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1040ez 2012 Form

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1040ez 2012 Form

1040ez 2012 form Publication 531 - Main Content Table of Contents Keeping a Daily Tip RecordElectronic tip record. 1040ez 2012 form Reporting Tips to Your EmployerElectronic tip statement. 1040ez 2012 form Final report. 1040ez 2012 form Tip Rate Determination and Education Program Reporting Tips on Your Tax Return Allocated Tips How To Get Tax Help Keeping a Daily Tip Record Why keep a daily tip record. 1040ez 2012 form   You must keep a daily tip record so you can: Report your tips accurately to your employer, Report your tips accurately on your tax return, and Prove your tip income if your return is ever questioned. 1040ez 2012 form How to keep a daily tip record. 1040ez 2012 form   There are two ways to keep a daily tip record. 1040ez 2012 form You can either: Write information about your tips in a tip diary, or Keep copies of documents that show your tips, such as restaurant bills and credit or debit card charge slips. 1040ez 2012 form You should keep your daily tip record with your tax or other personal records. 1040ez 2012 form You must keep your records for as long as they are important for administration of the federal tax law. 1040ez 2012 form For information on how long to keep records, see How Long to Keep Records in chapter 1 of Publication 17, Your Federal Income Tax. 1040ez 2012 form    If you keep a tip diary, you can use Form 4070A, Employee's Daily Record of Tips. 1040ez 2012 form To get Form 4070A, ask the Internal Revenue Service (IRS) or your employer for Publication 1244, Employee's Daily Record of Tips and Report to Employer. 1040ez 2012 form Publication 1244 is also available at www. 1040ez 2012 form irs. 1040ez 2012 form gov/pub1244. 1040ez 2012 form Publication 1244 includes a 1-year supply of Form 4070A. 1040ez 2012 form Each day, write in the information asked for on the form. 1040ez 2012 form A filled-in Form 4070A is shown on the following page. 1040ez 2012 form   In addition to the information asked for on Form 4070A, you also need to keep a record of the date and value of any noncash tips you get, such as tickets, passes, or other items of value. 1040ez 2012 form Although you do not report these tips to your employer, you must report them on your tax return. 1040ez 2012 form   If you do not use Form 4070A, start your records by writing your name, your employer's name, and the name of the business (if it is different from your employer's name). 1040ez 2012 form Then, each workday, write the date and the following information. 1040ez 2012 form Cash tips you get directly from customers or from other employees. 1040ez 2012 form Tips from credit and debit card charge customers that your employer pays you. 1040ez 2012 form The value of any noncash tips you get, such as tickets, passes, or other items of value. 1040ez 2012 form The amount of tips you paid out to other employees through tip pools or tip splitting, or other arrangements, and the names of the employees to whom you paid the tips. 1040ez 2012 form Please click here for the text description of the image. 1040ez 2012 form Sample Filled-in Form 4070A from Publication 1244 Electronic tip record. 1040ez 2012 form   You can use an electronic system provided by your employer to record your daily tips. 1040ez 2012 form If you do, you must receive and keep a paper copy of this record. 1040ez 2012 form Service charges. 1040ez 2012 form    Do not write in your tip diary the amount of any service charge that your employer adds to a customer's bill and then pays to you and treats as wages. 1040ez 2012 form This is part of your wages, not a tip. 1040ez 2012 form The following factors determine if you have a tip or service charge: The payment is made free from compulsion; The customer has the right to determine the amount of payment; The payment is not subject to negotiation or dictated by employer policy; and The customer generally has the right to determine who receives the payment. 1040ez 2012 form See examples below. 1040ez 2012 form Example 1. 1040ez 2012 form Good Food Restaurant adds an 18% charge to the bill for parties of 6 or more customers. 1040ez 2012 form Jane's bill for food and beverages for her party of 8 includes an amount on the tip line equal to 18% of the charges for food and beverages, and the total includes this amount. 1040ez 2012 form Because Jane did not have an unrestricted right to determine the amount on the “tip line,” the 18% charge is considered a service charge. 1040ez 2012 form Do not include the 18% charge in your tip diary. 1040ez 2012 form Service charges that are paid to you are considered wages, not tips. 1040ez 2012 form Example 2. 1040ez 2012 form Good Food Restaurant includes sample calculations of tip amounts at the bottom of its bills for food and beverages provided to customers. 1040ez 2012 form David's bill includes a blank “tip line,” with sample tip calculations of 15%, 18%, and 20% of the charges for food and beverages at the bottom of the bill beneath the signature line. 1040ez 2012 form Because David is free to enter any amount on the “tip line” or leave it blank, any amount he includes is considered a tip. 1040ez 2012 form Be sure to include this amount in your tip diary. 1040ez 2012 form Sample Filled-in Form 4070 from Publication 1244 Please click here for the text description of the image. 1040ez 2012 form Filled-in Form 4070 Reporting Tips to Your Employer Why report tips to your employer. 1040ez 2012 form   You must report tips to your employer so that: Your employer can withhold federal income tax and social security, Medicare, Additional Medicare, or railroad retirement taxes, Your employer can report the correct amount of your earnings to the Social Security Administration or Railroad Retirement Board (which affects your benefits when you retire or if you become disabled, or your family's benefits if you die), and You can avoid the penalty for not reporting tips to your employer (explained later). 1040ez 2012 form What tips to report. 1040ez 2012 form   Report to your employer only cash, check, and debit and credit card tips you receive. 1040ez 2012 form   If your total tips for any 1 month from any one job are less than $20, do not report the tips for that month to that employer. 1040ez 2012 form   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. 1040ez 2012 form Do not report to your employer any portion of the tips you receive that you pass on to other employees. 1040ez 2012 form However, you must report tips you receive from other employees. 1040ez 2012 form   Do not report the value of any noncash tips, such as tickets or passes, to your employer. 1040ez 2012 form You do not pay social security, Medicare, Additional Medicare, or railroad retirement taxes on these tips. 1040ez 2012 form How to report. 1040ez 2012 form   If your employer does not give you any other way to report your tips, you can use Form 4070, Employee's Report of Tips to Employer. 1040ez 2012 form Fill in the information asked for on the form, sign and date the form, and give it to your employer. 1040ez 2012 form A sample filled-in Form 4070 is shown above. 1040ez 2012 form To get a 1-year supply of the form, ask the IRS or your employer for Publication 1244. 1040ez 2012 form   If you do not use Form 4070, give your employer a statement with the following information. 1040ez 2012 form Your name, address, and social security number. 1040ez 2012 form Your employer's name, address, and business name (if it is different from your employer's name). 1040ez 2012 form The month (or the dates of any shorter period) in which you received tips. 1040ez 2012 form The total tips required to be reported for that period. 1040ez 2012 form You must sign and date the statement. 1040ez 2012 form Be sure to keep a copy with your tax or other personal records. 1040ez 2012 form   Your employer may require you to report your tips more than once a month. 1040ez 2012 form However, the statement cannot cover a period of more than 1 calendar month. 1040ez 2012 form Electronic tip statement. 1040ez 2012 form   Your employer can have you furnish your tip statements electronically. 1040ez 2012 form When to report. 1040ez 2012 form   Give your report for each month to your employer by the 10th of the next month. 1040ez 2012 form If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report by the next day that is not a Saturday, Sunday, or legal holiday. 1040ez 2012 form Example. 1040ez 2012 form You must report your tips received in September 2014 by October 10, 2014. 1040ez 2012 form Final report. 1040ez 2012 form   If your employment ends during the month, you can report your tips when your employment ends. 1040ez 2012 form Penalty for not reporting tips. 1040ez 2012 form   If you do not report tips to your employer as required, you may be subject to a penalty equal to 50% of the social security, Medicare, Additional Medicare, or railroad retirement taxes you owe on the unreported tips. 1040ez 2012 form (For information about these taxes, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, later. 1040ez 2012 form ) The penalty amount is in addition to the taxes you owe. 1040ez 2012 form   You can avoid this penalty if you can show reasonable cause for not reporting the tips to your employer. 1040ez 2012 form To do so, attach a statement to your return explaining why you did not report them. 1040ez 2012 form Giving your employer money for taxes. 1040ez 2012 form   Your regular pay may not be enough for your employer to withhold all the taxes you owe on your regular pay plus your reported tips. 1040ez 2012 form If this happens, you can give your employer money until the close of the calendar year to pay the rest of the taxes. 1040ez 2012 form   If you do not give your employer enough money, your employer will apply your regular pay and any money you give to the taxes, in the following order. 1040ez 2012 form All taxes on your regular pay. 1040ez 2012 form Social security, Medicare, Additional Medicare, or railroad retirement taxes on your reported tips. 1040ez 2012 form Federal, state, and local income taxes on your reported tips. 1040ez 2012 form    Any taxes that remain unpaid can be collected by your employer from your next paycheck. 1040ez 2012 form If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. 1040ez 2012 form See Publication 505, Tax Withholding and Estimated Tax, for more information. 1040ez 2012 form    Uncollected taxes. 1040ez 2012 form You must report on your tax return any social security and Medicare taxes, or railroad retirement taxes that remained uncollected at the end of 2013. 1040ez 2012 form These uncollected taxes will be shown on your 2013 Form W-2. 1040ez 2012 form See Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer under Reporting Tips on Your Tax Return, later. 1040ez 2012 form Tip Rate Determination and Education Program Your employer may participate in the Tip Rate Determination and Education Program. 1040ez 2012 form The program was developed to help employees and employers understand and meet their tip reporting responsibilities. 1040ez 2012 form There are two agreements under the program: the Tip Rate Determination Agreement (TRDA) and the Tip Reporting Alternative Commitment (TRAC). 1040ez 2012 form A variation of the TRAC program, the Employer Tip Reporting Alternative Commitment, (EmTRAC) was designed to allow employers in the food and beverage industry to design and receive approval for their own TRAC programs. 1040ez 2012 form For information on the EmTRAC program, see Notice 2001-1, which is on page 261 of Internal Revenue Bulletin 2001-2 at www. 1040ez 2012 form irs. 1040ez 2012 form gov/pub/irs-irbs/irb01-02. 1040ez 2012 form pdf. 1040ez 2012 form If you are employed in the gaming industry, your employer may participate in the Gaming Industry Tip Compliance Agreement Program. 1040ez 2012 form See Revenue Procedure 2007-32, 2007-22 I. 1040ez 2012 form R. 1040ez 2012 form B. 1040ez 2012 form 1322, available at www. 1040ez 2012 form irs. 1040ez 2012 form gov/pub/irs-irbs/irb07_22. 1040ez 2012 form pdf. 1040ez 2012 form Your employer can provide you with a copy of any applicable agreement. 1040ez 2012 form To find out more about these agreements, visit IRS. 1040ez 2012 form gov and enter “restaurant tip reporting” in the search box. 1040ez 2012 form You may also call 1-800-829-4933, visit www. 1040ez 2012 form irs. 1040ez 2012 form gov/localcontacts for the IRS Taxpayer Assistance Center in your area, or send an email to Tip. 1040ez 2012 form Program@irs. 1040ez 2012 form gov and request information on this program. 1040ez 2012 form Reporting Tips on Your Tax Return How to report tips. 1040ez 2012 form   Report your tips with your wages on Form 1040, line 7; Form 1040A, line 7; Form 1040EZ, line 1; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. 1040ez 2012 form What tips to report. 1040ez 2012 form   Generally, you must report all tips you received in 2013 on your tax return, including both cash tips and noncash tips. 1040ez 2012 form Any tips you reported to your employer as required in 2013 are included in the wages shown in box 1 of your Form W-2. 1040ez 2012 form Add to the amount in box 1 only the tips you did not report to your employer. 1040ez 2012 form   However, any tips you received in 2013 that you reported to your employer as required after 2013 but before January 11, 2014, are not included in the wages shown in box 1 of your 2013 Form W-2. 1040ez 2012 form Do not include the amount of these tips on your 2013 tax return. 1040ez 2012 form Instead, include them on your 2014 tax return. 1040ez 2012 form Tips you received in 2012 that you reported to your employer as required after 2012 but before January 11, 2013, are included in the wages shown in box 1 of your 2013 Form W-2. 1040ez 2012 form Although these tips were received in 2012, you must report them on your 2013 tax return. 1040ez 2012 form   If you participate in a tip-splitting or tip-pooling arrangement, report only the tips you receive and retain. 1040ez 2012 form Do not report on your income tax return any portion of the tips you receive that you pass on to other employees. 1040ez 2012 form However, you must report tips you receive from other employees. 1040ez 2012 form    If you received $20 or more in cash and charge tips in a month and did not report all of those tips to your employer, see Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer, later. 1040ez 2012 form    If you did not keep a daily tip record as required and an amount is shown in box 8 of your Form W-2, see Allocated Tips, later. 1040ez 2012 form   If you kept a daily tip record and reported tips to your employer as required under the rules explained earlier, add the following tips to the amount in box 1 of your Form W-2. 1040ez 2012 form Cash and charge tips you received that totaled less than $20 for any month. 1040ez 2012 form The value of noncash tips, such as tickets, passes, or other items of value. 1040ez 2012 form Example. 1040ez 2012 form Ben Smith began working at the Blue Ocean Restaurant (his only employer in 2013) on June 30 and received $10,000 in wages during the year. 1040ez 2012 form Ben kept a daily tip record showing that his tips for June were $18 and his tips for the rest of the year totaled $7,000. 1040ez 2012 form He was not required to report his June tips to his employer, but he reported all of the rest of his tips to his employer as required. 1040ez 2012 form Ben's Form W-2 from Blue Ocean Restaurant shows $17,000 ($10,000 wages + $7,000 reported tips) in box 1. 1040ez 2012 form He adds the $18 unreported tips to that amount and reports $17,018 as wages on his tax return. 1040ez 2012 form Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer. 1040ez 2012 form    If you received $20 or more in cash and charge tips in a month from any one job and did not report all of those tips to your employer, you must report the social security, Medicare, and Additional Medicare taxes on the unreported tips as additional tax on your return. 1040ez 2012 form To report these taxes, you must file a return even if you would not otherwise have to file. 1040ez 2012 form You must use Form 1040, Form 1040NR, Form 1040NR-EZ, Form 1040-SS, or 1040-PR (as appropriate) for this purpose. 1040ez 2012 form (You cannot file Form 1040EZ or Form 1040A. 1040ez 2012 form )    Use Form 4137, Social Security and Medicare Tax on Unreported Tip Income, to figure social security and Medicare taxes. 1040ez 2012 form Enter the tax on your return as instructed, and attach the completed Form 4137 to your return. 1040ez 2012 form Use Form 8959 to figure Additional Medicare Tax. 1040ez 2012 form If you are subject to the Railroad Retirement Tax Act, you cannot use Form 4137 to pay railroad retirement tax on unreported tips. 1040ez 2012 form To get railroad retirement credit, you must report tips to your employer. 1040ez 2012 form Reporting uncollected social security, Medicare, Additional Medicare, or railroad retirement taxes on tips reported to your employer. 1040ez 2012 form    You may have uncollected taxes if your regular pay was not enough for your employer to withhold all the taxes you owe and you did not give your employer enough money to pay the rest of the taxes. 1040ez 2012 form For more information, see Giving your employer money for taxes , under Reporting Tips to Your Employer, earlier. 1040ez 2012 form   If your employer could not collect all the social security and Medicare taxes, or railroad retirement taxes you owe on tips reported for 2013, the uncollected taxes will be shown in box 12 of your Form W-2 (codes A and B). 1040ez 2012 form You must report these amounts as additional tax on your return. 1040ez 2012 form   If you worked in the U. 1040ez 2012 form S. 1040ez 2012 form possessions and received Form W-2AS, Form W-2CM, Form W-2GU, or Form W-2VI, any uncollected taxes on tips will be shown in box 12 with codes A and B. 1040ez 2012 form If you received Form 499R-2/W-2PR, any uncollected taxes will be shown in boxes 22 and 23. 1040ez 2012 form Unlike the uncollected portion of the regular (1. 1040ez 2012 form 45%) Medicare tax, the uncollected Additional Medicare Tax is not reported on Form W-2. 1040ez 2012 form   To report these uncollected taxes, you must file a return even if you would not otherwise have to file. 1040ez 2012 form You can report these taxes on Form 1040, in the space next to line 60; Form 1040NR, line 59; Form 1040-SS, Part I, line 6; or Form 1040-PR, Part I, line 6. 1040ez 2012 form See the instructions for the appropriate form and line number indicated, and Form 8959. 1040ez 2012 form (You cannot file Form 1040A, Form 1040EZ, or Form 1040NR-EZ. 1040ez 2012 form ) Self-employed persons. 1040ez 2012 form    If you receive tips as a self-employed person, you should report these tips as income on Schedule C or C-EZ. 1040ez 2012 form See Publication 334, Tax Guide for Small Business, for more information on reporting business income. 1040ez 2012 form Allocated Tips If your employer allocated tips to you, they are shown separately in box 8 of your Form W-2. 1040ez 2012 form They are not included in box 1 with your wages and reported tips. 1040ez 2012 form If box 8 is blank, this discussion does not apply to you. 1040ez 2012 form What are allocated tips. 1040ez 2012 form   These are tips that your employer assigned to you in addition to the tips you reported to your employer for the year. 1040ez 2012 form Your employer will have done this only if: You worked in an establishment (restaurant, cocktail lounge, or similar business) that must allocate tips to employees, and The tips you reported to your employer were less than your share of 8% of food and drink sales. 1040ez 2012 form No income, social security, Medicare, Additional Medicare, or railroad retirement taxes are withheld on allocated tips. 1040ez 2012 form How were your allocated tips figured. 1040ez 2012 form   The tips allocated to you are your share of an amount figured by subtracting the reported tips of all employees from 8% (or an approved lower rate) of food and drink sales (other than carryout sales and sales with a service charge of 10% or more). 1040ez 2012 form Your share of that amount was figured using either a method provided by an employer-employee agreement or a method provided by IRS regulations based on employees' sales or hours worked. 1040ez 2012 form For information about the exact allocation method used, ask your employer. 1040ez 2012 form Must you report your allocated tips on your tax return. 1040ez 2012 form   You must report tips you received in 2013 (including both cash and noncash tips) on your tax return as explained in What tips to report , earlier. 1040ez 2012 form Any tips you reported to your employer in 2013 as required (explained under Reporting Tips to Your Employer , earlier) are included in the wages shown in box 1 of your Form W-2. 1040ez 2012 form Add to the amount in box 1 only the tips you did not report to your employer as required. 1040ez 2012 form This should include any allocated tips shown in box 8 on your Form(s) W-2, unless you have adequate records to show that you received less tips in the year than the allocated amount. 1040ez 2012 form   See What tips to report under Reporting Tips on Your Tax Return, and Keeping a Daily Tip Record , earlier. 1040ez 2012 form How to report allocated tips. 1040ez 2012 form   If you received any tips in 2013 that you did not report to your employer as required (including allocated tips that you are required to report on your tax return), add these tips to the amount in box 1 of your Form(s) W-2 and report this amount as wages on Form 1040, line 7; Form 1040NR, line 8; or Form 1040NR-EZ, line 3. 1040ez 2012 form (You cannot file Form 1040A or Form 1040EZ). 1040ez 2012 form    Because social security, Medicare, or Additional Medicare taxes were not withheld from the allocated tips, you must report those taxes as additional tax on your return. 1040ez 2012 form Complete Form 4137 and include the allocated tips on line 1 of the form as provided in its instructions. 1040ez 2012 form See Reporting social security, Medicare, Additional Medicare, or railroad retirement taxes on tips not reported to your employer under Reporting Tips on Your Tax Return, earlier. 1040ez 2012 form How to request an approved lower rate. 1040ez 2012 form   Your employer can use a tip rate lower than 8% (but not lower than 2%) to figure allocated tips only if the IRS approves the lower rate. 1040ez 2012 form Either the employer or the employees can request approval of a lower rate by filing a petition with the IRS. 1040ez 2012 form The petition must include specific information about the establishment that will justify the lower rate. 1040ez 2012 form A user fee must be paid with the petition. 1040ez 2012 form    An employee petition can be filed only with the consent of a majority of the directly tipped employees (waiters, bartenders, and others who receive tips directly from customers). 1040ez 2012 form The petition must state the total number of directly tipped employees and the number of employees consenting to the petition. 1040ez 2012 form Employees filing the petition must promptly notify the employer, and the employer must promptly give the IRS a copy of all Forms 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, filed for the establishment for the previous 3 years. 1040ez 2012 form   For more information about how to file a petition and what information to include, see Allocation of Tips in the Instructions for Form 8027. 1040ez 2012 form How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. 1040ez 2012 form Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. 1040ez 2012 form Free help with your tax return. 1040ez 2012 form   Free help in preparing your return is available nationwide from IRS-certified volunteers. 1040ez 2012 form The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. 1040ez 2012 form The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. 1040ez 2012 form 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. 1040ez 2012 form Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. 1040ez 2012 form To find the nearest VITA or TCE site, visit IRS. 1040ez 2012 form gov or call 1-800-906-9887. 1040ez 2012 form   As part of the TCE program, AARP offers the Tax-Aide counseling program. 1040ez 2012 form To find the nearest AARP Tax-Aide site, visit AARP's website at www. 1040ez 2012 form aarp. 1040ez 2012 form org/money/taxaide or call 1-888-227-7669. 1040ez 2012 form   For more information on these programs, go to IRS. 1040ez 2012 form gov and enter “VITA” in the search box. 1040ez 2012 form Internet. 1040ez 2012 form IRS. 1040ez 2012 form gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. 1040ez 2012 form Apply for an Employer Identification Number (EIN). 1040ez 2012 form Go to IRS. 1040ez 2012 form gov and enter Apply for an EIN in the search box. 1040ez 2012 form Request an Electronic Filing PIN by going to IRS. 1040ez 2012 form gov and entering Electronic Filing PIN in the search box. 1040ez 2012 form Check the status of your 2013 refund with Where's My Refund? Go to IRS. 1040ez 2012 form gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040ez 2012 form If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040ez 2012 form Check the status of your amended return. 1040ez 2012 form Go to IRS. 1040ez 2012 form gov and enter Where's My Amended Return in the search box. 1040ez 2012 form Download forms, instructions, and publications, including some accessible versions. 1040ez 2012 form Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. 1040ez 2012 form gov or IRS2Go. 1040ez 2012 form Tax return and tax account transcripts are generally available for the current year and past three years. 1040ez 2012 form Figure your income tax withholding with the IRS Withholding Calculator on IRS. 1040ez 2012 form gov. 1040ez 2012 form 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. 1040ez 2012 form Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. 1040ez 2012 form gov. 1040ez 2012 form Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. 1040ez 2012 form gov or IRS2Go. 1040ez 2012 form Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. 1040ez 2012 form An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. 1040ez 2012 form Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. 1040ez 2012 form If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. 1040ez 2012 form Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. 1040ez 2012 form Locate the nearest volunteer help site with the VITA Locator Tool on IRS. 1040ez 2012 form gov. 1040ez 2012 form Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040ez 2012 form The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. 1040ez 2012 form Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. 1040ez 2012 form AARP offers the Tax-Aide counseling program as part of the TCE program. 1040ez 2012 form Visit AARP's website to find the nearest Tax-Aide location. 1040ez 2012 form Research your tax questions. 1040ez 2012 form Search publications and instructions by topic or keyword. 1040ez 2012 form Read the Internal Revenue Code, regulations, or other official guidance. 1040ez 2012 form Read Internal Revenue Bulletins. 1040ez 2012 form Sign up to receive local and national tax news by email. 1040ez 2012 form Phone. 1040ez 2012 form You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. 1040ez 2012 form Download the free IRS2Go mobile app from the iTunes app store or from Google Play. 1040ez 2012 form Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, 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. 1040ez 2012 form Call to locate the nearest volunteer help site, 1-800-906-9887. 1040ez 2012 form Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. 1040ez 2012 form The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. 1040ez 2012 form Most VITA and TCE sites offer free electronic filing. 1040ez 2012 form Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. 1040ez 2012 form Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. 1040ez 2012 form Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. 1040ez 2012 form The automated Where's My Refund? information is available 24 hours a day, 7 days a week. 1040ez 2012 form If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. 1040ez 2012 form Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 1040ez 2012 form Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. 1040ez 2012 form Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. 1040ez 2012 form Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. 1040ez 2012 form Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). 1040ez 2012 form You should receive your order within 10 business days. 1040ez 2012 form Call to order transcripts of your tax returns or tax account, 1-800-908-9946. 1040ez 2012 form Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. 1040ez 2012 form Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. 1040ez 2012 form Call to ask tax questions, 1-800-829-1040. 1040ez 2012 form Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. 1040ez 2012 form The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. 1040ez 2012 form These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. 1040ez 2012 form gsa. 1040ez 2012 form gov/fedrelay. 1040ez 2012 form Walk-in. 1040ez 2012 form You can find a selection of forms, publications and services — in-person, face-to-face. 1040ez 2012 form Products. 1040ez 2012 form You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040ez 2012 form Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. 1040ez 2012 form Services. 1040ez 2012 form You can walk in to your local TAC most business days for personal, face-to-face tax help. 1040ez 2012 form An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 1040ez 2012 form If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. 1040ez 2012 form No appointment is necessary—just walk in. 1040ez 2012 form Before visiting, check www. 1040ez 2012 form irs. 1040ez 2012 form gov/localcontacts for hours of operation and services provided. 1040ez 2012 form Mail. 1040ez 2012 form You can send your order for forms, instructions, and publications to the address below. 1040ez 2012 form You should receive a response within 10 business days after your request is received. 1040ez 2012 form  Internal Revenue Service 1201 N. 1040ez 2012 form Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. 1040ez 2012 form   The Taxpayer Advocate Service (TAS) is your voice at the IRS. 1040ez 2012 form Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. 1040ez 2012 form What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. 1040ez 2012 form 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. 1040ez 2012 form You face (or your business is facing) an immediate threat of adverse action. 1040ez 2012 form You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. 1040ez 2012 form   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. 1040ez 2012 form Here's why we can help: TAS is an independent organization within the IRS. 1040ez 2012 form Our advocates know how to work with the IRS. 1040ez 2012 form Our services are free and tailored to meet your needs. 1040ez 2012 form We have offices in every state, the District of Columbia, and Puerto Rico. 1040ez 2012 form 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 www. 1040ez 2012 form irs. 1040ez 2012 form gov/advocate, or call us toll-free at 1-877-777-4778. 1040ez 2012 form How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. 1040ez 2012 form If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. 1040ez 2012 form irs. 1040ez 2012 form gov/sams. 1040ez 2012 form Low Income Taxpayer Clinics. 1040ez 2012 form   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. 1040ez 2012 form Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. 1040ez 2012 form Visit www. 1040ez 2012 form TaxpayerAdvocate. 1040ez 2012 form irs. 1040ez 2012 form gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. 1040ez 2012 form Prev  Up  Next   Home   More Online Publications
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The 1040ez 2012 Form

1040ez 2012 form 14. 1040ez 2012 form   Sale of Property Table of Contents Reminder Introduction Useful Items - You may want to see: Sales and TradesWhat Is a Sale or Trade? How To Figure Gain or Loss Nontaxable Trades Transfers Between Spouses Related Party Transactions Capital Gains and LossesCapital or Ordinary Gain or Loss Capital Assets and Noncapital Assets Holding Period Nonbusiness Bad Debts Wash Sales Rollover of Gain From Publicly Traded Securities Reminder Foreign income. 1040ez 2012 form  If you are a U. 1040ez 2012 form S. 1040ez 2012 form citizen who sells property located outside the United States, you must report all gains and losses from the sale of that property on your tax return unless it is exempt by U. 1040ez 2012 form S. 1040ez 2012 form law. 1040ez 2012 form This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the payer. 1040ez 2012 form Introduction This chapter discusses the tax consequences of selling or trading investment property. 1040ez 2012 form It explains the following. 1040ez 2012 form What a sale or trade is. 1040ez 2012 form Figuring gain or loss. 1040ez 2012 form Nontaxable trades. 1040ez 2012 form Related party transactions. 1040ez 2012 form Capital gains or losses. 1040ez 2012 form Capital assets and noncapital assets. 1040ez 2012 form Holding period. 1040ez 2012 form Rollover of gain from publicly traded securities. 1040ez 2012 form Other property transactions. 1040ez 2012 form   Certain transfers of property are not discussed here. 1040ez 2012 form They are discussed in other IRS publications. 1040ez 2012 form These include the following. 1040ez 2012 form Sales of a main home, covered in chapter 15. 1040ez 2012 form Installment sales, covered in Publication 537, Installment Sales. 1040ez 2012 form Transactions involving business property, covered in Publication 544, Sales and Other Dispositions of Assets. 1040ez 2012 form Dispositions of an interest in a passive activity, covered in Publication 925, Passive Activity and At-Risk Rules. 1040ez 2012 form    Publication 550, Investment Income and Expenses (Including Capital Gains and Losses), provides a more detailed discussion about sales and trades of investment property. 1040ez 2012 form Publication 550 includes information about the rules covering nonbusiness bad debts, straddles, section 1256 contracts, puts and calls, commodity futures, short sales, and wash sales. 1040ez 2012 form It also discusses investment-related expenses. 1040ez 2012 form Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 8949 Sales and Other Dispositions of Capital Assets 8824 Like-Kind Exchanges Sales and Trades If you sold property such as stocks, bonds, 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. 1040ez 2012 form Generally, you should receive the statement by February 15 of the next year. 1040ez 2012 form It will show the gross proceeds from the sale. 1040ez 2012 form If you sold a covered security in 2013, your 1099-B (or substitute statement) will show your basis. 1040ez 2012 form Generally, a covered security is a security you acquired after 2010, with certain exceptions. 1040ez 2012 form See the Instructions for Form 8949. 1040ez 2012 form The IRS will also get a copy of Form 1099-B from the broker. 1040ez 2012 form Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. 1040ez 2012 form What Is a Sale or Trade? This section explains what is a sale or trade. 1040ez 2012 form It also explains certain transactions and events that are treated as sales or trades. 1040ez 2012 form A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. 1040ez 2012 form A trade is a transfer of property for other property or services and may be taxed in the same way as a sale. 1040ez 2012 form Sale and purchase. 1040ez 2012 form   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. 1040ez 2012 form The sale and purchase are two separate transactions. 1040ez 2012 form But see Like-kind exchanges under Nontaxable Trades, later. 1040ez 2012 form Redemption of stock. 1040ez 2012 form   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. 1040ez 2012 form Dividend versus sale or trade. 1040ez 2012 form   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. 1040ez 2012 form Both direct and indirect ownership of stock will be considered. 1040ez 2012 form The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend (see chapter 8), 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. 1040ez 2012 form Redemption or retirement of bonds. 1040ez 2012 form   A redemption or retirement of bonds or notes at their maturity is generally treated as a sale or trade. 1040ez 2012 form   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. 1040ez 2012 form For details, see Regulations section 1. 1040ez 2012 form 1001-3. 1040ez 2012 form Surrender of stock. 1040ez 2012 form   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. 1040ez 2012 form The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. 1040ez 2012 form Worthless securities. 1040ez 2012 form    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. 1040ez 2012 form This affects whether your capital loss is long term or short term. 1040ez 2012 form See Holding Period , later. 1040ez 2012 form   Worthless securities also include securities that you abandon after March 12, 2008. 1040ez 2012 form To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. 1040ez 2012 form 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. 1040ez 2012 form    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. 1040ez 2012 form Do not deduct them in the year the stock became worthless. 1040ez 2012 form How to report loss. 1040ez 2012 form    Report worthless securities in Part I or Part II, whichever applies, of Form 8949. 1040ez 2012 form In column (a), enter “Worthless. 1040ez 2012 form ”    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. 1040ez 2012 form See Form 8949 and the Instructions for Form 8949. 1040ez 2012 form For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. 1040ez 2012 form See also Schedule D (Form 1040), Form 8949, and their separate instructions. 1040ez 2012 form Filing a claim for refund. 1040ez 2012 form   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. 1040ez 2012 form You must use Form 1040X, Amended U. 1040ez 2012 form S. 1040ez 2012 form Individual Income Tax Return, to amend your return for the year the security became worthless. 1040ez 2012 form 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. 1040ez 2012 form For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. 1040ez 2012 form 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. 1040ez 2012 form Gain. 1040ez 2012 form   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. 1040ez 2012 form Loss. 1040ez 2012 form   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. 1040ez 2012 form Adjusted basis. 1040ez 2012 form   The adjusted basis of property is your original cost or other original basis properly adjusted (increased or decreased) for certain items. 1040ez 2012 form See chapter 13 for more information about determining the adjusted basis of property. 1040ez 2012 form Amount realized. 1040ez 2012 form   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). 1040ez 2012 form Amount realized includes the money you receive plus the fair market value of any property or services you receive. 1040ez 2012 form If you received a note or other debt instrument for the property, see How To Figure Gain or Loss in chapter 4 of Publication 550 to figure the amount realized. 1040ez 2012 form 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. 1040ez 2012 form For more information, see Publication 537. 1040ez 2012 form Fair market value. 1040ez 2012 form   Fair market value 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. 1040ez 2012 form Example. 1040ez 2012 form 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. 1040ez 2012 form Your gain is $3,000 ($10,000 − $7,000). 1040ez 2012 form Debt paid off. 1040ez 2012 form    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. 1040ez 2012 form This is true even if neither you nor the buyer is personally liable for the debt. 1040ez 2012 form 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. 1040ez 2012 form Example. 1040ez 2012 form You sell stock that you had pledged as security for a bank loan of $8,000. 1040ez 2012 form Your basis in the stock is $6,000. 1040ez 2012 form The buyer pays off your bank loan and pays you $20,000 in cash. 1040ez 2012 form The amount realized is $28,000 ($20,000 + $8,000). 1040ez 2012 form Your gain is $22,000 ($28,000 − $6,000). 1040ez 2012 form Payment of cash. 1040ez 2012 form   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. 1040ez 2012 form Determine your gain or loss by subtracting the cash you pay plus the adjusted basis of the property you trade in from the amount you realize. 1040ez 2012 form If the result is a positive number, it is a gain. 1040ez 2012 form If the result is a negative number, it is a loss. 1040ez 2012 form No gain or loss. 1040ez 2012 form   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. 1040ez 2012 form In this case, you may have neither a gain nor a loss. 1040ez 2012 form See Basis Other Than Cost in chapter 13. 1040ez 2012 form Nontaxable Trades This section discusses trades that generally do not result in a taxable gain or deductible loss. 1040ez 2012 form For more information on nontaxable trades, see chapter 1 of Publication 544. 1040ez 2012 form Like-kind exchanges. 1040ez 2012 form   If you trade business or investment property for other business or investment property of a like kind, you do not pay tax on any gain or deduct any loss until you sell or dispose of the property you receive. 1040ez 2012 form To be nontaxable, a trade must meet all six of the following conditions. 1040ez 2012 form The property must be business or investment property. 1040ez 2012 form You must hold both the property you trade and the property you receive for productive use in your trade or business or for investment. 1040ez 2012 form Neither property may be property used for personal purposes, such as your home or family car. 1040ez 2012 form The property must not be held primarily for sale. 1040ez 2012 form The property you trade and the property you receive must not be property you sell to customers, such as merchandise. 1040ez 2012 form The property must not be stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest, including partnership interests. 1040ez 2012 form However, see Special rules for mutual ditch, reservoir, or irrigation company stock, in chapter 4 of Publication 550 for an exception. 1040ez 2012 form Also, you can have a nontaxable trade of corporate stocks under a different rule, as discussed later. 1040ez 2012 form There must be a trade of like property. 1040ez 2012 form The trade of real estate for real estate, or personal property for similar personal property, is a trade of like property. 1040ez 2012 form The trade of an apartment house for a store building, or a panel truck for a pickup truck, is a trade of like property. 1040ez 2012 form The trade of a piece of machinery for a store building is not a trade of like property. 1040ez 2012 form Real property located in the United States and real property located outside the United States are not like property. 1040ez 2012 form Also, personal property used predominantly within the United States and personal property used predominantly outside the United States are not like property. 1040ez 2012 form The property to be received must be identified in writing within 45 days after the date you transfer the property given up in the trade. 1040ez 2012 form The property to be received must be received by the earlier of: The 180th day after the date on which you transfer the property given up in the trade, or The due date, including extensions, for your tax return for the year in which the transfer of the property given up occurs. 1040ez 2012 form    If you trade property with a related party in a like-kind exchange, a special rule may apply. 1040ez 2012 form See Related Party Transactions , later in this chapter. 1040ez 2012 form Also, see chapter 1 of Publication 544 for more information on exchanges of business property and special rules for exchanges using qualified intermediaries or involving multiple properties. 1040ez 2012 form Partly nontaxable exchange. 1040ez 2012 form   If you receive money or unlike property in addition to like property, and the above six conditions are met, you have a partly nontaxable trade. 1040ez 2012 form You are taxed on any gain you realize, but only up to the amount of the money and the fair market value of the unlike property you receive. 1040ez 2012 form You cannot deduct a loss. 1040ez 2012 form Like property and unlike property transferred. 1040ez 2012 form   If you give up unlike property in addition to the like property, you must recognize gain or loss on the unlike property you give up. 1040ez 2012 form The gain or loss is the difference between the adjusted basis of the unlike property and its fair market value. 1040ez 2012 form Like property and money transferred. 1040ez 2012 form   If all of the above conditions (1) – (6) are met, you have a nontaxable trade even if you pay money in addition to the like property. 1040ez 2012 form Basis of property received. 1040ez 2012 form   To figure the basis of the property received, see Nontaxable Exchanges in chapter 13. 1040ez 2012 form How to report. 1040ez 2012 form   You must report the trade of like property on Form 8824. 1040ez 2012 form If you figure a recognized gain or loss on Form 8824, report it on Schedule D (Form 1040), or on Form 4797, Sales of Business Property, whichever applies. 1040ez 2012 form See the instructions for Line 22 in the Instructions for Form 8824. 1040ez 2012 form   For information on using Form 4797, see chapter 4 of Publication 544. 1040ez 2012 form Corporate stocks. 1040ez 2012 form   The following trades of corporate stocks generally do not result in a taxable gain or a deductible loss. 1040ez 2012 form Corporate reorganizations. 1040ez 2012 form   In some instances, a company will give you common stock for preferred stock, preferred stock for common stock, or stock in one corporation for stock in another corporation. 1040ez 2012 form If this is a result of a merger, recapitalization, transfer to a controlled corporation, bankruptcy, corporate division, corporate acquisition, or other corporate reorganization, you do not recognize gain or loss. 1040ez 2012 form Stock for stock of the same corporation. 1040ez 2012 form   You can exchange common stock for common stock or preferred stock for preferred stock in the same corporation without having a recognized gain or loss. 1040ez 2012 form This is true for a trade between two stockholders as well as a trade between a stockholder and the corporation. 1040ez 2012 form Convertible stocks and bonds. 1040ez 2012 form   You generally will not have a recognized gain or loss if you convert bonds into stock or preferred stock into common stock of the same corporation according to a conversion privilege in the terms of the bond or the preferred stock certificate. 1040ez 2012 form Property for stock of a controlled corporation. 1040ez 2012 form   If you transfer property to a corporation solely in exchange for stock in that corporation, and immediately after the trade you are in control of the corporation, you ordinarily will not recognize a gain or loss. 1040ez 2012 form This rule applies both to individuals and to groups who transfer property to a corporation. 1040ez 2012 form It does not apply if the corporation is an investment company. 1040ez 2012 form   For this purpose, to be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock of the corporation. 1040ez 2012 form   If this provision applies to you, you may have to attach to your return a complete statement of all facts pertinent to the exchange. 1040ez 2012 form For details, see Regulations section 1. 1040ez 2012 form 351-3. 1040ez 2012 form Additional information. 1040ez 2012 form   For more information on trades of stock, see Nontaxable Trades in chapter 4 of Publication 550. 1040ez 2012 form Insurance policies and annuities. 1040ez 2012 form   You will not have a recognized gain or loss if the insured or annuitant is the same under both contracts and you trade: A life insurance contract for another life insurance contract or for an endowment or annuity contract or for a qualified long-term care insurance contract, An endowment contract for another endowment contract that provides for regular payments beginning at a date no later than the beginning date under the old contract or for an annuity contract or for a qualified long-term insurance contract, An annuity contract for annuity contract or for a qualified long-term care insurance contract, or A qualified long-term care insurance contract for a qualified long-term care insurance contract. 1040ez 2012 form   You also may not have to recognize gain or loss on an exchange of a portion of an annuity contract for another annuity contract. 1040ez 2012 form For transfers completed before October 24, 2011, see Revenue Ruling 2003-76 in Internal Revenue Bulletin 2003-33 and Revenue Procedure 2008-24 in Internal Revenue Bulletin 2008-13. 1040ez 2012 form Revenue Ruling 2003-76 is available at www. 1040ez 2012 form irs. 1040ez 2012 form gov/irb/2003-33_IRB/ar11. 1040ez 2012 form html. 1040ez 2012 form Revenue Procedure 2008-24 is available at www. 1040ez 2012 form irs. 1040ez 2012 form gov/irb/2008-13_IRB/ar13. 1040ez 2012 form html. 1040ez 2012 form For transfers completed on or after October 24, 2011, see Revenue Ruling 2003-76, above, and Revenue Procedure 2011-38, in Internal Revenue Bulletin 2011-30. 1040ez 2012 form Revenue Procedure 2011-38 is available at www. 1040ez 2012 form irs. 1040ez 2012 form gov/irb/2011-30_IRB/ar09. 1040ez 2012 form html. 1040ez 2012 form   For tax years beginning after December 31, 2010, amounts received as an annuity for a period of 10 years or more, or for the lives of one or more individuals, under any portion of an annuity, endowment, or life insurance contract, are treated as a separate contract and are considered partial annuities. 1040ez 2012 form A portion of an annuity, endowment, or life insurance contract may be annuitized, provided that the annuitization period is for 10 years or more or for the lives of one or more individuals. 1040ez 2012 form The investment in the contract is allocated between the part of the contract from which amounts are received as an annuity and the part of the contract from which amounts are not received as an annuity. 1040ez 2012 form   Exchanges of contracts not included in this list, such as an annuity contract for an endowment contract, or an annuity or endowment contract for a life insurance contract, are taxable. 1040ez 2012 form Demutualization of life insurance companies. 1040ez 2012 form   If you received stock in exchange for your equity interest as a policyholder or an annuitant, you generally will not have a recognized gain or loss. 1040ez 2012 form See Demutualization of Life Insurance Companies in Publication 550. 1040ez 2012 form U. 1040ez 2012 form S. 1040ez 2012 form Treasury notes or bonds. 1040ez 2012 form   You can trade certain issues of U. 1040ez 2012 form S. 1040ez 2012 form Treasury obligations for other issues designated by the Secretary of the Treasury, with no gain or loss recognized on the trade. 1040ez 2012 form See Savings bonds traded in chapter 1 of Publication 550 for more information. 1040ez 2012 form Transfers Between Spouses Generally, no gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or if incident to a divorce, a former spouse. 1040ez 2012 form This nonrecognition rule does not apply in the following situations. 1040ez 2012 form The recipient spouse or former spouse is a nonresident alien. 1040ez 2012 form Property is transferred in trust and liability exceeds basis. 1040ez 2012 form Gain must be recognized to the extent the amount of the liabilities assumed by the trust, plus any liabilities on the property, exceed the adjusted basis of the property. 1040ez 2012 form For other situations, see Transfers Between Spouses in chapter 4 of Publication 550. 1040ez 2012 form Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. 1040ez 2012 form The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. 1040ez 2012 form This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its fair market value at the time of transfer or any consideration paid by the recipient. 1040ez 2012 form This rule applies for purposes of determining loss as well as gain. 1040ez 2012 form Any gain recognized on a transfer in trust increases the basis. 1040ez 2012 form A transfer of property is incident to a divorce if the transfer occurs within 1 year after the date on which the marriage ends, or if the transfer is related to the ending of the marriage. 1040ez 2012 form Related Party Transactions Special rules apply to the sale or trade of property between related parties. 1040ez 2012 form Gain on sale or trade of depreciable property. 1040ez 2012 form   Your gain from the sale or trade of property to a related party may be ordinary income, rather than capital gain, if the property can be depreciated by the party receiving it. 1040ez 2012 form See chapter 3 of Publication 544 for more information. 1040ez 2012 form Like-kind exchanges. 1040ez 2012 form   Generally, if you trade business or investment property for other business or investment property of a like kind, no gain or loss is recognized. 1040ez 2012 form See Like-kind exchanges , earlier, under Nontaxable Trades. 1040ez 2012 form   This rule also applies to trades of property between related parties, defined next under Losses on sales or trades of property. 1040ez 2012 form However, if either you or the related party disposes of the like property within 2 years after the trade, you both must report any gain or loss not recognized on the original trade on your return filed for the year in which the later disposition occurs. 1040ez 2012 form See Related Party Transactions in chapter 4 of Publication 550 for exceptions. 1040ez 2012 form Losses on sales or trades of property. 1040ez 2012 form   You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties. 1040ez 2012 form Members of your family. 1040ez 2012 form This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. 1040ez 2012 form ), and lineal descendants (children, grandchildren, etc. 1040ez 2012 form ). 1040ez 2012 form A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. 1040ez 2012 form A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. 1040ez 2012 form (See Constructive ownership of stock , later. 1040ez 2012 form ) A tax-exempt charitable or educational organization directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. 1040ez 2012 form   In addition, a loss on the sale or trade of property is not deductible if the transaction is directly or indirectly between the following related parties. 1040ez 2012 form A grantor and fiduciary, or the fiduciary and beneficiary, of any trust. 1040ez 2012 form Fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. 1040ez 2012 form A trust fiduciary and a corporation of which more than 50% in value of the outstanding stock is directly or indirectly owned by or for the trust, or by or for the grantor of the trust. 1040ez 2012 form A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest, or the profits interest, in the partnership. 1040ez 2012 form Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. 1040ez 2012 form Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. 1040ez 2012 form An executor and a beneficiary of an estate (except in the case of a sale or trade to satisfy a pecuniary bequest). 1040ez 2012 form Two corporations that are members of the same controlled group. 1040ez 2012 form (Under certain conditions, however, these losses are not disallowed but must be deferred. 1040ez 2012 form ) Two partnerships if the same persons own, directly or indirectly, more than 50% of the capital interests or the profit interests in both partnerships. 1040ez 2012 form Multiple property sales or trades. 1040ez 2012 form   If you sell or trade to a related party a number of blocks of stock or pieces of property in a lump sum, you must figure the gain or loss separately for each block of stock or piece of property. 1040ez 2012 form The gain on each item may be taxable. 1040ez 2012 form However, you cannot deduct the loss on any item. 1040ez 2012 form Also, you cannot reduce gains from the sales of any of these items by losses on the sales of any of the other items. 1040ez 2012 form Indirect transactions. 1040ez 2012 form   You cannot deduct your loss on the sale of stock through your broker if, under a prearranged plan, a related party buys the same stock you had owned. 1040ez 2012 form This does not apply to a trade between related parties through an exchange that is purely coincidental and is not prearranged. 1040ez 2012 form Constructive ownership of stock. 1040ez 2012 form   In determining whether a person directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. 1040ez 2012 form Rule 1. 1040ez 2012 form   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. 1040ez 2012 form Rule 2. 1040ez 2012 form   An individual is considered to own the stock directly or indirectly owned by or for his or her family. 1040ez 2012 form Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. 1040ez 2012 form Rule 3. 1040ez 2012 form   An individual owning, other than by applying rule 2, any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. 1040ez 2012 form Rule 4. 1040ez 2012 form   When applying rule 1, 2, or 3, stock constructively owned by a person under rule 1 is treated as actually owned by that person. 1040ez 2012 form But stock constructively owned by an individual under rule 2 or rule 3 is not treated as owned by that individual for again applying either rule 2 or rule 3 to make another person the constructive owner of the stock. 1040ez 2012 form Property received from a related party. 1040ez 2012 form    If you sell or trade at a gain property you acquired from a related party, you recognize the gain only to the extent it is more than the loss previously disallowed to the related party. 1040ez 2012 form This rule applies only if you are the original transferee and you acquired the property by purchase or exchange. 1040ez 2012 form This rule does not apply if the related party's loss was disallowed because of the wash sale rules described in chapter 4 of Publication 550 under Wash Sales. 1040ez 2012 form   If you sell or trade at a loss property you acquired from a related party, you cannot recognize the loss that was not allowed to the related party. 1040ez 2012 form Example 1. 1040ez 2012 form Your brother sells you stock for $7,600. 1040ez 2012 form His cost basis is $10,000. 1040ez 2012 form Your brother cannot deduct the loss of $2,400. 1040ez 2012 form Later, you sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900. 1040ez 2012 form Your reportable gain is $500 (the $2,900 gain minus the $2,400 loss not allowed to your brother). 1040ez 2012 form Example 2. 1040ez 2012 form If, in Example 1, you sold the stock for $6,900 instead of $10,500, your recognized loss is only $700 (your $7,600 basis minus $6,900). 1040ez 2012 form You cannot deduct the loss that was not allowed to your brother. 1040ez 2012 form Capital Gains and Losses This section discusses the tax treatment of gains and losses from different types of investment transactions. 1040ez 2012 form Character of gain or loss. 1040ez 2012 form   You need to classify your gains and losses as either ordinary or capital gains or losses. 1040ez 2012 form You then need to classify your capital gains and losses as either short term or long term. 1040ez 2012 form If you have long-term gains and losses, you must identify your 28% rate gains and losses. 1040ez 2012 form If you have a net capital gain, you must also identify any unrecaptured section 1250 gain. 1040ez 2012 form   The correct classification and identification helps you figure the limit on capital losses and the correct tax on capital gains. 1040ez 2012 form Reporting capital gains and losses is explained in chapter 16. 1040ez 2012 form Capital or Ordinary Gain or Loss If you have a taxable gain or a deductible loss from a transaction, it may be either a capital gain or loss or an ordinary gain or loss, depending on the circumstances. 1040ez 2012 form Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss. 1040ez 2012 form A sale or trade of a noncapital asset generally results in ordinary gain or loss. 1040ez 2012 form Depending on the circumstances, a gain or loss on a sale or trade of property used in a trade or business may be treated as either capital or ordinary, as explained in Publication 544. 1040ez 2012 form In some situations, part of your gain or loss may be a capital gain or loss and part may be an ordinary gain or loss. 1040ez 2012 form Capital Assets and Noncapital Assets For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. 1040ez 2012 form Some examples are: Stocks or bonds held in your personal account, A house owned and used by you and your family, Household furnishings, A car used for pleasure or commuting, Coin or stamp collections, Gems and jewelry, and Gold, silver, or any other metal. 1040ez 2012 form Any property you own is a capital asset, except the following noncapital assets. 1040ez 2012 form Property held mainly for sale to customers or property that will physically become a part of the merchandise for sale to customers. 1040ez 2012 form For an exception, see Capital Asset Treatment for Self-Created Musical Works , later. 1040ez 2012 form Depreciable property used in your trade or business, even if fully depreciated. 1040ez 2012 form Real property used in your trade or business. 1040ez 2012 form A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property that is: Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Acquired under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. 1040ez 2012 form For an exception to this rule, see Capital Asset Treatment for Self-Created Musical Works , later. 1040ez 2012 form Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of property described in (1). 1040ez 2012 form U. 1040ez 2012 form S. 1040ez 2012 form Government publications that you received from the government free or for less than the normal sales price, or that you acquired under circumstances entitling you to the basis of someone who received the publications free or for less than the normal sales price. 1040ez 2012 form Certain commodities derivative financial instruments held by commodities derivatives dealers. 1040ez 2012 form Hedging transactions, but only if the transaction is clearly identified as a hedging transaction before the close of the day on which it was acquired, originated, or entered into. 1040ez 2012 form Supplies of a type you regularly use or consume in the ordinary course of your trade or business. 1040ez 2012 form Investment Property Investment property is a capital asset. 1040ez 2012 form Any gain or loss from its sale or trade is generally a capital gain or loss. 1040ez 2012 form Gold, silver, stamps, coins, gems, etc. 1040ez 2012 form   These are capital assets except when they are held for sale by a dealer. 1040ez 2012 form Any gain or loss you have from their sale or trade generally is a capital gain or loss. 1040ez 2012 form Stocks, stock rights, and bonds. 1040ez 2012 form   All of these (including stock received as a dividend) are capital assets except when held for sale by a securities dealer. 1040ez 2012 form However, if you own small business stock, see Losses on Section 1244 (Small Business) Stock , later, and Losses on Small Business Investment Company Stock, in chapter 4 of Publication 550. 1040ez 2012 form Personal Use Property Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. 1040ez 2012 form However, you cannot deduct a loss from selling personal use property. 1040ez 2012 form Capital Asset Treatment for Self-Created Musical Works You can elect to treat musical compositions and copyrights in musical works as capital assets when you sell or exchange them if: Your personal efforts created the property, or You acquired the property under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. 1040ez 2012 form You must make a separate election for each musical composition (or copyright in a musical work) sold or exchanged during the tax year. 1040ez 2012 form You must make the election on or before the due date (including extensions) of the income tax return for the tax year of the sale or exchange. 1040ez 2012 form You must make the election on Form 8949 by treating the sale or exchange as the sale or exchange of a capital asset, according to Form 8949, Schedule D (Form 1040), and their separate instructions. 1040ez 2012 form For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. 1040ez 2012 form See also Schedule D (Form 1040), Form 8949, and their separate instructions. 1040ez 2012 form You can revoke the election if you have IRS approval. 1040ez 2012 form To get IRS approval, you must submit a request for a letter ruling under the appropriate IRS revenue procedure. 1040ez 2012 form See, for example, Rev. 1040ez 2012 form Proc. 1040ez 2012 form 2013-1, corrected by Announcement 2013–9, and amplified and modified by Rev. 1040ez 2012 form Proc. 1040ez 2012 form 2013–32, available at www. 1040ez 2012 form irs. 1040ez 2012 form gov/irb/2013-01_IRB/ar06. 1040ez 2012 form html. 1040ez 2012 form Alternatively, you are granted an automatic 6-month extension from the due date of your income tax return (excluding extensions) to revoke the election, provided you timely file your income tax return, and within this 6-month extension period, you file Form 1040X that treats the sale or exchange as the sale or exchange of property that is not a capital asset. 1040ez 2012 form Discounted Debt Instruments Treat your gain or loss on the sale, redemption, or retirement of a bond or other debt instrument originally issued at a discount or bought at a discount as capital gain or loss, except as explained in the following discussions. 1040ez 2012 form Short-term government obligations. 1040ez 2012 form   Treat gains on short-term federal, state, or local government obligations (other than tax-exempt obligations) as ordinary income up to your ratable share of the acquisition discount. 1040ez 2012 form This treatment applies to obligations with a fixed maturity date not more than 1 year from the date of issue. 1040ez 2012 form Acquisition discount is the stated redemption price at maturity minus your basis in the obligation. 1040ez 2012 form   However, do not treat these gains as income to the extent you previously included the discount in income. 1040ez 2012 form See Discount on Short-Term Obligations in chapter 1 of Publication 550. 1040ez 2012 form Short-term nongovernment obligations. 1040ez 2012 form   Treat gains on short-term nongovernment obligations as ordinary income up to your ratable share of original issue discount (OID). 1040ez 2012 form This treatment applies to obligations with a fixed maturity date of not more than 1 year from the date of issue. 1040ez 2012 form   However, to the extent you previously included the discount in income, you do not have to include it in income again. 1040ez 2012 form See Discount on Short-Term Obligations in chapter 1 of Publication 550. 1040ez 2012 form Tax-exempt state and local government bonds. 1040ez 2012 form   If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. 1040ez 2012 form To figure your gain or loss on the sale or trade of these bonds, reduce the amount realized by your part of OID. 1040ez 2012 form   If the bonds were issued after September 3, 1982, and acquired after March 1, 1984, increase the adjusted basis by your part of OID to figure gain or loss. 1040ez 2012 form For more information on the basis of these bonds, see Discounted Debt Instruments in chapter 4 of Publication 550. 1040ez 2012 form   Any gain from market discount is usually taxable on disposition or redemption of tax-exempt bonds. 1040ez 2012 form If you bought the bonds before May 1, 1993, the gain from market discount is capital gain. 1040ez 2012 form If you bought the bonds after April 30, 1993, the gain is ordinary income. 1040ez 2012 form   You figure the market discount by subtracting the price you paid for the bond from the sum of the original issue price of the bond and the amount of accumulated OID from the date of issue that represented interest to any earlier holders. 1040ez 2012 form For more information, see Market Discount Bonds in chapter 1 of Publication 550. 1040ez 2012 form    A loss on the sale or other disposition of a tax-exempt state or local government bond is deductible as a capital loss. 1040ez 2012 form Redeemed before maturity. 1040ez 2012 form   If a state or local bond issued before June 9, 1980, is redeemed before it matures, the OID is not taxable to you. 1040ez 2012 form   If a state or local bond issued after June 8, 1980, is redeemed before it matures, the part of OID earned while you hold the bond is not taxable to you. 1040ez 2012 form However, you must report the unearned part of OID as a capital gain. 1040ez 2012 form Example. 1040ez 2012 form On July 2, 2002, the date of issue, you bought a 20-year, 6% municipal bond for $800. 1040ez 2012 form The face amount of the bond was $1,000. 1040ez 2012 form The $200 discount was OID. 1040ez 2012 form At the time the bond was issued, the issuer had no intention of redeeming it before it matured. 1040ez 2012 form The bond was callable at its face amount beginning 10 years after the issue date. 1040ez 2012 form The issuer redeemed the bond at the end of 11 years (July 2, 2013) for its face amount of $1,000 plus accrued annual interest of $60. 1040ez 2012 form The OID earned during the time you held the bond, $73, is not taxable. 1040ez 2012 form The $60 accrued annual interest also is not taxable. 1040ez 2012 form However, you must report the unearned part of OID ($127) as a capital gain. 1040ez 2012 form Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). 1040ez 2012 form   If you sell, trade, or redeem for a gain one of these debt instruments, the part of your gain that is not more than your ratable share of the OID at the time of the sale or redemption is ordinary income. 1040ez 2012 form The rest of the gain is capital gain. 1040ez 2012 form If, however, there was an intention to call the debt instrument before maturity, all of your gain that is not more than the entire OID is treated as ordinary income at the time of the sale. 1040ez 2012 form This treatment of taxable gain also applies to corporate instruments issued after May 27, 1969, under a written commitment that was binding on May 27, 1969, and at all times thereafter. 1040ez 2012 form Long-term debt instruments issued after May 27, 1969 (or after July 1, 1982, if a government instrument). 1040ez 2012 form   If you hold one of these debt instruments, you must include a part of OID in your gross income each year you own the instrument. 1040ez 2012 form Your basis in that debt instrument is increased by the amount of OID that you have included in your gross income. 1040ez 2012 form See Original Issue Discount (OID) in chapter 7 for information about OID that you must report on your tax return. 1040ez 2012 form   If you sell or trade the debt instrument before maturity, your gain is a capital gain. 1040ez 2012 form However, if at the time the instrument was originally issued there was an intention to call it before its maturity, your gain generally is ordinary income to the extent of the entire OID reduced by any amounts of OID previously includible in your income. 1040ez 2012 form In this case, the rest of the gain is capital gain. 1040ez 2012 form Market discount bonds. 1040ez 2012 form   If the debt instrument has market discount and you chose to include the discount in income as it accrued, increase your basis in the debt instrument by the accrued discount to figure capital gain or loss on its disposition. 1040ez 2012 form If you did not choose to include the discount in income as it accrued, you must report gain as ordinary interest income up to the instrument's accrued market discount. 1040ez 2012 form The rest of the gain is capital gain. 1040ez 2012 form See Market Discount Bonds in chapter 1 of Publication 550. 1040ez 2012 form   A different rule applies to market discount bonds issued before July 19, 1984, and purchased by you before May 1, 1993. 1040ez 2012 form See Market discount bonds under Discounted Debt Instruments in chapter 4 of Publication 550. 1040ez 2012 form Retirement of debt instrument. 1040ez 2012 form   Any amount you receive on the retirement of a debt instrument is treated in the same way as if you had sold or traded that instrument. 1040ez 2012 form Notes of individuals. 1040ez 2012 form   If you hold an obligation of an individual issued with OID after March 1, 1984, you generally must include the OID in your income currently, and your gain or loss on its sale or retirement is generally capital gain or loss. 1040ez 2012 form An exception to this treatment applies if the obligation is a loan between individuals and all the following requirements are met. 1040ez 2012 form The lender is not in the business of lending money. 1040ez 2012 form The amount of the loan, plus the amount of any outstanding prior loans, is $10,000 or less. 1040ez 2012 form Avoiding federal tax is not one of the principal purposes of the loan. 1040ez 2012 form   If the exception applies, or the obligation was issued before March 2, 1984, you do not include the OID in your income currently. 1040ez 2012 form When you sell or redeem the obligation, the part of your gain that is not more than your accrued share of OID at that time is ordinary income. 1040ez 2012 form The rest of the gain, if any, is capital gain. 1040ez 2012 form Any loss on the sale or redemption is capital loss. 1040ez 2012 form Deposit in Insolvent or Bankrupt Financial Institution If you lose money you have on deposit in a bank, credit union, or other financial institution that becomes insolvent or bankrupt, you may be able to deduct your loss in one of three ways. 1040ez 2012 form Ordinary loss. 1040ez 2012 form Casualty loss. 1040ez 2012 form Nonbusiness bad debt (short-term capital loss). 1040ez 2012 form  For more information, see Deposit in Insolvent or Bankrupt Financial Institution, in chapter 4 of Publication 550. 1040ez 2012 form Sale of Annuity The part of any gain on the sale of an annuity contract before its maturity date that is based on interest accumulated on the contract is ordinary income. 1040ez 2012 form Losses on Section 1244 (Small Business) Stock You can deduct as an ordinary loss, rather than as a capital loss, your loss on the sale, trade, or worthlessness of section 1244 stock. 1040ez 2012 form Report the loss on Form 4797, line 10. 1040ez 2012 form Any gain on section 1244 stock is a capital gain if the stock is a capital asset in your hands. 1040ez 2012 form Report the gain on Form 8949. 1040ez 2012 form See Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. 1040ez 2012 form For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. 1040ez 2012 form See also Schedule D (Form 1040), Form 8949, and their separate instructions. 1040ez 2012 form Holding Period If you sold or traded investment property, you must determine your holding period for the property. 1040ez 2012 form Your holding period determines whether any capital gain or loss was a short-term or long-term capital gain or loss. 1040ez 2012 form Long-term or short-term. 1040ez 2012 form   If you hold investment property more than 1 year, any capital gain or loss is a long-term capital gain or loss. 1040ez 2012 form If you hold the property 1 year or less, any capital gain or loss is a short-term capital gain or loss. 1040ez 2012 form   To determine how long you held the investment property, begin counting on the date after the day you acquired the property. 1040ez 2012 form The day you disposed of the property is part of your holding period. 1040ez 2012 form Example. 1040ez 2012 form If you bought investment property on February 6, 2012, and sold it on February 6, 2013, your holding period is not more than 1 year and you have a short-term capital gain or loss. 1040ez 2012 form If you sold it on February 7, 2013, your holding period is more than 1 year and you will have a long-term capital gain or loss. 1040ez 2012 form Securities traded on established market. 1040ez 2012 form   For securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities, and ends on the trade date you sold them. 1040ez 2012 form    Do not confuse the trade date with the settlement date, which is the date by which the stock must be delivered and payment must be made. 1040ez 2012 form Example. 1040ez 2012 form You are a cash method, calendar year taxpayer. 1040ez 2012 form You sold stock at a gain on December 30, 2013. 1040ez 2012 form According to the rules of the stock exchange, the sale was closed by delivery of the stock 4 trading days after the sale, on January 6, 2014. 1040ez 2012 form You received payment of the sales price on that same day. 1040ez 2012 form Report your gain on your 2013 return, even though you received the payment in 2014. 1040ez 2012 form The gain is long term or short term depending on whether you held the stock more than 1 year. 1040ez 2012 form Your holding period ended on December 30. 1040ez 2012 form If you had sold the stock at a loss, you would also report it on your 2013 return. 1040ez 2012 form U. 1040ez 2012 form S. 1040ez 2012 form Treasury notes and bonds. 1040ez 2012 form   The holding period of U. 1040ez 2012 form S. 1040ez 2012 form Treasury notes and bonds sold at auction on the basis of yield starts the day after the Secretary of the Treasury, through news releases, gives notification of acceptance to successful bidders. 1040ez 2012 form The holding period of U. 1040ez 2012 form S. 1040ez 2012 form Treasury notes and bonds sold through an offering on a subscription basis at a specified yield starts the day after the subscription is submitted. 1040ez 2012 form Automatic investment service. 1040ez 2012 form   In determining your holding period for shares bought by the bank or other agent, full shares are considered bought first and any fractional shares are considered bought last. 1040ez 2012 form Your holding period starts on the day after the bank's purchase date. 1040ez 2012 form If a share was bought over more than one purchase date, your holding period for that share is a split holding period. 1040ez 2012 form A part of the share is considered to have been bought on each date that stock was bought by the bank with the proceeds of available funds. 1040ez 2012 form Nontaxable trades. 1040ez 2012 form   If you acquire investment property in a trade for other investment property and your basis for the new property is determined, in whole or in part, by your basis in the old property, your holding period for the new property begins on the day following the date you acquired the old property. 1040ez 2012 form Property received as a gift. 1040ez 2012 form   If you receive a gift of property and your basis is determined by the donor's adjusted basis, your holding period is considered to have started on the same day the donor's holding period started. 1040ez 2012 form   If your basis is determined by the fair market value of the property, your holding period starts on the day after the date of the gift. 1040ez 2012 form Inherited property. 1040ez 2012 form   Generally, if you inherited investment property, your capital gain or loss on any later disposition of that property is long-term capital gain or loss. 1040ez 2012 form This is true regardless of how long you actually held the property. 1040ez 2012 form However, if you inherited property from someone who died in 2010, see the information below. 1040ez 2012 form Inherited property from someone who died in 2010. 1040ez 2012 form   If you inherit investment property from a decedent who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your holding period. 1040ez 2012 form Real property bought. 1040ez 2012 form   To figure how long you have held real property bought under an unconditional contract, begin counting on the day after you received title to it or on the day after you took possession of it and assumed the burdens and privileges of ownership, whichever happened first. 1040ez 2012 form However, taking delivery or possession of real property under an option agreement is not enough to start the holding period. 1040ez 2012 form The holding period cannot start until there is an actual contract of sale. 1040ez 2012 form The holding period of the seller cannot end before that time. 1040ez 2012 form Real property repossessed. 1040ez 2012 form   If you sell real property but keep a security interest in it, and then later repossess the property under the terms of the sales contract, your holding period for a later sale includes the period you held the property before the original sale and the period after the repossession. 1040ez 2012 form Your holding period does not include the time between the original sale and the repossession. 1040ez 2012 form That is, it does not include the period during which the first buyer held the property. 1040ez 2012 form Stock dividends. 1040ez 2012 form   The holding period for stock you received as a taxable stock dividend begins on the date of distribution. 1040ez 2012 form   The holding period for new stock you received as a nontaxable stock dividend begins on the same day as the holding period of the old stock. 1040ez 2012 form This rule also applies to stock acquired in a “spin-off,” which is a distribution of stock or securities in a controlled corporation. 1040ez 2012 form Nontaxable stock rights. 1040ez 2012 form   Your holding period for nontaxable stock rights begins on the same day as the holding period of the underlying stock. 1040ez 2012 form The holding period for stock acquired through the exercise of stock rights begins on the date the right was exercised. 1040ez 2012 form Nonbusiness Bad Debts If someone owes you money that you cannot collect, you have a bad debt. 1040ez 2012 form You may be able to deduct the amount owed to you when you figure your tax for the year the debt becomes worthless. 1040ez 2012 form Generally, nonbusiness bad debts are bad debts that did not come from operating your trade or business, and are deductible as short-term capital losses. 1040ez 2012 form To be deductible, nonbusiness bad debts must be totally worthless. 1040ez 2012 form You cannot deduct a partly worthless nonbusiness debt. 1040ez 2012 form Genuine debt required. 1040ez 2012 form   A debt must be genuine for you to deduct a loss. 1040ez 2012 form A debt is genuine if it arises from a debtor-creditor relationship based on a valid and enforceable obligation to repay a fixed or determinable sum of money. 1040ez 2012 form Basis in bad debt required. 1040ez 2012 form    To deduct a bad debt, you must have a basis in it—that is, you must have already included the amount in your income or loaned out your cash. 1040ez 2012 form For example, you cannot claim a bad debt deduction for court-ordered child support not paid to you by your former spouse. 1040ez 2012 form If you are a cash method taxpayer (as most individuals are), you generally cannot take a bad debt deduction for unpaid salaries, wages, rents, fees, interest, dividends, and similar items. 1040ez 2012 form When deductible. 1040ez 2012 form   You can take a bad debt deduction only in the year the debt becomes worthless. 1040ez 2012 form You do not have to wait until a debt is due to determine whether it is worthless. 1040ez 2012 form A debt becomes worthless when there is no longer any chance that the amount owed will be paid. 1040ez 2012 form   It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. 1040ez 2012 form You must only show that you have taken reasonable steps to collect the debt. 1040ez 2012 form Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. 1040ez 2012 form How to report bad debts. 1040ez 2012 form    Deduct nonbusiness bad debts as short-term capital losses on Form 8949. 1040ez 2012 form    Make sure you report your bad debt(s) (and any other short-term transactions for which you did not receive a Form 1099-B) on Form 8949, Part I, with box C checked. 1040ez 2012 form    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. 1040ez 2012 form See also Schedule D (Form 1040), Form 8949, and their separate instructions. 1040ez 2012 form   For each bad debt, attach a statement to your return that contains: A description of the debt, including the amount, and the date it became due, The name of the debtor, and any business or family relationship between you and the debtor, The efforts you made to collect the debt, and Why you decided the debt was worthless. 1040ez 2012 form For example, you could show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt. 1040ez 2012 form Filing a claim for refund. 1040ez 2012 form    If you do not deduct a bad debt on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the bad debt. 1040ez 2012 form To do this, use Form 1040X to amend your return for the year the debt became worthless. 1040ez 2012 form 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. 1040ez 2012 form For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. 1040ez 2012 form Additional information. 1040ez 2012 form   For more information, see Nonbusiness Bad Debts in Publication 550. 1040ez 2012 form For information on business bad debts, see chapter 10 of Publication 535, Business Expenses. 1040ez 2012 form Wash Sales You cannot deduct losses from sales or trades of stock or securities in a wash sale. 1040ez 2012 form A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. 1040ez 2012 form If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). 1040ez 2012 form The result is your basis in the new stock or securities. 1040ez 2012 form This adjustment postpones the loss deduction until the disposition of the new stock or securities. 1040ez 2012 form Your holding period for the new stock or securities includes the holding period of the stock or securities sold. 1040ez 2012 form For more information, see Wash Sales, in chapter 4 of Publication 550. 1040ez 2012 form Rollover of Gain From Publicly Traded Securities You may qualify for a tax-free rollover of certain gains from the sale of publicly traded securities. 1040ez 2012 form This means that if you buy certain replacement property and make the choice described in this section, you postpone part or all of your gain. 1040ez 2012 form You postpone the gain by adjusting the basis of the replacement property as described in Basis of replacement property , later. 1040ez 2012 form This postpones your gain until the year you dispose of the replacement property. 1040ez 2012 form You qualify to make this choice if you meet all the following tests. 1040ez 2012 form You sell publicly traded securities at a gain. 1040ez 2012 form Publicly traded securities are securities traded on an established securities market. 1040ez 2012 form Your gain from the sale is a capital gain. 1040ez 2012 form During the 60-day period beginning on the date of the sale, you buy replacement property. 1040ez 2012 form This replacement property must be either common stock of, or a partnership interest in a specialized small business investment company (SSBIC). 1040ez 2012 form This is any partnership or corporation licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958, as in effect on May 13, 1993. 1040ez 2012 form Amount of gain recognized. 1040ez 2012 form   If you make the choice described in this section, you must recognize gain only up to the following amount. 1040ez 2012 form The amount realized on the sale, minus The cost of any common stock or partnership interest in an SSBIC that you bought during the 60-day period beginning on the date of sale (and did not previously take into account on an earlier sale of publicly traded securities). 1040ez 2012 form  If this amount is less than the amount of your gain, you can postpone the rest of your gain, subject to the limit described next. 1040ez 2012 form If this amount is equal to or more than the amount of your gain, you must recognize the full amount of your gain. 1040ez 2012 form Limit on gain postponed. 1040ez 2012 form   The amount of gain you can postpone each year is limited to the smaller of: $50,000 ($25,000 if you are married and file a separate return), or $500,000 ($250,000 if you are married and file a separate return), minus the amount of gain you postponed for all earlier years. 1040ez 2012 form Basis of replacement property. 1040ez 2012 form   You must subtract the amount of postponed gain from the basis of your replacement property. 1040ez 2012 form How to report and postpone gain. 1040ez 2012 form    See How to report and postpone gain under Rollover of Gain From Publicly Traded Securities in chapter 4 of Publication 550 for details. 1040ez 2012 form Prev  Up  Next   Home   More Online Publications