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1040x Form 2012

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1040x Form 2012

1040x form 2012 8. 1040x form 2012   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. 1040x form 2012 Reporting tax withheld. 1040x form 2012 Nominees. 1040x form 2012 Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. 1040x form 2012 Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. 1040x form 2012 Alternative minimum tax treatment. 1040x form 2012 How To Report Dividend IncomeInvestment interest deducted. 1040x form 2012 Reminder Foreign-source income. 1040x form 2012  If you are a U. 1040x form 2012 S. 1040x form 2012 citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. 1040x form 2012 S. 1040x form 2012 law. 1040x form 2012 This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. 1040x form 2012 Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. 1040x form 2012 This chapter also explains how to report dividend income on your tax return. 1040x form 2012 Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. 1040x form 2012 You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. 1040x form 2012 However, some amounts you receive that are called dividends are actually interest income. 1040x form 2012 (See Dividends that are actually interest under Taxable Interest in chapter 7. 1040x form 2012 ) Most distributions are paid in cash (or check). 1040x form 2012 However, distributions can consist of more stock, stock rights, other property, or services. 1040x form 2012 Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. 1040x form 2012 Tax on unearned income of certain children. 1040x form 2012   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. 1040x form 2012 If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. 1040x form 2012 If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. 1040x form 2012    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. 1040x form 2012 Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. 1040x form 2012   For more information about the tax on unearned income of children and the parents' election, see chapter 31. 1040x form 2012 Beneficiary of an estate or trust. 1040x form 2012    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. 1040x form 2012 You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. 1040x form 2012 , from the fiduciary. 1040x form 2012 Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. 1040x form 2012 Social security number (SSN) or individual taxpayer identification number (ITIN). 1040x form 2012    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. 1040x form 2012 This includes payers of dividends. 1040x form 2012 If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. 1040x form 2012 For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. 1040x form 2012 Backup withholding. 1040x form 2012   Your dividend income is generally not subject to regular withholding. 1040x form 2012 However, it may be subject to backup withholding to ensure that income tax is collected on the income. 1040x form 2012 Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. 1040x form 2012   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. 1040x form 2012 For more information, see Backup Withholding in chapter 4. 1040x form 2012 Stock certificate in two or more names. 1040x form 2012   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. 1040x form 2012 Form 1099-DIV. 1040x form 2012   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. 1040x form 2012 Keep this form with your records. 1040x form 2012 You do not have to attach it to your tax return. 1040x form 2012 Dividends not reported on Form 1099-DIV. 1040x form 2012   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. 1040x form 2012 For example, you may receive distributive shares of dividends from partnerships or S corporations. 1040x form 2012 These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. 1040x form 2012 , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. 1040x form 2012 Reporting tax withheld. 1040x form 2012   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. 1040x form 2012 Nominees. 1040x form 2012   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. 1040x form 2012 Form 1099-MISC. 1040x form 2012   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. 1040x form 2012 See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. 1040x form 2012 Incorrect amount shown on a Form 1099. 1040x form 2012   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. 1040x form 2012 The new Form 1099 you receive will be marked “Corrected. 1040x form 2012 ” Dividends on stock sold. 1040x form 2012   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. 1040x form 2012 Dividends received in January. 1040x form 2012   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. 1040x form 2012 You report the dividend in the year it was declared. 1040x form 2012 Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. 1040x form 2012 They are paid out of earnings and profits and are ordinary income to you. 1040x form 2012 This means they are not capital gains. 1040x form 2012 You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. 1040x form 2012 Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. 1040x form 2012 Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. 1040x form 2012 They should be shown in box 1b of the Form 1099-DIV you receive. 1040x form 2012 The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. 1040x form 2012 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. 1040x form 2012 6%. 1040x form 2012 20% on any amount that otherwise would be taxed at a 39. 1040x form 2012 6% rate. 1040x form 2012 To qualify for the maximum rate, all of the following requirements must be met. 1040x form 2012 The dividends must have been paid by a U. 1040x form 2012 S. 1040x form 2012 corporation or a qualified foreign corporation. 1040x form 2012 (See Qualified foreign corporation , later. 1040x form 2012 ) The dividends are not of the type listed later under Dividends that are not qualified dividends . 1040x form 2012 You meet the holding period (discussed next). 1040x form 2012 Holding period. 1040x form 2012   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. 1040x form 2012 The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. 1040x form 2012 Instead, the seller will get the dividend. 1040x form 2012   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. 1040x form 2012 See the examples later. 1040x form 2012 Exception for preferred stock. 1040x form 2012   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. 1040x form 2012 If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. 1040x form 2012 Example 1. 1040x form 2012 You bought 5,000 shares of XYZ Corp. 1040x form 2012 common stock on July 9, 2013. 1040x form 2012 XYZ Corp. 1040x form 2012 paid a cash dividend of 10 cents per share. 1040x form 2012 The ex-dividend date was July 16, 2013. 1040x form 2012 Your Form 1099-DIV from XYZ Corp. 1040x form 2012 shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). 1040x form 2012 However, you sold the 5,000 shares on August 12, 2013. 1040x form 2012 You held your shares of XYZ Corp. 1040x form 2012 for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). 1040x form 2012 The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. 1040x form 2012 You have no qualified dividends from XYZ Corp. 1040x form 2012 because you held the XYZ stock for less than 61 days. 1040x form 2012 Example 2. 1040x form 2012 Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. 1040x form 2012 You held the stock for 63 days (from July 16, 2013, through September 16, 2013). 1040x form 2012 The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). 1040x form 2012 Example 3. 1040x form 2012 You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. 1040x form 2012 ABC Mutual Fund paid a cash dividend of 10 cents a share. 1040x form 2012 The ex-dividend date was July 16, 2013. 1040x form 2012 The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. 1040x form 2012 Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. 1040x form 2012 However, you sold the 10,000 shares on August 12, 2013. 1040x form 2012 You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. 1040x form 2012 Holding period reduced where risk of loss is diminished. 1040x form 2012   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. 1040x form 2012 You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. 1040x form 2012 You were grantor (writer) of an option to buy substantially identical stock or securities. 1040x form 2012 Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. 1040x form 2012   For information about how to apply condition (3), see Regulations section 1. 1040x form 2012 246-5. 1040x form 2012 Qualified foreign corporation. 1040x form 2012   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. 1040x form 2012 The corporation is incorporated in a U. 1040x form 2012 S. 1040x form 2012 possession. 1040x form 2012 The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. 1040x form 2012 For a list of those treaties, see Table 8-1. 1040x form 2012 The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. 1040x form 2012 See Readily tradable stock , later. 1040x form 2012 Exception. 1040x form 2012   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. 1040x form 2012 Readily tradable stock. 1040x form 2012   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. 1040x form 2012 For a list of the exchanges that meet these requirements, see www. 1040x form 2012 sec. 1040x form 2012 gov/divisions/marketreg/mrexchanges. 1040x form 2012 shtml. 1040x form 2012 Dividends that are not qualified dividends. 1040x form 2012   The following dividends are not qualified dividends. 1040x form 2012 They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. 1040x form 2012 Capital gain distributions. 1040x form 2012 Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. 1040x form 2012 S. 1040x form 2012 building and loan associations, U. 1040x form 2012 S. 1040x form 2012 savings and loan associations, federal savings and loan associations, and similar financial institutions. 1040x form 2012 (Report these amounts as interest income. 1040x form 2012 ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. 1040x form 2012 Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. 1040x form 2012 Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. 1040x form 2012 Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. 1040x form 2012 Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. 1040x form 2012 Table 8-1. 1040x form 2012 Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. 1040x form 2012 Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. 1040x form 2012 This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. 1040x form 2012 Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. 1040x form 2012 If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. 1040x form 2012 If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. 1040x form 2012 You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. 1040x form 2012 But you may be able to deduct the service charge. 1040x form 2012 See chapter 28 for more information about deducting expenses of producing income. 1040x form 2012 In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. 1040x form 2012 If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. 1040x form 2012 When figuring this amount, use the fair market value of the stock on the dividend payment date. 1040x form 2012 Money Market Funds Report amounts you receive from money market funds as dividend income. 1040x form 2012 Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. 1040x form 2012 Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). 1040x form 2012 They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. 1040x form 2012 Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. 1040x form 2012 Undistributed capital gains of mutual funds and REITs. 1040x form 2012    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. 1040x form 2012 You must treat your share of these gains as distributions, even though you did not actually receive them. 1040x form 2012 However, they are not included on Form 1099-DIV. 1040x form 2012 Instead, they are reported to you in box 1a of Form 2439. 1040x form 2012   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. 1040x form 2012   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. 1040x form 2012 You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. 1040x form 2012 Attach Copy B of Form 2439 to your return, and keep Copy C for your records. 1040x form 2012 Basis adjustment. 1040x form 2012   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. 1040x form 2012 Additional information. 1040x form 2012   For more information on the treatment of distributions from mutual funds, see Publication 550. 1040x form 2012 Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. 1040x form 2012 You should receive a Form 1099-DIV or other statement showing the nondividend distribution. 1040x form 2012 On Form 1099-DIV, a nondividend distribution will be shown in box 3. 1040x form 2012 If you do not receive such a statement, you report the distribution as an ordinary dividend. 1040x form 2012 Basis adjustment. 1040x form 2012   A nondividend distribution reduces the basis of your stock. 1040x form 2012 It is not taxed until your basis in the stock is fully recovered. 1040x form 2012 This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. 1040x form 2012 If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. 1040x form 2012   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. 1040x form 2012 Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. 1040x form 2012 See Holding Period in chapter 14. 1040x form 2012 Example. 1040x form 2012 You bought stock in 2000 for $100. 1040x form 2012 In 2003, you received a nondividend distribution of $80. 1040x form 2012 You did not include this amount in your income, but you reduced the basis of your stock to $20. 1040x form 2012 You received a nondividend distribution of $30 in 2013. 1040x form 2012 The first $20 of this amount reduced your basis to zero. 1040x form 2012 You report the other $10 as a long-term capital gain for 2013. 1040x form 2012 You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. 1040x form 2012 Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. 1040x form 2012 These distributions are, at least in part, one form of a return of capital. 1040x form 2012 They may be paid in one or more installments. 1040x form 2012 You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. 1040x form 2012 For more information on liquidating distributions, see chapter 1 of Publication 550. 1040x form 2012 Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. 1040x form 2012 Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. 1040x form 2012 Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. 1040x form 2012 Taxable stock dividends and stock rights. 1040x form 2012   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. 1040x form 2012 You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. 1040x form 2012 The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. 1040x form 2012 The distribution is in convertible preferred stock and has the same result as in (2). 1040x form 2012 The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. 1040x form 2012 The distribution is on preferred stock. 1040x form 2012 (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. 1040x form 2012 )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. 1040x form 2012 If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. 1040x form 2012 Preferred stock redeemable at a premium. 1040x form 2012   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. 1040x form 2012 For more information, see chapter 1 of Publication 550. 1040x form 2012 Basis. 1040x form 2012   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. 1040x form 2012 If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. 1040x form 2012 Fractional shares. 1040x form 2012    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. 1040x form 2012 However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. 1040x form 2012 Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. 1040x form 2012 Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. 1040x form 2012 Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. 1040x form 2012    Report these transactions on Form 8949 with the correct box checked. 1040x form 2012   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. 1040x form 2012 Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). 1040x form 2012 Example. 1040x form 2012 You own one share of common stock that you bought on January 3, 2004, for $100. 1040x form 2012 The corporation declared a common stock dividend of 5% on June 29, 2013. 1040x form 2012 The fair market value of the stock at the time the stock dividend was declared was $200. 1040x form 2012 You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. 1040x form 2012 You figure your gain or loss as follows: Fair market value of old stock $200. 1040x form 2012 00 Fair market value of stock dividend (cash received) +10. 1040x form 2012 00 Fair market value of old stock and stock dividend $210. 1040x form 2012 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. 1040x form 2012 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. 1040x form 2012 76 Total $100. 1040x form 2012 00 Cash received $10. 1040x form 2012 00 Basis (cost) of stock dividend − 4. 1040x form 2012 76 Gain $5. 1040x form 2012 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. 1040x form 2012 Scrip dividends. 1040x form 2012   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. 1040x form 2012 The certificate is generally nontaxable when you receive it. 1040x form 2012 If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. 1040x form 2012   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. 1040x form 2012 You must include its fair market value in income on the date you receive it. 1040x form 2012 Other Distributions You may receive any of the following distributions during the year. 1040x form 2012 Exempt-interest dividends. 1040x form 2012   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. 1040x form 2012 Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. 1040x form 2012 Information reporting requirement. 1040x form 2012   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. 1040x form 2012 This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. 1040x form 2012 Alternative minimum tax treatment. 1040x form 2012   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. 1040x form 2012 See Alternative Minimum Tax (AMT) in chapter 30 for more information. 1040x form 2012 Dividends on insurance policies. 1040x form 2012    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. 1040x form 2012 However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. 1040x form 2012    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. 1040x form 2012 Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. 1040x form 2012 Report any taxable distributions on insurance policies on Form 1040, line 21. 1040x form 2012 Dividends on veterans' insurance. 1040x form 2012   Dividends you receive on veterans' insurance policies are not taxable. 1040x form 2012 In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. 1040x form 2012 Patronage dividends. 1040x form 2012   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. 1040x form 2012   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. 1040x form 2012 But you must reduce the basis (cost) of the items bought. 1040x form 2012 If the dividend is more than the adjusted basis of the assets, you must report the excess as income. 1040x form 2012   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. 1040x form 2012 Alaska Permanent Fund dividends. 1040x form 2012    Do not report these amounts as dividends. 1040x form 2012 Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. 1040x form 2012 How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. 1040x form 2012 Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. 1040x form 2012 Report qualified dividends on line 9b of Form 1040 or Form 1040A. 1040x form 2012 If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. 1040x form 2012 See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. 1040x form 2012 If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. 1040x form 2012 You cannot use Form 1040EZ if you receive any dividend income. 1040x form 2012 Form 1099-DIV. 1040x form 2012   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. 1040x form 2012 Even if you do not receive Form 1099-DIV, you must report all your dividend income. 1040x form 2012   See Form 1099-DIV for more information on how to report dividend income. 1040x form 2012 Form 1040A or 1040. 1040x form 2012    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. 1040x form 2012 If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. 1040x form 2012   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. 1040x form 2012 If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. 1040x form 2012 If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. 1040x form 2012   Enter on line 6 the total of the amounts listed on line 5. 1040x form 2012 Also enter this total on line 9a of Form 1040A or 1040. 1040x form 2012 Qualified dividends. 1040x form 2012   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. 1040x form 2012 The amount in box 1b is already included in box 1a. 1040x form 2012 Do not add the amount in box 1b to, or substract it from, the amount in box 1a. 1040x form 2012   Do not include any of the following on line 9b. 1040x form 2012 Qualified dividends you received as a nominee. 1040x form 2012 See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. 1040x form 2012 Dividends on stock for which you did not meet the holding period. 1040x form 2012 See Holding period , earlier under Qualified Dividends. 1040x form 2012 Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. 1040x form 2012 Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. 1040x form 2012 Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. 1040x form 2012   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. 1040x form 2012 Enter qualified dividends on line 2 of the worksheet. 1040x form 2012 Investment interest deducted. 1040x form 2012   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. 1040x form 2012 Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. 1040x form 2012 This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. 1040x form 2012 For more information about the limit on investment interest, see Investment expenses in chapter 23. 1040x form 2012 Expenses related to dividend income. 1040x form 2012   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). 1040x form 2012 See chapter 28 for general information about deducting expenses of producing income. 1040x form 2012 More information. 1040x form 2012    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. 1040x form 2012 Prev  Up  Next   Home   More Online Publications
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Procurement

Procurement At-a-Glance - Our dedicated acquisition professionals deliver world class, customer-focused acquisition services with the highest degree of integrity and the cooperative effort of our partners.


Small Business Program Office - The Internal Revenue Service (IRS) Small Business Program Office was established to assist small, HUBZone small, small disadvantaged, women-owned small, veteran-owned small and service disabled veteran-owned small businesses, to develop, grow, and ensure their long-term success.


Procurement Business Opportunities - The Procurement Office acquires the products and services required to support the IRS mission. We advertise commercial opportunities on Federal Business Opportunities (FedBizOpps) web site.


Justification for Other Than Full and Open Competition (JOFOC) - All open market JOFOCs exceeding the Simplified Acquisition Threshold (SAT) are posted on this web site in addition to being advertised on the Federal Business Opportunities (FedBizOpps) web site. (Some information may have been redacted to exclude proprietary information).


The American Recovery and Reinvestment Act of 2009 - The American Recovery and Reinvestment Act of 2009 (ARRA) – Approved on February 17, 2009, ARRA primarily provides supplemental appropriations for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, and State and local fiscal stabilization. Hyperlinks to various procurement actions awarded using ARRA funds are included herein.

What's New at Procurement



11/01/2013JEFO - Renewal of Maintenance for Net App Mass Storage equipment in support of the SOI Program



09/26/2013 Post-Award Posting of JOFOC TIRSE-14-P-00003-Utilities



09/06/2013
Justification for an Exception to Fair Opportunity



08/22/2013
Solicitation No: D-3-D9-23-MA-I10 – Neopost Postage Meter Supplies



08/19/2013 TIRNO-13-C-00055 JOFOC Post Award

 

 

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Contractor Security - Contract employees assigned to work under IRS contracts must undergo investigative processing appropriate to the position sensitivity and risk level designation associated with the work to be performed, as described in the Department of the Treasury Security Manual (TD P 15-71). In support of this undertaking, the contractor shall furnish prescribed security forms and documentation to the Contractor Security Lifecycle Program (CSLP), within 10 business days of assigning (or reassigning) a contractor employee to an IRS contract and prior to the contract employee performing any work there under.


Publication 4812 - Contractor Security Controls - Functions as the standard for security controls to be employed by contractors who will have or need access to IRS information, and/or who will have or need access to, maintain or operate IRS information systems in order to perform or carry out and meet their contractual obligations. Publication 4812 is a &quotlayperson's guide&quot to NIST SP 800-53 when access to IRS information or information systems under contracts for services on behalf of the IRS is outside of IRS controlled facilities or the direct control of the Service (as opposed to Internal Revenue Manual 10.8.1 - Information Technology (IT) Security, Policy and Guidance, which applies when contractors are accessing IRS information and information systems at Government controlled facilities).


Contracts - Information about the Prime Modernization Contract and Prime Contract Outreach Information. Treasury-Wide Contracts ( Total Information Processing Support Services (TIPSS-4), and Treasury Commercial Vehicles (TCV) Blanket Purchase Agreements). Government-Wide Contracts Land Mobile Radio (LMR) Subscriber Unit.


Total Information Processing Support Services (TIPSS-4) - Discover more about the wide spectrum of Information Technology services that TIPSS-4 offers. Included you will find guidance, and useful information to help you acquire the right services to support your program goals and objectives.


Treasury Acquisition Institute (TAI) Training - The Treasury Acquisition Institute (TAI) was established by the Department of the Treasury and Internal Revenue Service in partnerships with other Treasury Bureaus on September 14, 1983. TAI was created to coordinate and lead Departmental and Bureau efforts to obtain the best training possible for their acquisition professionals.


Guides for Doing Business with the Government - Information on how to do business with the Federal Government.


Treasury Inspector General for Tax Administration (TIGTA) FAR Contractor Reporting - This link allows contractors to comply with the reporting requirements in the December 12, 2008, Federal Acquisition Regulation final rule. Specifically, contractors must use this process to satisfy the requirement that they notify TIGTA, in writing, whenever the contractor has credible evidence that a principal, employee, agent, or subcontractor of the Contractor has committed a violation of the civil False Claims Act or a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations in connection with the award, performance, or closeout of a contract or any related subcontract.


Useful Links - Links to various sites.


Procurement A..Z Index - Search for Procurement information alphabetically.



Questions about the Procurement information on this site, please contact the webmaster.


Contact the Office of Procurement for other Procurement related questions.

Page Last Reviewed or Updated: 19-Feb-2014

The 1040x Form 2012

1040x form 2012 6. 1040x form 2012   Basis of Assets Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Cost BasisReal Property Allocating the Basis Uniform Capitalization Rules Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostTaxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Received as a Gift Property Transferred From a Spouse Inherited Property Property Distributed From a Partnership or Corporation Introduction Your basis is the amount of your investment in property for tax purposes. 1040x form 2012 Use basis to figure the gain or loss on the sale, exchange, or other disposition of property. 1040x form 2012 Also use basis to figure depreciation, amortization, depletion, and casualty losses. 1040x form 2012 If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. 1040x form 2012 Only the basis allocated to the business or investment use of the property can be depreciated. 1040x form 2012 Your original basis in property is adjusted (increased or decreased) by certain events. 1040x form 2012 For example, if you make improvements to the property, increase your basis. 1040x form 2012 If you take deductions for depreciation, or casualty losses, or claim certain credits, reduce your basis. 1040x form 2012 Keep accurate records of all items that affect the basis of your assets. 1040x form 2012 For information on keeping records, see chapter 1. 1040x form 2012 Topics - This chapter discusses: Cost basis Adjusted basis Basis other than cost Useful Items - You may want to see: Publication 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property See chapter 16 for information about getting publications and forms. 1040x form 2012 Cost Basis The basis of property you buy is usually its cost. 1040x form 2012 Cost is the amount you pay in cash, debt obligations, other property, or services. 1040x form 2012 Your cost includes amounts you pay for sales tax, freight, installation, and testing. 1040x form 2012 The basis of real estate and business assets will include other items, discussed later. 1040x form 2012 Basis generally does not include interest payments. 1040x form 2012 However, see Carrying charges and Capitalized interest in chapter 4 of Publication 535. 1040x form 2012 You also may have to capitalize (add to basis) certain other costs related to buying or producing property. 1040x form 2012 Under the uniform capitalization rules, discussed later, you may have to capitalize direct costs and certain indirect costs of producing property. 1040x form 2012 Loans with low or no interest. 1040x form 2012   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus the amount considered to be unstated interest. 1040x form 2012 You generally have unstated interest if your interest rate is less than the applicable federal rate. 1040x form 2012 See the discussion of unstated interest in Publication 537, Installment Sales. 1040x form 2012 Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. 1040x form 2012 If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. 1040x form 2012 Some of these expenses are discussed next. 1040x form 2012 Lump sum purchase. 1040x form 2012   If you buy improvements, such as buildings, and the land on which they stand for a lump sum, allocate your cost basis between the land and improvements. 1040x form 2012 Allocate the cost basis according to the respective fair market values (FMVs) of the land and improvements at the time of purchase. 1040x form 2012 Figure the basis of each asset by multiplying the lump sum by a fraction. 1040x form 2012 The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. 1040x form 2012 Fair market value (FMV). 1040x form 2012   FMV is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. 1040x form 2012 Sales of similar property on or about the same date may help in figuring the FMV of the property. 1040x form 2012 If you are not certain of the FMV of the land and improvements, you can allocate the basis according to their assessed values for real estate tax purposes. 1040x form 2012 Real estate taxes. 1040x form 2012   If you pay the real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. 1040x form 2012   If you reimburse the seller for taxes the seller paid for you, you generally can deduct that amount as a tax expense. 1040x form 2012 Whether or not you reimburse the seller, do not include that amount in the basis of your property. 1040x form 2012 Settlement costs. 1040x form 2012   Your basis includes the settlement fees and closing costs for buying the property. 1040x form 2012 See Publication 551 for a detailed list of items you can and cannot include in basis. 1040x form 2012   Do not include fees and costs for getting a loan on the property. 1040x form 2012 Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. 1040x form 2012 Points. 1040x form 2012   If you pay points to get a loan (including a mortgage, second mortgage, or line-of-credit), do not add the points to the basis of the related property. 1040x form 2012 You may be able to deduct the points currently or over the term of the loan. 1040x form 2012 For more information about deducting points, see Points in chapter 4 of Publication 535. 1040x form 2012 Assumption of a mortgage. 1040x form 2012   If you buy property and assume (or buy the property subject to) an existing mortgage, your basis includes the amount you pay for the property plus the amount you owe on the mortgage. 1040x form 2012 Example. 1040x form 2012 If you buy a farm for $100,000 cash and assume a mortgage of $400,000, your basis is $500,000. 1040x form 2012 Constructing assets. 1040x form 2012   If you build property or have assets built for you, your expenses for this construction are part of your basis. 1040x form 2012 Some of these expenses include the following costs: Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. 1040x form 2012   In addition, if you use your own employees, farm materials, and equipment to build an asset, do not deduct the following expenses. 1040x form 2012 You must capitalize them (include them in the asset's basis). 1040x form 2012 Employee wages paid for the construction work, reduced by any employment credits allowed. 1040x form 2012 Depreciation on equipment you own while it is used in the construction. 1040x form 2012 Operating and maintenance costs for equipment used in the construction. 1040x form 2012 The cost of business supplies and materials used in the construction. 1040x form 2012    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. 1040x form 2012 Allocating the Basis In some instances, the rules for determining basis apply to a group of assets acquired in the same transaction or to property that consists of separate items. 1040x form 2012 To determine the basis of these assets or separate items, there must be an allocation of basis. 1040x form 2012 Group of assets acquired. 1040x form 2012   If you buy multiple assets for a lump sum, allocate the amount you pay among the assets. 1040x form 2012 Use this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. 1040x form 2012 You and the seller may agree in the sales contract to a specific allocation of the purchase price among the assets. 1040x form 2012 If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. 1040x form 2012 Farming business acquired. 1040x form 2012   If you buy a group of assets that makes up a farming business, there are special rules you must use to allocate the purchase price among the assets. 1040x form 2012 Generally, reduce the purchase price by any cash received. 1040x form 2012 Allocate the remaining purchase price to the other business assets received in proportion to (but not more than) their FMV and in a certain order. 1040x form 2012 See Trade or Business Acquired under Allocating the Basis in Publication 551 for more information. 1040x form 2012 Transplanted embryo. 1040x form 2012   If you buy a cow that is pregnant with a transplanted embryo, allocate to the basis of the cow the part of the purchase price equal to the FMV of the cow without the implant. 1040x form 2012 Allocate the rest of the purchase price to the basis of the calf. 1040x form 2012 Neither the cost allocated to the cow nor the cost allocated to the calf is deductible as a current business expense. 1040x form 2012 Uniform Capitalization Rules Under the uniform capitalization rules, you must include certain direct and indirect costs in the basis of property you produce or in your inventory costs, rather than claim them as a current deduction. 1040x form 2012 You recover these costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. 1040x form 2012 Generally, you are subject to the uniform capitalization rules if you do any of the following: Produce real or tangible personal property, or Acquire property for resale. 1040x form 2012 However, this rule does not apply to personal property if your average annual gross receipts for the 3-tax-year period ending with the year preceding the current tax year are $10 million or less. 1040x form 2012 You produce property if you construct, build, install, manufacture, develop, improve, or create the property. 1040x form 2012 You are not subject to the uniform capitalization rules if the property is produced for personal use. 1040x form 2012 In a farming business, you produce property if you raise or grow any agricultural or horticultural commodity, including plants and animals. 1040x form 2012 Plants. 1040x form 2012   A plant produced in a farming business includes the following items: A fruit, nut, or other crop-bearing tree; An ornamental tree; A vine; A bush; Sod; and The crop or yield of a plant that will have more than one crop or yield. 1040x form 2012 Animals. 1040x form 2012   An animal produced in a farming business includes any stock, poultry or other bird, and fish or other sea life. 1040x form 2012 The direct and indirect costs of producing plants or animals include preparatory costs and preproductive period costs. 1040x form 2012 Preparatory costs include the acquisition costs of the seed, seedling, plant, or animal. 1040x form 2012 For plants, preproductive period costs include the costs of items such as irrigation, pruning, frost protection, spraying, and harvesting. 1040x form 2012 For animals, preproductive period costs include the costs of items such as feed, maintaining pasture or pen areas, breeding, veterinary services, and bedding. 1040x form 2012 Exceptions. 1040x form 2012   In a farming business, the uniform capitalization rules do not apply to: Any animal, Any plant with a preproductive period of 2 years or less, or Any costs of replanting certain plants lost or damaged due to casualty. 1040x form 2012   Exceptions (1) and (2) do not apply to a corporation, partnership, or tax shelter required to use an accrual method of accounting. 1040x form 2012 See Accrual Method Required under Accounting Methods in chapter 2. 1040x form 2012   In addition, you can elect not to use the uniform capitalization rules for plants with a preproductive period of more than 2 years. 1040x form 2012 If you make this election, special rules apply. 1040x form 2012 This election cannot be made by a corporation, partnership, or tax shelter required to use an accrual method of accounting. 1040x form 2012 This election also does not apply to any costs incurred for the planting, cultivation, maintenance, or development of any citrus or almond grove (or any part thereof) within the first 4 years the trees were planted. 1040x form 2012    If you elect not to use the uniform capitalization rules, you must use the alternative depreciation system for all property used in any of your farming businesses and placed in service in any tax year during which the election is in effect. 1040x form 2012 See chapter 7, for additional information on depreciation. 1040x form 2012 Example. 1040x form 2012 You grow trees that have a preproductive period of more than 2 years. 1040x form 2012 The trees produce an annual crop. 1040x form 2012 You are an individual and the uniform capitalization rules apply to your farming business. 1040x form 2012 You must capitalize the direct costs and an allocable part of indirect costs incurred due to the production of the trees. 1040x form 2012 You are not required to capitalize the costs of producing the annual crop because its preproductive period is 2 years or less. 1040x form 2012 Preproductive period of more than 2 years. 1040x form 2012   The preproductive period of plants grown in commercial quantities in the United States is based on their nationwide weighted average preproductive period. 1040x form 2012 Plants producing the crops or yields shown in Table 6-1 have a nationwide weighted average preproductive period of more than 2 years. 1040x form 2012 Other plants (not shown in Table 6-1) may also have a nationwide weighted average preproductive period of more than 2 years. 1040x form 2012 More information. 1040x form 2012   For more information on the uniform capitalization rules that apply to property produced in a farming business, see Regulations section 1. 1040x form 2012 263A-4. 1040x form 2012 Table 6-1. 1040x form 2012 Plants With a Preproductive Period of More Than 2 Years Plants producing the following crops or yields have a nationwide weighted average preproductive period of more than 2 years. 1040x form 2012 Almonds Apples Apricots Avocados Blueberries Cherries Chestnuts Coffee beans Currants Dates Figs Grapefruit Grapes Guavas Kiwifruit Kumquats Lemons Limes Macadamia nuts Mangoes Nectarines Olives Oranges Peaches Pears Pecans Persimmons Pistachio nuts Plums Pomegranates Prunes Tangelos Tangerines Tangors Walnuts Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the cost basis or basis other than cost (discussed later) of the property. 1040x form 2012 The adjustments to the original basis are increases or decreases to the cost basis or other basis which result in the adjusted basis of the property. 1040x form 2012 Increases to Basis Increase the basis of any property by all items properly added to a capital account. 1040x form 2012 These include the cost of any improvements having a useful life of more than 1 year. 1040x form 2012 The following costs increase the basis of property. 1040x form 2012 The cost of extending utility service lines to property. 1040x form 2012 Legal fees, such as the cost of defending and perfecting title. 1040x form 2012 Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements. 1040x form 2012 Assessments for items such as paving roads and building ditches that increase the value of the property assessed. 1040x form 2012 Do not deduct these expenses as taxes. 1040x form 2012 However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements. 1040x form 2012 If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. 1040x form 2012 See chapter 7. 1040x form 2012 Deducting vs. 1040x form 2012 capitalizing costs. 1040x form 2012   Do not add to your basis costs you can deduct as current expenses. 1040x form 2012 For example, amounts paid for incidental repairs or maintenance are deductible as business expenses and are not added to basis. 1040x form 2012 However, you can elect either to deduct or to capitalize certain other costs. 1040x form 2012 See chapter 7 in Publication 535. 1040x form 2012 Decreases to Basis The following are some items that reduce the basis of property. 1040x form 2012 Section 179 deduction. 1040x form 2012 Deductions previously allowed or allowable for amortization, depreciation, and depletion. 1040x form 2012 Alternative motor vehicle credit. 1040x form 2012 See Form 8910. 1040x form 2012 Alternative fuel vehicle refueling property credit. 1040x form 2012 See Form 8911. 1040x form 2012 Residential energy efficient property credits. 1040x form 2012 See Form 5695. 1040x form 2012 Investment credit (part or all) taken. 1040x form 2012 Casualty and theft losses and insurance reimbursements. 1040x form 2012 Payments you receive for granting an easement. 1040x form 2012 Exclusion from income of subsidies for energy conservation measures. 1040x form 2012 Certain canceled debt excluded from income. 1040x form 2012 Rebates from a manufacturer or seller. 1040x form 2012 Patronage dividends received from a cooperative association as a result of a purchase of property. 1040x form 2012 See Patronage Dividends in chapter 3. 1040x form 2012 Gas-guzzler tax. 1040x form 2012 See Form 6197. 1040x form 2012 Some of these items are discussed next. 1040x form 2012 For a more detailed list of items that decrease basis, see section 1016 of the Internal Revenue Code and Publication 551. 1040x form 2012 Depreciation and section 179 deduction. 1040x form 2012   The adjustments you must make to the basis of the property if you take the section 179 deduction or depreciate the property are explained next. 1040x form 2012 For more information on these deductions, see chapter 7. 1040x form 2012 Section 179 deduction. 1040x form 2012   If you take the section 179 expense deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. 1040x form 2012 Depreciation. 1040x form 2012   Decrease the basis of property by the depreciation you deducted or could have deducted on your tax returns under the method of depreciation you chose. 1040x form 2012 If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. 1040x form 2012 If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. 1040x form 2012   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for any year. 1040x form 2012   See chapter 7 for information on figuring the depreciation you should have claimed. 1040x form 2012   In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation you must capitalize under the uniform capitalization rules. 1040x form 2012 Casualty and theft losses. 1040x form 2012   If you have a casualty or theft loss, decrease the basis of the property by any insurance or other reimbursement. 1040x form 2012 Also, decrease it by any deductible loss not covered by insurance. 1040x form 2012 See chapter 11 for information about figuring your casualty or theft loss. 1040x form 2012   You must increase your basis in the property by the amount you spend on clean-up costs (such as debris removal) and repairs that restore the property to its pre-casualty condition. 1040x form 2012 To make this determination, compare the repaired property to the property before the casualty. 1040x form 2012 Easements. 1040x form 2012   The amount you receive for granting an easement is usually considered to be proceeds from the sale of an interest in the real property. 1040x form 2012 It reduces the basis of the affected part of the property. 1040x form 2012 If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. 1040x form 2012 See Easements and rights-of-way in chapter 3. 1040x form 2012 Exclusion from income of subsidies for energy conservation measures. 1040x form 2012   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. 1040x form 2012 Reduce the basis of the property by the excluded amount. 1040x form 2012 Canceled debt excluded from income. 1040x form 2012   If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. 1040x form 2012 A debt includes any indebtedness for which you are liable or which attaches to property you hold. 1040x form 2012   You can exclude your canceled debt from income if the debt is any of the following. 1040x form 2012 Debt canceled in a bankruptcy case or when you are insolvent. 1040x form 2012 Qualified farm debt. 1040x form 2012 Qualified real property business debt (provided you are not a C corporation). 1040x form 2012 Qualified principal residence indebtedness. 1040x form 2012 Discharge of certain indebtedness of a qualified individual because of Midwestern disasters. 1040x form 2012 If you exclude canceled debt described in (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. 1040x form 2012 If you exclude canceled debt described in (3), you must only reduce the basis of your depreciable property by the excluded amount. 1040x form 2012   For more information about canceled debt in a bankruptcy case, see Publication 908, Bankruptcy Tax Guide. 1040x form 2012 For more information about insolvency and canceled debt that is qualified farm debt or qualified principal residence indebtedness, see chapter 3. 1040x form 2012 For more information about qualified real property business debt, see Publication 334, Tax Guide for Small Business. 1040x form 2012 For more information about canceled debt in Midwestern disaster areas, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. 1040x form 2012 Basis Other Than Cost There are times when you cannot use cost as basis. 1040x form 2012 In these situations, the fair market value or the adjusted basis of property may be used. 1040x form 2012 Examples are discussed next. 1040x form 2012 Property changed from personal to business or rental use. 1040x form 2012   When you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. 1040x form 2012 An example of changing property from personal to business use would be changing the use of your pickup truck that you originally purchased for your personal use to use in your farming business. 1040x form 2012   The basis for depreciation is the lesser of: The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. 1040x form 2012   If you later sell or dispose of this property, the basis you use will depend on whether you are figuring a gain or loss. 1040x form 2012 The basis for figuring a gain is your adjusted basis in the property when you sell the property. 1040x form 2012 Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. 1040x form 2012 Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . 1040x form 2012 Property received for services. 1040x form 2012   If you receive property for services, include the property's FMV in income. 1040x form 2012 The amount you include in income becomes your basis. 1040x form 2012 If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. 1040x form 2012 Example. 1040x form 2012 George Smith is an accountant and also operates a farming business. 1040x form 2012 George agreed to do some accounting work for his neighbor in exchange for a dairy cow. 1040x form 2012 The accounting work and the cow are each worth $1,500. 1040x form 2012 George must include $1,500 in income for his accounting services. 1040x form 2012 George's basis in the cow is $1,500. 1040x form 2012 Taxable Exchanges A taxable exchange is one in which the gain is taxable, or the loss is deductible. 1040x form 2012 A taxable gain or deductible loss also is known as a recognized gain or loss. 1040x form 2012 A taxable exchange occurs when you receive cash or get property that is not similar or related in use to the property exchanged. 1040x form 2012 If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. 1040x form 2012 Example. 1040x form 2012 You trade a tract of farmland with an adjusted basis of $2,000 for a tractor that has an FMV of $6,000. 1040x form 2012 You must report a taxable gain of $4,000 for the land. 1040x form 2012 The tractor has a basis of $6,000. 1040x form 2012 Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property you receive using the basis of the converted property. 1040x form 2012 Similar or related property. 1040x form 2012   If the replacement property is similar or related in service or use to the converted property, the replacement property's basis is the same as the old property's basis on the date of the conversion. 1040x form 2012 However, make the following adjustments. 1040x form 2012 Decrease the basis by the following amounts. 1040x form 2012 Any loss you recognize on the involuntary conversion. 1040x form 2012 Any money you receive that you do not spend on similar property. 1040x form 2012 Increase the basis by the following amounts. 1040x form 2012 Any gain you recognize on the involuntary conversion. 1040x form 2012 Any cost of acquiring the replacement property. 1040x form 2012 Money or property not similar or related. 1040x form 2012   If you receive money or property not similar or related in service or use to the converted property and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the involuntary conversion. 1040x form 2012 Allocating the basis. 1040x form 2012   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. 1040x form 2012 Basis for depreciation. 1040x form 2012   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. 1040x form 2012 For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. 1040x form 2012 For more information about involuntary conversions, see chapter 11. 1040x form 2012 Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. 1040x form 2012 A nontaxable gain or loss also is known as an unrecognized gain or loss. 1040x form 2012 If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. 1040x form 2012 Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. 1040x form 2012 For an exchange to qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. 1040x form 2012 There must also be an exchange of like-kind property. 1040x form 2012 For more information, see Like-Kind Exchanges in  chapter 8. 1040x form 2012 The basis of the property you receive generally is the same as the adjusted basis of the property you gave up. 1040x form 2012 Example 1. 1040x form 2012 You traded a truck you used in your farming business for a new smaller truck to use in farming. 1040x form 2012 The adjusted basis of the old truck was $10,000. 1040x form 2012 The FMV of the new truck is $30,000. 1040x form 2012 Because this is a nontaxable exchange, you do not recognize any gain, and your basis in the new truck is $10,000, the same as the adjusted basis of the truck you traded. 1040x form 2012 Example 2. 1040x form 2012 You trade a field cultivator (adjusted basis of $8,000) for a planter (FMV of $9,000). 1040x form 2012 You use both the field cultivator and the planter in your farming business. 1040x form 2012 The basis of the planter you receive is $8,000, the same as the field cultivator traded Exchange expenses. 1040x form 2012   Exchange expenses generally are the closing costs that you pay. 1040x form 2012 They include such items as brokerage commissions, attorney fees, and deed preparation fees. 1040x form 2012 Add them to the basis of the like-kind property you receive. 1040x form 2012 Property plus cash. 1040x form 2012   If you trade property in a like-kind exchange and also pay money, the basis of the property you receive is the adjusted basis of the property you gave up plus the money you paid. 1040x form 2012 Example. 1040x form 2012 You trade in a truck (adjusted basis of $3,000) for another truck (FMV of $7,500) and pay $4,000. 1040x form 2012 Your basis in the new truck is $7,000 (the $3,000 adjusted basis of the old truck plus the $4,000 cash). 1040x form 2012 Special rules for related persons. 1040x form 2012   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. 1040x form 2012 Each person must report any gain or loss not recognized on the original exchange unless the loss is not deductible under the related party rules. 1040x form 2012 Each person reports it on the tax return filed for the year in which the later disposition occurred. 1040x form 2012 If this rule applies, the basis of the property received in the original exchange will be its FMV. 1040x form 2012 For more information, see chapter 8. 1040x form 2012 Exchange of business property. 1040x form 2012   Exchanging the property of one business for the property of another business generally is a multiple property exchange. 1040x form 2012 For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. 1040x form 2012 Basis for depreciation. 1040x form 2012   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind transaction. 1040x form 2012 For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. 1040x form 2012 Partially Nontaxable Exchanges A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. 1040x form 2012 The basis of the property you receive is the same as the adjusted basis of the property you gave up with the following adjustments. 1040x form 2012 Decrease the basis by the following amounts. 1040x form 2012 Any money you receive. 1040x form 2012 Any loss you recognize on the exchange. 1040x form 2012 Increase the basis by the following amounts. 1040x form 2012 Any additional costs you incur. 1040x form 2012 Any gain you recognize on the exchange. 1040x form 2012 If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. 1040x form 2012 Example 1. 1040x form 2012 You trade farmland (basis of $100,000) for another tract of farmland (FMV of $110,000) and $30,000 cash. 1040x form 2012 You realize a gain of $40,000. 1040x form 2012 This is the FMV of the land received plus the cash minus the basis of the land you traded ($110,000 + $30,000 − $100,000). 1040x form 2012 Include your gain in income (recognize gain) only to the extent of the cash received. 1040x form 2012 Your basis in the land you received is figured as follows. 1040x form 2012 Basis of land traded $100,000 Minus: Cash received (adjustment 1(a)) − 30,000   $70,000 Plus: Gain recognized (adjustment 2(b)) + 30,000 Basis of land received $100,000 Example 2. 1040x form 2012 You trade a truck (adjusted basis of $22,750) for another truck (FMV of $20,000) and $10,000 cash. 1040x form 2012 You realize a gain of $7,250. 1040x form 2012 This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($20,000 + $10,000 − $22,750). 1040x form 2012 You include all the gain in your income (recognize gain) because the gain is less than the cash you received. 1040x form 2012 Your basis in the truck you received is figured as follows. 1040x form 2012 Adjusted basis of truck traded $22,750 Minus: Cash received (adjustment 1(a)) −10,000   $12,750 Plus: Gain recognized (adjustment 2(b)) + 7,250 Basis of truck received $20,000 Allocation of basis. 1040x form 2012   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. 1040x form 2012 The rest is the basis of the like-kind property. 1040x form 2012 Example. 1040x form 2012 You traded a tractor with an adjusted basis of $15,000 for another tractor that had an FMV of $12,500. 1040x form 2012 You also received $1,000 cash and a truck that had an FMV of $3,000. 1040x form 2012 The truck is unlike property. 1040x form 2012 You realized a gain of $1,500. 1040x form 2012 This is the FMV of the tractor received plus the FMV of the truck received plus the cash minus the adjusted basis of the tractor you traded ($12,500 + $3,000 + $1,000 − $15,000). 1040x form 2012 You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. 1040x form 2012 Your basis in the properties you received is figured as follows. 1040x form 2012 Adjusted basis of old tractor $15,000 Minus: Cash received (adjustment 1(a)) − 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) + 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property—the truck ($3,000). 1040x form 2012 This is the truck's FMV. 1040x form 2012 The rest ($12,500) is the basis of the tractor. 1040x form 2012 Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. 1040x form 2012 Example. 1040x form 2012 You used a tractor on your farm for 3 years. 1040x form 2012 Its adjusted basis is $22,000 and its FMV is $40,000. 1040x form 2012 You are interested in a new tractor, which sells for $60,000. 1040x form 2012 Ordinarily, you would trade your old tractor for the new one and pay the dealer $20,000. 1040x form 2012 Your basis for depreciating the new tractor would then be $42,000 ($20,000 + $22,000, the adjusted basis of your old tractor). 1040x form 2012 However, you want a higher basis for depreciating the new tractor, so you agree to pay the dealer $60,000 for the new tractor if he will pay you $40,000 for your old tractor. 1040x form 2012 Because the two transactions are dependent on each other, you are treated as having exchanged your old tractor for the new one and paid $20,000 ($60,000 − $40,000). 1040x form 2012 Your basis for depreciating the new tractor is $42,000, the same as if you traded the old tractor. 1040x form 2012 Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you. 1040x form 2012 You also must know its FMV at the time it was given to you and any gift tax paid on it. 1040x form 2012 FMV equal to or greater than donor's adjusted basis. 1040x form 2012   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis when you received the gift. 1040x form 2012 Increase your basis by all or part of any gift tax paid, depending on the date of the gift. 1040x form 2012   Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. 1040x form 2012 See Adjusted Basis , earlier. 1040x form 2012   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. 1040x form 2012 Figure the increase by multiplying the gift tax paid by the following fraction. 1040x form 2012 Net increase in value of the gift Amount of the gift   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. 1040x form 2012 The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. 1040x form 2012 Example. 1040x form 2012 In 2013, you received a gift of property from your mother that had an FMV of $50,000. 1040x form 2012 Her adjusted basis was $20,000. 1040x form 2012 The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). 1040x form 2012 She paid a gift tax of $7,320. 1040x form 2012 Your basis, $26,076, is figured as follows. 1040x form 2012 Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000 Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . 1040x form 2012 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. 1040x form 2012 If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. 1040x form 2012 However, your basis cannot exceed the FMV of the gift when it was given to you. 1040x form 2012 FMV less than donor's adjusted basis. 1040x form 2012   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. 1040x form 2012 Your basis for figuring gain is the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. 1040x form 2012 Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. 1040x form 2012 (See Adjusted Basis , earlier. 1040x form 2012 )   If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither gain nor loss on the sale or other disposition of the property. 1040x form 2012 Example. 1040x form 2012 You received farmland as a gift from your parents when they retired from farming. 1040x form 2012 At the time of the gift, the land had an FMV of $80,000. 1040x form 2012 Your parents' adjusted basis was $100,000. 1040x form 2012 After you received the land, no events occurred that would increase or decrease your basis. 1040x form 2012 If you sell the land for $120,000, you will have a $20,000 gain because you must use the donor's adjusted basis at the time of the gift ($100,000) as your basis to figure a gain. 1040x form 2012 If you sell the land for $70,000, you will have a $10,000 loss because you must use the FMV at the time of the gift ($80,000) as your basis to figure a loss. 1040x form 2012 If the sales price is between $80,000 and $100,000, you have neither gain nor loss. 1040x form 2012 For instance, if the sales price was $90,000 and you tried to figure a gain using the donor's adjusted basis ($100,000), you would get a $10,000 loss. 1040x form 2012 If you then tried to figure a loss using the FMV ($80,000), you would get a $10,000 gain. 1040x form 2012 Business property. 1040x form 2012   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. 1040x form 2012 Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. 1040x form 2012 The same rule applies to a transfer by your former spouse if the transfer is incident to divorce. 1040x form 2012 However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed plus the liabilities to which the property is subject are more than the adjusted basis of the property transferred. 1040x form 2012 The transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. 1040x form 2012 For more information, see Property Settlements in Publication 504, Divorced or Separated Individuals. 1040x form 2012 Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. 1040x form 2012 If a federal estate return is filed, you can use its appraised value. 1040x form 2012 The FMV on the alternate valuation date, if the personal representative for the estate elects to use alternate valuation. 1040x form 2012 For information on the alternate valuation, see the Instructions for Form 706. 1040x form 2012 The decedent's adjusted basis in land to the extent of the value that is excluded from the decedent's taxable estate as a qualified conservation easement. 1040x form 2012 If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. 1040x form 2012 Special-use valuation method. 1040x form 2012   Under certain conditions, when a person dies, the executor or personal representative of that person's estate may elect to value qualified real property at other than its FMV. 1040x form 2012 If so, the executor or personal representative values the qualified real property based on its use as a farm or other closely held business. 1040x form 2012 If the executor or personal representative elects this method of valuation for estate tax purposes, this value is the basis of the property for the qualified heirs. 1040x form 2012 The qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. 1040x form 2012   If you are a qualified heir who received special-use valuation property, increase your basis by any gain recognized by the estate or trust because of post-death appreciation. 1040x form 2012 Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or on the alternate valuation date. 1040x form 2012 Figure all FMVs without regard to the special-use valuation. 1040x form 2012   You may be liable for an additional estate tax if, within 10 years after the death of the decedent, you transfer the property or the property stops being used as a farm. 1040x form 2012 This tax does not apply if you dispose of the property in a like-kind exchange or in an involuntary conversion in which all of the proceeds are reinvested in qualified replacement property. 1040x form 2012 The tax also does not apply if you transfer the property to a member of your family and certain requirements are met. 1040x form 2012   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. 1040x form 2012 To increase your basis, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of payment of the additional estate tax. 1040x form 2012 If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. 1040x form 2012 The increase in your basis is considered to have occurred immediately before the event that resulted in the additional estate tax. 1040x form 2012   You make the election by filing, with Form 706-A, United States Additional Estate Tax Return, a statement that: Contains your (and the estate's) name, address, and taxpayer identification number; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which you are making the election; and Provides any additional information required by the Form 706-A instructions. 1040x form 2012   For more information, see Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Form 706-A, and the related instructions. 1040x form 2012 Property inherited from a decedent who died in 2010. 1040x form 2012   If you inherited property from a decedent who died in 2010, different rules may apply. 1040x form 2012 See Publication 4895, Tax Treatment of Property Acquired From a Decendent Dying in 2010, for details. 1040x form 2012 Property Distributed From a Partnership or Corporation The following rules apply to determine a partner's basis and a shareholder's basis in property distributed respectively from a partnership to the partner with respect to the partner's interest in the partnership and from a corporation to the shareholder with respect to the shareholder's ownership of stock in the corporation. 1040x form 2012 Partner's basis. 1040x form 2012   Unless there is a complete liquidation of a partner's interest, the basis of property (other than money) distributed by a partnership to the partner is its adjusted basis to the partnership immediately before the distribution. 1040x form 2012 However, the basis of the property to the partner cannot be more than the adjusted basis of his or her interest in the partnership reduced by any money received in the same transaction. 1040x form 2012 For more information, see Partner's Basis for Distributed Property in Publication 541, Partnerships. 1040x form 2012 Shareholder's basis. 1040x form 2012   The basis of property distributed by a corporation to a shareholder is its fair market value. 1040x form 2012 For more information about corporate distributions, see Distributions to Shareholders in Publication 542, Corporations. 1040x form 2012 Prev  Up  Next   Home   More Online Publications