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1040x Irs Form

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1040x Irs Form

1040x irs form 5. 1040x irs form   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Prohibited Tax Shelter TransactionsEntity Level Tax Excess Benefit TransactionsTax on Disqualified Persons Tax on Organization Managers Excess Benefit Transaction Excess Business Holdings Taxable Distributions of Sponsoring Organizations Exception. 1040x irs form A donor advised fund does not include: Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Excise Taxes on Private Foundations Excise Taxes on Black Lung Benefit Trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements Introduction An excise tax may be imposed on certain tax-exempt organizations. 1040x irs form Topics - This chapter discusses: Prohibited tax shelter transactions Excess benefit transactions Excess business holdings Taxable distributions of sponsoring organizations Taxes on prohibited benefits distributed from donor advised funds Excise taxes on private foundations Excise taxes on 501(c)(21) black lung benefit trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements of Hospitals Useful Items - You may want to see: Forms (and Instructions) 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code See chapter 6 for more information about getting Form 4720. 1040x irs form Prohibited Tax Shelter Transactions Section 4965 imposes an excise tax on: Certain tax-exempt entities that are party to prohibited tax shelter transactions, and Any entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows or has reason to know that the transaction is a prohibited tax shelter transaction. 1040x irs form  Additionally, section 6033 provides new disclosure requirements on a tax-exempt entity that is a party to a prohibited tax shelter transaction. 1040x irs form Tax-exempt entities. 1040x irs form   Tax-exempt entities that are subject to section 4965 include: Entities described in section 501(c), including but not limited to the following common types of entities: Instrumentalities of the United States described in section 501(c)(1); Churches, hospitals, museums, schools, scientific research organizations, and other charities described in section 501(c)(3); Civic leagues, social welfare organizations, and local associations of employees described in section 501(c)(4); Labor, agricultural, or horticultural organizations described in section 501(c)(5); Business leagues, chambers of commerce, trade associations, and other organizations described in section 501(c)(6); Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9); Credit unions described in section 501(c)(14); Insurance companies described in section 501(c)(15); and Veterans' organizations described in section 501(c)(19). 1040x irs form Religious or apostolic associations or corporations described in section 501(d). 1040x irs form Entities described in section 170(c), including states, possessions of the United States, the District of Columbia, political subdivisions of states and political subdivisions of possessions of the United States (but not including the United States). 1040x irs form Indian tribal governments within the meaning of section 7701(a)(40). 1040x irs form Entity manager. 1040x irs form    An entity manager is any person with authority or responsibility similar to that exercised by an officer, director, or trustee, and, for any act, the person that has authority or responsibility with respect to the prohibited transaction. 1040x irs form Prohibited tax shelter transaction. 1040x irs form   A prohibited tax shelter transaction is any listed transaction, within the meaning of section 6707A(c)(2), and any prohibited reportable transactions. 1040x irs form A prohibited reportable transaction is a confidential transaction within the meaning of Regulations section 1. 1040x irs form 6011-4(b)(3), and a transaction with contractual protection within the meaning of Regulations section 1. 1040x irs form 6011-4(b)(4). 1040x irs form See the Instructions for Form 8886 for more information on listed transactions and prohibited reportable transactions. 1040x irs form Subsequently listed transaction. 1040x irs form   Any transaction to which the tax-exempt entity is a party and is later determined to be a listed transaction after the entity has become a party to it, is a subsequently listed transaction. 1040x irs form Entity Level Tax Section 4965(a)(1) imposes an entity level excise tax on any tax-exempt entity described in 1, 2, 3, or 4 above that becomes a party to a prohibited tax shelter transaction or is a party to a subsequently listed transaction (defined earlier). 1040x irs form The excise tax imposed on a tax-exempt entity applies to tax years in which the entity becomes a party to the prohibited tax shelter transaction and any subsequent tax years. 1040x irs form The amount of the excise tax depends on whether the tax-exempt entity knew or had reason to know that the transaction was a prohibited tax shelter transaction at the time it became a party to the transaction. 1040x irs form To figure and report the excise tax imposed on a tax-exempt entity for being a party to a prohibited tax shelter transaction, file Form 4720. 1040x irs form For more information about this excise tax, including information about how it is figured, see the Instructions for Form 4720. 1040x irs form Manager Level Tax Section 4965(a)(2) imposes an excise tax on any tax-exempt entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows (or has reason to know) that the transaction is a prohibited tax shelter transaction. 1040x irs form The excise tax, in the amount of $20,000, is assessed for each approval or other act causing the organization to be a party to the prohibited tax shelter transaction. 1040x irs form To report this tax, file Form 4720. 1040x irs form Excess Benefit Transactions Excise tax on excess benefit transactions. 1040x irs form   A disqualified person who benefits from an excess benefit transaction, such as compensation, fringe benefits, or contract payments from certain section 501(c)(3), 501(c)(4), or 501(c)(29) organizations, must correct the transaction and may have to pay an excise tax under section 4958. 1040x irs form A manager of the organization may also have to pay an excise tax under section 4958. 1040x irs form These taxes are reported on Form 4720. 1040x irs form   The excise taxes are imposed if an applicable tax-exempt organization provides an excess benefit to a disqualified person and that benefit exceeds the value of the benefit received in exchange. 1040x irs form   There are three taxes under section 4958. 1040x irs form Disqualified persons are liable for the first two taxes and certain organization managers are liable for the third tax. 1040x irs form    Taxes imposed on excess benefit transactions do not apply to a transaction under a written contract that was binding on September 13, 1995, and at all times thereafter before the transaction occurred. 1040x irs form Tax on Disqualified Persons An excise tax equal to 25% of the excess benefit is imposed on each excess benefit transaction between an applicable tax-exempt organization and a disqualified person. 1040x irs form The disqualified person who benefited from the transaction is liable for the tax. 1040x irs form See definition of Disqualified person, later at Disqualified person. 1040x irs form Additional tax on the disqualified person. 1040x irs form   If the 25% tax is imposed and the excess benefit transaction is not corrected within the taxable period, an additional excise tax equal to 200% of the excess benefit is imposed on any disqualified person involved. 1040x irs form   If a disqualified person makes a payment of less than the full correction amount, the 200% tax is imposed only on the unpaid portion of the correction amount. 1040x irs form If more than one disqualified person received an excess benefit from an excess benefit transaction, all such disqualified persons are jointly and severally liable for the taxes. 1040x irs form   To avoid the 200% tax, a disqualified person must correct the excess benefit transaction during the taxable period. 1040x irs form The 200% tax is abated (refunded if collected) if the excess benefit transaction is corrected within a 90-day correction period beginning on the date a statutory notice of deficiency is issued. 1040x irs form Taxable period. 1040x irs form   The taxable period means the period beginning with the date on which the excess benefit transaction occurs and ending on the earlier of: The date a notice of deficiency was mailed to the disqualified person for the initial tax on the excess benefit transaction, or The date on which the initial tax on the excess benefit transaction for the disqualified person is assessed. 1040x irs form Tax on Organization Managers If tax is imposed on a disqualified person for any excess benefit transaction, an excise tax equal to 10% of the excess benefit is imposed on an organization manager who knowingly participated in an excess benefit transaction, unless such participation was not willful and was due to reasonable cause. 1040x irs form This tax cannot exceed $20,000 ($10,000 for transactions entered in a tax year beginning before August 18, 2006), for each transaction. 1040x irs form There is also joint and several liability for this tax. 1040x irs form A person can be liable for both the tax paid by the disqualified person and the organization manager tax for a particular excess benefit transaction. 1040x irs form Organization Manager. 1040x irs form   An organization manager is any officer, director, or trustee of an applicable tax-exempt organization, or any individual having powers or responsibilities similar to officers, directors, or trustees of the organization, regardless of title. 1040x irs form An organization manager is not considered to have participated in an excess benefit transaction where the manager has opposed the transaction in a manner consistent with the fulfillment of the manager's responsibilities to the organization. 1040x irs form For example, a director who votes against giving an excess benefit would ordinarily not be subject to the 10% tax. 1040x irs form A person participates in a transaction knowingly if the person: Has actual knowledge of sufficient facts so that, based solely upon those facts, such transaction would be an excess benefit transaction; Is aware that such a transaction under these circumstances may violate the provisions of federal tax law governing excess benefit transactions; and Negligently fails to make reasonable attempts to ascertain whether the transaction is an excess benefit transaction, or the manager is in fact aware that it is such a transaction. 1040x irs form Knowing does not mean having reason to know. 1040x irs form The organization manager ordinarily will not be considered knowing if, after full disclosure of the factual situation to an appropriate professional, the organization manager relied on the professional's reasoned written opinion on matters within the professional's expertise or if the manager relied on the fact that the requirements for the rebuttable presumption of reasonableness have been satisfied. 1040x irs form Participation by an organization manager is willful if it is voluntary, conscious, and intentional. 1040x irs form An organization manager's participation is due to reasonable cause if the manager has exercised responsibility on behalf of the organization with ordinary business care and prudence. 1040x irs form Excess Benefit Transaction An excess benefit transaction is a transaction in which an economic benefit is provided by an applicable tax-exempt organization, directly or indirectly, to or for the use of any disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration (including the performance of services) received for providing such benefit. 1040x irs form The excess benefit transaction rules apply to all transactions with disqualified persons, regardless of whether the amount of the benefit provided is determined in whole or in part by the revenues of one or more activities of the organization. 1040x irs form To determine whether an excess benefit transaction has occurred, all consideration and benefits exchanged between a disqualified person and the applicable tax-exempt organization, and all entities it controls, are taken into account. 1040x irs form For purposes of determining the value of economic benefits, the value of property, including the right to use property, is the fair market value. 1040x irs form Fair market value is the price at which property, or the right to use property, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts. 1040x irs form Donor advised fund transactions occurring after August 17, 2006. 1040x irs form   For a donor advised fund, an excess benefit transaction includes a grant, loan, compensation, or other similar payment from the fund to a: Donor or donor advisor, Family member of a donor, or donor advisor, 35% controlled entity of a donor, or donor advisor, or 35% controlled entity of a family member of a donor, or donor advisor. 1040x irs form   The excess benefit in this transaction is the amount of the grant, loan, compensation, or other similar payment. 1040x irs form For additional information, see the Instructions for Form 4720. 1040x irs form Supporting organization transactions occurring after July 25, 2006. 1040x irs form   For any supporting organization, defined in section 509(a)(3), an excess benefit transaction includes grants, loans, compensation, or other similar payment provided by the supporting organization to a: Substantial contributor, Family member of a substantial contributor, 35% controlled entity of a substantial contributor, or 35% controlled entity of a family member of a substantial contributor. 1040x irs form   Additionally, an excess benefit transaction includes any loans provided by the supporting organization to a disqualified person (other than an organization described in section 509(a)(1), (2), or (4)). 1040x irs form   The excess benefit for substantial contributors and parties related to those contributors includes the amount of the grant, loan, compensation, or other similar payment. 1040x irs form For additional information, see the Instructions for Form 4720. 1040x irs form   Excess benefit transaction rules generally do not apply to transactions between a supporting organization and its supported organization described in section 501(c)(4), (5), or (6) in furtherance of charitable purposes. 1040x irs form Date of Occurrence An excess benefit transaction occurs on the date the disqualified person receives the economic benefit from the organization for federal income tax purposes. 1040x irs form However, when a single contractual arrangement provides for a series of compensation or other payments to or for the use of a disqualified person during the disqualified person's tax year, any excess benefit transaction with respect to these payments occurs on the last day of the taxpayer's tax year. 1040x irs form In the case of benefits provided to a qualified pension, profit-sharing, or stock bonus plan, the transaction occurs on the date the benefit is vested. 1040x irs form In the case of the transfer of property subject to a substantial risk of forfeiture, or in the case of rights to future compensation or property, the transaction occurs on the date the property, or the rights to future compensation or property, is not subject to a substantial risk of forfeiture. 1040x irs form Where the disqualified person elects to include an amount in gross income in the tax year of transfer under section 83(b), the excess benefit transaction occurs on the date the disqualified person receives the economic benefit for federal income tax purposes. 1040x irs form Correcting the excess benefit. 1040x irs form   An excess benefit transaction is corrected by undoing the excess benefit to the extent possible, and by taking any additional measures necessary to place the organization in a financial position not worse than what it would have been if the disqualified person were dealing under the highest fiduciary standards. 1040x irs form   A disqualified person corrects an excess benefit by making a payment in cash or cash equivalents, excluding payment by a promissory note, equal to the correction amount to the applicable tax-exempt organization. 1040x irs form The correction amount equals the excess benefit plus the interest on the excess benefit. 1040x irs form The interest rate can be no lower than the applicable federal rate, compounded annually, for the month the transaction occurred. 1040x irs form   A disqualified person can, with the agreement of the applicable tax-exempt organization, make a payment by returning the specific property previously transferred in the excess transaction. 1040x irs form In this case, the disqualified person is treated as making a payment equal to the lesser of: The fair market value of the property on the date the property is returned to the organization, or The fair market value of the property on the date the excess benefit transaction occurred. 1040x irs form   If the payment resulting from the return of property is less than the correction amount, the disqualified person must make an additional cash payment to the organization equal to the difference. 1040x irs form   If the payment resulting from the return of the property exceeds the correction amount described above, the organization can make a cash payment to the disqualified person equal to the difference. 1040x irs form Exception. 1040x irs form   For a correction of an excess benefit transaction (discussed earlier), no amount repaid in a manner prescribed by the Secretary can be held in a donor advised fund. 1040x irs form Applicable Tax-Exempt Organization An applicable tax-exempt organization is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization that is tax-exempt under section 501(a), or was such an organization at any time during a 5-year period ending on the day of the excess benefit transaction. 1040x irs form An applicable tax-exempt organization does not include: A private foundation as defined in section 509(a), A governmental entity that is: Exempt from (or not subject to) taxation without regard to section 501(a), or Not required to file an annual return, or A foreign organization, recognized by the IRS or by treaty, that receives substantially all of its support (other than gross investment income) from sources outside the United States. 1040x irs form An organization is not treated as a section 501(c)(3), 501(c)(4), or 501(c)(29) organization for any period covered by a final determination that the organization was not tax-exempt under section 501(a), but only if the determination was not based on private inurement or one or more excess benefit transactions. 1040x irs form Disqualified Person A disqualified person is: Any person (at any time during the 5-year period ending on the date of the transaction) in a position to exercise substantial influence over the affairs of the organization, A family member of an individual described in 1, and A 35% controlled entity. 1040x irs form For donor advised funds, sponsoring organizations, and certain supporting organizations occurring after August 17, 2006. 1040x irs form   The following persons will be considered disqualified persons along with certain family members and 35% controlled entities associated with them. 1040x irs form Donors of donor advised funds, Investment advisors of sponsoring organizations, and Disqualified persons of a section 509(a)(3) supporting organization that supports the applicable tax-exempt organization. 1040x irs form For certain supporting organization transactions occurring after July 25, 2006. 1040x irs form   Substantial contributors to supporting organizations will also be considered disqualified persons with respect to the supporting organizations, along with their family members and 35% controlled entities. 1040x irs form Investment advisor. 1040x irs form   Investment advisor means for any sponsoring organization, any person compensated by such organization (but not an employee of such organization) for managing the investment of, or providing investment advice for, assets maintained in donor advised funds owned by such sponsoring organization. 1040x irs form Substantial contributor. 1040x irs form   In general, a substantial contributor means any person who contributed or bequeathed an aggregate of more than $5,000 to the organization, if that amount is more than 2% of the total contributions and bequests received by the end of the organization's tax year in which the contribution or bequest is received. 1040x irs form A substantial contributor includes the grantor of a trust. 1040x irs form Family members. 1040x irs form   Family members of a disqualified person include a disqualified person's spouse, brothers or sisters (whether by whole or half-blood), spouses of brothers or sisters (whether by whole or half-blood), ancestors, children (including a legally adopted child), grandchildren, great grandchildren, and spouses of children, grandchildren, and great grandchildren (whether by whole or half-blood). 1040x irs form 35% controlled entity. 1040x irs form   A 35% controlled entity is: A corporation in which disqualified persons own more than 35% of the total combined voting power, A partnership in which such persons own more than 35% of the profits interest, or A trust or estate in which such persons own more than 35% of the beneficial interest. 1040x irs form   In determining the holdings of a business enterprise, any stock or other interest owned directly or indirectly shall apply. 1040x irs form Persons having substantial influence. 1040x irs form   Among those who are in a position to exercise substantial influence over the affairs of the organization are, for example, voting members of the governing body, and persons holding the power of: Presidents, chief executives, or chief operating officers. 1040x irs form Treasurers and chief financial officers. 1040x irs form Persons with a material financial interest in a provider-sponsored organization. 1040x irs form Persons not considered to have substantial influence. 1040x irs form   Persons who are not considered to be in a position to exercise substantial influence over the affairs of an organization include: An employee who receives benefits that total less than the highly compensated amount in section 414(q)(1)(B)(i) and who does not hold the executive or voting powers mentioned earlier in the discussion on Disqualified Person, is not a family member of a disqualified person, and is not a substantial contributor, Tax-exempt organizations described in section 501(c)(3), and Section 501(c)(4) organizations with respect to transactions engaged in with other section 501(c)(4) organizations. 1040x irs form Facts and circumstances. 1040x irs form   The determination of whether a person has substantial influence over the affairs of an organization is based on all the facts and circumstances. 1040x irs form Facts and circumstances that tend to show a person has substantial influence over the affairs of an organization include, but are not limited to, the following. 1040x irs form The person founded the organization. 1040x irs form The person is a substantial contributor to the organization under the section 507(d)(2)(A) definition, only taking into account contributions to the organization for the past 5 years. 1040x irs form The person's compensation is primarily based on revenues derived from activities of the organization that the person controls. 1040x irs form The person has or shares authority to control or determine a substantial portion of the organization's capital expenditures, operating budget, or compensation for employees. 1040x irs form The person manages a discrete segment or activity of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. 1040x irs form The person owns a controlling interest (measured by either vote or value) in a corporation, partnership, or trust that is a disqualified person. 1040x irs form The person is a nonstock organization controlled directly or indirectly by one or more disqualified persons. 1040x irs form   Facts and circumstances tending to show that a person does not have substantial influence over the affairs of an organization include, but are not limited to, the following. 1040x irs form The person has taken a bona fide vow of poverty as an employee or agent of a religious organization or on its behalf. 1040x irs form The person is an independent contractor whose sole relationship to the organization is providing professional advice (without having decision-making authority) with respect to transactions from which the independent contractor will not economically benefit either directly or indirectly aside from customary fees received for the professional advice rendered. 1040x irs form Any preferential treatment the person receives based on the size of the person's donation is also offered to others making comparable widely solicited donations. 1040x irs form The direct supervisor of the person is not a disqualified person. 1040x irs form The person does not participate in any management decisions affecting the organization as a whole or a discrete segment of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. 1040x irs form   In the case of multiple organizations affiliated by common control or governing documents, the determination of whether a person does or does not have substantial influence is made separately for each applicable tax-exempt organization. 1040x irs form A person may be a disqualified person with respect to transactions with more than one organization. 1040x irs form Reasonable Compensation. 1040x irs form    Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances. 1040x irs form The section 162 standard will apply in determining the reasonableness of compensation. 1040x irs form The fact that a bonus or revenue-sharing arrangement is subject to a cap is a relevant factor in determining reasonableness of compensation. 1040x irs form   To determine the reasonableness of compensation, all items of compensation provided by an applicable tax-exempt organization in exchange for performance of services are taken into account in determining the value of compensation (except for economic benefits that are disregarded under the discussion Disregarded benefits , later). 1040x irs form Items of compensation include: All forms of cash and noncash compensation, including salary, fees, bonuses, severance payments, and deferred noncash compensation, The payment of liability insurance premiums for, or the payment or reimbursement by the organization of penalties, taxes, or certain expenses under section 4958, unless excludable from income as a de minimis fringe benefit under section 132(a)(4), All other compensatory benefits, whether or not included in gross income for income tax purposes, Taxable and nontaxable fringe benefits, except fringe benefits described in section 132, and Foregone interest on loans. 1040x irs form    Intent to treat benefits as compensation. 1040x irs form An economic benefit is not treated as consideration for the performance of services unless the organization providing the benefit clearly indicates its intent to treat the benefit as compensation when the benefit is paid. 1040x irs form   An applicable tax-exempt organization (or entity that it controls) is treated as clearly indicating its intent to provide an economic benefit as compensation for services only if the organization provides written substantiation that is contemporaneous with the transfer of the economic benefits under consideration. 1040x irs form Ways to provide contemporaneous written substantiation of its intent to provide an economic benefit as compensation include: The organization produces a signed written employment contract, The organization reports the benefit as compensation on an original Form W-2, Form 1099, or Form 990, or on an amended form filed before starting an IRS examination, or The disqualified person reports the benefit as income on the person's original Form 1040, or on an amended form filed before starting an IRS examination. 1040x irs form Exception. 1040x irs form   If the economic benefit is excluded from the disqualified person's gross income for income tax purposes, the applicable tax-exempt organization is not required to indicate its intent to provide an economic benefit as compensation for services. 1040x irs form Rebuttable presumption that a transaction is not an excess benefit transaction. 1040x irs form   Payments under a compensation arrangement are presumed to be reasonable and the transfer of property (or right to use property) is presumed to be at fair market value, if the following three conditions are met. 1040x irs form The transaction is approved in advance by an authorized body of the organization (or an entity it controls) which is composed of individuals who do not have a conflict of interest concerning the transaction. 1040x irs form Before making its determination, the authorized body obtained and relied upon appropriate data as to comparability. 1040x irs form (There is a special safe harbor for small organizations. 1040x irs form If the organization has gross receipts of less than $1 million, appropriate comparability data includes data on compensation paid by three comparable organizations in the same or similar communities for similar services. 1040x irs form ) The authorized body adequately documents the basis for its determination concurrently with making that determination. 1040x irs form The documentation should include: The terms of the approved transaction and the date approved, The members of the authorized body who were present during debate on the transaction that was approved and those who voted on it, The comparability data obtained and relied upon by the authorized body and how the data was obtained, Any actions by a member of the authorized body having conflict of interest, and Documentation of the basis of the determination before the later of the next meeting of the authorized body or 60 days after the final actions of the authorized body are taken, and approval of records as reasonable, accurate, and complete within a reasonable time thereafter. 1040x irs form Disregarded benefits. 1040x irs form   The following economic benefits are disregarded for section 4958 purposes. 1040x irs form Nontaxable fringe benefits that are excluded from income under section 132. 1040x irs form Benefits provided to a volunteer for the organization if the benefit is provided to the general public in exchange for a membership fee or contribution of $75 or less. 1040x irs form Benefits provided to a member of an organization due to the payment of a membership fee or to a donor as a result of a deductible contribution, if a significant number of disqualified persons make similar payments or contributions and are offered a similar economic benefit. 1040x irs form Benefits provided to a person solely as a member of a charitable class that the applicable tax-exempt organization intends to benefit as part of the accomplishment of its exempt purpose. 1040x irs form A transfer of an economic benefit to or for the use of a governmental unit, as defined in section 170(c)(1), if exclusively for public purposes. 1040x irs form Special Exception for Initial Contracts      Section 4958 does not apply to any fixed payment made to a person under an initial contract. 1040x irs form   A fixed payment is an amount of cash or other property specified in the contract, or determined by a fixed formula that is specified in the contract, which is to be paid or transferred in exchange for the provision of specified services or property. 1040x irs form   A fixed formula can, generally, incorporate an amount that depends upon future specified events or contingencies, as long as no one has discretion when calculating the amount of a payment or deciding whether to make a payment (such as a bonus). 1040x irs form   An initial contract is a binding written contract between an applicable tax-exempt organization and a person who was not a disqualified person immediately before entering into the contract. 1040x irs form   A binding written contract, providing it can be terminated or canceled by the applicable tax-exempt organization without the other party's consent (except as a result of substantial nonperformance) and without substantial penalty, is treated as a new contract, as of the earliest date any termination or cancellation would be effective. 1040x irs form Also, if the parties make a material change to a contract, which includes an extension or renewal of the contract (except for an extension or renewal resulting from the exercise of an option by the disqualified person), or a more than incidental change to the amount payable under the contract, it is treated as a new contract as of the effective date of the material change. 1040x irs form More information. 1040x irs form   For more information, see the Instructions to Forms 990 and 4720. 1040x irs form Excess Business Holdings Private foundations are generally not permitted to hold more than a 20% interest in an unrelated business enterprise. 1040x irs form They may be subject to an excise tax on the amount of any excess business holdings. 1040x irs form For purposes of section 4943, for tax years beginning after August 17, 2006, donor advised funds and certain supporting organizations are considered private foundations. 1040x irs form Donor advised fund. 1040x irs form   In general, a donor advised fund is a fund or account separately identified by reference to contributions of a donor or donors that is owned and controlled by a sponsoring organization and for which the donor has or expects to have advisory privileges concerning the distribution or investment of the funds. 1040x irs form Supporting organizations. 1040x irs form   Only certain supporting organizations are subject to the excess business holdings tax under section 4943. 1040x irs form These include (1) Type III supporting organizations that are not functionally integrated and (2) Type II supporting organizations that accept any gift or contribution from a person who by himself or in connection with a related party controls the supported organization that the Type II supporting organization supports. 1040x irs form Taxes. 1040x irs form   A private foundation that has excess holdings in a business enterprise may become liable for an excise tax based on the amount of holdings. 1040x irs form The initial tax is 10% (5% for tax years beginning before August 18, 2006) of the value of the excess holdings and is imposed on the last day of each tax year that ends during the taxable period. 1040x irs form The excess holdings are determined on the day during the tax year when they were the largest. 1040x irs form   A foundation that fails to correct the excess business holdings becomes liable for an additional tax of 200% of the remaining excess business holdings as of the earlier of tax assessment or mailing of a notice of deficiency. 1040x irs form   For more information on the tax on excess business holdings, see the Instructions for Form 4720. 1040x irs form Taxable Distributions of Sponsoring Organizations An excise tax is imposed on a sponsoring organization for each taxable distribution it makes from a donor advised fund. 1040x irs form An excise tax is also imposed on any fund manager of the sponsoring organization who agreed to the making of a distribution, knowing that it is a taxable distribution. 1040x irs form Taxable distribution. 1040x irs form   A taxable distribution is any distribution from a donor advised fund to any natural person or to any other person if: The distribution is for any purpose other than one specified in section 170(c)(2)(B), or The sponsoring organization maintaining the donor advised fund does not exercise expenditure responsibility with respect to the distribution in accordance with section 4945(h). 1040x irs form    However, a taxable distribution does not include a distribution from a donor advised fund to: Any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization), The sponsoring organization of the donor advised fund, or Any other donor advised fund. 1040x irs form The tax on taxable distributions applies to distributions occurring in tax years beginning after August 17, 2006. 1040x irs form Sponsoring organization. 1040x irs form   A sponsoring organization is a section 170(c) organization that is neither a government organization (as referred to in section 170(c)(1) and (2)(A)) nor a private foundation. 1040x irs form Donor advised fund. 1040x irs form    A donor advised fund is a fund or account: Which is separately identified by reference to contributions of a donor or donors, Which is owned and controlled by a sponsoring organization, and For which the donor (or any person appointed or designated by the donor) has or expects to have advisory privileges concerning the distribution or investment of the funds held in the donor advised funds or accounts because of the donor's status as a donor. 1040x irs form Exception. 1040x irs form A donor advised fund does not include:    A fund or account that makes distributions only to a single identified organization or governmental entity, or Any fund or account for a person described in 3 above that gives advice about which individuals receive grants for travel, study, or similar purposes, if the following three requirements are met: The person's advisory privileges are performed exclusively by such person in their capacity as a committee member of which all the committee members are appointed by the sponsoring organization, No combination of persons with advisory privileges, described in 3 above, or persons related to those in 3 above directly or indirectly control the committee, and All grants from the fund or account are awarded on an objective and nondiscriminatory basis according to a procedure approved in advance by the board of directors of the sponsoring organization. 1040x irs form The procedure must be designed to ensure that all grants meet the requirements of section 4945(g)(1), (2), or (3). 1040x irs form Disqualified supporting organization. 1040x irs form   A disqualified supporting organization includes (1) a Type III supporting organization that is not functionally integrated and (2) any supporting organization where the donor or donor advisor (and any related parties) directly or indirectly controls a supported organization of the supporting organization. 1040x irs form Tax on sponsoring organization. 1040x irs form   A tax of 20% of the amount of each taxable distribution is imposed on the sponsoring organization. 1040x irs form Tax on fund manager. 1040x irs form   If a tax is imposed on a taxable distribution of the sponsoring organization, a tax of 5% of the distribution will be imposed on any fund manager who agreed to the distribution knowing that it was a taxable distribution. 1040x irs form Any fund manager who took part in the distribution and is liable for the tax must pay the tax. 1040x irs form The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. 1040x irs form If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. 1040x irs form   For more information on the tax on taxable distributions of sponsoring organizations, see the Instructions for Form 4720. 1040x irs form Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Prohibited benefit. 1040x irs form   If any donor, donor advisor, or related party advises the sponsoring organization about making a distribution which results in a donor, donor advisor, or related party receiving (either directly or indirectly) a more than incidental benefit, then such benefit is a prohibited benefit. 1040x irs form The tax on prohibited benefits applies to distributions occurring in tax years beginning after August 17, 2006. 1040x irs form Donor advisor. 1040x irs form   A donor advisor is any person appointed or designated by a donor to advise a sponsoring organization on the distribution or investment of amounts held in the donor's fund or account. 1040x irs form Related party. 1040x irs form   A related party includes any family member or 35% controlled entity. 1040x irs form See the definition of those terms under Disqualified Person , earlier. 1040x irs form Tax on donor, donor advisor, or related person. 1040x irs form    A tax of 125% of the benefit resulting from the distribution is imposed on both the party who advised as to the distribution (which might be a donor, donor advisor, or related party) and the party who received such benefit (which might be a donor, donor advisor, or related party). 1040x irs form The advisor and the party who received the benefit are jointly and severally liable for the tax. 1040x irs form Tax on fund managers. 1040x irs form   If a tax is imposed on a prohibited benefit received by a donor, donor advisor, or related person, a tax of 10% of the amount of the prohibited benefit is imposed on any fund manager who agreed to the distribution knowing that it would confer a prohibited benefit. 1040x irs form Any fund manager who took part in the distribution and is liable for the tax must pay the tax. 1040x irs form The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. 1040x irs form If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. 1040x irs form Exception. 1040x irs form   If a person engaged in an excess benefit transaction and received a prohibited benefit for the same transaction, the person is taxed under section 4958, and no tax is imposed under section 4967 for a prohibited benefit. 1040x irs form   For more information on taxes on prohibited benefits distributed from donor advised funds, see the Instructions for Form 4720. 1040x irs form Excise Taxes on Private Foundations There is an excise tax on the net investment income of most domestic private foundations. 1040x irs form Capital gains from appreciation are included in the tax base on private foundation net investment income. 1040x irs form This tax must be reported on Form 990-PF and must be paid annually at the time for filing that return or in quarterly estimated tax payments if the total tax for the year (section 4940 tax minus credits) is $500 or more. 1040x irs form Form 990-W is used to calculate the estimated tax. 1040x irs form In addition, there are several other rules that apply to excise taxes on private foundations. 1040x irs form These include: Restrictions on self-dealing between private foundations and their substantial contributors and other disqualified persons, Requirements that the foundation annually distribute income for charitable purposes, Limits on their holdings in any business enterprise (see Excess Business Holdings, earlier), Provisions that investments must not jeopardize the carrying out of exempt purposes, and Provisions to assure that expenditures further the organization's exempt purposes. 1040x irs form Violations of these provisions give rise to taxes and penalties against the private foundation and, in some cases, its managers, its substantial contributors, and certain related persons. 1040x irs form For more information on the excise taxes imposed on private foundations, see the Instructions for Form 4720 and the Instructions for Form 990-PF. 1040x irs form Excise Taxes on Black Lung Benefit Trusts A black lung benefit trust that makes any expenditures, payments, or investments other than those described in chapter 4 under 501(c)(21) - Black Lung Benefit Trusts must pay a tax equal to 10% of the amount of such expenditures. 1040x irs form If there are any acts of self-dealing between the trust and a disqualified person, a tax equal to 10% of the amount involved is imposed on the disqualified person. 1040x irs form Both of these excise taxes are reported on Schedule A (Form 990-BL). 1040x irs form See the Form 990-BL instructions for more information on these taxes and what has to be filed, even if the trust is excepted from filing. 1040x irs form Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements For tax years beginning after March 23, 2012, new section 4959 imposes an excise tax on hospital organizations which fail to meet certain section 501(r) requirements for each of their hospital facilities. 1040x irs form These entities must meet section 501(r)(3) requirements at all times during their tax year. 1040x irs form Section 501(r)(3) requirements pertain to a hospital organization preparing a community health needs assessment (CHNA). 1040x irs form See Schedule H, Hospitals (Form 990), for details. 1040x irs form Prev  Up  Next   Home   More Online Publications
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IRS Warns Consumers of Possible Scams Relating to Relief of Typhoon Victims

IR-2013-90, Nov. 15, 2013

WASHINGTON ― The Internal Revenue Service today issued a consumer alert about possible scams taking place in the wake of Typhoon Haiyan. On Nov. 8, 2013, Typhoon Haiyan — known as Yolanda in the Philippines — made landfall in the central Philippines, bringing strong winds and heavy rains that have resulted in flooding, landslides, and widespread damage.

Following major disasters, it is common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Such fraudulent schemes may involve contact by telephone, social media, email or in-person solicitations.

The IRS cautions people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:

  • To help disaster victims, donate to recognized charities. 

  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find legitimate, qualified charities; donations to these charities may be tax-deductible. Legitimate charities may also be found on the Federal Emergency Management Agency (FEMA) website at fema.gov.

  • Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.

  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

  • If you plan to make a contribution for which you would like to claim a deduction, see IRS Publication 526, Charitable Contributions, to read about the kinds of organizations that can receive deductible contributions.

Bogus websites may solicit funds for disaster victims. Such fraudulent sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade members of the public to send money or provide personal financial information that can be used to steal identities or financial resources. Additionally, scammers often send email that steers the recipient to bogus websites that appear to be affiliated with legitimate charitable causes.

Taxpayers suspecting disaster-related frauds should visit IRS.gov and search for the keywords “Report Phishing.” More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.” 

Related Item: Disaster Relief Resources for Charities and Contributors

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Page Last Reviewed or Updated: 19-Nov-2013

The 1040x Irs Form

1040x irs form Publication 3402 - Main Content Table of Contents What is a Limited Liability Company? Classification of an LLC LLCs Classified as Partnerships LLCs Classified as Disregarded Entities LLCs Classified as Corporations Subsequent Elections How To Get More InformationInternal Revenue Service Small Business Administration Other Federal Agencies What is a Limited Liability Company? For purposes of this publication, a limited liability company (LLC) is a business entity organized in the United States under state law. 1040x irs form Unlike a partnership, all of the members of an LLC have limited personal liability for its debts. 1040x irs form An LLC may be classified for federal income tax purposes as a partnership, corporation, or an entity disregarded as separate from its owner by applying the rules in Regulations section 301. 1040x irs form 7701-3. 1040x irs form The information in this publication applies to LLCs in general, and different rules may apply to special situations, including banks, insurance companies, or nonprofit organizations that are LLCs or that own LLCs. 1040x irs form Check your state's requirements and the federal tax regulations for further information. 1040x irs form Classification of an LLC Default classification rules. 1040x irs form   An LLC with at least two members is classified as a partnership for federal income tax purposes. 1040x irs form An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes). 1040x irs form Also, an LLC's federal tax classification can subsequently change under certain default rules discussed later. 1040x irs form Elected classification. 1040x irs form   If an LLC does not choose to be classified under the above default classifications, it can elect to be classified as an association taxable as a corporation or as an S corporation. 1040x irs form After an LLC has determined its federal tax classification, it can later elect to change that classification. 1040x irs form For details, see Subsequent Elections, later. 1040x irs form LLCs Classified as Partnerships If an LLC has at least two members and is classified as a partnership, it generally must file Form 1065, U. 1040x irs form S. 1040x irs form Return of Partnership Income. 1040x irs form Generally, an LLC classified as a partnership is subject to the same filing and reporting requirements as partnerships. 1040x irs form For certain purposes, members of an LLC are treated as limited partners in a limited partnership. 1040x irs form For example, LLC members are treated as limited partners for purposes of material participation under the passive activity limitation rules (see Temporary Regulation section 1. 1040x irs form 469-5T(e)). 1040x irs form See the Instructions for Form 1065 for reporting rules that apply specifically to LLCs. 1040x irs form Member manager. 1040x irs form   Only a member manager of an LLC can sign the partnership tax return. 1040x irs form And only a member manager can represent the LLC as the tax matters partner under the consolidated audit proceedings in sections 6221 through 6234. 1040x irs form A member manager is any owner of an interest in the LLC who, alone or together with others, has the continuing authority to make the management decisions necessary to conduct the business for which the LLC was formed. 1040x irs form If there are no elected or designated member managers, each owner is treated as a member manager. 1040x irs form Change in default classification. 1040x irs form   If the number of members in an LLC classified as a partnership is reduced to only one member, it becomes an entity disregarded as separate from its owner under Regulations section 301. 1040x irs form 7701-3(f)(2). 1040x irs form However, if the LLC has made an election to be classified as a corporation (discussed later) and that elective classification is in effect at the time of the change in membership, the default classification as a disregarded entity will not apply. 1040x irs form   Other tax consequences of a change in membership, such as recognition of gain or loss, are determined by the transactions through which an interest in the LLC is acquired or disposed of. 1040x irs form If a partnership that becomes a disregarded entity as a result of a decrease in the number of members makes an election to be classified as a corporation, the applicable deemed transactions discussed under Subsequent Elections, later, apply. 1040x irs form Example 1. 1040x irs form Ethel and Francis are members of an LLC classified as a partnership for federal tax purposes. 1040x irs form Each holds an equal membership interest. 1040x irs form The LLC does not hold any unrealized receivables or substantially appreciated inventory. 1040x irs form Ethel sells her entire interest in the LLC to Francis for $10,000. 1040x irs form After the sale, the business is continued by the LLC, which is owned solely by Francis. 1040x irs form No entity classification election is made after the sale to treat the LLC as a corporation for federal tax purposes. 1040x irs form The partnership terminates when Francis buys Ethel's entire interest. 1040x irs form Ethel must treat the transaction as the sale of a partnership interest and must report gain or loss, if any, resulting from the sale of her partnership interest. 1040x irs form For purposes of determining the tax treatment of Francis, the partnership is deemed to make a liquidating distribution of all of its assets to Ethel and Francis, and after this distribution, Francis is treated as acquiring the assets deemed to have been distributed to Ethel in liquidation of Ethel's partnership interest. 1040x irs form Francis's basis in the assets attributable to Ethel's one-half interest in the partnership is $10,000, the purchase price for Ethel's partnership interest. 1040x irs form Upon the termination of the partnership, Francis is considered to receive a distribution of those assets attributable to Francis's former interest in the partnership. 1040x irs form Francis must recognize gain or loss, if any, on the deemed distribution of the assets to the extent required by Internal Revenue Code section 731(a). 1040x irs form See Partnership Distributions in Publication 541. 1040x irs form Example 2. 1040x irs form George and Henrietta are members of an LLC classified as a partnership for federal tax purposes. 1040x irs form Each holds an equal membership interest. 1040x irs form The LLC does not hold any unrealized receivables or substantially appreciated inventory. 1040x irs form George and Henrietta each sell their entire interests in the LLC to Ian, an unrelated person, in exchange for $10,000. 1040x irs form After the sale, the business is continued by the LLC, which is owned solely by Ian. 1040x irs form No entity classification election is made after the sale to treat the LLC as a corporation for federal tax purposes. 1040x irs form The partnership terminates when Ian purchases the entire interests of George and Henrietta in the LLC. 1040x irs form George and Henrietta must report gain or loss, if any, resulting from the sale of their partnership interests. 1040x irs form For purposes of classifying the acquisition by Ian, the partnership is deemed to make a liquidating distribution of its assets to George and Henrietta. 1040x irs form Immediately following this distribution, Ian is deemed to acquire, by purchase, all of the former partnership's assets. 1040x irs form   For more details on the preceding two examples, see Revenue Ruling 99-6, 1999-6 I. 1040x irs form R. 1040x irs form B. 1040x irs form 6. 1040x irs form You can find Revenue Ruling 99-6 at www. 1040x irs form irs. 1040x irs form gov/pub/irs-irbs/irb99-06. 1040x irs form pdf. 1040x irs form LLCs Classified as Disregarded Entities If an LLC has only one member and is classified as an entity disregarded as separate from its owner, its income, deductions, gains, losses, and credits are reported on the owner's income tax return. 1040x irs form For example, if the owner of the LLC is an individual, the LLC's income and expenses would be reported on the following schedules filed with the owner's Form 1040: Schedule C, Profit or Loss from Business (Sole Proprietorship); Schedule C-EZ, Net Profit From Business (Sole Proprietorship); Schedule E, Supplemental Income and Loss; or Schedule F, Profit or Loss From Farming. 1040x irs form Employment tax and certain excise taxes. 1040x irs form   A single-member LLC that is classified as a disregarded entity for income tax purposes is treated as a separate entity for purposes of employment tax and certain excise taxes. 1040x irs form For wages paid after January 1, 2009, the single-member LLC is required to use its name and employer identification number (EIN) for reporting and payment of employment taxes. 1040x irs form A single-member LLC is also required to use its name and EIN to register for excise tax activities on Form 637; pay and report excise taxes reported on Forms 720, 730, 2290, and 11-C; and claim any refunds, credits, and payments on Form 8849. 1040x irs form See the employment and excise tax returns for more information. 1040x irs form Self-employment tax rule for disregarded entity LLCs. 1040x irs form   An individual owner of a single-member LLC classified as a disregarded entity is not an employee of the LLC. 1040x irs form Instead, the owner is subject to tax on the net earnings from self-employment of the LLC which is treated in the same manner as a sole-proprietorship. 1040x irs form Example 3. 1040x irs form LLC is a disregarded entity owned by Irene. 1040x irs form LLC has three employees (Kent, Patricia, and Tex) and pays wages. 1040x irs form LLC is treated as an entity separate from its owner for purposes of employment taxes. 1040x irs form For the wages paid to Kent, Patricia, and Tex, LLC is liable for income tax withholding, Federal Insurance Contributions Act (FICA) taxes, and Federal Unemployment Tax Act (FUTA) taxes. 1040x irs form In addition, LLC must file under its name and EIN the applicable employment tax returns; make timely employment tax deposits; and file with the Social Security Administration and furnish to LLC's employees (Kent, Patricia, and Tex) Forms W-2, Wage and Tax Statement. 1040x irs form Irene is self-employed for purposes of the self-employment tax. 1040x irs form Thus, Irene is subject to self-employment tax on her net earnings from self-employment with respect to LLC's activities. 1040x irs form Irene is not an employee of LLC for purposes of employment taxes. 1040x irs form Because LLC is treated as a sole proprietorship of Irene for income tax purposes, Irene must report the income and expenses from LLC on her Schedule C. 1040x irs form Irene will figure the tax due on her net earnings from self-employment on Schedule SE. 1040x irs form Irene can also deduct one-half of her self-employment tax on line 27 of her Form 1040. 1040x irs form Taxpayer identification number. 1040x irs form   For all income tax purposes, a single-member LLC classified as a disregarded entity must use the owner's social security number (SSN) or EIN. 1040x irs form This includes all information returns and reporting related to income tax. 1040x irs form For example, if a disregarded entity LLC that is owned by an individual is required to provide a Form W-9, Request for Taxpayer Identification Number and Certification, the LLC must provide the owner's SSN or EIN, not the LLC's EIN. 1040x irs form   However, most new single-member LLCs classified as a disregarded entity will need to obtain an EIN for the LLC. 1040x irs form An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed above (see Employment tax and certain excise taxes earlier). 1040x irs form See Form SS-4, Application for Employer Identification Number, for information on applying for an EIN. 1040x irs form Change in default classification. 1040x irs form   If a single-member LLC classified as a disregarded entity for income tax purposes acquires an additional member, it becomes a partnership under Regulations section 301. 1040x irs form 7701-3(f)(2). 1040x irs form However, if the LLC has made an election to be classified as a corporation (discussed later) and that elective classification is in effect at the time of the change in membership, the default classification as a partnership will not apply. 1040x irs form   Other tax consequences of a change in membership, such as recognition of gain or loss, are determined by the transactions through which an interest in the LLC is acquired or disposed of. 1040x irs form If a disregarded entity that becomes a partnership as a result of an increase in the number of members makes an election to be classified as a corporation, the applicable deemed transactions discussed in Subsequent Elections, later, apply. 1040x irs form Example 4. 1040x irs form Bart, who is not related to Alain, buys 50% of Alain's interest in an LLC that is a disregarded entity for $5,000. 1040x irs form Alain does not contribute any portion of the $5,000 to the LLC. 1040x irs form Alain and Bart continue to operate the business of the LLC as co-owners of the LLC. 1040x irs form The LLC is converted to a partnership when the new member, Bart, buys an interest in the disregarded entity from the owner, Alain. 1040x irs form Bart's buying a 50% interest in Alain's ownership interest in the LLC is treated as Bart's buying a 50% interest in each of the LLC's assets, which are treated as owned directly by Alain for federal income tax purposes. 1040x irs form Immediately thereafter, Alain and Bart are treated as contributing their respective interests in those assets to a partnership in exchange for ownership interests in the partnership. 1040x irs form Alain recognizes gain or loss from the deemed sale to Bart of the 50% interest in the assets. 1040x irs form Neither Alain nor Bart recognizes any gain or loss as a result of the deemed contribution of the assets to the partnership. 1040x irs form Example 5. 1040x irs form Charles, who is not related to Danielle, contributes $10,000 to an LLC owned by Danielle for a 50% ownership interest in the LLC. 1040x irs form The LLC uses all of the contributed cash in its business. 1040x irs form Charles and Danielle continue to operate the business of the LLC as co-owners of the LLC. 1040x irs form The LLC is converted from a disregarded entity to a partnership when Charles contributes cash to the LLC. 1040x irs form Charles's contribution is treated as a contribution to a partnership in exchange for an ownership interest in the partnership. 1040x irs form Danielle is treated as contributing all of the assets of the LLC to the partnership in exchange for a partnership interest. 1040x irs form Neither Charles nor Danielle recognizes gain or loss as a result of the conversion of the disregarded entity to a partnership. 1040x irs form   For more details on the preceding two examples, see Revenue Ruling 99-5, 1999-6 I. 1040x irs form R. 1040x irs form B. 1040x irs form 8. 1040x irs form You can find Revenue Ruling 99-5 at www. 1040x irs form irs. 1040x irs form gov/pub/irs-irbs/irb99-06. 1040x irs form pdf. 1040x irs form LLCs Classified as Corporations An LLC with either a single member or more than one member can elect to be classified as a corporation rather than be classified as a partnership or disregarded entity under the default rules discussed earlier. 1040x irs form File Form 8832, Entity Classification Election, to elect classification as a C corporation. 1040x irs form File Form 2553, Election by a Small Business Corporation, to elect classification as an S corporation. 1040x irs form LLCs electing classification as an S corporation are not required to file Form 8832 to elect classification as a corporation before filing Form 2553. 1040x irs form By filing Form 2553, an LLC is deemed to have elected classification as a corporation in addition to the S corporation classification. 1040x irs form If the LLC elects to be classified as a corporation by filing Form 8832, a copy of the LLC's Form 8832 must be attached to the federal income tax return of each direct and indirect owner of the LLC for the tax year of the owner that includes the date on which the election took effect. 1040x irs form Example 6. 1040x irs form Classification as a corporation without an S election. 1040x irs form Wanda and Sylvester are members of an LLC. 1040x irs form They agree that the LLC should be classified as a corporation but do not want to elect to have the LLC be treated as an S corporation. 1040x irs form The LLC must file Form 8832. 1040x irs form Example 7. 1040x irs form Classification as a corporation with an S election. 1040x irs form Evelyn and Carol are members of an LLC. 1040x irs form They agree that the LLC should be classified as an S corporation. 1040x irs form The LLC must file Form 2553 instead of Form 8832. 1040x irs form If the LLC is classified as a corporation, it must file a corporation income tax return. 1040x irs form If it is a C corporation, it is taxed on its taxable income and distributions to the members are includible in the members' gross income to the extent of the corporation's earnings and profits (double taxation). 1040x irs form If it is an S corporation, the corporation is generally not subject to any income tax and the income, deductions, gains, losses, and credits of the corporation “pass through” to the members. 1040x irs form Corporations generally file either: Form 1120, U. 1040x irs form S. 1040x irs form Corporation Income Tax Return; or Form 1120S, U. 1040x irs form S. 1040x irs form Income Tax Return for an S Corporation. 1040x irs form For more information on the income taxation of corporations and their shareholders, see Publication 542, Corporations. 1040x irs form For more information on the income taxation of S corporations and their shareholders, see the Instructions for Form 1120S, U. 1040x irs form S. 1040x irs form Income Tax Return for an S Corporation. 1040x irs form Subsequent Elections An LLC can elect to change its classification. 1040x irs form Generally, once an LLC has elected to change its classification, it cannot elect again to change it classification during the 60 months after the effective date of the election. 1040x irs form An election by a newly formed LLC that is effective on the date of formation is not considered a change for purposes of this limitation. 1040x irs form For more information and exceptions, see Regulations section 301. 1040x irs form 7701-3(c) and the Form 8832 instructions. 1040x irs form An election to change classification can have significant tax consequences based on the following transactions that are deemed to occur as a result of the election. 1040x irs form Partnership to corporation. 1040x irs form   An election to change classification from a partnership to a corporation will be treated as if the partnership contributed all of its assets and liabilities to the corporation in exchange for stock and the partnership then immediately liquidated by distributing the stock to its partners. 1040x irs form   For more information, see Partnership Distributions in Publication 541 and Property Exchanged for Stock in Publication 542. 1040x irs form Corporation to partnership. 1040x irs form   An election to change classification from a corporation to a partnership will be treated as if the corporation distributed all of its assets and liabilities to its shareholders in liquidation and the shareholders then immediately contributed all of the distributed assets and liabilities to a new partnership. 1040x irs form   For more information, see Contribution of Property in Publication 541 and Distributions to Shareholders in Publication 542. 1040x irs form Corporation to disregarded entity. 1040x irs form   An election to change classification from a corporation to a disregarded entity will be treated as if the corporation distributed all of its assets and liabilities to its single owner in liquidation. 1040x irs form   For more information, see Distributions to Shareholders in Publication 542. 1040x irs form Disregarded entity to corporation. 1040x irs form   An election to change classification from a disregarded entity to a corporation will be treated as if the owner of the disregarded entity contributed all of the assets and liabilities to the corporation in exchange for stock. 1040x irs form   For more information, see Property Exchanged for Stock in Publication 542. 1040x irs form How To Get More Information This section describes the help the IRS and other federal agencies offer to taxpayers who operate their own businesses. 1040x irs form Internal Revenue Service You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. 1040x irs form By selecting the method that is best for you, you will have quick and easy access to tax help. 1040x irs form Contacting your Taxpayer Advocate. 1040x irs form   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. 1040x irs form   You can contact the TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059 to see if you are eligible for assistance. 1040x irs form You can also call or write to your local taxpayer advocate, whose phone number and address are listed in your local telephone directory and in Publication 1546, Taxpayer Advocate Service — Your Voice at the IRS. 1040x irs form You can file Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), or ask an IRS employee to complete it on your behalf. 1040x irs form For more information, go to www. 1040x irs form irs. 1040x irs form gov/advocate. 1040x irs form Low Income Taxpayer Clinics (LITCs). 1040x irs form   LITCs are independent organizations that provide low income taxpayers with representation in federal tax controversies with the IRS for free or for a nominal charge. 1040x irs form The clinics also provide tax education and outreach for taxpayers with limited English proficiency or who speak English as a second language. 1040x irs form Publication 4134, Low Income Taxpayer Clinic List, provides information on clinics in your area. 1040x irs form It is available at www. 1040x irs form irs. 1040x irs form gov or at your local IRS office. 1040x irs form Small business workshops. 1040x irs form   Small business workshops are designed to help the small business owner understand and fulfill their federal tax responsibilities. 1040x irs form Workshops are sponsored and presented by IRS partners who are federal tax specialists. 1040x irs form Workshop topics vary from a general overview of taxes to more specific topics such as recordkeeping and retirement plans. 1040x irs form Although most are free, some workshops have fees associated with them. 1040x irs form Any fees charged for a workshop are paid to the sponsoring organization, not the IRS. 1040x irs form   For more information, visit www. 1040x irs form irs. 1040x irs form gov/businesses/small. 1040x irs form Subscribe to e-news for small businesses. 1040x irs form   Join the e-News for Small Businesses mailing list to receive updates, reminders, and other information useful to small business owners and self employed individuals. 1040x irs form Visit the website at www. 1040x irs form irs. 1040x irs form gov/businesses/small and click on “Subscribe to e-News. 1040x irs form ” Free tax services. 1040x irs form   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. 1040x irs form It contains a list of free tax publications and describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. 1040x irs form   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. 1040x irs form Internet. 1040x irs form You can access the IRS website at www. 1040x irs form irs. 1040x irs form gov 24 hours a day, 7 days a week, to: E-file your return. 1040x irs form Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 1040x irs form Check the status of your refund. 1040x irs form Go to www. 1040x irs form irs. 1040x irs form gov and click on Where's My Refund. 1040x irs form Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. 1040x irs form If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 1040x irs form Have your tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 1040x irs form Download forms, instructions, and publications. 1040x irs form Order IRS products online. 1040x irs form Research your tax questions online. 1040x irs form Search publications online by topic or keyword. 1040x irs form View Internal Revenue Bulletins (IRBs) published in the last few years. 1040x irs form Figure your withholding allowances using the withholding calculator online at www. 1040x irs form irs. 1040x irs form gov/individuals. 1040x irs form Determine if Form 6251 must be filed using our Alternative Minimum Tax (AMT) Assistant. 1040x irs form Sign up to receive local and national tax news by email. 1040x irs form Get information on starting and operating a small business. 1040x irs form Phone. 1040x irs form Many services are available by phone. 1040x irs form Ordering forms, instructions, and publications. 1040x irs form Call 1-800-829-3676 to order current-year forms, instructions, and publications, and prior-year forms and instructions. 1040x irs form You should receive your order within 10 days. 1040x irs form Asking tax questions. 1040x irs form Call the IRS with your tax questions at 1-800-829-1040. 1040x irs form Solving problems. 1040x irs form You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. 1040x irs form An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. 1040x irs form Call your local Taxpayer Assistance Center for an appointment. 1040x irs form To find the number, go to www. 1040x irs form irs. 1040x irs form gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 1040x irs form TTY/TDD equipment. 1040x irs form If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. 1040x irs form TeleTax topics. 1040x irs form Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. 1040x irs form Refund information. 1040x irs form To check the status of your 2009 refund, call 1-800-829-1954 during business hours or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). 1040x irs form Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. 1040x irs form If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 1040x irs form Have your 2009 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. 1040x irs form Refunds are sent out weekly on Fridays. 1040x irs form If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. 1040x irs form Evaluating the quality of our telephone services. 1040x irs form To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. 1040x irs form One method is for a second IRS representative to listen in on or record random telephone calls. 1040x irs form Another is to ask some callers to complete a short survey at the end of the call. 1040x irs form Walk-in. 1040x irs form Many products and services are available on a walk-in basis. 1040x irs form Products. 1040x irs form You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040x irs form Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. 1040x irs form Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. 1040x irs form Services. 1040x irs form You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. 1040x irs form An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 1040x irs form If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. 1040x irs form No appointment is necessary—just walk in. 1040x irs form If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. 1040x irs form A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. 1040x irs form If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. 1040x irs form All other issues will be handled without an appointment. 1040x irs form To find the number of your local office, go to www. 1040x irs form irs. 1040x irs form gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 1040x irs form Mail. 1040x irs form You can send your order for forms, instructions, and publications to the address below. 1040x irs form You should receive a response within 10 days after your request is received. 1040x irs form Internal Revenue Service1201 N. 1040x irs form Mitsubishi MotorwayBloomington, IL 61705–6613 DVD for tax products. 1040x irs form You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. 1040x irs form Prior-year forms, instructions, and publications. 1040x irs form Tax Map: an electronic research tool and finding aid. 1040x irs form Tax law frequently asked questions. 1040x irs form Tax Topics from the IRS telephone response system. 1040x irs form Internal Revenue Code—Title 26 of the U. 1040x irs form S. 1040x irs form Code. 1040x irs form Fill-in, print, and save features for most tax forms. 1040x irs form Internal Revenue Bulletins. 1040x irs form Toll-free and email technical support. 1040x irs form Two releases during the year. 1040x irs form – The first release will ship the beginning of January. 1040x irs form – The final release will ship the beginning of March. 1040x irs form Purchase the DVD from National Technical Information Service (NTIS) at www. 1040x irs form irs. 1040x irs form gov/cdorders for $30 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll free to buy the DVD for $30 (plus a $6 handling fee). 1040x irs form Small Business Administration The Small Business Administration (SBA) offers training and educational programs, counseling services, financial programs, and contract assistance for small business owners. 1040x irs form The SBA also has publications and videos on a variety of business topics. 1040x irs form The following briefly describes assistance provided by the SBA. 1040x irs form Small Business Development Centers (SBDCs). 1040x irs form   SBDCs provide counseling, training, and technical services to current and prospective small business owners who cannot afford the services of a private consultant. 1040x irs form Help is available when beginning, improving, or expanding a small business. 1040x irs form Business Information Centers (BICs). 1040x irs form   BICs offer a small business reference library, management video tapes, and computer technology to help plan a business. 1040x irs form BICs also offer one-on-one assistance. 1040x irs form Individuals who are in business or are interested in starting a business can use BICs as often as they wish at no charge. 1040x irs form Service Corps of Retired Executives (SCORE). 1040x irs form   SCORE provides small business counseling and training to current and prospective small business owners. 1040x irs form SCORE is made up of current and former business people who offer their expertise and knowledge to help people start, manage, and expand a small business. 1040x irs form SCORE also offers a variety of small business workshops. 1040x irs form    Internet. 1040x irs form You can visit the SBA website at www. 1040x irs form sba. 1040x irs form gov. 1040x irs form While visiting the SBA website, you can find a variety of information of interest to small business owners. 1040x irs form    Phone. 1040x irs form Call the SBA Answer Desk at 1-800-UASK-SBA (1-800-827-5722) for general information about programs available to assist small business owners. 1040x irs form    Walk-in. 1040x irs form You can walk in to a Small Business Development Center or Business Information Center to request assistance with your small business. 1040x irs form To find the location nearest you, visit the SBA website or call the SBA Answer Desk. 1040x irs form Other Federal Agencies Other federal agencies also publish publications and pamphlets to assist small businesses. 1040x irs form Most of these are available from the Superintendent of Documents at the Government Printing Office. 1040x irs form You can get information and order these publications and pamphlets in several ways. 1040x irs form Internet. 1040x irs form You can visit the GPO website at www. 1040x irs form access. 1040x irs form gpo. 1040x irs form gov. 1040x irs form Mail. 1040x irs form Write to the GPO at the following address. 1040x irs form Superintendent of DocumentsU. 1040x irs form S. 1040x irs form Government Printing OfficeP. 1040x irs form O. 1040x irs form Box 979050St. 1040x irs form Louis, MO 63917-9000 Phone. 1040x irs form Call the GPO toll-free at 1-866-512-1800 or at 202-512-1800 from the Washington, DC area. 1040x irs form Prev  Up  Next   Home   More Online Publications