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

State Of Louisiana Amended Return Form 1040x

How To File Amended Federal Tax ReturnIrs 1040 Ez Form 2011How To File An Amended Tax Return For 2013File Federal And State Taxes Online FreeNeed To Amend Tax ReturnAmend Tax Return For FreeTax Act Online 2009File Taxes 2007Federal Tax Return 2011Turbotax For 2011 Tax YearHow To File 1040ez OnlineFiling 2007 Taxes Late OnlineInstructions For Filing 1040xCan I Fill 2010 Taxes This Year1040ez Tax FormFree State Tax HelpIrs Gov 2011 Tax FormsWhere Do I File My 2012 Federal Tax ReturnStudent Tax RefundFree State Tax Prep OnlineIrs Form 1040 X1040nrNeed To File 2010 Taxes OnlineHrblockfree Com1040ez OnlineTax Chart1040ez State Tax FormFree Tax Filing OnlineH&r Block Free For MilitaryH&r Block Military Key Code2012 Online Tax Return2012 Tax Amendment FormFree E File 1040xIrs Gov Free File Federal And State TaxesFiling Past Tax ReturnsFree File State And Federal TaxesFile Taxes Online Free 2012Free State TaxTax Form 1040ezIrs 2012 Tax Forms 1040 Ez

State Of Louisiana Amended Return Form 1040x

State of louisiana amended return form 1040x 1. State of louisiana amended return form 1040x   Gain or Loss Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Sales and ExchangesGain or Loss From Sales and Exchanges Abandonments Foreclosures and RepossessionsAmount realized on a nonrecourse debt. State of louisiana amended return form 1040x Amount realized on a recourse debt. State of louisiana amended return form 1040x Involuntary ConversionsCondemnations Nontaxable ExchangesLike-Kind Exchanges Other Nontaxable Exchanges Transfers to Spouse Rollover of Gain From Publicly Traded Securities Gains on Sales of Qualified Small Business Stock Exclusion of Gain From Sale of DC Zone Assets Topics - This chapter discusses: Sales and exchanges Abandonments Foreclosures and repossessions Involuntary conversions Nontaxable exchanges Transfers to spouse Rollovers and exclusions for certain capital gains Useful Items - You may want to see: Publication 523 Selling Your Home 537 Installment Sales 547 Casualties, Disasters, and Thefts 550 Investment Income and Expenses 551 Basis of Assets 908 Bankruptcy Tax Guide 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 1040 U. State of louisiana amended return form 1040x S. State of louisiana amended return form 1040x Individual Income Tax Return 1040X Amended U. State of louisiana amended return form 1040x S. State of louisiana amended return form 1040x Individual Income Tax Return 1099-A Acquisition or Abandonment of Secured Property 1099-C Cancellation of Debt 4797 Sales of Business Property 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets Although the discussions in this chapter may at times refer mainly to individuals, many of the rules discussed also apply to taxpayers other than individuals. State of louisiana amended return form 1040x However, the rules for property held for personal use usually will not apply to taxpayers other than individuals. State of louisiana amended return form 1040x See chapter 5 for information about getting publications and forms. State of louisiana amended return form 1040x Sales and Exchanges A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. State of louisiana amended return form 1040x An exchange is a transfer of property for other property or services. State of louisiana amended return form 1040x The following discussions describe the kinds of transactions that are treated as sales or exchanges and explain how to figure gain or loss. State of louisiana amended return form 1040x Sale or lease. State of louisiana amended return form 1040x    Some agreements that seem to be leases may really be conditional sales contracts. State of louisiana amended return form 1040x The intention of the parties to the agreement can help you distinguish between a sale and a lease. State of louisiana amended return form 1040x   There is no test or group of tests to prove what the parties intended when they made the agreement. State of louisiana amended return form 1040x You should consider each agreement based on its own facts and circumstances. State of louisiana amended return form 1040x For more information, see chapter 3 in Publication 535, Business Expenses. State of louisiana amended return form 1040x Cancellation of a lease. State of louisiana amended return form 1040x    Payments received by a tenant for the cancellation of a lease are treated as an amount realized from the sale of property. State of louisiana amended return form 1040x Payments received by a landlord (lessor) for the cancellation of a lease are essentially a substitute for rental payments and are taxed as ordinary income in the year in which they are received. State of louisiana amended return form 1040x Copyright. State of louisiana amended return form 1040x    Payments you receive for granting the exclusive use of (or right to exploit) a copyright throughout its life in a particular medium are treated as received from the sale of property. State of louisiana amended return form 1040x It does not matter if the payments are a fixed amount or a percentage of receipts from the sale, performance, exhibition, or publication of the copyrighted work, or an amount based on the number of copies sold, performances given, or exhibitions made. State of louisiana amended return form 1040x Nor does it matter if the payments are made over the same period as that covering the grantee's use of the copyrighted work. State of louisiana amended return form 1040x   If the copyright was used in your trade or business and you held it longer than a year, the gain or loss may be a section 1231 gain or loss. State of louisiana amended return form 1040x For more information, see Section 1231 Gains and Losses in chapter 3. State of louisiana amended return form 1040x Easement. State of louisiana amended return form 1040x   The amount received for granting an easement is subtracted from the basis of the property. State of louisiana amended return form 1040x If only a specific part of the entire tract of property is affected by the easement, only the basis of that part is reduced by the amount received. State of louisiana amended return form 1040x If it is impossible or impractical to separate the basis of the part of the property on which the easement is granted, the basis of the whole property is reduced by the amount received. State of louisiana amended return form 1040x   Any amount received that is more than the basis to be reduced is a taxable gain. State of louisiana amended return form 1040x The transaction is reported as a sale of property. State of louisiana amended return form 1040x   If you transfer a perpetual easement for consideration and do not keep any beneficial interest in the part of the property affected by the easement, the transaction will be treated as a sale of property. State of louisiana amended return form 1040x However, if you make a qualified conservation contribution of a restriction or easement granted in perpetuity, it is treated as a charitable contribution and not a sale or exchange, even though you keep a beneficial interest in the property affected by the easement. State of louisiana amended return form 1040x   If you grant an easement on your property (for example, a right-of-way over it) under condemnation or threat of condemnation, you are considered to have made a forced sale, even though you keep the legal title. State of louisiana amended return form 1040x Although you figure gain or loss on the easement in the same way as a sale of property, the gain or loss is treated as a gain or loss from a condemnation. State of louisiana amended return form 1040x See Gain or Loss From Condemnations, later. State of louisiana amended return form 1040x Property transferred to satisfy debt. State of louisiana amended return form 1040x   A transfer of property to satisfy a debt is an exchange. State of louisiana amended return form 1040x Note's maturity date extended. State of louisiana amended return form 1040x   The extension of a note's maturity date is not treated as an exchange of an outstanding note for a new and different note. State of louisiana amended return form 1040x Also, it is not considered a closed and completed transaction that would result in a gain or loss. State of louisiana amended return form 1040x However, an extension will be treated as a taxable exchange of the outstanding note for a new and materially different note if the changes in the terms of the note are significant. State of louisiana amended return form 1040x Each case must be determined by its own facts. State of louisiana amended return form 1040x For more information, see Regulations section 1. State of louisiana amended return form 1040x 1001-3. State of louisiana amended return form 1040x Transfer on death. State of louisiana amended return form 1040x   The transfer of property of a decedent to an executor or administrator of the estate, or to the heirs or beneficiaries, is not a sale or exchange or other disposition. State of louisiana amended return form 1040x No taxable gain or deductible loss results from the transfer. State of louisiana amended return form 1040x Bankruptcy. State of louisiana amended return form 1040x   Generally, a transfer (other than by sale or exchange) of property from a debtor to a bankruptcy estate is not treated as a disposition. State of louisiana amended return form 1040x Consequently, the transfer generally does not result in gain or loss. State of louisiana amended return form 1040x For more information, see Publication 908, Bankruptcy Tax Guide. State of louisiana amended return form 1040x Gain or Loss From Sales and Exchanges You usually realize gain or loss when property is sold or exchanged. State of louisiana amended return form 1040x A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. State of louisiana amended return form 1040x A loss is the adjusted basis of the property that is more than the amount you realize. State of louisiana amended return form 1040x   Table 1-1. State of louisiana amended return form 1040x How To Figure Whether You Have a Gain or Loss IF your. State of louisiana amended return form 1040x . State of louisiana amended return form 1040x . State of louisiana amended return form 1040x THEN you have a. State of louisiana amended return form 1040x . State of louisiana amended return form 1040x . State of louisiana amended return form 1040x Adjusted basis is more than the amount realized, Loss. State of louisiana amended return form 1040x Amount realized is more than the adjusted basis, Gain. State of louisiana amended return form 1040x Basis. State of louisiana amended return form 1040x   You must know the basis of your property to determine whether you have a gain or loss from its sale or other disposition. State of louisiana amended return form 1040x The basis of property you buy is usually its cost. State of louisiana amended return form 1040x However, if you acquired the property by gift, inheritance, or in some way other than buying it, you must use a basis other than its cost. State of louisiana amended return form 1040x See Basis Other Than Cost in Publication 551, Basis of Assets. State of louisiana amended return form 1040x Special rules apply to property acquired from a decedent who died in 2010 and the executor made the election to file Form 8939, Allocation of Increase in Basis for Property Received From a Decedent. State of louisiana amended return form 1040x See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. State of louisiana amended return form 1040x Adjusted basis. State of louisiana amended return form 1040x   The adjusted basis of property is your original cost or other basis plus (increased by) certain additions and minus (decreased by) certain deductions. State of louisiana amended return form 1040x Increases include costs of any improvements having a useful life of more than 1 year. State of louisiana amended return form 1040x Decreases include depreciation and casualty losses. State of louisiana amended return form 1040x For more details and additional examples, see Adjusted Basis in Publication 551. State of louisiana amended return form 1040x Amount realized. State of louisiana amended return form 1040x   The amount you realize from a sale or exchange is the total of all money you receive plus the fair market value (defined below) of all property or services you receive. State of louisiana amended return form 1040x The amount you realize also includes any of your liabilities that were assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage. State of louisiana amended return form 1040x Fair market value. State of louisiana amended return form 1040x   Fair market value (FMV) is the price at which the property would change hands between a buyer and a seller when both have reasonable knowledge of all the necessary facts and neither is being forced to buy or sell. State of louisiana amended return form 1040x If parties with adverse interests place a value on property in an arm's-length transaction, that is strong evidence of FMV. State of louisiana amended return form 1040x If there is a stated price for services, this price is treated as the FMV unless there is evidence to the contrary. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x You used a building in your business that cost you $70,000. State of louisiana amended return form 1040x You made certain permanent improvements at a cost of $20,000 and deducted depreciation totaling $10,000. State of louisiana amended return form 1040x You sold the building for $100,000 plus property having an FMV of $20,000. State of louisiana amended return form 1040x The buyer assumed your real estate taxes of $3,000 and a mortgage of $17,000 on the building. State of louisiana amended return form 1040x The selling expenses were $4,000. State of louisiana amended return form 1040x Your gain on the sale is figured as follows. State of louisiana amended return form 1040x Amount realized:     Cash $100,000   FMV of property received 20,000   Real estate taxes assumed by buyer 3,000   Mortgage assumed by  buyer 17,000   Total 140,000   Minus: Selling expenses 4,000 $136,000 Adjusted basis:     Cost of building $70,000   Improvements 20,000   Total $90,000   Minus: Depreciation 10,000   Adjusted basis   $80,000 Gain on sale $56,000 Amount recognized. State of louisiana amended return form 1040x   Your gain or loss realized from a sale or exchange of property is usually a recognized gain or loss for tax purposes. State of louisiana amended return form 1040x Recognized gains must be included in gross income. State of louisiana amended return form 1040x Recognized losses are deductible from gross income. State of louisiana amended return form 1040x However, your gain or loss realized from certain exchanges of property is not recognized for tax purposes. State of louisiana amended return form 1040x See Nontaxable Exchanges, later. State of louisiana amended return form 1040x Also, a loss from the sale or other disposition of property held for personal use is not deductible, except in the case of a casualty or theft. State of louisiana amended return form 1040x Interest in property. State of louisiana amended return form 1040x   The amount you realize from the disposition of a life interest in property, an interest in property for a set number of years, or an income interest in a trust is a recognized gain under certain circumstances. State of louisiana amended return form 1040x If you received the interest as a gift, inheritance, or in a transfer from a spouse or former spouse incident to a divorce, the amount realized is a recognized gain. State of louisiana amended return form 1040x Your basis in the property is disregarded. State of louisiana amended return form 1040x This rule does not apply if all interests in the property are disposed of at the same time. State of louisiana amended return form 1040x Example 1. State of louisiana amended return form 1040x Your father dies and leaves his farm to you for life with a remainder interest to your younger brother. State of louisiana amended return form 1040x You decide to sell your life interest in the farm. State of louisiana amended return form 1040x The entire amount you receive is a recognized gain. State of louisiana amended return form 1040x Your basis in the farm is disregarded. State of louisiana amended return form 1040x Example 2. State of louisiana amended return form 1040x The facts are the same as in Example 1, except that your brother joins you in selling the farm. State of louisiana amended return form 1040x The entire interest in the property is sold, so your basis in the farm is not disregarded. State of louisiana amended return form 1040x Your gain or loss is the difference between your share of the sales price and your adjusted basis in the farm. State of louisiana amended return form 1040x Canceling a sale of real property. State of louisiana amended return form 1040x   If you sell real property under a sales contract that allows the buyer to return the property for a full refund and the buyer does so, you may not have to recognize gain or loss on the sale. State of louisiana amended return form 1040x If the buyer returns the property in the year of sale, no gain or loss is recognized. State of louisiana amended return form 1040x This cancellation of the sale in the same year it occurred places both you and the buyer in the same positions you were in before the sale. State of louisiana amended return form 1040x If the buyer returns the property in a later tax year, you must recognize gain (or loss, if allowed) in the year of the sale. State of louisiana amended return form 1040x When the property is returned in a later year, you acquire a new basis in the property. State of louisiana amended return form 1040x That basis is equal to the amount you pay to the buyer. State of louisiana amended return form 1040x Bargain Sale If you sell or exchange property for less than fair market value with the intent of making a gift, the transaction is partly a sale or exchange and partly a gift. State of louisiana amended return form 1040x You have a gain if the amount realized is more than your adjusted basis in the property. State of louisiana amended return form 1040x However, you do not have a loss if the amount realized is less than the adjusted basis of the property. State of louisiana amended return form 1040x Bargain sales to charity. State of louisiana amended return form 1040x   A bargain sale of property to a charitable organization is partly a sale or exchange and partly a charitable contribution. State of louisiana amended return form 1040x If a charitable deduction for the contribution is allowable, you must allocate your adjusted basis in the property between the part sold and the part contributed based on the fair market value of each. State of louisiana amended return form 1040x The adjusted basis of the part sold is figured as follows. State of louisiana amended return form 1040x Adjusted basis of entire property × Amount realized (fair market value of part sold)   Fair market value of entire property   Based on this allocation rule, you will have a gain even if the amount realized is not more than your adjusted basis in the property. State of louisiana amended return form 1040x This allocation rule does not apply if a charitable contribution deduction is not allowable. State of louisiana amended return form 1040x   See Publication 526, Charitable Contributions, for information on figuring your charitable contribution. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x You sold property with a fair market value of $10,000 to a charitable organization for $2,000 and are allowed a deduction for your contribution. State of louisiana amended return form 1040x Your adjusted basis in the property is $4,000. State of louisiana amended return form 1040x Your gain on the sale is $1,200, figured as follows. State of louisiana amended return form 1040x Sales price $2,000 Minus: Adjusted basis of part sold ($4,000 × ($2,000 ÷ $10,000)) 800 Gain on the sale $1,200 Property Used Partly for Business or Rental Generally, if you sell or exchange property you used partly for business or rental purposes and partly for personal purposes, you must figure the gain or loss on the sale or exchange as though you had sold two separate pieces of property. State of louisiana amended return form 1040x You must subtract depreciation you took or could have taken from the basis of the business or rental part. State of louisiana amended return form 1040x However, see the special rule below for a home used partly for business or rental. State of louisiana amended return form 1040x You must allocate the selling price, selling expenses, and the basis of the property between the business or rental part and the personal part. State of louisiana amended return form 1040x Gain or loss on the business or rental part of the property may be a capital gain or loss or an ordinary gain or loss, as discussed in chapter 3 under Section 1231 Gains and Losses. State of louisiana amended return form 1040x Any gain on the personal part of the property is a capital gain. State of louisiana amended return form 1040x You cannot deduct a loss on the personal part. State of louisiana amended return form 1040x Home used partly for business or rental. State of louisiana amended return form 1040x    If you use property partly as a home and partly for business or to produce rental income, the computation and treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. State of louisiana amended return form 1040x See Property Used Partly for Business or Rental, in Publication 523. State of louisiana amended return form 1040x Property Changed to Business or Rental Use You cannot deduct a loss on the sale of property you purchased or constructed for use as your home and used as your home until the time of sale. State of louisiana amended return form 1040x You can deduct a loss on the sale of property you acquired for use as your home but changed to business or rental property and used as business or rental property at the time of sale. State of louisiana amended return form 1040x However, if the adjusted basis of the property at the time of the change was more than its fair market value, the loss you can deduct is limited. State of louisiana amended return form 1040x Figure the loss you can deduct as follows. State of louisiana amended return form 1040x Use the lesser of the property's adjusted basis or fair market value at the time of the change. State of louisiana amended return form 1040x Add to (1) the cost of any improvements and other increases to basis since the change. State of louisiana amended return form 1040x Subtract from (2) depreciation and any other decreases to basis since the change. State of louisiana amended return form 1040x Subtract the amount you realized on the sale from the result in (3). State of louisiana amended return form 1040x If the amount you realized is more than the result in (3), treat this result as zero. State of louisiana amended return form 1040x The result in (4) is the loss you can deduct. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x You changed your main home to rental property 5 years ago. State of louisiana amended return form 1040x At the time of the change, the adjusted basis of your home was $75,000 and the fair market value was $70,000. State of louisiana amended return form 1040x This year, you sold the property for $55,000. State of louisiana amended return form 1040x You made no improvements to the property but you have depreciation expense of $12,620 over the 5 prior years. State of louisiana amended return form 1040x Although your loss on the sale is $7,380 [($75,000 − $12,620) − $55,000], the amount you can deduct as a loss is limited to $2,380, figured as follows. State of louisiana amended return form 1040x Lesser of adjusted basis or fair market value at time of the change $70,000 Plus: Cost of any improvements and any other additions to basis after the change -0-   70,000 Minus: Depreciation and any other decreases to basis after the change 12,620   57,380 Minus: Amount you realized from the sale 55,000 Deductible loss $2,380 Gain. State of louisiana amended return form 1040x   If you have a gain on the sale, you generally must recognize the full amount of the gain. State of louisiana amended return form 1040x You figure the gain by subtracting your adjusted basis from your amount realized, as described earlier. State of louisiana amended return form 1040x   You may be able to exclude all or part of the gain if you owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. State of louisiana amended return form 1040x However, you may not be able to exclude the part of the gain allocated to any period of nonqualified use. State of louisiana amended return form 1040x   For more information, see Business Use or Rental of Home in Publication 523. State of louisiana amended return form 1040x In addition, special rules apply if the home sold was acquired in a like-kind exchange. State of louisiana amended return form 1040x See Special Situations in Publication 523. State of louisiana amended return form 1040x Also see Like-Kind Exchanges, later. State of louisiana amended return form 1040x Abandonments The abandonment of property is a disposition of property. State of louisiana amended return form 1040x You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. State of louisiana amended return form 1040x Generally, abandonment is not treated as a sale or exchange of the property. State of louisiana amended return form 1040x If the amount you realize (if any) is more than your adjusted basis, then you have a gain. State of louisiana amended return form 1040x If your adjusted basis is more than the amount you realize (if any), then you have a loss. State of louisiana amended return form 1040x Loss from abandonment of business or investment property is deductible as a loss. State of louisiana amended return form 1040x A loss from an abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. State of louisiana amended return form 1040x This rule also applies to leasehold improvements the lessor made for the lessee that were abandoned. State of louisiana amended return form 1040x If the property is foreclosed on or repossessed in lieu of abandonment, gain or loss is figured as discussed later under Foreclosure and Repossessions. State of louisiana amended return form 1040x The abandonment loss is deducted in the tax year in which the loss is sustained. State of louisiana amended return form 1040x If the abandoned property is secured by debt, special rules apply. State of louisiana amended return form 1040x The tax consequences of abandonment of property that is secured by debt depend on whether you are personally liable for the debt (recourse debt) or you are not personally liable for the debt (nonrecourse debt). State of louisiana amended return form 1040x For more information, including examples, see chapter 3 of Publication 4681. State of louisiana amended return form 1040x You cannot deduct any loss from abandonment of your home or other property held for personal use only. State of louisiana amended return form 1040x Cancellation of debt. State of louisiana amended return form 1040x   If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you may realize ordinary income equal to the canceled debt. State of louisiana amended return form 1040x This income is separate from any loss realized from abandonment of the property. State of louisiana amended return form 1040x   You must report this income on your tax return unless one of the following applies. State of louisiana amended return form 1040x The cancellation is intended as a gift. State of louisiana amended return form 1040x The debt is qualified farm debt. State of louisiana amended return form 1040x The debt is qualified real property business debt. State of louisiana amended return form 1040x You are insolvent or bankrupt. State of louisiana amended return form 1040x The debt is qualified principal residence indebtedness. State of louisiana amended return form 1040x File Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), to report the income exclusion. State of louisiana amended return form 1040x For more information, including other exceptions and exclusion, see Publication 4681. State of louisiana amended return form 1040x Forms 1099-A and 1099-C. State of louisiana amended return form 1040x   If you abandon property that secures a loan and the lender knows the property has been abandoned, the lender should send you Form 1099-A showing information you need to figure your loss from the abandonment. State of louisiana amended return form 1040x However, if your debt is canceled and the lender must file Form 1099-C, the lender may include the information about the abandonment on that form instead of on Form 1099-A, and send you Form 1099-C only. State of louisiana amended return form 1040x The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. State of louisiana amended return form 1040x For abandonments of property and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. State of louisiana amended return form 1040x Foreclosures and Repossessions If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. State of louisiana amended return form 1040x The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. State of louisiana amended return form 1040x This is true even if you voluntarily return the property to the lender. State of louisiana amended return form 1040x You also may realize ordinary income from cancellation of debt if the loan balance is more than the fair market value of the property. State of louisiana amended return form 1040x Buyer's (borrower's) gain or loss. State of louisiana amended return form 1040x   You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale or exchange. State of louisiana amended return form 1040x The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. State of louisiana amended return form 1040x See Gain or Loss From Sales and Exchanges, earlier. State of louisiana amended return form 1040x You can use Table 1-2 to figure your gain or loss from a foreclosure or repossession. State of louisiana amended return form 1040x Amount realized on a nonrecourse debt. State of louisiana amended return form 1040x   If you are not personally liable for repaying the debt (nonrecourse debt) secured by the transferred property, the amount you realize includes the full debt canceled by the transfer. State of louisiana amended return form 1040x The full canceled debt is included even if the fair market value of the property is less than the canceled debt. State of louisiana amended return form 1040x Example 1. State of louisiana amended return form 1040x Chris bought a new car for $15,000. State of louisiana amended return form 1040x He paid $2,000 down and borrowed the remaining $13,000 from the dealer's credit company. State of louisiana amended return form 1040x Chris is not personally liable for the loan (nonrecourse debt), but pledges the new car as security. State of louisiana amended return form 1040x The credit company repossessed the car because he stopped making loan payments. State of louisiana amended return form 1040x The balance due after taking into account the payments Chris made was $10,000. State of louisiana amended return form 1040x The fair market value of the car when repossessed was $9,000. State of louisiana amended return form 1040x The amount Chris realized on the repossession is $10,000. State of louisiana amended return form 1040x That is the outstanding amount of the debt canceled by the repossession, even though the car's fair market value is less than $10,000. State of louisiana amended return form 1040x Chris figures his gain or loss on the repossession by comparing the amount realized ($10,000) with his adjusted basis ($15,000). State of louisiana amended return form 1040x He has a $5,000 nondeductible loss. State of louisiana amended return form 1040x Example 2. State of louisiana amended return form 1040x Abena paid $200,000 for her home. State of louisiana amended return form 1040x She paid $15,000 down and borrowed the remaining $185,000 from a bank. State of louisiana amended return form 1040x Abena is not personally liable for the loan (nonrecourse debt), but pledges the house as security. State of louisiana amended return form 1040x The bank foreclosed on the loan because Abena stopped making payments. State of louisiana amended return form 1040x When the bank foreclosed on the loan, the balance due was $180,000, the fair market value of the house was $170,000, and Abena's adjusted basis was $175,000 due to a casualty loss she had deducted. State of louisiana amended return form 1040x The amount Abena realized on the foreclosure is $180,000, the balance due and debt canceled by the foreclosure. State of louisiana amended return form 1040x She figures her gain or loss by comparing the amount realized ($180,000) with her adjusted basis ($175,000). State of louisiana amended return form 1040x She has a $5,000 realized gain. State of louisiana amended return form 1040x Amount realized on a recourse debt. State of louisiana amended return form 1040x   If you are personally liable for the debt (recourse debt), the amount realized on the foreclosure or repossession includes the lesser of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The fair market value of the transferred property. State of louisiana amended return form 1040x You are treated as receiving ordinary income from the canceled debt for the part of the debt that is more than the fair market value. State of louisiana amended return form 1040x The amount realized does not include the canceled debt that is your income from cancellation of debt. State of louisiana amended return form 1040x See Cancellation of debt, below. State of louisiana amended return form 1040x Seller's (lender's) gain or loss on repossession. State of louisiana amended return form 1040x   If you finance a buyer's purchase of property and later acquire an interest in it through foreclosure or repossession, you may have a gain or loss on the acquisition. State of louisiana amended return form 1040x For more information, see Repossession in Publication 537. State of louisiana amended return form 1040x    Table 1-2. State of louisiana amended return form 1040x Worksheet for Foreclosures and Repossessions Part 1. State of louisiana amended return form 1040x Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. State of louisiana amended return form 1040x Complete this part only  if you were personally liable for the debt. State of louisiana amended return form 1040x Otherwise,  go to Part 2. State of louisiana amended return form 1040x   1. State of louisiana amended return form 1040x Enter the amount of outstanding debt immediately before the transfer of   property reduced by any amount for which you remain personally liable after   the transfer of property   2. State of louisiana amended return form 1040x Enter the fair market value of the transferred property   3. State of louisiana amended return form 1040x Ordinary income from cancellation of debt upon foreclosure or    repossession. State of louisiana amended return form 1040x * Subtract line 2 from line 1. State of louisiana amended return form 1040x   If less than zero, enter zero   Part 2. State of louisiana amended return form 1040x Figure your gain or loss from foreclosure or repossession. State of louisiana amended return form 1040x   4. State of louisiana amended return form 1040x If you completed Part 1, enter the smaller of line 1 or line 2. State of louisiana amended return form 1040x   If you did not complete Part 1, enter the outstanding debt immediately before   the transfer of property   5. State of louisiana amended return form 1040x Enter any proceeds you received from the foreclosure sale   6. State of louisiana amended return form 1040x Add lines 4 and 5   7. State of louisiana amended return form 1040x Enter the adjusted basis of the transferred property   8. State of louisiana amended return form 1040x Gain or loss from foreclosure or repossession. State of louisiana amended return form 1040x Subtract line 7  from line 6   * The income may not be taxable. State of louisiana amended return form 1040x See Cancellation of debt. State of louisiana amended return form 1040x Cancellation of debt. State of louisiana amended return form 1040x   If property that is repossessed or foreclosed on secures a debt for which you are personally liable (recourse debt), you generally must report as ordinary income the amount by which the canceled debt is more than the fair market value of the property. State of louisiana amended return form 1040x This income is separate from any gain or loss realized from the foreclosure or repossession. State of louisiana amended return form 1040x Report the income from cancellation of a debt related to a business or rental activity as business or rental income. State of louisiana amended return form 1040x    You can use Table 1-2 to figure your income from cancellation of debt. State of louisiana amended return form 1040x   You must report this income on your tax return unless one of the following applies. State of louisiana amended return form 1040x The cancellation is intended as a gift. State of louisiana amended return form 1040x The debt is qualified farm debt. State of louisiana amended return form 1040x The debt is qualified real property business debt. State of louisiana amended return form 1040x You are insolvent or bankrupt. State of louisiana amended return form 1040x The debt is qualified principal residence indebtedness. State of louisiana amended return form 1040x File Form 982 to report the income exclusion. State of louisiana amended return form 1040x Example 1. State of louisiana amended return form 1040x Assume the same facts as in Example 1 under Amount realized on a nonrecourse debt, earlier, except Chris is personally liable for the car loan (recourse debt). State of louisiana amended return form 1040x In this case, the amount he realizes is $9,000. State of louisiana amended return form 1040x This is the lesser of the canceled debt ($10,000) or the car's fair market value ($9,000). State of louisiana amended return form 1040x Chris figures his gain or loss on the repossession by comparing the amount realized ($9,000) with his adjusted basis ($15,000). State of louisiana amended return form 1040x He has a $6,000 nondeductible loss. State of louisiana amended return form 1040x He also is treated as receiving ordinary income from cancellation of debt. State of louisiana amended return form 1040x That income is $1,000 ($10,000 − $9,000). State of louisiana amended return form 1040x This is the part of the canceled debt not included in the amount realized. State of louisiana amended return form 1040x Example 2. State of louisiana amended return form 1040x Assume the same facts as in Example 2 under Amount realized on a nonrecourse debt, earlier, except Abena is personally liable for the loan (recourse debt). State of louisiana amended return form 1040x In this case, the amount she realizes is $170,000. State of louisiana amended return form 1040x This is the lesser of the canceled debt ($180,000) or the fair market value of the house ($170,000). State of louisiana amended return form 1040x Abena figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($175,000). State of louisiana amended return form 1040x She has a $5,000 nondeductible loss. State of louisiana amended return form 1040x She also is treated as receiving ordinary income from cancellation of debt. State of louisiana amended return form 1040x (The debt is not exempt from tax as discussed under Cancellation of debt, above. State of louisiana amended return form 1040x ) That income is $10,000 ($180,000 − $170,000). State of louisiana amended return form 1040x This is the part of the canceled debt not included in the amount realized. State of louisiana amended return form 1040x Forms 1099-A and 1099-C. State of louisiana amended return form 1040x   A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A showing the information you need to figure your gain or loss. State of louisiana amended return form 1040x However, if the lender also cancels part of your debt and must file Form 1099-C, the lender may include the information about the foreclosure or repossession on that form instead of on Form 1099-A and send you Form 1099-C only. State of louisiana amended return form 1040x The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. State of louisiana amended return form 1040x For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. State of louisiana amended return form 1040x Involuntary Conversions An involuntary conversion occurs when your property is destroyed, stolen, condemned, or disposed of under the threat of condemnation and you receive other property or money in payment, such as insurance or a condemnation award. State of louisiana amended return form 1040x Involuntary conversions are also called involuntary exchanges. State of louisiana amended return form 1040x Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes unless the property is your main home. State of louisiana amended return form 1040x You report the gain or deduct the loss on your tax return for the year you realize it. State of louisiana amended return form 1040x You cannot deduct a loss from an involuntary conversion of property you held for personal use unless the loss resulted from a casualty or theft. State of louisiana amended return form 1040x However, depending on the type of property you receive, you may not have to report a gain on an involuntary conversion. State of louisiana amended return form 1040x Generally, you do not report the gain if you receive property that is similar or related in service or use to the converted property. State of louisiana amended return form 1040x Your basis for the new property is the same as your basis for the converted property. State of louisiana amended return form 1040x This means that the gain is deferred until a taxable sale or exchange occurs. State of louisiana amended return form 1040x If you receive money or property that is not similar or related in service or use to the involuntarily converted property and you buy qualifying replacement property within a certain period of time, you can elect to postpone reporting the gain on the property purchased. State of louisiana amended return form 1040x This publication explains the treatment of a gain or loss from a condemnation or disposition under the threat of condemnation. State of louisiana amended return form 1040x If you have a gain or loss from the destruction or theft of property, see Publication 547. State of louisiana amended return form 1040x Condemnations A condemnation is the process by which private property is legally taken for public use without the owner's consent. State of louisiana amended return form 1040x The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take it. State of louisiana amended return form 1040x The owner receives a condemnation award (money or property) in exchange for the property taken. State of louisiana amended return form 1040x A condemnation is like a forced sale, the owner being the seller and the condemning authority being the buyer. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x A local government authorized to acquire land for public parks informed you that it wished to acquire your property. State of louisiana amended return form 1040x After the local government took action to condemn your property, you went to court to keep it. State of louisiana amended return form 1040x But, the court decided in favor of the local government, which took your property and paid you an amount fixed by the court. State of louisiana amended return form 1040x This is a condemnation of private property for public use. State of louisiana amended return form 1040x Threat of condemnation. State of louisiana amended return form 1040x   A threat of condemnation exists if a representative of a government body or a public official authorized to acquire property for public use informs you that the government body or official has decided to acquire your property. State of louisiana amended return form 1040x You must have reasonable grounds to believe that, if you do not sell voluntarily, your property will be condemned. State of louisiana amended return form 1040x   The sale of your property to someone other than the condemning authority will also qualify as an involuntary conversion, provided you have reasonable grounds to believe that your property will be condemned. State of louisiana amended return form 1040x If the buyer of this property knows at the time of purchase that it will be condemned and sells it to the condemning authority, this sale also qualifies as an involuntary conversion. State of louisiana amended return form 1040x Reports of condemnation. State of louisiana amended return form 1040x   A threat of condemnation exists if you learn of a decision to acquire your property for public use through a report in a newspaper or other news medium, and this report is confirmed by a representative of the government body or public official involved. State of louisiana amended return form 1040x You must have reasonable grounds to believe that they will take necessary steps to condemn your property if you do not sell voluntarily. State of louisiana amended return form 1040x If you relied on oral statements made by a government representative or public official, the Internal Revenue Service (IRS) may ask you to get written confirmation of the statements. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x Your property lies along public utility lines. State of louisiana amended return form 1040x The utility company has the authority to condemn your property. State of louisiana amended return form 1040x The company informs you that it intends to acquire your property by negotiation or condemnation. State of louisiana amended return form 1040x A threat of condemnation exists when you receive the notice. State of louisiana amended return form 1040x Related property voluntarily sold. State of louisiana amended return form 1040x   A voluntary sale of your property may be treated as a forced sale that qualifies as an involuntary conversion if the property had a substantial economic relationship to property of yours that was condemned. State of louisiana amended return form 1040x A substantial economic relationship exists if together the properties were one economic unit. State of louisiana amended return form 1040x You also must show that the condemned property could not reasonably or adequately be replaced. State of louisiana amended return form 1040x You can elect to postpone reporting the gain by buying replacement property. State of louisiana amended return form 1040x See Postponement of Gain, later. State of louisiana amended return form 1040x Gain or Loss From Condemnations If your property was condemned or disposed of under the threat of condemnation, figure your gain or loss by comparing the adjusted basis of your condemned property with your net condemnation award. State of louisiana amended return form 1040x If your net condemnation award is more than the adjusted basis of the condemned property, you have a gain. State of louisiana amended return form 1040x You can postpone reporting gain from a condemnation if you buy replacement property. State of louisiana amended return form 1040x If only part of your property is condemned, you can treat the cost of restoring the remaining part to its former usefulness as the cost of replacement property. State of louisiana amended return form 1040x See Postponement of Gain, later. State of louisiana amended return form 1040x If your net condemnation award is less than your adjusted basis, you have a loss. State of louisiana amended return form 1040x If your loss is from property you held for personal use, you cannot deduct it. State of louisiana amended return form 1040x You must report any deductible loss in the tax year it happened. State of louisiana amended return form 1040x You can use Part 2 of Table 1-3 to figure your gain or loss from a condemnation award. State of louisiana amended return form 1040x Main home condemned. State of louisiana amended return form 1040x   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. State of louisiana amended return form 1040x You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). State of louisiana amended return form 1040x For information on this exclusion, see Publication 523. State of louisiana amended return form 1040x If your gain is more than you can exclude but you buy replacement property, you may be able to postpone reporting the rest of the gain. State of louisiana amended return form 1040x See Postponement of Gain, later. State of louisiana amended return form 1040x Table 1-3. State of louisiana amended return form 1040x Worksheet for Condemnations Part 1. State of louisiana amended return form 1040x Gain from severance damages. State of louisiana amended return form 1040x  If you did not receive severance damages, skip Part 1 and go to Part 2. State of louisiana amended return form 1040x   1. State of louisiana amended return form 1040x Enter gross severance damages received   2. State of louisiana amended return form 1040x Enter your expenses in getting severance damages   3. State of louisiana amended return form 1040x Subtract line 2 from line 1. State of louisiana amended return form 1040x If less than zero, enter -0-   4. State of louisiana amended return form 1040x Enter any special assessment on remaining property taken out of your award   5. State of louisiana amended return form 1040x Net severance damages. State of louisiana amended return form 1040x Subtract line 4 from line 3. State of louisiana amended return form 1040x If less than zero, enter -0-   6. State of louisiana amended return form 1040x Enter the adjusted basis of the remaining property   7. State of louisiana amended return form 1040x Gain from severance damages. State of louisiana amended return form 1040x Subtract line 6 from line 5. State of louisiana amended return form 1040x If less than zero, enter -0-   8. State of louisiana amended return form 1040x Refigured adjusted basis of the remaining property. State of louisiana amended return form 1040x Subtract line 5 from line 6. State of louisiana amended return form 1040x If less than zero, enter -0-   Part 2. State of louisiana amended return form 1040x Gain or loss from condemnation award. State of louisiana amended return form 1040x   9. State of louisiana amended return form 1040x Enter the gross condemnation award received   10. State of louisiana amended return form 1040x Enter your expenses in getting the condemnation award   11. State of louisiana amended return form 1040x If you completed Part 1, and line 4 is more than line 3, subtract line 3 from line 4. State of louisiana amended return form 1040x If you did not complete Part 1, but a special assessment was taken out of your award, enter that amount. State of louisiana amended return form 1040x Otherwise, enter -0-   12. State of louisiana amended return form 1040x Add lines 10 and 11   13. State of louisiana amended return form 1040x Net condemnation award. State of louisiana amended return form 1040x Subtract line 12 from line 9   14. State of louisiana amended return form 1040x Enter the adjusted basis of the condemned property   15. State of louisiana amended return form 1040x Gain from condemnation award. State of louisiana amended return form 1040x If line 14 is more than line 13, enter -0-. State of louisiana amended return form 1040x Otherwise, subtract line 14 from  line 13 and skip line 16   16. State of louisiana amended return form 1040x Loss from condemnation award. State of louisiana amended return form 1040x Subtract line 13 from line 14     (Note: You cannot deduct the amount on line 16 if the condemned property was held for personal use. State of louisiana amended return form 1040x )   Part 3. State of louisiana amended return form 1040x Postponed gain from condemnation. State of louisiana amended return form 1040x  (Complete only if line 7 or line 15 is more than zero and you bought qualifying replacement property or made expenditures to restore the usefulness of your remaining property. State of louisiana amended return form 1040x )   17. State of louisiana amended return form 1040x If you completed Part 1, and line 7 is more than zero, enter the amount from line 5. State of louisiana amended return form 1040x Otherwise, enter -0-   18. State of louisiana amended return form 1040x If line 15 is more than zero, enter the amount from line 13. State of louisiana amended return form 1040x Otherwise, enter -0-   19. State of louisiana amended return form 1040x Add lines 17 and 18. State of louisiana amended return form 1040x If the condemned property was your main home, subtract from this total the gain you excluded from your income and enter the result   20. State of louisiana amended return form 1040x Enter the total cost of replacement property and any expenses to restore the usefulness of your remaining property   21. State of louisiana amended return form 1040x Subtract line 20 from line 19. State of louisiana amended return form 1040x If less than zero, enter -0-   22. State of louisiana amended return form 1040x If you completed Part 1, add lines 7 and 15. State of louisiana amended return form 1040x Otherwise, enter the amount from line 15. State of louisiana amended return form 1040x If the condemned property was your main home, subtract from this total the gain you excluded from your income and enter the result   23. State of louisiana amended return form 1040x Recognized gain. State of louisiana amended return form 1040x Enter the smaller of line 21 or line 22. State of louisiana amended return form 1040x   24. State of louisiana amended return form 1040x Postponed gain. State of louisiana amended return form 1040x Subtract line 23 from line 22. State of louisiana amended return form 1040x If less than zero, enter -0-   Condemnation award. State of louisiana amended return form 1040x   A condemnation award is the money you are paid or the value of other property you receive for your condemned property. State of louisiana amended return form 1040x The award is also the amount you are paid for the sale of your property under threat of condemnation. State of louisiana amended return form 1040x Payment of your debts. State of louisiana amended return form 1040x   Amounts taken out of the award to pay your debts are considered paid to you. State of louisiana amended return form 1040x Amounts the government pays directly to the holder of a mortgage or lien against your property are part of your award, even if the debt attaches to the property and is not your personal liability. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x The state condemned your property for public use. State of louisiana amended return form 1040x The award was set at $200,000. State of louisiana amended return form 1040x The state paid you only $148,000 because it paid $50,000 to your mortgage holder and $2,000 accrued real estate taxes. State of louisiana amended return form 1040x You are considered to have received the entire $200,000 as a condemnation award. State of louisiana amended return form 1040x Interest on award. State of louisiana amended return form 1040x   If the condemning authority pays you interest for its delay in paying your award, it is not part of the condemnation award. State of louisiana amended return form 1040x You must report the interest separately as ordinary income. State of louisiana amended return form 1040x Payments to relocate. State of louisiana amended return form 1040x   Payments you receive to relocate and replace housing because you have been displaced from your home, business, or farm as a result of federal or federally assisted programs are not part of the condemnation award. State of louisiana amended return form 1040x Do not include them in your income. State of louisiana amended return form 1040x Replacement housing payments used to buy new property are included in the property's basis as part of your cost. State of louisiana amended return form 1040x Net condemnation award. State of louisiana amended return form 1040x   A net condemnation award is the total award you received, or are considered to have received, for the condemned property minus your expenses of obtaining the award. State of louisiana amended return form 1040x If only a part of your property was condemned, you also must reduce the award by any special assessment levied against the part of the property you retain. State of louisiana amended return form 1040x This is discussed later under Special assessment taken out of award. State of louisiana amended return form 1040x Severance damages. State of louisiana amended return form 1040x    Severance damages are not part of the award paid for the property condemned. State of louisiana amended return form 1040x They are paid to you if part of your property is condemned and the value of the part you keep is decreased because of the condemnation. State of louisiana amended return form 1040x   For example, you may receive severance damages if your property is subject to flooding because you sell flowage easement rights (the condemned property) under threat of condemnation. State of louisiana amended return form 1040x Severance damages also may be given to you if, because part of your property is condemned for a highway, you must replace fences, dig new wells or ditches, or plant trees to restore your remaining property to the same usefulness it had before the condemnation. State of louisiana amended return form 1040x   The contracting parties should agree on the specific amount of severance damages in writing. State of louisiana amended return form 1040x If this is not done, all proceeds from the condemning authority are considered awarded for your condemned property. State of louisiana amended return form 1040x   You cannot make a completely new allocation of the total award after the transaction is completed. State of louisiana amended return form 1040x However, you can show how much of the award both parties intended for severance damages. State of louisiana amended return form 1040x The severance damages part of the award is determined from all the facts and circumstances. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x You sold part of your property to the state under threat of condemnation. State of louisiana amended return form 1040x The contract you and the condemning authority signed showed only the total purchase price. State of louisiana amended return form 1040x It did not specify a fixed sum for severance damages. State of louisiana amended return form 1040x However, at settlement, the condemning authority gave you closing papers showing clearly the part of the purchase price that was for severance damages. State of louisiana amended return form 1040x You may treat this part as severance damages. State of louisiana amended return form 1040x Treatment of severance damages. State of louisiana amended return form 1040x   Your net severance damages are treated as the amount realized from an involuntary conversion of the remaining part of your property. State of louisiana amended return form 1040x Use them to reduce the basis of the remaining property. State of louisiana amended return form 1040x If the amount of severance damages is based on damage to a specific part of the property you kept, reduce the basis of only that part by the net severance damages. State of louisiana amended return form 1040x   If your net severance damages are more than the basis of your retained property, you have a gain. State of louisiana amended return form 1040x You may be able to postpone reporting the gain. State of louisiana amended return form 1040x See Postponement of Gain, later. State of louisiana amended return form 1040x    You can use Part 1 of Table 1-3 to figure any gain from severance damages and to refigure the adjusted basis of the remaining part of your property. State of louisiana amended return form 1040x Net severance damages. State of louisiana amended return form 1040x   To figure your net severance damages, you first must reduce your severance damages by your expenses in obtaining the damages. State of louisiana amended return form 1040x You then reduce them by any special assessment (described later) levied against the remaining part of the property and retained out of the award by the condemning authority. State of louisiana amended return form 1040x The balance is your net severance damages. State of louisiana amended return form 1040x Expenses of obtaining a condemnation award and severance damages. State of louisiana amended return form 1040x   Subtract the expenses of obtaining a condemnation award, such as legal, engineering, and appraisal fees, from the total award. State of louisiana amended return form 1040x Also, subtract the expenses of obtaining severance damages, which may include similar expenses, from the severance damages paid to you. State of louisiana amended return form 1040x If you cannot determine which part of your expenses is for each part of the condemnation proceeds, you must make a proportionate allocation. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x You receive a condemnation award and severance damages. State of louisiana amended return form 1040x One-fourth of the total was designated as severance damages in your agreement with the condemning authority. State of louisiana amended return form 1040x You had legal expenses for the entire condemnation proceeding. State of louisiana amended return form 1040x You cannot determine how much of your legal expenses is for each part of the condemnation proceeds. State of louisiana amended return form 1040x You must allocate one-fourth of your legal expenses to the severance damages and the other three-fourths to the condemnation award. State of louisiana amended return form 1040x Special assessment retained out of award. State of louisiana amended return form 1040x   When only part of your property is condemned, a special assessment levied against the remaining property may be retained by the governing body out of your condemnation award. State of louisiana amended return form 1040x An assessment may be levied if the remaining part of your property benefited by the improvement resulting from the condemnation. State of louisiana amended return form 1040x Examples of improvements that may cause a special assessment are widening a street and installing a sewer. State of louisiana amended return form 1040x   To figure your net condemnation award, you must reduce the amount of the award by the assessment retained out of the award. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x To widen the street in front of your home, the city condemned a 25-foot deep strip of your land. State of louisiana amended return form 1040x You were awarded $5,000 for this and spent $300 to get the award. State of louisiana amended return form 1040x Before paying the award, the city levied a special assessment of $700 for the street improvement against your remaining property. State of louisiana amended return form 1040x The city then paid you only $4,300. State of louisiana amended return form 1040x Your net award is $4,000 ($5,000 total award minus $300 expenses in obtaining the award and $700 for the special assessment retained). State of louisiana amended return form 1040x If the $700 special assessment was not retained out of the award and you were paid $5,000, your net award would be $4,700 ($5,000 − $300). State of louisiana amended return form 1040x The net award would not change, even if you later paid the assessment from the amount you received. State of louisiana amended return form 1040x Severance damages received. State of louisiana amended return form 1040x   If severance damages are included in the condemnation proceeds, the special assessment retained out of the severance damages is first used to reduce the severance damages. State of louisiana amended return form 1040x Any balance of the special assessment is used to reduce the condemnation award. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x You were awarded $4,000 for the condemnation of your property and $1,000 for severance damages. State of louisiana amended return form 1040x You spent $300 to obtain the severance damages. State of louisiana amended return form 1040x A special assessment of $800 was retained out of the award. State of louisiana amended return form 1040x The $1,000 severance damages are reduced to zero by first subtracting the $300 expenses and then $700 of the special assessment. State of louisiana amended return form 1040x Your $4,000 condemnation award is reduced by the $100 balance of the special assessment, leaving a $3,900 net condemnation award. State of louisiana amended return form 1040x Part business or rental. State of louisiana amended return form 1040x   If you used part of your condemned property as your home and part as business or rental property, treat each part as a separate property. State of louisiana amended return form 1040x Figure your gain or loss separately because gain or loss on each part may be treated differently. State of louisiana amended return form 1040x   Some examples of this type of property are a building in which you live and operate a grocery, and a building in which you live on the first floor and rent out the second floor. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x You sold your building for $24,000 under threat of condemnation to a public utility company that had the authority to condemn. State of louisiana amended return form 1040x You rented half the building and lived in the other half. State of louisiana amended return form 1040x You paid $25,000 for the building and spent an additional $1,000 for a new roof. State of louisiana amended return form 1040x You claimed allowable depreciation of $4,600 on the rental half. State of louisiana amended return form 1040x You spent $200 in legal expenses to obtain the condemnation award. State of louisiana amended return form 1040x Figure your gain or loss as follows. State of louisiana amended return form 1040x     Resi- dential Part Busi- ness Part 1) Condemnation award received $12,000 $12,000 2) Minus: Legal expenses, $200 100 100 3) Net condemnation award $11,900 $11,900 4) Adjusted basis:       ½ of original cost, $25,000 $12,500 $12,500   Plus: ½ of cost of roof, $1,000 500 500   Total $13,000 $13,000 5) Minus: Depreciation   4,600 6) Adjusted basis, business part   $8,400 7) (Loss) on residential property ($1,100)   8) Gain on business property $3,500 The loss on the residential part of the property is not deductible. State of louisiana amended return form 1040x Postponement of Gain Do not report the gain on condemned property if you receive only property that is similar or related in service or use to the condemned property. State of louisiana amended return form 1040x Your basis for the new property is the same as your basis for the old. State of louisiana amended return form 1040x Money or unlike property received. State of louisiana amended return form 1040x   You ordinarily must report the gain if you receive money or unlike property. State of louisiana amended return form 1040x You can elect to postpone reporting the gain if you buy property that is similar or related in service or use to the condemned property within the replacement period, discussed later. State of louisiana amended return form 1040x You also can elect to postpone reporting the gain if you buy a controlling interest (at least 80%) in a corporation owning property that is similar or related in service or use to the condemned property. State of louisiana amended return form 1040x See Controlling interest in a corporation, later. State of louisiana amended return form 1040x   To postpone reporting all the gain, you must buy replacement property costing at least as much as the amount realized for the condemned property. State of louisiana amended return form 1040x If the cost of the replacement property is less than the amount realized, you must report the gain up to the unspent part of the amount realized. State of louisiana amended return form 1040x   The basis of the replacement property is its cost, reduced by the postponed gain. State of louisiana amended return form 1040x Also, if your replacement property is stock in a corporation that owns property similar or related in service or use, the corporation generally will reduce its basis in its assets by the amount by which you reduce your basis in the stock. State of louisiana amended return form 1040x See Controlling interest in a corporation, later. State of louisiana amended return form 1040x You can use Part 3 of Table 1-3 to figure the gain you must report and your postponed gain. State of louisiana amended return form 1040x Postponing gain on severance damages. State of louisiana amended return form 1040x   If you received severance damages for part of your property because another part was condemned and you buy replacement property, you can elect to postpone reporting gain. State of louisiana amended return form 1040x See Treatment of severance damages, earlier. State of louisiana amended return form 1040x You can postpone reporting all your gain if the replacement property costs at least as much as your net severance damages plus your net condemnation award (if resulting in gain). State of louisiana amended return form 1040x   You also can make this election if you spend the severance damages, together with other money you received for the condemned property (if resulting in gain), to acquire nearby property that will allow you to continue your business. State of louisiana amended return form 1040x If suitable nearby property is not available and you are forced to sell the remaining property and relocate in order to continue your business, see Postponing gain on the sale of related property, next. State of louisiana amended return form 1040x   If you restore the remaining property to its former usefulness, you can treat the cost of restoring it as the cost of replacement property. State of louisiana amended return form 1040x Postponing gain on the sale of related property. State of louisiana amended return form 1040x   If you sell property that is related to the condemned property and then buy replacement property, you can elect to postpone reporting gain on the sale. State of louisiana amended return form 1040x You must meet the requirements explained earlier under Related property voluntarily sold. State of louisiana amended return form 1040x You can postpone reporting all your gain if the replacement property costs at least as much as the amount realized from the sale plus your net condemnation award (if resulting in gain) plus your net severance damages, if any (if resulting in gain). State of louisiana amended return form 1040x Buying replacement property from a related person. State of louisiana amended return form 1040x   Certain taxpayers cannot postpone reporting gain from a condemnation if they buy the replacement property from a related person. State of louisiana amended return form 1040x For information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2. State of louisiana amended return form 1040x   This rule applies to the following taxpayers. State of louisiana amended return form 1040x C corporations. State of louisiana amended return form 1040x Partnerships in which more than 50% of the capital or profits interest is owned by  C corporations. State of louisiana amended return form 1040x All others (including individuals, partnerships (other than those in (2)), and S corporations) if the total realized gain for the tax year on all involuntarily converted properties on which there is realized gain of more than $100,000. State of louisiana amended return form 1040x   For taxpayers described in (3) above, gains cannot be offset with any losses when determining whether the total gain is more than $100,000. State of louisiana amended return form 1040x If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. State of louisiana amended return form 1040x If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. State of louisiana amended return form 1040x Exception. State of louisiana amended return form 1040x   This rule does not apply if the related person acquired the property from an unrelated person within the replacement period. State of louisiana amended return form 1040x Advance payment. State of louisiana amended return form 1040x   If you pay a contractor in advance to build your replacement property, you have not bought replacement property unless it is finished before the end of the replacement period (discussed later). State of louisiana amended return form 1040x Replacement property. State of louisiana amended return form 1040x   To postpone reporting gain, you must buy replacement property for the specific purpose of replacing your condemned property. State of louisiana amended return form 1040x You do not have to use the actual funds from the condemnation award to acquire the replacement property. State of louisiana amended return form 1040x Property you acquire by gift or inheritance does not qualify as replacement property. State of louisiana amended return form 1040x Similar or related in service or use. State of louisiana amended return form 1040x   Your replacement property must be similar or related in service or use to the property it replaces. State of louisiana amended return form 1040x   If the condemned property is real property you held for productive use in your trade or business or for investment (other than property held mainly for sale), like-kind property to be held either for productive use in trade or business or for investment will be treated as property similar or related in service or use. State of louisiana amended return form 1040x For a discussion of like-kind property, see Like-Kind Property under Like-Kind Exchanges, later. State of louisiana amended return form 1040x Owner-user. State of louisiana amended return form 1040x   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x Your home was condemned and you invested the proceeds from the condemnation in a grocery store. State of louisiana amended return form 1040x Your replacement property is not similar or related in service or use to the condemned property. State of louisiana amended return form 1040x To be similar or related in service or use, your replacement property must also be used by you as your home. State of louisiana amended return form 1040x Owner-investor. State of louisiana amended return form 1040x   If you are an owner-investor, similar or related in service or use means that any replacement property must have the same relationship of services or uses to you as the property it replaces. State of louisiana amended return form 1040x You decide this by determining all the following information. State of louisiana amended return form 1040x Whether the properties are of similar service to you. State of louisiana amended return form 1040x The nature of the business risks connected with the properties. State of louisiana amended return form 1040x What the properties demand of you in the way of management, service, and relations to your tenants. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x You owned land and a building you rented to a manufacturing company. State of louisiana amended return form 1040x The building was condemned. State of louisiana amended return form 1040x During the replacement period, you had a new building built on other land you already owned. State of louisiana amended return form 1040x You rented out the new building for use as a wholesale grocery warehouse. State of louisiana amended return form 1040x The replacement property is also rental property, so the two properties are considered similar or related in service or use if there is a similarity in all the following areas. State of louisiana amended return form 1040x Your management activities. State of louisiana amended return form 1040x The amount and kind of services you provide to your tenants. State of louisiana amended return form 1040x The nature of your business risks connected with the properties. State of louisiana amended return form 1040x Leasehold replaced with fee simple property. State of louisiana amended return form 1040x   Fee simple property you will use in your trade or business or for investment can qualify as replacement property that is similar or related in service or use to a condemned leasehold if you use it in the same business and for the identical purpose as the condemned leasehold. State of louisiana amended return form 1040x   A fee simple property interest generally is a property interest that entitles the owner to the entire property with unconditional power to dispose of it during his or her lifetime. State of louisiana amended return form 1040x A leasehold is property held under a lease, usually for a term of years. State of louisiana amended return form 1040x Outdoor advertising display replaced with real property. State of louisiana amended return form 1040x   You can elect to treat an outdoor advertising display as real property. State of louisiana amended return form 1040x If you make this election and you replace the display with real property in which you hold a different kind of interest, your replacement property can qualify as like-kind property. State of louisiana amended return form 1040x For example, real property bought to replace a destroyed billboard and leased property on which the billboard was located qualify as property of a like-kind. State of louisiana amended return form 1040x   You can make this election only if you did not claim a section 179 deduction for the display. State of louisiana amended return form 1040x You cannot cancel this election unless you get the consent of the IRS. State of louisiana amended return form 1040x   An outdoor advertising display is a sign or device rigidly assembled and permanently attached to the ground, a building, or any other permanent structure used to display a commercial or other advertisement to the public. State of louisiana amended return form 1040x Substituting replacement property. State of louisiana amended return form 1040x   Once you designate certain property as replacement property on your tax return, you cannot substitute other qualified property. State of louisiana amended return form 1040x But, if your previously designated replacement property does not qualify, you can substitute qualified property if you acquire it within the replacement period. State of louisiana amended return form 1040x Controlling interest in a corporation. State of louisiana amended return form 1040x   You can replace property by acquiring a controlling interest in a corporation that owns property similar or related in service or use to your condemned property. State of louisiana amended return form 1040x You have controlling interest if you own stock having at least 80% of the combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of all other classes of stock of the corporation. State of louisiana amended return form 1040x Basis adjustment to corporation's property. State of louisiana amended return form 1040x   The basis of property held by the corporation at the time you acquired control must be reduced by your postponed gain, if any. State of louisiana amended return form 1040x You are not required to reduce the adjusted basis of the corporation's properties below your adjusted basis in the corporation's stock (determined after reduction by your postponed gain). State of louisiana amended return form 1040x   Allocate this reduction to the following classes of property in the order shown below. State of louisiana amended return form 1040x Property that is similar or related in service or use to the condemned property. State of louisiana amended return form 1040x Depreciable property not reduced in (1). State of louisiana amended return form 1040x All other property. State of louisiana amended return form 1040x If two or more properties fall in the same class, allocate the reduction to each property in proportion to the adjusted basis of all the properties in that class. State of louisiana amended return form 1040x The reduced basis of any single property cannot be less than zero. State of louisiana amended return form 1040x Main home replaced. State of louisiana amended return form 1040x   If your gain from a condemnation of your main home is more than you can exclude from your income (see Main home condemned under Gain or Loss From Condemnations, earlier), you can postpone reporting the rest of the gain by buying replacement property that is similar or related in service or use. State of louisiana amended return form 1040x The replacement property must cost at least as much as the amount realized from the condemnation minus the excluded gain. State of louisiana amended return form 1040x   You must reduce the basis of your replacement property by the postponed gain. State of louisiana amended return form 1040x Also, if you postpone reporting any part of your gain under these rules, you are treated as having owned and used the replacement property as your main home for the period you owned and used the condemned property as your main home. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x City authorities condemned your home that you had used as a personal residence for 5 years prior to the condemnation. State of louisiana amended return form 1040x The city paid you a condemnation award of $400,000. State of louisiana amended return form 1040x Your adjusted basis in the property was $80,000. State of louisiana amended return form 1040x You realize a gain of $320,000 ($400,000 − $80,000). State of louisiana amended return form 1040x You purchased a new home for $100,000. State of louisiana amended return form 1040x You can exclude $250,000 of the realized gain from your gross income. State of louisiana amended return form 1040x The amount realized is then treated as being $150,000 ($400,000 − $250,000) and the gain realized is $70,000 ($150,000 amount realized − $80,000 adjusted basis). State of louisiana amended return form 1040x You must recognize $50,000 of the gain ($150,000 amount realized − $100,000 cost of new home). State of louisiana amended return form 1040x The remaining $20,000 of realized gain is postponed. State of louisiana amended return form 1040x Your basis in the new home is $80,000 ($100,000 cost − $20,000 gain postponed). State of louisiana amended return form 1040x Replacement period. State of louisiana amended return form 1040x   To postpone reporting your gain from a condemnation, you must buy replacement property within a certain period of time. State of louisiana amended return form 1040x This is the replacement period. State of louisiana amended return form 1040x   The replacement period for a condemnation begins on the earlier of the following dates. State of louisiana amended return form 1040x The date on which you disposed of the condemned property. State of louisiana amended return form 1040x The date on which the threat of condemnation began. State of louisiana amended return form 1040x   The replacement period generally ends 2 years after the end of the first tax year in which any part of the gain on the condemnation is realized. State of louisiana amended return form 1040x However, see the exceptions below. State of louisiana amended return form 1040x Three-year replacement period for certain property. State of louisiana amended return form 1040x   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the end of the first tax year in which any part of the gain on the condemnation is realized. State of louisiana amended return form 1040x However, this 3-year replacement period cannot be used if you replace the condemned property by acquiring control of a corporation owning property that is similar or related in service or use. State of louisiana amended return form 1040x Five-year replacement period for certain property. State of louisiana amended return form 1040x   The replacement period ends 5 years after the end of the first tax year in which any part of the gain is realized on the compulsory or involuntary conversion of the following qualified property. State of louisiana amended return form 1040x Property in any Midwestern disaster area compulsorily or involuntarily converted on or after the applicable disaster date as a result of severe storms, tornadoes, or flooding, but only if substantially all of the use of the replacement property is in a Midwestern disaster area. State of louisiana amended return form 1040x Property in the Kansas disaster area compulsorily or involuntarily converted after May 3, 2007, but only if substantially all of the use of the replacement property is in the Kansas disaster area. State of louisiana amended return form 1040x Property in the Hurricane Katrina disaster area compulsorily or involuntarily converted after August 24, 2005, as a result of Hurricane Katrina, but only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. State of louisiana amended return form 1040x Extended replacement period for taxpayers affected by other federally declared disasters. State of louisiana amended return form 1040x    If you are affected by a federally declared disaster, the IRS may grant disaster relief by extending the periods to perform certain tax-related acts for 2013, including the replacement period, by up to one year. State of louisiana amended return form 1040x For more information visit www. State of louisiana amended return form 1040x irs. State of louisiana amended return form 1040x gov/uac/Tax-Relief-in-Disaster-Situations. State of louisiana amended return form 1040x Weather-related sales of livestock in an area eligible for federal assistance. State of louisiana amended return form 1040x   Generally, if the sale or exchange of livestock is due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. State of louisiana amended return form 1040x    If the weather-related conditions continue for longer than 3 years, the replacement period may be extended on a regional basis until the end of your first drought-free year for the applicable region. State of louisiana amended return form 1040x See Notice 2006-82. State of louisiana amended return form 1040x You can find Notice 2006-82 on page 529 of Internal Revenue Bulletin 2006-39 at www. State of louisiana amended return form 1040x irs. State of louisiana amended return form 1040x gov/irb/2006-39_IRB/ar13. State of louisiana amended return form 1040x html. State of louisiana amended return form 1040x    Each year, the IRS publishes a list of counties, districts, cities, or parishes for which exceptional, extreme, or severe drought was reported during the preceding 12 months. State of louisiana amended return form 1040x If you qualified for a 4-year replacement period for livestock sold or exchanged on account of drought and your replacement period is scheduled to expire at the end of 2013 (or at the end of the tax year that includes August 31, 2013), see Notice 2013-62. State of louisiana amended return form 1040x You can find Notice 2013-62 on page 466 of Internal Revenue Bulletin 2013-45 at www. State of louisiana amended return form 1040x irs. State of louisiana amended return form 1040x gov/irb/2013-45_IRB/ar04. State of louisiana amended return form 1040x html. State of louisiana amended return form 1040x The replacement period will be extended under Notice 2006-82 if the applicable region is on the list included in Notice 2013-62. State of louisiana amended return form 1040x Determining when gain is realized. State of louisiana amended return form 1040x   If you are a cash basis taxpayer, you realize gain when you receive payments that are more than your basis in the property. State of louisiana amended return form 1040x If the condemning authority makes deposits with the court, you realize gain when you withdraw (or have the right to withdraw) amounts that are more than your basis. State of louisiana amended return form 1040x   This applies even if the amounts received are only partial or advance payments and the full award has not yet been determined. State of louisiana amended return form 1040x A replacement will be too late if you wait for a final determination that does not take place in the applicable replacement period after you first realize gain. State of louisiana amended return form 1040x   For accrual basis taxpayers, gain (if any) accrues in the earlier year when either of the following occurs. State of louisiana amended return form 1040x All events have occurred that fix the right to the condemnation award and the amount can be determined with reasonable accuracy. State of louisiana amended return form 1040x All or part of the award is actually or constructively received. State of louisiana amended return form 1040x For example, if you have an absolute right to a part of a condemnation award when it is deposited with the court, the amount deposited accrues in the year the deposit is made even though the full amount of the award is still contested. State of louisiana amended return form 1040x Replacement property bought before the condemnation. State of louisiana amended return form 1040x   If you buy your replacement property after there is a threat of condemnation but before the actual condemnation and you still hold the replacement property at the time of the condemnation, you have bought your replacement property within the replacement period. State of louisiana amended return form 1040x Property you acquire before there is a threat of condemnation does not qualify as replacement property acquired within the replacement period. State of louisiana amended return form 1040x Example. State of louisiana amended return form 1040x On April 3, 2012, city authorities notified you that your property would be condemned. State of louisiana amended return form 1040x On June 5, 2012, you acquired property to replace the property to be condemned. State of louisiana amended return form 1040x You still had the new property when the city took possession of your old property on September 4, 2013. State of louisiana amended return form 1040x You have made a replacement within the replacement period. State of louisiana amended return form 1040x Extension. State of louisiana amended return form 1040x   You can request an extension of the replacement period from the IRS director for your area. State of louisiana amended return form 1040x You should apply before the end of the replacement period. State of louisiana amended return form 1040x Your request should explain in detail why you need an extension. State of louisiana amended return form 1040x The IRS will consider a request filed within a reasonable time after the replacement period if you can show reasonable cause for the delay. State of louisiana amended return form 1040x An extension of the replacement period will be granted if you can show reasonable cause for not making the replacement within the regular period. State of louisiana amended return form 1040x   Ordinarily, requests for extensions are granted near the end of the replacement period or the extended replacement period. State of louisiana amended return form 1040x Extensions are usually limited to a period of 1 year or less. State of louisiana amended return form 1040x The high market value or scarcity of replacement property is not a sufficient reason for granting an extension. State of louisiana amended return form 1040x If your replacement property is being built and you clearly show that the replacement or restoration cannot be made within the replacement peri
Print - Click this link to Print this page

IRS Releases the Dirty Dozen Tax Scams for 2012

IR-2012-23, Feb. 16, 2012

WASHINGTON –– The Internal Revenue Service today issued its annual “Dirty Dozen” ranking of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

“Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” said IRS Commissioner Doug Shulman. “Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money. Don’t be fooled by these scams.”

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

The following is the Dirty Dozen tax scams for 2012:

Identity Theft

Topping this year’s list Dirty Dozen list is identity theft. In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.
 
An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized. 

The IRS has a robust screening process with measures in place to stop fraudulent returns. While the IRS is continuing to address tax-related identity theft aggressively, the agency is also seeing an increase in identity crimes, including more complex schemes. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.

In January, the IRS announced the results of a massive, national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft.  Working with the Justice Department’s Tax Division and local U.S. Attorneys’ offices, the nationwide effort targeted 105 people in 23 states.

Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit.  For more information, visit the special identity theft page at www.IRS.gov/identitytheft

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information.  This includes any type of electronic communication, such as text messages and social media channels.  The IRS has information that can help you protect yourself from email scams.

Return Preparer Fraud

About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers.

Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.

In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and enter it on the returns he or she prepares.

Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:

  • Do not sign the return or place a Preparer Tax identification Number on it.
  • Do not give you a copy of your tax return.
  • Promise larger than normal tax refunds.
  • Charge a percentage of the refund amount as preparation fee.
  • Require you to split the refund to pay the preparation fee.
  • Add forms to the return you have never filed before.
  • Encourage you to place false information on your return, such as false income, expenses and/or credits.

For advice on how to find a competent tax professional, see  Tips for Choosing a Tax Preparer.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities, using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice to prosecute tax evasion cases.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.
 
Since 2009, 30,000 individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to bring their money back into the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore will become increasingly more difficult.

At the beginning of this year, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.  This program will be open for an indefinite period until otherwise announced.

The IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program. On top of that, the IRS has collected an additional $1 billion from up front payments required under the 2011 program.  That number will grow as the IRS processes the 2011 cases.

“Free Money” from the IRS & Tax Scams Involving Social Security

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country. These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives.

Scammers prey on low income individuals and the elderly. They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone. The IRS warns all taxpayers to remain vigilant.

There are a number of tax scams involving Social Security. For example, scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund but uses inflated information to complete the return. 

Beware. Intentional mistakes of this kind can result in a $5,000 penalty.

False/Inflated Income and Expenses

Including income that was never earned, either as wages or as self-employment income in order to maximize refundable credits, is another popular scam. Claiming income you did not earn or expenses you did not pay in order to secure larger refundable credits such as the Earned Income Tax Credit could have serious repercussions.  This could result in repaying the erroneous refunds, including interest and penalties, and in some cases, even prosecution. 

Additionally, some taxpayers are filing excessive claims for the fuel tax credit. Farmers and other taxpayers who use fuel for off-highway business purposes may be eligible for the fuel tax credit. But other individuals have claimed the tax credit when their occupations or income levels make the claims unreasonable. Fraud involving the fuel tax credit is considered a frivolous tax claim and can result in a penalty of $5,000.

False Form 1099 Refund Claims

In this ongoing scam, the perpetrator files a fake information return, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return. In some cases, individuals have made refund claims based on the bogus theory that the federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS.

Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.

Frivolous Arguments

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous tax arguments that taxpayers should avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

Falsely Claiming Zero Wages

Filing a phony information return is an illegal way to lower the amount of taxes an individual owes. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.

Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any variations of this scheme. Filing this type of return may result in a $5,000 penalty.

Abuse of Charitable Organizations and Deductions

IRS examiners continue to uncover the intentional abuse of 501(c)(3) organizations, including arrangements that improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or the income from donated property. The IRS is investigating schemes that involve the donation of non-cash assets –– including situations in which several organizations claim the full value of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new standards for qualified appraisals.

Disguised Corporate Ownership

Third parties are improperly used to request employer identification numbers and form corporations that obscure the true ownership of the business.

These entities can be used to underreport income, claim fictitious deductions, avoid filing tax returns, participate in listed transactions and facilitate money laundering, and financial crimes. The IRS is working with state authorities to identify these entities and bring the owners into compliance with the law.

Misuse of Trusts

For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. While there are legitimate uses of trusts in tax and estate planning, some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the tax benefits promised and are used primarily as a means of avoiding income tax liability and hiding assets from creditors, including the IRS.

IRS personnel have seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement.
 

Follow the IRS on New Media
Subscribe to IRS Newswire
 

Page Last Reviewed or Updated: 11-Feb-2014

The State Of Louisiana Amended Return Form 1040x

State of louisiana amended return form 1040x Publication 915 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. State of louisiana amended return form 1040x Tax questions. State of louisiana amended return form 1040x Useful Items - You may want to see: Reminders Future developments. State of louisiana amended return form 1040x  The IRS has created a page on IRS. State of louisiana amended return form 1040x gov for information about Publication 915, at www. State of louisiana amended return form 1040x irs. State of louisiana amended return form 1040x gov/pub915. State of louisiana amended return form 1040x Information about any future developments affecting Publication 915 (such as legislation enacted after we release it) will be posted on that page. State of louisiana amended return form 1040x Photographs of missing children. State of louisiana amended return form 1040x  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. State of louisiana amended return form 1040x Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. State of louisiana amended return form 1040x You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. State of louisiana amended return form 1040x Introduction This publication explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits. State of louisiana amended return form 1040x It is prepared through the joint efforts of the Internal Revenue Service (IRS), the Social Security Administration (SSA), and the U. State of louisiana amended return form 1040x S. State of louisiana amended return form 1040x Railroad Retirement Board (RRB). State of louisiana amended return form 1040x Social security benefits include monthly retirement, survivor, and disability benefits. State of louisiana amended return form 1040x They do not include supplemental security income (SSI) payments, which are not taxable. State of louisiana amended return form 1040x Equivalent tier 1 railroad retirement benefits are the part of tier 1 benefits that a railroad employee or beneficiary would have been entitled to receive under the social security system. State of louisiana amended return form 1040x They are commonly called the social security equivalent benefit (SSEB) portion of tier 1 benefits. State of louisiana amended return form 1040x If you received these benefits during 2013, you should have received a Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Payments by the Railroad Retirement Board, showing the amount. State of louisiana amended return form 1040x (If you are a nonresident alien, you should have received Form SSA-1042S, Social Security Benefit Statement, or Form RRB-1042S, Statement for Nonresident Alien Recipients of: Payments by the Railroad Retirement Board. State of louisiana amended return form 1040x ) Note. State of louisiana amended return form 1040x When the term “benefits” is used in this publication, it applies to both social security benefits and the SSEB portion of tier 1 railroad retirement benefits. State of louisiana amended return form 1040x What is covered in this publication. State of louisiana amended return form 1040x   This publication covers the following topics: Whether any of your benefits are taxable, How much is taxable, How to report taxable benefits, How to treat lump-sum benefit payments, and Deductions related to your benefits, including a deduction or credit you can claim if your repayments are more than your gross benefits. State of louisiana amended return form 1040x The Appendix at the end of this publication explains items shown on your Form SSA-1099, SSA-1042S, RRB-1099, or RRB-1042S. State of louisiana amended return form 1040x What is not covered in this publication. State of louisiana amended return form 1040x   This publication does not cover the tax rules for the following railroad retirement benefits: Non-social security equivalent benefit (NSSEB) portion of tier 1 benefits, Tier 2 benefits, Vested dual benefits, and Supplemental annuity benefits. State of louisiana amended return form 1040x For information on these taxable pension benefits, see Publication 575, Pension and Annuity Income. State of louisiana amended return form 1040x   This publication also does not cover the tax rules for foreign social security benefits. State of louisiana amended return form 1040x These benefits are taxable as annuities, unless they are exempt from U. State of louisiana amended return form 1040x S. State of louisiana amended return form 1040x tax or treated as a U. State of louisiana amended return form 1040x S. State of louisiana amended return form 1040x social security benefit under a tax treaty. State of louisiana amended return form 1040x Comments and suggestions. State of louisiana amended return form 1040x   We welcome your comments about this publication and your suggestions for future editions. State of louisiana amended return form 1040x   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. State of louisiana amended return form 1040x NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. State of louisiana amended return form 1040x Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. State of louisiana amended return form 1040x   You can send your comments from www. State of louisiana amended return form 1040x irs. State of louisiana amended return form 1040x gov/formspubs/. State of louisiana amended return form 1040x Click on “More Information” and then on “Comment on Tax Forms and Publications”. State of louisiana amended return form 1040x   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. State of louisiana amended return form 1040x Ordering forms and publications. State of louisiana amended return form 1040x   Visit www. State of louisiana amended return form 1040x irs. State of louisiana amended return form 1040x gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. State of louisiana amended return form 1040x Internal Revenue Service 1201 N. State of louisiana amended return form 1040x Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. State of louisiana amended return form 1040x   If you have a tax question, check the information available on IRS. State of louisiana amended return form 1040x gov or call 1-800-829-1040. State of louisiana amended return form 1040x We cannot answer tax questions sent to either of the above addresses. State of louisiana amended return form 1040x Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax 575 Pension and Annuity Income 590 Individual Retirement Arrangements (IRAs) Forms (and Instructions) 1040-ES Estimated Tax for Individuals SSA-1099 Social Security Benefit Statement RRB-1099 Payments by the Railroad Retirement Board W-4V Voluntary Withholding Request See How To Get Tax Help near the end of this publication for information about getting these publications and forms. State of louisiana amended return form 1040x Prev  Up  Next   Home   More Online Publications