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Amend Tax Return Online

Amend tax return online 8. Amend tax return online   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. Amend tax return online Reporting tax withheld. Amend tax return online Nominees. Amend tax return online Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. Amend tax return online Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. Amend tax return online Alternative minimum tax treatment. Amend tax return online How To Report Dividend IncomeInvestment interest deducted. Amend tax return online Reminder Foreign-source income. Amend tax return online  If you are a U. Amend tax return online S. Amend tax return online citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. Amend tax return online S. Amend tax return online law. Amend tax return online This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. Amend tax return online Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. Amend tax return online This chapter also explains how to report dividend income on your tax return. Amend tax return online Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. Amend tax return online You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. Amend tax return online However, some amounts you receive that are called dividends are actually interest income. Amend tax return online (See Dividends that are actually interest under Taxable Interest in chapter 7. Amend tax return online ) Most distributions are paid in cash (or check). Amend tax return online However, distributions can consist of more stock, stock rights, other property, or services. Amend tax return online Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. Amend tax return online Tax on unearned income of certain children. Amend tax return online   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Amend tax return online If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Amend tax return online If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Amend tax return online    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Amend tax return online Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Amend tax return online   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Amend tax return online Beneficiary of an estate or trust. Amend tax return online    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. Amend tax return online You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Amend tax return online , from the fiduciary. Amend tax return online Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Amend tax return online Social security number (SSN) or individual taxpayer identification number (ITIN). Amend tax return online    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. Amend tax return online This includes payers of dividends. Amend tax return online If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. Amend tax return online For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Amend tax return online Backup withholding. Amend tax return online   Your dividend income is generally not subject to regular withholding. Amend tax return online However, it may be subject to backup withholding to ensure that income tax is collected on the income. Amend tax return online Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Amend tax return online   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Amend tax return online For more information, see Backup Withholding in chapter 4. Amend tax return online Stock certificate in two or more names. Amend tax return online   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. Amend tax return online Form 1099-DIV. Amend tax return online   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. Amend tax return online Keep this form with your records. Amend tax return online You do not have to attach it to your tax return. Amend tax return online Dividends not reported on Form 1099-DIV. Amend tax return online   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. Amend tax return online For example, you may receive distributive shares of dividends from partnerships or S corporations. Amend tax return online These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Amend tax return online , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Amend tax return online Reporting tax withheld. Amend tax return online   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. Amend tax return online Nominees. Amend tax return online   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. Amend tax return online Form 1099-MISC. Amend tax return online   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. Amend tax return online See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. Amend tax return online Incorrect amount shown on a Form 1099. Amend tax return online   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Amend tax return online The new Form 1099 you receive will be marked “Corrected. Amend tax return online ” Dividends on stock sold. Amend tax return online   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. Amend tax return online Dividends received in January. Amend tax return online   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. Amend tax return online You report the dividend in the year it was declared. Amend tax return online Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. Amend tax return online They are paid out of earnings and profits and are ordinary income to you. Amend tax return online This means they are not capital gains. Amend tax return online You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. Amend tax return online Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Amend tax return online Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. Amend tax return online They should be shown in box 1b of the Form 1099-DIV you receive. Amend tax return online The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. Amend tax return online 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. Amend tax return online 6%. Amend tax return online 20% on any amount that otherwise would be taxed at a 39. Amend tax return online 6% rate. Amend tax return online To qualify for the maximum rate, all of the following requirements must be met. Amend tax return online The dividends must have been paid by a U. Amend tax return online S. Amend tax return online corporation or a qualified foreign corporation. Amend tax return online (See Qualified foreign corporation , later. Amend tax return online ) The dividends are not of the type listed later under Dividends that are not qualified dividends . Amend tax return online You meet the holding period (discussed next). Amend tax return online Holding period. Amend tax return online   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Amend tax return online The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. Amend tax return online Instead, the seller will get the dividend. Amend tax return online   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. Amend tax return online See the examples later. Amend tax return online Exception for preferred stock. Amend tax return online   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. Amend tax return online If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. Amend tax return online Example 1. Amend tax return online You bought 5,000 shares of XYZ Corp. Amend tax return online common stock on July 9, 2013. Amend tax return online XYZ Corp. Amend tax return online paid a cash dividend of 10 cents per share. Amend tax return online The ex-dividend date was July 16, 2013. Amend tax return online Your Form 1099-DIV from XYZ Corp. Amend tax return online shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). Amend tax return online However, you sold the 5,000 shares on August 12, 2013. Amend tax return online You held your shares of XYZ Corp. Amend tax return online for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). Amend tax return online The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. Amend tax return online You have no qualified dividends from XYZ Corp. Amend tax return online because you held the XYZ stock for less than 61 days. Amend tax return online Example 2. Amend tax return online Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. Amend tax return online You held the stock for 63 days (from July 16, 2013, through September 16, 2013). Amend tax return online The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). Amend tax return online Example 3. Amend tax return online You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. Amend tax return online ABC Mutual Fund paid a cash dividend of 10 cents a share. Amend tax return online The ex-dividend date was July 16, 2013. Amend tax return online The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Amend tax return online Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. Amend tax return online However, you sold the 10,000 shares on August 12, 2013. Amend tax return online You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. Amend tax return online Holding period reduced where risk of loss is diminished. Amend tax return online   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. Amend tax return online You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. Amend tax return online You were grantor (writer) of an option to buy substantially identical stock or securities. Amend tax return online Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. Amend tax return online   For information about how to apply condition (3), see Regulations section 1. Amend tax return online 246-5. Amend tax return online Qualified foreign corporation. Amend tax return online   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. Amend tax return online The corporation is incorporated in a U. Amend tax return online S. Amend tax return online possession. Amend tax return online The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. Amend tax return online For a list of those treaties, see Table 8-1. Amend tax return online The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. Amend tax return online See Readily tradable stock , later. Amend tax return online Exception. Amend tax return online   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. Amend tax return online Readily tradable stock. Amend tax return online   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. Amend tax return online For a list of the exchanges that meet these requirements, see www. Amend tax return online sec. Amend tax return online gov/divisions/marketreg/mrexchanges. Amend tax return online shtml. Amend tax return online Dividends that are not qualified dividends. Amend tax return online   The following dividends are not qualified dividends. Amend tax return online They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. Amend tax return online Capital gain distributions. Amend tax return online Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. Amend tax return online S. Amend tax return online building and loan associations, U. Amend tax return online S. Amend tax return online savings and loan associations, federal savings and loan associations, and similar financial institutions. Amend tax return online (Report these amounts as interest income. Amend tax return online ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. Amend tax return online Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. Amend tax return online Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. Amend tax return online Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Amend tax return online Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. Amend tax return online Table 8-1. Amend tax return online Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. Amend tax return online Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. Amend tax return online This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. Amend tax return online Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. Amend tax return online If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. Amend tax return online If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. Amend tax return online You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. Amend tax return online But you may be able to deduct the service charge. Amend tax return online See chapter 28 for more information about deducting expenses of producing income. Amend tax return online In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. Amend tax return online If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. Amend tax return online When figuring this amount, use the fair market value of the stock on the dividend payment date. Amend tax return online Money Market Funds Report amounts you receive from money market funds as dividend income. Amend tax return online Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. Amend tax return online Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). Amend tax return online They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. Amend tax return online Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. Amend tax return online Undistributed capital gains of mutual funds and REITs. Amend tax return online    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. Amend tax return online You must treat your share of these gains as distributions, even though you did not actually receive them. Amend tax return online However, they are not included on Form 1099-DIV. Amend tax return online Instead, they are reported to you in box 1a of Form 2439. Amend tax return online   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. Amend tax return online   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. Amend tax return online You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. Amend tax return online Attach Copy B of Form 2439 to your return, and keep Copy C for your records. Amend tax return online Basis adjustment. Amend tax return online   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. Amend tax return online Additional information. Amend tax return online   For more information on the treatment of distributions from mutual funds, see Publication 550. Amend tax return online Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. Amend tax return online You should receive a Form 1099-DIV or other statement showing the nondividend distribution. Amend tax return online On Form 1099-DIV, a nondividend distribution will be shown in box 3. Amend tax return online If you do not receive such a statement, you report the distribution as an ordinary dividend. Amend tax return online Basis adjustment. Amend tax return online   A nondividend distribution reduces the basis of your stock. Amend tax return online It is not taxed until your basis in the stock is fully recovered. Amend tax return online This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. Amend tax return online If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. Amend tax return online   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. Amend tax return online Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. Amend tax return online See Holding Period in chapter 14. Amend tax return online Example. Amend tax return online You bought stock in 2000 for $100. Amend tax return online In 2003, you received a nondividend distribution of $80. Amend tax return online You did not include this amount in your income, but you reduced the basis of your stock to $20. Amend tax return online You received a nondividend distribution of $30 in 2013. Amend tax return online The first $20 of this amount reduced your basis to zero. Amend tax return online You report the other $10 as a long-term capital gain for 2013. Amend tax return online You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. Amend tax return online Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. Amend tax return online These distributions are, at least in part, one form of a return of capital. Amend tax return online They may be paid in one or more installments. Amend tax return online You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. Amend tax return online For more information on liquidating distributions, see chapter 1 of Publication 550. Amend tax return online Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. Amend tax return online Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. Amend tax return online Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. Amend tax return online Taxable stock dividends and stock rights. Amend tax return online   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. Amend tax return online You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. Amend tax return online The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. Amend tax return online The distribution is in convertible preferred stock and has the same result as in (2). Amend tax return online The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. Amend tax return online The distribution is on preferred stock. Amend tax return online (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. Amend tax return online )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. Amend tax return online If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. Amend tax return online Preferred stock redeemable at a premium. Amend tax return online   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. Amend tax return online For more information, see chapter 1 of Publication 550. Amend tax return online Basis. Amend tax return online   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. Amend tax return online If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. Amend tax return online Fractional shares. Amend tax return online    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. Amend tax return online However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. Amend tax return online Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. Amend tax return online Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. Amend tax return online Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. Amend tax return online    Report these transactions on Form 8949 with the correct box checked. Amend tax return online   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. Amend tax return online Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Amend tax return online Example. Amend tax return online You own one share of common stock that you bought on January 3, 2004, for $100. Amend tax return online The corporation declared a common stock dividend of 5% on June 29, 2013. Amend tax return online The fair market value of the stock at the time the stock dividend was declared was $200. Amend tax return online You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. Amend tax return online You figure your gain or loss as follows: Fair market value of old stock $200. Amend tax return online 00 Fair market value of stock dividend (cash received) +10. Amend tax return online 00 Fair market value of old stock and stock dividend $210. Amend tax return online 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. Amend tax return online 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. Amend tax return online 76 Total $100. Amend tax return online 00 Cash received $10. Amend tax return online 00 Basis (cost) of stock dividend − 4. Amend tax return online 76 Gain $5. Amend tax return online 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. Amend tax return online Scrip dividends. Amend tax return online   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. Amend tax return online The certificate is generally nontaxable when you receive it. Amend tax return online If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. Amend tax return online   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. Amend tax return online You must include its fair market value in income on the date you receive it. Amend tax return online Other Distributions You may receive any of the following distributions during the year. Amend tax return online Exempt-interest dividends. Amend tax return online   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Amend tax return online Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Amend tax return online Information reporting requirement. Amend tax return online   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. Amend tax return online This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. Amend tax return online Alternative minimum tax treatment. Amend tax return online   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Amend tax return online See Alternative Minimum Tax (AMT) in chapter 30 for more information. Amend tax return online Dividends on insurance policies. Amend tax return online    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. Amend tax return online However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. Amend tax return online    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. Amend tax return online Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. Amend tax return online Report any taxable distributions on insurance policies on Form 1040, line 21. Amend tax return online Dividends on veterans' insurance. Amend tax return online   Dividends you receive on veterans' insurance policies are not taxable. Amend tax return online In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. Amend tax return online Patronage dividends. Amend tax return online   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. Amend tax return online   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. Amend tax return online But you must reduce the basis (cost) of the items bought. Amend tax return online If the dividend is more than the adjusted basis of the assets, you must report the excess as income. Amend tax return online   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. Amend tax return online Alaska Permanent Fund dividends. Amend tax return online    Do not report these amounts as dividends. Amend tax return online Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. Amend tax return online How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. Amend tax return online Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. Amend tax return online Report qualified dividends on line 9b of Form 1040 or Form 1040A. Amend tax return online If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. Amend tax return online See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. Amend tax return online If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. Amend tax return online You cannot use Form 1040EZ if you receive any dividend income. Amend tax return online Form 1099-DIV. Amend tax return online   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. Amend tax return online Even if you do not receive Form 1099-DIV, you must report all your dividend income. Amend tax return online   See Form 1099-DIV for more information on how to report dividend income. Amend tax return online Form 1040A or 1040. Amend tax return online    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. Amend tax return online If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. Amend tax return online   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. Amend tax return online If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. Amend tax return online If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. Amend tax return online   Enter on line 6 the total of the amounts listed on line 5. Amend tax return online Also enter this total on line 9a of Form 1040A or 1040. Amend tax return online Qualified dividends. Amend tax return online   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. Amend tax return online The amount in box 1b is already included in box 1a. Amend tax return online Do not add the amount in box 1b to, or substract it from, the amount in box 1a. Amend tax return online   Do not include any of the following on line 9b. Amend tax return online Qualified dividends you received as a nominee. Amend tax return online See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. Amend tax return online Dividends on stock for which you did not meet the holding period. Amend tax return online See Holding period , earlier under Qualified Dividends. Amend tax return online Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. Amend tax return online Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Amend tax return online Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. Amend tax return online   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. Amend tax return online Enter qualified dividends on line 2 of the worksheet. Amend tax return online Investment interest deducted. Amend tax return online   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. Amend tax return online Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. Amend tax return online This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. Amend tax return online For more information about the limit on investment interest, see Investment expenses in chapter 23. Amend tax return online Expenses related to dividend income. Amend tax return online   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). Amend tax return online See chapter 28 for general information about deducting expenses of producing income. Amend tax return online More information. Amend tax return online    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. Amend tax return online Prev  Up  Next   Home   More Online Publications
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Contact My Local Office in Colorado

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

 City Street Address  Days/Hours of Service  Telephone* 
Colorado Springs  2864 S. Circle Dr.
Colorado Springs, CO 80906 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(719) 579-5227 
Denver  1999 Broadway
Denver, CO 80202 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(303) 446-1675 
Ft. Collins  301 S. Howes St.
Ft. Collins, CO 80521 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(970) 221-0688 
Grand Junction  400 Rood Ave.
Grand Junction, CO 81505 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. -1:30 p.m.)

 

Services Provided

(970) 241-6265 


* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call 303-603-4600 in the Denver area or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
1999 Broadway, MS 6610DEN
Denver, CO 80202-2490

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Amend Tax Return Online

Amend tax return online 3. Amend tax return online   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. Amend tax return online Form 4797. Amend tax return online Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. Amend tax return online Granting the right to remove deposits. Amend tax return online Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. Amend tax return online You must report the income from all the different sources on your tax return, unless it is excluded by law. Amend tax return online Where you report the income on your tax return depends on its source. Amend tax return online This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. Amend tax return online For information on where to report other income, see the Instructions for Form 1040, U. Amend tax return online S. Amend tax return online Individual Income Tax Return. Amend tax return online Accounting method. Amend tax return online   The rules discussed in this chapter assume you use the cash method of accounting. Amend tax return online Under the cash method, you generally include an item of income in gross income in the year you receive it. Amend tax return online See Cash Method in chapter 2. Amend tax return online   If you use an accrual method of accounting, different rules may apply to your situation. Amend tax return online See Accrual Method in chapter 2. Amend tax return online Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. Amend tax return online Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. Amend tax return online Use this schedule to figure the net profit or loss from regular farming operations. Amend tax return online Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. Amend tax return online This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. Amend tax return online It also includes income from the sale of crop shares if you materially participate in producing the crop. Amend tax return online See Rents (Including Crop Shares) , later. Amend tax return online Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. Amend tax return online Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. Amend tax return online Land. Amend tax return online Depreciable farm equipment. Amend tax return online Buildings and structures. Amend tax return online Livestock held for draft, breeding, sport, or dairy purposes. Amend tax return online Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. Amend tax return online Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. Amend tax return online Sales of Farm Products Where to report. Amend tax return online    Table 3-1 shows where to report the sale of farm products on your tax return. Amend tax return online Schedule F. Amend tax return online   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. Amend tax return online This includes money and the fair market value of any property or services you receive. Amend tax return online When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). Amend tax return online See chapter 6 for information on the basis of assets. Amend tax return online You generally report these amounts on Schedule F for the year you receive payment. Amend tax return online Example. Amend tax return online In 2012, you bought 20 feeder calves for $11,000 for resale. Amend tax return online You sold them in 2013 for $21,000. Amend tax return online You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. Amend tax return online Form 4797. Amend tax return online   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. Amend tax return online In either case, you should always report these sales on Form 4797 instead of Schedule F. Amend tax return online See Livestock under Ordinary or Capital Gain or Loss in chapter 8. Amend tax return online Animals you do not hold primarily for sale are considered business assets of your farm. Amend tax return online Table 3-1. Amend tax return online Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. Amend tax return online   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. Amend tax return online This applies even if your agent pays you in a later year. Amend tax return online For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. Amend tax return online Sales Caused by Weather-Related Conditions If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. Amend tax return online You must meet all the following conditions to qualify. Amend tax return online Your principal trade or business is farming. Amend tax return online You use the cash method of accounting. Amend tax return online You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. Amend tax return online The weather-related condition caused an area to be designated as eligible for assistance by the federal government. Amend tax return online Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. Amend tax return online The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. Amend tax return online A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. Amend tax return online See Other Involuntary Conversions in chapter 11. Amend tax return online Usual business practice. Amend tax return online   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. Amend tax return online Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. Amend tax return online If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. Amend tax return online Connection with affected area. Amend tax return online   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. Amend tax return online However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. Amend tax return online This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. Amend tax return online Classes of livestock. Amend tax return online   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. Amend tax return online Do not separate animals into classes based on age, sex, or breed. Amend tax return online Amount to be postponed. Amend tax return online   Follow these steps to figure the amount of gain to be postponed for each class of animals. Amend tax return online Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. Amend tax return online For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. Amend tax return online Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. Amend tax return online Example. Amend tax return online You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. Amend tax return online As a result of drought, you sold 135 head during 2012. Amend tax return online You realized $70,200 from the sale. Amend tax return online On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. Amend tax return online The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. Amend tax return online How to postpone gain. Amend tax return online   To postpone gain, attach a statement to your tax return for the year of the sale. Amend tax return online The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. Amend tax return online A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). Amend tax return online Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. Amend tax return online A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. Amend tax return online The number of animals sold in each of the 3 preceding years. Amend tax return online The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. Amend tax return online The total number of animals sold and the number sold because of weather-related conditions during the tax year. Amend tax return online A computation, as described above, of the income to be postponed for each class of livestock. Amend tax return online   Generally, you must file the statement and the return by the due date of the return, including extensions. Amend tax return online However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. Amend tax return online For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return online Attach the statement to the amended return and write “Filed pursuant to section 301. Amend tax return online 9100-2” at the top of the amended return. Amend tax return online File the amended return at the same address you filed the original return. Amend tax return online Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. Amend tax return online Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. Amend tax return online However, if you materially participate in farming operations on the land, the rent is farm income. Amend tax return online See Landlord Participation in Farming in chapter 12. Amend tax return online Pasture income and rental. Amend tax return online   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. Amend tax return online You must enter it as Other income on Schedule F. Amend tax return online If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. Amend tax return online Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. Amend tax return online It does not matter whether you use the cash method of accounting or an accrual method of accounting. Amend tax return online If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. Amend tax return online See Landlord Participation in Farming in chapter 12. Amend tax return online Report the rental income on Schedule F. Amend tax return online If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). Amend tax return online The income is not included in self-employment income. Amend tax return online Crop shares you use to feed livestock. Amend tax return online   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. Amend tax return online You must include the fair market value of the crop shares in income at that time. Amend tax return online You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. Amend tax return online Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. Amend tax return online See  chapter 12. Amend tax return online Crop shares you give to others (gift). Amend tax return online   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. Amend tax return online You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. Amend tax return online Example. Amend tax return online A tenant farmed part of your land under a crop-share arrangement. Amend tax return online The tenant harvested and delivered the crop in your name to an elevator company. Amend tax return online Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. Amend tax return online They sell their crop shares in the following year and the elevator company makes payments directly to your children. Amend tax return online In this situation, you are considered to have received rental income and then made a gift of that income. Amend tax return online You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. Amend tax return online Crop share loss. Amend tax return online   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. Amend tax return online See Publication 925 for information on these rules. Amend tax return online Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. Amend tax return online However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. Amend tax return online See Cost-Sharing Exclusion (Improvements) , later. Amend tax return online Report the agricultural program payment on the appropriate line of Schedule F, Part I. Amend tax return online Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. Amend tax return online However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. Amend tax return online Claim the deduction on Schedule F for the year of repayment or reduction. Amend tax return online Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. Amend tax return online However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. Amend tax return online You do not need approval from the IRS to adopt this method of reporting CCC loans. Amend tax return online Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. Amend tax return online However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. Amend tax return online For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. Amend tax return online Revenue Procedure 2008-52, 2008-36 I. Amend tax return online R. Amend tax return online B. Amend tax return online 587, is available at  www. Amend tax return online irs. Amend tax return online gov/irb/2008-36_IRB/ar09. Amend tax return online html. Amend tax return online You can request income tax withholding from CCC loan payments you receive. Amend tax return online Use Form W-4V, Voluntary Withholding Request. Amend tax return online See chapter 16 for information about ordering the form. Amend tax return online To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. Amend tax return online Attach a statement to your return showing the details of the loan. Amend tax return online You must file the statement and the return by the due date of the return, including extensions. Amend tax return online If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return online Attach the statement to the amended return and write “Filed pursuant to section 301. Amend tax return online 9100-2” at the top of the return. Amend tax return online File the amended return at the same address you filed the original return. Amend tax return online When you make this election, the amount you report as income becomes your basis in the commodity. Amend tax return online See chapter 6 for information on the basis of assets. Amend tax return online If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. Amend tax return online If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. Amend tax return online If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. Amend tax return online If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. Amend tax return online Form 1099-A. Amend tax return online   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. Amend tax return online “CCC” should be shown in box 6. Amend tax return online The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. Amend tax return online Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. Amend tax return online If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. Amend tax return online Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. Amend tax return online Market gain should be reported as follows. Amend tax return online If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. Amend tax return online However, adjust the basis of the commodity for the amount of the market gain. Amend tax return online If you did not include the CCC loan in income in the year received, include the market gain in your income. Amend tax return online The following examples show how to report market gain. Amend tax return online Example 1. Amend tax return online Mike Green is a cotton farmer. Amend tax return online He uses the cash method of accounting and files his tax return on a calendar year basis. Amend tax return online He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. Amend tax return online In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. Amend tax return online 00 per pound). Amend tax return online In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. Amend tax return online 50 per pound (lower than the loan amount). Amend tax return online Later in 2013, he sold the cotton for $2,500. Amend tax return online The market gain on the redemption was $. Amend tax return online 50 ($2. Amend tax return online 00 – $1. Amend tax return online 50) per pound. Amend tax return online Mike realized total market gain of $500 ($. Amend tax return online 50 x 1,000 pounds). Amend tax return online How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. Amend tax return online Included CCC loan. Amend tax return online   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. Amend tax return online The $500 market gain is not recognized on the redemption. Amend tax return online He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. Amend tax return online   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. Amend tax return online His gain from the sale is $1,000 ($2,500 – $1,500). Amend tax return online He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. Amend tax return online Excluded CCC loan. Amend tax return online   Mike has income of $500 from market gain in 2013. Amend tax return online He reports it on Schedule F, lines 4a and 4b. Amend tax return online His basis in the cotton is zero, so his gain from its sale is $2,500. Amend tax return online He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. Amend tax return online Example 2. Amend tax return online The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. Amend tax return online Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. Amend tax return online In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. Amend tax return online How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. Amend tax return online Included CCC loan. Amend tax return online   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. Amend tax return online The $500 market gain is not recognized on the redemption. Amend tax return online Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. Amend tax return online   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. Amend tax return online Mike has no gain or loss on its sale to the cotton buyer for that amount. Amend tax return online Excluded CCC loan. Amend tax return online   As in Example 1, Mike has income of $500 from market gain in 2013. Amend tax return online He reports it on Schedule F, lines 4a and 4b. Amend tax return online His basis in the cotton is zero, so his gain from its sale is $1,500. Amend tax return online He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. Amend tax return online Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. Amend tax return online You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. Amend tax return online Cost-share payments you receive may qualify for the cost-sharing exclusion. Amend tax return online See Cost-Sharing Exclusion (Improvements) , later. Amend tax return online CRP payments are reported to you on Form 1099-G. Amend tax return online Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. Amend tax return online See the instructions for Schedule SE (Form 1040). Amend tax return online Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. Amend tax return online You generally include them in the year you receive them. Amend tax return online Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops, because of drought, flood, or any other natural disaster. Amend tax return online You can request income tax withholding from crop disaster payments you receive from the federal government. Amend tax return online Use Form W-4V, Voluntary Withholding Request. Amend tax return online See chapter 16 for information about ordering the form. Amend tax return online Election to postpone reporting until the following year. Amend tax return online   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. Amend tax return online You use the cash method of accounting. Amend tax return online You receive the crop insurance proceeds in the same tax year the crops are damaged. Amend tax return online You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. Amend tax return online   Deferral is not permitted for proceeds received from revenue insurance policies. Amend tax return online   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. Amend tax return online Check the box on line 8c and attach a statement to your tax return. Amend tax return online The statement must include your name and address and contain the following information. Amend tax return online A statement that you are making an election under IRC section 451(d) and Regulations section 1. Amend tax return online 451-6. Amend tax return online The specific crop or crops physically destroyed or damaged. Amend tax return online A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. Amend tax return online The cause of the physical destruction or damage and the date or dates it occurred. Amend tax return online The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. Amend tax return online The name of each insurance carrier from whom you received payments. Amend tax return online   One election covers all crops representing a single trade or business. Amend tax return online If you have more than one farming business, make a separate election for each one. Amend tax return online For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. Amend tax return online   An election is binding for the year unless the IRS approves your request to change it. Amend tax return online To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. Amend tax return online Ogden Submission Processing Center P. Amend tax return online O. Amend tax return online Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. Amend tax return online These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. Amend tax return online They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. Amend tax return online Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. Amend tax return online You must include these benefits in income in the year you receive them. Amend tax return online You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. Amend tax return online Report the benefits on Schedule F, Part I, as agricultural program payments. Amend tax return online You can usually take a current deduction for the same amount as a feed expense. Amend tax return online Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. Amend tax return online A payment is any economic benefit you get as a result of an improvement. Amend tax return online However, this exclusion applies only to that part of a payment that meets all three of the following tests. Amend tax return online It was for a capital expense. Amend tax return online You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. Amend tax return online You must include the payment for a deductible expense in income, and you can take any offsetting deduction. Amend tax return online See chapter 5 for information on deducting soil and water conservation expenses. Amend tax return online It does not substantially increase your annual income from the property for which it is made. Amend tax return online An increase in annual income is substantial if it is more than the greater of the following amounts. Amend tax return online 10% of the average annual income derived from the affected property before receiving the improvement. Amend tax return online $2. Amend tax return online 50 times the number of affected acres. Amend tax return online The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. Amend tax return online Qualifying programs. Amend tax return online   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. Amend tax return online The rural clean water program authorized by the Federal Water Pollution Control Act. Amend tax return online The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. Amend tax return online The water bank program authorized by the Water Bank Act. Amend tax return online The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. Amend tax return online The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. Amend tax return online The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. Amend tax return online The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. Amend tax return online Certain small watershed programs, listed later. Amend tax return online Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. Amend tax return online Several state programs have been approved. Amend tax return online For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). Amend tax return online Small watershed programs. Amend tax return online   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. Amend tax return online The programs under the Watershed Protection and Flood Prevention Act. Amend tax return online The flood prevention projects under the Flood Control Act of 1944. Amend tax return online The Emergency Watershed Protection Program under the Flood Control Act of 1950. Amend tax return online Certain programs under the Colorado River Basin Salinity Control Act. Amend tax return online The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. Amend tax return online The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. Amend tax return online The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. Amend tax return online The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. Amend tax return online The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. Amend tax return online The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. Amend tax return online The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. Amend tax return online The Conservation Security Program authorized by the Food Security Act of 1985. Amend tax return online The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. Amend tax return online Income realized. Amend tax return online   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). Amend tax return online Value of the improvement. Amend tax return online   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. Amend tax return online The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. Amend tax return online Any government payments under a program not listed earlier. Amend tax return online Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. Amend tax return online Any government payment to you for rent or for your services. Amend tax return online The denominator of the fraction is the total cost of the improvement. Amend tax return online Excludable portion. Amend tax return online   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. Amend tax return online 10% of the prior average annual income from the affected acreage. Amend tax return online The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. Amend tax return online $2. Amend tax return online 50 times the number of affected acres. Amend tax return online The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. Amend tax return online You may need to consult your tax advisor for assistance. Amend tax return online Example. Amend tax return online One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. Amend tax return online The total cost of the improvement was $500,000. Amend tax return online The USDA paid $490,000. Amend tax return online You paid $10,000. Amend tax return online The value of the cost-sharing improvement is $15,000. Amend tax return online The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. Amend tax return online The excludable portion is the greater amount, $1,550. Amend tax return online You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. Amend tax return online   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. Amend tax return online Any payment excluded from income is not part of your basis. Amend tax return online In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. Amend tax return online   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. Amend tax return online How to report the exclusion. Amend tax return online   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. Amend tax return online The statement must include the following information. Amend tax return online The dollar amount of the cost funded by the government payment. Amend tax return online The value of the improvement. Amend tax return online The amount you are excluding. Amend tax return online   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. Amend tax return online Recapture. Amend tax return online   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. Amend tax return online In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. Amend tax return online You must report the recapture on Form 4797. Amend tax return online See Section 1255 property under Other Gains in chapter 9. Amend tax return online Electing not to exclude payments. Amend tax return online   You can elect not to exclude all or part of any payments you receive under these programs. Amend tax return online If you make this election for all of these payments, none of the above restrictions and rules apply. Amend tax return online You must make this election by the due date, including extensions, for filing your return. Amend tax return online In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. Amend tax return online If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return online Write “Filed pursuant to section 301. Amend tax return online 9100-2” at the top of the amended return and file it at the same address you filed the original return. Amend tax return online Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. Amend tax return online You must include these payments on Schedule F, lines 4a and 4b. Amend tax return online The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. Amend tax return online You must include these payments on Schedule F, lines 6a and 6b. Amend tax return online The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. Amend tax return online Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. Amend tax return online As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. Amend tax return online If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. Amend tax return online If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. Amend tax return online Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. Amend tax return online Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. Amend tax return online The gain or loss is capital or ordinary depending on how you used the quota. Amend tax return online See Capital or ordinary gain or loss , later. Amend tax return online Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. Amend tax return online Adjusted basis. Amend tax return online   The adjusted basis of your quota is determined differently depending on how you obtained the quota. Amend tax return online The basis of a quota derived from an original grant by the federal government is zero. Amend tax return online The basis of a purchased quota is the purchase price. Amend tax return online The basis of a quota received as a gift is generally the same as the donor's basis. Amend tax return online However, under certain circumstances, the basis is increased by the amount of gift taxes paid. Amend tax return online If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. Amend tax return online The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. Amend tax return online Reduction of basis. Amend tax return online   You are required to reduce the basis of your tobacco quota by the following amounts. Amend tax return online Deductions you took for amortization, depletion, or depreciation. Amend tax return online Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. Amend tax return online The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). Amend tax return online Amount treated as interest. Amend tax return online   You must reduce your tobacco quota buyout program payment by the amount treated as interest. Amend tax return online The interest is reportable as ordinary income. Amend tax return online If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. Amend tax return online   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. Amend tax return online You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. Amend tax return online For more information, see Notice 2005-57, 2005-32 I. Amend tax return online R. Amend tax return online B. Amend tax return online 267, available at www. Amend tax return online irs. Amend tax return online gov/irb/2005-32_IRB/ar13. Amend tax return online html. Amend tax return online Installment method. Amend tax return online   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. Amend tax return online Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. Amend tax return online See chapter 10 for more information. Amend tax return online Capital or ordinary gain or loss. Amend tax return online   Whether your gain or loss is ordinary or capital depends on how you used the quota. Amend tax return online Quota used in the trade or business of farming. Amend tax return online   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. Amend tax return online See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. Amend tax return online Quota held for investment. Amend tax return online   If you held the quota for investment purposes, any gain or loss is capital gain or loss. Amend tax return online The same result also applies if you held the quota for the production of income, though not connected with a trade or business. Amend tax return online Gain treated as ordinary income. Amend tax return online   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. Amend tax return online Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. Amend tax return online The cost of acquiring a quota. Amend tax return online Amounts for amortization, depletion, or depreciation. Amend tax return online Amounts to reflect a reduction in the quota pounds. Amend tax return online   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. Amend tax return online Self-employment income. Amend tax return online   The tobacco quota buyout payments are not self-employment income. Amend tax return online Income averaging for farmers. Amend tax return online   The gain or loss resulting from the quota payments does not qualify for income averaging. Amend tax return online A tobacco quota is considered an interest in land. Amend tax return online Income averaging is not available for gain or loss arising from the sale or other disposition of land. Amend tax return online Involuntary conversion. Amend tax return online   The buyout of the tobacco quota is not an involuntary conversion. Amend tax return online Form 1099-S. Amend tax return online   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. Amend tax return online The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. Amend tax return online Like-kind exchange of quota. Amend tax return online   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. Amend tax return online See Notice 2005-57 for more information. Amend tax return online Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. Amend tax return online Taxation of payments to tobacco growers. Amend tax return online   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. Amend tax return online Individuals will generally report the payments as an Agricultural program payment on Schedule F. Amend tax return online If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. Amend tax return online Self-employment income. Amend tax return online   Payments to growers generally represent self-employment income. Amend tax return online If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. Amend tax return online Income averaging for farmers. Amend tax return online   Payments to growers who are individuals qualify for farm income averaging. Amend tax return online Form 1099-G. Amend tax return online   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. Amend tax return online Other Payments You must include most other government program payments in income. Amend tax return online Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. Amend tax return online How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. Amend tax return online Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. Amend tax return online You must also capitalize the full cost of the improvement. Amend tax return online Since you have included the payments in income, they do not reduce your basis. Amend tax return online However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. Amend tax return online National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. Amend tax return online You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. Amend tax return online If you produce a tobacco crop, report the payments as income from farming on your Schedule F. Amend tax return online If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. Amend tax return online Payment to More Than One Person The USDA reports program payments to the IRS. Amend tax return online It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). Amend tax return online If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. Amend tax return online You should file Form 1099-G to report the identity of the actual recipient to the IRS. Amend tax return online You should also give this information to the recipient. Amend tax return online You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. Amend tax return online Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. Amend tax return online However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. Amend tax return online See chapter 16 for information about ordering Form 1099-G. Amend tax return online Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). Amend tax return online If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative. Amend tax return online Form 1099-PATR. Amend tax return online   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. Amend tax return online Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. Amend tax return online For information on the alternative minimum tax, see the Instructions for Form 6251. Amend tax return online Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. Amend tax return online They include the following items. Amend tax return online Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). Amend tax return online The stated dollar value of qualified written notices of allocation. Amend tax return online The fair market value of other property. Amend tax return online Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. Amend tax return online You must reduce the cost or other basis of these items by the amount of such patronage dividends received. Amend tax return online Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. Amend tax return online If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. Amend tax return online Qualified written notice of allocation. Amend tax return online   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. Amend tax return online A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. Amend tax return online The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. Amend tax return online You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. Amend tax return online Signing and giving a written agreement to the cooperative. Amend tax return online Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. Amend tax return online The cooperative must notify you in writing of this bylaw and give you a copy. Amend tax return online Endorsing and cashing a qualified check paid as part of the same patronage dividend. Amend tax return online You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. Amend tax return online Qualified check. Amend tax return online   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. Amend tax return online It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. Amend tax return online It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. Amend tax return online Loss on redemption. Amend tax return online   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. Amend tax return online The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. Amend tax return online Nonqualified notice of allocation. Amend tax return online   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. Amend tax return online Your basis in the notice is zero. Amend tax return online You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. Amend tax return online Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. Amend tax return online However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. Amend tax return online   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. Amend tax return online For example, if it represents interest income, report it on your return as interest. Amend tax return online Buying or selling capital assets or depreciable property. Amend tax return online   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. Amend tax return online You must, however, reduce the basis of these assets by the dividends. Amend tax return online This reduction is taken into account as of the first day of the tax year in which the dividends are received. Amend tax return online If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. Amend tax return online   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. Amend tax return online Example. Amend tax return online On July 1, 2012, Mr. Amend tax return online Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. Amend tax return online The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). Amend tax return online Mr. Amend tax return online Brown files his return on a calendar year basis. Amend tax return online For 2012, he claimed a depreciation deduction of $311, using the 10. Amend tax return online 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). Amend tax return online On July 2, 2013, the cooperative association paid Mr. Amend tax return online Brown a $300 cash patronage dividend for buying the machine. Amend tax return online Mr. Amend tax return online Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. Amend tax return online Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. Amend tax return online 38% × 1. Amend tax return online 5 = 23. Amend tax return online 07% Depreciation deduction for 2013 ($2,289 × 23. Amend tax return online 07%) $528 Exceptions. Amend tax return online   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. Amend tax return online If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. Amend tax return online If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). Amend tax return online   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. Amend tax return online Personal purchases. Amend tax return online   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). Amend tax return online This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. Amend tax return online Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. Amend tax return online A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. Amend tax return online These allocations can be paid in money, other property, or qualified certificates. Amend tax return online Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. Amend tax return online Qualified certificates. Amend tax return online   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. Amend tax return online The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. Amend tax return online If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. Amend tax return online Nonqualified certificates. Amend tax return online   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. Amend tax return online Your basis in the certificate is zero. Amend tax return online You must include in income any amount you receive from its sale, redemption, or other disposition. Amend tax return online Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. Amend tax return online Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. Amend tax return online For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Amend tax return online General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in gross income for tax purposes. Amend tax return online Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. Amend tax return online It is excluded from taxable income (see Exclusions , later). Amend tax return online Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. Amend tax return online If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. Amend tax return online Election to defer income from discharge of indebtedness. Amend tax return online   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. Amend tax return online Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. Amend tax return online See IRC section 108(i) and Publication 4681 for details. Amend tax return online Form 1099-C. Amend tax return online   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Amend tax return online The amount of debt canceled is shown in box 2. Amend tax return online Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Amend tax return online These exceptions apply before the exclusions discussed below. Amend tax return online Price reduced after purchase. Amend tax return online   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. Amend tax return online Reduce your basis in the property by the amount of the reduction in the debt. Amend tax return online The rules that apply to bankruptcy and insolvency are explained below under Exclusions . Amend tax return online Deductible debt. Amend tax return online   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. Amend tax return online This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. Amend tax return online Example. Amend tax return online You get accounting services for your farm on credit. Amend tax return online Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. Amend tax return online Your accountant forgives part of the amount you owe for the accounting services. Amend tax return online How you treat the canceled debt depends on your method of accounting. Amend tax return online Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Amend tax return online Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Amend tax return online Exclusions Do not include canceled debt in income in the following situations. Amend tax return online The cancellation takes place in a bankruptcy case under title 11 of the U. Amend tax return online S. Amend tax return online Code. Amend tax return online The cancellation takes place when you are insolvent. Amend tax return online The canceled debt is a qualified farm debt. Amend tax return online The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). Amend tax return online See Publication 334, Tax Guide for Small Business, chapter 5. Amend tax return online The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. Amend tax return online The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. Amend tax return online If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. Amend tax return online If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. Amend tax return online See Form 982 , later, for information on how to claim an exclusion for a canceled debt. Amend tax return online Debt. Amend tax return online   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. Amend tax return online Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. Amend tax return online Bankruptcy. Amend tax return online   A bankruptcy case is a case under title 11 of the U. Amend tax return online S. Amend tax return online Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. Amend tax return online   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. Amend tax return online Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . Amend tax return online Insolvency. Amend tax return online   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. Amend tax return online   You can exclude canceled debt from gross income up to the amount by which you are insolvent. Amend tax return online If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. Amend tax return online Otherwise, you include the difference in gross income. Amend tax return online Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . Amend tax return online You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. Amend tax return online Example. Amend tax return online You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. Amend tax return online Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. Amend tax return online Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). Amend tax return online You can exclude this amount from income. Amend tax return online The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. Amend tax return online If not, you must include it in income. Amend tax return online Reduction of tax attributes. Amend tax return online   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. Amend tax return online Order of reduction. Amend tax return online   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. Amend tax return online Net operating loss (NOL). Amend tax return online Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. Amend tax return online Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. Amend tax return online General business credit carryover. Amend tax return online Reduce the credit carryover to or from the tax year of the debt cancellation. Amend tax return online Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. Amend tax return online Minimum tax credit. Amend tax return online Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. Amend tax return online Reduce the credit 331/3 cents for each dollar of excluded canceled debt. Amend tax return online Capital loss. Amend tax return online Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. Amend tax return online Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. Amend tax return online Basis. Amend tax return online Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. Amend tax return online Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. Amend tax return online Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. Amend tax return online Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. Amend tax return online Inventory and accounts and notes receivable. Amend tax return online Other property. Amend tax return online Reduce the basis one dollar for each dollar of excluded canceled debt. Amend tax return online However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. Amend tax return online For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. Amend tax return online 1017-1(b)(2). Amend tax return online Also see Electing to reduce the basis of depreciable property