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Amended Forms

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

Amended forms 1. Amended forms   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). Amended forms  You can set up and make contributions to an IRA if you receive taxable compensation. Amended forms Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. Amended forms For more information about IRAs, see Publication 590. Amended forms Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. Amended forms The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. Amended forms Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. Amended forms Many types of educational assistance are tax free if they meet the requirements discussed here. Amended forms Special rules apply to U. Amended forms S. Amended forms citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. Amended forms For information about these rules, see Publication 54, Tax Guide for U. Amended forms S. Amended forms Citizens and Resident Aliens Abroad. Amended forms Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. Amended forms A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. Amended forms Amount of scholarship or fellowship. Amended forms   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. Amended forms This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. Amended forms The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. Amended forms Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. Amended forms Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. Amended forms A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. Amended forms (But for exceptions, see Payment for services,later. Amended forms Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. Amended forms Candidate for a degree. Amended forms   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. Amended forms Eligible educational institution. Amended forms   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Amended forms Qualified education expenses. Amended forms   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Amended forms These items must be required of all students in your course of instruction. Amended forms Expenses that do not qualify. Amended forms   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. Amended forms Payment for services. Amended forms   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. Amended forms This applies even if all candidates for a degree must perform the services to receive the degree. Amended forms (See exceptions next. Amended forms ) Exceptions. Amended forms   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. Amended forms Example 1. Amended forms You received a scholarship of $2,500. Amended forms The scholarship was not received under either of the exceptions mentioned above. Amended forms As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. Amended forms Of the $2,500 scholarship, $1,000 represents payment for teaching. Amended forms The provider of your scholarship gives you a Form W-2 showing $1,000 as income. Amended forms Your qualified education expenses were at least $1,500. Amended forms Assuming that all other conditions are met, $1,500 of your scholarship is tax free. Amended forms The $1,000 you received for teaching is taxable. Amended forms Example 2. Amended forms You are a candidate for a degree at a medical school. Amended forms You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. Amended forms The terms of your scholarship require you to perform future services. Amended forms A substantial penalty applies if you do not comply. Amended forms The entire amount of your grant is taxable as payment for services in the year it is received. Amended forms Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. Amended forms Worksheet 1-1. Amended forms    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. Amended forms    Worksheet 1-1. Amended forms Taxable Scholarship and Fellowship Income 1. Amended forms Enter the total amount of any scholarship or fellowship for 2013. Amended forms See Amount of scholarship or fellowship, earlier. Amended forms 1. Amended forms       If you are a degree candidate at an eligible educational institution, go to line 2. Amended forms If you are not a degree candidate at an eligible educational institution, stop here. Amended forms The entire amount is taxable. Amended forms For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. Amended forms       2. Amended forms Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. Amended forms (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. Amended forms ) 2. Amended forms     3. Amended forms Subtract line 2 from line 1 3. Amended forms     4. Amended forms Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. Amended forms     5. Amended forms Subtract line 4 from line 3 5. Amended forms     6. Amended forms Enter the amount of your qualified education expenses 6. Amended forms     7. Amended forms Enter the smaller of line 5 or line 6. Amended forms This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. Amended forms     8. Amended forms Subtract line 7 from line 5 8. Amended forms     9. Amended forms Taxable part. Amended forms Add lines 2, 4, and 8. Amended forms See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. Amended forms     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. Amended forms You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. Amended forms Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. Amended forms If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. Amended forms If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. Amended forms You must report the taxable amount whether or not you received a Form W-2. Amended forms If you receive an incorrect Form W-2, ask the payer for a corrected one. Amended forms For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. Amended forms How To Report How you report any taxable scholarship or fellowship income depends on which return you file. Amended forms Form 1040EZ. Amended forms   If you file Form 1040EZ, include the taxable amount in the total on line 1. Amended forms If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. Amended forms Form 1040A. Amended forms   If you file Form 1040A, include the taxable amount in the total on line 7. Amended forms If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. Amended forms Form 1040. Amended forms   If you file Form 1040, include the taxable amount in the total on line 7. Amended forms If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. Amended forms Schedule SE (Form 1040). Amended forms   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. Amended forms If your net earnings are $400 or more, you must pay self-employment tax. Amended forms Use Schedule SE, Self-Employment Tax, to figure this tax. Amended forms Form 1040NR. Amended forms   If you file Form 1040NR, report the taxable amount on line 12. Amended forms Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. Amended forms S. Amended forms Source Income Subject to Withholding. Amended forms See the Instructions for Form 1040NR for more information. Amended forms Form 1040NR-EZ. Amended forms   If you file Form 1040NR-EZ, report the taxable amount on line 5. Amended forms Generally, you must report the amount shown in box 2 of Form(s) 1042-S. Amended forms See the Instructions for Form 1040NR-EZ for more information. Amended forms Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. Amended forms Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. Amended forms Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. Amended forms They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. Amended forms Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. Amended forms Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. Amended forms Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. Amended forms Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. Amended forms Do not include these payments as income on your federal tax return. Amended forms If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. Amended forms This applies only to the part of your VA payments that is required to be used for education expenses. Amended forms You may want to visit the Veteran's Administration website at www. Amended forms gibill. Amended forms va. Amended forms gov for specific information about the various VA benefits for education. Amended forms Example. Amended forms You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. Amended forms Neither of these benefits is taxable and you do not report them on your tax return. Amended forms You also want to claim an American opportunity credit on your return. Amended forms You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). Amended forms To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. Amended forms You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. Amended forms Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. Amended forms This is called a “tuition reduction. Amended forms ” You do not have to include a qualified tuition reduction in your income. Amended forms A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. Amended forms You do not have to use the tuition reduction at the eligible educational institution from which you received it. Amended forms In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. Amended forms The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. Amended forms You must include in your income any tuition reduction you receive that is payment for your services. Amended forms Eligible educational institution. Amended forms   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Amended forms Officers, owners, and highly compensated employees. Amended forms   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. Amended forms This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. Amended forms The group must be defined under a reasonable classification set up by the employer. Amended forms The classification must not discriminate in favor of owners, officers, or highly compensated employees. Amended forms Payment for services. Amended forms   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. Amended forms This applies even if all candidates for a degree must perform the services to receive the degree. Amended forms (See below for exceptions. Amended forms ) Exceptions. Amended forms   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. Amended forms Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. Amended forms You are an employee of the eligible educational institution. Amended forms You were an employee of the eligible educational institution, but you retired or left on disability. Amended forms You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. Amended forms You are the dependent child or spouse of an individual described in (1) through (3), above. Amended forms Child of deceased parents. Amended forms   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. Amended forms Child of divorced parents. Amended forms   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. Amended forms Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. Amended forms It is provided by an eligible educational institution. Amended forms You are a graduate student who performs teaching or research activities for the educational institution. Amended forms You must include in income any other tuition reductions for graduate education that you receive. Amended forms How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. Amended forms Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Amended forms Prev  Up  Next   Home   More Online Publications