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Forms you can use

Forms Available for Filing Season 2014 (TY 2013)
Form Number Form Name Available
Form 1040 U.S. Individual Income Tax Return

1/31/2014

Form 1040A U.S. Individual Income Tax Return

1/31/2014

Form 1040EZ Income Tax Return for Single and Joint Filers With No Dependents

1/31/2014

Form 1040V Payment Voucher

1/31/2014

Form 1040ES Estimated Tax Payments

2/13/2014

Schedule A Itemized Deductions

1/31/2014

Schedule B Interest and Ordinary Dividends

1/31/2014

Schedule C Profit or Loss From Business

1/31/2014

Schedule C-EZ Net Profit from Business

1/31/2014

Schedule D Capital Gains and Losses

1/31/2014

Schedule E Supplemental Income and Loss

1/31/2014

Schedule EIC Earned Income Credit

1/31/2014

Schedule F Profit or Loss From Farming

1/31/2014

Schedule H Household Employment Taxes

1/31/2014

Schedule J Farm Income Averaging

1/31/2014

Schedule L Standard Deduction for Certain Filers

1/31/2014

Schedule R Credit for the Elderly or the Disabled

1/31/2014

Schedule SE Self-Employment Tax

1/31/2014

Form 1116 Foreign Tax Credit

1/31/2014

Form 1310 Statement of Person Claiming Refund Due of a Deceased Taxpayer

1/31/2014

Form 2106 Employee Business Expenses

1/31/2014

Form 2106EZ Unreimbursed Employee Business Expenses

1/31/2014

Form 2120 Multiple Support Declaration

1/31/2014

Form 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts

1/31/2014

Form 2210F Underpayment of Estimated Tax by Farmers and Fishermen

2/13/2014

Form 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains

1/31/2014

Form 2441 Child and Dependent Care Expenses

1/31/2014

Form 2555 Form 2555 Foreign Earned Income

1/31/2014

Form 2555EZ Form 2555EZ Foreign Earned Income Exclusion

1/31/2014

Form 3468 Investment Credit

1/31/2014

Form 3800 General Business Credit

1/31/2014

Form 3903 Moving Expenses

1/31/2014

Form 4136 Credit for Federal Tax Paid on Fuels

1/31/2014

Form 4137 Social Security and Medicare Tax on Unreported Tip Income

1/31/2014

Form 4255 Recapture of Investment Credit

1/31/2014

Form 4562 Depreciation and Amortization (Including Information on Listed Property)

1/31/2014

Form 4684 Casualties and Thefts

1/31/2014

Form 4797 Sales of Business Property

1/31/2014

Form 4835 Farm Rental Income and Expenses

1/31/2014

Form 4868 Application for Automatic Extension of Time to File U.S. Individual Income Tax Return (Can print and mail now)

E-file on 3/5/14

Form 4952 Investment Interest Expense Deduction

1/31/2014

Form 4972 Tax on Lump Sum Distributions

1/31/2014

Form 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

1/31/2014

Form 5405 First-Time Homebuyer Credit (Only Page 2, Part IV of the Form, Repayment of Credit may be e-filed)

1/31/2014

Form 5695 Residential Energy Credits

1/31/2014

Form 5884 Work Opportunity Credit

1/31/2014

Form 6198 At-Risk Limitations

1/31/2014

Form 6251 Alternative Minimum Tax-Individuals

1/31/2014

Form 6252 Installment Sale Income

1/31/2014

Form 6478 Credit for Alcohol Used as Fuel

1/31/2014

Form 6765 Credit for Increasing Research Activities

1/31/2014

Form 6781 Gains and Losses from Section 1256 Contracts & Straddles

1/31/2014

Form 8082 Notice of Inconsistent Treatment or Administrative Adjustment Request

1/31/2014

Form 8275 Disclosure Statement

1/31/2014

Form 8275R Regulation Disclosure Statement

1/31/2014

Form 8283 Noncash Charitable Contribution

1/31/2014

Form 8379 Injured Spouse Allocation

1/31/2014

Form 8396 Mortgage Interest Credit

1/31/2014

Form 8453 U.S. Individual Income Tax Transmittal for an IRS e-file Return (This form that can't be e-filed, must be mailed in)

2/27/2014

Form 8582 Passive Activity Loss Limitations

1/31/2014

Form 8582-CR Passive Activity Credit Limitations

1/31/2014

Form 8586 Low-Income Housing Credit

1/31/2014

Form 8594 Asset Acquisition Statement

1/31/2014

Form 8606 Nondeductible IRAs

1/31/2014

Form 8609A Annual Statement for Low-Income Housing Credit

1/31/2014

Form 8611 Recapture of Low-income Housing Credit

1/31/2014

Form 8615 Tax for Children Under Age 18/24 With Investment Income of More Than $1,800

1/31/2014

Form 8689 Allocation of Individual Income Tax to the US Virgin Islands

1/31/2014

Form 8697 Interest Computation Under the Look-Back Method for Completed Long-Term Contracts

1/31/2014

Form 8801 Credit for Prior Year Minimum Tax - Individuals, Estates and Trusts

1/31/2014

Form 8812 Additional Child Tax Credit

1/31/2014

Form 8814 Parents' Election To Report Child's Interest and Dividends

1/31/2014

Form 8815 Exclusion of Interest From Series EE US Savings Bonds Issued After 1989

1/31/2014

Form 8820 Orphan Drug Credit

1/31/2014

Form 8824 Like-Kind Exchanges

1/31/2014

Form 8826 Disabled Access Credit

1/31/2014

Form 8828 Recapture of Federal Mortgage Subsidy

1/31/2014

Form 8829 Expenses for Business Use of Your Home

1/31/2014

Form 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)

1/31/2014

Form 8834 Qualified Electric Vehicle Credit

1/31/2014

Form 8839 Qualified Adoption Expense

1/31/2014

Form 8844 Empowerment Zone and Renewal Community Employment Credit

1/31/2014

Form 8845 Indian Employment Credit

1/31/2014

Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips

1/31/2014

Form 8847 Credit for Contributions to Selected Community Development Corporations

1/31/2014

Form 8853 Archer MSAs and Long-Term Care Insurance Contracts

1/31/2014

Form 8859 District of Columbia First-Time Homebuyer Credit

2/13/2014

Form 8862 Information To Claim Earned Income Credit After Disallowance

1/31/2014

Form 8863 Education Credits (Hope and Lifetime Learning Credits)

1/31/2014

Form 8864 Biodiesel and Renewable Diesel Fuels Credit

1/31/2014

Form 8874 New Markets Credit

1/31/2014

Form 8880 Credit for Qualified Retirement Savings Contributions

1/31/2014

Form 8881 Credit for Small Employer Pension Plan Startup Costs

1/31/2014

Form 8882 Credit for Employer - Provided ChildCare Facilities and Services

1/31/2014

Form 8885 Health Coverage Tax Credit

1/31/2014

Form 8886 Reportable Transaction Disclosure Statement

1/31/2014

Form 8888 Direct Deposit of Refund to more than 1 account

1/31/2014

Form 8889 Health Savings Accounts (HSAs)

1/31/2014

Form 8891 US Information Return for Beneficiary of Certain Canadian Registered Retirement Plans

1/31/2014

Form 8903 Domestic Production Activities Deduction

1/31/2014

Form 8906 Distilled Spirits Credit

1/31/2014

Form 8907 Nonconventional Source Fuel Credit

1/31/2014

Form 8908 Energy Efficient Home Credit

1/31/2014

Form 8909 Energy Efficient Appliance Credit

1/31/2014

Form 8910 Alternate Motor Vehicle Credit

1/31/2014

Form 8911 Alternate Fuel Vehicle Refueling Credit

1/31/2014

Form 8915 Qualified Hurricane Katrina Retirement Plan Dists and Repayments

1/31/2014

Form 8917 Tuition and Fees Deduction

1/31/2014

Form 8919 Uncollected Social Security and Medicare Tax on Wages

1/31/2014

Form 8930 Midwestern Disaster Area Distributions

1/31/2014

Form 8931 Agricultural Chemicals Security Credit

1/31/2014

Form 8932 Credit for Employer Differential Wage Payments

1/31/2014

Form 8933 Carbon Dioxide Sequestration Credit

1/31/2014

Form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit

2/13/2014

Form 8941 Credit for Small Employer Health Insurance Premiums

1/31/2014

Form 8949 Sales and other Dispositions of Capital Assets

1/31/2014

Form 8959 Additional Medicare Tax

2/13/2014

Form 8960 Net Investment Income Tax - Individuals, Estates and Trusts

2/13/2014

Form 9465 Installment Agreement Request

1/31/2014

Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (And Section 1082 Basis Adjustment)

1/31/2014

     

 

 

 

Page Last Reviewed or Updated: 04-Mar-2014

The 1040 Ez Free File

1040 ez free file Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. 1040 ez free file Proc. 1040 ez free file 2013-16 Table of Contents SECTION 1. 1040 ez free file PURPOSE SECTION 2. 1040 ez free file BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. 1040 ez free file BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. 1040 ez free file FEDERAL INCOME TAX TREATMENT SECTION 5. 1040 ez free file INFORMATION-REPORTING OBLIGATIONS SECTION 6. 1040 ez free file HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. 1040 ez free file PENALTY RELIEF FOR 2012 SECTION 8. 1040 ez free file SCOPE AND EFFECTIVE DATE SECTION 9. 1040 ez free file DRAFTING INFORMATION SECTION 1. 1040 ez free file PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). 1040 ez free file Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). 1040 ez free file In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. 1040 ez free file Current plans call for HAMP to continue accepting new borrowers through the end of 2013. 1040 ez free file The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. 1040 ez free file SECTION 2. 1040 ez free file BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . 1040 ez free file 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). 1040 ez free file A description of the program can be found at www. 1040 ez free file makinghomeaffordable. 1040 ez free file gov. 1040 ez free file . 1040 ez free file 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. 1040 ez free file These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. 1040 ez free file . 1040 ez free file 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. 1040 ez free file The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. 1040 ez free file However, as noted in section 2. 1040 ez free file 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. 1040 ez free file (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. 1040 ez free file ”) . 1040 ez free file 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. 1040 ez free file . 1040 ez free file 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. 1040 ez free file The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. 1040 ez free file (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. 1040 ez free file ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). 1040 ez free file Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. 1040 ez free file Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. 1040 ez free file . 1040 ez free file 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. 1040 ez free file (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. 1040 ez free file ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. 1040 ez free file . 1040 ez free file 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). 1040 ez free file If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. 1040 ez free file These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. 1040 ez free file The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. 1040 ez free file The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. 1040 ez free file For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. 1040 ez free file ” . 1040 ez free file 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). 1040 ez free file . 1040 ez free file 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. 1040 ez free file 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. 1040 ez free file . 1040 ez free file 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. 1040 ez free file SECTION 3. 1040 ez free file BACKGROUND—APPLICABLE PROVISIONS OF LAW . 1040 ez free file 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. 1040 ez free file See § 61(a)(12). 1040 ez free file . 1040 ez free file 02 Under § 1. 1040 ez free file 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. 1040 ez free file In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. 1040 ez free file However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. 1040 ez free file See § 1. 1040 ez free file 1001-3(c)(6). 1040 ez free file . 1040 ez free file 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. 1040 ez free file 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. 1040 ez free file If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. 1040 ez free file See also § 1. 1040 ez free file 61-12(c). 1040 ez free file . 1040 ez free file 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. 1040 ez free file If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. 1040 ez free file See, e. 1040 ez free file g. 1040 ez free file , §§ 1. 1040 ez free file 1272-1(c)(5) and 1. 1040 ez free file 1274-2(d). 1040 ez free file . 1040 ez free file 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. 1040 ez free file Section 108(a)(1)(E) and 108(a)(1)(B). 1040 ez free file (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. 1040 ez free file ) . 1040 ez free file 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. 1040 ez free file . 1040 ez free file 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. 1040 ez free file See §§ 108(h) and 163(h)(3)(B)(i). 1040 ez free file . 1040 ez free file 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). 1040 ez free file Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. 1040 ez free file . 1040 ez free file 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. 1040 ez free file . 1040 ez free file 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. 1040 ez free file Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. 1040 ez free file . 1040 ez free file 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. 1040 ez free file See § 108(h)(1). 1040 ez free file If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). 1040 ez free file See § 108(b). 1040 ez free file For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). 1040 ez free file . 1040 ez free file 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). 1040 ez free file See Form 982 instructions and Publication 4681. 1040 ez free file This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. 1040 ez free file . 1040 ez free file 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. 1040 ez free file See Notice 2003-18, 2003-1 C. 1040 ez free file B. 1040 ez free file 699, and Rev. 1040 ez free file Rul. 1040 ez free file 79-356, 1979-2 C. 1040 ez free file B. 1040 ez free file 28. 1040 ez free file However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). 1040 ez free file See Rev. 1040 ez free file Rul. 1040 ez free file 2005-46, 2005-2 C. 1040 ez free file B. 1040 ez free file 120, and Rev. 1040 ez free file Rul. 1040 ez free file 75-246, 1975-1 C. 1040 ez free file B. 1040 ez free file 24. 1040 ez free file . 1040 ez free file 14 Under § 451 and § 1. 1040 ez free file 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. 1040 ez free file . 1040 ez free file 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. 1040 ez free file See § 6041(a) and (d) and § 1. 1040 ez free file 6041-1(a)(1) and (b). 1040 ez free file . 1040 ez free file 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. 1040 ez free file See § 6050P(a)-(c) and §§ 1. 1040 ez free file 6050P-1(a) and 1. 1040 ez free file 6050P-2(a) and (d). 1040 ez free file . 1040 ez free file 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. 1040 ez free file These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. 1040 ez free file Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. 1040 ez free file ” . 1040 ez free file 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. 1040 ez free file These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. 1040 ez free file Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. 1040 ez free file SECTION 4. 1040 ez free file FEDERAL INCOME TAX TREATMENT . 1040 ez free file 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. 1040 ez free file See § 1. 1040 ez free file 1001-3. 1040 ez free file At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. 1040 ez free file See also § 61(a)(12) and § 1. 1040 ez free file 61-12(c). 1040 ez free file . 1040 ez free file 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. 1040 ez free file Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. 1040 ez free file Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. 1040 ez free file . 1040 ez free file 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. 1040 ez free file Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. 1040 ez free file . 1040 ez free file 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. 1040 ez free file Therefore, for purposes of § 1. 1040 ez free file 1001-3, the date of the modification is the date of the permanent modification. 1040 ez free file . 1040 ez free file 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. 1040 ez free file 01 of this revenue procedure for the taxable year in which the permanent modification occurs. 1040 ez free file Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. 1040 ez free file The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. 1040 ez free file . 1040 ez free file 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. 1040 ez free file . 1040 ez free file 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. 1040 ez free file This is consistent with Rev. 1040 ez free file Rul. 1040 ez free file 2009-19, 2009-28 I. 1040 ez free file R. 1040 ez free file B. 1040 ez free file 111, which addressed the treatment of Pay-for-Performance Success Payments. 1040 ez free file . 1040 ez free file 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. 1040 ez free file If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. 1040 ez free file . 1040 ez free file 09 As described in section 2. 1040 ez free file 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. 1040 ez free file To the extent that the HAMP-PRA borrower is described in section 4. 1040 ez free file 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. 1040 ez free file To the extent that the HAMP-PRA borrower is described in section 4. 1040 ez free file 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. 1040 ez free file SECTION 5. 1040 ez free file INFORMATION-REPORTING OBLIGATIONS . 1040 ez free file 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. 1040 ez free file A copy of this form is required to be furnished to the borrower. 1040 ez free file . 1040 ez free file 02 As stated in sections 4. 1040 ez free file 01 and 4. 1040 ez free file 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. 1040 ez free file . 1040 ez free file 03 An investor is an applicable entity that is required under § 1. 1040 ez free file 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. 1040 ez free file Under § 1. 1040 ez free file 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. 1040 ez free file Identifiable events determine when Forms 1099-C have to be issued. 1040 ez free file Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. 1040 ez free file This rule under § 1. 1040 ez free file 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. 1040 ez free file . 1040 ez free file 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. 1040 ez free file That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). 1040 ez free file . 1040 ez free file 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. 1040 ez free file 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. 1040 ez free file Under § 6041, these payments are not subject to information reporting. 1040 ez free file See Notice 2011-14, 2011-11 I. 1040 ez free file R. 1040 ez free file B. 1040 ez free file 544, 546. 1040 ez free file . 1040 ez free file 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. 1040 ez free file 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. 1040 ez free file The payment is subject to the information reporting requirements of § 6041, as described in section 3. 1040 ez free file 15 of this revenue procedure. 1040 ez free file Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. 1040 ez free file SECTION 6. 1040 ez free file HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . 1040 ez free file 01 In general. 1040 ez free file The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). 1040 ez free file As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. 1040 ez free file Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. 1040 ez free file A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. 1040 ez free file 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. 1040 ez free file Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. 1040 ez free file 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. 1040 ez free file . 1040 ez free file 02 HAMP-PRA borrower options. 1040 ez free file A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. 1040 ez free file 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. 1040 ez free file If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. 1040 ez free file 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. 1040 ez free file . 1040 ez free file 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. 1040 ez free file (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. 1040 ez free file (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. 1040 ez free file 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. 1040 ez free file 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. 1040 ez free file This section 6. 1040 ez free file 03(2) applies only if the change to reporting the discharge using the method described in section 6. 1040 ez free file 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. 1040 ez free file To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. 1040 ez free file (3) Example. 1040 ez free file The following example illustrates the application of section 6. 1040 ez free file 03(2) of this revenue procedure. 1040 ez free file In 2010, B’s basis in B’s principal residence was $330,000. 1040 ez free file In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. 1040 ez free file B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). 1040 ez free file The trial period plan effective date also fell in 2010. 1040 ez free file B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. 1040 ez free file 02(2) of this revenue procedure. 1040 ez free file That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. 1040 ez free file The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. 1040 ez free file For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. 1040 ez free file 02(1) of this revenue procedure. 1040 ez free file Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. 1040 ez free file 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). 1040 ez free file (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. 1040 ez free file 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. 1040 ez free file 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. 1040 ez free file Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. 1040 ez free file 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. 1040 ez free file Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. 1040 ez free file (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. 1040 ez free file 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. 1040 ez free file The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. 1040 ez free file (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. 1040 ez free file The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). 1040 ez free file The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. 1040 ez free file . 1040 ez free file 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. 1040 ez free file (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. 1040 ez free file Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. 1040 ez free file Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. 1040 ez free file If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. 1040 ez free file (2) A HAMP-PRA borrower who has been using the method described in section 6. 1040 ez free file 02(1) of this revenue procedure may change to the method described in section 6. 1040 ez free file 02(2) but must comply with the consistency and open-year requirements described in section 6. 1040 ez free file 01 of this revenue procedure. 1040 ez free file SECTION 7. 1040 ez free file PENALTY RELIEF FOR 2012 . 1040 ez free file 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. 1040 ez free file 03 through 5. 1040 ez free file 04 and section 8. 1040 ez free file 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. 1040 ez free file 01 through 4. 1040 ez free file 04 of this revenue procedure) that is required to be reported for 2012. 1040 ez free file (2) Not later than March 28, 2013, a statement is sent to the Service. 1040 ez free file It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. 1040 ez free file 01(1) of this revenue procedure. 1040 ez free file The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . 1040 ez free file 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. 1040 ez free file 06 and 8. 1040 ez free file 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. 1040 ez free file . 1040 ez free file 03 Section 8. 1040 ez free file 03 and 8. 1040 ez free file 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. 1040 ez free file SECTION 8. 1040 ez free file SCOPE AND EFFECTIVE DATE . 1040 ez free file 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. 1040 ez free file . 1040 ez free file 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. 1040 ez free file . 1040 ez free file 03 Because of the effective date in section 8. 1040 ez free file 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. 1040 ez free file 03 through 5. 1040 ez free file 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. 1040 ez free file 03 through 5. 1040 ez free file 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. 1040 ez free file . 1040 ez free file 04 Because of the effective date in section 8. 1040 ez free file 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. 1040 ez free file 06 of this revenue procedure. 1040 ez free file SECTION 9. 1040 ez free file DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. 1040 ez free file Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. 1040 ez free file Pflanz and Sheldon A. 1040 ez free file Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. 1040 ez free file Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). 1040 ez free file For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). 1040 ez free file Prev  Up  Next   Home   More Internal Revenue Bulletins