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1040x Amended Return Form

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1040x Amended Return Form

1040x amended return form 4. 1040x amended return form   Detailed Examples Table of Contents These examples use actual forms to help you prepare your income tax return. 1040x amended return form However, the information shown on the filled-in forms is not from any actual person or scenario. 1040x amended return form Example 1—Mortgage loan modification. 1040x amended return form    In 2007, Nancy Oak bought a main home for $435,000. 1040x amended return form Nancy took out a $420,000 mortgage loan to buy the home and made a down payment of $15,000. 1040x amended return form The loan was secured by the home. 1040x amended return form The mortgage loan was a recourse debt, meaning that Nancy was personally liable for the debt. 1040x amended return form In 2008, Nancy took out a second mortgage loan (also a recourse debt) in the amount of $30,000 that was used to substantially improve her kitchen. 1040x amended return form    In 2011, when the outstanding principal of the first and second mortgage loans was $440,000, Nancy refinanced the two recourse loans into one recourse loan in the amount of $475,000. 1040x amended return form The FMV of Nancy's home at the time of the refinancing was $500,000. 1040x amended return form Nancy used the additional $35,000 debt ($475,000 new mortgage loan minus $440,000 outstanding principal of Nancy's first and second mortgage loans immediately before the refinancing) to pay off personal credit cards and to pay college tuition for her son. 1040x amended return form After the refinancing, Nancy has qualified principal residence indebtedness in the amount of $440,000 because the refinanced debt is qualified principal residence indebtedness only to the extent the amount of debt is not more than the old mortgage principal just before the refinancing. 1040x amended return form   In 2013, Nancy was unable to make her mortgage loan payments. 1040x amended return form On August 31, 2013, when the outstanding balance of her refinanced mortgage loan was still $475,000 and the FMV of the property was $425,000, Nancy's bank agreed to a loan modification (a “workout”) that resulted in a $40,000 reduction in the principal balance of her loan. 1040x amended return form Nancy was neither insolvent nor in bankruptcy at the time of the loan modification. 1040x amended return form   Nancy received a 2013 Form 1099-C from her bank in January 2014 showing canceled debt of $40,000 in box 2. 1040x amended return form Identifiable event code "F" appears in box 6. 1040x amended return form This box shows the reason the creditor has filed Form 1099-C. 1040x amended return form To determine if she must include the canceled debt in her income, Nancy must determine whether she meets any of the exceptions or exclusions that apply to canceled debts. 1040x amended return form Nancy determines that the only exception or exclusion that applies to her is the qualified principal residence indebtedness exclusion. 1040x amended return form   Next, Nancy determines the amount, if any, of the $40,000 of canceled debt that was qualified principal residence indebtedness. 1040x amended return form Although Nancy has $440,000 of qualified principal residence indebtedness, part of her loan ($35,000) was not qualified principal residence indebtedness because it was used to pay off personal credit cards and college tuition for her son. 1040x amended return form Applying the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent the amount canceled is more than the amount of the debt (immediately before the cancellation) that is not qualified principal residence indebtedness. 1040x amended return form Thus, Nancy can exclude only $5,000 of the canceled debt as qualified principal residence indebtedness ($40,000 amount canceled minus $35,000 nonqualified debt). 1040x amended return form   Because Nancy does not meet any other exception or exclusion, she checks only the box on line 1e of Form 982 and enters $5,000 on line 2. 1040x amended return form Nancy must also enter $5,000 on line 10b and reduce the basis of her main home by the $5,000 she excluded from income, bringing the adjusted basis in her home to $460,000 ($435,000 purchase price plus $30,000 substantial improvement minus $5,000). 1040x amended return form Nancy must also include the $35,000 nonqualified debt portion in income on Form 1040, line 21. 1040x amended return form You can see Nancy's Form 1099-C and a portion of her Form 1040 below. 1040x amended return form Nancy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 1040x amended return form Please click the link to view the image. 1040x amended return form Form 1099-C, Cancellation of Debt Nancy's 2013 Form 1040 This image is too large to be displayed in the current screen. 1040x amended return form Please click the link to view the image. 1040x amended return form Form 1040, U. 1040x amended return form S. 1040x amended return form Individual Income Tax Nancy's Form 982 This image is too large to be displayed in the current screen. 1040x amended return form Please click the link to view the image. 1040x amended return form Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)              Example 2—Mortgage loan foreclosure. 1040x amended return form    In 2005, John and Mary Elm bought a main home for $335,000. 1040x amended return form John and Mary took out a $320,000 mortgage loan to buy the home and made a down payment of $15,000. 1040x amended return form The loan was secured by the home and is a recourse debt, meaning John and Mary are personally liable for the debt. 1040x amended return form   John and Mary became unable to make their mortgage loan payments and on March 1, 2013, when the outstanding balance of the mortgage loan was $315,000 and the FMV of the property was $290,000, the bank foreclosed on the property and simultaneously canceled the remaining mortgage debt. 1040x amended return form Immediately before the foreclosure, John and Mary's only other assets and liabilities were a checking account with a balance of $6,000, retirement savings of $13,000, and credit card debt of $5,500. 1040x amended return form   John and Mary received a 2013 Form 1099-C showing canceled debt of $25,000 in box 2 ($315,000 outstanding balance minus $290,000 FMV) and an FMV of $290,000 in box 7. 1040x amended return form Identifiable event code "D" appears in box 6. 1040x amended return form This box shows the reason the creditor has filed Form 1099-C. 1040x amended return form In order to determine if John and Mary must include the canceled debt in income, they must first determine whether they meet any of the exceptions or exclusions that apply to canceled debts. 1040x amended return form In this example, John and Mary meet both the insolvency and qualified principal residence indebtedness exclusions. 1040x amended return form Their sample Form 1099-C is shown on this page. 1040x amended return form   John and Mary complete the insolvency worksheet and determine that they were insolvent immediately before the cancellation because at that time their liabilities exceeded the FMV of their assets by $11,500 ($320,500 total liabilities minus $309,000 FMV of total assets). 1040x amended return form However, because the entire debt canceled is qualified principal residence indebtedness, the insolvency exclusion only applies if John and Mary elect to apply the insolvency exclusion instead of the qualified principal residence exclusion. 1040x amended return form   John and Mary do not elect to apply the insolvency exclusion instead of the qualified principal residence exclusion because under the insolvency exclusion their exclusion would be limited to the amount by which they were insolvent ($11,500). 1040x amended return form Instead, John and Mary check box 1e of Form 982 to exclude the canceled debt under the qualified principal residence exclusion. 1040x amended return form Under the qualified principal residence exclusion, the amount that John and Mary can exclude is not limited because their qualified principal residence indebtedness is not more than $2 million and no portion of the loan was nonqualified debt. 1040x amended return form As a result, John and Mary enter the full $25,000 of canceled debt on line 2 of Form 982. 1040x amended return form Because John and Mary no longer own the home due to the foreclosure, John and Mary have no remaining basis in the home at the time of the debt cancellation. 1040x amended return form Thus, John and Mary leave line 10b of Form 982 blank. 1040x amended return form   John and Mary must also determine whether they have a gain or loss from the foreclosure. 1040x amended return form John and Mary complete Table 1-1 (shown below) and find that they have a $45,000 loss from the foreclosure. 1040x amended return form Because this loss relates to their home, it is a nondeductible loss. 1040x amended return form   John and Mary's Form 1099-C, Insolvency Worksheet, and Form 982 follow. 1040x amended return form John and Mary's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 1040x amended return form Please click the link to view the image. 1040x amended return form Form 1099-C, Cancellation of Debt Table 1-1. 1040x amended return form Worksheet for Foreclosures and Repossessions (for John and Mary Elm) Part 1. 1040x amended return form Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). 1040x amended return form Otherwise, go to Part 2. 1040x amended return form 1. 1040x amended return form Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $315,000. 1040x amended return form 00 2. 1040x amended return form Enter the fair market value of the transferred property $290,000. 1040x amended return form 00 3. 1040x amended return form Ordinary income from the cancellation of debt upon foreclosure or repossession. 1040x amended return form * Subtract line 2 from line 1. 1040x amended return form If less than zero, enter zero. 1040x amended return form Next, go to Part 2 $ 25,000. 1040x amended return form 00 Part 2. 1040x amended return form Gain or loss from foreclosure or repossession. 1040x amended return form   4. 1040x amended return form Enter the smaller of line 1 or line 2. 1040x amended return form If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property $290,000. 1040x amended return form 00 5. 1040x amended return form Enter any proceeds you received from the foreclosure sale   6. 1040x amended return form Add line 4 and line 5 $290,000. 1040x amended return form 00 7. 1040x amended return form Enter the adjusted basis of the transferred property $335,000. 1040x amended return form 00 8. 1040x amended return form Gain or loss from foreclosure or repossession. 1040x amended return form Subtract line 7 from line 6 ($ 45,000. 1040x amended return form 00) * The income may not be taxable. 1040x amended return form See chapter 1 for more details. 1040x amended return form Insolvency Worksheet—John and Mary Elm Date debt was canceled (mm/dd/yy) 03/01/13 Part I. 1040x amended return form Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. 1040x amended return form Credit card debt $ 5,500 2. 1040x amended return form Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 315,000 3. 1040x amended return form Car and other vehicle loans $ 4. 1040x amended return form Medical bills owed $ 5. 1040x amended return form Student loans $ 6. 1040x amended return form Accrued or past-due mortgage interest $ 7. 1040x amended return form Accrued or past-due real estate taxes $ 8. 1040x amended return form Accrued or past-due utilities (water, gas, electric) $ 9. 1040x amended return form Accrued or past-due child care costs $ 10. 1040x amended return form Federal or state income taxes remaining due (for prior tax years) $ 11. 1040x amended return form Judgments $ 12. 1040x amended return form Business debts (including those owed as a sole proprietor or partner) $ 13. 1040x amended return form Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. 1040x amended return form Other liabilities (debts) not included above $ 15. 1040x amended return form Total liabilities immediately before the cancellation. 1040x amended return form Add lines 1 through 14. 1040x amended return form $ 320,500 Part II. 1040x amended return form Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. 1040x amended return form Cash and bank account balances $ 6,000 17. 1040x amended return form Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 290,000 18. 1040x amended return form Cars and other vehicles $ 19. 1040x amended return form Computers $ 20. 1040x amended return form Household goods and furnishings (for example, appliances, electronics, furniture, etc. 1040x amended return form ) $ 21. 1040x amended return form Tools $ 22. 1040x amended return form Jewelry $ 23. 1040x amended return form Clothing $ 24. 1040x amended return form Books $ 25. 1040x amended return form Stocks and bonds $ 26. 1040x amended return form Investments in coins, stamps, paintings, or other collectibles $ 27. 1040x amended return form Firearms, sports, photographic, and other hobby equipment $ 28. 1040x amended return form Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 13,000 29. 1040x amended return form Interest in a pension plan $ 30. 1040x amended return form Interest in education accounts $ 31. 1040x amended return form Cash value of life insurance $ 32. 1040x amended return form Security deposits with landlords, utilities, and others $ 33. 1040x amended return form Interests in partnerships $ 34. 1040x amended return form Value of investment in a business $ 35. 1040x amended return form Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. 1040x amended return form Other assets not included above $ 37. 1040x amended return form FMV of total assets immediately before the cancellation. 1040x amended return form Add lines 16 through 36. 1040x amended return form $ 309,000 Part III. 1040x amended return form Insolvency 38. 1040x amended return form Amount of Insolvency. 1040x amended return form Subtract line 37 from line 15. 1040x amended return form If zero or less, you are not insolvent. 1040x amended return form $ 11,500 John and Mary's Form 982 This image is too large to be displayed in the current screen. 1040x amended return form Please click the link to view the image. 1040x amended return form Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)          Example 3—Mortgage loan foreclosure with debt exceeding $2 million limit. 1040x amended return form    In 2011, Kathy and Frank Willow got married and entered into a contract with Hive Construction Corporation to build a house for $3,000,000 to be used as their main home. 1040x amended return form Kathy and Frank made a $400,000 down payment and took out a $2,600,000 mortgage to finance the remaining cost of the house. 1040x amended return form Kathy and Frank are personally liable for the mortgage loan, which is secured by the home. 1040x amended return form   In November 2013, when the outstanding principal balance on the mortgage loan was $2,500,000, the FMV of the property fell to $1,750,000 and Kathy and Frank abandoned the property by permanently moving out. 1040x amended return form The lender foreclosed on the property and, on December 5, 2013, sold the property to another buyer for $1,750,000. 1040x amended return form On December 26, 2013, the lender canceled the remaining debt. 1040x amended return form Kathy and Frank have no tax attributes other than basis of personal-use property. 1040x amended return form   The lender issued a 2013 Form 1099-C to Kathy and Frank showing canceled debt of $750,000 in box 2 (the remaining balance on the $2,500,000 mortgage debt after application of the foreclosure sale proceeds) and $1,750,000 in box 7 (FMV of the property). 1040x amended return form Identifiable event code "D" appears in box 6. 1040x amended return form This box shows the reason the creditor has filed Form 1099-C. 1040x amended return form Although Kathy and Frank abandoned the property, the lender did not need to also file a Form 1099-A because the lender canceled the debt in connection with the foreclosure in the same calendar year. 1040x amended return form Kathy and Frank are filing a joint return for 2013. 1040x amended return form   Because the foreclosure occurred prior to the debt cancellation, Kathy and Frank first calculate their gain or loss from the foreclosure using Table 1-1. 1040x amended return form Because Kathy and Frank remained personally liable for the $750,000 debt remaining after the foreclosure ($2,500,000 outstanding debt immediately before the foreclosure minus $1,750,000 satisfied through the sale of the home), Kathy and Frank enter $1,750,000 on line 1 of Table 1-1 ($2,500,000 outstanding debt immediately before the foreclosure minus the $750,000 for which they remained liable). 1040x amended return form Completing Table 1-1, Kathy and Frank find that they have no ordinary income from the cancellation of debt upon foreclosure and that they have a $1,250,000 loss. 1040x amended return form Because this loss relates to their home, it is a nondeductible loss. 1040x amended return form   Because the lender later canceled the remaining amount of the debt, Kathy and Frank must also determine whether that canceled debt is taxable. 1040x amended return form Immediately before the cancellation, Kathy and Frank had $15,000 in a savings account, household furnishings with an FMV of $17,000, a car with an FMV of $10,000, and $18,000 in credit card debt. 1040x amended return form Kathy and Frank also had the $750,000 remaining balance on the mortgage loan at that time. 1040x amended return form The household furnishings originally cost $30,000. 1040x amended return form The car had been fully paid off (so there was no related outstanding debt) and was originally purchased for $16,000. 1040x amended return form Kathy and Frank had no adjustments to the cost basis of the car. 1040x amended return form Kathy and Frank had no other assets or liabilities at the time of the cancellation. 1040x amended return form Kathy and Frank complete the insolvency worksheet to calculate that they were insolvent to the extent of $726,000 immediately before the cancellation ($768,000 of total liabilities minus $42,000 FMV of total assets). 1040x amended return form   At the beginning of 2014, Kathy and Frank had $9,000 in their savings account and $15,000 in credit card debt. 1040x amended return form Kathy and Frank also owned the same car at that time (still with an FMV of $10,000 and basis of $16,000) and the same household furnishings (still with an FMV of $17,000 and a basis of $30,000). 1040x amended return form Kathy and Frank had no other assets or liabilities at that time. 1040x amended return form Kathy and Frank no longer own the home because the lender foreclosed on it in 2013. 1040x amended return form   Because the canceled debt is qualified principal residence indebtedness, the insolvency exclusion does not apply unless Kathy and Frank elect to apply the insolvency exclusion instead of the qualified principal residence indebtedness exclusion. 1040x amended return form The maximum amount that Kathy and Frank can treat as qualified principal residence indebtedness is $2,000,000. 1040x amended return form The remaining $500,000 ($2,500,000 outstanding mortgage loan minus $2,000,000 limit on qualified principal residence indebtedness) is not qualified principal residence indebtedness. 1040x amended return form Because only a part of the loan is qualified principal residence indebtedness, Kathy and Frank must apply the ordering rule to the canceled debt. 1040x amended return form Under the ordering rule, the qualified principal residence indebtedness exclusion applies only to the extent that the amount canceled ($750,000) exceeds the amount of the loan (immediately before the cancellation) that is not qualified principal residence indebtedness ($500,000). 1040x amended return form This means that Kathy and Frank can only exclude $250,000 ($750,000 amount canceled minus $500,000 nonqualified debt) under the qualified principal residence indebtedness exclusion. 1040x amended return form   Kathy and Frank do not elect to have the insolvency exclusion apply instead of the qualified principal residence exclusion. 1040x amended return form Nonetheless, they can still apply the insolvency exclusion to the $500,000 nonqualified debt because it is not qualified principal residence indebtedness. 1040x amended return form Kathy and Frank can exclude the remaining $500,000 canceled debt under the insolvency exclusion because they were insolvent immediately before the cancellation to the extent of $726,000. 1040x amended return form Thus, Kathy and Frank check the boxes on lines 1b and 1e of Form 982 and enter $750,000 on line 2 ($250,000 excluded under the qualified principal residence indebtedness exclusion plus $500,000 excluded under the insolvency exclusion). 1040x amended return form   Next, Kathy and Frank reduce their tax attributes using Part II of Form 982. 1040x amended return form Because Kathy and Frank no longer own the home due to the foreclosure, Kathy and Frank have no remaining basis in the home at the time of the debt cancellation. 1040x amended return form Thus, Kathy and Frank leave line 10b of Form 982 blank. 1040x amended return form However, Kathy and Frank are also excluding nonqualified debt under the insolvency exclusion. 1040x amended return form As a result, Kathy and Frank must reduce the basis of property they own based on the amount of canceled debt they are excluding from income under the insolvency rules. 1040x amended return form Because Kathy and Frank have no tax attributes other than basis of personal-use property to reduce, Kathy and Frank figure the amount they must include on line 10a of Form 982 by taking the smallest of: The $46,000 bases of their personal-use property held at the beginning of 2014 ($16,000 basis in the car plus $30,000 basis in household furnishings), The $500,000 of the nonbusiness debt (other than qualified principal residence indebtedness) that they are excluding from income on line 2 of Form 982, or The $43,000 excess of the total bases of the property and the amount of money they held immediately after the cancellation over their total liabilities immediately after the cancellation ($15,000 in savings account plus $30,000 basis in household furnishings plus $16,000 adjusted basis in car minus $18,000 credit card debt). 1040x amended return form Kathy and Frank enter $43,000 on Form 982, line 10a and reduce their bases in the car and the household furnishings in proportion to the total adjusted bases in all their property. 1040x amended return form Kathy and Frank reduce the basis in the car by $14,956. 1040x amended return form 52 ($43,000 x $16,000/$46,000). 1040x amended return form And they reduce the basis in the household furnishings by $28,043. 1040x amended return form 48 ($43,000 x $30,000/$46,000). 1040x amended return form   Following are Kathy and Frank's sample forms and worksheets. 1040x amended return form Frank and Kathy's 2013 Form 1099-C, Cancellation of Debt This image is too large to be displayed in the current screen. 1040x amended return form Please click the link to view the image. 1040x amended return form Form 1099-C, Cancellation of Debt Table 1-1. 1040x amended return form Worksheet for Foreclosures and Repossessions (for Frank and Kathy Willow) Part 1. 1040x amended return form Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). 1040x amended return form Otherwise, go to Part 2. 1040x amended return form 1. 1040x amended return form Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property $1,750,000. 1040x amended return form 00 2. 1040x amended return form Enter the fair market value of the transferred property $1,750,000. 1040x amended return form 00 3. 1040x amended return form Ordinary income from the cancellation of debt upon foreclosure or repossession. 1040x amended return form * Subtract line 2 from line 1. 1040x amended return form If less than zero, enter zero. 1040x amended return form Next, go to Part 2 $0. 1040x amended return form 00 Part 2. 1040x amended return form Gain or loss from foreclosure or repossession. 1040x amended return form   4. 1040x amended return form Enter the smaller of line 1 or line 2. 1040x amended return form If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property. 1040x amended return form $1,750,000. 1040x amended return form 00 5. 1040x amended return form Enter any proceeds you received from the foreclosure sale   6. 1040x amended return form Add line 4 and line 5 $1,750,000. 1040x amended return form 00 7. 1040x amended return form Enter the adjusted basis of the transferred property $3,000,000. 1040x amended return form 00 8. 1040x amended return form Gain or loss from foreclosure or repossession. 1040x amended return form Subtract line 7 from line 6 ($1,250,000. 1040x amended return form 00) * The income may not be taxable. 1040x amended return form See chapter 1 for more details. 1040x amended return form    Insolvency Worksheet—Frank and Kathy Willow Date debt was canceled (mm/dd/yy) 12/26/13 Part I. 1040x amended return form Total liabilities immediately before the cancellation (do not include the same liability in more than one category) Liabilities (debts) Amount Owed Immediately Before the Cancellation 1. 1040x amended return form Credit card debt $ 18,000 2. 1040x amended return form Mortgage(s) on real property (including first and second mortgages and home equity loans) (mortgage(s) can be on personal residence, any additional residence, or property held for investment or used in a trade or business) $ 750,000 3. 1040x amended return form Car and other vehicle loans $ 4. 1040x amended return form Medical bills owed $ 5. 1040x amended return form Student loans $ 6. 1040x amended return form Accrued or past-due mortgage interest $ 7. 1040x amended return form Accrued or past-due real estate taxes $ 8. 1040x amended return form Accrued or past-due utilities (water, gas, electric) $ 9. 1040x amended return form Accrued or past-due child care costs $ 10. 1040x amended return form Federal or state income taxes remaining due (for prior tax years) $ 11. 1040x amended return form Judgments $ 12. 1040x amended return form Business debts (including those owed as a sole proprietor or partner) $ 13. 1040x amended return form Margin debt on stocks and other debt to purchase or secured by investment assets other than real property $ 14. 1040x amended return form Other liabilities (debts) not included above $ 15. 1040x amended return form Total liabilities immediately before the cancellation. 1040x amended return form Add lines 1 through 14. 1040x amended return form $ 768,000 Part II. 1040x amended return form Fair market value (FMV) of assets owned immediately before the cancellation (do not include the FMV of the same asset in more than one category) Assets FMV Immediately Before  the Cancellation 16. 1040x amended return form Cash and bank account balances $ 15,000 17. 1040x amended return form Real property, including the value of land (can be main home, any additional home, or property held for investment or used in a trade or business) $ 18. 1040x amended return form Cars and other vehicles $ 10,000 19. 1040x amended return form Computers $ 20. 1040x amended return form Household goods and furnishings (for example, appliances, electronics, furniture, etc. 1040x amended return form ) $ 17,000 21. 1040x amended return form Tools $ 22. 1040x amended return form Jewelry $ 23. 1040x amended return form Clothing $ 24. 1040x amended return form Books $ 25. 1040x amended return form Stocks and bonds $ 26. 1040x amended return form Investments in coins, stamps, paintings, or other collectibles $ 27. 1040x amended return form Firearms, sports, photographic, and other hobby equipment $ 28. 1040x amended return form Interest in retirement accounts (IRA accounts, 401(k) accounts, and other retirement accounts) $ 29. 1040x amended return form Interest in a pension plan $ 30. 1040x amended return form Interest in education accounts $ 31. 1040x amended return form Cash value of life insurance $ 32. 1040x amended return form Security deposits with landlords, utilities, and others $ 33. 1040x amended return form Interests in partnerships $ 34. 1040x amended return form Value of investment in a business $ 35. 1040x amended return form Other investments (for example, annuity contracts, guaranteed investment contracts, mutual funds, commodity accounts, interests in hedge funds, and options) $ 36. 1040x amended return form Other assets not included above $ 37. 1040x amended return form FMV of total assets immediately before the cancellation. 1040x amended return form Add lines 16 through 36. 1040x amended return form $ 42,000 Part III. 1040x amended return form Insolvency 38. 1040x amended return form Amount of Insolvency. 1040x amended return form Subtract line 37 from line 15. 1040x amended return form If zero or less, you are not insolvent. 1040x amended return form $ 726,000    Frank and Kathy's Form 982 This image is too large to be displayed in the current screen. 1040x amended return form Please click the link to view the image. 1040x amended return form Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Prev  Up  Next   Home   More Online Publications
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Page Last Reviewed or Updated: 13-Nov-2013

The 1040x Amended Return Form

1040x amended return form 4. 1040x amended return form   Limit on Elective Deferrals Table of Contents Excess elective deferrals. 1040x amended return form General Limit 15-Year RuleYears of Service Figuring the Limit on Elective DeferralsExample The second and final component of MAC is the limit on elective deferrals. 1040x amended return form This is a limit on the amount of contributions that can be made to your account through a salary reduction agreement. 1040x amended return form A salary reduction agreement is an agreement between you and your employer that allows for a portion of your compensation to be directly invested in a 403(b) account on your behalf. 1040x amended return form You can enter into more than one salary reduction agreement during a year. 1040x amended return form More than one 403(b) account. 1040x amended return form If, for any year, elective deferrals are contributed to more than one 403(b) account for you (whether or not with the same employer), you must combine all the elective deferrals to determine whether the total is more than the limit for that year. 1040x amended return form 403(b) plan and another retirement plan. 1040x amended return form If, during the year, contributions in the form of elective deferrals are made to other retirement plans on your behalf, you must combine all of the elective deferrals to determine if they are more than your limit on elective deferrals. 1040x amended return form The limit on elective deferrals applies to amounts contributed to: 401(k) plans, to the extent excluded from income, Roth contribution programs, Section 501(c)(18) plans, to the extent excluded from income, Savings incentive match plan for employees (SIMPLE plans), Simplified employee pension (SEP) plans, and All 403(b) plans. 1040x amended return form Roth contribution program. 1040x amended return form   Your 403(b) plan may allow you to designate all or a portion of your elective deferrals as Roth contributions. 1040x amended return form Elective deferrals designated as Roth contributions must be maintained in a separate Roth account and are not excludable from your gross income. 1040x amended return form   The maximum amount of contributions allowed under a Roth contribution program is your limit on elective deferrals, less your elective deferrals not designated as Roth contributions. 1040x amended return form For more information on the Roth contribution program, see Publication 560, Retirement Plans for Small Business. 1040x amended return form Excess elective deferrals. 1040x amended return form   If the amount contributed is more than the allowable limit, you must include the excess that is not a Roth contribution in your gross income for the year contributed. 1040x amended return form General Limit Under the general limit on elective deferrals, the most that can be contributed to your 403(b) account through a salary reduction agreement is $17,500 for 2013 and 2014. 1040x amended return form This limit applies without regard to community property laws. 1040x amended return form 15-Year Rule If you have at least 15 years of service with an educational organization (such as a public or private school), hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization), the limit on elective deferrals to your 403(b) account is increased by the least of: $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in prior years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. 1040x amended return form If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013 and 2014. 1040x amended return form To determine whether you have 15 years of service with your employer, see Years of Service , next. 1040x amended return form Years of Service To determine if you are eligible for the increased limit on elective deferrals, you will first need to figure your years of service. 1040x amended return form How you figure your years of service depends on whether you were a full-time or a part-time employee, whether you worked for the full year or only part of the year, and whether you have worked for your employer for an entire year. 1040x amended return form You must figure years of service for each year during which you worked for the employer who is maintaining your 403(b) account. 1040x amended return form If more than one employer maintains a 403(b) account for you in the same year, you must figure years of service separately for each employer. 1040x amended return form Definition Your years of service are the total number of years you have worked as a full time employee for the employer maintaining your 403(b) account as of the end of the year. 1040x amended return form Figuring Your Years of Service Take the following rules into account when figuring your years of service. 1040x amended return form Status of employer. 1040x amended return form   Your years of service include only periods during which your employer was a qualified employer. 1040x amended return form Your plan administrator can tell you whether or not your employer was qualified during all your periods of service. 1040x amended return form Service with one employer. 1040x amended return form   Generally, you cannot count service for any employer other than the one who maintains your 403(b) account. 1040x amended return form Church employee. 1040x amended return form   If you are a church employee, treat all of your years of service with related church organizations as years of service with the same employer. 1040x amended return form For more information about church employees, see chapter 5. 1040x amended return form Self-employed ministers. 1040x amended return form   If you are a self-employed minister, your years of service include full and part years in which you have been treated as employed by a tax-exempt organization that is a qualified employer. 1040x amended return form Total years of service. 1040x amended return form   When figuring prior years of service, figure each year individually and then add the individual years of service to determine your total years of service. 1040x amended return form Example. 1040x amended return form The annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. 1040x amended return form Marsha began working with ABC schools in September 2009. 1040x amended return form She has always worked full-time for each annual work period. 1040x amended return form At the end of 2013, Marsha had 4. 1040x amended return form 5 years of service with ABC Public Schools, as shown in Table 4-1. 1040x amended return form Table 4-1. 1040x amended return form Marsha's Years of Service Note. 1040x amended return form This table shows how Marsha figures her years of service, as explained in the previous example. 1040x amended return form Year Period Worked Portion of Work Period Years of Service 2009 Sept. 1040x amended return form –Dec. 1040x amended return form . 1040x amended return form 5 year . 1040x amended return form 5 year 2010 Feb. 1040x amended return form –May . 1040x amended return form 5 year 1 year Sept. 1040x amended return form –Dec. 1040x amended return form . 1040x amended return form 5 year 2011 Feb. 1040x amended return form –May . 1040x amended return form 5 year 1 year Sept. 1040x amended return form –Dec. 1040x amended return form . 1040x amended return form 5 year 2012 Feb. 1040x amended return form –May . 1040x amended return form 5 year 1 year Sept. 1040x amended return form –Dec. 1040x amended return form . 1040x amended return form 5 year 2013 Feb. 1040x amended return form –May . 1040x amended return form 5 year 1 year Sept. 1040x amended return form –Dec. 1040x amended return form . 1040x amended return form 5 year Total years of service 4. 1040x amended return form 5 years Full-time or part-time. 1040x amended return form   To figure your years of service, you must analyze each year individually and determine whether you worked full-time for the full year or something other than full-time. 1040x amended return form When determining whether you worked full-time or something other than full-time, use your employer's annual work period as the standard. 1040x amended return form Employer's annual work period. 1040x amended return form   Your employer's annual work period is the usual amount of time an individual working full-time in a specific position is required to work. 1040x amended return form Generally, this period of time is expressed in days, weeks, months, or semesters, and can span 2 calendar years. 1040x amended return form Note. 1040x amended return form You cannot accumulate more than 1 year of service in a 12-month period. 1040x amended return form Example. 1040x amended return form All full-time teachers at ABC Public Schools are required to work both the September through December semester and the February through May semester. 1040x amended return form Therefore, the annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. 1040x amended return form Teachers at ABC Public Schools who work both semesters in the same calendar year are considered working a full year of service in that calendar year. 1040x amended return form Full-Time Employee for the Full Year Count each full year during which you were employed full-time as 1 year of service. 1040x amended return form In determining whether you were employed full-time, compare the amount of work you were required to perform with the amount of work normally required of others who held the same position with the same employer and who generally received most of their pay from the position. 1040x amended return form How to compare. 1040x amended return form   You can use any method that reasonably and accurately reflects the amount of work required. 1040x amended return form For example, if you are a teacher, you can use the number of hours of classroom instruction as a measure of the amount of work required. 1040x amended return form   In determining whether positions with the same employer are the same, consider all of the facts and circumstances concerning the positions, including the work performed, the methods by which pay is determined, and the descriptions (or titles) of the positions. 1040x amended return form Example. 1040x amended return form An assistant professor employed in the English department of a university will be considered a full-time employee if the amount of work that he or she is required to perform is the same as the amount of work normally required of assistant professors of English at that university who get most of their pay from that position. 1040x amended return form   If no one else works for your employer in the same position, compare your work with the work normally required of others who held the same position with similar employers or similar positions with your employer. 1040x amended return form Full year of service. 1040x amended return form   A full year of service for a particular position means the usual annual work period of anyone employed full-time in that general type of work at that place of employment. 1040x amended return form Example. 1040x amended return form If a doctor works for a hospital 12 months of a year except for a 1-month vacation, the doctor will be considered as employed for a full year if the other doctors at that hospital also work 11 months of the year with a 1-month vacation. 1040x amended return form Similarly, if the usual annual work period at a university consists of the fall and spring semesters, an instructor at that university who teaches these semesters will be considered as working a full year. 1040x amended return form Other Than Full-Time for the Full Year If, during any year, you were employed full-time for only part of your employer's annual work period, part-time for the entire annual work period, or part-time for only part of the work period, your year of service for that year is a fraction of your employer's annual work period. 1040x amended return form Full-time for part of the year. 1040x amended return form   If, during a year, you were employed full-time for only part of your employer's annual work period, figure the fraction for that year as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. 1040x amended return form The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. 1040x amended return form Example. 1040x amended return form Jason was employed as a full-time instructor by a local college for the 4 months of the 2013 spring semester (February 2013 through May 2013). 1040x amended return form The annual work period for the college is 8 months (February through May and July through October). 1040x amended return form Given these facts, Jason was employed full-time for part of the annual work period and provided ½ of a year of service. 1040x amended return form Jason's years of service computation for 2013 is as follows: Number of months Jason worked = 4 = 1 Number of months in annual work period 8 2 Part-time for the full year. 1040x amended return form   If, during a year, you were employed part-time for the employer's entire annual work period, you figure the fraction for that year as follows: The numerator (top number) is the number of hours or days you worked. 1040x amended return form The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. 1040x amended return form Example. 1040x amended return form Vance teaches one course at a local medical school. 1040x amended return form He teaches 3 hours per week for two semesters. 1040x amended return form Other faculty members at the same school teach 9 hours per week for two semesters. 1040x amended return form The annual work period of the medical school is two semesters. 1040x amended return form An instructor teaching 9 hours a week for two semesters is considered a full-time employee. 1040x amended return form Given these facts, Vance has worked part-time for a full annual work period. 1040x amended return form Vance has completed 1/3 of a year of service, figured as shown below. 1040x amended return form Number of hours per week Vance worked = 3 = 1 Number of hours per week considered full-time 9 3 Part-time for part of the year. 1040x amended return form   If, during any year, you were employed part-time for only part of your employer's annual work period, you figure your fraction for that year by multiplying two fractions. 1040x amended return form   Figure the first fraction as though you had worked full-time for part of the annual work period. 1040x amended return form The fraction is as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. 1040x amended return form The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. 1040x amended return form   Figure the second fraction as though you had worked part-time for the entire annual work period. 1040x amended return form The fraction is as follows: The numerator (top number) is the number of hours or days you worked. 1040x amended return form The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. 1040x amended return form   Once you have figured these two fractions, multiply them together to determine the fraction representing your partial year of service for the year. 1040x amended return form Example. 1040x amended return form Maria, an attorney, teaches a course for one semester at a law school. 1040x amended return form She teaches 3 hours per week. 1040x amended return form The annual work period for teachers at the school is two semesters. 1040x amended return form All full-time instructors at the school are required to teach 12 hours per week. 1040x amended return form Based on these facts, Maria is employed part-time for part of the annual work period. 1040x amended return form Her year of service for this year is determined by multiplying two fractions. 1040x amended return form Her computation is as follows: Maria's first fraction Number of semesters Maria worked = 1 Number of semesters in annual work period 2 Maria's second fraction Number of hours Maria worked per week = 3 = 1 Number of hours per week considered full-time 12 4 Maria would multiply these fractions to obtain the fractional year of service: 1 x 1 = 1         2 4 8         Figuring the Limit on Elective Deferrals You can use Part II of Worksheet 1 in chapter 9 to figure the limit on elective deferrals. 1040x amended return form Example Floyd has figured his limit on annual additions. 1040x amended return form The only other component needed before he can determine his MAC for 2014 is his limit on elective deferrals. 1040x amended return form Figuring Floyd's limit on elective deferrals. 1040x amended return form   Floyd has been employed with his current employer for less than 15 years. 1040x amended return form He is not eligible for the special 15-year increase. 1040x amended return form Therefore, his limit on elective deferrals for 2014 is $17,500 as shown in Table 4-2. 1040x amended return form Floyd's employer will not make any nonelective contributions to his 403(b) account and Floyd will not make any after-tax contributions. 1040x amended return form Additionally, Floyd's employer does not offer a Roth contribution program. 1040x amended return form Figuring Floyd's MAC Floyd has determined that his limit on annual additions for 2014 is $52,000 and his limit on elective deferrals is $17,500. 1040x amended return form Because elective deferrals are the only contributions made to Floyd's account, the maximum amount that can be contributed to a 403(b) account on Floyd's behalf in 2014 is $17,500, the lesser of both limits. 1040x amended return form Table 4-2. 1040x amended return form Worksheet 1. 1040x amended return form Maximum Amount Contributable (MAC) Note. 1040x amended return form Use this worksheet to figure your MAC. 1040x amended return form Part I. 1040x amended return form Limit on Annual Additions     1. 1040x amended return form Enter your includible compensation for your most recent year of service 1. 1040x amended return form $70,475 2. 1040x amended return form Maximum: For 2013 enter $51,000 For 2014 enter $52,000 2. 1040x amended return form 52,000 3. 1040x amended return form Enter the lesser of line 1 or line 2. 1040x amended return form This is your limit on annual additions 3. 1040x amended return form 52,000   Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. 1040x amended return form     Part II. 1040x amended return form Limit on Elective Deferrals     4. 1040x amended return form Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. 1040x amended return form 17,500   Note. 1040x amended return form If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. 1040x amended return form If not, enter zero (-0-) on line 16 and go to line 17. 1040x amended return form     5. 1040x amended return form Amount per year of service 5. 1040x amended return form 5,000 6. 1040x amended return form Enter your years of service 6. 1040x amended return form   7. 1040x amended return form Multiply line 5 by line 6 7. 1040x amended return form   8. 1040x amended return form Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. 1040x amended return form   9. 1040x amended return form Subtract line 8 from line 7. 1040x amended return form If zero or less, enter zero (-0-) 9. 1040x amended return form   10. 1040x amended return form Maximum increase in limit for long service 10. 1040x amended return form 15,000 11. 1040x amended return form Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. 1040x amended return form   12. 1040x amended return form Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. 1040x amended return form   13. 1040x amended return form Add lines 11 and 12 13. 1040x amended return form   14. 1040x amended return form Subtract line 13 from line 10 14. 1040x amended return form   15. 1040x amended return form Maximum additional contributions 15. 1040x amended return form 3,000 16. 1040x amended return form Enter the least of lines 9, 14, or 15. 1040x amended return form This is your increase in the limit for long service 16. 1040x amended return form -0- 17. 1040x amended return form Add lines 4 and 16. 1040x amended return form This is your limit on elective deferrals 17. 1040x amended return form 17,500   Part III. 1040x amended return form Maximum Amount Contributable     18. 1040x amended return form If you had only nonelective contributions, enter the amount from line 3. 1040x amended return form This is your MAC. 1040x amended return form    If you had only elective deferrals, enter the lesser of lines 3 or 17. 1040x amended return form This is your MAC. 1040x amended return form    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. 1040x amended return form This is your MAC. 1040x amended return form (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. 1040x amended return form ) 18. 1040x amended return form $17,500 Prev  Up  Next   Home   More Online Publications