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1040x 2012 Tax Form

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1040x 2012 Tax Form

1040x 2012 tax form Index A Abortion, Abortion Acupuncture, Acupuncture Adopted child's medical expenses, Adopted child. 1040x 2012 tax form AGI limitation, Introduction, Community property states. 1040x 2012 tax form Alcoholism, Alcoholism Ambulances, Ambulance Archer MSAs Health coverage tax credit, How To Take the Credit Medical expenses paid for decedent from, Decedent Artificial limbs, Artificial Limb Artificial teeth, Artificial Teeth Aspirin, Nonprescription Drugs and Medicines Assistance (see Tax help) Assisted living homes, Nursing Home Athletic club dues, Health Club Dues Automobiles (see Cars) B Baby sitting, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Bandages, Bandages Basis Medical equipment or property (Worksheet D), Worksheet D. 1040x 2012 tax form Adjusted Basis of Medical Equipment or Property Sold Birth control pills, Birth Control Pills Body scan, Body Scan Braille books and magazines, Braille Books and Magazines Breast pumps and supplies, Breast Pumps and Supplies Breast reconstruction surgery, Breast Reconstruction Surgery C Calculation of deduction, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Capital expenses, Capital Expenses Improvements to rented property, Improvements to property rented by a person with a disability. 1040x 2012 tax form Operation and upkeep, Operation and upkeep. 1040x 2012 tax form Worksheet A, Capital expense worksheet. 1040x 2012 tax form Cars, Car Out-of-pocket expenses, Car expenses. 1040x 2012 tax form Standard medical mileage rates, Car expenses. 1040x 2012 tax form Child care, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Children's medical expenses Adopted child, Adopted child. 1040x 2012 tax form Dependents, Dependent Chiropractor, Chiropractor Christian Scientist practitioner, Christian Science Practitioner Chronically ill persons, Chronically ill individual. 1040x 2012 tax form COBRA assistance Recapture of COBRA premium assistance, Worksheet F. 1040x 2012 tax form Recapture of COBRA Premium Assistance for Higher Income Taxpayers COBRA premium assistance, COBRA Premium Assistance Community property states, Community property states. 1040x 2012 tax form Computer banks to track medical information, Medical Information Plan Contact lenses, Contact Lenses Controlled substances, Controlled Substances Cosmetic surgery, Cosmetic Surgery Credit (see Health coverage tax credit) Crutches, Crutches D Dancing lessons, Dancing Lessons Decedent's medical expenses, Decedent, What if you pay medical expenses of a deceased spouse or dependent? Deductible amount, How Much of the Expenses Can You Deduct? Deductible expenses, Whose Medical Expenses Can You Include?, X-ray Definition of medical expenses Doctor, What Are Medical Expenses? Physician, What Are Medical Expenses? Dental treatment, Dental Treatment Artificial teeth, Artificial Teeth Teeth whitening, Teeth Whitening Dentures, Artificial Teeth Dependent's medical expenses Adopted child, Adopted child. 1040x 2012 tax form Multiple support agreement, Support claimed under a multiple support agreement. 1040x 2012 tax form Qualifying child, Dependent Qualifying relative, Dependent Dependents Disabled dependent care, Disabled Dependent Care Expenses, Dependents with disabilities. 1040x 2012 tax form Diagnostic devices, Diagnostic Devices Diaper services, Diaper Service Disabilities, persons with Dependent care expenses, Disabled Dependent Care Expenses, Dependents with disabilities. 1040x 2012 tax form Improvements to rented property, Improvements to property rented by a person with a disability. 1040x 2012 tax form Special education, Special Education Divorced taxpayers Medical expenses of child, Child of divorced or separated parents. 1040x 2012 tax form Drug addiction, Drug Addiction Drugs (see Medicines) Dues Health club, Health Club Dues E Education, special, Special Education Electrolysis, Cosmetic Surgery Employer-sponsored health insurance plans, Employer-Sponsored Health Insurance Plan Employment taxes, Employment taxes. 1040x 2012 tax form Excluded expenses Insurance premiums, Insurance Premiums You Cannot Include Eye surgery, Eye Surgery Eyeglasses, Eyeglasses F Fertility enhancement Eggs, temporary storage of, Fertility Enhancement Fertility, Fertility Enhancement In vitro fertilization, Fertility Enhancement Figuring the deduction, How Do You Figure and Report the Deduction on Your Tax Return? Final return for decedent Medical expenses paid, Decedent Flexible spending account, Flexible Spending Account Food (see Weight-loss programs) Form 1040 Health coverage tax credit, How To Take the Credit Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 1040, Schedule A Impairment-related work expenses, Where to report. 1040x 2012 tax form Medical and dental expenses, Introduction, What Tax Form Do You Use? Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 1040, Schedule C Impairment-related work expenses, Where to report. 1040x 2012 tax form Form 1040, Schedule C-EZ Impairment-related work expenses, Where to report. 1040x 2012 tax form Form 1040, Schedule E Impairment-related work expenses, Where to report. 1040x 2012 tax form Form 1040, Schedule F Impairment-related work expenses, Where to report. 1040x 2012 tax form Form 1040NR Health coverage tax credit, How To Take the Credit Form 1040X Amended return, What Expenses Can You Include This Year? Deceased taxpayer, What if the decedent's return had been filed and the medical expenses were not included? Form 1099-H Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 2106 Impairment-related work expenses, Where to report. 1040x 2012 tax form Form 2106-EZ Impairment-related work expenses, Where to report. 1040x 2012 tax form Form 2555 Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 2555-EZ Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Form 8453 Health coverage tax credit, How To Take the Credit Form 8885 Health coverage tax credit, How To Take the Credit Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons Founder's fee (see Lifetime care, advance payments) Free tax services, Free help with your tax return. 1040x 2012 tax form Funeral expenses, Funeral Expenses Future medical care, Payments for future medical care. 1040x 2012 tax form , Future Medical Care G Glasses, Eyeglasses Guide dog or other animal, Guide Dog or Other Service Animal H Hair Removal, Cosmetic Surgery Transplants, Cosmetic Surgery Wigs, Wig Health club dues, Health Club Dues Health coverage tax credit, Health Coverage Tax Credit Advanced payments, Monthly HCTC Alternative TAA recipient, Health Coverage Tax Credit Archer MSAs, How To Take the Credit Both spouses eligible, Qualifying Family Member Children of divorced parents, Health Coverage Tax Credit, Qualifying Family Member Eligible coverage month, Eligible Coverage Month Insurance that covers other individuals, Insurance that covers other individuals. 1040x 2012 tax form Legally separated, Legally separated. 1040x 2012 tax form Married persons filing separate returns, Qualifying Family Member Monthly HCTC, Monthly HCTC Nonqualified health insurance, Nonqualified Health Insurance Other specified coverage Benefits from the Veterans Administration, Other Specified Coverage Pension Benefit Guaranty Corporation (PBGC) recipient, Health Coverage Tax Credit Qualified health insurance, Qualified Health Insurance Qualifying family member, Qualifying Family Member Reimbursement credit, Monthly HCTC Reporting, How To Take the Credit State-qualified health insurance, State-qualified health insurance. 1040x 2012 tax form TAA recipient, Health Coverage Tax Credit Yearly HCTC, Yearly HCTC Health Coverage Tax Credit Alternative TAA recipient, Who Can Take This Credit? PBGC pension payee, Who Can Take This Credit? TAA recipient, Who Can Take This Credit? Health institutes, Health Institute Health insurance Credit (see Health coverage tax credit) Employer-sponsored plan, Employer-Sponsored Health Insurance Plan Premiums Deductible, Insurance Premiums Nondeductible, Insurance Premiums You Cannot Include Paid by employer, Premiums paid by your employer. 1040x 2012 tax form Paid by employer and you, Premiums paid by you and your employer. 1040x 2012 tax form Paid by you, Premiums paid by you. 1040x 2012 tax form Prepaid, Prepaid Insurance Premiums Unused sick leave used to pay, Unused Sick Leave Used To Pay Premiums Reimbursements (see Reimbursements) Self-employed persons, Health Insurance Costs for Self-Employed Persons Health maintenance organizations (HMOs), Health Maintenance Organization (HMO) Health reimbursement arrangements (HRAs), Health reimbursement arrangement (HRA). 1040x 2012 tax form Health savings accounts (HSAs) Payments from, Health Savings Accounts Hearing aids, Hearing Aids Hearing-impaired persons Guide dog or other animal for, Guide Dog or Other Service Animal Help (see Tax help) HMOs (Health maintenance organizations), Health Maintenance Organization (HMO) Home care (see Nursing services) Home improvements (see Capital expenses:) Hospital services, Hospital Services Hotels, Lodging Household help, Household Help HRAs (Health reimbursement arrangements), Health reimbursement arrangement (HRA). 1040x 2012 tax form I Illegal operations and treatments, Illegal Operations and Treatments Illegal substances, Controlled Substances Impairment-related work expenses, Workers' compensation. 1040x 2012 tax form , Impairment-related expenses defined. 1040x 2012 tax form Reporting of, Where to report. 1040x 2012 tax form Insulin, Nonprescription Drugs and Medicines Insurance (see Health insurance) Intellectually and developmentally disabled persons Mentally retarded, Intellectually and Developmentally Disabled, Special Home for Special homes for, Intellectually and Developmentally Disabled, Special Home for L Laboratory fees, Laboratory Fees Lactation expenses (see Breast pumps and supplies) Laser eye surgery, Eye Surgery Lead-based paint removal, Lead-Based Paint Removal Learning disabilities, Special Education Legal fees, Legal Fees Lessons, dancing and swimming, Dancing Lessons Lifetime care Advance payments for, Lifetime Care—Advance Payments Lodging, Lodging, Trips (see also Trips) Long-term care, Long-Term Care Chronically ill individuals, Chronically ill individual. 1040x 2012 tax form Maintenance and personal care services, Maintenance and personal care services. 1040x 2012 tax form Qualified insurance contracts, Qualified Long-Term Care Insurance Contracts Qualified services, Qualified Long-Term Care Services M Maintenance and personal care services, Maintenance and personal care services. 1040x 2012 tax form Maternity clothes, Maternity Clothes Meals, Meals, Weight-Loss Program (see also Weight-loss programs) Medical conferences, Medical Conferences Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. 1040x 2012 tax form Adjusted Basis of Medical Equipment or Property Sold Medical expense records, What Tax Form Do You Use? Medical information plans, Medical Information Plan Medical savings accounts (MSAs), Medical Savings Account (MSA) Medicare Medicare A, deductible expense, Medicare A Medicare B, deductible expense, Medicare B Medicare D, deductible expense, Medicare D Medicines, Medicines Imported, Imported medicines and drugs. 1040x 2012 tax form , Medicines and Drugs From Other Countries Nonprescription drugs and medicines, Nonprescription Drugs and Medicines Missing children, photographs of in IRS publications, Reminders Multiple support agreement, Support claimed under a multiple support agreement. 1040x 2012 tax form N Nondeductible expenses, What Expenses Are Not Includible?, Weight-Loss Program Nonprescription drugs and medicines, Nonprescription Drugs and Medicines Nursing homes, Nursing Home Nursing services, Nursing Services, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Chronically ill individuals, Chronically ill individual. 1040x 2012 tax form Nutritional supplements Natural medicines, Nutritional Supplements O Operations, Operations Cosmetic surgery, Cosmetic Surgery Eye surgery, Eye Surgery Illegal operations and treatments, Illegal Operations and Treatments Optometrist, Optometrist Optometrist services, Eyeglasses Organ donors, Transplants Osteopath, Osteopath Oxygen, Oxygen P Paint removal, for lead-based, Lead-Based Paint Removal Parking fees and tolls, Car expenses. 1040x 2012 tax form Personal injury damages, Damages for Personal Injuries Personal use items, Personal Use Items Photographs of missing children in IRS publications, Reminders Physical examination, Physical Examination Physical therapy, Therapy Plastic surgery, Cosmetic Surgery Pregnancy test kit, Pregnancy Test Kit Premiums (see Health insurance) Prepaid insurance premiums, Prepaid Insurance Premiums Prosthesis, Artificial Limb Psychiatric care, Psychiatric Care Psychoanalysis, Psychoanalysis Psychologists, Psychologist Publications (see Tax help) R Radial keratotomy, Eye Surgery Recordkeeping, What Tax Form Do You Use? Rehabilitation facilities, Nursing Home Reimbursements, How Do You Treat Reimbursements?, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Excess includible in income More than one policy (Worksheet C), More than one policy. 1040x 2012 tax form One policy (Worksheet B), Worksheet B. 1040x 2012 tax form Excess Reimbursement Includible in Income When You Have Only One Policy Excess may be taxable (Figure 1), What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Health Reimbursement Arrangement (HRA), Health reimbursement arrangement (HRA). 1040x 2012 tax form Insurance, Insurance Reimbursement, What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Medical expenses not deducted, What If You Receive Insurance Reimbursement in a Later Year? More than one policy, More than one policy. 1040x 2012 tax form Received in later year, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Rental property Improvements to, Improvements to property rented by a person with a disability. 1040x 2012 tax form Reporting Health coverage tax credit, How To Take the Credit Impairment-related work expenses, Where to report. 1040x 2012 tax form Medical and dental expenses, What If You Are Reimbursed for Medical Expenses You Did Not Deduct? Medical deduction (see Form 1040, Schedule A) Self-employed persons, health insurance costs, Health Insurance Costs for Self-Employed Persons S Sale of medical equipment or property, Sale of Medical Equipment or Property Adjusted basis (Worksheet D), Worksheet D. 1040x 2012 tax form Adjusted Basis of Medical Equipment or Property Sold Schedules (see Form 1040) Seeing-eye dogs, Guide Dog or Other Service Animal Self-employed persons Health coverage tax credit, How To Take the Credit Health insurance costs, Health Insurance Costs for Self-Employed Persons Senior housing, Nursing Home Separate returns Community property states, Community property states. 1040x 2012 tax form Medical and dental expenses, Separate returns. 1040x 2012 tax form Separated taxpayers Health coverage tax credit, Legally separated. 1040x 2012 tax form Medical expenses of child, Child of divorced or separated parents. 1040x 2012 tax form Service animals, Guide Dog or Other Service Animal Sick leave Used to pay health insurance premiums, Unused Sick Leave Used To Pay Premiums Special education, Special Education Spouse's medical expenses, Spouse Deceased spouse, What if you pay medical expenses of a deceased spouse or dependent? Sterilization, Sterilization Stop-smoking programs, Stop-Smoking Programs Surgery (see Operations) Swimming lessons, Dancing Lessons T Tables and figures Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. 1040x 2012 tax form Adjusted Basis of Medical Equipment or Property Sold Reimbursements, excess includible in income More than one policy (Worksheet C), More than one policy. 1040x 2012 tax form One policy (Worksheet B), Worksheet B. 1040x 2012 tax form Excess Reimbursement Includible in Income When You Have Only One Policy Reimbursements, excess may be taxable (Figure 1), What If Your Insurance Reimbursement Is More Than Your Medical Expenses? Tax help, How To Get Tax Help Teeth Artificial, Artificial Teeth Dental treatment, Dental Treatment Whitening, Teeth Whitening Telephone, Telephone Television, Television Therapy, Therapy Transplants, Transplants Travel and transportation expenses, Transportation Car expenses, Car expenses. 1040x 2012 tax form Includible expenses, You can include:, Transportation expenses you cannot include. 1040x 2012 tax form Parking fees and tolls, Car expenses. 1040x 2012 tax form Trips, Trips TTY/TDD information, How To Get Tax Help Tuition, Tuition V Vasectomy, Vasectomy Veterinary fees, Veterinary Fees Vision correction surgery, Eye Surgery Visually impaired persons Guide dog or other animal for, Guide Dog or Other Service Animal Vitamins or minerals, Nutritional Supplements Voluntary Employee's Beneficiary Association (VEBA) Qualified health insurance, Voluntary Employee's Beneficiary Association (VEBA) W Weight-loss programs, Weight-Loss Program, Weight-Loss Program What's new COBRA continuous coverage, What's New Health coverage tax credit, What's New Standard medical mileage rate, What's New Wheelchairs, Wheelchair Wigs, Wig Work expenses Disabled dependent care, Disabled Dependent Care Expenses Impairment-related, Impairment-Related Work Expenses Workers' compensation, Workers' compensation. 1040x 2012 tax form Worksheets Capital expenses (Worksheet A), Capital expense worksheet. 1040x 2012 tax form Medical equipment or property Adjusted basis (Worksheet D), Worksheet D. 1040x 2012 tax form Adjusted Basis of Medical Equipment or Property Sold Reimbursements, excess includible in income More than one policy (Worksheet C), More than one policy. 1040x 2012 tax form One policy (Worksheet B), Worksheet B. 1040x 2012 tax form Excess Reimbursement Includible in Income When You Have Only One Policy X X-rays, X-ray Prev  Up     Home   More Online Publications
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Only you can decide if you need these features. Sellers of cars, major appliances and other expensive items may try to sell you a service contract or "extended warranty." Service contracts or "extended warranties" can add hundreds to your purchase price and are rarely worth the cost. Some sellers may try to frighten you or lead you to believe that purchasing an extended warranty is required. Some duplicate warranty coverage you get automatically from a manufacturer or dealer. Ask these questions before you agree to one of these contracts:

  • Does the dealer, the manufacturer, or an independent company back the service contract?
  • How are claims handled? Who will do the work and where it will be done?
  • What happens to your coverage if the dealer or administrator goes out of business?
  • Do you need prior authorization for repair work?
  • Are there any situations when coverage can be denied? You may not have protection from common wear and tear. And some manufacturers do not honor contracts if you fail to follow their recommendations for routine maintenance.

The 1040x 2012 Tax Form

1040x 2012 tax form 2. 1040x 2012 tax form   Tax Shelters and Other Reportable Transactions Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Abusive Tax SheltersRules To Curb Abusive Tax Shelters Investor Reporting Penalties Whether To Invest Introduction Investments that yield tax benefits are sometimes called “tax shelters. 1040x 2012 tax form ” In some cases, Congress has concluded that the loss of revenue is an acceptable side effect of special tax provisions designed to encourage taxpayers to make certain types of investments. 1040x 2012 tax form In many cases, however, losses from tax shelters produce little or no benefit to society, or the tax benefits are exaggerated beyond those intended. 1040x 2012 tax form Those cases are called “abusive tax shelters. 1040x 2012 tax form ” An investment that is considered a tax shelter is subject to restrictions, including the requirement that it be disclosed, as discussed later. 1040x 2012 tax form Topics - This chapter discusses: Abusive Tax Shelters , Rules To Curb Abusive Tax Shelters , Investor Reporting , Penalties , and Whether To Invest . 1040x 2012 tax form Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 556 Examination of Returns, Appeal Rights, and Claims for Refund 561 Determining the Value of Donated Property 925 Passive Activity and At-Risk Rules Form (and Instructions) 8275 Disclosure Statement 8275-R Regulation Disclosure Statement 8283 Noncash Charitable Contributions 8886 Reportable Transaction Disclosure Statement See chapter 5, How To Get Tax Help , for information about getting these publications and forms. 1040x 2012 tax form Abusive Tax Shelters Abusive tax shelters are marketing schemes involving artificial transactions with little or no economic reality. 1040x 2012 tax form They often make use of unrealistic allocations, inflated appraisals, losses in connection with nonrecourse loans, mismatching of income and deductions, financing techniques that do not conform to standard commercial business practices, or mischaracterization of the substance of the transaction. 1040x 2012 tax form Despite appearances to the contrary, the taxpayer generally risks little. 1040x 2012 tax form Abusive tax shelters commonly involve package deals designed from the start to generate losses, deductions, or credits that will be far more than present or future investment. 1040x 2012 tax form Or, they may promise investors from the start that future inflated appraisals will enable them, for example, to reap charitable contribution deductions based on those appraisals. 1040x 2012 tax form (But see the appraisal requirements discussed under Rules To Curb Abusive Tax Shelters , later. 1040x 2012 tax form ) They are commonly marketed in terms of the ratio of tax deductions allegedly available to each dollar invested. 1040x 2012 tax form This ratio (or “write-off”) is frequently said to be several times greater than one-to-one. 1040x 2012 tax form Because there are many abusive tax shelters, it is not possible to list all the factors you should consider in determining whether an offering is an abusive tax shelter. 1040x 2012 tax form However, you should ask the following questions, which might provide a clue to the abusive nature of the plan. 1040x 2012 tax form Do the tax benefits far outweigh the economic benefits? Is this a transaction you would seriously consider, apart from the tax benefits, if you hoped to make a profit? Do shelter assets really exist and, if so, are they insured for less than their purchase price? Is there a nontax justification for the way profits and losses are allocated to partners? Do the facts and supporting documents make economic sense? In that connection, are there sales and resales of the tax shelter property at ever increasing prices? Does the investment plan involve a gimmick, device, or sham to hide the economic reality of the transaction? Does the promoter offer to backdate documents after the close of the year? Are you instructed to backdate checks covering your investment? Is your debt a real debt or are you assured by the promoter that you will never have to pay it? Does this transaction involve laundering United States source income through foreign corporations incorporated in a tax haven and owned by United States shareholders? Rules To Curb Abusive Tax Shelters Congress has enacted a series of income tax laws designed to halt the growth of abusive tax shelters. 1040x 2012 tax form These provisions include the following. 1040x 2012 tax form Disclosure of reportable transactions. 1040x 2012 tax form   You must disclose information for each reportable transaction in which you participate. 1040x 2012 tax form See Reportable Transaction Disclosure Statement , later. 1040x 2012 tax form   Material advisors with respect to any reportable transaction must disclose information about the transaction on Form 8918, Material Advisor Disclosure Statement. 1040x 2012 tax form To determine whether you are a material advisor to a transaction, see the Instructions for Form 8918. 1040x 2012 tax form   Material advisors will receive a reportable transaction number for the disclosed reportable transaction. 1040x 2012 tax form They must provide this number to all persons to whom they acted as a material advisor. 1040x 2012 tax form They must provide the number at the time the transaction is entered into. 1040x 2012 tax form If they do not have the number at that time, they must provide it within 60 days from the date the number is mailed to them. 1040x 2012 tax form For information on penalties for failure to disclose and failure to maintain lists, see Internal Revenue Code sections 6707, 6707A, and 6708. 1040x 2012 tax form Requirement to maintain list. 1040x 2012 tax form   Material advisors must maintain a list of persons to whom they provide material aid, assistance, or advice on any reportable transaction. 1040x 2012 tax form The list must be available for inspection by the IRS, and the information required to be included on the list generally must be kept for 7 years. 1040x 2012 tax form See Regulations section 301. 1040x 2012 tax form 6112-1 for more information (including what information is required to be included on the list). 1040x 2012 tax form Confidentiality privilege. 1040x 2012 tax form   The confidentiality privilege between you and a federally authorized tax practitioner does not apply to written communications made after October 21, 2004, regarding the promotion of your direct or indirect participation in any tax shelter. 1040x 2012 tax form Appraisal requirement for donated property. 1040x 2012 tax form   If you claim a deduction of more than $5,000 for an item or group of similar items of donated property, you generally must get a qualified appraisal from a qualified appraiser and complete and attach section B of Form 8283 to your return. 1040x 2012 tax form If you claim a deduction of more than $500,000 for the donated property, you generally must attach the qualified appraisal to your return. 1040x 2012 tax form If you file electronically, see Form 8453, U. 1040x 2012 tax form S. 1040x 2012 tax form Individual Income Tax Transmittal for an IRS e-file Return, and its instructions. 1040x 2012 tax form For more information about appraisals, including exceptions, see Publication 561. 1040x 2012 tax form Passive activity loss and credit limits. 1040x 2012 tax form   The passive activity loss and credit rules limit the amount of losses and credits that can be claimed from passive activities and limit the amount that can offset nonpassive income, such as certain portfolio income from investments. 1040x 2012 tax form For more detailed information about determining and reporting income, losses, and credits from passive activities, see Publication 925. 1040x 2012 tax form Interest on penalties. 1040x 2012 tax form   If you are assessed an accuracy-related or civil fraud penalty (as discussed under Penalties , later), interest will be imposed on the amount of the penalty from the due date of the return (including any extensions) to the date you pay the penalty. 1040x 2012 tax form Accounting method restriction. 1040x 2012 tax form   Tax shelters generally cannot use the cash method of accounting. 1040x 2012 tax form Uniform capitalization rules. 1040x 2012 tax form   The uniform capitalization rules generally apply to producing property or acquiring it for resale. 1040x 2012 tax form Under those rules, the direct cost and part of the indirect cost of the property must be capitalized or included in inventory. 1040x 2012 tax form For more information, see Publication 538. 1040x 2012 tax form Denial of deduction for interest on an underpayment due to a reportable transaction. 1040x 2012 tax form   You cannot deduct any interest you paid or accrued on any part of an underpayment of tax due to an understatement arising from a reportable transaction (discussed later) if the relevant facts affecting the tax treatment of the item are not adequately disclosed. 1040x 2012 tax form This rule applies to reportable transactions entered into in tax years beginning after October 22, 2004. 1040x 2012 tax form Authority for Disallowance of Tax Benefits The IRS has published guidance concluding that the claimed tax benefits of various abusive tax shelters should be disallowed. 1040x 2012 tax form The guidance is the conclusion of the IRS on how the law is applied to a particular set of facts. 1040x 2012 tax form Guidance is published in the Internal Revenue Bulletin for taxpayers' information and also for use by IRS officials. 1040x 2012 tax form So, if your return is examined and an abusive tax shelter is identified and challenged, published guidance dealing with that type of shelter, which disallows certain claimed tax shelter benefits, could serve as the basis for the examining official's challenge of the tax benefits you claimed. 1040x 2012 tax form In such a case, the examiner will not compromise even if you or your representative believes you have authority for the positions taken on your tax return. 1040x 2012 tax form The courts have generally been unsympathetic to taxpayers involved in abusive tax shelter schemes and have ruled in favor of the IRS in the majority of the cases in which these shelters have been challenged. 1040x 2012 tax form Investor Reporting You may be required to file a reportable transaction disclosure statement. 1040x 2012 tax form Reportable Transaction Disclosure Statement Use Form 8886 to disclose information for each reportable transaction (discussed later) in which you participated. 1040x 2012 tax form Generally, you must attach Form 8886 to your return for each tax year in which you participated in the transaction. 1040x 2012 tax form Under certain circumstances, a transaction must be disclosed within 90 days of the transaction being identified as a listed transaction or a transaction of interest (discussed later). 1040x 2012 tax form In addition, for the first year Form 8886 is attached to your return, you must send a copy of the form to: Internal Revenue Service OTSA Mail Stop 4915 1973 North Rulon White Blvd. 1040x 2012 tax form  Ogden, UT 84404 If you file your return electronically, the copy sent to OTSA must show exactly the same information, word for word, provided with the electronically filed return and it must be provided on the official IRS Form 8886 or an exact copy of the form. 1040x 2012 tax form If you use a computer-generated or substitute Form 8886, it must be an exact copy of the official IRS form. 1040x 2012 tax form If you fail to file Form 8886 as required or fail to include any required information on the form, you may have to pay a penalty. 1040x 2012 tax form See Penalty for failure to disclose a reportable transaction , later under Penalties. 1040x 2012 tax form The following discussion briefly describes reportable transactions. 1040x 2012 tax form For more details, see the Instructions for Form 8886. 1040x 2012 tax form Reportable transaction. 1040x 2012 tax form   A reportable transaction is any of the following. 1040x 2012 tax form A listed transaction. 1040x 2012 tax form A confidential transaction. 1040x 2012 tax form A transaction with contractual protection. 1040x 2012 tax form A loss transaction. 1040x 2012 tax form A transaction of interest entered into after November 1, 2006. 1040x 2012 tax form Note. 1040x 2012 tax form Transactions with a brief asset holding period were removed from the definition of reportable transaction for transactions entered into after August 2, 2007. 1040x 2012 tax form Listed transaction. 1040x 2012 tax form   A listed transaction is the same as, or substantially similar to, one of the types of transactions the IRS has determined to be a tax-avoidance transaction. 1040x 2012 tax form These transactions have been identified in notices, regulations, and other published guidance issued by the IRS. 1040x 2012 tax form For a list of existing guidance, see Notice 2009-59 in Internal Revenue Bulletin 2009-31, available at www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/irb/2009-31_IRB/ar07. 1040x 2012 tax form html. 1040x 2012 tax form Confidential transaction. 1040x 2012 tax form   A confidential transaction is offered to you under conditions of confidentiality and for which you have paid an advisor a minimum fee. 1040x 2012 tax form A transaction is offered under conditions of confidentiality if the advisor who is paid the fee places a limit on your disclosure of the tax treatment or tax structure of the transaction and the limit protects the confidentiality of the advisor's tax strategies. 1040x 2012 tax form The transaction is treated as confidential even if the conditions of confidentiality are not legally binding on you. 1040x 2012 tax form Transaction with contractual protection. 1040x 2012 tax form   Generally, a transaction with contractual protection is one in which you or a related party has the right to a full or partial refund of fees if all or part of the intended tax consequences of the transaction are not sustained, or a transaction for which the fees are contingent on your realizing the tax benefits from the transaction. 1040x 2012 tax form For information on exceptions, see Revenue Procedure 2007-20 in Internal Revenue Bulletin 2007-7, available at www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/irb/2007-07_IRB/ar15. 1040x 2012 tax form html. 1040x 2012 tax form Loss transaction. 1040x 2012 tax form   For individuals, a loss transaction is one that results in a deductible loss if the gross amount of the loss is at least $2 million in a single tax year or $4 million in any combination of tax years. 1040x 2012 tax form A loss from a foreign currency transaction under Internal Revenue Code section 988 is a loss transaction if the gross amount of the loss is at least $50,000 in a single tax year, whether or not the loss flows through from an S corporation or partnership. 1040x 2012 tax form   Certain losses (such as losses from casualties, thefts, and condemnations) are excepted from this category and do not have to be reported on Form 8886. 1040x 2012 tax form For information on other exceptions, see Revenue Procedure 2004-66 in Internal Revenue Bulletin 2004-50, as modified and superseded by Revenue Procedure 2013-11, (or future published guidance) available at www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/irb/2004-50_IRB/ar11. 1040x 2012 tax form html. 1040x 2012 tax form Transaction of interest. 1040x 2012 tax form   A transaction of interest is a transaction entered into after November 1, 2006, that is the same as, or substantially similar to, one of the types of transactions that the IRS has identified by notice, regulation, or other form of published guidance as a transaction of interest. 1040x 2012 tax form The IRS has identified the following transactions of interest. 1040x 2012 tax form “Toggling” grantor trusts as described in Notice 2007-73, 2007-36 I. 1040x 2012 tax form R. 1040x 2012 tax form B. 1040x 2012 tax form 545, available at www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/irb/2007-36_IRB/ar20. 1040x 2012 tax form html. 1040x 2012 tax form Certain transactions involving contributions of a successor member interest in a limited liability company as described in Notice 2007-72, 2007-36 I. 1040x 2012 tax form R. 1040x 2012 tax form B. 1040x 2012 tax form 544, available at www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/irb/2007-36_IRB/ar19. 1040x 2012 tax form html. 1040x 2012 tax form Certain transactions involving the sale or other disposition of all interests in a charitable remainder trust and claiming little or no taxable gain as described in Notice 2008-99, 2008-47 I. 1040x 2012 tax form R. 1040x 2012 tax form B. 1040x 2012 tax form 1194, available at www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/irb/2008-47_IRB/ar11. 1040x 2012 tax form html. 1040x 2012 tax form Certain transactions involving a U. 1040x 2012 tax form S. 1040x 2012 tax form taxpayer owning controlled foreign corporations (CFCs) that hold stock of a lower-tier CFC through a domestic partnership to avoid reporting income as described in Notice 2009-7, 2009-3 I. 1040x 2012 tax form R. 1040x 2012 tax form B. 1040x 2012 tax form 312, available at www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/irb/2009-03_IRB/ar10. 1040x 2012 tax form html. 1040x 2012 tax form   For updates to this list, go to www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/Businesses/Corporations/Abusive-Tax-Shelters-and-Transactions. 1040x 2012 tax form Penalties Investing in an abusive tax shelter may lead to substantial expenses. 1040x 2012 tax form First, the promoter generally charges a substantial fee. 1040x 2012 tax form If your return is examined by the IRS and a tax deficiency is determined, you will be faced with payment of more tax, interest on the underpayment, possibly a 20%, 30%, or even 40% accuracy-related penalty, or a 75% civil fraud penalty. 1040x 2012 tax form You may also be subject to the penalty for failure to pay tax. 1040x 2012 tax form These penalties are explained in the following paragraphs. 1040x 2012 tax form Accuracy-related penalties. 1040x 2012 tax form   An accuracy-related penalty of 20% can be imposed for underpayments of tax due to: Negligence or disregard of rules or regulations, Substantial understatement of tax, Substantial valuation misstatement (increased to 40% for gross valuation misstatement), Transaction lacking economic substance (increased to 40% for undisclosed transaction lacking economic substance), or Undisclosed foreign financial asset understatement (40% in all cases). 1040x 2012 tax form Except for a transaction lacking economic substance, this penalty will not be imposed if you can show you had reasonable cause for any understatement of tax and that you acted in good faith. 1040x 2012 tax form Your failure to disclose a reportable transaction is a strong indication that you failed to act in good faith. 1040x 2012 tax form   If you are charged an accuracy-related penalty, interest will be imposed on the amount of the penalty from the due date of the return (including extensions) to the date you pay the penalty. 1040x 2012 tax form   The 20% penalties do not apply to any underpayment attributable to a reportable transaction understatement subject to an accuracy-related penalty (discussed later). 1040x 2012 tax form Negligence or disregard of rules or regulations. 1040x 2012 tax form   The penalty for negligence or disregard of rules or regulations is imposed only on the part of the underpayment due to negligence or disregard of rules or regulations. 1040x 2012 tax form The penalty will not be charged if you can show you had reasonable cause for understating your tax and that you acted in good faith. 1040x 2012 tax form    Negligence includes any failure to make a reasonable attempt to comply with the provisions of the Internal Revenue Code. 1040x 2012 tax form It also includes any failure to keep adequate books and records. 1040x 2012 tax form A return position that has a reasonable basis is not negligence. 1040x 2012 tax form   Disregard includes any careless, reckless, or intentional disregard of rules or regulations. 1040x 2012 tax form   The penalty for disregard of rules and regulations can be avoided if all the following are true. 1040x 2012 tax form You keep adequate books and records. 1040x 2012 tax form You have a reasonable basis for your position on the tax issue. 1040x 2012 tax form You make an adequate disclosure of your position. 1040x 2012 tax form Use Form 8275 to make your disclosure and attach it to your return. 1040x 2012 tax form To disclose a position contrary to a regulation, use Form 8275-R. 1040x 2012 tax form Use Form 8886 to disclose a reportable transaction (discussed earlier). 1040x 2012 tax form Substantial understatement of tax. 1040x 2012 tax form   An understatement is considered to be substantial if it is more than the greater of: 10% of the tax required to be shown on the return, or $5,000. 1040x 2012 tax form An “understatement” is the amount of tax required to be shown on your return for a tax year minus the amount of tax shown on the return, reduced by any rebates. 1040x 2012 tax form The term “rebate” generally means a decrease in the tax shown on your original return as the result of your filing an amended return or claim for refund. 1040x 2012 tax form   For items other than tax shelters, you can file Form 8275 or Form 8275-R to disclose items that could cause a substantial understatement of income tax. 1040x 2012 tax form In that way, you can avoid the substantial understatement penalty if you have a reasonable basis for your position on the tax issue. 1040x 2012 tax form Disclosure of the tax shelter item on a tax return does not reduce the amount of the understatement. 1040x 2012 tax form   Also, the understatement penalty will not be imposed if you can show there was reasonable cause for the underpayment caused by the understatement and that you acted in good faith. 1040x 2012 tax form An important factor in establishing reasonable cause and good faith will be the extent of your effort to determine your proper tax liability under the law. 1040x 2012 tax form Substantial valuation misstatement. 1040x 2012 tax form   In general, you are liable for a 20% penalty for a substantial valuation misstatement if all the following are true. 1040x 2012 tax form The value or adjusted basis of any property claimed on the return is 150% or more of the correct amount. 1040x 2012 tax form You underpaid your tax by more than $5,000 because of the misstatement. 1040x 2012 tax form You cannot establish that you had reasonable cause for the underpayment and that you acted in good faith. 1040x 2012 tax form   You may be assessed a penalty of 40% for a gross valuation misstatement. 1040x 2012 tax form If you misstate the value or the adjusted basis of property by 200% or more of the amount determined to be correct, you will be assessed a penalty of 40%, instead of 20%, of the amount you underpaid because of the gross valuation misstatement. 1040x 2012 tax form The penalty rate is also 40% if the property's correct value or adjusted basis is zero. 1040x 2012 tax form Transaction lacking economic substance. 1040x 2012 tax form   The economic substance doctrine only applies to an individual that entered into a transaction in connection with a trade or business or an activity engaged in for the production of income. 1040x 2012 tax form For transactions entered into after March 30, 2010, a transaction has economic substance for you as an individual taxpayer only if: The transaction changes your economic position in a meaningful way (apart from federal income tax effects), or You have a substantial purpose (apart from federal income tax effects) for entering into the transaction. 1040x 2012 tax form   For purposes of determining whether economic substance exists, a transaction's profit potential will only be taken into account if the present value of the reasonably expected pre-tax profit from the transaction is substantial compared to the present value of the expected net tax benefits that would be allowed if the transaction were respected. 1040x 2012 tax form   If any part of your underpayment is due to any disallowance of claimed tax benefits by reason of a transaction lacking economic substance or failing to meet the requirements of any similar rule of law, that part of your underpayment will be subject to the 20% accuracy-related penalty even if you had a reasonable cause and acted in good faith concerning that part. 1040x 2012 tax form   Additionally, the penalty increases to 40% if you do not adequately disclose on your return or in a statement attached to your return the relevant facts affecting the tax treatment of a transaction that lacks economic substance. 1040x 2012 tax form Relevant facts include any facts affecting the tax treatment of the transaction. 1040x 2012 tax form    Any excessive amount of an erroneous claim for an income tax refund or credit (other than a refund or credit related to the earned income credit) that results from a transaction found to be lacking economic substance will not be treated as having a reasonable basis and could be subject to a 20% penalty. 1040x 2012 tax form Undisclosed foreign financial asset understatement. 1040x 2012 tax form   For tax years beginning after March 18, 2010, you may be liable for a 40% penalty for an understatement of your tax liability due to an undisclosed foreign financial asset. 1040x 2012 tax form An undisclosed foreign financial asset is any asset for which an information return, required to be provided under Internal Revenue Code section 6038, 6038B, 6038D, 6046A, or 6048 for any taxable year, is not provided. 1040x 2012 tax form The penalty applies to any part of an underpayment related to the following undisclosed foreign financial assets. 1040x 2012 tax form Any foreign business you control, reportable on Form 5471, Information Return of U. 1040x 2012 tax form S. 1040x 2012 tax form Persons With Respect To Certain Foreign Corporations, or Form 8865, Return of U. 1040x 2012 tax form S. 1040x 2012 tax form Persons With Respect to Certain Foreign Partnerships. 1040x 2012 tax form Certain transfers of property to a foreign corporation or partnership, reportable on Form 926, Return by a U. 1040x 2012 tax form S. 1040x 2012 tax form Transferor of Property to a Foreign Corporation, or certain distributions to a foreign person, reportable on Form 8865. 1040x 2012 tax form Your ownership interest in certain foreign financial assets, temporarily reportable on Form 8275 or 8275-R. 1040x 2012 tax form    Instead of, or in addition to, Form 8275 or 8275-R, you may have to file Form 8938, Statement of Specified Foreign Financial Assets, with your tax return. 1040x 2012 tax form See the Instructions for Form 8938 for details. 1040x 2012 tax form    Your acquisition, disposition, or substantial change in ownership interest in a foreign partnership, reportable on Form 8865. 1040x 2012 tax form Creation or transfer of money or property to certain foreign trusts, reportable on Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. 1040x 2012 tax form Penalty for incorrect appraisals. 1040x 2012 tax form   The person who prepares an appraisal of the value of property may have to pay a penalty if: He or she knows, or reasonably should have known, that the appraisal would be used in connection with a return or claim for refund; and The claimed value of the property on a return or claim for refund based on that appraisal results in a substantial valuation misstatement or a gross valuation misstatement as discussed earlier. 1040x 2012 tax form For details on the penalty amount and exceptions, see Publication 561. 1040x 2012 tax form Penalty for failure to disclose a reportable transaction. 1040x 2012 tax form   If you fail to include any required information regarding a reportable transaction (discussed earlier) on a return or statement, you may have to pay a penalty of 75% of the decrease in tax shown on your return as a result of such transaction (or that would have resulted if the transaction were respected for federal tax purposes). 1040x 2012 tax form For an individual, the minimum penalty is $5,000 and the maximum is $10,000 (or $100,000 for a listed transaction). 1040x 2012 tax form This penalty is in addition to any other penalty that may be imposed. 1040x 2012 tax form   The IRS may rescind or abate the penalty for failing to disclose a reportable transaction under certain limited circumstances but cannot rescind the penalty for failing to disclose a listed transaction. 1040x 2012 tax form For information on rescission, see Revenue Procedure 2007-21 in Internal Revenue Bulletin 2007-9 available at www. 1040x 2012 tax form irs. 1040x 2012 tax form gov/irb/2007-09_IRB/ar12. 1040x 2012 tax form html. 1040x 2012 tax form Accuracy-related penalty for a reportable transaction understatement. 1040x 2012 tax form   If you have a reportable transaction understatement, you may have to pay a penalty equal to 20% of the amount of that understatement. 1040x 2012 tax form This applies to any item due to a listed transaction or other reportable transaction with a significant purpose of avoiding or evading federal income tax. 1040x 2012 tax form The penalty is 30% rather than 20% for the part of any reportable transaction understatement if the transaction was not properly disclosed. 1040x 2012 tax form You may not have to pay the 20% penalty if you meet the strengthened reasonable cause and good faith exception. 1040x 2012 tax form The reasonable cause and good faith exception does not apply to any part of a reportable transaction understatement attributable to one or more transactions that lack economic substance. 1040x 2012 tax form   This penalty does not apply to the part of an understatement on which the fraud penalty, gross valuation misstatement penalty, or penalty for nondisclosure of noneconomic substance transactions is imposed. 1040x 2012 tax form Civil fraud penalty. 1040x 2012 tax form   If any underpayment of tax on your return is due to fraud, a penalty of 75% of the underpayment will be added to your tax. 1040x 2012 tax form Joint return. 1040x 2012 tax form   The fraud penalty on a joint return applies to a spouse only if some part of the underpayment is due to the fraud of that spouse. 1040x 2012 tax form Failure to pay tax. 1040x 2012 tax form   If a deficiency is assessed and is not paid within 10 days of the demand for payment, an investor can be penalized with up to a 25% addition to tax if the failure to pay continues. 1040x 2012 tax form Whether To Invest In light of the adverse tax consequences and the substantial amount of penalties and interest that will result if the claimed tax benefits are disallowed, you should consider tax shelter investments carefully and seek competent legal and financial advice. 1040x 2012 tax form Prev  Up  Next   Home   More Online Publications