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File Taxes Online 1040ez Free

File taxes online 1040ez free 1. File taxes online 1040ez free   2013 Filing Requirements Table of Contents General RequirementsSelf-employed persons. File taxes online 1040ez free Decedents If income tax was withheld from your pay, or if you qualify for the earned income credit, the additional child tax credit, the health coverage tax credit, or the American opportunity credit, you should file a return to get a refund even if you are not otherwise required to file a return. File taxes online 1040ez free Do not file a federal income tax return if you do not meet the filing requirements and are not due a refund. File taxes online 1040ez free If you need assistance to determine if you need to file a federal income tax return for 2013, go to IRS. File taxes online 1040ez free gov and use the Interactive Tax Assistant (ITA). File taxes online 1040ez free You can find the ITA by going to IRS. File taxes online 1040ez free gov and entering “interactive tax assistant” in the search box. File taxes online 1040ez free Open the ITA and click on Do I Need to File a Tax Return under Topics by Category. File taxes online 1040ez free General Requirements If you are a U. File taxes online 1040ez free S. File taxes online 1040ez free citizen or resident alien, you must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1-1. File taxes online 1040ez free For other filing requirements, see your tax return instructions or Publication 501, Exemptions, Standard Deduction, and Filing Information. File taxes online 1040ez free If you were a nonresident alien at any time during the year, the filing requirements that apply to you may be different from those that apply to U. File taxes online 1040ez free S. File taxes online 1040ez free citizens. File taxes online 1040ez free See Publication 519, U. File taxes online 1040ez free S. File taxes online 1040ez free Tax Guide for Aliens. File taxes online 1040ez free Table 1-1. File taxes online 1040ez free 2013 Filing Requirements Chart for Most Taxpayers Note. File taxes online 1040ez free You must file a return if your gross income was at least the amount shown in the last column. File taxes online 1040ez free IF your filing status is. File taxes online 1040ez free . File taxes online 1040ez free . File taxes online 1040ez free AND at the end of 2013 you were*. File taxes online 1040ez free . File taxes online 1040ez free . File taxes online 1040ez free THEN file a return if your gross income** was at least. File taxes online 1040ez free . File taxes online 1040ez free . File taxes online 1040ez free Single under 65 $10,000 65 or older $11,500 Head of household under 65 $12,850 65 or older $14,350 Married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 Married filing separately any age $3,900 Qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born before January 2, 1949, you are considered to be 65 or older at the end of 2013. File taxes online 1040ez free ** Gross income means all income you receive in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). File taxes online 1040ez free It also includes gains, but not losses, reported on Form 8949 or Schedule D. File taxes online 1040ez free Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. File taxes online 1040ez free But in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. File taxes online 1040ez free Do not include any social security benefits unless (a) you are married filing separately and you lived with your spouse at any time in 2013 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). File taxes online 1040ez free If (a) or (b) applies, see the Instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. File taxes online 1040ez free *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. File taxes online 1040ez free Gross income. File taxes online 1040ez free   Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. File taxes online 1040ez free If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. File taxes online 1040ez free The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. File taxes online 1040ez free A registered domestic partner in Nevada, Washington, or California generally must report half the combined community income of the individual and his or her domestic partner. File taxes online 1040ez free For more information about community property, see Publication 555, Community Property. File taxes online 1040ez free   For more information on what to include in gross income, see chapter 2. File taxes online 1040ez free Self-employed persons. File taxes online 1040ez free    If you are self-employed in a business that provides services (where the production, purchase, or sale of merchandise is not an income-producing factor), gross income from that business is the gross receipts. File taxes online 1040ez free   If you are self-employed in a business involving manufacturing, merchandising, or mining, gross income from that business is the total sales minus the cost of goods sold. File taxes online 1040ez free Then, to this figure, you add any income from investments and from incidental or outside operations or sources. File taxes online 1040ez free See Publication 334, Tax Guide for Small Business, for more information. File taxes online 1040ez free Dependents. File taxes online 1040ez free   If you could be claimed as a dependent by another taxpayer (that is, you meet the dependency tests in Publication 501), special filing requirements apply. File taxes online 1040ez free See Publication 501. File taxes online 1040ez free Decedents A personal representative of a decedent's estate can be an executor, administrator, or anyone who is in charge of the decedent's property. File taxes online 1040ez free If you are acting as the personal representative of a person who died during the year, you may have to file a final return for that decedent. File taxes online 1040ez free You also have other duties, such as notifying the IRS that you are acting as the personal representative. File taxes online 1040ez free Form 56, Notice Concerning Fiduciary Relationship, is available for this purpose. File taxes online 1040ez free When you file a return for the decedent, either as the personal representative or as the surviving spouse, you should write “DECEASED,” the decedent's name, and the date of death across the top of the tax return. File taxes online 1040ez free If no personal representative has been appointed by the due date for filing the return, the surviving spouse (on a joint return) should sign the return and write in the signature area “Filing as surviving spouse. File taxes online 1040ez free ” For more information, see Publication 559, Survivors, Executors, and Administrators. File taxes online 1040ez free Surviving spouse. File taxes online 1040ez free   If you are the surviving spouse, the year your spouse died is the last year for which you can file a joint return with that spouse. File taxes online 1040ez free After that, if you do not remarry, you must file as a qualifying widow(er) with dependent child, head of household, or single. File taxes online 1040ez free For more information about each of these filing statuses, see Publication 501. File taxes online 1040ez free   If you remarry before the end of the year in which your spouse died, a final joint return with the deceased spouse cannot be filed. File taxes online 1040ez free You can, however, file a joint return with your new spouse. File taxes online 1040ez free In that case, the filing status of your deceased spouse for his or her final return is married filing separately. File taxes online 1040ez free The level of income that requires you to file an income tax return changes when your filing status changes (see Table 1-1). File taxes online 1040ez free Even if you and your deceased spouse were not required to file a return for several years, you may have to file a return for tax years after the year of death. File taxes online 1040ez free For example, if your filing status changes from filing jointly in 2012 to single in 2013 because of the death of your spouse, and your gross income is $17,500 for both years, you must file a return for 2013 even though you did not have to file a return for 2012. File taxes online 1040ez free Prev  Up  Next   Home   More Online Publications
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The File Taxes Online 1040ez Free

File taxes online 1040ez free 2. File taxes online 1040ez free   Ordinary or Capital Gain or Loss Table of Contents IntroductionSection 1231 transactions. File taxes online 1040ez free Topics - This chapter discusses: Useful Items - You may want to see: Capital Assets Noncapital AssetsCommodities derivative dealer. File taxes online 1040ez free Sales and Exchanges Between Related PersonsGain Is Ordinary Income Nondeductible Loss Other DispositionsSale of a Business Dispositions of Intangible Property Subdivision of Land Timber Precious Metals and Stones, Stamps, and Coins Coal and Iron Ore Conversion Transactions Introduction You must classify your gains and losses as either ordinary or capital (and your capital gains or losses as either short-term or long-term). File taxes online 1040ez free You must do this to figure your net capital gain or loss. File taxes online 1040ez free For individuals, a net capital gain may be taxed at a different tax rate than ordinary income. File taxes online 1040ez free See Capital Gains Tax Rates in chapter 4. File taxes online 1040ez free Your deduction for a net capital loss may be limited. File taxes online 1040ez free See Treatment of Capital Losses in chapter 4. File taxes online 1040ez free Capital gain or loss. File taxes online 1040ez free   Generally, you will have a capital gain or loss if you sell or exchange a capital asset. File taxes online 1040ez free You also may have a capital gain if your section 1231 transactions result in a net gain. File taxes online 1040ez free Section 1231 transactions. File taxes online 1040ez free   Section 1231 transactions are sales and exchanges of property held longer than 1 year and either used in a trade or business or held for the production of rents or royalties. File taxes online 1040ez free They also include certain involuntary conversions of business or investment property, including capital assets. File taxes online 1040ez free See Section 1231 Gains and Losses in chapter 3 for more information. File taxes online 1040ez free Topics - This chapter discusses: Capital assets Noncapital assets Sales and exchanges between  related persons Other dispositions Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 4797 Sales of Business Property 8594 Asset Acquisition Statement Under Section 1060 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. File taxes online 1040ez free Capital Assets Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. File taxes online 1040ez free For exceptions, see Noncapital Assets, later. File taxes online 1040ez free The following items are examples of capital assets. File taxes online 1040ez free Stocks and bonds. File taxes online 1040ez free A home owned and occupied by you and your family. File taxes online 1040ez free Timber grown on your home property or investment property, even if you make casual sales of the timber. File taxes online 1040ez free Household furnishings. File taxes online 1040ez free A car used for pleasure or commuting. File taxes online 1040ez free Coin or stamp collections. File taxes online 1040ez free Gems and jewelry. File taxes online 1040ez free Gold, silver, and other metals. File taxes online 1040ez free Personal-use property. File taxes online 1040ez free   Generally, property held for personal use is a capital asset. File taxes online 1040ez free Gain from a sale or exchange of that property is a capital gain. File taxes online 1040ez free Loss from the sale or exchange of that property is not deductible. File taxes online 1040ez free You can deduct a loss relating to personal-use property only if it results from a casualty or theft. File taxes online 1040ez free Investment property. File taxes online 1040ez free   Investment property (such as stocks and bonds) is a capital asset, and a gain or loss from its sale or exchange is a capital gain or loss. File taxes online 1040ez free This treatment does not apply to property used to produce rental income. File taxes online 1040ez free See Business assets, later, under Noncapital Assets. File taxes online 1040ez free Release of restriction on land. File taxes online 1040ez free   Amounts you receive for the release of a restrictive covenant in a deed to land are treated as proceeds from the sale of a capital asset. File taxes online 1040ez free Noncapital Assets A noncapital asset is property that is not a capital asset. File taxes online 1040ez free The following kinds of property are not capital assets. File taxes online 1040ez free Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business. File taxes online 1040ez free Inventories are discussed in Publication 538, Accounting Periods and Methods. File taxes online 1040ez free But, see the Tip below. File taxes online 1040ez free Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of any properties described in (1), above. File taxes online 1040ez free Depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later), even if the property is fully depreciated (or amortized). File taxes online 1040ez free Sales of this type of property are discussed in chapter 3. File taxes online 1040ez free Real property used in your trade or business or as rental property, even if the property is fully depreciated. File taxes online 1040ez free A copyright; a literary, musical, or artistic composition; a letter; a memorandum; or similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs): Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Received from a person who created the property or for whom the property was prepared under circumstances (for example, by gift) entitling you to the basis of the person who created the property, or for whom it was prepared or produced. File taxes online 1040ez free But, see the Tip below. File taxes online 1040ez free U. File taxes online 1040ez free S. File taxes online 1040ez free Government publications you got from the government for free or for less than the normal sales price or that you acquired under circumstances entitling you to the basis of someone who got the publications for free or for less than the normal sales price. File taxes online 1040ez free Any commodities derivative financial instrument (discussed later) held by a commodities derivatives dealer unless it meets both of the following requirements. File taxes online 1040ez free It is established to the satisfaction of the IRS that the instrument has no connection to the activities of the dealer as a dealer. File taxes online 1040ez free The instrument is clearly identified in the dealer's records as meeting (a) by the end of the day on which it was acquired, originated, or entered into. File taxes online 1040ez free Any hedging transaction (defined later) that is clearly identified as a hedging transaction by the end of the day on which it was acquired, originated, or entered into. File taxes online 1040ez free Supplies of a type you regularly use or consume in the ordinary course of your trade or business. File taxes online 1040ez free You can elect to treat as capital assets certain self-created musical compositions or copyrights you sold or exchanged. File taxes online 1040ez free See chapter 4 of Publication 550 for details. File taxes online 1040ez free Property held mainly for sale to customers. File taxes online 1040ez free   Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business are not capital assets. File taxes online 1040ez free Inventories are discussed in Publication 538. File taxes online 1040ez free Business assets. File taxes online 1040ez free   Real property and depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later under Dispositions of Intangible Property) are not capital assets. File taxes online 1040ez free The sale or disposition of business property is discussed in chapter 3. File taxes online 1040ez free Letters and memoranda. File taxes online 1040ez free   Letters, memoranda, and similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs) are not treated as capital assets (as discussed earlier) if your personal efforts created them or if they were prepared or produced for you. File taxes online 1040ez free Nor is this property a capital asset if your basis in it is determined by reference to the person who created it or the person for whom it was prepared. File taxes online 1040ez free For this purpose, letters and memoranda addressed to you are considered prepared for you. File taxes online 1040ez free If letters or memoranda are prepared by persons under your administrative control, they are considered prepared for you whether or not you review them. File taxes online 1040ez free Commodities derivative financial instrument. File taxes online 1040ez free   A commodities derivative financial instrument is a commodities contract or other financial instrument for commodities (other than a share of corporate stock, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract) the value or settlement price of which is calculated or determined by reference to a specified index (as defined in section 1221(b) of the Internal Revenue Code). File taxes online 1040ez free Commodities derivative dealer. File taxes online 1040ez free   A commodities derivative dealer is a person who regularly offers to enter into, assume, offset, assign, or terminate positions in commodities derivative financial instruments with customers in the ordinary course of a trade or business. File taxes online 1040ez free Hedging transaction. File taxes online 1040ez free   A hedging transaction is any transaction you enter into in the normal course of your trade or business primarily to manage any of the following. File taxes online 1040ez free Risk of price changes or currency fluctuations involving ordinary property you hold or will hold. File taxes online 1040ez free Risk of interest rate or price changes or currency fluctuations for borrowings you make or will make, or ordinary obligations you incur or will incur. File taxes online 1040ez free Sales and Exchanges Between Related Persons This section discusses the rules that may apply to the sale or exchange of property between related persons. File taxes online 1040ez free If these rules apply, gains may be treated as ordinary income and losses may not be deductible. File taxes online 1040ez free See Transfers to Spouse in chapter 1 for rules that apply to spouses. File taxes online 1040ez free Gain Is Ordinary Income If a gain is recognized on the sale or exchange of property to a related person, the gain may be ordinary income even if the property is a capital asset. File taxes online 1040ez free It is ordinary income if the sale or exchange is a depreciable property transaction or a controlled partnership transaction. File taxes online 1040ez free Depreciable property transaction. File taxes online 1040ez free   Gain on the sale or exchange of property, including a leasehold or a patent application, that is depreciable property in the hands of the person who receives it is ordinary income if the transaction is either directly or indirectly between any of the following pairs of entities. File taxes online 1040ez free A person and the person's controlled entity or entities. File taxes online 1040ez free A taxpayer and any trust in which the taxpayer (or his or her spouse) is a beneficiary unless the beneficiary's interest in the trust is a remote contingent interest; that is, the value of the interest computed actuarially is 5% or less of the value of the trust property. File taxes online 1040ez free An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest (a bequest for a sum of money). File taxes online 1040ez free An employer (or any person related to the employer under rules (1), (2), or (3)) and a welfare benefit fund (within the meaning of section 419(e) of the Internal Revenue Code) that is controlled directly or indirectly by the employer (or any person related to the employer). File taxes online 1040ez free Controlled entity. File taxes online 1040ez free   A person's controlled entity is either of the following. File taxes online 1040ez free A corporation in which more than 50% of the value of all outstanding stock, or a partnership in which more than 50% of the capital interest or profits interest, is directly or indirectly owned by or for that person. File taxes online 1040ez free An entity whose relationship with that person is one of the following. File taxes online 1040ez free A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest or profits interest in the partnership. File taxes online 1040ez free Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 50%” is substituted for “at least 80%” in that definition. File taxes online 1040ez free Two S corporations, if the same persons own more than 50% in value of the outstanding stock of each corporation. File taxes online 1040ez free Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. File taxes online 1040ez free Controlled partnership transaction. File taxes online 1040ez free   A gain recognized in a controlled partnership transaction may be ordinary income. File taxes online 1040ez free The gain is ordinary income if it results from the sale or exchange of property that, in the hands of the party who receives it, is a noncapital asset such as trade accounts receivable, inventory, stock in trade, or depreciable or real property used in a trade or business. File taxes online 1040ez free   A controlled partnership transaction is a transaction directly or indirectly between either of the following pairs of entities. File taxes online 1040ez free A partnership and a person who directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. File taxes online 1040ez free Two partnerships, if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. File taxes online 1040ez free Determining ownership. File taxes online 1040ez free   In the transactions under Depreciable property transaction and Controlled partnership transaction, earlier, use the following rules to determine the ownership of stock or a partnership interest. File taxes online 1040ez free Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. File taxes online 1040ez free (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. File taxes online 1040ez free ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. File taxes online 1040ez free Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. File taxes online 1040ez free For purposes of applying (1) or (2), above, stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. File taxes online 1040ez free But stock or a partnership interest constructively owned by an individual under (2) is not treated as owned by the individual for reapplying (2) to make another person the constructive owner of that stock or partnership interest. File taxes online 1040ez free Nondeductible Loss A loss on the sale or exchange of property between related persons is not deductible. File taxes online 1040ez free This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. File taxes online 1040ez free For the list of related persons, see Related persons next. File taxes online 1040ez free If a sale or exchange is between any of these related persons and involves the lump-sum sale of a number of blocks of stock or pieces of property, the gain or loss must be figured separately for each block of stock or piece of property. File taxes online 1040ez free The gain on each item is taxable. File taxes online 1040ez free The loss on any item is nondeductible. File taxes online 1040ez free Gains from the sales of any of these items may not be offset by losses on the sales of any of the other items. File taxes online 1040ez free Related persons. File taxes online 1040ez free   The following is a list of related persons. File taxes online 1040ez free Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. File taxes online 1040ez free ), and lineal descendants (children, grandchildren, etc. File taxes online 1040ez free ). File taxes online 1040ez free An individual and a corporation if the individual directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. File taxes online 1040ez free Two corporations that are members of the same controlled group as defined in section 267(f) of the Internal Revenue Code. File taxes online 1040ez free A trust fiduciary and a corporation if the trust or the grantor of the trust directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. File taxes online 1040ez free A grantor and fiduciary, and the fiduciary and beneficiary, of any trust. File taxes online 1040ez free Fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. File taxes online 1040ez free A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization, or a member of that person's family. File taxes online 1040ez free A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest or profits interest in the partnership. File taxes online 1040ez free Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. File taxes online 1040ez free Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. File taxes online 1040ez free An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest. File taxes online 1040ez free Two partnerships if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. File taxes online 1040ez free A person and a partnership if the person directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. File taxes online 1040ez free Partnership interests. File taxes online 1040ez free   The nondeductible loss rule does not apply to a sale or exchange of an interest in the partnership between the related persons described in (12) or (13) above. File taxes online 1040ez free Controlled groups. File taxes online 1040ez free   Losses on transactions between members of the same controlled group described in (3) earlier are deferred rather than denied. File taxes online 1040ez free   For more information, see section 267(f) of the Internal Revenue Code. File taxes online 1040ez free Ownership of stock or partnership interests. File taxes online 1040ez free   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation or an interest in a partnership for a loss on a sale or exchange, the following rules apply. File taxes online 1040ez free Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. File taxes online 1040ez free (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. File taxes online 1040ez free ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. File taxes online 1040ez free Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. File taxes online 1040ez free An individual owning (other than by applying (2)) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. File taxes online 1040ez free For purposes of applying (1), (2), or (3), stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. File taxes online 1040ez free But stock or a partnership interest constructively owned by an individual under (2) or (3) is not treated as owned by the individual for reapplying either (2) or (3) to make another person the constructive owner of that stock or partnership interest. File taxes online 1040ez free Indirect transactions. File taxes online 1040ez free   You cannot deduct your loss on the sale of stock through your broker if under a prearranged plan a related person or entity buys the same stock you had owned. File taxes online 1040ez free This does not apply to a cross-trade between related parties through an exchange that is purely coincidental and is not prearranged. File taxes online 1040ez free Property received from a related person. File taxes online 1040ez free   If, in a purchase or exchange, you received property from a related person who had a loss that was not allowable and you later sell or exchange the property at a gain, you recognize the gain only to the extent it is more than the loss previously disallowed to the related person. File taxes online 1040ez free This rule applies only to the original transferee. File taxes online 1040ez free Example 1. File taxes online 1040ez free Your brother sold stock to you for $7,600. File taxes online 1040ez free His cost basis was $10,000. File taxes online 1040ez free His loss of $2,400 was not deductible. File taxes online 1040ez free You later sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900 ($10,500 − $7,600). File taxes online 1040ez free Your recognized gain is only $500, the gain that is more than the $2,400 loss not allowed to your brother. File taxes online 1040ez free Example 2. File taxes online 1040ez free Assume the same facts as in Example 1, except that you sell the stock for $6,900 instead of $10,500. File taxes online 1040ez free Your recognized loss is only $700 ($7,600 − $6,900). File taxes online 1040ez free You cannot deduct the loss not allowed to your brother. File taxes online 1040ez free Other Dispositions This section discusses rules for determining the treatment of gain or loss from various dispositions of property. File taxes online 1040ez free Sale of a Business The sale of a business usually is not a sale of one asset. File taxes online 1040ez free Instead, all the assets of the business are sold. File taxes online 1040ez free Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. File taxes online 1040ez free A business usually has many assets. File taxes online 1040ez free When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade. File taxes online 1040ez free The gain or loss on each asset is figured separately. File taxes online 1040ez free The sale of capital assets results in capital gain or loss. File taxes online 1040ez free The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction (discussed in chapter 3). File taxes online 1040ez free The sale of inventory results in ordinary income or loss. File taxes online 1040ez free Partnership interests. File taxes online 1040ez free   An interest in a partnership or joint venture is treated as a capital asset when sold. File taxes online 1040ez free The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary gain or loss. File taxes online 1040ez free For more information, see Disposition of Partner's Interest in Publication 541. File taxes online 1040ez free Corporation interests. File taxes online 1040ez free   Your interest in a corporation is represented by stock certificates. File taxes online 1040ez free When you sell these certificates, you usually realize capital gain or loss. File taxes online 1040ez free For information on the sale of stock, see chapter 4 in Publication 550. File taxes online 1040ez free Corporate liquidations. File taxes online 1040ez free   Corporate liquidations of property generally are treated as a sale or exchange. File taxes online 1040ez free Gain or loss generally is recognized by the corporation on a liquidating sale of its assets. File taxes online 1040ez free Gain or loss generally is recognized also on a liquidating distribution of assets as if the corporation sold the assets to the distributee at fair market value. File taxes online 1040ez free   In certain cases in which the distributee is a corporation in control of the distributing corporation, the distribution may not be taxable. File taxes online 1040ez free For more information, see section 332 of the Internal Revenue Code and the related regulations. File taxes online 1040ez free Allocation of consideration paid for a business. File taxes online 1040ez free   The sale of a trade or business for a lump sum is considered a sale of each individual asset rather than of a single asset. File taxes online 1040ez free Except for assets exchanged under any nontaxable exchange rules, both the buyer and seller of a business must use the residual method (explained later) to allocate the consideration to each business asset transferred. File taxes online 1040ez free This method determines gain or loss from the transfer of each asset and how much of the consideration is for goodwill and certain other intangible property. File taxes online 1040ez free It also determines the buyer's basis in the business assets. File taxes online 1040ez free Consideration. File taxes online 1040ez free   The buyer's consideration is the cost of the assets acquired. File taxes online 1040ez free The seller's consideration is the amount realized (money plus the fair market value of property received) from the sale of assets. File taxes online 1040ez free Residual method. File taxes online 1040ez free   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. File taxes online 1040ez free This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b) of the Internal Revenue Code. File taxes online 1040ez free Section 743(b) applies if a partnership has an election in effect under section 754 of the Internal Revenue Code. File taxes online 1040ez free   A group of assets constitutes a trade or business if either of the following applies. File taxes online 1040ez free Goodwill or going concern value could, under any circumstances, attach to them. File taxes online 1040ez free The use of the assets would constitute an active trade or business under section 355 of the Internal Revenue Code. File taxes online 1040ez free   The residual method provides for the consideration to be reduced first by the amount of Class I assets (defined below). File taxes online 1040ez free The consideration remaining after this reduction must be allocated among the various business assets in a certain order. File taxes online 1040ez free See Classes of assets next for the complete order. File taxes online 1040ez free Classes of assets. File taxes online 1040ez free   The following definitions are the classifications for deemed or actual asset acquisitions. File taxes online 1040ez free Allocate the consideration among the assets in the following order. File taxes online 1040ez free The amount allocated to an asset, other than a Class VII asset, cannot exceed its fair market value on the purchase date. File taxes online 1040ez free The amount you can allocate to an asset also is subject to any applicable limits under the Internal Revenue Code or general principles of tax law. File taxes online 1040ez free Class I assets are cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). File taxes online 1040ez free Class II assets are certificates of deposit, U. File taxes online 1040ez free S. File taxes online 1040ez free Government securities, foreign currency, and actively traded personal property, including stock and securities. File taxes online 1040ez free Class III assets are accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. File taxes online 1040ez free However, see section 1. File taxes online 1040ez free 338-6(b)(2)(iii) of the regulations for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. File taxes online 1040ez free Class IV assets are property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. File taxes online 1040ez free Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets. File taxes online 1040ez free    Note. File taxes online 1040ez free Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business are generally Class V assets. File taxes online 1040ez free Class VI assets are section 197 intangibles (other than goodwill and going concern value). File taxes online 1040ez free Class VII assets are goodwill and going concern value (whether the goodwill or going concern value qualifies as a section 197 intangible). File taxes online 1040ez free   If an asset described in one of the classifications described above can be included in more than one class, include it in the lower numbered class. File taxes online 1040ez free For example, if an asset is described in both Class II and Class IV, choose Class II. File taxes online 1040ez free Example. File taxes online 1040ez free The total paid in the sale of the assets of Company SKB is $21,000. File taxes online 1040ez free No cash or deposit accounts or similar accounts were sold. File taxes online 1040ez free The company's U. File taxes online 1040ez free S. File taxes online 1040ez free Government securities sold had a fair market value of $3,200. File taxes online 1040ez free The only other asset transferred (other than goodwill and going concern value) was inventory with a fair market value of $15,000. File taxes online 1040ez free Of the $21,000 paid for the assets of Company SKB, $3,200 is allocated to U. File taxes online 1040ez free S. File taxes online 1040ez free Government securities, $15,000 to inventory assets, and the remaining $2,800 to goodwill and going concern value. File taxes online 1040ez free Agreement. File taxes online 1040ez free   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. File taxes online 1040ez free This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. File taxes online 1040ez free Reporting requirement. File taxes online 1040ez free   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. File taxes online 1040ez free Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. File taxes online 1040ez free Generally, the buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. File taxes online 1040ez free See the Instructions for Form 8594. File taxes online 1040ez free Dispositions of Intangible Property Intangible property is any personal property that has value but cannot be seen or touched. File taxes online 1040ez free It includes such items as patents, copyrights, and the goodwill value of a business. File taxes online 1040ez free Gain or loss on the sale or exchange of amortizable or depreciable intangible property held longer than 1 year (other than an amount recaptured as ordinary income) is a section 1231 gain or loss. File taxes online 1040ez free The treatment of section 1231 gain or loss and the recapture of amortization and depreciation as ordinary income are explained in chapter 3. File taxes online 1040ez free See chapter 8 of Publication 535, Business Expenses, for information on amortizable intangible property and chapter 1 of Publication 946, How To Depreciate Property, for information on intangible property that can and cannot be depreciated. File taxes online 1040ez free Gain or loss on dispositions of other intangible property is ordinary or capital depending on whether the property is a capital asset or a noncapital asset. File taxes online 1040ez free The following discussions explain special rules that apply to certain dispositions of intangible property. File taxes online 1040ez free Section 197 Intangibles Section 197 intangibles are certain intangible assets acquired after August 10, 1993 (after July 25, 1991, if chosen), and held in connection with the conduct of a trade or business or an activity entered into for profit whose costs are amortized over 15 years. File taxes online 1040ez free They include the following assets. File taxes online 1040ez free Goodwill. File taxes online 1040ez free Going concern value. File taxes online 1040ez free Workforce in place. File taxes online 1040ez free Business books and records, operating systems, and other information bases. File taxes online 1040ez free Patents, copyrights, formulas, processes, designs, patterns, know how, formats, and similar items. File taxes online 1040ez free Customer-based intangibles. File taxes online 1040ez free Supplier-based intangibles. File taxes online 1040ez free Licenses, permits, and other rights granted by a governmental unit. File taxes online 1040ez free Covenants not to compete entered into in connection with the acquisition of a business. File taxes online 1040ez free Franchises, trademarks, and trade names. File taxes online 1040ez free See chapter 8 of Publication 535 for a description of each intangible. File taxes online 1040ez free Dispositions. File taxes online 1040ez free   You cannot deduct a loss from the disposition or worthlessness of a section 197 intangible you acquired in the same transaction (or series of related transactions) as another section 197 intangible you still hold. File taxes online 1040ez free Instead, you must increase the adjusted basis of your retained section 197 intangible by the nondeductible loss. File taxes online 1040ez free If you retain more than one section 197 intangible, increase each intangible's adjusted basis. File taxes online 1040ez free Figure the increase by multiplying the nondeductible loss by a fraction, the numerator (top number) of which is the retained intangible's adjusted basis on the date of the loss and the denominator (bottom number) of which is the total adjusted basis of all retained intangibles on the date of the loss. File taxes online 1040ez free   In applying this rule, members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity. File taxes online 1040ez free For example, a corporation cannot deduct a loss on the sale of a section 197 intangible if, after the sale, a member of the same controlled group retains other section 197 intangibles acquired in the same transaction as the intangible sold. File taxes online 1040ez free Covenant not to compete. File taxes online 1040ez free   A covenant not to compete (or similar arrangement) that is a section 197 intangible cannot be treated as disposed of or worthless before you have disposed of your entire interest in the trade or business for which the covenant was entered into. File taxes online 1040ez free Members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity in determining whether a member has disposed of its entire interest in a trade or business. File taxes online 1040ez free Anti-churning rules. File taxes online 1040ez free   Anti-churning rules prevent a taxpayer from converting section 197 intangibles that do not qualify for amortization into property that would qualify for amortization. File taxes online 1040ez free However, these rules do not apply to part of the basis of property acquired by certain related persons if the transferor elects to do both the following. File taxes online 1040ez free Recognize gain on the transfer of the property. File taxes online 1040ez free Pay income tax on the gain at the highest tax rate. File taxes online 1040ez free   If the transferor is a partnership or S corporation, the partnership or S corporation (not the partners or shareholders) can make the election. File taxes online 1040ez free But each partner or shareholder must pay the tax on his or her share of gain. File taxes online 1040ez free   To make the election, you, as the transferor, must attach a statement containing certain information to your income tax return for the year of the transfer. File taxes online 1040ez free You must file the tax return by the due date (including extensions). File taxes online 1040ez free You must also notify the transferee of the election in writing by the due date of the return. File taxes online 1040ez free   If you timely filed your return without making the election, you can make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). File taxes online 1040ez free Attach the statement to the amended return and write “Filed pursuant to section 301. File taxes online 1040ez free 9100-2” at the top of the statement. File taxes online 1040ez free File the amended return at the same address the original return was filed. File taxes online 1040ez free For more information about making the election, see Regulations section 1. File taxes online 1040ez free 197-2(h)(9). File taxes online 1040ez free For information about reporting the tax on your income tax return, see the Instructions for Form 4797. File taxes online 1040ez free Patents The transfer of a patent by an individual is treated as a sale or exchange of a capital asset held longer than 1 year. File taxes online 1040ez free This applies even if the payments for the patent are made periodically during the transferee's use or are contingent on the productivity, use, or disposition of the patent. File taxes online 1040ez free For information on the treatment of gain or loss on the transfer of capital assets, see chapter 4. File taxes online 1040ez free This treatment applies to your transfer of a patent if you meet all the following conditions. File taxes online 1040ez free You are the holder of the patent. File taxes online 1040ez free You transfer the patent other than by gift, inheritance, or devise. File taxes online 1040ez free You transfer all substantial rights to the patent or an undivided interest in all such rights. File taxes online 1040ez free You do not transfer the patent to a related person. File taxes online 1040ez free Holder. File taxes online 1040ez free   You are the holder of a patent if you are either of the following. File taxes online 1040ez free The individual whose effort created the patent property and who qualifies as the original and first inventor. File taxes online 1040ez free The individual who bought an interest in the patent from the inventor before the invention was tested and operated successfully under operating conditions and who is neither related to, nor the employer of, the inventor. File taxes online 1040ez free All substantial rights. File taxes online 1040ez free   All substantial rights to patent property are all rights that have value when they are transferred. File taxes online 1040ez free A security interest (such as a lien), or a reservation calling for forfeiture for nonperformance, is not treated as a substantial right for these rules and may be kept by you as the holder of the patent. File taxes online 1040ez free   All substantial rights to a patent are not transferred if any of the following apply to the transfer. File taxes online 1040ez free The rights are limited geographically within a country. File taxes online 1040ez free The rights are limited to a period less than the remaining life of the patent. File taxes online 1040ez free The rights are limited to fields of use within trades or industries and are less than all the rights that exist and have value at the time of the transfer. File taxes online 1040ez free The rights are less than all the claims or inventions covered by the patent that exist and have value at the time of the transfer. File taxes online 1040ez free Related persons. File taxes online 1040ez free   This tax treatment does not apply if the transfer is directly or indirectly between you and a related person as defined earlier in the list under Nondeductible Loss, with the following changes. File taxes online 1040ez free Members of your family include your spouse, ancestors, and lineal descendants, but not your brothers, sisters, half-brothers, or half-sisters. File taxes online 1040ez free Substitute “25% or more” ownership for “more than 50%. File taxes online 1040ez free ”   If you fit within the definition of a related person independent of family status, the brother-sister exception in (1), earlier, does not apply. File taxes online 1040ez free For example, a transfer between a brother and a sister as beneficiary and fiduciary of the same trust is a transfer between related persons. File taxes online 1040ez free The brother-sister exception does not apply because the trust relationship is independent of family status. File taxes online 1040ez free Franchise, Trademark, or Trade Name If you transfer or renew a franchise, trademark, or trade name for a price contingent on its productivity, use, or disposition, the amount you receive generally is treated as an amount realized from the sale of a noncapital asset. File taxes online 1040ez free A franchise includes an agreement that gives one of the parties the right to distribute, sell, or provide goods, services, or facilities within a specified area. File taxes online 1040ez free Significant power, right, or continuing interest. File taxes online 1040ez free   If you keep any significant power, right, or continuing interest in the subject matter of a franchise, trademark, or trade name that you transfer or renew, the amount you receive is ordinary royalty income rather than an amount realized from a sale or exchange. File taxes online 1040ez free   A significant power, right, or continuing interest in a franchise, trademark, or trade name includes, but is not limited to, the following rights in the transferred interest. File taxes online 1040ez free A right to disapprove any assignment of the interest, or any part of it. File taxes online 1040ez free A right to end the agreement at will. File taxes online 1040ez free A right to set standards of quality for products used or sold, or for services provided, and for the equipment and facilities used to promote such products or services. File taxes online 1040ez free A right to make the recipient sell or advertise only your products or services. File taxes online 1040ez free A right to make the recipient buy most supplies and equipment from you. File taxes online 1040ez free A right to receive payments based on the productivity, use, or disposition of the transferred item of interest if those payments are a substantial part of the transfer agreement. File taxes online 1040ez free Subdivision of Land If you own a tract of land and, to sell or exchange it, you subdivide it into individual lots or parcels, the gain normally is ordinary income. File taxes online 1040ez free However, you may receive capital gain treatment on at least part of the proceeds provided you meet certain requirements. File taxes online 1040ez free See section 1237 of the Internal Revenue Code. File taxes online 1040ez free Timber Standing timber held as investment property is a capital asset. File taxes online 1040ez free Gain or loss from its sale is reported as a capital gain or loss on Form 8949, and Schedule D (Form 1040), as applicable. File taxes online 1040ez free If you held the timber primarily for sale to customers, it is not a capital asset. File taxes online 1040ez free Gain or loss on its sale is ordinary business income or loss. File taxes online 1040ez free It is reported in the gross receipts or sales and cost of goods sold items of your return. File taxes online 1040ez free Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. File taxes online 1040ez free These sales constitute a very minor part of their farm businesses. File taxes online 1040ez free In these cases, amounts realized from such sales, and the expenses of cutting, hauling, etc. File taxes online 1040ez free , are ordinary farm income and expenses reported on Schedule F (Form 1040), Profit or Loss From Farming. File taxes online 1040ez free Different rules apply if you owned the timber longer than 1 year and elect to either: Treat timber cutting as a sale or exchange, or Enter into a cutting contract. File taxes online 1040ez free Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. File taxes online 1040ez free This is true whether the timber is cut under contract or whether you cut it yourself. File taxes online 1040ez free Under the rules discussed below, disposition of the timber is treated as a section 1231 transaction. File taxes online 1040ez free See chapter 3. File taxes online 1040ez free Gain or loss is reported on Form 4797. File taxes online 1040ez free Christmas trees. File taxes online 1040ez free   Evergreen trees, such as Christmas trees, that are more than 6 years old when severed from their roots and sold for ornamental purposes are included in the term timber. File taxes online 1040ez free They qualify for both rules discussed below. File taxes online 1040ez free Election to treat cutting as a sale or exchange. File taxes online 1040ez free   Under the general rule, the cutting of timber results in no gain or loss. File taxes online 1040ez free It is not until a sale or exchange occurs that gain or loss is realized. File taxes online 1040ez free But if you owned or had a contractual right to cut timber, you can elect to treat the cutting of timber as a section 1231 transaction in the year the timber is cut. File taxes online 1040ez free Even though the cut timber is not actually sold or exchanged, you report your gain or loss on the cutting for the year the timber is cut. File taxes online 1040ez free Any later sale results in ordinary business income or loss. File taxes online 1040ez free See Example, later. File taxes online 1040ez free   To elect this treatment, you must: Own or hold a contractual right to cut the timber for a period of more than 1 year before it is cut, and Cut the timber for sale or for use in your trade or business. File taxes online 1040ez free Making the election. File taxes online 1040ez free   You make the election on your return for the year the cutting takes place by including in income the gain or loss on the cutting and including a computation of the gain or loss. File taxes online 1040ez free You do not have to make the election in the first year you cut timber. File taxes online 1040ez free You can make it in any year to which the election would apply. File taxes online 1040ez free If the timber is partnership property, the election is made on the partnership return. File taxes online 1040ez free This election cannot be made on an amended return. File taxes online 1040ez free   Once you have made the election, it remains in effect for all later years unless you cancel it. File taxes online 1040ez free   If you previously elected to treat the cutting of timber as a sale or exchange, you may revoke this election without the consent of the IRS. File taxes online 1040ez free The prior election (and revocation) is disregarded for purposes of making a subsequent election. File taxes online 1040ez free See Form T (Timber), Forest Activities Schedule, for more information. File taxes online 1040ez free Gain or loss. File taxes online 1040ez free   Your gain or loss on the cutting of standing timber is the difference between its adjusted basis for depletion and its fair market value on the first day of your tax year in which it is cut. File taxes online 1040ez free   Your adjusted basis for depletion of cut timber is based on the number of units (feet board measure, log scale, or other units) of timber cut during the tax year and considered to be sold or exchanged. File taxes online 1040ez free Your adjusted basis for depletion is also based on the depletion unit of timber in the account used for the cut timber, and should be figured in the same manner as shown in section 611 of the Internal Revenue Code and the related regulations. File taxes online 1040ez free   Timber depletion is discussed in chapter 9 of Publication 535. File taxes online 1040ez free Example. File taxes online 1040ez free In April 2013, you had owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. File taxes online 1040ez free It had an adjusted basis for depletion of $40 per MBF. File taxes online 1040ez free You are a calendar year taxpayer. File taxes online 1040ez free On January 1, 2013, the timber had a fair market value (FMV) of $350 per MBF. File taxes online 1040ez free It was cut in April for sale. File taxes online 1040ez free On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. File taxes online 1040ez free You report the difference between the fair market value and your adjusted basis for depletion as a gain. File taxes online 1040ez free This amount is reported on Form 4797 along with your other section 1231 gains and losses to figure whether it is treated as capital gain or as ordinary gain. File taxes online 1040ez free You figure your gain as follows. File taxes online 1040ez free FMV of timber January 1, 2013 $1,400,000 Minus: Adjusted basis for depletion 160,000 Section 1231 gain $1,240,000 The fair market value becomes your basis in the cut timber and a later sale of the cut timber including any by-product or tree tops will result in ordinary business income or loss. File taxes online 1040ez free Outright sales of timber. File taxes online 1040ez free   Outright sales of timber by landowners qualify for capital gains treatment using rules similar to the rules for certain disposal of timber under a contract with retained economic interest (defined below). File taxes online 1040ez free However, for outright sales, the date of disposal is not deemed to be the date the timber is cut because the landowner can elect to treat the payment date as the date of disposal (see below). File taxes online 1040ez free Cutting contract. File taxes online 1040ez free   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. File taxes online 1040ez free You are the owner of the timber. File taxes online 1040ez free You held the timber longer than 1 year before its disposal. File taxes online 1040ez free You kept an economic interest in the timber. File taxes online 1040ez free   You have kept an economic interest in standing timber if, under the cutting contract, the expected return on your investment is conditioned on the cutting of the timber. File taxes online 1040ez free   The difference between the amount realized from the disposal of the timber and its adjusted basis for depletion is treated as gain or loss on its sale. File taxes online 1040ez free Include this amount on Form 4797 along with your other section 1231 gains or losses to figure whether it is treated as capital or ordinary gain or loss. File taxes online 1040ez free Date of disposal. File taxes online 1040ez free   The date of disposal is the date the timber is cut. File taxes online 1040ez free However, for outright sales by landowners or if you receive payment under the contract before the timber is cut, you can elect to treat the date of payment as the date of disposal. File taxes online 1040ez free   This election applies only to figure the holding period of the timber. File taxes online 1040ez free It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). File taxes online 1040ez free   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. File taxes online 1040ez free The statement must identify the advance payments subject to the election and the contract under which they were made. File taxes online 1040ez free   If you timely filed your return for the year you received payment without making the election, you still can make the election by filing an amended return within 6 months after the due date for that year's return (excluding extensions). File taxes online 1040ez free Attach the statement to the amended return and write “Filed pursuant to section 301. File taxes online 1040ez free 9100-2” at the top of the statement. File taxes online 1040ez free File the amended return at the same address the original return was filed. File taxes online 1040ez free Owner. File taxes online 1040ez free   The owner of timber is any person who owns an interest in it, including a sublessor and the holder of a contract to cut the timber. File taxes online 1040ez free You own an interest in timber if you have the right to cut it for sale on your own account or for use in your business. File taxes online 1040ez free Tree stumps. File taxes online 1040ez free   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. File taxes online 1040ez free Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. File taxes online 1040ez free However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. File taxes online 1040ez free Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. File taxes online 1040ez free   See Form T (Timber) and its separate instructions for more information about dispositions of timber. File taxes online 1040ez free Precious Metals and Stones, Stamps, and Coins Gold, silver, gems, stamps, coins, etc. File taxes online 1040ez free , are capital assets except when they are held for sale by a dealer. File taxes online 1040ez free Any gain or loss from their sale or exchange generally is a capital gain or loss. File taxes online 1040ez free If you are a dealer, the amount received from the sale is ordinary business income. File taxes online 1040ez free Coal and Iron Ore You must treat the disposal of coal (including lignite) or iron ore mined in the United States as a section 1231 transaction if both the following apply to you. File taxes online 1040ez free You owned the coal or iron ore longer than 1 year before its disposal. File taxes online 1040ez free You kept an economic interest in the coal or iron ore. File taxes online 1040ez free For this rule, the date the coal or iron ore is mined is considered the date of its disposal. File taxes online 1040ez free Your gain or loss is the difference between the amount realized from disposal of the coal or iron ore and the adjusted basis you use to figure cost depletion (increased by certain expenses not allowed as deductions for the tax year). File taxes online 1040ez free This amount is included on Form 4797 along with your other section 1231 gains and losses. File taxes online 1040ez free You are considered an owner if you own or sublet an economic interest in the coal or iron ore in place. File taxes online 1040ez free If you own only an option to buy the coal in place, you do not qualify as an owner. File taxes online 1040ez free In addition, this gain or loss treatment does not apply to income realized by an owner who is a co-adventurer, partner, or principal in the mining of coal or iron ore. File taxes online 1040ez free The expenses of making and administering the contract under which the coal or iron ore was disposed of and the expenses of preserving the economic interest kept under the contract are not allowed as deductions in figuring taxable income. File taxes online 1040ez free Rather, their total, along with the adjusted depletion basis, is deducted from the amount received to determine gain. File taxes online 1040ez free If the total of these expenses plus the adjusted depletion basis is more than the amount received, the result is a loss. File taxes online 1040ez free Special rule. File taxes online 1040ez free   The above treatment does not apply if you directly or indirectly dispose of the iron ore or coal to any of the following persons. File taxes online 1040ez free A related person whose relationship to you would result in the disallowance of a loss (see Nondeductible Loss under Sales and Exchanges Between Related Persons, earlier). File taxes online 1040ez free An individual, trust, estate, partnership, association, company, or corporation owned or controlled directly or indirectly by the same interests that own or control your business. File taxes online 1040ez free Conversion Transactions Recognized gain on the disposition or termination of any position held as part of certain conversion transactions is treated as ordinary income. File taxes online 1040ez free This applies if substantially all your expected return is attributable to the time value of your net investment (like interest on a loan) and the transaction is any of the following. File taxes online 1040ez free An applicable straddle (generally, any set of offsetting positions with respect to personal property, including stock). File taxes online 1040ez free A transaction in which you acquire property and, at or about the same time, you contract to sell the same or substantially identical property at a specified price. File taxes online 1040ez free Any other transaction that is marketed and sold as producing capital gain from a transaction in which substantially all of your expected return is due to the time value of your net investment. File taxes online 1040ez free For more information, see chapter 4 of Publication 550. File taxes online 1040ez free Prev  Up  Next   Home   More Online Publications