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Amend tax return online free Publication 1212 - Main Content Table of Contents Definitions Debt Instruments on the OID List Debt Instruments Not on the OID List Information for Brokers and Other MiddlemenShort-Term Obligations Redeemed at Maturity Long-Term Debt Instruments Certificates of Deposit Bearer Bonds and Coupons Backup Withholding Information for Owners of OID Debt InstrumentsExceptions. Amend tax return online free Adjustment for premium. Amend tax return online free Adjustment for acquisition premium. Amend tax return online free Adjustment for market discount. Amend tax return online free Form 1099-OID How To Report OID Figuring OID on Long-Term Debt Instruments Figuring OID on Stripped Bonds and Coupons How To Get Tax HelpLow Income Taxpayer Clinics Definitions The following terms are used throughout this publication. Amend tax return online free “Original issue discount” is defined first. Amend tax return online free The other terms are listed alphabetically. Amend tax return online free Original issue discount (OID). Amend tax return online free   OID is a form of interest. Amend tax return online free It is the excess of a debt instrument's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). Amend tax return online free Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. Amend tax return online free Accrual period. Amend tax return online free   An accrual period is an interval of time used to measure OID. Amend tax return online free The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. Amend tax return online free Acquisition premium. Amend tax return online free   Acquisition premium is the excess of a debt instrument's adjusted basis immediately after purchase, including purchase at original issue, over the debt instrument's adjusted issue price at that time. Amend tax return online free A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. Amend tax return online free See Premium, later. Amend tax return online free Adjusted issue price. Amend tax return online free   The adjusted issue price of a debt instrument at the beginning of an accrual period is used to figure the OID allocable to that period. Amend tax return online free In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. Amend tax return online free The adjusted issue price at the beginning of any subsequent accrual period is the sum of the issue price and all the OID includible in income before that accrual period minus any payment previously made on the debt instrument, other than a payment of qualified stated interest. Amend tax return online free Debt instrument. Amend tax return online free   The term “debt instrument” means any instrument or contractual arrangement that constitutes indebtedness under general principles of federal income tax law (including, for example, a bond, debenture, note, certificate, or other evidence of indebtedness). Amend tax return online free It generally does not include an annuity contract. Amend tax return online free Issue price. Amend tax return online free   For debt instruments listed in Section I-A and Section I-B, the issue price generally is the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of these instruments was sold. Amend tax return online free Market discount. Amend tax return online free   Market discount arises when a debt instrument purchased in the secondary market has decreased in value since its issue date, generally because of an increase in interest rates. Amend tax return online free An OID debt instrument has market discount if your adjusted basis in the debt instrument immediately after you acquired it (usually its purchase price) was less than the debt instrument's issue price plus the total OID that accrued before you acquired it. Amend tax return online free The market discount is the difference between the issue price plus accrued OID and your adjusted basis. Amend tax return online free Premium. Amend tax return online free   A debt instrument is purchased at a premium if its adjusted basis immediately after purchase is greater than the total of all amounts payable on the debt instrument after the purchase date, other than qualified stated interest. Amend tax return online free The premium is the excess of the adjusted basis over the payable amounts. Amend tax return online free See Publication 550 for information on the tax treatment of bond premium. Amend tax return online free Qualified stated interest. Amend tax return online free   In general, qualified stated interest is stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually over the term of the debt instrument at a single fixed rate. Amend tax return online free Stated redemption price at maturity. Amend tax return online free   A debt instrument's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on the debt instrument other than qualified stated interest. Amend tax return online free Yield to maturity (YTM). Amend tax return online free   In general, the YTM is the discount rate that, when used in figuring the present value of all principal and interest payments, produces an amount equal to the issue price of the debt instrument. Amend tax return online free The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. Amend tax return online free If you do not have this information, consult your broker, tax advisor, or the issuer. Amend tax return online free Debt Instruments on the OID List The OID list on the IRS website can be used by brokers and other middlemen to prepare information returns. Amend tax return online free If you own a listed debt instrument, you generally should not rely on the information in the OID list to determine (or compare) the OID to be reported on your tax return. Amend tax return online free The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. Amend tax return online free For information about determining the OID to be reported on your tax return, see the instructions for figuring OID under Information for Owners of OID Debt Instruments, later. Amend tax return online free The following discussions explain what information is contained in each section of the list. Amend tax return online free Section I. Amend tax return online free   This section contains publicly offered, long-term debt instruments. Amend tax return online free Section I-A: Corporate Debt Instruments Issued Before 1985. Amend tax return online free Section I-B: Corporate Debt Instruments Issued After 1984. Amend tax return online free Section I-C: Inflation-Indexed Debt Instruments. Amend tax return online free For each publicly offered debt instrument in Section I, the list contains the following information. Amend tax return online free The name of the issuer. Amend tax return online free The Committee on Uniform Security Identification Procedures (CUSIP) number. Amend tax return online free The issue date. Amend tax return online free The maturity date. Amend tax return online free The issue price expressed as a percent of principal or of stated redemption price at maturity. Amend tax return online free The annual stated or coupon interest rate. Amend tax return online free (This rate is shown as 0. Amend tax return online free 00 if no annual interest payments are provided. Amend tax return online free ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. Amend tax return online free The total OID accrued up to January 1 of a calendar year. Amend tax return online free (This information is not available for every instrument. Amend tax return online free ) For long-term debt instruments issued after July 1, 1982, the daily OID for the accrual periods falling in a calendar year and a subsequent year. Amend tax return online free The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. Amend tax return online free Section II. Amend tax return online free   This section contains stripped coupons and principal components of U. Amend tax return online free S. Amend tax return online free Treasury and Government-Sponsored Enterprise debt instruments. Amend tax return online free These stripped components are available through the Department of the Treasury's Separate Trading of Registered Interest and Principal of Securities (STRIPS) program and government-sponsored enterprises such as the Resolution Funding Corporation. Amend tax return online free This section also includes debt instruments backed by U. Amend tax return online free S. Amend tax return online free Treasury securities that represent ownership interests in those securities. Amend tax return online free   The obligations listed in Section II are arranged by maturity date. Amend tax return online free The amounts listed are the total OID for a calendar year per $1,000 of redemption price. Amend tax return online free Section III. Amend tax return online free   This section contains short-term discount obligations. Amend tax return online free Section III-A: Short-Term U. Amend tax return online free S. Amend tax return online free Treasury Bills. Amend tax return online free Section III-B: Federal Home Loan Banks. Amend tax return online free Section III-C: Federal National Mortgage Association. Amend tax return online free Section III-D: Federal Farm Credit Banks. Amend tax return online free Section III-E: Federal Home Loan Mortgage Corporation. Amend tax return online free Section III-F: Federal Agricultural Mortgage Corporation. Amend tax return online free    Information that supplements Section III-A is available on the Internet at http://www. Amend tax return online free treasurydirect. Amend tax return online free gov/tdhome. Amend tax return online free htm. Amend tax return online free   The short-term obligations listed in this section are arranged by maturity date. Amend tax return online free For each obligation, the list contains the CUSIP number, maturity date, issue date, issue price (expressed as a percent of principal), and discount to be reported as interest for a calendar year per $1,000 of redemption price. Amend tax return online free Brokers and other middlemen should rely on the issue price information in Section III only if they are unable to determine the price actually paid by the owner. Amend tax return online free Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. Amend tax return online free U. Amend tax return online free S. Amend tax return online free savings bonds. Amend tax return online free Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. Amend tax return online free Obligations issued by tax-exempt organizations. Amend tax return online free OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. Amend tax return online free Mortgage-backed securities and mortgage participation certificates. Amend tax return online free Long-term OID debt instruments issued before May 28, 1969. Amend tax return online free Short-term obligations, other than the obligations listed in Section III. Amend tax return online free Debt instruments issued at a discount by states or their political subdivisions. Amend tax return online free REMIC regular interests and CDOs. Amend tax return online free Commercial paper and banker's acceptances issued at a discount. Amend tax return online free Obligations issued at a discount by individuals. Amend tax return online free Foreign obligations not traded in the United States and obligations not issued in the United States. Amend tax return online free Information for Brokers and Other Middlemen The following discussions contain specific instructions for brokers and middlemen who hold or redeem a debt instrument for the owner. Amend tax return online free In general, you must file a Form 1099 for the debt instrument if the interest or OID to be included in the owner's income for a calendar year totals $10 or more. Amend tax return online free You also must file a Form 1099 if you were required to deduct and withhold tax, even if the interest or OID is less than $10. Amend tax return online free See Backup Withholding, later. Amend tax return online free If you must file a Form 1099, furnish a copy to the owner of the debt instrument by January 31 in the year it is due. Amend tax return online free File all your Forms 1099 with the IRS, accompanied by Form 1096, by February 28 in the year it is due (March 31 if you file electronically). Amend tax return online free Electronic payee statements. Amend tax return online free   You can issue Form 1099-OID electronically with the consent of the recipient. Amend tax return online free More information. Amend tax return online free   For more information, including penalties for failure to file (or furnish) required information returns or statements, see the General Instructions for Certain Information Returns (Forms 1098, 1099, 3921, 3922, 5498, and W-2G) for the appropriate calendar year. Amend tax return online free Short-Term Obligations Redeemed at Maturity If you redeem a short-term discount obligation for the owner at maturity, you must report the discount as interest on Form 1099-INT. Amend tax return online free To figure the discount, use the purchase price shown on the owner's copy of the purchase confirmation receipt or similar record, or the price shown in your transaction records. Amend tax return online free If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. Amend tax return online free Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. Amend tax return online free If the owner's purchase price cannot be determined, figure the discount as if the owner had purchased the obligation at its original issue price. Amend tax return online free A special rule is used to determine the original issue price for information reporting on U. Amend tax return online free S. Amend tax return online free Treasury bills (T-bills) listed in Section III-A. Amend tax return online free Under this rule, you treat as the original issue price of the T-bill the noncompetitive (weighted average of accepted auction bids) discount price for the longest-maturity T-bill maturing on the same date as the T-bill being redeemed. Amend tax return online free This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. Amend tax return online free A similar rule is used to figure the discount on short-term discount obligations issued by the organizations listed in Section III-B through Section III-F. Amend tax return online free Example 1. Amend tax return online free There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. Amend tax return online free The price actually paid by the owner cannot be established by owner or middleman records. Amend tax return online free You treat as the issue price of the T-bill the noncompetitive discount price (expressed as a percent of principal) shown in Section III-A for a 26-week bill maturing on the same date as the T-bill redeemed. Amend tax return online free The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. Amend tax return online free Long-Term Debt Instruments If you hold a long-term OID debt instrument as a nominee for the true owner, you generally must file Form 1099-OID. Amend tax return online free For this purpose, you can rely on Section I of the OID list to determine the following information. Amend tax return online free Whether a debt instrument has OID. Amend tax return online free The OID to be reported on the Form 1099-OID. Amend tax return online free In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. Amend tax return online free You also can report OID on other long-term debt instruments. Amend tax return online free Form 1099-OID. Amend tax return online free   On Form 1099-OID for a calendar year show the following information. Amend tax return online free Box 1. Amend tax return online free The OID for the actual dates the owner held the debt instruments during a calendar year. Amend tax return online free To determine this amount, see Figuring OID, next. Amend tax return online free Box 2. Amend tax return online free The qualified stated interest paid or credited during the calendar year. Amend tax return online free Interest reported here is not reported on Form 1099-INT. Amend tax return online free The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. Amend tax return online free Box 3. Amend tax return online free Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. Amend tax return online free Do not reduce the amounts in boxes 1 and 2 by the forfeiture. Amend tax return online free Box 4. Amend tax return online free Any backup withholding for this debt instrument. Amend tax return online free Box 7. Amend tax return online free The CUSIP number, if any. Amend tax return online free If there is no CUSIP number, give a description of the debt instrument, including the abbreviation for the stock exchange, the abbreviation used by the stock exchange for the issuer, the coupon rate, and the year of maturity (for example, NYSE XYZ 12. Amend tax return online free 50 2006). Amend tax return online free If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. Amend tax return online free Box 8. Amend tax return online free The OID on a U. Amend tax return online free S. Amend tax return online free Treasury obligation for the part of the year the owner held the debt instrument. Amend tax return online free Box 9. Amend tax return online free Investment expenses passed on to holders of a single-class REMIC. Amend tax return online free Boxes 10-12. Amend tax return online free Use to report any state income tax withheld for this debt instrument. Amend tax return online free Figuring OID. Amend tax return online free   You can determine the OID on a long-term debt instrument by using either of the following. Amend tax return online free Section I of the OID list. Amend tax return online free The income tax regulations. Amend tax return online free Using Section I. Amend tax return online free   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. Amend tax return online free Because OID is listed for each $1,000 of stated redemption price at maturity, you must adjust the listed amount to reflect the debt instrument's actual stated redemption price at maturity. Amend tax return online free For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. Amend tax return online free   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. Amend tax return online free Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. Amend tax return online free Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. Amend tax return online free Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. Amend tax return online free Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. Amend tax return online free If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. Amend tax return online free Report the result on Form 1099-OID in box 1. Amend tax return online free Using the income tax regulations. Amend tax return online free   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. Amend tax return online free For example, under the regulations, you can use monthly accrual periods in figuring OID for a debt instrument issued after April 3, 1994, that provides for monthly payments. Amend tax return online free (If you use Section I-B, the OID is figured using 6-month accrual periods. Amend tax return online free )   For a general explanation of the rules for figuring OID under the regulations, see Figuring OID on Long-Term Debt Instruments under Information for Owners of OID Debt Instruments, later. Amend tax return online free Certificates of Deposit If you hold a bank certificate of deposit (CD) as a nominee, you must determine whether the CD has OID and any OID includible in the income of the owner. Amend tax return online free You must file an information return showing the reportable interest and OID, if any, on the CD. Amend tax return online free These rules apply whether or not you sold the CD to the owner. Amend tax return online free Report OID on a CD in the same way as OID on other debt instruments. Amend tax return online free See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. Amend tax return online free Bearer Bonds and Coupons If a coupon from a bearer bond is presented to you for collection before the bond matures, you generally must report the interest on Form 1099-INT. Amend tax return online free However, do not report the interest if either of the following apply. Amend tax return online free You hold the bond as a nominee for the true owner. Amend tax return online free The payee is a foreign person. Amend tax return online free See Payments to foreign person under Backup Withholding, later. Amend tax return online free Because you cannot assume the presenter of the coupon also owns the bond, you should not report OID on the bond on Form 1099-OID. Amend tax return online free The coupon may have been “stripped” (separated) from the bond and separately purchased. Amend tax return online free However, if a long-term bearer bond on the OID list is presented to you for redemption upon call or maturity, you should prepare a Form 1099-OID showing the OID for that calendar year, as well as any coupon interest payments collected at the time of redemption. Amend tax return online free Backup Withholding If you report OID on Form 1099-OID or interest on Form 1099-INT for a calendar year, you may be required to apply backup withholding to the reportable payment at a rate of 28%. Amend tax return online free The backup withholding is deducted at the time a cash payment is made. Amend tax return online free See Pub. Amend tax return online free 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. Amend tax return online free Backup withholding generally applies in the following situations. Amend tax return online free The payee does not give you a taxpayer identification number (TIN). Amend tax return online free The IRS notifies you that the payee gave an incorrect TIN. Amend tax return online free The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. Amend tax return online free For debt instruments acquired after 1983: The payee does not certify, under penalties of perjury, that he or she is not subject to backup withholding under (3), or The payee does not certify, under penalties of perjury, that the TIN given is correct. Amend tax return online free However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. Amend tax return online free S. Amend tax return online free savings bonds, backup withholding applies only if the payee does not give you a TIN or gives you an obviously incorrect number for a TIN. Amend tax return online free Short-term obligations. Amend tax return online free   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. Amend tax return online free However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. Amend tax return online free   If the owner of a short-term obligation at maturity is not the original owner and can establish the purchase price of the obligation, the amount subject to backup withholding must be determined by treating the purchase price as the issue price. Amend tax return online free However, you can choose to disregard that price if it would require significant manual intervention in the computer or recordkeeping system used for the obligation. Amend tax return online free If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. Amend tax return online free Long-term obligations. Amend tax return online free   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. Amend tax return online free The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. Amend tax return online free The amount to be withheld is limited to the cash paid. Amend tax return online free Registered long-term obligations with cash payments. Amend tax return online free   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. Amend tax return online free The amount subject to backup withholding is the total of the qualified stated interest (defined earlier under Definitions) and OID includible in the owner's gross income for the calendar year when the payment is made. Amend tax return online free If more than one cash payment is made during the year, the OID subject to withholding for the year must be allocated among the expected cash payments in the ratio that each bears to the total of the expected cash payments. Amend tax return online free For any payment, the required withholding is limited to the cash paid. Amend tax return online free Payee not the original owner. Amend tax return online free   If the payee is not the original owner of the obligation, the OID subject to backup withholding is the OID includible in the gross income of all owners during the calendar year (without regard to any amount paid by the new owner at the time of transfer). Amend tax return online free The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. Amend tax return online free Bearer long-term obligations with cash payments. Amend tax return online free   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. Amend tax return online free For payments before maturity, the amount subject to withholding is the qualified stated interest (defined earlier under Definitions) includible in the owner's gross income for the calendar year. Amend tax return online free For a payment at maturity, the amount subject to withholding is only the total of any qualified stated interest paid at maturity and the OID includible in the owner's gross income for the calendar year when the obligation matures. Amend tax return online free The required withholding at maturity is limited to the cash paid. Amend tax return online free Sales and redemptions. Amend tax return online free   If you report the gross proceeds from a sale, exchange, or redemption of a debt instrument on Form 1099-B for a calendar year, you may be required to withhold 28% of the amount reported. Amend tax return online free Backup withholding applies in the following situations. Amend tax return online free The payee does not give you a TIN. Amend tax return online free The IRS notifies you that the payee gave an incorrect TIN. Amend tax return online free For debt instruments held in an account opened after 1983, the payee does not certify, under penalties of perjury, that the TIN given is correct. Amend tax return online free Payments outside the United States to U. Amend tax return online free S. Amend tax return online free person. Amend tax return online free   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. Amend tax return online free S. Amend tax return online free person, a controlled foreign corporation, or a foreign person at least 50% of whose income for the preceding 3-year period is effectively connected with the conduct of a U. Amend tax return online free S. Amend tax return online free trade or business. Amend tax return online free Payments to foreign person. Amend tax return online free   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. Amend tax return online free U. Amend tax return online free S. Amend tax return online free -source amount. Amend tax return online free   Backup withholding and information reporting are not required for payments of U. Amend tax return online free S. Amend tax return online free -source OID, interest, or proceeds from a sale or redemption of an OID instrument if the payee has given you proof (generally the appropriate Form W-8 or an acceptable substitute) that the payee is a foreign person. Amend tax return online free A U. Amend tax return online free S. Amend tax return online free resident is not a foreign person. Amend tax return online free For proof of the payee's foreign status, you can rely on the appropriate Form W-8 or on documentary evidence for payments made outside the United States to an offshore account or, in case of broker proceeds, a sale effected outside the United States. Amend tax return online free Receipt of the appropriate Form W-8 does not relieve you from information reporting and backup withholding if you actually know the payee is a U. Amend tax return online free S. Amend tax return online free person. Amend tax return online free   For information about the 28% withholding tax that may apply to payments of U. Amend tax return online free S. Amend tax return online free -source OID or interest to foreign persons, see Publication 515. Amend tax return online free Foreign-source amount. Amend tax return online free   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. Amend tax return online free However, if the payments are made inside the United States, the requirements for backup withholding and information reporting will apply unless the payee has given you the appropriate Form W-8 or acceptable substitute as proof that the payee is a foreign person. Amend tax return online free More information. Amend tax return online free   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. Amend tax return online free 6049-5. Amend tax return online free Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. Amend tax return online free It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. Amend tax return online free It also includes a similar discussion for stripped bonds and coupons, such as zero coupon bonds available through the Department of the Treasury's STRIPS program and government-sponsored enterprises such as the Resolution Funding Corporation. Amend tax return online free However, the information provided does not cover every situation. Amend tax return online free More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. Amend tax return online free Including OID in income. Amend tax return online free   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. Amend tax return online free Exceptions. Amend tax return online free   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. Amend tax return online free U. Amend tax return online free S. Amend tax return online free savings bonds. Amend tax return online free Tax-exempt obligations. Amend tax return online free (However, see Tax-Exempt Bonds and Coupons, later. Amend tax return online free ) Obligations issued by individuals before March 2, 1984. Amend tax return online free Loans of $10,000 or less between individuals who are not in the business of lending money. Amend tax return online free (The dollar limit includes outstanding prior loans by the lender to the borrower. Amend tax return online free ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. Amend tax return online free   See chapter 1 of Publication 550 for information about the rules for these and other types of discounted debt instruments, such as short-term and market discount obligations. Amend tax return online free Publication 550 also discusses rules for holders of REMIC interests and CDOs. Amend tax return online free De minimis rule. Amend tax return online free   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. Amend tax return online free 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. Amend tax return online free Debt instruments with de minimis OID are not listed in this publication. Amend tax return online free There are special rules to determine the de minimis amount in the case of debt instruments that provide for more than one payment of principal. Amend tax return online free Also, the de minimis rules generally do not apply to tax-exempt obligations. Amend tax return online free Example 2. Amend tax return online free You bought at issuance a 10-year debt instrument with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. Amend tax return online free One-fourth of 1% of $1,000 (the stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. Amend tax return online free Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. Amend tax return online free Example 3. Amend tax return online free Assume the same facts as Example 2, except the debt instrument was issued at $950. Amend tax return online free You must report part of the $50 OID each year because it is more than $25. Amend tax return online free Choice to report all interest as OID. Amend tax return online free   Generally, you can choose to treat all interest on a debt instrument acquired after April 3, 1994, as OID and include it in gross income by using the constant yield method. Amend tax return online free See Constant yield method under Debt Instruments Issued After 1984, later, for more information. Amend tax return online free   For this choice, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. Amend tax return online free For more information, see Regulations section 1. Amend tax return online free 1272-3. Amend tax return online free Purchase after date of original issue. Amend tax return online free   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. Amend tax return online free If so, the OID reported to you on Form 1099-OID may have to be adjusted. Amend tax return online free For more information, see Showing an OID adjustment under How To Report OID, later. Amend tax return online free The following rules generally do not apply to contingent payment debt instruments. Amend tax return online free Adjustment for premium. Amend tax return online free   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. Amend tax return online free Your adjustment is the total OID shown on your Form 1099-OID. Amend tax return online free Adjustment for acquisition premium. Amend tax return online free   If your debt instrument has acquisition premium, reduce the OID you report. Amend tax return online free Your adjustment is the difference between the OID shown on your Form 1099-OID and the reduced OID amount figured using the rules explained later under Figuring OID on Long-Term Debt Instruments. Amend tax return online free Adjustment for market discount. Amend tax return online free   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. Amend tax return online free Your adjustment is the accrued market discount for the year. Amend tax return online free See Market Discount Bonds in chapter 1 of Publication 550 for information on how to figure accrued market discount and include it in your income currently and for other information about market discount bonds. Amend tax return online free If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. Amend tax return online free The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. Amend tax return online free For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. Amend tax return online free 1275-7. Amend tax return online free Sale, exchange, or redemption. Amend tax return online free   Generally, you treat your gain or loss from the sale, exchange, or redemption of a discounted debt instrument as a capital gain or loss if you held the debt instrument as a capital asset. Amend tax return online free If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. Amend tax return online free Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). Amend tax return online free   Your gain or loss is the difference between the amount you realized on the sale, exchange, or redemption and your basis in the debt instrument. Amend tax return online free Your basis, generally, is your cost increased by the OID you have included in income each year you held it. Amend tax return online free In general, to determine your gain or loss on a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. Amend tax return online free   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. Amend tax return online free Example 4. Amend tax return online free Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. Amend tax return online free 00 on November 1 of Year 1. Amend tax return online free The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. Amend tax return online free The debt instrument provides for semiannual payments of interest at 10%. Amend tax return online free Assume the debt instrument is a capital asset in Larry's hands. Amend tax return online free The debt instrument has $13,765. Amend tax return online free 00 of OID ($100,000 stated redemption price at maturity minus $86,235. Amend tax return online free 00 issue price). Amend tax return online free Larry sold the debt instrument for $90,000 on November 1 of Year 4. Amend tax return online free Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. Amend tax return online free 00 of OID in income and has increased his basis by that amount to $90,791. Amend tax return online free 00. Amend tax return online free Larry has realized a loss of $791. Amend tax return online free 00. Amend tax return online free All of Larry's loss is capital loss. Amend tax return online free Form 1099-OID The issuer of the debt instrument (or your broker, if you purchased or held the debt instrument through a broker) should give you a copy of Form 1099-OID or a similar statement if the accrued OID for the calendar year is $10 or more and the term of the debt instrument is more than 1 year. Amend tax return online free Form 1099-OID shows all OID income in box 1 except OID on a U. Amend tax return online free S. Amend tax return online free Treasury obligation, which is shown in box 8. Amend tax return online free It also shows, in box 2, any qualified stated interest you must include in income. Amend tax return online free (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. Amend tax return online free ) A copy of Form 1099-OID will be sent to the IRS. Amend tax return online free Do not attach your copy to your tax return. Amend tax return online free Keep it for your records. Amend tax return online free If you are required to file a tax return and you receive Form 1099-OID showing taxable amounts, you must report these amounts on your return. Amend tax return online free A 20% accuracy-related penalty may be charged for underpayment of tax due to either negligence or disregard of rules and regulations or substantial understatement of tax. Amend tax return online free Form 1099-OID not received. Amend tax return online free   If you held an OID debt instrument for a calendar year but did not receive a Form 1099-OID, refer to the discussions under Figuring OID on Long-Term Debt Instruments, later, for information on the OID you must report. Amend tax return online free Refiguring OID. Amend tax return online free   You must refigure the OID shown on Form 1099-OID, in box 1 or box 8, to determine the proper amount to include in income if one of the following applies. Amend tax return online free You bought the debt instrument at a premium or at an acquisition premium. Amend tax return online free The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. Amend tax return online free S. Amend tax return online free Treasury securities). Amend tax return online free The debt instrument is a contingent payment or inflation-indexed debt instrument. Amend tax return online free See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. Amend tax return online free Refiguring interest. Amend tax return online free   If you disposed of a debt instrument or acquired it from another holder between interest dates, see the discussion under Bonds Sold Between Interest Dates in chapter 1 of Publication 550 for information about refiguring the interest shown on Form 1099-OID in box 2. Amend tax return online free Nominee. Amend tax return online free   If you are the holder of an OID debt instrument and you receive a Form 1099-OID that shows your taxpayer identification number and includes amounts belonging to another person, you are considered a “nominee. Amend tax return online free ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. Amend tax return online free Show the owner of the debt instrument as the “recipient” and you as the “payer. Amend tax return online free ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. Amend tax return online free You must also give a copy of the Form 1099-OID to the actual owner. Amend tax return online free However, you are not required to file a nominee return to show amounts belonging to your spouse. Amend tax return online free See the Form 1099 instructions for more information. Amend tax return online free   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. Amend tax return online free How To Report OID Generally, you report your taxable interest and OID income on the interest line of Form 1040EZ, Form 1040A, or Form 1040. Amend tax return online free Form 1040 or Form 1040A required. Amend tax return online free   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. Amend tax return online free You received a Form 1099-OID as a nominee for the actual owner. Amend tax return online free Your total interest and OID income for the year was more than $1,500. Amend tax return online free Form 1040 required. Amend tax return online free   You must use Form 1040 (you cannot use Form 1040A or Form 1040EZ) if you are reporting more or less OID than the amount shown on Form 1099-OID, other than because you are a nominee. Amend tax return online free For example, if you paid a premium or an acquisition premium when you purchased the debt instrument, you must use Form 1040 because you will report less OID than shown on Form 1099-OID. Amend tax return online free Also, you must use Form 1040 if you were charged an early withdrawal penalty. Amend tax return online free Where to report. Amend tax return online free   List each payer's name (if a brokerage firm gave you a Form 1099, list the brokerage firm as the payer) and the amount received from each payer on Form 1040A, Schedule B, Part I, line 1, or Form 1040, Schedule B, line 1. Amend tax return online free Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. Amend tax return online free Also include any other OID and interest income for which you did not receive a Form 1099. Amend tax return online free Showing an OID adjustment. Amend tax return online free   If you use Form 1040 to report more or less OID than shown on Form 1099-OID, list the full OID on Schedule B, Part I, line 1, and follow the instructions under 1 or 2, next. Amend tax return online free   If you use Form 1040A to report the OID shown on a Form 1099-OID you received as a nominee for the actual owner, list the full OID on Schedule B, Part I, line 1 and follow the instructions under 1. Amend tax return online free If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. Amend tax return online free Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Amend tax return online free Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. Amend tax return online free Subtract that OID from the subtotal and enter the result on line 2. Amend tax return online free If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. Amend tax return online free Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Amend tax return online free Below the subtotal, write “OID Adjustment” and show the additional OID. Amend tax return online free Add that OID to the subtotal and enter the result on line 2. Amend tax return online free Figuring OID on Long-Term Debt Instruments How you figure the OID on a long-term debt instrument depends on the date it was issued. Amend tax return online free It also may depend on the type of the debt instrument. Amend tax return online free There are different rules for each of the following debt instruments. Amend tax return online free Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. Amend tax return online free Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. Amend tax return online free Debt instruments issued after July 1, 1982, and before 1985. Amend tax return online free Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). Amend tax return online free Contingent payment debt instruments issued after August 12, 1996. Amend tax return online free Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. Amend tax return online free Zero coupon bonds. Amend tax return online free   The rules for figuring OID on zero coupon bonds backed by U. Amend tax return online free S. Amend tax return online free Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. Amend tax return online free Corporate Debt Instruments Issued After 1954 and Before May 28, 1969, and Government Debt Instruments Issued After 1954 and Before July 2, 1982 If you hold these debt instruments as capital assets, you include OID in income only in the year the debt instrument is sold, exchanged, or redeemed, and only if you have a gain. Amend tax return online free The OID, which is taxed as ordinary income, generally equals the following amount. Amend tax return online free   number of full months you held the debt instrument  number of full months from date of original issue to date of maturity X original issue discount The balance of the gain is capital gain. Amend tax return online free If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. Amend tax return online free Corporate Debt Instruments Issued After May 27, 1969, and Before July 2, 1982 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments. Amend tax return online free For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. Amend tax return online free Your basis in the debt instrument is increased by the OID you include in income. Amend tax return online free Form 1099-OID. Amend tax return online free   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Amend tax return online free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Amend tax return online free See Reduction for acquisition premium, later. Amend tax return online free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. Amend tax return online free irs. Amend tax return online free gov/pub1212 by clicking the link under Recent Developments. Amend tax return online free Form 1099-OID not received. Amend tax return online free    The OID listed is for each $1,000 of redemption price. Amend tax return online free You must adjust the listed amount if your debt instrument has a different principal amount. Amend tax return online free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Amend tax return online free   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. Amend tax return online free (If your debt instrument is not listed in Section I-A, consult the issuer for information about the issue price and the OID that accrued for that year. Amend tax return online free ) If you did not hold the debt instrument the entire year, figure your OID using the following method. Amend tax return online free Divide the OID shown by 12. Amend tax return online free Multiply the result in (1) by the number of complete and partial months (for example, 6½ months) you held the debt instrument during a calendar year. Amend tax return online free This is the OID to include in income unless you paid an acquisition premium. Amend tax return online free The reduction for acquisition premium is discussed next. Amend tax return online free Reduction for acquisition premium. Amend tax return online free   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. Amend tax return online free Divide the total OID on the debt instrument by the number of complete months, and any part of a month, from the date of original issue to the maturity date. Amend tax return online free This is the monthly OID. Amend tax return online free Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. Amend tax return online free (If the result is zero or less, stop here. Amend tax return online free You did not pay an acquisition premium. Amend tax return online free ) Divide the amount figured in (2) by the number of complete months, and any part of a month, from the date of your purchase to the maturity date. Amend tax return online free Subtract the amount figured in (3) from the amount figured in (1). Amend tax return online free This is the OID to include in income for each month you hold the debt instrument during the year. Amend tax return online free Transfers during the month. Amend tax return online free   If you buy or sell a debt instrument on any day other than the same day of the month as the date of original issue, the ratable monthly portion of OID for the month of sale is divided between the seller and the buyer according to the number of days each held the debt instrument. Amend tax return online free Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. Amend tax return online free Debt Instruments Issued After July 1, 1982, and Before 1985 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments and increase your basis by the amount included. Amend tax return online free For information about showing the correct OID on your tax return, see How To Report OID, earlier. Amend tax return online free Form 1099-OID. Amend tax return online free   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Amend tax return online free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Amend tax return online free See Constant yield method and the discussions on acquisition premium that follow, later. Amend tax return online free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. Amend tax return online free irs. Amend tax return online free gov/pub1212 by clicking the link under Recent Developments. Amend tax return online free Form 1099-OID not received. Amend tax return online free    The OID listed is for each $1,000 of redemption price. Amend tax return online free You must adjust the listed amount if your debt instrument has a different principal amount. Amend tax return online free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Amend tax return online free   If you held the debt instrument the entire year, use the OID shown in Section I-A. Amend tax return online free (If your instrument is not listed in Section I-A, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. Amend tax return online free ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. Amend tax return online free Method 1. Amend tax return online free    Divide the total OID for a calendar year by 365 (366 for leap years). Amend tax return online free Multiply the result in (1) by the number of days you held the debt instrument during that particular year. Amend tax return online free  This computation is an approximation and may result in a slightly higher OID than Method 2. Amend tax return online free Method 2. Amend tax return online free    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. Amend tax return online free (See Accrual period under Constant yield method, next. Amend tax return online free ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Amend tax return online free If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. Amend tax return online free Add the results of (2) and (3). Amend tax return online free This is the OID to include in income, unless you paid an acquisition premium. Amend tax return online free (The reduction for acquisition premium is discussed later. Amend tax return online free ) Constant yield method. Amend tax return online free   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. Amend tax return online free OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Amend tax return online free   Figure the OID allocable to any accrual period as follows. Amend tax return online free Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. Amend tax return online free Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Amend tax return online free Accrual period. Amend tax return online free   An accrual period for any OID debt instrument issued after July 1, 1982, and before 1985 is each 1-year period beginning on the date of the issue of the obligation and each anniversary thereafter, or the shorter period to maturity for the last accrual period. Amend tax return online free Your tax year will usually include parts of two accrual periods. Amend tax return online free Daily OID. Amend tax return online free   The OID for any accrual period is allocated equally to each day in the accrual period. Amend tax return online free You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. Amend tax return online free If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. Amend tax return online free Figuring daily OID. Amend tax return online free   The daily OID for the initial accrual period is figured using the following formula. Amend tax return online free   (ip × ytm) − qsi     p   ip = issue price ytm = yield to maturity qsi = qualified stated interest p = number of days in accrual period         The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. Amend tax return online free Reduction for acquisition premium on debt instruments purchased before July 19, 1984. Amend tax return online free   If you bought the debt instrument at an acquisition premium before July 19, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Amend tax return online free Figure the daily acquisition premium by dividing the total acquisition premium by the number of days in the period beginning on your purchase date and ending on the day before the date of maturity. Amend tax return online free Reduction for acquisition premium on debt instruments purchased after July 18, 1984. Amend tax return online free   If you bought the debt instrument at an acquisition premium after July 18, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Amend tax return online free However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. Amend tax return online free To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. Amend tax return online free The numerator is the acquisition premium. Amend tax return online free The denominator is the total OID remaining for the debt instrument after your purchase date. Amend tax return online free Section I-A is available at www. Amend tax return online free irs. Amend tax return online free gov/pub1212 and clicking the link under Recent Developments. Amend tax return online free Using Section I-A to figure accumulated OID. Amend tax return online free   If you bought your corporate debt instrument in a calendar year or the subsequent year, you can figure the accumulated OID to the date of purchase by adding the following amounts. Amend tax return online free The amount from the “Total OID to January 1, YYYY” column for your debt instrument. Amend tax return online free The OID from January 1 of a calendar year to the date of purchase, figured as follows. Amend tax return online free Multiply the daily OID for the first accrual period in the calendar year by the number of days from January 1 to the date of purchase, or the end of the accrual period if the debt instrument was purchased in the second or third accrual period. Amend tax return online free Multiply the daily OID for each subsequent accrual period by the number of days in the period to the date of purchase or the end of the accrual period, whichever applies. Amend tax return online free Add the amounts figured in (2a) and (2b). Amend tax return online free Debt Instruments Issued After 1984 If you hold debt instruments issued after 1984, you must report part of the OID in gross income each year that you own the debt instruments. Amend tax return online free You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. Amend tax return online free Your basis in the debt instrument is increased by the OID you include in income. Amend tax return online free For information about showing the correct OID on your tax return, see How To Report OID, earlier. Amend tax return online free Form 1099-OID. Amend tax return online free   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. Amend tax return online free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Amend tax return online free See Constant yield method and Reduction for acquisition premium, later. Amend tax return online free   You may also need to refigure the OID for a contingent payment or inflation-indexed debt instrument on which the amount reported on Form 1099-OID is inaccurate. Amend tax return online free See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. Amend tax return online free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-B available at www. Amend tax return online free irs. Amend tax return online free gov/pub1212 by clicking the link under Recent Developments. Amend tax return online free Form 1099-OID not received. Amend tax return online free   The OID listed is for each $1,000 of redemption price. Amend tax return online free You must adjust the listed amount if your debt instrument has a different principal amount. Amend tax return online free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Amend tax return online free   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. Amend tax return online free (If your debt instrument is not listed in Section I-B, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. Amend tax return online free ) If you did not hold the debt instrument the entire year, figure your OID as follows. Amend tax return online free Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. Amend tax return online free (See Accrual period under Constant yield method, later. Amend tax return online free ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Amend tax return online free Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. Amend tax return online free Add the results of (2) and (3). Amend tax return online free This is the OID to include in income for that year, unless you paid an acquisition premium. Amend tax return online free (The reduction for acquisition premium is discussed later. Amend tax return online free ) Tax-exempt bond. Amend tax return online free   If you own a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. Amend tax return online free You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. Amend tax return online free In general, use the rules that follow to determine your OID. Amend tax return online free Constant yield method. Amend tax return online free   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. Amend tax return online free (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. Amend tax return online free ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Amend tax return online free   Figure the OID allocable to any accrual period as follows. Amend tax return online free Multiply the adjusted issue price at the beginning of the accrual period by a fraction. Amend tax return online free The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. Amend tax return online free The yield must be stated appropriately taking into account the length of the particular accrual period. Amend tax return online free Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Amend tax return online free Accrual period. Amend tax return online free   For debt instruments issued after 1984 and before April 4, 1994, an accrual period is each 6-month period that ends on the day that corresponds to the stated maturity date of the debt instrument or the date 6 months before that date. Amend tax return online free For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. Amend tax return online free Any short period is included as the first accrual period. Amend tax return online free   For debt instruments issued after April 3, 1994, accrual periods may be of any length and may vary in length over the term of the debt instrument, as long as each accrual period is no longer than 1 year and all payments are made on the first or last day of an accrual period. Amend tax return online free However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. Amend tax return online free Daily OID. Amend tax return online free   The OID for any accrual period is allocated equally to each day in the accrual period. Amend tax return online free Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. Amend tax return online free Since your tax year will usually include parts of two or more accrual periods, you must include the proper daily OID for each accrual period. Amend tax return online free If your debt instrument has 6-month accrual periods, your tax year will usually include one full 6-month accrual period and parts of two other 6-month periods. Amend tax return online free Figuring daily OID. Amend tax return online free   The daily OID for the initial accrual period is figured using the following formula. Amend tax return online free   (ip × ytm/n) − qsi     p   ip = issue price ytm = yield to maturity n = number of accrual periods in 1 year qsi = qualified stated interest p = number of days in accrual period       The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. Amend tax return online free Example 5. Amend tax return online free On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. Amend tax return online free 17. Amend tax return online free According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. Amend tax return online free The yield to maturity is 12%, compounded semiannually. Amend tax return online free The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. Amend tax return online free The accrual periods are the 6-month periods ending on each of these dates. Amend tax return online free The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). Amend tax return online free The daily OID for the first accrual period is figured as follows. Amend tax return online free   ($86,235. Amend tax return online free 17 x . Amend tax return online free 12/2) – $5,000     181 days     = $174. Amend tax return online free 11020 = $. Amend tax return online free 96193   181           The adjusted issue price at the beginning of the second accrual period is the issue price plus the OID previously includible in income ($86,235. Amend tax return online free 17 + $174. Amend tax return online free 11), or $86,409. Amend tax return online free 28. Amend tax return online free The number of days for the second accrual period (July 1 through December 31) is 184 days. Amend tax return online free The daily OID for the second accrual period is figured as follows. Amend tax return online free   ($86,409. Amend tax return online free 28 x . Amend tax return online free 12/2) – $5,000     184 days     = $184. Amend tax return online free 55681 = $1. Amend tax return online free 00303   184 Since the first and second accrual periods coincide exactly with your tax year, you include in income for Year 1 the OID allocable to the first two accrual periods, $174. Amend tax return online free 11 ($. Amend tax return online free 95665 × 182 days) plus $184. Amend tax return online free 56 ($1. Amend tax return online free 00303 × 184 days), or $358. Amend tax return online free 67. Amend tax return online free Add the OID to the $10,000 interest you report on your income tax return for Year 1. Amend tax return online free Example 6. Amend tax return online free Assume the same facts as in Example 5, except that you bought the debt instrument at original issue on May 1 of Year 1, with a maturity date of April 30, Year 16. Amend tax return online free Also, the interest payment dates are October 31 and April 30 of each calendar year. Amend tax return online free The accrual periods are the 6-month periods ending on each of these dates. Amend tax return online free The number of days for the first accrual period (May 1 through October 31) is 184 days. Amend tax return online free The daily OID for the first accrual period is figured as follows. Amend tax return online free   ($86,235. Amend tax return online free 17 x . Amend tax return online free 12/2) – $5,000     184 days     = $174. Amend tax return online free 11020 = $. Amend tax return online free 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). Amend tax return online free The daily OID for the second accrual period is figured as follows. Amend tax return online free   ($86,409. Amend tax return online free 28 x . Amend tax return online free 12/2) – $5,000     181 days     = $184. Amend tax return online free 55681 = $1. Amend tax return online free 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. Amend tax return online free 31 of OID in income. Amend tax return online free This is $174. Amend tax return online free 11 ($. Amend tax return online free 94625 × 184 days) for the period May 1 through October 31 plus $62. Amend tax return online free 20 ($1. Amend tax return online free 01965 × 61 days) for the period November 1 through December 31. Amend tax return online free The OID is added to the $5,000 interest income paid on October 31 of Year 1. Amend tax return online free Your basis in the debt instrument is increased by the OID you include in income. Amend tax return online free On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. Amend tax return online free 48 ($86,235. Amend tax return online free 17 + $236. Amend tax return online free 31). Amend tax return online free Short first accrual period. Amend tax return online free   You may have to make adjustments if a debt instrument has a short first accrual period. Amend tax return online free For example, a debt instrument with 6-month accrual periods that is issued on February 15 and matures on October 31 has a short first accrual period that ends April 30. Amend tax return online free (The remaining accrual periods begin on May 1 and November 1. Amend tax return online free ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. Amend tax return online free You may use any reasonable compounding method in determining OID for a short period. Amend tax return online free Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). Amend tax return online free Consult your tax advisor for more information about making this computation. Amend tax return online free   The OID for the final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. Amend tax return online free Reduction for acquisition premium. Amend tax return online free   If you bought the debt instrument at an acquisition premium, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Amend tax return online free To figure the daily acquisition premium, multiply the daily OID by the following fraction. Amend tax return online free The numerator is the acquisition premium. Amend tax return online free The denominator is the total OID remaining for the debt instrument after your purchase date. Amend tax return online free Example 7. Amend tax return online free Assume the same facts as in Example 6, except that you bought the debt instrument on November 1 of Year 1 for $87,000, after its original issue on May 1 of Year 1. Amend tax return online free The adjusted issue price on November 1 of Year 1 is $86,409. Amend tax return online free 28 ($86,235. Amend tax return online free 17 + $174. Amend tax return online free 11). Amend tax return online free In this case, you paid an acquisition premium of $590. Amend tax return online free 72 ($87,000 − $86,409. Amend tax return online free 28). Amend tax return online free The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. Amend tax return online free 1) Daily OID on date of purchase (2nd accrual period) $1. Amend tax return online free 01965*  2)  Acquisition premium $590. Amend tax return online free 72    3)  Total OID remaining after purchase date ($13,764. Amend tax return online free 83 − $174. Amend tax return online free 11) 13,590. Amend tax return online free 72   4) Line 2 ÷ line 3 . Amend tax return online free 04346  5)  Line 1 × line 4 . Amend tax return online free 04432  6)  Daily OID reduced for the acquisition premium. Amend tax return online free Line 1 − line 5 $0. Amend tax return online free 97533  * As shown in Example 6. Amend tax return online free The total OID to include in income for Year 1 is $59. Amend tax return online free 50 ($. Amend tax return online free 97533 × 61 days). Amend tax return online free Contingent Payment Debt Instruments This discussion shows how to figure OID on a contingent payment debt instrument issued after August 12, 1996, that was issued for cash or publicly traded property. Amend tax return online free In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. Amend tax return online free If you hold a contingent payment bond, you must report OID as it accrues each year. Amend tax return online free Because the actual payments on a contingent payment debt instrument cannot be known in advance, issuers and holders cannot use the constant yield method (discussed earlier under Debt Instruments Issued After 1984) without making certain assumptions about the payments on the debt instrument. Amend tax return online free To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. Amend tax return online free Noncontingent bond method. Amend tax return online free    Under this method, the issuer must compute a comparable yield for the debt instrument and, based on this yield, construct a projected payment schedule for the instrument, which includes a projected fixed amount for each contingent payment. Amend tax return online free In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. Amend tax return online free When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. Amend tax return online free If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. Amend tax return online free If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. Amend tax return online free Form 1099-OID. Amend tax return online free   The amount shown on Form 1099-OID in box 1 you receive for a contingent payment debt instrument may not be the correct amount to include in income. Amend tax return online free For example, the amount may not be correct if the contingent payment was different from the projected amount. Amend tax return online free If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. Amend tax return online free For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. Amend tax return online free Figuring OID. Amend tax return online free   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. Amend tax return online free The issuer must make these available to you. Amend tax return online free Comparable yield. Amend tax return online free   The comparable yield generally is the yield at which the issuer would issue a fixed rate debt instrument with terms and conditions similar to those of the contingent payment debt instrument. Amend tax return online free The comparable yield is determined as of the debt instrument's issue date. Amend tax return online free Projected payment schedule. Amend tax return online free   The projected payment schedule for a contingent payment debt instrument includes all fixed payments due under the instrument and a projected fixed amount for each contingent payment. Amend tax return online free The projected payment schedule is created by the issuer as of the debt instrument's issue date. Amend tax return online free It is used to determine the issuer's and holder's interest accruals and adjustments. Amend tax return online free Steps for figuring OID. Amend tax return online free   Figure the OID on a contingent payment debt instrument in two steps. Amend tax return online free Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. Amend tax return online free Use the comparable yield as the yield to maturity. Amend tax return online free In general, use the projected payment schedule to determine the instrument's adjusted issue price at the beginning of each accrual period (other than the initial period). Amend tax return online free Do not treat any amount payable as qualified stated interest. Amend tax return online free Adjust the OID in (1) to account for actual contingent payments. Amend tax return online free If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. Amend tax return online free If the contingent payment is less than the projected fixed amount, you have a negative adjustment. Amend tax return online free Net positive adjustment. Amend tax return online free   A net positive adjustment exists for a tax year when the total of any positive adjustments described in (2) above for the tax year is more than the total of any negative adjustments for the tax year. Amend tax return online free Treat a net positive adjustment as additional OID for the tax year. Amend tax return online free Net negative adjustment. Amend tax return online free   A net negative adjustment exists for a tax year when the total of any negative adjustments described in (2) above for the tax year is more than the total of any positive adjustments for the tax year. Amend tax return online free Use a net negative adjustment to offset OID on the debt instrument for the tax year. Amend tax return online free If the net negative adjustment is more than the OID on the debt instrument for the tax year, you can claim the difference as an ordinary loss. Amend tax return online free However, the amount you can claim as an ordinary loss is limited to the OID on the debt instrument you included in income in prior tax years. Amend tax return online free You must carry forward any net negative adjustment that is more than the total OID for the tax year and prior tax years and treat it as a negative adjustment in the next tax year. Amend tax return online free Basis adjustments. Amend tax return online free   In general, increase your basis in a contingent payment debt instrument by the OID included in income. Amend tax return online free Your basis, however, is not affected by any negative or positive adjustments. Amend tax return online free Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. Amend tax return online free Treatment of gain or loss on sale or exchange. Amend tax return online free   If you sell a contingent payment debt instrument at a gain, your gain is ordinary income (interest income), even if you hold the debt instrument as a capital asset. Amend tax return online free If you sell a contingent payment debt instrument at a loss, your loss is an ordinary loss to the extent of your prior OID accruals on the debt instrument. Amend tax return online free If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. Amend tax return online free See Regulations section 1. Amend tax return online free 1275-4 for exceptions to these rules. Amend tax return online free Premium, acquisition premium, and market discount. Amend tax return online free   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. Amend tax return online free See Regulations section 1. Amend tax return online free 1275-4 to determine how to account for these items. Amend tax return online free Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. Amend tax return online free An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d
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Question to Ask When Shopping for a Mortgage

When shopping for a home mortgage make sure you obtain all the relevant information:

  • Research current interest rates. Check the real estate section of your local newspaper, use the Internet, or call at least six lenders for information.
  • Check the rates for 30-year, 20-year and 15-year mortgages. You may be able to save thousands of dollars in interest charges by getting the shortest-term mortgage you can afford.
  • Ask for details on the same loan amount, loan term, and type of loan from multiple lenders so that you can compare the information. Be sure to get the Annual Percentage Rate (APR), which takes into account not only the interest rate but also points, broker fees, and other credit charges expressed as a yearly rate.
  • Ask whether the rate is fixed or adjustable. The interest rate on adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month.
  • If a loan has an adjustable rate, ask when and how the rate and loan payment could change.
  • Find out how much down payment is required. Some lenders require 20% of the home's purchase price as a down payment. But many lenders now offer loans that require less. In these cases, you may be required to purchase private mortgage insurance (PMI) to protect the lender if you fall behind on payments.
  • If PMI is required, ask what the total cost of the insurance will be. How much will the monthly mortgage payment be when the PMI premium is added and how long you will be required to carry PMI?
  • Ask if you can pay off the loan early and if there is a penalty for doing so.

There is a long list of sources for mortgages loans: mortgage banks, mortgage brokers, banks, thrifts and credit unions, home builders, real estate agencies and Internet lenders.

Tips for Working with Lenders

  • Get recommendations: Ask friends and family members for suggestions, especially if they've recently obtained a loan.
  • Check credentials: Mortgage bankers are regulated by either your state's department of banking or division of real estate. Check with the one appropriate to your state to see if a lender is in good professional standing. Mortgage brokers may be state regulated or not. If not, check with the local chapter of the National Association of Mortgage Brokers or the Better Business Bureau to see if their record is clean.
  • Do your homework: Learn about typical mortgages and ask questions when something looks amiss; a broker may be trying to pad closing costs or other fees at your expense.
  • Take care online: There are plenty of attractive deals online, but first make sure you're dealing with a reliable broker or lender.

If you're working with a broker, the National Consumer Law Center recommends you demand to know how much the broker is making from the lender as well as from any fees you might be paying. It's best to get this information upfront and in writing. Avoid a broker who is double-dipping-getting a fat premium from the lender, as well as fees from you.

The Real Estate Settlement Procedures Act (RESPA) requires lenders to give you information on all closing costs and escrow account practices. Any business relationships between the lender and closing service providers or other parties to the transaction must also be disclosed. Many of the fees are negotiable. More information is available from the Federal Trade Commission, the Federal Reserve Board, and the Department of Housing and Urban Development.

For more information on home buying and mortgages, visit Fannie Mae's website or call 202-752-7000.

The Amend Tax Return Online Free

Amend tax return online free 1. Amend tax return online free   Application, Approval, and Appeal Procedures Table of Contents Introduction Topics - This chapter discusses: Application ProceduresForms Required Required Inclusions Miscellaneous Procedures Rulings and Determination LettersEffective Date of Exemption Revocation or Modification of Exemption Appeal ProceduresAppeals Office Consideration EO Technical Consideration Administrative Remedies Appeal to Courts Group Exemption LetterCentral Organization Application Procedure Keeping the Group Exemption Letter in Force Events Causing Loss of Group Exemption Introduction If your organization is one of the organizations described in this publication and is seeking recognition of tax-exempt status from the IRS, you should follow the procedures described in this chapter and the instructions that accompany the appropriate application forms. Amend tax return online free For information on section 501(c)(3) organizations, go to Section 501(c)(3) Organizations chapter 3. Amend tax return online free If your organization is seeking exemption under one of the other paragraphs of section 501(c), see chapter 4. Amend tax return online free Topics - This chapter discusses: Application procedures that generally apply to all organizations discussed in this publication, including the application forms; Rulings and determination letters (approvals/disapprovals); Appeal procedures available if an adverse determination letter is proposed; and Group exemption letters. Amend tax return online free Application Procedures Oral requests for recognition of exemption will not be considered by the IRS. Amend tax return online free Your application for tax-exempt status must be in writing using the appropriate forms as discussed below. Amend tax return online free Forms Required If your organization is seeking recognition of exemption from federal income tax, it must use a specific application prescribed by the IRS in Revenue Procedure 2013–9, sec. Amend tax return online free 3. Amend tax return online free If your organization is a central organization with exempt status, see Group Exemption Letter , later. Amend tax return online free All applications must be signed by an authorized individual. Amend tax return online free Form 1023, Application for Recognition of Exemption. Amend tax return online free   File Form 1023 if you are seeking recognition of exemption under section: 501(c)(3) Corporations, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports, or prevention of cruelty for children or animals, 501(e) Cooperative hospital service organization, 501(f) Cooperative service organization of operating educational organizations, 501(k) Certain organizations providing child care, 501(n) Charitable risk pools, and 501(q) Credit counseling organizations. Amend tax return online free Form 1024, Application for Recognition of Exemption Under Section 501(a). Amend tax return online free    File Form 1024 if you are seeking recognition of exemption under section: 501(c)(2) Title holding corporations, 501(c)(4) Civic leagues, social welfare organizations, 501(c)(5) Labor, agricultural, or horticultural organizations, 501(c)(6) Business leagues, chambers of commerce, etc. Amend tax return online free , 501(c)(7) Social clubs, 501(c)(8) Fraternal beneficiary societies, orders, or associations, 501(c)(9) Voluntary employees’ beneficiary associations, 501(c)(10) Domestic fraternal societies, orders, etc. Amend tax return online free , 501(c)(12) Benevolent life insurance associations, mutual ditch or irrigation companies, mutual or cooperative telephone companies, 501(c)(13) Cemetery companies, 501(c)(15) Mutual insurance companies or associations, 501(c)(17) Trusts providing for the payment of supplemental unemployment compensation benefits, 501(c)(19) A post, organization, auxiliary unit, etc. Amend tax return online free of past or present members of the Armed Forces of the United States, and 501(c)(25) Title holding corporations or trusts. Amend tax return online free  Form 8718, User Fee for Exempt Organization Determination Letter Request, must also be sent along with Form 1024. Amend tax return online free Letter application. Amend tax return online free   If your organization is seeking recognition of exemption under section 501(c)(11), (14), (16), (18), (21), (22), (23), (26), (27), (28), or (29), submit a letter application with Form 8718. Amend tax return online free See Required Inclusions for the information to include with the letter application. Amend tax return online free Form 1028. Amend tax return online free   Use Form 1028 if your organization is a farmers’ cooperative seeking recognition of exemption under section 521. Amend tax return online free You must also submit Form 8718. Amend tax return online free Form 8871. Amend tax return online free    Use Form 8871 if you are a political party or campaign committee for a candidate for federal, state or local office seeking to be treated as tax-exempt under section 527. Amend tax return online free See Political Organization Income Tax Return , later. Amend tax return online free    Some organizations do not have to use specific application forms. Amend tax return online free The application your organization must use is specified in the chapter in this publication dealing with your kind of organization. Amend tax return online free It is also shown in the Organization Reference Chart, later. Amend tax return online free Power of attorney. Amend tax return online free   If your organization expects to be represented by an individual such as an attorney, CPA, officer or other person authorized to practice before the IRS, whether in person or by correspondence, you must file a Form 2848 with your exemption application. Amend tax return online free The power of attorney must specifically authorize an individual to represent your organization. Amend tax return online free You cannot name an organization, firm, etc. Amend tax return online free as your representative. Amend tax return online free Form 2848, Power of Attorney and Declaration of Representative, can be used for this purpose. Amend tax return online free The categories of individuals who can represent you before the IRS are listed on the form. Amend tax return online free Non-exemption for terrorist organizations. Amend tax return online free   An organization that is identified or designated as a terrorist organization within the meaning of section 501(p)(2) is not eligible to apply for recognition of exemption. Amend tax return online free User fee. Amend tax return online free   The law requires the payment of a user fee for determination letter requests such as your application for recognition of tax-exempt status. Amend tax return online free If you are filing Form 1023, user fee information is included in Part XI. Amend tax return online free If you are required to apply for recognition of exemption by submitting Form 1024, a letter application, etc. Amend tax return online free and you must pay a user fee, you should use Form 8718 to figure the amount of your user fee and to pay it. Amend tax return online free Your payment must accompany your request. Amend tax return online free The IRS will not process a request unless the fee has been paid. Amend tax return online free    For the current user fee amount and processing time for applications go to IRS. Amend tax return online free gov and select “Charities and Non-Profits” from the buttons near the top. Amend tax return online free Then select the underlined link “How to Apply To Be Tax-Exempt” for the latest user fees or I want to check the status of my application for more information. Amend tax return online free You can also call 1-877-829-5500. Amend tax return online free Required Inclusions Employer identification number (EIN). Amend tax return online free   Every exempt organization must have an EIN, whether or not it has any employees. Amend tax return online free An EIN is required before an exemption application is submitted. Amend tax return online free Information on how to apply for an EIN by using one of the following methods can be found at Employer ID Numbers (EIN): Online— This is the preferred method for requesting an EIN. Amend tax return online free The EIN is issued immediately once the application information is validated. Amend tax return online free By telephone at 1-800-829-4933, from 7:00 a. Amend tax return online free m. Amend tax return online free to 7:00 p. Amend tax return online free m. Amend tax return online free local time, Monday through Friday. Amend tax return online free The EIN is provided over the phone to an authorized individual. Amend tax return online free By mailing or faxing Form SS-4, Application for Employer Identification Number. Amend tax return online free If the faxed Form SS-4 includes the taxpayer's fax number, a fax will be sent back with the EIN within four (4) business days. Amend tax return online free    Use only one method for each entity so you do not receive more than one EIN for an entity. Amend tax return online free   If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance. Amend tax return online free Organizing documents. Amend tax return online free   Your application should include a copy of the organizing or enabling document that is signed by a principal officer or is accompanied by a written declaration signed by an authorized individual certifying that the document is a complete and accurate copy of the original or meets the requirements of a conformed copy. Amend tax return online free   If your organizing or enabling document are articles of incorporation, include evidence that it was filed and approved by a state official. Amend tax return online free (For example, a stamped “Filed” copy dated by the Secretary of State is prima facie evidence that it was filed and approved by a state official. Amend tax return online free ) A copy of the articles of incorporation can also be submitted with a written declaration signed by an authorized individual indicating the copy is complete and was filed and approved by the state, including the date filed. Amend tax return online free Bylaws. Amend tax return online free   Bylaws alone are not organizing documents. Amend tax return online free However, if your organization has adopted bylaws, include a current copy. Amend tax return online free The bylaws need not be signed if submitted as an attachment. Amend tax return online free   If your organization's name has been officially changed by an amendment to your organizing instruments, you should also attach a conformed copy of that amendment to your application. Amend tax return online free    Bylaws may be considered an organizing document only if they are properly structured (includes name, purpose, signatures, and intent to form an organization). Amend tax return online free Conformed copy. Amend tax return online free   A conformed copy is a copy that agrees with the original and all amendments to it. Amend tax return online free If the original document required a signature, the copy should either be signed by a principal officer or, if not signed, be accompanied by a written declaration signed by an authorized officer of the organization. Amend tax return online free With either option, the officer must certify that the document is a complete and accurate copy of the original. Amend tax return online free A certificate of incorporation should be approved and dated by an appropriate state official. Amend tax return online free Attachments. Amend tax return online free    When submitting attachments, every attachment should show your organization's name and EIN. Amend tax return online free It should also state that it is an attachment to your application form and identify the part and line item number to which it applies. Amend tax return online free Original documents. Amend tax return online free   Do not submit original documents because they become part of the IRS file and cannot be returned. Amend tax return online free Description of activities. Amend tax return online free   Your application must include a full description of the proposed activities of your organization, including each of the fundraising activities of a section 501(c)(3) organization and a narrative description of anticipated receipts and contemplated expenditures. Amend tax return online free When describing the activities in which your organization expects to engage, you must include the standards, criteria, procedures, or other means that your organization adopted or planned for carrying out those activities. Amend tax return online free   To determine the information you need to provide, you should study the part of this publication that applies to your organization. Amend tax return online free The appropriate chapter will describe the purposes and activities that your organization must pursue, engage in, and include in your application in order to achieve exempt status. Amend tax return online free   Often, your organization's articles of organization (or other organizing instruments) contain descriptions of your organization's purposes and activities. Amend tax return online free   Your application should describe completely and in detail your past, present, and planned activities. Amend tax return online free Financial data. Amend tax return online free   You must include in your application financial statements showing your receipts and expenditures and a balance sheet for the current year and the 3 preceding years (or for the number of years your organization was in existence, if less than 4 years). Amend tax return online free For each accounting period, you must describe the sources of your receipts and the nature of your expenditures. Amend tax return online free   If you have not yet begun operations, or have operated for less than 1 year, a proposed budget for 2 full accounting periods and a current statement of assets and liabilities will be acceptable. Amend tax return online free Exempt status established in application. Amend tax return online free   If your application and its supporting documents show that your organization meets the requirements for tax-exempt status under the Code section you applied, the IRS will issue a favorable determination letter or ruling. Amend tax return online free Miscellaneous Procedures To help in processing your application, be sure to attach all schedules, statements, and other documents required by the application form. Amend tax return online free If you do not attach them, you may have to resubmit your application or you may otherwise encounter a delay in processing your application. Amend tax return online free Incomplete application. Amend tax return online free   If an application is not complete and does not contain all the required attachments found under Required Inclusions, the IRS may return it to you for completion. Amend tax return online free The IRS may keep the application and send a letter requesting the missing information if most of the information has been received. Amend tax return online free   If the IRS returns the application or requests additional information from you, that application will be considered filed on the date the substantially completed application is postmarked, or if no postmark, received at the IRS. Amend tax return online free   Generally, the user fee will not be refunded if an incomplete application is filed. Amend tax return online free   Additional information may be requested if necessary to clarify the nature of your organization. Amend tax return online free Application made under wrong paragraph of section 501(c). Amend tax return online free   Occasionally, an organization appears to qualify for exemption under a paragraph of section 501(c) that is different from the one for which the organization applied. Amend tax return online free If the application was made on Form 1024, which applies to more than one paragraph of section 501(c), the organization can be recognized as exempt under any paragraph to which the form applies if the organization has agreed to have its application considered under that paragraph. Amend tax return online free It must also supply any additional information required for the application under the new paragraph. Amend tax return online free Different application form needed. Amend tax return online free   If a different application form is required for your organization, the IRS will so advise your organization and will provide the appropriate application form for your convenience in reapplying under that paragraph, if you wish to do so. Amend tax return online free Although supporting information previously furnished need not be duplicated, you must provide any necessary additional information required for the application. Amend tax return online free If your reply is not received within a limited time, your application will be processed only for the paragraph under which you originally applied. Amend tax return online free   When a specific application form is needed for the paragraph under which your organization qualifies, that form is required before a letter recognizing exemption can be issued. Amend tax return online free This includes cases in which a determination letter is modified to recognize an organization's exempt status under a paragraph other than the paragraph under which it originally established exemption. Amend tax return online free IRS responses. Amend tax return online free   Organizations that submit a complete application will receive an acknowledgment from the IRS. Amend tax return online free Others will receive a letter requesting more information or returning an incomplete application. Amend tax return online free Applicants also will be notified if the application is forwarded to EO Technical Office for consideration. Amend tax return online free These letters will be sent out as soon as possible after receipt of the organization's application. Amend tax return online free Withdrawal of application. Amend tax return online free   An application may be withdrawn at any time before the issuance of a ruling or determination letter upon the written request of a principal officer or authorized representative of your organization. Amend tax return online free However, the withdrawal will not prevent the information contained in the application from being used by the IRS in any subsequent examination of your organization's returns. Amend tax return online free The information forwarded with an application will not be returned to your organization and, generally, when an application is withdrawn, the user fee paid will not be refunded. Amend tax return online free Requests for withholding of information from the public. Amend tax return online free   The law requires many exempt organizations and private foundations to make their application forms and annual information returns available for public inspection. Amend tax return online free The law also requires the IRS to make available for public inspection, in accordance with section 6104 and the related regulations, your approved application for recognition of exemption (including any papers submitted in support of the application) and the ruling or determination letter (discussed later, under Rulings and Determination Letters . Amend tax return online free )   Any information submitted in the application or in support of it that relates to any trade secret, patent, process, style of work, or apparatus, upon request, can be withheld from public inspection if the IRS determines that the disclosure of such information would adversely affect the organization. Amend tax return online free Your request must: Identify the material to be withheld (the document, page, paragraph, and line) by clearly marking it “Not Subject To Public Inspection. Amend tax return online free ” Include the reasons for your organization's position that the information is of the type that can be withheld from public inspection. Amend tax return online free Be filed with the office where your organization files the documents in which the material to be withheld is contained. Amend tax return online free Where to file. Amend tax return online free   Send your application for exempt status and Form 8718, (if required) to: Internal Revenue Service PO Box 12192 Covington, KY 41012-0192   Your application will be considered by EO Determinations, who will either issue a favorable determination letter to your organization, issue an adverse determination letter denying the exempt status claimed in the application, or refer the case to the Exempt Organizations Technical Office (EO Technical). Amend tax return online free    Form 8940, Request for Miscellaneous Determination. Amend tax return online free You can request miscellaneous determinations under sections 507, 509(a), 4940, 4942, 4945, and 6033 with Form 8940. Amend tax return online free Nonexempt charitable trusts also file Form 8940 for an initial determination of section 509(a)(3) status or change to their type. Amend tax return online free See Form 8940 and instructions for more information. Amend tax return online free Requests other than applications. Amend tax return online free Requests other than applications for recognition of exemption or Form 8940 (for example, requests for rulings involving feeder organizations, application of excise taxes to activities of private foundations, taxation of unrelated business income, etc. Amend tax return online free ) should be sent to: Internal Revenue Service  Attention: EO Letter Rulings PO Box 27720 McPherson Station Washington, DC 20038 These requests, similar to applications for recognition of exemption previously discussed, must be accompanied by the appropriate user fee. Amend tax return online free The schedule for user fees, including those for requests other than applications, can be found in Revenue Procedure 2013-8, 2013-1 I. Amend tax return online free R. Amend tax return online free B. Amend tax return online free 237. Amend tax return online free Referral to EO Technical. Amend tax return online free   EO Determinations will refer to EO Technical any exempt organization issue concerning qualification for exemption or foundation status for which there is no published precedent or for which there is reason to believe that nonuniformity exists. Amend tax return online free EO Determinations can request technical advice on any technical or procedural question that cannot be resolved on the basis of law, regulations, or a clearly applicable revenue ruling or other published precedent. Amend tax return online free An organization can request that an issue be referred to EO Technical for technical advice if it feels that a lack of uniformity exists as to the disposition of the issue or if an issue is so unusual or complex as to warrant consideration by EO Technical. Amend tax return online free If a determination letter is issued based on technical advice from EO Technical regarding qualification for exemption or foundation status, no further administrative appeal is available on the issue that was the subject of technical advice. Amend tax return online free Reminder. Amend tax return online free   The law requires payment of a user fee for determination letter requests. Amend tax return online free Go to IRS. Amend tax return online free gov/Charities and select Current User Fees-Exempt Organizations to find the required payment. Amend tax return online free Payment must accompany each request. Amend tax return online free Rulings and Determination Letters Elimination of the advance public charity status. Amend tax return online free   New regulations eliminate the advance ruling process for a section 501(c)(3) organization. Amend tax return online free Under the new regulations, a new section 501(c)(3) organization will be classified as a publicly supported organization and not a private foundation if it can show when it applies for tax-exempt status that it reasonably can be expected to be publicly supported. Amend tax return online free The new rules no longer require the organization to file Form 8734, Support Schedule for Advance Ruling Period, after completing its first 5 tax years. Amend tax return online free See Elimination of the Advance Ruling Process . Amend tax return online free An organization must describe fully the activities in which it expects to engage. Amend tax return online free This includes standards, procedures, or other means adopted or planned by the organization for carrying out its activities, expected sources of funds, and the nature of its contemplated expenses. Amend tax return online free When an organization does not supply the information previously mentioned under Application Procedures , or fails to furnish a sufficiently detailed description of its proposed activities to permit a conclusion that it will clearly be exempt, a proposed adverse determination letter or ruling may be issued. Amend tax return online free Adverse determination. Amend tax return online free   A proposed adverse ruling or determination letter will be issued to an organization that has not provided sufficiently detailed information to establish that it qualifies for exemption or if the information provided establishes that it does not qualify for exemption. Amend tax return online free An organization can appeal a proposed adverse ruling or determination letter. Amend tax return online free See Appeal Procedures , later. Amend tax return online free Effective Date of Exemption A ruling or determination letter recognizing exemption is usually effective as of the date of formation of an organization if, during the period before the date of the ruling or determination letter, its purposes and activities were those required by the law. Amend tax return online free (See Application for Recognition of Exemption in chapter 3 for the special rule for organizations applying for recognition of exemption under section 501(c)(3). Amend tax return online free ) Upon obtaining recognition of exemption, the organization can file a claim for a refund of income taxes paid for the period for which its exempt status is recognized. Amend tax return online free If an organization is required to alter its activities or substantially amend its charter to qualify, the ruling or determination letter recognizing exemption will be effective as of the date specified in the letter. Amend tax return online free If a nonsubstantive amendment is made, such as correction of a clerical error in the enabling instrument or the addition of a dissolution clause, exemption will ordinarily be recognized as of the date of formation if the activities of the organization before the ruling or determination are consistent with the exemption requirements. Amend tax return online free A ruling or determination letter recognizing exemption cannot be relied on if there is a material change, inconsistent with exemption, in the character, the purpose, or the method of operation of the organization. Amend tax return online free Also, a ruling or determination letter cannot be relied on if it is based on any inaccurate material factual representations. Amend tax return online free Revocation or Modification of Exemption A ruling or determination letter recognizing exemption may be revoked or modified by: A notice to the organization to which the ruling or determination letter originally was issued, Enactment of legislation or ratification of a tax treaty, A decision of the United States Supreme Court, Issuance of temporary or final regulations, or Issuance of a revenue ruling, a revenue procedure, or other statement published in the Internal Revenue Bulletin or Cumulative Bulletin. Amend tax return online free When revocation takes effect. Amend tax return online free   If the organization omitted or misstated a material fact, operated in a manner materially different from that originally represented, or, with regard to organizations to which section 503 applies, engaged in a prohibited transaction (such as diverting corpus or income from its exempt purpose), the revocation or modification may be retroactive. Amend tax return online free Material change in organization. Amend tax return online free   If there is a material change, inconsistent with exemption, in the character, purpose, or method of operation of the organization, revocation or modification will ordinarily take effect as of the date of that material change. Amend tax return online free Relief from retroactivity. Amend tax return online free   If a ruling or determination letter was issued in error or the IRS changed its position after issuing a letter or ruling, and if section 7805(b) relief is granted, retroactivity of the revocation or modification ordinarily will be limited to a date not earlier than that on which the original ruling or determination letter was modified or revoked. Amend tax return online free For more information on requesting section 7805(b) relief, see Revenue Procedure 2013-4, 2013-1 I. Amend tax return online free R. Amend tax return online free B. Amend tax return online free 126, sec. Amend tax return online free 13 (or later update). Amend tax return online free Foundations. Amend tax return online free   The determination of the effective date is the same for the revocation or modification of foundation status or operating foundation status unless the effective date is expressly covered by statute or regulations. Amend tax return online free Written notice. Amend tax return online free   If an EO area manager concludes, as a result of examining an information return or considering information from any other source, that a ruling or determination letter should be revoked or modified, the organization will be advised in writing of the proposed action and the reasons for it. Amend tax return online free   The organization will also be advised of its right to protest the proposed action by requesting Appeals Office consideration. Amend tax return online free The appeal procedures are discussed next. Amend tax return online free Appeal Procedures If your organization applies for tax-exempt status and EO Determination decides your organization does not qualify, your organization will be advised of its rights to protest the determination by requesting Appeals Office consideration. Amend tax return online free This process does not apply to determinations issued by EO Technical. Amend tax return online free Your organization must submit a statement of its views fully explaining its reasoning. Amend tax return online free The statement must be submitted within 30 days from the date of the adverse determination letter and must state whether it wishes Appeals Office consideration. Amend tax return online free Representation. Amend tax return online free   A principal officer or trustee can represent an organization at any level of appeal within the IRS. Amend tax return online free Also, an attorney, certified public accountant, or individual enrolled to practice before the IRS can represent the organization. Amend tax return online free   If the organization's representative attends a conference without a principal officer or trustee, the representative must file a proper power of attorney or a tax information authorization before receiving or inspecting confidential information. Amend tax return online free Form 2848 or Form 8821, Tax Information Authorization, as appropriate (or any other properly written power of attorney or authorization), can be used for this purpose. Amend tax return online free These forms can be obtained from the IRS. Amend tax return online free For more information, see Publication 947, Practice Before the IRS and Power of Attorney. Amend tax return online free Appeals Office Consideration EO Determinations will consider the statement protesting and appealing (hereinafter appealing) the adverse determination and decide if the information affects its determination. Amend tax return online free If the appeal does not provide a basis to reconsider its adverse determination, it will forward the appeal and case file to the Appeals Office. Amend tax return online free For more information about the role of the Appeals Office, see Publication 892, Exempt Organization Appeal Procedures for Unagreed Issues. Amend tax return online free The appeal should include the following information. Amend tax return online free The organization's name, address, daytime telephone number, and employer identification number. Amend tax return online free A statement that the organization wants to protest the determination. Amend tax return online free A copy of the letter showing the determination you disagree with, or the date and symbols on the determination letter. Amend tax return online free A statement of facts supporting the organization's position in any contested factual issue. Amend tax return online free A statement outlining the law or other authority the organization is relying on. Amend tax return online free A statement as to whether a conference at the Appeals Office is desired. Amend tax return online free The statement of facts in item 4 must be declared true under penalties of perjury. Amend tax return online free This may be done by adding to the protest the following signed declaration:   “Under penalties of perjury, I declare that I have examined the statement of facts presented in this protest and in any accompanying schedules and statements and, to the best of my knowledge and belief, it is true, correct, and complete. Amend tax return online free ”           Signature. Amend tax return online free   If the organization's representative submits the appeal, a substitute declaration must be included, stating: That the representative prepared the appeal and accompanying documents, and Whether the representative knows personally that the statements of fact contained in the appeal and accompanying documents are true and correct. Amend tax return online free Be sure the appeal contains all of the information requested. Amend tax return online free Incomplete appeals will be returned for completion. Amend tax return online free If a conference is requested, it will be held at the Appeals Office, unless the organization requests that the meeting be held at a field office convenient to both parties. Amend tax return online free The Appeals Office, after considering the organization's appeal as well as information presented in any conference held, will notify the organization of its decision and issue an appropriate determination letter. Amend tax return online free An adverse decision can be appealed to the courts (discussed later). Amend tax return online free The Appeals Office must request technical advice from EO Technical on any exempt organization issue concerning qualification for exemption or foundation status for which there is no published precedent or for which there is reason to believe that nonuniformity exists. Amend tax return online free If an organization believes that its case involves such an issue, it should ask the Appeals Office to request technical advice. Amend tax return online free Any determination letter issued on the basis of technical advice from EO Technical cannot be appealed to the Appeals Office for those issues that were the subject of the technical advice from EO Technical. Amend tax return online free EO Technical Consideration If an application is referred to EO Technical for issuance of a ruling and an adverse ruling is issued, the organization will be informed of the basis for the conclusion, its right to file a protest within 30 days, and its right to have a conference with EO Technical. Amend tax return online free Administrative Remedies In the case of an application under section 501(c)(3), all of the following actions, called administrative remedies, must be completed by your organization before an unfavorable ruling or determination letter from the IRS can be appealed to the courts. Amend tax return online free The filing of a substantially completed application Form 1023 or group exemption request under section 501(c)(3) (described earlier in this chapter) or the filing of a request for a determination of foundation status (see Private Foundations and Public Charities in chapter 3). Amend tax return online free In the case of a late-filed application, requesting relief under Regulations section 301. Amend tax return online free 9100 regarding applications for extensions of time for making an election or application for relief from tax (see Application for Recognition of Exemption in chapter 3). Amend tax return online free The timely submission of all additional information requested to perfect an exemption application or request for determination of private foundation status. Amend tax return online free Exhaustion of all administrative appeals available within the IRS, including protest of an adverse ruling issued by EO Technical in the case of an exemption application. Amend tax return online free The actions just described will not be considered completed until the IRS has had a reasonable time to act upon the appeal or protest, as the case may be. Amend tax return online free An organization will not be considered to have exhausted its administrative remedies before the earlier of: The completion of the steps just listed and the sending by certified or registered mail of a notice of final determination, or The expiration of the 270-day period in which the IRS has not issued a notice of final determination and the organization has taken, in a timely manner, all reasonable steps to secure a ruling or determination. Amend tax return online free 270-day period. Amend tax return online free   The 270-day period will be considered by the IRS to begin on the date a substantially completed Form 1023 or group exemption request is sent to the IRS. Amend tax return online free See Application Procedures , earlier, for information needed to complete Form 1023. Amend tax return online free   If the application does not contain all of the required items, it will not be further processed and may be returned to the applicant for completion. Amend tax return online free The 270-day period, in this event, will not be considered as starting until the date the application is remailed to the IRS with the requested information, or, if a postmark is not evident, on the date the IRS receives a substantially completed application. Amend tax return online free Appeal to Courts If the IRS issues an unfavorable determination letter or ruling to your organization and you have exhausted all the administrative remedies just discussed, your organization can seek judicial remedies. Amend tax return online free For example, if your organization has paid the tax resulting from the adverse determination and met all other statutory prerequisites, it can file suit for a refund in a U. Amend tax return online free S. Amend tax return online free District Court or the U. Amend tax return online free S. Amend tax return online free Court of Federal Claims. Amend tax return online free Or, if your organization elected not to pay the tax deficiency resulting from the adverse determination and met all other statutory prerequisites, it can file suit for a redetermination of the tax deficiencies in the United States Tax Court. Amend tax return online free For more information on these types of suits, get Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund. Amend tax return online free In certain situations, your organization can file suit for a declaratory judgment in the U. Amend tax return online free S. Amend tax return online free District Court for the District of Columbia, the U. Amend tax return online free S. Amend tax return online free Court of Federal Claims, or the U. Amend tax return online free S. Amend tax return online free Tax Court. Amend tax return online free This remedy is available if your organization received an adverse notice of final determination, or if the IRS failed to make a timely determination on your initial or continuing qualification or classification as an exempt organization. Amend tax return online free However, your exempt status claim must be as: An organization qualifying under section 501(c)(3), An organization to which a deduction for a contribution is allowed under section 170(c)(2), An organization that is a private foundation under section 509(a), A private operating foundation under section 4942(j)(3), or A cooperative organization that is exempt from tax under section 521. Amend tax return online free Adverse notice of final determination. Amend tax return online free   The adverse notice of final determination referred to above is a ruling or determination letter sent by certified or registered mail holding that your organization: Is not described in section 501(c)(3) or section 170(c)(2), Is a private foundation as defined in section 4942(j)(3), or Is a public charity described in a part of section 509(a) or section 170(b)(1)(A) other than the part under which your organization requested classification. Amend tax return online free Favorable court rulings - IRS procedure. Amend tax return online free   If a suit results in a final determination that your organization is exempt from tax, the IRS will issue a favorable ruling or determination letter, provided your organization has filed an application for exemption and submitted a statement that the underlying facts and applicable law are the same as in the period considered by the court. Amend tax return online free Group Exemption Letter A group exemption letter is a ruling or determination letter issued to a central organization recognizing on a group basis the exemption under section 501(c) of subordinate organizations on whose behalf the central organization has applied for recognition of exemption. Amend tax return online free A central organization is an organization that has one or more subordinates under its general supervision or control. Amend tax return online free A subordinate organization is a chapter, local, post, or unit of a central organization. Amend tax return online free A central organization may be a subordinate itself, such as a state organization that has subordinate units and is itself affiliated with a national (central) organization. Amend tax return online free A subordinate organization may or may not be incorporated, but it must have an organizing document. Amend tax return online free A subordinate that is organized and operated in a foreign country cannot be included in a group exemption letter. Amend tax return online free A subordinate described in section 501(c)(3) cannot be included in a group exemption letter if it is a private foundation described in section 509(a). Amend tax return online free If your organization is a subordinate controlled by a central organization (for example, a church, a veterans' organization, or a fraternal organization), you should check with the central organization to see if it has been issued a group exemption letter that covers your organization. Amend tax return online free If it has, you do not have to file a separate application unless your organization no longer wants to be included in the group exemption letter. Amend tax return online free If the group exemption letter does not cover your organization, ask your central organization about being included in the next annual group ruling update that it submits to the IRS. Amend tax return online free Central Organization Application Procedure If your organization is a central organization with affiliated subordinates under its control, it can apply for a group exemption letter for its subordinates, provided it has obtained recognition of its own exemption before or concurrently with the group exemption. Amend tax return online free You should make the application for such subordinates by letter instead of submitting either Form 1023 or 1024. Amend tax return online free This procedure relieves each of the subordinates covered by a group exemption letter from filing its own application. Amend tax return online free A central organization obtains its own recognition of exemption by sending its application to the IRS address shown on Form 8718 or Form 1023. Amend tax return online free If the central organization has previously obtained recognition of its own exemption, it must indicate its employer identification number and the date of the letter recognizing its exemption. Amend tax return online free It need not forward documents already submitted. Amend tax return online free However, if it has not already done so, the central organization must submit a copy of any amendment to its governing instruments or internal regulations as well as any information about changes in its character, purposes, or method of operation. Amend tax return online free Employer identification number. Amend tax return online free   The central organization must have an EIN before it submits a completed exemption or group exemption application. Amend tax return online free Each subordinate must have its own EIN, even if it has no employees. Amend tax return online free When submitting its group exemption application, the central organization must provide an EIN for each subordinate organization. Amend tax return online free Information required for subordinate organizations. Amend tax return online free   In addition to the information required to obtain recognition of its own exemption, the central organization must submit information for those subordinates to be included in the group exemption letter. Amend tax return online free The information should be forwarded in a letter signed by a principal officer of the central organization setting forth or including as attachments the following. Amend tax return online free Information verifying that the subordinates: Are affiliated with the central organization at the close of its annual accounting period; Are subject to its general supervision or control; Are all eligible to qualify for exemption under the same paragraph of section 501(c), though not necessarily the paragraph under which the central organization itself is exempt; Are not private foundations if the application for a group exemption letter involves section 501(c)(3); Are all on the same accounting period as the central organization if they are to be included in group returns; and Are organizations that have been formed within the 15-month period preceding the date of submission of the group exemption application if they are claiming section 501(c)(3) status and are subject to the requirements of section 508(a) and wish to be recognized as exempt from their dates of creation (a group exemption letter may be issued covering subordinates, one or more of which have not been organized within the 15-month period preceding the date of submission, if all subordinates are willing to be recognized as exempt only from the date of application). Amend tax return online free A detailed description of the purposes and activities of the subordinates, including the sources of receipts and the nature of expenditures. Amend tax return online free A sample copy of a uniform governing instrument (such as a charter or articles of association) adopted by the subordinates, or, in its absence, copies of representative instruments. Amend tax return online free An affirmation to the effect that, to the best of the officer's knowledge, the purposes and activities of the subordinates are as stated in (2) and (3), above. Amend tax return online free A statement that each of the subordinates has provided a written authorization to the central organization, signed by an authorized officer of the subordinate, agreeing to be included in the group exemption (see also New 501(c)(3) organizations that want to be included , later in this section). Amend tax return online free A list of subordinates to be included in the group exemption letter to which the IRS has issued an outstanding ruling or determination letter relating to exemption. Amend tax return online free If the application for a group exemption letter involves section 501(c)(3) and is subject to the provisions of the Code requiring that it give timely notice that it is not a private foundation (see Private Foundations in chapter 3), an affirmation to the effect that, to the best of the officer's knowledge and belief, no subordinate to be included in the group exemption letter is a private foundation as defined in section 509(a). Amend tax return online free For each subordinate that is a school claiming exemption under section 501(c)(3), the information required by Revenue Ruling 71-447, 1971-2 C. Amend tax return online free B. Amend tax return online free 230 and Revenue Procedure 75-50, 1975-2 C. Amend tax return online free B. Amend tax return online free 587 (these requirements are fully described in chapter 3, under Private Schools ; see also Schedule B, Form 1023). Amend tax return online free For any school affiliated with a church, the information to show that the provisions of Revenue Ruling 75-231, 1975-1 C. Amend tax return online free B. Amend tax return online free 158, have been met. Amend tax return online free A list of the names, mailing addresses, actual addresses if different, and EINs of subordinates to be included in the group exemption letter. Amend tax return online free A current directory of subordinates may be furnished instead of the list if it includes the required information and if the subordinates not to be included in the group exemption letter are identified. Amend tax return online free New 501(c)(3) organizations that want to be included. Amend tax return online free   A new organization, described in section 501(c)(3), that wants to be included in a group exemption letter must submit its authorization (as explained in item number 5, earlier, under Information required for subordinate organizations ) to the central organization before the end of the 15th month after it was formed in order to satisfy the requirement of section 508(a). Amend tax return online free The central organization must also include this subordinate in its next annual submission of information, as discussed later, under Information Required Annually . Amend tax return online free Keeping the Group Exemption Letter in Force Continued effectiveness of a group exemption letter is based on the following conditions. Amend tax return online free The continued existence of the central organization. Amend tax return online free The continued qualification of the central organization for exemption under section 501(c). Amend tax return online free The submission by the central organization of the information regarding its subordinate organizations that is required annually (described under Information Required Annually). Amend tax return online free The annual filing of an information return (Form 990, for example) by the central organization if required. Amend tax return online free The continued effectiveness of a group exemption letter as to a particular subordinate is based on these four conditions, as well as on the continued conformity by the subordinate to the requirements for inclusion in a group exemption letter, the authorization for inclusion, and the annual filing of any required information return for the subordinate. Amend tax return online free Information Required Annually To maintain a group exemption letter, the central organization must submit annually, at least 90 days before the close of its annual accounting period, all of the following information. Amend tax return online free Information about all changes in the purposes, character, or method of operation of the subordinates included in the group exemption letter. Amend tax return online free A separate list (that includes the names, mailing addresses, actual addresses if different, and EINs of the affected subordinates) for each of the three following categories. Amend tax return online free Subordinates that have changed their names or addresses during the year. Amend tax return online free Subordinates no longer to be included in the group exemption letter because they no longer exist or have disaffiliated from or withdrawn their authorization to the central organization. Amend tax return online free Subordinates to be added to the group exemption letter because they are newly organized or affiliated or because they have recently authorized the central organization to include them. Amend tax return online free An annotated directory of subordinates will not be accepted for this purpose. Amend tax return online free If there were none of the above changes, the central organization must submit a statement to that effect. Amend tax return online free The same information about new subordinates that was required in the initial application for group exemption. Amend tax return online free (This information is listed in items 1 through 10, under Information required for subordinate organizations. Amend tax return online free , earlier. Amend tax return online free ) If a new subordinate does not differ in any material respects from the subordinates included in the application for group exemption, however, a statement to this effect may be submitted in lieu of detailed information. Amend tax return online free The organization should send this information to:   Ogden Service Center  Mail Stop 6271 Ogden, UT 84404-4749 Submitting the required information annually does not relieve the central organization or any of its subordinates of the duty to submit any other information that may be required by an EO area manager to determine whether the conditions for continued exemption are being met. Amend tax return online free Events Causing Loss of Group Exemption A group exemption letter no longer has effect, for either a particular subordinate or the group as a whole, when: The central organization notifies the IRS that it is going out of existence, The central organization notifies the IRS, by its annual submission or otherwise, that any of its subordinates will no longer fulfill the conditions for continued effectiveness, explained earlier, or The IRS notifies the central organization or the affected subordinate that the group exemption letter will no longer have effect for some or all of the group because the conditions for continued effectiveness of a group exemption letter have not been fulfilled. Amend tax return online free When notice is given under any of these three conditions, the IRS will no longer recognize the exempt status of the affected subordinates until they file separate applications on their own behalf or the central organization files complete supporting information for their reinclusion in the group exemption at the time of its annual submission. Amend tax return online free However, when the notice is given by the IRS and the withdrawal of recognition is based on the failure of the organization to comply with the requirements for recognition of tax-exempt status under the particular subsection of section 501(c), the revocation will ordinarily take effect as of the date of that failure. Amend tax return online free The notice, however, will be given only after the appeal procedures described earlier in this chapter are completed. Amend tax return online free Prev  Up  Next   Home   More Online Publications