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Where File Amended 1040x

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Where File Amended 1040x

Where file amended 1040x Publication 561 - Main Contents Table of Contents What Is Fair Market Value (FMV)?Factors. Where file amended 1040x Stock. Where file amended 1040x Options. Where file amended 1040x Determining Fair Market Value Problems in Determining Fair Market Value Valuation of Various Kinds of PropertyHousehold Goods Used Clothing Jewelry and Gems Paintings, Antiques, and Other Objects of Art Collections Cars, Boats, and Aircraft Inventory Patents Stocks and Bonds Real Estate Interest in a Business Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Certain Life Insurance and Annuity Contracts Partial Interest in Property Not in Trust AppraisalsDeductions of More Than $5,000 Deductions of More Than $500,000 Qualified Appraisal Form 8283 Internal Revenue Service Review of Appraisals Penalty How To Get Tax HelpLow income tax clinics (LITCs). Where file amended 1040x What Is Fair Market Value (FMV)? To figure how much you may deduct for property that you contribute, you must first determine its fair market value on the date of the contribution. Where file amended 1040x Fair market value. Where file amended 1040x   Fair market value (FMV) is the price that property would sell for on the open market. Where file amended 1040x It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. Where file amended 1040x If you put a restriction on the use of property you donate, the FMV must reflect that restriction. Where file amended 1040x Example 1. Where file amended 1040x If you give used clothing to the Salvation Army, the FMV would be the price that typical buyers actually pay for clothing of this age, condition, style, and use. Where file amended 1040x Usually, such items are worth far less than what you paid for them. Where file amended 1040x Example 2. Where file amended 1040x If you donate land and restrict its use to agricultural purposes, you must value the land at its value for agricultural purposes, even though it would have a higher FMV if it were not restricted. Where file amended 1040x Factors. Where file amended 1040x   In making and supporting the valuation of property, all factors affecting value are relevant and must be considered. Where file amended 1040x These include: The cost or selling price of the item, Sales of comparable properties, Replacement cost, and Opinions of experts. Where file amended 1040x   These factors are discussed later. Where file amended 1040x Also, see Table 1 for a summary of questions to ask as you consider each factor. Where file amended 1040x Date of contribution. Where file amended 1040x   Ordinarily, the date of a contribution is the date that the transfer of the property takes place. Where file amended 1040x Stock. Where file amended 1040x   If you deliver, without any conditions, a properly endorsed stock certificate to a qualified organization or to an agent of the organization, the date of the contribution is the date of delivery. Where file amended 1040x If the certificate is mailed and received through the regular mail, it is the date of mailing. Where file amended 1040x If you deliver the certificate to a bank or broker acting as your agent or to the issuing corporation or its agent, for transfer into the name of the organization, the date of the contribution is the date the stock is transferred on the books of the corporation. Where file amended 1040x Options. Where file amended 1040x   If you grant an option to a qualified organization to buy real property, you have not made a charitable contribution until the organization exercises the option. Where file amended 1040x The amount of the contribution is the FMV of the property on the date the option is exercised minus the exercise price. Where file amended 1040x Example. Where file amended 1040x You grant an option to a local university, which is a qualified organization, to buy real property. Where file amended 1040x Under the option, the university could buy the property at any time during a 2-year period for $40,000. Where file amended 1040x The FMV of the property on the date the option is granted is $50,000. Where file amended 1040x In the following tax year, the university exercises the option. Where file amended 1040x The FMV of the property on the date the option is exercised is $55,000. Where file amended 1040x Therefore, you have made a charitable contribution of $15,000 ($55,000, the FMV, minus $40,000, the exercise price) in the tax year the option is exercised. Where file amended 1040x Determining Fair Market Value Determining the value of donated property would be a simple matter if you could rely only on fixed formulas, rules, or methods. Where file amended 1040x Usually it is not that simple. Where file amended 1040x Using such formulas, etc. Where file amended 1040x , seldom results in an acceptable determination of FMV. Where file amended 1040x There is no single formula that always applies when determining the value of property. Where file amended 1040x This is not to say that a valuation is only guesswork. Where file amended 1040x You must consider all the facts and circumstances connected with the property, such as its desirability, use, and scarcity. Where file amended 1040x For example, donated furniture should not be evaluated at some fixed rate such as 15% of the cost of new replacement furniture. Where file amended 1040x When the furniture is contributed, it may be out of style or in poor condition, therefore having little or no market value. Where file amended 1040x On the other hand, it may be an antique, the value of which could not be determined by using any formula. Where file amended 1040x Cost or Selling Price of the Donated Property The cost of the property to you or the actual selling price received by the qualified organization may be the best indication of its FMV. Where file amended 1040x However, because conditions in the market change, the cost or selling price of property may have less weight if the property was not bought or sold reasonably close to the date of contribution. Where file amended 1040x The cost or selling price is a good indication of the property's value if: The purchase or sale took place close to the valuation date in an open market, The purchase or sale was at “arm's-length,” The buyer and seller knew all relevant facts, The buyer and seller did not have to act, and The market did not change between the date of purchase or sale and the valuation date. Where file amended 1040x Example. Where file amended 1040x Tom Morgan, who is not a dealer in gems, bought an assortment of gems for $5,000 from a promoter. Where file amended 1040x The promoter claimed that the price was “wholesale” even though he and other dealers made similar sales at similar prices to other persons who were not dealers. Where file amended 1040x The promoter said that if Tom kept the gems for more than 1 year and then gave them to charity, Tom could claim a charitable deduction of $15,000, which, according to the promoter, would be the value of the gems at the time of contribution. Where file amended 1040x Tom gave the gems to a qualified charity 13 months after buying them. Where file amended 1040x The selling price for these gems had not changed from the date of purchase to the date he donated them to charity. Where file amended 1040x The best evidence of FMV depends on actual transactions and not on some artificial estimate. Where file amended 1040x The $5,000 charged Tom and others is, therefore, the best evidence of the maximum FMV of the gems. Where file amended 1040x Terms of the purchase or sale. Where file amended 1040x   The terms of the purchase or sale should be considered in determining FMV if they influenced the price. Where file amended 1040x These terms include any restrictions, understandings, or covenants limiting the use or disposition of the property. Where file amended 1040x Rate of increase or decrease in value. Where file amended 1040x   Unless you can show that there were unusual circumstances, it is assumed that the increase or decrease in the value of your donated property from your cost has been at a reasonable rate. Where file amended 1040x For time adjustments, an appraiser may consider published price indexes for information on general price trends, building costs, commodity costs, securities, and works of art sold at auction in arm's-length sales. Where file amended 1040x Example. Where file amended 1040x Bill Brown bought a painting for $10,000. Where file amended 1040x Thirteen months later he gave it to an art museum, claiming a charitable deduction of $15,000 on his tax return. Where file amended 1040x The appraisal of the painting should include information showing that there were unusual circumstances that justify a 50% increase in value for the 13 months Bill held the property. Where file amended 1040x Arm's-length offer. Where file amended 1040x   An arm's-length offer to buy the property close to the valuation date may help to prove its value if the person making the offer was willing and able to complete the transaction. Where file amended 1040x To rely on an offer, you should be able to show proof of the offer and the specific amount to be paid. Where file amended 1040x Offers to buy property other than the donated item will help to determine value if the other property is reasonably similar to the donated property. Where file amended 1040x Sales of Comparable Properties The sales prices of properties similar to the donated property are often important in determining the FMV. Where file amended 1040x The weight to be given to each sale depends on the following. Where file amended 1040x The degree of similarity between the property sold and the donated property. Where file amended 1040x The time of the sale—whether it was close to the valuation date. Where file amended 1040x The circumstances of the sale—whether it was at arm's-length with a knowledgeable buyer and seller, with neither having to act. Where file amended 1040x The conditions of the market in which the sale was made—whether unusually inflated or deflated. Where file amended 1040x The comparable sales method of valuing real estate is explained later under Valuation of Various Kinds of Property. Where file amended 1040x Example 1. Where file amended 1040x Mary Black, who is not a book dealer, paid a promoter $10,000 for 500 copies of a single edition of a modern translation of the Bible. Where file amended 1040x The promoter had claimed that the price was considerably less than the “retail” price, and gave her a statement that the books had a total retail value of $30,000. Where file amended 1040x The promoter advised her that if she kept the Bibles for more than 1 year and then gave them to a qualified organization, she could claim a charitable deduction for the “retail” price of $30,000. Where file amended 1040x Thirteen months later she gave all the Bibles to a church that she selected from a list provided by the promoter. Where file amended 1040x At the time of her donation, wholesale dealers were selling similar quantities of Bibles to the general public for $10,000. Where file amended 1040x The FMV of the Bibles is $10,000, the price at which similar quantities of Bibles were being sold to others at the time of the contribution. Where file amended 1040x Example 2. Where file amended 1040x The facts are the same as in Example 1, except that the promoter gave Mary Black a second option. Where file amended 1040x The promoter said that if Mary wanted a charitable deduction within 1 year of the purchase, she could buy the 500 Bibles at the “retail” price of $30,000, paying only $10,000 in cash and giving a promissory note for the remaining $20,000. Where file amended 1040x The principal and interest on the note would not be due for 12 years. Where file amended 1040x According to the promoter, Mary could then, within 1 year of the purchase, give the Bibles to a qualified organization and claim the full $30,000 retail price as a charitable contribution. Where file amended 1040x She purchased the Bibles under the second option and, 3 months later, gave them to a church, which will use the books for church purposes. Where file amended 1040x At the time of the gift, the promoter was selling similar lots of Bibles for either $10,000 or $30,000. Where file amended 1040x The difference between the two prices was solely at the discretion of the buyer. Where file amended 1040x The promoter was a willing seller for $10,000. Where file amended 1040x Therefore, the value of Mary's contribution of the Bibles is $10,000, the amount at which similar lots of Bibles could be purchased from the promoter by members of the general public. Where file amended 1040x Replacement Cost The cost of buying, building, or manufacturing property similar to the donated item should be considered in determining FMV. Where file amended 1040x However, there must be a reasonable relationship between the replacement cost and the FMV. Where file amended 1040x The replacement cost is the amount it would cost to replace the donated item on the valuation date. Where file amended 1040x Often there is no relationship between the replacement cost and the FMV. Where file amended 1040x If the supply of the donated property is more or less than the demand for it, the replacement cost becomes less important. Where file amended 1040x To determine the replacement cost of the donated property, find the “estimated replacement cost new. Where file amended 1040x ” Then subtract from this figure an amount for depreciation due to the physical condition and obsolescence of the donated property. Where file amended 1040x You should be able to show the relationship between the depreciated replacement cost and the FMV, as well as how you arrived at the “estimated replacement cost new. Where file amended 1040x ” Opinions of Experts Generally, the weight given to an expert's opinion on matters such as the authenticity of a coin or a work of art, or the most profitable and best use of a piece of real estate, depends on the knowledge and competence of the expert and the thoroughness with which the opinion is supported by experience and facts. Where file amended 1040x For an expert's opinion to deserve much weight, the facts must support the opinion. Where file amended 1040x For additional information, see Appraisals, later. Where file amended 1040x Table 1. Where file amended 1040x Factors That Affect FMV IF the factor you are considering is. Where file amended 1040x . Where file amended 1040x . Where file amended 1040x THEN you should ask these questions. Where file amended 1040x . Where file amended 1040x . Where file amended 1040x     cost or selling price Was the purchase or sale of the property reasonably close to the date of contribution? Was any increase or decrease in value, as compared to your cost, at a reasonable rate? Do the terms of purchase or sale limit what can be done with the property? Was there an arm's-length offer to buy the property close to the valuation date?     sales of comparable properties How similar is the property sold to the property donated? How close is the date of sale to the valuation date? Was the sale at arm's-length? What was the condition of the market at the time of sale?     replacement cost What would it cost to replace the donated property? Is there a reasonable relationship between replacement cost and FMV? Is the supply of the donated property more or less than the demand for it?     opinions of experts Is the expert knowledgeable and competent? Is the opinion thorough and supported by facts and experience? Problems in Determining Fair Market Value There are a number of problems in determining the FMV of donated property. Where file amended 1040x Unusual Market Conditions The sale price of the property itself in an arm's-length transaction in an open market is often the best evidence of its value. Where file amended 1040x When you rely on sales of comparable property, the sales must have been made in an open market. Where file amended 1040x If those sales were made in a market that was artificially supported or stimulated so as not to be truly representative, the prices at which the sales were made will not indicate the FMV. Where file amended 1040x For example, liquidation sale prices usually do not indicate the FMV. Where file amended 1040x Also, sales of stock under unusual circumstances, such as sales of small lots, forced sales, and sales in a restricted market, may not represent the FMV. Where file amended 1040x Selection of Comparable Sales Using sales of comparable property is an important method for determining the FMV of donated property. Where file amended 1040x However, the amount of weight given to a sale depends on the degree of similarity between the comparable and the donated properties. Where file amended 1040x The degree of similarity must be close enough so that this selling price would have been given consideration by reasonably well-informed buyers or sellers of the property. Where file amended 1040x Example. Where file amended 1040x You give a rare, old book to your former college. Where file amended 1040x The book is a third edition and is in poor condition because of a missing back cover. Where file amended 1040x You discover that there was a sale for $300, near the valuation date, of a first edition of the book that was in good condition. Where file amended 1040x Although the contents are the same, the books are not at all similar because of the different editions and their physical condition. Where file amended 1040x Little consideration would be given to the selling price of the $300 property by knowledgeable buyers or sellers. Where file amended 1040x Future Events You may not consider unexpected events happening after your donation of property in making the valuation. Where file amended 1040x You may consider only the facts known at the time of the gift, and those that could be reasonably expected at the time of the gift. Where file amended 1040x Example. Where file amended 1040x You give farmland to a qualified charity. Where file amended 1040x The transfer provides that your mother will have the right to all income and full use of the property for her life. Where file amended 1040x Even though your mother dies 1 week after the transfer, the value of the property on the date it is given is its present value, subject to the life interest as estimated from actuarial tables. Where file amended 1040x You may not take a higher deduction because the charity received full use and possession of the land only 1 week after the transfer. Where file amended 1040x Using Past Events to Predict the Future A common error is to rely too much on past events that do not fairly reflect the probable future earnings and FMV. Where file amended 1040x Example. Where file amended 1040x You give all your rights in a successful patent to your favorite charity. Where file amended 1040x Your records show that before the valuation date there were three stages in the patent's history of earnings. Where file amended 1040x First, there was rapid growth in earnings when the invention was introduced. Where file amended 1040x Then, there was a period of high earnings when the invention was being exploited. Where file amended 1040x Finally, there was a decline in earnings when competing inventions were introduced. Where file amended 1040x The entire history of earnings may be relevant in estimating the future earnings. Where file amended 1040x However, the appraiser must not rely too much on the stage of rapid growth in earnings, or of high earnings. Where file amended 1040x The market conditions at those times do not represent the condition of the market at the valuation date. Where file amended 1040x What is most significant is the trend of decline in earnings up to the valuation date. Where file amended 1040x For more information about donations of patents, see Patents, later. Where file amended 1040x Valuation of Various Kinds of Property This section contains information on determining the FMV of ordinary kinds of donated property. Where file amended 1040x For information on appraisals, see Appraisals, later. Where file amended 1040x Household Goods The FMV of used household goods, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Where file amended 1040x Such used property may have little or no market value because of its worn condition. Where file amended 1040x It may be out of style or no longer useful. Where file amended 1040x You cannot take a deduction for household goods donated after August 17, 2006, unless they are in good used condition or better. Where file amended 1040x A household good that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal. Where file amended 1040x See Deduction over $500 for certain clothing or household items, later. Where file amended 1040x If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art. Where file amended 1040x Used Clothing Used clothing and other personal items are usually worth far less than the price you paid for them. Where file amended 1040x Valuation of items of clothing does not lend itself to fixed formulas or methods. Where file amended 1040x The price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops, is an indication of the value. Where file amended 1040x You cannot take a deduction for clothing donated after August 17, 2006, unless it is in good used condition or better. Where file amended 1040x An item of clothing that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal. Where file amended 1040x See Deduction over $500 for certain clothing or household items, later. Where file amended 1040x For valuable furs or very expensive gowns, a Form 8283 may have to be sent with your tax return. Where file amended 1040x Jewelry and Gems Jewelry and gems are of such a specialized nature that it is almost always necessary to get an appraisal by a specialized jewelry appraiser. Where file amended 1040x The appraisal should describe, among other things, the style of the jewelry, the cut and setting of the gem, and whether it is now in fashion. Where file amended 1040x If not in fashion, the possibility of having the property redesigned, recut, or reset should be reported in the appraisal. Where file amended 1040x The stone's coloring, weight, cut, brilliance, and flaws should be reported and analyzed. Where file amended 1040x Sentimental personal value has no effect on FMV. Where file amended 1040x But if the jewelry was owned by a famous person, its value might increase. Where file amended 1040x Paintings, Antiques, and Other Objects of Art Your deduction for contributions of paintings, antiques, and other objects of art, should be supported by a written appraisal from a qualified and reputable source, unless the deduction is $5,000 or less. Where file amended 1040x Examples of information that should be included in appraisals of art objects—paintings in particular—are found later under Qualified Appraisal. Where file amended 1040x Art valued at $20,000 or more. Where file amended 1040x   If you claim a deduction of $20,000 or more for donations of art, you must attach a complete copy of the signed appraisal to your return. Where file amended 1040x For individual objects valued at $20,000 or more, a photograph of a size and quality fully showing the object, preferably an 8 x 10 inch color photograph or a color transparency no smaller than 4 x 5 inches, must be provided upon request. Where file amended 1040x Art valued at $50,000 or more. Where file amended 1040x   If you donate an item of art that has been appraised at $50,000 or more, you can request a Statement of Value for that item from the IRS. Where file amended 1040x You must request the statement before filing the tax return that reports the donation. Where file amended 1040x Your request must include the following. Where file amended 1040x A copy of a qualified appraisal of the item. Where file amended 1040x See Qualified Appraisal, later. Where file amended 1040x A $2,500 check or money order payable to the Internal Revenue Service for the user fee that applies to your request regarding one, two, or three items of art. Where file amended 1040x Add $250 for each item in excess of three. Where file amended 1040x A completed Form 8283, Section B. Where file amended 1040x The location of the IRS territory that has examination responsibility for your return. Where file amended 1040x If your request lacks essential information, you will be notified and given 30 days to provide the missing information. Where file amended 1040x   Send your request to: Internal Revenue Service Attention: Art Appraisal (C:AP:ART) P. Where file amended 1040x O. Where file amended 1040x Box 27720 McPherson Station Washington, DC 20038 Refunds. Where file amended 1040x   You can withdraw your request for a Statement of Value at any time before it is issued. Where file amended 1040x However, the IRS will not refund the user fee if you do. Where file amended 1040x   If the IRS declines to issue a Statement of Value in the interest of efficient tax administration, the IRS will refund the user fee. Where file amended 1040x Authenticity. Where file amended 1040x   The authenticity of the donated art must be determined by the appraiser. Where file amended 1040x Physical condition. Where file amended 1040x   Important items in the valuation of antiques and art are physical condition and extent of restoration. Where file amended 1040x These have a significant effect on the value and must be fully reported in an appraisal. Where file amended 1040x An antique in damaged condition, or lacking the “original brasses,” may be worth much less than a similar piece in excellent condition. Where file amended 1040x Art appraisers. Where file amended 1040x   More weight will usually be given to an appraisal prepared by an individual specializing in the kind and price range of the art being appraised. Where file amended 1040x Certain art dealers or appraisers specialize, for example, in old masters, modern art, bronze sculpture, etc. Where file amended 1040x Their opinions on the authenticity and desirability of such art would usually be given more weight than the opinions of more generalized art dealers or appraisers. Where file amended 1040x They can report more recent comparable sales to support their opinion. Where file amended 1040x   To identify and locate experts on unique, specialized items or collections, you may wish to use the current Official Museum Directory of the American Association of Museums. Where file amended 1040x It lists museums both by state and by category. Where file amended 1040x   To help you locate a qualified appraiser for your donation, you may wish to ask an art historian at a nearby college or the director or curator of a local museum. Where file amended 1040x The Yellow Pages often list specialized art and antique dealers, auctioneers, and art appraisers. Where file amended 1040x You may be able to find a qualified appraiser on the Internet. Where file amended 1040x You may also contact associations of dealers for guidance. Where file amended 1040x Collections Since many kinds of hobby collections may be the subject of a charitable donation, it is not possible to discuss all of the possible collectibles in this publication. Where file amended 1040x Most common are rare books, autographs, sports memorabilia, dolls, manuscripts, stamps, coins, guns, phonograph records, and natural history items. Where file amended 1040x Many of the elements of valuation that apply to paintings and other objects of art, discussed earlier, also apply to miscellaneous collections. Where file amended 1040x Reference material. Where file amended 1040x   Publications available to help you determine the value of many kinds of collections include catalogs, dealers' price lists, and specialized hobby periodicals. Where file amended 1040x When using one of these price guides, you must use the current edition at the date of contribution. Where file amended 1040x However, these sources are not always reliable indicators of FMV and should be supported by other evidence. Where file amended 1040x   For example, a dealer may sell an item for much less than is shown on a price list, particularly after the item has remained unsold for a long time. Where file amended 1040x The price an item sold for in an auction may have been the result of a rigged sale or a mere bidding duel. Where file amended 1040x The appraiser must analyze the reference material, and recognize and make adjustments for misleading entries. Where file amended 1040x If you are donating a valuable collection, you should get an appraisal. Where file amended 1040x If your donation appears to be of little value, you may be able to make a satisfactory valuation using reference materials available at a state, city, college, or museum library. Where file amended 1040x Stamp collections. Where file amended 1040x   Most libraries have catalogs or other books that report the publisher's estimate of values. Where file amended 1040x Generally, two price levels are shown for each stamp: the price postmarked and the price not postmarked. Where file amended 1040x Stamp dealers generally know the value of their merchandise and are able to prepare satisfactory appraisals of valuable collections. Where file amended 1040x Coin collections. Where file amended 1040x   Many catalogs and other reference materials show the writer's or publisher's opinion of the value of coins on or near the date of the publication. Where file amended 1040x Like many other collectors' items, the value of a coin depends on the demand for it, its age, and its rarity. Where file amended 1040x Another important factor is the coin's condition. Where file amended 1040x For example, there is a great difference in the value of a coin that is in mint condition and a similar coin that is only in good condition. Where file amended 1040x   Catalogs usually establish a category for coins, based on their physical condition—mint or uncirculated, extremely fine, very fine, fine, very good, good, fair, or poor—with a different valuation for each category. Where file amended 1040x Books. Where file amended 1040x   The value of books is usually determined by selecting comparable sales and adjusting the prices according to the differences between the comparable sales and the item being evaluated. Where file amended 1040x This is difficult to do and, except for a collection of little value, should be done by a specialized appraiser. Where file amended 1040x Within the general category of literary property, there are dealers who specialize in certain areas, such as Americana, foreign imports, Bibles, and scientific books. Where file amended 1040x Modest value of collection. Where file amended 1040x   If the collection you are donating is of modest value, not requiring a written appraisal, the following information may help you in determining the FMV. Where file amended 1040x   A book that is very old, or very rare, is not necessarily valuable. Where file amended 1040x There are many books that are very old or rare, but that have little or no market value. Where file amended 1040x Condition of book. Where file amended 1040x   The condition of a book may have a great influence on its value. Where file amended 1040x Collectors are interested in items that are in fine, or at least good, condition. Where file amended 1040x When a book has a missing page, a loose binding, tears, stains, or is otherwise in poor condition, its value is greatly lowered. Where file amended 1040x Other factors. Where file amended 1040x   Some other factors in the valuation of a book are the kind of binding (leather, cloth, paper), page edges, and illustrations (drawings and photographs). Where file amended 1040x Collectors usually want first editions of books. Where file amended 1040x However, because of changes or additions, other editions are sometimes worth as much as, or more than, the first edition. Where file amended 1040x Manuscripts, autographs, diaries, and similar items. Where file amended 1040x   When these items are handwritten, or at least signed by famous people, they are often in demand and are valuable. Where file amended 1040x The writings of unknowns also may be of value if they are of unusual historical or literary importance. Where file amended 1040x Determining the value of such material is difficult. Where file amended 1040x For example, there may be a great difference in value between two diaries that were kept by a famous person—one kept during childhood and the other during a later period in his or her life. Where file amended 1040x The appraiser determines a value in these cases by applying knowledge and judgment to such factors as comparable sales and conditions. Where file amended 1040x Signatures. Where file amended 1040x   Signatures, or sets of signatures, that were cut from letters or other papers usually have little or no value. Where file amended 1040x But complete sets of the signatures of U. Where file amended 1040x S. Where file amended 1040x presidents are in demand. Where file amended 1040x Cars, Boats, and Aircraft If you donate a car, a boat, or an aircraft to a charitable organization, its FMV must be determined. Where file amended 1040x Certain commercial firms and trade organizations publish monthly or seasonal guides for different regions of the country, containing complete dealer sale prices or dealer average prices for recent model years. Where file amended 1040x Prices are reported for each make, model, and year. Where file amended 1040x These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Where file amended 1040x The prices are not “official,” and these publications are not considered an appraisal of any specific donated property. Where file amended 1040x But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Where file amended 1040x These publications are sometimes available from public libraries or at a bank, credit union, or finance company. Where file amended 1040x You can also find pricing information about used cars on the Internet. Where file amended 1040x An acceptable measure of the FMV of a donated car, boat, or airplane is an amount not in excess of the price listed in a used vehicle pricing guide for a private party sale, not the dealer retail value, of a similar vehicle. Where file amended 1040x However, the FMV may be less than that amount if the vehicle has engine trouble, body damage, high mileage, or any type of excessive wear. Where file amended 1040x The FMV of a donated vehicle is the same as the price listed in a used vehicle pricing guide for a private party sale only if the guide lists a sales price for a vehicle that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated vehicle. Where file amended 1040x Example. Where file amended 1040x You donate a used car in poor condition to a local high school for use by students studying car repair. Where file amended 1040x A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Where file amended 1040x However, the guide shows the price for a private party sale of the car is only $750. Where file amended 1040x The FMV of the car is considered to be no more than $750. Where file amended 1040x Boats. Where file amended 1040x   Except for inexpensive small boats, the valuation of boats should be based on an appraisal by a marine surveyor because the physical condition is so critical to the value. Where file amended 1040x More information. Where file amended 1040x   Your deduction for a donated car, boat, or airplane generally is limited to the gross proceeds from its sale by the qualified organization. Where file amended 1040x This rule applies if the claimed value of the donated vehicle is more than $500. Where file amended 1040x In certain cases, you can deduct the vehicle's FMV. Where file amended 1040x For details, see Publication 526. Where file amended 1040x Inventory If you donate any inventory item to a charitable organization, the amount of your deductible contribution generally is the FMV of the item, minus any gain you would have realized if you had sold the item at its FMV on the date of the gift. Where file amended 1040x For more information, see Publication 526. Where file amended 1040x Patents To determine the FMV of a patent, you must take into account, among other factors: Whether the patented technology has been made obsolete by other technology; Any restrictions on the donee's use of, or ability to transfer, the patented technology; and The length of time remaining before the patent expires. Where file amended 1040x However, your deduction for a donation of a patent or other intellectual property is its FMV, minus any gain you would have realized if you had sold the property at its FMV on the date of the gift. Where file amended 1040x Generally, this means your deduction is the lesser of the property's FMV or its basis. Where file amended 1040x For details, see Publication 526. Where file amended 1040x Stocks and Bonds The value of stocks and bonds is the FMV of a share or bond on the valuation date. Where file amended 1040x See Date of contribution, earlier, under What Is Fair Market Value (FMV). Where file amended 1040x Selling prices on valuation date. Where file amended 1040x   If there is an active market for the contributed stocks or bonds on a stock exchange, in an over-the-counter market, or elsewhere, the FMV of each share or bond is the average price between the highest and lowest quoted selling prices on the valuation date. Where file amended 1040x For example, if the highest selling price for a share was $11, and the lowest $9, the average price is $10. Where file amended 1040x You get the average price by adding $11 and $9 and dividing the sum by 2. Where file amended 1040x No sales on valuation date. Where file amended 1040x   If there were no sales on the valuation date, but there were sales within a reasonable period before and after the valuation date, you determine FMV by taking the average price between the highest and lowest sales prices on the nearest date before and on the nearest date after the valuation date. Where file amended 1040x Then you weight these averages in inverse order by the respective number of trading days between the selling dates and the valuation date. Where file amended 1040x Example. Where file amended 1040x   On the day you gave stock to a qualified organization, there were no sales of the stock. Where file amended 1040x Sales of the stock nearest the valuation date took place two trading days before the valuation date at an average selling price of $10 and three trading days after the valuation date at an average selling price of $15. Where file amended 1040x The FMV on the valuation date was $12, figured as follows: [(3 x $10) + (2 x $15)] ÷ 5 = $12 Listings on more than one stock exchange. Where file amended 1040x   Stocks or bonds listed on more than one stock exchange are valued based on the prices of the exchange on which they are principally dealt. Where file amended 1040x This applies if these prices are published in a generally available listing or publication of general circulation. Where file amended 1040x If this is not applicable, and the stocks or bonds are reported on a composite listing of combined exchanges in a publication of general circulation, use the composite list. Where file amended 1040x See also Unavailable prices or closely held corporation, later. Where file amended 1040x Bid and asked prices on valuation date. Where file amended 1040x   If there were no sales within a reasonable period before and after the valuation date, the FMV is the average price between the bona fide bid and asked prices on the valuation date. Where file amended 1040x Example. Where file amended 1040x Although there were no sales of Blue Corporation stock on the valuation date, bona fide bid and asked prices were available on that date of $14 and $16, respectively. Where file amended 1040x The FMV is $15, the average price between the bid and asked prices. Where file amended 1040x No prices on valuation date. Where file amended 1040x   If there were no prices available on the valuation date, you determine FMV by taking the average prices between the bona fide bid and asked prices on the closest trading date before and after the valuation date. Where file amended 1040x Both dates must be within a reasonable period. Where file amended 1040x Then you weight these averages in inverse order by the respective number of trading days between the bid and asked dates and the valuation date. Where file amended 1040x Example. Where file amended 1040x On the day you gave stock to a qualified organization, no prices were available. Where file amended 1040x Bona fide bid and asked prices 3 days before the valuation date were $10 and 2 days after the valuation date were $15. Where file amended 1040x The FMV on the valuation date is $13, figured as follows: [(2 x $10) + (3 x $15)] ÷ 5 = $13 Prices only before or after valuation date, but not both. Where file amended 1040x   If no selling prices or bona fide bid and asked prices are available on a date within a reasonable period before the valuation date, but are available on a date within a reasonable period after the valuation date, or vice versa, then the average price between the highest and lowest of such available prices may be treated as the value. Where file amended 1040x Large blocks of stock. Where file amended 1040x   When a large block of stock is put on the market, it may lower the selling price of the stock if the supply is greater than the demand. Where file amended 1040x On the other hand, market forces may exist that will afford higher prices for large blocks of stock. Where file amended 1040x Because of the many factors to be considered, determining the value of large blocks of stock usually requires the help of experts specializing in underwriting large quantities of securities, or in trading in the securities of the industry of which the particular company is a part. Where file amended 1040x Unavailable prices or closely held corporation. Where file amended 1040x   If selling prices or bid and asked prices are not available, or if securities of a closely held corporation are involved, determine the FMV by considering the following factors. Where file amended 1040x For bonds, the soundness of the security, the interest yield, the date of maturity, and other relevant factors. Where file amended 1040x For shares of stock, the company's net worth, prospective earning power and dividend-paying capacity, and other relevant factors. Where file amended 1040x Other factors. Where file amended 1040x   Other relevant factors include: The nature and history of the business, especially its recent history, The goodwill of the business, The economic outlook in the particular industry, The company's position in the industry, its competitors, and its management, and The value of securities of corporations engaged in the same or similar business. Where file amended 1040x For preferred stock, the most important factors are its yield, dividend coverage, and protection of its liquidation preference. Where file amended 1040x   You should keep complete financial and other information on which the valuation is based. Where file amended 1040x This includes copies of reports of examinations of the company made by accountants, engineers, or any technical experts on or close to the valuation date. Where file amended 1040x Restricted securities. Where file amended 1040x   Some classes of stock cannot be traded publicly because of restrictions imposed by the Securities and Exchange Commission, or by the corporate charter or a trust agreement. Where file amended 1040x These restricted securities usually trade at a discount in relation to freely traded securities. Where file amended 1040x   To arrive at the FMV of restricted securities, factors that you must consider include the resale provisions found in the restriction agreements, the relative negotiating strengths of the buyer and seller, and the market experience of freely traded securities of the same class as the restricted securities. Where file amended 1040x Real Estate Because each piece of real estate is unique and its valuation is complicated, a detailed appraisal by a professional appraiser is necessary. Where file amended 1040x The appraiser must be thoroughly trained in the application of appraisal principles and theory. Where file amended 1040x In some instances the opinions of equally qualified appraisers may carry unequal weight, such as when one appraiser has a better knowledge of local conditions. Where file amended 1040x The appraisal report must contain a complete description of the property, such as street address, legal description, and lot and block number, as well as physical features, condition, and dimensions. Where file amended 1040x The use to which the property is put, zoning and permitted uses, and its potential use for other higher and better uses are also relevant. Where file amended 1040x In general, there are three main approaches to the valuation of real estate. Where file amended 1040x An appraisal may require the combined use of two or three methods rather than one method only. Where file amended 1040x 1. Where file amended 1040x Comparable Sales The comparable sales method compares the donated property with several similar properties that have been sold. Where file amended 1040x The selling prices, after adjustments for differences in date of sale, size, condition, and location, would then indicate the estimated FMV of the donated property. Where file amended 1040x If the comparable sales method is used to determine the value of unimproved real property (land without significant buildings, structures, or any other improvements that add to its value), the appraiser should consider the following factors when comparing the potential comparable property and the donated property: Location, size, and zoning or use restrictions, Accessibility and road frontage, and available utilities and water rights, Riparian rights (right of access to and use of the water by owners of land on the bank of a river) and existing easements, rights-of-way, leases, etc. Where file amended 1040x , Soil characteristics, vegetative cover, and status of mineral rights, and Other factors affecting value. Where file amended 1040x For each comparable sale, the appraisal must include the names of the buyer and seller, the deed book and page number, the date of sale and selling price, a property description, the amount and terms of mortgages, property surveys, the assessed value, the tax rate, and the assessor's appraised FMV. Where file amended 1040x The comparable selling prices must be adjusted to account for differences between the sale property and the donated property. Where file amended 1040x Because differences of opinion may arise between appraisers as to the degree of comparability and the amount of the adjustment considered necessary for comparison purposes, an appraiser should document each item of adjustment. Where file amended 1040x Only comparable sales having the least adjustments in terms of items and/or total dollar adjustments should be considered as comparable to the donated property. Where file amended 1040x 2. Where file amended 1040x Capitalization of Income This method capitalizes the net income from the property at a rate that represents a fair return on the particular investment at the particular time, considering the risks involved. Where file amended 1040x The key elements are the determination of the income to be capitalized and the rate of capitalization. Where file amended 1040x 3. Where file amended 1040x Replacement Cost New or Reproduction Cost Minus Observed Depreciation This method, used alone, usually does not result in a determination of FMV. Where file amended 1040x Instead, it generally tends to set the upper limit of value, particularly in periods of rising costs, because it is reasonable to assume that an informed buyer will not pay more for the real estate than it would cost to reproduce a similar property. Where file amended 1040x Of course, this reasoning does not apply if a similar property cannot be created because of location, unusual construction, or some other reason. Where file amended 1040x Generally, this method serves to support the value determined from other methods. Where file amended 1040x When the replacement cost method is applied to improved realty, the land and improvements are valued separately. Where file amended 1040x The replacement cost of a building is figured by considering the materials, the quality of workmanship, and the number of square feet or cubic feet in the building. Where file amended 1040x This cost represents the total cost of labor and material, overhead, and profit. Where file amended 1040x After the replacement cost has been figured, consideration must be given to the following factors: Physical deterioration—the wear and tear on the building itself, Functional obsolescence—usually in older buildings with, for example, inadequate lighting, plumbing, or heating, small rooms, or a poor floor plan, and Economic obsolescence—outside forces causing the whole area to become less desirable. Where file amended 1040x Interest in a Business The FMV of any interest in a business, whether a sole proprietorship or a partnership, is the amount that a willing buyer would pay for the interest to a willing seller after consideration of all relevant factors. Where file amended 1040x The relevant factors to be considered in valuing the business are: The FMV of the assets of the business, The demonstrated earnings capacity of the business, based on a review of past and current earnings, and The other factors used in evaluating corporate stock, if they apply. Where file amended 1040x The value of the goodwill of the business should also be taken into consideration. Where file amended 1040x You should keep complete financial and other information on which you base the valuation. Where file amended 1040x This includes copies of reports of examinations of the business made by accountants, engineers, or any technical experts on or close to the valuation date. Where file amended 1040x Annuities, Interests for Life or Terms of Years, Remainders, and Reversions The value of these kinds of property is their present value, except in the case of annuities under contracts issued by companies regularly engaged in their sale. Where file amended 1040x The valuation of these commercial annuity contracts and of insurance policies is discussed later under Certain Life Insurance and Annuity Contracts. Where file amended 1040x To determine present value, you must know the applicable interest rate and use actuarial tables. Where file amended 1040x Interest rate. Where file amended 1040x   The applicable interest rate varies. Where file amended 1040x It is announced monthly in a news release and published in the Internal Revenue Bulletin as a Revenue Ruling. Where file amended 1040x The interest rate to use is under the heading “Rate Under Section 7520” for a given month and year. Where file amended 1040x You can call the IRS office at 1-800-829-1040 to obtain this rate. Where file amended 1040x Actuarial tables. Where file amended 1040x   You need to refer to actuarial tables to determine a qualified interest in the form of an annuity, any interest for life or a term of years, or any remainder interest to a charitable organization. Where file amended 1040x   Use the valuation tables set forth in IRS Publications 1457, Actuarial Values (Book Aleph), and 1458, Actuarial Values (Book Beth). Where file amended 1040x Both of these publications provide tables containing actuarial factors to be used in determining the present value of an annuity, an interest for life or for a term of years, or a remainder or reversionary interest. Where file amended 1040x For qualified charitable transfers, you can use the factor for the month in which you made the contribution or for either of the 2 months preceding that month. Where file amended 1040x   Publication 1457 also contains actuarial factors for computing the value of a remainder interest in a charitable remainder annuity trust and a pooled income fund. Where file amended 1040x Publication 1458 contains the factors for valuing the remainder interest in a charitable remainder unitrust. Where file amended 1040x You can download Publications 1457 and 1458 from www. Where file amended 1040x irs. Where file amended 1040x gov. Where file amended 1040x In addition, they are available for purchase via the website of the U. Where file amended 1040x S. Where file amended 1040x Government Printing Office, by phone at (202) 512-1800, or by mail from the: Superintendent of Documents P. Where file amended 1040x O. Where file amended 1040x Box 371954 Pittsburgh, PA 15250-7954 Tables containing actuarial factors for transfers to pooled income funds may also be found in Income Tax Regulation 1. Where file amended 1040x 642(c)-6(e)(6), transfers to charitable remainder unitrusts in Regulation 1. Where file amended 1040x 664-4(e), and other transfers in Regulation 20. Where file amended 1040x 2031-7(d)(6). Where file amended 1040x Special factors. Where file amended 1040x   If you need a special factor for an actual transaction, you can request a letter ruling. Where file amended 1040x Be sure to include the date of birth of each person the duration of whose life may affect the value of the interest. Where file amended 1040x Also include copies of the relevant instruments. Where file amended 1040x IRS charges a user fee for providing special factors. Where file amended 1040x   For more information about requesting a ruling, see Revenue Procedure 2006-1 (or annual update), 2006-1 I. Where file amended 1040x R. Where file amended 1040x B. Where file amended 1040x 1. Where file amended 1040x Revenue Procedure 2006-1 is available at www. Where file amended 1040x irs. Where file amended 1040x gov/irb/2006-01_IRB/ar06. Where file amended 1040x html. Where file amended 1040x   For information on the circumstances under which a charitable deduction may be allowed for the donation of a partial interest in property not in trust, see Partial Interest in Property Not in Trust, later. Where file amended 1040x Certain Life Insurance and Annuity Contracts The value of an annuity contract or a life insurance policy issued by a company regularly engaged in the sale of such contracts or policies is the amount that company would charge for a comparable contract. Where file amended 1040x But if the donee of a life insurance policy may reasonably be expected to cash the policy rather than hold it as an investment, then the FMV is the cash surrender value rather than the replacement cost. Where file amended 1040x If an annuity is payable under a combination annuity contract and life insurance policy (for example, a retirement income policy with a death benefit) and there was no insurance element when it was transferred to the charity, the policy is treated as an annuity contract. Where file amended 1040x Partial Interest in Property Not in Trust Generally, no deduction is allowed for a charitable contribution, not made in trust, of less than your entire interest in property. Where file amended 1040x However, this does not apply to a transfer of less than your entire interest if it is a transfer of: A remainder interest in your personal residence or farm, An undivided part of your entire interest in property, or A qualified conservation contribution. Where file amended 1040x Remainder Interest in Real Property The amount of the deduction for a donation of a remainder interest in real property is the FMV of the remainder interest at the time of the contribution. Where file amended 1040x To determine this value, you must know the FMV of the property on the date of the contribution. Where file amended 1040x Multiply this value by the appropriate factor. Where file amended 1040x Publications 1457 and 1458 contain these factors. Where file amended 1040x You must make an adjustment for depreciation or depletion using the factors shown in Publication 1459, Actuarial Values (Book Gimel). Where file amended 1040x You can use the factors for the month in which you made the contribution or for either of the two months preceding that month. Where file amended 1040x See the earlier discussion on Annuities, Interests for Life or Terms of Years, Remainders, and Reversions. Where file amended 1040x You can download Publication 1459 from www. Where file amended 1040x irs. Where file amended 1040x gov. Where file amended 1040x For this purpose, the term “depreciable property” means any property subject to wear and tear or obsolescence, even if not used in a trade or business or for the production of income. Where file amended 1040x If the remainder interest includes both depreciable and nondepreciable property, for example a house and land, the FMV must be allocated between each kind of property at the time of the contribution. Where file amended 1040x This rule also applies to a gift of a remainder interest that includes property that is part depletable and part not depletable. Where file amended 1040x Take into account depreciation or depletion only for the property that is subject to depreciation or depletion. Where file amended 1040x For more information, see section 1. Where file amended 1040x 170A-12 of the Income Tax Regulations. Where file amended 1040x Undivided Part of Your Entire Interest A contribution of an undivided part of your entire interest in property must consist of a part of each and every substantial interest or right you own in the property. Where file amended 1040x It must extend over the entire term of your interest in the property. Where file amended 1040x For example, you are entitled to the income from certain property for your life (life estate) and you contribute 20% of that life estate to a qualified organization. Where file amended 1040x You can claim a deduction for the contribution if you do not have any other interest in the property. Where file amended 1040x To figure the value of a contribution involving a partial interest, see Publication 1457. Where file amended 1040x If the only interest you own in real property is a remainder interest and you transfer part of that interest to a qualified organization, see the previous discussion on valuation of a remainder interest in real property. Where file amended 1040x Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. Where file amended 1040x Qualified organization. Where file amended 1040x   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charitable, religious, scientific, literary, educational, etc. Where file amended 1040x , organization, or An organization that is controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Where file amended 1040x The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Where file amended 1040x Conservation purposes. Where file amended 1040x   Your contribution must be made only for one of the following conservation purposes. Where file amended 1040x Preserving land areas for outdoor recreation by, or for the education of, the general public. Where file amended 1040x Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Where file amended 1040x Preserving open space, including farmland and forest land, if it yields a significant public benefit. Where file amended 1040x It must be either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Where file amended 1040x Preserving a historically important land area or a certified historic structure. Where file amended 1040x There must be some visual public access to the property. Where file amended 1040x Factors used in determining the type and amount of public access required include the historical significance of the property, the remoteness or accessibility of the site, and the extent to which intrusions on the privacy of individuals living on the property would be unreasonable. Where file amended 1040x Building in registered historic district. Where file amended 1040x   A contribution after July 25, 2006, of a qualified real property interest that is an easement or other restriction on the exterior of a building in a registered historic district is deductible only if it meets all of the following three conditions. Where file amended 1040x The restriction must preserve the entire exterior of the building and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Where file amended 1040x You and the organization receiving the contribution must enter into a written agreement certifying, that the organization is a qualified organization and that it has the resources and commitment to maintain the property as donated. Where file amended 1040x If you make the contribution in a tax year beginning after August 17, 2006, you must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. Where file amended 1040x   If you make this type of contribution after February 12, 2007, and claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Where file amended 1040x See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Where file amended 1040x Qualified real property interest. Where file amended 1040x   This is any of the following interests in real property. Where file amended 1040x Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). Where file amended 1040x A remainder interest. Where file amended 1040x A restriction (granted in perpetuity) on the use that may be made of the real property. Where file amended 1040x Valuation. Where file amended 1040x   A qualified real property interest described in (1) should be valued in a manner that is consistent with the type of interest transferred. Where file amended 1040x If you transferred all the interest in the property, the FMV of the property is the amount of the contribution. Where file amended 1040x If you do not transfer the mineral interest, the FMV of the surface rights in the property is the amount of the contribution. Where file amended 1040x   If you owned only a remainder interest or an income interest (life estate), see Undivided Part of Your Entire Interest, earlier. Where file amended 1040x If you owned the entire property but transferred only a remainder interest (item (2)), see Remainder Interest in Real Property, earlier. Where file amended 1040x   In determining the value of restrictions, you should take into account the selling price in arm's-length transactions of other properties that have comparable restrictions. Where file amended 1040x If there are no comparable sales, the restrictions are valued indirectly as the difference between the FMVs of the property involved before and after the grant of the restriction. Where file amended 1040x   The FMV of the property before contribution of the restriction should take into account not only current use but the likelihood that the property, without the restriction, would be developed. Where file amended 1040x You should also consider any zoning, conservation, or historical preservation laws that would restrict development. Where file amended 1040x Granting an easement may increase, rather than reduce, the value of property, and in such a situation no deduction would be allowed. Where file amended 1040x Example. Where file amended 1040x   You own 10 acres of farmland. Where file amended 1040x Similar land in the area has an FMV of $2,000 an acre. Where file amended 1040x However, land in the general area that is restricted solely to farm use has an FMV of $1,500 an acre. Where file amended 1040x Your county wants to preserve open space and prevent further development in your area. Where file amended 1040x   You grant to the county an enforceable open space easement in perpetuity on 8 of the 10 acres, restricting its use to farmland. Where file amended 1040x The value of this easement is $4,000, determined as follows: FMV of the property before granting easement:   $2,000 × 10 acres $20,000 FMV of the property after granting easement:   $1,500 × 8 acres $12,000   $2,000 × 2 acres 4,000 16,000 Value of easement   $4,000   If you later transfer in fee your remaining interest in the 8 acres to another qualified organization, the FMV of your remaining interest is the FMV of the 8 acres reduced by the FMV of the easement granted to the first organization. Where file amended 1040x More information. Where file amended 1040x   For more information about qualified conservation contributions, see Publication 526. Where file amended 1040x Appraisals Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. Where file amended 1040x (There is one exception, described next, for certain clothing and household items. Where file amended 1040x ) However, you generally will need an appraisal for donated property for which you claim a deduction of more than $5,000. Where file amended 1040x There are exceptions. Where file amended 1040x See Deductions of More Than $5,000, later. Where file amended 1040x The weight given an appraisal depends on the completeness of the report, the qualifications of the appraiser, and the appraiser's demonstrated knowledge of the donated property. Where file amended 1040x An appraisal must give all the facts on which to base an intelligent judgment of the value of the property. Where file amended 1040x The appraisal will not be given much weight if: All the factors that apply are not considered, The opinion is not supported with facts, such as purchase price and comparable sales, or The opinion is not consistent with known facts. Where file amended 1040x The appraiser's opinion is never more valid than the facts on which it is based; without these facts it is simply a guess. Where file amended 1040x The opinion of a person claiming to be an expert is not binding on the Internal Revenue Service. Where file amended 1040x All facts associated with the donation must be considered. Where file amended 1040x Deduction over $500 for certain clothing or household items. Where file amended 1040x   You must include with your return a qualified appraisal of any single item of clothing or any household item that is not in good used condition or better, that you donated after August 17, 2006, and for which you deduct more than $500. Where file amended 1040x See Household Goods and Used Clothing, earlier. Where file amended 1040x Cost of appraisals. Where file amended 1040x   You may not take a charitable contribution deduction for fees you pay for appraisals of your donated property. Where file amended 1040x However, these fees may qualify as a miscellaneous deduction, subject to the 2% limit, on Schedule A (Form 1040) if paid to determine the amount allowable as a charitable contribution. Where file amended 1040x Deductions of More Than $5,000 Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser, and you must attach Section B of Form 8283 to your tax return. Where file amended 1040x There are exceptions, discussed later. Where file amended 1040x You should keep the appraiser's report with your written records. Where file amended 1040x Records are discussed in Publication 526. Where file amended 1040x The phrase “similar items” means property of the same generic category or type (whether or not donated to the same donee), such as stamp collections, coin collections, lithographs, paintings, photographs, books, nonpublicly traded stock, nonpublicly traded securities other than nonpublicly traded stock, land, buildings, clothing, jewelry, furniture, electronic equipment, household appliances, toys, everyday kitchenware, china, crystal, or silver. Where file amended 1040x For example, if you give books to three schools and you deduct $2,000, $2,500, and $900, respectively, your claimed deduction is more than $5,000 for these books. Where file amended 1040x You must get a qualified appraisal of the books and for each school you must attach a fully completed Form 8283, Section B, to your tax return. Where file amended 1040x Exceptions. Where file amended 1040x   You do not need an appraisal if the property is: Nonpublicly traded stock of $10,000 or less, A vehicle (including a car, boat, or airplane) for which your deduction is limited to the gross proceeds from its sale, Qualified intellectual property, such as a patent, Certain publicly traded securities described next, Inventory and other property donated by a corporation that are “qualified contributions” for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A) of the Internal Revenue Code, or Stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business. Where file amended 1040x   Although an appraisal is not required for the types of property just listed, you must provide certain information about a donation of any of these types of property on Form 8283. Where file amended 1040x Publicly traded securities. Where file amended 1040x   Even if your claimed deduction is more than $5,000, neither a qualified appraisal nor Section B of Form 8283 is required for publicly traded securities that are: Listed on a stock exchange in which quotations are published on a daily basis, Regularly traded in a national or regional over-the-counter market for which published quotations are available, or Shares of an open-end investment company (mutual fund) for which quotations are published on a daily basis in a newspaper of general circulation throughout the United States. Where file amended 1040x Publicly traded securities that meet these requirements must be reported on Form 8283, Section A. Where file amended 1040x   A qualified appraisal is not required, but Form 8283, Section B, Parts I and IV, must be completed, for an issue of a security that does not meet the requirements just listed but does meet these requirements: The issue is regularly traded during the computation period (defined later) in a market for which there is an “interdealer quotation system” (defined later), The issuer or agent computes the “average trading price” (defined later) for the same issue for the computation period, The average trading price and total volume of the issue during the computation period are published in a newspaper of general circulation throughout the United States, not later than the last day of the month following the end of the calendar quarter in which the computation period ends, The issuer or agent keeps books and records that list for each transaction during the computation period the date of settlement of the transaction, the name and address of the broker or dealer making the market in which the transaction occurred, and the trading price and volume, and The issuer or agent permits the Internal Revenue Service to review the books and records described in item (4) with respect to transactions during the computation period upon receiving reasonable notice. Where file amended 1040x   An interdealer quotation system is any system of general circulation to brokers and dealers that regularly disseminates quotations of obligations by two or more identified brokers or dealers who are not related to either the issuer or agent who computes the average trading price of the security. Where file amended 1040x A quotation sheet prepared and distributed by a broker or dealer in the regular course of business and containing only quotations of that broker or dealer is not an interdealer quotation system. Where file amended 1040x   The average trading price is the average price of all transactions (weighted by volume), other than original issue or redemption transactions, conducted through a United States office of a broker or dealer who maintains a market in the issue of the security during the computation period. Where file amended 1040x Bid and asked quotations are not taken into account. Where file amended 1040x   The computation period is weekly during October through December and monthly during January through September. Where file amended 1040x The weekly computation periods during October through December begin with the first Monday in October and end with the first Sunday following the last Monday in December. Where file amended 1040x Nonpublicly traded stock. Where file amended 1040x   If you contribute nonpublicly traded stock, for which you claim a deduction of $10,000 or less, a qualified appraisal is not required. Where file amended 1040x However, you must attach Form 8283 to your tax return, with Section B, Parts I and IV, completed. Where file amended 1040x Deductions of More Than $500,000 If you claim a deduction of more than $500,000 for a donation of property, you must attach a qualified appraisal of the property to your return. Where file amended 1040x This does not apply to contributions of cash, inventory, publicly traded stock, or intellectual property. Where file amended 1040x If you do not attach the appraisal, you cannot deduct your contribution, unless your failure to attach the appraisal is due to reasonable cause and not to willful neglect. Where file amended 1040x Qualified Appraisal Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser. Where file amended 1040x You must also complete Form 8283, Section B, and attach it to your tax return. Where file amended 1040x See Deductions of More Than $5,000, earlier. Where file amended 1040x A qualified appraisal is an appraisal document that: Is made, signed, and dated by a qualified appraiser (defined later) in accordance with generally accepted appraisal standards, Meets the relevant requirements of Regulations section 1. Where file amended 1040x 170A-13(c)(3) and Notice 2006-96, 2006-46 I. Where file amended 1040x R. Where file amended 1040x B. Where file amended 1040x 902 (available at www. Where file amended 1040x irs. Where file amended 1040x gov/irb/2006-46_IRB/ar13. Where file amended 1040x html), Relates to an appraisal made not earlier than 60 days before the date of contribution of the appraised property, Does not involve a prohibited appraisal fee, and Includes certain information (covered later). Where file amended 1040x You must receive the qualified appraisal before the due date, including extensions, of the return on which a charitable contribution deduction is first claimed for the donated property. Where file amended 1040x If the deduction is first claimed on an amended return, the qualified appraisal must be received before the date on which the amended return is filed. Where file amended 1040x Form 8283, Section B, must be attached to your tax return. Where file amended 1040x Generally, you do not need to attach the qualified appraisal itself, but you should keep a copy as long as it may be relevant under the tax law. Where file amended 1040x There are four exceptions. Where file amended 1040x If you claim a deduction of $20,000 or more for donations of art, you must attach a complete copy of the appraisal. Where file amended 1040x See Paintings, Antiques, and Other Objects of Art, earlier. Where file amended 1040x If you claim a deduction of more than $500,000 for a donation of property, you must attach the appraisal. Where file amended 1040x See Deductions of More Than $500,000, earlier. Where file amended 1040x If you claim a deduction of more than $500 for an article of clothing, or a household item, that is not in good used condition or better, that you donated after August 17, 2006, you must attach the appraisal. Where file amended 1040x See Deduction over $500 for certain clothing or household items, earlier. Where file amended 1040x If you claim a deduction in a tax year beginning after August 17, 2006, for an easement or other restriction on the exterior of a building in a historic district, you must attach the appraisal. Where file amended 1040x See Building in registered historic district, earlier. Where file amended 1040x Prohibited appraisal fee. Where file amended 1040x   Generally, no part of the fee arrangement for a qualified appraisal can be based on a percentage of the appraised value of the property. Where file amended 1040x If a fee arrangement is based on what is allowed as a deduction, after Internal Revenue Service examination or otherwise, it is treated as a fee based on a percentage of appraised value. Where file amended 1040x However, appraisals are not disqualified when an otherwise prohi
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Electronic Filing Options for Business and Self-Employed Taxpayers
There are electronic filing options available for many of the taxes and forms that small businesses are required to file, such as excise and employment taxes, Forms 1120, 7004, 1041 and various information returns.

Employer Identification Number
An Employer Identification Number (EIN), also known as a federal tax identification number, is used to identify tax reports to the IRS.

Business Taxes
The form of business you operate determines what taxes you must pay and how you pay them.

Estimated Taxes
Federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. There are two ways to pay as you go: withholding and estimated taxes.

Employment Taxes for Small Businesses
If you have employees, you are responsible for several federal, state, and local taxes. As an employer, you must withhold Federal income tax withholding, social security and Medicare taxes, and Federal Unemployment Tax Act (FUTA) taxes.

Self-Employment Taxes
The self-employment tax is a social security and Medicare tax for individuals who work for themselves.

Reporting Information Returns
Your business may be required to file information returns to report certain types of payments made during the year.

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Learn your options for e-filing form 940, 941 or 944 for Small Businesses.

Filing Past Due Tax Returns
Before you decide not to file your tax return on time or not pay all of your taxes when they are due, consider this.

Reporting Payments to Independent Contractors
If you pay independent contractors, you may have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your trade or business.

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The Where File Amended 1040x

Where file amended 1040x 3. Where file amended 1040x   Credit for Withholding and Estimated Tax for 2013 Table of Contents Introduction Topics - This chapter discusses: WithholdingForm W-2 Form W-2G The 1099 Series Form Not Correct Form Received After Filing Separate Returns Fiscal Years (FY) Estimated TaxSeparate Returns Divorced Taxpayers Excess Social Security or Railroad Retirement Tax WithholdingJoint returns. Where file amended 1040x Worksheet for Nonrailroad Employees Worksheets for Railroad Employees Introduction When you file your 2013 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Where file amended 1040x Also take credit for the estimated tax you paid for 2013. Where file amended 1040x These credits are subtracted from your total tax. Where file amended 1040x Because these credits are refundable, you should file a return and claim these credits, even if you do not owe tax. Where file amended 1040x If the total of your withholding and your estimated tax payments for any payment period is less than the amount you needed to pay by the due date for that period, you may be charged a penalty, even if the total of these credits is more than your tax for the year. Where file amended 1040x Topics - This chapter discusses: How to take credit for withholding, How to take credit for estimated taxes you paid, and How to take credit for excess social security, Medicare, or railroad retirement tax withholding. Where file amended 1040x Withholding If you had income tax withheld during 2013, you generally should be sent a statement by January 31, 2014, showing your income and the tax withheld. Where file amended 1040x Depending on the source of your income, you will receive: Form W-2, Wage and Tax Statement, Form W-2G, Certain Gambling Winnings, or A form in the 1099 series. Where file amended 1040x Form W-2 Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. Where file amended 1040x You should receive a separate Form W-2 from each employer you worked for. Where file amended 1040x If you stopped working before the end of 2013, your employer could have given you your Form W-2 at any time after you stopped working. Where file amended 1040x However, your employer must provide or send it to you by January 31, 2014. Where file amended 1040x If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later. Where file amended 1040x If you have not received your Form W-2 by January 31, contact your employer or payer to request a copy. Where file amended 1040x If you still do not get the form by February 15, the IRS can help you by requesting the form from your employer. Where file amended 1040x The phone number for the IRS is listed in chapter 5. Where file amended 1040x You will be asked for the following information. Where file amended 1040x Your name, address, city and state, zip code, and social security number. Where file amended 1040x Your employer's name, address, city, state, zip code, and the employer's identification number (if known). Where file amended 1040x An estimate of the wages you earned, the federal income tax withheld, and the period you worked for that employer. Where file amended 1040x The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible. Where file amended 1040x Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Where file amended 1040x Total the federal income tax withheld (shown in box 2 of all Forms W-2 received) and enter that amount on the appropriate line of your tax return. Where file amended 1040x In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. Where file amended 1040x Your sick pay may be combined with other wages in one Form W-2 or you may receive a separate Form W-2 for sick pay. Where file amended 1040x If you file a paper tax return, attach Copy B of Form W-2 to your return. Where file amended 1040x Form W-2G If you had gambling winnings in 2013, the payer may have withheld income tax. Where file amended 1040x If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld. Where file amended 1040x Report the amounts you won on line 21 of Form 1040. Where file amended 1040x Take credit for the tax withheld on line 62 of Form 1040. Where file amended 1040x If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ. Where file amended 1040x Gambling losses can be deducted on Schedule A (Form 1040) as a miscellaneous itemized deduction. Where file amended 1040x However, you cannot deduct more than the gambling winnings you report on Form 1040. Where file amended 1040x File Form W-2G with your income tax return only if it shows any federal income tax withheld in box 2. Where file amended 1040x The 1099 Series Most forms in the 1099 series are not filed with your return. Where file amended 1040x In general, these forms should be furnished to you by January 31, 2014. Where file amended 1040x Unless instructed to file any of these forms with your return, keep them for your records. Where file amended 1040x There are several different forms in this series, including: Form 1099-B, Proceeds From Broker and Barter Exchange Transactions; Form 1099-C, Cancellation of Debt; Form 1099-DIV, Dividends and Distributions; Form 1099-G, Certain Government Payments; Form 1099-INT, Interest Income; Form 1099-K, Payment Card and Third-Party Network Transactions; Form 1099-MISC, Miscellaneous Income; Form 1099-OID, Original Issue Discount; Form 1099-PATR, Taxable Distributions Received From Cooperatives; Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530); Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Where file amended 1040x ; Form SSA-1099, Social Security Benefit Statement; and Form RRB-1099, Payments by the Railroad Retirement Board. Where file amended 1040x If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. Where file amended 1040x See the instructions to these forms for details. Where file amended 1040x Reporting your withholding. Where file amended 1040x   Report on your tax return all federal income tax withholding shown on your Form 1099, Form SSA-1099, and/or Form RRB-1099. Where file amended 1040x Include the amount withheld in the total on line 62 of Form 1040, line 36 of Form 1040A, or line 7 of Form 1040EZ. Where file amended 1040x Form 1099-R. Where file amended 1040x   Attach Form 1099-R to your paper return if federal income tax withholding is shown in box 4. Where file amended 1040x Do not attach any other Form 1099. Where file amended 1040x Form Not Correct If you receive a form with incorrect information, you should ask the payer for a corrected form. Where file amended 1040x Call the telephone number or write to the address given for the payer on the form. Where file amended 1040x The corrected Form W-2G or Form 1099 you receive will have an “X” in the “CORRECTED” box at the top of the form. Where file amended 1040x A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2. Where file amended 1040x In certain situations, you will receive two forms in place of the original incorrect form. Where file amended 1040x This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). Where file amended 1040x One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. Where file amended 1040x This form will have an “X” in the “CORRECTED” box at the top of the form. Where file amended 1040x The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked). Where file amended 1040x Form Received After Filing If you file your return and you later receive a form for income that you did not include on your return, report the income and take credit for any income tax withheld by filing Form 1040X, Amended U. Where file amended 1040x S. Where file amended 1040x Individual Income Tax Return. Where file amended 1040x Separate Returns If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Where file amended 1040x Do not include any amount withheld from your spouse's income. Where file amended 1040x However, different rules may apply if you live in a community property state. Where file amended 1040x Community property states. Where file amended 1040x   The following are community property states. Where file amended 1040x Arizona. Where file amended 1040x California. Where file amended 1040x Idaho. Where file amended 1040x Louisiana. Where file amended 1040x Nevada. Where file amended 1040x New Mexico. Where file amended 1040x Texas. Where file amended 1040x Washington. Where file amended 1040x Wisconsin. Where file amended 1040x Generally, if you live in a community property state and file a separate return, you and your spouse each must report half of all community income in addition to your own separate income. Where file amended 1040x If you are required to report half of all community income, you are entitled to take credit for half of all taxes withheld on the community income. Where file amended 1040x If you were divorced during the year, each of you generally must report half the community income and can take credit for half the withholding on that community income for the period before the divorce. Where file amended 1040x   For more information on these rules, and some exceptions, see Publication 555, Community Property. Where file amended 1040x Fiscal Years (FY) If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules, described below, to determine your credit for federal income tax withholding. Where file amended 1040x Fiscal year withholding. Where file amended 1040x    You can claim credit on your tax return only for the tax withheld during the calendar year (CY) ending within your fiscal year. Where file amended 1040x You cannot claim credit for any of the tax withheld during the calendar year beginning in your fiscal year. Where file amended 1040x You will be able to claim credit for that withholding on your return for your next fiscal year. Where file amended 1040x   The Form W-2 or 1099 you receive for the calendar year that ends during your fiscal year will show the tax withheld and the income you received during that calendar year. Where file amended 1040x   Although you take credit for all the withheld tax shown on the form, report only the part of the income shown on the form that you received during your fiscal year. Where file amended 1040x Add to that the income you received during the rest of your fiscal year. Where file amended 1040x Example. Where file amended 1040x Miles Hanson files his return for a fiscal year ending June 30, 2013. Where file amended 1040x In January 2013, he received a Form W-2 that showed that his wages for 2012 were $31,200 and that his income tax withheld was $3,380. Where file amended 1040x His records show that he had received $15,000 of the wages by June 30, 2012, and $16,200 from July 1 through December 31, 2012. Where file amended 1040x See Table 3-1 . Where file amended 1040x On his return for the fiscal year ending June 30, 2013, Miles will report the $16,200 he was paid in July through December of 2012, plus the $18,850 he was paid during the rest of the fiscal year, January 1, 2013, through June 30, 2013. Where file amended 1040x However, he takes credit for all $3,380 that was withheld during 2012. Where file amended 1040x On his return for the fiscal year ending June 30, 2012, he reported the $15,000 he was paid in January through June 2012, but took no credit for the tax withheld during that time. Where file amended 1040x On his return for the fiscal year ending June 30, 2014, he will take the credit for any tax withheld during 2013 but not for any tax withheld during 2014. Where file amended 1040x Table 3-1. Where file amended 1040x Example for Fiscal Year Ending June 30, 2013—Miles Hanson Date Form W-2 Miles' records Tax return for FY ending 6/30/20121 Tax return for FY ending 6/30/2013 Wages With- holding Wages With- holding Wages With- holding Wages With- holding CY 20122 $31,200 $3,380             1/1/2012 –  6/30/2012     $15,000 $1,600 $15,000       7/1/2012 –  12/31/2012     $16,200 $1,780     $16,200 $3,380 CY 2013 $37,700 $4,316 3             1/1/2013 –  6/30/2013     $18,850 $2,158     $18,850   7/1/2013 –  12/31/2013     $18,850 4 $2,158         1Miles' tax return for FY ending 6/30/2012 also included his wages for 7/1–12/31/2011 and the withholding shown on his 2011 Form W-2. Where file amended 1040x  2Calendar year (January 1 – December 31). Where file amended 1040x   3Withholding shown on 2013 Form W-2 ($4,316) will be included in Miles' tax return for FY ending 6/30/2014, the fiscal year in which calendar year 2013 ends. Where file amended 1040x   4Wages for 7/1–12/31/2013 ($18,850) will be included in Miles' tax return for FY ending 6/30/2014, the fiscal year in which the wages were received. Where file amended 1040x Backup withholding. Where file amended 1040x   If income tax has been withheld under the backup withholding rule, take credit for it on your tax return for the fiscal year in which you received the income. Where file amended 1040x Example. Where file amended 1040x Emily Smith's records show that she received income in November 2013 and February 2014 from which there was backup withholding ($100 and $50, respectively). Where file amended 1040x Emily takes credit for the entire $150 of backup withholding on her tax return for the fiscal year ending September 30, 2014. Where file amended 1040x Estimated Tax Take credit for all your estimated tax payments for 2013 on line 63 of Form 1040 or line 37 of Form 1040A. Where file amended 1040x Include any overpayment from 2012 that you had credited to your 2013 estimated tax. Where file amended 1040x You must use Form 1040 or Form 1040A if you paid estimated tax. Where file amended 1040x You cannot file Form 1040EZ. Where file amended 1040x If you were a beneficiary of an estate or trust, you should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Where file amended 1040x , from the fiduciary. Where file amended 1040x If you have estimated taxes credited to you from the estate or trust (from Schedule K-1 (Form 1041)), you must report the estimated taxes on Schedule E (Form 1040). Where file amended 1040x On the dotted line next to the entry space for line 37 of Schedule E (Form 1040), enter “ES payment claimed” and the amount. Where file amended 1040x However, do not include this amount in the total on line 37. Where file amended 1040x Instead, enter the amount on Form 1040, line 63. Where file amended 1040x This estimated tax payment for 2013 is treated as being made by you on January 15, 2014. Where file amended 1040x Name changed. Where file amended 1040x   If you changed your name, and you made estimated tax payments using your former name, attach a statement to the front of your paper tax return indicating: When you made the payments, The amount of each payment, Your name when you made the payments, and The social security number under which you made the payments. Where file amended 1040x  The statement should cover payments you made jointly with your spouse as well as any you made separately. Where file amended 1040x   Be sure to report the change to your local Social Security Administration office before filing your 2014 tax return. Where file amended 1040x This prevents delays in processing your return and issuing refunds. Where file amended 1040x It also safeguards your future social security benefits. Where file amended 1040x For more information, call the Social Security Administration at 1-800-772-1213. Where file amended 1040x Separate Returns If you and your spouse made separate estimated tax payments for 2013 and you file separate returns, you can take credit only for your own payments. Where file amended 1040x If you made joint estimated tax payments, you must decide how to divide the payments between your returns. Where file amended 1040x One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. Where file amended 1040x If you cannot agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2013. Where file amended 1040x Example. Where file amended 1040x James and Evelyn Brown made joint estimated tax payments for 2013 totaling $3,000. Where file amended 1040x They file separate 2013 Forms 1040. Where file amended 1040x James' tax is $4,000 and Evelyn's is $1,000. Where file amended 1040x If they do not agree on how to divide the $3,000, they must divide it proportionately between their returns. Where file amended 1040x Because James' tax ($4,000) is 80% of the total tax ($5,000), his share of the estimated tax is $2,400 (80% of $3,000). Where file amended 1040x The balance, $600 (20% of $3,000), is Evelyn's share. Where file amended 1040x Divorced Taxpayers If you made joint estimated tax payments for 2013 and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. Where file amended 1040x If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2013. Where file amended 1040x See Example earlier under Separate Returns. Where file amended 1040x If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided at the top of page 1 of Form 1040 or Form 1040A. Where file amended 1040x If you divorced and remarried in 2013, enter your present spouse's SSN in that space. Where file amended 1040x Enter your former spouse's SSN, followed by “DIV,” under Payments to the left of Form 1040, line 63, or in the blank space to the left of Form 1040A, line 37. Where file amended 1040x Excess Social Security or Railroad Retirement Tax Withholding Most employers must withhold social security tax from your wages. Where file amended 1040x In some cases, however, the federal government and state and local governments do not have to withhold social security tax from their employees' wages. Where file amended 1040x If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax. Where file amended 1040x Two or more employers. Where file amended 1040x   If you worked for two or more employers in 2013, too much social security tax or tier 1 RRTA tax may have been withheld from your pay. Where file amended 1040x You may be able to claim the excess as a credit against your income tax when you file your return. Where file amended 1040x Table 3-2 shows the maximum amount that should have been withheld for any of these taxes for 2013. Where file amended 1040x Figure the excess withholding on the appropriate worksheet. Where file amended 1040x    Table 3-2. Where file amended 1040x Maximum Social Security and RRTA Withholding for 2013 Type of tax Maximum wages subject to tax Tax rate Maximum tax to be withheld Social security $113,700 6. Where file amended 1040x 2% $7,049. Where file amended 1040x 40 Tier 1 RRTA $113,700 6. Where file amended 1040x 2% $7,049. Where file amended 1040x 40 Tier 2 RRTA $84,300 4. Where file amended 1040x 4% $3,709. Where file amended 1040x 20 Joint returns. Where file amended 1040x   If you are filing a joint return, you and your spouse must figure any excess social security or tier 1 RRTA separately. Where file amended 1040x Note. Where file amended 1040x All wages are subject to Medicare tax withholding. Where file amended 1040x Employer's error. Where file amended 1040x   If you had only one employer and he or she withheld too much social security, Medicare, or tier 1 RRTA tax, ask the employer to refund the excess amount to you. Where file amended 1040x If the employer refuses to refund the overcollection, ask for a statement indicating the amount of the overcollection to support your claim. Where file amended 1040x File a claim for refund using Form 843, Claim for Refund and Request for Abatement. Where file amended 1040x Worksheet for Nonrailroad Employees If you did not work for a railroad during 2013, figure the excess social security withholding on Worksheet 3-1. Where file amended 1040x Note. Where file amended 1040x If you worked for both a railroad employer and a nonrailroad employer, use Worksheet 3-2, to figure excess social security and tier 1 RRTA tax. Where file amended 1040x Where to claim credit for excess social security withholding. Where file amended 1040x   If you file Form 1040, enter the excess on line 69. Where file amended 1040x   If you file Form 1040A, include the excess in the total on line 41. Where file amended 1040x Write “Excess SST” and show the amount of the credit in the space to the left of the line. Where file amended 1040x   You cannot claim excess social security tax withholding on Form 1040EZ. Where file amended 1040x Worksheets for Railroad Employees If you worked for a railroad during 2013, figure your excess withholding on Worksheet 3-2 and 3-3, as appropriate. Where file amended 1040x Where to claim credit for excess tier 1 RRTA withholding. Where file amended 1040x   If you file Form 1040, enter the excess on line 69. Where file amended 1040x   If you file Form 1040A, include the excess in the total on line 41. Where file amended 1040x Write “Excess SST” and show the amount of the credit in the space to the left of the line. Where file amended 1040x   You cannot claim excess tier 1 RRTA withholding on Form 1040EZ. Where file amended 1040x How to claim refund of excess tier 2 RRTA. Where file amended 1040x   To claim a refund of tier 2 tax, use Form 843. Where file amended 1040x Be sure to attach a copy of all of your Forms W-2. Where file amended 1040x   See Worksheet 3-3 and the Instructions for Form 843, for more details. Where file amended 1040x Worksheet 3-1. Where file amended 1040x Excess Social Security—Nonrailroad Employees 1. Where file amended 1040x Add all social security tax withheld (but not more than  $7,049. Where file amended 1040x 40 for each employer). Where file amended 1040x This tax should be shown  in box 4 of your Forms W-2. Where file amended 1040x Enter the total here 1. Where file amended 1040x   2. Where file amended 1040x Enter any uncollected social security tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. Where file amended 1040x   3. Where file amended 1040x Add lines 1 and 2. Where file amended 1040x If $7,049. Where file amended 1040x 40 or less, stop here. Where file amended 1040x You cannot claim the credit 3. Where file amended 1040x   4. Where file amended 1040x Social security limit 4. Where file amended 1040x $7,049. Where file amended 1040x 40 5. Where file amended 1040x Excess. Where file amended 1040x Subtract line 4 from line 3 5. Where file amended 1040x   Worksheet 3-2. Where file amended 1040x Excess Social Security and Tier 1 RRTA—Railroad Employees 1. Where file amended 1040x Add all social security and tier 1 RRTA tax withheld (but not more than $7,049. Where file amended 1040x 40 for each employer). Where file amended 1040x Social security tax should be shown in box 4 and tier 1 RRTA should be shown  in box 14 of your Forms W-2. Where file amended 1040x Enter the total here 1. Where file amended 1040x   2. Where file amended 1040x Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. Where file amended 1040x   3. Where file amended 1040x Add lines 1 and 2. Where file amended 1040x If $7,049. Where file amended 1040x 40 or less, stop here. Where file amended 1040x You cannot claim the credit 3. Where file amended 1040x   4. Where file amended 1040x Social security and tier 1 RRTA tax limit 4. Where file amended 1040x $7,049. Where file amended 1040x 40 5. Where file amended 1040x Excess. Where file amended 1040x Subtract line 4 from line 3 5. Where file amended 1040x   Worksheet 3-3. Where file amended 1040x Excess Tier 2 RRTA—Railroad Employees 1. Where file amended 1040x Add all tier 2 RRTA tax withheld (but not more than $3,709. Where file amended 1040x 20 for each employer). Where file amended 1040x Box 14 of your Forms W-2 should show tier 2 RRTA tax. Where file amended 1040x Enter the total here 1. Where file amended 1040x   2. Where file amended 1040x Enter any uncollected tier 2 RRTA tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT” 2. Where file amended 1040x   3. Where file amended 1040x Add lines 1 and 2. Where file amended 1040x If $3,709. Where file amended 1040x 20 or less, stop here. Where file amended 1040x You cannot claim the credit. Where file amended 1040x 3. Where file amended 1040x   4. Where file amended 1040x Tier 2 RRTA tax limit 4. Where file amended 1040x $3,709. Where file amended 1040x 20 5. Where file amended 1040x Excess. Where file amended 1040x Subtract line 4 from line 3. Where file amended 1040x 5. 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