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Amended Tax Returns More:label_amended_20tax_20returns More:taxes

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Amended Tax Returns More:label_amended_20tax_20returns More:taxes

Amended tax returns more:label_amended_20tax_20returns more:taxes Publication 560 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionSEP plans. Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE plans. Amended tax returns more:label_amended_20tax_20returns more:taxes Qualified plans. Amended tax returns more:label_amended_20tax_20returns more:taxes Ordering forms and publications. Amended tax returns more:label_amended_20tax_20returns more:taxes Tax questions. Amended tax returns more:label_amended_20tax_20returns more:taxes Future Developments For the latest information about developments related to Publication 560, such as legislation enacted after we release it, go to www. Amended tax returns more:label_amended_20tax_20returns more:taxes irs. Amended tax returns more:label_amended_20tax_20returns more:taxes gov/pub560. Amended tax returns more:label_amended_20tax_20returns more:taxes What's New Compensation limit increased for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes  For 2013 the maximum compensation used for figuring contributions and benefits increases to $255,000. Amended tax returns more:label_amended_20tax_20returns more:taxes This limit increases to $260,000 for 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes Elective deferral limit for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes  The limit on elective deferrals, other than catch-up contributions, increases to $17,500 for 2013 and remains at $17,500 for 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes These limits apply for participants in SARSEPs, 401(k) plans (excluding SIMPLE plans), section 403(b) plans and section 457(b) plans. Amended tax returns more:label_amended_20tax_20returns more:taxes Defined contribution limit increased for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes  The limit on contributions, other than catch-up contributions, for a participant in a defined contribution plan increases to $51,000 for 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes This limit increases to $52,000 for 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE plan salary reduction contribution limit for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes  The limit on salary reduction contributions, other than catch-up contributions, increases to $12,000 for 2013 and remains at $12,000 for 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes Catch-up contribution limit remains unchanged for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes  A plan can permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes The catch-up contribution limitation for defined contribution plans other than SIMPLE plans remains unchanged at $5,500 for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes The catch-up contribution limitation for SIMPLE plans remains unchanged at $2,500 for 2013 and 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes The catch-up contributions a participant can make for a year cannot exceed the lesser of the following amounts. Amended tax returns more:label_amended_20tax_20returns more:taxes The catch-up contribution limit. Amended tax returns more:label_amended_20tax_20returns more:taxes The excess of the participant's compensation over the elective deferrals that are not catch-up contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes See “Catch-up contributions” under Contribution Limits and Limit on Elective Deferrals in chapters 3 and 4, respectively, for more information. Amended tax returns more:label_amended_20tax_20returns more:taxes All section references are to the Internal Revenue Code, unless otherwise stated. Amended tax returns more:label_amended_20tax_20returns more:taxes Reminders In-plan Roth rollovers. Amended tax returns more:label_amended_20tax_20returns more:taxes  Section 402A(c)(4) provides for a distribution from an individual's account in a 401(k) plan, other than from a designated Roth account, that is rolled over to the individual's designated Roth account in the same plan. Amended tax returns more:label_amended_20tax_20returns more:taxes An in-plan Roth rollover is not treated as a distribution for most purposes. Amended tax returns more:label_amended_20tax_20returns more:taxes Section 402A(c)(4) was added by the Small Business Jobs Act of 2010 and applies to distributions made after September 27, 2010. Amended tax returns more:label_amended_20tax_20returns more:taxes For additional guidance on in-plan Roth rollovers, see Notice 2010-84, 2010-51 I. Amended tax returns more:label_amended_20tax_20returns more:taxes R. Amended tax returns more:label_amended_20tax_20returns more:taxes B. Amended tax returns more:label_amended_20tax_20returns more:taxes 872, available at  www. Amended tax returns more:label_amended_20tax_20returns more:taxes irs. Amended tax returns more:label_amended_20tax_20returns more:taxes gov/irb/2010-51_IRB/ar11. Amended tax returns more:label_amended_20tax_20returns more:taxes html. Amended tax returns more:label_amended_20tax_20returns more:taxes In-plan Roth rollovers expanded. Amended tax returns more:label_amended_20tax_20returns more:taxes  Beginning in 2013, a plan with designated Roth accounts can permit a participant to roll over amounts into a designated Roth account from his or her other accounts in the same plan, regardless of whether the participant is eligible for a distribution from the other accounts. Amended tax returns more:label_amended_20tax_20returns more:taxes Section 402A(c)(4) was amended by the American Taxpayer Relief Act of 2012. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information, see Notice 2013-74, 2013-52 I. Amended tax returns more:label_amended_20tax_20returns more:taxes R. Amended tax returns more:label_amended_20tax_20returns more:taxes B. Amended tax returns more:label_amended_20tax_20returns more:taxes 819, available at www. Amended tax returns more:label_amended_20tax_20returns more:taxes irs. Amended tax returns more:label_amended_20tax_20returns more:taxes gov/irb/2013-52_IRB/ar11. Amended tax returns more:label_amended_20tax_20returns more:taxes html. Amended tax returns more:label_amended_20tax_20returns more:taxes Credit for startup costs. Amended tax returns more:label_amended_20tax_20returns more:taxes  You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SEP, SIMPLE, or qualified plan. Amended tax returns more:label_amended_20tax_20returns more:taxes The credit equals 50% of the cost to set up and administer the plan and educate employees about the plan, up to a maximum of $500 per year for each of the first 3 years of the plan. Amended tax returns more:label_amended_20tax_20returns more:taxes You can choose to start claiming the credit in the tax year before the tax year in which the plan becomes effective. Amended tax returns more:label_amended_20tax_20returns more:taxes You must have had 100 or fewer employees who received at least $5,000 in compensation from you for the preceding year. Amended tax returns more:label_amended_20tax_20returns more:taxes At least one participant must be a non-highly compensated employee. Amended tax returns more:label_amended_20tax_20returns more:taxes The employees generally cannot be substantially the same employees for whom contributions were made or benefits accrued under a plan of any of the following employers in the 3-tax-year period immediately before the first year to which the credit applies. Amended tax returns more:label_amended_20tax_20returns more:taxes You. Amended tax returns more:label_amended_20tax_20returns more:taxes A member of a controlled group that includes you. Amended tax returns more:label_amended_20tax_20returns more:taxes A predecessor of (1) or (2). Amended tax returns more:label_amended_20tax_20returns more:taxes The credit is part of the general business credit, which can be carried back or forward to other tax years if it cannot be used in the current year. Amended tax returns more:label_amended_20tax_20returns more:taxes However, the part of the general business credit attributable to the small employer pension plan startup cost credit cannot be carried back to a tax year beginning before January 1, 2002. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot deduct the part of the startup costs equal to the credit claimed for a tax year, but you can choose not to claim the allowable credit for a tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes To take the credit, use Form 8881, Credit for Small Employer Pension Plan Startup Costs. Amended tax returns more:label_amended_20tax_20returns more:taxes Retirement savings contributions credit. Amended tax returns more:label_amended_20tax_20returns more:taxes  Retirement plan participants (including self-employed individuals) who make contributions to their plan may qualify for the retirement savings contribution credit. Amended tax returns more:label_amended_20tax_20returns more:taxes The maximum contribution eligible for the credit is $2,000. Amended tax returns more:label_amended_20tax_20returns more:taxes To take the credit, use Form 8880, Credit for Qualified Retirement Savings Contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information on who is eligible for the credit, retirement plan contributions eligible for the credit and how to figure the credit, see Form 8880 and its instructions or go to the IRS website and search Retirement Topics-Retirement Savings Contributions Credit (Saver's Credit). Amended tax returns more:label_amended_20tax_20returns more:taxes Photographs of missing children. Amended tax returns more:label_amended_20tax_20returns more:taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Amended tax returns more:label_amended_20tax_20returns more:taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Amended tax returns more:label_amended_20tax_20returns more:taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Amended tax returns more:label_amended_20tax_20returns more:taxes Introduction This publication discusses retirement plans you can set up and maintain for yourself and your employees. Amended tax returns more:label_amended_20tax_20returns more:taxes In this publication, “you” refers to the employer. Amended tax returns more:label_amended_20tax_20returns more:taxes See chapter 1 for the definition of the term employer and the definitions of other terms used in this publication. Amended tax returns more:label_amended_20tax_20returns more:taxes This publication covers the following types of retirement plans. Amended tax returns more:label_amended_20tax_20returns more:taxes SEP (simplified employee pension) plans. Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE (savings incentive match plan for employees) plans. Amended tax returns more:label_amended_20tax_20returns more:taxes Qualified plans (also called H. Amended tax returns more:label_amended_20tax_20returns more:taxes R. Amended tax returns more:label_amended_20tax_20returns more:taxes 10 plans or Keogh plans when covering self-employed individuals), including 401(k) plans. Amended tax returns more:label_amended_20tax_20returns more:taxes SEP, SIMPLE, and qualified plans offer you and your employees a tax-favored way to save for retirement. Amended tax returns more:label_amended_20tax_20returns more:taxes You can deduct contributions you make to the plan for your employees. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are a sole proprietor, you can deduct contributions you make to the plan for yourself. Amended tax returns more:label_amended_20tax_20returns more:taxes You can also deduct trustees' fees if contributions to the plan do not cover them. Amended tax returns more:label_amended_20tax_20returns more:taxes Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Under a 401(k) plan, employees can have you contribute limited amounts of their before-tax (after-tax, in the case of a qualified Roth contribution program) pay to the plan. Amended tax returns more:label_amended_20tax_20returns more:taxes These amounts (and the earnings on them) are generally tax free until your employees receive distributions from the plan or, in the case of a qualified distribution from a designated Roth account, completely tax free. Amended tax returns more:label_amended_20tax_20returns more:taxes What this publication covers. Amended tax returns more:label_amended_20tax_20returns more:taxes   This publication contains the information you need to understand the following topics. Amended tax returns more:label_amended_20tax_20returns more:taxes What type of plan to set up. Amended tax returns more:label_amended_20tax_20returns more:taxes How to set up a plan. Amended tax returns more:label_amended_20tax_20returns more:taxes How much you can contribute to a plan. Amended tax returns more:label_amended_20tax_20returns more:taxes How much of your contribution is deductible. Amended tax returns more:label_amended_20tax_20returns more:taxes How to treat certain distributions. Amended tax returns more:label_amended_20tax_20returns more:taxes How to report information about the plan to the IRS and your employees. Amended tax returns more:label_amended_20tax_20returns more:taxes Basic features of SEP, SIMPLE, and qualified plans. Amended tax returns more:label_amended_20tax_20returns more:taxes The key rules for SEP, SIMPLE, and qualified plans are outlined in Table 1. Amended tax returns more:label_amended_20tax_20returns more:taxes SEP plans. Amended tax returns more:label_amended_20tax_20returns more:taxes   SEPs provide a simplified method for you to make contributions to a retirement plan for yourself and your employees. Amended tax returns more:label_amended_20tax_20returns more:taxes Instead of setting up a profit-sharing or money purchase plan with a trust, you can adopt a SEP agreement and make contributions directly to a traditional individual retirement account or a traditional individual retirement annuity (SEP-IRA) set up for yourself and each eligible employee. Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE plans. Amended tax returns more:label_amended_20tax_20returns more:taxes   Generally, if you had 100 or fewer employees who received at least $5,000 in compensation last year, you can set up a SIMPLE plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Under a SIMPLE plan, employees can choose to make salary reduction contributions rather than receiving these amounts as part of their regular pay. Amended tax returns more:label_amended_20tax_20returns more:taxes In addition, you will contribute matching or nonelective contributions. Amended tax returns more:label_amended_20tax_20returns more:taxes The two types of SIMPLE plans are the SIMPLE IRA plan and the SIMPLE 401(k) plan. Amended tax returns more:label_amended_20tax_20returns more:taxes Qualified plans. Amended tax returns more:label_amended_20tax_20returns more:taxes   The qualified plan rules are more complex than the SEP plan and SIMPLE plan rules. Amended tax returns more:label_amended_20tax_20returns more:taxes However, there are advantages to qualified plans, such as increased flexibility in designing plans and increased contribution and deduction limits in some cases. Amended tax returns more:label_amended_20tax_20returns more:taxes Table 1. Amended tax returns more:label_amended_20tax_20returns more:taxes Key Retirement Plan Rules for 2013 Type  of  Plan Last Date for Contribution Maximum Contribution Maximum Deduction When To Set Up Plan SEP Due date of employer's return (including extensions). Amended tax returns more:label_amended_20tax_20returns more:taxes Smaller of $51,000 or 25%1 of participant's compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes 2 25%1 of all participants' compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes 2 Any time up to the due date of employer's return (including extensions). Amended tax returns more:label_amended_20tax_20returns more:taxes SIMPLE IRA and SIMPLE 401(k) Salary reduction contributions: 30 days after the end of the month for which the contributions are to be made. Amended tax returns more:label_amended_20tax_20returns more:taxes 4  Matching or nonelective contributions: Due date of employer's return (including extensions). Amended tax returns more:label_amended_20tax_20returns more:taxes Employee contribution: Salary reduction contribution up to $12,000, $14,500 if age 50 or over. Amended tax returns more:label_amended_20tax_20returns more:taxes   Employer contribution:  Either dollar-for-dollar matching contributions, up to 3% of employee's compensation,3 or fixed nonelective contributions of 2% of compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes 2 Same as maximum contribution. Amended tax returns more:label_amended_20tax_20returns more:taxes Any time between 1/1 and 10/1 of the calendar year. Amended tax returns more:label_amended_20tax_20returns more:taxes   For a new employer coming into existence after 10/1, as soon as administratively feasible. Amended tax returns more:label_amended_20tax_20returns more:taxes Qualified Plan: Defined Contribution Plan  Elective deferral: Due date of employer's return (including extensions). Amended tax returns more:label_amended_20tax_20returns more:taxes 4   Employer contribution: Money Purchase or Profit-Sharing: Due date of employer's return (including extensions). Amended tax returns more:label_amended_20tax_20returns more:taxes  Employee contribution: Elective deferral up to $17,500, $23,000 if age 50 or over. Amended tax returns more:label_amended_20tax_20returns more:taxes   Employer contribution: Money Purchase: Smaller of $51,000 or 100%1 of participant's compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes 2  Profit-Sharing: Smaller of $51,000 or 100%1 of participant's compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes 2  25%1 of all participants' compensation2, plus amount of elective deferrals made. Amended tax returns more:label_amended_20tax_20returns more:taxes   By the end of the tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes Qualified Plan: Defined Benefit Plan Contributions generally must be paid in quarterly installments, due 15 days after the end of each quarter. Amended tax returns more:label_amended_20tax_20returns more:taxes See Minimum Funding Requirement in chapter 4. Amended tax returns more:label_amended_20tax_20returns more:taxes Amount needed to provide an annual benefit no larger than the smaller of $205,000 or 100% of the participant's average compensation for his or her highest 3 consecutive calendar years. Amended tax returns more:label_amended_20tax_20returns more:taxes Based on actuarial assumptions and computations. Amended tax returns more:label_amended_20tax_20returns more:taxes By the end of the tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes 1Net earnings from self-employment must take the contribution into account. Amended tax returns more:label_amended_20tax_20returns more:taxes See Deduction Limit for Self-Employed Individuals in chapters 2 and 4 . Amended tax returns more:label_amended_20tax_20returns more:taxes  2Compensation is generally limited to $255,000 in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes  3Under a SIMPLE 401(k) plan, compensation is generally limited to $255,000 in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes  4Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions and elective deferrals. Amended tax returns more:label_amended_20tax_20returns more:taxes What this publication does not cover. Amended tax returns more:label_amended_20tax_20returns more:taxes   Although the purpose of this publication is to provide general information about retirement plans you can set up for your employees, it does not contain all the rules and exceptions that apply to these plans. Amended tax returns more:label_amended_20tax_20returns more:taxes You may also need professional help and guidance. Amended tax returns more:label_amended_20tax_20returns more:taxes   Also, this publication does not cover all the rules that may be of interest to employees. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, it does not cover the following topics. Amended tax returns more:label_amended_20tax_20returns more:taxes The comprehensive IRA rules an employee needs to know. Amended tax returns more:label_amended_20tax_20returns more:taxes These rules are covered in Publication 590, Individual Retirement Arrangements (IRAs). Amended tax returns more:label_amended_20tax_20returns more:taxes The comprehensive rules that apply to distributions from retirement plans. Amended tax returns more:label_amended_20tax_20returns more:taxes These rules are covered in Publication 575, Pension and Annuity Income. Amended tax returns more:label_amended_20tax_20returns more:taxes The comprehensive rules that apply to section 403(b) plans. Amended tax returns more:label_amended_20tax_20returns more:taxes These rules are covered in Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). Amended tax returns more:label_amended_20tax_20returns more:taxes Comments and suggestions. Amended tax returns more:label_amended_20tax_20returns more:taxes   We welcome your comments about this publication and your suggestions for future editions. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Amended tax returns more:label_amended_20tax_20returns more:taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Amended tax returns more:label_amended_20tax_20returns more:taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can send your comments from www. Amended tax returns more:label_amended_20tax_20returns more:taxes irs. Amended tax returns more:label_amended_20tax_20returns more:taxes gov/formspubs. Amended tax returns more:label_amended_20tax_20returns more:taxes Click on “More Information” and then on “Give us feedback. Amended tax returns more:label_amended_20tax_20returns more:taxes ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Amended tax returns more:label_amended_20tax_20returns more:taxes Ordering forms and publications. Amended tax returns more:label_amended_20tax_20returns more:taxes   Visit www. Amended tax returns more:label_amended_20tax_20returns more:taxes irs. Amended tax returns more:label_amended_20tax_20returns more:taxes gov/formspubs to download forms  and publications, call 1-800-TAX-FORM  (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Amended tax returns more:label_amended_20tax_20returns more:taxes Internal Revenue Service 1201 N. Amended tax returns more:label_amended_20tax_20returns more:taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you have a tax question, check the information available on IRS. Amended tax returns more:label_amended_20tax_20returns more:taxes gov or call 1-800-829-1040. Amended tax returns more:label_amended_20tax_20returns more:taxes We cannot answer tax questions sent to either of the above addresses. Amended tax returns more:label_amended_20tax_20returns more:taxes Note. Amended tax returns more:label_amended_20tax_20returns more:taxes Forms filed electronically with the Department of Labor are not available on the IRS website. Amended tax returns more:label_amended_20tax_20returns more:taxes Instead, see www. Amended tax returns more:label_amended_20tax_20returns more:taxes efast. Amended tax returns more:label_amended_20tax_20returns more:taxes dol. Amended tax returns more:label_amended_20tax_20returns more:taxes gov. Amended tax returns more:label_amended_20tax_20returns more:taxes Prev  Up  Next   Home   More Online Publications
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The Amended Tax Returns More:label_amended_20tax_20returns More:taxes

Amended tax returns more:label_amended_20tax_20returns more:taxes 3. Amended tax returns more:label_amended_20tax_20returns more:taxes   Abandonments Table of Contents You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. Amended tax returns more:label_amended_20tax_20returns more:taxes Whether an abandonment has occurred is determined in light of all the facts and circumstances. Amended tax returns more:label_amended_20tax_20returns more:taxes You must both show an intention to abandon the property and affirmatively act to abandon the property. Amended tax returns more:label_amended_20tax_20returns more:taxes A voluntary conveyance of the property in lieu of foreclosure is not an abandonment and is treated as the exchange of property to satisfy a debt. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information, see Sales and Exchanges in Publication 544. Amended tax returns more:label_amended_20tax_20returns more:taxes The tax consequences of abandonment of property that secures a debt depend on whether you were personally liable for the debt (recourse debt) or were not personally liable for the debt (nonrecourse debt). Amended tax returns more:label_amended_20tax_20returns more:taxes See Publication 544 if you abandoned property that did not secure debt. Amended tax returns more:label_amended_20tax_20returns more:taxes This publication only discusses the tax consequences of abandoning property that secured a debt. Amended tax returns more:label_amended_20tax_20returns more:taxes Abandonment of property securing recourse debt. Amended tax returns more:label_amended_20tax_20returns more:taxes    In most cases, if you abandon property that secures debt for which you are personally liable (recourse debt), you do not have gain or loss until the later foreclosure is completed. Amended tax returns more:label_amended_20tax_20returns more:taxes For details on figuring gain or loss on the foreclosure, see chapter 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1—abandonment of personal-use property securing recourse debt. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2009, Anne purchased a home for $200,000. Amended tax returns more:label_amended_20tax_20returns more:taxes She borrowed the entire purchase price, for which she was personally liable, and gave the bank a mortgage on the home. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2013, Anne lost her job and was unable to continue making her mortgage loan payments. Amended tax returns more:label_amended_20tax_20returns more:taxes Because her mortgage loan balance was $185,000 and the FMV of her home was only $150,000, Anne decided to abandon her home by permanently moving out on August 1, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Because Anne was personally liable for the debt and the bank did not complete a foreclosure of the property in 2013, Anne has neither gain nor loss in tax year 2013 from abandoning the home. Amended tax returns more:label_amended_20tax_20returns more:taxes If the bank sells the house at a foreclosure sale in 2014, Anne will have to figure her gain or nondeductible loss for tax year 2014 as discussed earlier in chapter 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—abandonment of business or investment property securing recourse debt. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2009, Sue purchased business property for $200,000. Amended tax returns more:label_amended_20tax_20returns more:taxes She borrowed the entire purchase price, for which she was personally liable, and gave the lender a security interest in the property. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2013, Sue was unable to continue making her loan payments. Amended tax returns more:label_amended_20tax_20returns more:taxes Because her loan balance was $185,000 and the FMV of the property was only $150,000, Sue abandoned the property on August 1, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Because Sue was personally liable for the debt and the lender did not complete a foreclosure of the property in 2013, Sue has neither gain nor loss in tax year 2013 from abandoning the property. Amended tax returns more:label_amended_20tax_20returns more:taxes If the lender sells the property at a foreclosure sale in 2014, Sue will have to figure her gain or deductible loss for tax year 2014 as discussed earlier in chapter 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Abandonment of property securing nonrecourse debt. Amended tax returns more:label_amended_20tax_20returns more:taxes    If you abandon property that secures debt for which you are not personally liable (nonrecourse debt), the abandonment is treated as a sale or exchange. Amended tax returns more:label_amended_20tax_20returns more:taxes   The amount you realize on the abandonment of property that secured nonrecourse debt is the amount of the nonrecourse debt. Amended tax returns more:label_amended_20tax_20returns more:taxes If the amount you realize is more than your adjusted basis, then you have a gain. Amended tax returns more:label_amended_20tax_20returns more:taxes If your adjusted basis is more than the amount you realize, then you have a loss. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information on how to figure gain and loss, see Gain or Loss from Sales or Exchanges in Publication 544. Amended tax returns more:label_amended_20tax_20returns more:taxes   Loss from abandonment of business or investment property is deductible as a loss. Amended tax returns more:label_amended_20tax_20returns more:taxes The character of the loss depends on the character of the property. Amended tax returns more:label_amended_20tax_20returns more:taxes The amount of deductible capital loss may be limited. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information, see Treatment of Capital Losses in Publication 544. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot deduct any loss from abandonment of your home or other property held for personal use. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1—abandonment of personal-use property securing nonrecourse debt. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2009, Timothy purchased a home for $200,000. Amended tax returns more:label_amended_20tax_20returns more:taxes He borrowed the entire purchase price, for which he was not personally liable, and gave the bank a mortgage on the home. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2013, Timothy lost his job and was unable to continue making his mortgage loan payments. Amended tax returns more:label_amended_20tax_20returns more:taxes Because his mortgage loan balance was $185,000 and the FMV of his home was only $150,000, Timothy decided to abandon his home by permanently moving out on August 1, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Because Timothy was not personally liable for the debt, the abandonment is treated as a sale or exchange of the home in tax year 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Timothy's amount realized is $185,000 and his adjusted basis in the home is $200,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Timothy has a $15,000 nondeductible loss in tax year 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes (Had Timothy’s adjusted basis been less than the amount realized, Timothy would have had a gain that he would have to include in gross income. Amended tax returns more:label_amended_20tax_20returns more:taxes ) The bank sells the house at a foreclosure sale in 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes Timothy has neither gain nor loss from the foreclosure sale. Amended tax returns more:label_amended_20tax_20returns more:taxes Because he was not personally liable for the debt, he also has no cancellation of debt income. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—abandonment of business or investment property securing nonrecourse debt. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2009, Robert purchased business property for $200,000. Amended tax returns more:label_amended_20tax_20returns more:taxes He borrowed the entire purchase price, for which he was not personally liable, and gave the lender a security interest in the property. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2013, Robert was unable to continue making his loan payments. Amended tax returns more:label_amended_20tax_20returns more:taxes Because his loan balance was $185,000 and the FMV of the property was only $150,000, Robert decided to abandon the property on August 1, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Because Robert was not personally liable for the debt, the abandonment is treated as a sale or exchange of the property in tax year 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Robert's amount realized is $185,000 and his adjusted basis in the property is $180,000 (as a result of $20,000 of depreciation deductions on the property). Amended tax returns more:label_amended_20tax_20returns more:taxes Robert has a $5,000 gain in tax year 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes (Had Robert’s adjusted basis been greater than the amount realized, he would have had a deductible loss. Amended tax returns more:label_amended_20tax_20returns more:taxes ) The lender sells the property at a foreclosure sale in 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes Robert has neither gain nor loss from the foreclosure sale. Amended tax returns more:label_amended_20tax_20returns more:taxes Because he was not personally liable for the debt, he also has no cancellation of debt income. Amended tax returns more:label_amended_20tax_20returns more:taxes Canceled debt. Amended tax returns more:label_amended_20tax_20returns more:taxes    If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you will realize ordinary income equal to the canceled debt. Amended tax returns more:label_amended_20tax_20returns more:taxes This income is separate from any amount realized from abandonment of the property. Amended tax returns more:label_amended_20tax_20returns more:taxes You must report this income on your return unless one of the exceptions or exclusions described in chapter 1 applies. Amended tax returns more:label_amended_20tax_20returns more:taxes See chapter 1 for more details. Amended tax returns more:label_amended_20tax_20returns more:taxes Forms 1099-A and 1099-C. Amended tax returns more:label_amended_20tax_20returns more:taxes    In most cases, if you abandon real property (such as a home), intangible property, or tangible personal property held (wholly or partly) for use in a trade or business or for investment, that secures a loan and the lender knows the property has been abandoned, the lender should send you Form 1099-A showing information you need to figure your gain or loss from the abandonment. Amended tax returns more:label_amended_20tax_20returns more:taxes Also, if your debt is canceled and the lender must file Form 1099-C, the lender can include the information about the abandonment on that form instead of on Form 1099-A. Amended tax returns more:label_amended_20tax_20returns more:taxes The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Amended tax returns more:label_amended_20tax_20returns more:taxes For abandonments of property and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. Amended tax returns more:label_amended_20tax_20returns more:taxes Prev  Up  Next   Home   More Online Publications