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Efile Tax Returns

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

Efile tax returns 12. Efile tax returns   Filing Form 720 Table of Contents Attachments to Form 720. Efile tax returns Conditions to allowance. Efile tax returns Use Form 720 to report and pay the excise taxes previously discussed in this publication. Efile tax returns File Form 720 for each calendar quarter until you file a final Form 720. Efile tax returns For information on filing Form 720 electronically, visit the IRS e-file website at www. Efile tax returns irs. Efile tax returns gov/efile. Efile tax returns You may be required to file your returns on a monthly or semimonthly basis instead of quarterly if you do not make deposits as required (see Payment of Taxes, later) or are liable for the excise tax on taxable fuels and meet certain conditions. Efile tax returns Form 720 has three parts and three schedules. Efile tax returns Part I consists of excise taxes generally required to be deposited (see Payment of Taxes, later). Efile tax returns Part II consists of excise taxes that are not required to be deposited. Efile tax returns Part III is used to figure your tax liability for the quarter and the amount of any balance due or overpayment. Efile tax returns Schedule A, Excise Tax Liability, is used to record your net tax liability for each semimonthly period in a quarter. Efile tax returns Complete it if you have an entry in Part I. Efile tax returns Schedule C, Claims, is used to make claims. Efile tax returns However, Schedule C can only be used if you are reporting a liability in Part I or Part II. Efile tax returns Schedule T, Two-Party Exchange Information Reporting, is used to report certain exchanges of taxable fuel before or in connection with the removal at the terminal rack. Efile tax returns Attachments to Form 720. Efile tax returns   You may have to attach the following forms. Efile tax returns Form 6197 for the gas guzzler tax. Efile tax returns Form 6627 for environmental taxes. Efile tax returns Form 720X. Efile tax returns   This form is used to make adjustments to Forms 720 filed in prior quarters. Efile tax returns You can file Form 720X by itself or, if it shows a decrease in tax, you can attach it to Form 720. Efile tax returns See Form 720X for more information. Efile tax returns Conditions to allowance. Efile tax returns   For tax decreases, the claimant must check the appropriate box on Form 720X stating that: For adjustments of communications or air transportation taxes, the claimant has: Repaid the tax to the person from whom it was collected, or Obtained the consent of that person to the allowance of the adjustment. Efile tax returns For other adjustments, the claimant has: Not included the tax in the price of the article and not collected the tax from the purchaser, Repaid the tax to the ultimate purchaser, or Attached the written consent of the ultimate purchaser to the allowance of the adjustment. Efile tax returns However, the conditions listed under (2) do not apply to environmental taxes, the ship passenger tax, obligations not in registered form, foreign insurance taxes, fuels used on inland waterways, cellulosic or second generation biofuel sold as but not used as fuel, biodiesel sold as fuel but not used as fuel, and certain fuel taxes if the tax was based on use (for example, dyed diesel fuel used in trains, LPG, and CNG). Efile tax returns Final return. Efile tax returns   File a final return if: You go out of business, or You will not owe excise taxes that are reportable on Form 720 in future quarters. Efile tax returns Due dates. Efile tax returns   Form 720 must be filed by the following due dates. Efile tax returns Quarter Covered Due Dates January, February, March April 30 April, May, June July 31 July, August, September October 31 October, November, December January 31   If any due date falls on a Saturday, Sunday, or legal holiday, you can file the return on the next business day. Efile tax returns One-time filing. Efile tax returns   If you import a gas guzzling automobile, you may be eligible to make a one-time filing using your SSN if you: Do not import gas guzzling automobiles in the course of your trade or business, and Are not required to file Form 720 reporting other excise taxes for the calendar quarter, except for a one-time filing. Efile tax returns   If you meet both requirements above, see Gas guzzler tax (IRS No. Efile tax returns 40) in the Instructions for Form 720 for how to file and pay the tax. Efile tax returns Payment voucher. Efile tax returns   Form 720-V, Payment Voucher, must be included with Form 720 if you have a balance due on line 10 of Form 720 and you are making your payment by check or money order. Efile tax returns Prev  Up  Next   Home   More Online Publications