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Can I Efile My 2012 Tax Return

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Can I Efile My 2012 Tax Return

Can i efile my 2012 tax return 14. Can i efile my 2012 tax return   Sale of Property Table of Contents Reminder Introduction Useful Items - You may want to see: Sales and TradesWhat Is a Sale or Trade? How To Figure Gain or Loss Nontaxable Trades Transfers Between Spouses Related Party Transactions Capital Gains and LossesCapital or Ordinary Gain or Loss Capital Assets and Noncapital Assets Holding Period Nonbusiness Bad Debts Wash Sales Rollover of Gain From Publicly Traded Securities Reminder Foreign income. Can i efile my 2012 tax return  If you are a U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return citizen who sells property located outside the United States, you must report all gains and losses from the sale of that property on your tax return unless it is exempt by U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return law. Can i efile my 2012 tax return This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the payer. Can i efile my 2012 tax return Introduction This chapter discusses the tax consequences of selling or trading investment property. Can i efile my 2012 tax return It explains the following. Can i efile my 2012 tax return What a sale or trade is. Can i efile my 2012 tax return Figuring gain or loss. Can i efile my 2012 tax return Nontaxable trades. Can i efile my 2012 tax return Related party transactions. Can i efile my 2012 tax return Capital gains or losses. Can i efile my 2012 tax return Capital assets and noncapital assets. Can i efile my 2012 tax return Holding period. Can i efile my 2012 tax return Rollover of gain from publicly traded securities. Can i efile my 2012 tax return Other property transactions. Can i efile my 2012 tax return   Certain transfers of property are not discussed here. Can i efile my 2012 tax return They are discussed in other IRS publications. Can i efile my 2012 tax return These include the following. Can i efile my 2012 tax return Sales of a main home, covered in chapter 15. Can i efile my 2012 tax return Installment sales, covered in Publication 537, Installment Sales. Can i efile my 2012 tax return Transactions involving business property, covered in Publication 544, Sales and Other Dispositions of Assets. Can i efile my 2012 tax return Dispositions of an interest in a passive activity, covered in Publication 925, Passive Activity and At-Risk Rules. Can i efile my 2012 tax return    Publication 550, Investment Income and Expenses (Including Capital Gains and Losses), provides a more detailed discussion about sales and trades of investment property. Can i efile my 2012 tax return Publication 550 includes information about the rules covering nonbusiness bad debts, straddles, section 1256 contracts, puts and calls, commodity futures, short sales, and wash sales. Can i efile my 2012 tax return It also discusses investment-related expenses. Can i efile my 2012 tax return Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 8949 Sales and Other Dispositions of Capital Assets 8824 Like-Kind Exchanges Sales and Trades If you sold property such as stocks, bonds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. Can i efile my 2012 tax return Generally, you should receive the statement by February 15 of the next year. Can i efile my 2012 tax return It will show the gross proceeds from the sale. Can i efile my 2012 tax return If you sold a covered security in 2013, your 1099-B (or substitute statement) will show your basis. Can i efile my 2012 tax return Generally, a covered security is a security you acquired after 2010, with certain exceptions. Can i efile my 2012 tax return See the Instructions for Form 8949. Can i efile my 2012 tax return The IRS will also get a copy of Form 1099-B from the broker. Can i efile my 2012 tax return Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. Can i efile my 2012 tax return What Is a Sale or Trade? This section explains what is a sale or trade. Can i efile my 2012 tax return It also explains certain transactions and events that are treated as sales or trades. Can i efile my 2012 tax return A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. Can i efile my 2012 tax return A trade is a transfer of property for other property or services and may be taxed in the same way as a sale. Can i efile my 2012 tax return Sale and purchase. Can i efile my 2012 tax return   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. Can i efile my 2012 tax return The sale and purchase are two separate transactions. Can i efile my 2012 tax return But see Like-kind exchanges under Nontaxable Trades, later. Can i efile my 2012 tax return Redemption of stock. Can i efile my 2012 tax return   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. Can i efile my 2012 tax return Dividend versus sale or trade. Can i efile my 2012 tax return   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. Can i efile my 2012 tax return Both direct and indirect ownership of stock will be considered. Can i efile my 2012 tax return The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend (see chapter 8), There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. Can i efile my 2012 tax return Redemption or retirement of bonds. Can i efile my 2012 tax return   A redemption or retirement of bonds or notes at their maturity is generally treated as a sale or trade. Can i efile my 2012 tax return   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. Can i efile my 2012 tax return For details, see Regulations section 1. Can i efile my 2012 tax return 1001-3. Can i efile my 2012 tax return Surrender of stock. Can i efile my 2012 tax return   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. Can i efile my 2012 tax return The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. Can i efile my 2012 tax return Worthless securities. Can i efile my 2012 tax return    Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. Can i efile my 2012 tax return This affects whether your capital loss is long term or short term. Can i efile my 2012 tax return See Holding Period , later. Can i efile my 2012 tax return   Worthless securities also include securities that you abandon after March 12, 2008. Can i efile my 2012 tax return To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. Can i efile my 2012 tax return All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. Can i efile my 2012 tax return    If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. Can i efile my 2012 tax return Do not deduct them in the year the stock became worthless. Can i efile my 2012 tax return How to report loss. Can i efile my 2012 tax return    Report worthless securities in Part I or Part II, whichever applies, of Form 8949. Can i efile my 2012 tax return In column (a), enter “Worthless. Can i efile my 2012 tax return ”    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. Can i efile my 2012 tax return See Form 8949 and the Instructions for Form 8949. Can i efile my 2012 tax return For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Can i efile my 2012 tax return See also Schedule D (Form 1040), Form 8949, and their separate instructions. Can i efile my 2012 tax return Filing a claim for refund. Can i efile my 2012 tax return   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. Can i efile my 2012 tax return You must use Form 1040X, Amended U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return Individual Income Tax Return, to amend your return for the year the security became worthless. Can i efile my 2012 tax return You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. Can i efile my 2012 tax return For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. Can i efile my 2012 tax return How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. Can i efile my 2012 tax return Gain. Can i efile my 2012 tax return   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. Can i efile my 2012 tax return Loss. Can i efile my 2012 tax return   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. Can i efile my 2012 tax return Adjusted basis. Can i efile my 2012 tax return   The adjusted basis of property is your original cost or other original basis properly adjusted (increased or decreased) for certain items. Can i efile my 2012 tax return See chapter 13 for more information about determining the adjusted basis of property. Can i efile my 2012 tax return Amount realized. Can i efile my 2012 tax return   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). Can i efile my 2012 tax return Amount realized includes the money you receive plus the fair market value of any property or services you receive. Can i efile my 2012 tax return If you received a note or other debt instrument for the property, see How To Figure Gain or Loss in chapter 4 of Publication 550 to figure the amount realized. Can i efile my 2012 tax return If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. Can i efile my 2012 tax return For more information, see Publication 537. Can i efile my 2012 tax return Fair market value. Can i efile my 2012 tax return   Fair market value is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. Can i efile my 2012 tax return Your gain is $3,000 ($10,000 − $7,000). Can i efile my 2012 tax return Debt paid off. Can i efile my 2012 tax return    A debt against the property, or against you, that is paid off as a part of the transaction, or that is assumed by the buyer, must be included in the amount realized. Can i efile my 2012 tax return This is true even if neither you nor the buyer is personally liable for the debt. Can i efile my 2012 tax return For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return You sell stock that you had pledged as security for a bank loan of $8,000. Can i efile my 2012 tax return Your basis in the stock is $6,000. Can i efile my 2012 tax return The buyer pays off your bank loan and pays you $20,000 in cash. Can i efile my 2012 tax return The amount realized is $28,000 ($20,000 + $8,000). Can i efile my 2012 tax return Your gain is $22,000 ($28,000 − $6,000). Can i efile my 2012 tax return Payment of cash. Can i efile my 2012 tax return   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. Can i efile my 2012 tax return Determine your gain or loss by subtracting the cash you pay plus the adjusted basis of the property you trade in from the amount you realize. Can i efile my 2012 tax return If the result is a positive number, it is a gain. Can i efile my 2012 tax return If the result is a negative number, it is a loss. Can i efile my 2012 tax return No gain or loss. Can i efile my 2012 tax return   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. Can i efile my 2012 tax return In this case, you may have neither a gain nor a loss. Can i efile my 2012 tax return See Basis Other Than Cost in chapter 13. Can i efile my 2012 tax return Nontaxable Trades This section discusses trades that generally do not result in a taxable gain or deductible loss. Can i efile my 2012 tax return For more information on nontaxable trades, see chapter 1 of Publication 544. Can i efile my 2012 tax return Like-kind exchanges. Can i efile my 2012 tax return   If you trade business or investment property for other business or investment property of a like kind, you do not pay tax on any gain or deduct any loss until you sell or dispose of the property you receive. Can i efile my 2012 tax return To be nontaxable, a trade must meet all six of the following conditions. Can i efile my 2012 tax return The property must be business or investment property. Can i efile my 2012 tax return You must hold both the property you trade and the property you receive for productive use in your trade or business or for investment. Can i efile my 2012 tax return Neither property may be property used for personal purposes, such as your home or family car. Can i efile my 2012 tax return The property must not be held primarily for sale. Can i efile my 2012 tax return The property you trade and the property you receive must not be property you sell to customers, such as merchandise. Can i efile my 2012 tax return The property must not be stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest, including partnership interests. Can i efile my 2012 tax return However, see Special rules for mutual ditch, reservoir, or irrigation company stock, in chapter 4 of Publication 550 for an exception. Can i efile my 2012 tax return Also, you can have a nontaxable trade of corporate stocks under a different rule, as discussed later. Can i efile my 2012 tax return There must be a trade of like property. Can i efile my 2012 tax return The trade of real estate for real estate, or personal property for similar personal property, is a trade of like property. Can i efile my 2012 tax return The trade of an apartment house for a store building, or a panel truck for a pickup truck, is a trade of like property. Can i efile my 2012 tax return The trade of a piece of machinery for a store building is not a trade of like property. Can i efile my 2012 tax return Real property located in the United States and real property located outside the United States are not like property. Can i efile my 2012 tax return Also, personal property used predominantly within the United States and personal property used predominantly outside the United States are not like property. Can i efile my 2012 tax return The property to be received must be identified in writing within 45 days after the date you transfer the property given up in the trade. Can i efile my 2012 tax return The property to be received must be received by the earlier of: The 180th day after the date on which you transfer the property given up in the trade, or The due date, including extensions, for your tax return for the year in which the transfer of the property given up occurs. Can i efile my 2012 tax return    If you trade property with a related party in a like-kind exchange, a special rule may apply. Can i efile my 2012 tax return See Related Party Transactions , later in this chapter. Can i efile my 2012 tax return Also, see chapter 1 of Publication 544 for more information on exchanges of business property and special rules for exchanges using qualified intermediaries or involving multiple properties. Can i efile my 2012 tax return Partly nontaxable exchange. Can i efile my 2012 tax return   If you receive money or unlike property in addition to like property, and the above six conditions are met, you have a partly nontaxable trade. Can i efile my 2012 tax return You are taxed on any gain you realize, but only up to the amount of the money and the fair market value of the unlike property you receive. Can i efile my 2012 tax return You cannot deduct a loss. Can i efile my 2012 tax return Like property and unlike property transferred. Can i efile my 2012 tax return   If you give up unlike property in addition to the like property, you must recognize gain or loss on the unlike property you give up. Can i efile my 2012 tax return The gain or loss is the difference between the adjusted basis of the unlike property and its fair market value. Can i efile my 2012 tax return Like property and money transferred. Can i efile my 2012 tax return   If all of the above conditions (1) – (6) are met, you have a nontaxable trade even if you pay money in addition to the like property. Can i efile my 2012 tax return Basis of property received. Can i efile my 2012 tax return   To figure the basis of the property received, see Nontaxable Exchanges in chapter 13. Can i efile my 2012 tax return How to report. Can i efile my 2012 tax return   You must report the trade of like property on Form 8824. Can i efile my 2012 tax return If you figure a recognized gain or loss on Form 8824, report it on Schedule D (Form 1040), or on Form 4797, Sales of Business Property, whichever applies. Can i efile my 2012 tax return See the instructions for Line 22 in the Instructions for Form 8824. Can i efile my 2012 tax return   For information on using Form 4797, see chapter 4 of Publication 544. Can i efile my 2012 tax return Corporate stocks. Can i efile my 2012 tax return   The following trades of corporate stocks generally do not result in a taxable gain or a deductible loss. Can i efile my 2012 tax return Corporate reorganizations. Can i efile my 2012 tax return   In some instances, a company will give you common stock for preferred stock, preferred stock for common stock, or stock in one corporation for stock in another corporation. Can i efile my 2012 tax return If this is a result of a merger, recapitalization, transfer to a controlled corporation, bankruptcy, corporate division, corporate acquisition, or other corporate reorganization, you do not recognize gain or loss. Can i efile my 2012 tax return Stock for stock of the same corporation. Can i efile my 2012 tax return   You can exchange common stock for common stock or preferred stock for preferred stock in the same corporation without having a recognized gain or loss. Can i efile my 2012 tax return This is true for a trade between two stockholders as well as a trade between a stockholder and the corporation. Can i efile my 2012 tax return Convertible stocks and bonds. Can i efile my 2012 tax return   You generally will not have a recognized gain or loss if you convert bonds into stock or preferred stock into common stock of the same corporation according to a conversion privilege in the terms of the bond or the preferred stock certificate. Can i efile my 2012 tax return Property for stock of a controlled corporation. Can i efile my 2012 tax return   If you transfer property to a corporation solely in exchange for stock in that corporation, and immediately after the trade you are in control of the corporation, you ordinarily will not recognize a gain or loss. Can i efile my 2012 tax return This rule applies both to individuals and to groups who transfer property to a corporation. Can i efile my 2012 tax return It does not apply if the corporation is an investment company. Can i efile my 2012 tax return   For this purpose, to be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock of the corporation. Can i efile my 2012 tax return   If this provision applies to you, you may have to attach to your return a complete statement of all facts pertinent to the exchange. Can i efile my 2012 tax return For details, see Regulations section 1. Can i efile my 2012 tax return 351-3. Can i efile my 2012 tax return Additional information. Can i efile my 2012 tax return   For more information on trades of stock, see Nontaxable Trades in chapter 4 of Publication 550. Can i efile my 2012 tax return Insurance policies and annuities. Can i efile my 2012 tax return   You will not have a recognized gain or loss if the insured or annuitant is the same under both contracts and you trade: A life insurance contract for another life insurance contract or for an endowment or annuity contract or for a qualified long-term care insurance contract, An endowment contract for another endowment contract that provides for regular payments beginning at a date no later than the beginning date under the old contract or for an annuity contract or for a qualified long-term insurance contract, An annuity contract for annuity contract or for a qualified long-term care insurance contract, or A qualified long-term care insurance contract for a qualified long-term care insurance contract. Can i efile my 2012 tax return   You also may not have to recognize gain or loss on an exchange of a portion of an annuity contract for another annuity contract. Can i efile my 2012 tax return For transfers completed before October 24, 2011, see Revenue Ruling 2003-76 in Internal Revenue Bulletin 2003-33 and Revenue Procedure 2008-24 in Internal Revenue Bulletin 2008-13. Can i efile my 2012 tax return Revenue Ruling 2003-76 is available at www. Can i efile my 2012 tax return irs. Can i efile my 2012 tax return gov/irb/2003-33_IRB/ar11. Can i efile my 2012 tax return html. Can i efile my 2012 tax return Revenue Procedure 2008-24 is available at www. Can i efile my 2012 tax return irs. Can i efile my 2012 tax return gov/irb/2008-13_IRB/ar13. Can i efile my 2012 tax return html. Can i efile my 2012 tax return For transfers completed on or after October 24, 2011, see Revenue Ruling 2003-76, above, and Revenue Procedure 2011-38, in Internal Revenue Bulletin 2011-30. Can i efile my 2012 tax return Revenue Procedure 2011-38 is available at www. Can i efile my 2012 tax return irs. Can i efile my 2012 tax return gov/irb/2011-30_IRB/ar09. Can i efile my 2012 tax return html. Can i efile my 2012 tax return   For tax years beginning after December 31, 2010, amounts received as an annuity for a period of 10 years or more, or for the lives of one or more individuals, under any portion of an annuity, endowment, or life insurance contract, are treated as a separate contract and are considered partial annuities. Can i efile my 2012 tax return A portion of an annuity, endowment, or life insurance contract may be annuitized, provided that the annuitization period is for 10 years or more or for the lives of one or more individuals. Can i efile my 2012 tax return The investment in the contract is allocated between the part of the contract from which amounts are received as an annuity and the part of the contract from which amounts are not received as an annuity. Can i efile my 2012 tax return   Exchanges of contracts not included in this list, such as an annuity contract for an endowment contract, or an annuity or endowment contract for a life insurance contract, are taxable. Can i efile my 2012 tax return Demutualization of life insurance companies. Can i efile my 2012 tax return   If you received stock in exchange for your equity interest as a policyholder or an annuitant, you generally will not have a recognized gain or loss. Can i efile my 2012 tax return See Demutualization of Life Insurance Companies in Publication 550. Can i efile my 2012 tax return U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return Treasury notes or bonds. Can i efile my 2012 tax return   You can trade certain issues of U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return Treasury obligations for other issues designated by the Secretary of the Treasury, with no gain or loss recognized on the trade. Can i efile my 2012 tax return See Savings bonds traded in chapter 1 of Publication 550 for more information. Can i efile my 2012 tax return Transfers Between Spouses Generally, no gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or if incident to a divorce, a former spouse. Can i efile my 2012 tax return This nonrecognition rule does not apply in the following situations. Can i efile my 2012 tax return The recipient spouse or former spouse is a nonresident alien. Can i efile my 2012 tax return Property is transferred in trust and liability exceeds basis. Can i efile my 2012 tax return Gain must be recognized to the extent the amount of the liabilities assumed by the trust, plus any liabilities on the property, exceed the adjusted basis of the property. Can i efile my 2012 tax return For other situations, see Transfers Between Spouses in chapter 4 of Publication 550. Can i efile my 2012 tax return Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. Can i efile my 2012 tax return The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. Can i efile my 2012 tax return This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its fair market value at the time of transfer or any consideration paid by the recipient. Can i efile my 2012 tax return This rule applies for purposes of determining loss as well as gain. Can i efile my 2012 tax return Any gain recognized on a transfer in trust increases the basis. Can i efile my 2012 tax return A transfer of property is incident to a divorce if the transfer occurs within 1 year after the date on which the marriage ends, or if the transfer is related to the ending of the marriage. Can i efile my 2012 tax return Related Party Transactions Special rules apply to the sale or trade of property between related parties. Can i efile my 2012 tax return Gain on sale or trade of depreciable property. Can i efile my 2012 tax return   Your gain from the sale or trade of property to a related party may be ordinary income, rather than capital gain, if the property can be depreciated by the party receiving it. Can i efile my 2012 tax return See chapter 3 of Publication 544 for more information. Can i efile my 2012 tax return Like-kind exchanges. Can i efile my 2012 tax return   Generally, if you trade business or investment property for other business or investment property of a like kind, no gain or loss is recognized. Can i efile my 2012 tax return See Like-kind exchanges , earlier, under Nontaxable Trades. Can i efile my 2012 tax return   This rule also applies to trades of property between related parties, defined next under Losses on sales or trades of property. Can i efile my 2012 tax return However, if either you or the related party disposes of the like property within 2 years after the trade, you both must report any gain or loss not recognized on the original trade on your return filed for the year in which the later disposition occurs. Can i efile my 2012 tax return See Related Party Transactions in chapter 4 of Publication 550 for exceptions. Can i efile my 2012 tax return Losses on sales or trades of property. Can i efile my 2012 tax return   You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties. Can i efile my 2012 tax return Members of your family. Can i efile my 2012 tax return This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. Can i efile my 2012 tax return ), and lineal descendants (children, grandchildren, etc. Can i efile my 2012 tax return ). Can i efile my 2012 tax return A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. Can i efile my 2012 tax return A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. Can i efile my 2012 tax return (See Constructive ownership of stock , later. Can i efile my 2012 tax return ) A tax-exempt charitable or educational organization directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. Can i efile my 2012 tax return   In addition, a loss on the sale or trade of property is not deductible if the transaction is directly or indirectly between the following related parties. Can i efile my 2012 tax return A grantor and fiduciary, or the fiduciary and beneficiary, of any trust. Can i efile my 2012 tax return Fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. Can i efile my 2012 tax return A trust fiduciary and a corporation of which more than 50% in value of the outstanding stock is directly or indirectly owned by or for the trust, or by or for the grantor of the trust. Can i efile my 2012 tax return A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest, or the profits interest, in the partnership. Can i efile my 2012 tax return Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. Can i efile my 2012 tax return Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Can i efile my 2012 tax return An executor and a beneficiary of an estate (except in the case of a sale or trade to satisfy a pecuniary bequest). Can i efile my 2012 tax return Two corporations that are members of the same controlled group. Can i efile my 2012 tax return (Under certain conditions, however, these losses are not disallowed but must be deferred. Can i efile my 2012 tax return ) Two partnerships if the same persons own, directly or indirectly, more than 50% of the capital interests or the profit interests in both partnerships. Can i efile my 2012 tax return Multiple property sales or trades. Can i efile my 2012 tax return   If you sell or trade to a related party a number of blocks of stock or pieces of property in a lump sum, you must figure the gain or loss separately for each block of stock or piece of property. Can i efile my 2012 tax return The gain on each item may be taxable. Can i efile my 2012 tax return However, you cannot deduct the loss on any item. Can i efile my 2012 tax return Also, you cannot reduce gains from the sales of any of these items by losses on the sales of any of the other items. Can i efile my 2012 tax return Indirect transactions. Can i efile my 2012 tax return   You cannot deduct your loss on the sale of stock through your broker if, under a prearranged plan, a related party buys the same stock you had owned. Can i efile my 2012 tax return This does not apply to a trade between related parties through an exchange that is purely coincidental and is not prearranged. Can i efile my 2012 tax return Constructive ownership of stock. Can i efile my 2012 tax return   In determining whether a person directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. Can i efile my 2012 tax return Rule 1. Can i efile my 2012 tax return   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Can i efile my 2012 tax return Rule 2. Can i efile my 2012 tax return   An individual is considered to own the stock directly or indirectly owned by or for his or her family. Can i efile my 2012 tax return Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. Can i efile my 2012 tax return Rule 3. Can i efile my 2012 tax return   An individual owning, other than by applying rule 2, any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Can i efile my 2012 tax return Rule 4. Can i efile my 2012 tax return   When applying rule 1, 2, or 3, stock constructively owned by a person under rule 1 is treated as actually owned by that person. Can i efile my 2012 tax return But stock constructively owned by an individual under rule 2 or rule 3 is not treated as owned by that individual for again applying either rule 2 or rule 3 to make another person the constructive owner of the stock. Can i efile my 2012 tax return Property received from a related party. Can i efile my 2012 tax return    If you sell or trade at a gain property you acquired from a related party, you recognize the gain only to the extent it is more than the loss previously disallowed to the related party. Can i efile my 2012 tax return This rule applies only if you are the original transferee and you acquired the property by purchase or exchange. Can i efile my 2012 tax return This rule does not apply if the related party's loss was disallowed because of the wash sale rules described in chapter 4 of Publication 550 under Wash Sales. Can i efile my 2012 tax return   If you sell or trade at a loss property you acquired from a related party, you cannot recognize the loss that was not allowed to the related party. Can i efile my 2012 tax return Example 1. Can i efile my 2012 tax return Your brother sells you stock for $7,600. Can i efile my 2012 tax return His cost basis is $10,000. Can i efile my 2012 tax return Your brother cannot deduct the loss of $2,400. Can i efile my 2012 tax return Later, you sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900. Can i efile my 2012 tax return Your reportable gain is $500 (the $2,900 gain minus the $2,400 loss not allowed to your brother). Can i efile my 2012 tax return Example 2. Can i efile my 2012 tax return If, in Example 1, you sold the stock for $6,900 instead of $10,500, your recognized loss is only $700 (your $7,600 basis minus $6,900). Can i efile my 2012 tax return You cannot deduct the loss that was not allowed to your brother. Can i efile my 2012 tax return Capital Gains and Losses This section discusses the tax treatment of gains and losses from different types of investment transactions. Can i efile my 2012 tax return Character of gain or loss. Can i efile my 2012 tax return   You need to classify your gains and losses as either ordinary or capital gains or losses. Can i efile my 2012 tax return You then need to classify your capital gains and losses as either short term or long term. Can i efile my 2012 tax return If you have long-term gains and losses, you must identify your 28% rate gains and losses. Can i efile my 2012 tax return If you have a net capital gain, you must also identify any unrecaptured section 1250 gain. Can i efile my 2012 tax return   The correct classification and identification helps you figure the limit on capital losses and the correct tax on capital gains. Can i efile my 2012 tax return Reporting capital gains and losses is explained in chapter 16. Can i efile my 2012 tax return Capital or Ordinary Gain or Loss If you have a taxable gain or a deductible loss from a transaction, it may be either a capital gain or loss or an ordinary gain or loss, depending on the circumstances. Can i efile my 2012 tax return Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss. Can i efile my 2012 tax return A sale or trade of a noncapital asset generally results in ordinary gain or loss. Can i efile my 2012 tax return Depending on the circumstances, a gain or loss on a sale or trade of property used in a trade or business may be treated as either capital or ordinary, as explained in Publication 544. Can i efile my 2012 tax return In some situations, part of your gain or loss may be a capital gain or loss and part may be an ordinary gain or loss. Can i efile my 2012 tax return Capital Assets and Noncapital Assets For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. Can i efile my 2012 tax return Some examples are: Stocks or bonds held in your personal account, A house owned and used by you and your family, Household furnishings, A car used for pleasure or commuting, Coin or stamp collections, Gems and jewelry, and Gold, silver, or any other metal. Can i efile my 2012 tax return Any property you own is a capital asset, except the following noncapital assets. Can i efile my 2012 tax return Property held mainly for sale to customers or property that will physically become a part of the merchandise for sale to customers. Can i efile my 2012 tax return For an exception, see Capital Asset Treatment for Self-Created Musical Works , later. Can i efile my 2012 tax return Depreciable property used in your trade or business, even if fully depreciated. Can i efile my 2012 tax return Real property used in your trade or business. Can i efile my 2012 tax return A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property that is: Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Acquired under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. Can i efile my 2012 tax return For an exception to this rule, see Capital Asset Treatment for Self-Created Musical Works , later. Can i efile my 2012 tax return Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of property described in (1). Can i efile my 2012 tax return U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return Government publications that you received from the government free or for less than the normal sales price, or that you acquired under circumstances entitling you to the basis of someone who received the publications free or for less than the normal sales price. Can i efile my 2012 tax return Certain commodities derivative financial instruments held by commodities derivatives dealers. Can i efile my 2012 tax return Hedging transactions, but only if the transaction is clearly identified as a hedging transaction before the close of the day on which it was acquired, originated, or entered into. Can i efile my 2012 tax return Supplies of a type you regularly use or consume in the ordinary course of your trade or business. Can i efile my 2012 tax return Investment Property Investment property is a capital asset. Can i efile my 2012 tax return Any gain or loss from its sale or trade is generally a capital gain or loss. Can i efile my 2012 tax return Gold, silver, stamps, coins, gems, etc. Can i efile my 2012 tax return   These are capital assets except when they are held for sale by a dealer. Can i efile my 2012 tax return Any gain or loss you have from their sale or trade generally is a capital gain or loss. Can i efile my 2012 tax return Stocks, stock rights, and bonds. Can i efile my 2012 tax return   All of these (including stock received as a dividend) are capital assets except when held for sale by a securities dealer. Can i efile my 2012 tax return However, if you own small business stock, see Losses on Section 1244 (Small Business) Stock , later, and Losses on Small Business Investment Company Stock, in chapter 4 of Publication 550. Can i efile my 2012 tax return Personal Use Property Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. Can i efile my 2012 tax return However, you cannot deduct a loss from selling personal use property. Can i efile my 2012 tax return Capital Asset Treatment for Self-Created Musical Works You can elect to treat musical compositions and copyrights in musical works as capital assets when you sell or exchange them if: Your personal efforts created the property, or You acquired the property under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. Can i efile my 2012 tax return You must make a separate election for each musical composition (or copyright in a musical work) sold or exchanged during the tax year. Can i efile my 2012 tax return You must make the election on or before the due date (including extensions) of the income tax return for the tax year of the sale or exchange. Can i efile my 2012 tax return You must make the election on Form 8949 by treating the sale or exchange as the sale or exchange of a capital asset, according to Form 8949, Schedule D (Form 1040), and their separate instructions. Can i efile my 2012 tax return For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Can i efile my 2012 tax return See also Schedule D (Form 1040), Form 8949, and their separate instructions. Can i efile my 2012 tax return You can revoke the election if you have IRS approval. Can i efile my 2012 tax return To get IRS approval, you must submit a request for a letter ruling under the appropriate IRS revenue procedure. Can i efile my 2012 tax return See, for example, Rev. Can i efile my 2012 tax return Proc. Can i efile my 2012 tax return 2013-1, corrected by Announcement 2013–9, and amplified and modified by Rev. Can i efile my 2012 tax return Proc. Can i efile my 2012 tax return 2013–32, available at www. Can i efile my 2012 tax return irs. Can i efile my 2012 tax return gov/irb/2013-01_IRB/ar06. Can i efile my 2012 tax return html. Can i efile my 2012 tax return Alternatively, you are granted an automatic 6-month extension from the due date of your income tax return (excluding extensions) to revoke the election, provided you timely file your income tax return, and within this 6-month extension period, you file Form 1040X that treats the sale or exchange as the sale or exchange of property that is not a capital asset. Can i efile my 2012 tax return Discounted Debt Instruments Treat your gain or loss on the sale, redemption, or retirement of a bond or other debt instrument originally issued at a discount or bought at a discount as capital gain or loss, except as explained in the following discussions. Can i efile my 2012 tax return Short-term government obligations. Can i efile my 2012 tax return   Treat gains on short-term federal, state, or local government obligations (other than tax-exempt obligations) as ordinary income up to your ratable share of the acquisition discount. Can i efile my 2012 tax return This treatment applies to obligations with a fixed maturity date not more than 1 year from the date of issue. Can i efile my 2012 tax return Acquisition discount is the stated redemption price at maturity minus your basis in the obligation. Can i efile my 2012 tax return   However, do not treat these gains as income to the extent you previously included the discount in income. Can i efile my 2012 tax return See Discount on Short-Term Obligations in chapter 1 of Publication 550. Can i efile my 2012 tax return Short-term nongovernment obligations. Can i efile my 2012 tax return   Treat gains on short-term nongovernment obligations as ordinary income up to your ratable share of original issue discount (OID). Can i efile my 2012 tax return This treatment applies to obligations with a fixed maturity date of not more than 1 year from the date of issue. Can i efile my 2012 tax return   However, to the extent you previously included the discount in income, you do not have to include it in income again. Can i efile my 2012 tax return See Discount on Short-Term Obligations in chapter 1 of Publication 550. Can i efile my 2012 tax return Tax-exempt state and local government bonds. Can i efile my 2012 tax return   If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. Can i efile my 2012 tax return To figure your gain or loss on the sale or trade of these bonds, reduce the amount realized by your part of OID. Can i efile my 2012 tax return   If the bonds were issued after September 3, 1982, and acquired after March 1, 1984, increase the adjusted basis by your part of OID to figure gain or loss. Can i efile my 2012 tax return For more information on the basis of these bonds, see Discounted Debt Instruments in chapter 4 of Publication 550. Can i efile my 2012 tax return   Any gain from market discount is usually taxable on disposition or redemption of tax-exempt bonds. Can i efile my 2012 tax return If you bought the bonds before May 1, 1993, the gain from market discount is capital gain. Can i efile my 2012 tax return If you bought the bonds after April 30, 1993, the gain is ordinary income. Can i efile my 2012 tax return   You figure the market discount by subtracting the price you paid for the bond from the sum of the original issue price of the bond and the amount of accumulated OID from the date of issue that represented interest to any earlier holders. Can i efile my 2012 tax return For more information, see Market Discount Bonds in chapter 1 of Publication 550. Can i efile my 2012 tax return    A loss on the sale or other disposition of a tax-exempt state or local government bond is deductible as a capital loss. Can i efile my 2012 tax return Redeemed before maturity. Can i efile my 2012 tax return   If a state or local bond issued before June 9, 1980, is redeemed before it matures, the OID is not taxable to you. Can i efile my 2012 tax return   If a state or local bond issued after June 8, 1980, is redeemed before it matures, the part of OID earned while you hold the bond is not taxable to you. Can i efile my 2012 tax return However, you must report the unearned part of OID as a capital gain. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return On July 2, 2002, the date of issue, you bought a 20-year, 6% municipal bond for $800. Can i efile my 2012 tax return The face amount of the bond was $1,000. Can i efile my 2012 tax return The $200 discount was OID. Can i efile my 2012 tax return At the time the bond was issued, the issuer had no intention of redeeming it before it matured. Can i efile my 2012 tax return The bond was callable at its face amount beginning 10 years after the issue date. Can i efile my 2012 tax return The issuer redeemed the bond at the end of 11 years (July 2, 2013) for its face amount of $1,000 plus accrued annual interest of $60. Can i efile my 2012 tax return The OID earned during the time you held the bond, $73, is not taxable. Can i efile my 2012 tax return The $60 accrued annual interest also is not taxable. Can i efile my 2012 tax return However, you must report the unearned part of OID ($127) as a capital gain. Can i efile my 2012 tax return Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). Can i efile my 2012 tax return   If you sell, trade, or redeem for a gain one of these debt instruments, the part of your gain that is not more than your ratable share of the OID at the time of the sale or redemption is ordinary income. Can i efile my 2012 tax return The rest of the gain is capital gain. Can i efile my 2012 tax return If, however, there was an intention to call the debt instrument before maturity, all of your gain that is not more than the entire OID is treated as ordinary income at the time of the sale. Can i efile my 2012 tax return This treatment of taxable gain also applies to corporate instruments issued after May 27, 1969, under a written commitment that was binding on May 27, 1969, and at all times thereafter. Can i efile my 2012 tax return Long-term debt instruments issued after May 27, 1969 (or after July 1, 1982, if a government instrument). Can i efile my 2012 tax return   If you hold one of these debt instruments, you must include a part of OID in your gross income each year you own the instrument. Can i efile my 2012 tax return Your basis in that debt instrument is increased by the amount of OID that you have included in your gross income. Can i efile my 2012 tax return See Original Issue Discount (OID) in chapter 7 for information about OID that you must report on your tax return. Can i efile my 2012 tax return   If you sell or trade the debt instrument before maturity, your gain is a capital gain. Can i efile my 2012 tax return However, if at the time the instrument was originally issued there was an intention to call it before its maturity, your gain generally is ordinary income to the extent of the entire OID reduced by any amounts of OID previously includible in your income. Can i efile my 2012 tax return In this case, the rest of the gain is capital gain. Can i efile my 2012 tax return Market discount bonds. Can i efile my 2012 tax return   If the debt instrument has market discount and you chose to include the discount in income as it accrued, increase your basis in the debt instrument by the accrued discount to figure capital gain or loss on its disposition. Can i efile my 2012 tax return If you did not choose to include the discount in income as it accrued, you must report gain as ordinary interest income up to the instrument's accrued market discount. Can i efile my 2012 tax return The rest of the gain is capital gain. Can i efile my 2012 tax return See Market Discount Bonds in chapter 1 of Publication 550. Can i efile my 2012 tax return   A different rule applies to market discount bonds issued before July 19, 1984, and purchased by you before May 1, 1993. Can i efile my 2012 tax return See Market discount bonds under Discounted Debt Instruments in chapter 4 of Publication 550. Can i efile my 2012 tax return Retirement of debt instrument. Can i efile my 2012 tax return   Any amount you receive on the retirement of a debt instrument is treated in the same way as if you had sold or traded that instrument. Can i efile my 2012 tax return Notes of individuals. Can i efile my 2012 tax return   If you hold an obligation of an individual issued with OID after March 1, 1984, you generally must include the OID in your income currently, and your gain or loss on its sale or retirement is generally capital gain or loss. Can i efile my 2012 tax return An exception to this treatment applies if the obligation is a loan between individuals and all the following requirements are met. Can i efile my 2012 tax return The lender is not in the business of lending money. Can i efile my 2012 tax return The amount of the loan, plus the amount of any outstanding prior loans, is $10,000 or less. Can i efile my 2012 tax return Avoiding federal tax is not one of the principal purposes of the loan. Can i efile my 2012 tax return   If the exception applies, or the obligation was issued before March 2, 1984, you do not include the OID in your income currently. Can i efile my 2012 tax return When you sell or redeem the obligation, the part of your gain that is not more than your accrued share of OID at that time is ordinary income. Can i efile my 2012 tax return The rest of the gain, if any, is capital gain. Can i efile my 2012 tax return Any loss on the sale or redemption is capital loss. Can i efile my 2012 tax return Deposit in Insolvent or Bankrupt Financial Institution If you lose money you have on deposit in a bank, credit union, or other financial institution that becomes insolvent or bankrupt, you may be able to deduct your loss in one of three ways. Can i efile my 2012 tax return Ordinary loss. Can i efile my 2012 tax return Casualty loss. Can i efile my 2012 tax return Nonbusiness bad debt (short-term capital loss). Can i efile my 2012 tax return  For more information, see Deposit in Insolvent or Bankrupt Financial Institution, in chapter 4 of Publication 550. Can i efile my 2012 tax return Sale of Annuity The part of any gain on the sale of an annuity contract before its maturity date that is based on interest accumulated on the contract is ordinary income. Can i efile my 2012 tax return Losses on Section 1244 (Small Business) Stock You can deduct as an ordinary loss, rather than as a capital loss, your loss on the sale, trade, or worthlessness of section 1244 stock. Can i efile my 2012 tax return Report the loss on Form 4797, line 10. Can i efile my 2012 tax return Any gain on section 1244 stock is a capital gain if the stock is a capital asset in your hands. Can i efile my 2012 tax return Report the gain on Form 8949. Can i efile my 2012 tax return See Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. Can i efile my 2012 tax return For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Can i efile my 2012 tax return See also Schedule D (Form 1040), Form 8949, and their separate instructions. Can i efile my 2012 tax return Holding Period If you sold or traded investment property, you must determine your holding period for the property. Can i efile my 2012 tax return Your holding period determines whether any capital gain or loss was a short-term or long-term capital gain or loss. Can i efile my 2012 tax return Long-term or short-term. Can i efile my 2012 tax return   If you hold investment property more than 1 year, any capital gain or loss is a long-term capital gain or loss. Can i efile my 2012 tax return If you hold the property 1 year or less, any capital gain or loss is a short-term capital gain or loss. Can i efile my 2012 tax return   To determine how long you held the investment property, begin counting on the date after the day you acquired the property. Can i efile my 2012 tax return The day you disposed of the property is part of your holding period. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return If you bought investment property on February 6, 2012, and sold it on February 6, 2013, your holding period is not more than 1 year and you have a short-term capital gain or loss. Can i efile my 2012 tax return If you sold it on February 7, 2013, your holding period is more than 1 year and you will have a long-term capital gain or loss. Can i efile my 2012 tax return Securities traded on established market. Can i efile my 2012 tax return   For securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities, and ends on the trade date you sold them. Can i efile my 2012 tax return    Do not confuse the trade date with the settlement date, which is the date by which the stock must be delivered and payment must be made. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return You are a cash method, calendar year taxpayer. Can i efile my 2012 tax return You sold stock at a gain on December 30, 2013. Can i efile my 2012 tax return According to the rules of the stock exchange, the sale was closed by delivery of the stock 4 trading days after the sale, on January 6, 2014. Can i efile my 2012 tax return You received payment of the sales price on that same day. Can i efile my 2012 tax return Report your gain on your 2013 return, even though you received the payment in 2014. Can i efile my 2012 tax return The gain is long term or short term depending on whether you held the stock more than 1 year. Can i efile my 2012 tax return Your holding period ended on December 30. Can i efile my 2012 tax return If you had sold the stock at a loss, you would also report it on your 2013 return. Can i efile my 2012 tax return U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return Treasury notes and bonds. Can i efile my 2012 tax return   The holding period of U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return Treasury notes and bonds sold at auction on the basis of yield starts the day after the Secretary of the Treasury, through news releases, gives notification of acceptance to successful bidders. Can i efile my 2012 tax return The holding period of U. Can i efile my 2012 tax return S. Can i efile my 2012 tax return Treasury notes and bonds sold through an offering on a subscription basis at a specified yield starts the day after the subscription is submitted. Can i efile my 2012 tax return Automatic investment service. Can i efile my 2012 tax return   In determining your holding period for shares bought by the bank or other agent, full shares are considered bought first and any fractional shares are considered bought last. Can i efile my 2012 tax return Your holding period starts on the day after the bank's purchase date. Can i efile my 2012 tax return If a share was bought over more than one purchase date, your holding period for that share is a split holding period. Can i efile my 2012 tax return A part of the share is considered to have been bought on each date that stock was bought by the bank with the proceeds of available funds. Can i efile my 2012 tax return Nontaxable trades. Can i efile my 2012 tax return   If you acquire investment property in a trade for other investment property and your basis for the new property is determined, in whole or in part, by your basis in the old property, your holding period for the new property begins on the day following the date you acquired the old property. Can i efile my 2012 tax return Property received as a gift. Can i efile my 2012 tax return   If you receive a gift of property and your basis is determined by the donor's adjusted basis, your holding period is considered to have started on the same day the donor's holding period started. Can i efile my 2012 tax return   If your basis is determined by the fair market value of the property, your holding period starts on the day after the date of the gift. Can i efile my 2012 tax return Inherited property. Can i efile my 2012 tax return   Generally, if you inherited investment property, your capital gain or loss on any later disposition of that property is long-term capital gain or loss. Can i efile my 2012 tax return This is true regardless of how long you actually held the property. Can i efile my 2012 tax return However, if you inherited property from someone who died in 2010, see the information below. Can i efile my 2012 tax return Inherited property from someone who died in 2010. Can i efile my 2012 tax return   If you inherit investment property from a decedent who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your holding period. Can i efile my 2012 tax return Real property bought. Can i efile my 2012 tax return   To figure how long you have held real property bought under an unconditional contract, begin counting on the day after you received title to it or on the day after you took possession of it and assumed the burdens and privileges of ownership, whichever happened first. Can i efile my 2012 tax return However, taking delivery or possession of real property under an option agreement is not enough to start the holding period. Can i efile my 2012 tax return The holding period cannot start until there is an actual contract of sale. Can i efile my 2012 tax return The holding period of the seller cannot end before that time. Can i efile my 2012 tax return Real property repossessed. Can i efile my 2012 tax return   If you sell real property but keep a security interest in it, and then later repossess the property under the terms of the sales contract, your holding period for a later sale includes the period you held the property before the original sale and the period after the repossession. Can i efile my 2012 tax return Your holding period does not include the time between the original sale and the repossession. Can i efile my 2012 tax return That is, it does not include the period during which the first buyer held the property. Can i efile my 2012 tax return Stock dividends. Can i efile my 2012 tax return   The holding period for stock you received as a taxable stock dividend begins on the date of distribution. Can i efile my 2012 tax return   The holding period for new stock you received as a nontaxable stock dividend begins on the same day as the holding period of the old stock. Can i efile my 2012 tax return This rule also applies to stock acquired in a “spin-off,” which is a distribution of stock or securities in a controlled corporation. Can i efile my 2012 tax return Nontaxable stock rights. Can i efile my 2012 tax return   Your holding period for nontaxable stock rights begins on the same day as the holding period of the underlying stock. Can i efile my 2012 tax return The holding period for stock acquired through the exercise of stock rights begins on the date the right was exercised. Can i efile my 2012 tax return Nonbusiness Bad Debts If someone owes you money that you cannot collect, you have a bad debt. Can i efile my 2012 tax return You may be able to deduct the amount owed to you when you figure your tax for the year the debt becomes worthless. Can i efile my 2012 tax return Generally, nonbusiness bad debts are bad debts that did not come from operating your trade or business, and are deductible as short-term capital losses. Can i efile my 2012 tax return To be deductible, nonbusiness bad debts must be totally worthless. Can i efile my 2012 tax return You cannot deduct a partly worthless nonbusiness debt. Can i efile my 2012 tax return Genuine debt required. Can i efile my 2012 tax return   A debt must be genuine for you to deduct a loss. Can i efile my 2012 tax return A debt is genuine if it arises from a debtor-creditor relationship based on a valid and enforceable obligation to repay a fixed or determinable sum of money. Can i efile my 2012 tax return Basis in bad debt required. Can i efile my 2012 tax return    To deduct a bad debt, you must have a basis in it—that is, you must have already included the amount in your income or loaned out your cash. Can i efile my 2012 tax return For example, you cannot claim a bad debt deduction for court-ordered child support not paid to you by your former spouse. Can i efile my 2012 tax return If you are a cash method taxpayer (as most individuals are), you generally cannot take a bad debt deduction for unpaid salaries, wages, rents, fees, interest, dividends, and similar items. Can i efile my 2012 tax return When deductible. Can i efile my 2012 tax return   You can take a bad debt deduction only in the year the debt becomes worthless. Can i efile my 2012 tax return You do not have to wait until a debt is due to determine whether it is worthless. Can i efile my 2012 tax return A debt becomes worthless when there is no longer any chance that the amount owed will be paid. Can i efile my 2012 tax return   It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. Can i efile my 2012 tax return You must only show that you have taken reasonable steps to collect the debt. Can i efile my 2012 tax return Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. Can i efile my 2012 tax return How to report bad debts. Can i efile my 2012 tax return    Deduct nonbusiness bad debts as short-term capital losses on Form 8949. Can i efile my 2012 tax return    Make sure you report your bad debt(s) (and any other short-term transactions for which you did not receive a Form 1099-B) on Form 8949, Part I, with box C checked. Can i efile my 2012 tax return    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Can i efile my 2012 tax return See also Schedule D (Form 1040), Form 8949, and their separate instructions. Can i efile my 2012 tax return   For each bad debt, attach a statement to your return that contains: A description of the debt, including the amount, and the date it became due, The name of the debtor, and any business or family relationship between you and the debtor, The efforts you made to collect the debt, and Why you decided the debt was worthless. Can i efile my 2012 tax return For example, you could show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt. Can i efile my 2012 tax return Filing a claim for refund. Can i efile my 2012 tax return    If you do not deduct a bad debt on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the bad debt. Can i efile my 2012 tax return To do this, use Form 1040X to amend your return for the year the debt became worthless. Can i efile my 2012 tax return You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. Can i efile my 2012 tax return For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. Can i efile my 2012 tax return Additional information. Can i efile my 2012 tax return   For more information, see Nonbusiness Bad Debts in Publication 550. Can i efile my 2012 tax return For information on business bad debts, see chapter 10 of Publication 535, Business Expenses. Can i efile my 2012 tax return Wash Sales You cannot deduct losses from sales or trades of stock or securities in a wash sale. Can i efile my 2012 tax return A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. Can i efile my 2012 tax return If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). Can i efile my 2012 tax return The result is your basis in the new stock or securities. Can i efile my 2012 tax return This adjustment postpones the loss deduction until the disposition of the new stock or securities. Can i efile my 2012 tax return Your holding period for the new stock or securities includes the holding period of the stock or securities sold. Can i efile my 2012 tax return For more information, see Wash Sales, in chapter 4 of Publication 550. Can i efile my 2012 tax return Rollover of Gain From Publicly Traded Securities You may qualify for a tax-free rollover of certain gains from the sale of publicly traded securities. Can i efile my 2012 tax return This means that if you buy certain replacement property and make the choice described in this section, you postpone part or all of your gain. Can i efile my 2012 tax return You postpone the gain by adjusting the basis of the replacement property as described in Basis of replacement property , later. Can i efile my 2012 tax return This postpones your gain until the year you dispose of the replacement property. Can i efile my 2012 tax return You qualify to make this choice if you meet all the following tests. Can i efile my 2012 tax return You sell publicly traded securities at a gain. Can i efile my 2012 tax return Publicly traded securities are securities traded on an established securities market. Can i efile my 2012 tax return Your gain from the sale is a capital gain. Can i efile my 2012 tax return During the 60-day period beginning on the date of the sale, you buy replacement property. Can i efile my 2012 tax return This replacement property must be either common stock of, or a partnership interest in a specialized small business investment company (SSBIC). Can i efile my 2012 tax return This is any partnership or corporation licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958, as in effect on May 13, 1993. Can i efile my 2012 tax return Amount of gain recognized. Can i efile my 2012 tax return   If you make the choice described in this section, you must recognize gain only up to the following amount. Can i efile my 2012 tax return The amount realized on the sale, minus The cost of any common stock or partnership interest in an SSBIC that you bought during the 60-day period beginning on the date of sale (and did not previously take into account on an earlier sale of publicly traded securities). Can i efile my 2012 tax return  If this amount is less than the amount of your gain, you can postpone the rest of your gain, subject to the limit described next. Can i efile my 2012 tax return If this amount is equal to or more than the amount of your gain, you must recognize the full amount of your gain. Can i efile my 2012 tax return Limit on gain postponed. Can i efile my 2012 tax return   The amount of gain you can postpone each year is limited to the smaller of: $50,000 ($25,000 if you are married and file a separate return), or $500,000 ($250,000 if you are married and file a separate return), minus the amount of gain you postponed for all earlier years. Can i efile my 2012 tax return Basis of replacement property. Can i efile my 2012 tax return   You must subtract the amount of postponed gain from the basis of your replacement property. Can i efile my 2012 tax return How to report and postpone gain. Can i efile my 2012 tax return    See How to report and postpone gain under Rollover of Gain From Publicly Traded Securities in chapter 4 of Publication 550 for details. Can i efile my 2012 tax return Prev  Up  Next   Home   More Online Publications
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EFTPS: The Electronic Federal Tax Payment System

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The Easiest Way to Pay All Your Federal Taxes

EFTPS® is a system for paying federal taxes electronically using the Internet, or by phone using the EFTPS® Voice Response System. EFTPS® is offered free by the U.S. Department of Treasury. Over 12 million taxpayers are currently enrolled in the system. Since EFTPS® began in 1996, there have been over 1.45 billion electronic payments made, totaling over $29.5 trillion!
 


EFTPS® offers ...

  • Security
  • Convenience
  • Accuracy

Security You Can Count On

EFTPS® is a secure government web site that allows users to make federal tax payments electronically. Every user must have a secure Internet browser with 128-bit encryption in order to access the site. To log on to the system, an enrolled user must be authenticated with three pieces of unique information: Taxpayer Identification Number (EIN or SSN), EFTPS® Personal Identification Number (PIN) and an Internet Password. The combination of these three pieces of identification adds to the security of the site and the privacy of taxpayer data.

Convenience at Your Fingertips

  • EFTPS® offers you the convenience and flexibility of making your tax payments via the Internet or phone. You can initiate your tax payment from your home or office, 24/7.

  • Businesses and Individuals can schedule payments up to 365 days in advance. Scheduled payments can be changed or cancelled up to two business days in advance of the scheduled payment date.

  • You can use EFTPS® to make all your federal tax payments, including income, employment, estimated and excise taxes.

  • You can check up to 16 months of your EFTPS® payment history online or by calling EFTPS® Customer Service.

Accuracy You Can Depend On

By 8 p.m. ET at least one calendar day in advance of the due date, submit your payment instructions to EFTPS® to move the funds from your account to the Treasury's account for payment of your federal taxes. Funds will not move from your account until the date you indicate. You will receive an immediate acknowledgement of your payment instructions, and your bank statement will confirm the payment was made. 

EFTPS® Enrollment

To enroll, or for more information on enrollment, visit EFTPS® or call EFTPS® Customer Service to request an enrollment form:

  • 1-800-555-4477 
  • 1-800-733-4829 (TDD Hearing-Impaired)
  • 1-800-244-4829 (Español)

EFTPS Inquiry PIN

Beginning this year, when Payroll Service Providers enroll clients in EFTPS, an EFTPS Inquiry PIN will automatically be sent to the taxpayer.  Taxpayers who have had activity on their EFTPS account over the prior 12 months will also receive Inquiry PINs.  This Inquiry PIN allows the taxpayer access to monitor the EFTPS for transactions made on their behalf.

And there's more...

Tax professionals, accountants, and payroll companies are discovering the added benefits of using EFTPS®.

  • EFTPS® via the Internet or phone - Once enrolled, individual and business taxpayers can use the Internet to make all their federal tax payments via the Internet, or phone using the EFTPS® Voice Response System. Both payment methods are interchangeable. 

  • EFTPS® Batch Provider - Tax professionals/providers can register through this software and send up to 1,000 enrollments and 5,000 payments in one transaction. Users can synchronize enrollments and payments between the software and EFTPS® database in real-time. To download the EFTPS® Batch Provider Software and User's Manual visit EFTPS® and follow these steps:
  1. Click on HELP & INFORMATION
  2. Click on Downloads
  3. Click on Batch Provider Software User's Manual
  4. Click on Software (left side of screen) for additional information

  • EFTPS® Bulk Provider - Designed for payroll processors who initiate frequent payments from and desire automated enrollment through an Electronic Data Interchange (EDI) compatible system.

Additional Information is available in the articles below:

Publication 966 -  The Secure Way to Pay Your Federal Taxes for Businesses and Individuals

Publication 4990 - Tax Payment Instruction Booklet

Link for ordering free EFTPS® Marketing Materials

Electronic Payment Options Home Page

Current scams and phishing sites posing as the IRS

EFTPS® –  Treasury’s free service for paying federal taxes for individuals and businesses



 

Page Last Reviewed or Updated: 17-Mar-2014

The Can I Efile My 2012 Tax Return

Can i efile my 2012 tax return Publication 523 - Main Content Table of Contents Main HomeVacant land. Can i efile my 2012 tax return Factors used to determine main home. Can i efile my 2012 tax return Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining BasisCost As Basis Basis Other Than Cost Adjusted Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Nonqualified Use Business Use or Rental of HomeUnrecaptured section 1250 gain. Can i efile my 2012 tax return Property Used Partly for Business or Rental Reporting the SaleSeller-financed mortgage. Can i efile my 2012 tax return Individual taxpayer identification number (ITIN). Can i efile my 2012 tax return More information. Can i efile my 2012 tax return Comprehensive Examples Special SituationsException for sales to related persons. Can i efile my 2012 tax return Deducting Taxes in the Year of SaleForm 1099-S. Can i efile my 2012 tax return More information. Can i efile my 2012 tax return Recapturing (Paying Back) a Federal Mortgage Subsidy Recapture of First-Time Homebuyer CreditExample. Can i efile my 2012 tax return Worksheets How To Get Tax HelpLow Income Taxpayer Clinics Main Home This section explains the term “main home. Can i efile my 2012 tax return ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. Can i efile my 2012 tax return To exclude gain under the rules in this publication, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Can i efile my 2012 tax return Land. Can i efile my 2012 tax return   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return You buy a piece of land and move your main home to it. Can i efile my 2012 tax return Then, you sell the land on which your main home was located. Can i efile my 2012 tax return This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. Can i efile my 2012 tax return Vacant land. Can i efile my 2012 tax return   The sale of vacant land is not a sale of your main home unless: The vacant land is adjacent to land containing your home, You owned and used the vacant land as part of your main home, The separate sale of your home satisfies the requirements for exclusion and occurs within 2 years before or 2 years after the date of the sale of the vacant land, and The other requirements for excluding gain from the sale of a main home have been satisfied with respect to the vacant land. Can i efile my 2012 tax return If these requirements are met, the sale of the home and the sale of the vacant land are treated as one sale and only one maximum exclusion can be applied to any gain. Can i efile my 2012 tax return See Excluding the Gain , later. Can i efile my 2012 tax return The destruction of your home is treated as a sale of your home. Can i efile my 2012 tax return As a result, you may be able to meet these requirements if you sell vacant land used as a part of your main home within 2 years from the date of the destruction of your main home. Can i efile my 2012 tax return For information, see Publication 547. Can i efile my 2012 tax return More than one home. Can i efile my 2012 tax return   If you have more than one home, you can exclude gain only from the sale of your main home. Can i efile my 2012 tax return You must include in income the gain from the sale of any other home. Can i efile my 2012 tax return If you have two homes and live in each of them, your main home is ordinarily the one you live in most of the time during the year. Can i efile my 2012 tax return Example 1. Can i efile my 2012 tax return You own two homes, one in New York and one in Florida. Can i efile my 2012 tax return From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. Can i efile my 2012 tax return In the absence of facts and circumstances indicating otherwise, the New York home is your main home. Can i efile my 2012 tax return You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. Can i efile my 2012 tax return Example 2. Can i efile my 2012 tax return You own a house, but you live in another house that you rent. Can i efile my 2012 tax return The rented house is your main home. Can i efile my 2012 tax return Example 3. Can i efile my 2012 tax return You own two homes, one in Virginia and one in New Hampshire. Can i efile my 2012 tax return In 2009 and 2010, you lived in the Virginia home. Can i efile my 2012 tax return In 2011 and 2012, you lived in the New Hampshire home. Can i efile my 2012 tax return In 2013, you lived again in the Virginia home. Can i efile my 2012 tax return Your main home in 2009, 2010, and 2013 is the Virginia home. Can i efile my 2012 tax return Your main home in 2011 and 2012 is the New Hampshire home. Can i efile my 2012 tax return You would be eligible to exclude gain from the sale of either home (but not both) in 2013. Can i efile my 2012 tax return Factors used to determine main home. Can i efile my 2012 tax return   In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Can i efile my 2012 tax return Those factors include the following. Can i efile my 2012 tax return Your place of employment. Can i efile my 2012 tax return The location of your family members' main home. Can i efile my 2012 tax return Your mailing address for bills and correspondence. Can i efile my 2012 tax return The address listed on your: Federal and state tax returns, Driver's license, Car registration, and Voter registration card. Can i efile my 2012 tax return The location of the banks you use. Can i efile my 2012 tax return The location of recreational clubs and religious organizations of which you are a member. Can i efile my 2012 tax return Property used partly as your main home. Can i efile my 2012 tax return   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. Can i efile my 2012 tax return For details, see Business Use or Rental of Home , later. Can i efile my 2012 tax return Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. Can i efile my 2012 tax return Subtract the adjusted basis from the amount realized to get your gain or loss. Can i efile my 2012 tax return     Selling price     − Selling expenses       Amount realized     − Adjusted basis       Gain or loss   Gain. Can i efile my 2012 tax return   Gain is the excess of the amount realized over the adjusted basis of the property. Can i efile my 2012 tax return Loss. Can i efile my 2012 tax return   Loss is the excess of the adjusted basis over the amount realized for the property. Can i efile my 2012 tax return Selling Price The selling price is the total amount you receive for your home. Can i efile my 2012 tax return It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. Can i efile my 2012 tax return Personal property. Can i efile my 2012 tax return   The selling price of your home does not include amounts you received for personal property sold with your home. Can i efile my 2012 tax return Personal property is property that is not a permanent part of the home. Can i efile my 2012 tax return Examples are furniture, draperies, rugs, a washer and dryer, and lawn equipment. Can i efile my 2012 tax return Separately stated amounts you received for these items should not be shown on Form 1099-S (discussed later). Can i efile my 2012 tax return Any gains from sales of personal property must be included in your income, but not as part of the sale of your home. Can i efile my 2012 tax return Payment by employer. Can i efile my 2012 tax return   You may have to sell your home because of a job transfer. Can i efile my 2012 tax return If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. Can i efile my 2012 tax return Your employer will include it as wages in box 1 of your Form W-2 and you will include it in your income on Form 1040, line 7, or on Form 1040NR, line 8. Can i efile my 2012 tax return Option to buy. Can i efile my 2012 tax return   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. Can i efile my 2012 tax return If the option is not exercised, you must report the amount as ordinary income in the year the option expires. Can i efile my 2012 tax return Report this amount on Form 1040, line 21, or on Form 1040NR, line 21. Can i efile my 2012 tax return Form 1099-S. Can i efile my 2012 tax return   If you received Form 1099-S, box 2 (gross proceeds) should show the total amount you received for your home. Can i efile my 2012 tax return   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. Can i efile my 2012 tax return Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. Can i efile my 2012 tax return Amount Realized The amount realized is the selling price minus selling expenses. Can i efile my 2012 tax return Selling expenses. Can i efile my 2012 tax return   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. Can i efile my 2012 tax return ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. Can i efile my 2012 tax return This adjusted basis must be determined before you can figure gain or loss on the sale of your home. Can i efile my 2012 tax return For information on how to figure your home's adjusted basis, see Determining Basis , later. Can i efile my 2012 tax return Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. Can i efile my 2012 tax return Gain on sale. Can i efile my 2012 tax return   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, generally is taxable. Can i efile my 2012 tax return Loss on sale. Can i efile my 2012 tax return   If the amount realized is less than the adjusted basis, the difference is a loss. Can i efile my 2012 tax return Generally, a loss on the sale of your main home cannot be deducted. Can i efile my 2012 tax return Jointly owned home. Can i efile my 2012 tax return   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. Can i efile my 2012 tax return Separate returns. Can i efile my 2012 tax return   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. Can i efile my 2012 tax return Your ownership interest is generally determined by state law. Can i efile my 2012 tax return Joint owners not married. Can i efile my 2012 tax return   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. Can i efile my 2012 tax return Each of you applies the rules discussed in this publication on an individual basis. Can i efile my 2012 tax return Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. Can i efile my 2012 tax return Foreclosure or repossession. Can i efile my 2012 tax return   If your home was foreclosed on or repossessed, you have a disposition. Can i efile my 2012 tax return See Publication 4681 to determine if you have ordinary income, gain, or loss. Can i efile my 2012 tax return More information. Can i efile my 2012 tax return   If part of a home is used for business or rental purposes, see Foreclosures and Repossessions in chapter 1 of Publication 544 for more information. Can i efile my 2012 tax return Publication 544 has examples of how to figure gain or loss on a foreclosure or repossession. Can i efile my 2012 tax return Abandonment. Can i efile my 2012 tax return   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. Can i efile my 2012 tax return Trading (exchanging) homes. Can i efile my 2012 tax return   If you trade your home for another home, treat the trade as a sale and a purchase. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return You owned and lived in a home with an adjusted basis of $41,000. Can i efile my 2012 tax return A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. Can i efile my 2012 tax return This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 − $41,000). Can i efile my 2012 tax return If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). Can i efile my 2012 tax return Transfer to spouse. Can i efile my 2012 tax return   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss (unless the Exception, discussed next, applies). Can i efile my 2012 tax return This is true even if you receive cash or other consideration for the home. Can i efile my 2012 tax return As a result, the rules explained in this publication do not apply. Can i efile my 2012 tax return   If you owned your home jointly with your spouse and transfer your interest in the home to your spouse, or to your former spouse incident to your divorce, the same rule applies. Can i efile my 2012 tax return You have no gain or loss. Can i efile my 2012 tax return Exception. Can i efile my 2012 tax return   These transfer rules do not apply if your spouse or former spouse is a nonresident alien. Can i efile my 2012 tax return In that case, you generally will have a gain or loss. Can i efile my 2012 tax return More information. Can i efile my 2012 tax return    See Property Settlements in Publication 504, Divorced or Separated Individuals, for more information. Can i efile my 2012 tax return Involuntary conversion. Can i efile my 2012 tax return   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. Can i efile my 2012 tax return This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations (see Home destroyed or condemned ). Can i efile my 2012 tax return Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. Can i efile my 2012 tax return Your basis in your home is determined by how you got the home. Can i efile my 2012 tax return Generally, your basis is its cost if you bought it or built it. Can i efile my 2012 tax return If you got it in some other way (inheritance, gift, etc. Can i efile my 2012 tax return ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. Can i efile my 2012 tax return While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. Can i efile my 2012 tax return The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. Can i efile my 2012 tax return To figure your adjusted basis, you can use Worksheet 1, near the end of this publication. Can i efile my 2012 tax return Filled-in examples of that worksheet are included in the Comprehensive Examples , later. Can i efile my 2012 tax return Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. Can i efile my 2012 tax return Purchase. Can i efile my 2012 tax return   If you bought your home, your basis is its cost to you. Can i efile my 2012 tax return This includes the purchase price and certain settlement or closing costs. Can i efile my 2012 tax return In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. Can i efile my 2012 tax return If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed later. Can i efile my 2012 tax return Seller-paid points. Can i efile my 2012 tax return   If the person who sold you your home paid points on your loan, you may have to reduce your home's basis by the amount of the points, as shown in the following chart. Can i efile my 2012 tax return    IF you bought your home. Can i efile my 2012 tax return . Can i efile my 2012 tax return . Can i efile my 2012 tax return THEN reduce your home's basis by the seller-paid points. Can i efile my 2012 tax return . Can i efile my 2012 tax return . Can i efile my 2012 tax return after 1990 but before April 4, 1994 only if you deducted them as home mortgage interest in the year paid. Can i efile my 2012 tax return after April 3, 1994 even if you did not deduct them. Can i efile my 2012 tax return Settlement fees or closing costs. Can i efile my 2012 tax return   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Can i efile my 2012 tax return You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. Can i efile my 2012 tax return A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). Can i efile my 2012 tax return   Settlement fees do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Can i efile my 2012 tax return   Some of the settlement fees or closing costs that you can include in your basis are: Abstract fees (abstract of title fees), Charges for installing utility services, Legal fees (including fees for the title search and preparing the sales contract and deed), Recording fees, Survey fees, Transfer or stamp taxes, Owner's title insurance, and Any amounts the seller owes that you agree to pay, such as: Certain real estate taxes (discussed later), Back interest, Recording or mortgage fees, Charges for improvements or repairs, and Sales commissions. Can i efile my 2012 tax return   Some settlement fees and closing costs you cannot include in your basis are: Fire insurance premiums, Rent for occupancy of the house before closing, Charges for utilities or other services related to occupancy of the house before closing, Any fee or cost that you deducted as a moving expense (allowed for certain fees and costs before 1994), Charges connected with getting a mortgage loan, such as: Mortgage insurance premiums (including funding fees connected with loans guaranteed by the Department of Veterans Affairs), Loan assumption fees, Cost of a credit report, Fee for an appraisal required by a lender, and Fees for refinancing a mortgage. Can i efile my 2012 tax return Real estate taxes. Can i efile my 2012 tax return   Real estate taxes for the year you bought your home may affect your basis, as shown in the following chart. Can i efile my 2012 tax return    IF. Can i efile my 2012 tax return . Can i efile my 2012 tax return . Can i efile my 2012 tax return AND. Can i efile my 2012 tax return . Can i efile my 2012 tax return . Can i efile my 2012 tax return THEN the taxes. Can i efile my 2012 tax return . Can i efile my 2012 tax return . Can i efile my 2012 tax return you pay taxes that the seller owed on the home up to the date of sale the seller does not reimburse you are added to the basis of your home. Can i efile my 2012 tax return the seller reimburses you do not affect the basis of your home. Can i efile my 2012 tax return the seller pays taxes for you (taxes owed beginning on the date of sale) you do not reimburse the seller are subtracted from the basis of your home. Can i efile my 2012 tax return you reimburse the seller do not affect the basis of your home. Can i efile my 2012 tax return Construction. Can i efile my 2012 tax return   If you contracted to have your house built on land you own, your basis is: The cost of the land, plus The amount it cost you to complete the house, including: The cost of labor and materials, Any amounts paid to a contractor, Any architect's fees, Building permit charges, Utility meter and connection charges, and Legal fees directly connected with building the house. Can i efile my 2012 tax return   Your cost includes your down payment and any debt such as a first or second mortgage or notes you gave the seller or builder. Can i efile my 2012 tax return It also includes certain settlement or closing costs. Can i efile my 2012 tax return You may have to reduce your basis by points the seller paid for you. Can i efile my 2012 tax return For more information, see Seller-paid points and Settlement fees or closing costs , earlier. Can i efile my 2012 tax return Built by you. Can i efile my 2012 tax return   If you built all or part of your house yourself, its basis is the total amount it cost you to complete it. Can i efile my 2012 tax return Do not include in the cost of the house: The value of your own labor, or The value of any other labor you did not pay for. Can i efile my 2012 tax return Temporary housing. Can i efile my 2012 tax return   If a builder gave you temporary housing while your home was being finished, you must reduce your basis by the part of the contract price that was for the temporary housing. Can i efile my 2012 tax return To figure the amount of the reduction, multiply the contract price by a fraction. Can i efile my 2012 tax return The numerator is the value of the temporary housing, and the denominator is the sum of the value of the temporary housing plus the value of the new home. Can i efile my 2012 tax return Cooperative apartment. Can i efile my 2012 tax return   If you are a tenant-stockholder in a cooperative housing corporation, your basis in the cooperative apartment used as your home is usually the cost of your stock in the corporation. Can i efile my 2012 tax return This may include your share of a mortgage on the apartment building. Can i efile my 2012 tax return Condominium. Can i efile my 2012 tax return   To determine your basis in a condominium apartment used as your home, use the same rules as for any other home. Can i efile my 2012 tax return Basis Other Than Cost You must use a basis other than cost, such as adjusted basis or fair market value, if you received your home as a gift, inheritance, a trade, or from your spouse. Can i efile my 2012 tax return These situations are discussed in the following pages. Can i efile my 2012 tax return Also, the instructions for Worksheet 1 (near the end of the publication) address each of these issues. Can i efile my 2012 tax return Other special rules may apply in certain situations. Can i efile my 2012 tax return If you converted the property, or some part of it, to business or rental use, see Property Changed to Business or Rental Use, in Publication 551. Can i efile my 2012 tax return Home received as gift. Can i efile my 2012 tax return   Use the following chart to find the basis of a home you received as a gift. Can i efile my 2012 tax return IF the donor's adjusted basis at the time of the gift was. Can i efile my 2012 tax return . Can i efile my 2012 tax return . Can i efile my 2012 tax return THEN your basis is. Can i efile my 2012 tax return . Can i efile my 2012 tax return . Can i efile my 2012 tax return more than the fair market value of the home at that time the same as the donor's adjusted basis at the time of the gift. Can i efile my 2012 tax return   Exception: If using the donor's adjusted basis results in a loss when you sell the home, you must use the fair market value of the home at the time of the gift as your basis. Can i efile my 2012 tax return If using the fair market value results in a gain, you have neither gain nor loss. Can i efile my 2012 tax return equal to or less than the fair market value at that time, and you received the gift before 1977 the smaller of the: • donor's adjusted basis, plus  any federal gift tax paid on  the gift, or • the home's fair market value  at the time of the gift. Can i efile my 2012 tax return equal to or less than the fair market value at that time, and you received the gift after 1976 the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net increase in value of the home (explained next). Can i efile my 2012 tax return Fair market value. Can i efile my 2012 tax return   The fair market value of property at the time of the gift is the value of the property as appraised for purposes of the federal gift tax. Can i efile my 2012 tax return If the gift was not subject to the federal gift tax, the fair market value is the value as appraised for the purposes of a state gift tax. Can i efile my 2012 tax return Part of federal gift tax due to net increase in value. Can i efile my 2012 tax return   Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by a fraction. Can i efile my 2012 tax return The numerator of the fraction is the net increase in the value of the home, and the denominator is the value of the home for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Can i efile my 2012 tax return The net increase in the value of the home is its fair market value minus the donor's adjusted basis immediately before the gift. Can i efile my 2012 tax return Home acquired from a decedent who died before or after 2010. Can i efile my 2012 tax return   If you inherited your home from a decedent who died before or after 2010, your basis is the fair market value of the property on the date of the decedent's death (or the later alternate valuation date chosen by the personal representative of the estate). Can i efile my 2012 tax return If an estate tax return was filed or required to be filed, the value of the property listed on the estate tax return is your basis. Can i efile my 2012 tax return If a federal estate tax return did not have to be filed, your basis in the home is the same as its appraised value at the date of death, for purposes of state inheritance or transmission taxes. Can i efile my 2012 tax return Surviving spouse. Can i efile my 2012 tax return   If you are a surviving spouse and you owned your home jointly, your basis in the home will change. Can i efile my 2012 tax return The new basis for the interest your spouse owned will be its fair market value on the date of death (or alternate valuation date). Can i efile my 2012 tax return The basis in your interest will remain the same. Can i efile my 2012 tax return Your new basis in the home is the total of these two amounts. Can i efile my 2012 tax return   If you and your spouse owned the home either as tenants by the entirety or as joint tenants with right of survivorship, you will each be considered to have owned one-half of the home. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return Your jointly owned home (owned as joint tenants with right of survivorship) had an adjusted basis of $50,000 on the date of your spouse's death, and the fair market value on that date was $100,000. Can i efile my 2012 tax return Your new basis in the home is $75,000 ($25,000 for one-half of the adjusted basis plus $50,000 for one-half of the fair market value). Can i efile my 2012 tax return Community property. Can i efile my 2012 tax return   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), each spouse is usually considered to own half of the community property. Can i efile my 2012 tax return When either spouse dies, the total fair market value of the community property becomes the basis of the entire property, including the part belonging to the surviving spouse. Can i efile my 2012 tax return For this to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Can i efile my 2012 tax return   For more information about community property, see Publication 555, Community Property. Can i efile my 2012 tax return    If you are selling a home in which you acquired an interest from a decedent who died in 2010, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your basis. Can i efile my 2012 tax return Home received as trade. Can i efile my 2012 tax return   If you acquired your home as a trade for other property, in most cases, the basis of your home is the fair market value (at the time of the trade) of the property you gave up. Can i efile my 2012 tax return If you traded one home for another, you have made a sale and purchase. Can i efile my 2012 tax return In that case, you may have a gain. Can i efile my 2012 tax return See Trading (exchanging) homes under Dispositions Other Than Sales, earlier, for an example of figuring the gain. Can i efile my 2012 tax return Home received from spouse. Can i efile my 2012 tax return   If you received your home from your spouse or from your former spouse incident to your divorce, your basis in the home depends on the date of the transfer. Can i efile my 2012 tax return Transfers after July 18, 1984. Can i efile my 2012 tax return   If you received the home after July 18, 1984, there was no gain or loss on the transfer. Can i efile my 2012 tax return In most cases, your basis in this home is the same as your spouse's (or former spouse's) adjusted basis just before you received it. Can i efile my 2012 tax return This rule applies even if you received the home in exchange for cash, the release of marital rights, the assumption of liabilities, or other considerations. Can i efile my 2012 tax return   If you owned a home jointly with your spouse and your spouse transferred his or her interest in the home to you, in most cases, your basis in the half interest received from your spouse is the same as your spouse's adjusted basis just before the transfer. Can i efile my 2012 tax return This also applies if your former spouse transferred his or her interest in the home to you incident to your divorce. Can i efile my 2012 tax return Your basis in the half interest you already owned does not change. Can i efile my 2012 tax return Your new basis in the home is the total of these two amounts. Can i efile my 2012 tax return Transfers before July 19, 1984. Can i efile my 2012 tax return   If you received your home before July 19, 1984, in exchange for your release of marital rights, in most cases, your basis in the home is generally its fair market value at the time you received it. Can i efile my 2012 tax return More information. Can i efile my 2012 tax return   For more information on property received from a spouse or former spouse, see Property Settlements in Publication 504. Can i efile my 2012 tax return Involuntary conversion. Can i efile my 2012 tax return   If your home is destroyed or condemned, you may receive insurance proceeds or a condemnation award. Can i efile my 2012 tax return If you acquired a replacement home with these proceeds, the basis is its cost decreased by any gain not recognized on the conversion under the rules explained in: Publication 547, in the case of a home that was destroyed, or Chapter 1 of Publication 544, in the case of a home that was condemned. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return A fire destroyed your home that you owned and used for only 6 months. Can i efile my 2012 tax return The home had an adjusted basis of $80,000 and the insurance company paid you $130,000 for the loss. Can i efile my 2012 tax return Your gain is $50,000 ($130,000 − $80,000). Can i efile my 2012 tax return You bought a replacement home for $100,000. Can i efile my 2012 tax return The part of your gain that is taxable is $30,000 ($130,000 − $100,000), the unspent part of the payment from the insurance company. Can i efile my 2012 tax return The rest of the gain ($20,000) is not taxable, so that amount reduces your basis in the new home. Can i efile my 2012 tax return The basis of the new home is figured as follows. Can i efile my 2012 tax return Cost of replacement home $100,000 Minus: Gain not recognized 20,000 Basis of the replacement home $80,000 More information. Can i efile my 2012 tax return   For more information about basis, see Publication 551. Can i efile my 2012 tax return Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. Can i efile my 2012 tax return To figure your adjusted basis, you can use Worksheet 1, found toward the end of this publication. Can i efile my 2012 tax return Filled-in examples of that worksheet are included in Comprehensive Examples , later. Can i efile my 2012 tax return Recordkeeping. Can i efile my 2012 tax return You should keep records to prove your home's adjusted basis. Can i efile my 2012 tax return Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. Can i efile my 2012 tax return But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. Can i efile my 2012 tax return Keep records proving the basis of both homes as long as they are needed for tax purposes. Can i efile my 2012 tax return The records you should keep include: Proof of the home's purchase price and purchase expenses; Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis; Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain; Any Form 982 you filed to exclude any discharge of qualified principal residence indebtedness; Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997; and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. Can i efile my 2012 tax return Increases to Basis These include the following. Can i efile my 2012 tax return Additions and other improvements that have a useful life of more than 1 year. Can i efile my 2012 tax return Special assessments for local improvements. Can i efile my 2012 tax return Amounts you spent after a casualty to restore damaged property. Can i efile my 2012 tax return Improvements. Can i efile my 2012 tax return   These add to the value of your home, prolong its useful life, or adapt it to new uses. Can i efile my 2012 tax return You add the cost of additions and other improvements to the basis of your property. Can i efile my 2012 tax return   The following chart lists some other examples of improvements. Can i efile my 2012 tax return Examples of Improvements That Increase Basis Additions Bedroom Bathroom Deck Garage Porch Patio Heating & Air Conditioning Heating system Central air conditioning Furnace Duct work Central humidifier Filtration system Lawn & Grounds Landscaping Driveway Walkway Fence  Retaining wall Sprinkler system Swimming pool  Miscellaneous Storm windows, doors New roof Central vacuum Wiring upgrades Satellite dish Security system  Plumbing Septic system Water heater Soft water system Filtration system  Interior Improvements Built-in appliances  Kitchen modernization  Flooring Wall-to-wall carpeting  Insulation Attic Walls Floors Pipes and duct work Improvements no longer part of home. Can i efile my 2012 tax return   Your home's adjusted basis does not include the cost of any improvements that are replaced and are no longer part of the home. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return You put wall-to-wall carpeting in your home 15 years ago. Can i efile my 2012 tax return Later, you replaced that carpeting with new wall-to-wall carpeting. Can i efile my 2012 tax return The cost of the old carpeting you replaced is no longer part of your home's adjusted basis. Can i efile my 2012 tax return Repairs. Can i efile my 2012 tax return   These maintain your home in good condition but do not add to its value or prolong its life. Can i efile my 2012 tax return You do not add their cost to the basis of your property. Can i efile my 2012 tax return Examples. Can i efile my 2012 tax return Repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes are examples of repairs. Can i efile my 2012 tax return Exception. Can i efile my 2012 tax return   The entire job is considered an improvement if items that would otherwise be considered repairs are done as part of an extensive remodeling or restoration of your home. Can i efile my 2012 tax return For example, if you have a casualty and your home is damaged, increase your basis by the amount you spend on repairs that restore the property to its pre-casualty condition. Can i efile my 2012 tax return Decreases to Basis These include the following. Can i efile my 2012 tax return Discharge of qualified principal residence indebtedness that was excluded from income (but not below zero). Can i efile my 2012 tax return For details, see Publication 4681. Can i efile my 2012 tax return Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. Can i efile my 2012 tax return For details, see Publication 4681. Can i efile my 2012 tax return Gain you postponed from the sale of a previous home before May 7, 1997. Can i efile my 2012 tax return Deductible casualty losses. Can i efile my 2012 tax return Insurance payments you received or expect to receive for casualty losses. Can i efile my 2012 tax return Payments you received for granting an easement or right-of-way. Can i efile my 2012 tax return Depreciation allowed or allowable if you used your home for business or rental purposes. Can i efile my 2012 tax return Energy-related credits allowed for expenditures made on the residence. Can i efile my 2012 tax return (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. Can i efile my 2012 tax return ) Adoption credit you claimed for improvements added to the basis of your home. Can i efile my 2012 tax return Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. Can i efile my 2012 tax return Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. Can i efile my 2012 tax return An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. Can i efile my 2012 tax return District of Columbia first-time homebuyer credit allowed on the purchase of a principal residence in the District of Columbia. Can i efile my 2012 tax return General sales taxes claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. Can i efile my 2012 tax return Discharges of qualified principal residence indebtedness. Can i efile my 2012 tax return   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. Can i efile my 2012 tax return This exclusion applies to discharges made after 2006 and before 2014. Can i efile my 2012 tax return If you choose to exclude this income, you must reduce (but not below zero) the basis of your principal residence by the amount excluded from gross income. Can i efile my 2012 tax return   File Form 982 with your tax return. Can i efile my 2012 tax return See the form's instructions for detailed information. Can i efile my 2012 tax return    A decrease in basis due to a discharge of qualified principal residence indebtedness that is excluded from income occurs only if you retain ownership of the principal residence after a discharge. Can i efile my 2012 tax return In most cases, this would occur in a refinancing or a restructuring of the mortgage. Can i efile my 2012 tax return Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. Can i efile my 2012 tax return This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. Can i efile my 2012 tax return To qualify, you must meet the ownership and use tests described later. Can i efile my 2012 tax return You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. Can i efile my 2012 tax return This choice can be made (or revoked) at any time before the expiration of a 3-year period beginning on the due date of your return (not including extensions) for the year of the sale. Can i efile my 2012 tax return You can use Worksheet 2 (near the end of this publication) to figure the amount of your exclusion and your taxable gain, if any. Can i efile my 2012 tax return If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. Can i efile my 2012 tax return See Publication 505, Tax Withholding and Estimated Tax. Can i efile my 2012 tax return Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. Can i efile my 2012 tax return You meet the ownership test. Can i efile my 2012 tax return You meet the use test. Can i efile my 2012 tax return During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. Can i efile my 2012 tax return For details on gain allocated to periods of nonqualified use, see Nonqualified Use , later. Can i efile my 2012 tax return If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions just listed. Can i efile my 2012 tax return You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . Can i efile my 2012 tax return Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. Can i efile my 2012 tax return This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Can i efile my 2012 tax return Exception. Can i efile my 2012 tax return   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. Can i efile my 2012 tax return However, the maximum amount you may be able to exclude will be reduced. Can i efile my 2012 tax return See Reduced Maximum Exclusion , later. Can i efile my 2012 tax return Example 1—home owned and occupied for at least 2 years. Can i efile my 2012 tax return Mya bought and moved into her main home in September 2011. Can i efile my 2012 tax return She sold the home at a gain in October 2013. Can i efile my 2012 tax return During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. Can i efile my 2012 tax return She meets the ownership and use tests. Can i efile my 2012 tax return Example 2—ownership test met but use test not met. Can i efile my 2012 tax return Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. Can i efile my 2012 tax return He later sold the home for a gain in June 2013. Can i efile my 2012 tax return He owned the home during the entire 5-year period ending on the date of sale. Can i efile my 2012 tax return He meets the ownership test but not the use test. Can i efile my 2012 tax return He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). Can i efile my 2012 tax return Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. Can i efile my 2012 tax return You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return Naomi bought and moved into a house in July 2009. Can i efile my 2012 tax return She lived there for 13 months and then moved in with a friend. Can i efile my 2012 tax return She later moved back into her house and lived there for 12 months until she sold it in August 2013. Can i efile my 2012 tax return Naomi meets the ownership and use tests because, during the 5-year period ending on the date of sale, she owned the house for more than 2 years and lived in it for a total of 25 (13 + 12) months. Can i efile my 2012 tax return Temporary absence. Can i efile my 2012 tax return   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. Can i efile my 2012 tax return The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. Can i efile my 2012 tax return Example 1. Can i efile my 2012 tax return David Johnson, who is single, bought and moved into his home on February 1, 2011. Can i efile my 2012 tax return Each year during 2011 and 2012, David left his home for a 2-month summer vacation. Can i efile my 2012 tax return David sold the house on March 1, 2013. Can i efile my 2012 tax return Although the total time David lived in his home is less than 2 years (21 months), he meets the use requirement and may exclude gain. Can i efile my 2012 tax return The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. Can i efile my 2012 tax return Example 2. Can i efile my 2012 tax return Professor Paul Beard, who is single, bought and moved into a house in December 2010, went abroad for a 1-year sabbatical leave in January 2012, returned to the house in January 2013, and sold it at a gain in February 2013. Can i efile my 2012 tax return Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. Can i efile my 2012 tax return He cannot exclude any part of his gain because he did not use the residence for the required 2 years. Can i efile my 2012 tax return Ownership and use tests met at different times. Can i efile my 2012 tax return   You can meet the ownership and use tests during different 2-year periods. Can i efile my 2012 tax return However, you must meet both tests during the 5-year period ending on the date of the sale. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return Beginning in 2002, Helen Jones lived in a rented apartment. Can i efile my 2012 tax return The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. Can i efile my 2012 tax return In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. Can i efile my 2012 tax return On July 12, 2013, while still living in her daughter's home, she sold her condominium. Can i efile my 2012 tax return Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. Can i efile my 2012 tax return She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). Can i efile my 2012 tax return She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). Can i efile my 2012 tax return The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. Can i efile my 2012 tax return Cooperative apartment. Can i efile my 2012 tax return   If you sold stock as a tenant-shareholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitled you to occupy as your main home for at least 2 years. Can i efile my 2012 tax return Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. Can i efile my 2012 tax return Exception for individuals with a disability. Can i efile my 2012 tax return   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. Can i efile my 2012 tax return Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. Can i efile my 2012 tax return   If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. Can i efile my 2012 tax return Previous home destroyed or condemned. Can i efile my 2012 tax return   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. Can i efile my 2012 tax return This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home (see Involuntary Conversions in Publication 551). Can i efile my 2012 tax return Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. Can i efile my 2012 tax return Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Can i efile my 2012 tax return   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on qualified official extended duty (defined later) as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. Can i efile my 2012 tax return You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on qualified official extended duty (defined later) or as an enrolled volunteer or volunteer leader of the Peace Corps. Can i efile my 2012 tax return This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. Can i efile my 2012 tax return   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return John bought and moved into a home in 2005. Can i efile my 2012 tax return He lived in it as his main home for 2½ years. Can i efile my 2012 tax return For the next 6 years, he did not live in it because he was on qualified official extended duty with the Army. Can i efile my 2012 tax return He then sold the home at a gain in 2013. Can i efile my 2012 tax return To meet the use test, John chooses to suspend the 5-year test period for the 6 years he was on qualified official extended duty. Can i efile my 2012 tax return This means he can disregard those 6 years. Can i efile my 2012 tax return Therefore, John's 5-year test period consists of the 5 years before he went on qualified official extended duty. Can i efile my 2012 tax return He meets the ownership and use tests because he owned and lived in the home for 2½ years during this test period. Can i efile my 2012 tax return Period of suspension. Can i efile my 2012 tax return   The period of suspension cannot last more than 10 years. Can i efile my 2012 tax return Together, the 10-year suspension period and the 5-year test period can be as long as, but no more than, 15 years. Can i efile my 2012 tax return You cannot suspend the 5-year period for more than one property at a time. Can i efile my 2012 tax return You can revoke your choice to suspend the 5-year period at any time. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return Mary bought a home on April 1, 1997. Can i efile my 2012 tax return She used it as her main home until August 31, 2000. Can i efile my 2012 tax return On September 1, 2000, she went on qualified official extended duty with the Navy. Can i efile my 2012 tax return She did not live in the house again before selling it on July 31, 2013. Can i efile my 2012 tax return Mary chooses to use the entire 10-year suspension period. Can i efile my 2012 tax return Therefore, the suspension period would extend back from July 31, 2013, to August 1, 2003, and the 5-year test period would extend back to August 1, 1998. Can i efile my 2012 tax return During that period, Mary owned the house all 5 years and lived in it as her main home from August 1, 1998, until August 31, 2000, a period of more than 24 months. Can i efile my 2012 tax return She meets the ownership and use tests because she owned and lived in the home for at least 2 years during this test period. Can i efile my 2012 tax return Uniformed services. Can i efile my 2012 tax return   The uniformed services are: The Armed Forces (the Army, Navy, Air Force, Marine Corps, and Coast Guard), The commissioned corps of the National Oceanic and Atmospheric Administration, and The commissioned corps of the Public Health Service. Can i efile my 2012 tax return Foreign Service member. Can i efile my 2012 tax return   For purposes of the choice to suspend the 5-year test period for ownership and use, you are a member of the Foreign Service if you are any of the following. Can i efile my 2012 tax return A Chief of mission. Can i efile my 2012 tax return An Ambassador at large. Can i efile my 2012 tax return A member of the Senior Foreign Service. Can i efile my 2012 tax return A Foreign Service officer. Can i efile my 2012 tax return Part of the Foreign Service personnel. Can i efile my 2012 tax return Employee of the intelligence community. Can i efile my 2012 tax return   For purposes of the choice to suspend the 5-year test period for ownership and use, you are an employee of the intelligence community if you are an employee of any of the following. Can i efile my 2012 tax return The Office of the Director of National Intelligence. Can i efile my 2012 tax return The Central Intelligence Agency. Can i efile my 2012 tax return The National Security Agency. Can i efile my 2012 tax return The Defense Intelligence Agency. Can i efile my 2012 tax return The National Geospatial-Intelligence Agency. Can i efile my 2012 tax return The National Reconnaissance Office and any other office within the Department of Defense for the collection of specialized national intelligence through reconnaissance programs. Can i efile my 2012 tax return Any of the intelligence elements of the Army, the Navy, the Air Force, the Marine Corps, the Federal Bureau of Investigation, the Department of Treasury, the Department of Energy, and the Coast Guard. Can i efile my 2012 tax return The Bureau of Intelligence and Research of the Department of State. Can i efile my 2012 tax return Any of the elements of the Department of Homeland Security concerned with the analyses of foreign intelligence information. Can i efile my 2012 tax return Qualified official extended duty. Can i efile my 2012 tax return   You are on qualified official extended duty if you are on extended duty while: Serving at a duty station at least 50 miles from your main home, or Living in Government quarters under Government orders. Can i efile my 2012 tax return   You are on extended duty when you are called or ordered to active duty for a period of more than 90 days or for an indefinite period. Can i efile my 2012 tax return Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. Can i efile my 2012 tax return (But see Special rules for joint returns, next. Can i efile my 2012 tax return ) Special rules for joint returns. Can i efile my 2012 tax return   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. Can i efile my 2012 tax return You are married and file a joint return for the year. Can i efile my 2012 tax return Either you or your spouse meets the ownership test. Can i efile my 2012 tax return Both you and your spouse meet the use test. Can i efile my 2012 tax return During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. Can i efile my 2012 tax return If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. Can i efile my 2012 tax return For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. Can i efile my 2012 tax return Example 1—one spouse sells a home. Can i efile my 2012 tax return Emily sells her home in June 2013 for a gain of $300,000. Can i efile my 2012 tax return She marries Jamie later in the year. Can i efile my 2012 tax return She meets the ownership and use tests, but Jamie does not. Can i efile my 2012 tax return Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. Can i efile my 2012 tax return The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. Can i efile my 2012 tax return Example 2—each spouse sells a home. Can i efile my 2012 tax return The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. Can i efile my 2012 tax return He meets the ownership and use tests on his home, but Emily does not. Can i efile my 2012 tax return Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. Can i efile my 2012 tax return However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. Can i efile my 2012 tax return Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. Can i efile my 2012 tax return The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. Can i efile my 2012 tax return Sale of main home by surviving spouse. Can i efile my 2012 tax return   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. Can i efile my 2012 tax return   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Can i efile my 2012 tax return The sale or exchange took place after 2008. Can i efile my 2012 tax return The sale or exchange took place no more than 2 years after the date of death of your spouse. Can i efile my 2012 tax return You have not remarried. Can i efile my 2012 tax return You and your spouse met the use test at the time of your spouse's death. Can i efile my 2012 tax return You or your spouse met the ownership test at the time of your spouse's death. Can i efile my 2012 tax return Neither you nor your spouse excluded gain from the sale of another home during the last 2 years before the date of death. Can i efile my 2012 tax return The ownership and use tests were described earlier. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return Harry owned and used a house as his main home since 2009. Can i efile my 2012 tax return Harry and Wilma married on July 1, 2013, and from that date they used Harry's house as their main home. Can i efile my 2012 tax return Harry died on August 15, 2013, and Wilma inherited the property. Can i efile my 2012 tax return Wilma sold the property on September 1, 2013, at which time she had not remarried. Can i efile my 2012 tax return Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. Can i efile my 2012 tax return Home transferred from spouse. Can i efile my 2012 tax return   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. Can i efile my 2012 tax return Use of home after divorce. Can i efile my 2012 tax return   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. Can i efile my 2012 tax return Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. Can i efile my 2012 tax return This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. Can i efile my 2012 tax return In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. Can i efile my 2012 tax return A change in place of employment. Can i efile my 2012 tax return Health. Can i efile my 2012 tax return Unforeseen circumstances. Can i efile my 2012 tax return Qualified individual. Can i efile my 2012 tax return   For purposes of the reduced maximum exclusion, a qualified individual is any of the following. Can i efile my 2012 tax return You. Can i efile my 2012 tax return Your spouse. Can i efile my 2012 tax return A co-owner of the home. Can i efile my 2012 tax return A person whose main home is the same as yours. Can i efile my 2012 tax return Primary reason for sale. Can i efile my 2012 tax return   One of the three reasons above will be considered to be the primary reason you sold your home if either (1) or (2) is true. Can i efile my 2012 tax return You qualify under a “safe harbor. Can i efile my 2012 tax return ” This is a specific set of facts and circumstances that, if applicable, qualifies you to claim a reduced maximum exclusion. Can i efile my 2012 tax return Safe harbors corresponding to the reasons listed above are described later. Can i efile my 2012 tax return A safe harbor does not apply, but you can establish, based on facts and circumstances, that the primary reason for the sale is a change in place of employment, health, or unforeseen circumstances. Can i efile my 2012 tax return  Factors that may be relevant in determining your primary reason for sale include whether: Your sale and the circumstances causing it were close in time, The circumstances causing your sale occurred during the time you owned and used the property as your main home, The circumstances causing your sale were not reasonably foreseeable when you began using the property as your main home, Your financial ability to maintain the property became materially impaired, The suitability of the property as your main home materially changed, and During the time you owned the property, you used it as your home. Can i efile my 2012 tax return Change in Place of Employment You may qualify for a reduced exclusion if the primary reason for the sale of your main home is a change in the location of employment of a qualified individual. Can i efile my 2012 tax return Employment. Can i efile my 2012 tax return   For this purpose, employment includes the start of work with a new employer or continuation of work with the same employer. Can i efile my 2012 tax return It also includes the start or continuation of self-employment. Can i efile my 2012 tax return Distance safe harbor. Can i efile my 2012 tax return   A change in place of employment is considered to be the reason you sold your home if: The change occurred during the period you owned and used the property as your main home, and The new place of employment is at least 50 miles farther from the home you sold than was the former place of employment (or, if there was no former place of employment, the distance between your new place of employment and the home sold is at least 50 miles). Can i efile my 2012 tax return Example. Can i efile my 2012 tax return Justin was unemployed and living in a townhouse in Florida he had owned and used as his main home since 2012. Can i efile my 2012 tax return He got a job in North Carolina and sold his townhouse in 2013. Can i efile my 2012 tax return Because the distance between Justin's new place of employment and the home he sold is at least 50 miles, the sale satisfies the conditions of the distance safe harbor. Can i efile my 2012 tax return Justin's sale of his home is considered to be because of a change in place of employment, and he is entitled to claim a reduced maximum exclusion of gain from the sale. Can i efile my 2012 tax return Health The sale of your main home is because of health if your primary reason for the sale is: To obtain, provide, or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness, or injury of a qualified individual, or To obtain or provide medical or personal care for a qualified individual suffering from a disease, illness, or injury. Can i efile my 2012 tax return The sale of your home is not because of health if the sale merely benefits a qualified individual's general health or well-being. Can i efile my 2012 tax return For purposes of this reason, a qualified individual includes, in addition to the individuals listed earlier under Qualified individual , any of the following family members of these individuals. Can i efile my 2012 tax return Parent, grandparent, stepmother, stepfather. Can i efile my 2012 tax return Child, grandchild, stepchild, adopted child, eligible foster child. Can i efile my 2012 tax return Brother, sister, stepbrother, stepsister, half-brother, half-sister. Can i efile my 2012 tax return Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law. Can i efile my 2012 tax return Uncle, aunt, nephew, niece, or cousin. Can i efile my 2012 tax return Example. Can i efile my 2012 tax return In 2012, Chase and Lauren, spouses, bought a house that they used as their main home. Can i efile my 2012 tax return Lauren's father has a chronic disease and is unable to care for himself. Can i efile my 2012 tax return In 2013, Chase and Lauren sold their home in order to move into Lauren's father's house to provide care for him. Can i efile my 2012 tax return Because the primary reason for the sale of their home was to provide care for Lauren's father, Chase and Lauren are entitled to a reduced maximum exclusion. Can i efile my 2012 tax return Doctor's recommendation safe harbor. Can i efile my 2012 tax return   Health is considered to be the reason you sold your home if, for one or more of the reasons listed at the beginning of this discussion, a doctor recommends a change of residence. Can i efile my 2012 tax return Unforeseen Circumstances The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying that home. Can i efile my 2012 tax return You are not considered to have an unforeseen circumstance if the primary reason you sold your home was that you preferred to get a different home or because your finances improved. Can i efile my 2012 tax return Specific event safe harbors. Can i efile my 2012 tax return   Unforeseen circumstances are considered to be the reason for selling your home if any of the following events occurred while you owned and used the property as your main home. Can i efile my 2012 tax return An involuntary conversion of your home, such as when your home is destroyed or condemned. Can i efile my 2012 tax return Natural or man-made disasters or acts of war or terrorism resulting in a casualty to your home, whether or not your loss is deductible. Can i efile my 2012 tax return In the case of qualified individuals (listed earlier under Qualified individual ): Death, Unemployment (if the individual is eligible for unemployment compensation), A change in employment or self-employment status that results in the individual's inability to pay reasonable basic living expenses (listed under Reasonable basic living expenses , later) for his or her household, Divorce or legal separation under a decree of divorce or separate maintenance, or Multiple births resulting from the same pregnancy. Can i efile my 2012 tax return An event the IRS determined to be an unforeseen circumstance in published guidance of general applicability. Can i efile my 2012 tax return For example, the IRS determined the September 11, 2001, terrorist attacks to be an unforeseen circumstance. Can i efile my 2012 tax return Reasonable basic living expenses. Can i efile my 2012 tax return   Reasonable basic living expenses for your household include the following. Can i efile my 2012 tax return Amounts spent for food. Can i efile my 2012 tax return Amounts spent for clothing. Can i efile my 2012 tax return Housing and related expenses. Can i efile my 2012 tax return Medical expenses. Can i efile my 2012 tax return Transportation expenses. Can i efile my 2012 tax return Tax payments. Can i efile my 2012 tax return Court-ordered payments. Can i efile my 2012 tax return Expenses reasonably necessary to produce income. Can i efile my 2012 tax return   Any of these amounts spent to maintain an affluent or luxurious standard of living are not reasonable basic living expenses. Can i efile my 2012 tax return Nonqualified Use Gain from the sale or exchange of the main home is not excludable from income if it is allocable to periods of nonqualified use. Can i efile my 2012 tax return Nonqualified use means any period after 2008 where neither you nor your spouse (or your former spouse) used the property as a main home, with certain exceptions (see next). Can i efile my 2012 tax return Exceptions. Can i efile my 2012 tax return   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. Can i efile my 2012 tax return Calculation. Can i efile my 2012 tax return   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain (net of any depreciation allowed or allowable on the property for periods after May 6, 1997) by the following fraction:   Total nonqualified use during the period of ownership after 2008     Total period of ownership     This calculation can be found in Worksheet 2, line 10, later in this publication. Can i efile my 2012 tax return   For examples of this calculation, see Business Use or Rental of Home , next. Can i efile my 2012 tax return Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income if you meet the ownership and use tests. Can i efile my 2012 tax return Example 1. Can i efile my 2012 tax return On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. Can i efile my 2012 tax return She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. Can i efile my 2012 tax return The house was rented from June 1, 2009, to March 31, 2011. Can i efile my 2012 tax return Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. Can i efile my 2012 tax return Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. Can i efile my 2012 tax return During the 5-year period ending on the date of the sale (January 31, 2008–January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. Can i efile my 2012 tax return Five-Year Period Used as Home Used as Rental 1/31/08 – 5/31/09 16 months   6/01/09 – 3/31/11   22 months 4/01/11 – 1/31/13 22 months     38 months 22 months       During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. Can i efile my 2012 tax return Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain, as shown on Worksheet 2. Can i efile my 2012 tax return Example 2. Can i efile my 2012 tax return William owned and used a house as his main home from 2007 through 2010. Can i efile my 2012 tax return On January 1, 2011, he moved to another state. Can i efile my 2012 tax return He rented his house from that date until April 30, 2013, when he sold it. Can i efile my 2012 tax return During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. Can i efile my 2012 tax return Because it was rental property at the time of the sale, he must report the sale on Form 4797. Can i efile my 2012 tax return Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. Can i efile my 2012 tax return Because he met the ownership and use tests, he can exclude gain up to $250,000. Can i efile my 2012 tax return However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. Can i efile my 2012 tax return Depreciation after May 6, 1997. Can i efile my 2012 tax return   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. Can i efile my 2012 tax return If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. Can i efile my 2012 tax return Unrecaptured section 1250 gain. Can i efile my 2012 tax return   This is the part of any long-term capital gain from the sale of your home that is due to depreciation and cannot be excluded. Can i efile my 2012 tax return To figure the amount of unrecaptured section 1250 gain to be reported on Schedule D (Form 1040), you must also take into account certain gains or losses from the sale of property other than your home. Can i efile my 2012 tax return Use the Unrecaptured Section 1250 Gain Worksheet in the Schedule D instructions for this purpose. Can i efile my 2012 tax return Worksheet 2. Can i efile my 2012 tax return Taxable Gain on Sale of Home—Completed Example 1 for Amy Part 1. Can i efile my 2012 tax return Gain or (Loss) on Sale       1. Can i efile my 2012 tax return   Selling price of home 1. Can i efile my 2012 tax return     2. Can i efile my 2012 tax return   Selling expenses (including commissions, advertising and legal fees, and seller-paid loan charges) 2. Can i efile my 2012 tax return     3. Can i efile my 2012 tax return   Subtract line 2 from line 1. Can i efile my 2012 tax return This is the amount realized 3. Can i efile my 2012 tax return     4. Can i efile my 2012 tax return   Adjusted basis of home sold (from Worksheet 1, line 13) 4. Can i efile my 2012 tax return     5. Can i efile my 2012 tax return   Gain or (loss) on the sale. Can i efile my 2012 tax return Subtract line 4 from line 3. Can i efile my 2012 tax return If this is a loss, stop here 5. Can i efile my 2012 tax return 200,000   Part 2. Can i efile my 2012 tax return Exclusion and Taxable Gain       6. Can i efile my 2012 tax return   Enter any depreciation allowed or allowable on the property for periods after May 6, 1997. Can i efile my 2012 tax return If none, enter -0- 6. Can i efile my 2012 tax return 10,000   7. Can i efile my 2012 tax return   Subtract line 6 from line 5. Can i efile my 2012 tax return If the result is less than zero, enter -0- 7. Can i efile my 2012 tax return 190,000   8. Can i efile my 2012 tax return   Aggregate number of days of nonqualified use after 2008. Can i efile my 2012 tax return If none, enter -0-. Can i efile my 2012 tax return  If line 8 is equal to zero, skip to line 12 and enter the amount from line 7 on line 12 8. Can i efile my 2012 tax return 668   9. Can i efile my 2012 tax return   Number of days taxpayer owned the property 9. Can i efile my 2012 tax return 2,080   10. Can i efile my 2012 tax return   Divide the amount on line 8 by the amount on line 9. Can i efile my 2012 tax return Enter the result as a decimal (rounded to at least 3 places). Can i efile my 2012 tax return But do not enter an amount greater than 1. Can i efile my 2012 tax return 00 10. Can i efile my 2012 tax return 0. Can i efile my 2012 tax return 321   11. Can i efile my 2012 tax return   Gain allocated to nonqualified use. Can i efile my 2012 tax return (Line 7 multiplied by line 10) 11. Can i efile my 2012 tax return 60,990   12. Can i efile my 2012 tax return   Gain eligible for exclusion. Can i efile my 2012 tax return Subtract line 11 from line 7 12. Can i efile my 2012 tax return 129,010   13. Can i efile my 2012 tax return   If you qualify to exclude gain on the sale, enter your maximum exclusion (see Maximum Exclusion ). Can i efile my 2012 tax return  If you qualify for a reduced maximum exclusion, enter the amount from Worksheet 3, line 7. Can i efile my 2012 tax return If you do  not qualify to exclude gain, enter -0- 13. Can i efile my 2012 tax return 250,000   14. Can i efile my 2012 tax return   Exclusion. Can i efile my 2012 tax return Enter the smaller of line 12 or line 13 14. Can i efile my 2012 tax return 129,010   15. Can i efile my 2012 tax return   Taxable gain. Can i efile my 2012 tax return Subtract line 14 from line 5. Can i efile my 2012 tax return Report your taxable gain as described under Reporting the Sale . Can i efile my 2012 tax return If the amount on line 6 is more than zero, complete line 16 15. Can i efile my 2012 tax return 70,990   16. Can i efile my 2012 tax return   Enter the smaller of line 6 or line 15. Can i efile my 2012 tax return Enter this amount on line 12 of the Unrecaptured Section 1250 Gain  Worksheet in the instructions for Schedule D (Form 1040) 16. Can i efile my 2012 tax return 10,000 Property Used Partly for Business or Rental If you use property partly as a home and partly for business or to produce rental income, the treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. Can i efile my 2012 tax return Part of Home Used for Business or Rental If the part of your property used for business or to produce rental income is within your home, such as a room used as a home office for a business, you do not need to allocate gain on the sale of the property between the business part of the property and the part used as a home. Can i efile my 2012 tax return In addition, you do not need to report the sale of the business or rental part on Form 4797. Can i efile my 2012 tax return This is true whether or not you were entitled to claim any depreciation. Can i efile my 2012 tax return However, you cannot exclude the part of any gain equal to any depreciation allowed or allowable after May 6, 1997. Can i efile my 2012 tax return See Depreciation after May 6, 1997, earlier. Can i efile my 2012 tax return Example 1. Can i efile my 2012 tax return Ray sold his main home in 2013 at a $30,000 gain. Can i efile my 2012 tax return He has no gains or losses from the sale of property other than the gain from the sale of his home. Can i efile my 2012 tax return He meets the ownership and use tests to exclude the gain from his income. Can i efile my 2012 tax return However, he used part of the home as a business office in 2012 and claimed $500 depreciation. Can i efile my 2012 tax return Because the business office was part of his home (not separate from it), he does not have to allocate the gain on the sale between the business part of the property and the part used as a home. Can i efile my 2012 tax return In addition, he does not have to report any part of the gain on Form 4797. Can i efile my 2012 tax return Because Ray was entitled to take a depreciation deduction, he must recognize $500 of the gain as unrecaptured section 1250 gain. Can i efile my 2012 tax return He reports his gain, exclusion, and the taxable gain of $500 on Form 8949 and Schedule D (Form 1040). Can i efile my 2012 tax return Example 2. Can i efile my 2012 tax return The facts are the same as in Example 1 except that Ray was not entitled to claim depreciation for the business use of his home. Can i efile my 2012 tax return Since Ray did not claim any depreciation, he can exclude the entire $30,000 gain. Can i efile my 2012 tax return Separate Part of Property Used for Business or Rental You may have used part of your property as your home and a separate part of it for business or to produce rental income. Can i efile my 2012 tax return Examples are: A working farm on which your house was located, A duplex in w