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State Tax Forms 2014

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State Tax Forms 2014

State tax forms 2014 Publication 521 - Main Content Table of Contents Who Can Deduct Moving ExpensesMove Related to Start of Work Distance Test Time Test Retirees or Survivors Who Move to the United States Deductible Moving ExpensesMoves to Locations in the United States Moves to Locations Outside the United States Nondeductible Expenses ReimbursementsTypes of Reimbursement Plans Tax Withholding and Estimated Tax How and When To ReportForm 3903 When To Deduct Expenses Illustrated Example Members of the Armed Forces How To Get Tax Help Who Can Deduct Moving Expenses You can deduct your moving expenses if you meet all three of the following requirements. State tax forms 2014 Your move is closely related to the start of work. State tax forms 2014 You meet the distance test. State tax forms 2014 You meet the time test. State tax forms 2014 After you have read these rules, you may want to use Figure B to help you decide if you can deduct your moving expenses. State tax forms 2014 Retirees, survivors, and Armed Forces members. State tax forms 2014   Different rules may apply if you are a member of the Armed Forces or a retiree or survivor moving to the United States. State tax forms 2014 These rules are discussed later in this publication. State tax forms 2014 Move Related to Start of Work Your move must be closely related, both in time and in place, to the start of work at your new job location. State tax forms 2014 Closely related in time. State tax forms 2014   In most cases, you can consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. State tax forms 2014 It is not necessary that you arrange to work before moving to a new location, as long as you actually go to work in that location. State tax forms 2014    Figure A. State tax forms 2014 Illustration of Distance Test Please click here for the text description of the image. State tax forms 2014 Figure A   If you do not move within 1 year of the date you begin work, you ordinarily cannot deduct the expenses unless you can show that circumstances existed that prevented the move within that time. State tax forms 2014 Example. State tax forms 2014 Your family moved more than a year after you started work at a new location. State tax forms 2014 You delayed the move for 18 months to allow your child to complete high school. State tax forms 2014 You can deduct your moving expenses. State tax forms 2014 Closely related in place. State tax forms 2014   You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location is not more than the distance from your former home to the new job location. State tax forms 2014 If your move does not meet this requirement, you may still be able to deduct moving expenses if you can show that: You are required to live at your new home as a condition of your employment, or You will spend less time or money commuting from your new home to your new job location. State tax forms 2014 Home defined. State tax forms 2014   Your home means your main home (residence). State tax forms 2014 It can be a house, apartment, condominium, houseboat, house trailer, or similar dwelling. State tax forms 2014 It does not include other homes owned or kept up by you or members of your family. State tax forms 2014 It also does not include a seasonal home, such as a summer beach cottage. State tax forms 2014 Your former home means your home before you left for your new job location. State tax forms 2014 Your new home means your home within the area of your new job location. State tax forms 2014 Retirees or survivors. State tax forms 2014   You may be able to deduct the expenses of moving to the United States or its possessions even though the move is not related to the start of work at a new job location. State tax forms 2014 You must have worked outside the United States or be a survivor of someone who did. State tax forms 2014 See Retirees or Survivors Who Move to the United States, later. State tax forms 2014 Distance Test Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. State tax forms 2014 For example, if your old main job location was 3 miles from your former home, your new main job location must be at least 53 miles from that former home. State tax forms 2014 You can use Worksheet 1 to see if you meet this test. State tax forms 2014 Worksheet 1. State tax forms 2014 Distance Test   Note. State tax forms 2014 Members of the Armed Forces may not have to meet this test. State tax forms 2014 See Members of the Armed Forces. State tax forms 2014     1. State tax forms 2014 Enter the number of miles from your old home to your new workplace 1. State tax forms 2014 miles 2. State tax forms 2014 Enter the number of miles from your old home to your old workplace 2. State tax forms 2014 miles 3. State tax forms 2014 Subtract line 2 from line 1. State tax forms 2014 If zero or less, enter -0- 3. State tax forms 2014 miles 4. State tax forms 2014 Is line 3 at least 50 miles? □ Yes. State tax forms 2014 You meet this test. State tax forms 2014  □ No. State tax forms 2014 You do not meet this test. State tax forms 2014 You cannot deduct your moving expenses. State tax forms 2014 The distance between a job location and your home is the shortest of the more commonly traveled routes between them. State tax forms 2014 The distance test considers only the location of your former home. State tax forms 2014 It does not take into account the location of your new home. State tax forms 2014 See Figure A, earlier. State tax forms 2014 Example. State tax forms 2014 You moved to a new home less than 50 miles from your former home because you changed main job locations. State tax forms 2014 Your old main job location was 3 miles from your former home. State tax forms 2014 Your new main job location is 60 miles from that home. State tax forms 2014 Because your new main job location is 57 miles farther from your former home than the distance from your former home to your old main job location, you meet the distance test. State tax forms 2014 First job or return to full-time work. State tax forms 2014   If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test. State tax forms 2014   If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home. State tax forms 2014 Armed Forces. State tax forms 2014   If you are in the Armed Forces and you moved because of a permanent change of station, you do not have to meet the distance test. State tax forms 2014 See Members of the Armed Forces, later. State tax forms 2014 Main job location. State tax forms 2014   Your main job location is usually the place where you spend most of your working time. State tax forms 2014 This could be your office, plant, store, shop, or other location. State tax forms 2014 If there is no one place where you spend most of your working time, your main job location is the place where your work is centered, such as where you report for work or are otherwise required to “base” your work. State tax forms 2014 Union members. State tax forms 2014   If you work for several employers on a short-term basis and you get work under a union hall system (such as a construction or building trades worker), your main job location is the union hall. State tax forms 2014 More than one job. State tax forms 2014   If you have more than one job at any time, your main job location depends on the facts in each case. State tax forms 2014 The more important factors to be considered are: The total time you spend at each place, The amount of work you do at each place, and How much money you earn at each place. State tax forms 2014    Table 1. State tax forms 2014 Satisfying the Time Test for Employees and Self-Employed Persons IF you are. State tax forms 2014 . State tax forms 2014 . State tax forms 2014 THEN you satisfy the time test by meeting the. State tax forms 2014 . State tax forms 2014 . State tax forms 2014 an employee 39-week test for employees. State tax forms 2014 self-employed 78-week test for self-employed persons. State tax forms 2014 both self-employed and an employee at the same time 78-week test for a self-employed person or the 39-week  test for an employee. State tax forms 2014 Your principal place of work  determines which test applies. State tax forms 2014 both self-employed and an employee, but unable to satisfy the 39-week test for employees 78-week test for self-employed persons. State tax forms 2014 Time Test To deduct your moving expenses, you also must meet one of the following two time tests. State tax forms 2014 The time test for employees. State tax forms 2014 The time test for self-employed persons. State tax forms 2014 Both of these tests are explained below. State tax forms 2014 See Table 1, below, for a summary of these tests. State tax forms 2014 You can deduct your moving expenses before you meet either of the time tests. State tax forms 2014 See Time Test Not Yet Met, later. State tax forms 2014 Time Test for Employees If you are an employee, you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location (39-week test). State tax forms 2014 Full-time employment depends on what is usual for your type of work in your area. State tax forms 2014 For purposes of this test, the following four rules apply. State tax forms 2014 You count only your full-time work as an employee, not any work you do as a self-employed person. State tax forms 2014 You do not have to work for the same employer for all 39 weeks. State tax forms 2014 You do not have to work 39 weeks in a row. State tax forms 2014 You must work full time within the same general commuting area for all 39 weeks. State tax forms 2014 Temporary absence from work. State tax forms 2014   You are considered to have worked full time during any week you are temporarily absent from work because of illness, strikes, lockouts, layoffs, natural disasters, or similar causes. State tax forms 2014 You are also considered to have worked full time during any week you are absent from work for leave or vacation provided for in your work contract or agreement. State tax forms 2014 Seasonal work. State tax forms 2014   If your work is seasonal, you are considered to be working full time during the off-season only if your work contract or agreement covers an off-season period of less than 6 months. State tax forms 2014 For example, a school teacher on a 12-month contract who teaches on a full-time basis for more than 6 months is considered to have worked full time for the entire 12 months. State tax forms 2014    Figure B. State tax forms 2014 Can You Deduct Expenses for a Non-Military Move Within the United States? Please click here for the text description of the image. State tax forms 2014 Figure B Time Test for Self-Employed Persons If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you arrive in the general area of your new job location (78-week test). State tax forms 2014 For purposes of the time test for self-employed persons, the following three rules apply. State tax forms 2014 You count any full-time work you do either as an employee or as a self-employed person. State tax forms 2014 You do not have to work for the same employer or be self-employed in the same trade or business for the 78 weeks. State tax forms 2014 You must work within the same general commuting area for all 78 weeks. State tax forms 2014 Example. State tax forms 2014 You are a self-employed accountant who moves from Atlanta to New York City, and begin to work there on December 1, 2013. State tax forms 2014 You pay moving expenses in 2013 and 2014 in connection with this move. State tax forms 2014 On April 15, 2014, when you file your income tax return for the year 2013, you have been performing services as a self-employed individual on a full-time basis in New York City for approximately 20 weeks. State tax forms 2014 Although you have not satisfied the 78-week employment condition at this time, you can deduct your 2013 moving expenses on your 2013 income tax return as there is still sufficient time remaining before December 1, 2015, to satisfy such condition. State tax forms 2014 You can deduct any moving expenses you pay in 2014 on your 2014 income tax return even if you have not met the 78-week test. State tax forms 2014 You have until December 1, 2015, to satisfy this requirement. State tax forms 2014 Self-employment. State tax forms 2014   You are self-employed if you work as the sole owner of an unincorporated business or as a partner in a partnership carrying on a business. State tax forms 2014 You are not considered self-employed if you are semi-retired, are a part-time student, or work only a few hours each week. State tax forms 2014 Full-time work. State tax forms 2014   You can count only those weeks during which you work full time as a week of work. State tax forms 2014 Whether you work full time during any week depends on what is usual for your type of work in your area. State tax forms 2014 For example, you are a self-employed dentist and maintain office hours 4 days a week. State tax forms 2014 You are considered to perform services full time if maintaining office hours 4 days a week is not unusual for other self-employed dentists in your area. State tax forms 2014 Temporary absence from work. State tax forms 2014   You are considered to be self-employed on a full-time basis during any week you are temporarily absent from work because of illness, strikes, natural disasters, or similar causes. State tax forms 2014 Seasonal trade or business. State tax forms 2014   If your trade or business is seasonal, the off-season weeks when no work is required or available may be counted as weeks during which you worked full time. State tax forms 2014 The off-season must be less than 6 months and you must work full time before and after the off-season. State tax forms 2014 Example. State tax forms 2014 You own and operate a motel at a beach resort. State tax forms 2014 The motel is closed for 5 months during the off-season. State tax forms 2014 You work full time as the operator of the motel before and after the off-season. State tax forms 2014 You are considered self-employed on a full-time basis during the weeks of the off-season. State tax forms 2014   If you were both an employee and self-employed, see Table 1 earlier, for the requirements. State tax forms 2014 Example. State tax forms 2014 Justin quit his job and moved from the east coast to the west coast to begin a full-time job as a cabinet-maker for C and L Cabinet Shop. State tax forms 2014 He generally worked at the shop about 40 hours each week. State tax forms 2014 Shortly after the move, Justin also began operating a cabinet-installation business from his home for several hours each afternoon and all day on weekends. State tax forms 2014 Because Justin's principal place of business is the cabinet shop, he can satisfy the time test by meeting the 39-week test. State tax forms 2014    If Justin is unable to satisfy the requirements of the 39-week test during the 12-month period immediately following his arrival in the general location of his new principal place of work, he can satisfy the 78-week test. State tax forms 2014 Joint Return If you are married, file a joint return, and both you and your spouse work full-time, either of you can satisfy the full-time work test. State tax forms 2014 However, you cannot add the weeks your spouse worked to the weeks you worked to satisfy that test. State tax forms 2014 Time Test Not Yet Met You can deduct your moving expenses on your 2013 tax return even though you have not met the time test by the date your 2013 return is due. State tax forms 2014 You can do this if you expect to meet the 39-week test in 2014 or the 78-week test in 2014 or 2015. State tax forms 2014 If you do not deduct your moving expenses on your 2013 return, and you later meet the time test, you can file an amended return for 2013 to take the deduction. State tax forms 2014 See When To Deduct Expenses later, for more details. State tax forms 2014 Failure to meet the time test. State tax forms 2014    If you deduct moving expenses but do not meet the time test in 2014 or 2015, you must either: Report your moving expense deduction as other income on your Form 1040 for the year you cannot meet the test, or Use Form 1040X to amend your 2013 return, figuring your tax without the moving expense deduction. State tax forms 2014 Example. State tax forms 2014 You arrive in the general area of your new job location, as an employee, on September 15, 2013. State tax forms 2014 You deduct your moving expenses on your 2013 return, the year of the move, even though you have not yet met the time test by the date your return is due. State tax forms 2014 If you do not meet the 39-week test during the 12-month period following your arrival in the general area of your new job location, you must either: Report your moving expense deduction as other income on your Form 1040 for 2014, or Use Form 1040X to amend your 2013 return, figuring your tax without the moving expense deduction. State tax forms 2014 Exceptions to the Time Test You do not have to meet the time test if one of the following applies. State tax forms 2014 You are in the Armed Forces and you moved because of a permanent change of station. State tax forms 2014 See Members of the Armed Forces , later. State tax forms 2014 Your main job location was outside the United States and you moved to the United States because you retired. State tax forms 2014 See Retirees or Survivors Who Move to the United States, later. State tax forms 2014 You are the survivor of a person whose main job location at the time of death was outside the United States. State tax forms 2014 See Retirees or Survivors Who Move to the United States, later. State tax forms 2014 Your job at the new location ends because of death or disability. State tax forms 2014 You are transferred for your employer's benefit or laid off for a reason other than willful misconduct. State tax forms 2014 For this exception, you must have obtained full-time employment and you must have expected to meet the test at the time you started the job. State tax forms 2014 Retirees or Survivors Who Move to the United States If you are a retiree who was working abroad or a survivor of a decedent who was working abroad and you move to the United States or one of its possessions, you do not have to meet the time test, discussed earlier. State tax forms 2014 However, you must meet the requirements discussed below under Retirees who were working abroad or Survivors of decedents who were working abroad. State tax forms 2014 If you are living in the United States, retire, and then move and remain retired, you cannot claim a moving expense deduction for that move. State tax forms 2014 United States defined. State tax forms 2014   For this section of this publication, the term “United States” includes the possessions of the United States. State tax forms 2014 Retirees who were working abroad. State tax forms 2014   You can deduct moving expenses for a move to a new home in the United States when you permanently retire. State tax forms 2014 However, both your former main job location and your former home must have been outside the United States. State tax forms 2014 Permanently retired. State tax forms 2014   You are considered permanently retired when you cease gainful full-time employment or self-employment. State tax forms 2014 If, at the time you retire, you intend your retirement to be permanent, you will be considered retired even though you later return to work. State tax forms 2014 Your intention to retire permanently may be determined by: Your age and health, The customary retirement age for people who do similar work, Whether you receive retirement payments from a pension or retirement fund, and The length of time before you return to full-time work. State tax forms 2014 Decedents. State tax forms 2014   Qualified deductible moving expenses are allowed on a final return (Form 1040 or 1040NR) when a taxpayer has moved and dies within the same calendar year. State tax forms 2014 The personal representative filing on behalf of that taxpayer should complete and attach Form 3903 to the final return. State tax forms 2014   A personal representative can be an executor, administrator, or anyone who is in charge of the deceased person's property. State tax forms 2014 For more information, see Publication 559, Survivors, Executors, and Administrators. State tax forms 2014 Survivors of decedents who were working abroad. State tax forms 2014   If you are the spouse or the dependent of a person whose main job location at the time of death was outside the United States, you can deduct moving expenses if the following five requirements are met. State tax forms 2014 The move is to a home in the United States. State tax forms 2014 The move begins within 6 months after the decedent's death. State tax forms 2014 (When a move begins is described below. State tax forms 2014 ) The move is from the decedent's former home. State tax forms 2014 The decedent's former home was outside the United States. State tax forms 2014 The decedent's former home was also your home. State tax forms 2014 When a move begins. State tax forms 2014   A move begins when one of the following events occurs. State tax forms 2014 You contract for your household goods and personal effects to be moved to your home in the United States, but only if the move is completed within a reasonable time. State tax forms 2014 Your household goods and personal effects are packed and on the way to your home in the United States. State tax forms 2014 You leave your former home to travel to your new home in the United States. State tax forms 2014 Deductible Moving Expenses If you meet the requirements discussed earlier under Who Can Deduct Moving Expenses, you can deduct the reasonable expenses of: Moving your household goods and personal effects (including in-transit or foreign-move storage expenses), and Traveling (including lodging but not meals) to your new home. State tax forms 2014 You cannot deduct any expenses for meals. State tax forms 2014 Reasonable expenses. State tax forms 2014   You can deduct only those expenses that are reasonable for the circumstances of your move. State tax forms 2014 For example, the cost of traveling from your former home to your new one should be by the shortest, most direct route available by conventional transportation. State tax forms 2014 If during your trip to your new home, you stop over, or make side trips for sightseeing, the additional expenses for your stopover or side trips are not deductible as moving expenses. State tax forms 2014 Example. State tax forms 2014 Beth's employer transferred her from Boston, Massachusetts, to Buffalo, New York. State tax forms 2014 On her way to Buffalo, Beth drove into Canada to visit the Toronto Zoo. State tax forms 2014 Since Beth's excursion into Canada was away from the usual Boston-Buffalo route, the expenses paid or incurred for the excursion are not deductible. State tax forms 2014 Beth can only deduct what it would have cost to drive directly from Boston to Buffalo. State tax forms 2014 Likewise, Beth cannot deduct any expenses, such as the cost of a hotel room, caused by the delay for sightseeing. State tax forms 2014 Travel by car. State tax forms 2014   If you use your car to take yourself, members of your household, or your personal effects to your new home, you can figure your expenses by deducting either: Your actual expenses, such as the amount you pay for gas and oil for your car, if you keep an accurate record of each expense, or The standard mileage rate of 24 cents per mile. State tax forms 2014 Whether you use actual expenses or the standard mileage rate to figure your expenses, you can deduct the parking fees and tolls you pay to move. State tax forms 2014 You cannot deduct any part of general repairs, general maintenance, insurance, or depreciation for your car. State tax forms 2014 Member of your household. State tax forms 2014   You can deduct moving expenses you pay for yourself and members of your household. State tax forms 2014 A member of your household is anyone who has both your former and new home as his or her home. State tax forms 2014 It does not include a tenant or employee, unless that person is your dependent. State tax forms 2014 Moves to Locations in the United States If you meet the requirements under Who Can Deduct Moving Expenses, earlier, you can deduct expenses for a move to the area of a new main job location within the United States or its possessions. State tax forms 2014 Your move may be from one U. State tax forms 2014 S. State tax forms 2014 location to another or from a foreign country to the United States. State tax forms 2014 Household goods and personal effects. State tax forms 2014   You can deduct the cost of packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home. State tax forms 2014 For purposes of moving expenses, the term “personal effects” includes, but is not limited to, movable personal property that the taxpayer owns and frequently uses. State tax forms 2014   If you use your own car to move your things, see Travel by car, earlier. State tax forms 2014   You can deduct any costs of connecting or disconnecting utilities required because you are moving your household goods, appliances, or personal effects. State tax forms 2014   You can deduct the cost of shipping your car and your household pets to your new home. State tax forms 2014   You can deduct the cost of moving your household goods and personal effects from a place other than your former home. State tax forms 2014 Your deduction is limited to the amount it would have cost to move them from your former home. State tax forms 2014 Example. State tax forms 2014 Paul Brown has been living and working in North Carolina for the last 4 years. State tax forms 2014 Because he has been renting a small apartment, he stored some furniture at his parents' home in Georgia. State tax forms 2014 Paul got a job in Washington, DC. State tax forms 2014 It cost him $900 to move the furniture from his North Carolina apartment to Washington and $3,000 to move the stored furniture from Georgia to Washington. State tax forms 2014 It would have cost $1,800 to ship the stored furniture from North Carolina to Washington. State tax forms 2014 He can deduct only $1,800 of the $3,000 he paid. State tax forms 2014 The amount he can deduct for moving his furniture is $2,700 ($900 + $1,800). State tax forms 2014 You cannot deduct the cost of moving furniture you buy on the way to your new home. State tax forms 2014   Storage expenses. State tax forms 2014   You can include the cost of storing and insuring household goods and personal effects within any period of 30 consecutive days after the day your things are moved from your former home and before they are delivered to your new home. State tax forms 2014 Travel expenses. State tax forms 2014   You can deduct the cost of transportation and lodging for yourself and members of your household while traveling from your former home to your new home. State tax forms 2014 This includes expenses for the day you arrive. State tax forms 2014    The day of arrival is the day you secure lodging at the new place of residence, even if the lodging is on a temporary basis. State tax forms 2014   You can include any lodging expenses you had in the area of your former home within one day after you could no longer live in your former home because your furniture had been moved. State tax forms 2014   The members of your household do not have to travel together or at the same time. State tax forms 2014 However, you can only deduct expenses for one trip per person. State tax forms 2014 If you use your own car, see Travel by car, earlier. State tax forms 2014 Example. State tax forms 2014   In February 2013, Josh and Robyn Black moved from Minneapolis to Washington, DC, where Josh was starting a new job. State tax forms 2014 Josh drove the family car to Washington, DC, a trip of 1,100 miles. State tax forms 2014 His expenses were $264. State tax forms 2014 00 for mileage (1,100 miles x 24 cents per mile) plus $40 for tolls and $150 for lodging, for a total of $454. State tax forms 2014 00. State tax forms 2014 One week later, Robyn flew from Minneapolis to Washington, DC. State tax forms 2014 Her only expense was her $400 plane ticket. State tax forms 2014 The Blacks' deduction is $854. State tax forms 2014 00 (Josh's $454. State tax forms 2014 00 + Robyn's $400). State tax forms 2014 Moves to Locations Outside the United States To deduct expenses for a move outside the United States, you must move to the area of a new place of work outside the United States and its possessions. State tax forms 2014 You must meet the requirements under Who Can Deduct Moving Expenses , earlier. State tax forms 2014 Deductible expenses. State tax forms 2014   If your move is to a location outside the United States and its possessions, you can deduct the following expenses. State tax forms 2014 The cost of moving household goods and personal effects from your former home to your new home. State tax forms 2014 The cost of traveling (including lodging) from your former home to your new home. State tax forms 2014 The cost of moving household goods and personal effects to and from storage. State tax forms 2014 The cost of storing household goods and personal effects while you are at the new job location. State tax forms 2014 The first two items were explained earlier under Moves to Locations in the United States . State tax forms 2014 The last two items are discussed, later. State tax forms 2014 Moving goods and effects to and from storage. State tax forms 2014   You can deduct the reasonable expenses of moving your personal effects to and from storage. State tax forms 2014 Storage expenses. State tax forms 2014   You can deduct the reasonable expenses of storing your household goods and personal effects for all or part of the time the new job location remains your main job location. State tax forms 2014 Moving expenses allocable to excluded foreign income. State tax forms 2014   If you live and work outside the United States, you may be able to exclude from income part or all of the income you earn in the foreign country. State tax forms 2014 You may also be able to claim a foreign housing exclusion or deduction. State tax forms 2014 If you claim the foreign earned income or foreign housing exclusion, you cannot deduct the part of your moving expenses that relates to the excluded income. State tax forms 2014    Publication 54, Tax Guide for U. State tax forms 2014 S. State tax forms 2014 Citizens and Resident Aliens Abroad, explains how to figure the part of your moving expenses that relates to excluded income. State tax forms 2014 You can get the publication from most U. State tax forms 2014 S. State tax forms 2014 embassies and consulates, or see How To Get Tax Help at the end of this publication. State tax forms 2014 Nondeductible Expenses You cannot deduct the following items as moving expenses. State tax forms 2014 Any part of the purchase price of your new home. State tax forms 2014 Car tags. State tax forms 2014 Driver's license. State tax forms 2014 Expenses of buying or selling a home (including closing costs, mortgage fees, and points). State tax forms 2014 Expenses of entering into or breaking a lease. State tax forms 2014 Home improvements to help sell your home. State tax forms 2014 Loss on the sale of your home. State tax forms 2014 Losses from disposing of memberships in clubs. State tax forms 2014 Mortgage penalties. State tax forms 2014 Pre-move househunting expenses. State tax forms 2014 Real estate taxes. State tax forms 2014 Refitting of carpet and draperies. State tax forms 2014 Return trips to your former residence. State tax forms 2014 Security deposits (including any given up due to the move). State tax forms 2014 Storage charges except those incurred in transit and for foreign moves. State tax forms 2014 No double deduction. State tax forms 2014   You cannot take a moving expense deduction and a business expense deduction for the same expenses. State tax forms 2014 You must decide if your expenses are deductible as moving expenses or as business expenses. State tax forms 2014 For example, expenses you have for travel, meals, and lodging while temporarily working at a place away from your regular place of work may be deductible as business expenses if you are considered away from home on business. State tax forms 2014 In most cases, your work at a single location is considered temporary if it is realistically expected to last (and does in fact last) for one year or less. State tax forms 2014   See Publication 463, Travel, Entertainment, Gift, and Car Expenses, for information on deducting your business expenses. State tax forms 2014 Reimbursements This section explains how to report a reimbursement (including advances and allowances) on your tax return. State tax forms 2014 It covers reimbursements for any of your moving expenses discussed in this publication. State tax forms 2014 It also explains the types of reimbursements on which your employer must withhold income, social security, and Medicare taxes. State tax forms 2014 Types of Reimbursement Plans If you receive a reimbursement for your moving expenses, how you report this amount and your expenses depends on whether the reimbursement is paid to you under an accountable plan or a nonaccountable plan. State tax forms 2014 For a quick overview of how to report your reimbursement and moving expenses, see Table 2 in the section on How and When To Report, later. State tax forms 2014 Your employer should tell you what method of reimbursement is used and what records are required. State tax forms 2014 Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. State tax forms 2014 Your expenses must have a business connection – that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. State tax forms 2014 Two examples of this are the reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home. State tax forms 2014 You must adequately account to your employer for these expenses within a reasonable period of time. State tax forms 2014 You must return any excess reimbursement or allowance within a reasonable period of time. State tax forms 2014 Adequate accounting. State tax forms 2014   You adequately account for your moving expenses by giving your employer documentation of those expenses, such as a statement of expense, an account book, a diary, or a similar record in which you entered each expense at or near the time you had it. State tax forms 2014 Documentation includes receipts, canceled checks, and bills. State tax forms 2014 Reasonable period of time. State tax forms 2014   What constitutes a “reasonable period of time” depends on the facts and circumstances of your situation. State tax forms 2014 However, regardless of the facts and circumstances, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time. State tax forms 2014 You receive an advance within 30 days of the time you have an expense. State tax forms 2014 You adequately account for your expenses within 60 days after they were paid or incurred. State tax forms 2014 You return any excess reimbursement within 120 days after the expense was paid or incurred. State tax forms 2014 You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement. State tax forms 2014 Excess reimbursement. State tax forms 2014   This includes any amount you are paid (including advances and allowances) that is more than the moving expenses that you adequately accounted for to your employer within a reasonable period of time. State tax forms 2014 Returning excess reimbursements. State tax forms 2014   You must be required to return any excess reimbursement for your moving expenses to the person paying the reimbursement. State tax forms 2014 Excess reimbursement includes any amount for which you did not adequately account within a reasonable period of time. State tax forms 2014 For example, if you received an advance and you did not spend all the money on deductible moving expenses, or you do not have proof of all your expenses, you have an excess reimbursement. State tax forms 2014 You meet accountable plan rules. State tax forms 2014   If for all reimbursements you meet the three rules for an accountable plan (listed earlier), your employer should not include any reimbursements of expenses in your income in box 1 of your Form W-2, Wage and Tax Statement. State tax forms 2014 Instead, your employer should include the reimbursements in box 12 of your Form W-2. State tax forms 2014 Example. State tax forms 2014 You lived in Boston and accepted a job in Atlanta. State tax forms 2014 Under an accountable plan, your employer reimbursed you for your actual traveling expenses from Boston to Atlanta and the cost of moving your furniture to Atlanta. State tax forms 2014 Your employer will include the reimbursement on your Form W-2, box 12, with Code P. State tax forms 2014 If your moving expenses are more than your reimbursement, you may be able to deduct your additional expenses (see How and When To Report, later). State tax forms 2014 You do not meet accountable plan rules. State tax forms 2014   You may be reimbursed by your employer, but you may not meet all three rules for part of your expenses. State tax forms 2014   If your deductible expenses are reimbursed under an otherwise accountable plan but you do not return, within a reasonable period, any reimbursement of expenses for which you did not adequately account, then only the amount for which you did adequately account is considered as paid under an accountable plan. State tax forms 2014 The remaining expenses are treated as having been reimbursed under a nonaccountable plan (discussed below). State tax forms 2014 Reimbursement of nondeductible expenses. State tax forms 2014   You may be reimbursed by your employer for moving expenses, some of which are deductible expenses and some of which are not deductible. State tax forms 2014 The reimbursements you receive for the nondeductible expenses and any allowances for miscellaneous or unspecified expenses are treated as paid under a nonaccountable plan (see below) and are included in your income. State tax forms 2014 If you are reimbursed by your employer for the taxes you must pay (including social security and Medicare taxes) because you have received taxable moving expense reimbursements, you must pay tax on this reimbursement as well, and it is treated as paid under a nonaccountable plan. State tax forms 2014 Nonaccountable Plans A nonaccountable plan is a reimbursement arrangement that does not meet the three rules listed earlier under Accountable Plans. State tax forms 2014 In addition, the following payments will be treated as paid under a nonaccountable plan. State tax forms 2014 Excess reimbursements you fail to return to your employer. State tax forms 2014 Reimbursements of nondeductible expenses. State tax forms 2014 See Reimbursement of nondeductible expenses, earlier. State tax forms 2014 If an arrangement pays for your moving expenses by reducing your wages, salary, or other pay, the amount of the reduction will be treated as a payment made under a nonaccountable plan. State tax forms 2014 This is because you are entitled to receive the full amount of your pay regardless of whether you had any moving expenses. State tax forms 2014 If you are not sure if the moving expense reimbursement arrangement is an accountable or nonaccountable plan, ask your employer. State tax forms 2014 Your employer will add the amount of any reimbursement paid to you under a nonaccountable plan to your wages, salary, or other pay. State tax forms 2014 Your employer will report the total in box 1 of your Form W-2. State tax forms 2014 Example. State tax forms 2014 To get you to work in another city, your new employer reimburses you under an accountable plan for the $7,500 loss on the sale of your home. State tax forms 2014 Because this is a reimbursement of a nondeductible expense, it is treated as paid under a nonaccountable plan and must be included as income in box 1 of your Form W-2. State tax forms 2014 Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 Do not include in income any moving expense payment you received under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. State tax forms 2014 These payments are made to persons displaced from their homes, businesses, or farms by federal projects. State tax forms 2014 Tax Withholding and Estimated Tax Your employer must withhold income, social security, and Medicare taxes from reimbursements and allowances paid to you that are included in your income. State tax forms 2014 See Reimbursements included in income, later. State tax forms 2014 Reimbursements excluded from income. State tax forms 2014   Your employer should not include in your wages reimbursements paid under an accountable plan (explained earlier) for moving expenses that you: Could deduct if you had paid or incurred them, and Did not deduct in an earlier year. State tax forms 2014 These reimbursements are fringe benefits excludable from your income as qualified moving expense reimbursements. State tax forms 2014 Your employer should report these reimbursements on your Form W-2, box 12, with Code P. State tax forms 2014    You cannot claim a moving expense deduction for expenses covered by reimbursements excluded from income (see Accountable Plans under Types of Reimbursement Plans, earlier). State tax forms 2014 Expenses deducted in earlier year. State tax forms 2014   If you receive a reimbursement this year for moving expenses deducted in an earlier year, and the reimbursement is not included as wages in box 1 of your Form W-2, you must include the reimbursement in income on Form 1040, line 21. State tax forms 2014 Your employer should show the amount of your reimbursement in box 12 of your Form W-2. State tax forms 2014 Reimbursements included in income. State tax forms 2014   Your employer must include in your income any reimbursements made (or treated as made) under a nonaccountable plan, even though they are for deductible moving expenses. State tax forms 2014 See Nonaccountable Plans under Types of Reimbursement Plans, earlier. State tax forms 2014 Your employer also must include in your gross income as wages any reimbursements of, or payments for, nondeductible moving expenses. State tax forms 2014 This includes amounts your employer reimbursed you under an accountable plan (explained earlier) for meals, househunting trips, and real estate expenses. State tax forms 2014 It also includes reimbursements that exceed your deductible expenses and that you do not return to your employer. State tax forms 2014 Reimbursement for deductible and nondeductible expenses. State tax forms 2014    If your employer reimburses you for both deductible and nondeductible moving expenses, your employer must determine the amount of the reimbursement that is not taxable and not subject to withholding. State tax forms 2014 Your employer must treat any remaining amount as taxable wages and withhold income, social security, and Medicare taxes. State tax forms 2014 Amount of income tax withheld. State tax forms 2014   If the reimbursements or allowances you receive are taxable, the amount of income tax your employer will withhold depends on several factors. State tax forms 2014 It depends in part on whether income tax is withheld from your regular wages, on whether the reimbursements and allowances are added to your regular wages, and on any information you have given to your employer on Form W-4, Employee's Withholding Allowance Certificate. State tax forms 2014   Your employer can treat your reimbursements as supplemental wages and not include the reimbursements and allowances in your regular wages. State tax forms 2014 The employer can withhold income tax on supplemental wages at a flat rate which may be different from your regular tax rate. State tax forms 2014 Estimated tax. State tax forms 2014    If you must make estimated tax payments, you need to take into account any taxable reimbursements and deductible moving expenses in figuring your estimated tax. State tax forms 2014 For details about estimated taxes, see Publication 505, Tax Withholding and Estimated Tax. State tax forms 2014 How and When To Report This section explains how and when to report your moving expenses and any reimbursements or allowances you received for your move. State tax forms 2014 For a quick overview, see Table 2, later. State tax forms 2014 Form 3903 Use Form 3903 to figure your moving expense deduction. State tax forms 2014 Use a separate Form 3903 for each move for which you are deducting expenses. State tax forms 2014 Do not file Form 3903 if all of the following apply. State tax forms 2014 You moved to a location outside the United States in an earlier year. State tax forms 2014 You are claiming only storage fees while you were away from the United States. State tax forms 2014 Any amount your employer paid for the storage fees is included as wages in box 1 of your Form W-2. State tax forms 2014 Instead, enter the storage fees (after the reduction for the part that is allocable to excluded income) on Form 1040, line 26, and enter “Storage” on the dotted line next to the amount. State tax forms 2014 If you meet the special rules for members of the Armed Forces, see How to complete Form 3903 for members of the Armed Forces under Members of the Armed Forces, later. State tax forms 2014 Completing Form 3903. State tax forms 2014   Complete Worksheet 1, earlier, or the Distance Test Worksheet in the instructions for Form 3903 to see whether you meet the distance test. State tax forms 2014 If so, complete lines 1 through 3 of the form using your actual expenses (except, if you use your own car, you can figure expenses based on the standard mileage rate, instead of actual amounts for gas and oil). State tax forms 2014 Enter on line 4 the total amount of your moving expense reimbursement that was excluded from your wages. State tax forms 2014 This excluded amount should be identified on Form W-2, box 12, with code P. State tax forms 2014 Expenses greater than reimbursement. State tax forms 2014   If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. State tax forms 2014 This is your moving expense deduction. State tax forms 2014 Expenses equal to or less than reimbursement. State tax forms 2014    If line 3 is equal to or less than line 4, you have no moving expense deduction. State tax forms 2014 Subtract line 3 from line 4 and, if the result is more than zero, include it as income on Form 1040, line 7. State tax forms 2014 Table 2. State tax forms 2014 Reporting Your Moving Expenses and Reimbursements IF your Form W-2 shows. State tax forms 2014 . State tax forms 2014 . State tax forms 2014 AND you have. State tax forms 2014 . State tax forms 2014 . State tax forms 2014 THEN. State tax forms 2014 . State tax forms 2014 . State tax forms 2014 your reimbursement reported only  in box 12 with code P moving expenses greater than the  amount in box 12 file Form 3903 showing all allowable  expenses* and reimbursements. State tax forms 2014 your reimbursement reported only  in box 12 with code P moving expenses equal to the amount  in box 12 do not file Form 3903. State tax forms 2014 your reimbursement divided  between box 12 and box 1 moving expenses greater than the  amount in box 12 file Form 3903 showing all allowable  expenses,* but only the  reimbursements reported in box 12 of  Form W-2. State tax forms 2014 your entire reimbursement reported  as wages in box 1 moving expenses file Form 3903 showing all allowable  expenses,* but do not show any  reimbursements. State tax forms 2014 no reimbursement moving expenses file Form 3903 showing all allowable  expenses. State tax forms 2014 * * See Deductible Moving Expenses, earlier, for allowable expenses. State tax forms 2014    Where to deduct. State tax forms 2014   Deduct your moving expenses on Form 1040, line 26. State tax forms 2014 The amount of moving expenses you can deduct is shown on Form 3903, line 5. State tax forms 2014    You cannot deduct moving expenses on Form 1040EZ or Form 1040A. State tax forms 2014   When To Deduct Expenses You may have a choice of when to deduct your moving expenses. State tax forms 2014 Expenses not reimbursed. State tax forms 2014   If you were not reimbursed, deduct your moving expenses in the year you paid or incurred the expenses. State tax forms 2014 Example. State tax forms 2014 In December 2012, your employer transferred you to another city in the United States, where you still work. State tax forms 2014 You are single and were not reimbursed for your moving expenses. State tax forms 2014 In 2012, you paid for moving your furniture and deducted these expenses on your 2012 tax return. State tax forms 2014 In January 2013, you paid for travel to the new city. State tax forms 2014 You can deduct these additional expenses on your 2013 tax return. State tax forms 2014 Expenses reimbursed. State tax forms 2014   If you are reimbursed for your expenses and you use the cash method of accounting, you can deduct your expenses either in the year you paid them or in the year you received the reimbursement. State tax forms 2014 If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year. State tax forms 2014 See Choosing when to deduct, next. State tax forms 2014   If you deduct your expenses and you receive the reimbursement in a later year, you must include the reimbursement in your income on Form 1040, line 21. State tax forms 2014 Choosing when to deduct. State tax forms 2014   If you use the cash method of accounting, which is used by most individuals, you can choose to deduct moving expenses in the year your employer reimburses you if: You paid the expenses in a year before the year of reimbursement, or You paid the expenses in the year immediately after the year of reimbursement but by the due date, including extensions, for filing your return for the reimbursement year. State tax forms 2014 How to make the choice. State tax forms 2014   You choose to deduct moving expenses in the year you received reimbursement by taking the deduction on your return, or amended return, for that year. State tax forms 2014    You cannot deduct any moving expenses for which you received a reimbursement that was not included in your income. State tax forms 2014 Illustrated Example Tom and Peggy Smith are married and have two children. State tax forms 2014 They owned a home in Detroit where Tom worked. State tax forms 2014 On February 8, 2013, Tom's employer told him that he would be transferred to San Diego as of April 10 that year. State tax forms 2014 Peggy flew to San Diego on March 1 to look for a new home. State tax forms 2014 She put a down payment of $25,000 on a house being built and returned to Detroit on March 4. State tax forms 2014 The Smiths sold their Detroit home for $1,500 less than they paid for it. State tax forms 2014 They contracted to have their personal effects moved to San Diego on April 3. State tax forms 2014 The family drove to San Diego where they found that their new home was not finished. State tax forms 2014 They stayed in a nearby motel until the house was ready on May 1. State tax forms 2014 On April 10, Tom went to work in the San Diego plant where he still works. State tax forms 2014 Their records for the move show: 1) Peggy's pre-move househunting  trip:       Travel and lodging   $ 449       Meals   75   $ 524 2) Down payment on San Diego  home 25,000 3) Real estate commission paid on  sale of Detroit home 3,500 4) Loss on sale of Detroit home (not  including real estate commission) 1,500 5) Amount paid for moving personal  effects (furniture, other household  goods, etc. State tax forms 2014 ) 8,000 6) Expenses of driving to San Diego:       Mileage (Start 14,278;  End 16,478) 2,200 miles at 24 cents a mile   $ 528       Lodging   180       Meals   320   1,028 7) Cost of temporary living  expenses in San Diego:       Motel rooms   $1,450       Meals   2,280   3,730 Total $43,282   Tom was reimbursed $10,907 under an accountable plan. State tax forms 2014 His employer gave him the following breakdown of the reimbursement that was allowed under the employer's plan. State tax forms 2014 Moving personal effects   $6,800 Travel (and lodging) to San Diego   708 Travel (and lodging) for househunting trip   449 Lodging for temporary quarters   1,450 Loss on sale of home   1,500 Total reimbursement   $10,907 The employer included this reimbursement on Tom's Form W-2 for the year. State tax forms 2014 The reimbursement of allowable expenses, $7,508 for moving household goods and travel to San Diego, was included in box 12 of Form W-2. State tax forms 2014 His employer identified this amount with code P. State tax forms 2014 The employer included the balance, $3,399 reimbursement of nonallowable expenses, in box 1 of Form W-2 with Tom's other wages. State tax forms 2014 Tom must include this amount on Form 1040, line 7. State tax forms 2014 The employer withholds taxes from the $3,399, as discussed under Reimbursement for deductible and nondeductible expenses under Tax Withholding and Estimated Tax, earlier. State tax forms 2014 Also, Tom's employer could have given him a separate Form W-2 for his moving expense reimbursement. State tax forms 2014 To figure his tax deduction for moving expenses, Tom enters the following amounts on Form 3903. State tax forms 2014 Item 5 — moving personal effects (line 1)   $8,000 Item 6 — driving to San Diego ($528 + $180)  (line 2)   708 Total tax deductible moving expenses (line 3)   $8,708 Minus: Reimbursement included in box 12  of Form W-2 (line 4)   7,508 Tax deduction for moving expenses (line 5)   $1,200   Tom's Form 3903 is shown, later. State tax forms 2014 He also enters his deduction, $1,200, on Form 1040, line 26. State tax forms 2014 Nondeductible expenses. State tax forms 2014   Of the $43,282 expenses that Tom and Peggy incurred, the following items totaling $34,574 ($43,282 – $8,708) cannot be deducted. State tax forms 2014 Item 1 — pre-move househunting expenses of $524. State tax forms 2014 Item 2 — the $25,000 down payment on the San Diego home. State tax forms 2014 If any part of it were for payment of deductible taxes or interest on the mortgage on the house, that part would be deductible as an itemized deduction. State tax forms 2014 Item 3 — the $3,500 real estate commission paid on the sale of the Detroit home. State tax forms 2014 The commission is used to figure the gain or loss on the sale. State tax forms 2014 Item 4 — the $1,500 loss on the sale of the Detroit home. State tax forms 2014 Item 6 — the $320 expense for meals while driving to San Diego. State tax forms 2014 (However, the lodging and car expenses are deductible. State tax forms 2014 ) Item 7 — temporary living expenses of $3,730. State tax forms 2014    This image is too large to be displayed in the current screen. State tax forms 2014 Please click the link to view the image. State tax forms 2014 2012 Form 3903 Moving Expenses Members of the Armed Forces If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you do not have to meet the distance and time tests, discussed earlier. State tax forms 2014 You can deduct your unreimbursed moving expenses. State tax forms 2014 A permanent change of station includes: A move from your home to your first post of active duty, A move from one permanent post of duty to another, and A move from your last post of duty to your home or to a nearer point in the United States. State tax forms 2014 The move must occur within one year of ending your active duty or within the period allowed under the Joint Travel Regulations. State tax forms 2014 Spouse and dependents. State tax forms 2014   If a member of the Armed Forces dies, is imprisoned, or deserts, a permanent change of station for the spouse or dependent includes a move to: The place of enlistment, The member's, spouse's, or dependent's home of record, or A nearer point in the United States. State tax forms 2014   If the military moves you, your spouse, and dependents, to or from separate locations, the moves are treated as a single move to your new main job location. State tax forms 2014 Services or reimbursements provided by government. State tax forms 2014   Do not include in income the value of moving and storage services provided by the government because of a permanent change of station. State tax forms 2014 In general, if the total reimbursements or allowances you receive from the government because of the move are more than your actual moving expenses, the government must include the excess in your wages on Form W-2. State tax forms 2014 However, the excess portion of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance is not included in income and should not be included in box 1 of Form W-2. State tax forms 2014   If your reimbursements or allowances are less than your actual moving expenses, do not include the reimbursements or allowances in income. State tax forms 2014 You can deduct the expenses that are more than your reimbursements. State tax forms 2014 See Deductible Moving Expenses, earlier. State tax forms 2014 How to complete Form 3903 for members of the Armed Forces. State tax forms 2014    Take the following steps. State tax forms 2014 Complete lines 1 through 3 of the form, using your actual expenses. State tax forms 2014 Do not include any expenses for moving services provided by the government. State tax forms 2014 Also, do not include any expenses that were reimbursed by an allowance you do not have to include in your income. State tax forms 2014 Enter on line 4 the total reimbursements and allowances you received from the government for the expenses claimed on lines 1 and 2. State tax forms 2014 Do not include the value of moving or storage services provided by the government. State tax forms 2014 Also, do not include any part of a dislocation allowance, a temporary lodging allowance, a temporary lodging expense, or a move-in housing allowance. State tax forms 2014 Complete line 5. State tax forms 2014 If line 3 is more than line 4, subtract line 4 from line 3 and enter the result on line 5 and on Form 1040, line 26. State tax forms 2014 This is your moving expense deduction. State tax forms 2014 If line 3 is equal to or less than line 4, you do not have a moving expense deduction. State tax forms 2014 Subtract line 3 from line 4 and, if the result is more than zero, enter it on Form 1040, line 7. State tax forms 2014 If the military moves you, your spouse and dependents, to or from different locations, treat these moves as a single move. State tax forms 2014    Do not deduct any expenses for moving or storage services provided by the government. State tax forms 2014 How To Get Tax Help Go online, use a smart phone, call or walk in to an office near you. State tax forms 2014 Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. State tax forms 2014 Free help with your tax return. State tax forms 2014   Free help in preparing your return is available nationwide from IRS-certified volunteers. State tax forms 2014 The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. State tax forms 2014 The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. State tax forms 2014 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. State tax forms 2014 Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. State tax forms 2014 To find the nearest VITA or TCE site, visit IRS. State tax forms 2014 gov or call 1-800-906-9887. State tax forms 2014   As part of the TCE program, AARP offers the Tax-Aide counseling program. State tax forms 2014 To find the nearest AARP Tax-Aide site, visit AARP's website at www. State tax forms 2014 aarp. State tax forms 2014 org/money/taxaide or call 1-888-227-7669. State tax forms 2014   For more information on these programs, go to IRS. State tax forms 2014 gov and enter “VITA” in the search box. State tax forms 2014 Internet. State tax forms 2014 IRS. State tax forms 2014 gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. State tax forms 2014 Apply for an Employer Identification Number (EIN). State tax forms 2014 Go to IRS. State tax forms 2014 gov and enter Apply for an EIN in the search box. State tax forms 2014 Request an Electronic Filing PIN by going to IRS. State tax forms 2014 gov and entering Electronic Filing PIN in the search box. State tax forms 2014 Check the status of your 2013 refund with Where's My Refund? Go to IRS. State tax forms 2014 gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. State tax forms 2014 If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. State tax forms 2014 Check the status of your amended return. State tax forms 2014 Go to IRS. State tax forms 2014 gov and enter Where's My Amended Return in the search box. State tax forms 2014 Download forms, instructions, and publications, including some accessible versions. State tax forms 2014 Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. State tax forms 2014 gov or IRS2Go. State tax forms 2014 Tax return and tax account transcripts are generally available for the current year and past three years. State tax forms 2014 Figure your income tax withholding with the IRS Withholding Calculator on IRS. State tax forms 2014 gov. State tax forms 2014 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. State tax forms 2014 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. State tax forms 2014 gov. State tax forms 2014 Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. State tax forms 2014 gov or IRS2Go. State tax forms 2014 Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. State tax forms 2014 An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. State tax forms 2014 Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. State tax forms 2014 If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. State tax forms 2014 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. State tax forms 2014 Locate the nearest volunteer help site with the VITA Locator Tool on IRS. State tax forms 2014 gov. State tax forms 2014 Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. State tax forms 2014 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. State tax forms 2014 Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. State tax forms 2014 AARP offers the Tax-Aide counseling program as part of the TCE program. State tax forms 2014 Visit AARP's website to find the nearest Tax-Aide location. State tax forms 2014 Research your tax questions. State tax forms 2014 Search publications and instructions by topic or keyword. State tax forms 2014 Read the Internal Revenue Code, regulations, or other official guidance. State tax forms 2014 Read Internal Revenue Bulletins. State tax forms 2014 Sign up to receive local and national tax news by email. State tax forms 2014 Phone. State tax forms 2014 You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. State tax forms 2014 Download the free IRS2Go mobile app from the iTunes app store or from Google Play. State tax forms 2014 Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. State tax forms 2014 Call to locate the nearest volunteer help site, 1-800-906-9887. State tax forms 2014 Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. State tax forms 2014 The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. State tax forms 2014 Most VITA and TCE sites offer free electronic filing. State tax forms 2014 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. State tax forms 2014 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. State tax forms 2014 Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. State tax forms 2014 The automated Where's My Refund? information is available 24 hours a day, 7 days a week. State tax forms 2014 If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. State tax forms 2014 Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. State tax forms 2014 Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. State tax forms 2014 Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. State tax forms 2014 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. State tax forms 2014 Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). State tax forms 2014 You should receive your order within 10 business days. State tax forms 2014 Call to order transcripts of your tax returns or tax account, 1-800-908-9946. State tax forms 2014 Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. State tax forms 2014 Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. State tax forms 2014 Call to ask tax questions, 1-800-829-1040. State tax forms 2014 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. State tax forms 2014 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. State tax forms 2014 These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. State tax forms 2014 gsa. State tax forms 2014 gov/fedrelay. State tax forms 2014 Walk-in. State tax forms 2014 You can find a selection of forms, publications and services — in-person, face-to-face. State tax forms 2014 Products. State tax forms 2014 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. State tax forms 2014 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. State tax forms 2014 Services. State tax forms 2014 You can walk in to your local TAC most business days for personal, face-to-face tax help. State tax forms 2014 An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. State tax forms 2014 If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. State tax forms 2014 No appointment is necessary—just walk in. State tax forms 2014 Before visiting, check www. State tax forms 2014 irs. State tax forms 2014 gov/localcontacts for hours of operation and services provided. State tax forms 2014 Mail. State tax forms 2014 You can send your order for forms, instructions, and publications to the address below. State tax forms 2014 You should receive a response within 10 business days after your request is received. State tax forms 2014  Internal Revenue Service 1201 N. State tax forms 2014 Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. State tax forms 2014   The Taxpayer Advocate Service (TAS) is your voice at the IRS. State tax forms 2014 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. State tax forms 2014 What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. State tax forms 2014 We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. State tax forms 2014 You face (or your business is facing) an immediate threat of adverse action. State tax forms 2014 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. State tax forms 2014   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. State tax forms 2014 Here's why we can help: TAS is an independent organization within the IRS. State tax forms 2014 Our advocates know how to work with the IRS. State tax forms 2014 Our services are free and tailored to meet your needs. State tax forms 2014 We have offices in every state, the District of Columbia, and Puerto Rico. State tax forms 2014 How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. State tax forms 2014 irs. State tax forms 2014 gov/advocate, or call us toll-free at 1-877-777-4778. State tax forms 2014 How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. State tax forms 2014 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. State tax forms 2014 irs. State tax forms 2014 gov/sams. State tax forms 2014 Low Income Taxpayer Clinics. State tax forms 2014   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. State tax forms 2014 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. State tax forms 2014 Visit www. State tax forms 2014 TaxpayerAdvocate. State tax forms 2014 irs. State tax forms 2014 gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. 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Understanding your CP178 Notice

Your tax return filing requirements may have changed: You may no longer owe excise tax.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

If you no longer owe excise tax, file a final Quarterly Excise Tax Return (Form 720) by:

  • Writing "Not liable" at the top of next quarter’s Form 720, and
  • Checking the box that says, "Final return," located on Page 1 of the form in the upper left corner.
  • If you owe excise tax in the future, we’ll automatically send you Form 720 after we receive a return from you reporting tax.

You may want to...


Answers to Common Questions

How do I know if my business remains liable for excise taxes?
Your business is liable for excise tax if it involves goods, services, or activities identified on Form 720.

If I no longer owe excise taxes where to I mail my final Form 720?
File a final Form 720 if you no longer owe excise taxes because you’re either going out of business or you will not owe excise taxes in future quarters. Check the final return box above Part I of Form 720 and mail to IRS, Cincinnati, OH 45999-0009.

I don’t handle excise taxes for my corporation. How can I request that the IRS send all future notices directly to our accountant?
Complete a Form 8822, Change of Address, and send it to the address shown on the form.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.


Understanding your notice

Reading your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP178, Page 1

Page Last Reviewed or Updated: 28-Mar-2014

The State Tax Forms 2014

State tax forms 2014 14. State tax forms 2014   Sale of Property Table of Contents Reminder Introduction Useful Items - You may want to see: Sales and TradesWhat Is a Sale or Trade? How To Figure Gain or Loss Nontaxable Trades Transfers Between Spouses Related Party Transactions Capital Gains and LossesCapital or Ordinary Gain or Loss Capital Assets and Noncapital Assets Holding Period Nonbusiness Bad Debts Wash Sales Rollover of Gain From Publicly Traded Securities Reminder Foreign income. State tax forms 2014  If you are a U. State tax forms 2014 S. State tax forms 2014 citizen who sells property located outside the United States, you must report all gains and losses from the sale of that property on your tax return unless it is exempt by U. State tax forms 2014 S. State tax forms 2014 law. State tax forms 2014 This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the payer. State tax forms 2014 Introduction This chapter discusses the tax consequences of selling or trading investment property. State tax forms 2014 It explains the following. State tax forms 2014 What a sale or trade is. State tax forms 2014 Figuring gain or loss. State tax forms 2014 Nontaxable trades. State tax forms 2014 Related party transactions. State tax forms 2014 Capital gains or losses. State tax forms 2014 Capital assets and noncapital assets. State tax forms 2014 Holding period. State tax forms 2014 Rollover of gain from publicly traded securities. State tax forms 2014 Other property transactions. State tax forms 2014   Certain transfers of property are not discussed here. State tax forms 2014 They are discussed in other IRS publications. State tax forms 2014 These include the following. State tax forms 2014 Sales of a main home, covered in chapter 15. State tax forms 2014 Installment sales, covered in Publication 537, Installment Sales. State tax forms 2014 Transactions involving business property, covered in Publication 544, Sales and Other Dispositions of Assets. State tax forms 2014 Dispositions of an interest in a passive activity, covered in Publication 925, Passive Activity and At-Risk Rules. State tax forms 2014    Publication 550, Investment Income and Expenses (Including Capital Gains and Losses), provides a more detailed discussion about sales and trades of investment property. State tax forms 2014 Publication 550 includes information about the rules covering nonbusiness bad debts, straddles, section 1256 contracts, puts and calls, commodity futures, short sales, and wash sales. State tax forms 2014 It also discusses investment-related expenses. State tax forms 2014 Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 8949 Sales and Other Dispositions of Capital Assets 8824 Like-Kind Exchanges Sales and Trades If you sold property such as stocks, bonds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. State tax forms 2014 Generally, you should receive the statement by February 15 of the next year. State tax forms 2014 It will show the gross proceeds from the sale. State tax forms 2014 If you sold a covered security in 2013, your 1099-B (or substitute statement) will show your basis. State tax forms 2014 Generally, a covered security is a security you acquired after 2010, with certain exceptions. State tax forms 2014 See the Instructions for Form 8949. State tax forms 2014 The IRS will also get a copy of Form 1099-B from the broker. State tax forms 2014 Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. State tax forms 2014 What Is a Sale or Trade? This section explains what is a sale or trade. State tax forms 2014 It also explains certain transactions and events that are treated as sales or trades. State tax forms 2014 A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. State tax forms 2014 A trade is a transfer of property for other property or services and may be taxed in the same way as a sale. State tax forms 2014 Sale and purchase. State tax forms 2014   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. State tax forms 2014 The sale and purchase are two separate transactions. State tax forms 2014 But see Like-kind exchanges under Nontaxable Trades, later. State tax forms 2014 Redemption of stock. State tax forms 2014   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. State tax forms 2014 Dividend versus sale or trade. State tax forms 2014   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. State tax forms 2014 Both direct and indirect ownership of stock will be considered. State tax forms 2014 The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend (see chapter 8), There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. State tax forms 2014 Redemption or retirement of bonds. State tax forms 2014   A redemption or retirement of bonds or notes at their maturity is generally treated as a sale or trade. State tax forms 2014   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. State tax forms 2014 For details, see Regulations section 1. State tax forms 2014 1001-3. State tax forms 2014 Surrender of stock. State tax forms 2014   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. State tax forms 2014 The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. State tax forms 2014 Worthless securities. State tax forms 2014    Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. State tax forms 2014 This affects whether your capital loss is long term or short term. State tax forms 2014 See Holding Period , later. State tax forms 2014   Worthless securities also include securities that you abandon after March 12, 2008. State tax forms 2014 To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. State tax forms 2014 All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. State tax forms 2014    If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. State tax forms 2014 Do not deduct them in the year the stock became worthless. State tax forms 2014 How to report loss. State tax forms 2014    Report worthless securities in Part I or Part II, whichever applies, of Form 8949. State tax forms 2014 In column (a), enter “Worthless. State tax forms 2014 ”    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. State tax forms 2014 See Form 8949 and the Instructions for Form 8949. State tax forms 2014 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. State tax forms 2014 See also Schedule D (Form 1040), Form 8949, and their separate instructions. State tax forms 2014 Filing a claim for refund. State tax forms 2014   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. State tax forms 2014 You must use Form 1040X, Amended U. State tax forms 2014 S. State tax forms 2014 Individual Income Tax Return, to amend your return for the year the security became worthless. State tax forms 2014 You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. State tax forms 2014 For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. State tax forms 2014 How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. State tax forms 2014 Gain. State tax forms 2014   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. State tax forms 2014 Loss. State tax forms 2014   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. State tax forms 2014 Adjusted basis. State tax forms 2014   The adjusted basis of property is your original cost or other original basis properly adjusted (increased or decreased) for certain items. State tax forms 2014 See chapter 13 for more information about determining the adjusted basis of property. State tax forms 2014 Amount realized. State tax forms 2014   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). State tax forms 2014 Amount realized includes the money you receive plus the fair market value of any property or services you receive. State tax forms 2014 If you received a note or other debt instrument for the property, see How To Figure Gain or Loss in chapter 4 of Publication 550 to figure the amount realized. State tax forms 2014 If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. State tax forms 2014 For more information, see Publication 537. State tax forms 2014 Fair market value. State tax forms 2014   Fair market value is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. State tax forms 2014 Example. State tax forms 2014 You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. State tax forms 2014 Your gain is $3,000 ($10,000 − $7,000). State tax forms 2014 Debt paid off. State tax forms 2014    A debt against the property, or against you, that is paid off as a part of the transaction, or that is assumed by the buyer, must be included in the amount realized. State tax forms 2014 This is true even if neither you nor the buyer is personally liable for the debt. State tax forms 2014 For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. State tax forms 2014 Example. State tax forms 2014 You sell stock that you had pledged as security for a bank loan of $8,000. State tax forms 2014 Your basis in the stock is $6,000. State tax forms 2014 The buyer pays off your bank loan and pays you $20,000 in cash. State tax forms 2014 The amount realized is $28,000 ($20,000 + $8,000). State tax forms 2014 Your gain is $22,000 ($28,000 − $6,000). State tax forms 2014 Payment of cash. State tax forms 2014   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. State tax forms 2014 Determine your gain or loss by subtracting the cash you pay plus the adjusted basis of the property you trade in from the amount you realize. State tax forms 2014 If the result is a positive number, it is a gain. State tax forms 2014 If the result is a negative number, it is a loss. State tax forms 2014 No gain or loss. State tax forms 2014   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. State tax forms 2014 In this case, you may have neither a gain nor a loss. State tax forms 2014 See Basis Other Than Cost in chapter 13. State tax forms 2014 Nontaxable Trades This section discusses trades that generally do not result in a taxable gain or deductible loss. State tax forms 2014 For more information on nontaxable trades, see chapter 1 of Publication 544. State tax forms 2014 Like-kind exchanges. State tax forms 2014   If you trade business or investment property for other business or investment property of a like kind, you do not pay tax on any gain or deduct any loss until you sell or dispose of the property you receive. State tax forms 2014 To be nontaxable, a trade must meet all six of the following conditions. State tax forms 2014 The property must be business or investment property. State tax forms 2014 You must hold both the property you trade and the property you receive for productive use in your trade or business or for investment. State tax forms 2014 Neither property may be property used for personal purposes, such as your home or family car. State tax forms 2014 The property must not be held primarily for sale. State tax forms 2014 The property you trade and the property you receive must not be property you sell to customers, such as merchandise. State tax forms 2014 The property must not be stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest, including partnership interests. State tax forms 2014 However, see Special rules for mutual ditch, reservoir, or irrigation company stock, in chapter 4 of Publication 550 for an exception. State tax forms 2014 Also, you can have a nontaxable trade of corporate stocks under a different rule, as discussed later. State tax forms 2014 There must be a trade of like property. State tax forms 2014 The trade of real estate for real estate, or personal property for similar personal property, is a trade of like property. State tax forms 2014 The trade of an apartment house for a store building, or a panel truck for a pickup truck, is a trade of like property. State tax forms 2014 The trade of a piece of machinery for a store building is not a trade of like property. State tax forms 2014 Real property located in the United States and real property located outside the United States are not like property. State tax forms 2014 Also, personal property used predominantly within the United States and personal property used predominantly outside the United States are not like property. State tax forms 2014 The property to be received must be identified in writing within 45 days after the date you transfer the property given up in the trade. State tax forms 2014 The property to be received must be received by the earlier of: The 180th day after the date on which you transfer the property given up in the trade, or The due date, including extensions, for your tax return for the year in which the transfer of the property given up occurs. State tax forms 2014    If you trade property with a related party in a like-kind exchange, a special rule may apply. State tax forms 2014 See Related Party Transactions , later in this chapter. State tax forms 2014 Also, see chapter 1 of Publication 544 for more information on exchanges of business property and special rules for exchanges using qualified intermediaries or involving multiple properties. State tax forms 2014 Partly nontaxable exchange. State tax forms 2014   If you receive money or unlike property in addition to like property, and the above six conditions are met, you have a partly nontaxable trade. State tax forms 2014 You are taxed on any gain you realize, but only up to the amount of the money and the fair market value of the unlike property you receive. State tax forms 2014 You cannot deduct a loss. State tax forms 2014 Like property and unlike property transferred. State tax forms 2014   If you give up unlike property in addition to the like property, you must recognize gain or loss on the unlike property you give up. State tax forms 2014 The gain or loss is the difference between the adjusted basis of the unlike property and its fair market value. State tax forms 2014 Like property and money transferred. State tax forms 2014   If all of the above conditions (1) – (6) are met, you have a nontaxable trade even if you pay money in addition to the like property. State tax forms 2014 Basis of property received. State tax forms 2014   To figure the basis of the property received, see Nontaxable Exchanges in chapter 13. State tax forms 2014 How to report. State tax forms 2014   You must report the trade of like property on Form 8824. State tax forms 2014 If you figure a recognized gain or loss on Form 8824, report it on Schedule D (Form 1040), or on Form 4797, Sales of Business Property, whichever applies. State tax forms 2014 See the instructions for Line 22 in the Instructions for Form 8824. State tax forms 2014   For information on using Form 4797, see chapter 4 of Publication 544. State tax forms 2014 Corporate stocks. State tax forms 2014   The following trades of corporate stocks generally do not result in a taxable gain or a deductible loss. State tax forms 2014 Corporate reorganizations. State tax forms 2014   In some instances, a company will give you common stock for preferred stock, preferred stock for common stock, or stock in one corporation for stock in another corporation. State tax forms 2014 If this is a result of a merger, recapitalization, transfer to a controlled corporation, bankruptcy, corporate division, corporate acquisition, or other corporate reorganization, you do not recognize gain or loss. State tax forms 2014 Stock for stock of the same corporation. State tax forms 2014   You can exchange common stock for common stock or preferred stock for preferred stock in the same corporation without having a recognized gain or loss. State tax forms 2014 This is true for a trade between two stockholders as well as a trade between a stockholder and the corporation. State tax forms 2014 Convertible stocks and bonds. State tax forms 2014   You generally will not have a recognized gain or loss if you convert bonds into stock or preferred stock into common stock of the same corporation according to a conversion privilege in the terms of the bond or the preferred stock certificate. State tax forms 2014 Property for stock of a controlled corporation. State tax forms 2014   If you transfer property to a corporation solely in exchange for stock in that corporation, and immediately after the trade you are in control of the corporation, you ordinarily will not recognize a gain or loss. State tax forms 2014 This rule applies both to individuals and to groups who transfer property to a corporation. State tax forms 2014 It does not apply if the corporation is an investment company. State tax forms 2014   For this purpose, to be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock of the corporation. State tax forms 2014   If this provision applies to you, you may have to attach to your return a complete statement of all facts pertinent to the exchange. State tax forms 2014 For details, see Regulations section 1. State tax forms 2014 351-3. State tax forms 2014 Additional information. State tax forms 2014   For more information on trades of stock, see Nontaxable Trades in chapter 4 of Publication 550. State tax forms 2014 Insurance policies and annuities. State tax forms 2014   You will not have a recognized gain or loss if the insured or annuitant is the same under both contracts and you trade: A life insurance contract for another life insurance contract or for an endowment or annuity contract or for a qualified long-term care insurance contract, An endowment contract for another endowment contract that provides for regular payments beginning at a date no later than the beginning date under the old contract or for an annuity contract or for a qualified long-term insurance contract, An annuity contract for annuity contract or for a qualified long-term care insurance contract, or A qualified long-term care insurance contract for a qualified long-term care insurance contract. State tax forms 2014   You also may not have to recognize gain or loss on an exchange of a portion of an annuity contract for another annuity contract. State tax forms 2014 For transfers completed before October 24, 2011, see Revenue Ruling 2003-76 in Internal Revenue Bulletin 2003-33 and Revenue Procedure 2008-24 in Internal Revenue Bulletin 2008-13. State tax forms 2014 Revenue Ruling 2003-76 is available at www. State tax forms 2014 irs. State tax forms 2014 gov/irb/2003-33_IRB/ar11. State tax forms 2014 html. State tax forms 2014 Revenue Procedure 2008-24 is available at www. State tax forms 2014 irs. State tax forms 2014 gov/irb/2008-13_IRB/ar13. State tax forms 2014 html. State tax forms 2014 For transfers completed on or after October 24, 2011, see Revenue Ruling 2003-76, above, and Revenue Procedure 2011-38, in Internal Revenue Bulletin 2011-30. State tax forms 2014 Revenue Procedure 2011-38 is available at www. State tax forms 2014 irs. State tax forms 2014 gov/irb/2011-30_IRB/ar09. State tax forms 2014 html. State tax forms 2014   For tax years beginning after December 31, 2010, amounts received as an annuity for a period of 10 years or more, or for the lives of one or more individuals, under any portion of an annuity, endowment, or life insurance contract, are treated as a separate contract and are considered partial annuities. State tax forms 2014 A portion of an annuity, endowment, or life insurance contract may be annuitized, provided that the annuitization period is for 10 years or more or for the lives of one or more individuals. State tax forms 2014 The investment in the contract is allocated between the part of the contract from which amounts are received as an annuity and the part of the contract from which amounts are not received as an annuity. State tax forms 2014   Exchanges of contracts not included in this list, such as an annuity contract for an endowment contract, or an annuity or endowment contract for a life insurance contract, are taxable. State tax forms 2014 Demutualization of life insurance companies. State tax forms 2014   If you received stock in exchange for your equity interest as a policyholder or an annuitant, you generally will not have a recognized gain or loss. State tax forms 2014 See Demutualization of Life Insurance Companies in Publication 550. State tax forms 2014 U. State tax forms 2014 S. State tax forms 2014 Treasury notes or bonds. State tax forms 2014   You can trade certain issues of U. State tax forms 2014 S. State tax forms 2014 Treasury obligations for other issues designated by the Secretary of the Treasury, with no gain or loss recognized on the trade. State tax forms 2014 See Savings bonds traded in chapter 1 of Publication 550 for more information. State tax forms 2014 Transfers Between Spouses Generally, no gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or if incident to a divorce, a former spouse. State tax forms 2014 This nonrecognition rule does not apply in the following situations. State tax forms 2014 The recipient spouse or former spouse is a nonresident alien. State tax forms 2014 Property is transferred in trust and liability exceeds basis. State tax forms 2014 Gain must be recognized to the extent the amount of the liabilities assumed by the trust, plus any liabilities on the property, exceed the adjusted basis of the property. State tax forms 2014 For other situations, see Transfers Between Spouses in chapter 4 of Publication 550. State tax forms 2014 Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. State tax forms 2014 The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. State tax forms 2014 This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its fair market value at the time of transfer or any consideration paid by the recipient. State tax forms 2014 This rule applies for purposes of determining loss as well as gain. State tax forms 2014 Any gain recognized on a transfer in trust increases the basis. State tax forms 2014 A transfer of property is incident to a divorce if the transfer occurs within 1 year after the date on which the marriage ends, or if the transfer is related to the ending of the marriage. State tax forms 2014 Related Party Transactions Special rules apply to the sale or trade of property between related parties. State tax forms 2014 Gain on sale or trade of depreciable property. State tax forms 2014   Your gain from the sale or trade of property to a related party may be ordinary income, rather than capital gain, if the property can be depreciated by the party receiving it. State tax forms 2014 See chapter 3 of Publication 544 for more information. State tax forms 2014 Like-kind exchanges. State tax forms 2014   Generally, if you trade business or investment property for other business or investment property of a like kind, no gain or loss is recognized. State tax forms 2014 See Like-kind exchanges , earlier, under Nontaxable Trades. State tax forms 2014   This rule also applies to trades of property between related parties, defined next under Losses on sales or trades of property. State tax forms 2014 However, if either you or the related party disposes of the like property within 2 years after the trade, you both must report any gain or loss not recognized on the original trade on your return filed for the year in which the later disposition occurs. State tax forms 2014 See Related Party Transactions in chapter 4 of Publication 550 for exceptions. State tax forms 2014 Losses on sales or trades of property. State tax forms 2014   You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties. State tax forms 2014 Members of your family. State tax forms 2014 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. State tax forms 2014 ), and lineal descendants (children, grandchildren, etc. State tax forms 2014 ). State tax forms 2014 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. State tax forms 2014 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. State tax forms 2014 (See Constructive ownership of stock , later. State tax forms 2014 ) A tax-exempt charitable or educational organization directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. State tax forms 2014   In addition, a loss on the sale or trade of property is not deductible if the transaction is directly or indirectly between the following related parties. State tax forms 2014 A grantor and fiduciary, or the fiduciary and beneficiary, of any trust. State tax forms 2014 Fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. State tax forms 2014 A trust fiduciary and a corporation of which more than 50% in value of the outstanding stock is directly or indirectly owned by or for the trust, or by or for the grantor of the trust. State tax forms 2014 A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest, or the profits interest, in the partnership. State tax forms 2014 Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. State tax forms 2014 Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. State tax forms 2014 An executor and a beneficiary of an estate (except in the case of a sale or trade to satisfy a pecuniary bequest). State tax forms 2014 Two corporations that are members of the same controlled group. State tax forms 2014 (Under certain conditions, however, these losses are not disallowed but must be deferred. State tax forms 2014 ) Two partnerships if the same persons own, directly or indirectly, more than 50% of the capital interests or the profit interests in both partnerships. State tax forms 2014 Multiple property sales or trades. State tax forms 2014   If you sell or trade to a related party a number of blocks of stock or pieces of property in a lump sum, you must figure the gain or loss separately for each block of stock or piece of property. State tax forms 2014 The gain on each item may be taxable. State tax forms 2014 However, you cannot deduct the loss on any item. State tax forms 2014 Also, you cannot reduce gains from the sales of any of these items by losses on the sales of any of the other items. State tax forms 2014 Indirect transactions. State tax forms 2014   You cannot deduct your loss on the sale of stock through your broker if, under a prearranged plan, a related party buys the same stock you had owned. State tax forms 2014 This does not apply to a trade between related parties through an exchange that is purely coincidental and is not prearranged. State tax forms 2014 Constructive ownership of stock. State tax forms 2014   In determining whether a person directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. State tax forms 2014 Rule 1. State tax forms 2014   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. State tax forms 2014 Rule 2. State tax forms 2014   An individual is considered to own the stock directly or indirectly owned by or for his or her family. State tax forms 2014 Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. State tax forms 2014 Rule 3. State tax forms 2014   An individual owning, other than by applying rule 2, any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. State tax forms 2014 Rule 4. State tax forms 2014   When applying rule 1, 2, or 3, stock constructively owned by a person under rule 1 is treated as actually owned by that person. State tax forms 2014 But stock constructively owned by an individual under rule 2 or rule 3 is not treated as owned by that individual for again applying either rule 2 or rule 3 to make another person the constructive owner of the stock. State tax forms 2014 Property received from a related party. State tax forms 2014    If you sell or trade at a gain property you acquired from a related party, you recognize the gain only to the extent it is more than the loss previously disallowed to the related party. State tax forms 2014 This rule applies only if you are the original transferee and you acquired the property by purchase or exchange. State tax forms 2014 This rule does not apply if the related party's loss was disallowed because of the wash sale rules described in chapter 4 of Publication 550 under Wash Sales. State tax forms 2014   If you sell or trade at a loss property you acquired from a related party, you cannot recognize the loss that was not allowed to the related party. State tax forms 2014 Example 1. State tax forms 2014 Your brother sells you stock for $7,600. State tax forms 2014 His cost basis is $10,000. State tax forms 2014 Your brother cannot deduct the loss of $2,400. State tax forms 2014 Later, you sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900. State tax forms 2014 Your reportable gain is $500 (the $2,900 gain minus the $2,400 loss not allowed to your brother). State tax forms 2014 Example 2. State tax forms 2014 If, in Example 1, you sold the stock for $6,900 instead of $10,500, your recognized loss is only $700 (your $7,600 basis minus $6,900). State tax forms 2014 You cannot deduct the loss that was not allowed to your brother. State tax forms 2014 Capital Gains and Losses This section discusses the tax treatment of gains and losses from different types of investment transactions. State tax forms 2014 Character of gain or loss. State tax forms 2014   You need to classify your gains and losses as either ordinary or capital gains or losses. State tax forms 2014 You then need to classify your capital gains and losses as either short term or long term. State tax forms 2014 If you have long-term gains and losses, you must identify your 28% rate gains and losses. State tax forms 2014 If you have a net capital gain, you must also identify any unrecaptured section 1250 gain. State tax forms 2014   The correct classification and identification helps you figure the limit on capital losses and the correct tax on capital gains. State tax forms 2014 Reporting capital gains and losses is explained in chapter 16. State tax forms 2014 Capital or Ordinary Gain or Loss If you have a taxable gain or a deductible loss from a transaction, it may be either a capital gain or loss or an ordinary gain or loss, depending on the circumstances. State tax forms 2014 Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss. State tax forms 2014 A sale or trade of a noncapital asset generally results in ordinary gain or loss. State tax forms 2014 Depending on the circumstances, a gain or loss on a sale or trade of property used in a trade or business may be treated as either capital or ordinary, as explained in Publication 544. State tax forms 2014 In some situations, part of your gain or loss may be a capital gain or loss and part may be an ordinary gain or loss. State tax forms 2014 Capital Assets and Noncapital Assets For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. State tax forms 2014 Some examples are: Stocks or bonds held in your personal account, A house owned and used by you and your family, Household furnishings, A car used for pleasure or commuting, Coin or stamp collections, Gems and jewelry, and Gold, silver, or any other metal. State tax forms 2014 Any property you own is a capital asset, except the following noncapital assets. State tax forms 2014 Property held mainly for sale to customers or property that will physically become a part of the merchandise for sale to customers. State tax forms 2014 For an exception, see Capital Asset Treatment for Self-Created Musical Works , later. State tax forms 2014 Depreciable property used in your trade or business, even if fully depreciated. State tax forms 2014 Real property used in your trade or business. State tax forms 2014 A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property that is: Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Acquired under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. State tax forms 2014 For an exception to this rule, see Capital Asset Treatment for Self-Created Musical Works , later. State tax forms 2014 Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of property described in (1). State tax forms 2014 U. State tax forms 2014 S. State tax forms 2014 Government publications that you received from the government free or for less than the normal sales price, or that you acquired under circumstances entitling you to the basis of someone who received the publications free or for less than the normal sales price. State tax forms 2014 Certain commodities derivative financial instruments held by commodities derivatives dealers. State tax forms 2014 Hedging transactions, but only if the transaction is clearly identified as a hedging transaction before the close of the day on which it was acquired, originated, or entered into. State tax forms 2014 Supplies of a type you regularly use or consume in the ordinary course of your trade or business. State tax forms 2014 Investment Property Investment property is a capital asset. State tax forms 2014 Any gain or loss from its sale or trade is generally a capital gain or loss. State tax forms 2014 Gold, silver, stamps, coins, gems, etc. State tax forms 2014   These are capital assets except when they are held for sale by a dealer. State tax forms 2014 Any gain or loss you have from their sale or trade generally is a capital gain or loss. State tax forms 2014 Stocks, stock rights, and bonds. State tax forms 2014   All of these (including stock received as a dividend) are capital assets except when held for sale by a securities dealer. State tax forms 2014 However, if you own small business stock, see Losses on Section 1244 (Small Business) Stock , later, and Losses on Small Business Investment Company Stock, in chapter 4 of Publication 550. State tax forms 2014 Personal Use Property Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. State tax forms 2014 However, you cannot deduct a loss from selling personal use property. State tax forms 2014 Capital Asset Treatment for Self-Created Musical Works You can elect to treat musical compositions and copyrights in musical works as capital assets when you sell or exchange them if: Your personal efforts created the property, or You acquired the property under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. State tax forms 2014 You must make a separate election for each musical composition (or copyright in a musical work) sold or exchanged during the tax year. State tax forms 2014 You must make the election on or before the due date (including extensions) of the income tax return for the tax year of the sale or exchange. State tax forms 2014 You must make the election on Form 8949 by treating the sale or exchange as the sale or exchange of a capital asset, according to Form 8949, Schedule D (Form 1040), and their separate instructions. State tax forms 2014 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. State tax forms 2014 See also Schedule D (Form 1040), Form 8949, and their separate instructions. State tax forms 2014 You can revoke the election if you have IRS approval. State tax forms 2014 To get IRS approval, you must submit a request for a letter ruling under the appropriate IRS revenue procedure. State tax forms 2014 See, for example, Rev. State tax forms 2014 Proc. State tax forms 2014 2013-1, corrected by Announcement 2013–9, and amplified and modified by Rev. State tax forms 2014 Proc. State tax forms 2014 2013–32, available at www. State tax forms 2014 irs. State tax forms 2014 gov/irb/2013-01_IRB/ar06. State tax forms 2014 html. State tax forms 2014 Alternatively, you are granted an automatic 6-month extension from the due date of your income tax return (excluding extensions) to revoke the election, provided you timely file your income tax return, and within this 6-month extension period, you file Form 1040X that treats the sale or exchange as the sale or exchange of property that is not a capital asset. State tax forms 2014 Discounted Debt Instruments Treat your gain or loss on the sale, redemption, or retirement of a bond or other debt instrument originally issued at a discount or bought at a discount as capital gain or loss, except as explained in the following discussions. State tax forms 2014 Short-term government obligations. State tax forms 2014   Treat gains on short-term federal, state, or local government obligations (other than tax-exempt obligations) as ordinary income up to your ratable share of the acquisition discount. State tax forms 2014 This treatment applies to obligations with a fixed maturity date not more than 1 year from the date of issue. State tax forms 2014 Acquisition discount is the stated redemption price at maturity minus your basis in the obligation. State tax forms 2014   However, do not treat these gains as income to the extent you previously included the discount in income. State tax forms 2014 See Discount on Short-Term Obligations in chapter 1 of Publication 550. State tax forms 2014 Short-term nongovernment obligations. State tax forms 2014   Treat gains on short-term nongovernment obligations as ordinary income up to your ratable share of original issue discount (OID). State tax forms 2014 This treatment applies to obligations with a fixed maturity date of not more than 1 year from the date of issue. State tax forms 2014   However, to the extent you previously included the discount in income, you do not have to include it in income again. State tax forms 2014 See Discount on Short-Term Obligations in chapter 1 of Publication 550. State tax forms 2014 Tax-exempt state and local government bonds. State tax forms 2014   If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. State tax forms 2014 To figure your gain or loss on the sale or trade of these bonds, reduce the amount realized by your part of OID. State tax forms 2014   If the bonds were issued after September 3, 1982, and acquired after March 1, 1984, increase the adjusted basis by your part of OID to figure gain or loss. State tax forms 2014 For more information on the basis of these bonds, see Discounted Debt Instruments in chapter 4 of Publication 550. State tax forms 2014   Any gain from market discount is usually taxable on disposition or redemption of tax-exempt bonds. State tax forms 2014 If you bought the bonds before May 1, 1993, the gain from market discount is capital gain. State tax forms 2014 If you bought the bonds after April 30, 1993, the gain is ordinary income. State tax forms 2014   You figure the market discount by subtracting the price you paid for the bond from the sum of the original issue price of the bond and the amount of accumulated OID from the date of issue that represented interest to any earlier holders. State tax forms 2014 For more information, see Market Discount Bonds in chapter 1 of Publication 550. State tax forms 2014    A loss on the sale or other disposition of a tax-exempt state or local government bond is deductible as a capital loss. State tax forms 2014 Redeemed before maturity. State tax forms 2014   If a state or local bond issued before June 9, 1980, is redeemed before it matures, the OID is not taxable to you. State tax forms 2014   If a state or local bond issued after June 8, 1980, is redeemed before it matures, the part of OID earned while you hold the bond is not taxable to you. State tax forms 2014 However, you must report the unearned part of OID as a capital gain. State tax forms 2014 Example. State tax forms 2014 On July 2, 2002, the date of issue, you bought a 20-year, 6% municipal bond for $800. State tax forms 2014 The face amount of the bond was $1,000. State tax forms 2014 The $200 discount was OID. State tax forms 2014 At the time the bond was issued, the issuer had no intention of redeeming it before it matured. State tax forms 2014 The bond was callable at its face amount beginning 10 years after the issue date. State tax forms 2014 The issuer redeemed the bond at the end of 11 years (July 2, 2013) for its face amount of $1,000 plus accrued annual interest of $60. State tax forms 2014 The OID earned during the time you held the bond, $73, is not taxable. State tax forms 2014 The $60 accrued annual interest also is not taxable. State tax forms 2014 However, you must report the unearned part of OID ($127) as a capital gain. State tax forms 2014 Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). State tax forms 2014   If you sell, trade, or redeem for a gain one of these debt instruments, the part of your gain that is not more than your ratable share of the OID at the time of the sale or redemption is ordinary income. State tax forms 2014 The rest of the gain is capital gain. State tax forms 2014 If, however, there was an intention to call the debt instrument before maturity, all of your gain that is not more than the entire OID is treated as ordinary income at the time of the sale. State tax forms 2014 This treatment of taxable gain also applies to corporate instruments issued after May 27, 1969, under a written commitment that was binding on May 27, 1969, and at all times thereafter. State tax forms 2014 Long-term debt instruments issued after May 27, 1969 (or after July 1, 1982, if a government instrument). State tax forms 2014   If you hold one of these debt instruments, you must include a part of OID in your gross income each year you own the instrument. State tax forms 2014 Your basis in that debt instrument is increased by the amount of OID that you have included in your gross income. State tax forms 2014 See Original Issue Discount (OID) in chapter 7 for information about OID that you must report on your tax return. State tax forms 2014   If you sell or trade the debt instrument before maturity, your gain is a capital gain. State tax forms 2014 However, if at the time the instrument was originally issued there was an intention to call it before its maturity, your gain generally is ordinary income to the extent of the entire OID reduced by any amounts of OID previously includible in your income. State tax forms 2014 In this case, the rest of the gain is capital gain. State tax forms 2014 Market discount bonds. State tax forms 2014   If the debt instrument has market discount and you chose to include the discount in income as it accrued, increase your basis in the debt instrument by the accrued discount to figure capital gain or loss on its disposition. State tax forms 2014 If you did not choose to include the discount in income as it accrued, you must report gain as ordinary interest income up to the instrument's accrued market discount. State tax forms 2014 The rest of the gain is capital gain. State tax forms 2014 See Market Discount Bonds in chapter 1 of Publication 550. State tax forms 2014   A different rule applies to market discount bonds issued before July 19, 1984, and purchased by you before May 1, 1993. State tax forms 2014 See Market discount bonds under Discounted Debt Instruments in chapter 4 of Publication 550. State tax forms 2014 Retirement of debt instrument. State tax forms 2014   Any amount you receive on the retirement of a debt instrument is treated in the same way as if you had sold or traded that instrument. State tax forms 2014 Notes of individuals. State tax forms 2014   If you hold an obligation of an individual issued with OID after March 1, 1984, you generally must include the OID in your income currently, and your gain or loss on its sale or retirement is generally capital gain or loss. State tax forms 2014 An exception to this treatment applies if the obligation is a loan between individuals and all the following requirements are met. State tax forms 2014 The lender is not in the business of lending money. State tax forms 2014 The amount of the loan, plus the amount of any outstanding prior loans, is $10,000 or less. State tax forms 2014 Avoiding federal tax is not one of the principal purposes of the loan. State tax forms 2014   If the exception applies, or the obligation was issued before March 2, 1984, you do not include the OID in your income currently. State tax forms 2014 When you sell or redeem the obligation, the part of your gain that is not more than your accrued share of OID at that time is ordinary income. State tax forms 2014 The rest of the gain, if any, is capital gain. State tax forms 2014 Any loss on the sale or redemption is capital loss. State tax forms 2014 Deposit in Insolvent or Bankrupt Financial Institution If you lose money you have on deposit in a bank, credit union, or other financial institution that becomes insolvent or bankrupt, you may be able to deduct your loss in one of three ways. State tax forms 2014 Ordinary loss. State tax forms 2014 Casualty loss. State tax forms 2014 Nonbusiness bad debt (short-term capital loss). State tax forms 2014  For more information, see Deposit in Insolvent or Bankrupt Financial Institution, in chapter 4 of Publication 550. State tax forms 2014 Sale of Annuity The part of any gain on the sale of an annuity contract before its maturity date that is based on interest accumulated on the contract is ordinary income. State tax forms 2014 Losses on Section 1244 (Small Business) Stock You can deduct as an ordinary loss, rather than as a capital loss, your loss on the sale, trade, or worthlessness of section 1244 stock. State tax forms 2014 Report the loss on Form 4797, line 10. State tax forms 2014 Any gain on section 1244 stock is a capital gain if the stock is a capital asset in your hands. State tax forms 2014 Report the gain on Form 8949. State tax forms 2014 See Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. State tax forms 2014 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. State tax forms 2014 See also Schedule D (Form 1040), Form 8949, and their separate instructions. State tax forms 2014 Holding Period If you sold or traded investment property, you must determine your holding period for the property. State tax forms 2014 Your holding period determines whether any capital gain or loss was a short-term or long-term capital gain or loss. State tax forms 2014 Long-term or short-term. State tax forms 2014   If you hold investment property more than 1 year, any capital gain or loss is a long-term capital gain or loss. State tax forms 2014 If you hold the property 1 year or less, any capital gain or loss is a short-term capital gain or loss. State tax forms 2014   To determine how long you held the investment property, begin counting on the date after the day you acquired the property. State tax forms 2014 The day you disposed of the property is part of your holding period. State tax forms 2014 Example. State tax forms 2014 If you bought investment property on February 6, 2012, and sold it on February 6, 2013, your holding period is not more than 1 year and you have a short-term capital gain or loss. State tax forms 2014 If you sold it on February 7, 2013, your holding period is more than 1 year and you will have a long-term capital gain or loss. State tax forms 2014 Securities traded on established market. State tax forms 2014   For securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities, and ends on the trade date you sold them. State tax forms 2014    Do not confuse the trade date with the settlement date, which is the date by which the stock must be delivered and payment must be made. State tax forms 2014 Example. State tax forms 2014 You are a cash method, calendar year taxpayer. State tax forms 2014 You sold stock at a gain on December 30, 2013. State tax forms 2014 According to the rules of the stock exchange, the sale was closed by delivery of the stock 4 trading days after the sale, on January 6, 2014. State tax forms 2014 You received payment of the sales price on that same day. State tax forms 2014 Report your gain on your 2013 return, even though you received the payment in 2014. State tax forms 2014 The gain is long term or short term depending on whether you held the stock more than 1 year. State tax forms 2014 Your holding period ended on December 30. State tax forms 2014 If you had sold the stock at a loss, you would also report it on your 2013 return. State tax forms 2014 U. State tax forms 2014 S. State tax forms 2014 Treasury notes and bonds. State tax forms 2014   The holding period of U. State tax forms 2014 S. State tax forms 2014 Treasury notes and bonds sold at auction on the basis of yield starts the day after the Secretary of the Treasury, through news releases, gives notification of acceptance to successful bidders. State tax forms 2014 The holding period of U. State tax forms 2014 S. State tax forms 2014 Treasury notes and bonds sold through an offering on a subscription basis at a specified yield starts the day after the subscription is submitted. State tax forms 2014 Automatic investment service. State tax forms 2014   In determining your holding period for shares bought by the bank or other agent, full shares are considered bought first and any fractional shares are considered bought last. State tax forms 2014 Your holding period starts on the day after the bank's purchase date. State tax forms 2014 If a share was bought over more than one purchase date, your holding period for that share is a split holding period. State tax forms 2014 A part of the share is considered to have been bought on each date that stock was bought by the bank with the proceeds of available funds. State tax forms 2014 Nontaxable trades. State tax forms 2014   If you acquire investment property in a trade for other investment property and your basis for the new property is determined, in whole or in part, by your basis in the old property, your holding period for the new property begins on the day following the date you acquired the old property. State tax forms 2014 Property received as a gift. State tax forms 2014   If you receive a gift of property and your basis is determined by the donor's adjusted basis, your holding period is considered to have started on the same day the donor's holding period started. State tax forms 2014   If your basis is determined by the fair market value of the property, your holding period starts on the day after the date of the gift. State tax forms 2014 Inherited property. State tax forms 2014   Generally, if you inherited investment property, your capital gain or loss on any later disposition of that property is long-term capital gain or loss. State tax forms 2014 This is true regardless of how long you actually held the property. State tax forms 2014 However, if you inherited property from someone who died in 2010, see the information below. State tax forms 2014 Inherited property from someone who died in 2010. State tax forms 2014   If you inherit investment property from a decedent who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your holding period. State tax forms 2014 Real property bought. State tax forms 2014   To figure how long you have held real property bought under an unconditional contract, begin counting on the day after you received title to it or on the day after you took possession of it and assumed the burdens and privileges of ownership, whichever happened first. State tax forms 2014 However, taking delivery or possession of real property under an option agreement is not enough to start the holding period. State tax forms 2014 The holding period cannot start until there is an actual contract of sale. State tax forms 2014 The holding period of the seller cannot end before that time. State tax forms 2014 Real property repossessed. State tax forms 2014   If you sell real property but keep a security interest in it, and then later repossess the property under the terms of the sales contract, your holding period for a later sale includes the period you held the property before the original sale and the period after the repossession. State tax forms 2014 Your holding period does not include the time between the original sale and the repossession. State tax forms 2014 That is, it does not include the period during which the first buyer held the property. State tax forms 2014 Stock dividends. State tax forms 2014   The holding period for stock you received as a taxable stock dividend begins on the date of distribution. State tax forms 2014   The holding period for new stock you received as a nontaxable stock dividend begins on the same day as the holding period of the old stock. State tax forms 2014 This rule also applies to stock acquired in a “spin-off,” which is a distribution of stock or securities in a controlled corporation. State tax forms 2014 Nontaxable stock rights. State tax forms 2014   Your holding period for nontaxable stock rights begins on the same day as the holding period of the underlying stock. State tax forms 2014 The holding period for stock acquired through the exercise of stock rights begins on the date the right was exercised. State tax forms 2014 Nonbusiness Bad Debts If someone owes you money that you cannot collect, you have a bad debt. State tax forms 2014 You may be able to deduct the amount owed to you when you figure your tax for the year the debt becomes worthless. State tax forms 2014 Generally, nonbusiness bad debts are bad debts that did not come from operating your trade or business, and are deductible as short-term capital losses. State tax forms 2014 To be deductible, nonbusiness bad debts must be totally worthless. State tax forms 2014 You cannot deduct a partly worthless nonbusiness debt. State tax forms 2014 Genuine debt required. State tax forms 2014   A debt must be genuine for you to deduct a loss. State tax forms 2014 A debt is genuine if it arises from a debtor-creditor relationship based on a valid and enforceable obligation to repay a fixed or determinable sum of money. State tax forms 2014 Basis in bad debt required. State tax forms 2014    To deduct a bad debt, you must have a basis in it—that is, you must have already included the amount in your income or loaned out your cash. State tax forms 2014 For example, you cannot claim a bad debt deduction for court-ordered child support not paid to you by your former spouse. State tax forms 2014 If you are a cash method taxpayer (as most individuals are), you generally cannot take a bad debt deduction for unpaid salaries, wages, rents, fees, interest, dividends, and similar items. State tax forms 2014 When deductible. State tax forms 2014   You can take a bad debt deduction only in the year the debt becomes worthless. State tax forms 2014 You do not have to wait until a debt is due to determine whether it is worthless. State tax forms 2014 A debt becomes worthless when there is no longer any chance that the amount owed will be paid. State tax forms 2014   It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. State tax forms 2014 You must only show that you have taken reasonable steps to collect the debt. State tax forms 2014 Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. State tax forms 2014 How to report bad debts. State tax forms 2014    Deduct nonbusiness bad debts as short-term capital losses on Form 8949. State tax forms 2014    Make sure you report your bad debt(s) (and any other short-term transactions for which you did not receive a Form 1099-B) on Form 8949, Part I, with box C checked. State tax forms 2014    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. State tax forms 2014 See also Schedule D (Form 1040), Form 8949, and their separate instructions. State tax forms 2014   For each bad debt, attach a statement to your return that contains: A description of the debt, including the amount, and the date it became due, The name of the debtor, and any business or family relationship between you and the debtor, The efforts you made to collect the debt, and Why you decided the debt was worthless. State tax forms 2014 For example, you could show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt. State tax forms 2014 Filing a claim for refund. State tax forms 2014    If you do not deduct a bad debt on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the bad debt. State tax forms 2014 To do this, use Form 1040X to amend your return for the year the debt became worthless. State tax forms 2014 You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. State tax forms 2014 For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. State tax forms 2014 Additional information. State tax forms 2014   For more information, see Nonbusiness Bad Debts in Publication 550. State tax forms 2014 For information on business bad debts, see chapter 10 of Publication 535, Business Expenses. State tax forms 2014 Wash Sales You cannot deduct losses from sales or trades of stock or securities in a wash sale. State tax forms 2014 A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. State tax forms 2014 If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). State tax forms 2014 The result is your basis in the new stock or securities. State tax forms 2014 This adjustment postpones the loss deduction until the disposition of the new stock or securities. State tax forms 2014 Your holding period for the new stock or securities includes the holding period of the stock or securities sold. State tax forms 2014 For more information, see Wash Sales, in chapter 4 of Publication 550. State tax forms 2014 Rollover of Gain From Publicly Traded Securities You may qualify for a tax-free rollover of certain gains from the sale of publicly traded securities. State tax forms 2014 This means that if you buy certain replacement property and make the choice described in this section, you postpone part or all of your gain. State tax forms 2014 You postpone the gain by adjusting the basis of the replacement property as described in Basis of replacement property , later. State tax forms 2014 This postpones your gain until the year you dispose of the replacement property. State tax forms 2014 You qualify to make this choice if you meet all the following tests. State tax forms 2014 You sell publicly traded securities at a gain. State tax forms 2014 Publicly traded securities are securities traded on an established securities market. State tax forms 2014 Your gain from the sale is a capital gain. State tax forms 2014 During the 60-day period beginning on the date of the sale, you buy replacement property. State tax forms 2014 This replacement property must be either common stock of, or a partnership interest in a specialized small business investment company (SSBIC). State tax forms 2014 This is any partnership or corporation licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958, as in effect on May 13, 1993. State tax forms 2014 Amount of gain recognized. State tax forms 2014   If you make the choice described in this section, you must recognize gain only up to the following amount. State tax forms 2014 The amount realized on the sale, minus The cost of any common stock or partnership interest in an SSBIC that you bought during the 60-day period beginning on the date of sale (and did not previously take into account on an earlier sale of publicly traded securities). State tax forms 2014  If this amount is less than the amount of your gain, you can postpone the rest of your gain, subject to the limit described next. State tax forms 2014 If this amount is equal to or more than the amount of your gain, you must recognize the full amount of your gain. State tax forms 2014 Limit on gain postponed. State tax forms 2014   The amount of gain you can postpone each year is limited to the smaller of: $50,000 ($25,000 if you are married and file a separate return), or $500,000 ($250,000 if you are married and file a separate return), minus the amount of gain you postponed for all earlier years. State tax forms 2014 Basis of replacement property. State tax forms 2014   You must subtract the amount of postponed gain from the basis of your replacement property. State tax forms 2014 How to report and postpone gain. State tax forms 2014    See How to report and postpone gain under Rollover of Gain From Publicly Traded Securities in chapter 4 of Publication 550 for details. State tax forms 2014 Prev  Up  Next   Home   More Online Publications