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Amend My 2011 Taxes

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Amend My 2011 Taxes

Amend my 2011 taxes 2. Amend my 2011 taxes   Ordinary or Capital Gain or Loss Table of Contents IntroductionSection 1231 transactions. Amend my 2011 taxes Topics - This chapter discusses: Useful Items - You may want to see: Capital Assets Noncapital AssetsCommodities derivative dealer. Amend my 2011 taxes Sales and Exchanges Between Related PersonsGain Is Ordinary Income Nondeductible Loss Other DispositionsSale of a Business Dispositions of Intangible Property Subdivision of Land Timber Precious Metals and Stones, Stamps, and Coins Coal and Iron Ore Conversion Transactions Introduction You must classify your gains and losses as either ordinary or capital (and your capital gains or losses as either short-term or long-term). Amend my 2011 taxes You must do this to figure your net capital gain or loss. Amend my 2011 taxes For individuals, a net capital gain may be taxed at a different tax rate than ordinary income. Amend my 2011 taxes See Capital Gains Tax Rates in chapter 4. Amend my 2011 taxes Your deduction for a net capital loss may be limited. Amend my 2011 taxes See Treatment of Capital Losses in chapter 4. Amend my 2011 taxes Capital gain or loss. Amend my 2011 taxes   Generally, you will have a capital gain or loss if you sell or exchange a capital asset. Amend my 2011 taxes You also may have a capital gain if your section 1231 transactions result in a net gain. Amend my 2011 taxes Section 1231 transactions. Amend my 2011 taxes   Section 1231 transactions are sales and exchanges of property held longer than 1 year and either used in a trade or business or held for the production of rents or royalties. Amend my 2011 taxes They also include certain involuntary conversions of business or investment property, including capital assets. Amend my 2011 taxes See Section 1231 Gains and Losses in chapter 3 for more information. Amend my 2011 taxes Topics - This chapter discusses: Capital assets Noncapital assets Sales and exchanges between  related persons Other dispositions Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 4797 Sales of Business Property 8594 Asset Acquisition Statement Under Section 1060 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. Amend my 2011 taxes Capital Assets Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. Amend my 2011 taxes For exceptions, see Noncapital Assets, later. Amend my 2011 taxes The following items are examples of capital assets. Amend my 2011 taxes Stocks and bonds. Amend my 2011 taxes A home owned and occupied by you and your family. Amend my 2011 taxes Timber grown on your home property or investment property, even if you make casual sales of the timber. Amend my 2011 taxes Household furnishings. Amend my 2011 taxes A car used for pleasure or commuting. Amend my 2011 taxes Coin or stamp collections. Amend my 2011 taxes Gems and jewelry. Amend my 2011 taxes Gold, silver, and other metals. Amend my 2011 taxes Personal-use property. Amend my 2011 taxes   Generally, property held for personal use is a capital asset. Amend my 2011 taxes Gain from a sale or exchange of that property is a capital gain. Amend my 2011 taxes Loss from the sale or exchange of that property is not deductible. Amend my 2011 taxes You can deduct a loss relating to personal-use property only if it results from a casualty or theft. Amend my 2011 taxes Investment property. Amend my 2011 taxes   Investment property (such as stocks and bonds) is a capital asset, and a gain or loss from its sale or exchange is a capital gain or loss. Amend my 2011 taxes This treatment does not apply to property used to produce rental income. Amend my 2011 taxes See Business assets, later, under Noncapital Assets. Amend my 2011 taxes Release of restriction on land. Amend my 2011 taxes   Amounts you receive for the release of a restrictive covenant in a deed to land are treated as proceeds from the sale of a capital asset. Amend my 2011 taxes Noncapital Assets A noncapital asset is property that is not a capital asset. Amend my 2011 taxes The following kinds of property are not capital assets. Amend my 2011 taxes Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business. Amend my 2011 taxes Inventories are discussed in Publication 538, Accounting Periods and Methods. Amend my 2011 taxes But, see the Tip below. Amend my 2011 taxes Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of any properties described in (1), above. Amend my 2011 taxes Depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later), even if the property is fully depreciated (or amortized). Amend my 2011 taxes Sales of this type of property are discussed in chapter 3. Amend my 2011 taxes Real property used in your trade or business or as rental property, even if the property is fully depreciated. Amend my 2011 taxes A copyright; a literary, musical, or artistic composition; a letter; a memorandum; or similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs): Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Received from a person who created the property or for whom the property was prepared under circumstances (for example, by gift) entitling you to the basis of the person who created the property, or for whom it was prepared or produced. Amend my 2011 taxes But, see the Tip below. Amend my 2011 taxes U. Amend my 2011 taxes S. Amend my 2011 taxes Government publications you got from the government for free or for less than the normal sales price or that you acquired under circumstances entitling you to the basis of someone who got the publications for free or for less than the normal sales price. Amend my 2011 taxes Any commodities derivative financial instrument (discussed later) held by a commodities derivatives dealer unless it meets both of the following requirements. Amend my 2011 taxes It is established to the satisfaction of the IRS that the instrument has no connection to the activities of the dealer as a dealer. Amend my 2011 taxes The instrument is clearly identified in the dealer's records as meeting (a) by the end of the day on which it was acquired, originated, or entered into. Amend my 2011 taxes Any hedging transaction (defined later) that is clearly identified as a hedging transaction by the end of the day on which it was acquired, originated, or entered into. Amend my 2011 taxes Supplies of a type you regularly use or consume in the ordinary course of your trade or business. Amend my 2011 taxes You can elect to treat as capital assets certain self-created musical compositions or copyrights you sold or exchanged. Amend my 2011 taxes See chapter 4 of Publication 550 for details. Amend my 2011 taxes Property held mainly for sale to customers. Amend my 2011 taxes   Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business are not capital assets. Amend my 2011 taxes Inventories are discussed in Publication 538. Amend my 2011 taxes Business assets. Amend my 2011 taxes   Real property and depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later under Dispositions of Intangible Property) are not capital assets. Amend my 2011 taxes The sale or disposition of business property is discussed in chapter 3. Amend my 2011 taxes Letters and memoranda. Amend my 2011 taxes   Letters, memoranda, and similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs) are not treated as capital assets (as discussed earlier) if your personal efforts created them or if they were prepared or produced for you. Amend my 2011 taxes Nor is this property a capital asset if your basis in it is determined by reference to the person who created it or the person for whom it was prepared. Amend my 2011 taxes For this purpose, letters and memoranda addressed to you are considered prepared for you. Amend my 2011 taxes If letters or memoranda are prepared by persons under your administrative control, they are considered prepared for you whether or not you review them. Amend my 2011 taxes Commodities derivative financial instrument. Amend my 2011 taxes   A commodities derivative financial instrument is a commodities contract or other financial instrument for commodities (other than a share of corporate stock, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract) the value or settlement price of which is calculated or determined by reference to a specified index (as defined in section 1221(b) of the Internal Revenue Code). Amend my 2011 taxes Commodities derivative dealer. Amend my 2011 taxes   A commodities derivative dealer is a person who regularly offers to enter into, assume, offset, assign, or terminate positions in commodities derivative financial instruments with customers in the ordinary course of a trade or business. Amend my 2011 taxes Hedging transaction. Amend my 2011 taxes   A hedging transaction is any transaction you enter into in the normal course of your trade or business primarily to manage any of the following. Amend my 2011 taxes Risk of price changes or currency fluctuations involving ordinary property you hold or will hold. Amend my 2011 taxes Risk of interest rate or price changes or currency fluctuations for borrowings you make or will make, or ordinary obligations you incur or will incur. Amend my 2011 taxes Sales and Exchanges Between Related Persons This section discusses the rules that may apply to the sale or exchange of property between related persons. Amend my 2011 taxes If these rules apply, gains may be treated as ordinary income and losses may not be deductible. Amend my 2011 taxes See Transfers to Spouse in chapter 1 for rules that apply to spouses. Amend my 2011 taxes Gain Is Ordinary Income If a gain is recognized on the sale or exchange of property to a related person, the gain may be ordinary income even if the property is a capital asset. Amend my 2011 taxes It is ordinary income if the sale or exchange is a depreciable property transaction or a controlled partnership transaction. Amend my 2011 taxes Depreciable property transaction. Amend my 2011 taxes   Gain on the sale or exchange of property, including a leasehold or a patent application, that is depreciable property in the hands of the person who receives it is ordinary income if the transaction is either directly or indirectly between any of the following pairs of entities. Amend my 2011 taxes A person and the person's controlled entity or entities. Amend my 2011 taxes A taxpayer and any trust in which the taxpayer (or his or her spouse) is a beneficiary unless the beneficiary's interest in the trust is a remote contingent interest; that is, the value of the interest computed actuarially is 5% or less of the value of the trust property. Amend my 2011 taxes An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest (a bequest for a sum of money). Amend my 2011 taxes An employer (or any person related to the employer under rules (1), (2), or (3)) and a welfare benefit fund (within the meaning of section 419(e) of the Internal Revenue Code) that is controlled directly or indirectly by the employer (or any person related to the employer). Amend my 2011 taxes Controlled entity. Amend my 2011 taxes   A person's controlled entity is either of the following. Amend my 2011 taxes A corporation in which more than 50% of the value of all outstanding stock, or a partnership in which more than 50% of the capital interest or profits interest, is directly or indirectly owned by or for that person. Amend my 2011 taxes An entity whose relationship with that person is one of the following. Amend my 2011 taxes A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest or profits interest in the partnership. Amend my 2011 taxes Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 50%” is substituted for “at least 80%” in that definition. Amend my 2011 taxes Two S corporations, if the same persons own more than 50% in value of the outstanding stock of each corporation. Amend my 2011 taxes Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Amend my 2011 taxes Controlled partnership transaction. Amend my 2011 taxes   A gain recognized in a controlled partnership transaction may be ordinary income. Amend my 2011 taxes The gain is ordinary income if it results from the sale or exchange of property that, in the hands of the party who receives it, is a noncapital asset such as trade accounts receivable, inventory, stock in trade, or depreciable or real property used in a trade or business. Amend my 2011 taxes   A controlled partnership transaction is a transaction directly or indirectly between either of the following pairs of entities. Amend my 2011 taxes A partnership and a person who directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. Amend my 2011 taxes Two partnerships, if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. Amend my 2011 taxes Determining ownership. Amend my 2011 taxes   In the transactions under Depreciable property transaction and Controlled partnership transaction, earlier, use the following rules to determine the ownership of stock or a partnership interest. Amend my 2011 taxes Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Amend my 2011 taxes (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. Amend my 2011 taxes ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. Amend my 2011 taxes Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. Amend my 2011 taxes For purposes of applying (1) or (2), above, stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. Amend my 2011 taxes But stock or a partnership interest constructively owned by an individual under (2) is not treated as owned by the individual for reapplying (2) to make another person the constructive owner of that stock or partnership interest. Amend my 2011 taxes Nondeductible Loss A loss on the sale or exchange of property between related persons is not deductible. Amend my 2011 taxes This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. Amend my 2011 taxes For the list of related persons, see Related persons next. Amend my 2011 taxes If a sale or exchange is between any of these related persons and involves the lump-sum sale of a number of blocks of stock or pieces of property, the gain or loss must be figured separately for each block of stock or piece of property. Amend my 2011 taxes The gain on each item is taxable. Amend my 2011 taxes The loss on any item is nondeductible. Amend my 2011 taxes Gains from the sales of any of these items may not be offset by losses on the sales of any of the other items. Amend my 2011 taxes Related persons. Amend my 2011 taxes   The following is a list of related persons. Amend my 2011 taxes Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Amend my 2011 taxes ), and lineal descendants (children, grandchildren, etc. Amend my 2011 taxes ). Amend my 2011 taxes An individual and a corporation if the individual directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. Amend my 2011 taxes Two corporations that are members of the same controlled group as defined in section 267(f) of the Internal Revenue Code. Amend my 2011 taxes A trust fiduciary and a corporation if the trust or the grantor of the trust directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. Amend my 2011 taxes A grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Amend my 2011 taxes Fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. Amend my 2011 taxes A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization, or a member of that person's family. Amend my 2011 taxes A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest or profits interest in the partnership. Amend my 2011 taxes Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. Amend my 2011 taxes Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Amend my 2011 taxes An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest. Amend my 2011 taxes Two partnerships if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. Amend my 2011 taxes A person and a partnership if the person directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. Amend my 2011 taxes Partnership interests. Amend my 2011 taxes   The nondeductible loss rule does not apply to a sale or exchange of an interest in the partnership between the related persons described in (12) or (13) above. Amend my 2011 taxes Controlled groups. Amend my 2011 taxes   Losses on transactions between members of the same controlled group described in (3) earlier are deferred rather than denied. Amend my 2011 taxes   For more information, see section 267(f) of the Internal Revenue Code. Amend my 2011 taxes Ownership of stock or partnership interests. Amend my 2011 taxes   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation or an interest in a partnership for a loss on a sale or exchange, the following rules apply. Amend my 2011 taxes Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Amend my 2011 taxes (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. Amend my 2011 taxes ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. Amend my 2011 taxes Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. Amend my 2011 taxes An individual owning (other than by applying (2)) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Amend my 2011 taxes For purposes of applying (1), (2), or (3), stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. Amend my 2011 taxes But stock or a partnership interest constructively owned by an individual under (2) or (3) is not treated as owned by the individual for reapplying either (2) or (3) to make another person the constructive owner of that stock or partnership interest. Amend my 2011 taxes Indirect transactions. Amend my 2011 taxes   You cannot deduct your loss on the sale of stock through your broker if under a prearranged plan a related person or entity buys the same stock you had owned. Amend my 2011 taxes This does not apply to a cross-trade between related parties through an exchange that is purely coincidental and is not prearranged. Amend my 2011 taxes Property received from a related person. Amend my 2011 taxes   If, in a purchase or exchange, you received property from a related person who had a loss that was not allowable and you later sell or exchange the property at a gain, you recognize the gain only to the extent it is more than the loss previously disallowed to the related person. Amend my 2011 taxes This rule applies only to the original transferee. Amend my 2011 taxes Example 1. Amend my 2011 taxes Your brother sold stock to you for $7,600. Amend my 2011 taxes His cost basis was $10,000. Amend my 2011 taxes His loss of $2,400 was not deductible. Amend my 2011 taxes You later sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900 ($10,500 − $7,600). Amend my 2011 taxes Your recognized gain is only $500, the gain that is more than the $2,400 loss not allowed to your brother. Amend my 2011 taxes Example 2. Amend my 2011 taxes Assume the same facts as in Example 1, except that you sell the stock for $6,900 instead of $10,500. Amend my 2011 taxes Your recognized loss is only $700 ($7,600 − $6,900). Amend my 2011 taxes You cannot deduct the loss not allowed to your brother. Amend my 2011 taxes Other Dispositions This section discusses rules for determining the treatment of gain or loss from various dispositions of property. Amend my 2011 taxes Sale of a Business The sale of a business usually is not a sale of one asset. Amend my 2011 taxes Instead, all the assets of the business are sold. Amend my 2011 taxes Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. Amend my 2011 taxes A business usually has many assets. Amend my 2011 taxes When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade. Amend my 2011 taxes The gain or loss on each asset is figured separately. Amend my 2011 taxes The sale of capital assets results in capital gain or loss. Amend my 2011 taxes The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction (discussed in chapter 3). Amend my 2011 taxes The sale of inventory results in ordinary income or loss. Amend my 2011 taxes Partnership interests. Amend my 2011 taxes   An interest in a partnership or joint venture is treated as a capital asset when sold. Amend my 2011 taxes The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary gain or loss. Amend my 2011 taxes For more information, see Disposition of Partner's Interest in Publication 541. Amend my 2011 taxes Corporation interests. Amend my 2011 taxes   Your interest in a corporation is represented by stock certificates. Amend my 2011 taxes When you sell these certificates, you usually realize capital gain or loss. Amend my 2011 taxes For information on the sale of stock, see chapter 4 in Publication 550. Amend my 2011 taxes Corporate liquidations. Amend my 2011 taxes   Corporate liquidations of property generally are treated as a sale or exchange. Amend my 2011 taxes Gain or loss generally is recognized by the corporation on a liquidating sale of its assets. Amend my 2011 taxes Gain or loss generally is recognized also on a liquidating distribution of assets as if the corporation sold the assets to the distributee at fair market value. Amend my 2011 taxes   In certain cases in which the distributee is a corporation in control of the distributing corporation, the distribution may not be taxable. Amend my 2011 taxes For more information, see section 332 of the Internal Revenue Code and the related regulations. Amend my 2011 taxes Allocation of consideration paid for a business. Amend my 2011 taxes   The sale of a trade or business for a lump sum is considered a sale of each individual asset rather than of a single asset. Amend my 2011 taxes Except for assets exchanged under any nontaxable exchange rules, both the buyer and seller of a business must use the residual method (explained later) to allocate the consideration to each business asset transferred. Amend my 2011 taxes This method determines gain or loss from the transfer of each asset and how much of the consideration is for goodwill and certain other intangible property. Amend my 2011 taxes It also determines the buyer's basis in the business assets. Amend my 2011 taxes Consideration. Amend my 2011 taxes   The buyer's consideration is the cost of the assets acquired. Amend my 2011 taxes The seller's consideration is the amount realized (money plus the fair market value of property received) from the sale of assets. Amend my 2011 taxes Residual method. Amend my 2011 taxes   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. Amend my 2011 taxes This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b) of the Internal Revenue Code. Amend my 2011 taxes Section 743(b) applies if a partnership has an election in effect under section 754 of the Internal Revenue Code. Amend my 2011 taxes   A group of assets constitutes a trade or business if either of the following applies. Amend my 2011 taxes Goodwill or going concern value could, under any circumstances, attach to them. Amend my 2011 taxes The use of the assets would constitute an active trade or business under section 355 of the Internal Revenue Code. Amend my 2011 taxes   The residual method provides for the consideration to be reduced first by the amount of Class I assets (defined below). Amend my 2011 taxes The consideration remaining after this reduction must be allocated among the various business assets in a certain order. Amend my 2011 taxes See Classes of assets next for the complete order. Amend my 2011 taxes Classes of assets. Amend my 2011 taxes   The following definitions are the classifications for deemed or actual asset acquisitions. Amend my 2011 taxes Allocate the consideration among the assets in the following order. Amend my 2011 taxes The amount allocated to an asset, other than a Class VII asset, cannot exceed its fair market value on the purchase date. Amend my 2011 taxes The amount you can allocate to an asset also is subject to any applicable limits under the Internal Revenue Code or general principles of tax law. Amend my 2011 taxes Class I assets are cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). Amend my 2011 taxes Class II assets are certificates of deposit, U. Amend my 2011 taxes S. Amend my 2011 taxes Government securities, foreign currency, and actively traded personal property, including stock and securities. Amend my 2011 taxes Class III assets are accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. Amend my 2011 taxes However, see section 1. Amend my 2011 taxes 338-6(b)(2)(iii) of the regulations for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. Amend my 2011 taxes Class IV assets are property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. Amend my 2011 taxes Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets. Amend my 2011 taxes    Note. Amend my 2011 taxes Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business are generally Class V assets. Amend my 2011 taxes Class VI assets are section 197 intangibles (other than goodwill and going concern value). Amend my 2011 taxes Class VII assets are goodwill and going concern value (whether the goodwill or going concern value qualifies as a section 197 intangible). Amend my 2011 taxes   If an asset described in one of the classifications described above can be included in more than one class, include it in the lower numbered class. Amend my 2011 taxes For example, if an asset is described in both Class II and Class IV, choose Class II. Amend my 2011 taxes Example. Amend my 2011 taxes The total paid in the sale of the assets of Company SKB is $21,000. Amend my 2011 taxes No cash or deposit accounts or similar accounts were sold. Amend my 2011 taxes The company's U. Amend my 2011 taxes S. Amend my 2011 taxes Government securities sold had a fair market value of $3,200. Amend my 2011 taxes The only other asset transferred (other than goodwill and going concern value) was inventory with a fair market value of $15,000. Amend my 2011 taxes Of the $21,000 paid for the assets of Company SKB, $3,200 is allocated to U. Amend my 2011 taxes S. Amend my 2011 taxes Government securities, $15,000 to inventory assets, and the remaining $2,800 to goodwill and going concern value. Amend my 2011 taxes Agreement. Amend my 2011 taxes   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. Amend my 2011 taxes This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. Amend my 2011 taxes Reporting requirement. Amend my 2011 taxes   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. Amend my 2011 taxes Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. Amend my 2011 taxes Generally, the buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. Amend my 2011 taxes See the Instructions for Form 8594. Amend my 2011 taxes Dispositions of Intangible Property Intangible property is any personal property that has value but cannot be seen or touched. Amend my 2011 taxes It includes such items as patents, copyrights, and the goodwill value of a business. Amend my 2011 taxes Gain or loss on the sale or exchange of amortizable or depreciable intangible property held longer than 1 year (other than an amount recaptured as ordinary income) is a section 1231 gain or loss. Amend my 2011 taxes The treatment of section 1231 gain or loss and the recapture of amortization and depreciation as ordinary income are explained in chapter 3. Amend my 2011 taxes See chapter 8 of Publication 535, Business Expenses, for information on amortizable intangible property and chapter 1 of Publication 946, How To Depreciate Property, for information on intangible property that can and cannot be depreciated. Amend my 2011 taxes Gain or loss on dispositions of other intangible property is ordinary or capital depending on whether the property is a capital asset or a noncapital asset. Amend my 2011 taxes The following discussions explain special rules that apply to certain dispositions of intangible property. Amend my 2011 taxes Section 197 Intangibles Section 197 intangibles are certain intangible assets acquired after August 10, 1993 (after July 25, 1991, if chosen), and held in connection with the conduct of a trade or business or an activity entered into for profit whose costs are amortized over 15 years. Amend my 2011 taxes They include the following assets. Amend my 2011 taxes Goodwill. Amend my 2011 taxes Going concern value. Amend my 2011 taxes Workforce in place. Amend my 2011 taxes Business books and records, operating systems, and other information bases. Amend my 2011 taxes Patents, copyrights, formulas, processes, designs, patterns, know how, formats, and similar items. Amend my 2011 taxes Customer-based intangibles. Amend my 2011 taxes Supplier-based intangibles. Amend my 2011 taxes Licenses, permits, and other rights granted by a governmental unit. Amend my 2011 taxes Covenants not to compete entered into in connection with the acquisition of a business. Amend my 2011 taxes Franchises, trademarks, and trade names. Amend my 2011 taxes See chapter 8 of Publication 535 for a description of each intangible. Amend my 2011 taxes Dispositions. Amend my 2011 taxes   You cannot deduct a loss from the disposition or worthlessness of a section 197 intangible you acquired in the same transaction (or series of related transactions) as another section 197 intangible you still hold. Amend my 2011 taxes Instead, you must increase the adjusted basis of your retained section 197 intangible by the nondeductible loss. Amend my 2011 taxes If you retain more than one section 197 intangible, increase each intangible's adjusted basis. Amend my 2011 taxes Figure the increase by multiplying the nondeductible loss by a fraction, the numerator (top number) of which is the retained intangible's adjusted basis on the date of the loss and the denominator (bottom number) of which is the total adjusted basis of all retained intangibles on the date of the loss. Amend my 2011 taxes   In applying this rule, members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity. Amend my 2011 taxes For example, a corporation cannot deduct a loss on the sale of a section 197 intangible if, after the sale, a member of the same controlled group retains other section 197 intangibles acquired in the same transaction as the intangible sold. Amend my 2011 taxes Covenant not to compete. Amend my 2011 taxes   A covenant not to compete (or similar arrangement) that is a section 197 intangible cannot be treated as disposed of or worthless before you have disposed of your entire interest in the trade or business for which the covenant was entered into. Amend my 2011 taxes Members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity in determining whether a member has disposed of its entire interest in a trade or business. Amend my 2011 taxes Anti-churning rules. Amend my 2011 taxes   Anti-churning rules prevent a taxpayer from converting section 197 intangibles that do not qualify for amortization into property that would qualify for amortization. Amend my 2011 taxes However, these rules do not apply to part of the basis of property acquired by certain related persons if the transferor elects to do both the following. Amend my 2011 taxes Recognize gain on the transfer of the property. Amend my 2011 taxes Pay income tax on the gain at the highest tax rate. Amend my 2011 taxes   If the transferor is a partnership or S corporation, the partnership or S corporation (not the partners or shareholders) can make the election. Amend my 2011 taxes But each partner or shareholder must pay the tax on his or her share of gain. Amend my 2011 taxes   To make the election, you, as the transferor, must attach a statement containing certain information to your income tax return for the year of the transfer. Amend my 2011 taxes You must file the tax return by the due date (including extensions). Amend my 2011 taxes You must also notify the transferee of the election in writing by the due date of the return. Amend my 2011 taxes   If you timely filed your return without making the election, you can make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). Amend my 2011 taxes Attach the statement to the amended return and write “Filed pursuant to section 301. Amend my 2011 taxes 9100-2” at the top of the statement. Amend my 2011 taxes File the amended return at the same address the original return was filed. Amend my 2011 taxes For more information about making the election, see Regulations section 1. Amend my 2011 taxes 197-2(h)(9). Amend my 2011 taxes For information about reporting the tax on your income tax return, see the Instructions for Form 4797. Amend my 2011 taxes Patents The transfer of a patent by an individual is treated as a sale or exchange of a capital asset held longer than 1 year. Amend my 2011 taxes This applies even if the payments for the patent are made periodically during the transferee's use or are contingent on the productivity, use, or disposition of the patent. Amend my 2011 taxes For information on the treatment of gain or loss on the transfer of capital assets, see chapter 4. Amend my 2011 taxes This treatment applies to your transfer of a patent if you meet all the following conditions. Amend my 2011 taxes You are the holder of the patent. Amend my 2011 taxes You transfer the patent other than by gift, inheritance, or devise. Amend my 2011 taxes You transfer all substantial rights to the patent or an undivided interest in all such rights. Amend my 2011 taxes You do not transfer the patent to a related person. Amend my 2011 taxes Holder. Amend my 2011 taxes   You are the holder of a patent if you are either of the following. Amend my 2011 taxes The individual whose effort created the patent property and who qualifies as the original and first inventor. Amend my 2011 taxes The individual who bought an interest in the patent from the inventor before the invention was tested and operated successfully under operating conditions and who is neither related to, nor the employer of, the inventor. Amend my 2011 taxes All substantial rights. Amend my 2011 taxes   All substantial rights to patent property are all rights that have value when they are transferred. Amend my 2011 taxes A security interest (such as a lien), or a reservation calling for forfeiture for nonperformance, is not treated as a substantial right for these rules and may be kept by you as the holder of the patent. Amend my 2011 taxes   All substantial rights to a patent are not transferred if any of the following apply to the transfer. Amend my 2011 taxes The rights are limited geographically within a country. Amend my 2011 taxes The rights are limited to a period less than the remaining life of the patent. Amend my 2011 taxes The rights are limited to fields of use within trades or industries and are less than all the rights that exist and have value at the time of the transfer. Amend my 2011 taxes The rights are less than all the claims or inventions covered by the patent that exist and have value at the time of the transfer. Amend my 2011 taxes Related persons. Amend my 2011 taxes   This tax treatment does not apply if the transfer is directly or indirectly between you and a related person as defined earlier in the list under Nondeductible Loss, with the following changes. Amend my 2011 taxes Members of your family include your spouse, ancestors, and lineal descendants, but not your brothers, sisters, half-brothers, or half-sisters. Amend my 2011 taxes Substitute “25% or more” ownership for “more than 50%. Amend my 2011 taxes ”   If you fit within the definition of a related person independent of family status, the brother-sister exception in (1), earlier, does not apply. Amend my 2011 taxes For example, a transfer between a brother and a sister as beneficiary and fiduciary of the same trust is a transfer between related persons. Amend my 2011 taxes The brother-sister exception does not apply because the trust relationship is independent of family status. Amend my 2011 taxes Franchise, Trademark, or Trade Name If you transfer or renew a franchise, trademark, or trade name for a price contingent on its productivity, use, or disposition, the amount you receive generally is treated as an amount realized from the sale of a noncapital asset. Amend my 2011 taxes A franchise includes an agreement that gives one of the parties the right to distribute, sell, or provide goods, services, or facilities within a specified area. Amend my 2011 taxes Significant power, right, or continuing interest. Amend my 2011 taxes   If you keep any significant power, right, or continuing interest in the subject matter of a franchise, trademark, or trade name that you transfer or renew, the amount you receive is ordinary royalty income rather than an amount realized from a sale or exchange. Amend my 2011 taxes   A significant power, right, or continuing interest in a franchise, trademark, or trade name includes, but is not limited to, the following rights in the transferred interest. Amend my 2011 taxes A right to disapprove any assignment of the interest, or any part of it. Amend my 2011 taxes A right to end the agreement at will. Amend my 2011 taxes A right to set standards of quality for products used or sold, or for services provided, and for the equipment and facilities used to promote such products or services. Amend my 2011 taxes A right to make the recipient sell or advertise only your products or services. Amend my 2011 taxes A right to make the recipient buy most supplies and equipment from you. Amend my 2011 taxes A right to receive payments based on the productivity, use, or disposition of the transferred item of interest if those payments are a substantial part of the transfer agreement. Amend my 2011 taxes Subdivision of Land If you own a tract of land and, to sell or exchange it, you subdivide it into individual lots or parcels, the gain normally is ordinary income. Amend my 2011 taxes However, you may receive capital gain treatment on at least part of the proceeds provided you meet certain requirements. Amend my 2011 taxes See section 1237 of the Internal Revenue Code. Amend my 2011 taxes Timber Standing timber held as investment property is a capital asset. Amend my 2011 taxes Gain or loss from its sale is reported as a capital gain or loss on Form 8949, and Schedule D (Form 1040), as applicable. Amend my 2011 taxes If you held the timber primarily for sale to customers, it is not a capital asset. Amend my 2011 taxes Gain or loss on its sale is ordinary business income or loss. Amend my 2011 taxes It is reported in the gross receipts or sales and cost of goods sold items of your return. Amend my 2011 taxes Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. Amend my 2011 taxes These sales constitute a very minor part of their farm businesses. Amend my 2011 taxes In these cases, amounts realized from such sales, and the expenses of cutting, hauling, etc. Amend my 2011 taxes , are ordinary farm income and expenses reported on Schedule F (Form 1040), Profit or Loss From Farming. Amend my 2011 taxes Different rules apply if you owned the timber longer than 1 year and elect to either: Treat timber cutting as a sale or exchange, or Enter into a cutting contract. Amend my 2011 taxes Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. Amend my 2011 taxes This is true whether the timber is cut under contract or whether you cut it yourself. Amend my 2011 taxes Under the rules discussed below, disposition of the timber is treated as a section 1231 transaction. Amend my 2011 taxes See chapter 3. Amend my 2011 taxes Gain or loss is reported on Form 4797. Amend my 2011 taxes Christmas trees. Amend my 2011 taxes   Evergreen trees, such as Christmas trees, that are more than 6 years old when severed from their roots and sold for ornamental purposes are included in the term timber. Amend my 2011 taxes They qualify for both rules discussed below. Amend my 2011 taxes Election to treat cutting as a sale or exchange. Amend my 2011 taxes   Under the general rule, the cutting of timber results in no gain or loss. Amend my 2011 taxes It is not until a sale or exchange occurs that gain or loss is realized. Amend my 2011 taxes But if you owned or had a contractual right to cut timber, you can elect to treat the cutting of timber as a section 1231 transaction in the year the timber is cut. Amend my 2011 taxes Even though the cut timber is not actually sold or exchanged, you report your gain or loss on the cutting for the year the timber is cut. Amend my 2011 taxes Any later sale results in ordinary business income or loss. Amend my 2011 taxes See Example, later. Amend my 2011 taxes   To elect this treatment, you must: Own or hold a contractual right to cut the timber for a period of more than 1 year before it is cut, and Cut the timber for sale or for use in your trade or business. Amend my 2011 taxes Making the election. Amend my 2011 taxes   You make the election on your return for the year the cutting takes place by including in income the gain or loss on the cutting and including a computation of the gain or loss. Amend my 2011 taxes You do not have to make the election in the first year you cut timber. Amend my 2011 taxes You can make it in any year to which the election would apply. Amend my 2011 taxes If the timber is partnership property, the election is made on the partnership return. Amend my 2011 taxes This election cannot be made on an amended return. Amend my 2011 taxes   Once you have made the election, it remains in effect for all later years unless you cancel it. Amend my 2011 taxes   If you previously elected to treat the cutting of timber as a sale or exchange, you may revoke this election without the consent of the IRS. Amend my 2011 taxes The prior election (and revocation) is disregarded for purposes of making a subsequent election. Amend my 2011 taxes See Form T (Timber), Forest Activities Schedule, for more information. Amend my 2011 taxes Gain or loss. Amend my 2011 taxes   Your gain or loss on the cutting of standing timber is the difference between its adjusted basis for depletion and its fair market value on the first day of your tax year in which it is cut. Amend my 2011 taxes   Your adjusted basis for depletion of cut timber is based on the number of units (feet board measure, log scale, or other units) of timber cut during the tax year and considered to be sold or exchanged. Amend my 2011 taxes Your adjusted basis for depletion is also based on the depletion unit of timber in the account used for the cut timber, and should be figured in the same manner as shown in section 611 of the Internal Revenue Code and the related regulations. Amend my 2011 taxes   Timber depletion is discussed in chapter 9 of Publication 535. Amend my 2011 taxes Example. Amend my 2011 taxes In April 2013, you had owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. Amend my 2011 taxes It had an adjusted basis for depletion of $40 per MBF. Amend my 2011 taxes You are a calendar year taxpayer. Amend my 2011 taxes On January 1, 2013, the timber had a fair market value (FMV) of $350 per MBF. Amend my 2011 taxes It was cut in April for sale. Amend my 2011 taxes On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. Amend my 2011 taxes You report the difference between the fair market value and your adjusted basis for depletion as a gain. Amend my 2011 taxes This amount is reported on Form 4797 along with your other section 1231 gains and losses to figure whether it is treated as capital gain or as ordinary gain. Amend my 2011 taxes You figure your gain as follows. Amend my 2011 taxes FMV of timber January 1, 2013 $1,400,000 Minus: Adjusted basis for depletion 160,000 Section 1231 gain $1,240,000 The fair market value becomes your basis in the cut timber and a later sale of the cut timber including any by-product or tree tops will result in ordinary business income or loss. Amend my 2011 taxes Outright sales of timber. Amend my 2011 taxes   Outright sales of timber by landowners qualify for capital gains treatment using rules similar to the rules for certain disposal of timber under a contract with retained economic interest (defined below). Amend my 2011 taxes However, for outright sales, the date of disposal is not deemed to be the date the timber is cut because the landowner can elect to treat the payment date as the date of disposal (see below). Amend my 2011 taxes Cutting contract. Amend my 2011 taxes   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. Amend my 2011 taxes You are the owner of the timber. Amend my 2011 taxes You held the timber longer than 1 year before its disposal. Amend my 2011 taxes You kept an economic interest in the timber. Amend my 2011 taxes   You have kept an economic interest in standing timber if, under the cutting contract, the expected return on your investment is conditioned on the cutting of the timber. Amend my 2011 taxes   The difference between the amount realized from the disposal of the timber and its adjusted basis for depletion is treated as gain or loss on its sale. Amend my 2011 taxes Include this amount on Form 4797 along with your other section 1231 gains or losses to figure whether it is treated as capital or ordinary gain or loss. Amend my 2011 taxes Date of disposal. Amend my 2011 taxes   The date of disposal is the date the timber is cut. Amend my 2011 taxes However, for outright sales by landowners or if you receive payment under the contract before the timber is cut, you can elect to treat the date of payment as the date of disposal. Amend my 2011 taxes   This election applies only to figure the holding period of the timber. Amend my 2011 taxes It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). Amend my 2011 taxes   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. Amend my 2011 taxes The statement must identify the advance payments subject to the election and the contract under which they were made. Amend my 2011 taxes   If you timely filed your return for the year you received payment without making the election, you still can make the election by filing an amended return within 6 months after the due date for that year's return (excluding extensions). Amend my 2011 taxes Attach the statement to the amended return and write “Filed pursuant to section 301. Amend my 2011 taxes 9100-2” at the top of the statement. Amend my 2011 taxes File the amended return at the same address the original return was filed. Amend my 2011 taxes Owner. Amend my 2011 taxes   The owner of timber is any person who owns an interest in it, including a sublessor and the holder of a contract to cut the timber. Amend my 2011 taxes You own an interest in timber if you have the right to cut it for sale on your own account or for use in your business. Amend my 2011 taxes Tree stumps. Amend my 2011 taxes   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. Amend my 2011 taxes Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. Amend my 2011 taxes However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. Amend my 2011 taxes Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. Amend my 2011 taxes   See Form T (Timber) and its separate instructions for more information about dispositions of timber. Amend my 2011 taxes Precious Metals and Stones, Stamps, and Coins Gold, silver, gems, stamps, coins, etc. Amend my 2011 taxes , are capital assets except when they are held for sale by a dealer. Amend my 2011 taxes Any gain or loss from their sale or exchange generally is a capital gain or loss. Amend my 2011 taxes If you are a dealer, the amount received from the sale is ordinary business income. Amend my 2011 taxes Coal and Iron Ore You must treat the disposal of coal (including lignite) or iron ore mined in the United States as a section 1231 transaction if both the following apply to you. Amend my 2011 taxes You owned the coal or iron ore longer than 1 year before its disposal. Amend my 2011 taxes You kept an economic interest in the coal or iron ore. Amend my 2011 taxes For this rule, the date the coal or iron ore is mined is considered the date of its disposal. Amend my 2011 taxes Your gain or loss is the difference between the amount realized from disposal of the coal or iron ore and the adjusted basis you use to figure cost depletion (increased by certain expenses not allowed as deductions for the tax year). Amend my 2011 taxes This amount is included on Form 4797 along with your other section 1231 gains and losses. Amend my 2011 taxes You are considered an owner if you own or sublet an economic interest in the coal or iron ore in place. Amend my 2011 taxes If you own only an option to buy the coal in place, you do not qualify as an owner. Amend my 2011 taxes In addition, this gain or loss treatment does not apply to income realized by an owner who is a co-adventurer, partner, or principal in the mining of coal or iron ore. Amend my 2011 taxes The expenses of making and administering the contract under which the coal or iron ore was disposed of and the expenses of preserving the economic interest kept under the contract are not allowed as deductions in figuring taxable income. Amend my 2011 taxes Rather, their total, along with the adjusted depletion basis, is deducted from the amount received to determine gain. Amend my 2011 taxes If the total of these expenses plus the adjusted depletion basis is more than the amount received, the result is a loss. Amend my 2011 taxes Special rule. Amend my 2011 taxes   The above treatment does not apply if you directly or indirectly dispose of the iron ore or coal to any of the following persons. Amend my 2011 taxes A related person whose relationship to you would result in the disallowance of a loss (see Nondeductible Loss under Sales and Exchanges Between Related Persons, earlier). Amend my 2011 taxes An individual, trust, estate, partnership, association, company, or corporation owned or controlled directly or indirectly by the same interests that own or control your business. Amend my 2011 taxes Conversion Transactions Recognized gain on the disposition or termination of any position held as part of certain conversion transactions is treated as ordinary income. Amend my 2011 taxes This applies if substantially all your expected return is attributable to the time value of your net investment (like interest on a loan) and the transaction is any of the following. Amend my 2011 taxes An applicable straddle (generally, any set of offsetting positions with respect to personal property, including stock). Amend my 2011 taxes A transaction in which you acquire property and, at or about the same time, you contract to sell the same or substantially identical property at a specified price. Amend my 2011 taxes Any other transaction that is marketed and sold as producing capital gain from a transaction in which substantially all of your expected return is due to the time value of your net investment. Amend my 2011 taxes For more information, see chapter 4 of Publication 550. Amend my 2011 taxes Prev  Up  Next   Home   More Online Publications
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Help for Victims of Hurricane Sandy

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The IRS is providing help to the victims of Hurricane Sandy. Special tax relief and assistance is available to taxpayers in the Presidential Disaster Areas. 

So far, the IRS filing and payment relief applies to the following localities identified by FEMA for Individual Assistance due to Hurricane Sandy:

  • In Connecticut: Fairfield, Middlesex, New Haven, and New London Counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County;

  • In Maryland: Somerset County
  • In New Jersey: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren;
  • In New York: Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Sullivan, Suffolk, Ulster and Westchester;
  • In Rhode Island: Newport and Washington counties.

The IRS also announced additional tax relief to certain affected individuals and businesses, further extending tax deadlines of that relief until April 1 for the following localities:

  • In New Jersey: Monmouth and Ocean counties.
  • In New York: Nassau, Queens, Richmond and Suffolk counties.

We are monitoring the situation closely to resolve potential tax administration issues as they are identified. The IRS often updates its information on disaster relief efforts related to Hurricane Sandy. For the latest news, check this page frequently.

News Releases

  • IR-2013-16, IRS Extends Tax Relief to Some New Jersey and New York Victims of Hurricane Sandy; Return Filing and Tax Payment Deadline Extended to April 1, 2013
  • IR-2012-96, IRS Gives Additional Time to Small, Automatically Revoked Tax-Exempt Organizations Affected by Hurricane Sandy
  • IR-2012-94, IRS Extends Hurricane Sandy Diesel Fuel Penalty Waiver to Dec. 7 for New Jersey and Parts of New York
  • IR-2012-93, Retirement Plans Can Make Loans, Hardship Distributions to Sandy Victims
  • IR-2012-91, IRS Warns Consumers of Possible Scams Relating to Hurricane Sandy Relief
  • IR-2012-91SP, IRS Advierte a Consumidores de Posibles Estafas Relacionadas a las Ayudas por el Huracán Sandy
  • IR-2012-88, Treasury, IRS Announce Special Relief to Encourage Leave-Donation Programs for Victims of Hurricane Sandy
  • IR-2012-88SP, Tesoro y IRS Anuncian Alivio Especial para Estimular Programas Que Permitan la Donación de Días de Paga a Víctimas del Huracán Sandy
  • IR-2012-87, IRS Expedites Charity Applications, Urges Use of Existing Charities
  • IR-2012-87SP, El IRS Acelera Las Solicitudes de Organizaciones Benéficas, Recomienda el Uso de Caridades Existentes
  • IR-2012-86, Treasury and IRS Expand Availability of Housing for Hurricane Sandy Victims
  • IR-2012-85, IRS Waives Diesel Fuel Penalty Due to Hurricane Sandy
  • IR-2012-84, IRS Announces Qualified Disaster Treatment of Payments to Victims of Hurricane Sandy
  • IR-2012-84SP, El IRS Anuncia el Trato de Pagos Por un Desastre Calificado para las Víctimas del Huracán Sandy
  • IR-2012-83, IRS Provides Tax Relief to Victims of Hurricane Sandy; Return Filing and Tax Payment Deadline Extended to Feb. 1, 2013
  • IR-2012-83SP, IRS Ofrece Alivio a Víctimas del Huracán Sandy; Extiende Plazo de Presentación de Declaraciones de Impuestos y Pagos al 1 de Febrero de 2013
  • IR-2012-82, IRS Gives Additional Time to Taxpayers and Preparers Affected by Hurricane Sandy; File and Pay by Nov. 7

Legal Guidance

  • Notice 2013-21, Postponement of Deadline for Making an Election to Deduct for the Preceding Taxable Year Losses Attributable to Hurricane Sandy
  • Notice 2012-71, Postponement of Deadline for Transitional Relief under Notice 2011-43 for Certain Small Organizations Affected by Hurricane Sandy
  • Notice 2012-69, Treatment of Certain Amounts Paid to Section 170(c) Organizations under Certain Employer Leave-Based Donation Programs to Aid Victims of Hurricane Sandy
  • Notice 2012-68, Low-Income Housing Credit Disaster Relief for Hurricane Sandy

Other Resources

For additional information provided by the federal government on disaster recovery, visit DisasterAssistance.gov and the Hurricane Sandy Recovery page on USA.gov. The latest Federal Emergency Management Agency disaster declarations are also available.

Related Item: Hurricane Sandy News Releases and Legal Guidance

 

Page Last Reviewed or Updated: 05-Nov-2013

The Amend My 2011 Taxes

Amend my 2011 taxes 3. Amend my 2011 taxes   SIMPLE Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: SIMPLE IRA PlanWho Can Set Up a SIMPLE IRA Plan? Who Can Participate in a SIMPLE IRA Plan? How To Set Up a SIMPLE IRA Plan Notification Requirement Contribution Limits When To Deduct Contributions Where To Deduct Contributions Tax Treatment of Contributions Distributions (Withdrawals) More Information on SIMPLE IRA Plans SIMPLE 401(k) Plan Topics - This chapter discusses: SIMPLE IRA plan SIMPLE 401(k) plan Useful Items - You may want to see: Publications 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4284 SIMPLE IRA Plan Checklist 4334 SIMPLE IRA Plans for Small Businesses Forms (and Instructions) W-2 Wage and Tax Statement 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A savings incentive match plan for employees (SIMPLE plan) is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income. Amend my 2011 taxes Under a SIMPLE plan, employees can choose to make salary reduction contributions to the plan rather than receiving these amounts as part of their regular pay. Amend my 2011 taxes In addition, you will contribute matching or nonelective contributions. Amend my 2011 taxes SIMPLE plans can only be maintained on a calendar-year basis. Amend my 2011 taxes A SIMPLE plan can be set up in either of the following ways. Amend my 2011 taxes Using SIMPLE IRAs (SIMPLE IRA plan). Amend my 2011 taxes As part of a 401(k) plan (SIMPLE 401(k) plan). Amend my 2011 taxes Many financial institutions will help you set up a SIMPLE plan. Amend my 2011 taxes SIMPLE IRA Plan A SIMPLE IRA plan is a retirement plan that uses SIMPLE IRAs for each eligible employee. Amend my 2011 taxes Under a SIMPLE IRA plan, a SIMPLE IRA must be set up for each eligible employee. Amend my 2011 taxes For the definition of an eligible employee, see Who Can Participate in a SIMPLE IRA Plan , later. Amend my 2011 taxes Who Can Set Up a SIMPLE IRA Plan? You can set up a SIMPLE IRA plan if you meet both the following requirements. Amend my 2011 taxes You meet the employee limit. Amend my 2011 taxes You do not maintain another qualified plan unless the other plan is for collective bargaining employees. Amend my 2011 taxes Employee limit. Amend my 2011 taxes   You can set up a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year. Amend my 2011 taxes Under this rule, you must take into account all employees employed at any time during the calendar year regardless of whether they are eligible to participate. Amend my 2011 taxes Employees include self-employed individuals who received earned income and leased employees (defined in chapter 1). Amend my 2011 taxes   Once you set up a SIMPLE IRA plan, you must continue to meet the 100-employee limit each year you maintain the plan. Amend my 2011 taxes Grace period for employers who cease to meet the 100-employee limit. Amend my 2011 taxes   If you maintain the SIMPLE IRA plan for at least 1 year and you cease to meet the 100-employee limit in a later year, you will be treated as meeting it for the 2 calendar years immediately following the calendar year for which you last met it. Amend my 2011 taxes   A different rule applies if you do not meet the 100-employee limit because of an acquisition, disposition, or similar transaction. Amend my 2011 taxes Under this rule, the SIMPLE IRA plan will be treated as meeting the 100-employee limit for the year of the transaction and the 2 following years if both the following conditions are satisfied. Amend my 2011 taxes Coverage under the plan has not significantly changed during the grace period. Amend my 2011 taxes The SIMPLE IRA plan would have continued to qualify after the transaction if you had remained a separate employer. Amend my 2011 taxes    The grace period for acquisitions, dispositions, and similar transactions also applies if, because of these types of transactions, you do not meet the rules explained under Other qualified plan or Who Can Participate in a SIMPLE IRA Plan, below. Amend my 2011 taxes Other qualified plan. Amend my 2011 taxes   The SIMPLE IRA plan generally must be the only retirement plan to which you make contributions, or to which benefits accrue, for service in any year beginning with the year the SIMPLE IRA plan becomes effective. Amend my 2011 taxes Exception. Amend my 2011 taxes   If you maintain a qualified plan for collective bargaining employees, you are permitted to maintain a SIMPLE IRA plan for other employees. Amend my 2011 taxes Who Can Participate in a SIMPLE IRA Plan? Eligible employee. Amend my 2011 taxes   Any employee who received at least $5,000 in compensation during any 2 years preceding the current calendar year and is reasonably expected to receive at least $5,000 during the current calendar year is eligible to participate. Amend my 2011 taxes The term “employee” includes a self-employed individual who received earned income. Amend my 2011 taxes   You can use less restrictive eligibility requirements (but not more restrictive ones) by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both. Amend my 2011 taxes For example, you can allow participation for employees who received at least $3,000 in compensation during any preceding calendar year. Amend my 2011 taxes However, you cannot impose any other conditions for participating in a SIMPLE IRA plan. Amend my 2011 taxes Excludable employees. Amend my 2011 taxes   The following employees do not need to be covered under a SIMPLE IRA plan. Amend my 2011 taxes Employees who are covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. Amend my 2011 taxes Nonresident alien employees who have received no U. Amend my 2011 taxes S. Amend my 2011 taxes source wages, salaries, or other personal services compensation from you. Amend my 2011 taxes Compensation. Amend my 2011 taxes   Compensation for employees is the total wages, tips, and other compensation from the employer subject to federal income tax withholding and the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. Amend my 2011 taxes Compensation also includes the employee's salary reduction contributions made under this plan and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the employer on Form W-2. Amend my 2011 taxes If you are self-employed, compensation is your net earnings from self-employment (line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040)) before subtracting any contributions made to the SIMPLE IRA plan for yourself. Amend my 2011 taxes How To Set Up a SIMPLE IRA Plan You can use Form 5304-SIMPLE or Form 5305-SIMPLE to set up a SIMPLE IRA plan. Amend my 2011 taxes Each form is a model savings incentive match plan for employees (SIMPLE) plan document. Amend my 2011 taxes Which form you use depends on whether you select a financial institution or your employees select the institution that will receive the contributions. Amend my 2011 taxes Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. Amend my 2011 taxes Use Form 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be deposited initially at a designated financial institution. Amend my 2011 taxes The SIMPLE IRA plan is adopted when you have completed all appropriate boxes and blanks on the form and you (and the designated financial institution, if any) have signed it. Amend my 2011 taxes Keep the original form. Amend my 2011 taxes Do not file it with the IRS. Amend my 2011 taxes Other uses of the forms. Amend my 2011 taxes   If you set up a SIMPLE IRA plan using Form 5304-SIMPLE or Form 5305-SIMPLE, you can use the form to satisfy other requirements, including the following. Amend my 2011 taxes Meeting employer notification requirements for the SIMPLE IRA plan. Amend my 2011 taxes Form 5304-SIMPLE and Form 5305-SIMPLE contain a Model Notification to Eligible Employees that provides the necessary information to the employee. Amend my 2011 taxes Maintaining the SIMPLE IRA plan records and proving you set up a SIMPLE IRA plan for employees. Amend my 2011 taxes Deadline for setting up a SIMPLE IRA plan. Amend my 2011 taxes   You can set up a SIMPLE IRA plan effective on any date from January 1 through October 1 of a year, provided you did not previously maintain a SIMPLE IRA plan. Amend my 2011 taxes This requirement does not apply if you are a new employer that comes into existence after October 1 of the year the SIMPLE IRA plan is set up and you set up a SIMPLE IRA plan as soon as administratively feasible after your business comes into existence. Amend my 2011 taxes If you previously maintained a SIMPLE IRA plan, you can set up a SIMPLE IRA plan effective only on January 1 of a year. Amend my 2011 taxes A SIMPLE IRA plan cannot have an effective date that is before the date you actually adopt the plan. Amend my 2011 taxes Setting up a SIMPLE IRA. Amend my 2011 taxes   SIMPLE IRAs are the individual retirement accounts or annuities into which the contributions are deposited. Amend my 2011 taxes A SIMPLE IRA must be set up for each eligible employee. Amend my 2011 taxes Forms 5305-S, SIMPLE Individual Retirement Trust Account, and 5305-SA, SIMPLE Individual Retirement Custodial Account, are model trust and custodial account documents the participant and the trustee (or custodian) can use for this purpose. Amend my 2011 taxes   A SIMPLE IRA cannot be a Roth IRA. Amend my 2011 taxes Contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. Amend my 2011 taxes Deadline for setting up a SIMPLE IRA. Amend my 2011 taxes   A SIMPLE IRA must be set up for an employee before the first date by which a contribution is required to be deposited into the employee's IRA. Amend my 2011 taxes See Time limits for contributing funds , later, under Contribution Limits. Amend my 2011 taxes Credit for startup costs. Amend my 2011 taxes   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE IRA plan that first became effective in 2013. Amend my 2011 taxes For more information, see Credit for startup costs under Reminders, earlier. Amend my 2011 taxes Notification Requirement If you adopt a SIMPLE IRA plan, you must notify each employee of the following information before the beginning of the election period. Amend my 2011 taxes The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan. Amend my 2011 taxes Your decision to make either matching contributions or nonelective contributions (discussed later). Amend my 2011 taxes A summary description provided by the financial institution. Amend my 2011 taxes Written notice that his or her balance can be transferred without cost or penalty if they use a designated financial institution. Amend my 2011 taxes Election period. Amend my 2011 taxes   The election period is generally the 60-day period immediately preceding January 1 of a calendar year (November 2 to December 31 of the preceding calendar year). Amend my 2011 taxes However, the dates of this period are modified if you set up a SIMPLE IRA plan in mid-year (for example, on July 1) or if the 60-day period falls before the first day an employee becomes eligible to participate in the SIMPLE IRA plan. Amend my 2011 taxes   A SIMPLE IRA plan can provide longer periods for permitting employees to enter into salary reduction agreements or to modify prior agreements. Amend my 2011 taxes For example, a SIMPLE IRA plan can provide a 90-day election period instead of the 60-day period. Amend my 2011 taxes Similarly, in addition to the 60-day period, a SIMPLE IRA plan can provide quarterly election periods during the 30 days before each calendar quarter, other than the first quarter of each year. Amend my 2011 taxes Contribution Limits Contributions are made up of salary reduction contributions and employer contributions. Amend my 2011 taxes You, as the employer, must make either matching contributions or nonelective contributions, defined later. Amend my 2011 taxes No other contributions can be made to the SIMPLE IRA plan. Amend my 2011 taxes These contributions, which you can deduct, must be made timely. Amend my 2011 taxes See Time limits for contributing funds , later. Amend my 2011 taxes Salary reduction contributions. Amend my 2011 taxes   The amount the employee chooses to have you contribute to a SIMPLE IRA on his or her behalf cannot be more than $12,000 for 2013 and 2014. Amend my 2011 taxes These contributions must be expressed as a percentage of the employee's compensation unless you permit the employee to express them as a specific dollar amount. Amend my 2011 taxes You cannot place restrictions on the contribution amount (such as limiting the contribution percentage), except to comply with the $12,000 limit. Amend my 2011 taxes   If you or an employee participates in any other qualified plan during the year and you or your employee have salary reduction contributions (elective deferrals) under those plans, the salary reduction contributions under a SIMPLE IRA plan also count toward the overall annual limit ($17,500 for 2013 and 2014) on exclusion of salary reduction contributions and other elective deferrals. Amend my 2011 taxes Catch-up contributions. Amend my 2011 taxes   A SIMPLE IRA plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. Amend my 2011 taxes The catch-up contribution limit for 2013 and 2014 for SIMPLE IRA plans is $2,500. Amend my 2011 taxes Salary reduction contributions are not treated as catch-up contributions for 2013 or 2014 until they exceed $12,000. Amend my 2011 taxes However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. Amend my 2011 taxes The catch-up contribution limit. Amend my 2011 taxes The excess of the participant's compensation over the salary reduction contributions that are not catch-up contributions. Amend my 2011 taxes Employer matching contributions. Amend my 2011 taxes   You are generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. Amend my 2011 taxes This requirement does not apply if you make nonelective contributions as discussed later. Amend my 2011 taxes Example. Amend my 2011 taxes In 2013, your employee, John Rose, earned $25,000 and chose to defer 5% of his salary. Amend my 2011 taxes Your net earnings from self-employment are $40,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Amend my 2011 taxes You make 3% matching contributions. Amend my 2011 taxes The total contribution you make for John is $2,000, figured as follows. Amend my 2011 taxes Salary reduction contributions ($25,000 × . Amend my 2011 taxes 05) $1,250 Employer matching contribution ($25,000 × . Amend my 2011 taxes 03) 750 Total contributions $2,000     The total contribution you make for yourself is $5,200, figured as follows. Amend my 2011 taxes Salary reduction contributions ($40,000 × . Amend my 2011 taxes 10) $4,000 Employer matching contribution ($40,000 × . Amend my 2011 taxes 03) 1,200 Total contributions $5,200 Lower percentage. Amend my 2011 taxes   If you choose a matching contribution less than 3%, the percentage must be at least 1%. Amend my 2011 taxes You must notify the employees of the lower match within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. Amend my 2011 taxes You cannot choose a percentage less than 3% for more than 2 years during the 5-year period that ends with (and includes) the year for which the choice is effective. Amend my 2011 taxes Nonelective contributions. Amend my 2011 taxes   Instead of matching contributions, you can choose to make nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 (or some lower amount you select) of compensation from you for the year. Amend my 2011 taxes If you make this choice, you must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. Amend my 2011 taxes Only $255,000 of the employee's compensation can be taken into account to figure the contribution limit in 2013 ($260,000 in 2014). Amend my 2011 taxes   If you choose this 2% contribution formula, you must notify the employees within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. Amend my 2011 taxes Example 1. Amend my 2011 taxes In 2013, your employee, Jane Wood, earned $36,000 and chose to have you contribute 10% of her salary. Amend my 2011 taxes Your net earnings from self-employment are $50,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. Amend my 2011 taxes You make a 2% nonelective contribution. Amend my 2011 taxes Both of you are under age 50. Amend my 2011 taxes The total contribution you make for Jane is $4,320, figured as follows. Amend my 2011 taxes Salary reduction contributions ($36,000 × . Amend my 2011 taxes 10) $3,600 2% nonelective contributions ($36,000 × . Amend my 2011 taxes 02) 720 Total contributions $4,320     The total contribution you make for yourself is $6,000, figured as follows. Amend my 2011 taxes Salary reduction contributions ($50,000 × . Amend my 2011 taxes 10) $5,000 2% nonelective contributions ($50,000 × . Amend my 2011 taxes 02) 1,000 Total contributions $6,000 Example 2. Amend my 2011 taxes Using the same facts as in Example 1, above, the maximum contribution you make for Jane or for yourself if you each earned $75,000 is $13,500, figured as follows. Amend my 2011 taxes Salary reduction contributions (maximum amount allowed) $12,000 2% nonelective contributions ($75,000 × . Amend my 2011 taxes 02) 1,500 Total contributions $13,500 Time limits for contributing funds. Amend my 2011 taxes   You must make the salary reduction contributions to the SIMPLE IRA within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash. Amend my 2011 taxes You must make matching contributions or nonelective contributions by the due date (including extensions) for filing your federal income tax return for the year. Amend my 2011 taxes Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions. Amend my 2011 taxes When To Deduct Contributions You can deduct SIMPLE IRA contributions in the tax year within which the calendar year for which contributions were made ends. Amend my 2011 taxes You can deduct contributions for a particular tax year if they are made for that tax year and are made by the due date (including extensions) of your federal income tax return for that year. Amend my 2011 taxes Example 1. Amend my 2011 taxes Your tax year is the fiscal year ending June 30. Amend my 2011 taxes Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2013 before July 1, 2013) are deductible in the tax year ending June 30, 2014. Amend my 2011 taxes Example 2. Amend my 2011 taxes You are a sole proprietor whose tax year is the calendar year. Amend my 2011 taxes Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2014 by April 15, 2014) are deductible in the 2013 tax year. Amend my 2011 taxes Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. Amend my 2011 taxes For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120 or Form 1120S. Amend my 2011 taxes Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. Amend my 2011 taxes (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you receive from the partnership. Amend my 2011 taxes ) Tax Treatment of Contributions You can deduct your contributions and your employees can exclude these contributions from their gross income. Amend my 2011 taxes SIMPLE IRA plan contributions are not subject to federal income tax withholding. Amend my 2011 taxes However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. Amend my 2011 taxes Matching and nonelective contributions are not subject to these taxes. Amend my 2011 taxes Reporting on Form W-2. Amend my 2011 taxes   Do not include SIMPLE IRA plan contributions in the “Wages, tips, other compensation” box of Form W-2. Amend my 2011 taxes You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. Amend my 2011 taxes You must also include them in box 12. Amend my 2011 taxes Mark the “Retirement plan” checkbox in box 13. Amend my 2011 taxes For more information, see the Form W-2 instructions. Amend my 2011 taxes Distributions (Withdrawals) Distributions from a SIMPLE IRA are subject to IRA rules and generally are includible in income for the year received. Amend my 2011 taxes Tax-free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA. Amend my 2011 taxes However, a rollover from a SIMPLE IRA to a non-SIMPLE IRA can be made tax free only after a 2-year participation in the SIMPLE IRA plan. Amend my 2011 taxes Generally, you or your employee must begin to receive distributions from a SIMPLE IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. Amend my 2011 taxes Early withdrawals generally are subject to a 10% additional tax. Amend my 2011 taxes However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation. Amend my 2011 taxes More information. Amend my 2011 taxes   See Publication 590 for information about IRA rules, including those on the tax treatment of distributions, rollovers, required distributions, and income tax withholding. Amend my 2011 taxes More Information on SIMPLE IRA Plans If you need help to set up or maintain a SIMPLE IRA plan, go to the IRS website and search SIMPLE IRA Plan. Amend my 2011 taxes SIMPLE 401(k) Plan You can adopt a SIMPLE plan as part of a 401(k) plan if you meet the 100-employee limit as discussed earlier under SIMPLE IRA Plan. Amend my 2011 taxes A SIMPLE 401(k) plan is a qualified retirement plan and generally must satisfy the rules discussed under Qualification Rules in chapter 4, including the required distribution rules. Amend my 2011 taxes However, a SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy rules discussed in chapter 4 if the plan meets the conditions listed below. Amend my 2011 taxes Under the plan, an employee can choose to have you make salary reduction contributions for the year to a trust in an amount expressed as a percentage of the employee's compensation, but not more than $12,000 for 2013 and 2014. Amend my 2011 taxes If permitted under the plan, an employee who is age 50 or over can also make a catch-up contribution of up to $2,500 for 2013 and 2014. Amend my 2011 taxes See Catch-up contributions , earlier under Contribution Limits. Amend my 2011 taxes You must make either: Matching contributions up to 3% of compensation for the year, or Nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 of compensation from you for the year. Amend my 2011 taxes No other contributions can be made to the trust. Amend my 2011 taxes No contributions are made, and no benefits accrue, for services during the year under any other qualified retirement plan sponsored by you on behalf of any employee eligible to participate in the SIMPLE 401(k) plan. Amend my 2011 taxes The employee's rights to any contributions are nonforfeitable. Amend my 2011 taxes No more than $255,000 of the employee's compensation can be taken into account in figuring matching contributions and nonelective contributions in 2013 ($260,000 in 2014). Amend my 2011 taxes Compensation is defined earlier in this chapter. Amend my 2011 taxes Employee notification. Amend my 2011 taxes   The notification requirement that applies to SIMPLE IRA plans also applies to SIMPLE 401(k) plans. Amend my 2011 taxes See Notification Requirement in this chapter. Amend my 2011 taxes Credit for startup costs. Amend my 2011 taxes   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE 401(k) plan that first became effective in 2013. Amend my 2011 taxes For more information, see Credit for startup costs under Reminders, earlier. Amend my 2011 taxes Note on Forms. Amend my 2011 taxes   Please note that Forms 5304-SIMPLE and 5305-SIMPLE can not be used to establish a SIMPLE 401(k) plan. Amend my 2011 taxes To set up a SIMPLE 401(k) plan, see Adopting a Written Plan in chapter 4. Amend my 2011 taxes Prev  Up  Next   Home   More Online Publications