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1040ez Electronic Filing

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1040ez Electronic Filing

1040ez electronic filing 1. 1040ez electronic filing   Canceled Debts Table of Contents General RulesForm 1099-C Discounts and loan modifications Sales or other dispositions (such as foreclosures and repossessions) Abandonments Stockholder debt This chapter discusses the tax treatment of canceled debts. 1040ez electronic filing General Rules Generally, if a debt for which you are personally liable is forgiven or discharged for less than the full amount owed, the debt is considered canceled in whatever amount it remained unpaid. 1040ez electronic filing There are exceptions to this rule, discussed under Exceptions , later. 1040ez electronic filing Generally, you must include the canceled debt in your income. 1040ez electronic filing However, you may be able to exclude the canceled debt. 1040ez electronic filing See Exclusions , later. 1040ez electronic filing Example. 1040ez electronic filing John owed $1,000 to Mary. 1040ez electronic filing Mary agreed to accept and John paid $400 in satisfaction of the entire debt. 1040ez electronic filing John has canceled debt of $600. 1040ez electronic filing Example. 1040ez electronic filing Margaret owed $1,000 to Henry. 1040ez electronic filing Henry and Margaret agreed that Margaret would provide Henry with services (instead of money) in full satisfaction of the debt. 1040ez electronic filing Margaret does not have canceled debt. 1040ez electronic filing Instead, she has income from services. 1040ez electronic filing A debt includes any indebtedness: For which you are liable, or Subject to which you hold property. 1040ez electronic filing Debt for which you are personally liable is recourse debt. 1040ez electronic filing All other debt is nonrecourse debt. 1040ez electronic filing If you are not personally liable for the debt, you do not have ordinary income from the cancellation of debt unless you retain the collateral and either: The lender offers a discount for the early payment of the debt, or The lender agrees to a loan modification that results in the reduction of the principal balance of the debt. 1040ez electronic filing See Discounts and loan modifications , later. 1040ez electronic filing However, upon the disposition of the property securing a nonrecourse debt, the amount realized includes the entire unpaid amount of the debt, not just the FMV of the property. 1040ez electronic filing As a result, you may realize a gain or loss if the outstanding debt immediately before the disposition is more or less than your adjusted basis in the property. 1040ez electronic filing For more details on figuring your gain or loss, see chapter 2 of this publication or see Publication 544. 1040ez electronic filing There are several exceptions and exclusions that may result in part or all of a canceled debt being nontaxable. 1040ez electronic filing See Exceptions and Exclusions, later. 1040ez electronic filing You must report any taxable canceled debt as ordinary income on: Form 1040 or Form 1040NR, line 21, if the debt is a nonbusiness debt; Schedule C (Form 1040), line 6 (or Schedule C-EZ (Form 1040), line 1), if the debt is related to a nonfarm sole proprietorship; Schedule E (Form 1040), line 3, if the debt is related to nonfarm rental of real property; Form 4835, line 6, if the debt is related to a farm rental activity for which you use Form 4835 to report farm rental income based on crops or livestock produced by a tenant; or Schedule F (Form 1040), line 8, if the debt is farm debt and you are a farmer. 1040ez electronic filing Form 1099-C If you receive a Form 1099-C, that means an applicable entity has reported an identifiable event to the IRS regarding a debt you owe. 1040ez electronic filing The identifiable event may be an actual cancellation of the debt or it may be an event the applicable entity is required, solely for purposes of reporting to the IRS, to treat as a cancellation of debt. 1040ez electronic filing For information on the reasons an applicable entity files Form 1099-C, see Identifiable event codes, later. 1040ez electronic filing Unless you meet one of the exceptions or exclusions discussed later, this canceled debt is ordinary income and must be reported on the appropriate form discussed above. 1040ez electronic filing An applicable entity includes: A federal government agency, A financial institution, A credit union, and Any organization a significant trade or business of which is lending money. 1040ez electronic filing Identifiable event codes. 1040ez electronic filing    Box 6 of Form 1099-C should indicate the reason the creditor filed this form. 1040ez electronic filing The codes shown in box 6 are explained below. 1040ez electronic filing Also see the chart after the explanation for a quick reference guide for the codes used in Box 6. 1040ez electronic filing Note. 1040ez electronic filing Codes A through G and I identify specific occurrences resulting from an actual discharge of indebtedness. 1040ez electronic filing However, Code H, Expiration of nonpayment testing period, does not necessarily identify an actual discharge of indebtedness. 1040ez electronic filing Code A — Bankruptcy. 1040ez electronic filing Code A is used to identify cancellation of debt as a result of a title 11 bankruptcy case. 1040ez electronic filing See Bankruptcy , later. 1040ez electronic filing Code B — Other judicial debt relief. 1040ez electronic filing Code B is used to identify cancellation of debt as a result of a receivership, foreclosure, or similar federal or state court proceeding other than bankruptcy. 1040ez electronic filing Code C — Statute of limitations or expiration of deficiency period. 1040ez electronic filing Code C is used to identify cancellation of debt either when the statute of limitations for collecting the debt expires or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. 1040ez electronic filing In the case of the expiration of a statute of limitations, an identifiable event occurs only if and when your affirmative defense of the statute of limitations is upheld in a final judgment or decision in a judicial proceeding, and the period for appealing the judgment or decision has expired. 1040ez electronic filing Code D — Foreclosure election. 1040ez electronic filing Code D is used to identify cancellation of debt when the creditor elects foreclosure remedies that statutorily end or bar the creditor's right to pursue collection of the debt. 1040ez electronic filing This event applies to a mortgage lender or holder who is barred from pursuing debt collection after a power of sale in the mortgage or deed of trust is exercised. 1040ez electronic filing Code E — Debt relief from probate or similar proceeding. 1040ez electronic filing Code E is used to identify cancellation of debt as a result of a probate court or similar legal proceeding. 1040ez electronic filing Code F — By agreement. 1040ez electronic filing Code F is used to identify cancellation of debt as a result of an agreement between the creditor and the debtor to cancel the debt at less than full consideration. 1040ez electronic filing Code G — Decision or policy to discontinue collection. 1040ez electronic filing Code G is used to identify cancellation of debt as a result of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. 1040ez electronic filing For purposes of this identifiable event, a defined policy includes both a written policy and the creditor's established business practice. 1040ez electronic filing Code H — Expiration of nonpayment testing period. 1040ez electronic filing Code H is used to indicate that the creditor has not received a payment on the debt during a testing period ending on December 31, 2013. 1040ez electronic filing The testing period is a 36-month period increased by the number of months the creditor was prevented from engaging in collection activity by a stay in bankruptcy or similar bar under state or local law. 1040ez electronic filing This identifiable event applies only for a creditor that is a financial institution or credit union (and certain of their subsidiaries), the Federal Deposit Insurance Corporation (FDIC), Resolution Trust Corporation (RTC), National Credit Union Administration (NCUA), and other Federal executive agencies. 1040ez electronic filing Expiration of the nonpayment testing period does not necessarily result from an actual discharge of indebtedness. 1040ez electronic filing Code I — Other actual discharge before identifiable event. 1040ez electronic filing Code I is used to identify an actual cancellation of debt that occurs before any of the identifiable events described in codes A through H. 1040ez electronic filing Form 1099-C Reference Guide for Box 6 Identifiable Event Codes A Bankruptcy B Other judicial debt relief C Statute of limitations or expiration of deficiency period D Foreclosure election E Debt relief from probate or similar proceeding F By agreement G Decision or policy to discontinue collection H Expiration of nonpayment testing period I Other actual discharge before identifiable event Even if you did not receive a Form 1099-C, you must report canceled debt as gross income on your tax return unless one of the exceptions or exclusions described later applies. 1040ez electronic filing Amount of canceled debt. 1040ez electronic filing    The amount in box 2 of Form 1099-C may represent some or all of the debt that has been canceled or treated as canceled. 1040ez electronic filing The amount in box 2 will include principal and may include interest and other nonprincipal amounts (such as fees or penalties). 1040ez electronic filing Unless you meet one of the exceptions or exclusions discussed later, the amount of the debt that has been canceled is ordinary income and must be reported on the appropriate form as discussed earlier. 1040ez electronic filing Interest included in canceled debt. 1040ez electronic filing    If any interest is included in the amount of canceled debt in box 2, it will be shown in box 3. 1040ez electronic filing Whether the interest portion of the canceled debt must be included in your income depends on whether the interest would be deductible if you paid it. 1040ez electronic filing See Deductible Debt under Exceptions, later. 1040ez electronic filing Persons who each receive a Form 1099-C showing the full amount of debt. 1040ez electronic filing    If you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. 1040ez electronic filing However, you may not have to report that entire amount as income. 1040ez electronic filing The amount, if any, you must report depends on all the facts and circumstances, including: State law, The amount of debt proceeds each person received, How much of any interest deduction from the debt was claimed by each person, How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner, and Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication. 1040ez electronic filing See Example 3 under Insolvency, later. 1040ez electronic filing Discounts and loan modifications If a lender discounts (reduces) the principal balance of a loan because you pay it off early, or agrees to a loan modification (a “workout”) that includes a reduction in the principal balance of a loan, the amount of the discount or the amount of principal reduction is canceled debt. 1040ez electronic filing However, if the debt is nonrecourse and you did not retain the collateral, you do not have cancellation of the debt income. 1040ez electronic filing The amount of the canceled debt must be included in income unless one of the exceptions or exclusions described later applies. 1040ez electronic filing For more details, see Exceptions and Exclusions, later. 1040ez electronic filing Sales or other dispositions (such as foreclosures and repossessions) Recourse debt. 1040ez electronic filing   If you owned property that was subject to a recourse debt in excess of the FMV of the property, the lender's foreclosure or repossession of the property is treated as a sale or disposition of the property by you and may result in your realization of gain or loss. 1040ez electronic filing The gain or loss on the disposition of the property is measured by the difference between the FMV of the property at the time of the disposition and your adjusted basis (usually your cost) in the property. 1040ez electronic filing The character of the gain or loss (such as ordinary or capital) is determined by the character of the property. 1040ez electronic filing If the lender forgives all or part of the amount of the debt in excess of the FMV of the property, the cancellation of the excess debt may result in ordinary income. 1040ez electronic filing The ordinary income from the cancellation of debt (the excess of the canceled debt over the FMV of the property) must be included in your gross income reported on your tax return unless one of the exceptions or exclusions described later applies. 1040ez electronic filing For more details, see Exceptions and Exclusions, later. 1040ez electronic filing Nonrecourse debt. 1040ez electronic filing   If you owned property that was subject to a nonrecourse debt in excess of the FMV of the property, the lender's foreclosure on the property does not result in ordinary income from the cancellation of debt. 1040ez electronic filing The entire amount of the nonrecourse debt is treated as an amount realized on the disposition of the property. 1040ez electronic filing The gain or loss on the disposition of the property is measured by the difference between the total amount realized (the entire amount of the nonrecourse debt plus the amount of cash and the FMV of any property received) and your adjusted basis in the property. 1040ez electronic filing The character of the gain or loss is determined by the character of the property. 1040ez electronic filing More information. 1040ez electronic filing    See Publications 523, 544, and 551, and chapter 2 of this publication for more details. 1040ez electronic filing Abandonments Recourse debt. 1040ez electronic filing   If you abandon property that secures a debt for which you are personally liable (recourse debt) and the debt is canceled, you will realize ordinary income equal to the canceled debt. 1040ez electronic filing You must report this income on your tax return unless one of the exceptions or exclusions described later applies. 1040ez electronic filing For more details, see Exceptions and Exclusions, later. 1040ez electronic filing This income is separate from any amount realized from the abandonment of the property. 1040ez electronic filing For more details, see chapter 3. 1040ez electronic filing Nonrecourse debt. 1040ez electronic filing   If you abandon property that secures a debt for which you are not personally liable (nonrecourse debt), you may realize gain or loss but will not have cancellation of indebtedness income. 1040ez electronic filing Stockholder debt If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution. 1040ez electronic filing For more information, see Publication 542, Corporations. 1040ez electronic filing Prev  Up  Next   Home   More Online Publications
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Plug-In Electric Drive Vehicle Credit (IRC 30D)

Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks.  

For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009). For additional information see Notice 2009-89.

Section 30D originally was enacted in the Energy Improvement and Extension Act of 2008. The American Recovery and Reinvestment Act of 2009 amended section 30D effective for vehicles acquired after December 31, 2009.  Section 30D was also modified by the American Taxpayer Relief Act (ATRA) 2013 for certain 2 or 3 wheeled vehicles acquired after December 31, 2011 and before January 1, 2014.

The vehicles must be acquired for use or lease and not for resale. Additionally, the original use of the vehicle must commence with the taxpayer and the vehicle must be used predominantly in the United States. For purposes of the 30D credit, a vehicle is not considered acquired prior to the time when title to the vehicle passes to the taxpayer under state law.

Notice 2009-89 applies to vehicles acquired subsequent to December 31, 2009 and provides procedures that a vehicle manufacturer may use if it chooses to certify that a vehicle meets certain requirements that must be satisfied to claim the Qualified Plug-in Electric Drive Motor Vehicle Credit and the amount of the credit allowable with respect to that vehicle

Credit Amounts for Qualified Vehicles Acquired After December 31, 2009

Qualified Plug-In Electric Drive Motor Vehicle Credit (IRC 30D) Phase Out
The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period.  Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.

Quarterly Sales by Manufacturer

Page Last Reviewed or Updated: 13-Feb-2014

The 1040ez Electronic Filing

1040ez electronic filing 11. 1040ez electronic filing   Employer-Provided Educational Assistance Table of Contents Introduction Working condition fringe benefit. 1040ez electronic filing Introduction If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. 1040ez electronic filing This means your employer should not include those benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2. 1040ez electronic filing This also means that you do not have to include the benefits on your income tax return. 1040ez electronic filing You cannot use any of the tax-free education expenses paid for by your employer as the basis for any other deduction or credit, including the American opportunity credit and lifetime learning credit. 1040ez electronic filing Educational assistance program. 1040ez electronic filing   To qualify as an educational assistance program, the plan must be written and must meet certain other requirements. 1040ez electronic filing Your employer can tell you whether there is a qualified program where you work. 1040ez electronic filing Educational assistance benefits. 1040ez electronic filing   Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, books, supplies, and equipment. 1040ez electronic filing Education generally includes any form of instruction or training that improves or develops your capabilities. 1040ez electronic filing The payments do not have to be for work-related courses or courses that are part of a degree program. 1040ez electronic filing   Educational assistance benefits do not include payments for the following items. 1040ez electronic filing Meals, lodging, or transportation. 1040ez electronic filing Tools or supplies (other than textbooks) that you can keep after completing the course of instruction. 1040ez electronic filing Courses involving sports, games, or hobbies unless they: Have a reasonable relationship to the business of your employer, or Are required as part of a degree program. 1040ez electronic filing Benefits over $5,250. 1040ez electronic filing   If your employer pays more than $5,250 in educational assistance benefits for you during the year, you must generally pay tax on the amount over $5,250. 1040ez electronic filing Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income. 1040ez electronic filing Working condition fringe benefit. 1040ez electronic filing    However, if the benefits over $5,250 also qualify as a working condition fringe benefit, your employer does not have to include them in your wages. 1040ez electronic filing A working condition fringe benefit is a benefit which, had you paid for it, you could deduct as an employee business expense. 1040ez electronic filing For more information on working condition fringe benefits, see Working Condition Benefits in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. 1040ez electronic filing Prev  Up  Next   Home   More Online Publications