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Federal Tax Extension Form

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Federal Tax Extension Form

Federal tax extension form Publication 15 - Introductory Material Table of Contents Future Developments What's New Reminders Electronic Filing and Payment Forms in Spanish Hiring New Employees Paying Wages, Pensions, or Annuities Information Returns Nonpayroll Income Tax Withholding Recordkeeping Change of Business Address or Responsible Party Private Delivery Services Telephone Help Ordering Employer Tax Forms and Publications Filing Addresses Dishonored Payments Photographs of Missing Children Calendar Introduction Future Developments For the latest information about developments related to Publication 15 (Circular E), such as legislation enacted after it was published, go to www. Federal tax extension form irs. Federal tax extension form gov/pub15. Federal tax extension form What's New Social security and Medicare tax for 2014. Federal tax extension form  The social security tax rate is 6. Federal tax extension form 2% each for the employee and employer, unchanged from 2013. Federal tax extension form The social security wage base limit is $117,000. Federal tax extension form The Medicare tax rate is 1. Federal tax extension form 45% each for the employee and employer, unchanged from 2013. Federal tax extension form There is no wage base limit for Medicare tax. Federal tax extension form Social security and Medicare taxes apply to the wages of household workers you pay $1,900 or more in cash or an equivalent form of compensation. Federal tax extension form Social security and Medicare taxes apply to election workers who are paid $1,600 or more in cash or an equivalent form of compensation. Federal tax extension form 2014 withholdng tables. Federal tax extension form  This publication includes the 2014 Percentage Method Tables and Wage Bracket Tables for Income Tax Withholding. Federal tax extension form Withholding allowance. Federal tax extension form  The 2014 amount for one withholding allowance on an annual basis is $3,950. Federal tax extension form Voluntary withholding on dividends and other distributions by an Alaska Native Corporation (ANC). Federal tax extension form  A shareholder of an ANC may now request voluntary income tax withholding on dividends and other distributions paid by an ANC. Federal tax extension form A shareholder may request voluntary withholding by giving the ANC a completed Form W-4V, Voluntary Withholding Request. Federal tax extension form For more information see Notice 2013-77, 2013-50 I. Federal tax extension form R. Federal tax extension form B. Federal tax extension form 632, available at www. Federal tax extension form irs. Federal tax extension form gov/irb/2013-50_IRB/ar10. Federal tax extension form html. Federal tax extension form Change of responsible party. Federal tax extension form  Beginning January 1, 2014, any entity with an employer identification number (EIN) must file Form 8822-B, Change of Address or Responsible Party — Business, to report the latest change to its responsible party. Federal tax extension form Form 8822-B must be filed within 60 days of the change. Federal tax extension form If the change in the identity of your responsible party occurred before 2014, and you have not previously notified the IRS of the change, file Form 8822-B before March 1, 2014, reporting only the most recent change. Federal tax extension form For a definition of “responsible party,” see the Form 8822-B instructions. Federal tax extension form Same-sex marriage. Federal tax extension form  For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Federal tax extension form For more information, see Revenue Ruling 2013-17, 2013-38 I. Federal tax extension form R. Federal tax extension form B. Federal tax extension form 201, available at www. Federal tax extension form irs. Federal tax extension form gov/irb/2013-38_IRB/ar07. Federal tax extension form html. Federal tax extension form Notice 2013-61 provides special administrative procedures for employers to make claims for refunds or adjustments of overpayments of social security and Medicare taxes with respect to certain same-sex spouse benefits before expiration of the period of limitations. Federal tax extension form Notice 2013-61, 2013-44 I. Federal tax extension form R. Federal tax extension form B. Federal tax extension form 432, is available at www. Federal tax extension form irs. Federal tax extension form gov/irb/2013-44_IRB/ar10. Federal tax extension form html. Federal tax extension form Reminders Additional Medicare Tax withholding. Federal tax extension form  In addition to withholding Medicare tax at 1. Federal tax extension form 45%, you must withhold a 0. Federal tax extension form 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Federal tax extension form You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Federal tax extension form Additional Medicare Tax is only imposed on the employee. Federal tax extension form There is no employer share of Additional Medicare Tax. Federal tax extension form All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Federal tax extension form For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments , in section 15. Federal tax extension form For more information on Additional Medicare Tax, visit IRS. Federal tax extension form gov and enter “Additional Medicare Tax” in the search box. Federal tax extension form Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans. Federal tax extension form  The work opportunity tax credit is available for eligible unemployed veterans who began work on or after November 22, 2011, and before January 1, 2014. Federal tax extension form Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Federal tax extension form For more information, visit IRS. Federal tax extension form gov and enter “work opportunity tax credit” in the search box. Federal tax extension form Outsourcing payroll duties. Federal tax extension form  Employers are responsible to ensure that tax returns are filed and deposits and payments are made, even if the employer contracts with a third party to perform these acts. Federal tax extension form The employer remains responsible if the third party fails to perform any required action. Federal tax extension form If you choose to outsource any of your payroll and related tax duties (that is, withholding, reporting, and paying over social security, Medicare, FUTA, and income taxes) to a third-party payer such as a payroll service provider or reporting agent, visit IRS. Federal tax extension form gov and enter “outsourcing payroll duties” in the search box for helpful information on this topic. Federal tax extension form COBRA premium assistance credit. Federal tax extension form  The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months. Federal tax extension form See COBRA premium assistance credit under Introduction. Federal tax extension form Federal tax deposits must be made by electronic funds transfer. Federal tax extension form  You must use electronic funds transfer to make all federal tax deposits. Federal tax extension form Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). Federal tax extension form If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Federal tax extension form Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Federal tax extension form EFTPS is a free service provided by the Department of Treasury. Federal tax extension form Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Federal tax extension form For more information on making federal tax deposits, see How To Deposit in section 11. Federal tax extension form To get more information about EFTPS or to enroll in EFTPS, visit www. Federal tax extension form eftps. Federal tax extension form gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Federal tax extension form Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. Federal tax extension form You must receive written notice from the IRS to file Form 944. Federal tax extension form  If you have been filing Forms 941, Employer's QUARTERLY Federal Tax Return (or Forms 941-SS, Employer's QUARTERLY Federal Tax Return—American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U. Federal tax extension form S. Federal tax extension form Virgin Islands, or Formularios 941-PR, Planilla para la Declaración Federal TRIMESTRAL del Patrono), and believe your employment taxes for the calendar year will be $1,000 or less, and you would like to file Form 944, Employer's ANNUAL Federal Tax Return, instead of Forms 941, you must contact the IRS to request to file Form 944. Federal tax extension form You must receive written notice from the IRS to file Form 944 instead of Forms 941 before you may file this form. Federal tax extension form For more information on requesting to file Form 944, visit IRS. Federal tax extension form gov and enter “file employment taxes annually” in the search box. Federal tax extension form Employers can request to file Forms 941 instead of Form 944. Federal tax extension form  If you received notice from the IRS and have been filing Form 944 but would like to file Forms 941 instead, you must contact the IRS to request to file Forms 941. Federal tax extension form You must receive written notice from the IRS to file Forms 941 instead of Form 944 before you may file these forms. Federal tax extension form For more information on requesting to file Form 944, visit IRS. Federal tax extension form gov and enter “file employment taxes annually” in the search box. Federal tax extension form Aggregate Form 941 filers. Federal tax extension form  Agents must complete Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, when filing an aggregate Form 941. Federal tax extension form Aggregate Forms 941 may only be filed by agents approved by the IRS under section 3504 of the Internal Revenue Code. Federal tax extension form To request approval to act as an agent for an employer, the agent files Form 2678, Employer/Payer Appointment of Agent, with the IRS. Federal tax extension form Aggregate Form 940 filers. Federal tax extension form  Agents must complete Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers, when filing an aggregate Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Federal tax extension form Aggregate Forms 940 can be filed by agents acting on behalf of home care service recipients who receive home care services through a program administered by a federal, state, or local government. Federal tax extension form To request approval to act as an agent on behalf of home care service recipients, the agent files Form 2678 with the IRS. Federal tax extension form Electronic Filing and Payment  Now, more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Federal tax extension form Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make filing and payment easier. Federal tax extension form Spend less time and worry about taxes and more time running your business. Federal tax extension form Use e-file and the Electronic Federal Tax Payment System (EFTPS) to your benefit. Federal tax extension form For e-file, visit www. Federal tax extension form irs. Federal tax extension form gov/efile for additional information. Federal tax extension form For EFTPS, visit www. Federal tax extension form eftps. Federal tax extension form gov or call EFTPS Customer Service at 1-800-555-4477 or 1-800-733-4829 (TDD). Federal tax extension form For electronic filing of Forms W-2, Wage and Tax Statement, visit www. Federal tax extension form socialsecurity. Federal tax extension form gov/employer. Federal tax extension form If you are filing your tax return or paying your federal taxes electronically, a valid EIN is required. Federal tax extension form If a valid EIN is not provided, the return or payment will not be processed. Federal tax extension form This may result in penalties and delays in processing your return or payment. Federal tax extension form Electronic funds withdrawal (EFW). Federal tax extension form  If you file Form 940, Form 941, Form 944, or Form 945 electronically, you can e-file and e-pay (electronic funds withdrawal) the balance due in a single step using tax preparation software or through a tax professional. Federal tax extension form However, do not use EFW to make federal tax deposits. Federal tax extension form For more information on paying your taxes using EFW, visit the IRS website at www. Federal tax extension form irs. Federal tax extension form gov/e-pay. Federal tax extension form A fee may be charged to file electronically. Federal tax extension form Credit or debit card payments. Federal tax extension form  For information on paying your taxes with a credit or debit card, visit the IRS website at www. Federal tax extension form irs. Federal tax extension form gov/e-pay. Federal tax extension form However, do not use credit or debit cards to make federal tax deposits. Federal tax extension form Forms in Spanish You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, Employee's Withholding Allowance Certificate, to your Spanish-speaking employees. Federal tax extension form For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). Federal tax extension form For nonemployees, Formulario W-9(SP), Solicitud y Certificación del Número de Identificación del Contribuyente, may be used in place of Form W-9, Request for Taxpayer Identification Number and Certification. Federal tax extension form Hiring New Employees Eligibility for employment. Federal tax extension form  You must verify that each new employee is legally eligible to work in the United States. Federal tax extension form This includes completing the U. Federal tax extension form S. Federal tax extension form Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. Federal tax extension form You can get the form from USCIS offices or by calling 1-800-870-3676. Federal tax extension form Contact the USCIS at 1-800-375-5283, or visit the USCIS website at www. Federal tax extension form uscis. Federal tax extension form gov for more information. Federal tax extension form New hire reporting. Federal tax extension form  You are required to report any new employee to a designated state new hire registry. Federal tax extension form A new employee is an employee who has not previously been employed by you or was previously employed by you but has been separated from such prior employment for at least 60 consecutive days. Federal tax extension form Many states accept a copy of Form W-4 with employer information added. Federal tax extension form Visit the Office of Child Support Enforcement website at www. Federal tax extension form acf. Federal tax extension form hhs. Federal tax extension form gov/programs/cse/newhire for more information. Federal tax extension form W-4 request. Federal tax extension form  Ask each new employee to complete the 2014 Form W-4. Federal tax extension form See section 9. Federal tax extension form Name and social security number. Federal tax extension form  Record each new employee's name and number from his or her social security card. Federal tax extension form Any employee without a social security card should apply for one. Federal tax extension form See section 4. Federal tax extension form Paying Wages, Pensions, or Annuities Correcting Form 941 or Form 944. Federal tax extension form  If you discover an error on a previously filed Form 941 or Form 944, make the correction using Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, or Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund. Federal tax extension form Forms 941-X and 944-X are stand-alone forms, meaning taxpayers can file them when an error is discovered. Federal tax extension form Forms 941-X and 944-X are used by employers to claim refunds or abatements of employment taxes, rather than Form 843, Claim for Refund and Request for Abatement. Federal tax extension form See section 13 for more information. Federal tax extension form Income tax withholding. Federal tax extension form  Withhold federal income tax from each wage payment or supplemental unemployment compensation plan benefit payment according to the employee's Form W-4 and the correct withholding table. Federal tax extension form If you have nonresident alien employees, see Withholding income taxes on the wages of nonresident alien employees in section 9. Federal tax extension form Withhold from periodic pension and annuity payments as if the recipient is married claiming three withholding allowances, unless he or she has provided Form W-4P, Withholding Certificate for Pension or Annuity Payments, either electing no withholding or giving a different number of allowances, marital status, or an additional amount to be withheld. Federal tax extension form Do not withhold on direct rollovers from qualified plans or governmental section 457(b) plans. Federal tax extension form See section 9 and Publication 15-A, Employer's Supplemental Tax Guide. Federal tax extension form Publication 15-A includes information about withholding on pensions and annuities. Federal tax extension form Zero wage return. Federal tax extension form  If you have not filed a “final” Form 941 or Form 944, or are not a “seasonal” employer, you must continue to file a Form 941 or Form 944 even for periods during which you paid no wages. Federal tax extension form The IRS encourages you to file your “Zero Wage” Forms 941 or 944 electronically using IRS e-file at www. Federal tax extension form irs. Federal tax extension form gov/efile. Federal tax extension form Employer Responsibilities Employer Responsibilities: The following list provides a brief summary of your basic responsibilities. Federal tax extension form Because the individual circumstances for each employer can vary greatly, responsibilities for withholding, depositing, and reporting employment taxes can differ. Federal tax extension form Each item in this list has a page reference to a more detailed discussion in this publication. Federal tax extension form   New Employees: Page     Annually (By January 31 of the current year, Page □ Verify work eligibility of new employees 3     for the prior year):   □ Record employees' names and SSNs from     □ File Form 944 if required (pay tax with return if     social security cards 4     not required to deposit) 29 □ Ask employees for Form W-4 3     Annually (see Calendar for due dates):     Each Payday:     □ Remind employees to submit a new Form W-4   □ Withhold federal income tax based on each       if they need to change their withholding 20   employee's Form W-4 20   □ Ask for a new Form W-4 from employees   □ Withhold employee's share of social security       claiming exemption from income tax     and Medicare taxes 23     withholding 20 □ Deposit:     □ Reconcile Forms 941 (or Form 944) with Forms     • Withheld income tax       W-2 and W-3 31   • Withheld and employer social security taxes     □ Furnish each employee a Form W-2 7   • Withheld and employer Medicare taxes 24   □ File Copy A of Forms W-2 and the transmittal     Note:Due date of deposit generally depends       Form W-3 with the SSA 8   on your deposit schedule (monthly or semiweekly)     □ Furnish each other payee a Form 1099 (for example, Form 1099-MISC, Miscellaneous Income) 7   Quarterly (By April 30, July 31, October 31, and January 31):     □ File Forms 1099 and the transmittal Form   □ Deposit FUTA tax if undeposited amount       1096 8   is over $500 35   □ File Form 940 7 □ File Form 941 (pay tax with return if not     □ File Form 945 for any nonpayroll income tax     required to deposit) 29     withholding 8 Information Returns You may be required to file information returns to report certain types of payments made during the year. Federal tax extension form For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (for example, independent contractors) for services performed for your trade or business. Federal tax extension form For details about filing Forms 1099 and for information about required electronic filing, see the General Instructions for Certain Information Returns for general information and the separate, specific instructions for each information return you file (for example, Instructions for Form 1099-MISC). Federal tax extension form Generally, do not use Forms 1099 to report wages and other compensation you paid to employees; report these on Form W-2. Federal tax extension form See the General Instructions for Forms W-2 and W-3 for details about filing Form W-2 and for information about required electronic filing. Federal tax extension form If you file 250 or more Forms 1099, you must file them electronically. Federal tax extension form If you file 250 or more Forms W-2, you must file them electronically. Federal tax extension form SSA will not accept Forms W-2 and W-3 filed on magnetic media. Federal tax extension form Information reporting customer service site. Federal tax extension form  The IRS operates the Enterprise Computing Center—Martinsburg, a centralized customer service site, to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. Federal tax extension form If you have questions related to reporting on information returns, call 1-866-455-7438 (toll free), 304-263-8700 (toll call), or 304-267-3367 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Federal tax extension form The center can also be reached by email at mccirp@irs. Federal tax extension form gov. Federal tax extension form Do not include tax identification numbers (TINs) or attachments in email correspondence because electronic mail is not secure. Federal tax extension form Nonpayroll Income Tax Withholding Nonpayroll federal income tax withholding (reported on Forms 1099 and Form W-2G) must be reported on Form 945, Annual Return of Withheld Federal Income Tax. Federal tax extension form Separate deposits are required for payroll (Form 941 or Form 944) and nonpayroll (Form 945) withholding. Federal tax extension form Nonpayroll items include: Pensions (including distributions from tax-favored retirement plans, for example, section 401(k), section 403(b), and governmental section 457(b) plans) and annuities. Federal tax extension form Military retirement. Federal tax extension form Gambling winnings. Federal tax extension form Indian gaming profits. Federal tax extension form Certain government payments, such as unemployment compensation, social security, and Tier 1 railroad retirement benefits, subject to voluntary withholding. Federal tax extension form Payments subject to backup withholding. Federal tax extension form For details on depositing and reporting nonpayroll income tax withholding, see the Instructions for Form 945. Federal tax extension form All income tax withholding reported on Form W-2 must be reported on Form 941, Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, Form 944, or Schedule H (Form 1040), Household Employment Taxes. Federal tax extension form Distributions from nonqualified pension plans and deferred compensation plans. Federal tax extension form  Because distributions to participants from some nonqualified pension plans and deferred compensation plans (including section 457(b) plans of tax-exempt organizations) are treated as wages and are reported on Form W-2, income tax withheld must be reported on Form 941 or Form 944, not on Form 945. Federal tax extension form However, distributions from such plans to a beneficiary or estate of a deceased employee are not wages and are reported on Forms 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Federal tax extension form ; income tax withheld must be reported on Form 945. Federal tax extension form Backup withholding. Federal tax extension form  You generally must withhold 28% of certain taxable payments if the payee fails to furnish you with his or her correct taxpayer identification number (TIN). Federal tax extension form This withholding is referred to as “backup withholding. Federal tax extension form ” Payments subject to backup withholding include interest, dividends, patronage dividends, rents, royalties, commissions, nonemployee compensation, and certain other payments you make in the course of your trade or business. Federal tax extension form In addition, transactions by brokers and barter exchanges and certain payments made by fishing boat operators are subject to backup withholding. Federal tax extension form Backup withholding does not apply to wages, pensions, annuities, IRAs (including simplified employee pension (SEP) and SIMPLE retirement plans), section 404(k) distributions from an employee stock ownership plan (ESOP), medical savings accounts, health savings accounts, long-term-care benefits, or real estate transactions. Federal tax extension form You can use Form W-9 or Formulario W-9(SP) to request payees to furnish a TIN and to certify the number furnished is correct. Federal tax extension form You can also use Form W-9 or Formulario W-9(SP) to get certifications from payees that they are not subject to backup withholding or that they are exempt from backup withholding. Federal tax extension form The Instructions for the Requester of Form W-9 or Formulario W-9(SP) includes a list of types of payees who are exempt from backup withholding. Federal tax extension form For more information, see Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s). Federal tax extension form Recordkeeping Keep all records of employment taxes for at least 4 years. Federal tax extension form These should be available for IRS review. Federal tax extension form Your records should include the following information. Federal tax extension form Your EIN. Federal tax extension form Amounts and dates of all wage, annuity, and pension payments. Federal tax extension form Amounts of tips reported to you by your employees. Federal tax extension form Records of allocated tips. Federal tax extension form The fair market value of in-kind wages paid. Federal tax extension form Names, addresses, social security numbers, and occupations of employees and recipients. Federal tax extension form Any employee copies of Forms W-2 and W-2c returned to you as undeliverable. Federal tax extension form Dates of employment for each employee. Federal tax extension form Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third party payors made to them. Federal tax extension form Copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4, W-4P, W-4(SP), W-4S, and W-4V). Federal tax extension form Copies of employees' Earned Income Credit Advance Payment Certificates (Forms W-5 and W-5(SP)). Federal tax extension form Dates and amounts of tax deposits you made and acknowledgment numbers for deposits made by EFTPS. Federal tax extension form Copies of returns filed and confirmation numbers. Federal tax extension form Records of fringe benefits and expense reimbursements provided to your employees, including substantiation. Federal tax extension form Change of Business Address or Responsible Party To notify the IRS of a change in business address or responsible party, file Form 8822-B. Federal tax extension form Do not mail Form 8822-B with your employment tax return. Federal tax extension form Private Delivery Services You can use certain private delivery services designated by the IRS to mail tax returns and payments. Federal tax extension form The list includes only the following: DHL Express (DHL): DHL Same Day Service. Federal tax extension form Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Federal tax extension form United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Federal tax extension form M. Federal tax extension form , UPS Worldwide Express Plus, and UPS Worldwide Express. Federal tax extension form For the IRS mailing address to use if you are using a private delivery service, go to IRS. Federal tax extension form gov and enter “private delivery service” in the search box. Federal tax extension form Your private delivery service can tell you how to get written proof of the mailing date. Federal tax extension form   Private delivery services cannot deliver items to P. Federal tax extension form O. Federal tax extension form boxes. Federal tax extension form You must use the U. Federal tax extension form S. Federal tax extension form Postal Service to mail any item to an IRS P. Federal tax extension form O. Federal tax extension form box address. Federal tax extension form Telephone Help Tax questions. Federal tax extension form   You can call the IRS Business and Specialty Tax Line with your employment tax questions at 1-800-829-4933. Federal tax extension form Help for people with disabilities. Federal tax extension form  You may call 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability) with any tax question or to order forms and publications. Federal tax extension form You may also use this number for assistance with unresolved tax problems. Federal tax extension form Recorded tax information (TeleTax). Federal tax extension form  The IRS TeleTax service provides recorded tax information on topics that answer many individual and business federal tax questions. Federal tax extension form You can listen to up to three topics on each call you make. Federal tax extension form Touch-Tone service is available 24 hours a day, 7 days a week. Federal tax extension form TeleTax topics are also available on the IRS website at www. Federal tax extension form irs. Federal tax extension form gov/taxtopics. Federal tax extension form Most tax topics listed below are also available in Spanish. Federal tax extension form For a complete list of TeleTax topics in Spanish, visit the IRS website at www. Federal tax extension form irs. Federal tax extension form gov/Spanish/Índice-de-Temas-Tributarios-Año-2013. Federal tax extension form A list of employment tax topics is provided next. Federal tax extension form Select, by number, the topic you want to hear and call 1-800-829-4477. Federal tax extension form For the directory of all topics, select Topic 123. Federal tax extension form Teletax Topics Topic No. Federal tax extension form Subject 751 Social Security and Medicare Withholding Rates 752 Form W-2—Where, When, and How to File 753 Form W-4—Employee's Withholding Allowance Certificate 755 Employer Identification Number (EIN)—How to Apply 756 Employment Taxes for Household Employees 757 Form 941 and Form 944—Deposit Requirements 758 Form 941—Employer's QUARTERLY Federal Tax Return and Form 944—Employer's ANNUAL Federal Tax Return 759 Form 940—Employer's Annual Federal Unemployment (FUTA) Tax Return—Filing and Deposit Requirements 760 Reporting and Deposit Requirements for Agricultural Employers 761 Tips—Withholding and Reporting 762 Independent Contractor vs. Federal tax extension form Employee 763 The “Affordable Care Act” of 2010 Offers Employers New Tax Deductions and Credits Additional employment tax information. Federal tax extension form  Visit the IRS website at www. Federal tax extension form irs. Federal tax extension form gov/businesses and click on the Employment Taxes link under Businesses Topics. Federal tax extension form Ordering Employer Tax Forms and Publications You can order employer tax forms and publications and information returns online at www. Federal tax extension form irs. Federal tax extension form gov/businesses. Federal tax extension form To order 2013 and 2014 forms, click on the Online Ordering for Information Returns and Employer Returns link. Federal tax extension form You may also order employer tax forms and publications and information returns by calling 1-800-TAX-FORM (1-800-829-3676). Federal tax extension form Instead of ordering paper Forms W-2 and W-3, consider filing them electronically using the Social Security Administration's (SSA) free e-file service. Federal tax extension form Visit the SSA's Employer W-2 Filing Instructions & Information website at www. Federal tax extension form socialsecurity. Federal tax extension form gov/employer to register for Business Services Online. Federal tax extension form You will be able to create Forms W-2 online and submit them to the SSA by typing your wage information into easy-to-use fill-in fields. Federal tax extension form In addition, you can print out completed copies of Forms W-2 to file with state or local governments, distribute to your employees, and keep for your records. Federal tax extension form Form W-3 will be created for you based on your Forms W-2. Federal tax extension form Filing Addresses Generally, your filing address for Forms 940, 941, 943, 944, 945, and CT-1 depends on the location of your residence or principal place of business and whether or not you are including a payment with your return. Federal tax extension form There are separate filing addresses for these returns if you are a tax-exempt organization or government entity. Federal tax extension form See the separate instructions for Forms 940, 941, 943, 944, 945, or CT-1 for the filing addresses. Federal tax extension form Dishonored Payments Any form of payment that is dishonored and returned from a financial institution is subject to a penalty. Federal tax extension form The penalty is $25 or 2% of the payment, whichever is more. Federal tax extension form However, the penalty on dishonored payments of $24. Federal tax extension form 99 or less is an amount equal to the payment. Federal tax extension form For example, a dishonored payment of $18 is charged a penalty of $18. Federal tax extension form Photographs of Missing Children The IRS is a proud partner with the National Center for Missing and Exploited Children. Federal tax extension form Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Federal tax extension form You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Federal tax extension form Calendar The following is a list of important dates. Federal tax extension form Also see Publication 509, Tax Calendars. Federal tax extension form   If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, use the next business day. Federal tax extension form A statewide legal holiday delays a filing due date only if the IRS office where you are required to file is located in that state. Federal tax extension form However, a statewide legal holiday does not delay the due date of federal tax deposits. Federal tax extension form See Deposits on Business Days Only in section 11. Federal tax extension form For any filing due date, you will meet the “file” or “furnish” requirement if the envelope containing the return or form is properly addressed, contains sufficient postage, and is postmarked by the U. Federal tax extension form S. Federal tax extension form Postal Service on or before the due date, or sent by an IRS-designated private delivery service on or before the due date. Federal tax extension form See Private Delivery Services under Reminders for more information. Federal tax extension form Introduction This publication explains your tax responsibilities as an employer. Federal tax extension form It explains the requirements for withholding, depositing, reporting, paying, and correcting employment taxes. Federal tax extension form It explains the forms you must give to your employees, those your employees must give to you, and those you must send to the IRS and SSA. Federal tax extension form This guide also has tax tables you need to figure the taxes to withhold from each employee for 2014. Federal tax extension form References to “income tax” in this guide apply only to “federal” income tax. Federal tax extension form Contact your state or local tax department to determine if their rules are different. Federal tax extension form Additional employment tax information is available in Publication 15-A. Federal tax extension form Publication 15-A includes specialized information supplementing the basic employment tax information provided in this publication. Federal tax extension form Publication 15-B, Employer's Tax Guide to Fringe Benefits, contains information about the employment tax treatment and valuation of various types of noncash compensation. Federal tax extension form Most employers must withhold (except FUTA), deposit, report, and pay the following employment taxes. Federal tax extension form Income tax. Federal tax extension form Social security tax. Federal tax extension form Medicare tax. Federal tax extension form FUTA tax. Federal tax extension form There are exceptions to these requirements. Federal tax extension form See section 15 for guidance. Federal tax extension form Railroad retirement taxes are explained in the Instructions for Form CT-1. Federal tax extension form Comments and suggestions. Federal tax extension form   We welcome your comments about this publication and your suggestions for future editions. Federal tax extension form   You can write to us at the following address: Internal Revenue Service Tax Forms & Publications Division 1111 Constitution Ave. Federal tax extension form NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Federal tax extension form Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Federal tax extension form   You can also send us comments from www. Federal tax extension form irs. Federal tax extension form gov/formspubs. Federal tax extension form Click on More Information and then click on Comment on Tax Forms and Publications. Federal tax extension form   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. Federal tax extension form Federal Government employers. Federal tax extension form   The information in this publication, including the rules for making federal tax deposits, applies to federal agencies. Federal tax extension form State and local government employers. Federal tax extension form   Payments to employees for services in the employ of state and local government employers are generally subject to federal income tax withholding but not FUTA tax. Federal tax extension form Most elected and appointed public officials of state or local governments are employees under common law rules. Federal tax extension form See chapter 3 of Publication 963, Federal-State Reference Guide. Federal tax extension form In addition, wages, with certain exceptions, are subject to social security and Medicare taxes. Federal tax extension form See section 15 for more information on the exceptions. Federal tax extension form   If an election worker is employed in another capacity with the same government entity, see Revenue Ruling 2000-6 on page 512 of Internal Revenue Bulletin 2000-6 at www. Federal tax extension form irs. Federal tax extension form gov/pub/irs-irbs/irb00-06. Federal tax extension form pdf. Federal tax extension form   You can get information on reporting and social security coverage from your local IRS office. Federal tax extension form If you have any questions about coverage under a section 218 (Social Security Act) agreement, contact the appropriate state official. Federal tax extension form To find your State Social Security Administrator, visit the National Conference of State Social Security Administrators website at www. Federal tax extension form ncsssa. Federal tax extension form org. Federal tax extension form Disregarded entities and qualified subchapter S subsidiaries (QSubs). Federal tax extension form   Eligible single-owner disregarded entities and QSubs are treated as separate entities for employment tax purposes. Federal tax extension form Eligible single-member entities that have not elected to be taxed as corporations must report and pay employment taxes on wages paid to their employees using the entities' own names and EINs. Federal tax extension form See Regulations sections 1. Federal tax extension form 1361-4(a)(7) and 301. Federal tax extension form 7701-2(c)(2)(iv). Federal tax extension form COBRA premium assistance credit. Federal tax extension form   The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. Federal tax extension form COBRA generally covers multiemployer health plans and health plans maintained by private-sector employers (other than churches) with 20 or more full and part-time employees. Federal tax extension form Parallel requirements apply to these plans under the Employee Retirement Income Security Act of 1974 (ERISA). Federal tax extension form Under the Public Health Service Act, COBRA requirements apply also to health plans covering state or local government employees. Federal tax extension form Similar requirements apply under the Federal Employees Health Benefits Program and under some state laws. Federal tax extension form For the premium assistance (or subsidy) discussed below, these requirements are all referred to as COBRA requirements. Federal tax extension form   Under the American Recovery and Reinvestment Act of 2009 (ARRA), employers are allowed a credit against “payroll taxes” (referred to in this publication as “employment taxes”) for providing COBRA premium assistance to assistance eligible individuals. Federal tax extension form For periods of COBRA continuation coverage beginning after February 16, 2009, a group health plan must treat an assistance eligible individual as having paid the required COBRA continuation coverage premium if the individual elects COBRA coverage and pays 35% of the amount of the premium. Federal tax extension form   An assistance eligible individual is a qualified beneficiary of an employer's group health plan who is eligible for COBRA continuation coverage during the period beginning September 1, 2008, and ending May 31, 2010, due to the involuntarily termination from employment of a covered employee during the period and elects continuation COBRA coverage. Federal tax extension form The assistance for the coverage can last up to 15 months. Federal tax extension form   Employees terminated during the period beginning September 1, 2008, and ending May 31, 2010, who received a severance package that delayed the start of the COBRA continuation coverage, may still be eligible for premium assistance for COBRA continuation coverage. Federal tax extension form For more information see Notice 2009-27, 2009-16 I. Federal tax extension form R. Federal tax extension form B. Federal tax extension form 838, available at www. Federal tax extension form irs. Federal tax extension form gov/irb/2009-16_irb/ar09. Federal tax extension form html. Federal tax extension form   Administrators of the group health plans (or other entities) that provide or administer COBRA continuation coverage must provide notice to assistance eligible individuals of the COBRA premium assistance. Federal tax extension form   The 65% of the premium not paid by the assistance eligible individuals is reimbursed to the employer maintaining the group health plan. Federal tax extension form The reimbursement is made through a credit against the employer's employment tax liabilities. Federal tax extension form For information on how to claim the credit, see the Instructions for Form 941 or the Instructions for Form 944. Federal tax extension form The credit is treated as a deposit made on the first day of the return period (quarter or year). Federal tax extension form In the case of a multiemployer plan, the credit is claimed by the plan, rather than the employer. Federal tax extension form In the case of an insured plan subject to state law continuation coverage requirements, the credit is claimed by the insurance company, rather than the employer. Federal tax extension form   Anyone claiming the credit for COBRA premium assistance payments must maintain the following information to support their claim, including the following. Federal tax extension form Information on the receipt of the assistance eligible individuals' 35% share of the premium, including dates and amounts. Federal tax extension form In the case of an insurance plan, a copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA. Federal tax extension form In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the assistance eligible individuals. Federal tax extension form Attestation of involuntary termination, including the date of the involuntary termination for each covered employee whose involuntary termination is the basis for eligibility for the subsidy. Federal tax extension form Proof of each assistance eligible individual's eligibility for COBRA coverage and the election of COBRA coverage. Federal tax extension form A record of the SSNs of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for one individual or two or more individuals. Federal tax extension form   For more information, visit IRS. Federal tax extension form gov and enter “COBRA” in the search box. Federal tax extension form Prev  Up  Next   Home   More Online Publications
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The Federal Tax Extension Form

Federal tax extension form 2. Federal tax extension form   Ordinary or Capital Gain or Loss Table of Contents IntroductionSection 1231 transactions. Federal tax extension form Topics - This chapter discusses: Useful Items - You may want to see: Capital Assets Noncapital AssetsCommodities derivative dealer. Federal tax extension form 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). Federal tax extension form You must do this to figure your net capital gain or loss. Federal tax extension form For individuals, a net capital gain may be taxed at a different tax rate than ordinary income. Federal tax extension form See Capital Gains Tax Rates in chapter 4. Federal tax extension form Your deduction for a net capital loss may be limited. Federal tax extension form See Treatment of Capital Losses in chapter 4. Federal tax extension form Capital gain or loss. Federal tax extension form   Generally, you will have a capital gain or loss if you sell or exchange a capital asset. Federal tax extension form You also may have a capital gain if your section 1231 transactions result in a net gain. Federal tax extension form Section 1231 transactions. Federal tax extension form   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. Federal tax extension form They also include certain involuntary conversions of business or investment property, including capital assets. Federal tax extension form See Section 1231 Gains and Losses in chapter 3 for more information. Federal tax extension form 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. Federal tax extension form Capital Assets Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. Federal tax extension form For exceptions, see Noncapital Assets, later. Federal tax extension form The following items are examples of capital assets. Federal tax extension form Stocks and bonds. Federal tax extension form A home owned and occupied by you and your family. Federal tax extension form Timber grown on your home property or investment property, even if you make casual sales of the timber. Federal tax extension form Household furnishings. Federal tax extension form A car used for pleasure or commuting. Federal tax extension form Coin or stamp collections. Federal tax extension form Gems and jewelry. Federal tax extension form Gold, silver, and other metals. Federal tax extension form Personal-use property. Federal tax extension form   Generally, property held for personal use is a capital asset. Federal tax extension form Gain from a sale or exchange of that property is a capital gain. Federal tax extension form Loss from the sale or exchange of that property is not deductible. Federal tax extension form You can deduct a loss relating to personal-use property only if it results from a casualty or theft. Federal tax extension form Investment property. Federal tax extension form   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. Federal tax extension form This treatment does not apply to property used to produce rental income. Federal tax extension form See Business assets, later, under Noncapital Assets. Federal tax extension form Release of restriction on land. Federal tax extension form   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. Federal tax extension form Noncapital Assets A noncapital asset is property that is not a capital asset. Federal tax extension form The following kinds of property are not capital assets. Federal tax extension form Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business. Federal tax extension form Inventories are discussed in Publication 538, Accounting Periods and Methods. Federal tax extension form But, see the Tip below. Federal tax extension form 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. Federal tax extension form 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). Federal tax extension form Sales of this type of property are discussed in chapter 3. Federal tax extension form Real property used in your trade or business or as rental property, even if the property is fully depreciated. Federal tax extension form 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. Federal tax extension form But, see the Tip below. Federal tax extension form U. Federal tax extension form S. Federal tax extension form 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. Federal tax extension form Any commodities derivative financial instrument (discussed later) held by a commodities derivatives dealer unless it meets both of the following requirements. Federal tax extension form It is established to the satisfaction of the IRS that the instrument has no connection to the activities of the dealer as a dealer. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Supplies of a type you regularly use or consume in the ordinary course of your trade or business. Federal tax extension form You can elect to treat as capital assets certain self-created musical compositions or copyrights you sold or exchanged. Federal tax extension form See chapter 4 of Publication 550 for details. Federal tax extension form Property held mainly for sale to customers. Federal tax extension form   Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business are not capital assets. Federal tax extension form Inventories are discussed in Publication 538. Federal tax extension form Business assets. Federal tax extension form   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. Federal tax extension form The sale or disposition of business property is discussed in chapter 3. Federal tax extension form Letters and memoranda. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form For this purpose, letters and memoranda addressed to you are considered prepared for you. Federal tax extension form If letters or memoranda are prepared by persons under your administrative control, they are considered prepared for you whether or not you review them. Federal tax extension form Commodities derivative financial instrument. Federal tax extension form   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). Federal tax extension form Commodities derivative dealer. Federal tax extension form   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. Federal tax extension form Hedging transaction. Federal tax extension form   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. Federal tax extension form Risk of price changes or currency fluctuations involving ordinary property you hold or will hold. Federal tax extension form 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. Federal tax extension form Sales and Exchanges Between Related Persons This section discusses the rules that may apply to the sale or exchange of property between related persons. Federal tax extension form If these rules apply, gains may be treated as ordinary income and losses may not be deductible. Federal tax extension form See Transfers to Spouse in chapter 1 for rules that apply to spouses. Federal tax extension form 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. Federal tax extension form It is ordinary income if the sale or exchange is a depreciable property transaction or a controlled partnership transaction. Federal tax extension form Depreciable property transaction. Federal tax extension form   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. Federal tax extension form A person and the person's controlled entity or entities. Federal tax extension form 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. Federal tax extension form 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). Federal tax extension form 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). Federal tax extension form Controlled entity. Federal tax extension form   A person's controlled entity is either of the following. Federal tax extension form 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. Federal tax extension form An entity whose relationship with that person is one of the following. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Two S corporations, if the same persons own more than 50% in value of the outstanding stock of each corporation. Federal tax extension form 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. Federal tax extension form Controlled partnership transaction. Federal tax extension form   A gain recognized in a controlled partnership transaction may be ordinary income. Federal tax extension form 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. Federal tax extension form   A controlled partnership transaction is a transaction directly or indirectly between either of the following pairs of entities. Federal tax extension form A partnership and a person who directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. Federal tax extension form Two partnerships, if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. Federal tax extension form Determining ownership. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form (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. Federal tax extension form ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. Federal tax extension form Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Nondeductible Loss A loss on the sale or exchange of property between related persons is not deductible. Federal tax extension form This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. Federal tax extension form For the list of related persons, see Related persons next. Federal tax extension form 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. Federal tax extension form The gain on each item is taxable. Federal tax extension form The loss on any item is nondeductible. Federal tax extension form Gains from the sales of any of these items may not be offset by losses on the sales of any of the other items. Federal tax extension form Related persons. Federal tax extension form   The following is a list of related persons. Federal tax extension form Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. Federal tax extension form ), and lineal descendants (children, grandchildren, etc. Federal tax extension form ). Federal tax extension form An individual and a corporation if the individual directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. Federal tax extension form Two corporations that are members of the same controlled group as defined in section 267(f) of the Internal Revenue Code. Federal tax extension form 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. Federal tax extension form A grantor and fiduciary, and the fiduciary and beneficiary, of any trust. Federal tax extension form Fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. Federal tax extension form 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. Federal tax extension form An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest. Federal tax extension form Two partnerships if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. Federal tax extension form 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. Federal tax extension form Partnership interests. Federal tax extension form   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. Federal tax extension form Controlled groups. Federal tax extension form   Losses on transactions between members of the same controlled group described in (3) earlier are deferred rather than denied. Federal tax extension form   For more information, see section 267(f) of the Internal Revenue Code. Federal tax extension form Ownership of stock or partnership interests. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form (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. Federal tax extension form ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. Federal tax extension form Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Indirect transactions. Federal tax extension form   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. Federal tax extension form This does not apply to a cross-trade between related parties through an exchange that is purely coincidental and is not prearranged. Federal tax extension form Property received from a related person. Federal tax extension form   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. Federal tax extension form This rule applies only to the original transferee. Federal tax extension form Example 1. Federal tax extension form Your brother sold stock to you for $7,600. Federal tax extension form His cost basis was $10,000. Federal tax extension form His loss of $2,400 was not deductible. Federal tax extension form You later sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900 ($10,500 − $7,600). Federal tax extension form Your recognized gain is only $500, the gain that is more than the $2,400 loss not allowed to your brother. Federal tax extension form Example 2. Federal tax extension form Assume the same facts as in Example 1, except that you sell the stock for $6,900 instead of $10,500. Federal tax extension form Your recognized loss is only $700 ($7,600 − $6,900). Federal tax extension form You cannot deduct the loss not allowed to your brother. Federal tax extension form Other Dispositions This section discusses rules for determining the treatment of gain or loss from various dispositions of property. Federal tax extension form Sale of a Business The sale of a business usually is not a sale of one asset. Federal tax extension form Instead, all the assets of the business are sold. Federal tax extension form Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. Federal tax extension form A business usually has many assets. Federal tax extension form 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. Federal tax extension form The gain or loss on each asset is figured separately. Federal tax extension form The sale of capital assets results in capital gain or loss. Federal tax extension form 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). Federal tax extension form The sale of inventory results in ordinary income or loss. Federal tax extension form Partnership interests. Federal tax extension form   An interest in a partnership or joint venture is treated as a capital asset when sold. Federal tax extension form The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary gain or loss. Federal tax extension form For more information, see Disposition of Partner's Interest in Publication 541. Federal tax extension form Corporation interests. Federal tax extension form   Your interest in a corporation is represented by stock certificates. Federal tax extension form When you sell these certificates, you usually realize capital gain or loss. Federal tax extension form For information on the sale of stock, see chapter 4 in Publication 550. Federal tax extension form Corporate liquidations. Federal tax extension form   Corporate liquidations of property generally are treated as a sale or exchange. Federal tax extension form Gain or loss generally is recognized by the corporation on a liquidating sale of its assets. Federal tax extension form 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. Federal tax extension form   In certain cases in which the distributee is a corporation in control of the distributing corporation, the distribution may not be taxable. Federal tax extension form For more information, see section 332 of the Internal Revenue Code and the related regulations. Federal tax extension form Allocation of consideration paid for a business. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form It also determines the buyer's basis in the business assets. Federal tax extension form Consideration. Federal tax extension form   The buyer's consideration is the cost of the assets acquired. Federal tax extension form The seller's consideration is the amount realized (money plus the fair market value of property received) from the sale of assets. Federal tax extension form Residual method. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form Section 743(b) applies if a partnership has an election in effect under section 754 of the Internal Revenue Code. Federal tax extension form   A group of assets constitutes a trade or business if either of the following applies. Federal tax extension form Goodwill or going concern value could, under any circumstances, attach to them. Federal tax extension form The use of the assets would constitute an active trade or business under section 355 of the Internal Revenue Code. Federal tax extension form   The residual method provides for the consideration to be reduced first by the amount of Class I assets (defined below). Federal tax extension form The consideration remaining after this reduction must be allocated among the various business assets in a certain order. Federal tax extension form See Classes of assets next for the complete order. Federal tax extension form Classes of assets. Federal tax extension form   The following definitions are the classifications for deemed or actual asset acquisitions. Federal tax extension form Allocate the consideration among the assets in the following order. Federal tax extension form The amount allocated to an asset, other than a Class VII asset, cannot exceed its fair market value on the purchase date. Federal tax extension form 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. Federal tax extension form Class I assets are cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). Federal tax extension form Class II assets are certificates of deposit, U. Federal tax extension form S. Federal tax extension form Government securities, foreign currency, and actively traded personal property, including stock and securities. Federal tax extension form Class III assets are accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. Federal tax extension form However, see section 1. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets. Federal tax extension form    Note. Federal tax extension form Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business are generally Class V assets. Federal tax extension form Class VI assets are section 197 intangibles (other than goodwill and going concern value). Federal tax extension form Class VII assets are goodwill and going concern value (whether the goodwill or going concern value qualifies as a section 197 intangible). Federal tax extension form   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. Federal tax extension form For example, if an asset is described in both Class II and Class IV, choose Class II. Federal tax extension form Example. Federal tax extension form The total paid in the sale of the assets of Company SKB is $21,000. Federal tax extension form No cash or deposit accounts or similar accounts were sold. Federal tax extension form The company's U. Federal tax extension form S. Federal tax extension form Government securities sold had a fair market value of $3,200. Federal tax extension form The only other asset transferred (other than goodwill and going concern value) was inventory with a fair market value of $15,000. Federal tax extension form Of the $21,000 paid for the assets of Company SKB, $3,200 is allocated to U. Federal tax extension form S. Federal tax extension form Government securities, $15,000 to inventory assets, and the remaining $2,800 to goodwill and going concern value. Federal tax extension form Agreement. Federal tax extension form   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. Federal tax extension form This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. Federal tax extension form Reporting requirement. Federal tax extension form   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. Federal tax extension form Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. Federal tax extension form Generally, the buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. Federal tax extension form See the Instructions for Form 8594. Federal tax extension form Dispositions of Intangible Property Intangible property is any personal property that has value but cannot be seen or touched. Federal tax extension form It includes such items as patents, copyrights, and the goodwill value of a business. Federal tax extension form 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. Federal tax extension form The treatment of section 1231 gain or loss and the recapture of amortization and depreciation as ordinary income are explained in chapter 3. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form The following discussions explain special rules that apply to certain dispositions of intangible property. Federal tax extension form 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. Federal tax extension form They include the following assets. Federal tax extension form Goodwill. Federal tax extension form Going concern value. Federal tax extension form Workforce in place. Federal tax extension form Business books and records, operating systems, and other information bases. Federal tax extension form Patents, copyrights, formulas, processes, designs, patterns, know how, formats, and similar items. Federal tax extension form Customer-based intangibles. Federal tax extension form Supplier-based intangibles. Federal tax extension form Licenses, permits, and other rights granted by a governmental unit. Federal tax extension form Covenants not to compete entered into in connection with the acquisition of a business. Federal tax extension form Franchises, trademarks, and trade names. Federal tax extension form See chapter 8 of Publication 535 for a description of each intangible. Federal tax extension form Dispositions. Federal tax extension form   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. Federal tax extension form Instead, you must increase the adjusted basis of your retained section 197 intangible by the nondeductible loss. Federal tax extension form If you retain more than one section 197 intangible, increase each intangible's adjusted basis. Federal tax extension form 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. Federal tax extension form   In applying this rule, members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity. Federal tax extension form 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. Federal tax extension form Covenant not to compete. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form Anti-churning rules. Federal tax extension form   Anti-churning rules prevent a taxpayer from converting section 197 intangibles that do not qualify for amortization into property that would qualify for amortization. Federal tax extension form 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. Federal tax extension form Recognize gain on the transfer of the property. Federal tax extension form Pay income tax on the gain at the highest tax rate. Federal tax extension form   If the transferor is a partnership or S corporation, the partnership or S corporation (not the partners or shareholders) can make the election. Federal tax extension form But each partner or shareholder must pay the tax on his or her share of gain. Federal tax extension form   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. Federal tax extension form You must file the tax return by the due date (including extensions). Federal tax extension form You must also notify the transferee of the election in writing by the due date of the return. Federal tax extension form   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). Federal tax extension form Attach the statement to the amended return and write “Filed pursuant to section 301. Federal tax extension form 9100-2” at the top of the statement. Federal tax extension form File the amended return at the same address the original return was filed. Federal tax extension form For more information about making the election, see Regulations section 1. Federal tax extension form 197-2(h)(9). Federal tax extension form For information about reporting the tax on your income tax return, see the Instructions for Form 4797. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form For information on the treatment of gain or loss on the transfer of capital assets, see chapter 4. Federal tax extension form This treatment applies to your transfer of a patent if you meet all the following conditions. Federal tax extension form You are the holder of the patent. Federal tax extension form You transfer the patent other than by gift, inheritance, or devise. Federal tax extension form You transfer all substantial rights to the patent or an undivided interest in all such rights. Federal tax extension form You do not transfer the patent to a related person. Federal tax extension form Holder. Federal tax extension form   You are the holder of a patent if you are either of the following. Federal tax extension form The individual whose effort created the patent property and who qualifies as the original and first inventor. Federal tax extension form 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. Federal tax extension form All substantial rights. Federal tax extension form   All substantial rights to patent property are all rights that have value when they are transferred. Federal tax extension form 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. Federal tax extension form   All substantial rights to a patent are not transferred if any of the following apply to the transfer. Federal tax extension form The rights are limited geographically within a country. Federal tax extension form The rights are limited to a period less than the remaining life of the patent. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Related persons. Federal tax extension form   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. Federal tax extension form Members of your family include your spouse, ancestors, and lineal descendants, but not your brothers, sisters, half-brothers, or half-sisters. Federal tax extension form Substitute “25% or more” ownership for “more than 50%. Federal tax extension form ”   If you fit within the definition of a related person independent of family status, the brother-sister exception in (1), earlier, does not apply. Federal tax extension form For example, a transfer between a brother and a sister as beneficiary and fiduciary of the same trust is a transfer between related persons. Federal tax extension form The brother-sister exception does not apply because the trust relationship is independent of family status. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Significant power, right, or continuing interest. Federal tax extension form   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. Federal tax extension form   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. Federal tax extension form A right to disapprove any assignment of the interest, or any part of it. Federal tax extension form A right to end the agreement at will. Federal tax extension form 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. Federal tax extension form A right to make the recipient sell or advertise only your products or services. Federal tax extension form A right to make the recipient buy most supplies and equipment from you. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form However, you may receive capital gain treatment on at least part of the proceeds provided you meet certain requirements. Federal tax extension form See section 1237 of the Internal Revenue Code. Federal tax extension form Timber Standing timber held as investment property is a capital asset. Federal tax extension form Gain or loss from its sale is reported as a capital gain or loss on Form 8949, and Schedule D (Form 1040), as applicable. Federal tax extension form If you held the timber primarily for sale to customers, it is not a capital asset. Federal tax extension form Gain or loss on its sale is ordinary business income or loss. Federal tax extension form It is reported in the gross receipts or sales and cost of goods sold items of your return. Federal tax extension form 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. Federal tax extension form These sales constitute a very minor part of their farm businesses. Federal tax extension form In these cases, amounts realized from such sales, and the expenses of cutting, hauling, etc. Federal tax extension form , are ordinary farm income and expenses reported on Schedule F (Form 1040), Profit or Loss From Farming. Federal tax extension form 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. Federal tax extension form Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. Federal tax extension form This is true whether the timber is cut under contract or whether you cut it yourself. Federal tax extension form Under the rules discussed below, disposition of the timber is treated as a section 1231 transaction. Federal tax extension form See chapter 3. Federal tax extension form Gain or loss is reported on Form 4797. Federal tax extension form Christmas trees. Federal tax extension form   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. Federal tax extension form They qualify for both rules discussed below. Federal tax extension form Election to treat cutting as a sale or exchange. Federal tax extension form   Under the general rule, the cutting of timber results in no gain or loss. Federal tax extension form It is not until a sale or exchange occurs that gain or loss is realized. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Any later sale results in ordinary business income or loss. Federal tax extension form See Example, later. Federal tax extension form   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. Federal tax extension form Making the election. Federal tax extension form   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. Federal tax extension form You do not have to make the election in the first year you cut timber. Federal tax extension form You can make it in any year to which the election would apply. Federal tax extension form If the timber is partnership property, the election is made on the partnership return. Federal tax extension form This election cannot be made on an amended return. Federal tax extension form   Once you have made the election, it remains in effect for all later years unless you cancel it. Federal tax extension form   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. Federal tax extension form The prior election (and revocation) is disregarded for purposes of making a subsequent election. Federal tax extension form See Form T (Timber), Forest Activities Schedule, for more information. Federal tax extension form Gain or loss. Federal tax extension form   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. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form   Timber depletion is discussed in chapter 9 of Publication 535. Federal tax extension form Example. Federal tax extension form In April 2013, you had owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. Federal tax extension form It had an adjusted basis for depletion of $40 per MBF. Federal tax extension form You are a calendar year taxpayer. Federal tax extension form On January 1, 2013, the timber had a fair market value (FMV) of $350 per MBF. Federal tax extension form It was cut in April for sale. Federal tax extension form On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. Federal tax extension form You report the difference between the fair market value and your adjusted basis for depletion as a gain. Federal tax extension form 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. Federal tax extension form You figure your gain as follows. Federal tax extension form 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. Federal tax extension form Outright sales of timber. Federal tax extension form   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). Federal tax extension form 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). Federal tax extension form Cutting contract. Federal tax extension form   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. Federal tax extension form You are the owner of the timber. Federal tax extension form You held the timber longer than 1 year before its disposal. Federal tax extension form You kept an economic interest in the timber. Federal tax extension form   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. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form Date of disposal. Federal tax extension form   The date of disposal is the date the timber is cut. Federal tax extension form 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. Federal tax extension form   This election applies only to figure the holding period of the timber. Federal tax extension form It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). Federal tax extension form   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. Federal tax extension form The statement must identify the advance payments subject to the election and the contract under which they were made. Federal tax extension form   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). Federal tax extension form Attach the statement to the amended return and write “Filed pursuant to section 301. Federal tax extension form 9100-2” at the top of the statement. Federal tax extension form File the amended return at the same address the original return was filed. Federal tax extension form Owner. Federal tax extension form   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. Federal tax extension form 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. Federal tax extension form Tree stumps. Federal tax extension form   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. Federal tax extension form Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. Federal tax extension form However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. Federal tax extension form Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. Federal tax extension form   See Form T (Timber) and its separate instructions for more information about dispositions of timber. Federal tax extension form Precious Metals and Stones, Stamps, and Coins Gold, silver, gems, stamps, coins, etc. Federal tax extension form , are capital assets except when they are held for sale by a dealer. Federal tax extension form Any gain or loss from their sale or exchange generally is a capital gain or loss. Federal tax extension form If you are a dealer, the amount received from the sale is ordinary business income. Federal tax extension form 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. Federal tax extension form You owned the coal or iron ore longer than 1 year before its disposal. Federal tax extension form You kept an economic interest in the coal or iron ore. Federal tax extension form For this rule, the date the coal or iron ore is mined is considered the date of its disposal. Federal tax extension form 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). Federal tax extension form This amount is included on Form 4797 along with your other section 1231 gains and losses. Federal tax extension form You are considered an owner if you own or sublet an economic interest in the coal or iron ore in place. Federal tax extension form If you own only an option to buy the coal in place, you do not qualify as an owner. Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form Rather, their total, along with the adjusted depletion basis, is deducted from the amount received to determine gain. Federal tax extension form If the total of these expenses plus the adjusted depletion basis is more than the amount received, the result is a loss. Federal tax extension form Special rule. Federal tax extension form   The above treatment does not apply if you directly or indirectly dispose of the iron ore or coal to any of the following persons. Federal tax extension form 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). Federal tax extension form 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. Federal tax extension form Conversion Transactions Recognized gain on the disposition or termination of any position held as part of certain conversion transactions is treated as ordinary income. Federal tax extension form 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. Federal tax extension form An applicable straddle (generally, any set of offsetting positions with respect to personal property, including stock). Federal tax extension form 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. Federal tax extension form 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. Federal tax extension form For more information, see chapter 4 of Publication 550. Federal tax extension form Prev  Up  Next   Home   More Online Publications