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Efile Tax Return Online Free Federal And State

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Efile Tax Return Online Free Federal And State

Efile tax return online free federal and state 15. Efile tax return online free federal and state   Examination and Appeal Procedures If your excise tax return is examined and you disagree with the findings, you can get information about audit and appeal procedures from Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund. Efile tax return online free federal and state An unagreed case involving an excise tax covered in this publication differs from other tax cases in that you can only contest it in court after payment of the tax by filing suit for a refund in the United States District Court or the United States Court of Federal Claims. Efile tax return online free federal and state Prev  Up  Next   Home   More Online Publications
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Internal Revenue Manual (IRM) Materials Relating to Tax Exempt Bonds

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IRM 4.81.1 TEB Program
This manual section outlines the Tax Exempt Bonds (TEB) program responsibilities in the oversight, compliance and education related to arrangements that involve debt instruments or obligations of States, their political subdivisions and other entities entitled to issue tax-exempt and tax credit obligations.

IRM 4.81.2 Examination Selection
This manual section provides procedures for the TEB classification program through which examinations pertaining to tax-exempt bond transactions are selected in accordance with inventory requirements.

IRM 4.81.5 Examination Process (Sections 1 - 7.6) (Sections 7.7 - 9.6)
This manual section provides the basic techniques that are intended to ensure that a uniform approach is taken when conducting TEB examinations. The following guidance on general examination techniques and procedures used to conduct examinations of tax-exempt bonds and tax credit bonds is provided for TEB examiners. The procedures outlined within this manual are designed to be used as a guide for TEB examiners when examining a Form 8038 series information return and are not intended to be all inclusive.

IRM 4.81.6 Closing Agreements
This manual section sets forth procedures under which the IRS will enter into closing agreements with governmental issuers and other parties to tax-exempt bond transactions with respect to the application of federal tax law requirements under the Code and corresponding Income Tax regulations (the " Regulations" or "ITR" ) in order to correct any compliance failures and preserve the tax-exempt status of the bonds. These procedures seek to ensure consistency of treatment and to encourage increased voluntary compliance throughout the municipal bond industry.

IRM 4.81.7 Bondholder Referrals
This manual section provides guidance for TEB examiners to refer bondholders in the event of an adverse bond examination.

IRM 4.81.10 Quality Review
This manual section provides guidance and procedures for the systematic review of cases for the purpose of measuring quality and to identify examination deficiency trends.

IRM 4.81.11 Referral Program
This manual provides procedures for the TEB Referral Program for Tax Exempt Bonds. It provides guidance for handling information items and referrals received or developed by TEB that relate specifically to compliance issues.

IRM 4.82.1 Examining Qualified Small Issue Bonds
This manual section provides procedures for examining qualified small issue bonds under section 144(a) of the Internal Revenue Code

IRM 7.2.3 Tax Exempt Bonds Voluntary Closing Agreement Program
This manual section provides procedures for the voluntary closing agreement program for tax-exempt bonds and tax credit bonds known as TEB VCAP.

IRM 22.42.1 Tax Exempt Bonds Customer Education and Outreach
This manual section provides procedures for the Tax Exempt Bonds Customer Education & Outreach ("TEB CE&O" ) program.

Page Last Reviewed or Updated: 26-Mar-2014

The Efile Tax Return Online Free Federal And State

Efile tax return online free federal and state 2. Efile tax return online free federal and state   Ordinary or Capital Gain or Loss Table of Contents IntroductionSection 1231 transactions. Efile tax return online free federal and state Topics - This chapter discusses: Useful Items - You may want to see: Capital Assets Noncapital AssetsCommodities derivative dealer. Efile tax return online free federal and state Sales and Exchanges Between Related PersonsGain Is Ordinary Income Nondeductible Loss Other DispositionsSale of a Business Dispositions of Intangible Property Subdivision of Land Timber Precious Metals and Stones, Stamps, and Coins Coal and Iron Ore Conversion Transactions Introduction You must classify your gains and losses as either ordinary or capital (and your capital gains or losses as either short-term or long-term). Efile tax return online free federal and state You must do this to figure your net capital gain or loss. Efile tax return online free federal and state For individuals, a net capital gain may be taxed at a different tax rate than ordinary income. Efile tax return online free federal and state See Capital Gains Tax Rates in chapter 4. Efile tax return online free federal and state Your deduction for a net capital loss may be limited. Efile tax return online free federal and state See Treatment of Capital Losses in chapter 4. Efile tax return online free federal and state Capital gain or loss. Efile tax return online free federal and state   Generally, you will have a capital gain or loss if you sell or exchange a capital asset. Efile tax return online free federal and state You also may have a capital gain if your section 1231 transactions result in a net gain. Efile tax return online free federal and state Section 1231 transactions. Efile tax return online free federal and state   Section 1231 transactions are sales and exchanges of property held longer than 1 year and either used in a trade or business or held for the production of rents or royalties. Efile tax return online free federal and state They also include certain involuntary conversions of business or investment property, including capital assets. Efile tax return online free federal and state See Section 1231 Gains and Losses in chapter 3 for more information. Efile tax return online free federal and state Topics - This chapter discusses: Capital assets Noncapital assets Sales and exchanges between  related persons Other dispositions Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 4797 Sales of Business Property 8594 Asset Acquisition Statement Under Section 1060 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. Efile tax return online free federal and state Capital Assets Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. Efile tax return online free federal and state For exceptions, see Noncapital Assets, later. Efile tax return online free federal and state The following items are examples of capital assets. Efile tax return online free federal and state Stocks and bonds. Efile tax return online free federal and state A home owned and occupied by you and your family. Efile tax return online free federal and state Timber grown on your home property or investment property, even if you make casual sales of the timber. Efile tax return online free federal and state Household furnishings. Efile tax return online free federal and state A car used for pleasure or commuting. Efile tax return online free federal and state Coin or stamp collections. Efile tax return online free federal and state Gems and jewelry. Efile tax return online free federal and state Gold, silver, and other metals. Efile tax return online free federal and state Personal-use property. Efile tax return online free federal and state   Generally, property held for personal use is a capital asset. Efile tax return online free federal and state Gain from a sale or exchange of that property is a capital gain. Efile tax return online free federal and state Loss from the sale or exchange of that property is not deductible. Efile tax return online free federal and state You can deduct a loss relating to personal-use property only if it results from a casualty or theft. Efile tax return online free federal and state Investment property. Efile tax return online free federal and state   Investment property (such as stocks and bonds) is a capital asset, and a gain or loss from its sale or exchange is a capital gain or loss. Efile tax return online free federal and state This treatment does not apply to property used to produce rental income. Efile tax return online free federal and state See Business assets, later, under Noncapital Assets. Efile tax return online free federal and state Release of restriction on land. Efile tax return online free federal and state   Amounts you receive for the release of a restrictive covenant in a deed to land are treated as proceeds from the sale of a capital asset. Efile tax return online free federal and state Noncapital Assets A noncapital asset is property that is not a capital asset. Efile tax return online free federal and state The following kinds of property are not capital assets. Efile tax return online free federal and state Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business. Efile tax return online free federal and state Inventories are discussed in Publication 538, Accounting Periods and Methods. Efile tax return online free federal and state But, see the Tip below. Efile tax return online free federal and state Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of any properties described in (1), above. Efile tax return online free federal and state Depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later), even if the property is fully depreciated (or amortized). Efile tax return online free federal and state Sales of this type of property are discussed in chapter 3. Efile tax return online free federal and state Real property used in your trade or business or as rental property, even if the property is fully depreciated. Efile tax return online free federal and state A copyright; a literary, musical, or artistic composition; a letter; a memorandum; or similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs): Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Received from a person who created the property or for whom the property was prepared 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. Efile tax return online free federal and state But, see the Tip below. Efile tax return online free federal and state U. Efile tax return online free federal and state S. Efile tax return online free federal and state Government publications you got from the government for free or for less than the normal sales price or that you acquired under circumstances entitling you to the basis of someone who got the publications for free or for less than the normal sales price. Efile tax return online free federal and state Any commodities derivative financial instrument (discussed later) held by a commodities derivatives dealer unless it meets both of the following requirements. Efile tax return online free federal and state It is established to the satisfaction of the IRS that the instrument has no connection to the activities of the dealer as a dealer. Efile tax return online free federal and state The instrument is clearly identified in the dealer's records as meeting (a) by the end of the day on which it was acquired, originated, or entered into. Efile tax return online free federal and state Any hedging transaction (defined later) that is clearly identified as a hedging transaction by the end of the day on which it was acquired, originated, or entered into. Efile tax return online free federal and state Supplies of a type you regularly use or consume in the ordinary course of your trade or business. Efile tax return online free federal and state You can elect to treat as capital assets certain self-created musical compositions or copyrights you sold or exchanged. Efile tax return online free federal and state See chapter 4 of Publication 550 for details. Efile tax return online free federal and state Property held mainly for sale to customers. Efile tax return online free federal and state   Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business are not capital assets. Efile tax return online free federal and state Inventories are discussed in Publication 538. Efile tax return online free federal and state Business assets. Efile tax return online free federal and state   Real property and depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later under Dispositions of Intangible Property) are not capital assets. Efile tax return online free federal and state The sale or disposition of business property is discussed in chapter 3. Efile tax return online free federal and state Letters and memoranda. Efile tax return online free federal and state   Letters, memoranda, and similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs) are not treated as capital assets (as discussed earlier) if your personal efforts created them or if they were prepared or produced for you. Efile tax return online free federal and state Nor is this property a capital asset if your basis in it is determined by reference to the person who created it or the person for whom it was prepared. Efile tax return online free federal and state For this purpose, letters and memoranda addressed to you are considered prepared for you. Efile tax return online free federal and state If letters or memoranda are prepared by persons under your administrative control, they are considered prepared for you whether or not you review them. Efile tax return online free federal and state Commodities derivative financial instrument. Efile tax return online free federal and state   A commodities derivative financial instrument is a commodities contract or other financial instrument for commodities (other than a share of corporate stock, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract) the value or settlement price of which is calculated or determined by reference to a specified index (as defined in section 1221(b) of the Internal Revenue Code). Efile tax return online free federal and state Commodities derivative dealer. Efile tax return online free federal and state   A commodities derivative dealer is a person who regularly offers to enter into, assume, offset, assign, or terminate positions in commodities derivative financial instruments with customers in the ordinary course of a trade or business. Efile tax return online free federal and state Hedging transaction. Efile tax return online free federal and state   A hedging transaction is any transaction you enter into in the normal course of your trade or business primarily to manage any of the following. Efile tax return online free federal and state Risk of price changes or currency fluctuations involving ordinary property you hold or will hold. Efile tax return online free federal and state Risk of interest rate or price changes or currency fluctuations for borrowings you make or will make, or ordinary obligations you incur or will incur. Efile tax return online free federal and state Sales and Exchanges Between Related Persons This section discusses the rules that may apply to the sale or exchange of property between related persons. Efile tax return online free federal and state If these rules apply, gains may be treated as ordinary income and losses may not be deductible. Efile tax return online free federal and state See Transfers to Spouse in chapter 1 for rules that apply to spouses. Efile tax return online free federal and state Gain Is Ordinary Income If a gain is recognized on the sale or exchange of property to a related person, the gain may be ordinary income even if the property is a capital asset. Efile tax return online free federal and state It is ordinary income if the sale or exchange is a depreciable property transaction or a controlled partnership transaction. Efile tax return online free federal and state Depreciable property transaction. Efile tax return online free federal and state   Gain on the sale or exchange of property, including a leasehold or a patent application, that is depreciable property in the hands of the person who receives it is ordinary income if the transaction is either directly or indirectly between any of the following pairs of entities. Efile tax return online free federal and state A person and the person's controlled entity or entities. Efile tax return online free federal and state A taxpayer and any trust in which the taxpayer (or his or her spouse) is a beneficiary unless the beneficiary's interest in the trust is a remote contingent interest; that is, the value of the interest computed actuarially is 5% or less of the value of the trust property. Efile tax return online free federal and state An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest (a bequest for a sum of money). Efile tax return online free federal and state An employer (or any person related to the employer under rules (1), (2), or (3)) and a welfare benefit fund (within the meaning of section 419(e) of the Internal Revenue Code) that is controlled directly or indirectly by the employer (or any person related to the employer). Efile tax return online free federal and state Controlled entity. Efile tax return online free federal and state   A person's controlled entity is either of the following. Efile tax return online free federal and state A corporation in which more than 50% of the value of all outstanding stock, or a partnership in which more than 50% of the capital interest or profits interest, is directly or indirectly owned by or for that person. Efile tax return online free federal and state An entity whose relationship with that person is one of the following. Efile tax return online free federal and state 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 profits interest in the partnership. Efile tax return online free federal and state Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 50%” is substituted for “at least 80%” in that definition. Efile tax return online free federal and state Two S corporations, if the same persons own more than 50% in value of the outstanding stock of each corporation. Efile tax return online free federal and state 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. Efile tax return online free federal and state Controlled partnership transaction. Efile tax return online free federal and state   A gain recognized in a controlled partnership transaction may be ordinary income. Efile tax return online free federal and state The gain is ordinary income if it results from the sale or exchange of property that, in the hands of the party who receives it, is a noncapital asset such as trade accounts receivable, inventory, stock in trade, or depreciable or real property used in a trade or business. Efile tax return online free federal and state   A controlled partnership transaction is a transaction directly or indirectly between either of the following pairs of entities. Efile tax return online free federal and state A partnership and a person who directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. Efile tax return online free federal and state Two partnerships, if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. Efile tax return online free federal and state Determining ownership. Efile tax return online free federal and state   In the transactions under Depreciable property transaction and Controlled partnership transaction, earlier, use the following rules to determine the ownership of stock or a partnership interest. Efile tax return online free federal and state Stock or a partnership interest 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. Efile tax return online free federal and state (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. Efile tax return online free federal and state ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. Efile tax return online free federal and state Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. Efile tax return online free federal and state For purposes of applying (1) or (2), above, stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. Efile tax return online free federal and state But stock or a partnership interest constructively owned by an individual under (2) is not treated as owned by the individual for reapplying (2) to make another person the constructive owner of that stock or partnership interest. Efile tax return online free federal and state Nondeductible Loss A loss on the sale or exchange of property between related persons is not deductible. Efile tax return online free federal and state This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. Efile tax return online free federal and state For the list of related persons, see Related persons next. Efile tax return online free federal and state If a sale or exchange is between any of these related persons and involves the lump-sum sale of a number of blocks of stock or pieces of property, the gain or loss must be figured separately for each block of stock or piece of property. Efile tax return online free federal and state The gain on each item is taxable. Efile tax return online free federal and state The loss on any item is nondeductible. Efile tax return online free federal and state Gains from the sales of any of these items may not be offset by losses on the sales of any of the other items. Efile tax return online free federal and state Related persons. Efile tax return online free federal and state   The following is a list of related persons. Efile tax return online free federal and state Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Efile tax return online free federal and state ), and lineal descendants (children, grandchildren, etc. Efile tax return online free federal and state ). Efile tax return online free federal and state An individual and a corporation if the individual directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. Efile tax return online free federal and state Two corporations that are members of the same controlled group as defined in section 267(f) of the Internal Revenue Code. Efile tax return online free federal and state A trust fiduciary and a corporation if the trust or the grantor of the trust directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. Efile tax return online free federal and state A grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Efile tax return online free federal and state Fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. Efile tax return online free federal and state A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization, or a member of that person's family. Efile tax return online free federal and state 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 profits interest in the partnership. Efile tax return online free federal and state Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. Efile tax return online free federal and state 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. Efile tax return online free federal and state An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest. Efile tax return online free federal and state Two partnerships if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. Efile tax return online free federal and state A person and a partnership if the person directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. Efile tax return online free federal and state Partnership interests. Efile tax return online free federal and state   The nondeductible loss rule does not apply to a sale or exchange of an interest in the partnership between the related persons described in (12) or (13) above. Efile tax return online free federal and state Controlled groups. Efile tax return online free federal and state   Losses on transactions between members of the same controlled group described in (3) earlier are deferred rather than denied. Efile tax return online free federal and state   For more information, see section 267(f) of the Internal Revenue Code. Efile tax return online free federal and state Ownership of stock or partnership interests. Efile tax return online free federal and state   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation or an interest in a partnership for a loss on a sale or exchange, the following rules apply. Efile tax return online free federal and state Stock or a partnership interest 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. Efile tax return online free federal and state (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. Efile tax return online free federal and state ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. Efile tax return online free federal and state Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. Efile tax return online free federal and state An individual owning (other than by applying (2)) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Efile tax return online free federal and state For purposes of applying (1), (2), or (3), stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. Efile tax return online free federal and state But stock or a partnership interest constructively owned by an individual under (2) or (3) is not treated as owned by the individual for reapplying either (2) or (3) to make another person the constructive owner of that stock or partnership interest. Efile tax return online free federal and state Indirect transactions. Efile tax return online free federal and state   You cannot deduct your loss on the sale of stock through your broker if under a prearranged plan a related person or entity buys the same stock you had owned. Efile tax return online free federal and state This does not apply to a cross-trade between related parties through an exchange that is purely coincidental and is not prearranged. Efile tax return online free federal and state Property received from a related person. Efile tax return online free federal and state   If, in a purchase or exchange, you received property from a related person who had a loss that was not allowable and you later sell or exchange the property at a gain, you recognize the gain only to the extent it is more than the loss previously disallowed to the related person. Efile tax return online free federal and state This rule applies only to the original transferee. Efile tax return online free federal and state Example 1. Efile tax return online free federal and state Your brother sold stock to you for $7,600. Efile tax return online free federal and state His cost basis was $10,000. Efile tax return online free federal and state His loss of $2,400 was not deductible. Efile tax return online free federal and state You later sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900 ($10,500 − $7,600). Efile tax return online free federal and state Your recognized gain is only $500, the gain that is more than the $2,400 loss not allowed to your brother. Efile tax return online free federal and state Example 2. Efile tax return online free federal and state Assume the same facts as in Example 1, except that you sell the stock for $6,900 instead of $10,500. Efile tax return online free federal and state Your recognized loss is only $700 ($7,600 − $6,900). Efile tax return online free federal and state You cannot deduct the loss not allowed to your brother. Efile tax return online free federal and state Other Dispositions This section discusses rules for determining the treatment of gain or loss from various dispositions of property. Efile tax return online free federal and state Sale of a Business The sale of a business usually is not a sale of one asset. Efile tax return online free federal and state Instead, all the assets of the business are sold. Efile tax return online free federal and state Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. Efile tax return online free federal and state A business usually has many assets. Efile tax return online free federal and state When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade. Efile tax return online free federal and state The gain or loss on each asset is figured separately. Efile tax return online free federal and state The sale of capital assets results in capital gain or loss. Efile tax return online free federal and state The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction (discussed in chapter 3). Efile tax return online free federal and state The sale of inventory results in ordinary income or loss. Efile tax return online free federal and state Partnership interests. Efile tax return online free federal and state   An interest in a partnership or joint venture is treated as a capital asset when sold. Efile tax return online free federal and state The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary gain or loss. Efile tax return online free federal and state For more information, see Disposition of Partner's Interest in Publication 541. Efile tax return online free federal and state Corporation interests. Efile tax return online free federal and state   Your interest in a corporation is represented by stock certificates. Efile tax return online free federal and state When you sell these certificates, you usually realize capital gain or loss. Efile tax return online free federal and state For information on the sale of stock, see chapter 4 in Publication 550. Efile tax return online free federal and state Corporate liquidations. Efile tax return online free federal and state   Corporate liquidations of property generally are treated as a sale or exchange. Efile tax return online free federal and state Gain or loss generally is recognized by the corporation on a liquidating sale of its assets. Efile tax return online free federal and state Gain or loss generally is recognized also on a liquidating distribution of assets as if the corporation sold the assets to the distributee at fair market value. Efile tax return online free federal and state   In certain cases in which the distributee is a corporation in control of the distributing corporation, the distribution may not be taxable. Efile tax return online free federal and state For more information, see section 332 of the Internal Revenue Code and the related regulations. Efile tax return online free federal and state Allocation of consideration paid for a business. Efile tax return online free federal and state   The sale of a trade or business for a lump sum is considered a sale of each individual asset rather than of a single asset. Efile tax return online free federal and state Except for assets exchanged under any nontaxable exchange rules, both the buyer and seller of a business must use the residual method (explained later) to allocate the consideration to each business asset transferred. Efile tax return online free federal and state This method determines gain or loss from the transfer of each asset and how much of the consideration is for goodwill and certain other intangible property. Efile tax return online free federal and state It also determines the buyer's basis in the business assets. Efile tax return online free federal and state Consideration. Efile tax return online free federal and state   The buyer's consideration is the cost of the assets acquired. Efile tax return online free federal and state The seller's consideration is the amount realized (money plus the fair market value of property received) from the sale of assets. Efile tax return online free federal and state Residual method. Efile tax return online free federal and state   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. Efile tax return online free federal and state This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b) of the Internal Revenue Code. Efile tax return online free federal and state Section 743(b) applies if a partnership has an election in effect under section 754 of the Internal Revenue Code. Efile tax return online free federal and state   A group of assets constitutes a trade or business if either of the following applies. Efile tax return online free federal and state Goodwill or going concern value could, under any circumstances, attach to them. Efile tax return online free federal and state The use of the assets would constitute an active trade or business under section 355 of the Internal Revenue Code. Efile tax return online free federal and state   The residual method provides for the consideration to be reduced first by the amount of Class I assets (defined below). Efile tax return online free federal and state The consideration remaining after this reduction must be allocated among the various business assets in a certain order. Efile tax return online free federal and state See Classes of assets next for the complete order. Efile tax return online free federal and state Classes of assets. Efile tax return online free federal and state   The following definitions are the classifications for deemed or actual asset acquisitions. Efile tax return online free federal and state Allocate the consideration among the assets in the following order. Efile tax return online free federal and state The amount allocated to an asset, other than a Class VII asset, cannot exceed its fair market value on the purchase date. Efile tax return online free federal and state The amount you can allocate to an asset also is subject to any applicable limits under the Internal Revenue Code or general principles of tax law. Efile tax return online free federal and state Class I assets are cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). Efile tax return online free federal and state Class II assets are certificates of deposit, U. Efile tax return online free federal and state S. Efile tax return online free federal and state Government securities, foreign currency, and actively traded personal property, including stock and securities. Efile tax return online free federal and state Class III assets are accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. Efile tax return online free federal and state However, see section 1. Efile tax return online free federal and state 338-6(b)(2)(iii) of the regulations for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. Efile tax return online free federal and state Class IV assets are property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. Efile tax return online free federal and state Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets. Efile tax return online free federal and state    Note. Efile tax return online free federal and state Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business are generally Class V assets. Efile tax return online free federal and state Class VI assets are section 197 intangibles (other than goodwill and going concern value). Efile tax return online free federal and state Class VII assets are goodwill and going concern value (whether the goodwill or going concern value qualifies as a section 197 intangible). Efile tax return online free federal and state   If an asset described in one of the classifications described above can be included in more than one class, include it in the lower numbered class. Efile tax return online free federal and state For example, if an asset is described in both Class II and Class IV, choose Class II. Efile tax return online free federal and state Example. Efile tax return online free federal and state The total paid in the sale of the assets of Company SKB is $21,000. Efile tax return online free federal and state No cash or deposit accounts or similar accounts were sold. Efile tax return online free federal and state The company's U. Efile tax return online free federal and state S. Efile tax return online free federal and state Government securities sold had a fair market value of $3,200. Efile tax return online free federal and state The only other asset transferred (other than goodwill and going concern value) was inventory with a fair market value of $15,000. Efile tax return online free federal and state Of the $21,000 paid for the assets of Company SKB, $3,200 is allocated to U. Efile tax return online free federal and state S. Efile tax return online free federal and state Government securities, $15,000 to inventory assets, and the remaining $2,800 to goodwill and going concern value. Efile tax return online free federal and state Agreement. Efile tax return online free federal and state   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. Efile tax return online free federal and state This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. Efile tax return online free federal and state Reporting requirement. Efile tax return online free federal and state   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. Efile tax return online free federal and state Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. Efile tax return online free federal and state Generally, the buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. Efile tax return online free federal and state See the Instructions for Form 8594. Efile tax return online free federal and state Dispositions of Intangible Property Intangible property is any personal property that has value but cannot be seen or touched. Efile tax return online free federal and state It includes such items as patents, copyrights, and the goodwill value of a business. Efile tax return online free federal and state Gain or loss on the sale or exchange of amortizable or depreciable intangible property held longer than 1 year (other than an amount recaptured as ordinary income) is a section 1231 gain or loss. Efile tax return online free federal and state The treatment of section 1231 gain or loss and the recapture of amortization and depreciation as ordinary income are explained in chapter 3. Efile tax return online free federal and state See chapter 8 of Publication 535, Business Expenses, for information on amortizable intangible property and chapter 1 of Publication 946, How To Depreciate Property, for information on intangible property that can and cannot be depreciated. Efile tax return online free federal and state Gain or loss on dispositions of other intangible property is ordinary or capital depending on whether the property is a capital asset or a noncapital asset. Efile tax return online free federal and state The following discussions explain special rules that apply to certain dispositions of intangible property. Efile tax return online free federal and state Section 197 Intangibles Section 197 intangibles are certain intangible assets acquired after August 10, 1993 (after July 25, 1991, if chosen), and held in connection with the conduct of a trade or business or an activity entered into for profit whose costs are amortized over 15 years. Efile tax return online free federal and state They include the following assets. Efile tax return online free federal and state Goodwill. Efile tax return online free federal and state Going concern value. Efile tax return online free federal and state Workforce in place. Efile tax return online free federal and state Business books and records, operating systems, and other information bases. Efile tax return online free federal and state Patents, copyrights, formulas, processes, designs, patterns, know how, formats, and similar items. Efile tax return online free federal and state Customer-based intangibles. Efile tax return online free federal and state Supplier-based intangibles. Efile tax return online free federal and state Licenses, permits, and other rights granted by a governmental unit. Efile tax return online free federal and state Covenants not to compete entered into in connection with the acquisition of a business. Efile tax return online free federal and state Franchises, trademarks, and trade names. Efile tax return online free federal and state See chapter 8 of Publication 535 for a description of each intangible. Efile tax return online free federal and state Dispositions. Efile tax return online free federal and state   You cannot deduct a loss from the disposition or worthlessness of a section 197 intangible you acquired in the same transaction (or series of related transactions) as another section 197 intangible you still hold. Efile tax return online free federal and state Instead, you must increase the adjusted basis of your retained section 197 intangible by the nondeductible loss. Efile tax return online free federal and state If you retain more than one section 197 intangible, increase each intangible's adjusted basis. Efile tax return online free federal and state Figure the increase by multiplying the nondeductible loss by a fraction, the numerator (top number) of which is the retained intangible's adjusted basis on the date of the loss and the denominator (bottom number) of which is the total adjusted basis of all retained intangibles on the date of the loss. Efile tax return online free federal and state   In applying this rule, members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity. Efile tax return online free federal and state For example, a corporation cannot deduct a loss on the sale of a section 197 intangible if, after the sale, a member of the same controlled group retains other section 197 intangibles acquired in the same transaction as the intangible sold. Efile tax return online free federal and state Covenant not to compete. Efile tax return online free federal and state   A covenant not to compete (or similar arrangement) that is a section 197 intangible cannot be treated as disposed of or worthless before you have disposed of your entire interest in the trade or business for which the covenant was entered into. Efile tax return online free federal and state Members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity in determining whether a member has disposed of its entire interest in a trade or business. Efile tax return online free federal and state Anti-churning rules. Efile tax return online free federal and state   Anti-churning rules prevent a taxpayer from converting section 197 intangibles that do not qualify for amortization into property that would qualify for amortization. Efile tax return online free federal and state However, these rules do not apply to part of the basis of property acquired by certain related persons if the transferor elects to do both the following. Efile tax return online free federal and state Recognize gain on the transfer of the property. Efile tax return online free federal and state Pay income tax on the gain at the highest tax rate. Efile tax return online free federal and state   If the transferor is a partnership or S corporation, the partnership or S corporation (not the partners or shareholders) can make the election. Efile tax return online free federal and state But each partner or shareholder must pay the tax on his or her share of gain. Efile tax return online free federal and state   To make the election, you, as the transferor, must attach a statement containing certain information to your income tax return for the year of the transfer. Efile tax return online free federal and state You must file the tax return by the due date (including extensions). Efile tax return online free federal and state You must also notify the transferee of the election in writing by the due date of the return. Efile tax return online free federal and state   If you timely filed your return without making the election, you can make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). Efile tax return online free federal and state Attach the statement to the amended return and write “Filed pursuant to section 301. Efile tax return online free federal and state 9100-2” at the top of the statement. Efile tax return online free federal and state File the amended return at the same address the original return was filed. Efile tax return online free federal and state For more information about making the election, see Regulations section 1. Efile tax return online free federal and state 197-2(h)(9). Efile tax return online free federal and state For information about reporting the tax on your income tax return, see the Instructions for Form 4797. Efile tax return online free federal and state Patents The transfer of a patent by an individual is treated as a sale or exchange of a capital asset held longer than 1 year. Efile tax return online free federal and state This applies even if the payments for the patent are made periodically during the transferee's use or are contingent on the productivity, use, or disposition of the patent. Efile tax return online free federal and state For information on the treatment of gain or loss on the transfer of capital assets, see chapter 4. Efile tax return online free federal and state This treatment applies to your transfer of a patent if you meet all the following conditions. Efile tax return online free federal and state You are the holder of the patent. Efile tax return online free federal and state You transfer the patent other than by gift, inheritance, or devise. Efile tax return online free federal and state You transfer all substantial rights to the patent or an undivided interest in all such rights. Efile tax return online free federal and state You do not transfer the patent to a related person. Efile tax return online free federal and state Holder. Efile tax return online free federal and state   You are the holder of a patent if you are either of the following. Efile tax return online free federal and state The individual whose effort created the patent property and who qualifies as the original and first inventor. Efile tax return online free federal and state The individual who bought an interest in the patent from the inventor before the invention was tested and operated successfully under operating conditions and who is neither related to, nor the employer of, the inventor. Efile tax return online free federal and state All substantial rights. Efile tax return online free federal and state   All substantial rights to patent property are all rights that have value when they are transferred. Efile tax return online free federal and state A security interest (such as a lien), or a reservation calling for forfeiture for nonperformance, is not treated as a substantial right for these rules and may be kept by you as the holder of the patent. Efile tax return online free federal and state   All substantial rights to a patent are not transferred if any of the following apply to the transfer. Efile tax return online free federal and state The rights are limited geographically within a country. Efile tax return online free federal and state The rights are limited to a period less than the remaining life of the patent. Efile tax return online free federal and state The rights are limited to fields of use within trades or industries and are less than all the rights that exist and have value at the time of the transfer. Efile tax return online free federal and state The rights are less than all the claims or inventions covered by the patent that exist and have value at the time of the transfer. Efile tax return online free federal and state Related persons. Efile tax return online free federal and state   This tax treatment does not apply if the transfer is directly or indirectly between you and a related person as defined earlier in the list under Nondeductible Loss, with the following changes. Efile tax return online free federal and state Members of your family include your spouse, ancestors, and lineal descendants, but not your brothers, sisters, half-brothers, or half-sisters. Efile tax return online free federal and state Substitute “25% or more” ownership for “more than 50%. Efile tax return online free federal and state ”   If you fit within the definition of a related person independent of family status, the brother-sister exception in (1), earlier, does not apply. Efile tax return online free federal and state For example, a transfer between a brother and a sister as beneficiary and fiduciary of the same trust is a transfer between related persons. Efile tax return online free federal and state The brother-sister exception does not apply because the trust relationship is independent of family status. Efile tax return online free federal and state Franchise, Trademark, or Trade Name If you transfer or renew a franchise, trademark, or trade name for a price contingent on its productivity, use, or disposition, the amount you receive generally is treated as an amount realized from the sale of a noncapital asset. Efile tax return online free federal and state A franchise includes an agreement that gives one of the parties the right to distribute, sell, or provide goods, services, or facilities within a specified area. Efile tax return online free federal and state Significant power, right, or continuing interest. Efile tax return online free federal and state   If you keep any significant power, right, or continuing interest in the subject matter of a franchise, trademark, or trade name that you transfer or renew, the amount you receive is ordinary royalty income rather than an amount realized from a sale or exchange. Efile tax return online free federal and state   A significant power, right, or continuing interest in a franchise, trademark, or trade name includes, but is not limited to, the following rights in the transferred interest. Efile tax return online free federal and state A right to disapprove any assignment of the interest, or any part of it. Efile tax return online free federal and state A right to end the agreement at will. Efile tax return online free federal and state A right to set standards of quality for products used or sold, or for services provided, and for the equipment and facilities used to promote such products or services. Efile tax return online free federal and state A right to make the recipient sell or advertise only your products or services. Efile tax return online free federal and state A right to make the recipient buy most supplies and equipment from you. Efile tax return online free federal and state A right to receive payments based on the productivity, use, or disposition of the transferred item of interest if those payments are a substantial part of the transfer agreement. Efile tax return online free federal and state Subdivision of Land If you own a tract of land and, to sell or exchange it, you subdivide it into individual lots or parcels, the gain normally is ordinary income. Efile tax return online free federal and state However, you may receive capital gain treatment on at least part of the proceeds provided you meet certain requirements. Efile tax return online free federal and state See section 1237 of the Internal Revenue Code. Efile tax return online free federal and state Timber Standing timber held as investment property is a capital asset. Efile tax return online free federal and state Gain or loss from its sale is reported as a capital gain or loss on Form 8949, and Schedule D (Form 1040), as applicable. Efile tax return online free federal and state If you held the timber primarily for sale to customers, it is not a capital asset. Efile tax return online free federal and state Gain or loss on its sale is ordinary business income or loss. Efile tax return online free federal and state It is reported in the gross receipts or sales and cost of goods sold items of your return. Efile tax return online free federal and state Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. Efile tax return online free federal and state These sales constitute a very minor part of their farm businesses. Efile tax return online free federal and state In these cases, amounts realized from such sales, and the expenses of cutting, hauling, etc. Efile tax return online free federal and state , are ordinary farm income and expenses reported on Schedule F (Form 1040), Profit or Loss From Farming. Efile tax return online free federal and state Different rules apply if you owned the timber longer than 1 year and elect to either: Treat timber cutting as a sale or exchange, or Enter into a cutting contract. Efile tax return online free federal and state Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. Efile tax return online free federal and state This is true whether the timber is cut under contract or whether you cut it yourself. Efile tax return online free federal and state Under the rules discussed below, disposition of the timber is treated as a section 1231 transaction. Efile tax return online free federal and state See chapter 3. Efile tax return online free federal and state Gain or loss is reported on Form 4797. Efile tax return online free federal and state Christmas trees. Efile tax return online free federal and state   Evergreen trees, such as Christmas trees, that are more than 6 years old when severed from their roots and sold for ornamental purposes are included in the term timber. Efile tax return online free federal and state They qualify for both rules discussed below. Efile tax return online free federal and state Election to treat cutting as a sale or exchange. Efile tax return online free federal and state   Under the general rule, the cutting of timber results in no gain or loss. Efile tax return online free federal and state It is not until a sale or exchange occurs that gain or loss is realized. Efile tax return online free federal and state But if you owned or had a contractual right to cut timber, you can elect to treat the cutting of timber as a section 1231 transaction in the year the timber is cut. Efile tax return online free federal and state Even though the cut timber is not actually sold or exchanged, you report your gain or loss on the cutting for the year the timber is cut. Efile tax return online free federal and state Any later sale results in ordinary business income or loss. Efile tax return online free federal and state See Example, later. Efile tax return online free federal and state   To elect this treatment, you must: Own or hold a contractual right to cut the timber for a period of more than 1 year before it is cut, and Cut the timber for sale or for use in your trade or business. Efile tax return online free federal and state Making the election. Efile tax return online free federal and state   You make the election on your return for the year the cutting takes place by including in income the gain or loss on the cutting and including a computation of the gain or loss. Efile tax return online free federal and state You do not have to make the election in the first year you cut timber. Efile tax return online free federal and state You can make it in any year to which the election would apply. Efile tax return online free federal and state If the timber is partnership property, the election is made on the partnership return. Efile tax return online free federal and state This election cannot be made on an amended return. Efile tax return online free federal and state   Once you have made the election, it remains in effect for all later years unless you cancel it. Efile tax return online free federal and state   If you previously elected to treat the cutting of timber as a sale or exchange, you may revoke this election without the consent of the IRS. Efile tax return online free federal and state The prior election (and revocation) is disregarded for purposes of making a subsequent election. Efile tax return online free federal and state See Form T (Timber), Forest Activities Schedule, for more information. Efile tax return online free federal and state Gain or loss. Efile tax return online free federal and state   Your gain or loss on the cutting of standing timber is the difference between its adjusted basis for depletion and its fair market value on the first day of your tax year in which it is cut. Efile tax return online free federal and state   Your adjusted basis for depletion of cut timber is based on the number of units (feet board measure, log scale, or other units) of timber cut during the tax year and considered to be sold or exchanged. Efile tax return online free federal and state Your adjusted basis for depletion is also based on the depletion unit of timber in the account used for the cut timber, and should be figured in the same manner as shown in section 611 of the Internal Revenue Code and the related regulations. Efile tax return online free federal and state   Timber depletion is discussed in chapter 9 of Publication 535. Efile tax return online free federal and state Example. Efile tax return online free federal and state In April 2013, you had owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. Efile tax return online free federal and state It had an adjusted basis for depletion of $40 per MBF. Efile tax return online free federal and state You are a calendar year taxpayer. Efile tax return online free federal and state On January 1, 2013, the timber had a fair market value (FMV) of $350 per MBF. Efile tax return online free federal and state It was cut in April for sale. Efile tax return online free federal and state On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. Efile tax return online free federal and state You report the difference between the fair market value and your adjusted basis for depletion as a gain. Efile tax return online free federal and state This amount is reported on Form 4797 along with your other section 1231 gains and losses to figure whether it is treated as capital gain or as ordinary gain. Efile tax return online free federal and state You figure your gain as follows. Efile tax return online free federal and state FMV of timber January 1, 2013 $1,400,000 Minus: Adjusted basis for depletion 160,000 Section 1231 gain $1,240,000 The fair market value becomes your basis in the cut timber and a later sale of the cut timber including any by-product or tree tops will result in ordinary business income or loss. Efile tax return online free federal and state Outright sales of timber. Efile tax return online free federal and state   Outright sales of timber by landowners qualify for capital gains treatment using rules similar to the rules for certain disposal of timber under a contract with retained economic interest (defined below). Efile tax return online free federal and state However, for outright sales, the date of disposal is not deemed to be the date the timber is cut because the landowner can elect to treat the payment date as the date of disposal (see below). Efile tax return online free federal and state Cutting contract. Efile tax return online free federal and state   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. Efile tax return online free federal and state You are the owner of the timber. Efile tax return online free federal and state You held the timber longer than 1 year before its disposal. Efile tax return online free federal and state You kept an economic interest in the timber. Efile tax return online free federal and state   You have kept an economic interest in standing timber if, under the cutting contract, the expected return on your investment is conditioned on the cutting of the timber. Efile tax return online free federal and state   The difference between the amount realized from the disposal of the timber and its adjusted basis for depletion is treated as gain or loss on its sale. Efile tax return online free federal and state Include this amount on Form 4797 along with your other section 1231 gains or losses to figure whether it is treated as capital or ordinary gain or loss. Efile tax return online free federal and state Date of disposal. Efile tax return online free federal and state   The date of disposal is the date the timber is cut. Efile tax return online free federal and state However, for outright sales by landowners or if you receive payment under the contract before the timber is cut, you can elect to treat the date of payment as the date of disposal. Efile tax return online free federal and state   This election applies only to figure the holding period of the timber. Efile tax return online free federal and state It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). Efile tax return online free federal and state   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. Efile tax return online free federal and state The statement must identify the advance payments subject to the election and the contract under which they were made. Efile tax return online free federal and state   If you timely filed your return for the year you received payment without making the election, you still can make the election by filing an amended return within 6 months after the due date for that year's return (excluding extensions). Efile tax return online free federal and state Attach the statement to the amended return and write “Filed pursuant to section 301. Efile tax return online free federal and state 9100-2” at the top of the statement. Efile tax return online free federal and state File the amended return at the same address the original return was filed. Efile tax return online free federal and state Owner. Efile tax return online free federal and state   The owner of timber is any person who owns an interest in it, including a sublessor and the holder of a contract to cut the timber. Efile tax return online free federal and state You own an interest in timber if you have the right to cut it for sale on your own account or for use in your business. Efile tax return online free federal and state Tree stumps. Efile tax return online free federal and state   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. Efile tax return online free federal and state Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. Efile tax return online free federal and state However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. Efile tax return online free federal and state Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. Efile tax return online free federal and state   See Form T (Timber) and its separate instructions for more information about dispositions of timber. Efile tax return online free federal and state Precious Metals and Stones, Stamps, and Coins Gold, silver, gems, stamps, coins, etc. Efile tax return online free federal and state , are capital assets except when they are held for sale by a dealer. Efile tax return online free federal and state Any gain or loss from their sale or exchange generally is a capital gain or loss. Efile tax return online free federal and state If you are a dealer, the amount received from the sale is ordinary business income. Efile tax return online free federal and state Coal and Iron Ore You must treat the disposal of coal (including lignite) or iron ore mined in the United States as a section 1231 transaction if both the following apply to you. Efile tax return online free federal and state You owned the coal or iron ore longer than 1 year before its disposal. Efile tax return online free federal and state You kept an economic interest in the coal or iron ore. Efile tax return online free federal and state For this rule, the date the coal or iron ore is mined is considered the date of its disposal. Efile tax return online free federal and state Your gain or loss is the difference between the amount realized from disposal of the coal or iron ore and the adjusted basis you use to figure cost depletion (increased by certain expenses not allowed as deductions for the tax year). Efile tax return online free federal and state This amount is included on Form 4797 along with your other section 1231 gains and losses. Efile tax return online free federal and state You are considered an owner if you own or sublet an economic interest in the coal or iron ore in place. Efile tax return online free federal and state If you own only an option to buy the coal in place, you do not qualify as an owner. Efile tax return online free federal and state In addition, this gain or loss treatment does not apply to income realized by an owner who is a co-adventurer, partner, or principal in the mining of coal or iron ore. Efile tax return online free federal and state The expenses of making and administering the contract under which the coal or iron ore was disposed of and the expenses of preserving the economic interest kept under the contract are not allowed as deductions in figuring taxable income. Efile tax return online free federal and state Rather, their total, along with the adjusted depletion basis, is deducted from the amount received to determine gain. Efile tax return online free federal and state If the total of these expenses plus the adjusted depletion basis is more than the amount received, the result is a loss. Efile tax return online free federal and state Special rule. Efile tax return online free federal and state   The above treatment does not apply if you directly or indirectly dispose of the iron ore or coal to any of the following persons. Efile tax return online free federal and state A related person whose relationship to you would result in the disallowance of a loss (see Nondeductible Loss under Sales and Exchanges Between Related Persons, earlier). Efile tax return online free federal and state An individual, trust, estate, partnership, association, company, or corporation owned or controlled directly or indirectly by the same interests that own or control your business. Efile tax return online free federal and state Conversion Transactions Recognized gain on the disposition or termination of any position held as part of certain conversion transactions is treated as ordinary income. Efile tax return online free federal and state This applies if substantially all your expected return is attributable to the time value of your net investment (like interest on a loan) and the transaction is any of the following. Efile tax return online free federal and state An applicable straddle (generally, any set of offsetting positions with respect to personal property, including stock). Efile tax return online free federal and state A transaction in which you acquire property and, at or about the same time, you contract to sell the same or substantially identical property at a specified price. Efile tax return online free federal and state Any other transaction that is marketed and sold as producing capital gain from a transaction in which substantially all of your expected return is due to the time value of your net investment. Efile tax return online free federal and state For more information, see chapter 4 of Publication 550. Efile tax return online free federal and state Prev  Up  Next   Home   More Online Publications