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Free Tax Filing For Military

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Free Tax Filing For Military

Free tax filing for military Internal Revenue Bulletin:  2009-36  September 8, 2009  Rev. Free tax filing for military Proc. Free tax filing for military 2009-37 Table of Contents SECTION 1. Free tax filing for military PURPOSE SECTION 2. Free tax filing for military BACKGROUND SECTION 3. Free tax filing for military SCOPE SECTION 4. Free tax filing for military ELECTION PROCEDURES SECTION 5. Free tax filing for military REQUIRED INFORMATION STATEMENT SECTION 6. Free tax filing for military EFFECTIVE DATE SECTION 7. Free tax filing for military TRANSITION RULE SECTION 8. Free tax filing for military PAPERWORK REDUCTION ACT DRAFTING INFORMATION SECTION 1. Free tax filing for military PURPOSE . Free tax filing for military 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. Free tax filing for military . Free tax filing for military 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. Free tax filing for military This revenue procedure describes the time and manner of providing this additional information. Free tax filing for military . Free tax filing for military 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. Free tax filing for military Taxpayers should be aware that these regulations may be retroactive. Free tax filing for military See § 7805(b)(2). Free tax filing for military This revenue procedure may be modified to provide procedures consistent with additional guidance. Free tax filing for military SECTION 2. Free tax filing for military BACKGROUND . Free tax filing for military 01 Section 108(i), Generally. Free tax filing for military Section 108(i) was added to the Code by § 1231 of the American Recovery and Reinvestment Tax Act of 2009, Pub. Free tax filing for military L. Free tax filing for military No. Free tax filing for military 111-5, 123 Stat. Free tax filing for military 338. Free tax filing for military 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. Free tax filing for military 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). Free tax filing for military 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. Free tax filing for military 1273-1(d) of the Income Tax Regulations. Free tax filing for military The OID deferral rule in § 108(i)(2) applies at the entity level for a pass-through entity. Free tax filing for military For example, a partnership (and therefore its partners) may not deduct currently the OID described in § 108(i)(2)(A)(i). Free tax filing for military 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). Free tax filing for military See § 108(i)(5)(D). Free tax filing for military 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. Free tax filing for military Section 108(i)(5)(D)(ii). Free tax filing for military 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. Free tax filing for military . Free tax filing for military 02 Applicable Debt Instrument. Free tax filing for military 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. Free tax filing for military 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). Free tax filing for military Section 108(i)(3)(B). Free tax filing for military For purposes of § 108(i), in the case of an intercompany obligation (as defined in § 1. Free tax filing for military 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. Free tax filing for military 1502-13(g)(5). Free tax filing for military . Free tax filing for military 03 Reacquisition. Free tax filing for military 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). Free tax filing for military 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. Free tax filing for military See § 108(i)(4)(B). Free tax filing for military The term “acquisition” also includes an indirect acquisition within the meaning of § 1. Free tax filing for military 108-2(c) if a direct acquisition of the debt instrument would qualify for an election under § 108(i). Free tax filing for military 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. Free tax filing for military . Free tax filing for military 04 General Requirements for the Section 108(i) Election. Free tax filing for military 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. Free tax filing for military (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. Free tax filing for military ) The statement must include the amount of income to which § 108(i)(1) applies and other information the Service may prescribe. Free tax filing for military Once made, a § 108(i) election is irrevocable and, except as provided in section 7 of this revenue procedure, may not be modified. Free tax filing for military . Free tax filing for military 05 Section 108(i) Elections Made by Pass-through Entities. Free tax filing for military 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. Free tax filing for military Section 108(i)(5)(B)(iii). Free tax filing for military . Free tax filing for military 06 Additional Information on Subsequent Years’ Returns. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 07 Exclusivity. Free tax filing for military 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). Free tax filing for military . Free tax filing for military 08 Allocation of Deferred COD Income on Partnership Indebtedness. Free tax filing for military Section 4. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military 704-1(b)(2)(iii). Free tax filing for military Each partner’s share of this COD income is the partner’s COD income amount (“COD income amount”). Free tax filing for military The partner’s COD income amount that is deferred under § 108(i) is the partner’s deferred amount (“deferred amount”). Free tax filing for military 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”). Free tax filing for military . Free tax filing for military 09 Partner’s Deferred § 752 Amount. Free tax filing for military 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”). Free tax filing for military 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). Free tax filing for military 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. Free tax filing for military 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). Free tax filing for military See Rev. Free tax filing for military Rul. Free tax filing for military 92-97, 1992-2 C. Free tax filing for military B. Free tax filing for military 124, and Rev. Free tax filing for military Rul. Free tax filing for military 94-4, 1994-1 C. Free tax filing for military B. Free tax filing for military 195. Free tax filing for military 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). Free tax filing for military . Free tax filing for military 10 Allocation of Deferred COD Income on S Corporation Indebtedness. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 11 Deferred COD Income, Earnings and Profits, and Alternative Minimum Taxable Income. Free tax filing for military (1) In general. Free tax filing for military 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). Free tax filing for military 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. Free tax filing for military 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). Free tax filing for military 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. Free tax filing for military See § 1. Free tax filing for military 56(g)-1(c)(1). Free tax filing for military (2) Exceptions for certain special status corporations. Free tax filing for military 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. Free tax filing for military OID deductions deferred under § 108(i) generally decrease earnings and profits in the taxable year or years that the deferred OID deductions are deductible. Free tax filing for military . Free tax filing for military 12 Extension of Time to Make Election. Free tax filing for military Under § 301. Free tax filing for military 9100-1 of the Procedure and Administration Regulations, the Service may grant an extension of time to make a regulatory election. Free tax filing for military An election is a regulatory election if the due date is prescribed by regulation or other published guidance of general applicability. Free tax filing for military Section 301. Free tax filing for military 9100-2(a) provides an automatic 12-month extension from the due date for making certain regulatory elections. Free tax filing for military SECTION 3. Free tax filing for military 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). Free tax filing for military SECTION 4. Free tax filing for military ELECTION PROCEDURES . Free tax filing for military 01 In General. Free tax filing for military (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. Free tax filing for military 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. Free tax filing for military 07, 4. Free tax filing for military 08, 4. Free tax filing for military 09, or 4. Free tax filing for military 10 of this revenue procedure. Free tax filing for military (2) The Service grants an automatic extension of 12 months from the due date prescribed in section 4. Free tax filing for military 01(1)(a) of this revenue procedure for making the § 108(i) election. Free tax filing for military The rules that apply to an automatic extension under § 301. Free tax filing for military 9100-2(a) apply to this automatic extension. Free tax filing for military . Free tax filing for military 02 Section 108(i) Elections Made by Members of Consolidated Groups. Free tax filing for military The common parent of a consolidated group makes the § 108(i) election on behalf of all members of the group. Free tax filing for military See § 1. Free tax filing for military 1502-77(a). Free tax filing for military . Free tax filing for military 03 Aggregation Rule. Free tax filing for military 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. Free tax filing for military A pass-through entity may not treat two or more applicable debt instruments as one applicable debt instrument under this section 4. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 04 Partial Elections. Free tax filing for military (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. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military (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). Free tax filing for military 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. Free tax filing for military (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. Free tax filing for military 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). Free tax filing for military A partner may exclude from income the partner’s included amount under § 108(a)(1)(A), (B), (C), or (D), if applicable. Free tax filing for military The provisions of this section 4. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 05 Contents of Election Statement. Free tax filing for military A statement meets the requirements of this section 4. Free tax filing for military 05 if the statement— (1) Label. Free tax filing for military States “Section 108(i) Election” across the top. Free tax filing for military (2) Required information. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 06 Supplemental information. Free tax filing for military The statement described in section 4. Free tax filing for military 05 of this revenue procedure may specify for each applicable debt instrument an amount greater than the amount identified in section 4. Free tax filing for military 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. Free tax filing for military 05(2)(d) of this revenue procedure. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military 08, 2. Free tax filing for military 10 and, if applicable, 4. Free tax filing for military 04(3) of this revenue procedure, respectively, as if the additional COD income was realized. Free tax filing for military . Free tax filing for military 07 Additional Requirements for Certain Partnerships Making a § 108(i) Election. Free tax filing for military The rules of this section 4. Free tax filing for military 07 apply to partnerships other than partnerships described in section 4. Free tax filing for military 10 of this revenue procedure. Free tax filing for military (1) Information filing on Schedule K-1 (Form 1065 and Form 1065-B). Free tax filing for military 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. Free tax filing for military , 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. Free tax filing for military 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). Free tax filing for military (2) Election information statement provided to partners. Free tax filing for military 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. Free tax filing for military 07(2). Free tax filing for military 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. Free tax filing for military A statement meets the requirements of this section 4. Free tax filing for military 07(2) if the statement— (a) Label. Free tax filing for military States “Section 108(i) Election Information Statement for Partners” across the top. Free tax filing for military (b) Required information. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military 09 of this revenue procedure; (ix) The partner’s additional deferred amount as described in section 4. Free tax filing for military 06 of this revenue procedure; and (x) The date of the reacquisition transaction generating the COD income. Free tax filing for military (c) If a partner fails to provide the written statement required by section 4. Free tax filing for military 07(3) of this revenue procedure, the partnership must indicate that the amounts described in section 4. Free tax filing for military 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. Free tax filing for military (3) Partner reporting requirements. Free tax filing for military 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. Free tax filing for military 09 of this revenue procedure) a written statement signed under penalties of perjury that includes this information. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military If a partner provides its written statement under this section 4. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 08 Additional Requirements for an S Corporation Making a § 108(i) Election. Free tax filing for military (1) Information filing on Schedule K-1 (Form 1120S). Free tax filing for military 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. Free tax filing for military , 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. Free tax filing for military 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. Free tax filing for military (2) Election information statement provided to shareholders. Free tax filing for military 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. Free tax filing for military 08(2). Free tax filing for military 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. Free tax filing for military A statement meets the requirements of this section 4. Free tax filing for military 08(2) if the statement— (a) Label. Free tax filing for military States “Section 108(i) Election Information Statement for Shareholders” across the top. Free tax filing for military (b) Required information. Free tax filing for military 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. Free tax filing for military 06 of this revenue procedure. Free tax filing for military . Free tax filing for military 09 Section 108(i) Elections Made on Behalf of Certain Foreign Corporations. Free tax filing for military 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. Free tax filing for military 964-1(c)(3). Free tax filing for military Each controlling domestic shareholder must attach a statement identifying the foreign corporation and satisfying the requirements of section 4. Free tax filing for military 05 of this revenue procedure and, if applicable, section 4. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 10 Section 108(i) Elections Made By Certain Foreign Partnerships. Free tax filing for military The rules of this section 4. Free tax filing for military 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”). Free tax filing for military See § 1. Free tax filing for military 6031(a)-1(b). Free tax filing for military (1) A nonfiling foreign partnership making the election must attach a statement satisfying the requirements of section 4. Free tax filing for military 05 of this revenue procedure and, if applicable, section 4. Free tax filing for military 06 of this revenue procedure, to a partnership return satisfying the requirements of § 1. Free tax filing for military 6031(a)-1(b)(5) it files with the Service. Free tax filing for military In addition, a nonfiling foreign partnership must include in the information required in section 4. Free tax filing for military 05(2)(d) and (e) of this revenue procedure the aggregate amounts for all partners as well as the aggregate amounts for all U. Free tax filing for military S. Free tax filing for military 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”). Free tax filing for military (2) The nonfiling foreign partnership must make the election, in accordance with § 1. Free tax filing for military 6031(a)-1(b)(5), by the date provided in section 4. Free tax filing for military 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. Free tax filing for military (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. Free tax filing for military 07(1) of this revenue procedure. Free tax filing for military Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K-1 (Form 1065). Free tax filing for military 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. Free tax filing for military 07(2) of this revenue procedure by the date provided in section 4. Free tax filing for military 01(1)(a) of this revenue procedure. Free tax filing for military The partnership should not attach any statement described in section 4. Free tax filing for military 07(2) of this revenue procedure to the Schedules K-1 that are filed with the Service. Free tax filing for military 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. Free tax filing for military (4) The partnership and each affected partner must satisfy the requirements of section 4. Free tax filing for military 07(3) of this revenue procedure. Free tax filing for military . Free tax filing for military 11 Protective § 108(i) Election. Free tax filing for military (1) In general. Free tax filing for military 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. Free tax filing for military 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). Free tax filing for military 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. Free tax filing for military A taxpayer makes a protective election by attaching a statement satisfying the requirements of this section 4. Free tax filing for military 11(1) to the taxpayer’s original federal income tax return within the period described in section 4. Free tax filing for military 01(1)(a) of this revenue procedure. Free tax filing for military 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. Free tax filing for military A statement meets the requirements of this section 4. Free tax filing for military 11(1) if the statement— (a) States “Section 108(i) Protective Election” across the top; (b) Provides the information required under section 4. Free tax filing for military 05(2)(a), (b), and (c) of this revenue procedure; (c) Provides that the amounts described in sections 4. Free tax filing for military 05(2)(d) and (e) of this revenue procedure are zero; and (d) Provides the information described in section 4. Free tax filing for military 06 of this revenue procedure. Free tax filing for military (2) Statements provided to shareholders and partners. Free tax filing for military (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. Free tax filing for military 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. Free tax filing for military 11(1)(d) of this revenue procedure. Free tax filing for military (b) The partnership or S corporation should not attach the statements described in this section 4. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 12 Election-Year Reporting by Tiered Pass-Through Entities. Free tax filing for military (1) A partnership required to file a U. Free tax filing for military S. Free tax filing for military partnership return other than under § 1. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military 07(1)(a) through (d) of this revenue procedure). Free tax filing for military (2) If a partnership described in section 4. Free tax filing for military 12(1) of this revenue procedure receives a statement described in sections 4. Free tax filing for military 07(2) or 4. Free tax filing for military 10(3) of this revenue procedure or this section 4. Free tax filing for military 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. Free tax filing for military 07(2)(b)(x) of this revenue procedure. Free tax filing for military If an S corporation receives a statement described in sections 4. Free tax filing for military 07(2) or 4. Free tax filing for military 10(3) of this revenue procedure or this section 4. Free tax filing for military 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. Free tax filing for military 07(2)(b)(i), (ii), (iii), (iv) and (ix) of this revenue procedure. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military (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. Free tax filing for military 704-1(b)(2)(iii). Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military The partnership allocates amounts described in section 4. Free tax filing for military 06 of this revenue procedure under this section 4. Free tax filing for military 12(3) as if the additional COD income was realized. Free tax filing for military (4) The deferred § 752 amount for partners in a partnership making a § 108(i) election is calculated only for the partnership’s direct partners. Free tax filing for military 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. Free tax filing for military (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. Free tax filing for military (6) This paragraph 4. Free tax filing for military 12(6) provides the rules for Category 1 and Category 2 filers of Form 8865, Return of U. Free tax filing for military S. Free tax filing for military 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. Free tax filing for military 07(1) of this revenue procedure, or a statement described in sections 4. Free tax filing for military 07(2) or 4. Free tax filing for military 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). Free tax filing for military (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. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military (b) A Category 2 filer must include its share of the information described in section 4. Free tax filing for military 07(1) on the Schedule K-1 (Form 8865) that it is required to complete. Free tax filing for military Category 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership. Free tax filing for military (c) The Category 1 and Category 2 filers should not attach the statements described in sections 4. Free tax filing for military 12(6)(a)(ii) and 4. Free tax filing for military 12(6)(b) of this revenue procedure, respectively, to the Schedules K-1 that are filed with the Service. Free tax filing for military However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records. Free tax filing for military (7) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 4. Free tax filing for military 12(1) of this revenue procedure or a shareholder of an S corporation described in section 4. Free tax filing for military 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. Free tax filing for military 12(1) and (2) of this revenue procedure. Free tax filing for military Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4. Free tax filing for military 12(6) of this revenue procedure. Free tax filing for military (8) The provisions of section 4. Free tax filing for military 12(2), (3), (5) and (6) of this revenue procedure also apply to a statement received that is described in section 4. Free tax filing for military 11(2) of this revenue procedure, except that the information that must be provided are those items described in section 4. Free tax filing for military 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. Free tax filing for military 11(1)(d) of this revenue procedure. Free tax filing for military SECTION 5. Free tax filing for military REQUIRED INFORMATION STATEMENT . Free tax filing for military 01 Annual Information Statements. Free tax filing for military Pursuant to § 108(i)(7)(B), a taxpayer that makes an election under § 108(i) (except for a protective election under section 4. Free tax filing for military 11(1) of this revenue procedure) must attach a statement meeting the requirements of section 5. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 02 Contents of Statement. Free tax filing for military A statement meets the requirements of this section 5. Free tax filing for military 02 if the statement— (1) Label. Free tax filing for military States “Section 108(i) Information Statement” across the top; (2) Required information. Free tax filing for military 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. Free tax filing for military (3) Election attached. Free tax filing for military Includes a copy of the election statement described in section 4. Free tax filing for military 05 of this revenue procedure. Free tax filing for military . Free tax filing for military 03 Additional Annual Reporting Requirements for Certain Partnerships. Free tax filing for military The rules of this section 5. Free tax filing for military 03 apply to partnerships other than partnerships described in section 5. Free tax filing for military 05 of this revenue procedure. Free tax filing for military (1) In general. Free tax filing for military A partnership that makes an election under § 108(i) (except for a protective election under section 4. Free tax filing for military 11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5. Free tax filing for military 01 of this revenue procedure. Free tax filing for military In addition, for each taxable year in which a statement is required under section 5. Free tax filing for military 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. Free tax filing for military 07(1) of this revenue procedure. Free tax filing for military (2) Annual information statements provided to partners. Free tax filing for military 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. Free tax filing for military 01 of this revenue procedure, a statement meeting the requirements of this section 5. Free tax filing for military 03(2). Free tax filing for military 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. Free tax filing for military A statement meets the requirements of this section 5. Free tax filing for military 03(2) if the statement— (a) Label. Free tax filing for military States “Section 108(i) Annual Information Statement for Partners” across the top of the statement. Free tax filing for military (b) Required information. Free tax filing for military 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. Free tax filing for military If a partner fails to provide the written statement required by section 4. Free tax filing for military 07(3) of this revenue procedure, the partnership must indicate that the amounts described in this section 5. Free tax filing for military 03(2)(b)(ix) cannot be calculated because the partner did not provide the information necessary to report these amounts. Free tax filing for military . Free tax filing for military 04 Additional Annual Reporting Requirements for an S Corporation. Free tax filing for military (1) In general. Free tax filing for military An S corporation that makes an election under § 108(i) (except for a protective election under section 4. Free tax filing for military 11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5. Free tax filing for military 01 of this revenue procedure. Free tax filing for military In addition, for each taxable year in which a statement is required under section 5. Free tax filing for military 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. Free tax filing for military 08(1) of this revenue procedure. Free tax filing for military (2) Annual information statements provided to shareholders. Free tax filing for military 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. Free tax filing for military 01 of this revenue procedure a statement meeting the requirements of this section 5. Free tax filing for military 04(2). Free tax filing for military 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. Free tax filing for military A statement meets the requirements of this section 5. Free tax filing for military 04(2) if the statement— (a) Label. Free tax filing for military States “Section 108(i) Annual Information Statement for Shareholders” across the top; (b) Required information. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 05 Additional Annual Reporting Requirements for Certain Foreign Partnerships. Free tax filing for military (1) The rules of this section 5. Free tax filing for military 05 apply to nonfiling foreign partnerships. Free tax filing for military (2) A nonfiling foreign partnership that makes an election under § 108(i) (except for a protective election under section 4. Free tax filing for military 11(1) of this revenue procedure) must file federal income tax returns with the Service containing the information under § 1. Free tax filing for military 6031(a)-1(b)(5) for each taxable year in which a statement is required by section 5. Free tax filing for military 01 of this revenue procedure. Free tax filing for military (3) The nonfiling foreign partnership must attach to its federal income tax returns the statements required under section 5. Free tax filing for military 01 of this revenue procedure, but only for that portion of the COD income allocated to affected partners. Free tax filing for military (4) For each taxable year in which a statement is required under section 5. Free tax filing for military 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. Free tax filing for military 07(1) of this revenue procedure. Free tax filing for military Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K-1 (Form 1065). Free tax filing for military The partnership must provide each affected partner with a copy of the Schedule K-1 (Form 1065) by the date provided in § 1. Free tax filing for military 6031(b)-1T(b). Free tax filing for military The partnership must attach the Schedules K-1 (Form 1065) to the federal income tax returns filed with the Service pursuant to section 5. Free tax filing for military 05(2) of this revenue procedure. Free tax filing for military (5) For each taxable year for which a statement is required under section 5. Free tax filing for military 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. Free tax filing for military 03(2) of this revenue procedure. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 06 Information Statements Made on Behalf of Certain Foreign Corporations. Free tax filing for military Each controlling domestic shareholder must attach a statement identifying the foreign corporation and meeting the requirements of section 5. Free tax filing for military 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. Free tax filing for military 01 of this revenue procedure. Free tax filing for military . Free tax filing for military 07 Additional Annual Reporting Requirements for Tiered Pass-Through Entities. Free tax filing for military (1) A partnership required to file a U. Free tax filing for military S. Free tax filing for military partnership return other than under § 1. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military 07(1)(a) through (d) of this revenue procedure). Free tax filing for military (2) If a partnership described in section 5. Free tax filing for military 07(1) of this revenue procedure receives a statement described in sections 5. Free tax filing for military 03(2) or 5. Free tax filing for military 05(5) of this revenue procedure or this section 5. Free tax filing for military 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. Free tax filing for military If an S corporation receives a statement described in sections 5. Free tax filing for military 03(2) or 5. Free tax filing for military 05(5) of this revenue procedure or this section 5. Free tax filing for military 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. Free tax filing for military 03(2)(b)(i) through (viii) of this revenue procedure. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military (3) This paragraph 5. Free tax filing for military 07(3) provides the rules for persons described in section 4. Free tax filing for military 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. Free tax filing for military 03(1) of this revenue procedure, or a statement described in sections 5. Free tax filing for military 03(2) or 5. Free tax filing for military 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). Free tax filing for military (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. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military (b) A Category 2 filer must include its share of the information described in section 4. Free tax filing for military 07(1) on the Schedule K-1 (Form 8865) that it is required to complete. Free tax filing for military Category 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership. Free tax filing for military (c) The Category 1 and Category 2 filers should not attach the statements described in sections 5. Free tax filing for military 07(3)(a)(ii) and 5. Free tax filing for military 07(3)(b) of this revenue procedure, respectively, to the Schedules K-1 that are filed with the Service. Free tax filing for military However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records. Free tax filing for military (4) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 5. Free tax filing for military 07(1) of this revenue procedure or a shareholder of an S corporation described in section 5. Free tax filing for military 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. Free tax filing for military 07(1) and (2) of this revenue procedure. Free tax filing for military Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4. Free tax filing for military 12(6) of this revenue procedure. Free tax filing for military SECTION 6. Free tax filing for military EFFECTIVE DATE This revenue procedure is effective for reacquisitions of applicable debt instruments in taxable years ending after December 31, 2008. Free tax filing for military SECTION 7. Free tax filing for military TRANSITION RULE . Free tax filing for military 01 Noncomplying Election. Free tax filing for military Except as otherwise provided in this section 7. Free tax filing for military 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. Free tax filing for military 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. Free tax filing for military . Free tax filing for military 02 Modification of Election. Free tax filing for military 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). Free tax filing for military 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. Free tax filing for military . Free tax filing for military 03 Notations. Free tax filing for military A taxpayer that files the amended return on paper must write “Section 108(i) Election” on the top of the first page. Free tax filing for military A taxpayer that files the amended return electronically should indicate “Section 108(i) Election” on the return. Free tax filing for military See Publication 4163, Modernized e-File (MeF) Information for Authorized IRS e-file Providers for Business Returns Tax Year 2008 for more details. Free tax filing for military SECTION 8. Free tax filing for military 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. Free tax filing for military S. Free tax filing for military C. Free tax filing for military 3507) under control number 1545-2147. Free tax filing for military 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. Free tax filing for military The collection of information in this revenue procedure is in sections 4, 5 and 7. Free tax filing for military 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. Free tax filing for military This information will be used during examination to verify that a taxpayer has correctly deferred income and deductions. Free tax filing for military The collection of information is required to obtain a benefit. Free tax filing for military 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. Free tax filing for military The estimated total annual reporting burden is 300,000 hours. Free tax filing for military The estimated annual burden per respondent varies from 1 to 8 hours, depending on individual circumstances, with an estimated average of 6 hours. Free tax filing for military The estimated number of respondents is 50,000. Free tax filing for military 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. Free tax filing for military Generally, tax returns and return information are confidential, as required by § 6103. Free tax filing for military DRAFTING INFORMATION The principal authors of this revenue procedure are Megan A. Free tax filing for military Stoner of the Office of Associate Chief Counsel (Passthroughs & Special Industries) and Craig Wojay of the Office of Associate Chief Counsel (Income Tax & Accounting). Free tax filing for military For further information regarding this revenue procedure, contact Megan A. Free tax filing for military Stoner at (202) 622-3070 for questions involving partnerships and S corporations, William E. Free tax filing for military Blanchard at (202) 622-3950 for questions involving OID, Ronald M. Free tax filing for military 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). 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The Free Tax Filing For Military

Free tax filing for military Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). Free tax filing for military Low Income Taxpayer Clinics (LITCs). Free tax filing for military Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. Free tax filing for military All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. Free tax filing for military The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). Free tax filing for military After notice and hearing, the bankruptcy court may extend the period for another 30 days. Free tax filing for military Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. Free tax filing for military Note. Free tax filing for military Individual debtors should use their home address when filing Form 1040 with the IRS. Free tax filing for military Returns should not be filed “in care of” the trustee's address. Free tax filing for military Ordering tax transcripts and copies of returns. Free tax filing for military   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. Free tax filing for military The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. Free tax filing for military If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. Free tax filing for military Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. Free tax filing for military Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. Free tax filing for military A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. Free tax filing for military To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. Free tax filing for military It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. Free tax filing for military 00 per tax return for copies of the returns. Free tax filing for military Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. Free tax filing for military If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. Free tax filing for military Tax returns and payment of taxes in chapter 11 cases. Free tax filing for military   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. Free tax filing for military Disclosure of debtor's return information to trustee. Free tax filing for military   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. Free tax filing for military If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. Free tax filing for military    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. Free tax filing for military Material interest is generally defined as a financial or monetary interest. Free tax filing for military Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Free tax filing for military   However, the U. Free tax filing for military S. Free tax filing for military Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. Free tax filing for military Disclosure of bankruptcy estate's return information to debtor. Free tax filing for military    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. Free tax filing for military Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. Free tax filing for military Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. Free tax filing for military Chapter 13 relief is not available to corporations or partnerships. Free tax filing for military The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. Free tax filing for military In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. Free tax filing for military S. Free tax filing for military Individual Income Tax Return. Free tax filing for military On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. Free tax filing for military Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. Free tax filing for military To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. Free tax filing for military See Debt Cancellation, later. Free tax filing for military Interest on trust accounts in chapter 13 cases. Free tax filing for military   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. Free tax filing for military This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. Free tax filing for military S. Free tax filing for military Trustee system. Free tax filing for military The interest is also not taxable to the trustee as income. Free tax filing for military Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. Free tax filing for military The bankruptcy estate in a chapter 7 case is represented by a trustee. Free tax filing for military The trustee is appointed to administer the estate and liquidate any nonexempt assets. Free tax filing for military In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. Free tax filing for military However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. Free tax filing for military During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. Free tax filing for military The bankruptcy trustee files a Form 1041 for the bankruptcy estate. Free tax filing for military However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). Free tax filing for military Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. Free tax filing for military Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). Free tax filing for military For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Free tax filing for military Debtor's Election To End Tax Year – Form 1040 Short tax years. Free tax filing for military   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. Free tax filing for military If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. Free tax filing for military The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. Free tax filing for military   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. Free tax filing for military Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. Free tax filing for military    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. Free tax filing for military Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. Free tax filing for military Note. Free tax filing for military The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. Free tax filing for military Making the Election - Filing Requirements First short tax year. Free tax filing for military   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. Free tax filing for military The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. Free tax filing for military Second short tax year. Free tax filing for military   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. Free tax filing for military   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. Free tax filing for military To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. Free tax filing for military Example. Free tax filing for military Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. Free tax filing for military If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. Free tax filing for military Jane's second short year runs from May 8, 2012, through December 31, 2012. Free tax filing for military To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. Free tax filing for military To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. Free tax filing for military The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. Free tax filing for military S. Free tax filing for military Individual Tax Return. Free tax filing for military The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. Free tax filing for military The debtor must file Form 4868 by the due date of the return for the first short tax year. Free tax filing for military The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. Free tax filing for military Election by debtor's spouse. Free tax filing for military   If the debtor is married, the debtor's spouse may join in the election to end the tax year. Free tax filing for military If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. Free tax filing for military The debtor must elect by the due date for filing the return for the first short tax year. Free tax filing for military Once the election is made, it cannot be revoked for the first short tax year. Free tax filing for military However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. Free tax filing for military Later bankruptcy of spouse. Free tax filing for military    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. Free tax filing for military   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. Free tax filing for military If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. Free tax filing for military However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. Free tax filing for military The debtor and the spouse are precluded from this election because they have different tax years. Free tax filing for military This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. Free tax filing for military Example 1. Free tax filing for military Paul and Mary Harris are calendar-year taxpayers. Free tax filing for military Paul's voluntary chapter 7 bankruptcy case begins on March 4. Free tax filing for military If Paul does not make an election, his tax year does not end on March 3. Free tax filing for military If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. Free tax filing for military Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. Free tax filing for military They must make the election by July 15, the due date for filing the joint return. Free tax filing for military Example 2. Free tax filing for military Fred and Ethel Barnes are calendar-year taxpayers. Free tax filing for military Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. Free tax filing for military Ethel could elect to end her tax year on October 31. Free tax filing for military If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. Free tax filing for military Her first tax year is January 1–October 31, and her second year is November 1–December 31. Free tax filing for military If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. Free tax filing for military If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. Free tax filing for military Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. Free tax filing for military Example 3. Free tax filing for military Jack and Karen Thomas are calendar-year taxpayers. Free tax filing for military Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. Free tax filing for military Karen elected to close her tax year on April 9 and Jack joins in Karen's election. Free tax filing for military Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. Free tax filing for military The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. Free tax filing for military Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). Free tax filing for military If Karen does join in, she would have the same 3 short tax years as Jack. Free tax filing for military Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. Free tax filing for military Annualizing taxable income. Free tax filing for military   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. Free tax filing for military See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. Free tax filing for military Dismissal of bankruptcy case. Free tax filing for military   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. Free tax filing for military It is as if no bankruptcy estate was created for tax purposes. Free tax filing for military In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. Free tax filing for military Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. Free tax filing for military Attach a statement to the amended returns explaining why the debtor is filing an amended return. Free tax filing for military Taxes and the Bankruptcy Estate Property of the bankruptcy estate. Free tax filing for military   At the commencement of a bankruptcy case a bankruptcy estate is created. Free tax filing for military Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. Free tax filing for military This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. Free tax filing for military However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. Free tax filing for military Note. Free tax filing for military Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. Free tax filing for military Excluded property is never included in the estate. Free tax filing for military Transfer of assets between debtor and bankruptcy estate. Free tax filing for military   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. Free tax filing for military The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. Free tax filing for military For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. Free tax filing for military The estate assumes the same basis, holding period, and character of the transferred assets. Free tax filing for military Also, the estate generally accounts for the transferred assets in the same manner as debtor. Free tax filing for military   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. Free tax filing for military The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. Free tax filing for military Abandoned property. Free tax filing for military    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. Free tax filing for military If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. Free tax filing for military Separate taxable entity. Free tax filing for military   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. Free tax filing for military The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. Free tax filing for military S. Free tax filing for military Income Tax Return for Estates and Trusts, and paying its taxes. Free tax filing for military The debtor remains responsible for filing his or her own returns on Form 1040, U. Free tax filing for military S. Free tax filing for military Individual Income Tax Return, and paying taxes on income that does not belong to the estate. Free tax filing for military Employer identification number. Free tax filing for military   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Free tax filing for military The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Free tax filing for military See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Free tax filing for military    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Free tax filing for military Income, deductions, and credits – Form 1040. Free tax filing for military   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). Free tax filing for military Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. Free tax filing for military The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. Free tax filing for military See Debt Cancellation, below. Free tax filing for military Note. Free tax filing for military The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. Free tax filing for military Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. Free tax filing for military However, other exclusions, such as the insolvency exclusion, may apply. Free tax filing for military Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. Free tax filing for military    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. Free tax filing for military Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. Free tax filing for military   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. Free tax filing for military Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. Free tax filing for military Income of the estate in individual chapter 11 cases. Free tax filing for military    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. Free tax filing for military Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. Free tax filing for military S. Free tax filing for military C. Free tax filing for military section 1115). Free tax filing for military Note. Free tax filing for military A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. Free tax filing for military Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). Free tax filing for military Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. Free tax filing for military See Administrative expenses, below. Free tax filing for military Conversion or dismissal of chapter 11 cases. Free tax filing for military   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. Free tax filing for military If the chapter 11 case is converted to a chapter 7 case, 11 U. Free tax filing for military S. Free tax filing for military C. Free tax filing for military section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. Free tax filing for military Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. Free tax filing for military If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. Free tax filing for military Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. Free tax filing for military Note. Free tax filing for military Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). Free tax filing for military Administrative expenses. Free tax filing for military   Allowable expenses include administrative expenses. Free tax filing for military    Administrative expenses can only be deducted by the estate, never by the debtor. Free tax filing for military   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. Free tax filing for military These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. Free tax filing for military See IRC section 67(e). Free tax filing for military Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. Free tax filing for military Note. Free tax filing for military The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. Free tax filing for military See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. Free tax filing for military Administrative expense loss. Free tax filing for military   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. Free tax filing for military The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. Free tax filing for military The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. Free tax filing for military For a discussion of NOLs, see Publication 536. Free tax filing for military Attribute carryovers. Free tax filing for military   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. Free tax filing for military These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. Free tax filing for military The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. Free tax filing for military   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. Free tax filing for military See Debt Cancellation, later. Free tax filing for military   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. Free tax filing for military The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. Free tax filing for military Note. Free tax filing for military The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. Free tax filing for military See Administrative expense loss, above. Free tax filing for military Passive and at-risk activities. Free tax filing for military   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. Free tax filing for military Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. Free tax filing for military These transfers include the return of exempt property and abandonment of estate property to the debtor. Free tax filing for military Carrybacks from the debtor's activities. Free tax filing for military   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. Free tax filing for military Carrybacks from the bankruptcy estate. Free tax filing for military   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. Free tax filing for military The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. Free tax filing for military Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. Free tax filing for military    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. Free tax filing for military The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. Free tax filing for military These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. Free tax filing for military The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. Free tax filing for military The same method must be used to allocate the income and the withheld tax. Free tax filing for military Example. Free tax filing for military If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. Free tax filing for military Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. Free tax filing for military See IRC section 31(a). Free tax filing for military   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. Free tax filing for military In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. Free tax filing for military    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. Free tax filing for military The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. Free tax filing for military Note. Free tax filing for military The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). Free tax filing for military   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. Free tax filing for military Self-employment taxes in individual chapter 11 cases. Free tax filing for military   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. Free tax filing for military Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. Free tax filing for military   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. Free tax filing for military Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. Free tax filing for military This schedule includes self-employment income earned post-petition and the attributable deductions. Free tax filing for military The debtor must pay any self-employment tax imposed by IRC section 1401. Free tax filing for military Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. Free tax filing for military   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. Free tax filing for military However, section 1115 of the Bankruptcy Code (11 U. Free tax filing for military S. Free tax filing for military C. Free tax filing for military section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. Free tax filing for military See Notice 2006-83. Free tax filing for military   The reporting and withholding obligations of a debtor's employer also do not change. Free tax filing for military An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. Free tax filing for military Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. Free tax filing for military   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. Free tax filing for military See IRC section 6109(a)(2). Free tax filing for military As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). Free tax filing for military   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. Free tax filing for military See Notice 2006-83. Free tax filing for military An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. Free tax filing for military   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. Free tax filing for military However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. Free tax filing for military See Employment Tax Regulations section 31. Free tax filing for military 3402(f)(2)-1. Free tax filing for military Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. Free tax filing for military See IRC section 6654(a). Free tax filing for military Notice required in converted and dismissed cases. Free tax filing for military   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. Free tax filing for military The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. Free tax filing for military This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. Free tax filing for military   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. Free tax filing for military Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. Free tax filing for military However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. Free tax filing for military After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. Free tax filing for military Employment taxes. Free tax filing for military   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Free tax filing for military See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. Free tax filing for military   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Free tax filing for military For a further discussion of employment taxes, see Employment Taxes, later. Free tax filing for military Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . Free tax filing for military The bankruptcy court case number is . Free tax filing for military Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. Free tax filing for military   Year Taxpayer   Estate 1. Free tax filing for military Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. Free tax filing for military Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. Free tax filing for military Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. Free tax filing for military Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. Free tax filing for military   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. Free tax filing for military This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. Free tax filing for military   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). Free tax filing for military   These amounts are generally adjusted annually. Free tax filing for military See the present year Form 1041 Instructions at www. Free tax filing for military irs. Free tax filing for military gov/form1041 for the current dollar amounts. Free tax filing for military Accounting period. Free tax filing for military   A bankruptcy estate may have a fiscal year. Free tax filing for military However, this period cannot be longer than 12 months. Free tax filing for military Change of accounting period. Free tax filing for military   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. Free tax filing for military This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. Free tax filing for military The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. Free tax filing for military Employer identification number. Free tax filing for military   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Free tax filing for military The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Free tax filing for military    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Free tax filing for military   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. Free tax filing for military irs. Free tax filing for military gov/businesses/small. Free tax filing for military The EIN is issued immediately once the application information is validated. Free tax filing for military By telephone at 1-800-829-4933 from 7:00 a. Free tax filing for military m. Free tax filing for military to 7:00 p. Free tax filing for military m. Free tax filing for military in the trustee's or debtor-in-possession's local time zone. Free tax filing for military Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. Free tax filing for military   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. Free tax filing for military For more details, see Pub. Free tax filing for military 583, Starting a Business and Keeping Records. Free tax filing for military   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. Free tax filing for military Figuring tax due. Free tax filing for military   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. Free tax filing for military However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. Free tax filing for military The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. Free tax filing for military The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. Free tax filing for military Tax rate schedule. Free tax filing for military The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. Free tax filing for military When to file. Free tax filing for military   Calendar year bankruptcy estates must file Form 1041 by April 15th. Free tax filing for military Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. Free tax filing for military For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. Free tax filing for military If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. Free tax filing for military Note. Free tax filing for military The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. Free tax filing for military Transmittal for Form 1040. Free tax filing for military   Form 1041 is used as a transmittal for Form 1040. Free tax filing for military If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. Free tax filing for military   Prepare the bankruptcy estate's return by completing Form 1040. Free tax filing for military In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. Free tax filing for military ” Then, attach Form 1040 to the Form 1041 transmittal. Free tax filing for military Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. Free tax filing for military An example of a bankruptcy estate's tax return is prepared below. Free tax filing for military Note. Free tax filing for military The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. Free tax filing for military Payment of Tax Due Payment methods. Free tax filing for military   Payment of tax due may be made by check or money order or by credit or debit card. Free tax filing for military For information on how to make payments electronically by credit or debit card, go to irs. Free tax filing for military gov/e-pay. Free tax filing for military      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. Free tax filing for military To enroll in EFTPS, go to eftps. Free tax filing for military gov or call 1-800-555-4477. Free tax filing for military For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. Free tax filing for military Payment voucher – Form 1041-V. Free tax filing for military   Form 1041-V accompanies payments made by check or money order for Form 1041. Free tax filing for military The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. Free tax filing for military Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. Free tax filing for military We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. Free tax filing for military Estimated tax – Form 1041-ES. Free tax filing for military   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. Free tax filing for military See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. Free tax filing for military Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Free tax filing for military Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. Free tax filing for military If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. Free tax filing for military   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. Free tax filing for military Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. Free tax filing for military The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Free tax filing for military If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free tax filing for military , with their individual income tax returns. Free tax filing for military Tax Return Example – Form 1041 This publication is not revised annually. Free tax filing for military Future changes to the forms and their instructions may not be reflected in this example. Free tax filing for military Note. Free tax filing for military The following return was prepared for tax year 2011. Free tax filing for military In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). Free tax filing for military Facts and circumstances. Free tax filing for military   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. Free tax filing for military Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. Free tax filing for military   The estate received the following assets from Mr. Free tax filing for military Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. Free tax filing for military   Also, the estate received a $251,500 capital loss carryover. Free tax filing for military   Mr. Free tax filing for military Smith's bankruptcy case was closed on December 31, 2011. Free tax filing for military During 2011, Mr. Free tax filing for military Smith was relieved of $70,000 of debt by the bankruptcy court. Free tax filing for military The estate chose a calendar year as its tax year. Free tax filing for military Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. Free tax filing for military Schedule B (Form 1040). Free tax filing for military    The certificate of deposit earned $5,500 of interest during 2011. Free tax filing for military Joan reports this interest on Schedule B. Free tax filing for military She completes this schedule and enters the result on Form 1040. Free tax filing for military Form 4562. Free tax filing for military   Joan enters the depreciation allowed on Form 4562. Free tax filing for military She completes the form and enters the result on Schedule E. Free tax filing for military Schedule E (Form 1040). Free tax filing for military   The commercial real estate was rented through the date of sale. Free tax filing for military Joan reports the income and expenses on Schedule E. Free tax filing for military She enters the net income on Form 1040. Free tax filing for military Form 4797. Free tax filing for military   The commercial real estate was sold on July 1, 2011, for $280,000. Free tax filing for military The property was purchased in 2001 at a cost of $250,000. Free tax filing for military The total depreciation allowable as of the date of sale was $120,000. Free tax filing for military Additionally, $25,000 of selling expenses were incurred. Free tax filing for military Joan reports the gain or loss from the sale on Form 4797. Free tax filing for military She completes the form and enters the gain on Schedule D (Form 1040). Free tax filing for military   Mr. Free tax filing for military Smith's former residence was sold on September 30, 2011. Free tax filing for military The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. Free tax filing for military This sale is excluded from gross income under IRC section 121. Free tax filing for military Note. Free tax filing for military Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). Free tax filing for military Bankruptcy estates succeed to this exclusion at the commencement of the case. Free tax filing for military See Regulation section 1. Free tax filing for military 1398-3. Free tax filing for military Schedule D (Form 1040). Free tax filing for military   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). Free tax filing for military She enters the results on Form 1040. Free tax filing for military Form 1040, page 1. Free tax filing for military   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. Free tax filing for military Schedule A (Form 1040). Free tax filing for military   During 2011, the estate paid mortgage interest and real property tax on Mr. Free tax filing for military Smith's former residence. Free tax filing for military It also paid income tax to the state. Free tax filing for military Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. Free tax filing for military Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. Free tax filing for military She completes the Schedule A and enters the result on page 2 of Form 1040. Free tax filing for military Form 1040, page 2. Free tax filing for military   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. Free tax filing for military She then enters the estate's estimated tax payments and figures the amount the estate still owes. Free tax filing for military Form 982. Free tax filing for military   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. Free tax filing for military Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. Free tax filing for military See Debt Cancellation, later. Free tax filing for military After the bankruptcy case ends, Mr. Free tax filing for military Smith will assume the estate's tax attributes. Free tax filing for military Mr. Free tax filing for military Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). Free tax filing for military Note. Free tax filing for military If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. Free tax filing for military Form 1041. Free tax filing for military   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. Free tax filing for military She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. Free tax filing for military This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Schedule A This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Schedule B This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Schedule D This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Schedule E This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Form 2119 This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Form 4562 This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. Free tax filing for military Please click the link to view the image. Free tax filing for military Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. Free tax filing for military Otherwise, you do not have any carryovers. Free tax filing for military 1. Free tax filing for military Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. Free tax filing for military If a loss, enclose the amount in parentheses 1. Free tax filing for military 19,880   2. Free tax filing for military Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. Free tax filing for military 1,500   3. Free tax filing for military Combine lines 1 and 2. Free tax filing for military If zero or less, enter -0- 3. Free tax filing for military 21,380   4. Free tax filing for military Enter the smaller of line 2 or line 3 4. Free tax filing for military 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. Free tax filing for military       5. Free tax filing for military Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. Free tax filing for military 0   6. Free tax filing for military Enter any gain from your 2010 Schedule D, line 15. Free tax filing for military If a loss, enter -0- 6. Free tax filing for military         7. Free tax filing for military Add lines 4 and 6 7. Free tax filing for military 1,500   8. Free tax filing for military Short-term capital loss carryover for 2011. Free tax filing for military Subtract line 7 from line 5. Free tax filing for military If zero or less, enter -0-. Free tax filing for military If more than zero, also enter this amount on Schedule D, line 6 8. Free tax filing for military 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. Free tax filing for military       9. Free tax filing for military Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. Free tax filing for military 251,500   10. Free tax filing for military Enter any gain from your 2010 Schedule D, line 7. Free tax filing for military If a loss, enter -0- 10. Free tax filing for military 0       11. Free tax filing for military Subtract line 5 from line 4. Free tax filing for military If zero or less, enter -0- 11. Free tax filing for military 1,500       12. Free tax filing for military Add lines 10 and 11 12. Free tax filing for military 1,500   13. Free tax filing for military Long-term capital loss carryover for 2011. Free tax filing for military Subtract line 12 from line 9. Free tax filing for military If zero or less, enter -0-. Free tax filing for military If more than zero, also enter this amount on Schedule D, line 14 13. Free tax filing for military 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. Free tax filing for military The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. Free tax filing for military In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. Free tax filing for military The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. Free tax filing for military Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. Free tax filing for military However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. Free tax filing for military A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. Free tax filing for military However, It may or may not be included in the individual partners' income. Free tax filing for military See Partnerships, below under Debt Cancellation. Free tax filing for military Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. Free tax filing for military A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. Free tax filing for military The following discussion only highlights bankruptcy tax rules applying to corporations. Free tax filing for military The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. Free tax filing for military Therefore, you may wish to seek the help of a professional tax advisor. Free tax filing for military See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. Free tax filing for military Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. Free tax filing for military However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. Free tax filing for military A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. Free tax filing for military In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. Free tax filing for military In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. Free tax filing for military Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. Free tax filing for military In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. Free tax filing for military IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. Free tax filing for military IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. Free tax filing for military In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. Free tax filing for military No loss is recognized in this situation. Free tax filing for military Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. Free tax filing for military To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. Free tax filing for military The exemption request must be submitted to the local IRS Insolvency Office handling the case. Free tax filing for military The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. Free tax filing for military The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. Free tax filing for military ” The statement must be signed by the trustee, receiver or assignee. Free tax filing for military The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). Free tax filing for military The IRS will act on your request within 90 days. Free tax filing for military Disclosure of return information to trustee. Free tax filing for military   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. Free tax filing for military However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. Free tax filing for military Material interest is generally defined as a financial or monetary interest. Free tax filing for military Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Free tax filing for military Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. Free tax filing for military Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. Free tax filing for military QSFs are required to file an annual income tax return, Form 1120-SF, U. Free tax filing for military S. Free tax filing for military Income Tax Return for Settlement Funds. Free tax filing for military More information about QSFs may be found in Treasury Regulation sections 1. Free tax filing for military 468B-1 through -5. Free tax filing for military Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. Free tax filing for military After a return is filed, the IRS will either accept the return as filed or select the return for examination. Free tax filing for military Under examination the IRS may redetermine the tax liability shown on the return. Free tax filing for military If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. Free tax filing for military See Court Jurisdiction over Tax Matters, later. Free tax filing for military Prompt Determination Requests Pursuant to Rev. Free tax filing for military Proc. Free tax filing for military 2006-24, 2006-22 I. Free tax filing for military R. Free tax filing for military B. Free tax filing for military 943, www. Free tax filing for military irs. Free tax filing for military gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. Free tax filing for military irs. Free tax filing for military gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. Free tax filing for military Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). Free tax filing for military Making the request for determination. Free tax filing for military   As detailed in Rev. Free tax filing for military Proc. Free tax filing for military 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. Free tax filing for military O. Free tax filing for military Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). Free tax filing for military   The request must be submitted in duplicate and must be executed under penalties of perjury. Free tax filing for military In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. Free tax filing for military The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. Free tax filing for military The name and location of the office where the return was filed. Free tax filing for military The name of the debtor. Free tax filing for military Debtor's social security number, TIN, or EIN. Free tax filing for military Type of bankruptcy estate. Free tax filing for military Bankruptcy case number. Free tax filing for military Court where the bankruptcy case is pending. Free tax filing for military   The copy of the return(s) submitted with the request must be an exact copy of a valid return. Free tax filing for military A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. Free tax filing for military    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. Free tax filing for military A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. Free tax filing for military Examination of return. Free tax filing for military   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. Free tax filing for military If the return is selected for examination, it will be examined as soon as possible. Free tax filing for military The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. Free tax filing for military   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. Free tax filing for military   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. Free tax filing for military   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. Free tax filing for military Note. Free tax filing for military An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. Free tax filing for military   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei