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Www freefilefillableforms com Publication 521 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Www freefilefillableforms com Tax questions. Www freefilefillableforms com Useful Items - You may want to see: What's New Standard mileage rate. Www freefilefillableforms com  For 2013, the standard mileage rate for using your vehicle to move to a new home is 24 cents per mile. Www freefilefillableforms com See Travel by car under Deductible Moving Expenses. Www freefilefillableforms com Reminders Future developments. Www freefilefillableforms com  For the latest information about developments related to Publication 521, such as legislation enacted after it was published, go to www. Www freefilefillableforms com irs. Www freefilefillableforms com gov/pub521. Www freefilefillableforms com Change of address. Www freefilefillableforms com  If you change your mailing address, be sure to notify the IRS using Form 8822, Change of Address. Www freefilefillableforms com Mail it to the Internal Revenue Service Center for your old address. Www freefilefillableforms com Addresses for the service centers are on the back of the form. Www freefilefillableforms com If you change your business address or the identity of your responsible party, use Form 8822-B, Change of Address or Responsible Party—Business. Www freefilefillableforms com Photographs of missing children. Www freefilefillableforms com  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Www freefilefillableforms com Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Www freefilefillableforms com You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Www freefilefillableforms com Introduction This publication explains the deduction of certain expenses of moving to a new home because you changed job locations or started a new job. Www freefilefillableforms com It includes the following topics. Www freefilefillableforms com Who can deduct moving expenses. Www freefilefillableforms com What moving expenses are deductible. Www freefilefillableforms com What moving expenses are not deductible. Www freefilefillableforms com How a reimbursement affects your moving expense deduction. Www freefilefillableforms com How and when to report moving expenses. Www freefilefillableforms com Special rules for members of the Armed Forces. Www freefilefillableforms com Form 3903, Moving Expenses, is used to claim the moving expense deduction. Www freefilefillableforms com An example of how to report your moving expenses, including a filled-in Form 3903, is shown near the end of the publication. Www freefilefillableforms com You may be able to deduct moving expenses whether you are self-employed or an employee. Www freefilefillableforms com Your expenses generally must be related to starting work at your new job location. Www freefilefillableforms com However, certain retirees and survivors may qualify to claim the deduction even though they are not starting work at a new job location. Www freefilefillableforms com See Who Can Deduct Moving Expenses. Www freefilefillableforms com Recordkeeping. Www freefilefillableforms com    It is important to maintain an accurate record of expenses you paid to move. Www freefilefillableforms com You should save items such as receipts, bills, cancelled checks, credit card statements, and mileage logs. Www freefilefillableforms com Also, you should save your Form W-2 and statements of reimbursement from your employer. Www freefilefillableforms com Comments and suggestions. Www freefilefillableforms com   We welcome your comments about this publication and your suggestions for future editions. Www freefilefillableforms com   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Www freefilefillableforms com NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Www freefilefillableforms com Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Www freefilefillableforms com   You can send your comments from www. Www freefilefillableforms com irs. Www freefilefillableforms com gov/formspubs/. Www freefilefillableforms com Click on “More Information” and then on “Comment on Tax Forms and Publications”. Www freefilefillableforms com   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Www freefilefillableforms com Ordering forms and publications. Www freefilefillableforms com   Visit www. Www freefilefillableforms com irs. Www freefilefillableforms com gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Www freefilefillableforms com Internal Revenue Service 1201 N. Www freefilefillableforms com Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Www freefilefillableforms com   If you have a tax question, check the information available on IRS. Www freefilefillableforms com gov or call 1-800-829-1040. Www freefilefillableforms com We cannot answer tax questions sent to either of the above addresses. Www freefilefillableforms com Useful Items - You may want to see: Publication 3 Armed Forces' Tax Guide Forms (and Instructions) 1040 U. Www freefilefillableforms com S. Www freefilefillableforms com Individual Income Tax Return 1040X Amended U. Www freefilefillableforms com S. Www freefilefillableforms com Individual Income Tax Return 3903 Moving Expenses 8822 Change of Address 8822–B Change of Address or Responsible Party-Business See How To Get Tax Help, near the end of this publication, for information about getting the publications and the forms listed above. Www freefilefillableforms com Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of May 25 Flooding in Iowa

MIL-2011-07, Oct. 19, 2011

MILWAUKEE — Victims of the flooding that began on May 25, 2011 in parts of Iowa may qualify for tax relief from the Internal Revenue Service.

The President has declared the following counties a federal disaster area: Fremont, Harrison, Mills, Monona and Pottawattamie. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after May 25, and on or before Aug. 1, have been postponed to Aug. 1, 2011.
In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after May 25, and on or before June 9, as long as the deposits are made by June 9, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Aug. 1 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 25 and on or before Aug. 1.

The IRS also gives affected taxpayers until Aug. 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 25 and on or before Aug. 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 25 and on or before June 9 provided the taxpayer makes these deposits by June 9.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Iowa/Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 13-Mar-2014

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