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Ammend 5. Ammend   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. Ammend Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. Ammend When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. Ammend Otherwise, these are capital expenses that must be added to the basis of the land. Ammend (See chapter 6 for information on determining basis. Ammend ) Conservation expenses for land in a foreign country do not qualify for this special treatment. Ammend The deduction for conservation expenses cannot be more than 25% of your gross income from farming. Ammend See 25% Limit on Deduction , later. Ammend Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. Ammend These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. Ammend You must include in income most government payments for approved conservation practices. Ammend However, you can exclude some payments you receive under certain cost-sharing conservation programs. Ammend For more information, see Agricultural Program Payments in chapter 3. Ammend To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. Ammend Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. Ammend You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. Ammend You are not farming if you are engaged only in forestry or the growing of timber. Ammend Farm defined. Ammend   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. Ammend It also includes plantations, ranches, ranges, and orchards. Ammend A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. Ammend It does not include an area where they are merely caught or harvested. Ammend A plant nursery is a farm for purposes of deducting soil and water conservation expenses. Ammend Farm rental. Ammend   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. Ammend If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. Ammend   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. Ammend Example. Ammend You own a farm in Iowa and live in California. Ammend You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. Ammend You cannot deduct your soil conservation expenses for this farm. Ammend You must capitalize the expenses and add them to the basis of the land. Ammend     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. Ammend Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. Ammend If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. Ammend Keep a copy of the plan with your books and records to support your deductions. Ammend Conservation plan. Ammend   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. Ammend There are three types of approved plans. Ammend NRCS individual site plans. Ammend These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. Ammend NRCS county plans. Ammend These plans include a listing of farm conservation practices approved for the county where the farmland is located. Ammend You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. Ammend Comparable state agency plans. Ammend These plans are approved by state agencies and can be approved individual site plans or county plans. Ammend   A list of NRCS conservation programs is available at www. Ammend nrcs. Ammend usda. Ammend gov/programs. Ammend Individual site plans can be obtained from NRCS offices and the comparable state agencies. Ammend Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. Ammend These expenses include, but are not limited to, the following. Ammend The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. Ammend The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. Ammend The eradication of brush. Ammend The planting of windbreaks. Ammend You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. Ammend These expenses are added to the basis of the land. Ammend If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. Ammend See chapter 3 for information about payments eligible for the cost-sharing exclusion. Ammend New farm or farmland. Ammend   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. Ammend You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. Ammend The new farming activity does not have to be the same as the old farming activity. Ammend For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. Ammend Land not used for farming. Ammend   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. Ammend For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. Ammend You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. Ammend Depreciable conservation assets. Ammend   You generally cannot deduct your expenses for depreciable conservation assets. Ammend However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. Ammend See Assessment for Depreciable Property , later. Ammend   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. Ammend These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. Ammend You recover your capital investment through annual allowances for depreciation. Ammend   You can deduct soil and water conservation expenses for nondepreciable earthen items. Ammend Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. Ammend Water well. Ammend   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. Ammend It is a capital expense. Ammend You recover your cost through depreciation. Ammend You also must capitalize your cost for drilling a test hole. Ammend If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. Ammend You can recover the total cost through depreciation deductions. Ammend   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. Ammend Abandonment means that all economic benefits from the well are terminated. Ammend For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. Ammend Endangered species recovery expenses. Ammend   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. Ammend Otherwise, these are capital expenses that must be added to the basis of the land. Ammend   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. Ammend See Internal Revenue Code section 175 for more information. Ammend Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. Ammend You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. Ammend Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. Ammend This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. Ammend The depreciable property must be used in the district's soil and water conservation activities. Ammend However, the following limits apply to these assessments. Ammend The total assessment limit. Ammend The yearly assessment limit. Ammend After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. Ammend The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. Ammend See Table 5-1 for a brief summary of these limits. Ammend Table 5-1. Ammend Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. Ammend Your deductible share of the cost to the district for the property. Ammend Your gross income from farming. Ammend No one taxpayer can deduct more than 10% of the total assessment. Ammend Any amount over 10% is a capital expense and is added to the basis of your land. Ammend If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Ammend If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. Ammend You can deduct the remainder in equal amounts over the next 9 tax years. Ammend Limit for all conservation expenses, including assessments for depreciable property. Ammend Amounts greater than 25% can be carried to the following year and added to that year's expenses. Ammend The total is then subject to the 25% of gross income from farming limit in that year. Ammend To ensure your deduction is within the deduction limits, keep records to show the following. Ammend The total assessment against all members of the district for the depreciable property. Ammend Your deductible share of the cost to the district for the depreciable property. Ammend Your gross income from farming. Ammend Total assessment limit. Ammend   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. Ammend This applies whether you pay the assessment in one payment or in installments. Ammend If your assessment is more than 10% of the total amount assessed, both the following rules apply. Ammend The amount over 10% is a capital expense and is added to the basis of your land. Ammend If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Ammend Yearly assessment limit. Ammend   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. Ammend If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. Ammend If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. Ammend You can deduct the remainder in equal amounts over the next 9 tax years. Ammend Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. Ammend Example 1. Ammend This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. Ammend Of the assessment, $1,500 is for digging drainage ditches. Ammend You can deduct this part as a soil or conservation expense as if you had paid it directly. Ammend The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. Ammend The total amount assessed by the district against all its members for the depreciable equipment is $7,000. Ammend The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. Ammend The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. Ammend To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. Ammend Add $500 to the result for a total of $570. Ammend Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). Ammend You can deduct the balance at the rate of $70 a year over the next 9 years. Ammend You add $70 to the $1,500 portion of the assessment for drainage ditches. Ammend You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. Ammend Example 2. Ammend Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. Ammend The total amount assessed by the district against all its members for depreciable equipment is $5,500. Ammend The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. Ammend The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). Ammend Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. Ammend You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. Ammend Sale or other disposal of land during 9-year period. Ammend   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. Ammend Death of farmer during 9-year period. Ammend   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. Ammend 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. Ammend Gross income from farming. Ammend   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. Ammend Gains from sales of draft, breeding, or dairy livestock are included. Ammend Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. Ammend Carryover of deduction. Ammend   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. Ammend However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. Ammend Example. Ammend In 2012, you have gross income of $32,000 from two farms. Ammend During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. Ammend However, your deduction is limited to 25% of $32,000, or $8,000. Ammend The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. Ammend The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. Ammend Any expenses over the limit in that year are carried to 2014 and later years. Ammend Net operating loss. Ammend   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. Ammend If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. Ammend When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. Ammend If you do not choose to deduct the expenses, you must capitalize them. Ammend Change of method. Ammend   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. Ammend To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. Ammend You or your authorized representative must sign the request. Ammend   The request must include the following information. Ammend Your name and address. Ammend The first tax year the method or change of method is to apply. Ammend Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. Ammend If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. Ammend The total expenses you paid or incurred in the first tax year the method or change of method is to apply. Ammend A statement that you will account separately in your books for the expenses to which this method or change of method relates. Ammend Send your request to the following  address. Ammend  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. Ammend Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). Ammend However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. Ammend Gain on sale of farmland. Ammend   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. Ammend If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. Ammend See Section 1252 property under Other Gains in chapter 9. Ammend Prev  Up  Next   Home   More Online Publications
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Ammend 16. Ammend   Reporting Gains and Losses Table of Contents What's New Introduction Useful Items - You may want to see: Reporting Capital Gains and Losses Exception 1. Ammend Exception 2. Ammend File Form 1099-B or Form 1099-S with the IRS. Ammend Capital Losses Capital Gain Tax Rates What's New Maximum capital gain rates. Ammend . Ammend  For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. Ammend Introduction This chapter discusses how to report capital gains and losses from sales, exchanges, and other dispositions of investment property on Form 8949 and Schedule D (Form 1040). Ammend The discussion includes the following topics. Ammend How to report short-term gains and losses. Ammend How to report long-term gains and losses. Ammend How to figure capital loss carryovers. Ammend How to figure your tax on a net capital gain. Ammend If you sell or otherwise dispose of property used in a trade or business or for the production of income, see Publication 544, Sales and Other Dispositions of Assets, before completing Schedule D (Form 1040). Ammend Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses Form (and Instructions) 4797 Sales of Business Property 6252 Installment Sale Income 8582 Passive Activity Loss Limitations 8949 Sales and Other Dispositions of Capital Assets Schedule D (Form 1040) Capital Gains and Losses Reporting Capital Gains and Losses Generally, report capital gains and losses on Form 8949. Ammend Complete Form 8949 before you complete line 1b, 2, 3, 8b, 9, or 10 of Schedule D (Form 1040). Ammend Use Form 8949 to report: The sale or exchange of a capital asset not reported on another form or schedule; Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit; and Nonbusiness bad debts. Ammend Use Schedule D (Form 1040): To figure the overall gain or loss from transactions reported on Form 8949; To report a gain from Form 6252 or Part I of Form 4797; To report a gain or loss from Form 4684, 6781, or 8824; To report capital gain distributions not reported directly on Form 1040 or Form 1040A; To report a capital loss carryover from the previous tax year to the current tax year; To report your share of a gain or (loss) from a partnership, S corporation, estate, or trust; To report transactions reported to you on a Form 1099-B (or substitute statement) showing basis was reported to the IRS and to which none of the Form 8949 adjustments or codes apply; and To report undistributed long-term capital gains from Form 2439. Ammend On Form 8949, enter all sales and exchanges of capital assets, including stocks, bonds, etc. Ammend , and real estate (if not reported on Form 4684, 4797, 6252, 6781, 8824, or line 1a or 8a of Schedule D). Ammend Include these transactions even if you did not receive a Form 1099-B or 1099-S (or substitute statement) for the transaction. Ammend Report short-term gains or losses in Part I. Ammend Report long-term gains or losses in Part II. Ammend Use as many Forms 8949 as you need. Ammend Exceptions to filing Form 8949 and Schedule D (Form 1040). Ammend   There are certain situations where you may not have to file Form 8949 and/or Schedule D (Form 1040). Ammend Exception 1. Ammend   You do not have to file Form 8949 or Schedule D (Form 1040) if you have no capital losses and your only capital gains are capital gain distributions from Form(s) 1099-DIV, box 2a (or substitute statements). Ammend (If any Form(s) 1099-DIV (or substitute statements) you receive have an amount in box 2b (unrecaptured section 1250 gain), box 2c (section 1202 gain), or box 2d (collectibles (28%) gain), you do not qualify for this exception. Ammend ) If you qualify for this exception, report your capital gain distributions directly on line 13 of Form 1040 (and check the box on line 13). Ammend Also use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 instructions to figure your tax. Ammend You can report your capital gain distributions on line 10 of Form 1040A, instead of on Form 1040, if none of the Forms 1099-DIV (or substitute statements) you received have an amount in box 2b, 2c, or 2d, and you do not have to file Form 1040. Ammend Exception 2. Ammend   You must file Schedule D (Form 1040), but generally do not have to file Form 8949, if Exception 1 does not apply and your only capital gains and losses are: Capital gain distributions; A capital loss carryover; A gain from Form 2439 or 6252 or Part I of Form 4797; A gain or loss from Form 4684, 6781, or 8824; A gain or loss from a partnership, S corporation, estate, or trust; or Gains and losses from transactions for which you received a Form 1099-B (or substitute statement) that shows the basis was reported to the IRS and for which you do not need to make any adjustments in column (g) of Form 8949 or enter any codes in column (f) of Form 8949. Ammend Installment sales. Ammend   You cannot use the installment method to report a gain from the sale of stock or securities traded on an established securities market. Ammend You must report the entire gain in the year of sale (the year in which the trade date occurs). Ammend Passive activity gains and losses. Ammend    If you have gains or losses from a passive activity, you may also have to report them on Form 8582. Ammend In some cases, the loss may be limited under the passive activity rules. Ammend Refer to Form 8582 and its instructions for more information about reporting capital gains and losses from a passive activity. Ammend Form 1099-B transactions. Ammend   If you sold property, such as stocks, bonds, or certain commodities, through a broker, you should receive Form 1099-B or substitute statement from the broker. Ammend Use the Form 1099-B or the substitute statement to complete Form 8949. Ammend If you sold a covered security in 2013, your broker should send you a Form 1099-B (or substitute statement) that shows your basis. Ammend This will help you complete Form 8949. Ammend Generally, a covered security is a security you acquired after 2010. Ammend   Report the gross proceeds shown in box 2a of Form 1099-B as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. Ammend However, if the broker advises you, in box 2a of Form 1099-B, that gross proceeds (sales price) less commissions and option premiums were reported to the IRS, enter that net sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. Ammend    Include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). Ammend If you include an expense of sale in column (g), enter “E” in column (f). Ammend Form 1099-CAP transactions. Ammend   If a corporation in which you own stock has had a change in control or a substantial change in capital structure, you should receive Form 1099-CAP or a substitute statement from the corporation. Ammend Use the Form 1099-CAP or substitute statement to fill in Form 8949. Ammend If your computations show that you would have a loss because of the change, do not enter any amounts on Form 8949 or Schedule D (Form 1040). Ammend You cannot claim a loss on Schedule D (Form 1040) as a result of this transaction. Ammend   Report the aggregate amount received shown in box 2 of Form 1099-CAP as the sales price in column (d) of either Part I or Part II of Form 8949, whichever applies. Ammend Form 1099-S transactions. Ammend   If you sold or traded reportable real estate, you generally should receive from the real estate reporting person a Form 1099-S showing the gross proceeds. Ammend    “Reportable real estate” is defined as any present or future ownership interest in any of the following: Improved or unimproved land, including air space; Inherently permanent structures, including any residential, commercial, or industrial building; A condominium unit and its accessory fixtures and common elements, including land; and Stock in a cooperative housing corporation (as defined in section 216 of the Internal Revenue Code). Ammend   A “real estate reporting person” could include the buyer's attorney, your attorney, the title or escrow company, a mortgage lender, your broker, the buyer's broker, or the person acquiring the biggest interest in the property. Ammend   Your Form 1099-S will show the gross proceeds from the sale or exchange in box 2. Ammend See the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040) for how to report these transactions and include them in Part I or Part II of Form 8949 as appropriate. Ammend However, report like-kind exchanges on Form 8824 instead. Ammend   It is unlawful for any real estate reporting person to separately charge you for complying with the requirement to file Form 1099-S. Ammend Nominees. Ammend   If you receive gross proceeds as a nominee (that is, the gross proceeds are in your name but actually belong to someone else), see the Instructions for Form 8949 for how to report these amounts on Form 8949. Ammend File Form 1099-B or Form 1099-S with the IRS. Ammend   If you received gross proceeds as a nominee in 2013, you must file a Form 1099-B or Form 1099-S for those proceeds with the IRS. Ammend Send the Form 1099-B or Form 1099-S with a Form 1096, Annual Summary and Transmittal of U. Ammend S. Ammend Information Returns, to your Internal Revenue Service Center by February 28, 2014 (March 31, 2014, if you file Form 1099-B or Form 1099-S electronically). Ammend Give the actual owner of the proceeds Copy B of the Form 1099-B or Form 1099-S by February 18, 2014. Ammend On Form 1099-B, you should be listed as the “Payer. Ammend ” The other owner should be listed as the “Recipient. Ammend ” On Form 1099-S, you should be listed as the “Filer. Ammend ” The other owner should be listed as the “Transferor. Ammend ” You do not have to file a Form 1099-B or Form 1099-S to show proceeds for your spouse. Ammend For more information about the reporting requirements and the penalties for failure to file (or furnish) certain information returns, see the General Instructions for Certain Information Returns. Ammend If you are filing electronically see Publication 1220. Ammend Sale of property bought at various times. Ammend   If you sell a block of stock or other property that you bought at various times, report the short-term gain or loss from the sale on one row in Part I of Form 8949, and the long-term gain or loss on one row in Part II of Form 8949. Ammend Write “Various” in column (b) for the “Date acquired. Ammend ” Sale expenses. Ammend    On Form 8949, include in column (g) any expense of sale, such as broker's fees, commissions, state and local transfer taxes, and option premiums, unless you reported the net sales price in column (d). Ammend If you include an expense of sale in column (g), enter “E” in column (f). Ammend   For more information about adjustments to basis, see chapter 13. Ammend Short-term gains and losses. Ammend   Capital gain or loss on the sale or trade of investment property held 1 year or less is a short-term capital gain or loss. Ammend You report it in Part I of Form 8949. Ammend   You combine your share of short-term capital gain or loss from partnerships, S corporations, estates, and trusts, and any short-term capital loss carryover, with your other short-term capital gains and losses to figure your net short-term capital gain or loss on line 7 of Schedule D (Form 1040). Ammend Long-term gains and losses. Ammend    A capital gain or loss on the sale or trade of investment property held more than 1 year is a long-term capital gain or loss. Ammend You report it in Part II of Form 8949. Ammend   You report the following in Part II of Schedule D (Form 1040): Undistributed long-term capital gains from a mutual fund (or other regulated investment company) or real estate investment trust (REIT); Your share of long-term capital gains or losses from partnerships, S corporations, estates, and trusts; All capital gain distributions from mutual funds and REITs not reported directly on line 10 of Form 1040A or line 13 of Form 1040; and Long-term capital loss carryovers. Ammend    The result after combining these items with your other long-term capital gains and losses is your net long-term capital gain or loss (Schedule D (Form 1040), line 15). Ammend Total net gain or loss. Ammend   To figure your total net gain or loss, combine your net short-term capital gain or loss (Schedule D (Form 1040), line 7) with your net long-term capital gain or loss (Schedule D (Form 1040), line 15). Ammend Enter the result on Schedule D (Form 1040), Part III, line 16. Ammend If your losses are more than your gains, see Capital Losses , next. Ammend If both lines 15 and 16 of your Schedule D (Form 1040) are gains and your taxable income on your Form 1040 is more than zero, see Capital Gain Tax Rates , later. Ammend Capital Losses If your capital losses are more than your capital gains, you can claim a capital loss deduction. Ammend Report the amount of the deduction on line 13 of Form 1040, in parentheses. Ammend Limit on deduction. Ammend   Your allowable capital loss deduction, figured on Schedule D (Form 1040), is the lesser of: $3,000 ($1,500 if you are married and file a separate return); or Your total net loss as shown on line 16 of Schedule D (Form 1040). Ammend   You can use your total net loss to reduce your income dollar for dollar, up to the $3,000 limit. Ammend Capital loss carryover. Ammend   If you have a total net loss on line 16 of Schedule D (Form 1040) that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year. Ammend If part of the loss is still unused, you can carry it over to later years until it is completely used up. Ammend   When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year. Ammend   When you carry over a loss, it remains long term or short term. Ammend A long-term capital loss you carry over to the next tax year will reduce that year's long-term capital gains before it reduces that year's short-term capital gains. Ammend Figuring your carryover. Ammend   The amount of your capital loss carryover is the amount of your total net loss that is more than the lesser of: Your allowable capital loss deduction for the year; or Your taxable income increased by your allowable capital loss deduction for the year and your deduction for personal exemptions. Ammend   If your deductions are more than your gross income for the tax year, use your negative taxable income in computing the amount in item (2). Ammend    Complete the Capital Loss Carryover Worksheet in the Instructions for Schedule D or Publication 550 to determine the part of your capital loss that you can carry over. Ammend Example. Ammend Bob and Gloria sold securities in 2013. Ammend The sales resulted in a capital loss of $7,000. Ammend They had no other capital transactions. Ammend Their taxable income was $26,000. Ammend On their joint 2013 return, they can deduct $3,000. Ammend The unused part of the loss, $4,000 ($7,000 − $3,000), can be carried over to 2014. Ammend If their capital loss had been $2,000, their capital loss deduction would have been $2,000. Ammend They would have no carryover. Ammend Use short-term losses first. Ammend   When you figure your capital loss carryover, use your short-term capital losses first, even if you incurred them after a long-term capital loss. Ammend If you have not reached the limit on the capital loss deduction after using the short-term capital losses, use the long-term capital losses until you reach the limit. Ammend Decedent's capital loss. Ammend    A capital loss sustained by a decedent during his or her last tax year (or carried over to that year from an earlier year) can be deducted only on the final income tax return filed for the decedent. Ammend The capital loss limits discussed earlier still apply in this situation. Ammend The decedent's estate cannot deduct any of the loss or carry it over to following years. Ammend Joint and separate returns. Ammend   If you and your spouse once filed separate returns and are now filing a joint return, combine your separate capital loss carryovers. Ammend However, if you and your spouse once filed a joint return and are now filing separate returns, any capital loss carryover from the joint return can be deducted only on the return of the spouse who actually had the loss. Ammend Capital Gain Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. Ammend These lower rates are called the maximum capital gain rates. Ammend The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Ammend For 2013, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%. Ammend See Table 16-1 for details. Ammend If you figure your tax using the maximum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies. Ammend Example. Ammend All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%. Ammend If you are otherwise subject to a rate lower than 28%, the 28% rate does not apply. Ammend Investment interest deducted. Ammend   If you claim a deduction for investment interest, you may have to reduce the amount of your net capital gain that is eligible for the capital gain tax rates. Ammend Reduce it by the amount of the net capital gain you choose to include in investment income when figuring the limit on your investment interest deduction. Ammend This is done on the Schedule D Tax Worksheet or the Qualified Dividends and Capital Gain Tax Worksheet. Ammend For more information about the limit on investment interest, see Interest Expenses in chapter 3 of Publication 550. Ammend Table 16-1. Ammend What Is Your Maximum Capital Gain Rate? IF your net capital gain is from . Ammend . Ammend . Ammend THEN your  maximum capital gain rate is . Ammend . Ammend . Ammend a collectibles gain 28% an eligible gain on qualified small business stock minus the section 1202 exclusion 28% an unrecaptured section 1250 gain 25% other gain1 and the regular tax rate that would apply is 39. Ammend 6% 20% other gain1 and the regular tax rate that would apply is 25%, 28%, 33%, or 35% 15% other gain1 and the regular tax rate that would apply is 10% or 15% 0% 1 Other gain means any gain that is not collectibles gain, gain on qualified small business stock, or unrecaptured section 1250 gain. Ammend     Collectibles gain or loss. Ammend   This is gain or loss from the sale or trade of a work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage held more than 1 year. Ammend   Collectibles gain includes gain from sale of an interest in a partnership, S corporation, or trust due to unrealized appreciation of collectibles. Ammend Gain on qualified small business stock. Ammend    If you realized a gain from qualified small business stock that you held more than 5 years, you generally can exclude some or all of your gain under section 1202. Ammend The eligible gain minus your section 1202 exclusion is a 28% rate gain. Ammend See Gains on Qualified Small Business Stock in chapter 4 of Publication 550. Ammend Unrecaptured section 1250 gain. Ammend    Generally, this is any part of your capital gain from selling section 1250 property (real property) that is due to depreciation (but not more than your net section 1231 gain), reduced by any net loss in the 28% group. Ammend Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D (Form 1040) instructions to figure your unrecaptured section 1250 gain. Ammend For more information about section 1250 property and section 1231 gain, see chapter 3 of Publication 544. Ammend Tax computation using maximum capital gain rates. Ammend   Use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet (whichever applies) to figure your tax if you have qualified dividends or net capital gain. Ammend You have net capital gain if Schedule D (Form 1040), lines 15 and 16, are both gains. Ammend Schedule D Tax Worksheet. Ammend   Use the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions to figure your tax if: You have to file Schedule D (Form 1040); and Schedule D (Form 1040), line 18 (28% rate gain) or line 19 (unrecaptured section 1250 gain), is more than zero. Ammend Qualified Dividends and Capital Gain Tax Worksheet. Ammend   If you do not have to use the Schedule D Tax Worksheet (as explained above) and any of the following apply, use the Qualified Dividends and Capital Gain Tax Worksheet in the instructions for Form 1040 or Form 1040A (whichever you file) to figure your tax. Ammend You received qualified dividends. Ammend (See Qualified Dividends in chapter 8. Ammend ) You do not have to file Schedule D (Form 1040) and you received capital gain distributions. Ammend (See Exceptions to filing Form 8949 and Schedule D (Form 1040) , earlier. Ammend ) Schedule D (Form 1040), lines 15 and 16, are both more than zero. Ammend Alternative minimum tax. Ammend   These capital gain rates are also used in figuring alternative minimum tax. Ammend Prev  Up  Next   Home   More Online Publications