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Military Filing Taxes

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Military Filing Taxes

Military filing taxes 13. Military filing taxes   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. Military filing taxes It is divided into the following sections. Military filing taxes Cost basis. Military filing taxes Adjusted basis. Military filing taxes Basis other than cost. Military filing taxes Your basis is the amount of your investment in property for tax purposes. Military filing taxes Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. Military filing taxes Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. Military filing taxes If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Military filing taxes Only the basis allocated to the business or investment use of the property can be depreciated. Military filing taxes Your original basis in property is adjusted (increased or decreased) by certain events. Military filing taxes For example, if you make improvements to the property, increase your basis. Military filing taxes If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. Military filing taxes Keep accurate records of all items that affect the basis of your property. Military filing taxes For more information on keeping records, see chapter 1. Military filing taxes Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. Military filing taxes The cost is the amount you pay in cash, debt obligations, other property, or services. Military filing taxes Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). Military filing taxes In addition, the basis of real estate and business assets may include other items. Military filing taxes Loans with low or no interest. Military filing taxes    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. Military filing taxes You generally have unstated interest if your interest rate is less than the applicable federal rate. Military filing taxes   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Military filing taxes Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Military filing taxes If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Military filing taxes Lump sum purchase. Military filing taxes   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. Military filing taxes Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. Military filing taxes Figure the basis of each asset by multiplying the lump sum by a fraction. Military filing taxes The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Military filing taxes    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. Military filing taxes Fair market value (FMV). Military filing taxes   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Military filing taxes Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. Military filing taxes Assumption of mortgage. Military filing taxes   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Military filing taxes Settlement costs. Military filing taxes   Your basis includes the settlement fees and closing costs you paid for buying the property. Military filing taxes (A fee for buying property is a cost that must be paid even if you buy the property for cash. Military filing taxes ) Do not include fees and costs for getting a loan on the property in your basis. Military filing taxes   The following are some of the settlement fees or closing costs you can include in the basis of your property. Military filing taxes Abstract fees (abstract of title fees). Military filing taxes Charges for installing utility services. Military filing taxes Legal fees (including fees for the title search and preparation of the sales contract and deed). Military filing taxes Recording fees. Military filing taxes Survey fees. Military filing taxes Transfer taxes. Military filing taxes Owner's title insurance. Military filing taxes Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Military filing taxes   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Military filing taxes   The following are some of the settlement fees and closing costs you cannot include in the basis of property. Military filing taxes Casualty insurance premiums. Military filing taxes Rent for occupancy of the property before closing. Military filing taxes Charges for utilities or other services related to occupancy of the property before closing. Military filing taxes Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. Military filing taxes Fees for refinancing a mortgage. Military filing taxes Real estate taxes. Military filing taxes   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Military filing taxes You cannot deduct them as an expense. Military filing taxes    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Military filing taxes Do not include that amount in the basis of your property. Military filing taxes If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Military filing taxes Points. Military filing taxes   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Military filing taxes Generally, you deduct the points over the term of the loan. Military filing taxes For more information on how to deduct points, see chapter 23. Military filing taxes Points on home mortgage. Military filing taxes   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. Military filing taxes If certain requirements are met, you can deduct the points in full for the year in which they are paid. Military filing taxes Reduce the basis of your home by any seller-paid points. Military filing taxes Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. Military filing taxes The result is the adjusted basis. Military filing taxes Increases to Basis Increase the basis of any property by all items properly added to a capital account. Military filing taxes Examples of items that increase basis are shown in Table 13-1. Military filing taxes These include the items discussed below. Military filing taxes Improvements. Military filing taxes   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. Military filing taxes For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. Military filing taxes Assessments for local improvements. Military filing taxes   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. Military filing taxes Do not deduct them as taxes. Military filing taxes However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. Military filing taxes Example. Military filing taxes Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. Military filing taxes Add the assessment to your property's basis. Military filing taxes In this example, the assessment is a depreciable asset. Military filing taxes Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. Military filing taxes Examples of items that decrease basis are shown in Table 13-1. Military filing taxes These include the items discussed below. Military filing taxes Table 13-1. Military filing taxes Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. Military filing taxes   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. Military filing taxes    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. Military filing taxes   For more information on casualty and theft losses, see chapter 25. Military filing taxes Depreciation and section 179 deduction. Military filing taxes   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. Military filing taxes   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. Military filing taxes Example. Military filing taxes You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. Military filing taxes You added an improvement to the duplex that cost $10,000. Military filing taxes In February last year, the duplex was damaged by fire. Military filing taxes Up to that time, you had been allowed depreciation of $23,000. Military filing taxes You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. Military filing taxes You deducted a casualty loss of $1,000 on your income tax return for last year. Military filing taxes You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. Military filing taxes You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. Military filing taxes Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. Military filing taxes Your basis in the land is its original cost of $5,000. Military filing taxes Easements. Military filing taxes   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. Military filing taxes It reduces the basis of the affected part of the property. Military filing taxes If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Military filing taxes   If the gain is on a capital asset, see chapter 16 for information about how to report it. Military filing taxes If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. Military filing taxes Exclusion of subsidies for energy conservation measures. Military filing taxes   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Military filing taxes Reduce the basis of the property for which you received the subsidy by the excluded amount. Military filing taxes For more information about this subsidy, see chapter 12. Military filing taxes Postponed gain from sale of home. Military filing taxes    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. Military filing taxes For more information on the rules for the sale of a home, see chapter 15. Military filing taxes Basis Other Than Cost There are many times when you cannot use cost as basis. Military filing taxes In these cases, the fair market value or the adjusted basis of the property can be used. Military filing taxes Fair market value (FMV) and adjusted basis were discussed earlier. Military filing taxes Property Received for Services If you receive property for your services, include the FMV of the property in income. Military filing taxes The amount you include in income becomes your basis. Military filing taxes If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Military filing taxes Restricted property. Military filing taxes   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. Military filing taxes However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. Military filing taxes Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). Military filing taxes For more information, see Restricted Property in Publication 525. Military filing taxes Bargain purchases. Military filing taxes   A bargain purchase is a purchase of an item for less than its FMV. Military filing taxes If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Military filing taxes Your basis in the property is its FMV (your purchase price plus the amount you include in income). Military filing taxes   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. Military filing taxes However, your basis in the property is still its FMV. Military filing taxes See Employee Discounts in Publication 15-B. Military filing taxes Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Military filing taxes A taxable gain or deductible loss also is known as a recognized gain or loss. Military filing taxes If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Military filing taxes Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. Military filing taxes Similar or related property. Military filing taxes   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. Military filing taxes Decrease the basis by the following. Military filing taxes Any loss you recognize on the involuntary conversion. Military filing taxes Any money you receive that you do not spend on similar property. Military filing taxes Increase the basis by the following. Military filing taxes Any gain you recognize on the involuntary conversion. Military filing taxes Any cost of acquiring the replacement property. Military filing taxes Money or property not similar or related. Military filing taxes    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. Military filing taxes Example. Military filing taxes The state condemned your property. Military filing taxes The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. Military filing taxes You realized a gain of $5,000 ($31,000 − $26,000). Military filing taxes You bought replacement property similar in use to the converted property for $29,000. Military filing taxes You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Military filing taxes Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Military filing taxes The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. Military filing taxes   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Military filing taxes Basis for depreciation. Military filing taxes   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Military filing taxes For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Military filing taxes Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Military filing taxes If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. Military filing taxes See Nontaxable Trades in chapter 14. Military filing taxes Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Military filing taxes To qualify as a like-kind exchange, the property traded and the property received must be both of the following. Military filing taxes Qualifying property. Military filing taxes Like-kind property. Military filing taxes The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. Military filing taxes If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. Military filing taxes Qualifying property. Military filing taxes   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. Military filing taxes Like-kind property. Military filing taxes   There must be an exchange of like-kind property. Military filing taxes Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Military filing taxes The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. Military filing taxes Example. Military filing taxes You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. Military filing taxes The dealer allows you $2,000 on the old truck, and you pay $4,800. Military filing taxes This is a like-kind exchange. Military filing taxes The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). Military filing taxes If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). Military filing taxes The basis of the new truck is the price you pay the dealer. Military filing taxes Partially nontaxable exchanges. Military filing taxes   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Military filing taxes The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. Military filing taxes Decrease the basis by the following amounts. Military filing taxes Any money you receive. Military filing taxes Any loss you recognize on the exchange. Military filing taxes Increase the basis by the following amounts. Military filing taxes Any additional costs you incur. Military filing taxes Any gain you recognize on the exchange. Military filing taxes If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Military filing taxes Allocation of basis. Military filing taxes   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Military filing taxes The rest is the basis of the like-kind property. Military filing taxes More information. Military filing taxes   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. Military filing taxes Basis for depreciation. Military filing taxes   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. Military filing taxes For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Military filing taxes Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Military filing taxes The same rule applies to a transfer by your former spouse that is incident to divorce. Military filing taxes However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Military filing taxes If the property transferred to you is a series E, series EE, or series I U. Military filing taxes S. Military filing taxes savings bond, the transferor must include in income the interest accrued to the date of transfer. Military filing taxes Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Military filing taxes For more information on these bonds, see chapter 7. Military filing taxes At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Military filing taxes For more information about the transfer of property from a spouse, see chapter 14. Military filing taxes Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Military filing taxes FMV less than donor's adjusted basis. Military filing taxes   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Military filing taxes Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Military filing taxes Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Military filing taxes See Adjusted Basis , earlier. Military filing taxes Example. Military filing taxes You received an acre of land as a gift. Military filing taxes At the time of the gift, the land had an FMV of $8,000. Military filing taxes The donor's adjusted basis was $10,000. Military filing taxes After you received the property, no events occurred to increase or decrease your basis. Military filing taxes If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. Military filing taxes If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. Military filing taxes If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Military filing taxes Business property. Military filing taxes   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Military filing taxes FMV equal to or greater than donor's adjusted basis. Military filing taxes   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Military filing taxes Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. Military filing taxes   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Military filing taxes See Adjusted Basis , earlier. Military filing taxes   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Military filing taxes Figure the increase by multiplying the gift tax paid by a fraction. Military filing taxes The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Military filing taxes   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Military filing taxes The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Military filing taxes Example. Military filing taxes In 2013, you received a gift of property from your mother that had an FMV of $50,000. Military filing taxes Her adjusted basis was $20,000. Military filing taxes The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Military filing taxes She paid a gift tax of $7,320 on the property. Military filing taxes Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Military filing taxes 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Military filing taxes If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Military filing taxes However, your basis cannot exceed the FMV of the gift at the time it was given to you. Military filing taxes Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Military filing taxes The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. Military filing taxes The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. Military filing taxes The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Military filing taxes If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Military filing taxes For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Military filing taxes Property inherited from a decedent who died in 2010. Military filing taxes   If you inherited property from a decedent who died in 2010, special rules may apply. Military filing taxes For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Military filing taxes Community property. Military filing taxes   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Military filing taxes When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Military filing taxes For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Military filing taxes Example. Military filing taxes You and your spouse owned community property that had a basis of $80,000. Military filing taxes When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Military filing taxes The FMV of the community interest was $100,000. Military filing taxes The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Military filing taxes The basis of the other half to your spouse's heirs is also $50,000. Military filing taxes For more information about community property, see Publication 555, Community Property. Military filing taxes Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. Military filing taxes To do so, you must figure its basis for depreciation at the time of the change. Military filing taxes An example of changing property held for personal use to business or rental use would be renting out your former personal residence. Military filing taxes Basis for depreciation. Military filing taxes   The basis for depreciation is the lesser of the following amounts. Military filing taxes The FMV of the property on the date of the change. Military filing taxes Your adjusted basis on the date of the change. Military filing taxes Example. Military filing taxes Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. Military filing taxes You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Military filing taxes Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Military filing taxes Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Military filing taxes On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Military filing taxes The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). Military filing taxes Sale of property. Military filing taxes   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. Military filing taxes Gain. Military filing taxes   The basis for figuring a gain is your adjusted basis in the property when you sell the property. Military filing taxes Example. Military filing taxes Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Military filing taxes Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Military filing taxes Loss. Military filing taxes   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Military filing taxes Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Military filing taxes Example. Military filing taxes Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Military filing taxes In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. Military filing taxes Reduce that amount ($180,000) by the depreciation deductions ($37,500). Military filing taxes The basis for loss is $142,500 ($180,000 − $37,500). Military filing taxes Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Military filing taxes If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. Military filing taxes You must adjust the basis of stocks for certain events that occur after purchase. Military filing taxes For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. Military filing taxes This rule applies only when the additional stock received is identical to the stock held. Military filing taxes Also reduce your basis when you receive nontaxable distributions. Military filing taxes They are a return of capital. Military filing taxes Example. Military filing taxes In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. Military filing taxes In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. Military filing taxes In 2013 XYZ declared a 2-for-1 stock split. Military filing taxes You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. Military filing taxes Other basis. Military filing taxes   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. Military filing taxes For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Military filing taxes Identifying stocks or bonds sold. Military filing taxes   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. Military filing taxes If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Military filing taxes For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Military filing taxes Mutual fund shares. Military filing taxes   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. Military filing taxes For more information, see Publication 550. Military filing taxes Bond premium. Military filing taxes   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. Military filing taxes See Bond Premium Amortization in chapter 3 of Publication 550 for more information. Military filing taxes Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. Military filing taxes Original issue discount (OID) on debt instruments. Military filing taxes   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. Military filing taxes See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. Military filing taxes Tax-exempt obligations. Military filing taxes    OID on tax-exempt obligations is generally not taxable. Military filing taxes However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. Military filing taxes The accrued OID is added to the basis of the obligation to determine your gain or loss. Military filing taxes See chapter 4 of Publication 550. Military filing taxes Prev  Up  Next   Home   More Online Publications
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The Taxpayer Advocate Service Is Your Voice at the IRS

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS. We help taxpayers who are experiencing economic harm, such as not being able to provide necessities like housing, transportation, or food; taxpayers who are seeking help in resolving problems with the IRS; and those who believe an IRS system or procedure is not working as it should. Here are ten things every taxpayer should know about TAS:

  1. The Taxpayer Advocate Service is your voice at the IRS.
  2. Our service is free and tailored to meet your needs.
  3. You may be eligible for our help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should.
  4. The worst thing you can do is nothing at all!
  5. We help taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. This includes businesses as well as individuals.
  6. If you qualify for our help, we’ll do everything we can to get your problem resolved. You will be assigned to one advocate who will be with you at every turn.
  7. We have at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico. You can call your local advocate, whose number is in your phone book and in Publication 1546, Taxpayer Advocate Service -- Your Voice at the IRS. You can also call our toll-free number at 1-877-777-4778.
  8. As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Our tax toolkit at www.taxtoolkit.irs.gov can help you understand these rights.
  9. TAS also handles large-scale or systemic problems that affect many taxpayers. If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System.
  10. You can get updates on hot tax topics by visiting our YouTube channel at www.youtube.com/tasnta and our Facebook page at http://www.facebook.com/YourVoiceAtIRS, or by following our tweets at http://twitter.com/YourVoiceatIRS
Page Last Reviewed or Updated: 14-Mar-2014

The Military Filing Taxes

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