 ez 2014 Property Received From Your Spouse If property is transferred to you from your spouse (or former spouse, if the transfer is incident to your divorce), your basis is the same as your spouse's or former spouse's adjusted basis just before the transfer. 1040 ez 2014 See Transfers Between Spouses , later. 1040 ez 2014 Recordkeeping. 1040 ez 2014 The transferor must give you the records necessary to determine the adjusted basis and holding period of the property as of the date of the transfer. 1040 ez 2014 Property Received as a Gift To figure your basis in property that you received as a gift, you must know its adjusted basis to the donor just before it was given to you, its fair market value at the time it was given to you, the amount of any gift tax paid on it, and the date it was given to you. 1040 ez 2014 Fair market value less than donor's adjusted basis. 1040 ez 2014   If the fair market value of the property at the time of the gift was less than the donor's adjusted basis just before the gift, your basis for gain on its sale or other disposition is the same as the donor's adjusted basis plus or minus any required adjustments to basis during the period you hold the property. 1040 ez 2014 Your basis for loss is its fair market value at the time of the gift plus or minus any required adjustments to basis during the period you hold the property. 1040 ez 2014 No gain or loss. 1040 ez 2014   If you use the basis for figuring a gain and the result is a loss, and then use the basis for figuring a loss and the result is a gain, you will have neither a gain nor a loss. 1040 ez 2014 Example. 1040 ez 2014 You receive a gift of investment property having an adjusted basis of $10,000 at the time of the gift. 1040 ez 2014 The fair market value at the time of the gift is $9,000. 1040 ez 2014 You later sell the property for $9,500. 1040 ez 2014 You have neither gain nor loss. 1040 ez 2014 Your basis for figuring gain is $10,000, and $9,500 minus $10,000 results in a $500 loss. 1040 ez 2014 Your basis for figuring loss is $9,000, and $9,500 minus $9,000 results in a $500 gain. 1040 ez 2014 Fair market value equal to or more than donor's adjusted basis. 1040 ez 2014   If the fair market value of the property at the time of the gift was equal to or more than the donor's adjusted basis just before the gift, your basis for gain or loss on its sale or other disposition is the donor's adjusted basis plus or minus any required adjustments to basis during the period you hold the property. 1040 ez 2014 Also, you may be allowed to add to the donor's adjusted basis all or part of any gift tax paid, depending on the date of the gift. 1040 ez 2014 Gift received before 1977. 1040 ez 2014   If you received property as a gift before 1977, your basis in the property is the donor's adjusted basis increased by the total gift tax paid on the gift. 1040 ez 2014 However, your basis cannot be more than the fair market value of the gift at the time it was given to you. 1040 ez 2014 Example 1. 1040 ez 2014 You were given XYZ Company stock in 1976. 1040 ez 2014 At the time of the gift, the stock had a fair market value of $21,000. 1040 ez 2014 The donor's adjusted basis was $20,000. 1040 ez 2014 The donor paid a gift tax of $500 on the gift. 1040 ez 2014 Your basis for gain or loss is $20,500, the donor's adjusted basis plus the amount of gift tax paid. 1040 ez 2014 Example 2. 1040 ez 2014 The facts are the same as in Example 1 except that the gift tax paid was $1,500. 1040 ez 2014 Your basis is $21,000, the donor's adjusted basis plus the gift tax paid, but limited to the fair market value of the stock at the time of the gift. 1040 ez 2014 Gift received after 1976. 1040 ez 2014   If you received property as a gift after 1976, your basis is the donor's adjusted basis increased by the part of the gift tax paid that was for the net increase in value of the gift. 1040 ez 2014 You figure this part by multiplying the gift tax paid on the gift by a fraction. 1040 ez 2014 The numerator (top part) is the net increase in value of the gift and the denominator (bottom part) is the amount of the gift. 1040 ez 2014   The net increase in value of the gift is the fair market value of the gift minus the donor's adjusted basis. 1040 ez 2014 The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. 1040 ez 2014 Example. 1040 ez 2014 In 2013, you received a gift of property from your mother. 1040 ez 2014 At the time of the gift, the property had a fair market value of $101,000 and an adjusted basis to her of $40,000. 1040 ez 2014 The amount of the gift for gift tax purposes was $87,000 ($101,000 minus the $14,000 annual exclusion), and your mother paid a gift tax of $21,000. 1040 ez 2014 You figure your basis in the following way: Fair market value $101,000 Minus: Adjusted basis 40,000 Net increase in value of gift $61,000 Gift tax paid $21,000 Multiplied by . 1040 ez 2014 701 ($61,000 ÷ $87,000) . 1040 ez 2014 701 Gift tax due to net increase in value $14,721 Plus: Adjusted basis of property to  your mother 40,000 Your basis in the property $54,721 Part sale, part gift. 1040 ez 2014   If you get property in a transfer that is partly a sale and partly a gift, your basis is the larger of the amount you paid for the property or the transferor's adjusted basis in the property at the time of the transfer. 1040 ez 2014 Add to that amount the amount of any gift tax paid on the gift, as described in the preceding discussion. 1040 ez 2014 For figuring loss, your basis is limited to the property's fair market value at the time of the transfer. 1040 ez 2014 Gift tax information. 1040 ez 2014   For information on gift tax, see Publication 950, Introduction to Estate and Gift Taxes. 1040 ez 2014 For information on figuring the amount of gift tax to add to your basis, see Property Received as a Gift in Publication 551. 1040 ez 2014 Property Received as Inheritance Before or after 2010. 1040 ez 2014   If you inherited property from a decedent who died before or after 2010, or who died in 2010 and the executor of the decedent's estate elected not to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, your basis in that property generally is its fair market value (its appraised value on Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) on: The date of the decedent's death, or The later alternate valuation date if the estate qualifies for, and elects to use, alternate valuation. 1040 ez 2014 If no Form 706 was filed, use the appraised value on the date of death for state inheritance or transmission taxes. 1040 ez 2014 For stocks and bonds, if no Form 706 was filed and there are no state inheritance or transmission taxes, see the Form 706 instructions for figuring the fair market value of the stocks and bonds on the date of the decedent's death. 1040 ez 2014 Appreciated property you gave the decedent. 1040 ez 2014   Your basis in certain appreciated property that you inherited is the decedent's adjusted basis in the property immediately before death rather than its fair market value. 1040 ez 2014 This applies to appreciated property that you or your spouse gave the decedent as a gift during the 1-year period ending on the date of death. 1040 ez 2014 Appreciated property is any property whose fair market value on the day you gave it to the decedent was more than its adjusted basis. 1040 ez 2014 More information. 1040 ez 2014   See Publication 551 for more information on the basis of inherited property, including community property, property held by a surviving tenant in a joint tenancy or tenancy by the entirety, a qualified joint interest, and a farm or closely held business. 1040 ez 2014 Inherited in 2010 and executor elected to file Form 8939. 1040 ez 2014   If you inherited property from a decedent who died in 2010 and the executor made the election to file Form 8939, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to figure your basis. 1040 ez 2014 Adjusted Basis Before you can figure any gain or loss on a sale, exchange, or other disposition of property or figure allowable depreciation, depletion, or amortization, you usually must make certain adjustments (increases and decreases) to the basis of the property. 1040 ez 2014 The result of these adjustments to the basis is the adjusted basis. 1040 ez 2014 Adjustments to the basis of stocks and bonds are explained in the following discussion. 1040 ez 2014 For information about other adjustments to basis, see Publication 551. 1040 ez 2014 Stocks and Bonds The basis of stocks or bonds you own generally is the purchase price plus the costs of purchase, such as commissions and recording or transfer fees. 1040 ez 2014 If you acquired stock or bonds other than by purchase, your basis is usually determined by fair market value or the previous owner's adjusted basis as discussed earlier under Basis Other Than Cost . 1040 ez 2014 The basis of stock must be adjusted for certain events that occur after purchase. 1040 ez 2014 For example, if you receive more stock from nontaxable stock dividends or stock splits, you must reduce the basis of your original stock. 1040 ez 2014 You must also reduce your basis when you receive nondividend distributions (discussed in chapter 1). 1040 ez 2014 These distributions, up to the amount of your basis, are a nontaxable return of capital. 1040 ez 2014 The IRS partners with companies that offer Form 8949 and Schedule D (Form 1040) software that can import trades from many brokerage firms and accounting software to help you keep track of your adjusted basis in securities. 1040 ez 2014 To find out more, go to www. 1040 ez 2014 irs. 1040 ez 2014 gov/Filing/Filing-Options. 1040 ez 2014 Identifying stock or bonds sold. 1040 ez 2014   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. 1040 ez 2014 Adequate identification. 1040 ez 2014   You will make an adequate identification if you show that certificates representing shares of stock from a lot that you bought on a certain date or for a certain price were delivered to your broker or other agent. 1040 ez 2014 Broker holds stock. 1040 ez 2014   If you have left the stock certificates with your broker or other agent, you will make an adequate identification if you: Tell your broker or other agent the particular stock to be sold or transferred at the time of the sale or transfer, and Receive a written confirmation of this from your broker or other agent within a reasonable time. 1040 ez 2014  Stock identified this way is the stock sold or transferred even if stock certificates from a different lot are delivered to the broker or other agent. 1040 ez 2014 Single stock certificate. 1040 ez 2014   If you bought stock in different lots at different times and you hold a single stock certificate for this stock, you will make an adequate identification if you: Tell your broker or other agent the particular stock to be sold or transferred when you deliver the certificate to your broker or other agent, and Receive a written confirmation of this from your broker or other agent within a reasonable time. 1040 ez 2014   If you sell part of the stock represented by a single certificate directly to the buyer instead of through a broker, you will make an adequate identification if you keep a written record of the particular stock that you intend to sell. 1040 ez 2014 Bonds. 1040 ez 2014   These methods of identification also apply to bonds sold or transferred. 1040 ez 2014 Identification not possible. 1040 ez 2014   If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. 1040 ez 2014 Except for certain mutual fund shares, discussed later, you cannot use the average price per share to figure gain or loss on the sale of the shares. 1040 ez 2014 Example. 1040 ez 2014 You bought 100 shares of stock of XYZ Corporation in 1998 for $10 a share. 1040 ez 2014 In January 1999 you bought another 200 shares for $11 a share. 1040 ez 2014 In July 1999 you gave your son 50 shares. 1040 ez 2014 In December 2001 you bought 100 shares for $9 a share. 1040 ez 2014 In April 2013 you sold 130 shares. 1040 ez 2014 You cannot identify the shares you disposed of, so you must use the stock you acquired first to figure the basis. 1040 ez 2014 The shares of stock you gave your son had a basis of $500 (50 × $10). 1040 ez 2014 You figure the basis of the 130 shares of stock you sold in 2013 as follows: 50 shares (50 × $10) balance of stock bought in 1998 $ 500 80 shares (80 × $11) stock bought in January 1999 880 Total basis of stock sold in 2013 $1,380 Shares in a mutual fund or REIT. 1040 ez 2014    The basis of shares in a mutual fund (or other regulated investment company) or a real estate investment trust (REIT) is generally figured in the same way as the basis of other stock and usually includes any commissions or load charges paid for the purchase. 1040 ez 2014 Example. 1040 ez 2014 You bought 100 shares of Fund A for $10 a share. 1040 ez 2014 You paid a $50 commission to the broker for the purchase. 1040 ez 2014 Your cost basis for each share is $10. 1040 ez 2014 50 ($1,050 ÷ 100). 1040 ez 2014 Commissions and load charges. 1040 ez 2014   The fees and charges you pay to acquire or redeem shares of a mutual fund are not deductible. 1040 ez 2014 You can usually add acquisition fees and charges to your cost of the shares and thereby increase your basis. 1040 ez 2014 A fee paid to redeem the shares is usually a reduction in the redemption price (sales price). 1040 ez 2014   You cannot add your entire acquisition fee or load charge to the cost of the mutual fund shares acquired if all of the following conditions apply. 1040 ez 2014 You get a reinvestment right because of the purchase of the shares or the payment of the fee or charge. 1040 ez 2014 You dispose of the shares within 90 days of the purchase date. 1040 ez 2014 You acquire new shares in the same mutual fund or another mutual fund, for which the fee or charge is reduced or waived because of the reinvestment right you got when you acquired the original shares. 1040 ez 2014   The amount of the original fee or charge in excess of the reduction in (3) is added to the cost of the original shares. 1040 ez 2014 The rest of the original fee or charge is added to the cost basis of the new shares (unless all three conditions above also apply to the purchase of the new shares). 1040 ez 2014 Choosing average basis for mutual fund shares. 1040 ez 2014   You can choose to use the average basis of mutual fund shares if you acquired the identical shares at various times and prices, or you acquired the shares after 2010 in connection with a dividend reinvestment plan, and left them on deposit in an account kept by a custodian or agent. 1040 ez 2014 The methods you can use to figure average basis are explained later. 1040 ez 2014 Undistributed capital gains. 1040 ez 2014   If you had to include in your income any undistributed capital gains of the mutual fund or REIT, increase your basis in the stock by the difference between the amount you included and the amount of tax paid for you by the fund or REIT. 1040 ez 2014 See Undistributed capital gains of mutual funds and REITs under Capital Gain Distributions in chapter 1. 1040 ez 2014 Reinvestment right. 1040 ez 2014   This is the right to acquire mutual fund shares in the same or another mutual fund without paying a fee or load charge, or by paying a reduced fee or load charge. 1040 ez 2014      The original cost basis of mutual fund shares you acquire by reinvesting your distributions is the amount of the distributions used to purchase each full or fractional share. 1040 ez 2014 This rule applies even if the distribution is an exempt-interest dividend that you do not report as income. 1040 ez 2014 Table 4-1. 1040 ez 2014 This is a worksheet you can use to keep track of the adjusted basis of your mutual fund shares. 1040 ez 2014 Enter the cost per share when you acquire new shares and any adjustments to their basis when the adjustment occurs. 1040 ez 2014 This worksheet will help you figure the adjusted basis when you sell or redeem shares. 1040 ez 2014 Table 4-1. 1040 ez 2014 Mutual Fund Record Mutual Fund Acquired1 Adjustment to Basis Per Share Adjusted2 Basis Per Share Sold or redeemed Date Number of Shares Cost Per Share Date Number of Shares                                                                                                                                                                                                                                                                         1 Include share received from reinvestment of distributions. 1040 ez 2014 2 Cost plus or minus adjustments. 1040 ez 2014 Automatic investment service. 1040 ez 2014   If you participate in an automatic investment service, your basis for each share of stock, including fractional shares, bought by the bank or other agent is the purchase price plus a share of the broker's commission. 1040 ez 2014 Dividend reinvestment plans. 1040 ez 2014   If you participate in a dividend reinvestment plan and receive stock from the corporation at a discount, your basis is the full fair market value of the stock on the dividend payment date. 1040 ez 2014 You must include the amount of the discount in your income. 1040 ez 2014 Public utilities. 1040 ez 2014   If, before 1986, you excluded from income the value of stock you had received under a qualified public utility reinvestment plan, your basis in that stock is zero. 1040 ez 2014 Stock dividends. 1040 ez 2014   Stock dividends are distributions made by a corporation of its own stock. 1040 ez 2014 Generally, stock dividends are not taxable to you. 1040 ez 2014 However, see Distributions of Stock and Stock Rights under Dividends and Other Distributions in chapter 1 for some exceptions. 1040 ez 2014 If the stock dividends are not taxable, you must divide your basis for the old stock between the old and new stock. 1040 ez 2014 New and old stock identical. 1040 ez 2014   If the new stock you received as a nontaxable dividend is identical to the old stock on which the dividend was declared, divide the adjusted basis of the old stock by the number of shares of old and new stock. 1040 ez 2014 The result is your basis for each share of stock. 1040 ez 2014 Example 1. 1040 ez 2014 You owned one share of common stock that you bought for $45. 1040 ez 2014 The corporation distributed two new shares of common stock for each share held. 1040 ez 2014 You then had three shares of common stock. 1040 ez 2014 Your basis in each share is $15 ($45 ÷ 3). 1040 ez 2014 Example 2. 1040 ez 2014 You owned two shares of common stock. 1040 ez 2014 You bought one for $30 and the other for $45. 1040 ez 2014 The corporation distributed two new shares of common stock for each share held. 1040 ez 2014 You had six shares after the distribution—three with a basis of $10 each ($30 ÷ 3) and three with a basis of $15 each ($45 ÷ 3). 1040 ez 2014 New and old stock not identical. 1040 ez 2014   If the new stock you received as a nontaxable dividend is not identical to the old stock on which it was declared, the basis of the new stock is calculated differently. 1040 ez 2014 Divide the adjusted basis of the old stock between the old and the new stock in the ratio of the fair market value of each lot of stock to the total fair market value of both lots on the date of distribution of the new stock. 1040 ez 2014 Example. 1040 ez 2014 You bought a share of common stock for $100. 1040 ez 2014 Later, the corporation distributed a share of preferred stock for each share of common stock held. 1040 ez 2014 At the date of distribution, your common stock had a fair market value of $150 and the preferred stock had a fair market value of $50. 1040 ez 2014 You figure the basis of the old and new stock by dividing your $100 basis between them. 1040 ez 2014 The basis of your common stock is $75 (($150 ÷ $200) × $100), and the basis of the new preferred stock is $25 (($50 ÷ $200) × $100). 1040 ez 2014 Stock bought at various times. 1040 ez 2014   Figure the basis of stock dividends received on stock you bought at various times and at different prices by allocating to each lot of stock the share of the stock dividends due to it. 1040 ez 2014 Taxable stock dividends. 1040 ez 2014   If your stock dividend is taxable when you receive it, the basis of your new stock is its fair market value on the date of distribution. 1040 ez 2014 The basis of your old stock does not change. 1040 ez 2014 Stock splits. 1040 ez 2014   Figure the basis of stock splits in the same way as stock dividends if identical stock is distributed on the stock held. 1040 ez 2014 Stock rights. 1040 ez 2014   A stock right is a right to acquire a corporation's stock. 1040 ez 2014 It may be exercised, it may be sold if it has a market value, or it may expire. 1040 ez 2014 Stock rights are rarely taxable when you receive them. 1040 ez 2014 See Distributions of Stock and Stock Rights under Dividends and Other Distributions in chapter 1. 1040 ez 2014 Taxable stock rights. 1040 ez 2014   If you receive stock rights that are taxable, the basis of the rights is their fair market value at the time of distribution. 1040 ez 2014 The basis of the old stock does not change. 1040 ez 2014 Nontaxable stock rights. 1040 ez 2014   If you receive nontaxable stock rights and allow them to expire, they have no basis. 1040 ez 2014   If you exercise or sell the nontaxable stock rights and if, at the time of distribution, the stock rights had a fair market value of 15% or more of the fair market value of the old stock, you must divide the adjusted basis of the old stock between the old stock and the stock rights. 1040 ez 2014 Use a ratio of the fair market value of each to the total fair market value of both at the time of distribution. 1040 ez 2014   If the fair market value of the stock rights was less than 15%, their basis is zero. 1040 ez 2014 However, you can choose to divide the basis of the old stock between the old stock and the stock rights. 1040 ez 2014 To make the choice, attach a statement to your return for the year in which you received the rights, stating that you choose to divide the basis of the stock. 1040 ez 2014 Basis of new stock. 1040 ez 2014   If you exercise the stock rights, the basis of the new stock is its cost plus the basis of the stock rights exercised. 1040 ez 2014 Example. 1040 ez 2014 You own 100 shares of ABC Company stock, which cost you $22 per share. 1040 ez 2014 The ABC Company gave you 10 nontaxable stock rights that would allow you to buy 10 more shares at $26 per share. 1040 ez 2014 At the time the stock rights were distributed, the stock had a market value of $30, not including the stock rights. 1040 ez 2014 Each stock right had a market value of $3. 1040 ez 2014 The market value of the stock rights was less than 15% of the market value of the stock, but you chose to divide the basis of your stock between the stock and the rights. 1040 ez 2014 You figure the basis of the rights and the basis of the old stock as follows: 100 shares × $22 = $2,200, basis of old stock   100 shares × $30 = $3,000, market value of old stock   10 rights × $3 = $30, market value of rights   ($3,000 ÷ $3,030) × $2,200 = $2,178. 1040 ez 2014 22, new basis of old stock   ($30 ÷ $3,030) × $2,200 = $21. 1040 ez 2014 78, basis of rights   If you sell the rights, the basis for figuring gain or loss is $2. 1040 ez 2014 18 ($21. 1040 ez 2014 78 ÷ 10) per right. 1040 ez 2014 If you exercise the rights, the basis of the stock you acquire is the price you pay ($26) plus the basis of the right exercised ($2. 1040 ez 2014 18), or $28. 1040 ez 2014 18 per share. 1040 ez 2014 The remaining basis of the old stock is $21. 1040 ez 2014 78 per share. 1040 ez 2014 Investment property received in liquidation. 1040 ez 2014   In general, if you receive investment property as a distribution in partial or complete liquidation of a corporation and if you recognize gain or loss when you acquire the property, your basis in the property is its fair market value at the time of the distribution. 1040 ez 2014 S corporation stock. 1040 ez 2014   You must increase your basis in stock of an S corporation by your pro rata share of the following items. 1040 ez 2014 All income items of the S corporation, including tax-exempt income, that are separately stated and passed through to you as a shareholder. 1040 ez 2014 The nonseparately stated income of the S corporation. 1040 ez 2014 The amount of the deduction for depletion (other than oil and gas depletion) that is more than the basis of the property being depleted. 1040 ez 2014   You must decrease your basis in stock of an S corporation by your pro rata share of the following items. 1040 ez 2014 Distributions by the S corporation that were not included in your income. 1040 ez 2014 All loss and deduction items of the S corporation that are separately stated and passed through to you. 1040 ez 2014 Any nonseparately stated loss of the S corporation. 1040 ez 2014 Any expense of the S corporation that is not deductible in figuring its taxable income and not properly chargeable to a capital account. 1040 ez 2014 The amount of your deduction for depletion of oil and gas wells to the extent the deduction is not more than your share of the adjusted basis of the wells. 1040 ez 2014 However, your basis in the stock cannot be reduced below zero. 1040 ez 2014 Specialized small business investment company stock or partnership interest. 1040 ez 2014   If you bought this stock or interest as replacement property for publicly traded securities you sold at a gain, you must reduce the basis of the stock or interest by the amount of any postponed gain on that sale. 1040 ez 2014 See Rollover of Gain From Publicly Traded Securities , later. 1040 ez 2014 Qualified small business stock. 1040 ez 2014   If you bought this stock as replacement property for other qualified small business stock you sold at a gain, you must reduce the basis of this replacement stock by the amount of any postponed gain on the earlier sale. 1040 ez 2014 See Gains on Qualified Small Business Stock , later. 1040 ez 2014 Short sales. 1040 ez 2014   If you cannot deduct payments you make to a lender in lieu of dividends on stock used in a short sale, the amount you pay to the lender is a capital expense, and you must add it to the basis of the stock used to close the short sale. 1040 ez 2014   See Payments in lieu of dividends , later, for information about deducting payments in lieu of dividends. 1040 ez 2014 Premiums on bonds. 1040 ez 2014   If you buy a bond at a premium, the premium is treated as part of your basis in the bond. 1040 ez 2014 If you choose to amortize the premium paid on a taxable bond, you must reduce the basis of the bond by the amortized part of the premium each year over the life of the bond. 1040 ez 2014   Although you cannot deduct the premium on a tax-exempt bond, you must amortize it to determine your adjusted basis in the bond. 1040 ez 2014 You must reduce the basis of the bond by the premium you amortized for the period you held the bond. 1040 ez 2014   See Bond Premium Amortization in chapter 3 for more information. 1040 ez 2014 Market discount on bonds. 1040 ez 2014   If you include market discount on a bond in income currently, increase the basis of your bond by the amount of market discount you include in your income. 1040 ez 2014 See Market Discount Bonds in chapter 1 for more information. 1040 ez 2014 Bonds purchased at par value. 1040 ez 2014   A bond purchased at par value (face amount) has no premium or discount. 1040 ez 2014 When you sell or otherwise dispose of the bond, you figure the gain or loss by comparing the bond proceeds to the purchase price of the bond. 1040 ez 2014 Example. 1040 ez 2014 You purchased a bond several years ago for its par value of $10,000. 1040 ez 2014 You sold the bond this year for $10,100. 1040 ez 2014 You have a gain of $100. 1040 ez 2014 However, if you had sold the bond for $9,900, you would have a loss of $100. 1040 ez 2014 Acquisition discount on short-term obligations. 1040 ez 2014   If you include acquisition discount on a short-term obligation in your income currently, increase the basis of the obligation by the amount of acquisition discount you include in your income. 1040 ez 2014 See Discount on Short-Term Obligations in chapter 1 for more information. 1040 ez 2014 Original issue discount (OID) on debt instruments. 1040 ez 2014   Increase the basis of a debt instrument by the OID you include in your income. 1040 ez 2014 See Original Issue Discount (OID) in chapter 1. 1040 ez 2014 Discounted tax-exempt obligations. 1040 ez 2014   OID on tax-exempt obligations is generally not taxable. 1040 ez 2014 However, when you dispose of a tax-exempt obligation issued after September 3, 1982, that you acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. 1040 ez 2014 The accrued OID is added to the basis of the obligation to determine your gain or loss. 1040 ez 2014   For information on determining OID on a long-term obligation, see Debt Instruments Issued After July 1, 1982, and Before 1985 or Debt Instruments Issued After 1984, whichever applies, in Publication 1212 under Figuring OID on Long-Term Debt Instruments. 1040 ez 2014   If the tax-exempt obligation has a maturity of 1 year or less, accrue OID under the rules for acquisition discount on short-term obligations. 1040 ez 2014 See Discount on Short-Term Obligations in chapter 1. 1040 ez 2014 Stripped tax-exempt obligation. 1040 ez 2014   If you acquired a stripped tax-exempt bond or coupon after October 22, 1986, you must accrue OID on it to determine its adjusted basis when you dispose of it. 1040 ez 2014 For stripped tax-exempt bonds or coupons acquired after June 10, 1987, part of this OID may be taxable. 1040 ez 2014 You accrue the OID on these obligations in the manner described in chapter 1 under Stripped Bonds and Coupons . 1040 ez 2014   Increase your basis in the stripped tax-exempt bond or coupon by the taxable and nontaxable accrued OID. 1040 ez 2014 Also increase your basis by the interest that accrued (but was not paid and was not previously reflected in your basis) before the date you sold the bond or coupon. 1040 ez 2014 In addition, for bonds acquired after June 10, 1987, add to your basis any accrued market discount not previously reflected in basis. 1040 ez 2014 How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. 1040 ez 2014 Gain. 1040 ez 2014   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. 1040 ez 2014 Loss. 1040 ez 2014   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. 1040 ez 2014 Amount realized. 1040 ez 2014   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). 1040 ez 2014 Amount realized includes the money you receive plus the fair market value of any property or services you receive. 1040 ez 2014   If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. 1040 ez 2014 For more information, see Publication 537. 1040 ez 2014   If a buyer of property issues a debt instrument to the seller of the property, the amount realized is determined by reference to the issue price of the debt instrument, which may or may not be the fair market value of the debt instrument. 1040 ez 2014 See Regulations section 1. 1040 ez 2014 1001-1(g). 1040 ez 2014 However, if the debt instrument was previously issued by a third party (one not part of the sale transaction), the fair market value of the debt instrument is used to determine the amount realized. 1040 ez 2014 Fair market value. 1040 ez 2014   Fair market value is the price at which property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. 1040 ez 2014 Example. 1040 ez 2014 You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. 1040 ez 2014 Your gain is $3,000 ($10,000 – $7,000). 1040 ez 2014 If you also receive a note for $6,000 that has an issue price of $6,000, your gain is $9,000 ($10,000 + $6,000 – $7,000). 1040 ez 2014 Debt paid off. 1040 ez 2014   A debt against the property, or against you, that is paid off as a part of the transaction or that is assumed by the buyer must be included in the amount realized. 1040 ez 2014 This is true even if neither you nor the buyer is personally liable for the debt. 1040 ez 2014 For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. 1040 ez 2014 Example. 1040 ez 2014 You sell stock that you had pledged as security for a bank loan of $8,000. 1040 ez 2014 Your basis in the stock is $6,000. 1040 ez 2014 The buyer pays off your bank loan and pays you $20,000 in cash. 1040 ez 2014 The amount realized is $28,000 ($20,000 + $8,000). 1040 ez 2014 Your gain is $22,000 ($28,000 – $6,000). 1040 ez 2014 Payment of cash. 1040 ez 2014   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. 1040 ez 2014 Determine your gain or loss by subtracting the cash you pay and the adjusted basis of the property you trade in from the amount you realize. 1040 ez 2014 If the result is a positive number, it is a gain. 1040 ez 2014 If the result is a negative number, it is a loss. 1040 ez 2014 No gain or loss. 1040 ez 2014   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. 1040 ez 2014 In this case, you may have neither a gain nor a loss. 1040 ez 2014 See No gain or loss in the discussion on the basis of property you received as a gift under Basis Other Than Cost, earlier. 1040 ez 2014 Special Rules for Mutual Funds To figure your gain or loss when you dispose of mutual fund shares, you need to determine which shares were sold and the basis of those shares. 1040 ez 2014 If your shares in a mutual fund were acquired all on the same day and for the same price, figuring their basis is not difficu