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2013 Form 1040ez Instructions

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2013 Form 1040ez Instructions

2013 form 1040ez instructions 11. 2013 form 1040ez instructions   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. 2013 form 1040ez instructions Nondeductible losses. 2013 form 1040ez instructions Family pet. 2013 form 1040ez instructions Progressive deterioration. 2013 form 1040ez instructions Decline in market value of stock. 2013 form 1040ez instructions Mislaid or lost property. 2013 form 1040ez instructions Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. 2013 form 1040ez instructions Related persons. 2013 form 1040ez instructions Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. 2013 form 1040ez instructions Covered disaster area. 2013 form 1040ez instructions Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. 2013 form 1040ez instructions A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. 2013 form 1040ez instructions A theft occurs when property is stolen. 2013 form 1040ez instructions A condemnation occurs when private property is legally taken for public use without the owner's consent. 2013 form 1040ez instructions A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. 2013 form 1040ez instructions You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. 2013 form 1040ez instructions An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. 2013 form 1040ez instructions If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. 2013 form 1040ez instructions For more information, see Postponing Gain , later. 2013 form 1040ez instructions Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. 2013 form 1040ez instructions Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. 2013 form 1040ez instructions If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. 2013 form 1040ez instructions Casualty. 2013 form 1040ez instructions   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. 2013 form 1040ez instructions A sudden event is one that is swift, not gradual or progressive. 2013 form 1040ez instructions An unexpected event is one that is ordinarily unanticipated and unintended. 2013 form 1040ez instructions An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged. 2013 form 1040ez instructions Deductible losses. 2013 form 1040ez instructions   Deductible casualty losses can result from a number of different causes, including the following. 2013 form 1040ez instructions Airplane crashes. 2013 form 1040ez instructions Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. 2013 form 1040ez instructions Earthquakes. 2013 form 1040ez instructions Fires (but see Nondeductible losses next for exceptions). 2013 form 1040ez instructions Floods. 2013 form 1040ez instructions Freezing. 2013 form 1040ez instructions Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses, in Publication 547. 2013 form 1040ez instructions Lightning. 2013 form 1040ez instructions Storms, including hurricanes and tornadoes. 2013 form 1040ez instructions Terrorist attacks. 2013 form 1040ez instructions Vandalism. 2013 form 1040ez instructions Volcanic eruptions. 2013 form 1040ez instructions Nondeductible losses. 2013 form 1040ez instructions   A casualty loss is not deductible if the damage or destruction is caused by the following. 2013 form 1040ez instructions Accidentally breaking articles such as glassware or china under normal conditions. 2013 form 1040ez instructions A family pet (explained below). 2013 form 1040ez instructions A fire if you willfully set it, or pay someone else to set it. 2013 form 1040ez instructions A car, truck, or farm equipment accident if your willful negligence or willful act caused it. 2013 form 1040ez instructions The same is true if the willful act or willful negligence of someone acting for you caused the accident. 2013 form 1040ez instructions Progressive deterioration (explained below). 2013 form 1040ez instructions Family pet. 2013 form 1040ez instructions   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions You keep your horse in your yard. 2013 form 1040ez instructions The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. 2013 form 1040ez instructions Some of the trees were completely girdled and died. 2013 form 1040ez instructions Because the damage was not unexpected or unusual, the loss is not deductible. 2013 form 1040ez instructions Progressive deterioration. 2013 form 1040ez instructions   Loss of property due to progressive deterioration is not deductible as a casualty loss. 2013 form 1040ez instructions This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. 2013 form 1040ez instructions Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. 2013 form 1040ez instructions However, weather-related conditions or disease may cause another type of involuntary conversion. 2013 form 1040ez instructions See Other Involuntary Conversions , later. 2013 form 1040ez instructions Theft. 2013 form 1040ez instructions   A theft is the taking and removing of money or property with the intent to deprive the owner of it. 2013 form 1040ez instructions The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. 2013 form 1040ez instructions You do not need to show a conviction for theft. 2013 form 1040ez instructions   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. 2013 form 1040ez instructions The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. 2013 form 1040ez instructions Decline in market value of stock. 2013 form 1040ez instructions   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. 2013 form 1040ez instructions However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. 2013 form 1040ez instructions You report a capital loss on Schedule D (Form 1040). 2013 form 1040ez instructions For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. 2013 form 1040ez instructions Mislaid or lost property. 2013 form 1040ez instructions   The simple disappearance of money or property is not a theft. 2013 form 1040ez instructions However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. 2013 form 1040ez instructions The diamond falls from the ring and is never found. 2013 form 1040ez instructions The loss of the diamond is a casualty. 2013 form 1040ez instructions Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. 2013 form 1040ez instructions The following is a discussion of some losses you can deduct and some you cannot deduct. 2013 form 1040ez instructions Livestock or produce bought for resale. 2013 form 1040ez instructions   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. 2013 form 1040ez instructions If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. 2013 form 1040ez instructions You cannot take a separate deduction. 2013 form 1040ez instructions Livestock, plants, produce, and crops raised for sale. 2013 form 1040ez instructions   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. 2013 form 1040ez instructions You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. 2013 form 1040ez instructions   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. 2013 form 1040ez instructions You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. 2013 form 1040ez instructions The uniform capitalization rules are discussed in chapter 6. 2013 form 1040ez instructions   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. 2013 form 1040ez instructions You get the deduction by omitting the item from your inventory at the close of your tax year. 2013 form 1040ez instructions You cannot take a separate casualty or theft deduction. 2013 form 1040ez instructions Income loss. 2013 form 1040ez instructions   A loss of future income is not deductible. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions A severe flood destroyed your crops. 2013 form 1040ez instructions Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . 2013 form 1040ez instructions You estimate that the crop loss will reduce your farm income by $25,000. 2013 form 1040ez instructions This loss of future income is also not deductible. 2013 form 1040ez instructions Loss of timber. 2013 form 1040ez instructions   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. 2013 form 1040ez instructions If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. 2013 form 1040ez instructions See Postponing Gain , later. 2013 form 1040ez instructions Property used in farming. 2013 form 1040ez instructions   Casualty and theft losses of property used in your farm business usually result in deductible losses. 2013 form 1040ez instructions If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. 2013 form 1040ez instructions See How To Figure a Loss , later. 2013 form 1040ez instructions Raised draft, breeding, dairy, or sporting animals. 2013 form 1040ez instructions   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. 2013 form 1040ez instructions However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. 2013 form 1040ez instructions You use inventories to determine your income and you included the animals in your inventory. 2013 form 1040ez instructions You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. 2013 form 1040ez instructions When you include livestock in inventory, its last inventory value is its basis. 2013 form 1040ez instructions When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. 2013 form 1040ez instructions You cannot take a separate deduction. 2013 form 1040ez instructions How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. 2013 form 1040ez instructions Farm property. 2013 form 1040ez instructions   Farm property is the property you use in your farming business. 2013 form 1040ez instructions If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. 2013 form 1040ez instructions   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. 2013 form 1040ez instructions However, the deduction limits, discussed later, do not apply to farm property. 2013 form 1040ez instructions Personal-use property. 2013 form 1040ez instructions   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. 2013 form 1040ez instructions The following items are examples of personal-use property: Your main home. 2013 form 1040ez instructions Furniture and electronics used in your main home and not used in a home office or for business purposes. 2013 form 1040ez instructions Clothing and jewelry. 2013 form 1040ez instructions An automobile used for nonbusiness purposes. 2013 form 1040ez instructions You figure the casualty or theft loss on this property by taking the following steps. 2013 form 1040ez instructions Determine your adjusted basis in the property before the casualty or theft. 2013 form 1040ez instructions Determine the decrease in fair market value of the property as a result of the casualty or theft. 2013 form 1040ez instructions From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. 2013 form 1040ez instructions You must apply the deduction limits, discussed later, to determine your deductible loss. 2013 form 1040ez instructions    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. 2013 form 1040ez instructions It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. 2013 form 1040ez instructions Adjusted basis. 2013 form 1040ez instructions   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. 2013 form 1040ez instructions For more information about adjusted basis, see chapter 6. 2013 form 1040ez instructions Decrease in fair market value (FMV). 2013 form 1040ez instructions   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. 2013 form 1040ez instructions FMV is defined in chapter 10 under Payments Received or Considered Received . 2013 form 1040ez instructions Appraisal. 2013 form 1040ez instructions   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. 2013 form 1040ez instructions But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. 2013 form 1040ez instructions   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. 2013 form 1040ez instructions The appraiser must recognize the effects of any general market decline that may occur along with the casualty. 2013 form 1040ez instructions This information is needed to limit any deduction to the actual loss resulting from damage to the property. 2013 form 1040ez instructions Cost of cleaning up or making repairs. 2013 form 1040ez instructions   The cost of cleaning up after a casualty is not part of a casualty loss. 2013 form 1040ez instructions Neither is the cost of repairing damaged property after a casualty. 2013 form 1040ez instructions But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. 2013 form 1040ez instructions The repairs are actually made. 2013 form 1040ez instructions The repairs are necessary to bring the property back to its condition before the casualty. 2013 form 1040ez instructions The amount spent for repairs is not excessive. 2013 form 1040ez instructions The repairs fix the damage only. 2013 form 1040ez instructions The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. 2013 form 1040ez instructions Related expenses. 2013 form 1040ez instructions   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. 2013 form 1040ez instructions However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. 2013 form 1040ez instructions Separate computations for more than one item of property. 2013 form 1040ez instructions   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. 2013 form 1040ez instructions Then combine the losses to determine your total loss. 2013 form 1040ez instructions    There is an exception to this rule for personal-use real property. 2013 form 1040ez instructions See Exception for personal-use real property, later. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions A fire on your farm damaged a tractor and the barn in which it was stored. 2013 form 1040ez instructions The tractor had an adjusted basis of $3,300. 2013 form 1040ez instructions Its FMV was $28,000 just before the fire and $10,000 immediately afterward. 2013 form 1040ez instructions The barn had an adjusted basis of $28,000. 2013 form 1040ez instructions Its FMV was $55,000 just before the fire and $25,000 immediately afterward. 2013 form 1040ez instructions You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. 2013 form 1040ez instructions Figure your deductible casualty loss separately for the two items of property. 2013 form 1040ez instructions     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. 2013 form 1040ez instructions   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. 2013 form 1040ez instructions Figure the loss using the smaller of the following. 2013 form 1040ez instructions The decrease in FMV of the entire property. 2013 form 1040ez instructions The adjusted basis of the entire property. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions You bought a farm in 1990 for $160,000. 2013 form 1040ez instructions The adjusted basis of the residential part is now $128,000. 2013 form 1040ez instructions In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. 2013 form 1040ez instructions The adjusted basis of the residential part includes the $7,500. 2013 form 1040ez instructions The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. 2013 form 1040ez instructions The trees were not covered by insurance. 2013 form 1040ez instructions 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. 2013 form 1040ez instructions   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. 2013 form 1040ez instructions You do not have a casualty or theft loss to the extent you are reimbursed. 2013 form 1040ez instructions   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. 2013 form 1040ez instructions You must reduce your loss even if you do not receive payment until a later tax year. 2013 form 1040ez instructions    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. 2013 form 1040ez instructions You may have to include a portion of these payments in your income. 2013 form 1040ez instructions See Insurance payments for living expenses in Publication 547 for details. 2013 form 1040ez instructions Disaster relief. 2013 form 1040ez instructions   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss, unless they are replacements for lost or destroyed property. 2013 form 1040ez instructions Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. 2013 form 1040ez instructions   Generally, disaster relief grants received under the Robert T. 2013 form 1040ez instructions Stafford Disaster Relief and Emergency Assistance Act are not included in your income. 2013 form 1040ez instructions See Federal disaster relief grants , later, under Disaster Area Losses . 2013 form 1040ez instructions   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. 2013 form 1040ez instructions See Qualified disaster relief payments , later, under Disaster Area Losses . 2013 form 1040ez instructions Reimbursement received after deducting loss. 2013 form 1040ez instructions   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. 2013 form 1040ez instructions Actual reimbursement less than expected. 2013 form 1040ez instructions   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. 2013 form 1040ez instructions Actual reimbursement more than expected. 2013 form 1040ez instructions   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. 2013 form 1040ez instructions However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. 2013 form 1040ez instructions Do not refigure your tax for the year you claimed the deduction. 2013 form 1040ez instructions See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. 2013 form 1040ez instructions If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. 2013 form 1040ez instructions See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. 2013 form 1040ez instructions Actual reimbursement same as expected. 2013 form 1040ez instructions   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. 2013 form 1040ez instructions Lump-sum reimbursement. 2013 form 1040ez instructions   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. 2013 form 1040ez instructions Figure the gain or loss separately for each asset that has a separate basis. 2013 form 1040ez instructions Adjustments to basis. 2013 form 1040ez instructions   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any deductible loss. 2013 form 1040ez instructions The result is your adjusted basis in the property. 2013 form 1040ez instructions Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. 2013 form 1040ez instructions See Adjusted Basis in chapter 6 for more information. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions You built a new silo for $25,000. 2013 form 1040ez instructions This is the basis in your silo because that is the total cost you incurred to build it. 2013 form 1040ez instructions During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. 2013 form 1040ez instructions In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. 2013 form 1040ez instructions Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). 2013 form 1040ez instructions Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). 2013 form 1040ez instructions There are two limits on the deduction for casualty or theft loss of personal-use property. 2013 form 1040ez instructions You figure these limits on Form 4684. 2013 form 1040ez instructions $100 rule. 2013 form 1040ez instructions   You must reduce each casualty or theft loss on personal-use property by $100. 2013 form 1040ez instructions This rule applies after you have subtracted any reimbursement. 2013 form 1040ez instructions 10% rule. 2013 form 1040ez instructions   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. 2013 form 1040ez instructions Apply this rule after you reduce each loss by $100. 2013 form 1040ez instructions Adjusted gross income is on line 38 of Form 1040. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions In June, you discovered that your house had been burglarized. 2013 form 1040ez instructions Your loss after insurance reimbursement was $2,000. 2013 form 1040ez instructions Your adjusted gross income for the year you discovered the burglary is $57,000. 2013 form 1040ez instructions Figure your theft loss deduction as follows: 1. 2013 form 1040ez instructions Loss after insurance $2,000 2. 2013 form 1040ez instructions Subtract $100 100 3. 2013 form 1040ez instructions Loss after $100 rule $1,900 4. 2013 form 1040ez instructions Subtract 10% (. 2013 form 1040ez instructions 10) × $57,000 AGI $5,700 5. 2013 form 1040ez instructions Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). 2013 form 1040ez instructions    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. 2013 form 1040ez instructions See 10% Rule in Publication 547. 2013 form 1040ez instructions When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. 2013 form 1040ez instructions You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. 2013 form 1040ez instructions However, losses in federally declared disaster areas are subject to different rules. 2013 form 1040ez instructions See Disaster Area Losses , later, for an exception. 2013 form 1040ez instructions If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. 2013 form 1040ez instructions Leased property. 2013 form 1040ez instructions   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. 2013 form 1040ez instructions This is true even if the loss occurred or the liability was paid in a different year. 2013 form 1040ez instructions You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. 2013 form 1040ez instructions Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions Robert leased a tractor from First Implement, Inc. 2013 form 1040ez instructions , for use in his farm business. 2013 form 1040ez instructions The tractor was destroyed by a tornado in June 2012. 2013 form 1040ez instructions The loss was not insured. 2013 form 1040ez instructions First Implement billed Robert for the fair market value of the tractor on the date of the loss. 2013 form 1040ez instructions Robert disagreed with the bill and refused to pay it. 2013 form 1040ez instructions First Implement later filed suit in court against Robert. 2013 form 1040ez instructions In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. 2013 form 1040ez instructions Robert paid $20,000 in June 2013. 2013 form 1040ez instructions He can claim the $20,000 as a loss on his 2013 tax return. 2013 form 1040ez instructions Net operating loss (NOL). 2013 form 1040ez instructions   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. 2013 form 1040ez instructions An NOL can be carried back or carried forward and deducted from income in other years. 2013 form 1040ez instructions See Publication 536 for more information on NOLs. 2013 form 1040ez instructions Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. 2013 form 1040ez instructions You must have records to support the amount you claim for the loss. 2013 form 1040ez instructions Casualty loss proof. 2013 form 1040ez instructions   For a casualty loss, your records should show all the following information. 2013 form 1040ez instructions The type of casualty (car accident, fire, storm, etc. 2013 form 1040ez instructions ) and when it occurred. 2013 form 1040ez instructions That the loss was a direct result of the casualty. 2013 form 1040ez instructions That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. 2013 form 1040ez instructions Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 2013 form 1040ez instructions Theft loss proof. 2013 form 1040ez instructions   For a theft loss, your records should show all the following information. 2013 form 1040ez instructions When you discovered your property was missing. 2013 form 1040ez instructions That your property was stolen. 2013 form 1040ez instructions That you were the owner of the property. 2013 form 1040ez instructions Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 2013 form 1040ez instructions Figuring a Gain A casualty or theft may result in a taxable gain. 2013 form 1040ez instructions If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. 2013 form 1040ez instructions You generally report your gain as income in the year you receive the reimbursement. 2013 form 1040ez instructions However, depending on the type of property you receive, you may not have to report your gain. 2013 form 1040ez instructions See Postponing Gain , later. 2013 form 1040ez instructions Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. 2013 form 1040ez instructions Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. 2013 form 1040ez instructions Amount you receive. 2013 form 1040ez instructions   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. 2013 form 1040ez instructions It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions A tornado severely damaged your barn. 2013 form 1040ez instructions The adjusted basis of the barn was $25,000. 2013 form 1040ez instructions Your insurance company reimbursed you $40,000 for the damaged barn. 2013 form 1040ez instructions However, you had legal expenses of $2,000 to collect that insurance. 2013 form 1040ez instructions Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. 2013 form 1040ez instructions 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. 2013 form 1040ez instructions Some of these are discussed in the following paragraphs. 2013 form 1040ez instructions Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. 2013 form 1040ez instructions You report the gain or deduct the loss on your tax return for the year you realize it. 2013 form 1040ez instructions However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. 2013 form 1040ez instructions See Postponing Gain , later. 2013 form 1040ez instructions Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. 2013 form 1040ez instructions The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. 2013 form 1040ez instructions The owner receives a condemnation award (money or property) in exchange for the property taken. 2013 form 1040ez instructions A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. 2013 form 1040ez instructions Threat of condemnation. 2013 form 1040ez instructions   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. 2013 form 1040ez instructions Main home condemned. 2013 form 1040ez instructions   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. 2013 form 1040ez instructions For information on this exclusion, see Publication 523. 2013 form 1040ez instructions If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. 2013 form 1040ez instructions See Postponing Gain , later. 2013 form 1040ez instructions (You cannot deduct a loss from the condemnation of your main home. 2013 form 1040ez instructions ) More information. 2013 form 1040ez instructions   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. 2013 form 1040ez instructions Also see Postponing Gain , later, to find out if you can postpone reporting the gain. 2013 form 1040ez instructions Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. 2013 form 1040ez instructions Livestock Losses Diseased livestock. 2013 form 1040ez instructions   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. 2013 form 1040ez instructions If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . 2013 form 1040ez instructions Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. 2013 form 1040ez instructions If you replace the livestock, you may be able to postpone reporting the gain. 2013 form 1040ez instructions See Postponing Gain below. 2013 form 1040ez instructions Reporting dispositions of diseased livestock. 2013 form 1040ez instructions   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. 2013 form 1040ez instructions You must also include other information on this statement. 2013 form 1040ez instructions See How To Postpone Gain , later, under Postponing Gain . 2013 form 1040ez instructions Weather-related sales of livestock. 2013 form 1040ez instructions   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. 2013 form 1040ez instructions Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. 2013 form 1040ez instructions Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. 2013 form 1040ez instructions If you replace the livestock, you may be able to postpone reporting the gain. 2013 form 1040ez instructions See Postponing Gain below. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions It is your usual business practice to sell five of your dairy animals during the year. 2013 form 1040ez instructions This year you sold 20 dairy animals because of drought. 2013 form 1040ez instructions The sale of 15 animals is treated as an involuntary conversion. 2013 form 1040ez instructions    If you do not replace the livestock, you may be able to report the gain in the following year's income. 2013 form 1040ez instructions This rule also applies to other livestock (including poultry). 2013 form 1040ez instructions See Sales Caused by Weather-Related Conditions in chapter 3. 2013 form 1040ez instructions Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. 2013 form 1040ez instructions Treat the loss as a loss from an involuntary conversion. 2013 form 1040ez instructions The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. 2013 form 1040ez instructions You deduct the loss on the return for the year the seedlings died. 2013 form 1040ez instructions Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. 2013 form 1040ez instructions Your basis in the new property is generally the same as your adjusted basis in the property it replaces. 2013 form 1040ez instructions You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. 2013 form 1040ez instructions However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. 2013 form 1040ez instructions If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. 2013 form 1040ez instructions To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. 2013 form 1040ez instructions If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. 2013 form 1040ez instructions Example 1. 2013 form 1040ez instructions In 1985, you constructed a barn to store farm equipment at a cost of $20,000. 2013 form 1040ez instructions In 1987, you added a silo to the barn at a cost of $15,000 to store grain. 2013 form 1040ez instructions In May of this year, the property was worth $100,000. 2013 form 1040ez instructions In June the barn and silo were destroyed by a tornado. 2013 form 1040ez instructions At the time of the tornado, you had an adjusted basis of $0 in the property. 2013 form 1040ez instructions You received $85,000 from the insurance company. 2013 form 1040ez instructions You had a gain of $85,000 ($85,000 – $0). 2013 form 1040ez instructions You spent $80,000 to rebuild the barn and silo. 2013 form 1040ez instructions Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. 2013 form 1040ez instructions Example 2. 2013 form 1040ez instructions In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. 2013 form 1040ez instructions You made no further improvements or additions to it. 2013 form 1040ez instructions When a storm destroyed the cabin this January, the cabin was worth $250,000. 2013 form 1040ez instructions You received $146,000 from the insurance company in March. 2013 form 1040ez instructions You had a gain of $128,000 ($146,000 − $18,000). 2013 form 1040ez instructions You spent $144,000 to rebuild the cabin. 2013 form 1040ez instructions Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. 2013 form 1040ez instructions Buying replacement property from a related person. 2013 form 1040ez instructions   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). 2013 form 1040ez instructions This rule applies to the following taxpayers. 2013 form 1040ez instructions C corporations. 2013 form 1040ez instructions Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. 2013 form 1040ez instructions Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. 2013 form 1040ez instructions For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. 2013 form 1040ez instructions If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. 2013 form 1040ez instructions If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. 2013 form 1040ez instructions Exception. 2013 form 1040ez instructions   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. 2013 form 1040ez instructions Related persons. 2013 form 1040ez instructions   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. 2013 form 1040ez instructions For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. 2013 form 1040ez instructions Death of a taxpayer. 2013 form 1040ez instructions   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. 2013 form 1040ez instructions The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. 2013 form 1040ez instructions Replacement Property You must buy replacement property for the specific purpose of replacing your property. 2013 form 1040ez instructions Your replacement property must be similar or related in service or use to the property it replaces. 2013 form 1040ez instructions You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. 2013 form 1040ez instructions If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. 2013 form 1040ez instructions Property you acquire by gift or inheritance does not qualify as replacement property. 2013 form 1040ez instructions Owner-user. 2013 form 1040ez instructions   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. 2013 form 1040ez instructions Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. 2013 form 1040ez instructions A grinding mill that replaces a tractor does not qualify. 2013 form 1040ez instructions Neither does a breeding or draft animal that replaces a dairy cow. 2013 form 1040ez instructions Soil or other environmental contamination. 2013 form 1040ez instructions   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. 2013 form 1040ez instructions Weather-related conditions. 2013 form 1040ez instructions   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions Each year you normally sell 25 cows from your beef herd. 2013 form 1040ez instructions However, this year you had to sell 50 cows. 2013 form 1040ez instructions This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. 2013 form 1040ez instructions Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. 2013 form 1040ez instructions Standing crop destroyed by casualty. 2013 form 1040ez instructions   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. 2013 form 1040ez instructions The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). 2013 form 1040ez instructions In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. 2013 form 1040ez instructions Timber loss. 2013 form 1040ez instructions   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. 2013 form 1040ez instructions If you bought the standing timber within the replacement period, you can postpone reporting the gain. 2013 form 1040ez instructions Business or income-producing property located in a federally declared disaster area. 2013 form 1040ez instructions   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. 2013 form 1040ez instructions For more information, see Disaster Area Losses in Publication 547. 2013 form 1040ez instructions Substituting replacement property. 2013 form 1040ez instructions   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. 2013 form 1040ez instructions This is true even if you acquire the other property within the replacement period. 2013 form 1040ez instructions However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. 2013 form 1040ez instructions Basis of replacement property. 2013 form 1040ez instructions   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. 2013 form 1040ez instructions In this way, tax on the gain is postponed until you dispose of the replacement property. 2013 form 1040ez instructions Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. 2013 form 1040ez instructions This is the replacement period. 2013 form 1040ez instructions The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. 2013 form 1040ez instructions The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. 2013 form 1040ez instructions Example. 2013 form 1040ez instructions You are a calendar year taxpayer. 2013 form 1040ez instructions While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. 2013 form 1040ez instructions You discovered the theft when you returned to your farm on November 11, 2012. 2013 form 1040ez instructions Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. 2013 form 1040ez instructions You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. 2013 form 1040ez instructions Main home in disaster area. 2013 form 1040ez instructions   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. 2013 form 1040ez instructions See Disaster Area Losses , later. 2013 form 1040ez instructions Property in the Midwestern disaster areas. 2013 form 1040ez instructions   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. 2013 form 1040ez instructions This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. 2013 form 1040ez instructions Property in the Kansas disaster area. 2013 form 1040ez instructions   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. 2013 form 1040ez instructions This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. 2013 form 1040ez instructions Property in the Hurricane Katrina disaster area. 2013 form 1040ez instructions   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. 2013 form 1040ez instructions This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. 2013 form 1040ez instructions Weather-related sales of livestock in an area eligible for federal assistance. 2013 form 1040ez instructions   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. 2013 form 1040ez instructions The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. 2013 form 1040ez instructions   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. 2013 form 1040ez instructions R. 2013 form 1040ez instructions B. 2013 form 1040ez instructions 529, available at  www. 2013 form 1040ez instructions irs. 2013 form 1040ez instructions gov/irb/2006-39_IRB/ar11. 2013 form 1040ez instructions html. 2013 form 1040ez instructions For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. 2013 form 1040ez instructions gov. 2013 form 1040ez instructions Condemnation. 2013 form 1040ez instructions   The replacement period for a condemnation begins on the earlier of the following dates. 2013 form 1040ez instructions The date on which you disposed of the condemned property. 2013 form 1040ez instructions The date on which the threat of condemnation began. 2013 form 1040ez instructions The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. 2013 form 1040ez instructions But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. 2013 form 1040ez instructions Business or investment real property. 2013 form 1040ez instructions   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. 2013 form 1040ez instructions Extension. 2013 form 1040ez instructions   You can apply for an extension of the replacement period. 2013 form 1040ez instructions Send your written application to the Internal Revenue Service Center where you file your tax return. 2013 form 1040ez instructions See your tax return instructions for the address. 2013 form 1040ez instructions Include all the details about your need for an extension. 2013 form 1040ez instructions Make your application before the end of the replacement period. 2013 form 1040ez instructions However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. 2013 form 1040ez instructions You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. 2013 form 1040ez instructions How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. 2013 form 1040ez instructions You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. 2013 form 1040ez instructions Required statement. 2013 form 1040ez instructions   You should attach a statement to your return for the year you have the gain. 2013 form 1040ez instructions This statement should include all the following information. 2013 form 1040ez instructions The date and details of the casualty, theft, or other involuntary conversion. 2013 form 1040ez instructions The insurance or other reimbursement you received. 2013 form 1040ez instructions How you figured the gain. 2013 form 1040ez instructions Replacement property acquired before return filed. 2013 form 1040ez instructions   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. 2013 form 1040ez instructions The replacement property. 2013 form 1040ez instructions The postponed gain. 2013 form 1040ez instructions The basis adjustment that reflects the postponed gain. 2013 form 1040ez instructions Any gain you are reporting as income. 2013 form 1040ez instructions Replacement property acquired after return filed. 2013 form 1040ez instructions   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. 2013 form 1040ez instructions   You should then attach another statement to your return for the year in which you buy the replacement property. 2013 form 1040ez instructions This statement should contain detailed information on the replacement property. 2013 form 1040ez instructions If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. 2013 form 1040ez instructions Include in the statement detailed information on the replacement property bought in that year. 2013 form 1040ez instructions Reporting weather-related sales of livestock. 2013 form 1040ez instructions   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. 2013 form 1040ez instructions Evidence of the weather-related conditions that forced the sale or exchange of the livestock. 2013 form 1040ez instructions The gain realized on the sale or exchange. 2013 form 1040ez instructions The number and kind of livestock sold or exchanged. 2013 form 1040ez instructions The number of livestock of each kind you would have sold or exchanged under your usual business practice. 2013 form 1040ez instructions   Show all the following information and the preceding information on the return for the year in which you replace the livestock. 2013 form 1040ez instructions The dates you bought the replacement property. 2013 form 1040ez instructions The cost of the replacement property. 2013 form 1040ez instructions Description of the replacement property (for example, the number and kind of the replacement livestock). 2013 form 1040ez instructions Amended return. 2013 form 1040ez instructions   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. 2013 form 1040ez instructions You do not acquire replacement property within the replacement period, plus extensions. 2013 form 1040ez instructions On this amended return, you must report the gain and pay any additional tax due. 2013 form 1040ez instructions You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. 2013 form 1040ez instructions On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. 2013 form 1040ez instructions Disaster Area Losses Special rules apply to federally declared disaster area losses. 2013 form 1040ez instructions A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. 2013 form 1040ez instructions Stafford Disaster Relief and Emergency Assistance Act. 2013 form 1040ez instructions It includes a major disaster or emergency declaration under the act. 2013 form 1040ez instructions A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. 2013 form 1040ez instructions fema. 2013 form 1040ez instructions gov. 2013 form 1040ez instructions This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. 2013 form 1040ez instructions For other special rules, see Disaster Area Losses in Publication 547. 2013 form 1040ez instructions When to deduct the loss. 2013 form 1040ez instructions   You generally must deduct a casualty loss in the year it occurred. 2013 form 1040ez instructions However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. 2013 form 1040ez instructions If you make this choice, the loss is treated as having occurred in the preceding year. 2013 form 1040ez instructions    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. 2013 form 1040ez instructions   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. 2013 form 1040ez instructions The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. 2013 form 1040ez instructions The due date (with extensions) for the return for the preceding tax year. 2013 form 1040ez instructions Federal disaster relief grants. 2013 form 1040ez instructions   Do not include post-disaster relief grants received under the Robert T. 2013 form 1040ez instructions Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. 2013 form 1040ez instructions Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. 2013 form 1040ez instructions If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. 2013 form 1040ez instructions Unemployment assistance payments under the Act are taxable unemployment compensation. 2013 form 1040ez instructions Qualified disaster relief payments. 2013 form 1040ez instructions   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. 2013 form 1040ez instructions These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). 2013 form 1040ez instructions No withholding applies to these payments. 2013 form 1040ez instructions   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. 2013 form 1040ez instructions Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. 2013 form 1040ez instructions Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. 2013 form 1040ez instructions (A personal residence can be a rented residence or one you own. 2013 form 1040ez instructions ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. 2013 form 1040ez instructions   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. 2013 form 1040ez instructions    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. 2013 form 1040ez instructions Qualified disaster mitigation payments. 2013 form 1040ez instructions   Qualified disaster mitigation payments made under the Robert T. 2013 form 1040ez instructions Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. 2013 form 1040ez instructions These are payments you, as a property owner, receive to reduce the risk of future damage to your property. 2013 form 1040ez instructions You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. 2013 form 1040ez instructions Sale of property under hazard mitigation program. 2013 form 1040ez instructions   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. 2013 form 1040ez instructions You report the gain or deduct the loss on your tax return for the year you realize it. 2013 form 1040ez instructions (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. 2013 form 1040ez instructions ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. 2013 form 1040ez instructions See Postponing Gain , earlier, for the rules that apply. 2013 form 1040ez instructions Other federal assistance programs. 2013 form 1040ez instructions    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. 2013 form 1040ez instructions Postponed tax deadlines. 2013 form 1040ez instructions   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. 2013 form 1040ez instructions The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. 2013 form 1040ez instructions   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). 2013 form 1040ez instructions Go to http://www. 2013 form 1040ez instructions irs. 2013 form 1040ez instructions gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. 2013 form 1040ez instructions Who is eligible. 2013 form 1040ez instructions   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. 2013 form 1040ez instructions Any individual whose main home is located in a covered disaster area (defined next). 2013 form 1040ez instructions Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. 2013 form 1040ez instructions Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. 2013 form 1040ez instructions Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. 2013 form 1040ez instructions The main home or principal place of business does not have to be located in the covered disaster area. 2013 form 1040ez instructions Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. 2013 form 1040ez instructions The spouse on a joint return with a taxpayer who is eligible for postponements. 2013 form 1040ez instructions Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. 2013 form 1040ez instructions Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. 2013 form 1040ez instructions Any other person determined by the IRS to be affected by a federally declared disaster. 2013 form 1040ez instructions Covered disaster area. 2013 form 1040ez instructions   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. 2013 form 1040ez instructions Abatement of interest and penalties. 2013 form 1040ez instructions   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. 2013 form 1040ez instructions Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. 2013 form 1040ez instructions Form 4684. 2013 form 1040ez instructions   Use this form to report your gains and losses from casualties and thefts. 2013 form 1040ez instructions Form 4797. 2013 form 1040ez instructions   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. 2013 form 1040ez instructions Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. 2013 form 1040ez instructions Form 8949. 2013 form 1040ez instructions   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. 2013 form 1040ez instructions Schedule A (Form 1040). 2013 form 1040ez instructions   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. 2013 form 1040ez instructions Schedule D (Form 1040). 2013 form 1040ez instructions   Use this form to carry over the following gains. 2013 form 1040ez instructions Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. 2013 form 1040ez instructions Net gain shown on Form 4684 from the casualty or theft of personal-use property. 2013 form 1040ez instructions    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. 2013 form 1040ez instructions Schedule F (Form 1040). 2013 form 1040ez instructions   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. 2013 form 1040ez instructions Prev  Up  Next   Home   More Online Publications
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Audit Techniques Guides (ATGs)

These Audit Techniques Guides (ATGs) help IRS examiners during audits by providing insight into issues and accounting methods unique to specific industries. While ATGs are designed to provide guidance for IRS employees, they’re also useful to small business owners and tax professionals who prepare returns.

ATGs explain industry-specific examination techniques and include common, as well as, unique industry issues, business practices and terminology. Guidance is also provided on the examination of income, interview techniques and evaluation of evidence. So they may be helpful for business and tax planning purposes. To find out more about how these guides may be helpful to you, watch this short video.

Audit Techniques Guides are available here in Adobe PDF, or as Web pages, or both. The PDF versions must be viewed with the Acrobat Reader.

NOTE: These guides are current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of these documents, no guarantees are made concerning the technical accuracy after the publication date.


A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


Aerospace Industry
Publication Date: 01/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating research credit in the aerospace industry. The guide focuses on the particular unique aspects of the industry and provides examiners tools and tests to utilize in evaluating and auditing research credit.


Air Transportation (PDF - 1.85MB)
Publication Date: 04/2008
Overview of excise tax paid for transportation of persons or property by air.


Architects and Landscape Architects (PDF - 378.27KB)
Publication Date:
08/2011
This audit technique guide (ATG) has been developed to provide guidance to taxpayers as well as to revenue agents and tax compliance officers conducting examinations in the architect and landscape architect service industries.


Art Galleries - Audit Technique Guide (PDF - 461KB)
Publication Date: 01/2012
This Audit Technique Guide (ATG) has been developed to provide guidance to taxpayers as well as to revenue agents and tax compliance officers conducting examinations of Art Galleries.


Attorneys Audit Technique Guide (PDF - 525.34KB)
Publication Date: 03/2011
The Attorneys Audit Techniques Guide is intended to provide guidance to the examiner who is auditing a taxpayer who is an attorney or an attorney firm and to provide tax related guidance to taxpayers and other professionals in this industry.


Business Consultants (PDF - 700KB)
Publication Date: 07/2011
The Business Consultants ATG now includes an income section that addresses the shifting or the assignment of income issue and the substance versus form issue an examiner may encounter when conducting an examination.


Capitalization v Repairs
Publication Date: 11/2010
The ATG provides techniques for reviewing and examining capitalization v repairs issues.


Cash Intensive Businesses
Publication Date: 04/2010
Businesses that have substantial cash transactions are included in the consolidated Cash Intensive Businesses Audit Techniques Guide. Some of these businesses include bail bonds, beauty shops, car washes, check cashing establishments, coin operated amusements, laundromats, scrap metal, some convenience stores and Taxicabs. Guidance is also provided on examination of income, interview techniques, and evaluation of evidence.


Child Care Provider (PDF - 220KB)
Publication Date: 3/30/2009
This Audit Techniques Guide will provide information on tax related issues pertaining to the child care providers industry. It provides guidance on accounting for income and deductions. Intended audiences are taxpayers, tax professionals and IRS examiners.


Coal Excise Tax (PDF - 471KB)
Publication Date: 05/2005
Provides excise tax agents with specific tools to examine issues relating to domestically produced coal.


Commercial Banking (PDF - 857KB)
Publication Date: 05/2001
Overview of the industry. Discusses potential issues and terminology unique to banking.


Conservation Easement (PDF - 926KB)
Publication Date: 11/2011
Audit Techniques Guide providing guidance on charitable contributions of conservation easements.


Construction Industry (PDF - 2.6MB)
Publication Date: 05/2009
Overview of the industry including a glossary. Discusses types of contracts; types of contractors; methods of accounting; and joint ventures. This updated guide includes the filing locations for Rev. Proc. 92-29 elections (Chpt 7); includes contractor square footage costs (Chpt. 11); and common errors in look-back interest filings (Chpt. 5). See also Examination and Closing Procedures Form 8697, Look-Back Interest, Publication Date: 05/2007, for general information regarding the application of Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts.


Continuation of Employee Healthcare Coverage (PDF - 360KB)
Publication Date: 03/2012
This audit techniques guide was developed to provide guidance to IRS employees and taxpayers concerning the Consolidated Omnibus Budget Reconciliation Act of 1985.


Cost Segregation
Publication Date: 01/14/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating cost segregation studies submitted by taxpayers in support of depreciation deductions. The guide is also beneficial for taxpayers and practitioners in preparing these studies.


Credit for Increasing Research Activities (i.e. Research Tax Credit) IRC § 41 (PDF -116KB)
Publication Date: 06/2005
This audit techniques guide sets forth the Research Credit Technical Advisors’ suggested guidelines for auditing research credit issues.


Excise Tax on Indoor Tanning Services (PDF - 469KB)
Publication Date: 12/2013

The Excise Tax on Indoor Tanning Services Audit Techniques Guide provides an overview of the indoor tanning tax and examination direction. Intended audiences are taxpayers, tax professionals and IRS examiners.


Executive Compensation - Fringe Benefits
Publication Date: 02/04/2005
Corporate executives often receive extraordinary fringe benefits that are not provided to other corporate employees. Any property or service that an executive receives in lieu of or in addition to regular taxable wages is a fringe benefit that may be subject to taxation.


Factoring of Receivables (PDF - 32KB)
Publication Date: 06/2006
This audit techniques guide focuses on a strategy in which multinational corporations use factoring of accounts receivable among related parties to avoid U.S. taxation by shifting income offshore and reducing U.S. income by deducting expenses related to the same income.


Farmers
Publication Date:
07/2006
The Farmers Audit Techniques Guide (ATG) focuses on developing highly trained examiners for the agricultural market segment. The Guide contain examination techniques, common and unique industry issues, business practices, industry terminology and other information to assist examiners in performing examinations. Some agricultural guides covered include cotton, raisin grapes, general livestock, livestock marketing/auction barns, grain, and tobacco.


Fishing Audit Technique Guide (PDF - 851KB)
Publication Date:
08/2011
This guide provides technical information and audit techniques for common issues in the fishing industry. The intended audience is fishermen, tax professionals and IRS examiners.


Foreign Insurance (PDF - 434KB)
Publication Date: 04/2008
This audit techniques guide was designed to assist the examiner in conducting audits where Excise Tax of Foreign Insurance transactions may be due.


Golden Parachute
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating parachute examinations. The parachute examination can occur during the examination of either the corporation's or the individual's return.


Hardwood Timber Industry (PDF - 480KB)
Publication Date:
12/2012
This Industry Guide is intended for examiners conducting audits in the hardwood timber industry and as information for taxpayers and practitioners associated with the hardwood timber industry.


IC-DISC Audit Guide
Publication Date: 03/2012
This IC-DISC Audit Guide is intended to provide guidance to examiners who are auditing a Form 1120 IC-DISC and/or its related shareholder(s).


Inland Waterways (PDF - 607KB)
Publication Date: 12/2008
This audit techniques guide is intended to provide assistance to the examiner who is auditing a taxpayer for which the use of the Inland Waterways is an issue.


IRC 162(m) Salary Deduction Limitation
Publication Date: 02/04/2005
Every publicly held corporation maintains its executive compensation records differently. Likewise, every publicly held corporation maintains different methods for compensating its executives. As the examining agent, you must first learn the identity of the individual(s) within the corporation who are most familiar with how the executive compensation records are maintained.


IRC § 183: Activities Not Engaged in For Profit (PDF - 723KB)
Publication Date: 06/19/2009
This audit techniques guide (ATG) has been developed to provide guidance to Revenue Agents and Tax Compliance Officers in pursuing the application of IRC § 183, Activities Not Engaged in for Profit (sometimes referred to as the "hobby loss rule").


Lawsuits, Awards, and Settlements (PDF - 568 KB)
Publication Date: 05/2011
This guide focuses on taxability of lawsuits, awards and settlements.


Low-Income Housing Credit - Guide for Completing Form 8823 (PDF - 841 KB)
Publication Date: 01/2011
IRC 42, The Low-Income Housing Credit (LIHC) Program, is co-administered by the IRS and state housing credit agencies. As part of their administrative responsibilities, the agencies monitor the housing project for compliance with IRC 42 requirements and report any observed noncompliance to the IRS using Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition. This ATG provides state agencies with guidelines for evaluating taxpayer compliance and reporting noncompliance to the IRS.


Ministers (PDF - 243KB)
Publication Date: 04/23/2009
The Ministers Audit Techniques Guide is intended to provide guidance to the examiner who is auditing a taxpayer who is a minister and to provide tax related guidance to taxpayers and other professionals in this industry.


New Markets Tax Credit (PDF - 208KB)
Publication Date: 05/2010
The New Markets Tax Credit (NMTC) Program, enacted by Congress as part of the Community Renewal Tax Relief Act of 2000, is incorporated as section 45D of the Internal Revenue Code. This Code section permits individual and corporate taxpayers to receive a credit against federal income taxes for making Qualified Equity Investments (QEIs) in qualified community development entities (CDEs).


New Vehicle Dealership (PDF - 1.99 MB)
Publication Date: 1/2005
This guide will give you the key to a quick and competent closure of any new vehicle dealership examination which hinges on narrowing the scope of the examination to items that may prove productive.


Non-Qualified Deferred Compensation
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating non-qualified deferred compensation. A nonqualified deferred compensation (NQDC) plan is any elective or nonelective plan, agreement, method, or arrangement between an employer and an employee (or service recipient and service provider) to pay the employee compensation some time in the future.


Obligations Not in Registered Form (PDF - 275KB)
Publication Date: 6/2006
Obligations Not in Registered Form


Obligations Not in Registered Form D (PDF - 84KB)
Publication Date: 06/2006
Obligations Not in Registered Form D


Oil and Gas Industry (PDF - 494KB)
Publication Date: 5/1996
Provides information on basic operations and common terminology. Includes reference to royalty owners and an introduction to financial products.


Ozone Depleting Chemicals (PDF - 412KB)
Publication Date: 9/2007
This is the audit techniques guide for Ozone Depleting Chemicals (ODC).


Partnerships
Publication Date: See Table of Contents for Publication/Revision Date of the Individual Chapters
The focus is on issues that fall within sections 701 through 761 of the Code (Subchapter K). Subchapter K deals primarily with the formation, operation, and termination of partnerships. Many issues arise during the initial or final year of the partnership.


Passive Activity Losses (PDF - 3437 KB)
Publication Date: 02/2005
Provides examiners with specific guidance on potential audit issues, issue identification and lead sheets and other job aids.


Placer Mining (PDF - 181KB)
Publication Date: 7/1999
Provides guidelines for the examination of taxpayers in this industry. Focuses on small mining operations represented as sole proprietorships on Schedule C, but can be adapted for partnership and corporate returns.


The Port Project (PDF - 282KB)
Publication Date: 8/1995
Provides examiners assistance in auditing industries related to coastal and inland waterways.


Reforestation Industry (PDF - 120KB)
Publication Date: 8/1995
Overview of the industry. Discusses some issues that may be encountered - including employment taxes; poor accounting records; etc.


Rehabilitation Tax Credit (PDF - 353KB)
Publication Date: 12/2002
Provides examiners with audit aids (i.e. issue checksheet, pro forma Information Document Request, and standardized audit reports, etc.) which assist in identifying and addressing common rehab tax credit issues.


Research Credit Claims: Credit for Increasing Research Activities § 41
Publication Date: See table of contents for publication/revision date for the individual chapters, exhibits, and letters & forms. This guide provides guidance on the handling and evaluation of research credit claims.


Retail Industry (PDF 785KB)
Publication Date: 2/2009
Overview of the Retail Industry.


Sections 48A and 48B - Advanced Coal and Gasification Project Credits
Publication Date: 5/2009
Section 46 provides that the amount of investment credit for purposes of § 38 for any taxable year is the sum of the credits listed in § 46. Section 1307(a) of the Energy Tax Incentives Act of 2005, Pub. L. 109-58, 119 Stat. 594 (August 8, 2005), amended § 46 to add two new credits to that list: The qualifying advanced coal project credit, (section 48A) and the qualifying gasification project credit, (section 48B).


Split Dollar Life Insurance
Publication Date: 03/07/2005
Split-dollar life insurance arrangements can be a key feature of executive compensation packages. Over the years, the Service has provided limited guidance regarding the taxation of these arrangements. Beginning in 2001, transitional guidance on the valuation of split-dollar life insurance arrangements was provided in the form of notices and proposed regulations in anticipation of final regulations.


Stock Based Compensation
Publication Date: 02/04/2005
The Service has prepared a comprehensive audit techniques guide to assist examiners in evaluating stock-based compensation. Stock-based compensation generally consists of either the transferring of stock or the issuance of stock options to an employee or independent contractor.


Structured Settlement Factoring (PDF - 282KB)
Publication Date: 11/2006
Structured Settlement Factoring


Timber Casualty Loss (PDF - 611KB)
Publication Date: 04/2011
The purpose of this Audit Technique Guide is to provide guidance on conducting income tax examinations with a Timber Casualty Loss.


Veterinary Medicine (PDF - 495KB)
Publication Date: 4/2005
Overview of industry includes discussion of types of business entities (especially personal service corporation); cash vs. accrual method of accounting; and inventory vs. supplies.


Wine Industry ATG (PDF - 354KB)
Publication Date: 05/2011
The Wine Industry Audit Technique Guide is designed to assist examiners in their compliance reviews of both winery and vineyard operations.


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The 2013 Form 1040ez Instructions

2013 form 1040ez instructions 15. 2013 form 1040ez instructions   Estimated Tax Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Special Estimated Tax Rules for Qualified FarmersQualified Farmer Special Rules for Qualified Farmers Estimated Tax Penalty for 2013 What's New Net Investment Income Tax. 2013 form 1040ez instructions . 2013 form 1040ez instructions  For tax years beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). 2013 form 1040ez instructions NIIT is a 3. 2013 form 1040ez instructions 8% tax on the lesser of net investment income or the excess of your modified adjusted gross income (MAGI) over the threshold amount. 2013 form 1040ez instructions NIIT may need to be included when calculating your estimated tax. 2013 form 1040ez instructions For more information, see Publication 505,Tax Withholding and Estimated Tax. 2013 form 1040ez instructions Additional Medicare Tax. 2013 form 1040ez instructions  For tax years beginning in 2013, a 0. 2013 form 1040ez instructions 9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income over a threshold amount based on your filing status. 2013 form 1040ez instructions You may need to include this amount when figuring your estimated tax. 2013 form 1040ez instructions For more information, see Publication 505. 2013 form 1040ez instructions Introduction Estimated tax is the method used to pay tax on income that is not subject to withholding. 2013 form 1040ez instructions See Publication 505 for the general rules and requirements for paying estimated tax. 2013 form 1040ez instructions If you are a qualified farmer, defined below, you are subject to the special rules covered in this chapter for paying estimated tax. 2013 form 1040ez instructions Topics - This chapter discusses: Special estimated tax rules for qualified farmers Estimated tax penalty Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. 2013 form 1040ez instructions S. 2013 form 1040ez instructions Individual Income Tax Return 1040-ES Estimated Tax for Individuals 2210-F Underpayment of Estimated Tax by Farmers and Fishermen See chapter 16 for information about getting publications and forms. 2013 form 1040ez instructions Special Estimated Tax Rules for Qualified Farmers Special rules apply to the payment of estimated tax by individuals who are qualified farmers. 2013 form 1040ez instructions If you are not a qualified farmer as defined next, see Publication 505 for the estimated tax rules that apply. 2013 form 1040ez instructions Qualified Farmer An individual is a qualified farmer for 2013 if at least two-thirds of his or her gross income from all sources for 2012 or 2013 was from farming. 2013 form 1040ez instructions See Gross Income , next, for information on how to figure your gross income from all sources and see Gross Income From Farming , later, for information on how to figure your gross income from farming. 2013 form 1040ez instructions See also Percentage From Farming , later, for information on how to determine the percentage of your gross income from farming. 2013 form 1040ez instructions Gross Income Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from income tax. 2013 form 1040ez instructions On a joint return, you must add your spouse's gross income to your gross income. 2013 form 1040ez instructions To decide whether two-thirds of your gross income was from farming, use as your gross income the total of the following income (not loss) amounts from your tax return. 2013 form 1040ez instructions Wages, salaries, tips, etc. 2013 form 1040ez instructions Taxable interest. 2013 form 1040ez instructions Ordinary dividends. 2013 form 1040ez instructions Taxable refunds, credits, or offsets of state and local income taxes. 2013 form 1040ez instructions Alimony. 2013 form 1040ez instructions Gross business income from Schedule C (Form 1040). 2013 form 1040ez instructions Gross business receipts from Schedule C-EZ (Form 1040). 2013 form 1040ez instructions Capital gains from Schedule D (Form 1040). 2013 form 1040ez instructions Losses are not netted against gains. 2013 form 1040ez instructions Gains on sales of business property. 2013 form 1040ez instructions Taxable IRA distributions, pensions, annuities, and social security benefits. 2013 form 1040ez instructions Gross rental income from Schedule E (Form 1040). 2013 form 1040ez instructions Gross royalty income from Schedule E (Form 1040). 2013 form 1040ez instructions Taxable net income from an estate or trust reported on Schedule E (Form 1040). 2013 form 1040ez instructions Income from a Real Estate Mortgage Investment Conduit reported on Schedule E (Form 1040). 2013 form 1040ez instructions Gross farm rental income from Form 4835. 2013 form 1040ez instructions Gross farm income from Schedule F (Form 1040). 2013 form 1040ez instructions Your distributive share of gross income from a partnership, or limited liability company treated as a partnership, from Schedule K-1 (Form 1065). 2013 form 1040ez instructions Your pro rata share of gross income from an S corporation, from Schedule K-1 (Form 1120S). 2013 form 1040ez instructions Unemployment compensation. 2013 form 1040ez instructions Other income not included with any of the items listed above. 2013 form 1040ez instructions Gross Income From Farming Gross income from farming is income from cultivating the soil or raising agricultural commodities. 2013 form 1040ez instructions It includes the following amounts. 2013 form 1040ez instructions Income from operating a stock, dairy, poultry, bee, fruit, or truck farm. 2013 form 1040ez instructions Income from a plantation, ranch, nursery, range, orchard, or oyster bed. 2013 form 1040ez instructions Crop shares for the use of your land. 2013 form 1040ez instructions Gains from sales of draft, breeding, dairy, or sporting livestock. 2013 form 1040ez instructions Gross income from farming is the total of the following amounts from your tax return. 2013 form 1040ez instructions Gross farm income from Schedule F (Form 1040). 2013 form 1040ez instructions Gross farm rental income from Form 4835. 2013 form 1040ez instructions Gross farm income from Schedule E (Form 1040), Parts II and III. 2013 form 1040ez instructions Gains from the sale of livestock used for draft, breeding, sport, or dairy purposes reported on Form 4797. 2013 form 1040ez instructions For more information about income from farming, see chapter 3. 2013 form 1040ez instructions Farm income does not include any of the following: Wages you receive as a farm employee. 2013 form 1040ez instructions Income you receive from contract grain harvesting and hauling with workers and machines you furnish. 2013 form 1040ez instructions Gains you receive from the sale of farm land and depreciable farm equipment. 2013 form 1040ez instructions Percentage From Farming Figure your gross income from all sources, discussed earlier. 2013 form 1040ez instructions Then figure your gross income from farming, discussed earlier. 2013 form 1040ez instructions Divide your farm gross income by your total gross income to determine the percentage of gross income from farming. 2013 form 1040ez instructions Example 1. 2013 form 1040ez instructions Jane Smith had the following total gross income and farm gross income amounts in 2013. 2013 form 1040ez instructions Gross Income   Total Farm Taxable interest $3,000   Dividends 500   Rental income (Sch E) 41,500   Farm income (Sch F) 75,000 $75,000 Gain (Form 4797) 5,000 5,000 Total $125,000 $80,000 Schedule D showed gain from the sale of dairy cows carried over from Form 4797 ($5,000) in addition to a loss from the sale of corporate stock ($2,000). 2013 form 1040ez instructions However, that loss is not netted against the gain to figure Ms. 2013 form 1040ez instructions Smith's total gross income or her gross farm income. 2013 form 1040ez instructions Her gross farm income is 64% of her total gross income ($80,000 ÷ $125,000 = 0. 2013 form 1040ez instructions 64). 2013 form 1040ez instructions Special Rules for Qualified Farmers The following special estimated tax rules apply if you are a qualified farmer for 2013. 2013 form 1040ez instructions You do not have to pay estimated tax if you file your 2013 tax return and pay all the tax due by March 3, 2014. 2013 form 1040ez instructions You do not have to pay estimated tax if your 2013 income tax withholding (including any amount applied to your 2013 estimated tax from your 2012 return) will be at least 662/3% (. 2013 form 1040ez instructions 6667) of the total tax shown on your 2013 tax return or 100% of the total tax shown on your 2012 return. 2013 form 1040ez instructions If you must pay estimated tax, you are required to make only one estimated tax payment (your required annual payment) by January 15, 2014, using special rules to figure the amount of the payment. 2013 form 1040ez instructions See Required Annual Payment , next, for details. 2013 form 1040ez instructions Figure 15-1 presents an overview of the special estimated tax rules that apply to qualified farmers. 2013 form 1040ez instructions Example 2. 2013 form 1040ez instructions Assume the same fact as in Example 1. 2013 form 1040ez instructions Ms. 2013 form 1040ez instructions Smith's gross farm income is only 64% of her total income. 2013 form 1040ez instructions Therefore, based on her 2013 income, she does not qualify to use the special estimated tax rules for qualified farmers. 2013 form 1040ez instructions However, she does qualify if at least two-thirds of her 2012 gross income was from farming. 2013 form 1040ez instructions Example 3. 2013 form 1040ez instructions Assume the same facts as in Example 1 except that Ms. 2013 form 1040ez instructions Smith's farm income from Schedule F was $90,000 instead of $75,000. 2013 form 1040ez instructions This made her total gross income $140,000 ($3,000 + $500 + $41,500 + $90,000 + $5,000) and her farm gross income $95,000 ($90,000 + $5,000). 2013 form 1040ez instructions She qualifies to use the special estimated tax rules for qualified farmers, since 67. 2013 form 1040ez instructions 9% (at least two-thirds) of her gross income is from farming ($95,000 ÷ $140,000 = . 2013 form 1040ez instructions 679). 2013 form 1040ez instructions Required Annual Payment If you are a qualified farmer and must pay estimated tax for 2013, use the worksheet on Form 1040-ES to figure the amount of your required annual payment. 2013 form 1040ez instructions Apply the following special rules for qualified farmers to the worksheet. 2013 form 1040ez instructions On line 14a, multiply line 13c by 662/3% (. 2013 form 1040ez instructions 6667). 2013 form 1040ez instructions On line 14b, enter 100% of the tax shown on your 2012 tax return regardless of the amount of your adjusted gross income. 2013 form 1040ez instructions For this purpose, the “tax shown on your 2012 tax return” is the amount on line 61 of your 2012 return modified by certain adjustments. 2013 form 1040ez instructions For more information, see chapter 4 of Publication 505. 2013 form 1040ez instructions Estimated Tax Penalty for 2013 If you do not pay all your required estimated tax for 2013 by January 15, 2014, or file your 2013 return and pay any tax due by March 3, 2014, you may owe a penalty. 2013 form 1040ez instructions Use Form 2210-F, Underpayment of Estimated Tax by Farmers and Fishermen, to determine if you owe a penalty. 2013 form 1040ez instructions See the instructions for Form 2210-F. 2013 form 1040ez instructions Figure 15-1. 2013 form 1040ez instructions Estimated Tax for Farmers Please click here for the text description of the image. 2013 form 1040ez instructions Figure 2–A If you receive a penalty notice, do not ignore it, even if you think it is in error. 2013 form 1040ez instructions You may get a penalty notice even though you filed your return on time, attached Form 2210-F, and met the gross-income-from-farming requirement. 2013 form 1040ez instructions If you receive a penalty notice for underpaying estimated tax and you think it is in error, write to the address on the notice and explain why you think the notice is in error. 2013 form 1040ez instructions Include a computation similar to the one in Example 1 (earlier), showing that you met the gross income from farming requirement. 2013 form 1040ez instructions Prev  Up  Next   Home   More Online Publications