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File Taxes Online Free 2012

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File Taxes Online Free 2012

File taxes online free 2012 5. File taxes online free 2012   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. File taxes online free 2012 You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. File taxes online free 2012 By selecting the method that is best for you, you will have quick and easy access to tax help. File taxes online free 2012 Free help with your tax return. File taxes online free 2012   You can get free help preparing your return nationwide from IRS-certified volunteers. File taxes online free 2012 The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. File taxes online free 2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File taxes online free 2012 Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. File taxes online free 2012 In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. File taxes online free 2012 To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. File taxes online free 2012 gov, download the IRS2Go app, or call 1-800-906-9887. File taxes online free 2012   As part of the TCE program, AARP offers the Tax-Aide counseling program. File taxes online free 2012 To find the nearest AARP Tax-Aide site, visit AARP's website at www. File taxes online free 2012 aarp. File taxes online free 2012 org/money/taxaide or call 1-888-227-7669. File taxes online free 2012 For more information on these programs, go to IRS. File taxes online free 2012 gov and enter “VITA” in the search box. File taxes online free 2012 Internet. File taxes online free 2012    IRS. File taxes online free 2012 gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. File taxes online free 2012 Download the free IRS2Go app from the iTunes app store or from Google Play. File taxes online free 2012 Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. File taxes online free 2012 Check the status of your 2013 refund with the Where's My Refund? application on IRS. File taxes online free 2012 gov or download the IRS2Go app and select the Refund Status option. File taxes online free 2012 The IRS issues more than 9 out of 10 refunds in less than 21 days. File taxes online free 2012 Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. File taxes online free 2012 You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. File taxes online free 2012 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File taxes online free 2012 Use the Interactive Tax Assistant (ITA) to research your tax questions. File taxes online free 2012 No need to wait on the phone or stand in line. File taxes online free 2012 The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. File taxes online free 2012 When you reach the response screen, you can print the entire interview and the final response for your records. File taxes online free 2012 New subject areas are added on a regular basis. File taxes online free 2012  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. File taxes online free 2012 gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. File taxes online free 2012 You can use the IRS Tax Map, to search publications and instructions by topic or keyword. File taxes online free 2012 The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. File taxes online free 2012 When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. File taxes online free 2012 Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. File taxes online free 2012 You can also ask the IRS to mail a return or an account transcript to you. File taxes online free 2012 Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. File taxes online free 2012 gov or by calling 1-800-908-9946. File taxes online free 2012 Tax return and tax account transcripts are generally available for the current year and the past three years. File taxes online free 2012 Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. File taxes online free 2012 Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. File taxes online free 2012 If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. File taxes online free 2012 Check the status of your amended return using Where's My Amended Return? Go to IRS. File taxes online free 2012 gov and enter Where's My Amended Return? in the search box. File taxes online free 2012 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File taxes online free 2012 It can take up to 3 weeks from the date you mailed it to show up in our system. File taxes online free 2012 Make a payment using one of several safe and convenient electronic payment options available on IRS. File taxes online free 2012 gov. File taxes online free 2012 Select the Payment tab on the front page of IRS. File taxes online free 2012 gov for more information. File taxes online free 2012 Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. File taxes online free 2012 Figure your income tax withholding with the IRS Withholding Calculator on IRS. File taxes online free 2012 gov. File taxes online free 2012 Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. File taxes online free 2012 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. File taxes online free 2012 gov. File taxes online free 2012 Request an Electronic Filing PIN by going to IRS. File taxes online free 2012 gov and entering Electronic Filing PIN in the search box. File taxes online free 2012 Download forms, instructions and publications, including accessible versions for people with disabilities. File taxes online free 2012 Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. File taxes online free 2012 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. File taxes online free 2012 An employee can answer questions about your tax account or help you set up a payment plan. File taxes online free 2012 Before you visit, check the Office Locator on IRS. File taxes online free 2012 gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. File taxes online free 2012 If you have a special need, such as a disability, you can request an appointment. File taxes online free 2012 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. File taxes online free 2012 Apply for an Employer Identification Number (EIN). File taxes online free 2012 Go to IRS. File taxes online free 2012 gov and enter Apply for an EIN in the search box. File taxes online free 2012 Read the Internal Revenue Code, regulations, or other official guidance. File taxes online free 2012 Read Internal Revenue Bulletins. File taxes online free 2012 Sign up to receive local and national tax news and more by email. File taxes online free 2012 Just click on “subscriptions” above the search box on IRS. File taxes online free 2012 gov and choose from a variety of options. File taxes online free 2012 Phone. File taxes online free 2012    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. File taxes online free 2012 Download the free IRS2Go app from the iTunes app store or from Google Play. File taxes online free 2012 Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. File taxes online free 2012 gov, or download the IRS2Go app. File taxes online free 2012 Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File taxes online free 2012 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File taxes online free 2012 Most VITA and TCE sites offer free electronic filing. File taxes online free 2012 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. File taxes online free 2012 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. File taxes online free 2012 Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. File taxes online free 2012 If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File taxes online free 2012 The IRS issues more than 9 out of 10 refunds in less than 21 days. File taxes online free 2012 Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. File taxes online free 2012 Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. File taxes online free 2012 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File taxes online free 2012 Note, the above information is for our automated hotline. File taxes online free 2012 Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. File taxes online free 2012 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. File taxes online free 2012 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File taxes online free 2012 It can take up to 3 weeks from the date you mailed it to show up in our system. File taxes online free 2012 Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). File taxes online free 2012 You should receive your order within 10 business days. File taxes online free 2012 Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. File taxes online free 2012 If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. File taxes online free 2012 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. File taxes online free 2012 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. File taxes online free 2012 These individuals can also contact the IRS through relay services such as the Federal Relay Service. File taxes online free 2012 Mail. File taxes online free 2012   You can send your order for forms, instructions, and publications to the address below. File taxes online free 2012 You should receive a response within 10 business days after your request is received. File taxes online free 2012 Internal Revenue Service 1201 N. File taxes online free 2012 Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. File taxes online free 2012 The Taxpayer Advocate Service (TAS) is your voice at the IRS. File taxes online free 2012 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. File taxes online free 2012   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. File taxes online free 2012 We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. File taxes online free 2012 You face (or your business is facing) an immediate threat of adverse action. File taxes online free 2012 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. File taxes online free 2012   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. File taxes online free 2012 Here's why we can help: TAS is an independent organization within the IRS. File taxes online free 2012 Our advocates know how to work with the IRS. File taxes online free 2012 Our services are free and tailored to meet your needs. File taxes online free 2012 We have offices in every state, the District of Columbia, and Puerto Rico. File taxes online free 2012   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. File taxes online free 2012 irs. File taxes online free 2012 gov/Advocate, or call us toll-free at 1-877-777-4778. File taxes online free 2012   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. File taxes online free 2012 If you know of one of these broad issues, please report it to us through our Systemic Advisory Management System at www. File taxes online free 2012 irs. File taxes online free 2012 gov/Advocate/Systemic-Advocacy-Management-System-SAMS. File taxes online free 2012 Low Income Taxpayer Clinics. File taxes online free 2012    Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. File taxes online free 2012 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. File taxes online free 2012 Visit www. File taxes online free 2012 irs. File taxes online free 2012 gov/Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. File taxes online free 2012 Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Earthquake in Virginia

Updated 2/2/2012 to include Albemarle and King George Counties
Updated 1/3/2012 to include Culpeper, Fluvanna, Goochland, Orange and Spotsylvania Counties and the City of Fredericksburg.

VA-2011-22, Nov. 7, 2011

BALTIMORE — Victims of the earthquake that took place on Aug. 23, 2011 in parts of Virginia may qualify for tax relief from the Internal Revenue Service.

The President has declared Albemarle, Culpeper, Fluvanna, Goochland, King George, Louisa, Orange and Spotsylvania Counties and the City of Fredericksburg a federal disaster area. Individuals who reside or have a business in this county may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 23, and on or before Oct. 31, have been postponed to Oct. 31, 2011. This includes previously obtained extensions to file 2010 returns and the estimated tax payment for the third quarter, normally due Sept. 15.  

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 23, and on or before Sept. 7, as long as the deposits are made by Sept. 7, 2011.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The county listed above constitutes a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Oct. 31 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 23 and on or before Oct. 31.

The IRS also gives affected taxpayers until Oct. 31 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 23 and on or before Oct. 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 23 and on or before Sept. 7 provided the taxpayer makes these deposits by Sept. 7.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Virginia/Earthquake” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Related Information

Page Last Reviewed or Updated: 05-Dec-2013

The File Taxes Online Free 2012

File taxes online free 2012 1. File taxes online free 2012   Gain or Loss Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Sales and ExchangesGain or Loss From Sales and Exchanges Abandonments Foreclosures and RepossessionsAmount realized on a nonrecourse debt. File taxes online free 2012 Amount realized on a recourse debt. File taxes online free 2012 Involuntary ConversionsCondemnations Nontaxable ExchangesLike-Kind Exchanges Other Nontaxable Exchanges Transfers to Spouse Rollover of Gain From Publicly Traded Securities Gains on Sales of Qualified Small Business Stock Exclusion of Gain From Sale of DC Zone Assets Topics - This chapter discusses: Sales and exchanges Abandonments Foreclosures and repossessions Involuntary conversions Nontaxable exchanges Transfers to spouse Rollovers and exclusions for certain capital gains Useful Items - You may want to see: Publication 523 Selling Your Home 537 Installment Sales 547 Casualties, Disasters, and Thefts 550 Investment Income and Expenses 551 Basis of Assets 908 Bankruptcy Tax Guide 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 1040 U. File taxes online free 2012 S. File taxes online free 2012 Individual Income Tax Return 1040X Amended U. File taxes online free 2012 S. File taxes online free 2012 Individual Income Tax Return 1099-A Acquisition or Abandonment of Secured Property 1099-C Cancellation of Debt 4797 Sales of Business Property 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets Although the discussions in this chapter may at times refer mainly to individuals, many of the rules discussed also apply to taxpayers other than individuals. File taxes online free 2012 However, the rules for property held for personal use usually will not apply to taxpayers other than individuals. File taxes online free 2012 See chapter 5 for information about getting publications and forms. File taxes online free 2012 Sales and Exchanges A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. File taxes online free 2012 An exchange is a transfer of property for other property or services. File taxes online free 2012 The following discussions describe the kinds of transactions that are treated as sales or exchanges and explain how to figure gain or loss. File taxes online free 2012 Sale or lease. File taxes online free 2012    Some agreements that seem to be leases may really be conditional sales contracts. File taxes online free 2012 The intention of the parties to the agreement can help you distinguish between a sale and a lease. File taxes online free 2012   There is no test or group of tests to prove what the parties intended when they made the agreement. File taxes online free 2012 You should consider each agreement based on its own facts and circumstances. File taxes online free 2012 For more information, see chapter 3 in Publication 535, Business Expenses. File taxes online free 2012 Cancellation of a lease. File taxes online free 2012    Payments received by a tenant for the cancellation of a lease are treated as an amount realized from the sale of property. File taxes online free 2012 Payments received by a landlord (lessor) for the cancellation of a lease are essentially a substitute for rental payments and are taxed as ordinary income in the year in which they are received. File taxes online free 2012 Copyright. File taxes online free 2012    Payments you receive for granting the exclusive use of (or right to exploit) a copyright throughout its life in a particular medium are treated as received from the sale of property. File taxes online free 2012 It does not matter if the payments are a fixed amount or a percentage of receipts from the sale, performance, exhibition, or publication of the copyrighted work, or an amount based on the number of copies sold, performances given, or exhibitions made. File taxes online free 2012 Nor does it matter if the payments are made over the same period as that covering the grantee's use of the copyrighted work. File taxes online free 2012   If the copyright was used in your trade or business and you held it longer than a year, the gain or loss may be a section 1231 gain or loss. File taxes online free 2012 For more information, see Section 1231 Gains and Losses in chapter 3. File taxes online free 2012 Easement. File taxes online free 2012   The amount received for granting an easement is subtracted from the basis of the property. File taxes online free 2012 If only a specific part of the entire tract of property is affected by the easement, only the basis of that part is reduced by the amount received. File taxes online free 2012 If it is impossible or impractical to separate the basis of the part of the property on which the easement is granted, the basis of the whole property is reduced by the amount received. File taxes online free 2012   Any amount received that is more than the basis to be reduced is a taxable gain. File taxes online free 2012 The transaction is reported as a sale of property. File taxes online free 2012   If you transfer a perpetual easement for consideration and do not keep any beneficial interest in the part of the property affected by the easement, the transaction will be treated as a sale of property. File taxes online free 2012 However, if you make a qualified conservation contribution of a restriction or easement granted in perpetuity, it is treated as a charitable contribution and not a sale or exchange, even though you keep a beneficial interest in the property affected by the easement. File taxes online free 2012   If you grant an easement on your property (for example, a right-of-way over it) under condemnation or threat of condemnation, you are considered to have made a forced sale, even though you keep the legal title. File taxes online free 2012 Although you figure gain or loss on the easement in the same way as a sale of property, the gain or loss is treated as a gain or loss from a condemnation. File taxes online free 2012 See Gain or Loss From Condemnations, later. File taxes online free 2012 Property transferred to satisfy debt. File taxes online free 2012   A transfer of property to satisfy a debt is an exchange. File taxes online free 2012 Note's maturity date extended. File taxes online free 2012   The extension of a note's maturity date is not treated as an exchange of an outstanding note for a new and different note. File taxes online free 2012 Also, it is not considered a closed and completed transaction that would result in a gain or loss. File taxes online free 2012 However, an extension will be treated as a taxable exchange of the outstanding note for a new and materially different note if the changes in the terms of the note are significant. File taxes online free 2012 Each case must be determined by its own facts. File taxes online free 2012 For more information, see Regulations section 1. File taxes online free 2012 1001-3. File taxes online free 2012 Transfer on death. File taxes online free 2012   The transfer of property of a decedent to an executor or administrator of the estate, or to the heirs or beneficiaries, is not a sale or exchange or other disposition. File taxes online free 2012 No taxable gain or deductible loss results from the transfer. File taxes online free 2012 Bankruptcy. File taxes online free 2012   Generally, a transfer (other than by sale or exchange) of property from a debtor to a bankruptcy estate is not treated as a disposition. File taxes online free 2012 Consequently, the transfer generally does not result in gain or loss. File taxes online free 2012 For more information, see Publication 908, Bankruptcy Tax Guide. File taxes online free 2012 Gain or Loss From Sales and Exchanges You usually realize gain or loss when property is sold or exchanged. File taxes online free 2012 A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. File taxes online free 2012 A loss is the adjusted basis of the property that is more than the amount you realize. File taxes online free 2012   Table 1-1. File taxes online free 2012 How To Figure Whether You Have a Gain or Loss IF your. File taxes online free 2012 . File taxes online free 2012 . File taxes online free 2012 THEN you have a. File taxes online free 2012 . File taxes online free 2012 . File taxes online free 2012 Adjusted basis is more than the amount realized, Loss. File taxes online free 2012 Amount realized is more than the adjusted basis, Gain. File taxes online free 2012 Basis. File taxes online free 2012   You must know the basis of your property to determine whether you have a gain or loss from its sale or other disposition. File taxes online free 2012 The basis of property you buy is usually its cost. File taxes online free 2012 However, if you acquired the property by gift, inheritance, or in some way other than buying it, you must use a basis other than its cost. File taxes online free 2012 See Basis Other Than Cost in Publication 551, Basis of Assets. File taxes online free 2012 Special rules apply to property acquired from a decedent who died in 2010 and the executor made the election to file Form 8939, Allocation of Increase in Basis for Property Received From a Decedent. File taxes online free 2012 See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. File taxes online free 2012 Adjusted basis. File taxes online free 2012   The adjusted basis of property is your original cost or other basis plus (increased by) certain additions and minus (decreased by) certain deductions. File taxes online free 2012 Increases include costs of any improvements having a useful life of more than 1 year. File taxes online free 2012 Decreases include depreciation and casualty losses. File taxes online free 2012 For more details and additional examples, see Adjusted Basis in Publication 551. File taxes online free 2012 Amount realized. File taxes online free 2012   The amount you realize from a sale or exchange is the total of all money you receive plus the fair market value (defined below) of all property or services you receive. File taxes online free 2012 The amount you realize also includes any of your liabilities that were assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage. File taxes online free 2012 Fair market value. File taxes online free 2012   Fair market value (FMV) is the price at which the property would change hands between a buyer and a seller when both have reasonable knowledge of all the necessary facts and neither is being forced to buy or sell. File taxes online free 2012 If parties with adverse interests place a value on property in an arm's-length transaction, that is strong evidence of FMV. File taxes online free 2012 If there is a stated price for services, this price is treated as the FMV unless there is evidence to the contrary. File taxes online free 2012 Example. File taxes online free 2012 You used a building in your business that cost you $70,000. File taxes online free 2012 You made certain permanent improvements at a cost of $20,000 and deducted depreciation totaling $10,000. File taxes online free 2012 You sold the building for $100,000 plus property having an FMV of $20,000. File taxes online free 2012 The buyer assumed your real estate taxes of $3,000 and a mortgage of $17,000 on the building. File taxes online free 2012 The selling expenses were $4,000. File taxes online free 2012 Your gain on the sale is figured as follows. File taxes online free 2012 Amount realized:     Cash $100,000   FMV of property received 20,000   Real estate taxes assumed by buyer 3,000   Mortgage assumed by  buyer 17,000   Total 140,000   Minus: Selling expenses 4,000 $136,000 Adjusted basis:     Cost of building $70,000   Improvements 20,000   Total $90,000   Minus: Depreciation 10,000   Adjusted basis   $80,000 Gain on sale $56,000 Amount recognized. File taxes online free 2012   Your gain or loss realized from a sale or exchange of property is usually a recognized gain or loss for tax purposes. File taxes online free 2012 Recognized gains must be included in gross income. File taxes online free 2012 Recognized losses are deductible from gross income. File taxes online free 2012 However, your gain or loss realized from certain exchanges of property is not recognized for tax purposes. File taxes online free 2012 See Nontaxable Exchanges, later. File taxes online free 2012 Also, a loss from the sale or other disposition of property held for personal use is not deductible, except in the case of a casualty or theft. File taxes online free 2012 Interest in property. File taxes online free 2012   The amount you realize from the disposition of a life interest in property, an interest in property for a set number of years, or an income interest in a trust is a recognized gain under certain circumstances. File taxes online free 2012 If you received the interest as a gift, inheritance, or in a transfer from a spouse or former spouse incident to a divorce, the amount realized is a recognized gain. File taxes online free 2012 Your basis in the property is disregarded. File taxes online free 2012 This rule does not apply if all interests in the property are disposed of at the same time. File taxes online free 2012 Example 1. File taxes online free 2012 Your father dies and leaves his farm to you for life with a remainder interest to your younger brother. File taxes online free 2012 You decide to sell your life interest in the farm. File taxes online free 2012 The entire amount you receive is a recognized gain. File taxes online free 2012 Your basis in the farm is disregarded. File taxes online free 2012 Example 2. File taxes online free 2012 The facts are the same as in Example 1, except that your brother joins you in selling the farm. File taxes online free 2012 The entire interest in the property is sold, so your basis in the farm is not disregarded. File taxes online free 2012 Your gain or loss is the difference between your share of the sales price and your adjusted basis in the farm. File taxes online free 2012 Canceling a sale of real property. File taxes online free 2012   If you sell real property under a sales contract that allows the buyer to return the property for a full refund and the buyer does so, you may not have to recognize gain or loss on the sale. File taxes online free 2012 If the buyer returns the property in the year of sale, no gain or loss is recognized. File taxes online free 2012 This cancellation of the sale in the same year it occurred places both you and the buyer in the same positions you were in before the sale. File taxes online free 2012 If the buyer returns the property in a later tax year, you must recognize gain (or loss, if allowed) in the year of the sale. File taxes online free 2012 When the property is returned in a later year, you acquire a new basis in the property. File taxes online free 2012 That basis is equal to the amount you pay to the buyer. File taxes online free 2012 Bargain Sale If you sell or exchange property for less than fair market value with the intent of making a gift, the transaction is partly a sale or exchange and partly a gift. File taxes online free 2012 You have a gain if the amount realized is more than your adjusted basis in the property. File taxes online free 2012 However, you do not have a loss if the amount realized is less than the adjusted basis of the property. File taxes online free 2012 Bargain sales to charity. File taxes online free 2012   A bargain sale of property to a charitable organization is partly a sale or exchange and partly a charitable contribution. File taxes online free 2012 If a charitable deduction for the contribution is allowable, you must allocate your adjusted basis in the property between the part sold and the part contributed based on the fair market value of each. File taxes online free 2012 The adjusted basis of the part sold is figured as follows. File taxes online free 2012 Adjusted basis of entire property × Amount realized (fair market value of part sold)   Fair market value of entire property   Based on this allocation rule, you will have a gain even if the amount realized is not more than your adjusted basis in the property. File taxes online free 2012 This allocation rule does not apply if a charitable contribution deduction is not allowable. File taxes online free 2012   See Publication 526, Charitable Contributions, for information on figuring your charitable contribution. File taxes online free 2012 Example. File taxes online free 2012 You sold property with a fair market value of $10,000 to a charitable organization for $2,000 and are allowed a deduction for your contribution. File taxes online free 2012 Your adjusted basis in the property is $4,000. File taxes online free 2012 Your gain on the sale is $1,200, figured as follows. File taxes online free 2012 Sales price $2,000 Minus: Adjusted basis of part sold ($4,000 × ($2,000 ÷ $10,000)) 800 Gain on the sale $1,200 Property Used Partly for Business or Rental Generally, if you sell or exchange property you used partly for business or rental purposes and partly for personal purposes, you must figure the gain or loss on the sale or exchange as though you had sold two separate pieces of property. File taxes online free 2012 You must subtract depreciation you took or could have taken from the basis of the business or rental part. File taxes online free 2012 However, see the special rule below for a home used partly for business or rental. File taxes online free 2012 You must allocate the selling price, selling expenses, and the basis of the property between the business or rental part and the personal part. File taxes online free 2012 Gain or loss on the business or rental part of the property may be a capital gain or loss or an ordinary gain or loss, as discussed in chapter 3 under Section 1231 Gains and Losses. File taxes online free 2012 Any gain on the personal part of the property is a capital gain. File taxes online free 2012 You cannot deduct a loss on the personal part. File taxes online free 2012 Home used partly for business or rental. File taxes online free 2012    If you use property partly as a home and partly for business or to produce rental income, the computation and treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. File taxes online free 2012 See Property Used Partly for Business or Rental, in Publication 523. File taxes online free 2012 Property Changed to Business or Rental Use You cannot deduct a loss on the sale of property you purchased or constructed for use as your home and used as your home until the time of sale. File taxes online free 2012 You can deduct a loss on the sale of property you acquired for use as your home but changed to business or rental property and used as business or rental property at the time of sale. File taxes online free 2012 However, if the adjusted basis of the property at the time of the change was more than its fair market value, the loss you can deduct is limited. File taxes online free 2012 Figure the loss you can deduct as follows. File taxes online free 2012 Use the lesser of the property's adjusted basis or fair market value at the time of the change. File taxes online free 2012 Add to (1) the cost of any improvements and other increases to basis since the change. File taxes online free 2012 Subtract from (2) depreciation and any other decreases to basis since the change. File taxes online free 2012 Subtract the amount you realized on the sale from the result in (3). File taxes online free 2012 If the amount you realized is more than the result in (3), treat this result as zero. File taxes online free 2012 The result in (4) is the loss you can deduct. File taxes online free 2012 Example. File taxes online free 2012 You changed your main home to rental property 5 years ago. File taxes online free 2012 At the time of the change, the adjusted basis of your home was $75,000 and the fair market value was $70,000. File taxes online free 2012 This year, you sold the property for $55,000. File taxes online free 2012 You made no improvements to the property but you have depreciation expense of $12,620 over the 5 prior years. File taxes online free 2012 Although your loss on the sale is $7,380 [($75,000 − $12,620) − $55,000], the amount you can deduct as a loss is limited to $2,380, figured as follows. File taxes online free 2012 Lesser of adjusted basis or fair market value at time of the change $70,000 Plus: Cost of any improvements and any other additions to basis after the change -0-   70,000 Minus: Depreciation and any other decreases to basis after the change 12,620   57,380 Minus: Amount you realized from the sale 55,000 Deductible loss $2,380 Gain. File taxes online free 2012   If you have a gain on the sale, you generally must recognize the full amount of the gain. File taxes online free 2012 You figure the gain by subtracting your adjusted basis from your amount realized, as described earlier. File taxes online free 2012   You may be able to exclude all or part of the gain if you owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. File taxes online free 2012 However, you may not be able to exclude the part of the gain allocated to any period of nonqualified use. File taxes online free 2012   For more information, see Business Use or Rental of Home in Publication 523. File taxes online free 2012 In addition, special rules apply if the home sold was acquired in a like-kind exchange. File taxes online free 2012 See Special Situations in Publication 523. File taxes online free 2012 Also see Like-Kind Exchanges, later. File taxes online free 2012 Abandonments The abandonment of property is a disposition of property. File taxes online free 2012 You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. File taxes online free 2012 Generally, abandonment is not treated as a sale or exchange of the property. File taxes online free 2012 If the amount you realize (if any) is more than your adjusted basis, then you have a gain. File taxes online free 2012 If your adjusted basis is more than the amount you realize (if any), then you have a loss. File taxes online free 2012 Loss from abandonment of business or investment property is deductible as a loss. File taxes online free 2012 A loss from an abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. File taxes online free 2012 This rule also applies to leasehold improvements the lessor made for the lessee that were abandoned. File taxes online free 2012 If the property is foreclosed on or repossessed in lieu of abandonment, gain or loss is figured as discussed later under Foreclosure and Repossessions. File taxes online free 2012 The abandonment loss is deducted in the tax year in which the loss is sustained. File taxes online free 2012 If the abandoned property is secured by debt, special rules apply. File taxes online free 2012 The tax consequences of abandonment of property that is secured by debt depend on whether you are personally liable for the debt (recourse debt) or you are not personally liable for the debt (nonrecourse debt). File taxes online free 2012 For more information, including examples, see chapter 3 of Publication 4681. File taxes online free 2012 You cannot deduct any loss from abandonment of your home or other property held for personal use only. File taxes online free 2012 Cancellation of debt. File taxes online free 2012   If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you may realize ordinary income equal to the canceled debt. File taxes online free 2012 This income is separate from any loss realized from abandonment of the property. File taxes online free 2012   You must report this income on your tax return unless one of the following applies. File taxes online free 2012 The cancellation is intended as a gift. File taxes online free 2012 The debt is qualified farm debt. File taxes online free 2012 The debt is qualified real property business debt. File taxes online free 2012 You are insolvent or bankrupt. File taxes online free 2012 The debt is qualified principal residence indebtedness. File taxes online free 2012 File Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), to report the income exclusion. File taxes online free 2012 For more information, including other exceptions and exclusion, see Publication 4681. File taxes online free 2012 Forms 1099-A and 1099-C. File taxes online free 2012   If you abandon property that secures a loan and the lender knows the property has been abandoned, the lender should send you Form 1099-A showing information you need to figure your loss from the abandonment. File taxes online free 2012 However, if your debt is canceled and the lender must file Form 1099-C, the lender may include the information about the abandonment on that form instead of on Form 1099-A, and send you Form 1099-C only. File taxes online free 2012 The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. File taxes online free 2012 For abandonments of property and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. File taxes online free 2012 Foreclosures and Repossessions If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. File taxes online free 2012 The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. File taxes online free 2012 This is true even if you voluntarily return the property to the lender. File taxes online free 2012 You also may realize ordinary income from cancellation of debt if the loan balance is more than the fair market value of the property. File taxes online free 2012 Buyer's (borrower's) gain or loss. File taxes online free 2012   You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale or exchange. File taxes online free 2012 The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. File taxes online free 2012 See Gain or Loss From Sales and Exchanges, earlier. File taxes online free 2012 You can use Table 1-2 to figure your gain or loss from a foreclosure or repossession. File taxes online free 2012 Amount realized on a nonrecourse debt. File taxes online free 2012   If you are not personally liable for repaying the debt (nonrecourse debt) secured by the transferred property, the amount you realize includes the full debt canceled by the transfer. File taxes online free 2012 The full canceled debt is included even if the fair market value of the property is less than the canceled debt. File taxes online free 2012 Example 1. File taxes online free 2012 Chris bought a new car for $15,000. File taxes online free 2012 He paid $2,000 down and borrowed the remaining $13,000 from the dealer's credit company. File taxes online free 2012 Chris is not personally liable for the loan (nonrecourse debt), but pledges the new car as security. File taxes online free 2012 The credit company repossessed the car because he stopped making loan payments. File taxes online free 2012 The balance due after taking into account the payments Chris made was $10,000. File taxes online free 2012 The fair market value of the car when repossessed was $9,000. File taxes online free 2012 The amount Chris realized on the repossession is $10,000. File taxes online free 2012 That is the outstanding amount of the debt canceled by the repossession, even though the car's fair market value is less than $10,000. File taxes online free 2012 Chris figures his gain or loss on the repossession by comparing the amount realized ($10,000) with his adjusted basis ($15,000). File taxes online free 2012 He has a $5,000 nondeductible loss. File taxes online free 2012 Example 2. File taxes online free 2012 Abena paid $200,000 for her home. File taxes online free 2012 She paid $15,000 down and borrowed the remaining $185,000 from a bank. File taxes online free 2012 Abena is not personally liable for the loan (nonrecourse debt), but pledges the house as security. File taxes online free 2012 The bank foreclosed on the loan because Abena stopped making payments. File taxes online free 2012 When the bank foreclosed on the loan, the balance due was $180,000, the fair market value of the house was $170,000, and Abena's adjusted basis was $175,000 due to a casualty loss she had deducted. File taxes online free 2012 The amount Abena realized on the foreclosure is $180,000, the balance due and debt canceled by the foreclosure. File taxes online free 2012 She figures her gain or loss by comparing the amount realized ($180,000) with her adjusted basis ($175,000). File taxes online free 2012 She has a $5,000 realized gain. File taxes online free 2012 Amount realized on a recourse debt. File taxes online free 2012   If you are personally liable for the debt (recourse debt), the amount realized on the foreclosure or repossession includes the lesser of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The fair market value of the transferred property. File taxes online free 2012 You are treated as receiving ordinary income from the canceled debt for the part of the debt that is more than the fair market value. File taxes online free 2012 The amount realized does not include the canceled debt that is your income from cancellation of debt. File taxes online free 2012 See Cancellation of debt, below. File taxes online free 2012 Seller's (lender's) gain or loss on repossession. File taxes online free 2012   If you finance a buyer's purchase of property and later acquire an interest in it through foreclosure or repossession, you may have a gain or loss on the acquisition. File taxes online free 2012 For more information, see Repossession in Publication 537. File taxes online free 2012    Table 1-2. File taxes online free 2012 Worksheet for Foreclosures and Repossessions Part 1. File taxes online free 2012 Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. File taxes online free 2012 Complete this part only  if you were personally liable for the debt. File taxes online free 2012 Otherwise,  go to Part 2. File taxes online free 2012   1. File taxes online free 2012 Enter the amount of outstanding debt immediately before the transfer of   property reduced by any amount for which you remain personally liable after   the transfer of property   2. File taxes online free 2012 Enter the fair market value of the transferred property   3. File taxes online free 2012 Ordinary income from cancellation of debt upon foreclosure or    repossession. File taxes online free 2012 * Subtract line 2 from line 1. File taxes online free 2012   If less than zero, enter zero   Part 2. File taxes online free 2012 Figure your gain or loss from foreclosure or repossession. File taxes online free 2012   4. File taxes online free 2012 If you completed Part 1, enter the smaller of line 1 or line 2. File taxes online free 2012   If you did not complete Part 1, enter the outstanding debt immediately before   the transfer of property   5. File taxes online free 2012 Enter any proceeds you received from the foreclosure sale   6. File taxes online free 2012 Add lines 4 and 5   7. File taxes online free 2012 Enter the adjusted basis of the transferred property   8. File taxes online free 2012 Gain or loss from foreclosure or repossession. File taxes online free 2012 Subtract line 7  from line 6   * The income may not be taxable. File taxes online free 2012 See Cancellation of debt. File taxes online free 2012 Cancellation of debt. File taxes online free 2012   If property that is repossessed or foreclosed on secures a debt for which you are personally liable (recourse debt), you generally must report as ordinary income the amount by which the canceled debt is more than the fair market value of the property. File taxes online free 2012 This income is separate from any gain or loss realized from the foreclosure or repossession. File taxes online free 2012 Report the income from cancellation of a debt related to a business or rental activity as business or rental income. File taxes online free 2012    You can use Table 1-2 to figure your income from cancellation of debt. File taxes online free 2012   You must report this income on your tax return unless one of the following applies. File taxes online free 2012 The cancellation is intended as a gift. File taxes online free 2012 The debt is qualified farm debt. File taxes online free 2012 The debt is qualified real property business debt. File taxes online free 2012 You are insolvent or bankrupt. File taxes online free 2012 The debt is qualified principal residence indebtedness. File taxes online free 2012 File Form 982 to report the income exclusion. File taxes online free 2012 Example 1. File taxes online free 2012 Assume the same facts as in Example 1 under Amount realized on a nonrecourse debt, earlier, except Chris is personally liable for the car loan (recourse debt). File taxes online free 2012 In this case, the amount he realizes is $9,000. File taxes online free 2012 This is the lesser of the canceled debt ($10,000) or the car's fair market value ($9,000). File taxes online free 2012 Chris figures his gain or loss on the repossession by comparing the amount realized ($9,000) with his adjusted basis ($15,000). File taxes online free 2012 He has a $6,000 nondeductible loss. File taxes online free 2012 He also is treated as receiving ordinary income from cancellation of debt. File taxes online free 2012 That income is $1,000 ($10,000 − $9,000). File taxes online free 2012 This is the part of the canceled debt not included in the amount realized. File taxes online free 2012 Example 2. File taxes online free 2012 Assume the same facts as in Example 2 under Amount realized on a nonrecourse debt, earlier, except Abena is personally liable for the loan (recourse debt). File taxes online free 2012 In this case, the amount she realizes is $170,000. File taxes online free 2012 This is the lesser of the canceled debt ($180,000) or the fair market value of the house ($170,000). File taxes online free 2012 Abena figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($175,000). File taxes online free 2012 She has a $5,000 nondeductible loss. File taxes online free 2012 She also is treated as receiving ordinary income from cancellation of debt. File taxes online free 2012 (The debt is not exempt from tax as discussed under Cancellation of debt, above. File taxes online free 2012 ) That income is $10,000 ($180,000 − $170,000). File taxes online free 2012 This is the part of the canceled debt not included in the amount realized. File taxes online free 2012 Forms 1099-A and 1099-C. File taxes online free 2012   A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A showing the information you need to figure your gain or loss. File taxes online free 2012 However, if the lender also cancels part of your debt and must file Form 1099-C, the lender may include the information about the foreclosure or repossession on that form instead of on Form 1099-A and send you Form 1099-C only. File taxes online free 2012 The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. File taxes online free 2012 For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. File taxes online free 2012 Involuntary Conversions An involuntary conversion occurs when your property is destroyed, stolen, condemned, or disposed of under the threat of condemnation and you receive other property or money in payment, such as insurance or a condemnation award. File taxes online free 2012 Involuntary conversions are also called involuntary exchanges. File taxes online free 2012 Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes unless the property is your main home. File taxes online free 2012 You report the gain or deduct the loss on your tax return for the year you realize it. File taxes online free 2012 You cannot deduct a loss from an involuntary conversion of property you held for personal use unless the loss resulted from a casualty or theft. File taxes online free 2012 However, depending on the type of property you receive, you may not have to report a gain on an involuntary conversion. File taxes online free 2012 Generally, you do not report the gain if you receive property that is similar or related in service or use to the converted property. File taxes online free 2012 Your basis for the new property is the same as your basis for the converted property. File taxes online free 2012 This means that the gain is deferred until a taxable sale or exchange occurs. File taxes online free 2012 If you receive money or property that is not similar or related in service or use to the involuntarily converted property and you buy qualifying replacement property within a certain period of time, you can elect to postpone reporting the gain on the property purchased. File taxes online free 2012 This publication explains the treatment of a gain or loss from a condemnation or disposition under the threat of condemnation. File taxes online free 2012 If you have a gain or loss from the destruction or theft of property, see Publication 547. File taxes online free 2012 Condemnations A condemnation is the process by which private property is legally taken for public use without the owner's consent. File taxes online free 2012 The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take it. File taxes online free 2012 The owner receives a condemnation award (money or property) in exchange for the property taken. File taxes online free 2012 A condemnation is like a forced sale, the owner being the seller and the condemning authority being the buyer. File taxes online free 2012 Example. File taxes online free 2012 A local government authorized to acquire land for public parks informed you that it wished to acquire your property. File taxes online free 2012 After the local government took action to condemn your property, you went to court to keep it. File taxes online free 2012 But, the court decided in favor of the local government, which took your property and paid you an amount fixed by the court. File taxes online free 2012 This is a condemnation of private property for public use. File taxes online free 2012 Threat of condemnation. File taxes online free 2012   A threat of condemnation exists if a representative of a government body or a public official authorized to acquire property for public use informs you that the government body or official has decided to acquire your property. File taxes online free 2012 You must have reasonable grounds to believe that, if you do not sell voluntarily, your property will be condemned. File taxes online free 2012   The sale of your property to someone other than the condemning authority will also qualify as an involuntary conversion, provided you have reasonable grounds to believe that your property will be condemned. File taxes online free 2012 If the buyer of this property knows at the time of purchase that it will be condemned and sells it to the condemning authority, this sale also qualifies as an involuntary conversion. File taxes online free 2012 Reports of condemnation. File taxes online free 2012   A threat of condemnation exists if you learn of a decision to acquire your property for public use through a report in a newspaper or other news medium, and this report is confirmed by a representative of the government body or public official involved. File taxes online free 2012 You must have reasonable grounds to believe that they will take necessary steps to condemn your property if you do not sell voluntarily. File taxes online free 2012 If you relied on oral statements made by a government representative or public official, the Internal Revenue Service (IRS) may ask you to get written confirmation of the statements. File taxes online free 2012 Example. File taxes online free 2012 Your property lies along public utility lines. File taxes online free 2012 The utility company has the authority to condemn your property. File taxes online free 2012 The company informs you that it intends to acquire your property by negotiation or condemnation. File taxes online free 2012 A threat of condemnation exists when you receive the notice. File taxes online free 2012 Related property voluntarily sold. File taxes online free 2012   A voluntary sale of your property may be treated as a forced sale that qualifies as an involuntary conversion if the property had a substantial economic relationship to property of yours that was condemned. File taxes online free 2012 A substantial economic relationship exists if together the properties were one economic unit. File taxes online free 2012 You also must show that the condemned property could not reasonably or adequately be replaced. File taxes online free 2012 You can elect to postpone reporting the gain by buying replacement property. File taxes online free 2012 See Postponement of Gain, later. File taxes online free 2012 Gain or Loss From Condemnations If your property was condemned or disposed of under the threat of condemnation, figure your gain or loss by comparing the adjusted basis of your condemned property with your net condemnation award. File taxes online free 2012 If your net condemnation award is more than the adjusted basis of the condemned property, you have a gain. File taxes online free 2012 You can postpone reporting gain from a condemnation if you buy replacement property. File taxes online free 2012 If only part of your property is condemned, you can treat the cost of restoring the remaining part to its former usefulness as the cost of replacement property. File taxes online free 2012 See Postponement of Gain, later. File taxes online free 2012 If your net condemnation award is less than your adjusted basis, you have a loss. File taxes online free 2012 If your loss is from property you held for personal use, you cannot deduct it. File taxes online free 2012 You must report any deductible loss in the tax year it happened. File taxes online free 2012 You can use Part 2 of Table 1-3 to figure your gain or loss from a condemnation award. File taxes online free 2012 Main home condemned. File taxes online free 2012   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. File taxes online free 2012 You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). File taxes online free 2012 For information on this exclusion, see Publication 523. File taxes online free 2012 If your gain is more than you can exclude but you buy replacement property, you may be able to postpone reporting the rest of the gain. File taxes online free 2012 See Postponement of Gain, later. File taxes online free 2012 Table 1-3. File taxes online free 2012 Worksheet for Condemnations Part 1. File taxes online free 2012 Gain from severance damages. File taxes online free 2012  If you did not receive severance damages, skip Part 1 and go to Part 2. File taxes online free 2012   1. File taxes online free 2012 Enter gross severance damages received   2. File taxes online free 2012 Enter your expenses in getting severance damages   3. File taxes online free 2012 Subtract line 2 from line 1. File taxes online free 2012 If less than zero, enter -0-   4. File taxes online free 2012 Enter any special assessment on remaining property taken out of your award   5. File taxes online free 2012 Net severance damages. File taxes online free 2012 Subtract line 4 from line 3. File taxes online free 2012 If less than zero, enter -0-   6. File taxes online free 2012 Enter the adjusted basis of the remaining property   7. File taxes online free 2012 Gain from severance damages. File taxes online free 2012 Subtract line 6 from line 5. File taxes online free 2012 If less than zero, enter -0-   8. File taxes online free 2012 Refigured adjusted basis of the remaining property. File taxes online free 2012 Subtract line 5 from line 6. File taxes online free 2012 If less than zero, enter -0-   Part 2. File taxes online free 2012 Gain or loss from condemnation award. File taxes online free 2012   9. File taxes online free 2012 Enter the gross condemnation award received   10. File taxes online free 2012 Enter your expenses in getting the condemnation award   11. File taxes online free 2012 If you completed Part 1, and line 4 is more than line 3, subtract line 3 from line 4. File taxes online free 2012 If you did not complete Part 1, but a special assessment was taken out of your award, enter that amount. File taxes online free 2012 Otherwise, enter -0-   12. File taxes online free 2012 Add lines 10 and 11   13. File taxes online free 2012 Net condemnation award. File taxes online free 2012 Subtract line 12 from line 9   14. File taxes online free 2012 Enter the adjusted basis of the condemned property   15. File taxes online free 2012 Gain from condemnation award. File taxes online free 2012 If line 14 is more than line 13, enter -0-. File taxes online free 2012 Otherwise, subtract line 14 from  line 13 and skip line 16   16. File taxes online free 2012 Loss from condemnation award. File taxes online free 2012 Subtract line 13 from line 14     (Note: You cannot deduct the amount on line 16 if the condemned property was held for personal use. File taxes online free 2012 )   Part 3. File taxes online free 2012 Postponed gain from condemnation. File taxes online free 2012  (Complete only if line 7 or line 15 is more than zero and you bought qualifying replacement property or made expenditures to restore the usefulness of your remaining property. File taxes online free 2012 )   17. File taxes online free 2012 If you completed Part 1, and line 7 is more than zero, enter the amount from line 5. File taxes online free 2012 Otherwise, enter -0-   18. File taxes online free 2012 If line 15 is more than zero, enter the amount from line 13. File taxes online free 2012 Otherwise, enter -0-   19. File taxes online free 2012 Add lines 17 and 18. File taxes online free 2012 If the condemned property was your main home, subtract from this total the gain you excluded from your income and enter the result   20. File taxes online free 2012 Enter the total cost of replacement property and any expenses to restore the usefulness of your remaining property   21. File taxes online free 2012 Subtract line 20 from line 19. File taxes online free 2012 If less than zero, enter -0-   22. File taxes online free 2012 If you completed Part 1, add lines 7 and 15. File taxes online free 2012 Otherwise, enter the amount from line 15. File taxes online free 2012 If the condemned property was your main home, subtract from this total the gain you excluded from your income and enter the result   23. File taxes online free 2012 Recognized gain. File taxes online free 2012 Enter the smaller of line 21 or line 22. File taxes online free 2012   24. File taxes online free 2012 Postponed gain. File taxes online free 2012 Subtract line 23 from line 22. File taxes online free 2012 If less than zero, enter -0-   Condemnation award. File taxes online free 2012   A condemnation award is the money you are paid or the value of other property you receive for your condemned property. File taxes online free 2012 The award is also the amount you are paid for the sale of your property under threat of condemnation. File taxes online free 2012 Payment of your debts. File taxes online free 2012   Amounts taken out of the award to pay your debts are considered paid to you. File taxes online free 2012 Amounts the government pays directly to the holder of a mortgage or lien against your property are part of your award, even if the debt attaches to the property and is not your personal liability. File taxes online free 2012 Example. File taxes online free 2012 The state condemned your property for public use. File taxes online free 2012 The award was set at $200,000. File taxes online free 2012 The state paid you only $148,000 because it paid $50,000 to your mortgage holder and $2,000 accrued real estate taxes. File taxes online free 2012 You are considered to have received the entire $200,000 as a condemnation award. File taxes online free 2012 Interest on award. File taxes online free 2012   If the condemning authority pays you interest for its delay in paying your award, it is not part of the condemnation award. File taxes online free 2012 You must report the interest separately as ordinary income. File taxes online free 2012 Payments to relocate. File taxes online free 2012   Payments you receive to relocate and replace housing because you have been displaced from your home, business, or farm as a result of federal or federally assisted programs are not part of the condemnation award. File taxes online free 2012 Do not include them in your income. File taxes online free 2012 Replacement housing payments used to buy new property are included in the property's basis as part of your cost. File taxes online free 2012 Net condemnation award. File taxes online free 2012   A net condemnation award is the total award you received, or are considered to have received, for the condemned property minus your expenses of obtaining the award. File taxes online free 2012 If only a part of your property was condemned, you also must reduce the award by any special assessment levied against the part of the property you retain. File taxes online free 2012 This is discussed later under Special assessment taken out of award. File taxes online free 2012 Severance damages. File taxes online free 2012    Severance damages are not part of the award paid for the property condemned. File taxes online free 2012 They are paid to you if part of your property is condemned and the value of the part you keep is decreased because of the condemnation. File taxes online free 2012   For example, you may receive severance damages if your property is subject to flooding because you sell flowage easement rights (the condemned property) under threat of condemnation. File taxes online free 2012 Severance damages also may be given to you if, because part of your property is condemned for a highway, you must replace fences, dig new wells or ditches, or plant trees to restore your remaining property to the same usefulness it had before the condemnation. File taxes online free 2012   The contracting parties should agree on the specific amount of severance damages in writing. File taxes online free 2012 If this is not done, all proceeds from the condemning authority are considered awarded for your condemned property. File taxes online free 2012   You cannot make a completely new allocation of the total award after the transaction is completed. File taxes online free 2012 However, you can show how much of the award both parties intended for severance damages. File taxes online free 2012 The severance damages part of the award is determined from all the facts and circumstances. File taxes online free 2012 Example. File taxes online free 2012 You sold part of your property to the state under threat of condemnation. File taxes online free 2012 The contract you and the condemning authority signed showed only the total purchase price. File taxes online free 2012 It did not specify a fixed sum for severance damages. File taxes online free 2012 However, at settlement, the condemning authority gave you closing papers showing clearly the part of the purchase price that was for severance damages. File taxes online free 2012 You may treat this part as severance damages. File taxes online free 2012 Treatment of severance damages. File taxes online free 2012   Your net severance damages are treated as the amount realized from an involuntary conversion of the remaining part of your property. File taxes online free 2012 Use them to reduce the basis of the remaining property. File taxes online free 2012 If the amount of severance damages is based on damage to a specific part of the property you kept, reduce the basis of only that part by the net severance damages. File taxes online free 2012   If your net severance damages are more than the basis of your retained property, you have a gain. File taxes online free 2012 You may be able to postpone reporting the gain. File taxes online free 2012 See Postponement of Gain, later. File taxes online free 2012    You can use Part 1 of Table 1-3 to figure any gain from severance damages and to refigure the adjusted basis of the remaining part of your property. File taxes online free 2012 Net severance damages. File taxes online free 2012   To figure your net severance damages, you first must reduce your severance damages by your expenses in obtaining the damages. File taxes online free 2012 You then reduce them by any special assessment (described later) levied against the remaining part of the property and retained out of the award by the condemning authority. File taxes online free 2012 The balance is your net severance damages. File taxes online free 2012 Expenses of obtaining a condemnation award and severance damages. File taxes online free 2012   Subtract the expenses of obtaining a condemnation award, such as legal, engineering, and appraisal fees, from the total award. File taxes online free 2012 Also, subtract the expenses of obtaining severance damages, which may include similar expenses, from the severance damages paid to you. File taxes online free 2012 If you cannot determine which part of your expenses is for each part of the condemnation proceeds, you must make a proportionate allocation. File taxes online free 2012 Example. File taxes online free 2012 You receive a condemnation award and severance damages. File taxes online free 2012 One-fourth of the total was designated as severance damages in your agreement with the condemning authority. File taxes online free 2012 You had legal expenses for the entire condemnation proceeding. File taxes online free 2012 You cannot determine how much of your legal expenses is for each part of the condemnation proceeds. File taxes online free 2012 You must allocate one-fourth of your legal expenses to the severance damages and the other three-fourths to the condemnation award. File taxes online free 2012 Special assessment retained out of award. File taxes online free 2012   When only part of your property is condemned, a special assessment levied against the remaining property may be retained by the governing body out of your condemnation award. File taxes online free 2012 An assessment may be levied if the remaining part of your property benefited by the improvement resulting from the condemnation. File taxes online free 2012 Examples of improvements that may cause a special assessment are widening a street and installing a sewer. File taxes online free 2012   To figure your net condemnation award, you must reduce the amount of the award by the assessment retained out of the award. File taxes online free 2012 Example. File taxes online free 2012 To widen the street in front of your home, the city condemned a 25-foot deep strip of your land. File taxes online free 2012 You were awarded $5,000 for this and spent $300 to get the award. File taxes online free 2012 Before paying the award, the city levied a special assessment of $700 for the street improvement against your remaining property. File taxes online free 2012 The city then paid you only $4,300. File taxes online free 2012 Your net award is $4,000 ($5,000 total award minus $300 expenses in obtaining the award and $700 for the special assessment retained). File taxes online free 2012 If the $700 special assessment was not retained out of the award and you were paid $5,000, your net award would be $4,700 ($5,000 − $300). File taxes online free 2012 The net award would not change, even if you later paid the assessment from the amount you received. File taxes online free 2012 Severance damages received. File taxes online free 2012   If severance damages are included in the condemnation proceeds, the special assessment retained out of the severance damages is first used to reduce the severance damages. File taxes online free 2012 Any balance of the special assessment is used to reduce the condemnation award. File taxes online free 2012 Example. File taxes online free 2012 You were awarded $4,000 for the condemnation of your property and $1,000 for severance damages. File taxes online free 2012 You spent $300 to obtain the severance damages. File taxes online free 2012 A special assessment of $800 was retained out of the award. File taxes online free 2012 The $1,000 severance damages are reduced to zero by first subtracting the $300 expenses and then $700 of the special assessment. File taxes online free 2012 Your $4,000 condemnation award is reduced by the $100 balance of the special assessment, leaving a $3,900 net condemnation award. File taxes online free 2012 Part business or rental. File taxes online free 2012   If you used part of your condemned property as your home and part as business or rental property, treat each part as a separate property. File taxes online free 2012 Figure your gain or loss separately because gain or loss on each part may be treated differently. File taxes online free 2012   Some examples of this type of property are a building in which you live and operate a grocery, and a building in which you live on the first floor and rent out the second floor. File taxes online free 2012 Example. File taxes online free 2012 You sold your building for $24,000 under threat of condemnation to a public utility company that had the authority to condemn. File taxes online free 2012 You rented half the building and lived in the other half. File taxes online free 2012 You paid $25,000 for the building and spent an additional $1,000 for a new roof. File taxes online free 2012 You claimed allowable depreciation of $4,600 on the rental half. File taxes online free 2012 You spent $200 in legal expenses to obtain the condemnation award. File taxes online free 2012 Figure your gain or loss as follows. File taxes online free 2012     Resi- dential Part Busi- ness Part 1) Condemnation award received $12,000 $12,000 2) Minus: Legal expenses, $200 100 100 3) Net condemnation award $11,900 $11,900 4) Adjusted basis:       ½ of original cost, $25,000 $12,500 $12,500   Plus: ½ of cost of roof, $1,000 500 500   Total $13,000 $13,000 5) Minus: Depreciation   4,600 6) Adjusted basis, business part   $8,400 7) (Loss) on residential property ($1,100)   8) Gain on business property $3,500 The loss on the residential part of the property is not deductible. File taxes online free 2012 Postponement of Gain Do not report the gain on condemned property if you receive only property that is similar or related in service or use to the condemned property. File taxes online free 2012 Your basis for the new property is the same as your basis for the old. File taxes online free 2012 Money or unlike property received. File taxes online free 2012   You ordinarily must report the gain if you receive money or unlike property. File taxes online free 2012 You can elect to postpone reporting the gain if you buy property that is similar or related in service or use to the condemned property within the replacement period, discussed later. File taxes online free 2012 You also can elect to postpone reporting the gain if you buy a controlling interest (at least 80%) in a corporation owning property that is similar or related in service or use to the condemned property. File taxes online free 2012 See Controlling interest in a corporation, later. File taxes online free 2012   To postpone reporting all the gain, you must buy replacement property costing at least as much as the amount realized for the condemned property. File taxes online free 2012 If the cost of the replacement property is less than the amount realized, you must report the gain up to the unspent part of the amount realized. File taxes online free 2012   The basis of the replacement property is its cost, reduced by the postponed gain. File taxes online free 2012 Also, if your replacement property is stock in a corporation that owns property similar or related in service or use, the corporation generally will reduce its basis in its assets by the amount by which you reduce your basis in the stock. File taxes online free 2012 See Controlling interest in a corporation, later. File taxes online free 2012 You can use Part 3 of Table 1-3 to figure the gain you must report and your postponed gain. File taxes online free 2012 Postponing gain on severance damages. File taxes online free 2012   If you received severance damages for part of your property because another part was condemned and you buy replacement property, you can elect to postpone reporting gain. File taxes online free 2012 See Treatment of severance damages, earlier. File taxes online free 2012 You can postpone reporting all your gain if the replacement property costs at least as much as your net severance damages plus your net condemnation award (if resulting in gain). File taxes online free 2012   You also can make this election if you spend the severance damages, together with other money you received for the condemned property (if resulting in gain), to acquire nearby property that will allow you to continue your business. File taxes online free 2012 If suitable nearby property is not available and you are forced to sell the remaining property and relocate in order to continue your business, see Postponing gain on the sale of related property, next. File taxes online free 2012   If you restore the remaining property to its former usefulness, you can treat the cost of restoring it as the cost of replacement property. File taxes online free 2012 Postponing gain on the sale of related property. File taxes online free 2012   If you sell property that is related to the condemned property and then buy replacement property, you can elect to postpone reporting gain on the sale. File taxes online free 2012 You must meet the requirements explained earlier under Related property voluntarily sold. File taxes online free 2012 You can postpone reporting all your gain if the replacement property costs at least as much as the amount realized from the sale plus your net condemnation award (if resulting in gain) plus your net severance damages, if any (if resulting in gain). File taxes online free 2012 Buying replacement property from a related person. File taxes online free 2012   Certain taxpayers cannot postpone reporting gain from a condemnation if they buy the replacement property from a related person. File taxes online free 2012 For information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2. File taxes online free 2012   This rule applies to the following taxpayers. File taxes online free 2012 C corporations. File taxes online free 2012 Partnerships in which more than 50% of the capital or profits interest is owned by  C corporations. File taxes online free 2012 All others (including individuals, partnerships (other than those in (2)), and S corporations) if the total realized gain for the tax year on all involuntarily converted properties on which there is realized gain of more than $100,000. File taxes online free 2012   For taxpayers described in (3) above, gains cannot be offset with any losses when determining whether the total gain is more than $100,000. File taxes online free 2012 If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. File taxes online free 2012 If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. File taxes online free 2012 Exception. File taxes online free 2012   This rule does not apply if the related person acquired the property from an unrelated person within the replacement period. File taxes online free 2012 Advance payment. File taxes online free 2012   If you pay a contractor in advance to build your replacement property, you have not bought replacement property unless it is finished before the end of the replacement period (discussed later). File taxes online free 2012 Replacement property. File taxes online free 2012   To postpone reporting gain, you must buy replacement property for the specific purpose of replacing your condemned property. File taxes online free 2012 You do not have to use the actual funds from the condemnation award to acquire the replacement property. File taxes online free 2012 Property you acquire by gift or inheritance does not qualify as replacement property. File taxes online free 2012 Similar or related in service or use. File taxes online free 2012   Your replacement property must be similar or related in service or use to the property it replaces. File taxes online free 2012   If the condemned property is real property you held for productive use in your trade or business or for investment (other than property held mainly for sale), like-kind property to be held either for productive use in trade or business or for investment will be treated as property similar or related in service or use. File taxes online free 2012 For a discussion of like-kind property, see Like-Kind Property under Like-Kind Exchanges, later. File taxes online free 2012 Owner-user. File taxes online free 2012   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. File taxes online free 2012 Example. File taxes online free 2012 Your home was condemned and you invested the proceeds from the condemnation in a grocery store. File taxes online free 2012 Your replacement property is not similar or related in service or use to the condemned property. File taxes online free 2012 To be similar or related in service or use, your replacement property must also be used by you as your home. File taxes online free 2012 Owner-investor. File taxes online free 2012   If you are an owner-investor, similar or related in service or use means that any replacement property must have the same relationship of services or uses to you as the property it replaces. File taxes online free 2012 You decide this by determining all the following information. File taxes online free 2012 Whether the properties are of similar service to you. File taxes online free 2012 The nature of the business risks connected with the properties. File taxes online free 2012 What the properties demand of you in the way of management, service, and relations to your tenants. File taxes online free 2012 Example. File taxes online free 2012 You owned land and a building you rented to a manufacturing company. File taxes online free 2012 The building was condemned. File taxes online free 2012 During the replacement period, you had a new building built on other land you already owned. File taxes online free 2012 You rented out the new building for use as a wholesale grocery warehouse. File taxes online free 2012 The replacement property is also rental property, so the two properties are considered similar or related in service or use if there is a similarity in all the following areas. File taxes online free 2012 Your management activities. File taxes online free 2012 The amount and kind of services you provide to your tenants. File taxes online free 2012 The nature of your business risks connected with the properties. File taxes online free 2012 Leasehold replaced with fee simple property. File taxes online free 2012   Fee simple property you will use in your trade or business or for investment can qualify as replacement property that is similar or related in service or use to a condemned leasehold if you use it in the same business and for the identical purpose as the condemned leasehold. File taxes online free 2012   A fee simple property interest generally is a property interest that entitles the owner to the entire property with unconditional power to dispose of it during his or her lifetime. File taxes online free 2012 A leasehold is property held under a lease, usually for a term of years. File taxes online free 2012 Outdoor advertising display replaced with real property. File taxes online free 2012   You can elect to treat an outdoor advertising display as real property. File taxes online free 2012 If you make this election and you replace the display with real property in which you hold a different kind of interest, your replacement property can qualify as like-kind property. File taxes online free 2012 For example, real property bought to replace a destroyed billboard and leased property on which the billboard was located qualify as property of a like-kind. File taxes online free 2012   You can make this election only if you did not claim a section 179 deduction for the display. File taxes online free 2012 You cannot cancel this election unless you get the consent of the IRS. File taxes online free 2012   An outdoor advertising display is a sign or device rigidly assembled and permanently attached to the ground, a building, or any other permanent structure used to display a commercial or other advertisement to the public. File taxes online free 2012 Substituting replacement property. File taxes online free 2012   Once you designate certain property as replacement property on your tax return, you cannot substitute other qualified property. File taxes online free 2012 But, if your previously designated replacement property does not qualify, you can substitute qualified property if you acquire it within the replacement period. File taxes online free 2012 Controlling interest in a corporation. File taxes online free 2012   You can replace property by acquiring a controlling interest in a corporation that owns property similar or related in service or use to your condemned property. File taxes online free 2012 You have controlling interest if you own stock having at least 80% of the combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of all other classes of stock of the corporation. File taxes online free 2012 Basis adjustment to corporation's property. File taxes online free 2012   The basis of property held by the corporation at the time you acquired control must be reduced by your postponed gain, if any. File taxes online free 2012 You are not required to reduce the adjusted basis of the corporation's properties below your adjusted basis in the corporation's stock (determined after reduction by your postponed gain). File taxes online free 2012   Allocate this reduction to the following classes of property in the order shown below. File taxes online free 2012 Property that is similar or related in service or use to the condemned property. File taxes online free 2012 Depreciable property not reduced in (1). File taxes online free 2012 All other property. File taxes online free 2012 If two or more properties fall in the same class, allocate the reduction to each property in proportion to the adjusted basis of all the properties in that class. File taxes online free 2012 The reduced basis of any single property cannot be less than zero. File taxes online free 2012 Main home replaced. File taxes online free 2012   If your gain from a condemnation of your main home is more than you can exclude from your income (see Main home condemned under Gain or Loss From Condemnations, earlier), you can postpone reporting the rest of the gain by buying replacement property that is similar or related in service or use. File taxes online free 2012 The replacement property must cost at least as much as the amount realized from the condemnation minus the excluded gain. File taxes online free 2012   You must reduce the basis of your replacement property by the postponed gain. File taxes online free 2012 Also, if you postpone reporting any part of your gain under these rules, you are treated as having owned and used the replacement property as your main home for the period you owned and used the condemned property as your main home. File taxes online free 2012 Example. File taxes online free 2012 City authorities condemned your home that you had used as a personal residence for 5 years prior to the condemnation. File taxes online free 2012 The city paid you a condemnation award of $400,000. File taxes online free 2012 Your adjusted basis in the property was $80,000. File taxes online free 2012 You realize a gain of $320,000 ($400,000 − $80,000). File taxes online free 2012 You purchased a new home for $100,000. File taxes online free 2012 You can exclude $250,000 of the realized gain from your gross income. File taxes online free 2012 The amount realized is then treated as being $150,000 ($400,000 − $250,000) and the gain realized is $70,000 ($150,000 amount realized − $80,000 adjusted basis). File taxes online free 2012 You must recognize $50,000 of the gain ($150,000 amount realized − $100,000 cost of new home). File taxes online free 2012 The remaining $20,000 of realized gain is postponed. File taxes online free 2012 Your basis in the new home is $80,000 ($100,000 cost − $20,000 gain postponed). File taxes online free 2012 Replacement period. File taxes online free 2012   To postpone reporting your gain from a condemnation, you must buy replacement property within a certain period of time. File taxes online free 2012 This is the replacement period. File taxes online free 2012   The replacement period for a condemnation begins on the earlier of the following dates. File taxes online free 2012 The date on which you disposed of the condemned property. File taxes online free 2012 The date on which the threat of condemnation began. File taxes online free 2012   The replacement period generally ends 2 years after the end of the first tax year in which any part of the gain on the condemnation is realized. File taxes online free 2012 However, see the exceptions below. File taxes online free 2012 Three-year replacement period for certain property. File taxes online free 2012   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the end of the first tax year in which any part of the gain on the condemnation is realized. File taxes online free 2012 However, this 3-year replacement period cannot be used if you replace the condemned property by acquiring control of a corporation owning property that is similar or related in service or use. File taxes online free 2012 Five-year replacement period for certain property. File taxes online free 2012   The replacement period ends 5 years after the end of the first tax year in which any part of the gain is realized on the compulsory or involuntary conversion of the following qualified property. File taxes online free 2012 Property in any Midwestern disaster area compulsorily or involuntarily converted on or after the applicable disaster date as a result of severe storms, tornadoes, or flooding, but only if substantially all of the use of the replacement property is in a Midwestern disaster area. File taxes online free 2012 Property in the Kansas disaster area compulsorily or involuntarily converted after May 3, 2007, but only if substantially all of the use of the replacement property is in the Kansas disaster area. File taxes online free 2012 Property in the Hurricane Katrina disaster area compulsorily or involuntarily converted after August 24, 2005, as a result of Hurricane Katrina, but only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. File taxes online free 2012 Extended replacement period for taxpayers affected by other federally declared disasters. File taxes online free 2012    If you are affected by a federally declared disaster, the IRS may grant disaster relief by extending the periods to perform certain tax-related acts for 2013, including the replacement period, by up to one year. File taxes online free 2012 For more information visit www. File taxes online free 2012 irs. File taxes online free 2012 gov/uac/Tax-Relief-in-Disaster-Situations. File taxes online free 2012 Weather-related sales of livestock in an area eligible for federal assistance. File taxes online free 2012   Generally, if the sale or exchange of livestock is due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. File taxes online free 2012    If the weather-related conditions continue for longer than 3 years, the replacement period may be extended on a regional basis until the end of your first drought-free year for the applicable region. File taxes online free 2012 See Notice 2006-82. File taxes online free 2012 You can find Notice 2006-82 on page 529 of Internal Revenue Bulletin 2006-39 at www. File taxes online free 2012 irs. File taxes online free 2012 gov/irb/2006-39_IRB/ar13. File taxes online free 2012 html. File taxes online free 2012    Each year, the IRS publishes a list of counties, districts, cities, or parishes for which exceptional, extreme, or severe drought was reported during the preceding 12 months. File taxes online free 2012 If you qualified for a 4-year replacement period for livestock sold or exchanged on account of drought and your replacement period is scheduled to expire at the end of 2013 (or at the end of the tax year that includes August 31, 2013), see Notice 2013-62. File taxes online free 2012 You can find Notice 2013-62 on page 466 of Internal Revenue Bulletin 2013-45 at www. File taxes online free 2012 irs. File taxes online free 2012 gov/irb/2013-45_IRB/ar04. File taxes online free 2012 html. File taxes online free 2012 The replacement period will be extended under Notice 2006-82 if the applicable region is on the list included in Notice 2013-62. File taxes online free 2012 Determining when gain is realized. File taxes online free 2012   If you are a cash basis taxpayer, you realize gain when you receive payments that are more than your basis in the property. File taxes online free 2012 If the condemning authority makes deposits with the court, you realize gain when you withdraw (or have the right to withdraw) amounts that are more than your basis. File taxes online free 2012   This applies even if the amounts received are only partial or advance payments and the full award has not yet been determined. File taxes online free 2012 A replacement will be too late if you wait for a final determination that does not take place in the applicable replacement period after you first realize gain. File taxes online free 2012   For accrual basis taxpayers, gain (if any) accrues in the earlier year when either of the following occurs. File taxes online free 2012 All events have occurred that fix the right to the condemnation award and the amount can be determined with reasonable accuracy. File taxes online free 2012 All or part of the award is actually or constructively received. File taxes online free 2012 For example, if you have an absolute right to a part of a condemnation award when it is deposited with the court, the amount deposited accrues in the year the deposit is made even though the full amount of the award is still contested. File taxes online free 2012 Replacement property bought before the condemnation. File taxes online free 2012   If you buy your replacement property after there is a threat of condemnation but before the actual condemnation and you still hold the replacement property at the time of the condemnation, you have bought your replacement property within the replacement period. File taxes online free 2012 Property you acquire before there is a threat of condemnation does not qualify as replacement property acquired within the replacement period. File taxes online free 2012 Example. File taxes online free 2012 On April 3, 2012, city authorities notified you that your property would be condemned. File taxes online free 2012 On June 5, 2012, you acquired property to replace the property to be condemned. File taxes online free 2012 You still had the new property when the city took possession of your old property on September 4, 2013. File taxes online free 2012 You have made a replacement within the replacement period. File taxes online free 2012 Extension. File taxes online free 2012   You can request an extension of the replacement period from the IRS director for your area. File taxes online free 2012 You should apply before the end of the replacement period. File taxes online free 2012 Your request should explain in detail why you need an extension. File taxes online free 2012 The IRS will consider a request filed within a reasonable time after the replacement period if you can show reasonable cause for the delay. File taxes online free 2012 An extension of the replacement period will be granted if you can show reasonable cause for not making the replacement within the regular period. File taxes online free 2012   Ordinarily, requests for extensions are granted near the end of the replacement period or the extended replacement period. File taxes online free 2012 Extensions are usually limited to a period of 1 year or less. File taxes online free 2012 The high market value or scarcity of replacement property is not a sufficient reason for granting an extension. File taxes online free 2012 If your replacement property is being built and you clearly show that the replacement or restoration cannot be made within the replacement peri