Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free Tax Online

Free Tax Preparation For MilitaryAmend Prior Years Taxes1040x Forms1040x Online FreeHow To File State Return For FreeTax Forms For College StudentsFile 1040x Online FreeTurbotax Deluxe Federal E File State 2010 Old VersionAmmended Tax ReturnsH And R Block Online FilingIrs Form 1040ez2013 Federal Tax Form 1040ezFree File State Tax OnlyState Tax Filing FormsE File State Taxes FreeFile 2011 TaxesHrblock At HomeFree Tax Extension OnlineAmend 2012 Tax Return FreeDo College Students Have To File TaxesFree State E-file1040nr Tax SoftwareIrs Forms 1040ez 2012Free Online 1040ez FilingE File 1040xState Income Tax ReturnCan I File My Back Taxes Online FreeFree 2007 Taxes OnlineFree Tax FilingFree Federal Tax Filing 2011Irs E FileWww Myfreetaxes Com SpringfieldmoHow To Amend A Tax Return 2011Free H&r Block SoftwareAmend 2010 Tax1040nr Online FilingFree State Taxes FilingInstructionsFreetaxusa1040 Ez Download

Free Tax Online

Free tax online 1. Free tax online   Filing and Paying Business Taxes Table of Contents Introduction Useful Items - You may want to see: Identification NumbersNew EIN. Free tax online Employee. Free tax online Other payee. Free tax online Income TaxDo I Have To File an Income Tax Return? How Do I File? IRS e-file (Electronic Filing) When Is My Tax Return Due? How Do I Pay Income Tax? Self-Employment (SE) TaxHow to become insured under social security. Free tax online Earning credits in 2013 and 2014. Free tax online Employment Taxes Excise Taxes Information ReturnsWaiver of penalties. Free tax online Penalties. Free tax online Introduction This chapter explains the business taxes you may have to pay and the forms you may have to file. Free tax online It also discusses taxpayer identification numbers. Free tax online Table 1-1 lists the benefits of filing electronically. Free tax online Table 1-2 lists the federal taxes you may have to pay, their due dates, and the forms you use to report them. Free tax online Table 1-3 provides checklists that highlight the typical forms and schedules you may need to file if you ever go out of business. Free tax online You may want to get Publication 509, Tax Calendars. Free tax online It has tax calendars that tell you when to file returns and make tax payments. Free tax online Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. Free tax online S. Free tax online Individual Income Tax Return 1040-ES Estimated Tax for Individuals Sch C (Form 1040) Profit or Loss From Business Sch C-EZ (Form 1040) Net Profit From Business Sch SE (Form 1040) Self-Employment Tax See chapter 12 for information about getting publications and forms. Free tax online Identification Numbers This section explains three types of taxpayer identification numbers, who needs them, when to use them, and how to get them. Free tax online Social security number (SSN). Free tax online   Generally, use your SSN as your taxpayer identification number. Free tax online You must put this number on each of your individual income tax forms, such as Form 1040 and its schedules. Free tax online   To apply for an SSN, use Form SS-5, Application for a Social Security Card. Free tax online This form is available at Social Security Administration (SSA) offices or by calling 1-800-772-1213. Free tax online It is also available from the SSA website at www. Free tax online socialsecurity. Free tax online gov. Free tax online Individual taxpayer identification number (ITIN). Free tax online   The IRS will issue an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN. Free tax online In general, if you need to obtain an ITIN, you must attach Form W-7, Application for IRS Individual Taxpayer Identification Number, with your signed, original, completed tax return and any other required documentation and mail them to the following address. Free tax online  Internal Revenue Service ITIN Operation P. Free tax online O. Free tax online Box 149342 Austin, TX 78714-9342 The exceptions are covered in detail in the instructions for Form W-7. Free tax online If you must include another person's SSN on your return and that person does not have and cannot get an SSN, enter that person's ITIN. Free tax online The application is also available in Spanish. Free tax online The form is available at IRS. Free tax online gov or you can call 1-800-829-3676 to order the form. Free tax online    An ITIN is for tax use only. Free tax online It does not entitle the holder to social security benefits or change the holder's employment or immigration status. Free tax online Employer identification number (EIN). Free tax online   You must also have an EIN to use as a taxpayer identification number if you do either of the following. Free tax online Pay wages to one or more employees. Free tax online File pension or excise tax returns. Free tax online   If you must have an EIN, include it along with your SSN on your Schedule C or C-EZ. Free tax online   You can apply for an EIN: Online by clicking on the Employer ID Numbers (EINs) link at www. Free tax online irs. Free tax online gov/businesses/small. Free tax online The EIN is issued immediately once the application information is validated. Free tax online By telephone at 1-800-829-4933. Free tax online By mailing or faxing Form SS-4, Application for Employer Identification Number. Free tax online New EIN. Free tax online   You may need to get a new EIN if either the form or the ownership of your business changes. Free tax online For more information, see Publication 1635, Understanding Your EIN. Free tax online When you need identification numbers of other persons. Free tax online   In operating your business, you will probably make certain payments you must report on information returns. Free tax online These payments are discussed under Information Returns, later in this chapter. Free tax online You must give the recipient of these payments (the payee) a statement showing the total amount paid during the year. Free tax online You must include the payee's identification number and your identification number on the returns and statements. Free tax online Employee. Free tax online   If you have employees, you must get an SSN from each of them. Free tax online Record the name and SSN of each employee exactly as they are shown on the employee's social security card. Free tax online If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. Free tax online This may occur if the employee's name was changed due to marriage or divorce. Free tax online   Form W-4, Employee's Withholding Allowance Certificate, is completed by each employee so the correct federal income tax can be withheld from their pay. Free tax online   If your employee does not have an SSN, he or she should file Form SS-5 with the SSA. Free tax online Other payee. Free tax online   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. Free tax online If you must report payments to an organization, such as a corporation or partnership, you must get its EIN. Free tax online   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. Free tax online   A payee who does not provide you with an identification number may be subject to backup withholding. Free tax online For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. Free tax online Income Tax This part explains whether you have to file an income tax return and when you file it. Free tax online It also explains how you pay the tax. Free tax online Do I Have To File an Income Tax Return? You have to file an income tax return for 2013 if your net earnings from self-employment were $400 or more. Free tax online If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions. Free tax online How Do I File? File your income tax return on Form 1040 and attach Schedule C or Schedule C-EZ. Free tax online Enter the net profit or loss from Schedule C or Schedule C-EZ on page 1 of Form 1040. Free tax online Use Schedule C to figure your net profit or loss from your business. Free tax online If you operated more than one business as a sole proprietorship, you must attach a separate Schedule C for each business. Free tax online You can use the simpler Schedule C-EZ if you operated only one business as a sole proprietorship, you did not have a net loss, and you meet the other requirements listed in Part I of the schedule. Free tax online IRS e-file (Electronic Filing) Please click here for the text description of the image. Free tax online E-file logo You may be able to file your tax returns electronically using an IRS e-file option. Free tax online Table 1-1 lists the benefits of IRS e-file. Free tax online IRS e-file uses automation to replace most of the manual steps needed to process paper returns. Free tax online As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. Free tax online As with a paper return, you are responsible for making sure your return contains accurate information and is filed on time. Free tax online Using e-file does not affect your chances of an IRS examination of your return. Free tax online You can file most commonly used business forms using IRS e-file. Free tax online For more information, visit IRS. Free tax online gov. Free tax online Electronic signatures. Free tax online   Paperless filing is easier than you think and it's available to most taxpayers who file electronically—including those first-time filers who were 16 or older at the end of 2013. Free tax online If you file electronically using tax preparation software or a tax professional, you will participate in the Self-Select PIN (personal identification number) program. Free tax online If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures. Free tax online    To create a PIN, you must know your adjusted gross income (AGI) from your originally filed 2012 income tax return (not from an amended return, Form 1040X, or any math error notice from the IRS). Free tax online You will also need to provide your date of birth (DOB). Free tax online Make sure your DOB is accurate and matches the information on record with the Social Security Administration before you e-file. Free tax online To do this, check your annual Social Security Statement. Free tax online   With a Self-Select PIN, there is nothing to sign and nothing to mail—not even your Forms W-2. Free tax online For more details on the Self-Select PIN program, visit IRS. Free tax online gov. Free tax online State returns. Free tax online   In most states, you can file an electronic state return simultaneously with your federal return. Free tax online For more information, check with your local IRS office, state tax agency, tax professional, or IRS. Free tax online gov. Free tax online Refunds. Free tax online   You can have your refund check mailed to you, or you can have your refund deposited directly to your checking or savings account. Free tax online   With e-file, your refund will be issued in half the time as when filing on paper. Free tax online Most refunds are issued within 3 weeks. Free tax online If you choose Direct Deposit, you can receive your refund in as few as 10 days. Free tax online Offset against debts. Free tax online   As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. Free tax online You will be notified if the refund you claimed has been offset against your debts. Free tax online Refund inquiries. Free tax online   You can check the status of your refund if it has been at least 24 hours (4 weeks if you mailed a paper return) from the date you filed your return. Free tax online Be sure to have a copy of your tax return available because you will need to know the filing status, the first social security number shown on the return, and the exact whole-dollar amount of the refund. Free tax online To check on your refund, do one of the following. Free tax online Go to IRS. Free tax online gov and click on Where's My Refund. Free tax online Call 1-800-829-4477 for automated refund information, and follow the recorded instructions. Free tax online Call 1-800-829-1954 during the hours shown in your form instructions. Free tax online Balance due. Free tax online   If you owe tax, you must pay it by April 15, 2014, to avoid late-payment penalties and interest. Free tax online You can make your payment electronically by scheduling an electronic funds withdrawal from your checking or savings account or by credit card. Free tax online Using an Authorized IRS e-file Provider Many tax professionals can electronically file paperless returns for their clients. Free tax online You have two options. Free tax online You can prepare your return, take it to an authorized IRS e-file provider, and have the provider transmit it electronically to the IRS. Free tax online You can have an authorized IRS e-file provider prepare your return and transmit it for you electronically. Free tax online You will be asked to complete Form 8879, IRS e-file Signature Authorization, to authorize the provider to enter your self-selected PIN on your return. Free tax online Depending on the provider and the specific services requested, a fee may be charged. Free tax online To find an authorized IRS e-file provider near you, go to IRS. Free tax online gov or look for an “Authorized IRS e-file Provider” sign. Free tax online Using Your Personal Computer A computer with Internet access is all you need to file your tax return using IRS e-file. Free tax online When you use your personal computer, you can e-file your return from your home any time of the day or night. Free tax online Sign your return electronically using a self-selected PIN to complete the process. Free tax online There is no signature form to submit or Forms W-2 to send in. Free tax online Free Internet filing options. Free tax online   More taxpayers can now prepare and e-file their individual income tax returns free using commercial tax preparation software accessible through IRS. Free tax online gov or www. Free tax online usa. Free tax online gov. Free tax online The IRS is partnering with the tax software industry to offer free preparation and filing services to a significant number of taxpayers. Free tax online Security and privacy certificate programs will assure tax data is safe and secure. Free tax online To see if you qualify for these services, visit the Return Preparation and Filing Options page at IRS. Free tax online gov. Free tax online   If you cannot use the free services, you can buy tax preparation software at various electronics stores or computer and office supply stores. Free tax online You can also download software from the Internet or prepare and file your return completely online by using tax preparation software available on the Internet. Free tax online Filing Through Employers and Financial Institutions Some businesses offer free e-file to their employees, members, or customers. Free tax online Others offer it for a fee. Free tax online Ask your employer or financial institution if they offer IRS e-file as an employee, member, or customer benefit. Free tax online Free Help With Your Return Free help in preparing your return is available nationwide from IRS-trained volunteers. Free tax online The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers, and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 or older with their tax returns. Free tax online Some locations offer free electronic filing. Free tax online Table 1-1. Free tax online Benefits of IRS e-file Accuracy • Your chance of getting an error notice from the IRS is significantly reduced. Free tax online Security • Your privacy and security are assured. Free tax online Electronic signatures • Create your own personal identification number (PIN) and file a completely paperless return through your tax preparation software or tax professional. Free tax online There is nothing to mail. Free tax online Proof of acceptance • You receive an electronic acknowledgment within 48 hours that the IRS has accepted your return for processing. Free tax online Fast refunds • You get your refund faster with Direct Deposit—in as few as 10 days. Free tax online Free Internet filing options • Use IRS. Free tax online gov to access commercial tax preparation and e-file services available at no cost to eligible taxpayers. Free tax online Electronic payment options • Convenient, safe, and secure electronic payment options are available. Free tax online E-file and pay your taxes in a single step. Free tax online Schedule an electronic funds withdrawal from your checking or savings account (up to and including April 15, 2014) or pay by credit card. Free tax online Federal/State filing • Prepare and file your federal and state tax returns together and double the benefits you get from e-file. Free tax online When Is My Tax Return Due? Form 1040 for calendar year 2013 is due by April 15, 2014. Free tax online If you use a fiscal year (explained in chapter 2), your return is due by the 15th day of the 4th month after the end of your fiscal year. Free tax online If you file late, you may have to pay penalties and interest. Free tax online If you cannot file your return on time, use Form 4868, Application for Automatic Extension of Time To File U. Free tax online S. Free tax online Individual Income Tax Return, to request an automatic 6-month extension. Free tax online For calendar year taxpayers, this will extend the tax filing due date until October 15. Free tax online Filing an extension does not extend the time to pay your taxes, only the time to file the tax return. Free tax online How Do I Pay Income Tax? Federal income tax is a pay-as-you-go tax. Free tax online You must pay it as you earn or receive income during the year. Free tax online An employee usually has income tax withheld from his or her pay. Free tax online If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. Free tax online You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax (discussed later), of $1,000 or more when you file your return. Free tax online Use Form 1040-ES to figure and pay the tax. Free tax online If you do not have to make estimated tax payments, you can pay any tax due when you file your return. Free tax online For more information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax. Free tax online What are my payment options?   You can pay your estimated tax electronically using various options. Free tax online If you pay electronically, there is no need to mail in Form 1040-ES payment vouchers. Free tax online These options include: Paying electronically through the Electronic Federal Tax Payment System (EFTPS). Free tax online Paying by authorizing an electronic funds withdrawal when you file Form 1040 electronically. Free tax online Paying by credit or debit card over the phone or by Internet. Free tax online Other options include crediting an overpayment from your 2013 return to your 2014 estimated tax, or mailing a check or money order with a Form 1040-ES payment voucher. Free tax online EFTPS    To enroll in EFTPS, go to www. Free tax online eftps. Free tax online gov or call 1-800-555-4477. Free tax online When you request a new EIN and you will have a tax obligation, you are automatically enrolled in EFTPS. Free tax online Benefits of EFTPS: The chance of an error in making your payments is reduced. Free tax online You receive immediate confirmation of every transaction. Free tax online Penalty for underpayment of tax. Free tax online   If you did not pay enough income tax and self-employment tax for 2013 by withholding or by making estimated tax payments, you may have to pay a penalty on the amount not paid. Free tax online The IRS will figure the penalty for you and send you a bill. Free tax online Or you can use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you have to pay a penalty and to figure the penalty amount. Free tax online For more information, see Publication 505. Free tax online Self-Employment (SE) Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Free tax online It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. Free tax online If you earned income as a statutory employee, you do not pay SE tax on that income. Free tax online Social security coverage. Free tax online   Social security benefits are available to self-employed persons just as they are to wage earners. Free tax online Your payments of SE tax contribute to your coverage under the social security system. Free tax online Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. Free tax online By not reporting all of your self-employment income, you could cause your social security benefits to be lower when you retire. Free tax online How to become insured under social security. Free tax online   You must be insured under the social security system before you begin receiving social security benefits. Free tax online You are insured if you have the required number of credits (also called quarters of coverage), discussed next. Free tax online Earning credits in 2013 and 2014. Free tax online   For 2013, you received one credit, up to a maximum of four credits, for each $1,160 ($1,200 for 2014) of income subject to social security taxes. Free tax online Therefore, for 2013, if you had income (self-employment and wages) of $4,640 that was subject to social security taxes, you receive four credits ($4,640 ÷ $1,160). Free tax online   For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office. Free tax online    Making false statements to get or to increase social security benefits may subject you to penalties. Free tax online The Social Security Administration (SSA) time limit for posting self-employment income. Free tax online   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. Free tax online If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. Free tax online The SSA will not change its records to increase your self-employment income. Free tax online Who must pay self-employment tax. Free tax online   You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. Free tax online Your net earnings from self-employment (excluding church employee income) were $400 or more. Free tax online You had church employee income of $108. Free tax online 28 or more. Free tax online The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. Free tax online SE tax rate. Free tax online   For 2013, the SE tax rate on net earnings is 15. Free tax online 3% (12. Free tax online 4% social security tax plus 2. Free tax online 9% Medicare tax). Free tax online Maximum earnings subject to SE tax. Free tax online   Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. Free tax online 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. Free tax online   All your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. Free tax online 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. Free tax online   If wages and tips you receive as an employee are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. Free tax online 4% social security part of the SE tax on any of your net earnings. Free tax online However, you must pay the 2. Free tax online 9% Medicare part of the SE tax on all your net earnings. Free tax online Deduct one-half of your SE tax as an adjustment to income on line 27 of Form 1040. Free tax online   More information. Free tax online   For information on methods of calculating SE tax, see Chapter 10, Self-Employment Tax. Free tax online Table 1-2. Free tax online Which Forms Must I File? IF you are liable for: THEN use Form: DUE by:1 Income tax 1040 and Schedule C or C-EZ2 15th day of 4th month after end of  tax year. Free tax online Self-employment tax Schedule SE File with Form 1040. Free tax online Estimated tax 1040-ES 15th day of 4th, 6th, and 9th months of tax year, and 15th day of 1st month after the end of tax year. Free tax online Social security and Medicare taxes and income tax withholding 941 or 944 April 30, July 31, October 31, and January 313. Free tax online     See Publication 15. Free tax online Providing information on social security and Medicare taxes and income tax withholding W-2 (to employee)  W-2 and W-3 (to the Social Security Administration) January 313. Free tax online   Last day of February (March 31 if filing electronically)3. Free tax online Federal unemployment (FUTA) tax 940 January 313. Free tax online     April 30, July 31, October 31, and January 31, but only if the liability for unpaid tax is more than $500. Free tax online Filing information returns for payments to nonemployees and transactions with other persons See Information Returns Forms 1099 – to the recipient by January 31 and to the IRS by February 28 (March 31 if filing electronically). Free tax online     Other forms – see the General Instructions for Certain Information Returns. Free tax online Excise tax See Excise Taxes See the instructions to the forms. Free tax online 1 If a due date falls on a Saturday, Sunday, or legal holiday, file by the next day that is not a Saturday, Sunday, or legal holiday. Free tax online For more information, see Publication 509, Tax Calendars. Free tax online 2 File a separate schedule for each business. Free tax online 3 See the form instructions if you go out of business, change the form of your business, or stop paying wages. Free tax online     Employment Taxes If you have employees, you will need to file forms to report employment taxes. Free tax online Employment taxes include the following items. Free tax online Social security and Medicare taxes. Free tax online Federal income tax withholding. Free tax online Federal unemployment (FUTA) tax. Free tax online For more information, see Publication 15 (Circular E), Employer's Tax Guide. Free tax online That publication explains your tax responsibilities as an employer. Free tax online To help you determine whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. Free tax online That publication has information to help you determine whether an individual is an independent contractor or an employee. Free tax online If you incorrectly classify an employee as an independent contractor, you may be held liable for employment taxes for that worker plus a penalty. Free tax online An independent contractor is someone who is self-employed. Free tax online You do not generally have to withhold or pay any taxes on payments made to an independent contractor. Free tax online Excise Taxes This section identifies some of the excise taxes you may have to pay and the forms you have to file if you do any of the following. Free tax online Manufacture or sell certain products. Free tax online Operate certain kinds of businesses. Free tax online Use various kinds of equipment, facilities, or products. Free tax online Receive payment for certain services. Free tax online For more information on excise taxes, see Publication 510, Excise Taxes. Free tax online Form 720. Free tax online   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. Free tax online Environmental taxes on the sale or use of ozone-depleting chemicals and imported products containing or manufactured with these chemicals. Free tax online Communications and air transportation taxes. Free tax online Fuel taxes. Free tax online Tax on the first retail sale of heavy trucks, trailers, and tractors. Free tax online Manufacturers taxes on the sale or use of a variety of different articles. Free tax online Tax on indoor tanning services. Free tax online Form 2290. Free tax online   There is a federal excise tax on the use of certain trucks, truck tractors, and buses on public highways. Free tax online The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. Free tax online Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. Free tax online For more information, see the Instructions for Form 2290. Free tax online Depositing excise taxes. Free tax online   If you have to file a quarterly excise tax return on Form 720, you may have to deposit your excise taxes before the return is due. Free tax online For details on depositing excise taxes, see the Instructions for Form 720. Free tax online Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. Free tax online The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. Free tax online You must give a copy of each information return you are required to file to the recipient or payer. Free tax online In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. Free tax online For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. Free tax online Form 1099-MISC. Free tax online   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your business. Free tax online These payments include the following items. Free tax online Payments of $600 or more for services performed for your business by people not treated as your employees, such as fees to subcontractors, attorneys, accountants, or directors. Free tax online Rent payments of $600 or more, other than rents paid to real estate agents. Free tax online Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. Free tax online Royalty payments of $10 or more. Free tax online Payments to certain crew members by operators of fishing boats. Free tax online You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. Free tax online Form W-2. Free tax online   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. Free tax online You can file Form W-2 online. Free tax online For more information about Form W-2, see the General Instructions for Forms W-2 and W-3. Free tax online Penalties. Free tax online   The law provides for the following penalties if you do not file Form 1099-MISC or Form W-2 or do not correctly report the information. Free tax online For more information, see the General Instructions for Certain Information Returns. Free tax online Failure to file information returns. Free tax online This penalty applies if you do not file information returns by the due date, do not include all required information, or report incorrect information. Free tax online Failure to furnish correct payee statements. Free tax online This penalty applies if you do not furnish a required statement to a payee by the required date, do not include all required information, or report incorrect information. Free tax online Waiver of penalties. Free tax online   These penalties will not apply if you can show that the failure was due to reasonable cause and not willful neglect. Free tax online   In addition, there is no penalty for failure to include all required information, or for including incorrect information, on a de minimis (small) number of information returns if you correct the errors by August 1 of the year the returns are due. Free tax online (A de minimis number of returns is the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. Free tax online ) Form 8300. Free tax online   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction, or two or more related business transactions. Free tax online Cash includes U. Free tax online S. Free tax online and foreign coin and currency. Free tax online It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. Free tax online Cash does not include a check drawn on an individual's personal account (personal check). Free tax online For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Free tax online Penalties. Free tax online   There are civil and criminal penalties, including up to 5 years in prison, for not filing Form 8300, filing (or causing the filing of) a false or fraudulent Form 8300, or structuring a transaction to evade reporting requirements. Free tax online Table 1-3. Free tax online Going Out of Business Checklists (Note. Free tax online The following checklists highlight the typical final forms and schedules you may need to file if you ever go out of business. Free tax online For more information, see the instructions for the listed forms. Free tax online ) IF you are liable for:   THEN you may need to: Income tax □ File Schedule C or C-EZ with your Form 1040 for the year in which you go out of business. Free tax online   □ File Form 4797 with your Form 1040 for each year in which you sell or exchange property used in your business or in which the business use of certain section 179 or listed property drops to 50% or less. Free tax online   □ File Form 8594 with your Form 1040 if you sold your business. Free tax online Self-employment tax □ File Schedule SE with your Form 1040 for the year in which you go out of business. Free tax online Employment taxes □ File Form 941 (or Form 944) for the calendar quarter in which you make final wage payments. Free tax online Note. Free tax online Do not forget to check the box and enter the date final wages were paid on line 15 of Form 941 or line 14 of Form 944. Free tax online   □ File Form 940 for the calendar year in which final wages were paid. Free tax online Note. Free tax online Do not forget to check box d, Final: Business closed or stopped paying wages, under Type of Return. Free tax online Information returns □ Provide Forms W-2 to your employees for the calendar year in which you make final wage payments. Free tax online Note. Free tax online These forms are generally due by the due date of your final Form 941 or Form 944. Free tax online   □ File Form W-3 to file Forms W-2. Free tax online Note. Free tax online These forms are generally due within 1 month after the due date of your final Form 941 or Form 944. Free tax online   □ Provide Forms 1099-MISC to each person to whom you have paid at least $600 for services (including parts and materials) during the calendar year in which you go out of business. Free tax online   □ File Form 1096 to file Forms 1099-MISC. Free tax online Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

IRS - Issuing Refunds

Return to Tax Stats home page

Every year, the IRS issues refunds to millions of taxpayers. Refund data are reported in multiple ways, including by the number issued and refund amounts. Historical refund data are also available from 1987 to 2007.

Excel Viewer


Fiscal Year Data

The tables below were originally published in the IRS Data Book, which is IRS Publication 55B, and are complied by various divisions throughout the IRS. The IRS's fiscal year runs from October 1 to September 30.

Refunds Issued and Refund Amounts

Number of Internal Revenue Refunds Issued
The number of refunds issued are shown for selected returns, including corporation, individual, employment, estate, gift, and excise taxes, by state.

• Prior to 2000, the number of refunds for selected tax return types are classified by Internal Revenue region and district.

Fiscal Years available:
1999     1998     1997     1996     1995

 

Amount of Internal Revenue Refunds Issued, Including Interest
These tables show the total dollar amount refunded, by state and type of tax.

• Prior to 2000, the total dollar amounts refunded are shown by Internal Revenue region and district and by type of tax return. 

Fiscal Years available:
1999     1998     1997     1996     1995


Historical IRS Tax Refunds
Total dollar amounts refunded by quarter and fiscal year, by type of return.

SOI Bulletin Historical Table 19
Fiscal Years covered:  1987-2007




(Back to top)


Issuing RefundsEnforcing Laws

Assisting Taxpayers  |  Managing the System

IRS Tax Compliance Activities  |  Taxpayer Compliance Research

 

 

   Return to Tax Stats home page

Page Last Reviewed or Updated: 24-Mar-2014

The Free Tax Online

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