File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Irs Gov Org

Military Tax ServiceWhere To File 2012 Taxes OnlineAmend Your Tax ReturnHow To File Amended ReturnInstructions Michigan 2012 Mi 1040xWhere Can I Get 2011 Tax FormsHow To Ammend 2010 Tax ReturnState EfileTax Filing Extension Deadline 2012File Taxes FreeHow Do I File Self Employment TaxesAmend Tax Return 2011H And R Block Free Tax FilingFree State Taxes1040x Amended Return InstructionsIrs Forms PublicationsH&r Block Free OnlineH & R Block Free Tax CalculatorIrs FreefileAmended Michigan Tax ReturnWww H&rblock Com1040nr Tax ReturnRevise Tax ReturnDownload State Tax FormsHrblock Free1040ezformsState Taxes Free OnlineTurbotax 1040x 2012Irs 10401040ez Free FileHow To File An Amended Return For 20121040 FormsHow Do You Amend A Tax ReturnH & R Block Free Tax FilingFree Federal Tax Forms 2011Free Tax EfileHow To Refile Your TaxesHow To File An Amendment To 2011 TaxesEfile For 2012 Tax Year1040ez 2010

Irs Gov Org

Irs gov org 31. Irs gov org   Impuesto sobre Ingresos No Derivados del Trabajo de Determinados Hijos Table of Contents ¿Que Hay de Nuevo? Introduction Useful Items - You may want to see: Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la MadrePadres que no Presentan la Declaración Conjunta Elección de los Padres de Declarar los Intereses y Dividendos del HijoConsecuencias de Incluir los Ingresos del Hijo Cómo Calcular los Ingresos del Hijo Cómo Calcular el Impuesto Adicional Impuesto para Determinados Hijos con Ingresos No Derivados del TrabajoCómo Facilitar Información sobre los Padres (líneas A-C del Formulario 8615) Paso 1. Irs gov org Cómo Calcular los Ingresos Netos No Derivados del Trabajo del Hijo (Parte I del Formulario 8615) Paso 2. Irs gov org Cómo Calcular el Impuesto Provisional a la Tasa Impositiva de los Padres (Parte II del Formulario 8615) Paso 3. Irs gov org Cómo Calcular el Impuesto del Hijo (Parte III del Formulario 8615) ¿Que Hay de Nuevo? Impuesto sobre el ingreso neto de inversiones. Irs gov org  Para años empezando después del 31 de diciembre de 2012, el impuesto de un hijo, el cual se calcula en el Formulario 8615, puede estar sujeto al impuesto sobre el ingreso neto de inversiones (NIIT, por sus siglas en inglés). Irs gov org El NIIT es un impuesto de 3. Irs gov org 8% sobre la cantidad menor entre el ingreso neto de inversión o el exceso del ingreso bruto ajustado modificado (MAGI) del hijo que exceda del límite superior específico. Irs gov org Utilice el Formulario 8960, Net Investment Income Tax (Impuesto sobre ingreso neto de inversiones), en inglés, para calcular este impuesto. Irs gov org Para más información sobre el NIIT, visite www. Irs gov org irs. Irs gov org gov e ingrese “Net Investment Income Tax” en la casilla de búsqueda “Search” (Buscar), en inglés. Irs gov org Introduction Este capítulo explica los dos requisitos siguientes, los cuales podrían afectar el impuesto sobre ingresos no derivados del trabajo de determinados hijos: Si los ingresos procedentes de intereses y dividendos del hijo (incluidas las distribuciones de ganancias de capital) totalizan menos de $10,000, el padre o la madre tal vez pueda optar por incluir dichos ingresos en la declaración de uno de los padres en vez de presentar una declaración a nombre del hijo. Irs gov org Vea Elección de los Padres de Declarar Intereses y Dividendos del Hijo , más adelante. Irs gov org Si el total de intereses, dividendos y otros ingresos no derivados del trabajo del hijo sobrepasa $2,000, una parte de dichos ingresos podría estar sujeta a la misma tasa de impuesto que la de sus padres en lugar de estar sujeta a la tasa del hijo. Irs gov org (Vea Impuesto para Determinados Hijos con Ingresos No Derivados del Trabajo , más adelante). Irs gov org En lo que concierne a estos requisitos, el término “hijo” abarca a hijos legalmente adoptados e hijastros. Irs gov org Estos requisitos corresponden tanto si el hijo es dependiente como si no lo es. Irs gov org Useful Items - You may want to see: Publicación 929 Tax Rules for Children and Dependents (Requisitos tributarios para hijos y dependientes), en inglés Formulario (e Instrucciones) 8615 Tax for Certain Children Who Have Unearned Income (Impuesto para determinados hijos con ingresos no derivados del trabajo), en inglés 8814 Parents' Election To Report Child's Interest and Dividends (Elección de los padres de declarar los intereses y dividendos del hijo), en inglés Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la Madre Si los padres del hijo están casados el uno con el otro y presentan una declaración conjunta, básese en la declaración conjunta para calcular el impuesto sobre los ingresos no derivados del trabajo de dicho hijo. Irs gov org La tasa impositiva y otra información de dicha declaración se utiliza para calcular el impuesto del hijo según se explica más adelante bajo Impuesto para Determinados Hijos con Ingresos No Derivados del Trabajo . Irs gov org Padres que no Presentan la Declaración Conjunta Para los padres que no presenten la declaración conjunta, los siguientes temas aclaran, cuál declaración de impuestos de los padres tiene que utilizar para calcular el impuesto. Irs gov org Sólo el padre o la madre cuya declaración se utilice puede elegir la opción descrita bajo Elección de los Padres de Declarar Intereses y Dividendos del Hijo . Irs gov org Padres casados. Irs gov org   Si los padres del hijo presentan declaraciones por separado, utilice la declaración de quien tenga el mayor ingreso tributable. Irs gov org Padres que no viven juntos. Irs gov org   Si los padres del hijo están casados el uno con el otro pero no viven juntos, y el padre o la madre con quien vive el hijo (el padre o la madre con custodia) se considera no casado, utilice la declaración del padre o de la madre con custodia. Irs gov org Si el padre o la madre con custodia no es considerado no casado, utilice la declaración de quien tenga el mayor ingreso tributable. Irs gov org   Para una explicación sobre cuándo una persona casada que vive aparte de su cónyuge es considerada no casada, vea Cabeza de Familia en el capítulo 2. Irs gov org Padres divorciados. Irs gov org   Si los padres del hijo están divorciados o legalmente separados y el padre o la madre que tuvo la custodia del hijo durante la mayor parte del año (el padre o la madre con custodia) no se ha vuelto a casar, utilice la declaración del padre o de la madre con custodia. Irs gov org Padre o madre con custodia que se ha vuelto a casar. Irs gov org   Si el padre o la madre con custodia ha vuelto a casarse, el padrastro o la madrastra (en vez del padre o la madre sin custodia) se considera el otro padre o la otra madre del hijo. Irs gov org Por lo tanto, si el padre o la madre con custodia y el padrastro o la madrastra presentan una declaración conjunta, utilice dicha declaración conjunta. Irs gov org No utilice la declaración del padre o de la madre sin custodia. Irs gov org   Si el padre o la madre con custodia está casado con el padrastro o la madrastra pero presentan declaraciones por separado, utilice la declaración de quien tenga el mayor ingreso tributable. Irs gov org Si el padre o la madre con custodia está casado con el padrastro o la madrastra pero no viven juntos, corresponde el tema anterior Padres que no viven juntos . Irs gov org Padres que nunca se han casado. Irs gov org   Si los padres del hijo nunca han estado casados el uno con el otro pero vivieron juntos durante todo el año, utilice la declaración de quien tenga el mayor ingreso tributable. Irs gov org Si los padres no vivieron juntos durante todo el año, corresponden los requisitos explicados anteriormente bajo Padres divorciados . Irs gov org Padre viudo o madre viuda que se vuelve a casar. Irs gov org   Si un viudo o una viuda vuelve a casarse, el nuevo cónyuge se considera el otro padre o la otra madre del hijo. Irs gov org En este caso, corresponden los requisitos explicados anteriormente bajo Padre o madre con custodia que se ha vuelto a casar . Irs gov org Elección de los Padres de Declarar los Intereses y Dividendos del Hijo Tal vez pueda optar por incluir los ingresos de su hijo procedentes de intereses y dividendos (incluidas las distribuciones de ganancias de capital) en la declaración de impuestos. Irs gov org En tal caso, su hijo no estará obligado a presentar una declaración. Irs gov org Puede elegir esta opción sólo si se cumplen todas las condiciones siguientes: Su hijo tenía menos de 19 años de edad (o tenía menos de 24 años si era estudiante a tiempo completo) al finalizar el año. Irs gov org Su hijo recibió ingresos sólo de intereses y dividendos (incluidas las distribuciones de ganancias de capital y dividendos del Alaska Permanent Fund (Fondo Permanente de Alaska)). Irs gov org Los ingresos brutos del hijo eran menos de $10,000. Irs gov org El hijo está obligado a presentar la declaración a no ser que usted elija incluir estos ingresos. Irs gov org El hijo no presenta una declaración conjunta correspondiente al año actual. Irs gov org No se efectuó ningún pago de impuestos estimados para el año ni se aplicó a este año ningún pago del año anterior (ni de una declaración enmendada) en exceso bajo el nombre y número de Seguro Social de su hijo. Irs gov org No se retuvo de los ingresos de su hijo ningún impuesto federal sobre los ingresos conforme a las reglas de la retención adicional. Irs gov org Usted es el padre o la madre cuya declaración se tiene que utilizar al aplicar los requisitos tributarios especiales para hijos. Irs gov org (Vea Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la Madre , anteriormente). Irs gov org Estas condiciones se hallan también en la Figura 31-A. Irs gov org Determinados cumpleaños el 1 de enero. Irs gov org   Un hijo que haya nacido el 1 de enero de 1995 se considerará de 19 años de edad al final del año 2013. Irs gov org Usted no puede optar por declarar los intereses y dividendos de tal hijo a menos que éste fuera estudiante a tiempo completo. Irs gov org   Aquel hijo que haya nacido el 1 de enero de 1990 se considerará de 24 años de edad al final del año 2013. Irs gov org Usted no puede optar por declarar los intereses y dividendos de tal hijo. Irs gov org Estudiante a tiempo completo. Irs gov org   Un estudiante a tiempo completo es un hijo matriculado como tal durante alguna parte de cada uno de 5 meses del año calendario en una escuela o que asistió a tiempo completo a un curso de capacitación agrícola ofrecido sobre el terreno por una escuela, agencia del estado, condado o gobierno local. Irs gov org El término “escuela” abarca escuelas politécnicas, profesionales e industriales. Irs gov org Una escuela no incluye un curso de capacitación en el trabajo, escuela por correspondencia, ni escuelas que ofrecen cursos sólo por Internet. Irs gov org Cómo optar por incluir los ingresos de su hijo. Irs gov org   Elija incluir los ingresos de su hijo adjuntando el Formulario 8814 al Formulario 1040. Irs gov org (Si opta por hacer esto, no puede presentar el Formulario 1040A ni el Formulario 1040EZ). Irs gov org Adjunte un Formulario 8814 distinto correspondiente a cada hijo cuyos ingresos desee incluir. Irs gov org Puede incluir los ingresos de uno o más hijos y no incluir los ingresos de otros. Irs gov org Consecuencias de Incluir los Ingresos del Hijo El impuesto federal sobre los ingresos de su hijo podría ser mayor si opta por usar el Formulario 8814. Irs gov org La tasa impositiva podría ser más alta. Irs gov org   Si su hijo recibió dividendos calificados o distribuciones de ganancias de capital, usted podría pagar hasta $100 adicionales de impuestos si incluye los ingresos de su hijo en vez de presentar una declaración de impuestos por separado a nombre del hijo. Irs gov org Esto se debe a que la tasa impositiva que corresponde a los ingresos de su hijo entre $1,000 y $2,000 es de 10% si usted opta por incluirlos. Irs gov org No obstante, si presenta una declaración por separado en nombre del hijo, la tasa impositiva podría bajar hasta 0% (porcentaje de cero) debido a las tasas impositivas preferentes para dividendos calificados y distribuciones de ganancias de capital. Irs gov org Deducciones que no puede tomar. Irs gov org   Al hacer la elección de incluir estos ingresos en el Formulario 8814, no puede tomar ninguna de las deducciones siguientes a la que el hijo tendría derecho en su propia declaración. Irs gov org La deducción estándar adicional si el hijo es ciego. Irs gov org La deducción por una multa por el retiro prematuro de los ahorros de su hijo. Irs gov org Deducciones detalladas (como gastos de inversiones de su hijo o donaciones caritativas). Irs gov org Deducciones o créditos reducidos. Irs gov org   Si utiliza el Formulario 8814, su ingreso bruto ajustado aumentado podría reducir determinados créditos o deducciones en la declaración, incluyendo lo siguiente: Deducciones por aportaciones a una cuenta de ahorros tradicional para la jubilación (IRA, por sus siglas en inglés). Irs gov org Deducciones por intereses sobre un préstamo de estudios. Irs gov org Deducciones detalladas por gastos médicos, pérdidas por hecho fortuito y robo y ciertos gastos misceláneos. Irs gov org Crédito por gastos del cuidado de hijos y dependientes. Irs gov org Crédito tributario por hijos. Irs gov org Créditos tributarios por estudios. Irs gov org Crédito por ingreso del trabajo. Irs gov org Figura 31-A. Irs gov org ¿Puede Incluir Usted en su Declaración de Impuestos los Ingresos de su Hijo? Please click here for the text description of the image. Irs gov org Figura 31–A. Irs gov org ¿Puede Incluir Usted en su Declaración de Impuestos los Ingresos de su Hijo? Multa por pago insuficiente del impuesto estimado. Irs gov org   Si elige incluir estos ingresos para 2013 y no se le retuvo impuesto suficiente o no pagó suficiente impuesto estimado para saldar los impuestos adeudados, podría estar sujeto a una multa. Irs gov org Si piensa elegir lo mismo para 2014, es posible que necesite aumentar la retención de impuestos federales sobre el ingreso o los pagos de impuesto estimado para evitar la multa. Irs gov org Vea el capítulo 4 para más información. Irs gov org Cómo Calcular los Ingresos del Hijo Utilice la Parte I del Formulario 8814 para calcular los ingresos de su hijo procedentes de intereses y dividendos declarados por usted. Irs gov org A sus ingresos sólo se le añade la cantidad que sea superior a $2,000. Irs gov org La cantidad superior a $2,000 se indica en la línea 6 del Formulario 8814. Irs gov org A menos que los ingresos del hijo abarquen dividendos calificados o distribuciones de ganancias de capital (explicadas a continuación), la misma cantidad se indica en la línea 12 del Formulario 8814. Irs gov org Incluya la cantidad de la línea 12 del Formulario 8814 en la línea 21 del Formulario 1040. Irs gov org Anote en inglés “Form 8814” en la línea de puntos al lado de la línea 21. Irs gov org Si presenta más de un Formulario 8814, incluya el total de los montos de la línea 12 de todos los Formularios 8814 en la línea 21 del Formulario 1040. Irs gov org Distribuciones de ganancias de capital y dividendos calificados. Irs gov org   Si se incluye alguna distribución de ganancias de capital en los ingresos de dividendos de su hijo, vea Capital gain distributions (Distribuciones de ganancias de capital) bajo Figuring Child's Income (Cómo calcular los ingresos del hijo) en la Parte 2 de la Publicación 929, en inglés. Irs gov org Si se incluye algún dividendo calificado en los ingresos de dividendos de su hijo, vea Qualified dividends (Dividendos calificados) bajo Figuring Child's Income (Cómo calcular los ingresos del hijo) en la Parte 2 de la Publicación 929, en inglés. Irs gov org Cómo Calcular el Impuesto Adicional Utilice la Parte II del Formulario 8814 para calcular el impuesto sobre los $2,000 de los intereses y dividendos de su hijo que no incluya usted en sus ingresos. Irs gov org Este impuesto se suma al impuesto calculado sobre los ingresos suyos. Irs gov org Dicho impuesto adicional es la cantidad que sea menor entre: El 10% (multiplicado por la cantidad de los ingresos brutos de su hijo menos $1,000) o $100. Irs gov org Incluya el monto de la línea 15 de todos los Formularios 8814 en el total de la línea 44 del Formulario 1040. Irs gov org Marque el recuadro a de la línea 44 del Formulario 1040. Irs gov org Figura 31-B. Irs gov org ¿Tiene que Utilizar el Formulario 8615 para Calcular los Impuestos de su Hijo? Please click here for the text description of the image. Irs gov org Figura 31-B. Irs gov org ¿Tiene que Utilizar el Formulario 8615 para Calcular los Impuestos de su Hijo? Impuesto para Determinados Hijos con Ingresos No Derivados del Trabajo Si el total de intereses, dividendos y otros ingresos no derivados del trabajo de un hijo sobrepasa $2,000, una parte de dichos ingresos podría estar sujeta a la misma tasa impositiva que la de sus padres en lugar de estar sujeta a la tasa del hijo. Irs gov org Si el padre o la madre no elige, o no puede elegir, incluir los ingresos del hijo en su declaración, utilice el Formulario 8615 para calcular los impuestos del hijo. Irs gov org Adjunte el formulario completado al Formulario 1040 o al Formulario 1040A del hijo. Irs gov org Cuándo se tiene que presentar el Formulario 8615. Irs gov org   El Formulario 8615 tiene que presentarse para un hijo si se dan todas las siguientes condiciones: Los ingresos del hijo no derivados del trabajo eran superiores a $2,000. Irs gov org El hijo está obligado a presentar una declaración para 2013. Irs gov org Dicho hijo: Era menor de 18 años de edad al final del año, Tenía 18 años a finales del año y su ingreso del trabajo no constituía más de la mitad de su manutención o Era estudiante a tiempo completo mayor de 18 años y menor de 24 años al finalizar el año y su ingreso del trabajo no constituía más de la mitad de la manutención suya. Irs gov org Por lo menos uno de los padres del hijo estaba vivo al finalizar el año 2013. Irs gov org El hijo no presenta una declaración conjunta para 2013. Irs gov org Estas condiciones se hallan también en la Figura 31-B. Irs gov org Ingreso del trabajo. Irs gov org   El ingreso del trabajo incluye sueldos, salarios, propinas y otras remuneraciones recibidas por servicios personales que usted prestó. Irs gov org No incluye los ingresos no derivados del trabajo según se define más adelante en este capítulo. Irs gov org Manutención. Irs gov org   La manutención de su hijo incluye todas las cantidades gastadas para proveerle alimentos, alojamiento, ropa, educación, cuidado médico y dental, recreación, transporte y necesidades similares. Irs gov org Al calcular la manutención de su hijo, incluya aquélla proporcionada por usted, su hijo y otras personas. Irs gov org Sin embargo, no se considera como manutención una beca que su hijo haya recibido si éste es estudiante a tiempo completo. Irs gov org Vea el capítulo 3 para más detalles acerca de la manutención. Irs gov org Determinados cumpleaños el 1 de enero. Irs gov org   Utilice la siguiente tabla para saber si determinados hijos con cumpleaños en el 1 de enero cumplen la condición 3 bajo Cuándo se tiene que presentar el Formulario 8615. Irs gov org    SI un hijo nació. Irs gov org . Irs gov org . Irs gov org ENTONCES, al finalizar 2013, se considera que el hijo tiene. Irs gov org . Irs gov org . Irs gov org el 1 de enero de 1996 18 años* el 1 de enero de 1995 19 años** el 1 de enero de 1990 24 años*** *Este hijo no es menor de 18 años. Irs gov org El hijo cumple la condición 3 sólo si éste no tuvo ingresos derivados del trabajo superiores a más de la mitad de la manutención suya. Irs gov org  **El hijo cumple la condición 3 sólo si éste era estudiante a tiempo completo y no tuvo ingresos derivados del trabajo superiores a más de la mitad de la manutención suya. Irs gov org  ***No utilice el Formulario 8615 para este hijo. Irs gov org Cómo Facilitar Información sobre los Padres (líneas A-C del Formulario 8615) En las líneas A y B del Formulario 8615, escriba el nombre y número de Seguro Social de los padres. Irs gov org (Si los padres presentaron una declaración conjunta, escriba el nombre y número de Seguro Social que aparezca primero en la declaración conjunta). Irs gov org En la línea C, marque el recuadro correspondiente al estado civil para efectos de la declaración del padre o de la madre. Irs gov org Vea Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la Madre al principio de este capítulo para información sobre qué información de la declaración de los padres tiene que utilizar para llenar el Formulario 8615. Irs gov org Padre o madre con año tributario distinto. Irs gov org   Si el padre o la madre y el hijo no tienen el mismo año tributario, complete el Formulario 8615 utilizando la información de la declaración del padre o de la madre para el año tributario que finalice durante el año tributario del hijo. Irs gov org Si no se obtiene a tiempo la información de la declaración del padre o de la madre. Irs gov org   Si la información necesaria de la declaración de los padres no se obtiene para la fecha de vencimiento del plazo de entrega de la declaración del hijo (normalmente el 15 de abril), puede utilizar cálculos aproximados para presentar la declaración. Irs gov org   Puede utilizar cualquier cálculo aproximado razonable. Irs gov org Dicho cálculo puede derivarse de información de la declaración del año anterior. Irs gov org Si utiliza un cálculo aproximado en el Formulario 8615, anote en inglés, “Estimated” (Aproximado) en la línea junto a dicha cantidad. Irs gov org    Cuando obtenga la información correcta, presente una declaración enmendada utilizando el Formulario 1040X, Amended U. Irs gov org S. Irs gov org Individual Income Tax Return (Declaración enmendada de impuestos sobre el ingreso personal de los Estados Unidos), en inglés. Irs gov org   En vez de utilizar cálculos aproximados, quizás pueda conseguir una prórroga automática de 6 meses para presentar la declaración de impuestos si para la fecha de vencimiento del plazo de entrega de la misma, presenta el Formulario 4868(SP), Solicitud de Prórroga Automática para Presentar la Declaración del Impuesto sobre el Ingreso Personal de los Estados Unidos (o el Formulario 4868, en inglés). Irs gov org Las prórrogas se explican en el capítulo 1 . Irs gov org Paso 1. Irs gov org Cómo Calcular los Ingresos Netos No Derivados del Trabajo del Hijo (Parte I del Formulario 8615) Al calcular el impuesto de un hijo utilizando el Formulario 8615, el primer paso es calcular los ingresos netos no derivados del trabajo del hijo. Irs gov org Para hacerlo, utilice la Parte I del Formulario 8615. Irs gov org Línea 1 (ingresos no derivados del trabajo). Irs gov org   Si el hijo no recibió ingresos del trabajo, anote en esta línea los ingresos brutos ajustados indicados en la declaración del hijo. Irs gov org Los ingresos brutos ajustados aparecen en la línea 38 del Formulario 1040 o en la línea 22 del Formulario 1040A. Irs gov org No se puede utilizar el Formulario 1040EZ si se tiene que presentar el Formulario 8615. Irs gov org   Si el hijo sí recibió ingresos del trabajo, calcule la cantidad a anotar en la línea 1 del Formulario 8615 utilizando la hoja de trabajo de las instrucciones del formulario. Irs gov org   No obstante, si el hijo: ha excluido de la declaración algunos ingresos ganados en el extranjero, ha deducido alguna pérdida del trabajo por cuenta propia o ha deducido alguna pérdida neta de operación de otro año, utilice la Alternate Worksheet (Hoja de trabajo alternativa) para la línea 1 del Formulario 8615 que se encuentra en la Publicación 929, en inglés, para calcular la cantidad a anotar en la línea 1 del Formulario 8615. Irs gov org Definición de los ingresos no derivados del trabajo. Irs gov org   Los ingresos no derivados del trabajo generalmente son todos los ingresos que no sean sueldos, salarios ni otras cantidades recibidas como pago por trabajo que de hecho se haya realizado. Irs gov org Dichos ingresos abarcan los intereses tributables, dividendos (inclusive las distribuciones de ganancias de capital), ganancias de capital, compensación por desempleo, la parte sujeta a impuestos de pagos del Seguro Social y pensiones y determinadas distribuciones de fideicomisos. Irs gov org Además, los ingresos no derivados del trabajo abarcan cantidades derivadas de bienes que el hijo haya adquirido con ingresos del trabajo (como intereses sobre una cuenta de ahorros en la que el hijo haya depositado sueldos). Irs gov org Ingresos no sujetos a impuestos. Irs gov org   Para este fin, los ingresos no derivados del trabajo sólo abarcan cantidades que su hijo tenga que incluir en el total de ingresos. Irs gov org No se incluyen los ingresos no tributables no derivados del trabajo, tales como los intereses exentos de impuestos y la parte no tributable de pagos del Seguro Social y pensiones. Irs gov org Ingresos procedentes de bienes recibidos como regalo. Irs gov org   Los ingresos no derivados del trabajo de un hijo abarcan todo ingreso generado por bienes que pertenezcan al hijo. Irs gov org Esto es así aun si se le traspasaron los bienes al hijo, independientemente de cuándo se traspasaron o se compraron dichos bienes ni quién los traspasó. Irs gov org   Los ingresos no derivados del trabajo de un hijo incluyen ingresos generados por bienes dados al hijo como regalo. Irs gov org Esto incluye regalos dados al hijo por los abuelos o cualquier otra persona y regalos dados conforme a la Uniform Gift to Minors Act (Ley de Uniformidad Respecto a Regalos a Menores). Irs gov org Ejemplo. Irs gov org Amanda Naranjo, de 13 años de edad, recibió los siguientes ingresos: Dividendos — $800 Salarios — $2,100 Intereses tributables — $1,200 Intereses exentos de impuestos — $100 Ganancias netas de capital — $100 Los dividendos eran dividendos calificados sobre acciones que le habían regalado sus abuelos. Irs gov org Los ingresos no derivados del trabajo de Amanda son $2,100. Irs gov org Éste es el total de dividendos ($800), intereses tributables ($1,200) y ganancias netas de capital ($100). Irs gov org Su salario se considera ingreso del trabajo, y no de ingreso no derivado del trabajo porque se le paga por un trabajo que de hecho se ha realizado. Irs gov org No se incluyen los intereses exentos de impuestos porque éstos no están sujetos a impuestos. Irs gov org Ingresos provenientes de fideicomisos. Irs gov org   Si el hijo es beneficiario de un fideicomiso, las distribuciones de intereses, dividendos, ganancias de capital y otros ingresos no derivados del trabajo tributables procedentes de dicho fideicomiso se consideran ingresos no derivados del trabajo del hijo. Irs gov org   No obstante, para llenar el Formulario 8615, una distribución tributable de un fideicomiso calificado establecido para casos de incapacidad no se considera ingresos no derivados del trabajo sino ingresos del trabajo. Irs gov org Línea 2 (deducciones). Irs gov org   Si el hijo no detalla las deducciones en el Anexo A del Formulario 1040, anote $2,000 en la línea 2. Irs gov org   Si el hijo sí detalla las deducciones, anote en la línea 2 la cantidad mayor entre: $1,000 más la parte de las deducciones detalladas del hijo de la línea 29 del Anexo A del Formulario 1040 que esté directamente relacionada con la generación de ingresos no derivados del trabajo anotados en la línea 1 o $2,000. Irs gov org Relación directa entre las deducciones y la generación de ingresos no derivados del trabajo. Irs gov org   Se considera que las deducciones detalladas están directamente relacionadas con la generación de ingresos no derivados del trabajo si las mismas corresponden a gastos pagados para generar o cobrar ingresos sujetos a impuestos o para administrar, conservar o mantener bienes cuyo fin es generar ingresos. Irs gov org Esos gastos abarcan cargos por custodia y servicios, cargos por servicios de cobro de intereses y dividendos tributables y determinados cargos por asesoramiento sobre inversiones. Irs gov org   Estos gastos se suman a otras deducciones detalladas misceláneas en el Anexo A (Formulario 1040). Irs gov org Sólo se puede deducir la cantidad que sea superior al 2% de los ingresos brutos ajustados del hijo. Irs gov org Vea el capítulo 28 para más información. Irs gov org Ejemplo 1. Irs gov org Roberto, de 12 años de edad, tiene ingresos no derivados del trabajo de $8,000, sin otros ingresos ni ajustes a los ingresos. Irs gov org Tiene deducciones detalladas de $300 (netas del límite del 2%) que están directamente relacionadas con sus ingresos no derivados del trabajo. Irs gov org Tiene ingresos brutos ajustados de $8,000 que se anotan en la línea 38 del Formulario 1040 y en la línea 1 del Formulario 8615. Irs gov org En la línea 2 se anotan $2,000 porque dicha cantidad supera la suma de $1,000 más las deducciones detalladas de $300 directamente relacionadas con la generación de ingresos de inversiones. Irs gov org Ejemplo 2. Irs gov org Elena, de 8 años de edad, tiene ingresos no derivados del trabajo de $16,000 y tiene una multa de $100 por retiro prematuro. Irs gov org No tiene otros ingresos. Irs gov org Tiene deducciones detalladas de $1,050 (netas del límite del 2%) que están directamente relacionadas con la generación de sus ingresos no derivados del trabajo. Irs gov org Sus ingresos brutos ajustados, anotados en la línea 1, son $15,900 ($16,000 − $100). Irs gov org La cantidad de la línea 2 es $2,050. Irs gov org Ésta es la cantidad mayor de: $1,000 más los $1,050 de deducciones detalladas directamente relacionadas con la generación de ingresos de inversiones o $2,000. Irs gov org Línea 3. Irs gov org   De la línea 1 reste la línea 2 y anote el resultado en esta línea. Irs gov org Si es cero o menos, no llene el resto del formulario. Irs gov org No obstante, tiene que adjuntar el Formulario 8615 a la declaración del hijo. Irs gov org Calcule el impuesto sobre los ingresos tributables del hijo de manera normal. Irs gov org Línea 4 (ingresos tributables del hijo). Irs gov org   Anote en la línea 4 los ingresos tributables del hijo provenientes de la línea 43 del Formulario 1040 o de la línea 27 del Formulario 1040A. Irs gov org   Sin embargo, si el hijo presenta el Formulario 2555 o el Formulario 2555-EZ para declarar la exclusión de ingresos ganados en el extranjero, la exclusión por concepto de vivienda o la deducción por concepto de vivienda, vea las Instrucciones del Formulario 8615 o la Publicación 929, ambas en inglés. Irs gov org Línea 5 (ingresos netos no derivados del trabajo). Irs gov org   Los ingresos netos no derivados del trabajo del hijo no pueden sobrepasar sus ingresos tributables. Irs gov org Anote en la línea 5 del Formulario 8615 la cantidad de la línea 3 o la línea 4, la que sea menor. Irs gov org Esta cantidad corresponde a los ingresos netos no derivados del trabajo del hijo. Irs gov org   Si es cero o menos, no llene el resto del formulario. Irs gov org No obstante, tiene que adjuntar el Formulario 8615 a la declaración del hijo. Irs gov org Calcule el impuesto sobre los ingresos tributables del hijo de manera normal. Irs gov org Paso 2. Irs gov org Cómo Calcular el Impuesto Provisional a la Tasa Impositiva de los Padres (Parte II del Formulario 8615) El siguiente paso al llenar el Formulario 8615 es calcular un impuesto provisional sobre los ingresos netos no derivados del trabajo del hijo utilizando la tasa impositiva del padre o de la madre. Irs gov org El impuesto provisional a la tasa impositiva del padre o de la madre es la diferencia entre el impuesto sobre los ingresos tributables del padre o de la madre calculados con los ingresos netos no derivados del trabajo del hijo (más los ingresos netos no derivados del trabajo de cualquier otro hijo cuyo Formulario 8615 incluya la información de la declaración de impuestos del padre o de la madre) y el impuesto calculado sin dichos ingresos. Irs gov org Al calcular el impuesto provisional a la tasa impositiva del padre o de la madre en el Formulario 8615, no vuelva a calcular las exclusiones, deducciones ni créditos en la declaración del padre o de la madre debido a los ingresos netos no derivados del trabajo del hijo. Irs gov org Por ejemplo, no vuelva a calcular la deducción por gastos médicos. Irs gov org Calcule el impuesto provisional en las líneas 6 a 13 del Formulario 8615. Irs gov org Nota: Si el hijo o el padre o la madre tiene pérdidas o ganancias de capital, obtenga la Publicación 929, en inglés, para información que le será de ayuda al completar la Parte II del Formulario 8615. Irs gov org Línea 6 (ingresos tributables del padre o de la madre). Irs gov org   Anote en la línea 6 los ingresos tributables del padre o de la madre provenientes de la línea 43 del Formulario 1040, de la línea 27 del Formulario 1040A o la línea 6 del Formulario 1040EZ. Irs gov org   Si utilizó la Foreign Earned Income Tax Worksheet (Hoja de trabajo para el impuesto sobre los ingresos del trabajo en el extranjero) de las instrucciones del Formulario 1040 para calcular el impuesto correspondiente al padre o a la madre, anote la cantidad de la línea 3 de dicha hoja de trabajo en vez de los ingresos tributables del padre o de la madre. Irs gov org Línea 7 (ingresos netos no derivados del trabajo de otros hijos). Irs gov org   Si la información de la declaración del padre o de la madre se utiliza también en el Formulario 8615 de otro hijo, anote en la línea 7 el total de las cantidades de la línea 5 de los Formularios 8615 de todos los demás hijos. Irs gov org No incluya la cantidad de la línea 5 del Formulario 8615 que esté llenando. Irs gov org Ejemplo. Irs gov org Pablo y Juana del Pozo tienen tres hijos, Sandra, Geraldo y Miguel, quienes tienen que adjuntar el Formulario 8615 a sus declaraciones de impuestos respectivas. Irs gov org Los ingresos netos no derivados del trabajo de los hijos en la línea 5 de sus Formularios 8615 son: Sandra — $800 Geraldo — $600 Miguel — $1,000 La línea 7 del Formulario 8615 de Sandra indicará $1,600, o sea, el total de las cantidades anotadas en la línea 5 de los Formularios 8615 de Geraldo y Miguel. Irs gov org La línea 7 del Formulario 8615 de Geraldo indicará $1,800 ($800 + $1,000). Irs gov org La línea 7 del Formulario 8615 de Miguel indicará $1,400 ($800 + $600). Irs gov org Si no está disponible la información de los otros hijos. Irs gov org   Si no está disponible la cantidad de los ingresos netos no derivados del trabajo de los otros hijos antes de que venza el plazo para presentar la declaración, preséntela anotando cálculos aproximados o solicite una prórroga del plazo para presentarla. Irs gov org Vea Si no se obtiene a tiempo la información de la declaración del padre o de la madre , anteriormente. Irs gov org Línea 11 (impuesto provisional). Irs gov org   Reste la línea 10 de la línea 9 y anote el resultado en esta línea. Irs gov org Éste es el impuesto provisional. Irs gov org   Si la línea 7 está en blanco, ignore las líneas 12a y 12b y anote en la línea 13 la cantidad proveniente de la línea 11. Irs gov org Ignore asimismo el tema siguiente que trata de las líneas 12a y 12b. Irs gov org Líneas 12a y 12b (dividiendo el impuesto provisional). Irs gov org   Si anota alguna cantidad en la línea 7 (fuera de cero), divida el impuesto provisional indicado en la línea 11 entre los hijos según la participación de cada hijo en el total de los ingresos netos no derivados del trabajo. Irs gov org Esto se hace en las líneas 12a, 12b y 13. Irs gov org Sume la cantidad de la línea 7 a la de la línea 5 y anote el total en la línea 12a. Irs gov org Divida la cantidad de la línea 5 entre la de la línea 12a y anote el resultado, como número decimal, en la línea 12b. Irs gov org Ejemplo. Irs gov org En el ejemplo anterior bajo Línea 7 (ingresos netos no derivados del trabajo de otros hijos), el Formulario 8615 de Sandra indica $1,600 en la línea 7. Irs gov org La cantidad anotada en la línea 12a es $2,400, o sea, el total de las cantidades provenientes de las líneas 5 y 7 ($800 + $1,600). Irs gov org El número decimal en la línea 12b es . Irs gov org 333, calculado de la siguienta manera y redondeado hasta tres decimales:   $800 = . Irs gov org 333     $2,400   Paso 3. Irs gov org Cómo Calcular el Impuesto del Hijo (Parte III del Formulario 8615) El último paso para calcular el impuesto de su hijo utilizando el Formulario 8615 es determinar la cantidad mayor entre: El total de: La parte del impuesto provisional correspondiente al hijo basado en la tasa impositiva del padre o de la madre, más El impuesto sobre los ingresos tributables del hijo que sean superiores a los ingresos netos no derivados del trabajo, calculado a la tasa impositiva del hijo o El impuesto sobre los ingresos tributables del hijo calculado a la tasa impositiva del hijo. Irs gov org Éste es el impuesto del hijo. Irs gov org Se calcula en las líneas 14 a 18 del Formulario 8615. Irs gov org Impuesto mínimo alternativo. Irs gov org   Un hijo puede estar sujeto al impuesto mínimo alternativo (AMT, por sus siglas en inglés) si cuenta con determinados elementos que reciben un trato preferente conforme a la ley tributaria. Irs gov org Vea el tema titulado Impuesto Mínimo Alternativo (AMT) , en el capítulo 30. Irs gov org    Para información adicional acerca de quién tiene que pagar el AMT y cómo calcularlo, vea el Formulario 6251, Alternative Minimum Tax—Individuals (Impuesto mínimo alternativo—individuos), en inglés. Irs gov org Para información sobre límites especiales aplicables a un hijo que presente el Formulario 6251, vea Certain Children Under Age 24 (Determinados hijos menores de 24 años de edad), en las Instrucciones para el Formulario 6251, en inglés. Irs gov org Prev  Up  Next   Home   More Online Publications
Español

Know Your Options

Airline delays caused by bad weather, traffic control problems, and mechanical repairs are hard to predict. If your flight is canceled, most airlines will rebook you on the earliest flight possible to your destination, at no additional charge. If you're able to find a flight on another airline, ask the first airline to endorse your ticket to the new carrier. This could save you a fare increase, but there is no rule requiring them to do this.

Each airline has its own policies about what it will do for delayed passengers; there are no federal requirements. If your flight is delayed or canceled, ask the airline if it will pay for meals or a phone call. Contrary to what many people believe, airlines are not required to do so.

Tarmac Delays

Under new federal rules, U.S. airlines operating domestic flights must allow passengers to deplane after a tarmac delay of three hours. The only exceptions allowed are for safety or security, or if air traffic control advises the pilot otherwise. Carriers are also required to provided adequate food and drinking water within two hours of being delayed on the tarmac; they must also maintain operable lavatories and, if necessary, provide medical attention.
There are other protections as well, such as prohibiting airlines from scheduling chronically delayed flights. For more information, search for Airline Passenger Protections on the Department of Transportation's website.

Overbooked Flights

Selling more tickets than there are seats is not illegal. Most airlines overbook their flights to compensate for "no-shows." If there are more passengers than seats just before a plane is scheduled to depart, you could be "bumped" or left behind against your will. Whether you are bumped or not may depend on when you officially check-in for your flight, so try to arrive early. The U.S. Department of Transportation requires airlines to ask people to give up their seats voluntarily, in exchange for compensation. Airlines decide what to offer volunteers, such as money, a free trip, food or lodging.

Federal rules protect you if you are "bumped" on most flights within the United States and on outbound international flights. Passengers who are involuntarily bumped are protected under Federal Aviation Administration guidelines. If you volunteer to be bumped, your agreement with the airline that is not regulated and will depend on negotiating at the gate.
The airline must give you a written statement describing your rights, as well as the airline's boarding priority rules and criteria. If the airline is not able to get you to your final destination within one hour of your original arrival time, the airline must pay you an amount equal to 200% of your one-way fare, with a maximum of $650. To receive this payment, you must have a confirmed reservation. You must also meet the airline's deadlines for ticketing and check-in. An airline may offer you a free ticket on a future flight in place of a check, but you have the right to insist on a check.

The Irs Gov Org

Irs gov org 3. Irs gov org   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. Irs gov org Form 4797. Irs gov org Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. Irs gov org Granting the right to remove deposits. Irs gov org Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. Irs gov org You must report the income from all the different sources on your tax return, unless it is excluded by law. Irs gov org Where you report the income on your tax return depends on its source. Irs gov org This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. Irs gov org For information on where to report other income, see the Instructions for Form 1040, U. Irs gov org S. Irs gov org Individual Income Tax Return. Irs gov org Accounting method. Irs gov org   The rules discussed in this chapter assume you use the cash method of accounting. Irs gov org Under the cash method, you generally include an item of income in gross income in the year you receive it. Irs gov org See Cash Method in chapter 2. Irs gov org   If you use an accrual method of accounting, different rules may apply to your situation. Irs gov org See Accrual Method in chapter 2. Irs gov org Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. Irs gov org Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. Irs gov org Use this schedule to figure the net profit or loss from regular farming operations. Irs gov org Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. Irs gov org This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. Irs gov org It also includes income from the sale of crop shares if you materially participate in producing the crop. Irs gov org See Rents (Including Crop Shares) , later. Irs gov org Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. Irs gov org Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. Irs gov org Land. Irs gov org Depreciable farm equipment. Irs gov org Buildings and structures. Irs gov org Livestock held for draft, breeding, sport, or dairy purposes. Irs gov org Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. Irs gov org Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. Irs gov org Sales of Farm Products Where to report. Irs gov org    Table 3-1 shows where to report the sale of farm products on your tax return. Irs gov org Schedule F. Irs gov org   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. Irs gov org This includes money and the fair market value of any property or services you receive. Irs gov org When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). Irs gov org See chapter 6 for information on the basis of assets. Irs gov org You generally report these amounts on Schedule F for the year you receive payment. Irs gov org Example. Irs gov org In 2012, you bought 20 feeder calves for $11,000 for resale. Irs gov org You sold them in 2013 for $21,000. Irs gov org You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. Irs gov org Form 4797. Irs gov org   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. Irs gov org In either case, you should always report these sales on Form 4797 instead of Schedule F. Irs gov org See Livestock under Ordinary or Capital Gain or Loss in chapter 8. Irs gov org Animals you do not hold primarily for sale are considered business assets of your farm. Irs gov org Table 3-1. Irs gov org Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. Irs gov org   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. Irs gov org This applies even if your agent pays you in a later year. Irs gov org For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. Irs gov org Sales Caused by Weather-Related Conditions If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. Irs gov org You must meet all the following conditions to qualify. Irs gov org Your principal trade or business is farming. Irs gov org You use the cash method of accounting. Irs gov org You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. Irs gov org The weather-related condition caused an area to be designated as eligible for assistance by the federal government. Irs gov org Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. Irs gov org The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. Irs gov org A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. Irs gov org See Other Involuntary Conversions in chapter 11. Irs gov org Usual business practice. Irs gov org   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. Irs gov org Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. Irs gov org If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. Irs gov org Connection with affected area. Irs gov org   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. Irs gov org However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. Irs gov org This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. Irs gov org Classes of livestock. Irs gov org   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. Irs gov org Do not separate animals into classes based on age, sex, or breed. Irs gov org Amount to be postponed. Irs gov org   Follow these steps to figure the amount of gain to be postponed for each class of animals. Irs gov org Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. Irs gov org For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. Irs gov org Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. Irs gov org Example. Irs gov org You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. Irs gov org As a result of drought, you sold 135 head during 2012. Irs gov org You realized $70,200 from the sale. Irs gov org On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. Irs gov org The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. Irs gov org How to postpone gain. Irs gov org   To postpone gain, attach a statement to your tax return for the year of the sale. Irs gov org The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. Irs gov org A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). Irs gov org Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. Irs gov org A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. Irs gov org The number of animals sold in each of the 3 preceding years. Irs gov org The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. Irs gov org The total number of animals sold and the number sold because of weather-related conditions during the tax year. Irs gov org A computation, as described above, of the income to be postponed for each class of livestock. Irs gov org   Generally, you must file the statement and the return by the due date of the return, including extensions. Irs gov org However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. Irs gov org For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). Irs gov org Attach the statement to the amended return and write “Filed pursuant to section 301. Irs gov org 9100-2” at the top of the amended return. Irs gov org File the amended return at the same address you filed the original return. Irs gov org Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. Irs gov org Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. Irs gov org However, if you materially participate in farming operations on the land, the rent is farm income. Irs gov org See Landlord Participation in Farming in chapter 12. Irs gov org Pasture income and rental. Irs gov org   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. Irs gov org You must enter it as Other income on Schedule F. Irs gov org If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. Irs gov org Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. Irs gov org It does not matter whether you use the cash method of accounting or an accrual method of accounting. Irs gov org If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. Irs gov org See Landlord Participation in Farming in chapter 12. Irs gov org Report the rental income on Schedule F. Irs gov org If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). Irs gov org The income is not included in self-employment income. Irs gov org Crop shares you use to feed livestock. Irs gov org   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. Irs gov org You must include the fair market value of the crop shares in income at that time. Irs gov org You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. Irs gov org Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. Irs gov org See  chapter 12. Irs gov org Crop shares you give to others (gift). Irs gov org   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. Irs gov org You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. Irs gov org Example. Irs gov org A tenant farmed part of your land under a crop-share arrangement. Irs gov org The tenant harvested and delivered the crop in your name to an elevator company. Irs gov org Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. Irs gov org They sell their crop shares in the following year and the elevator company makes payments directly to your children. Irs gov org In this situation, you are considered to have received rental income and then made a gift of that income. Irs gov org You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. Irs gov org Crop share loss. Irs gov org   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. Irs gov org See Publication 925 for information on these rules. Irs gov org Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. Irs gov org However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. Irs gov org See Cost-Sharing Exclusion (Improvements) , later. Irs gov org Report the agricultural program payment on the appropriate line of Schedule F, Part I. Irs gov org Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. Irs gov org However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. Irs gov org Claim the deduction on Schedule F for the year of repayment or reduction. Irs gov org Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. Irs gov org However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. Irs gov org You do not need approval from the IRS to adopt this method of reporting CCC loans. Irs gov org Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. Irs gov org However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. Irs gov org For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. Irs gov org Revenue Procedure 2008-52, 2008-36 I. Irs gov org R. Irs gov org B. Irs gov org 587, is available at  www. Irs gov org irs. Irs gov org gov/irb/2008-36_IRB/ar09. Irs gov org html. Irs gov org You can request income tax withholding from CCC loan payments you receive. Irs gov org Use Form W-4V, Voluntary Withholding Request. Irs gov org See chapter 16 for information about ordering the form. Irs gov org To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. Irs gov org Attach a statement to your return showing the details of the loan. Irs gov org You must file the statement and the return by the due date of the return, including extensions. Irs gov org If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Irs gov org Attach the statement to the amended return and write “Filed pursuant to section 301. Irs gov org 9100-2” at the top of the return. Irs gov org File the amended return at the same address you filed the original return. Irs gov org When you make this election, the amount you report as income becomes your basis in the commodity. Irs gov org See chapter 6 for information on the basis of assets. Irs gov org If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. Irs gov org If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. Irs gov org If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. Irs gov org If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. Irs gov org Form 1099-A. Irs gov org   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. Irs gov org “CCC” should be shown in box 6. Irs gov org The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. Irs gov org Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. Irs gov org If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. Irs gov org Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. Irs gov org Market gain should be reported as follows. Irs gov org If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. Irs gov org However, adjust the basis of the commodity for the amount of the market gain. Irs gov org If you did not include the CCC loan in income in the year received, include the market gain in your income. Irs gov org The following examples show how to report market gain. Irs gov org Example 1. Irs gov org Mike Green is a cotton farmer. Irs gov org He uses the cash method of accounting and files his tax return on a calendar year basis. Irs gov org He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. Irs gov org In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. Irs gov org 00 per pound). Irs gov org In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. Irs gov org 50 per pound (lower than the loan amount). Irs gov org Later in 2013, he sold the cotton for $2,500. Irs gov org The market gain on the redemption was $. Irs gov org 50 ($2. Irs gov org 00 – $1. Irs gov org 50) per pound. Irs gov org Mike realized total market gain of $500 ($. Irs gov org 50 x 1,000 pounds). Irs gov org How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. Irs gov org Included CCC loan. Irs gov org   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. Irs gov org The $500 market gain is not recognized on the redemption. Irs gov org He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. Irs gov org   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. Irs gov org His gain from the sale is $1,000 ($2,500 – $1,500). Irs gov org He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. Irs gov org Excluded CCC loan. Irs gov org   Mike has income of $500 from market gain in 2013. Irs gov org He reports it on Schedule F, lines 4a and 4b. Irs gov org His basis in the cotton is zero, so his gain from its sale is $2,500. Irs gov org He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. Irs gov org Example 2. Irs gov org The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. Irs gov org Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. Irs gov org In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. Irs gov org How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. Irs gov org Included CCC loan. Irs gov org   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. Irs gov org The $500 market gain is not recognized on the redemption. Irs gov org Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. Irs gov org   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. Irs gov org Mike has no gain or loss on its sale to the cotton buyer for that amount. Irs gov org Excluded CCC loan. Irs gov org   As in Example 1, Mike has income of $500 from market gain in 2013. Irs gov org He reports it on Schedule F, lines 4a and 4b. Irs gov org His basis in the cotton is zero, so his gain from its sale is $1,500. Irs gov org He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. Irs gov org Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. Irs gov org You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. Irs gov org Cost-share payments you receive may qualify for the cost-sharing exclusion. Irs gov org See Cost-Sharing Exclusion (Improvements) , later. Irs gov org CRP payments are reported to you on Form 1099-G. Irs gov org Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. Irs gov org See the instructions for Schedule SE (Form 1040). Irs gov org Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. Irs gov org You generally include them in the year you receive them. Irs gov org Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops, because of drought, flood, or any other natural disaster. Irs gov org You can request income tax withholding from crop disaster payments you receive from the federal government. Irs gov org Use Form W-4V, Voluntary Withholding Request. Irs gov org See chapter 16 for information about ordering the form. Irs gov org Election to postpone reporting until the following year. Irs gov org   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. Irs gov org You use the cash method of accounting. Irs gov org You receive the crop insurance proceeds in the same tax year the crops are damaged. Irs gov org You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. Irs gov org   Deferral is not permitted for proceeds received from revenue insurance policies. Irs gov org   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. Irs gov org Check the box on line 8c and attach a statement to your tax return. Irs gov org The statement must include your name and address and contain the following information. Irs gov org A statement that you are making an election under IRC section 451(d) and Regulations section 1. Irs gov org 451-6. Irs gov org The specific crop or crops physically destroyed or damaged. Irs gov org A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. Irs gov org The cause of the physical destruction or damage and the date or dates it occurred. Irs gov org The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. Irs gov org The name of each insurance carrier from whom you received payments. Irs gov org   One election covers all crops representing a single trade or business. Irs gov org If you have more than one farming business, make a separate election for each one. Irs gov org For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. Irs gov org   An election is binding for the year unless the IRS approves your request to change it. Irs gov org To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. Irs gov org Ogden Submission Processing Center P. Irs gov org O. Irs gov org Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. Irs gov org These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. Irs gov org They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. Irs gov org Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. Irs gov org You must include these benefits in income in the year you receive them. Irs gov org You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. Irs gov org Report the benefits on Schedule F, Part I, as agricultural program payments. Irs gov org You can usually take a current deduction for the same amount as a feed expense. Irs gov org Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. Irs gov org A payment is any economic benefit you get as a result of an improvement. Irs gov org However, this exclusion applies only to that part of a payment that meets all three of the following tests. Irs gov org It was for a capital expense. Irs gov org You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. Irs gov org You must include the payment for a deductible expense in income, and you can take any offsetting deduction. Irs gov org See chapter 5 for information on deducting soil and water conservation expenses. Irs gov org It does not substantially increase your annual income from the property for which it is made. Irs gov org An increase in annual income is substantial if it is more than the greater of the following amounts. Irs gov org 10% of the average annual income derived from the affected property before receiving the improvement. Irs gov org $2. Irs gov org 50 times the number of affected acres. Irs gov org The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. Irs gov org Qualifying programs. Irs gov org   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. Irs gov org The rural clean water program authorized by the Federal Water Pollution Control Act. Irs gov org The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. Irs gov org The water bank program authorized by the Water Bank Act. Irs gov org The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. Irs gov org The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. Irs gov org The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. Irs gov org The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. Irs gov org Certain small watershed programs, listed later. Irs gov org Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. Irs gov org Several state programs have been approved. Irs gov org For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). Irs gov org Small watershed programs. Irs gov org   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. Irs gov org The programs under the Watershed Protection and Flood Prevention Act. Irs gov org The flood prevention projects under the Flood Control Act of 1944. Irs gov org The Emergency Watershed Protection Program under the Flood Control Act of 1950. Irs gov org Certain programs under the Colorado River Basin Salinity Control Act. Irs gov org The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. Irs gov org The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. Irs gov org The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. Irs gov org The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. Irs gov org The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. Irs gov org The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. Irs gov org The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. Irs gov org The Conservation Security Program authorized by the Food Security Act of 1985. Irs gov org The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. Irs gov org Income realized. Irs gov org   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). Irs gov org Value of the improvement. Irs gov org   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. Irs gov org The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. Irs gov org Any government payments under a program not listed earlier. Irs gov org Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. Irs gov org Any government payment to you for rent or for your services. Irs gov org The denominator of the fraction is the total cost of the improvement. Irs gov org Excludable portion. Irs gov org   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. Irs gov org 10% of the prior average annual income from the affected acreage. Irs gov org The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. Irs gov org $2. Irs gov org 50 times the number of affected acres. Irs gov org The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. Irs gov org You may need to consult your tax advisor for assistance. Irs gov org Example. Irs gov org One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. Irs gov org The total cost of the improvement was $500,000. Irs gov org The USDA paid $490,000. Irs gov org You paid $10,000. Irs gov org The value of the cost-sharing improvement is $15,000. Irs gov org The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. Irs gov org The excludable portion is the greater amount, $1,550. Irs gov org You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. Irs gov org   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. Irs gov org Any payment excluded from income is not part of your basis. Irs gov org In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. Irs gov org   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. Irs gov org How to report the exclusion. Irs gov org   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. Irs gov org The statement must include the following information. Irs gov org The dollar amount of the cost funded by the government payment. Irs gov org The value of the improvement. Irs gov org The amount you are excluding. Irs gov org   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. Irs gov org Recapture. Irs gov org   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. Irs gov org In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. Irs gov org You must report the recapture on Form 4797. Irs gov org See Section 1255 property under Other Gains in chapter 9. Irs gov org Electing not to exclude payments. Irs gov org   You can elect not to exclude all or part of any payments you receive under these programs. Irs gov org If you make this election for all of these payments, none of the above restrictions and rules apply. Irs gov org You must make this election by the due date, including extensions, for filing your return. Irs gov org In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. Irs gov org If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Irs gov org Write “Filed pursuant to section 301. Irs gov org 9100-2” at the top of the amended return and file it at the same address you filed the original return. Irs gov org Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. Irs gov org You must include these payments on Schedule F, lines 4a and 4b. Irs gov org The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. Irs gov org You must include these payments on Schedule F, lines 6a and 6b. Irs gov org The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. Irs gov org Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. Irs gov org As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. Irs gov org If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. Irs gov org If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. Irs gov org Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. Irs gov org Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. Irs gov org The gain or loss is capital or ordinary depending on how you used the quota. Irs gov org See Capital or ordinary gain or loss , later. Irs gov org Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. Irs gov org Adjusted basis. Irs gov org   The adjusted basis of your quota is determined differently depending on how you obtained the quota. Irs gov org The basis of a quota derived from an original grant by the federal government is zero. Irs gov org The basis of a purchased quota is the purchase price. Irs gov org The basis of a quota received as a gift is generally the same as the donor's basis. Irs gov org However, under certain circumstances, the basis is increased by the amount of gift taxes paid. Irs gov org If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. Irs gov org The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. Irs gov org Reduction of basis. Irs gov org   You are required to reduce the basis of your tobacco quota by the following amounts. Irs gov org Deductions you took for amortization, depletion, or depreciation. Irs gov org Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. Irs gov org The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). Irs gov org Amount treated as interest. Irs gov org   You must reduce your tobacco quota buyout program payment by the amount treated as interest. Irs gov org The interest is reportable as ordinary income. Irs gov org If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. Irs gov org   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. Irs gov org You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. Irs gov org For more information, see Notice 2005-57, 2005-32 I. Irs gov org R. Irs gov org B. Irs gov org 267, available at www. Irs gov org irs. Irs gov org gov/irb/2005-32_IRB/ar13. Irs gov org html. Irs gov org Installment method. Irs gov org   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. Irs gov org Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. Irs gov org See chapter 10 for more information. Irs gov org Capital or ordinary gain or loss. Irs gov org   Whether your gain or loss is ordinary or capital depends on how you used the quota. Irs gov org Quota used in the trade or business of farming. Irs gov org   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. Irs gov org See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. Irs gov org Quota held for investment. Irs gov org   If you held the quota for investment purposes, any gain or loss is capital gain or loss. Irs gov org The same result also applies if you held the quota for the production of income, though not connected with a trade or business. Irs gov org Gain treated as ordinary income. Irs gov org   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. Irs gov org Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. Irs gov org The cost of acquiring a quota. Irs gov org Amounts for amortization, depletion, or depreciation. Irs gov org Amounts to reflect a reduction in the quota pounds. Irs gov org   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. Irs gov org Self-employment income. Irs gov org   The tobacco quota buyout payments are not self-employment income. Irs gov org Income averaging for farmers. Irs gov org   The gain or loss resulting from the quota payments does not qualify for income averaging. Irs gov org A tobacco quota is considered an interest in land. Irs gov org Income averaging is not available for gain or loss arising from the sale or other disposition of land. Irs gov org Involuntary conversion. Irs gov org   The buyout of the tobacco quota is not an involuntary conversion. Irs gov org Form 1099-S. Irs gov org   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. Irs gov org The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. Irs gov org Like-kind exchange of quota. Irs gov org   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. Irs gov org See Notice 2005-57 for more information. Irs gov org Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. Irs gov org Taxation of payments to tobacco growers. Irs gov org   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. Irs gov org Individuals will generally report the payments as an Agricultural program payment on Schedule F. Irs gov org If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. Irs gov org Self-employment income. Irs gov org   Payments to growers generally represent self-employment income. Irs gov org If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. Irs gov org Income averaging for farmers. Irs gov org   Payments to growers who are individuals qualify for farm income averaging. Irs gov org Form 1099-G. Irs gov org   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. Irs gov org Other Payments You must include most other government program payments in income. Irs gov org Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. Irs gov org How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. Irs gov org Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. Irs gov org You must also capitalize the full cost of the improvement. Irs gov org Since you have included the payments in income, they do not reduce your basis. Irs gov org However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. Irs gov org National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. Irs gov org You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. Irs gov org If you produce a tobacco crop, report the payments as income from farming on your Schedule F. Irs gov org If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. Irs gov org Payment to More Than One Person The USDA reports program payments to the IRS. Irs gov org It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). Irs gov org If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. Irs gov org You should file Form 1099-G to report the identity of the actual recipient to the IRS. Irs gov org You should also give this information to the recipient. Irs gov org You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. Irs gov org Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. Irs gov org However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. Irs gov org See chapter 16 for information about ordering Form 1099-G. Irs gov org Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). Irs gov org If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative. Irs gov org Form 1099-PATR. Irs gov org   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. Irs gov org Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. Irs gov org For information on the alternative minimum tax, see the Instructions for Form 6251. Irs gov org Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. Irs gov org They include the following items. Irs gov org Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). Irs gov org The stated dollar value of qualified written notices of allocation. Irs gov org The fair market value of other property. Irs gov org Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. Irs gov org You must reduce the cost or other basis of these items by the amount of such patronage dividends received. Irs gov org Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. Irs gov org If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. Irs gov org Qualified written notice of allocation. Irs gov org   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. Irs gov org A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. Irs gov org The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. Irs gov org You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. Irs gov org Signing and giving a written agreement to the cooperative. Irs gov org Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. Irs gov org The cooperative must notify you in writing of this bylaw and give you a copy. Irs gov org Endorsing and cashing a qualified check paid as part of the same patronage dividend. Irs gov org You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. Irs gov org Qualified check. Irs gov org   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. Irs gov org It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. Irs gov org It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. Irs gov org Loss on redemption. Irs gov org   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. Irs gov org The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. Irs gov org Nonqualified notice of allocation. Irs gov org   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. Irs gov org Your basis in the notice is zero. Irs gov org You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. Irs gov org Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. Irs gov org However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. Irs gov org   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. Irs gov org For example, if it represents interest income, report it on your return as interest. Irs gov org Buying or selling capital assets or depreciable property. Irs gov org   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. Irs gov org You must, however, reduce the basis of these assets by the dividends. Irs gov org This reduction is taken into account as of the first day of the tax year in which the dividends are received. Irs gov org If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. Irs gov org   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. Irs gov org Example. Irs gov org On July 1, 2012, Mr. Irs gov org Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. Irs gov org The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). Irs gov org Mr. Irs gov org Brown files his return on a calendar year basis. Irs gov org For 2012, he claimed a depreciation deduction of $311, using the 10. Irs gov org 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). Irs gov org On July 2, 2013, the cooperative association paid Mr. Irs gov org Brown a $300 cash patronage dividend for buying the machine. Irs gov org Mr. Irs gov org Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. Irs gov org Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. Irs gov org 38% × 1. Irs gov org 5 = 23. Irs gov org 07% Depreciation deduction for 2013 ($2,289 × 23. Irs gov org 07%) $528 Exceptions. Irs gov org   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. Irs gov org If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. Irs gov org If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). Irs gov org   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. Irs gov org Personal purchases. Irs gov org   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). Irs gov org This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. Irs gov org Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. Irs gov org A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. Irs gov org These allocations can be paid in money, other property, or qualified certificates. Irs gov org Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. Irs gov org Qualified certificates. Irs gov org   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. Irs gov org The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. Irs gov org If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. Irs gov org Nonqualified certificates. Irs gov org   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. Irs gov org Your basis in the certificate is zero. Irs gov org You must include in income any amount you receive from its sale, redemption, or other disposition. Irs gov org Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. Irs gov org Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. Irs gov org For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Irs gov org General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in gross income for tax purposes. Irs gov org Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. Irs gov org It is excluded from taxable income (see Exclusions , later). Irs gov org Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. Irs gov org If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. Irs gov org Election to defer income from discharge of indebtedness. Irs gov org   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. Irs gov org Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. Irs gov org See IRC section 108(i) and Publication 4681 for details. Irs gov org Form 1099-C. Irs gov org   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Irs gov org The amount of debt canceled is shown in box 2. Irs gov org Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Irs gov org These exceptions apply before the exclusions discussed below. Irs gov org Price reduced after purchase. Irs gov org   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. Irs gov org Reduce your basis in the property by the amount of the reduction in the debt. Irs gov org The rules that apply to bankruptcy and insolvency are explained below under Exclusions . Irs gov org Deductible debt. Irs gov org   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. Irs gov org This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. Irs gov org Example. Irs gov org You get accounting services for your farm on credit. Irs gov org Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. Irs gov org Your accountant forgives part of the amount you owe for the accounting services. Irs gov org How you treat the canceled debt depends on your method of accounting. Irs gov org Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Irs gov org Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Irs gov org Exclusions Do not include canceled debt in income in the following situations. Irs gov org The cancellation takes place in a bankruptcy case under title 11 of the U. Irs gov org S. Irs gov org Code. Irs gov org The cancellation takes place when you are insolvent. Irs gov org The canceled debt is a qualified farm debt. Irs gov org The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). Irs gov org See Publication 334, Tax Guide for Small Business, chapter 5. Irs gov org The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. Irs gov org The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. Irs gov org If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. Irs gov org If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. Irs gov org See Form 982 , later, for information on how to claim an exclusion for a canceled debt. Irs gov org Debt. Irs gov org   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. Irs gov org Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. Irs gov org Bankruptcy. Irs gov org   A bankruptcy case is a case under title 11 of the U. Irs gov org S. Irs gov org Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. Irs gov org   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. Irs gov org Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . Irs gov org Insolvency. Irs gov org   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. Irs gov org   You can exclude canceled debt from gross income up to the amount by which you are insolvent. Irs gov org If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. Irs gov org Otherwise, you include the difference in gross income. Irs gov org Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . Irs gov org You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. Irs gov org Example. Irs gov org You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. Irs gov org Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. Irs gov org Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). Irs gov org You can exclude this amount from income. Irs gov org The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. Irs gov org If not, you must include it in income. Irs gov org Reduction of tax attributes. Irs gov org   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. Irs gov org Order of reduction. Irs gov org   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. Irs gov org Net operating loss (NOL). Irs gov org Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. Irs gov org Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. Irs gov org General business credit carryover. Irs gov org Reduce the credit carryover to or from the tax year of the debt cancellation. Irs gov org Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. Irs gov org Minimum tax credit. Irs gov org Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. Irs gov org Reduce the credit 331/3 cents for each dollar of excluded canceled debt. Irs gov org Capital loss. Irs gov org Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. Irs gov org Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. Irs gov org Basis. Irs gov org Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. Irs gov org Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. Irs gov org Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. Irs gov org Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. Irs gov org Inventory and accounts and notes receivable. Irs gov org Other property. Irs gov org Reduce the basis one dollar for each dollar of excluded canceled debt. Irs gov org However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. Irs gov org For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. Irs gov org 1017-1(b)(2). Irs gov org Also see Electing to reduce the basis of depreciable property