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File Tax Extension 2011

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File Tax Extension 2011

File tax extension 2011 Internal Revenue Bulletin:  2009-36  September 8, 2009  Rev. File tax extension 2011 Proc. File tax extension 2011 2009-37 Table of Contents SECTION 1. File tax extension 2011 PURPOSE SECTION 2. File tax extension 2011 BACKGROUND SECTION 3. File tax extension 2011 SCOPE SECTION 4. File tax extension 2011 ELECTION PROCEDURES SECTION 5. File tax extension 2011 REQUIRED INFORMATION STATEMENT SECTION 6. File tax extension 2011 EFFECTIVE DATE SECTION 7. File tax extension 2011 TRANSITION RULE SECTION 8. File tax extension 2011 PAPERWORK REDUCTION ACT DRAFTING INFORMATION SECTION 1. File tax extension 2011 PURPOSE . File tax extension 2011 01 This revenue procedure provides the exclusive procedures for taxpayers to make an election to defer recognizing discharge of indebtedness income (“COD income”) under § 108(i) of the Internal Revenue Code. File tax extension 2011 . File tax extension 2011 02 This revenue procedure also requires taxpayers making the § 108(i) election to provide additional information on returns beginning with the taxable year following the taxable year for which the taxpayer makes the election. File tax extension 2011 This revenue procedure describes the time and manner of providing this additional information. File tax extension 2011 . File tax extension 2011 03 The Internal Revenue Service and Treasury Department intend to issue additional guidance under § 108(i) that may include regulations addressing matters in this revenue procedure. File tax extension 2011 Taxpayers should be aware that these regulations may be retroactive. File tax extension 2011 See § 7805(b)(2). File tax extension 2011 This revenue procedure may be modified to provide procedures consistent with additional guidance. File tax extension 2011 SECTION 2. File tax extension 2011 BACKGROUND . File tax extension 2011 01 Section 108(i), Generally. File tax extension 2011 Section 108(i) was added to the Code by § 1231 of the American Recovery and Reinvestment Tax Act of 2009, Pub. File tax extension 2011 L. File tax extension 2011 No. File tax extension 2011 111-5, 123 Stat. File tax extension 2011 338. File tax extension 2011 In general, § 108(i) provides that, at the election of a taxpayer, COD income realized in connection with a reacquisition after December 31, 2008, and before January 1, 2011, of an applicable debt instrument is includible in gross income ratably over a 5-taxable-year inclusion period, beginning with the taxpayer’s fourth or fifth taxable year following the taxable year of the reacquisition. File tax extension 2011 Generally, if a taxpayer makes a § 108(i) election and reacquires (or is treated as reacquiring) the applicable debt instrument generating the COD income for a new debt instrument with original issue discount (“OID”), then interest deductions for this OID also are deferred, as provided in § 108(i)(2). File tax extension 2011 The OID deferral rule, however, does not apply if the amount of OID is less than a de minimis amount, as determined under § 1273(a)(3) and § 1. File tax extension 2011 1273-1(d) of the Income Tax Regulations. File tax extension 2011 The OID deferral rule in § 108(i)(2) applies at the entity level for a pass-through entity. File tax extension 2011 For example, a partnership (and therefore its partners) may not deduct currently the OID described in § 108(i)(2)(A)(i). File tax extension 2011 A taxpayer must take into account any item of income or deduction deferred under § 108(i), and not previously taken into account, in the taxable year in which certain events occur (such as the liquidation of the taxpayer and upon other events specified in administrative guidance). File tax extension 2011 See § 108(i)(5)(D). File tax extension 2011 The rule regarding acceleration of deferred COD income and OID deductions also applies in the case of certain dispositions by persons holding ownership interests in pass-through entities. File tax extension 2011 Section 108(i)(5)(D)(ii). File tax extension 2011 For purposes of § 108(i), regulated investment companies (as defined in § 851(a)) and real estate investment trusts (as defined in § 856(a)) are not pass-through entities. File tax extension 2011 . File tax extension 2011 02 Applicable Debt Instrument. File tax extension 2011 Section 108(i)(3)(A) defines the term “applicable debt instrument” to mean any debt instrument issued by a C corporation or by any other person in connection with the conduct of a trade or business by that person. File tax extension 2011 The term “debt instrument” means any bond, debenture, note, certificate, or any other instrument or contractual arrangement constituting indebtedness within the meaning of § 1275(a)(1). File tax extension 2011 Section 108(i)(3)(B). File tax extension 2011 For purposes of § 108(i), in the case of an intercompany obligation (as defined in § 1. File tax extension 2011 1502-13(g)(2)(ii)), an applicable debt instrument includes only an instrument for which COD income is realized upon the instrument’s deemed satisfaction under § 1. File tax extension 2011 1502-13(g)(5). File tax extension 2011 . File tax extension 2011 03 Reacquisition. File tax extension 2011 Section 108(i)(4)(A) defines the term “reacquisition” to mean, with respect to any applicable debt instrument, any acquisition of the debt instrument by the debtor that issued (or is otherwise the obligor under) the debt instrument, or a person related to the debtor under § 108(e)(4). File tax extension 2011 The term “acquisition” includes an acquisition of the debt instrument for cash or other property, the exchange of the debt instrument for another debt instrument (including an exchange resulting from a modification of the debt instrument), the exchange of the debt instrument for corporate stock or a partnership interest, the contribution of the debt instrument to capital, and the complete forgiveness of the indebtedness by the holder of the debt instrument. File tax extension 2011 See § 108(i)(4)(B). File tax extension 2011 The term “acquisition” also includes an indirect acquisition within the meaning of § 1. File tax extension 2011 108-2(c) if a direct acquisition of the debt instrument would qualify for an election under § 108(i). File tax extension 2011 For example, if a corporation acquires debt of a partnership that the partnership issued in connection with its trade or business, and the partnership and corporation become related within six months of the corporation’s acquisition of the debt, the indirect acquisition is an acquisition for which an election under § 108(i) may be made. File tax extension 2011 . File tax extension 2011 04 General Requirements for the Section 108(i) Election. File tax extension 2011 Section 108(i)(5)(B) provides, in general, that a taxpayer makes the § 108(i) election by including a statement that clearly identifies the applicable debt instrument with the return of tax imposed for the taxable year in which the reacquisition of the instrument occurs. File tax extension 2011 (For purposes of this revenue procedure, a return of tax or income tax return includes an information return, and a taxpayer includes a person that files an information return. File tax extension 2011 ) The statement must include the amount of income to which § 108(i)(1) applies and other information the Service may prescribe. File tax extension 2011 Once made, a § 108(i) election is irrevocable and, except as provided in section 7 of this revenue procedure, may not be modified. File tax extension 2011 . File tax extension 2011 05 Section 108(i) Elections Made by Pass-through Entities. File tax extension 2011 In the case of COD income realized by a pass-through entity from the reacquisition of an applicable debt instrument, the pass-through entity makes the § 108(i) election. File tax extension 2011 Section 108(i)(5)(B)(iii). File tax extension 2011 . File tax extension 2011 06 Additional Information on Subsequent Years’ Returns. File tax extension 2011 Section 108(i)(7) authorizes the Service to issue guidance necessary or appropriate for applying § 108(i), including requiring reporting the election and other information on returns of tax for subsequent taxable years. File tax extension 2011 . File tax extension 2011 07 Exclusivity. File tax extension 2011 Section 108(i)(5)(C) provides that if a taxpayer elects to apply § 108(i) to an applicable debt instrument, § 108(a)(1)(A), (B), (C), and (D) do not apply to COD income deferred under § 108(i). File tax extension 2011 . File tax extension 2011 08 Allocation of Deferred COD Income on Partnership Indebtedness. File tax extension 2011 Section 4. File tax extension 2011 04(3) of this revenue procedure describes how a partnership may elect under § 108(i) to defer a portion of the COD income realized from the reacquisition of an applicable debt instrument. File tax extension 2011 If a partnership elects to defer all or any portion of COD income realized from the reacquisition of an applicable debt instrument, all of the COD income with respect to that debt instrument, without regard to § 108(i), is allocated to the partners in the partnership immediately before the reacquisition in the manner in which the income would be included in the distributive shares of these partners under § 704 and the regulations thereunder, including § 1. File tax extension 2011 704-1(b)(2)(iii). File tax extension 2011 Each partner’s share of this COD income is the partner’s COD income amount (“COD income amount”). File tax extension 2011 The partner’s COD income amount that is deferred under § 108(i) is the partner’s deferred amount (“deferred amount”). File tax extension 2011 The partner’s COD income amount that is not deferred and is included in the partner’s distributive share of partnership income for the taxable year of the partnership in which the reacquisition occurs is the partner’s included amount (“included amount”). File tax extension 2011 . File tax extension 2011 09 Partner’s Deferred § 752 Amount. File tax extension 2011 A decrease in a partner’s share of a partnership liability resulting from the reacquisition of an applicable debt instrument that is not treated as a current distribution of money to the partner under § 752 by reason of § 108(i)(6) is the partner’s deferred § 752 amount (“deferred § 752 amount”). File tax extension 2011 A partner’s deferred § 752 amount may not exceed the lesser of (i) the partner’s deferred amount or (ii) gain that the partner would recognize in the year of reacquisition under § 731 as a result of the reacquisition absent § 108(i)(6). File tax extension 2011 To determine the amount of gain the partner would recognize under clause (ii) of the preceding sentence, the amount of any deemed distribution of money under § 752(b) resulting from the decrease in the partner’s share of a reacquired applicable debt instrument that is treated as an advance or draw of money under § 1. File tax extension 2011 731-1(a)(1)(ii) is determined as if no COD income resulting from the reacquisition of the applicable debt instrument is deferred under § 108(i). File tax extension 2011 See Rev. File tax extension 2011 Rul. File tax extension 2011 92-97, 1992-2 C. File tax extension 2011 B. File tax extension 2011 124, and Rev. File tax extension 2011 Rul. File tax extension 2011 94-4, 1994-1 C. File tax extension 2011 B. File tax extension 2011 195. File tax extension 2011 A partner’s deferred § 752 amount is treated as a distribution of money to the partner under § 752 at the same time, and to the extent remaining in the same amount, as the partner recognizes the COD income deferred under § 108(i). File tax extension 2011 . File tax extension 2011 10 Allocation of Deferred COD Income on S Corporation Indebtedness. File tax extension 2011 For purposes of § 108(i), an S corporation’s COD income deferred under § 108(i) is shared pro rata only among those shareholders that are shareholders of the S corporation immediately before the reacquisition transaction. File tax extension 2011 . File tax extension 2011 11 Deferred COD Income, Earnings and Profits, and Alternative Minimum Taxable Income. File tax extension 2011 (1) In general. File tax extension 2011 The Service and Treasury Department intend to issue regulations regarding the computation of a corporation’s earnings and profits with respect to COD income and OID deductions that are deferred under § 108(i). File tax extension 2011 These regulations generally will provide that deferred COD income increases earnings and profits in the taxable year that it is realized and not in the taxable year or years that the deferred COD income is includible in gross income. File tax extension 2011 OID deductions deferred under § 108(i) generally will decrease earnings and profits in the taxable year or years in which the deduction would be allowed without regard to § 108(i). File tax extension 2011 COD income and OID deductions that are deferred increase or decrease adjusted current earnings under § 56(g)(4) in the taxable year or years that the income or deduction is includible or deductible in determining taxable income. File tax extension 2011 See § 1. File tax extension 2011 56(g)-1(c)(1). File tax extension 2011 (2) Exceptions for certain special status corporations. File tax extension 2011 The Service and Treasury Department intend to issue regulations providing that in the case of regulated investment companies and real estate investment trusts, COD income deferred under § 108(i) generally increases earnings and profits in the taxable year or years in which the deferred COD income is includible in gross income and not in the year that the deferred COD income is realized. File tax extension 2011 OID deductions deferred under § 108(i) generally decrease earnings and profits in the taxable year or years that the deferred OID deductions are deductible. File tax extension 2011 . File tax extension 2011 12 Extension of Time to Make Election. File tax extension 2011 Under § 301. File tax extension 2011 9100-1 of the Procedure and Administration Regulations, the Service may grant an extension of time to make a regulatory election. File tax extension 2011 An election is a regulatory election if the due date is prescribed by regulation or other published guidance of general applicability. File tax extension 2011 Section 301. File tax extension 2011 9100-2(a) provides an automatic 12-month extension from the due date for making certain regulatory elections. File tax extension 2011 SECTION 3. File tax extension 2011 SCOPE This revenue procedure applies to taxpayers that realize COD income from a reacquisition after December 31, 2008, and before January 1, 2011, of an applicable debt instrument, as provided in § 108(i). File tax extension 2011 SECTION 4. File tax extension 2011 ELECTION PROCEDURES . File tax extension 2011 01 In General. File tax extension 2011 (1) A taxpayer within the scope of this revenue procedure makes the § 108(i) election by— (a) Attaching a statement meeting the requirements of section 4. File tax extension 2011 05 of this revenue procedure to the taxpayer’s timely filed (including extensions) original federal income tax return for the taxable year in which the reacquisition of the applicable debt instrument occurs, and (b) If applicable, satisfying the additional requirements of section 4. File tax extension 2011 07, 4. File tax extension 2011 08, 4. File tax extension 2011 09, or 4. File tax extension 2011 10 of this revenue procedure. File tax extension 2011 (2) The Service grants an automatic extension of 12 months from the due date prescribed in section 4. File tax extension 2011 01(1)(a) of this revenue procedure for making the § 108(i) election. File tax extension 2011 The rules that apply to an automatic extension under § 301. File tax extension 2011 9100-2(a) apply to this automatic extension. File tax extension 2011 . File tax extension 2011 02 Section 108(i) Elections Made by Members of Consolidated Groups. File tax extension 2011 The common parent of a consolidated group makes the § 108(i) election on behalf of all members of the group. File tax extension 2011 See § 1. File tax extension 2011 1502-77(a). File tax extension 2011 . File tax extension 2011 03 Aggregation Rule. File tax extension 2011 A taxpayer within the scope of this revenue procedure may treat two or more applicable debt instruments that are part of the same issue and that are reacquired during the same taxable year as one applicable debt instrument for purposes of this revenue procedure. File tax extension 2011 A pass-through entity may not treat two or more applicable debt instruments as one applicable debt instrument under this section 4. File tax extension 2011 03 if the owners and their ownership interests in the pass-through entity immediately prior to the reacquisition of each applicable debt instrument are not identical. File tax extension 2011 . File tax extension 2011 04 Partial Elections. File tax extension 2011 (1) A taxpayer within the scope of this revenue procedure may make an election for any portion of COD income realized from the reacquisition of any applicable debt instrument. File tax extension 2011 Thus, for example, if a taxpayer realizes $100 of COD income from the reacquisition of an applicable debt instrument, the taxpayer may elect under § 108(i)(1) to defer only $40 of the $100 of COD income. File tax extension 2011 The taxpayer may exclude from income the portion of COD income that the taxpayer does not elect to defer under § 108(i) ($60 in this example) under § 108(a)(1)(A), (B), (C), or (D), if applicable. File tax extension 2011 (2) A taxpayer is not required to make an election for the same portion of COD income arising from each applicable debt instrument that it reacquires, but may make an election for different portions of COD income arising from different applicable debt instruments (whether or not part of the same issue). File tax extension 2011 Thus, for example, if a taxpayer realizes $100 of COD income from the reacquisition of an applicable debt instrument (Instrument A) and $100 of COD income from the reacquisition of a different applicable debt instrument (Instrument B), the taxpayer may elect to defer all or a portion of the COD income associated with Instrument A and none or a different portion of the COD income associated with Instrument B. File tax extension 2011 (3) A partnership that elects to defer less than all of the COD income realized from the reacquisition of an applicable debt instrument may determine, in any manner, the portion, if any, of a partner’s COD income amount that is the partner’s deferred amount and the portion, if any, of a partner’s COD income amount that is the partner’s included amount. File tax extension 2011 Thus, for example, one partner’s deferred amount may be zero while another partner’s deferred amount may equal that partner’s COD income amount (or any portion thereof). File tax extension 2011 A partner may exclude from income the partner’s included amount under § 108(a)(1)(A), (B), (C), or (D), if applicable. File tax extension 2011 The provisions of this section 4. File tax extension 2011 04(3) apply for purposes of § 108(i) only and are not intended as an interpretation of or a change to existing law under § 704. File tax extension 2011 . File tax extension 2011 05 Contents of Election Statement. File tax extension 2011 A statement meets the requirements of this section 4. File tax extension 2011 05 if the statement— (1) Label. File tax extension 2011 States “Section 108(i) Election” across the top. File tax extension 2011 (2) Required information. File tax extension 2011 Provides, for each applicable debt instrument the reacquisition of which generates COD income that the taxpayer is electing to defer under § 108(i)— (a) The name and taxpayer identification numbers, if any, of the issuer or issuers of the applicable debt instrument; (b) A general description of the applicable debt instrument (including the issue and maturity dates) and, in the case of any person other than a C corporation, a general description of the person’s trade or business to which the applicable debt instrument is connected; (c) A general description of the reacquisition transaction or transactions generating the COD income (including the date(s) of the transaction(s)); (d) The total amount of COD income for the applicable debt instrument that results from the reacquisition (in the case of a partnership, the aggregate of the partners’ COD income amounts) and a general description of the manner in which this amount is calculated; (e) The amount of COD income for the applicable debt instrument that the taxpayer is electing to defer under § 108(i); (f) In the case of a partnership, a list of partners that have a deferred amount, their identifying information and each partner’s deferred amount; and in the case of an S corporation, a list of shareholders with COD income deferred under § 108(i), their identifying information and each shareholder’s share of the S corporation’s deferred COD income; and (g) In cases in which a new debt instrument is issued or deemed issued in exchange for the applicable debt instrument (including exchanges under § 108(e)(4), § 108(i)(2)(B), and § 1. File tax extension 2011 1001-3), the issuer’s name, the issuer’s taxpayer identification number, if any, a general description of the new debt instrument and whether the new debt instrument has OID, and if the new debt instrument has OID, a schedule of the OID that the issuer expects to accrue each taxable year on the instrument and the amount of OID that the issuer expects to defer under § 108(i)(2) each taxable year. File tax extension 2011 . File tax extension 2011 06 Supplemental information. File tax extension 2011 The statement described in section 4. File tax extension 2011 05 of this revenue procedure may specify for each applicable debt instrument an amount greater than the amount identified in section 4. File tax extension 2011 05(2)(e) of this revenue procedure that the taxpayer elects to defer under § 108(i) in the event the Service subsequently concludes that the taxpayer understated the amount of COD income described in section 4. File tax extension 2011 05(2)(d) of this revenue procedure. File tax extension 2011 This additional amount of COD income the taxpayer elects to defer may be described as the entire additional COD income, or as a percentage of any additional COD income. File tax extension 2011 If the taxpayer is a partnership, the partnership must specify each partner’s share of the partnership’s additional COD income that would be deferred (the partner’s additional deferred amount), which the partnership may describe for each partner as the partner’s entire share of the partnership’s additional COD income or as a percentage of the partner’s share of the partnership’s additional COD income. File tax extension 2011 If the taxpayer is an S corporation, the S corporation must specify each shareholder’s share of the S corporation’s additional COD income that would be deferred, which the S corporation may describe for each shareholder as the shareholder’s entire share of the S corporation’s additional COD income or as a percentage of the shareholder’s share of the S corporation’s additional COD income. File tax extension 2011 In the case of partnerships and S corporations, the additional COD income and the portion of additional COD income that would be deferred are allocated or determined as provided in sections 2. File tax extension 2011 08, 2. File tax extension 2011 10 and, if applicable, 4. File tax extension 2011 04(3) of this revenue procedure, respectively, as if the additional COD income was realized. File tax extension 2011 . File tax extension 2011 07 Additional Requirements for Certain Partnerships Making a § 108(i) Election. File tax extension 2011 The rules of this section 4. File tax extension 2011 07 apply to partnerships other than partnerships described in section 4. File tax extension 2011 10 of this revenue procedure. File tax extension 2011 (1) Information filing on Schedule K-1 (Form 1065 and Form 1065-B). File tax extension 2011 For the taxable year in which the § 108(i) election is made, the partnership must report on the Schedule K-1 (Form 1065 or Form 1065-B), Partner’s Share of Income, Deductions, Credits, etc. File tax extension 2011 , in the manner specified in the instructions to the forms, for each partner § 108(i) information on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made. File tax extension 2011 Partnerships reporting § 108(i) information on the 2008 Schedule K-1 (Form 1065 or Form 1065-B) must report for each partner on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made: (a) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(1) or § 108(i)(5)(D)(i) or (ii), in box 11 (“other income”) using code F for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (b) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii) or § 108(i)(5)(D)(i) or (ii), in box 13 (“other deductions”) using code W for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (c) The partner’s deferred amount that has not been included in income in the current or prior taxable years, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (d) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (e) The partner’s deferred § 752 amount that is treated as a distribution of money to the partner under § 752 in the current taxable year, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); and (f) The partner’s deferred § 752 amount remaining as of the end of the current taxable year, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B). File tax extension 2011 (2) Election information statement provided to partners. File tax extension 2011 The partnership must attach to the Schedule K-1 (Form 1065 or Form 1065-B) provided to each partner for the taxable year in which the § 108(i) election is made a statement satisfying the requirements of this section 4. File tax extension 2011 07(2). File tax extension 2011 The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner must retain that partner’s statement, in their respective books and records. File tax extension 2011 A statement meets the requirements of this section 4. File tax extension 2011 07(2) if the statement— (a) Label. File tax extension 2011 States “Section 108(i) Election Information Statement for Partners” across the top. File tax extension 2011 (b) Required information. File tax extension 2011 Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies— (i) The partner’s COD income amount, the partner’s deferred amount, and the partner’s included amount; (ii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (iv) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); (v) The partner’s share of each liability of the partnership described in section 4. File tax extension 2011 05(2)(g) of this revenue procedure; (vi) The partner’s share of the decrease in the partnership liability that results from the reacquisition of the applicable debt instrument; (vii) The partner’s share of the decrease in the partnership liability that results from the reacquisition of the applicable debt instrument that is treated as a distribution of money to the partner under § 752 in the current taxable year; (viii) The partner’s deferred § 752 amount as described in section 2. File tax extension 2011 09 of this revenue procedure; (ix) The partner’s additional deferred amount as described in section 4. File tax extension 2011 06 of this revenue procedure; and (x) The date of the reacquisition transaction generating the COD income. File tax extension 2011 (c) If a partner fails to provide the written statement required by section 4. File tax extension 2011 07(3) of this revenue procedure, the partnership must indicate that the amounts described in section 4. File tax extension 2011 07(2)(b)(vii) and (viii) of this revenue procedure cannot be calculated because the partner did not provide the information necessary to report these amounts. File tax extension 2011 (3) Partner reporting requirements. File tax extension 2011 The partnership must make reasonable efforts prior to making a § 108(i) election to secure from each partner with a deferred amount for which it does not have the information necessary to compute the partner’s basis in its partnership interest (and its deferred § 752 amount as described in section 2. File tax extension 2011 09 of this revenue procedure) a written statement signed under penalties of perjury that includes this information. File tax extension 2011 Each partner with a deferred amount must provide this written statement to the partnership within 30 days of the date of request by the partnership. File tax extension 2011 A partner’s failure to comply with this reporting requirement does not invalidate the partnership’s election under § 108(i) for an applicable debt instrument only if the partnership makes reasonable efforts before making the § 108(i) election to obtain the written statement from the partner and otherwise complies with the requirements of section 4 of this revenue procedure. File tax extension 2011 If a partner provides its written statement under this section 4. File tax extension 2011 07(3) after the partnership has provided to the partner the Section 108(i) Election Information Statement for Partners, the partnership must provide to the partner a revised Section 108(i) Election Information Statement for Partners reporting the information required under section 4. File tax extension 2011 07(2)(b)(vii) and (viii) of this revenue procedure and report the partner’s deferred § 752 amount on the partner’s Schedule K-1 (Form 1065 or Form 1065-B) in subsequent taxable years. File tax extension 2011 . File tax extension 2011 08 Additional Requirements for an S Corporation Making a § 108(i) Election. File tax extension 2011 (1) Information filing on Schedule K-1 (Form 1120S). File tax extension 2011 For the taxable year in which the § 108(i) election is made, the S corporation must report on the Schedule K-1 (Form 1120S), Shareholder’s Share of Income, Deductions, Credits, etc. File tax extension 2011 , in the manner specified in the instructions to the forms, for each shareholder § 108(i) information on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made. File tax extension 2011 S corporations reporting § 108(i) information on the 2008 Schedule K-1 (Form 1120S) must report for each shareholder, on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made, the shareholder’s share of the S corporation’s: (a) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(1) or § 108(i)(5)(D)(i) or (ii), in box 10 (“other income”) using code E; (b) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii), or § 108(i)(5)(D)(i) or (ii), in box 12 (“other deductions”) using code S; (c) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years, in box 17 (“other information”) using code T; and (d) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years, in box 17 (“other information”) using code T. File tax extension 2011 (2) Election information statement provided to shareholders. File tax extension 2011 The S corporation must attach to the Schedule K-1 (Form 1120S) provided to each shareholder for the taxable year in which the § 108(i) election is made, a statement satisfying the requirements of this section 4. File tax extension 2011 08(2). File tax extension 2011 The S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each shareholder must retain that shareholder’s statement, in their respective books and records. File tax extension 2011 A statement meets the requirements of this section 4. File tax extension 2011 08(2) if the statement— (a) Label. File tax extension 2011 States “Section 108(i) Election Information Statement for Shareholders” across the top. File tax extension 2011 (b) Required information. File tax extension 2011 Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies, the shareholder’s share of the S corporation’s— (i) COD income that the S corporation elects to defer under § 108(i); (ii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iii) OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (iv) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); and (v) Additional COD income that would be deferred as described in section 4. File tax extension 2011 06 of this revenue procedure. File tax extension 2011 . File tax extension 2011 09 Section 108(i) Elections Made on Behalf of Certain Foreign Corporations. File tax extension 2011 The controlling domestic shareholder(s) (or common parent of the controlling domestic shareholder(s), if applicable) of a controlled foreign corporation or a noncontrolled § 902 corporation not otherwise required to file a return of tax may make the § 108(i) election on behalf of the foreign corporation by satisfying the requirements of § 1. File tax extension 2011 964-1(c)(3). File tax extension 2011 Each controlling domestic shareholder must attach a statement identifying the foreign corporation and satisfying the requirements of section 4. File tax extension 2011 05 of this revenue procedure and, if applicable, section 4. File tax extension 2011 06 of this revenue procedure, to its federal income tax return for the taxable year ending within or with the taxable year of the foreign corporation for which the § 108(i) election is made. File tax extension 2011 . File tax extension 2011 10 Section 108(i) Elections Made By Certain Foreign Partnerships. File tax extension 2011 The rules of this section 4. File tax extension 2011 10 apply to a foreign partnership making a § 108(i) election that is not otherwise required to file a federal partnership return (“nonfiling foreign partnership”). File tax extension 2011 See § 1. File tax extension 2011 6031(a)-1(b). File tax extension 2011 (1) A nonfiling foreign partnership making the election must attach a statement satisfying the requirements of section 4. File tax extension 2011 05 of this revenue procedure and, if applicable, section 4. File tax extension 2011 06 of this revenue procedure, to a partnership return satisfying the requirements of § 1. File tax extension 2011 6031(a)-1(b)(5) it files with the Service. File tax extension 2011 In addition, a nonfiling foreign partnership must include in the information required in section 4. File tax extension 2011 05(2)(d) and (e) of this revenue procedure the aggregate amounts for all partners as well as the aggregate amounts for all U. File tax extension 2011 S. File tax extension 2011 persons (as defined in § 7701(a)(30)) and controlled foreign corporation(s) that are partners with deferred amounts in the nonfiling foreign partnership (“affected partners”). File tax extension 2011 (2) The nonfiling foreign partnership must make the election, in accordance with § 1. File tax extension 2011 6031(a)-1(b)(5), by the date provided in section 4. File tax extension 2011 01(1)(a) of this revenue procedure, as if it had a filing obligation for the taxable year in which the reacquisition of the applicable debt instrument occurs. File tax extension 2011 (3) For each affected partner, the partnership must file with the Service a Schedule K-1 (Form 1065) and report on the Schedule K-1 (Form 1065) for the affected partner as provided in section 4. File tax extension 2011 07(1) of this revenue procedure. File tax extension 2011 Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K-1 (Form 1065). File tax extension 2011 The partnership must provide a copy of the respective Schedule K-1 (Form 1065) to each affected partner and must also attach to the Schedule K-1 (Form 1065) provided to each affected partner a statement satisfying the requirements of section 4. File tax extension 2011 07(2) of this revenue procedure by the date provided in section 4. File tax extension 2011 01(1)(a) of this revenue procedure. File tax extension 2011 The partnership should not attach any statement described in section 4. File tax extension 2011 07(2) of this revenue procedure to the Schedules K-1 that are filed with the Service. File tax extension 2011 However, the partnership must retain the statements provided to the affected partners, and each affected partner must retain that partner’s statement, in their respective books and records. File tax extension 2011 (4) The partnership and each affected partner must satisfy the requirements of section 4. File tax extension 2011 07(3) of this revenue procedure. File tax extension 2011 . File tax extension 2011 11 Protective § 108(i) Election. File tax extension 2011 (1) In general. File tax extension 2011 A taxpayer may make a protective election under § 108(i) for an applicable debt instrument if the taxpayer concludes that a particular transaction does not result in the realization of COD income, reports the transaction on its federal income tax return in a manner consistent with the taxpayer’s conclusion, and would be within the scope of this revenue procedure if the taxpayer’s conclusion were incorrect. File tax extension 2011 If the Service at any time determines the taxpayer’s conclusion that the particular transaction does not result in the realization of COD income is incorrect, the taxpayer’s protective election is treated as a valid, irrevocable election under § 108(i). File tax extension 2011 Thus, if a taxpayer makes a protective election, the Service subsequently may require the taxpayer to report COD income deferred pursuant to the valid and irrevocable protective election even if the statute of limitations has expired for the year in which the COD income was realized and the protective election was made. File tax extension 2011 A taxpayer makes a protective election by attaching a statement satisfying the requirements of this section 4. File tax extension 2011 11(1) to the taxpayer’s original federal income tax return within the period described in section 4. File tax extension 2011 01(1)(a) of this revenue procedure. File tax extension 2011 The taxpayer also must attach the election to its federal income tax return in each of the 8 or 9 taxable years, as applicable, following the taxable year of the election. File tax extension 2011 A statement meets the requirements of this section 4. File tax extension 2011 11(1) if the statement— (a) States “Section 108(i) Protective Election” across the top; (b) Provides the information required under section 4. File tax extension 2011 05(2)(a), (b), and (c) of this revenue procedure; (c) Provides that the amounts described in sections 4. File tax extension 2011 05(2)(d) and (e) of this revenue procedure are zero; and (d) Provides the information described in section 4. File tax extension 2011 06 of this revenue procedure. File tax extension 2011 (2) Statements provided to shareholders and partners. File tax extension 2011 (a) For each applicable debt instrument, a partnership or S corporation that makes a protective election must attach to the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) it provides each of its partners or shareholders, as the case may be, for the taxable year in which the protective election is made a statement containing the information described in section 4. File tax extension 2011 11(1)(b) of this revenue procedure (an S corporation need not provide its shareholders with the date(s) of the transaction(s) that would constitute the reacquisition transaction or transactions) and the partner’s or shareholder’s share of the additional COD income that would be deferred as described in section 4. File tax extension 2011 11(1)(d) of this revenue procedure. File tax extension 2011 (b) The partnership or S corporation should not attach the statements described in this section 4. File tax extension 2011 11(2) to the Schedules K-1 that are filed with the Service but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. File tax extension 2011 . File tax extension 2011 12 Election-Year Reporting by Tiered Pass-Through Entities. File tax extension 2011 (1) A partnership required to file a U. File tax extension 2011 S. File tax extension 2011 partnership return other than under § 1. File tax extension 2011 6031(a)-1(b)(5), or an S corporation, that receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting its share of any items listed in section 4. File tax extension 2011 07(1) of this revenue procedure, must report on the Schedules K-1 (Form 1065, Form 1065-B, or Form 1120S) to its partners or shareholders, as the case may be, each partner’s or shareholder’s share of those items (an S corporation only reports to its shareholders the items described in section 4. File tax extension 2011 07(1)(a) through (d) of this revenue procedure). File tax extension 2011 (2) If a partnership described in section 4. File tax extension 2011 12(1) of this revenue procedure receives a statement described in sections 4. File tax extension 2011 07(2) or 4. File tax extension 2011 10(3) of this revenue procedure or this section 4. File tax extension 2011 12(2), it must provide each of its partners a statement containing the partner’s share of each of the items listed on each statement received by the partnership, including the information described in section 4. File tax extension 2011 07(2)(b)(x) of this revenue procedure. File tax extension 2011 If an S corporation receives a statement described in sections 4. File tax extension 2011 07(2) or 4. File tax extension 2011 10(3) of this revenue procedure or this section 4. File tax extension 2011 12(2), it must provide each of its shareholders a statement containing the shareholder’s share of each of the items listed on each statement received by the S corporation that are described in section 4. File tax extension 2011 07(2)(b)(i), (ii), (iii), (iv) and (ix) of this revenue procedure. File tax extension 2011 The partnership or S corporation must attach this statement or statements to the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) that it provides to each of its partners or shareholders, as the case may be, for the taxable year of the partnership or S corporation. File tax extension 2011 The partnership or S corporation should not attach these statements to the Schedules K-1 that are filed with the Service but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. File tax extension 2011 (3) A partnership that receives a statement described in this section 4 identifying its COD income amount with respect to an applicable debt instrument must allocate its COD income amount, without regard to § 108(i), to the partners in the partnership immediately before the reacquisition transaction in the manner in which the income would be included in the distributive shares of these partners under § 704 and the regulations thereunder, including § 1. File tax extension 2011 704-1(b)(2)(iii). File tax extension 2011 The partnership may determine in any manner the portion, if any, of a partner’s COD income amount that is the partner’s deferred amount and the portion, if any, of a partner’s COD income amount that is the partner’s included amount. File tax extension 2011 No partner’s deferred amount with respect to an applicable debt instrument may exceed its COD income amount with respect to the applicable debt instrument, and the aggregate of deferred amounts of its partners with respect to an applicable debt instrument must equal the partnership’s deferred amount with respect to the applicable debt instrument. File tax extension 2011 The partnership allocates amounts described in section 4. File tax extension 2011 06 of this revenue procedure under this section 4. File tax extension 2011 12(3) as if the additional COD income was realized. File tax extension 2011 (4) The deferred § 752 amount for partners in a partnership making a § 108(i) election is calculated only for the partnership’s direct partners. File tax extension 2011 No further adjustment to the deferred § 752 amount is made to reflect the basis or other attributes of partners that are indirect partners in the partnership. File tax extension 2011 (5) If an S corporation receives a statement described in this section 4 identifying its COD income amount, deferred amount, included amount or additional COD income that would be deferred with respect to an applicable debt instrument, these amounts are shared pro rata only among those shareholders that are shareholders in the S corporation immediately before the reacquisition transaction. File tax extension 2011 (6) This paragraph 4. File tax extension 2011 12(6) provides the rules for Category 1 and Category 2 filers of Form 8865, Return of U. File tax extension 2011 S. File tax extension 2011 Persons With Respect to Certain Foreign Partnerships, as defined in the instructions for Form 8865, if the foreign partnership, for which the Category 1 or Category 2 filer has a filing requirement, receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting the partnership’s share of any items listed in section 4. File tax extension 2011 07(1) of this revenue procedure, or a statement described in sections 4. File tax extension 2011 07(2) or 4. File tax extension 2011 10(3) of this revenue procedure (because the foreign partnership owns an interest directly or indirectly in another partnership in which an election was made under § 108(i) with respect to that foreign partnership’s distributive share from the other entity). File tax extension 2011 (a) For each partner for whom the Category 1 filer is required to complete a Schedule K-1 (Form 8865) (which includes the Category 1 filer itself), the Category 1 filer must: (i) Include the information described in section 4. File tax extension 2011 07(1) of this revenue procedure in the Schedule K-1 (Form 8865) that the Category 1 filer files with the Service and completes for the partner; (ii) Produce a statement containing the partner’s share of the items listed on each statement received by the partnership; and (iii) Attach the statement described in section 4. File tax extension 2011 12(6)(a)(ii) of this revenue procedure to each Schedule K-1 (Form 8865) that it is required to provide to a partner of the foreign partnership. File tax extension 2011 (b) A Category 2 filer must include its share of the information described in section 4. File tax extension 2011 07(1) on the Schedule K-1 (Form 8865) that it is required to complete. File tax extension 2011 Category 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership. File tax extension 2011 (c) The Category 1 and Category 2 filers should not attach the statements described in sections 4. File tax extension 2011 12(6)(a)(ii) and 4. File tax extension 2011 12(6)(b) of this revenue procedure, respectively, to the Schedules K-1 that are filed with the Service. File tax extension 2011 However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records. File tax extension 2011 (7) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 4. File tax extension 2011 12(1) of this revenue procedure or a shareholder of an S corporation described in section 4. File tax extension 2011 12(1) of this revenue procedure must recognize items deferred under § 108(i), the partnership or S corporation must report these items on the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) and statements provided to the partner or shareholder pursuant to section 4. File tax extension 2011 12(1) and (2) of this revenue procedure. File tax extension 2011 Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4. File tax extension 2011 12(6) of this revenue procedure. File tax extension 2011 (8) The provisions of section 4. File tax extension 2011 12(2), (3), (5) and (6) of this revenue procedure also apply to a statement received that is described in section 4. File tax extension 2011 11(2) of this revenue procedure, except that the information that must be provided are those items described in section 4. File tax extension 2011 11(1)(b) of this revenue procedure (an S corporation need not provide its shareholders with the date(s) of the transaction(s) that would constitute the reacquisition transaction or transactions) and the share of the partner or shareholder in the amounts described in section 4. File tax extension 2011 11(1)(d) of this revenue procedure. File tax extension 2011 SECTION 5. File tax extension 2011 REQUIRED INFORMATION STATEMENT . File tax extension 2011 01 Annual Information Statements. File tax extension 2011 Pursuant to § 108(i)(7)(B), a taxpayer that makes an election under § 108(i) (except for a protective election under section 4. File tax extension 2011 11(1) of this revenue procedure) must attach a statement meeting the requirements of section 5. File tax extension 2011 02 of this revenue procedure to its federal income tax return for each taxable year beginning with the taxable year following the taxable year for which the taxpayer makes the election and ending with the first taxable year in which all items deferred under § 108(i) have been recognized. File tax extension 2011 . File tax extension 2011 02 Contents of Statement. File tax extension 2011 A statement meets the requirements of this section 5. File tax extension 2011 02 if the statement— (1) Label. File tax extension 2011 States “Section 108(i) Information Statement” across the top; (2) Required information. File tax extension 2011 Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies— (a) COD income deferred under § 108(i) that is included in income in the current taxable year under § 108(i)(1); (b) COD income deferred under § 108(i) that is included in income in the current taxable year under § 108(i)(5)(D), including a description and date of the acceleration event described in § 108(i)(5)(D); (c) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years (in the case of a partnership, the aggregate of the partners’ deferred amounts that have not been included in income in the current or prior taxable years, and in the case of an S corporation, the S corporation’s COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years); (d) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (e) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D); and (f) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years. File tax extension 2011 (3) Election attached. File tax extension 2011 Includes a copy of the election statement described in section 4. File tax extension 2011 05 of this revenue procedure. File tax extension 2011 . File tax extension 2011 03 Additional Annual Reporting Requirements for Certain Partnerships. File tax extension 2011 The rules of this section 5. File tax extension 2011 03 apply to partnerships other than partnerships described in section 5. File tax extension 2011 05 of this revenue procedure. File tax extension 2011 (1) In general. File tax extension 2011 A partnership that makes an election under § 108(i) (except for a protective election under section 4. File tax extension 2011 11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5. File tax extension 2011 01 of this revenue procedure. File tax extension 2011 In addition, for each taxable year in which a statement is required under section 5. File tax extension 2011 01 of this revenue procedure, the partnership must report on the Schedule K-1 (Form 1065 or Form 1065-B) for each partner § 108(i) information in the manner described in section 4. File tax extension 2011 07(1) of this revenue procedure. File tax extension 2011 (2) Annual information statements provided to partners. File tax extension 2011 The partnership must attach to the Schedule K-1 (Form 1065) provided to each partner for each taxable year in which a statement is required under section 5. File tax extension 2011 01 of this revenue procedure, a statement meeting the requirements of this section 5. File tax extension 2011 03(2). File tax extension 2011 The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner must retain that partner’s statement, in their respective books and records. File tax extension 2011 A statement meets the requirements of this section 5. File tax extension 2011 03(2) if the statement— (a) Label. File tax extension 2011 States “Section 108(i) Annual Information Statement for Partners” across the top of the statement. File tax extension 2011 (b) Required information. File tax extension 2011 Clearly identifies for each applicable debt instrument to which a § 108(i) election applies— (i) The partner’s deferred amount that has not been included in income as of the end of the prior taxable year; (ii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(1); (iii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iv) The partner’s deferred amount that has not been included in income in the current or prior taxable years; (v) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (vi) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (vii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); (viii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years; and (ix) The partner’s deferred § 752 amount that is treated as a distribution of money to the partner under § 752 in the current taxable year and any remaining deferred § 752 amount. File tax extension 2011 If a partner fails to provide the written statement required by section 4. File tax extension 2011 07(3) of this revenue procedure, the partnership must indicate that the amounts described in this section 5. File tax extension 2011 03(2)(b)(ix) cannot be calculated because the partner did not provide the information necessary to report these amounts. File tax extension 2011 . File tax extension 2011 04 Additional Annual Reporting Requirements for an S Corporation. File tax extension 2011 (1) In general. File tax extension 2011 An S corporation that makes an election under § 108(i) (except for a protective election under section 4. File tax extension 2011 11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5. File tax extension 2011 01 of this revenue procedure. File tax extension 2011 In addition, for each taxable year in which a statement is required under section 5. File tax extension 2011 01 of this revenue procedure, the S corporation must report on the Schedule K-1 (Form 1120S) for each shareholder § 108(i) information in the manner described in section 4. File tax extension 2011 08(1) of this revenue procedure. File tax extension 2011 (2) Annual information statements provided to shareholders. File tax extension 2011 The S corporation must attach to the Schedule K-1 (Form 1120S) provided to each shareholder for each taxable year in which a statement is required under section 5. File tax extension 2011 01 of this revenue procedure a statement meeting the requirements of this section 5. File tax extension 2011 04(2). File tax extension 2011 The S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each shareholder must retain that shareholder’s statement, in their respective books and records. File tax extension 2011 A statement meets the requirements of this section 5. File tax extension 2011 04(2) if the statement— (a) Label. File tax extension 2011 States “Section 108(i) Annual Information Statement for Shareholders” across the top; (b) Required information. File tax extension 2011 Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies, the shareholder’s share of the S corporation’s— (i) COD income deferred under § 108(i) that has not been included in income as of the end of the prior taxable year; (ii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(1); (iii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iv) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years; (v) OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (vi) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (vii) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); and (viii) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years. File tax extension 2011 . File tax extension 2011 05 Additional Annual Reporting Requirements for Certain Foreign Partnerships. File tax extension 2011 (1) The rules of this section 5. File tax extension 2011 05 apply to nonfiling foreign partnerships. File tax extension 2011 (2) A nonfiling foreign partnership that makes an election under § 108(i) (except for a protective election under section 4. File tax extension 2011 11(1) of this revenue procedure) must file federal income tax returns with the Service containing the information under § 1. File tax extension 2011 6031(a)-1(b)(5) for each taxable year in which a statement is required by section 5. File tax extension 2011 01 of this revenue procedure. File tax extension 2011 (3) The nonfiling foreign partnership must attach to its federal income tax returns the statements required under section 5. File tax extension 2011 01 of this revenue procedure, but only for that portion of the COD income allocated to affected partners. File tax extension 2011 (4) For each taxable year in which a statement is required under section 5. File tax extension 2011 01 of this revenue procedure, the nonfiling foreign partnership must provide each affected partner a Schedule K-1 (Form 1065) reporting § 108(i) information in the manner described in section 4. File tax extension 2011 07(1) of this revenue procedure. File tax extension 2011 Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K-1 (Form 1065). File tax extension 2011 The partnership must provide each affected partner with a copy of the Schedule K-1 (Form 1065) by the date provided in § 1. File tax extension 2011 6031(b)-1T(b). File tax extension 2011 The partnership must attach the Schedules K-1 (Form 1065) to the federal income tax returns filed with the Service pursuant to section 5. File tax extension 2011 05(2) of this revenue procedure. File tax extension 2011 (5) For each taxable year for which a statement is required under section 5. File tax extension 2011 01 of this revenue procedure, the nonfiling foreign partnership must attach to each affected partner’s Schedule K-1 (Form 1065) a statement meeting the requirements of section 5. File tax extension 2011 03(2) of this revenue procedure. File tax extension 2011 The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain the statements, and each partner must retain that partner’s statement, in their respective books and records. File tax extension 2011 . File tax extension 2011 06 Information Statements Made on Behalf of Certain Foreign Corporations. File tax extension 2011 Each controlling domestic shareholder must attach a statement identifying the foreign corporation and meeting the requirements of section 5. File tax extension 2011 02 of this revenue procedure to the shareholder’s federal income tax return for each taxable year for which a statement is required under section 5. File tax extension 2011 01 of this revenue procedure. File tax extension 2011 . File tax extension 2011 07 Additional Annual Reporting Requirements for Tiered Pass-Through Entities. File tax extension 2011 (1) A partnership required to file a U. File tax extension 2011 S. File tax extension 2011 partnership return other than under § 1. File tax extension 2011 6031(a)-1(b)(5), or an S corporation, that receives a Schedule K-1 (Form 1065 or Form 1065-B) described in the second sentence of section 5. File tax extension 2011 03(1) of this revenue procedure reflecting its share of any § 108(i) information must report on the Schedules K-1 (Form 1065, Form 1065-B, or Form 1120S) to its partners or shareholders, as the case may be, each partner’s or shareholder’s share of those items (an S corporation only reports to its shareholders the items described in section 4. File tax extension 2011 07(1)(a) through (d) of this revenue procedure). File tax extension 2011 (2) If a partnership described in section 5. File tax extension 2011 07(1) of this revenue procedure receives a statement described in sections 5. File tax extension 2011 03(2) or 5. File tax extension 2011 05(5) of this revenue procedure or this section 5. File tax extension 2011 07(2), it must provide each of its partners a statement containing the partner’s share of each of the items listed on each statement received by the partnership. File tax extension 2011 If an S corporation receives a statement described in sections 5. File tax extension 2011 03(2) or 5. File tax extension 2011 05(5) of this revenue procedure or this section 5. File tax extension 2011 07(2), it must provide each of its shareholders a statement containing the shareholder’s share of each of the items listed on each statement received by the S corporation that are described in section 5. File tax extension 2011 03(2)(b)(i) through (viii) of this revenue procedure. File tax extension 2011 The partnership or S corporation must attach the statement or statements to the Schedule K-1 (Form 1065 or Form 1065-B) or Schedule K-1 (Form 1120S) that is provided to each of its partners or shareholders, as the case may be, for the taxable year of the partnership or S corporation. File tax extension 2011 The partnership or S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. File tax extension 2011 (3) This paragraph 5. File tax extension 2011 07(3) provides the rules for persons described in section 4. File tax extension 2011 12(6) of this revenue procedure if the foreign partnership, for which the Category 1 or 2 filer has a filing requirement, receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting the partnership’s share of any items described in the second sentence of section 5. File tax extension 2011 03(1) of this revenue procedure, or a statement described in sections 5. File tax extension 2011 03(2) or 5. File tax extension 2011 05(5) of this revenue procedure (because the foreign partnership owns an interest directly or indirectly in another partnership in which an election was made under § 108(i) with respect to that foreign partnership’s distributive share from the other entity). File tax extension 2011 (a) For each partner for whom the Category 1 filer is required to complete a Schedule K-1 (Form 8865) (which includes the Category 1 filer itself), the Category 1 filer must: (i) Include the information described in section 4. File tax extension 2011 07(1) of this revenue procedure in the Schedule K-1 (Form 8865) that the Category 1 filer files with the Service and completes for the partner; (ii) Produce a statement containing the partner’s share of the items listed on each statement received by the partnership; and (iii) Attach the statement described in section 5. File tax extension 2011 07(3)(a)(ii) of this revenue procedure to each Schedule K-1 (Form 8865) that it is required to provide to a partner of the foreign partnership. File tax extension 2011 (b) A Category 2 filer must include its share of the information described in section 4. File tax extension 2011 07(1) on the Schedule K-1 (Form 8865) that it is required to complete. File tax extension 2011 Category 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership. File tax extension 2011 (c) The Category 1 and Category 2 filers should not attach the statements described in sections 5. File tax extension 2011 07(3)(a)(ii) and 5. File tax extension 2011 07(3)(b) of this revenue procedure, respectively, to the Schedules K-1 that are filed with the Service. File tax extension 2011 However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records. File tax extension 2011 (4) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 5. File tax extension 2011 07(1) of this revenue procedure or a shareholder of an S corporation described in section 5. File tax extension 2011 07(1) of this revenue procedure must recognize items deferred under § 108(i), the partnership or S corporation must report these items on the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) and statements provided to the partner or shareholder pursuant to section 5. File tax extension 2011 07(1) and (2) of this revenue procedure. File tax extension 2011 Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4. File tax extension 2011 12(6) of this revenue procedure. File tax extension 2011 SECTION 6. File tax extension 2011 EFFECTIVE DATE This revenue procedure is effective for reacquisitions of applicable debt instruments in taxable years ending after December 31, 2008. File tax extension 2011 SECTION 7. File tax extension 2011 TRANSITION RULE . File tax extension 2011 01 Noncomplying Election. File tax extension 2011 Except as otherwise provided in this section 7. File tax extension 2011 01, the Service will treat a § 108(i) election as effective if a taxpayer files an election with the taxpayer’s federal income tax return filed on or before September 16, 2009, using any reasonable procedure to make the election. File tax extension 2011 However, an election that does not comply with section 4 of this revenue procedure will not be effective unless the taxpayer on or before November 16, 2009, files an amended return for the taxable year of the election and complies with the requirements of section 4 of this revenue procedure. File tax extension 2011 . File tax extension 2011 02 Modification of Election. File tax extension 2011 A taxpayer that files a § 108(i) election on or before September 16, 2009, may modify that election by filing an amended return on or before November 16, 2009 (for example, to modify the amount of COD income the taxpayer elects to defer). File tax extension 2011 To be effective, a modification of an election described in the preceding sentence must satisfy the requirements for an election described in section 4 of this revenue procedure. File tax extension 2011 . File tax extension 2011 03 Notations. File tax extension 2011 A taxpayer that files the amended return on paper must write “Section 108(i) Election” on the top of the first page. File tax extension 2011 A taxpayer that files the amended return electronically should indicate “Section 108(i) Election” on the return. File tax extension 2011 See Publication 4163, Modernized e-File (MeF) Information for Authorized IRS e-file Providers for Business Returns Tax Year 2008 for more details. File tax extension 2011 SECTION 8. File tax extension 2011 PAPERWORK REDUCTION ACT The collection of information contained in this revenue procedure has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U. File tax extension 2011 S. File tax extension 2011 C. File tax extension 2011 3507) under control number 1545-2147. File tax extension 2011 An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. File tax extension 2011 The collection of information in this revenue procedure is in sections 4, 5 and 7. File tax extension 2011 This information is required to determine the amount of income and deductions a taxpayer elects to defer and to track those amounts until the taxpayer has reported all deferred income and deductions on the taxpayer’s tax return. File tax extension 2011 This information will be used during examination to verify that a taxpayer has correctly deferred income and deductions. File tax extension 2011 The collection of information is required to obtain a benefit. File tax extension 2011 The likely respondents are C corporations, shareholders of S corporations, partners of partnerships, and other individuals engaged in a trade or business, that reacquire applicable debt instruments in 2009 or 2010. File tax extension 2011 The estimated total annual reporting burden is 300,000 hours. File tax extension 2011 The estimated annual burden per respondent varies from 1 to 8 hours, depending on individual circumstances, with an estimated average of 6 hours. File tax extension 2011 The estimated number of respondents is 50,000. File tax extension 2011 Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. File tax extension 2011 Generally, tax returns and return information are confidential, as required by § 6103. File tax extension 2011 DRAFTING INFORMATION The principal authors of this revenue procedure are Megan A. File tax extension 2011 Stoner of the Office of Associate Chief Counsel (Passthroughs & Special Industries) and Craig Wojay of the Office of Associate Chief Counsel (Income Tax & Accounting). File tax extension 2011 For further information regarding this revenue procedure, contact Megan A. File tax extension 2011 Stoner at (202) 622-3070 for questions involving partnerships and S corporations, William E. File tax extension 2011 Blanchard at (202) 622-3950 for questions involving OID, Ronald M. File tax extension 2011 Gootzeit at (202) 622-3860 for questions involving foreign entities, Robert Rhyne at (202) 622-7790 for questions involving earnings and profits and consolidated groups, and Craig Wojay at (202) 622-4920 for questions on § 108(i) generally (not toll-free calls). File tax extension 2011 Prev  Up  Next   Home   More Internal Revenue Bulletins
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File tax extension 2011 8. File tax extension 2011   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. File tax extension 2011 Reporting tax withheld. File tax extension 2011 Nominees. File tax extension 2011 Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. File tax extension 2011 Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. File tax extension 2011 Alternative minimum tax treatment. File tax extension 2011 How To Report Dividend IncomeInvestment interest deducted. File tax extension 2011 Reminder Foreign-source income. File tax extension 2011  If you are a U. File tax extension 2011 S. File tax extension 2011 citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. File tax extension 2011 S. File tax extension 2011 law. File tax extension 2011 This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. File tax extension 2011 Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. File tax extension 2011 This chapter also explains how to report dividend income on your tax return. File tax extension 2011 Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. File tax extension 2011 You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. File tax extension 2011 However, some amounts you receive that are called dividends are actually interest income. File tax extension 2011 (See Dividends that are actually interest under Taxable Interest in chapter 7. File tax extension 2011 ) Most distributions are paid in cash (or check). File tax extension 2011 However, distributions can consist of more stock, stock rights, other property, or services. File tax extension 2011 Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. File tax extension 2011 Tax on unearned income of certain children. File tax extension 2011   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. File tax extension 2011 If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. File tax extension 2011 If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. File tax extension 2011    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. File tax extension 2011 Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. File tax extension 2011   For more information about the tax on unearned income of children and the parents' election, see chapter 31. File tax extension 2011 Beneficiary of an estate or trust. File tax extension 2011    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. File tax extension 2011 You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. File tax extension 2011 , from the fiduciary. File tax extension 2011 Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. File tax extension 2011 Social security number (SSN) or individual taxpayer identification number (ITIN). File tax extension 2011    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. File tax extension 2011 This includes payers of dividends. File tax extension 2011 If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. File tax extension 2011 For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. File tax extension 2011 Backup withholding. File tax extension 2011   Your dividend income is generally not subject to regular withholding. File tax extension 2011 However, it may be subject to backup withholding to ensure that income tax is collected on the income. File tax extension 2011 Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. File tax extension 2011   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. File tax extension 2011 For more information, see Backup Withholding in chapter 4. File tax extension 2011 Stock certificate in two or more names. File tax extension 2011   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. File tax extension 2011 Form 1099-DIV. File tax extension 2011   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. File tax extension 2011 Keep this form with your records. File tax extension 2011 You do not have to attach it to your tax return. File tax extension 2011 Dividends not reported on Form 1099-DIV. File tax extension 2011   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. File tax extension 2011 For example, you may receive distributive shares of dividends from partnerships or S corporations. File tax extension 2011 These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. File tax extension 2011 , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. File tax extension 2011 Reporting tax withheld. File tax extension 2011   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. File tax extension 2011 Nominees. File tax extension 2011   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. File tax extension 2011 Form 1099-MISC. File tax extension 2011   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. File tax extension 2011 See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. File tax extension 2011 Incorrect amount shown on a Form 1099. File tax extension 2011   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. File tax extension 2011 The new Form 1099 you receive will be marked “Corrected. File tax extension 2011 ” Dividends on stock sold. File tax extension 2011   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. File tax extension 2011 Dividends received in January. File tax extension 2011   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. File tax extension 2011 You report the dividend in the year it was declared. File tax extension 2011 Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. File tax extension 2011 They are paid out of earnings and profits and are ordinary income to you. File tax extension 2011 This means they are not capital gains. File tax extension 2011 You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. File tax extension 2011 Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. File tax extension 2011 Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. File tax extension 2011 They should be shown in box 1b of the Form 1099-DIV you receive. File tax extension 2011 The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. File tax extension 2011 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. File tax extension 2011 6%. File tax extension 2011 20% on any amount that otherwise would be taxed at a 39. File tax extension 2011 6% rate. File tax extension 2011 To qualify for the maximum rate, all of the following requirements must be met. File tax extension 2011 The dividends must have been paid by a U. File tax extension 2011 S. File tax extension 2011 corporation or a qualified foreign corporation. File tax extension 2011 (See Qualified foreign corporation , later. File tax extension 2011 ) The dividends are not of the type listed later under Dividends that are not qualified dividends . File tax extension 2011 You meet the holding period (discussed next). File tax extension 2011 Holding period. File tax extension 2011   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. File tax extension 2011 The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. File tax extension 2011 Instead, the seller will get the dividend. File tax extension 2011   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. File tax extension 2011 See the examples later. File tax extension 2011 Exception for preferred stock. File tax extension 2011   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. File tax extension 2011 If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. File tax extension 2011 Example 1. File tax extension 2011 You bought 5,000 shares of XYZ Corp. File tax extension 2011 common stock on July 9, 2013. File tax extension 2011 XYZ Corp. File tax extension 2011 paid a cash dividend of 10 cents per share. File tax extension 2011 The ex-dividend date was July 16, 2013. File tax extension 2011 Your Form 1099-DIV from XYZ Corp. File tax extension 2011 shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). File tax extension 2011 However, you sold the 5,000 shares on August 12, 2013. File tax extension 2011 You held your shares of XYZ Corp. File tax extension 2011 for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). File tax extension 2011 The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. File tax extension 2011 You have no qualified dividends from XYZ Corp. File tax extension 2011 because you held the XYZ stock for less than 61 days. File tax extension 2011 Example 2. File tax extension 2011 Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. File tax extension 2011 You held the stock for 63 days (from July 16, 2013, through September 16, 2013). File tax extension 2011 The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). File tax extension 2011 Example 3. File tax extension 2011 You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. File tax extension 2011 ABC Mutual Fund paid a cash dividend of 10 cents a share. File tax extension 2011 The ex-dividend date was July 16, 2013. File tax extension 2011 The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. File tax extension 2011 Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. File tax extension 2011 However, you sold the 10,000 shares on August 12, 2013. File tax extension 2011 You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. File tax extension 2011 Holding period reduced where risk of loss is diminished. File tax extension 2011   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. File tax extension 2011 You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. File tax extension 2011 You were grantor (writer) of an option to buy substantially identical stock or securities. File tax extension 2011 Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. File tax extension 2011   For information about how to apply condition (3), see Regulations section 1. File tax extension 2011 246-5. File tax extension 2011 Qualified foreign corporation. File tax extension 2011   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. File tax extension 2011 The corporation is incorporated in a U. File tax extension 2011 S. File tax extension 2011 possession. File tax extension 2011 The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. File tax extension 2011 For a list of those treaties, see Table 8-1. File tax extension 2011 The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. File tax extension 2011 See Readily tradable stock , later. File tax extension 2011 Exception. File tax extension 2011   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. File tax extension 2011 Readily tradable stock. File tax extension 2011   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. File tax extension 2011 For a list of the exchanges that meet these requirements, see www. File tax extension 2011 sec. File tax extension 2011 gov/divisions/marketreg/mrexchanges. File tax extension 2011 shtml. File tax extension 2011 Dividends that are not qualified dividends. File tax extension 2011   The following dividends are not qualified dividends. File tax extension 2011 They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. File tax extension 2011 Capital gain distributions. File tax extension 2011 Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. File tax extension 2011 S. File tax extension 2011 building and loan associations, U. File tax extension 2011 S. File tax extension 2011 savings and loan associations, federal savings and loan associations, and similar financial institutions. File tax extension 2011 (Report these amounts as interest income. File tax extension 2011 ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. File tax extension 2011 Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. File tax extension 2011 Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. File tax extension 2011 Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. File tax extension 2011 Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. File tax extension 2011 Table 8-1. File tax extension 2011 Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. File tax extension 2011 Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. File tax extension 2011 This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. File tax extension 2011 Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. File tax extension 2011 If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. File tax extension 2011 If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. File tax extension 2011 You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. File tax extension 2011 But you may be able to deduct the service charge. File tax extension 2011 See chapter 28 for more information about deducting expenses of producing income. File tax extension 2011 In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. File tax extension 2011 If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. File tax extension 2011 When figuring this amount, use the fair market value of the stock on the dividend payment date. File tax extension 2011 Money Market Funds Report amounts you receive from money market funds as dividend income. File tax extension 2011 Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. File tax extension 2011 Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). File tax extension 2011 They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. File tax extension 2011 Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. File tax extension 2011 Undistributed capital gains of mutual funds and REITs. File tax extension 2011    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. File tax extension 2011 You must treat your share of these gains as distributions, even though you did not actually receive them. File tax extension 2011 However, they are not included on Form 1099-DIV. File tax extension 2011 Instead, they are reported to you in box 1a of Form 2439. File tax extension 2011   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. File tax extension 2011   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. File tax extension 2011 You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. File tax extension 2011 Attach Copy B of Form 2439 to your return, and keep Copy C for your records. File tax extension 2011 Basis adjustment. File tax extension 2011   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. File tax extension 2011 Additional information. File tax extension 2011   For more information on the treatment of distributions from mutual funds, see Publication 550. File tax extension 2011 Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. File tax extension 2011 You should receive a Form 1099-DIV or other statement showing the nondividend distribution. File tax extension 2011 On Form 1099-DIV, a nondividend distribution will be shown in box 3. File tax extension 2011 If you do not receive such a statement, you report the distribution as an ordinary dividend. File tax extension 2011 Basis adjustment. File tax extension 2011   A nondividend distribution reduces the basis of your stock. File tax extension 2011 It is not taxed until your basis in the stock is fully recovered. File tax extension 2011 This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. File tax extension 2011 If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. File tax extension 2011   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. File tax extension 2011 Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. File tax extension 2011 See Holding Period in chapter 14. File tax extension 2011 Example. File tax extension 2011 You bought stock in 2000 for $100. File tax extension 2011 In 2003, you received a nondividend distribution of $80. File tax extension 2011 You did not include this amount in your income, but you reduced the basis of your stock to $20. File tax extension 2011 You received a nondividend distribution of $30 in 2013. File tax extension 2011 The first $20 of this amount reduced your basis to zero. File tax extension 2011 You report the other $10 as a long-term capital gain for 2013. File tax extension 2011 You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. File tax extension 2011 Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. File tax extension 2011 These distributions are, at least in part, one form of a return of capital. File tax extension 2011 They may be paid in one or more installments. File tax extension 2011 You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. File tax extension 2011 For more information on liquidating distributions, see chapter 1 of Publication 550. File tax extension 2011 Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. File tax extension 2011 Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. File tax extension 2011 Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. File tax extension 2011 Taxable stock dividends and stock rights. File tax extension 2011   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. File tax extension 2011 You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. File tax extension 2011 The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. File tax extension 2011 The distribution is in convertible preferred stock and has the same result as in (2). File tax extension 2011 The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. File tax extension 2011 The distribution is on preferred stock. File tax extension 2011 (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. File tax extension 2011 )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. File tax extension 2011 If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. File tax extension 2011 Preferred stock redeemable at a premium. File tax extension 2011   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. File tax extension 2011 For more information, see chapter 1 of Publication 550. File tax extension 2011 Basis. File tax extension 2011   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. File tax extension 2011 If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. File tax extension 2011 Fractional shares. File tax extension 2011    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. File tax extension 2011 However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. File tax extension 2011 Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. File tax extension 2011 Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. File tax extension 2011 Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. File tax extension 2011    Report these transactions on Form 8949 with the correct box checked. File tax extension 2011   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. File tax extension 2011 Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). File tax extension 2011 Example. File tax extension 2011 You own one share of common stock that you bought on January 3, 2004, for $100. File tax extension 2011 The corporation declared a common stock dividend of 5% on June 29, 2013. File tax extension 2011 The fair market value of the stock at the time the stock dividend was declared was $200. File tax extension 2011 You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. File tax extension 2011 You figure your gain or loss as follows: Fair market value of old stock $200. File tax extension 2011 00 Fair market value of stock dividend (cash received) +10. File tax extension 2011 00 Fair market value of old stock and stock dividend $210. File tax extension 2011 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. File tax extension 2011 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. File tax extension 2011 76 Total $100. File tax extension 2011 00 Cash received $10. File tax extension 2011 00 Basis (cost) of stock dividend − 4. File tax extension 2011 76 Gain $5. File tax extension 2011 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. File tax extension 2011 Scrip dividends. File tax extension 2011   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. File tax extension 2011 The certificate is generally nontaxable when you receive it. File tax extension 2011 If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. File tax extension 2011   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. File tax extension 2011 You must include its fair market value in income on the date you receive it. File tax extension 2011 Other Distributions You may receive any of the following distributions during the year. File tax extension 2011 Exempt-interest dividends. File tax extension 2011   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. File tax extension 2011 Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. File tax extension 2011 Information reporting requirement. File tax extension 2011   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. File tax extension 2011 This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. File tax extension 2011 Alternative minimum tax treatment. File tax extension 2011   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. File tax extension 2011 See Alternative Minimum Tax (AMT) in chapter 30 for more information. File tax extension 2011 Dividends on insurance policies. File tax extension 2011    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. File tax extension 2011 However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. File tax extension 2011    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. File tax extension 2011 Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. File tax extension 2011 Report any taxable distributions on insurance policies on Form 1040, line 21. File tax extension 2011 Dividends on veterans' insurance. File tax extension 2011   Dividends you receive on veterans' insurance policies are not taxable. File tax extension 2011 In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. File tax extension 2011 Patronage dividends. File tax extension 2011   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. File tax extension 2011   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. File tax extension 2011 But you must reduce the basis (cost) of the items bought. File tax extension 2011 If the dividend is more than the adjusted basis of the assets, you must report the excess as income. File tax extension 2011   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. File tax extension 2011 Alaska Permanent Fund dividends. File tax extension 2011    Do not report these amounts as dividends. File tax extension 2011 Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. File tax extension 2011 How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. File tax extension 2011 Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. File tax extension 2011 Report qualified dividends on line 9b of Form 1040 or Form 1040A. File tax extension 2011 If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. File tax extension 2011 See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. File tax extension 2011 If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. File tax extension 2011 You cannot use Form 1040EZ if you receive any dividend income. File tax extension 2011 Form 1099-DIV. File tax extension 2011   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. File tax extension 2011 Even if you do not receive Form 1099-DIV, you must report all your dividend income. File tax extension 2011   See Form 1099-DIV for more information on how to report dividend income. File tax extension 2011 Form 1040A or 1040. File tax extension 2011    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. File tax extension 2011 If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. File tax extension 2011   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. File tax extension 2011 If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. File tax extension 2011 If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. File tax extension 2011   Enter on line 6 the total of the amounts listed on line 5. File tax extension 2011 Also enter this total on line 9a of Form 1040A or 1040. File tax extension 2011 Qualified dividends. File tax extension 2011   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. File tax extension 2011 The amount in box 1b is already included in box 1a. File tax extension 2011 Do not add the amount in box 1b to, or substract it from, the amount in box 1a. File tax extension 2011   Do not include any of the following on line 9b. File tax extension 2011 Qualified dividends you received as a nominee. File tax extension 2011 See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. File tax extension 2011 Dividends on stock for which you did not meet the holding period. File tax extension 2011 See Holding period , earlier under Qualified Dividends. File tax extension 2011 Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. File tax extension 2011 Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. File tax extension 2011 Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. File tax extension 2011   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. File tax extension 2011 Enter qualified dividends on line 2 of the worksheet. File tax extension 2011 Investment interest deducted. File tax extension 2011   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. File tax extension 2011 Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. File tax extension 2011 This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. File tax extension 2011 For more information about the limit on investment interest, see Investment expenses in chapter 23. File tax extension 2011 Expenses related to dividend income. File tax extension 2011   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). File tax extension 2011 See chapter 28 for general information about deducting expenses of producing income. File tax extension 2011 More information. File tax extension 2011    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. File tax extension 2011 Prev  Up  Next   Home   More Online Publications