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Tax Forms 2008

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Tax Forms 2008

Tax forms 2008 11. Tax forms 2008   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. Tax forms 2008 Free help with your tax return. Tax forms 2008   You can get free help preparing your return nationwide from IRS-certified volunteers. Tax forms 2008 The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Tax forms 2008 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Tax forms 2008 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. Tax forms 2008 In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Tax forms 2008 To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Tax forms 2008 gov, download the IRS2Go app, or call 1-800-906-9887. Tax forms 2008   As part of the TCE program, AARP offers the Tax-Aide counseling program. Tax forms 2008 To find the nearest AARP Tax-Aide site, visit AARP's website at www. Tax forms 2008 aarp. Tax forms 2008 org/money/taxaide or call 1-888-227-7669. Tax forms 2008 For more information on these programs, go to IRS. Tax forms 2008 gov and enter “VITA” in the search box. Tax forms 2008 Internet. Tax forms 2008    IRS. Tax forms 2008 gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Tax forms 2008 Download the free IRS2Go app from the iTunes app store or from Google Play. Tax forms 2008 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. Tax forms 2008 Check the status of your 2013 refund with the Where's My Refund? application on IRS. Tax forms 2008 gov or download the IRS2Go app and select the Refund Status option. Tax forms 2008 The IRS issues more than 9 out of 10 refunds in less than 21 days. Tax forms 2008 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. Tax forms 2008 You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax forms 2008 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Tax forms 2008 Use the Interactive Tax Assistant (ITA) to research your tax questions. Tax forms 2008 No need to wait on the phone or stand in line. Tax forms 2008 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. Tax forms 2008 When you reach the response screen, you can print the entire interview and the final response for your records. Tax forms 2008 New subject areas are added on a regular basis. Tax forms 2008  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Tax forms 2008 gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Tax forms 2008 You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Tax forms 2008 The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Tax forms 2008 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. Tax forms 2008 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. Tax forms 2008 You can also ask the IRS to mail a return or an account transcript to you. Tax forms 2008 Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Tax forms 2008 gov or by calling 1-800-908-9946. Tax forms 2008 Tax return and tax account transcripts are generally available for the current year and the past three years. Tax forms 2008 Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Tax forms 2008 Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Tax forms 2008 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. Tax forms 2008 Check the status of your amended return using Where's My Amended Return? Go to IRS. Tax forms 2008 gov and enter Where's My Amended Return? in the search box. Tax forms 2008 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Tax forms 2008 It can take up to 3 weeks from the date you mailed it to show up in our system. Tax forms 2008 Make a payment using one of several safe and convenient electronic payment options available on IRS. Tax forms 2008 gov. Tax forms 2008 Select the Payment tab on the front page of IRS. Tax forms 2008 gov for more information. Tax forms 2008 Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Tax forms 2008 Figure your income tax withholding with the IRS Withholding Calculator on IRS. Tax forms 2008 gov. Tax forms 2008 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. Tax forms 2008 Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Tax forms 2008 gov. Tax forms 2008 Request an Electronic Filing PIN by going to IRS. Tax forms 2008 gov and entering Electronic Filing PIN in the search box. Tax forms 2008 Download forms, instructions and publications, including accessible versions for people with disabilities. Tax forms 2008 Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Tax forms 2008 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Tax forms 2008 An employee can answer questions about your tax account or help you set up a payment plan. Tax forms 2008 Before you visit, check the Office Locator on IRS. Tax forms 2008 gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Tax forms 2008 If you have a special need, such as a disability, you can request an appointment. Tax forms 2008 Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Tax forms 2008 Apply for an Employer Identification Number (EIN). Tax forms 2008 Go to IRS. Tax forms 2008 gov and enter Apply for an EIN in the search box. Tax forms 2008 Read the Internal Revenue Code, regulations, or other official guidance. Tax forms 2008 Read Internal Revenue Bulletins. Tax forms 2008 Sign up to receive local and national tax news and more by email. Tax forms 2008 Just click on “subscriptions” above the search box on IRS. Tax forms 2008 gov and choose from a variety of options. Tax forms 2008 Phone. Tax forms 2008    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Tax forms 2008 Download the free IRS2Go app from the iTunes app store or from Google Play. Tax forms 2008 Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Tax forms 2008 gov, or download the IRS2Go app. Tax forms 2008 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. Tax forms 2008 The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Tax forms 2008 Most VITA and TCE sites offer free electronic filing. Tax forms 2008 Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Tax forms 2008 Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Tax forms 2008 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. Tax forms 2008 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. Tax forms 2008 The IRS issues more than 9 out of 10 refunds in less than 21 days. Tax forms 2008 Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax forms 2008 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. Tax forms 2008 The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Tax forms 2008 Note, the above information is for our automated hotline. Tax forms 2008 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. Tax forms 2008 Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Tax forms 2008 You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Tax forms 2008 It can take up to 3 weeks from the date you mailed it to show up in our system. Tax forms 2008 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). Tax forms 2008 You should receive your order within 10 business days. Tax forms 2008 Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Tax forms 2008 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. Tax forms 2008 Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Tax forms 2008 The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Tax forms 2008 These individuals can also contact the IRS through relay services such as the Federal Relay Service. Tax forms 2008 Walk-in. Tax forms 2008   You can find a selection of forms, publications and services — in-person. Tax forms 2008 Products. Tax forms 2008 You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Tax forms 2008 Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Tax forms 2008 Services. Tax forms 2008 You can walk in to your local TAC for face-to-face tax help. Tax forms 2008 An employee can answer questions about your tax account or help you set up a payment plan. Tax forms 2008 Before visiting, use the Office Locator tool on IRS. Tax forms 2008 gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Tax forms 2008 Mail. Tax forms 2008   You can send your order for forms, instructions, and publications to the address below. Tax forms 2008 You should receive a response within 10 business days after your request is received. Tax forms 2008 Internal Revenue Service 1201 N. Tax forms 2008 Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Tax forms 2008 The Taxpayer Advocate Service (TAS) is your voice at the IRS. Tax forms 2008 Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Tax forms 2008   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Tax forms 2008 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. Tax forms 2008 You face (or your business is facing) an immediate threat of adverse action. Tax forms 2008 You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Tax forms 2008   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. Tax forms 2008 Here's why we can help: TAS is an independent organization within the IRS. Tax forms 2008 Our advocates know how to work with the IRS. Tax forms 2008 Our services are free and tailored to meet your needs. Tax forms 2008 We have offices in every state, the District of Columbia, and Puerto Rico. Tax forms 2008   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 Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Tax forms 2008   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Tax forms 2008 If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Tax forms 2008 Low Income Taxpayer Clinics. Tax forms 2008   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. Tax forms 2008 Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Tax forms 2008 Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Tax forms 2008 Prev  Up  Next   Home   More Online Publications
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What is My Filing Status?

Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits, and your correct tax. If more than one filing status applies to you, this interview will choose the one that will result in the lowest amount of tax.

Information You Will Need:

  • Marital status and spouse's year of death (if applicable)
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Page Last Reviewed or Updated: 14-Feb-2014

The Tax Forms 2008

Tax forms 2008 14. Tax forms 2008   Sale of Property Table of Contents Reminder Introduction Useful Items - You may want to see: Sales and TradesWhat Is a Sale or Trade? How To Figure Gain or Loss Nontaxable Trades Transfers Between Spouses Related Party Transactions Capital Gains and LossesCapital or Ordinary Gain or Loss Capital Assets and Noncapital Assets Holding Period Nonbusiness Bad Debts Wash Sales Rollover of Gain From Publicly Traded Securities Reminder Foreign income. Tax forms 2008  If you are a U. Tax forms 2008 S. Tax forms 2008 citizen who sells property located outside the United States, you must report all gains and losses from the sale of that property on your tax return unless it is exempt by U. Tax forms 2008 S. Tax forms 2008 law. Tax forms 2008 This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the payer. Tax forms 2008 Introduction This chapter discusses the tax consequences of selling or trading investment property. Tax forms 2008 It explains the following. Tax forms 2008 What a sale or trade is. Tax forms 2008 Figuring gain or loss. Tax forms 2008 Nontaxable trades. Tax forms 2008 Related party transactions. Tax forms 2008 Capital gains or losses. Tax forms 2008 Capital assets and noncapital assets. Tax forms 2008 Holding period. Tax forms 2008 Rollover of gain from publicly traded securities. Tax forms 2008 Other property transactions. Tax forms 2008   Certain transfers of property are not discussed here. Tax forms 2008 They are discussed in other IRS publications. Tax forms 2008 These include the following. Tax forms 2008 Sales of a main home, covered in chapter 15. Tax forms 2008 Installment sales, covered in Publication 537, Installment Sales. Tax forms 2008 Transactions involving business property, covered in Publication 544, Sales and Other Dispositions of Assets. Tax forms 2008 Dispositions of an interest in a passive activity, covered in Publication 925, Passive Activity and At-Risk Rules. Tax forms 2008    Publication 550, Investment Income and Expenses (Including Capital Gains and Losses), provides a more detailed discussion about sales and trades of investment property. Tax forms 2008 Publication 550 includes information about the rules covering nonbusiness bad debts, straddles, section 1256 contracts, puts and calls, commodity futures, short sales, and wash sales. Tax forms 2008 It also discusses investment-related expenses. Tax forms 2008 Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 8949 Sales and Other Dispositions of Capital Assets 8824 Like-Kind Exchanges Sales and Trades If you sold property such as stocks, bonds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. Tax forms 2008 Generally, you should receive the statement by February 15 of the next year. Tax forms 2008 It will show the gross proceeds from the sale. Tax forms 2008 If you sold a covered security in 2013, your 1099-B (or substitute statement) will show your basis. Tax forms 2008 Generally, a covered security is a security you acquired after 2010, with certain exceptions. Tax forms 2008 See the Instructions for Form 8949. Tax forms 2008 The IRS will also get a copy of Form 1099-B from the broker. Tax forms 2008 Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. Tax forms 2008 What Is a Sale or Trade? This section explains what is a sale or trade. Tax forms 2008 It also explains certain transactions and events that are treated as sales or trades. Tax forms 2008 A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. Tax forms 2008 A trade is a transfer of property for other property or services and may be taxed in the same way as a sale. Tax forms 2008 Sale and purchase. Tax forms 2008   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. Tax forms 2008 The sale and purchase are two separate transactions. Tax forms 2008 But see Like-kind exchanges under Nontaxable Trades, later. Tax forms 2008 Redemption of stock. Tax forms 2008   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. Tax forms 2008 Dividend versus sale or trade. Tax forms 2008   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. Tax forms 2008 Both direct and indirect ownership of stock will be considered. Tax forms 2008 The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend (see chapter 8), There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. Tax forms 2008 Redemption or retirement of bonds. Tax forms 2008   A redemption or retirement of bonds or notes at their maturity is generally treated as a sale or trade. Tax forms 2008   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. Tax forms 2008 For details, see Regulations section 1. Tax forms 2008 1001-3. Tax forms 2008 Surrender of stock. Tax forms 2008   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. Tax forms 2008 The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. Tax forms 2008 Worthless securities. Tax forms 2008    Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. Tax forms 2008 This affects whether your capital loss is long term or short term. Tax forms 2008 See Holding Period , later. Tax forms 2008   Worthless securities also include securities that you abandon after March 12, 2008. Tax forms 2008 To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. Tax forms 2008 All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. Tax forms 2008    If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. Tax forms 2008 Do not deduct them in the year the stock became worthless. Tax forms 2008 How to report loss. Tax forms 2008    Report worthless securities in Part I or Part II, whichever applies, of Form 8949. Tax forms 2008 In column (a), enter “Worthless. Tax forms 2008 ”    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. Tax forms 2008 See Form 8949 and the Instructions for Form 8949. Tax forms 2008 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Tax forms 2008 See also Schedule D (Form 1040), Form 8949, and their separate instructions. Tax forms 2008 Filing a claim for refund. Tax forms 2008   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. Tax forms 2008 You must use Form 1040X, Amended U. Tax forms 2008 S. Tax forms 2008 Individual Income Tax Return, to amend your return for the year the security became worthless. Tax forms 2008 You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. Tax forms 2008 For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. Tax forms 2008 How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. Tax forms 2008 Gain. Tax forms 2008   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. Tax forms 2008 Loss. Tax forms 2008   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. Tax forms 2008 Adjusted basis. Tax forms 2008   The adjusted basis of property is your original cost or other original basis properly adjusted (increased or decreased) for certain items. Tax forms 2008 See chapter 13 for more information about determining the adjusted basis of property. Tax forms 2008 Amount realized. Tax forms 2008   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). Tax forms 2008 Amount realized includes the money you receive plus the fair market value of any property or services you receive. Tax forms 2008 If you received a note or other debt instrument for the property, see How To Figure Gain or Loss in chapter 4 of Publication 550 to figure the amount realized. Tax forms 2008 If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. Tax forms 2008 For more information, see Publication 537. Tax forms 2008 Fair market value. Tax forms 2008   Fair market value is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. Tax forms 2008 Example. Tax forms 2008 You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. Tax forms 2008 Your gain is $3,000 ($10,000 − $7,000). Tax forms 2008 Debt paid off. Tax forms 2008    A debt against the property, or against you, that is paid off as a part of the transaction, or that is assumed by the buyer, must be included in the amount realized. Tax forms 2008 This is true even if neither you nor the buyer is personally liable for the debt. Tax forms 2008 For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. Tax forms 2008 Example. Tax forms 2008 You sell stock that you had pledged as security for a bank loan of $8,000. Tax forms 2008 Your basis in the stock is $6,000. Tax forms 2008 The buyer pays off your bank loan and pays you $20,000 in cash. Tax forms 2008 The amount realized is $28,000 ($20,000 + $8,000). Tax forms 2008 Your gain is $22,000 ($28,000 − $6,000). Tax forms 2008 Payment of cash. Tax forms 2008   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. Tax forms 2008 Determine your gain or loss by subtracting the cash you pay plus the adjusted basis of the property you trade in from the amount you realize. Tax forms 2008 If the result is a positive number, it is a gain. Tax forms 2008 If the result is a negative number, it is a loss. Tax forms 2008 No gain or loss. Tax forms 2008   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. Tax forms 2008 In this case, you may have neither a gain nor a loss. Tax forms 2008 See Basis Other Than Cost in chapter 13. Tax forms 2008 Nontaxable Trades This section discusses trades that generally do not result in a taxable gain or deductible loss. Tax forms 2008 For more information on nontaxable trades, see chapter 1 of Publication 544. Tax forms 2008 Like-kind exchanges. Tax forms 2008   If you trade business or investment property for other business or investment property of a like kind, you do not pay tax on any gain or deduct any loss until you sell or dispose of the property you receive. Tax forms 2008 To be nontaxable, a trade must meet all six of the following conditions. Tax forms 2008 The property must be business or investment property. Tax forms 2008 You must hold both the property you trade and the property you receive for productive use in your trade or business or for investment. Tax forms 2008 Neither property may be property used for personal purposes, such as your home or family car. Tax forms 2008 The property must not be held primarily for sale. Tax forms 2008 The property you trade and the property you receive must not be property you sell to customers, such as merchandise. Tax forms 2008 The property must not be stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest, including partnership interests. Tax forms 2008 However, see Special rules for mutual ditch, reservoir, or irrigation company stock, in chapter 4 of Publication 550 for an exception. Tax forms 2008 Also, you can have a nontaxable trade of corporate stocks under a different rule, as discussed later. Tax forms 2008 There must be a trade of like property. Tax forms 2008 The trade of real estate for real estate, or personal property for similar personal property, is a trade of like property. Tax forms 2008 The trade of an apartment house for a store building, or a panel truck for a pickup truck, is a trade of like property. Tax forms 2008 The trade of a piece of machinery for a store building is not a trade of like property. Tax forms 2008 Real property located in the United States and real property located outside the United States are not like property. Tax forms 2008 Also, personal property used predominantly within the United States and personal property used predominantly outside the United States are not like property. Tax forms 2008 The property to be received must be identified in writing within 45 days after the date you transfer the property given up in the trade. Tax forms 2008 The property to be received must be received by the earlier of: The 180th day after the date on which you transfer the property given up in the trade, or The due date, including extensions, for your tax return for the year in which the transfer of the property given up occurs. Tax forms 2008    If you trade property with a related party in a like-kind exchange, a special rule may apply. Tax forms 2008 See Related Party Transactions , later in this chapter. Tax forms 2008 Also, see chapter 1 of Publication 544 for more information on exchanges of business property and special rules for exchanges using qualified intermediaries or involving multiple properties. Tax forms 2008 Partly nontaxable exchange. Tax forms 2008   If you receive money or unlike property in addition to like property, and the above six conditions are met, you have a partly nontaxable trade. Tax forms 2008 You are taxed on any gain you realize, but only up to the amount of the money and the fair market value of the unlike property you receive. Tax forms 2008 You cannot deduct a loss. Tax forms 2008 Like property and unlike property transferred. Tax forms 2008   If you give up unlike property in addition to the like property, you must recognize gain or loss on the unlike property you give up. Tax forms 2008 The gain or loss is the difference between the adjusted basis of the unlike property and its fair market value. Tax forms 2008 Like property and money transferred. Tax forms 2008   If all of the above conditions (1) – (6) are met, you have a nontaxable trade even if you pay money in addition to the like property. Tax forms 2008 Basis of property received. Tax forms 2008   To figure the basis of the property received, see Nontaxable Exchanges in chapter 13. Tax forms 2008 How to report. Tax forms 2008   You must report the trade of like property on Form 8824. Tax forms 2008 If you figure a recognized gain or loss on Form 8824, report it on Schedule D (Form 1040), or on Form 4797, Sales of Business Property, whichever applies. Tax forms 2008 See the instructions for Line 22 in the Instructions for Form 8824. Tax forms 2008   For information on using Form 4797, see chapter 4 of Publication 544. Tax forms 2008 Corporate stocks. Tax forms 2008   The following trades of corporate stocks generally do not result in a taxable gain or a deductible loss. Tax forms 2008 Corporate reorganizations. Tax forms 2008   In some instances, a company will give you common stock for preferred stock, preferred stock for common stock, or stock in one corporation for stock in another corporation. Tax forms 2008 If this is a result of a merger, recapitalization, transfer to a controlled corporation, bankruptcy, corporate division, corporate acquisition, or other corporate reorganization, you do not recognize gain or loss. Tax forms 2008 Stock for stock of the same corporation. Tax forms 2008   You can exchange common stock for common stock or preferred stock for preferred stock in the same corporation without having a recognized gain or loss. Tax forms 2008 This is true for a trade between two stockholders as well as a trade between a stockholder and the corporation. Tax forms 2008 Convertible stocks and bonds. Tax forms 2008   You generally will not have a recognized gain or loss if you convert bonds into stock or preferred stock into common stock of the same corporation according to a conversion privilege in the terms of the bond or the preferred stock certificate. Tax forms 2008 Property for stock of a controlled corporation. Tax forms 2008   If you transfer property to a corporation solely in exchange for stock in that corporation, and immediately after the trade you are in control of the corporation, you ordinarily will not recognize a gain or loss. Tax forms 2008 This rule applies both to individuals and to groups who transfer property to a corporation. Tax forms 2008 It does not apply if the corporation is an investment company. Tax forms 2008   For this purpose, to be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock of the corporation. Tax forms 2008   If this provision applies to you, you may have to attach to your return a complete statement of all facts pertinent to the exchange. Tax forms 2008 For details, see Regulations section 1. Tax forms 2008 351-3. Tax forms 2008 Additional information. Tax forms 2008   For more information on trades of stock, see Nontaxable Trades in chapter 4 of Publication 550. Tax forms 2008 Insurance policies and annuities. Tax forms 2008   You will not have a recognized gain or loss if the insured or annuitant is the same under both contracts and you trade: A life insurance contract for another life insurance contract or for an endowment or annuity contract or for a qualified long-term care insurance contract, An endowment contract for another endowment contract that provides for regular payments beginning at a date no later than the beginning date under the old contract or for an annuity contract or for a qualified long-term insurance contract, An annuity contract for annuity contract or for a qualified long-term care insurance contract, or A qualified long-term care insurance contract for a qualified long-term care insurance contract. Tax forms 2008   You also may not have to recognize gain or loss on an exchange of a portion of an annuity contract for another annuity contract. Tax forms 2008 For transfers completed before October 24, 2011, see Revenue Ruling 2003-76 in Internal Revenue Bulletin 2003-33 and Revenue Procedure 2008-24 in Internal Revenue Bulletin 2008-13. Tax forms 2008 Revenue Ruling 2003-76 is available at www. Tax forms 2008 irs. Tax forms 2008 gov/irb/2003-33_IRB/ar11. Tax forms 2008 html. Tax forms 2008 Revenue Procedure 2008-24 is available at www. Tax forms 2008 irs. Tax forms 2008 gov/irb/2008-13_IRB/ar13. Tax forms 2008 html. Tax forms 2008 For transfers completed on or after October 24, 2011, see Revenue Ruling 2003-76, above, and Revenue Procedure 2011-38, in Internal Revenue Bulletin 2011-30. Tax forms 2008 Revenue Procedure 2011-38 is available at www. Tax forms 2008 irs. Tax forms 2008 gov/irb/2011-30_IRB/ar09. Tax forms 2008 html. Tax forms 2008   For tax years beginning after December 31, 2010, amounts received as an annuity for a period of 10 years or more, or for the lives of one or more individuals, under any portion of an annuity, endowment, or life insurance contract, are treated as a separate contract and are considered partial annuities. Tax forms 2008 A portion of an annuity, endowment, or life insurance contract may be annuitized, provided that the annuitization period is for 10 years or more or for the lives of one or more individuals. Tax forms 2008 The investment in the contract is allocated between the part of the contract from which amounts are received as an annuity and the part of the contract from which amounts are not received as an annuity. Tax forms 2008   Exchanges of contracts not included in this list, such as an annuity contract for an endowment contract, or an annuity or endowment contract for a life insurance contract, are taxable. Tax forms 2008 Demutualization of life insurance companies. Tax forms 2008   If you received stock in exchange for your equity interest as a policyholder or an annuitant, you generally will not have a recognized gain or loss. Tax forms 2008 See Demutualization of Life Insurance Companies in Publication 550. Tax forms 2008 U. Tax forms 2008 S. Tax forms 2008 Treasury notes or bonds. Tax forms 2008   You can trade certain issues of U. Tax forms 2008 S. Tax forms 2008 Treasury obligations for other issues designated by the Secretary of the Treasury, with no gain or loss recognized on the trade. Tax forms 2008 See Savings bonds traded in chapter 1 of Publication 550 for more information. Tax forms 2008 Transfers Between Spouses Generally, no gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or if incident to a divorce, a former spouse. Tax forms 2008 This nonrecognition rule does not apply in the following situations. Tax forms 2008 The recipient spouse or former spouse is a nonresident alien. Tax forms 2008 Property is transferred in trust and liability exceeds basis. Tax forms 2008 Gain must be recognized to the extent the amount of the liabilities assumed by the trust, plus any liabilities on the property, exceed the adjusted basis of the property. Tax forms 2008 For other situations, see Transfers Between Spouses in chapter 4 of Publication 550. Tax forms 2008 Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. Tax forms 2008 The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. Tax forms 2008 This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its fair market value at the time of transfer or any consideration paid by the recipient. Tax forms 2008 This rule applies for purposes of determining loss as well as gain. Tax forms 2008 Any gain recognized on a transfer in trust increases the basis. Tax forms 2008 A transfer of property is incident to a divorce if the transfer occurs within 1 year after the date on which the marriage ends, or if the transfer is related to the ending of the marriage. Tax forms 2008 Related Party Transactions Special rules apply to the sale or trade of property between related parties. Tax forms 2008 Gain on sale or trade of depreciable property. Tax forms 2008   Your gain from the sale or trade of property to a related party may be ordinary income, rather than capital gain, if the property can be depreciated by the party receiving it. Tax forms 2008 See chapter 3 of Publication 544 for more information. Tax forms 2008 Like-kind exchanges. Tax forms 2008   Generally, if you trade business or investment property for other business or investment property of a like kind, no gain or loss is recognized. Tax forms 2008 See Like-kind exchanges , earlier, under Nontaxable Trades. Tax forms 2008   This rule also applies to trades of property between related parties, defined next under Losses on sales or trades of property. Tax forms 2008 However, if either you or the related party disposes of the like property within 2 years after the trade, you both must report any gain or loss not recognized on the original trade on your return filed for the year in which the later disposition occurs. Tax forms 2008 See Related Party Transactions in chapter 4 of Publication 550 for exceptions. Tax forms 2008 Losses on sales or trades of property. Tax forms 2008   You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties. Tax forms 2008 Members of your family. Tax forms 2008 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. Tax forms 2008 ), and lineal descendants (children, grandchildren, etc. Tax forms 2008 ). Tax forms 2008 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. Tax forms 2008 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. Tax forms 2008 (See Constructive ownership of stock , later. Tax forms 2008 ) A tax-exempt charitable or educational organization directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. Tax forms 2008   In addition, a loss on the sale or trade of property is not deductible if the transaction is directly or indirectly between the following related parties. Tax forms 2008 A grantor and fiduciary, or the fiduciary and beneficiary, of any trust. Tax forms 2008 Fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. Tax forms 2008 A trust fiduciary and a corporation of which more than 50% in value of the outstanding stock is directly or indirectly owned by or for the trust, or by or for the grantor of the trust. Tax forms 2008 A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest, or the profits interest, in the partnership. Tax forms 2008 Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. Tax forms 2008 Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Tax forms 2008 An executor and a beneficiary of an estate (except in the case of a sale or trade to satisfy a pecuniary bequest). Tax forms 2008 Two corporations that are members of the same controlled group. Tax forms 2008 (Under certain conditions, however, these losses are not disallowed but must be deferred. Tax forms 2008 ) Two partnerships if the same persons own, directly or indirectly, more than 50% of the capital interests or the profit interests in both partnerships. Tax forms 2008 Multiple property sales or trades. Tax forms 2008   If you sell or trade to a related party a number of blocks of stock or pieces of property in a lump sum, you must figure the gain or loss separately for each block of stock or piece of property. Tax forms 2008 The gain on each item may be taxable. Tax forms 2008 However, you cannot deduct the loss on any item. Tax forms 2008 Also, you cannot reduce gains from the sales of any of these items by losses on the sales of any of the other items. Tax forms 2008 Indirect transactions. Tax forms 2008   You cannot deduct your loss on the sale of stock through your broker if, under a prearranged plan, a related party buys the same stock you had owned. Tax forms 2008 This does not apply to a trade between related parties through an exchange that is purely coincidental and is not prearranged. Tax forms 2008 Constructive ownership of stock. Tax forms 2008   In determining whether a person directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. Tax forms 2008 Rule 1. Tax forms 2008   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Tax forms 2008 Rule 2. Tax forms 2008   An individual is considered to own the stock directly or indirectly owned by or for his or her family. Tax forms 2008 Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. Tax forms 2008 Rule 3. Tax forms 2008   An individual owning, other than by applying rule 2, any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Tax forms 2008 Rule 4. Tax forms 2008   When applying rule 1, 2, or 3, stock constructively owned by a person under rule 1 is treated as actually owned by that person. Tax forms 2008 But stock constructively owned by an individual under rule 2 or rule 3 is not treated as owned by that individual for again applying either rule 2 or rule 3 to make another person the constructive owner of the stock. Tax forms 2008 Property received from a related party. Tax forms 2008    If you sell or trade at a gain property you acquired from a related party, you recognize the gain only to the extent it is more than the loss previously disallowed to the related party. Tax forms 2008 This rule applies only if you are the original transferee and you acquired the property by purchase or exchange. Tax forms 2008 This rule does not apply if the related party's loss was disallowed because of the wash sale rules described in chapter 4 of Publication 550 under Wash Sales. Tax forms 2008   If you sell or trade at a loss property you acquired from a related party, you cannot recognize the loss that was not allowed to the related party. Tax forms 2008 Example 1. Tax forms 2008 Your brother sells you stock for $7,600. Tax forms 2008 His cost basis is $10,000. Tax forms 2008 Your brother cannot deduct the loss of $2,400. Tax forms 2008 Later, you sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900. Tax forms 2008 Your reportable gain is $500 (the $2,900 gain minus the $2,400 loss not allowed to your brother). Tax forms 2008 Example 2. Tax forms 2008 If, in Example 1, you sold the stock for $6,900 instead of $10,500, your recognized loss is only $700 (your $7,600 basis minus $6,900). Tax forms 2008 You cannot deduct the loss that was not allowed to your brother. Tax forms 2008 Capital Gains and Losses This section discusses the tax treatment of gains and losses from different types of investment transactions. Tax forms 2008 Character of gain or loss. Tax forms 2008   You need to classify your gains and losses as either ordinary or capital gains or losses. Tax forms 2008 You then need to classify your capital gains and losses as either short term or long term. Tax forms 2008 If you have long-term gains and losses, you must identify your 28% rate gains and losses. Tax forms 2008 If you have a net capital gain, you must also identify any unrecaptured section 1250 gain. Tax forms 2008   The correct classification and identification helps you figure the limit on capital losses and the correct tax on capital gains. Tax forms 2008 Reporting capital gains and losses is explained in chapter 16. Tax forms 2008 Capital or Ordinary Gain or Loss If you have a taxable gain or a deductible loss from a transaction, it may be either a capital gain or loss or an ordinary gain or loss, depending on the circumstances. Tax forms 2008 Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss. Tax forms 2008 A sale or trade of a noncapital asset generally results in ordinary gain or loss. Tax forms 2008 Depending on the circumstances, a gain or loss on a sale or trade of property used in a trade or business may be treated as either capital or ordinary, as explained in Publication 544. Tax forms 2008 In some situations, part of your gain or loss may be a capital gain or loss and part may be an ordinary gain or loss. Tax forms 2008 Capital Assets and Noncapital Assets For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. Tax forms 2008 Some examples are: Stocks or bonds held in your personal account, A house owned and used by you and your family, Household furnishings, A car used for pleasure or commuting, Coin or stamp collections, Gems and jewelry, and Gold, silver, or any other metal. Tax forms 2008 Any property you own is a capital asset, except the following noncapital assets. Tax forms 2008 Property held mainly for sale to customers or property that will physically become a part of the merchandise for sale to customers. Tax forms 2008 For an exception, see Capital Asset Treatment for Self-Created Musical Works , later. Tax forms 2008 Depreciable property used in your trade or business, even if fully depreciated. Tax forms 2008 Real property used in your trade or business. Tax forms 2008 A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property that is: Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Acquired under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. Tax forms 2008 For an exception to this rule, see Capital Asset Treatment for Self-Created Musical Works , later. Tax forms 2008 Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of property described in (1). Tax forms 2008 U. Tax forms 2008 S. Tax forms 2008 Government publications that you received from the government free or for less than the normal sales price, or that you acquired under circumstances entitling you to the basis of someone who received the publications free or for less than the normal sales price. Tax forms 2008 Certain commodities derivative financial instruments held by commodities derivatives dealers. Tax forms 2008 Hedging transactions, but only if the transaction is clearly identified as a hedging transaction before the close of the day on which it was acquired, originated, or entered into. Tax forms 2008 Supplies of a type you regularly use or consume in the ordinary course of your trade or business. Tax forms 2008 Investment Property Investment property is a capital asset. Tax forms 2008 Any gain or loss from its sale or trade is generally a capital gain or loss. Tax forms 2008 Gold, silver, stamps, coins, gems, etc. Tax forms 2008   These are capital assets except when they are held for sale by a dealer. Tax forms 2008 Any gain or loss you have from their sale or trade generally is a capital gain or loss. Tax forms 2008 Stocks, stock rights, and bonds. Tax forms 2008   All of these (including stock received as a dividend) are capital assets except when held for sale by a securities dealer. Tax forms 2008 However, if you own small business stock, see Losses on Section 1244 (Small Business) Stock , later, and Losses on Small Business Investment Company Stock, in chapter 4 of Publication 550. Tax forms 2008 Personal Use Property Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. Tax forms 2008 However, you cannot deduct a loss from selling personal use property. Tax forms 2008 Capital Asset Treatment for Self-Created Musical Works You can elect to treat musical compositions and copyrights in musical works as capital assets when you sell or exchange them if: Your personal efforts created the property, or You acquired the property under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. Tax forms 2008 You must make a separate election for each musical composition (or copyright in a musical work) sold or exchanged during the tax year. Tax forms 2008 You must make the election on or before the due date (including extensions) of the income tax return for the tax year of the sale or exchange. Tax forms 2008 You must make the election on Form 8949 by treating the sale or exchange as the sale or exchange of a capital asset, according to Form 8949, Schedule D (Form 1040), and their separate instructions. Tax forms 2008 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Tax forms 2008 See also Schedule D (Form 1040), Form 8949, and their separate instructions. Tax forms 2008 You can revoke the election if you have IRS approval. Tax forms 2008 To get IRS approval, you must submit a request for a letter ruling under the appropriate IRS revenue procedure. Tax forms 2008 See, for example, Rev. Tax forms 2008 Proc. Tax forms 2008 2013-1, corrected by Announcement 2013–9, and amplified and modified by Rev. Tax forms 2008 Proc. Tax forms 2008 2013–32, available at www. Tax forms 2008 irs. Tax forms 2008 gov/irb/2013-01_IRB/ar06. Tax forms 2008 html. Tax forms 2008 Alternatively, you are granted an automatic 6-month extension from the due date of your income tax return (excluding extensions) to revoke the election, provided you timely file your income tax return, and within this 6-month extension period, you file Form 1040X that treats the sale or exchange as the sale or exchange of property that is not a capital asset. Tax forms 2008 Discounted Debt Instruments Treat your gain or loss on the sale, redemption, or retirement of a bond or other debt instrument originally issued at a discount or bought at a discount as capital gain or loss, except as explained in the following discussions. Tax forms 2008 Short-term government obligations. Tax forms 2008   Treat gains on short-term federal, state, or local government obligations (other than tax-exempt obligations) as ordinary income up to your ratable share of the acquisition discount. Tax forms 2008 This treatment applies to obligations with a fixed maturity date not more than 1 year from the date of issue. Tax forms 2008 Acquisition discount is the stated redemption price at maturity minus your basis in the obligation. Tax forms 2008   However, do not treat these gains as income to the extent you previously included the discount in income. Tax forms 2008 See Discount on Short-Term Obligations in chapter 1 of Publication 550. Tax forms 2008 Short-term nongovernment obligations. Tax forms 2008   Treat gains on short-term nongovernment obligations as ordinary income up to your ratable share of original issue discount (OID). Tax forms 2008 This treatment applies to obligations with a fixed maturity date of not more than 1 year from the date of issue. Tax forms 2008   However, to the extent you previously included the discount in income, you do not have to include it in income again. Tax forms 2008 See Discount on Short-Term Obligations in chapter 1 of Publication 550. Tax forms 2008 Tax-exempt state and local government bonds. Tax forms 2008   If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. Tax forms 2008 To figure your gain or loss on the sale or trade of these bonds, reduce the amount realized by your part of OID. Tax forms 2008   If the bonds were issued after September 3, 1982, and acquired after March 1, 1984, increase the adjusted basis by your part of OID to figure gain or loss. Tax forms 2008 For more information on the basis of these bonds, see Discounted Debt Instruments in chapter 4 of Publication 550. Tax forms 2008   Any gain from market discount is usually taxable on disposition or redemption of tax-exempt bonds. Tax forms 2008 If you bought the bonds before May 1, 1993, the gain from market discount is capital gain. Tax forms 2008 If you bought the bonds after April 30, 1993, the gain is ordinary income. Tax forms 2008   You figure the market discount by subtracting the price you paid for the bond from the sum of the original issue price of the bond and the amount of accumulated OID from the date of issue that represented interest to any earlier holders. Tax forms 2008 For more information, see Market Discount Bonds in chapter 1 of Publication 550. Tax forms 2008    A loss on the sale or other disposition of a tax-exempt state or local government bond is deductible as a capital loss. Tax forms 2008 Redeemed before maturity. Tax forms 2008   If a state or local bond issued before June 9, 1980, is redeemed before it matures, the OID is not taxable to you. Tax forms 2008   If a state or local bond issued after June 8, 1980, is redeemed before it matures, the part of OID earned while you hold the bond is not taxable to you. Tax forms 2008 However, you must report the unearned part of OID as a capital gain. Tax forms 2008 Example. Tax forms 2008 On July 2, 2002, the date of issue, you bought a 20-year, 6% municipal bond for $800. Tax forms 2008 The face amount of the bond was $1,000. Tax forms 2008 The $200 discount was OID. Tax forms 2008 At the time the bond was issued, the issuer had no intention of redeeming it before it matured. Tax forms 2008 The bond was callable at its face amount beginning 10 years after the issue date. Tax forms 2008 The issuer redeemed the bond at the end of 11 years (July 2, 2013) for its face amount of $1,000 plus accrued annual interest of $60. Tax forms 2008 The OID earned during the time you held the bond, $73, is not taxable. Tax forms 2008 The $60 accrued annual interest also is not taxable. Tax forms 2008 However, you must report the unearned part of OID ($127) as a capital gain. Tax forms 2008 Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). Tax forms 2008   If you sell, trade, or redeem for a gain one of these debt instruments, the part of your gain that is not more than your ratable share of the OID at the time of the sale or redemption is ordinary income. Tax forms 2008 The rest of the gain is capital gain. Tax forms 2008 If, however, there was an intention to call the debt instrument before maturity, all of your gain that is not more than the entire OID is treated as ordinary income at the time of the sale. Tax forms 2008 This treatment of taxable gain also applies to corporate instruments issued after May 27, 1969, under a written commitment that was binding on May 27, 1969, and at all times thereafter. Tax forms 2008 Long-term debt instruments issued after May 27, 1969 (or after July 1, 1982, if a government instrument). Tax forms 2008   If you hold one of these debt instruments, you must include a part of OID in your gross income each year you own the instrument. Tax forms 2008 Your basis in that debt instrument is increased by the amount of OID that you have included in your gross income. Tax forms 2008 See Original Issue Discount (OID) in chapter 7 for information about OID that you must report on your tax return. Tax forms 2008   If you sell or trade the debt instrument before maturity, your gain is a capital gain. Tax forms 2008 However, if at the time the instrument was originally issued there was an intention to call it before its maturity, your gain generally is ordinary income to the extent of the entire OID reduced by any amounts of OID previously includible in your income. Tax forms 2008 In this case, the rest of the gain is capital gain. Tax forms 2008 Market discount bonds. Tax forms 2008   If the debt instrument has market discount and you chose to include the discount in income as it accrued, increase your basis in the debt instrument by the accrued discount to figure capital gain or loss on its disposition. Tax forms 2008 If you did not choose to include the discount in income as it accrued, you must report gain as ordinary interest income up to the instrument's accrued market discount. Tax forms 2008 The rest of the gain is capital gain. Tax forms 2008 See Market Discount Bonds in chapter 1 of Publication 550. Tax forms 2008   A different rule applies to market discount bonds issued before July 19, 1984, and purchased by you before May 1, 1993. Tax forms 2008 See Market discount bonds under Discounted Debt Instruments in chapter 4 of Publication 550. Tax forms 2008 Retirement of debt instrument. Tax forms 2008   Any amount you receive on the retirement of a debt instrument is treated in the same way as if you had sold or traded that instrument. Tax forms 2008 Notes of individuals. Tax forms 2008   If you hold an obligation of an individual issued with OID after March 1, 1984, you generally must include the OID in your income currently, and your gain or loss on its sale or retirement is generally capital gain or loss. Tax forms 2008 An exception to this treatment applies if the obligation is a loan between individuals and all the following requirements are met. Tax forms 2008 The lender is not in the business of lending money. Tax forms 2008 The amount of the loan, plus the amount of any outstanding prior loans, is $10,000 or less. Tax forms 2008 Avoiding federal tax is not one of the principal purposes of the loan. Tax forms 2008   If the exception applies, or the obligation was issued before March 2, 1984, you do not include the OID in your income currently. Tax forms 2008 When you sell or redeem the obligation, the part of your gain that is not more than your accrued share of OID at that time is ordinary income. Tax forms 2008 The rest of the gain, if any, is capital gain. Tax forms 2008 Any loss on the sale or redemption is capital loss. Tax forms 2008 Deposit in Insolvent or Bankrupt Financial Institution If you lose money you have on deposit in a bank, credit union, or other financial institution that becomes insolvent or bankrupt, you may be able to deduct your loss in one of three ways. Tax forms 2008 Ordinary loss. Tax forms 2008 Casualty loss. Tax forms 2008 Nonbusiness bad debt (short-term capital loss). Tax forms 2008  For more information, see Deposit in Insolvent or Bankrupt Financial Institution, in chapter 4 of Publication 550. Tax forms 2008 Sale of Annuity The part of any gain on the sale of an annuity contract before its maturity date that is based on interest accumulated on the contract is ordinary income. Tax forms 2008 Losses on Section 1244 (Small Business) Stock You can deduct as an ordinary loss, rather than as a capital loss, your loss on the sale, trade, or worthlessness of section 1244 stock. Tax forms 2008 Report the loss on Form 4797, line 10. Tax forms 2008 Any gain on section 1244 stock is a capital gain if the stock is a capital asset in your hands. Tax forms 2008 Report the gain on Form 8949. Tax forms 2008 See Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. Tax forms 2008 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Tax forms 2008 See also Schedule D (Form 1040), Form 8949, and their separate instructions. Tax forms 2008 Holding Period If you sold or traded investment property, you must determine your holding period for the property. Tax forms 2008 Your holding period determines whether any capital gain or loss was a short-term or long-term capital gain or loss. Tax forms 2008 Long-term or short-term. Tax forms 2008   If you hold investment property more than 1 year, any capital gain or loss is a long-term capital gain or loss. Tax forms 2008 If you hold the property 1 year or less, any capital gain or loss is a short-term capital gain or loss. Tax forms 2008   To determine how long you held the investment property, begin counting on the date after the day you acquired the property. Tax forms 2008 The day you disposed of the property is part of your holding period. Tax forms 2008 Example. Tax forms 2008 If you bought investment property on February 6, 2012, and sold it on February 6, 2013, your holding period is not more than 1 year and you have a short-term capital gain or loss. Tax forms 2008 If you sold it on February 7, 2013, your holding period is more than 1 year and you will have a long-term capital gain or loss. Tax forms 2008 Securities traded on established market. Tax forms 2008   For securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities, and ends on the trade date you sold them. Tax forms 2008    Do not confuse the trade date with the settlement date, which is the date by which the stock must be delivered and payment must be made. Tax forms 2008 Example. Tax forms 2008 You are a cash method, calendar year taxpayer. Tax forms 2008 You sold stock at a gain on December 30, 2013. Tax forms 2008 According to the rules of the stock exchange, the sale was closed by delivery of the stock 4 trading days after the sale, on January 6, 2014. Tax forms 2008 You received payment of the sales price on that same day. Tax forms 2008 Report your gain on your 2013 return, even though you received the payment in 2014. Tax forms 2008 The gain is long term or short term depending on whether you held the stock more than 1 year. Tax forms 2008 Your holding period ended on December 30. Tax forms 2008 If you had sold the stock at a loss, you would also report it on your 2013 return. Tax forms 2008 U. Tax forms 2008 S. Tax forms 2008 Treasury notes and bonds. Tax forms 2008   The holding period of U. Tax forms 2008 S. Tax forms 2008 Treasury notes and bonds sold at auction on the basis of yield starts the day after the Secretary of the Treasury, through news releases, gives notification of acceptance to successful bidders. Tax forms 2008 The holding period of U. Tax forms 2008 S. Tax forms 2008 Treasury notes and bonds sold through an offering on a subscription basis at a specified yield starts the day after the subscription is submitted. Tax forms 2008 Automatic investment service. Tax forms 2008   In determining your holding period for shares bought by the bank or other agent, full shares are considered bought first and any fractional shares are considered bought last. Tax forms 2008 Your holding period starts on the day after the bank's purchase date. Tax forms 2008 If a share was bought over more than one purchase date, your holding period for that share is a split holding period. Tax forms 2008 A part of the share is considered to have been bought on each date that stock was bought by the bank with the proceeds of available funds. Tax forms 2008 Nontaxable trades. Tax forms 2008   If you acquire investment property in a trade for other investment property and your basis for the new property is determined, in whole or in part, by your basis in the old property, your holding period for the new property begins on the day following the date you acquired the old property. Tax forms 2008 Property received as a gift. Tax forms 2008   If you receive a gift of property and your basis is determined by the donor's adjusted basis, your holding period is considered to have started on the same day the donor's holding period started. Tax forms 2008   If your basis is determined by the fair market value of the property, your holding period starts on the day after the date of the gift. Tax forms 2008 Inherited property. Tax forms 2008   Generally, if you inherited investment property, your capital gain or loss on any later disposition of that property is long-term capital gain or loss. Tax forms 2008 This is true regardless of how long you actually held the property. Tax forms 2008 However, if you inherited property from someone who died in 2010, see the information below. Tax forms 2008 Inherited property from someone who died in 2010. Tax forms 2008   If you inherit investment property from a decedent who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your holding period. Tax forms 2008 Real property bought. Tax forms 2008   To figure how long you have held real property bought under an unconditional contract, begin counting on the day after you received title to it or on the day after you took possession of it and assumed the burdens and privileges of ownership, whichever happened first. Tax forms 2008 However, taking delivery or possession of real property under an option agreement is not enough to start the holding period. Tax forms 2008 The holding period cannot start until there is an actual contract of sale. Tax forms 2008 The holding period of the seller cannot end before that time. Tax forms 2008 Real property repossessed. Tax forms 2008   If you sell real property but keep a security interest in it, and then later repossess the property under the terms of the sales contract, your holding period for a later sale includes the period you held the property before the original sale and the period after the repossession. Tax forms 2008 Your holding period does not include the time between the original sale and the repossession. Tax forms 2008 That is, it does not include the period during which the first buyer held the property. Tax forms 2008 Stock dividends. Tax forms 2008   The holding period for stock you received as a taxable stock dividend begins on the date of distribution. Tax forms 2008   The holding period for new stock you received as a nontaxable stock dividend begins on the same day as the holding period of the old stock. Tax forms 2008 This rule also applies to stock acquired in a “spin-off,” which is a distribution of stock or securities in a controlled corporation. Tax forms 2008 Nontaxable stock rights. Tax forms 2008   Your holding period for nontaxable stock rights begins on the same day as the holding period of the underlying stock. Tax forms 2008 The holding period for stock acquired through the exercise of stock rights begins on the date the right was exercised. Tax forms 2008 Nonbusiness Bad Debts If someone owes you money that you cannot collect, you have a bad debt. Tax forms 2008 You may be able to deduct the amount owed to you when you figure your tax for the year the debt becomes worthless. Tax forms 2008 Generally, nonbusiness bad debts are bad debts that did not come from operating your trade or business, and are deductible as short-term capital losses. Tax forms 2008 To be deductible, nonbusiness bad debts must be totally worthless. Tax forms 2008 You cannot deduct a partly worthless nonbusiness debt. Tax forms 2008 Genuine debt required. Tax forms 2008   A debt must be genuine for you to deduct a loss. Tax forms 2008 A debt is genuine if it arises from a debtor-creditor relationship based on a valid and enforceable obligation to repay a fixed or determinable sum of money. Tax forms 2008 Basis in bad debt required. Tax forms 2008    To deduct a bad debt, you must have a basis in it—that is, you must have already included the amount in your income or loaned out your cash. Tax forms 2008 For example, you cannot claim a bad debt deduction for court-ordered child support not paid to you by your former spouse. Tax forms 2008 If you are a cash method taxpayer (as most individuals are), you generally cannot take a bad debt deduction for unpaid salaries, wages, rents, fees, interest, dividends, and similar items. Tax forms 2008 When deductible. Tax forms 2008   You can take a bad debt deduction only in the year the debt becomes worthless. Tax forms 2008 You do not have to wait until a debt is due to determine whether it is worthless. Tax forms 2008 A debt becomes worthless when there is no longer any chance that the amount owed will be paid. Tax forms 2008   It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. Tax forms 2008 You must only show that you have taken reasonable steps to collect the debt. Tax forms 2008 Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. Tax forms 2008 How to report bad debts. Tax forms 2008    Deduct nonbusiness bad debts as short-term capital losses on Form 8949. Tax forms 2008    Make sure you report your bad debt(s) (and any other short-term transactions for which you did not receive a Form 1099-B) on Form 8949, Part I, with box C checked. Tax forms 2008    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Tax forms 2008 See also Schedule D (Form 1040), Form 8949, and their separate instructions. Tax forms 2008   For each bad debt, attach a statement to your return that contains: A description of the debt, including the amount, and the date it became due, The name of the debtor, and any business or family relationship between you and the debtor, The efforts you made to collect the debt, and Why you decided the debt was worthless. Tax forms 2008 For example, you could show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt. Tax forms 2008 Filing a claim for refund. Tax forms 2008    If you do not deduct a bad debt on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the bad debt. Tax forms 2008 To do this, use Form 1040X to amend your return for the year the debt became worthless. Tax forms 2008 You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. Tax forms 2008 For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. Tax forms 2008 Additional information. Tax forms 2008   For more information, see Nonbusiness Bad Debts in Publication 550. Tax forms 2008 For information on business bad debts, see chapter 10 of Publication 535, Business Expenses. Tax forms 2008 Wash Sales You cannot deduct losses from sales or trades of stock or securities in a wash sale. Tax forms 2008 A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. Tax forms 2008 If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). Tax forms 2008 The result is your basis in the new stock or securities. Tax forms 2008 This adjustment postpones the loss deduction until the disposition of the new stock or securities. Tax forms 2008 Your holding period for the new stock or securities includes the holding period of the stock or securities sold. Tax forms 2008 For more information, see Wash Sales, in chapter 4 of Publication 550. Tax forms 2008 Rollover of Gain From Publicly Traded Securities You may qualify for a tax-free rollover of certain gains from the sale of publicly traded securities. Tax forms 2008 This means that if you buy certain replacement property and make the choice described in this section, you postpone part or all of your gain. Tax forms 2008 You postpone the gain by adjusting the basis of the replacement property as described in Basis of replacement property , later. Tax forms 2008 This postpones your gain until the year you dispose of the replacement property. Tax forms 2008 You qualify to make this choice if you meet all the following tests. Tax forms 2008 You sell publicly traded securities at a gain. Tax forms 2008 Publicly traded securities are securities traded on an established securities market. Tax forms 2008 Your gain from the sale is a capital gain. Tax forms 2008 During the 60-day period beginning on the date of the sale, you buy replacement property. Tax forms 2008 This replacement property must be either common stock of, or a partnership interest in a specialized small business investment company (SSBIC). Tax forms 2008 This is any partnership or corporation licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958, as in effect on May 13, 1993. Tax forms 2008 Amount of gain recognized. Tax forms 2008   If you make the choice described in this section, you must recognize gain only up to the following amount. Tax forms 2008 The amount realized on the sale, minus The cost of any common stock or partnership interest in an SSBIC that you bought during the 60-day period beginning on the date of sale (and did not previously take into account on an earlier sale of publicly traded securities). Tax forms 2008  If this amount is less than the amount of your gain, you can postpone the rest of your gain, subject to the limit described next. Tax forms 2008 If this amount is equal to or more than the amount of your gain, you must recognize the full amount of your gain. Tax forms 2008 Limit on gain postponed. Tax forms 2008   The amount of gain you can postpone each year is limited to the smaller of: $50,000 ($25,000 if you are married and file a separate return), or $500,000 ($250,000 if you are married and file a separate return), minus the amount of gain you postponed for all earlier years. Tax forms 2008 Basis of replacement property. Tax forms 2008   You must subtract the amount of postponed gain from the basis of your replacement property. Tax forms 2008 How to report and postpone gain. Tax forms 2008    See How to report and postpone gain under Rollover of Gain From Publicly Traded Securities in chapter 4 of Publication 550 for details. 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