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2012 Income Tax Form

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2012 Income Tax Form

2012 income tax form 3. 2012 income tax form   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. 2012 income tax form Form 4797. 2012 income tax form Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. 2012 income tax form Granting the right to remove deposits. 2012 income tax form Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. 2012 income tax form You must report the income from all the different sources on your tax return, unless it is excluded by law. 2012 income tax form Where you report the income on your tax return depends on its source. 2012 income tax form This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. 2012 income tax form For information on where to report other income, see the Instructions for Form 1040, U. 2012 income tax form S. 2012 income tax form Individual Income Tax Return. 2012 income tax form Accounting method. 2012 income tax form   The rules discussed in this chapter assume you use the cash method of accounting. 2012 income tax form Under the cash method, you generally include an item of income in gross income in the year you receive it. 2012 income tax form See Cash Method in chapter 2. 2012 income tax form   If you use an accrual method of accounting, different rules may apply to your situation. 2012 income tax form See Accrual Method in chapter 2. 2012 income tax form Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. 2012 income tax form Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. 2012 income tax form Use this schedule to figure the net profit or loss from regular farming operations. 2012 income tax form Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. 2012 income tax form This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. 2012 income tax form It also includes income from the sale of crop shares if you materially participate in producing the crop. 2012 income tax form See Rents (Including Crop Shares) , later. 2012 income tax form Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. 2012 income tax form Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. 2012 income tax form Land. 2012 income tax form Depreciable farm equipment. 2012 income tax form Buildings and structures. 2012 income tax form Livestock held for draft, breeding, sport, or dairy purposes. 2012 income tax form Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. 2012 income tax form Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. 2012 income tax form Sales of Farm Products Where to report. 2012 income tax form    Table 3-1 shows where to report the sale of farm products on your tax return. 2012 income tax form Schedule F. 2012 income tax form   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. 2012 income tax form This includes money and the fair market value of any property or services you receive. 2012 income tax form When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). 2012 income tax form See chapter 6 for information on the basis of assets. 2012 income tax form You generally report these amounts on Schedule F for the year you receive payment. 2012 income tax form Example. 2012 income tax form In 2012, you bought 20 feeder calves for $11,000 for resale. 2012 income tax form You sold them in 2013 for $21,000. 2012 income tax form You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. 2012 income tax form Form 4797. 2012 income tax form   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. 2012 income tax form In either case, you should always report these sales on Form 4797 instead of Schedule F. 2012 income tax form See Livestock under Ordinary or Capital Gain or Loss in chapter 8. 2012 income tax form Animals you do not hold primarily for sale are considered business assets of your farm. 2012 income tax form Table 3-1. 2012 income tax form Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. 2012 income tax form   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. 2012 income tax form This applies even if your agent pays you in a later year. 2012 income tax form For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. 2012 income tax form Sales Caused by Weather-Related Conditions If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. 2012 income tax form You must meet all the following conditions to qualify. 2012 income tax form Your principal trade or business is farming. 2012 income tax form You use the cash method of accounting. 2012 income tax form You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. 2012 income tax form The weather-related condition caused an area to be designated as eligible for assistance by the federal government. 2012 income tax form Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. 2012 income tax form The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. 2012 income tax form A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. 2012 income tax form See Other Involuntary Conversions in chapter 11. 2012 income tax form Usual business practice. 2012 income tax form   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. 2012 income tax form Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. 2012 income tax form If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. 2012 income tax form Connection with affected area. 2012 income tax form   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. 2012 income tax form However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. 2012 income tax form This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. 2012 income tax form Classes of livestock. 2012 income tax form   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. 2012 income tax form Do not separate animals into classes based on age, sex, or breed. 2012 income tax form Amount to be postponed. 2012 income tax form   Follow these steps to figure the amount of gain to be postponed for each class of animals. 2012 income tax form Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. 2012 income tax form For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. 2012 income tax form Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. 2012 income tax form Example. 2012 income tax form You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. 2012 income tax form As a result of drought, you sold 135 head during 2012. 2012 income tax form You realized $70,200 from the sale. 2012 income tax form On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. 2012 income tax form The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. 2012 income tax form How to postpone gain. 2012 income tax form   To postpone gain, attach a statement to your tax return for the year of the sale. 2012 income tax form The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. 2012 income tax form A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). 2012 income tax form Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. 2012 income tax form A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. 2012 income tax form The number of animals sold in each of the 3 preceding years. 2012 income tax form The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. 2012 income tax form The total number of animals sold and the number sold because of weather-related conditions during the tax year. 2012 income tax form A computation, as described above, of the income to be postponed for each class of livestock. 2012 income tax form   Generally, you must file the statement and the return by the due date of the return, including extensions. 2012 income tax form However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. 2012 income tax form For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). 2012 income tax form Attach the statement to the amended return and write “Filed pursuant to section 301. 2012 income tax form 9100-2” at the top of the amended return. 2012 income tax form File the amended return at the same address you filed the original return. 2012 income tax form Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. 2012 income tax form Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. 2012 income tax form However, if you materially participate in farming operations on the land, the rent is farm income. 2012 income tax form See Landlord Participation in Farming in chapter 12. 2012 income tax form Pasture income and rental. 2012 income tax form   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. 2012 income tax form You must enter it as Other income on Schedule F. 2012 income tax form If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. 2012 income tax form Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. 2012 income tax form It does not matter whether you use the cash method of accounting or an accrual method of accounting. 2012 income tax form If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. 2012 income tax form See Landlord Participation in Farming in chapter 12. 2012 income tax form Report the rental income on Schedule F. 2012 income tax form If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). 2012 income tax form The income is not included in self-employment income. 2012 income tax form Crop shares you use to feed livestock. 2012 income tax form   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. 2012 income tax form You must include the fair market value of the crop shares in income at that time. 2012 income tax form You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. 2012 income tax form Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. 2012 income tax form See  chapter 12. 2012 income tax form Crop shares you give to others (gift). 2012 income tax form   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. 2012 income tax form You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. 2012 income tax form Example. 2012 income tax form A tenant farmed part of your land under a crop-share arrangement. 2012 income tax form The tenant harvested and delivered the crop in your name to an elevator company. 2012 income tax form Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. 2012 income tax form They sell their crop shares in the following year and the elevator company makes payments directly to your children. 2012 income tax form In this situation, you are considered to have received rental income and then made a gift of that income. 2012 income tax form You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. 2012 income tax form Crop share loss. 2012 income tax form   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. 2012 income tax form See Publication 925 for information on these rules. 2012 income tax form Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. 2012 income tax form However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. 2012 income tax form See Cost-Sharing Exclusion (Improvements) , later. 2012 income tax form Report the agricultural program payment on the appropriate line of Schedule F, Part I. 2012 income tax form Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. 2012 income tax form However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. 2012 income tax form Claim the deduction on Schedule F for the year of repayment or reduction. 2012 income tax form Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. 2012 income tax form However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. 2012 income tax form You do not need approval from the IRS to adopt this method of reporting CCC loans. 2012 income tax form Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. 2012 income tax form However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. 2012 income tax form For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. 2012 income tax form Revenue Procedure 2008-52, 2008-36 I. 2012 income tax form R. 2012 income tax form B. 2012 income tax form 587, is available at  www. 2012 income tax form irs. 2012 income tax form gov/irb/2008-36_IRB/ar09. 2012 income tax form html. 2012 income tax form You can request income tax withholding from CCC loan payments you receive. 2012 income tax form Use Form W-4V, Voluntary Withholding Request. 2012 income tax form See chapter 16 for information about ordering the form. 2012 income tax form To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. 2012 income tax form Attach a statement to your return showing the details of the loan. 2012 income tax form You must file the statement and the return by the due date of the return, including extensions. 2012 income tax form If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). 2012 income tax form Attach the statement to the amended return and write “Filed pursuant to section 301. 2012 income tax form 9100-2” at the top of the return. 2012 income tax form File the amended return at the same address you filed the original return. 2012 income tax form When you make this election, the amount you report as income becomes your basis in the commodity. 2012 income tax form See chapter 6 for information on the basis of assets. 2012 income tax form If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. 2012 income tax form If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. 2012 income tax form If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. 2012 income tax form If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. 2012 income tax form Form 1099-A. 2012 income tax form   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. 2012 income tax form “CCC” should be shown in box 6. 2012 income tax form The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. 2012 income tax form Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. 2012 income tax form If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. 2012 income tax form Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. 2012 income tax form Market gain should be reported as follows. 2012 income tax form If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. 2012 income tax form However, adjust the basis of the commodity for the amount of the market gain. 2012 income tax form If you did not include the CCC loan in income in the year received, include the market gain in your income. 2012 income tax form The following examples show how to report market gain. 2012 income tax form Example 1. 2012 income tax form Mike Green is a cotton farmer. 2012 income tax form He uses the cash method of accounting and files his tax return on a calendar year basis. 2012 income tax form He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. 2012 income tax form In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. 2012 income tax form 00 per pound). 2012 income tax form In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. 2012 income tax form 50 per pound (lower than the loan amount). 2012 income tax form Later in 2013, he sold the cotton for $2,500. 2012 income tax form The market gain on the redemption was $. 2012 income tax form 50 ($2. 2012 income tax form 00 – $1. 2012 income tax form 50) per pound. 2012 income tax form Mike realized total market gain of $500 ($. 2012 income tax form 50 x 1,000 pounds). 2012 income tax form How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. 2012 income tax form Included CCC loan. 2012 income tax form   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. 2012 income tax form The $500 market gain is not recognized on the redemption. 2012 income tax form He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. 2012 income tax form   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. 2012 income tax form His gain from the sale is $1,000 ($2,500 – $1,500). 2012 income tax form He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. 2012 income tax form Excluded CCC loan. 2012 income tax form   Mike has income of $500 from market gain in 2013. 2012 income tax form He reports it on Schedule F, lines 4a and 4b. 2012 income tax form His basis in the cotton is zero, so his gain from its sale is $2,500. 2012 income tax form He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. 2012 income tax form Example 2. 2012 income tax form The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. 2012 income tax form Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. 2012 income tax form In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. 2012 income tax form How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. 2012 income tax form Included CCC loan. 2012 income tax form   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. 2012 income tax form The $500 market gain is not recognized on the redemption. 2012 income tax form Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. 2012 income tax form   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. 2012 income tax form Mike has no gain or loss on its sale to the cotton buyer for that amount. 2012 income tax form Excluded CCC loan. 2012 income tax form   As in Example 1, Mike has income of $500 from market gain in 2013. 2012 income tax form He reports it on Schedule F, lines 4a and 4b. 2012 income tax form His basis in the cotton is zero, so his gain from its sale is $1,500. 2012 income tax form He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. 2012 income tax form Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. 2012 income tax form You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. 2012 income tax form Cost-share payments you receive may qualify for the cost-sharing exclusion. 2012 income tax form See Cost-Sharing Exclusion (Improvements) , later. 2012 income tax form CRP payments are reported to you on Form 1099-G. 2012 income tax form Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. 2012 income tax form See the instructions for Schedule SE (Form 1040). 2012 income tax form Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. 2012 income tax form You generally include them in the year you receive them. 2012 income tax form Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops, because of drought, flood, or any other natural disaster. 2012 income tax form You can request income tax withholding from crop disaster payments you receive from the federal government. 2012 income tax form Use Form W-4V, Voluntary Withholding Request. 2012 income tax form See chapter 16 for information about ordering the form. 2012 income tax form Election to postpone reporting until the following year. 2012 income tax form   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. 2012 income tax form You use the cash method of accounting. 2012 income tax form You receive the crop insurance proceeds in the same tax year the crops are damaged. 2012 income tax form You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. 2012 income tax form   Deferral is not permitted for proceeds received from revenue insurance policies. 2012 income tax form   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. 2012 income tax form Check the box on line 8c and attach a statement to your tax return. 2012 income tax form The statement must include your name and address and contain the following information. 2012 income tax form A statement that you are making an election under IRC section 451(d) and Regulations section 1. 2012 income tax form 451-6. 2012 income tax form The specific crop or crops physically destroyed or damaged. 2012 income tax form A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. 2012 income tax form The cause of the physical destruction or damage and the date or dates it occurred. 2012 income tax form The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. 2012 income tax form The name of each insurance carrier from whom you received payments. 2012 income tax form   One election covers all crops representing a single trade or business. 2012 income tax form If you have more than one farming business, make a separate election for each one. 2012 income tax form For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. 2012 income tax form   An election is binding for the year unless the IRS approves your request to change it. 2012 income tax form To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. 2012 income tax form Ogden Submission Processing Center P. 2012 income tax form O. 2012 income tax form Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. 2012 income tax form These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. 2012 income tax form They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. 2012 income tax form Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. 2012 income tax form You must include these benefits in income in the year you receive them. 2012 income tax form You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. 2012 income tax form Report the benefits on Schedule F, Part I, as agricultural program payments. 2012 income tax form You can usually take a current deduction for the same amount as a feed expense. 2012 income tax form Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. 2012 income tax form A payment is any economic benefit you get as a result of an improvement. 2012 income tax form However, this exclusion applies only to that part of a payment that meets all three of the following tests. 2012 income tax form It was for a capital expense. 2012 income tax form You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. 2012 income tax form You must include the payment for a deductible expense in income, and you can take any offsetting deduction. 2012 income tax form See chapter 5 for information on deducting soil and water conservation expenses. 2012 income tax form It does not substantially increase your annual income from the property for which it is made. 2012 income tax form An increase in annual income is substantial if it is more than the greater of the following amounts. 2012 income tax form 10% of the average annual income derived from the affected property before receiving the improvement. 2012 income tax form $2. 2012 income tax form 50 times the number of affected acres. 2012 income tax form The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. 2012 income tax form Qualifying programs. 2012 income tax form   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. 2012 income tax form The rural clean water program authorized by the Federal Water Pollution Control Act. 2012 income tax form The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. 2012 income tax form The water bank program authorized by the Water Bank Act. 2012 income tax form The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. 2012 income tax form The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. 2012 income tax form The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. 2012 income tax form The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. 2012 income tax form Certain small watershed programs, listed later. 2012 income tax form Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. 2012 income tax form Several state programs have been approved. 2012 income tax form For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). 2012 income tax form Small watershed programs. 2012 income tax form   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. 2012 income tax form The programs under the Watershed Protection and Flood Prevention Act. 2012 income tax form The flood prevention projects under the Flood Control Act of 1944. 2012 income tax form The Emergency Watershed Protection Program under the Flood Control Act of 1950. 2012 income tax form Certain programs under the Colorado River Basin Salinity Control Act. 2012 income tax form The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. 2012 income tax form The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. 2012 income tax form The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. 2012 income tax form The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. 2012 income tax form The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. 2012 income tax form The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. 2012 income tax form The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. 2012 income tax form The Conservation Security Program authorized by the Food Security Act of 1985. 2012 income tax form The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. 2012 income tax form Income realized. 2012 income tax form   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). 2012 income tax form Value of the improvement. 2012 income tax form   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. 2012 income tax form The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. 2012 income tax form Any government payments under a program not listed earlier. 2012 income tax form Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. 2012 income tax form Any government payment to you for rent or for your services. 2012 income tax form The denominator of the fraction is the total cost of the improvement. 2012 income tax form Excludable portion. 2012 income tax form   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. 2012 income tax form 10% of the prior average annual income from the affected acreage. 2012 income tax form The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. 2012 income tax form $2. 2012 income tax form 50 times the number of affected acres. 2012 income tax form The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. 2012 income tax form You may need to consult your tax advisor for assistance. 2012 income tax form Example. 2012 income tax form One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. 2012 income tax form The total cost of the improvement was $500,000. 2012 income tax form The USDA paid $490,000. 2012 income tax form You paid $10,000. 2012 income tax form The value of the cost-sharing improvement is $15,000. 2012 income tax form The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. 2012 income tax form The excludable portion is the greater amount, $1,550. 2012 income tax form You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. 2012 income tax form   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. 2012 income tax form Any payment excluded from income is not part of your basis. 2012 income tax form In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. 2012 income tax form   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. 2012 income tax form How to report the exclusion. 2012 income tax form   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. 2012 income tax form The statement must include the following information. 2012 income tax form The dollar amount of the cost funded by the government payment. 2012 income tax form The value of the improvement. 2012 income tax form The amount you are excluding. 2012 income tax form   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. 2012 income tax form Recapture. 2012 income tax form   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. 2012 income tax form In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. 2012 income tax form You must report the recapture on Form 4797. 2012 income tax form See Section 1255 property under Other Gains in chapter 9. 2012 income tax form Electing not to exclude payments. 2012 income tax form   You can elect not to exclude all or part of any payments you receive under these programs. 2012 income tax form If you make this election for all of these payments, none of the above restrictions and rules apply. 2012 income tax form You must make this election by the due date, including extensions, for filing your return. 2012 income tax form In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. 2012 income tax form If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). 2012 income tax form Write “Filed pursuant to section 301. 2012 income tax form 9100-2” at the top of the amended return and file it at the same address you filed the original return. 2012 income tax form Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. 2012 income tax form You must include these payments on Schedule F, lines 4a and 4b. 2012 income tax form The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. 2012 income tax form You must include these payments on Schedule F, lines 6a and 6b. 2012 income tax form The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. 2012 income tax form Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. 2012 income tax form As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. 2012 income tax form If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. 2012 income tax form If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. 2012 income tax form Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. 2012 income tax form Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. 2012 income tax form The gain or loss is capital or ordinary depending on how you used the quota. 2012 income tax form See Capital or ordinary gain or loss , later. 2012 income tax form Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. 2012 income tax form Adjusted basis. 2012 income tax form   The adjusted basis of your quota is determined differently depending on how you obtained the quota. 2012 income tax form The basis of a quota derived from an original grant by the federal government is zero. 2012 income tax form The basis of a purchased quota is the purchase price. 2012 income tax form The basis of a quota received as a gift is generally the same as the donor's basis. 2012 income tax form However, under certain circumstances, the basis is increased by the amount of gift taxes paid. 2012 income tax form If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. 2012 income tax form The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. 2012 income tax form Reduction of basis. 2012 income tax form   You are required to reduce the basis of your tobacco quota by the following amounts. 2012 income tax form Deductions you took for amortization, depletion, or depreciation. 2012 income tax form Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. 2012 income tax form The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). 2012 income tax form Amount treated as interest. 2012 income tax form   You must reduce your tobacco quota buyout program payment by the amount treated as interest. 2012 income tax form The interest is reportable as ordinary income. 2012 income tax form If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. 2012 income tax form   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. 2012 income tax form You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. 2012 income tax form For more information, see Notice 2005-57, 2005-32 I. 2012 income tax form R. 2012 income tax form B. 2012 income tax form 267, available at www. 2012 income tax form irs. 2012 income tax form gov/irb/2005-32_IRB/ar13. 2012 income tax form html. 2012 income tax form Installment method. 2012 income tax form   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. 2012 income tax form Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. 2012 income tax form See chapter 10 for more information. 2012 income tax form Capital or ordinary gain or loss. 2012 income tax form   Whether your gain or loss is ordinary or capital depends on how you used the quota. 2012 income tax form Quota used in the trade or business of farming. 2012 income tax form   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. 2012 income tax form See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. 2012 income tax form Quota held for investment. 2012 income tax form   If you held the quota for investment purposes, any gain or loss is capital gain or loss. 2012 income tax form The same result also applies if you held the quota for the production of income, though not connected with a trade or business. 2012 income tax form Gain treated as ordinary income. 2012 income tax form   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. 2012 income tax form Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. 2012 income tax form The cost of acquiring a quota. 2012 income tax form Amounts for amortization, depletion, or depreciation. 2012 income tax form Amounts to reflect a reduction in the quota pounds. 2012 income tax form   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. 2012 income tax form Self-employment income. 2012 income tax form   The tobacco quota buyout payments are not self-employment income. 2012 income tax form Income averaging for farmers. 2012 income tax form   The gain or loss resulting from the quota payments does not qualify for income averaging. 2012 income tax form A tobacco quota is considered an interest in land. 2012 income tax form Income averaging is not available for gain or loss arising from the sale or other disposition of land. 2012 income tax form Involuntary conversion. 2012 income tax form   The buyout of the tobacco quota is not an involuntary conversion. 2012 income tax form Form 1099-S. 2012 income tax form   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. 2012 income tax form The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. 2012 income tax form Like-kind exchange of quota. 2012 income tax form   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. 2012 income tax form See Notice 2005-57 for more information. 2012 income tax form Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. 2012 income tax form Taxation of payments to tobacco growers. 2012 income tax form   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. 2012 income tax form Individuals will generally report the payments as an Agricultural program payment on Schedule F. 2012 income tax form If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. 2012 income tax form Self-employment income. 2012 income tax form   Payments to growers generally represent self-employment income. 2012 income tax form If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. 2012 income tax form Income averaging for farmers. 2012 income tax form   Payments to growers who are individuals qualify for farm income averaging. 2012 income tax form Form 1099-G. 2012 income tax form   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. 2012 income tax form Other Payments You must include most other government program payments in income. 2012 income tax form Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. 2012 income tax form How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. 2012 income tax form Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. 2012 income tax form You must also capitalize the full cost of the improvement. 2012 income tax form Since you have included the payments in income, they do not reduce your basis. 2012 income tax form However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. 2012 income tax form National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. 2012 income tax form You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. 2012 income tax form If you produce a tobacco crop, report the payments as income from farming on your Schedule F. 2012 income tax form If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. 2012 income tax form Payment to More Than One Person The USDA reports program payments to the IRS. 2012 income tax form It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). 2012 income tax form If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. 2012 income tax form You should file Form 1099-G to report the identity of the actual recipient to the IRS. 2012 income tax form You should also give this information to the recipient. 2012 income tax form You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. 2012 income tax form Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. 2012 income tax form However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. 2012 income tax form See chapter 16 for information about ordering Form 1099-G. 2012 income tax form Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). 2012 income tax form If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative. 2012 income tax form Form 1099-PATR. 2012 income tax form   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. 2012 income tax form Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. 2012 income tax form For information on the alternative minimum tax, see the Instructions for Form 6251. 2012 income tax form Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. 2012 income tax form They include the following items. 2012 income tax form Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). 2012 income tax form The stated dollar value of qualified written notices of allocation. 2012 income tax form The fair market value of other property. 2012 income tax form Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. 2012 income tax form You must reduce the cost or other basis of these items by the amount of such patronage dividends received. 2012 income tax form Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. 2012 income tax form If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. 2012 income tax form Qualified written notice of allocation. 2012 income tax form   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. 2012 income tax form A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. 2012 income tax form The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. 2012 income tax form You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. 2012 income tax form Signing and giving a written agreement to the cooperative. 2012 income tax form Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. 2012 income tax form The cooperative must notify you in writing of this bylaw and give you a copy. 2012 income tax form Endorsing and cashing a qualified check paid as part of the same patronage dividend. 2012 income tax form You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. 2012 income tax form Qualified check. 2012 income tax form   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. 2012 income tax form It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. 2012 income tax form It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. 2012 income tax form Loss on redemption. 2012 income tax form   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. 2012 income tax form The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. 2012 income tax form Nonqualified notice of allocation. 2012 income tax form   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. 2012 income tax form Your basis in the notice is zero. 2012 income tax form You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. 2012 income tax form Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. 2012 income tax form However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. 2012 income tax form   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. 2012 income tax form For example, if it represents interest income, report it on your return as interest. 2012 income tax form Buying or selling capital assets or depreciable property. 2012 income tax form   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. 2012 income tax form You must, however, reduce the basis of these assets by the dividends. 2012 income tax form This reduction is taken into account as of the first day of the tax year in which the dividends are received. 2012 income tax form If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. 2012 income tax form   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. 2012 income tax form Example. 2012 income tax form On July 1, 2012, Mr. 2012 income tax form Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. 2012 income tax form The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). 2012 income tax form Mr. 2012 income tax form Brown files his return on a calendar year basis. 2012 income tax form For 2012, he claimed a depreciation deduction of $311, using the 10. 2012 income tax form 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). 2012 income tax form On July 2, 2013, the cooperative association paid Mr. 2012 income tax form Brown a $300 cash patronage dividend for buying the machine. 2012 income tax form Mr. 2012 income tax form Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. 2012 income tax form Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. 2012 income tax form 38% × 1. 2012 income tax form 5 = 23. 2012 income tax form 07% Depreciation deduction for 2013 ($2,289 × 23. 2012 income tax form 07%) $528 Exceptions. 2012 income tax form   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. 2012 income tax form If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. 2012 income tax form If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). 2012 income tax form   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. 2012 income tax form Personal purchases. 2012 income tax form   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). 2012 income tax form This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. 2012 income tax form Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. 2012 income tax form A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. 2012 income tax form These allocations can be paid in money, other property, or qualified certificates. 2012 income tax form Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. 2012 income tax form Qualified certificates. 2012 income tax form   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. 2012 income tax form The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. 2012 income tax form If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. 2012 income tax form Nonqualified certificates. 2012 income tax form   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. 2012 income tax form Your basis in the certificate is zero. 2012 income tax form You must include in income any amount you receive from its sale, redemption, or other disposition. 2012 income tax form Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. 2012 income tax form Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. 2012 income tax form For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. 2012 income tax form General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in gross income for tax purposes. 2012 income tax form Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. 2012 income tax form It is excluded from taxable income (see Exclusions , later). 2012 income tax form Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. 2012 income tax form If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. 2012 income tax form Election to defer income from discharge of indebtedness. 2012 income tax form   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. 2012 income tax form Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. 2012 income tax form See IRC section 108(i) and Publication 4681 for details. 2012 income tax form Form 1099-C. 2012 income tax form   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. 2012 income tax form The amount of debt canceled is shown in box 2. 2012 income tax form Exceptions The following discussion covers some exceptions to the general rule for canceled debt. 2012 income tax form These exceptions apply before the exclusions discussed below. 2012 income tax form Price reduced after purchase. 2012 income tax form   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. 2012 income tax form Reduce your basis in the property by the amount of the reduction in the debt. 2012 income tax form The rules that apply to bankruptcy and insolvency are explained below under Exclusions . 2012 income tax form Deductible debt. 2012 income tax form   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. 2012 income tax form This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. 2012 income tax form Example. 2012 income tax form You get accounting services for your farm on credit. 2012 income tax form Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. 2012 income tax form Your accountant forgives part of the amount you owe for the accounting services. 2012 income tax form How you treat the canceled debt depends on your method of accounting. 2012 income tax form Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. 2012 income tax form Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. 2012 income tax form Exclusions Do not include canceled debt in income in the following situations. 2012 income tax form The cancellation takes place in a bankruptcy case under title 11 of the U. 2012 income tax form S. 2012 income tax form Code. 2012 income tax form The cancellation takes place when you are insolvent. 2012 income tax form The canceled debt is a qualified farm debt. 2012 income tax form The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). 2012 income tax form See Publication 334, Tax Guide for Small Business, chapter 5. 2012 income tax form The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. 2012 income tax form The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. 2012 income tax form If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. 2012 income tax form If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. 2012 income tax form See Form 982 , later, for information on how to claim an exclusion for a canceled debt. 2012 income tax form Debt. 2012 income tax form   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. 2012 income tax form Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. 2012 income tax form Bankruptcy. 2012 income tax form   A bankruptcy case is a case under title 11 of the U. 2012 income tax form S. 2012 income tax form Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. 2012 income tax form   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. 2012 income tax form Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . 2012 income tax form Insolvency. 2012 income tax form   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. 2012 income tax form   You can exclude canceled debt from gross income up to the amount by which you are insolvent. 2012 income tax form If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. 2012 income tax form Otherwise, you include the difference in gross income. 2012 income tax form Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . 2012 income tax form You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. 2012 income tax form Example. 2012 income tax form You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. 2012 income tax form Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. 2012 income tax form Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). 2012 income tax form You can exclude this amount from income. 2012 income tax form The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. 2012 income tax form If not, you must include it in income. 2012 income tax form Reduction of tax attributes. 2012 income tax form   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. 2012 income tax form Order of reduction. 2012 income tax form   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. 2012 income tax form Net operating loss (NOL). 2012 income tax form Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. 2012 income tax form Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. 2012 income tax form General business credit carryover. 2012 income tax form Reduce the credit carryover to or from the tax year of the debt cancellation. 2012 income tax form Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. 2012 income tax form Minimum tax credit. 2012 income tax form Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. 2012 income tax form Reduce the credit 331/3 cents for each dollar of excluded canceled debt. 2012 income tax form Capital loss. 2012 income tax form Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. 2012 income tax form Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. 2012 income tax form Basis. 2012 income tax form Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. 2012 income tax form Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. 2012 income tax form Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. 2012 income tax form Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. 2012 income tax form Inventory and accounts and notes receivable. 2012 income tax form Other property. 2012 income tax form Reduce the basis one dollar for each dollar of excluded canceled debt. 2012 income tax form However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. 2012 income tax form For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. 2012 income tax form 1017-1(b)(2). 2012 income tax form Also see Electing to reduce the basis of depreciable property
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The 2012 Income Tax Form

2012 income tax form 1. 2012 income tax form   Nonresident Alien or Resident Alien? Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Nonresident Aliens Resident AliensGreen Card Test Substantial Presence Test Effect of Tax Treaties Dual-Status AliensFirst Year of Residency Choosing Resident Alien Status Last Year of Residency Nonresident Spouse Treated as a ResidentHow To Make the Choice Aliens From American Samoa or Puerto Rico Introduction You should first determine whether, for income tax purposes, you are a nonresident alien or a resident alien. 2012 income tax form If you are both a nonresident and resident in the same year, you have a dual status. 2012 income tax form Dual status is explained later. 2012 income tax form Also explained later are a choice to treat your nonresident spouse as a resident and some other special situations. 2012 income tax form Topics - This chapter discusses: How to determine if you are a nonresident, resident, or dual-status alien, and How to treat a nonresident spouse as a resident alien. 2012 income tax form Useful Items - You may want to see: Form (and Instructions) 1040 U. 2012 income tax form S. 2012 income tax form Individual Income Tax Return 1040A U. 2012 income tax form S. 2012 income tax form Individual Income Tax Return 1040NR U. 2012 income tax form S. 2012 income tax form Nonresident Alien Income Tax Return 8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) 8840 Closer Connection Exception Statement for Aliens 8843 Statement for Exempt Individuals and Individuals With a Medical Condition See chapter 12 for information about getting these forms. 2012 income tax form Nonresident Aliens If you are an alien (not a U. 2012 income tax form S. 2012 income tax form citizen), you are considered a nonresident alien unless you meet one of the two tests described next under Resident Aliens. 2012 income tax form Resident Aliens You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for calendar year 2013 (January 1–December 31). 2012 income tax form Even if you do not meet either of these tests, you may be able to choose to be treated as a U. 2012 income tax form S. 2012 income tax form resident for part of the year. 2012 income tax form See First-Year Choice under Dual-Status Aliens, later. 2012 income tax form Green Card Test You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year 2013. 2012 income tax form (However, see Dual-Status Aliens , later. 2012 income tax form ) This is known as the “green card” test. 2012 income tax form You are a lawful permanent resident of the United States at any time if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. 2012 income tax form You generally have this status if the U. 2012 income tax form S. 2012 income tax form Citizenship and Immigration Services (USCIS) (or its predecessor organization) has issued you an alien registration card, also known as a “green card. 2012 income tax form ” You continue to have resident status under this test unless the status is taken away from you or is administratively or judicially determined to have been abandoned. 2012 income tax form Resident status taken away. 2012 income tax form   Resident status is considered to have been taken away from you if the U. 2012 income tax form S. 2012 income tax form government issues you a final administrative or judicial order of exclusion or deportation. 2012 income tax form A final judicial order is an order that you may no longer appeal to a higher court of competent jurisdiction. 2012 income tax form Resident status abandoned. 2012 income tax form   An administrative or judicial determination of abandonment of resident status may be initiated by you, the USCIS, or a U. 2012 income tax form S. 2012 income tax form consular officer. 2012 income tax form    If you initiate the determination, your resident status is considered to be abandoned when you file either of the following with the USCIS or U. 2012 income tax form S. 2012 income tax form consular officer. 2012 income tax form Your application for abandonment. 2012 income tax form Your Alien Registration Receipt Card attached to a letter stating your intent to abandon your resident status. 2012 income tax form You must file the letter by certified mail, return receipt requested. 2012 income tax form You must keep a copy of the letter and proof that it was mailed and received. 2012 income tax form    Until you have proof your letter was received, you remain a resident alien for tax purposes even if the USCIS would not recognize the validity of your green card because it is more than ten years old or because you have been absent from the United States for a period of time. 2012 income tax form   If the USCIS or U. 2012 income tax form S. 2012 income tax form consular officer initiates this determination, your resident status will be considered to be abandoned when the final administrative order of abandonment is issued. 2012 income tax form If you are granted an appeal to a federal court of competent jurisdiction, a final judicial order is required. 2012 income tax form   Under U. 2012 income tax form S. 2012 income tax form immigration law, a lawful permanent resident who is required to file a tax return as a resident and fails to do so may be regarded as having abandoned status and may lose permanent resident status. 2012 income tax form    A long-term resident who ceases to be a lawful permanent resident may be subject to special reporting requirements and tax provisions. 2012 income tax form See Expatriation Tax in chapter 4. 2012 income tax form Termination of residency after June 3, 2004, and before June 17, 2008. 2012 income tax form   If you terminated your residency after June 3, 2004, and before June 17, 2008, you will still be considered a U. 2012 income tax form S. 2012 income tax form resident for tax purposes until you notify the Secretary of Homeland Security and file Form 8854, Initial and Annual Expatriation Statement. 2012 income tax form Termination of residency after June 16, 2008. 2012 income tax form   For information on your residency termination date, see Former long-term resident under Expatriation After June 16, 2008, in chapter 4. 2012 income tax form Substantial Presence Test You will be considered a U. 2012 income tax form S. 2012 income tax form resident for tax purposes if you meet the substantial presence test for calendar year 2013. 2012 income tax form To meet this test, you must be physically present in the United States on at least: 31 days during 2013, and 183 days during the 3-year period that includes 2013, 2012, and 2011, counting: All the days you were present in 2013, and 1/3 of the days you were present in 2012, and 1/6 of the days you were present in 2011. 2012 income tax form Example. 2012 income tax form You were physically present in the United States on 120 days in each of the years 2011, 2012, and 2013. 2012 income tax form To determine if you meet the substantial presence test for 2013, count the full 120 days of presence in 2013, 40 days in 2012 (1/3 of 120), and 20 days in 2011 (1/6 of 120). 2012 income tax form Because the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2013. 2012 income tax form The term United States includes the following areas. 2012 income tax form All 50 states and the District of Columbia. 2012 income tax form The territorial waters of the United States. 2012 income tax form The seabed and subsoil of those submarine areas that are adjacent to U. 2012 income tax form S. 2012 income tax form territorial waters and over which the United States has exclusive rights under international law to explore and exploit natural resources. 2012 income tax form The term does not include U. 2012 income tax form S. 2012 income tax form possessions and territories or U. 2012 income tax form S. 2012 income tax form airspace. 2012 income tax form Days of Presence in the United States You are treated as present in the United States on any day you are physically present in the country at any time during the day. 2012 income tax form However, there are exceptions to this rule. 2012 income tax form Do not count the following as days of presence in the United States for the substantial presence test. 2012 income tax form Days you commute to work in the United States from a residence in Canada or Mexico if you regularly commute from Canada or Mexico. 2012 income tax form Days you are in the United States for less than 24 hours when you are in transit between two places outside the United States. 2012 income tax form Days you are in the United States as a crew member of a foreign vessel. 2012 income tax form Days you are unable to leave the United States because of a medical condition that arose while you are in the United States. 2012 income tax form Days you are an exempt individual. 2012 income tax form The specific rules that apply to each of these categories are discussed next. 2012 income tax form Regular commuters from Canada or Mexico. 2012 income tax form   Do not count the days on which you commute to work in the United States from your residence in Canada or Mexico if you regularly commute from Canada or Mexico. 2012 income tax form You are considered to commute regularly if you commute to work in the United States on more than 75% of the workdays during your working period. 2012 income tax form   For this purpose, “commute” means to travel to work and return to your residence within a 24-hour period. 2012 income tax form “Workdays” are the days on which you work in the United States or Canada or Mexico. 2012 income tax form “Working period” means the period beginning with the first day in the current year on which you are physically present in the United States to work and ending on the last day in the current year on which you are physically present in the United States to work. 2012 income tax form If your work requires you to be present in the United States only on a seasonal or cyclical basis, your working period begins on the first day of the season or cycle on which you are present in the United States to work and ends on the last day of the season or cycle on which you are present in the United States to work. 2012 income tax form You can have more than one working period in a calendar year, and your working period can begin in one calendar year and end in the following calendar year. 2012 income tax form Example. 2012 income tax form Maria Perez lives in Mexico and works for Compañía ABC in its office in Mexico. 2012 income tax form She was assigned to her firm's office in the United States from February 1 through June 1. 2012 income tax form On June 2, she resumed her employment in Mexico. 2012 income tax form On 69 days, Maria commuted each morning from her home in Mexico to work in Compañía ABC's U. 2012 income tax form S. 2012 income tax form office. 2012 income tax form She returned to her home in Mexico on each of those evenings. 2012 income tax form On 7 days, she worked in her firm's Mexico office. 2012 income tax form For purposes of the substantial presence test, Maria does not count the days she commuted to work in the United States because those days equal more than 75% of the workdays during the working period (69 workdays in the United States divided by 76 workdays in the working period equals 90. 2012 income tax form 8%). 2012 income tax form Days in transit. 2012 income tax form   Do not count the days you are in the United States for less than 24 hours and you are in transit between two places outside the United States. 2012 income tax form You are considered to be in transit if you engage in activities that are substantially related to completing travel to your foreign destination. 2012 income tax form For example, if you travel between airports in the United States to change planes en route to your foreign destination, you are considered to be in transit. 2012 income tax form However, you are not considered to be in transit if you attend a business meeting while in the United States. 2012 income tax form This is true even if the meeting is held at the airport. 2012 income tax form Crew members. 2012 income tax form   Do not count the days you are temporarily present in the United States as a regular crew member of a foreign vessel (boat or ship) engaged in transportation between the United States and a foreign country or a U. 2012 income tax form S. 2012 income tax form possession. 2012 income tax form However, this exception does not apply if you otherwise engage in any trade or business in the United States on those days. 2012 income tax form Medical condition. 2012 income tax form   Do not count the days you intended to leave, but could not leave the United States because of a medical condition or problem that arose while you were in the United States. 2012 income tax form Whether you intended to leave the United States on a particular day is determined based on all the facts and circumstances. 2012 income tax form For example, you may be able to establish that you intended to leave if your purpose for visiting the United States could be accomplished during a period that is not long enough to qualify you for the substantial presence test. 2012 income tax form However, if you need an extended period of time to accomplish the purpose of your visit and that period would qualify you for the substantial presence test, you would not be able to establish an intent to leave the United States before the end of that extended period. 2012 income tax form   In the case of an individual who is judged mentally incompetent, proof of intent to leave the United States can be determined by analyzing the individual's pattern of behavior before he or she was judged mentally incompetent. 2012 income tax form   If you qualify to exclude days of presence because of a medical condition, you must file a fully completed Form 8843 with the IRS. 2012 income tax form See Form 8843 , later. 2012 income tax form   You cannot exclude any days of presence in the United States under the following circumstances. 2012 income tax form You were initially prevented from leaving, were then able to leave, but remained in the United States beyond a reasonable period for making arrangements to leave. 2012 income tax form You returned to the United States for treatment of a medical condition that arose during a prior stay. 2012 income tax form The condition existed before your arrival in the United States and you were aware of the condition. 2012 income tax form It does not matter whether you needed treatment for the condition when you entered the United States. 2012 income tax form Exempt individual. 2012 income tax form   Do not count days for which you are an exempt individual. 2012 income tax form The term “exempt individual” does not refer to someone exempt from U. 2012 income tax form S. 2012 income tax form tax, but to anyone in the following categories. 2012 income tax form An individual temporarily present in the United States as a foreign government-related individual under an “A” or “G” visa. 2012 income tax form A teacher or trainee temporarily present in the United States under a “J” or “Q” visa, who substantially complies with the requirements of the visa. 2012 income tax form A student temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa, who substantially complies with the requirements of the visa. 2012 income tax form A professional athlete temporarily in the United States to compete in a charitable sports event. 2012 income tax form   The specific rules for each of these four categories (including any rules on the length of time you will be an exempt individual) are discussed next. 2012 income tax form Foreign government-related individuals. 2012 income tax form   A foreign government-related individual is an individual (or a member of the individual's immediate family) who is temporarily present in the United States: As a full-time employee of an international organization, By reason of diplomatic status, or By reason of a visa (other than a visa that grants lawful permanent residence) that the Secretary of the Treasury determines represents full-time diplomatic or consular status. 2012 income tax form Note. 2012 income tax form You are considered temporarily present in the United States regardless of the actual amount of time you are present in the United States. 2012 income tax form    An international organization is any public international organization that the President of the United States has designated by Executive Order as being entitled to the privileges, exemptions, and immunities provided for in the International Organizations Act. 2012 income tax form An individual is a full-time employee if his or her work schedule meets the organization's standard full-time work schedule. 2012 income tax form   An individual is considered to have full-time diplomatic or consular status if he or she: Has been accredited by a foreign government that is recognized by the United States, Intends to engage primarily in official activities for that foreign government while in the United States, and Has been recognized by the President, Secretary of State, or a consular officer as being entitled to that status. 2012 income tax form Note. 2012 income tax form If you are present in the United States under an “A” or “G” visa you are considered a foreign government-related individual (with full-time diplomatic or consular status). 2012 income tax form None of your days count for purposes of the substantial presence test. 2012 income tax form   Members of the immediate family include the individual's spouse and unmarried children (whether by blood or adoption) but only if the spouse's or unmarried children's visa statuses are derived from and dependent on the exempt individual's visa classification. 2012 income tax form Unmarried children are included only if they: Are under 21 years of age, Reside regularly in the exempt individual's household, and Are not members of another household. 2012 income tax form Teachers and trainees. 2012 income tax form   A teacher or trainee is an individual, other than a student, who is temporarily in the United States under a “J” or “Q” visa and substantially complies with the requirements of that visa. 2012 income tax form You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are prohibited by U. 2012 income tax form S. 2012 income tax form immigration laws and could result in the loss of your visa status. 2012 income tax form   Also included are immediate family members of exempt teachers and trainees. 2012 income tax form See the definition of immediate family, earlier, under Foreign government-related individuals . 2012 income tax form   You will not be an exempt individual as a teacher or trainee in 2013 if you were exempt as a teacher, trainee, or student for any part of 2 of the 6 preceding calendar years. 2012 income tax form However, you will be an exempt individual if all of the following conditions are met. 2012 income tax form You were exempt as a teacher, trainee, or student for any part of 3 (or fewer) of the 6 preceding calendar years, A foreign employer paid all of your compensation during 2013, and A foreign employer paid all of your compensation during each of the preceding 6 years you were present in the United States as a teacher or trainee. 2012 income tax form A foreign employer includes an office or place of business of an American entity in a foreign country or a U. 2012 income tax form S. 2012 income tax form possession. 2012 income tax form   If you qualify to exclude days of presence as a teacher or trainee, you must file a fully completed Form 8843 with the IRS. 2012 income tax form See Form 8843 , later. 2012 income tax form Example. 2012 income tax form Carla was temporarily in the United States during the year as a teacher on a “J” visa. 2012 income tax form Her compensation for the year was paid by a foreign employer. 2012 income tax form Carla was treated as an exempt teacher for the previous 2 years but her compensation was not paid by a foreign employer. 2012 income tax form She will not be considered an exempt individual for the current year because she was exempt as a teacher for at least 2 of the past 6 years. 2012 income tax form If her compensation for the past 2 years had been paid by a foreign employer, she would be an exempt individual for the current year. 2012 income tax form Students. 2012 income tax form   A student is any individual who is temporarily in the United States on an “F,” “J,” “M,” or “Q” visa and who substantially complies with the requirements of that visa. 2012 income tax form You are considered to have substantially complied with the visa requirements if you have not engaged in activities that are prohibited by U. 2012 income tax form S. 2012 income tax form immigration laws and could result in the loss of your visa status. 2012 income tax form   Also included are immediate family members of exempt students. 2012 income tax form See the definition of immediate family, earlier, under Foreign government-related individuals . 2012 income tax form   You will not be an exempt individual as a student in 2013 if you have been exempt as a teacher, trainee, or student for any part of more than 5 calendar years unless you meet both of the following requirements. 2012 income tax form You establish that you do not intend to reside permanently in the United States. 2012 income tax form You have substantially complied with the requirements of your visa. 2012 income tax form The facts and circumstances to be considered in determining if you have demonstrated an intent to reside permanently in the United States include, but are not limited to, the following. 2012 income tax form Whether you have maintained a closer connection to a foreign country (discussed later). 2012 income tax form Whether you have taken affirmative steps to change your status from nonimmigrant to lawful permanent resident as discussed later under Closer Connection to a Foreign Country . 2012 income tax form   If you qualify to exclude days of presence as a student, you must file a fully completed Form 8843 with the IRS. 2012 income tax form See Form 8843 , later. 2012 income tax form Professional athletes. 2012 income tax form   A professional athlete who is temporarily in the United States to compete in a charitable sports event is an exempt individual. 2012 income tax form A charitable sports event is one that meets the following conditions. 2012 income tax form The main purpose is to benefit a qualified charitable organization. 2012 income tax form The entire net proceeds go to charity. 2012 income tax form Volunteers perform substantially all the work. 2012 income tax form   In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in a sports event. 2012 income tax form You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events. 2012 income tax form   If you qualify to exclude days of presence as a professional athlete, you must file a fully completed Form 8843 with the IRS. 2012 income tax form See Form 8843 , next. 2012 income tax form Form 8843. 2012 income tax form   If you exclude days of presence in the United States because you fall into any of the following categories, you must file a fully completed Form 8843. 2012 income tax form You were unable to leave the United States as planned because of a medical condition or problem. 2012 income tax form You were temporarily in the United States as a teacher or trainee on a “J” or “Q” visa. 2012 income tax form You were temporarily in the United States as a student on an “F,” “J,” “M,” or “Q” visa. 2012 income tax form You were a professional athlete competing in a charitable sports event. 2012 income tax form Attach Form 8843 to your 2013 income tax return. 2012 income tax form If you do not have to file a return, send Form 8843 to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, by the due date for filing Form 1040NR or Form 1040NR-EZ. 2012 income tax form The due date for filing is discussed in chapter 7. 2012 income tax form If you do not timely file Form 8843, you cannot exclude the days you were present in the United States as a professional athlete or because of a medical condition that arose while you were in the United States. 2012 income tax form This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing requirements and significant steps to comply with those requirements. 2012 income tax form Closer Connection to a Foreign Country Even if you meet the substantial presence test, you can be treated as a nonresident alien if you: Are present in the United States for less than 183 days during the year, Maintain a tax home in a foreign country during the year, and Have a closer connection during the year to one foreign country in which you have a tax home than to the United States (unless you have a closer connection to two foreign countries, discussed next). 2012 income tax form Closer connection to two foreign countries. 2012 income tax form   You can demonstrate that you have a closer connection to two foreign countries (but not more than two) if you meet all of the following conditions. 2012 income tax form You maintained a tax home beginning on the first day of the year in one foreign country. 2012 income tax form You changed your tax home during the year to a second foreign country. 2012 income tax form You continued to maintain your tax home in the second foreign country for the rest of the year. 2012 income tax form You had a closer connection to each foreign country than to the United States for the period during which you maintained a tax home in that foreign country. 2012 income tax form You are subject to tax as a resident under the tax laws of either foreign country for the entire year or subject to tax as a resident in both foreign countries for the period during which you maintained a tax home in each foreign country. 2012 income tax form Tax home. 2012 income tax form   Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. 2012 income tax form Your tax home is the place where you permanently or indefinitely work as an employee or a self-employed individual. 2012 income tax form If you do not have a regular or main place of business because of the nature of your work, then your tax home is the place where you regularly live. 2012 income tax form If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work. 2012 income tax form   For determining whether you have a closer connection to a foreign country, your tax home must also be in existence for the entire current year, and must be located in the same foreign country to which you are claiming to have a closer connection. 2012 income tax form Foreign country. 2012 income tax form   In determining whether you have a closer connection to a foreign country, the term “foreign country” means: Any territory under the sovereignty of the United Nations or a government other than that of the United States, The territorial waters of the foreign country (determined under U. 2012 income tax form S. 2012 income tax form law), The seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the foreign country and over which the foreign country has exclusive rights under international law to explore and exploit natural resources, and Possessions and territories of the United States. 2012 income tax form Establishing a closer connection. 2012 income tax form   You will be considered to have a closer connection to a foreign country than the United States if you or the IRS establishes that you have maintained more significant contacts with the foreign country than with the United States. 2012 income tax form In determining whether you have maintained more significant contacts with the foreign country than with the United States, the facts and circumstances to be considered include, but are not limited to, the following. 2012 income tax form The country of residence you designate on forms and documents. 2012 income tax form The types of official forms and documents you file, such as Form W-9, Form W-8BEN, or Form W-8ECI. 2012 income tax form The location of: Your permanent home, Your family, Your personal belongings, such as cars, furniture, clothing, and jewelry, Your current social, political, cultural, professional, or religious affiliations, Your business activities (other than those that constitute your tax home), The jurisdiction in which you hold a driver's license, The jurisdiction in which you vote, and Charitable organizations to which you contribute. 2012 income tax form It does not matter whether your permanent home is a house, an apartment, or a furnished room. 2012 income tax form It also does not matter whether you rent or own it. 2012 income tax form It is important, however, that your home be available at all times, continuously, and not solely for short stays. 2012 income tax form When you cannot have a closer connection. 2012 income tax form   You cannot claim you have a closer connection to a foreign country if either of the following applies: You personally applied, or took other steps during the year, to change your status to that of a permanent resident, or You had an application pending for adjustment of status during the current year. 2012 income tax form Steps to change your status to that of a permanent resident include, but are not limited to, the filing of the following forms. 2012 income tax form Form I-508, Waiver of Rights, Privileges, Exemptions and Immunities Form I-485, Application to Register Permanent Residence or Adjust Status Form I-130, Petition for Alien Relative, on your behalf Form I-140, Immigrant Petition for Alien Worker, on your behalf Form ETA-750, Application for Alien Employment Certification, on your behalf Form DS-230, Application for Immigrant Visa and Alien Registration Form 8840. 2012 income tax form   You must attach a fully completed Form 8840 to your income tax return to claim you have a closer connection to a foreign country or countries. 2012 income tax form   If you do not have to file a return, send the form to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, by the due date for filing Form 1040NR or Form 1040NR-EZ. 2012 income tax form The due date for filing is discussed later in chapter 7. 2012 income tax form   If you do not timely file Form 8840, you cannot claim a closer connection to a foreign country or countries. 2012 income tax form This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing requirements and significant steps to comply with those requirements. 2012 income tax form Effect of Tax Treaties The rules given here to determine if you are a U. 2012 income tax form S. 2012 income tax form resident do not override tax treaty definitions of residency. 2012 income tax form If you are a dual-resident taxpayer, you can still claim the benefits under an income tax treaty. 2012 income tax form A dual-resident taxpayer is one who is a resident of both the United States and another country under each country's tax laws. 2012 income tax form The income tax treaty between the two countries must contain a provision that provides for resolution of conflicting claims of residence (tie-breaker rule). 2012 income tax form If you are treated as a resident of a foreign country under a tax treaty, you are treated as a nonresident alien in figuring your U. 2012 income tax form S. 2012 income tax form income tax. 2012 income tax form For purposes other than figuring your tax, you will be treated as a U. 2012 income tax form S. 2012 income tax form resident. 2012 income tax form For example, the rules discussed here do not affect your residency time periods as discussed later under Dual-Status Aliens . 2012 income tax form Information to be reported. 2012 income tax form   If you are a dual-resident taxpayer and you claim treaty benefits, you must file a return by the due date (including extensions) using Form 1040NR or Form 1040NR-EZ, and compute your tax as a nonresident alien. 2012 income tax form You must also attach a fully completed Form 8833 if you determine your residency under a tax treaty and receive payments or income items totaling more than $100,000. 2012 income tax form You may also have to attach Form 8938 (discussed in chapter 7). 2012 income tax form See Reporting Treaty Benefits Claimed in chapter 9 for more information on reporting treaty benefits. 2012 income tax form Dual-Status Aliens You can be both a nonresident alien and a resident alien during the same tax year. 2012 income tax form This usually occurs in the year you arrive in or depart from the United States. 2012 income tax form Aliens who have dual status should see chapter 6 for information on filing a return for a dual-status tax year. 2012 income tax form First Year of Residency If you are a U. 2012 income tax form S. 2012 income tax form resident for the calendar year, but you were not a U. 2012 income tax form S. 2012 income tax form resident at any time during the preceding calendar year, you are a U. 2012 income tax form S. 2012 income tax form resident only for the part of the calendar year that begins on the residency starting date. 2012 income tax form You are a nonresident alien for the part of the year before that date. 2012 income tax form Residency starting date under substantial presence test. 2012 income tax form   If you meet the substantial presence test for a calendar year, your residency starting date is generally the first day you are present in the United States during that calendar year. 2012 income tax form However, you do not have to count up to 10 days of actual presence in the United States if on those days you establish that: You had a closer connection to a foreign country than to the United States, and Your tax home was in that foreign country. 2012 income tax form See Closer Connection to a Foreign Country , earlier. 2012 income tax form   In determining whether you can exclude up to 10 days, the following rules apply. 2012 income tax form You can exclude days from more than one period of presence as long as the total days in all periods are not more than 10. 2012 income tax form You cannot exclude any days in a period of consecutive days of presence if all the days in that period cannot be excluded. 2012 income tax form Although you can exclude up to 10 days of presence in determining your residency starting date, you must include those days when determining whether you meet the substantial presence test. 2012 income tax form Example. 2012 income tax form Ivan Ivanovich is a citizen of Russia. 2012 income tax form He came to the United States for the first time on January 6, 2013, to attend a business meeting and returned to Russia on January 10, 2013. 2012 income tax form His tax home remained in Russia. 2012 income tax form On March 1, 2013, he moved to the United States and resided here for the rest of the year. 2012 income tax form Ivan is able to establish a closer connection to Russia for the period January 6–10. 2012 income tax form Thus, his residency starting date is March 1. 2012 income tax form Statement required to exclude up to 10 days of presence. 2012 income tax form   You must file a statement with the IRS if you are excluding up to 10 days of presence in the United States for purposes of your residency starting date. 2012 income tax form You must sign and date this statement and include a declaration that it is made under penalties of perjury. 2012 income tax form The statement must contain the following information (as applicable). 2012 income tax form Your name, address, U. 2012 income tax form S. 2012 income tax form taxpayer identification number (if any), and U. 2012 income tax form S. 2012 income tax form visa number (if any). 2012 income tax form Your passport number and the name of the country that issued your passport. 2012 income tax form The tax year for which the statement applies. 2012 income tax form The first day that you were present in the United States during the year. 2012 income tax form The dates of the days you are excluding in figuring your first day of residency. 2012 income tax form Sufficient facts to establish that you have maintained your tax home in and a closer connection to a foreign country during the period you are excluding. 2012 income tax form   Attach the required statement to your income tax return. 2012 income tax form If you are not required to file a return, send the statement to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, on or before the due date for filing Form 1040NR or Form 1040NR-EZ. 2012 income tax form The due date for filing is discussed in chapter 7. 2012 income tax form   If you do not file the required statement as explained above, you cannot claim that you have a closer connection to a foreign country or countries. 2012 income tax form Therefore, your first day of residency will be the first day you are present in the United States. 2012 income tax form This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the requirements for filing the statement and significant steps to comply with those requirements. 2012 income tax form Residency starting date under green card test. 2012 income tax form   If you meet the green card test at any time during a calendar year, but do not meet the substantial presence test for that year, your residency starting date is the first day in the calendar year on which you are present in the United States as a lawful permanent resident. 2012 income tax form   If you meet both the substantial presence test and the green card test, your residency starting date is the earlier of the first day during the year you are present in the United States under the substantial presence test or as a lawful permanent resident. 2012 income tax form Residency during the preceding year. 2012 income tax form   If you were a U. 2012 income tax form S. 2012 income tax form resident during any part of the preceding calendar year and you are a U. 2012 income tax form S. 2012 income tax form resident for any part of the current year, you will be considered a U. 2012 income tax form S. 2012 income tax form resident at the beginning of the current year. 2012 income tax form This applies whether you are a resident under the substantial presence test or green card test. 2012 income tax form Example. 2012 income tax form Robert Bach is a citizen of Switzerland. 2012 income tax form He came to the United States as a U. 2012 income tax form S. 2012 income tax form resident for the first time on May 1, 2012, and remained until November 5, 2012, when he returned to Switzerland. 2012 income tax form Robert came back to the United States on March 5, 2013, as a lawful permanent resident and still resides here. 2012 income tax form In calendar year 2013, Robert's U. 2012 income tax form S. 2012 income tax form residency is deemed to begin on January 1, 2013, because he qualified as a resident in calendar year 2012. 2012 income tax form First-Year Choice If you do not meet either the green card test or the substantial presence test for 2012 or 2013 and you did not choose to be treated as a resident for part of 2012, but you meet the substantial presence test for 2014, you can choose to be treated as a U. 2012 income tax form S. 2012 income tax form resident for part of 2013. 2012 income tax form To make this choice, you must: Be present in the United States for at least 31 days in a row in 2013, and Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of 2013. 2012 income tax form For purposes of this 75% requirement, you can treat up to 5 days of absence from the United States as days of presence in the United States. 2012 income tax form When counting the days of presence in (1) and (2) above, do not count the days you were in the United States under any of the exceptions discussed earlier under Days of Presence in the United States. 2012 income tax form If you make the first-year choice, your residency starting date for 2013 is the first day of the earliest 31-day period (described in (1) above) that you use to qualify for the choice. 2012 income tax form You are treated as a U. 2012 income tax form S. 2012 income tax form resident for the rest of the year. 2012 income tax form If you are present for more than one 31-day period and you satisfy condition (2) above for each of those periods, your residency starting date is the first day of the first 31-day period. 2012 income tax form If you are present for more than one 31-day period but you satisfy condition (2) above only for a later 31-day period, your residency starting date is the first day of the later 31-day period. 2012 income tax form Note. 2012 income tax form You do not have to be married to make this choice. 2012 income tax form Example 1. 2012 income tax form Juan DaSilva is a citizen of the Philippines. 2012 income tax form He came to the United States for the first time on November 1, 2013, and was here on 31 consecutive days (from November 1 through December 1, 2013). 2012 income tax form Juan returned to the Philippines on December 1 and came back to the United States on December 17, 2013. 2012 income tax form He stayed in the United States for the rest of the year. 2012 income tax form During 2014, Juan was a resident of the United States under the substantial presence test. 2012 income tax form Juan can make the first-year choice for 2013 because he was in the United States in 2013 for a period of 31 days in a row (November 1 through December 1) and for at least 75% of the days following (and including) the first day of his 31-day period (46 total days of presence in the United States divided by 61 days in the period from November 1 through December 31 equals 75. 2012 income tax form 4%). 2012 income tax form If Juan makes the first-year choice, his residency starting date will be November 1, 2013. 2012 income tax form Example 2. 2012 income tax form The facts are the same as in Example 1, except that Juan was also absent from the United States on December 24, 25, 29, 30, and 31. 2012 income tax form He can make the first-year choice for 2013 because up to 5 days of absence are considered days of presence for purposes of the 75% requirement. 2012 income tax form Statement required to make the first-year choice for 2013. 2012 income tax form   You must attach a statement to Form 1040 to make the first-year choice for 2013. 2012 income tax form The statement must contain your name and address and specify the following. 2012 income tax form That you are making the first-year choice for 2013. 2012 income tax form That you were not a resident in 2012. 2012 income tax form That you are a resident under the substantial presence test in 2014. 2012 income tax form The number of days of presence in the United States during 2014. 2012 income tax form The date or dates of your 31-day period of presence and the period of continuous presence in the United States during 2013. 2012 income tax form The date or dates of absence from the United States during 2013 that you are treating as days of presence. 2012 income tax form You cannot file Form 1040 or the statement until you meet the substantial presence test for 2014. 2012 income tax form If you have not met the test for 2014 as of April 15, 2014, you can request an extension of time for filing your 2013 Form 1040 until a reasonable period after you have met that test. 2012 income tax form To request an extension to file until October 15, 2014, use Form 4868, Application for Automatic Extension of Time To File U. 2012 income tax form S. 2012 income tax form Individual Income Tax Return. 2012 income tax form You can file the paper form or use one of the electronic filing options explained in the Form 4868 instructions. 2012 income tax form You should pay with this extension the amount of tax you expect to owe for 2013 figured as if you were a nonresident alien the entire year. 2012 income tax form You can use Form 1040NR or Form 1040NR-EZ to figure the tax. 2012 income tax form Enter the tax on Form 4868. 2012 income tax form If you do not pay the tax due, you will be charged interest on any tax not paid by the regular due date of your return, and you may be charged a penalty on the late payment. 2012 income tax form   Once you make the first-year choice, you may not revoke it without the approval of the Internal Revenue Service. 2012 income tax form   If you do not follow the procedures discussed here for making the first-year choice, you will be treated as a nonresident alien for all of 2013. 2012 income tax form However, this does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the filing procedures and significant steps to comply with the procedures. 2012 income tax form Choosing Resident Alien Status If you are a dual-status alien, you can choose to be treated as a U. 2012 income tax form S. 2012 income tax form resident for the entire year if all of the following apply. 2012 income tax form You were a nonresident alien at the beginning of the year. 2012 income tax form You are a resident alien or U. 2012 income tax form S. 2012 income tax form citizen at the end of the year. 2012 income tax form You are married to a U. 2012 income tax form S. 2012 income tax form citizen or resident alien at the end of the year. 2012 income tax form Your spouse joins you in making the choice. 2012 income tax form This includes situations in which both you and your spouse were nonresident aliens at the beginning of the tax year and both of you are resident aliens at the end of the tax year. 2012 income tax form Note. 2012 income tax form If you are single at the end of the year, you cannot make this choice. 2012 income tax form If you make this choice, the following rules apply. 2012 income tax form You and your spouse are treated as U. 2012 income tax form S. 2012 income tax form residents for the entire year for income tax purposes. 2012 income tax form You and your spouse are taxed on worldwide income. 2012 income tax form You and your spouse must file a joint return for the year of the choice. 2012 income tax form Neither you nor your spouse can make this choice for any later tax year, even if you are separated, divorced, or remarried. 2012 income tax form The special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you. 2012 income tax form Note. 2012 income tax form A similar choice is available if, at the end of the tax year, one spouse is a nonresident alien and the other spouse is a U. 2012 income tax form S. 2012 income tax form citizen or resident. 2012 income tax form See Nonresident Spouse Treated as a Resident , later. 2012 income tax form If you previously made that choice and it is still in effect, you do not need to make the choice explained here. 2012 income tax form Making the choice. 2012 income tax form   You should attach a statement signed by both spouses to your joint return for the year of the choice. 2012 income tax form The statement must contain the following information. 2012 income tax form A declaration that you both qualify to make the choice and that you choose to be treated as U. 2012 income tax form S. 2012 income tax form residents for the entire tax year. 2012 income tax form The name, address, and taxpayer identification number (SSN or ITIN) of each spouse. 2012 income tax form (If one spouse died, include the name and address of the person who makes the choice for the deceased spouse. 2012 income tax form )   You generally make this choice when you file your joint return. 2012 income tax form However, you also can make the choice by filing Form 1040X, Amended U. 2012 income tax form S. 2012 income tax form Individual Income Tax Return. 2012 income tax form Attach Form 1040, Form 1040A, or Form 1040EZ and print “Amended” across the top of the corrected return. 2012 income tax form If you make the choice with an amended return, you and your spouse must also amend any returns that you may have filed after the year for which you made the choice. 2012 income tax form   You generally must file the amended joint return within 3 years from the date you filed your original U. 2012 income tax form S. 2012 income tax form income tax return or 2 years from the date you paid your income tax for that year, whichever is later. 2012 income tax form Last Year of Residency If you were a U. 2012 income tax form S. 2012 income tax form resident in 2013 but are not a U. 2012 income tax form S. 2012 income tax form resident during any part of 2014, you cease to be a U. 2012 income tax form S. 2012 income tax form resident on your residency termination date. 2012 income tax form Your residency termination date is December 31, 2013, unless you qualify for an earlier date as discussed next. 2012 income tax form Earlier residency termination date. 2012 income tax form   You may qualify for a residency termination date that is earlier than December 31. 2012 income tax form This date is: The last day in 2013 that you are physically present in the United States, if you met the substantial presence test, The first day in 2013 that you are no longer a lawful permanent resident of the United States, if you met the green card test, or The later of (1) or (2), if you met both tests. 2012 income tax form You can use this date only if, for the remainder of 2013, your tax home was in a foreign country and you had a closer connection to that foreign country. 2012 income tax form See Closer Connection to a Foreign Country , earlier. 2012 income tax form    A long-term resident who ceases to be a lawful permanent resident may be subject to special reporting requirements and tax provisions. 2012 income tax form See Expatriation Tax in chapter 4. 2012 income tax form Termination of residency. 2012 income tax form   For information on your residency termination date, see Former long-term resident under Expatriation After June 16, 2008, in chapter 4. 2012 income tax form De minimis presence. 2012 income tax form   If you are a U. 2012 income tax form S. 2012 income tax form resident because of the substantial presence test and you qualify to use the earlier residency termination date, you can exclude up to 10 days of actual presence in the United States in determining your residency termination date. 2012 income tax form In determining whether you can exclude up to 10 days, the following rules apply. 2012 income tax form You can exclude days from more than one period of presence as long as the total days in all periods are not more than 10. 2012 income tax form You cannot exclude any days in a period of consecutive days of presence if all the days in that period cannot be excluded. 2012 income tax form Although you can exclude up to 10 days of presence in determining your residency termination date, you must include those days when determining whether you meet the substantial presence test. 2012 income tax form Example. 2012 income tax form Lola Bovary is a citizen of Malta. 2012 income tax form She came to the United States for the first time on March 1, 2013, and resided here until August 25, 2013. 2012 income tax form On December 12, 2013, Lola came to the United States for vacation and stayed here until December 16, 2013, when she returned to Malta. 2012 income tax form She is able to establish a closer connection to Malta for the period December 12–16. 2012 income tax form Lola is not a U. 2012 income tax form S. 2012 income tax form resident for tax purposes during 2014 and can establish a closer connection to Malta for the rest of calendar year 2013. 2012 income tax form Lola is a U. 2012 income tax form S. 2012 income tax form resident under the substantial presence test for 2013 because she was present in the United States for 183 days (178 days for the period March 1 to August 25 plus 5 days in December). 2012 income tax form Lola's residency termination date is August 25, 2013. 2012 income tax form Residency during the next year. 2012 income tax form   If you are a U. 2012 income tax form S. 2012 income tax form resident during any part of 2014 and you are a resident during any part of 2013, you will be treated as a resident through the end of 2013. 2012 income tax form This applies whether you have a closer connection to a foreign country than the United States during 2013, and whether you are a resident under the substantial presence test or green card test. 2012 income tax form Statement required to establish your residency termination date. 2012 income tax form   You must file a statement with the IRS to establish your residency termination date. 2012 income tax form You must sign and date this statement and include a declaration that it is made under penalties of perjury. 2012 income tax form The statement must contain the following information (as applicable). 2012 income tax form Your name, address, U. 2012 income tax form S. 2012 income tax form taxpayer identification number (if any), and U. 2012 income tax form S. 2012 income tax form visa number (if any). 2012 income tax form Your passport number and the name of the country that issued your passport. 2012 income tax form The tax year for which the statement applies. 2012 income tax form The last day that you were present in the United States during the year. 2012 income tax form Sufficient facts to establish that you have maintained your tax home in, and that you have a closer connection to, a foreign country following your last day of presence in the United States during the year or following the abandonment or rescission of your status as a lawful permanent resident during the year. 2012 income tax form The date that your status as a lawful permanent resident was abandoned or rescinded. 2012 income tax form Sufficient facts (including copies of relevant documents) to establish that your status as a lawful permanent resident has been abandoned or rescinded. 2012 income tax form If you can exclude days under the de minimis presence rule, discussed earlier, include the dates of the days you are excluding and sufficient facts to establish that you have maintained your tax home in and that you have a closer connection to a foreign country during the period you are excluding. 2012 income tax form   Attach the required statement to your income tax return. 2012 income tax form If you are not required to file a return, send the statement to the Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215, on or before the due date for filing Form 1040NR or Form 1040NR-EZ. 2012 income tax form The due date for filing is discussed in chapter 7. 2012 income tax form   If you do not file the required statement as explained above, you cannot claim that you have a closer connection to a foreign country or countries. 2012 income tax form This does not apply if you can show by clear and convincing evidence that you took reasonable actions to become aware of the requirements for filing the statement and significant steps to comply with those requirements. 2012 income tax form Nonresident Spouse Treated as a Resident If, at the end of your tax year, you are married and one spouse is a U. 2012 income tax form S. 2012 income tax form citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U. 2012 income tax form S. 2012 income tax form resident. 2012 income tax form This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year. 2012 income tax form If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire tax year. 2012 income tax form Neither you nor your spouse can claim under any tax treaty not to be a U. 2012 income tax form S. 2012 income tax form resident. 2012 income tax form You are both taxed on worldwide income. 2012 income tax form You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years. 2012 income tax form If you file a joint return under this provision, the special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you. 2012 income tax form Example. 2012 income tax form Bob and Sharon Williams are married and both are nonresident aliens at the beginning of the year. 2012 income tax form In June, Bob became a resident alien and remained a resident for the rest of the year. 2012 income tax form Bob and Sharon both choose to be treated as resident aliens by attaching a statement to their joint return. 2012 income tax form Bob and Sharon must file a joint return for the year they make the choice, but they can file either joint or separate returns for later years. 2012 income tax form How To Make the Choice Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. 2012 income tax form It should contain the following information. 2012 income tax form A declaration that one spouse was a nonresident alien and the other spouse a U. 2012 income tax form S. 2012 income tax form citizen or resident alien on the last day of your tax year, and that you choose to be treated as U. 2012 income tax form S. 2012 income tax form residents for the entire tax year. 2012 income tax form The name, address, and identification number of each spouse. 2012 income tax form (If one spouse died, include the name and address of the person making the choice for the deceased spouse. 2012 income tax form ) Amended return. 2012 income tax form   You generally make this choice when you file your joint return. 2012 income tax form However, you can also make the choice by filing a joint amended return on Form 1040X. 2012 income tax form Attach Form 1040, Form 1040A, or Form 1040EZ and print “Amended” across the top of the corrected return. 2012 income tax form If you make the choice with an amended return, you and your spouse must also amend any returns that you may have filed after the year for which you made the choice. 2012 income tax form   You generally must file the amended joint return within 3 years from the date you filed your original U. 2012 income tax form S. 2012 income tax form income tax return or 2 years from the date you paid your income tax for that year, whichever is later. 2012 income tax form Suspending the Choice The choice to be treated as a resident alien is suspended for any tax year (after the tax year you made the choice) if neither spouse is a U. 2012 income tax form S. 2012 income tax form citizen or resident alien at any time during the tax year. 2012 income tax form This means each spouse must file a separate return as a nonresident alien for that year if either meets the filing requirements for nonresident aliens discussed in chapter 7. 2012 income tax form Example. 2012 income tax form Dick Brown was a resident alien on December 31, 2010, and married to Judy, a nonresident alien. 2012 income tax form They chose to treat Judy as a resident alien and filed joint 2010 and 2011 income tax returns. 2012 income tax form On January 10, 2012, Dick became a nonresident alien. 2012 income tax form Judy had remained a nonresident alien throughout the period. 2012 income tax form Dick and Judy could have filed joint or separate returns for 2012 because Dick was a resident alien for part of that year. 2012 income tax form However, because neither Dick nor Judy is a resident alien at any time during 2013, their choice is suspended for that year. 2012 income tax form If either meets the filing requirements for nonresident aliens discussed in chapter 7, they must file separate returns as nonresident aliens for 2013. 2012 income tax form If Dick becomes a resident alien again in 2014, their choice is no longer suspended. 2012 income tax form Ending the Choice Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier under Suspending the Choice ) or ended in one of the following ways. 2012 income tax form If the choice is ended in one of the following ways, neither spouse can make this choice in any later tax year. 2012 income tax form Revocation. 2012 income tax form Either spouse can revoke the choice for any tax year, provided he or she makes the revocation by the due date for filing the tax return for that tax year. 2012 income tax form The spouse who revokes the choice must attach a signed statement declaring that the choice is being revoked. 2012 income tax form The statement must include the name, address, and identification number of each spouse. 2012 income tax form (If one spouse dies, include the name and address of the person who is revoking the choice for the deceased spouse. 2012 income tax form ) The statement also must include a list of any states, foreign countries, and possessions that have community property laws in which either spouse is domiciled or where real property is located from which either spouse receives income. 2012 income tax form File the statement as follows. 2012 income tax form If the spouse revoking the choice must file a return, attach the statement to the return for the first year the revocation applies. 2012 income tax form If the spouse revoking the choice does not have to file a return, but does file a return (for example, to obtain a refund), attach the statement to the return. 2012 income tax form If the spouse revoking the choice does not have to file a return and does not file a claim for refund, send the statement to the Internal Revenue Service Center where you filed the last joint return. 2012 income tax form Death. 2012 income tax form The death of either spouse ends the choice, beginning with the first tax year following the year the spouse died. 2012 income tax form However, if the surviving spouse is a U. 2012 income tax form S. 2012 income tax form citizen or resident and is entitled to the joint tax rates as a surviving spouse, the choice will not end until the close of the last year for which these joint rates may be used. 2012 income tax form If both spouses die in the same tax year, the choice ends on the first day after the close of the tax year in which the spouses died. 2012 income tax form Legal separation. 2012 income tax form A legal separation under a decree of divorce or separate maintenance ends the choice as of the beginning of the tax year in which the legal separation occurs. 2012 income tax form Inadequate records. 2012 income tax form The Internal Revenue Service can end the choice for any tax year that either spouse has failed to keep adequate books, records, and other information necessary to determine the correct income tax liability, or to provide adequate access to those records. 2012 income tax form Aliens From American Samoa or Puerto Rico If you are a nonresident alien in the United States and a bona fide resident of American Samoa or Puerto Rico during the entire tax year, you are taxed, with certain exceptions, according to the rules for resident aliens of the United States. 2012 income tax form For more information, see Bona Fide Residents of American Samoa or Puerto Rico in chapter 5. 2012 income tax form If you are a nonresident alien from American Samoa or Puerto Rico who does not qualify as a bona fide resident of American Samoa or Puerto Rico for the entire tax year, you are taxed as a nonresident alien. 2012 income tax form Resident aliens who formerly were bona fide residents of American Samoa or Puerto Rico are taxed according to the rules for resident aliens. 2012 income tax form Prev  Up  Next   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