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

TurboTax Federal Free Edition - File Taxes Online

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

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


© 2012 - 2018 All rights reserved.

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

Tax Return 2011 Deadline

State Income Tax E File1040x Amended Return 2012State Taxes For FreeDo Tax AmendmentHow Do I File A Tax Extension For Free2012 Tax Preparation Software FreeFree Online State Tax ReturnHow Can I Amend My 2011 Tax ReturnMilitary Filing TaxesTurbotax 1040nrForm To Amend Taxes1040ez 2011File My State Taxes Free1040 Ez Form 20121040ez Tax Form 2011Free Taxes Online 2012Tax Extension 2011Free Fed 1040ez FilingHow Do I File An Amended ReturnFree Tax Filing 2012Tax Return 2013How Do I Amend My TaxesTax Cut Free FileFile AmendmentFree H&r Block EfileHnr Block TaxesFree State Filing2013 Federal Tax Form 1040ez1040nr Form 2013140ez 2011Download Form 1040xTurbo Tax Free MilitaryFile State Tax OnlyAmend 2011 TaxTax AmendedTax Planning Us State Income TaxesFile Previous Years Tax ReturnsTax Planning Us 1040xIrs 1040x FormsFile A 1040ez Online

Tax Return 2011 Deadline

Tax return 2011 deadline Publication 925 - Main Content Table of Contents Passive Activity LimitsWho Must Use These Rules? Passive Activity Loss Passive Activity Credit Publicly Traded Partnership Excess Farm Loss Passive Activities Activities That Are Not Passive Activities Passive Activity Income and Deductions Grouping Your Activities Recharacterization of Passive Income Dispositions How To Report Your Passive Activity Loss Comprehensive ExampleGeneral Information At-Risk LimitsWho Is Affected? Activities Covered by the At-Risk Rules At-Risk Amounts Amounts Not At Risk Reductions of Amounts At Risk Recapture Rule How To Get Tax HelpLow Income Taxpayer Clinics Passive Activity Limits Who Must Use These Rules? The passive activity rules apply to: Individuals, Estates, Trusts (other than grantor trusts), Personal service corporations, and Closely held corporations. Tax return 2011 deadline Even though the rules do not apply to grantor trusts, partnerships, and S corporations directly, they do apply to the owners of these entities. Tax return 2011 deadline For information about personal service corporations and closely held corporations, including definitions and how the passive activity rules apply to these corporations, see Form 8810 and its instructions. Tax return 2011 deadline Before applying the passive activity limits, you must first determine the amount of the deductions disallowed under the basis, excess farm loss, or at-risk rules. Tax return 2011 deadline See Passive Activity Deductions, later. Tax return 2011 deadline Passive Activity Loss Generally, the passive activity loss for the tax year is not allowed. Tax return 2011 deadline However, there is a special allowance under which some or all of your passive activity loss may be allowed. Tax return 2011 deadline See Special $25,000 allowance , later. Tax return 2011 deadline Definition of passive activity loss. Tax return 2011 deadline    Generally, your passive activity loss for the tax year is the excess of your passive activity deductions over your passive activity gross income. Tax return 2011 deadline See Passive Activity Income and Deductions , later. Tax return 2011 deadline   For a closely held corporation, the passive activity loss is the excess of passive activity deductions over the sum of passive activity gross income and net active income. Tax return 2011 deadline For details on net active income, see the Instructions for Form 8810. Tax return 2011 deadline For the definition of passive activity gross income, see Passive Activity Income , later. Tax return 2011 deadline For the definition of passive activity deductions, see Passive Activity Deductions , later. Tax return 2011 deadline Identification of Disallowed Passive Activity Deductions If all or a part of your passive activity loss is disallowed for the tax year, you may need to allocate the disallowed passive activity loss among different passive activities and among different deductions within a passive activity. Tax return 2011 deadline Allocation of disallowed passive activity loss among activities. Tax return 2011 deadline   If all or any part of your passive activity loss is disallowed for the tax year, a ratable portion of the loss (if any) from each of your passive activities is disallowed. Tax return 2011 deadline The ratable portion of a loss from an activity is computed by multiplying the passive activity loss that is disallowed for the tax year by the fraction obtained by dividing: The loss from the activity for the tax year; by The sum of the losses for the tax year from all activities having losses for the tax year. Tax return 2011 deadline Use Worksheet 5 of Form 8582 to figure the ratable portion of the loss from each activity that is disallowed. Tax return 2011 deadline Loss from an activity. Tax return 2011 deadline   The term “loss from an activity” means: The amount by which the passive activity deductions (defined later) from the activity for the tax year exceed the passive activity gross income (defined later) from the activity for the tax year; reduced by Any part of such amount that is allowed under the Special $25,000 Allowance , later. Tax return 2011 deadline   If your passive activity gross income from significant participation passive activities (defined later) for the tax year is more than your passive activity deductions from those activities for the tax year, those activities shall be treated, solely for purposes of figuring your loss from the activity, as a single activity that does not have a loss for such taxable year. Tax return 2011 deadline See Significant Participation Passive Activities , later. Tax return 2011 deadline Example. Tax return 2011 deadline John Pine holds interests in three passive activities, A, B, and C. Tax return 2011 deadline The gross income and deductions from these activities for the taxable year are as follows:   A B C Total Gross income $7,000 $4,000 $12,000 $23,000 Deductions (16,000) (20,000) (8,000) (44,000)           Net income (loss) ($9,000) ($16,000) $4,000 ($21,000)   John Pine’s $21,000 passive activity loss for the taxable year is disallowed. Tax return 2011 deadline Therefore, a ratable portion of the losses from activities A and B is disallowed. Tax return 2011 deadline He figures the disallowed portion of each loss as follows: A: $21,000 x $9,000/$25,000 $7,560 B: $21,000 x $16,000/$25,000 13,440     Total $21,000 Allocation within loss activities. Tax return 2011 deadline   If all or any part of your loss from an activity is disallowed under Allocation of disallowed passive activity loss among activities for the tax year, a ratable portion of each of your passive activity deductions (defined later), other than an excluded deduction (defined below) from such activity is disallowed. Tax return 2011 deadline The ratable portion of a passive activity deduction is the amount of the disallowed portion of the loss from the activity for the tax year multiplied by the fraction obtained by dividing: The amount of such deduction; by The sum of all of your passive activity deductions (other than excluded deductions) from that activity from the tax year. Tax return 2011 deadline Excluded deductions. Tax return 2011 deadline    “Excluded deduction” means any passive activity deduction that is taken into account in computing your net income from an item of property for a taxable year in which an amount of the taxpayer's gross income from such item of property is treated as not from a passive activity. Tax return 2011 deadline See Recharacterization of Passive Income , later. Tax return 2011 deadline Separately identified deductions. Tax return 2011 deadline   In identifying the deductions from an activity that are disallowed, you do not need to account separately for a deduction unless such deduction may, if separately taken into account, result in an income tax liability for any tax year different from that which would result were such deduction not taken into account separately. Tax return 2011 deadline   Use Form 8582, Worksheet 7, for any activity if you have passive activity deductions for that activity that must be separately identified. Tax return 2011 deadline   Deductions that must be accounted for separately include (but are not limited to) the following deductions. Tax return 2011 deadline Deductions that arise in a rental real estate activity in tax years in which you actively participate in such activity. Tax return 2011 deadline See Active participation , later. Tax return 2011 deadline Deductions that arise in a rental real estate activity in tax years in which you do not actively participate in such activity. Tax return 2011 deadline See Active participation , later. Tax return 2011 deadline Losses from sales or exchanges of capital assets. Tax return 2011 deadline Section 1231 losses. Tax return 2011 deadline See Section 1231 Gains and Losses in Publication 544, Sales and Other Disposition of Assets, for more information. Tax return 2011 deadline Carryover of Disallowed Deductions In the case of an activity with respect to which any deductions or credits are disallowed for a taxable year (the loss activity), the disallowed deductions are allocated among your activities for the next tax year in a manner that reasonably reflects the extent to which each activity continues the loss activity. Tax return 2011 deadline The disallowed deductions or credits allocated to an activity under the preceding sentence are treated as deductions or credits from the activity for the next tax year. Tax return 2011 deadline For more information, see Regulations section 1. Tax return 2011 deadline 469-1(f)(4). Tax return 2011 deadline Passive Activity Credit Generally, the passive activity credit for the tax year is disallowed. Tax return 2011 deadline The passive activity credit is the amount by which the sum of all your credits subject to the passive activity rules exceed your regular tax liability allocable to all passive activities for the tax year. Tax return 2011 deadline Credits that are included in figuring the general business credit are subject to the passive activity rules. Tax return 2011 deadline See the Instructions for Form 8582-CR for more information. Tax return 2011 deadline Publicly Traded Partnership You must apply the rules in this part separately to your income or loss from a passive activity held through a publicly traded partnership (PTP). Tax return 2011 deadline You also must apply the limit on passive activity credits separately to your credits from a passive activity held through a PTP. Tax return 2011 deadline You can offset deductions from passive activities of a PTP only against income or gain from passive activities of the same PTP. Tax return 2011 deadline Likewise, you can offset credits from passive activities of a PTP only against the tax on the net passive income from the same PTP. Tax return 2011 deadline This separate treatment rule also applies to a regulated investment company holding an interest in a PTP for the items attributable to that interest. Tax return 2011 deadline For more information on how to apply the passive activity loss rules to PTPs, and on how to apply the limit on passive activity credits to PTPs, see Publicly Traded Partnerships (PTPs) in the Instructions for Forms 8582 and 8582-CR, respectively. Tax return 2011 deadline Excess Farm Loss If you receive an applicable subsidy for any tax year and you have an excess farm loss for the tax year, special rules apply. Tax return 2011 deadline These rules do not apply to C corporations. Tax return 2011 deadline For information, see the Instructions for Schedule F (Form 1040), Profit or Loss From Farming. Tax return 2011 deadline Passive Activities There are two kinds of passive activities. Tax return 2011 deadline Trade or business activities in which you do not materially participate during the year. Tax return 2011 deadline Rental activities, even if you do materially participate in them, unless you are a real estate professional. Tax return 2011 deadline Material participation in a trade or business is discussed later, under Activities That Are Not Passive Activities . Tax return 2011 deadline Treatment of former passive activities. Tax return 2011 deadline   A former passive activity is an activity that was a passive activity in any earlier tax year, but is not a passive activity in the current tax year. Tax return 2011 deadline You can deduct a prior year's unallowed loss from the activity up to the amount of your current year net income from the activity. Tax return 2011 deadline Treat any remaining prior year unallowed loss like you treat any other passive loss. Tax return 2011 deadline   In addition, any prior year unallowed passive activity credits from a former passive activity offset the allocable part of your current year tax liability. Tax return 2011 deadline The allocable part of your current year tax liability is that part of this year's tax liability that is allocable to the current year net income from the former passive activity. Tax return 2011 deadline You figure this after you reduce your net income from the activity by any prior year unallowed loss from that activity (but not below zero). Tax return 2011 deadline Trade or Business Activities A trade or business activity is an activity that: Involves the conduct of a trade or business (that is, deductions would be allowable under section 162 of the Internal Revenue Code if other limitations, such as the passive activity rules, did not apply), Is conducted in anticipation of starting a trade or business, or Involves research or experimental expenditures that are deductible under Internal Revenue Code section 174 (or that would be deductible if you chose to deduct rather than capitalize them). Tax return 2011 deadline A trade or business activity does not include a rental activity or the rental of property that is incidental to an activity of holding the property for investment. Tax return 2011 deadline You generally report trade or business activities on Schedule C, C-EZ, F, or in Part II or III of Schedule E. Tax return 2011 deadline Rental Activities A rental activity is a passive activity even if you materially participated in that activity, unless you materially participated as a real estate professional. Tax return 2011 deadline See Real Estate Professional under Activities That Are Not Passive Activities, later. Tax return 2011 deadline An activity is a rental activity if tangible property (real or personal) is used by customers or held for use by customers, and the gross income (or expected gross income) from the activity represents amounts paid (or to be paid) mainly for the use of the property. Tax return 2011 deadline It does not matter whether the use is under a lease, a service contract, or some other arrangement. Tax return 2011 deadline Exceptions. Tax return 2011 deadline   Your activity is not a rental activity if any of the following apply. Tax return 2011 deadline The average period of customer use of the property is 7 days or less. Tax return 2011 deadline You figure the average period of customer use by dividing the total number of days in all rental periods by the number of rentals during the tax year. Tax return 2011 deadline If the activity involves renting more than one class of property, multiply the average period of customer use of each class by a fraction. Tax return 2011 deadline The numerator of the fraction is the gross rental income from that class of property and the denominator is the activity's total gross rental income. Tax return 2011 deadline The activity's average period of customer use will equal the sum of the amounts for each class. Tax return 2011 deadline The average period of customer use of the property, as figured in (1) above, is 30 days or less and you provide significant personal services with the rentals. Tax return 2011 deadline Significant personal services include only services performed by individuals. Tax return 2011 deadline To determine if personal services are significant, all relevant facts and circumstances are taken into consideration, including the frequency of the services, the type and amount of labor required to perform the services, and the value of the services relative to the amount charged for use of the property. Tax return 2011 deadline Significant personal services do not include the following. Tax return 2011 deadline Services needed to permit the lawful use of the property, Services to repair or improve property that would extend its useful life for a period substantially longer than the average rental, and Services that are similar to those commonly provided with long-term rentals of real estate, such as cleaning and maintenance of common areas or routine repairs. Tax return 2011 deadline You provide extraordinary personal services in making the rental property available for customer use. Tax return 2011 deadline Services are extraordinary personal services if they are performed by individuals and the customers' use of the property is incidental to their receipt of the services. Tax return 2011 deadline The rental is incidental to a nonrental activity. Tax return 2011 deadline The rental of property is incidental to an activity of holding property for investment if the main purpose of holding the property is to realize a gain from its appreciation and the gross rental income from the property is less than 2% of the smaller of the property's unadjusted basis or fair market value. Tax return 2011 deadline The unadjusted basis of property is its cost not reduced by depreciation or any other basis adjustment. Tax return 2011 deadline The rental of property is incidental to a trade or business activity if all of the following apply. Tax return 2011 deadline You own an interest in the trade or business activity during the year. Tax return 2011 deadline The rental property was used mainly in that trade or business activity during the current year, or during at least 2 of the 5 preceding tax years. Tax return 2011 deadline Your gross rental income from the property is less than 2% of the smaller of its unadjusted basis or fair market value. Tax return 2011 deadline Lodging provided to an employee or the employee's spouse or dependents is incidental to the activity or activities in which the employee performs services if the lodging is furnished for the employer's convenience. Tax return 2011 deadline You customarily make the rental property available during defined business hours for nonexclusive use by various customers. Tax return 2011 deadline You provide the property for use in a nonrental activity in your capacity as an owner of an interest in the partnership, S corporation, or joint venture conducting that activity. Tax return 2011 deadline    If you meet any of the exceptions listed above, see the instructions for Form 8582 for information about how to report any income or loss from the activity. Tax return 2011 deadline Special $25,000 allowance. Tax return 2011 deadline   If you or your spouse actively participated in a passive rental real estate activity, the amount of the passive activity loss that is disallowed is decreased and you therefore can deduct up to $25,000 of loss from the activity from your nonpassive income. Tax return 2011 deadline This special allowance is an exception to the general rule disallowing the passive activity loss. Tax return 2011 deadline Similarly, you can offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Tax return 2011 deadline   If you are married, filing a separate return, and lived apart from your spouse for the entire tax year, your special allowance cannot be more than $12,500. Tax return 2011 deadline If you lived with your spouse at any time during the year and are filing a separate return, you cannot use the special allowance to reduce your nonpassive income or tax on nonpassive income. Tax return 2011 deadline   The maximum special allowance is reduced if your modified adjusted gross income exceeds certain amounts. Tax return 2011 deadline See Phaseout rule , later. Tax return 2011 deadline Example. Tax return 2011 deadline Kate, a single taxpayer, has $70,000 in wages, $15,000 income from a limited partnership, a $26,000 loss from rental real estate activities in which she actively participated, and is not subject to the modified adjusted gross income phaseout rule. Tax return 2011 deadline She can use $15,000 of her $26,000 loss to offset her $15,000 passive income from the partnership. Tax return 2011 deadline She actively participated in her rental real estate activities, so she can use the remaining $11,000 rental real estate loss to offset $11,000 of her nonpassive income (wages). Tax return 2011 deadline Commercial revitalization deduction (CRD). Tax return 2011 deadline   The special allowance must first be applied to losses from rental real estate activities figured without the CRD. Tax return 2011 deadline Any remaining part of the special allowance is available for the CRD from the rental real estate activities and is not subject to the active participation rules or the phaseout based on modified adjusted gross income. Tax return 2011 deadline You cannot claim a CRD for a building placed in service after December 31, 2009. Tax return 2011 deadline Active participation. Tax return 2011 deadline   Active participation is not the same as material participation (defined later). Tax return 2011 deadline Active participation is a less stringent standard than material participation. Tax return 2011 deadline For example, you may be treated as actively participating if you make management decisions in a significant and bona fide sense. Tax return 2011 deadline Management decisions that count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Tax return 2011 deadline   Only individuals can actively participate in rental real estate activities. Tax return 2011 deadline However, a decedent's estate is treated as actively participating for its tax years ending less than 2 years after the decedent's death, if the decedent would have satisfied the active participation requirement for the activity for the tax year the decedent died. Tax return 2011 deadline   A decedent's qualified revocable trust can also be treated as actively participating if both the trustee and the executor (if any) of the estate choose to treat the trust as part of the estate. Tax return 2011 deadline The choice applies to tax years ending after the decedent's death and before: 2 years after the decedent's death if no estate tax return is required, or 6 months after the estate tax liability is finally determined if an estate tax return is required. Tax return 2011 deadline   The choice is irrevocable and cannot be made later than the due date for the estate's first income tax return (including any extensions). Tax return 2011 deadline   Limited partners are not treated as actively participating in a partnership's rental real estate activities. Tax return 2011 deadline   You are not treated as actively participating in a rental real estate activity unless your interest in the activity (including your spouse's interest) was at least 10% (by value) of all interests in the activity throughout the year. Tax return 2011 deadline   Active participation is not required to take the low-income housing credit, the rehabilitation investment credit, or CRD from rental real estate activities. Tax return 2011 deadline Example. Tax return 2011 deadline Mike, a single taxpayer, had the following income and loss during the tax year: Salary $42,300 Dividends 300 Interest 1,400 Rental loss (4,000) The rental loss came from a house Mike owned. Tax return 2011 deadline He advertised and rented the house to the current tenant himself. Tax return 2011 deadline He also collected the rents and did the repairs or hired someone to do them. Tax return 2011 deadline Even though the rental loss is a loss from a passive activity, Mike can use the entire $4,000 loss to offset his other income because he actively participated. Tax return 2011 deadline Phaseout rule. Tax return 2011 deadline   The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that is more than $100,000 ($50,000 if you are married filing separately). Tax return 2011 deadline If your modified adjusted gross income is $150,000 or more ($75,000 or more if you are married filing separately), you generally cannot use the special allowance. Tax return 2011 deadline    Modified adjusted gross income for this purpose is your adjusted gross income figured without the following. Tax return 2011 deadline Taxable social security and tier 1 railroad retirement benefits. Tax return 2011 deadline Deductible contributions to individual retirement accounts (IRAs) and section 501(c)(18) pension plans. Tax return 2011 deadline The exclusion from income of interest from qualified U. Tax return 2011 deadline S. Tax return 2011 deadline savings bonds used to pay qualified higher education expenses. Tax return 2011 deadline The exclusion from income of amounts received from an employer's adoption assistance program. Tax return 2011 deadline Passive activity income or loss included on Form 8582. Tax return 2011 deadline Any rental real estate loss allowed because you materially participated in the rental activity as a Real Estate Professional (as discussed later, under Activities That Are Not Passive Activities). Tax return 2011 deadline Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the instructions for Form 8582). Tax return 2011 deadline The deduction for the employer-equivalent portion of self-employment tax. Tax return 2011 deadline The deduction for domestic production activities. Tax return 2011 deadline The deduction allowed for interest on student loans. Tax return 2011 deadline The deduction for qualified tuition and related expenses. Tax return 2011 deadline Example. Tax return 2011 deadline During 2013, John was unmarried and was not a real estate professional. Tax return 2011 deadline For 2013, he had $120,000 in salary and a $31,000 loss from his rental real estate activities in which he actively participated. Tax return 2011 deadline His modified adjusted gross income is $120,000. Tax return 2011 deadline When he files his 2013 return, he can deduct only $15,000 of his passive activity loss. Tax return 2011 deadline He must carry over the remaining $16,000 passive activity loss to 2014. Tax return 2011 deadline He figures his deduction and carryover as follows: Adjusted gross income, modified as required $120,000       Minus amount not subject to phaseout 100,000 Amount subject to phaseout rule $20,000 Multiply by 50% × 50% Required reduction to special allowance $10,000 Maximum special allowance $25,000 Minus required reduction (see above) 10,000 Adjusted special allowance $15,000 Passive loss from rental real estate $31,000 Deduction allowable/Adjusted  special allowance (see above) 15,000       Amount that must be carried forward $16,000 Exceptions to the phaseout rules. Tax return 2011 deadline   A higher phaseout range applies to rehabilitation investment credits from rental real estate activities. Tax return 2011 deadline For those credits, the phaseout of the $25,000 special allowance starts when your modified adjusted gross income exceeds $200,000 ($100,000 if you are a married individual filing a separate return and living apart at all times during the year). Tax return 2011 deadline   There is no phaseout of the $25,000 special allowance for low-income housing credits or for the CRD. Tax return 2011 deadline Ordering rules. Tax return 2011 deadline   If you have more than one of the exceptions to the phaseout rules in the same tax year, you must apply the $25,000 phaseout against your passive activity losses and credits in the following order. Tax return 2011 deadline The portion of passive activity losses not attributable to the CRD. Tax return 2011 deadline The portion of passive activity losses attributable to the CRD. Tax return 2011 deadline The portion of passive activity credits attributable to credits other than the rehabilitation and low-income housing credits. Tax return 2011 deadline The portion of passive activity credits attributable to the rehabilitation credit. Tax return 2011 deadline The portion of passive activity credits attributable to the low-income housing credit. Tax return 2011 deadline Activities That Are Not Passive Activities The following are not passive activities. Tax return 2011 deadline Trade or business activities in which you materially participated for the tax year. Tax return 2011 deadline A working interest in an oil or gas well which you hold directly or through an entity that does not limit your liability (such as a general partner interest in a partnership). Tax return 2011 deadline It does not matter whether you materially participated in the activity for the tax year. Tax return 2011 deadline However, if your liability was limited for part of the year (for example, you converted your general partner interest to a limited partner interest during the year) and you had a net loss from the well for the year, some of your income and deductions from the working interest may be treated as passive activity gross income and passive activity deductions. Tax return 2011 deadline  See Temporary Regulations section 1. Tax return 2011 deadline 469-1T(e)(4)(ii). Tax return 2011 deadline The rental of a dwelling unit that you also used for personal purposes during the year for more than the greater of 14 days or 10% of the number of days during the year that the home was rented at a fair rental. Tax return 2011 deadline An activity of trading personal property for the account of those who own interests in the activity. Tax return 2011 deadline See Temporary Regulations section 1. Tax return 2011 deadline 469-1T(e)(6). Tax return 2011 deadline Rental real estate activities in which you materially participated as a real estate professional. Tax return 2011 deadline See Real Estate Professional , later. Tax return 2011 deadline You should not enter income and losses from these activities on Form 8582. Tax return 2011 deadline Instead, enter them on the forms or schedules you would normally use. Tax return 2011 deadline Material Participation A trade or business activity is not a passive activity if you materially participated in the activity. Tax return 2011 deadline Material participation tests. Tax return 2011 deadline    You materially participated in a trade or business activity for a tax year if you satisfy any of the following tests. Tax return 2011 deadline You participated in the activity for more than 500 hours. Tax return 2011 deadline Your participation was substantially all the participation in the activity of all individuals for the tax year, including the participation of individuals who did not own any interest in the activity. Tax return 2011 deadline You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other individual (including individuals who did not own any interest in the activity) for the year. Tax return 2011 deadline The activity is a significant participation activity, and you participated in all significant participation activities for more than 500 hours. Tax return 2011 deadline A significant participation activity is any trade or business activity in which you participated for more than 100 hours during the year and in which you did not materially participate under any of the material participation tests, other than this test. Tax return 2011 deadline See Significant Participation Passive Activities , under Recharacterization of Passive Income, later. Tax return 2011 deadline You materially participated in the activity for any 5 (whether or not consecutive) of the 10 immediately preceding tax years. Tax return 2011 deadline The activity is a personal service activity in which you materially participated for any 3 (whether or not consecutive) preceding tax years. Tax return 2011 deadline An activity is a personal service activity if it involves the performance of personal services in the fields of health (including veterinary services), law, engineering, architecture, accounting, actuarial science, performing arts, consulting, or any other trade or business in which capital is not a material income-producing factor. Tax return 2011 deadline Based on all the facts and circumstances, you participated in the activity on a regular, continuous, and substantial basis during the year. Tax return 2011 deadline   You did not materially participate in the activity under test (7) if you participated in the activity for 100 hours or less during the year. Tax return 2011 deadline Your participation in managing the activity does not count in determining whether you materially participated under this test if: Any person other than you received compensation for managing the activity, or Any individual spent more hours during the tax year managing the activity than you did (regardless of whether the individual was compensated for the management services). Tax return 2011 deadline Participation. Tax return 2011 deadline   In general, any work you do in connection with an activity in which you own an interest is treated as participation in the activity. Tax return 2011 deadline Work not usually performed by owners. Tax return 2011 deadline   You do not treat the work you do in connection with an activity as participation in the activity if both of the following are true. Tax return 2011 deadline The work is not work that is customarily done by the owner of that type of activity. Tax return 2011 deadline One of your main reasons for doing the work is to avoid the disallowance of any loss or credit from the activity under the passive activity rules. Tax return 2011 deadline Participation as an investor. Tax return 2011 deadline   You do not treat the work you do in your capacity as an investor in an activity as participation unless you are directly involved in the day-to-day management or operations of the activity. Tax return 2011 deadline Work you do as an investor includes: Studying and reviewing financial statements or reports on operations of the activity, Preparing or compiling summaries or analyses of the finances or operations of the activity for your own use, and Monitoring the finances or operations of the activity in a nonmanagerial capacity. Tax return 2011 deadline Spouse's participation. Tax return 2011 deadline   Your participation in an activity includes your spouse's participation. Tax return 2011 deadline This applies even if your spouse did not own any interest in the activity and you and your spouse do not file a joint return for the year. Tax return 2011 deadline Proof of participation. Tax return 2011 deadline You can use any reasonable method to prove your participation in an activity for the year. Tax return 2011 deadline You do not have to keep contemporaneous daily time reports, logs, or similar documents if you can establish your participation in some other way. Tax return 2011 deadline For example, you can show the services you performed and the approximate number of hours spent by using an appointment book, calendar, or narrative summary. Tax return 2011 deadline Limited partners. Tax return 2011 deadline   If you owned an activity as a limited partner, you generally are not treated as materially participating in the activity. Tax return 2011 deadline However, you are treated as materially participating in the activity if you met test (1), (5), or (6) under Material participation tests , discussed earlier, for the tax year. Tax return 2011 deadline   You are not treated as a limited partner, however, if you also were a general partner in the partnership at all times during the partnership's tax year ending with or within your tax year (or, if shorter, during that part of the partnership's tax year in which you directly or indirectly owned your limited partner interest). Tax return 2011 deadline Retired or disabled farmer and surviving spouse of a farmer. Tax return 2011 deadline   If you are a retired or disabled farmer, you are treated as materially participating in a farming activity if you materially participated for 5 or more of the 8 years before your retirement or disability. Tax return 2011 deadline Similarly, if you are a surviving spouse of a farmer, you are treated as materially participating in a farming activity if the real property used in the activity meets the estate tax rules for special valuation of farm property passed from a qualifying decedent, and you actively manage the farm. Tax return 2011 deadline Corporations. Tax return 2011 deadline   A closely held corporation or a personal service corporation is treated as materially participating in an activity only if one or more shareholders holding more than 50% by value of the outstanding stock of the corporation materially participate in the activity. Tax return 2011 deadline   A closely held corporation can also satisfy the material participation standard by meeting the first two requirements for the qualifying business exception from the at-risk limits. Tax return 2011 deadline See Special exception for qualified corporations under Activities Covered by the At-Risk Rules, later. Tax return 2011 deadline Real Estate Professional Generally, rental activities are passive activities even if you materially participated in them. Tax return 2011 deadline However, if you qualified as a real estate professional, rental real estate activities in which you materially participated are not passive activities. Tax return 2011 deadline For this purpose, each interest you have in a rental real estate activity is a separate activity, unless you choose to treat all interests in rental real estate activities as one activity. Tax return 2011 deadline See the Instructions for Schedule E (Form 1040), Supplemental Income and Loss, for information about making this choice. Tax return 2011 deadline If you qualified as a real estate professional for 2013, report income or losses from rental real estate activities in which you materially participated as nonpassive income or losses, and complete line 43 of Schedule E (Form 1040). Tax return 2011 deadline If you also have an unallowed loss from these activities from an earlier year when you did not qualify, see Treatment of former passive activities under Passive Activities, earlier. Tax return 2011 deadline Qualifications. Tax return 2011 deadline   You qualified as a real estate professional for the year if you met both of the following requirements. Tax return 2011 deadline More than half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated. Tax return 2011 deadline You performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated. Tax return 2011 deadline   Do not count personal services you performed as an employee in real property trades or businesses unless you were a 5% owner of your employer. Tax return 2011 deadline You were a 5% owner if you owned (or are considered to have owned) more than 5% of your employer's outstanding stock, outstanding voting stock, or capital or profits interest. Tax return 2011 deadline   If you file a joint return, do not count your spouse's personal services to determine whether you met the preceding requirements. Tax return 2011 deadline However, you can count your spouse's participation in an activity in determining if you materially participated. Tax return 2011 deadline Real property trades or businesses. Tax return 2011 deadline   A real property trade or business is a trade or business that does any of the following with real property. Tax return 2011 deadline Develops or redevelops it. Tax return 2011 deadline Constructs or reconstructs it. Tax return 2011 deadline Acquires it. Tax return 2011 deadline Converts it. Tax return 2011 deadline Rents or leases it. Tax return 2011 deadline Operates or manages it. Tax return 2011 deadline Brokers it. Tax return 2011 deadline Closely held corporations. Tax return 2011 deadline   A closely held corporation can qualify as a real estate professional if more than 50% of the gross receipts for its tax year came from real property trades or businesses in which it materially participated. Tax return 2011 deadline Passive Activity Income and Deductions In figuring your net income or loss from a passive activity, take into account only passive activity income and passive activity deductions. Tax return 2011 deadline Self-charged interest. Tax return 2011 deadline   Certain self-charged interest income or deductions may be treated as passive activity gross income or passive activity deductions if the loan proceeds are used in a passive activity. Tax return 2011 deadline   Generally, self-charged interest income and deductions result from loans between you and a partnership or S corporation in which you had a direct or indirect ownership interest. Tax return 2011 deadline This includes both loans you made to the partnership or S corporation and loans the partnership or S corporation made to you. Tax return 2011 deadline   It also includes loans from one partnership or S corporation to another partnership or S corporation if each owner in the borrowing entity has the same proportional ownership interest in the lending entity. Tax return 2011 deadline    Exception. Tax return 2011 deadline The self-charged interest rules do not apply to your interest in a partnership or S corporation if the entity made an election under Regulations section 1. Tax return 2011 deadline 469-7(g) to avoid the application of these rules. Tax return 2011 deadline For more details on the self-charged interest rules, see Regulations section 1. Tax return 2011 deadline 469-7. Tax return 2011 deadline Passive Activity Income Passive activity income includes all income from passive activities and generally includes gain from disposition of an interest in a passive activity or property used in a passive activity. Tax return 2011 deadline Passive activity income does not include the following items. Tax return 2011 deadline Income from an activity that is not a passive activity. Tax return 2011 deadline These activities are discussed under Activities That Are Not Passive Activities , earlier. Tax return 2011 deadline Portfolio income. Tax return 2011 deadline This includes interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business. Tax return 2011 deadline It includes gain or loss from the disposition of property that produces these types of income or that is held for investment. Tax return 2011 deadline The exclusion for portfolio income does not apply to self-charged interest treated as passive activity income. Tax return 2011 deadline For more information on self-charged interest, see Self-charged interest , earlier. Tax return 2011 deadline Personal service income. Tax return 2011 deadline This includes salaries, wages, commissions, self-employment income from trade or business activities in which you materially participated, deferred compensation, taxable social security and other retirement benefits, and payments from partnerships to partners for personal services. Tax return 2011 deadline Income from positive section 481 adjustments allocated to activities other than passive activities. Tax return 2011 deadline (Section 481 adjustments are adjustments that must be made due to changes in your accounting method. Tax return 2011 deadline ) Income or gain from investments of working capital. Tax return 2011 deadline Income from an oil or gas property if you treated any loss from a working interest in the property for any tax year beginning after 1986 as a nonpassive loss, as discussed in item (2) under Activities That Are Not Passive Activities , earlier. Tax return 2011 deadline This also applies to income from other oil and gas property the basis of which is determined wholly or partly by the basis of the property in the preceding sentence. Tax return 2011 deadline Any income from intangible property, such as a patent, copyright, or literary, musical, or artistic composition, if your personal efforts significantly contributed to the creation of the property. Tax return 2011 deadline Any other income that must be treated as nonpassive income. Tax return 2011 deadline See Recharacterization of Passive Income , later. Tax return 2011 deadline Overall gain from any interest in a publicly traded partnership. Tax return 2011 deadline See Publicly Traded Partnerships (PTPs) in the instructions for Form 8582. Tax return 2011 deadline State, local, and foreign income tax refunds. Tax return 2011 deadline Income from a covenant not to compete. Tax return 2011 deadline Reimbursement of a casualty or theft loss included in gross income to recover all or part of a prior year loss deduction, if the loss deduction was not a passive activity deduction. Tax return 2011 deadline Alaska Permanent Fund dividends. Tax return 2011 deadline Cancellation of debt income, if at the time the debt is discharged the debt is not allocated to passive activities under the interest expense allocation rules. Tax return 2011 deadline See chapter 4 of Publication 535, Business Expenses, for information about the rules for allocating interest. Tax return 2011 deadline Disposition of property interests. Tax return 2011 deadline   Gain on the disposition of an interest in property generally is passive activity income if, at the time of the disposition, the property was used in an activity that was a passive activity in the year of disposition. Tax return 2011 deadline The gain generally is not passive activity income if, at the time of disposition, the property was used in an activity that was not a passive activity in the year of disposition. Tax return 2011 deadline An exception to this general rule may apply if you previously used the property in a different activity. Tax return 2011 deadline Exception for more than one use in the preceding 12 months. Tax return 2011 deadline   If you used the property in more than one activity during the 12-month period before its disposition, you must allocate the gain between the activities on a basis that reasonably reflects the property's use during that period. Tax return 2011 deadline Any gain allocated to a passive activity is passive activity income. Tax return 2011 deadline   For this purpose, an allocation of the gain solely to the activity in which the property was mainly used during that period reasonably reflects the property's use if the fair market value of your interest in the property is not more than the lesser of: $10,000, or 10% of the total of the fair market value of your interest in the property and the fair market value of all other property used in that activity immediately before the disposition. Tax return 2011 deadline Exception for substantially appreciated property. Tax return 2011 deadline   The gain is passive activity income if the fair market value of the property at disposition was more than 120% of its adjusted basis and either of the following conditions applies. Tax return 2011 deadline You used the property in a passive activity for 20% of the time you held your interest in the property. Tax return 2011 deadline You used the property in a passive activity for the entire 24-month period before its disposition. Tax return 2011 deadline If neither condition applies, the gain is not passive activity income. Tax return 2011 deadline However, it is treated as portfolio income only if you held the property for investment for more than half of the time you held it in nonpassive activities. Tax return 2011 deadline   For this purpose, treat property you held through a corporation (other than an S corporation) or other entity whose owners receive only portfolio income as property held in a nonpassive activity and as property held for investment. Tax return 2011 deadline Also, treat the date you agree to transfer your interest for a fixed or determinable amount as the disposition date. Tax return 2011 deadline   If you used the property in more than one activity during the 12-month period before its disposition, this exception applies only to the part of the gain allocated to a passive activity under the rules described in the preceding discussion. Tax return 2011 deadline Disposition of property converted to inventory. Tax return 2011 deadline   If you disposed of property that you had converted to inventory from its use in another activity (for example, you sold condominium units you previously held for use in a rental activity), a special rule may apply. Tax return 2011 deadline Under this rule, you disregard the property's use as inventory and treat it as if it were still used in that other activity at the time of disposition. Tax return 2011 deadline This rule applies only if you meet all of the following conditions. Tax return 2011 deadline At the time of disposition, you held your interest in the property in a dealing activity (an activity that involves holding the property or similar property mainly for sale to customers in the ordinary course of a trade or business). Tax return 2011 deadline Your other activities included a nondealing activity (an activity that does not involve holding similar property for sale to customers in the ordinary course of a trade or business) in which you used the property for more than 80% of the period you held it. Tax return 2011 deadline You did not acquire or hold your interest in the property for the main purpose of selling it to customers in the ordinary course of a trade or business. Tax return 2011 deadline Passive Activity Deductions Generally, a deduction is a passive activity deduction for a taxable year if and only if such deduction either: Arises in connection with the conduct of an activity that is a passive activity for the tax year; or Is treated as a deduction from an activity for the tax year because it was disallowed by the passive activity rules in the preceding year and carried forward to the tax year. Tax return 2011 deadline For purposes of item (1), above, an item of deduction arises in the taxable year in which the item would be allowable as a deduction under the taxpayer's method of accounting if taxable income for all taxable years were determined without regard to the passive activity rules and without regard to the basis, excess farm loss, and at-risk limits. Tax return 2011 deadline See Coordination with other limitations on deductions that apply before the passive activity rules , later. Tax return 2011 deadline Passive activity deductions generally include losses from dispositions of property used in a passive activity at the time of the disposition and losses from a disposition of less than your entire interest in a passive activity. Tax return 2011 deadline Exceptions. Tax return 2011 deadline   Passive activity deductions do not include the following items. Tax return 2011 deadline Deductions for expenses (other than interest expense) that are clearly and directly allocable to portfolio income. Tax return 2011 deadline Qualified home mortgage interest, capitalized interest expenses, and other interest expenses (other than self-charged interest) properly allocable to passive activities. Tax return 2011 deadline For more information on self-charged interest, see Self-charged interest under Passive Activity Income and Deductions, earlier. Tax return 2011 deadline Losses from dispositions of property that produce portfolio income or property held for investment. Tax return 2011 deadline State, local, and foreign income taxes. Tax return 2011 deadline Miscellaneous itemized deductions that may be disallowed because of the 2%-of-adjusted-gross-income limit. Tax return 2011 deadline Charitable contribution deductions. Tax return 2011 deadline Net operating loss deductions. Tax return 2011 deadline Percentage depletion carryovers for oil and gas wells. Tax return 2011 deadline Capital loss carrybacks and carryovers. Tax return 2011 deadline Items of deduction from a passive activity that are disallowed under the limits on deductions that apply before the passive activity rules. Tax return 2011 deadline See Coordination with other limitations on deductions that apply before the passive activity rules , later. Tax return 2011 deadline Deductions and losses that would have been allowed for tax years beginning before 1987 but for basis or at-risk limits. Tax return 2011 deadline Net negative section 481 adjustments allocated to activities other than passive activities. Tax return 2011 deadline (Section 481 adjustments are adjustments required due to changes in accounting methods. Tax return 2011 deadline ) Casualty and theft losses, unless losses similar in cause and severity recur regularly in the activity. Tax return 2011 deadline The deduction for the employer-equivalent portion of self-employment tax. Tax return 2011 deadline Coordination with other limitations on deductions that apply before the passive activity rules. Tax return 2011 deadline   An item of deduction from a passive activity that is disallowed for a tax year under the basis or at-risk limitations is not a passive activity deduction for the tax year. Tax return 2011 deadline The following sections provide rules for figuring the extent to which items of deduction from a passive activity are disallowed for a tax year under the basis or at-risk limitations. Tax return 2011 deadline Proration of deductions disallowed under basis limitations. Tax return 2011 deadline   If any amount of your distributive share of a partnership's loss for the tax year is disallowed under the basis limitation, a ratable portion of your distributive share of each item of deduction or loss of the partnership is disallowed for the tax year. Tax return 2011 deadline For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of your distributive share of partnership loss that is disallowed for the taxable year; by The sum of your distributive shares of all items of deduction and loss of the partnership for the tax year. Tax return 2011 deadline   If any amount of your pro rata share of an S corporation's loss for the tax year is disallowed under the basis limitation, a ratable portion of your pro rata share of each item of deduction or loss of the S corporation is disallowed for the tax year. Tax return 2011 deadline For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of your share of S corporation loss that is disallowed for the tax year; by The sum of your pro rata shares of all items of deduction and loss of the corporation for the tax year. Tax return 2011 deadline Proration of deductions disallowed under at-risk limitation. Tax return 2011 deadline   If any amount of your loss from an activity (as defined in Activities Covered by the At-Risk Rules , later) is disallowed under the at-risk rules for the tax year, a ratable portion of each item of deduction or loss from the activity is disallowed for the tax year. Tax return 2011 deadline For this purpose, the ratable portion of an item of deduction or loss is the amount of such item multiplied by the fraction obtained by dividing: The amount of the loss from the activity that is disallowed for the tax year; by The sum of all deductions from the activity for the taxable year. Tax return 2011 deadline Coordination of basis and at-risk limitations. Tax return 2011 deadline   The portion of any item of deduction or loss that is disallowed for the tax year under the basis limitations is not taken into account for the taxable year in determining the loss from an activity (as defined in Activities Covered by the At-Risk Rules , later) for purposes of applying the at-risk rules. Tax return 2011 deadline Separately identified items of deduction and loss. Tax return 2011 deadline   In identifying the items of deduction and loss from an activity that are not disallowed under the basis and at-risk limitations (and that therefore may be treated as passive activity deductions), you need not account separately for any item of deduction or loss unless such item may, if separately taken into account, result in an income tax liability different from that which would result were such item of deduction or loss taken into account separately. Tax return 2011 deadline   Items of deduction or loss that must be accounted for separately include (but are not limited to) items of deduction or loss that: Are attributable to separate activities. Tax return 2011 deadline See Grouping Your Activities , later. Tax return 2011 deadline Arise in a rental real estate activity in tax years in which you actively participate in such activity; Arise in a rental real estate activity in taxable years in which you do not actively participate in such activity; Arose in a taxable year beginning before 1987 and were not allowed for such taxable year under the basis or at-risk limitations; Are taken into account under section 613A(d) (relating to limitations on certain depletion deductions); Are taken into account under section 1211 (relating to the limitation on capital losses); Are taken into account under section 1231 (relating to property used in a trade or business and involuntary conversions). Tax return 2011 deadline See Section 1231 Gains and Losses in Publication 544 for more information. Tax return 2011 deadline Are attributable to pre-enactment interests in activities. Tax return 2011 deadline See Regulations section 1. Tax return 2011 deadline 469-11T(c). Tax return 2011 deadline Grouping Your Activities You can treat one or more trade or business activities, or rental activities, as a single activity if those activities form an appropriate economic unit for measuring gain or loss under the passive activity rules. Tax return 2011 deadline Grouping is important for a number of reasons. Tax return 2011 deadline If you group two activities into one larger activity, you need only show material participation in the activity as a whole. Tax return 2011 deadline But if the two activities are separate, you must show material participation in each one. Tax return 2011 deadline On the other hand, if you group two activities into one larger activity and you dispose of one of the two, then you have disposed of only part of your entire interest in the activity. Tax return 2011 deadline But if the two activities are separate and you dispose of one of them, then you have disposed of your entire interest in that activity. Tax return 2011 deadline Grouping can also be important in determining whether you meet the 10% ownership requirement for actively participating in a rental real estate activity. Tax return 2011 deadline Appropriate Economic Units Generally, to determine if activities form an appropriate economic unit, you must consider all the relevant facts and circumstances. Tax return 2011 deadline You can use any reasonable method of applying the relevant facts and circumstances in grouping activities. Tax return 2011 deadline The following factors have the greatest weight in determining whether activities form an appropriate economic unit. Tax return 2011 deadline All of the factors do not have to apply to treat more than one activity as a single activity. Tax return 2011 deadline The factors that you should consider are: The similarities and differences in the types of trades or businesses, The extent of common control, The extent of common ownership, The geographical location, and The interdependencies between or among activities, which may include the extent to which the activities: Buy or sell goods between or among themselves, Involve products or services that are generally provided together, Have the same customers, Have the same employees, or Use a single set of books and records to account for the activities. Tax return 2011 deadline Example 1. Tax return 2011 deadline John Jackson owns a bakery and a movie theater at a shopping mall in Baltimore and a bakery and movie theater in Philadelphia. Tax return 2011 deadline Based on all the relevant facts and circumstances, there may be more than one reasonable method for grouping John's activities. Tax return 2011 deadline For example, John may be able to group the movie theaters and the bakeries into: One activity, A movie theater activity and a bakery activity, A Baltimore activity and a Philadelphia activity, or Four separate activities. Tax return 2011 deadline Example 2. Tax return 2011 deadline Betty is a partner in ABC partnership, which sells nonfood items to grocery stores. Tax return 2011 deadline Betty is also a partner in DEF (a trucking business). Tax return 2011 deadline ABC and DEF are under common control. Tax return 2011 deadline The main part of DEF's business is transporting goods for ABC. Tax return 2011 deadline DEF is the only trucking business in which Betty is involved. Tax return 2011 deadline Based on the rules of this section, Betty treats ABC's wholesale activity and DEF's trucking activity as a single activity. Tax return 2011 deadline Consistency and disclosure requirement. Tax return 2011 deadline   Generally, when you group activities into appropriate economic units, you may not regroup those activities in a later tax year. Tax return 2011 deadline You must meet any disclosure requirements of the IRS when you first group your activities and when you add or dispose of any activities in your groupings. Tax return 2011 deadline   However, if the original grouping is clearly inappropriate or there is a material change in the facts and circumstances that makes the original grouping clearly inappropriate, you must regroup the activities and comply with any disclosure requirements of the IRS. Tax return 2011 deadline   See Disclosure Requirement , later. Tax return 2011 deadline Regrouping by the IRS. Tax return 2011 deadline   If any of the activities resulting from your grouping is not an appropriate economic unit and one of the primary purposes of your grouping (or failure to regroup) is to avoid the passive activity rules, the IRS may regroup your activities. Tax return 2011 deadline Rental activities. Tax return 2011 deadline   In general, you cannot group a rental activity with a trade or business activity. Tax return 2011 deadline However, you can group them together if the activities form an appropriate economic unit and: The rental activity is insubstantial in relation to the trade or business activity, The trade or business activity is insubstantial in relation to the rental activity, or Each owner of the trade or business activity has the same ownership interest in the rental activity, in which case the part of the rental activity that involves the rental of items of property for use in the trade or business activity may be grouped with the trade or business activity. Tax return 2011 deadline Example. Tax return 2011 deadline Herbert and Wilma are married and file a joint return. Tax return 2011 deadline Healthy Food, an S corporation, is a grocery store business. Tax return 2011 deadline Herbert is Healthy Food's only shareholder. Tax return 2011 deadline Plum Tower, an S corporation, owns and rents out the building. Tax return 2011 deadline Wilma is Plum Tower's only shareholder. Tax return 2011 deadline Plum Tower rents part of its building to Healthy Food. Tax return 2011 deadline Plum Tower's grocery store rental business and Healthy Food's grocery business are not insubstantial in relation to each other. Tax return 2011 deadline Herbert and Wilma file a joint return, so they are treated as one taxpayer for purposes of the passive activity rules. Tax return 2011 deadline The same owner (Herbert and Wilma) owns both Healthy Food and Plum Tower with the same ownership interest (100% in each). Tax return 2011 deadline If the grouping forms an appropriate economic unit, as discussed earlier, Herbert and Wilma can group Plum Tower's grocery store rental and Healthy Food's grocery business into a single trade or business activity. Tax return 2011 deadline Grouping of real and personal property rentals. Tax return 2011 deadline   In general, you cannot treat an activity involving the rental of real property and an activity involving the rental of personal property as a single activity. Tax return 2011 deadline However, you can treat them as a single activity if you provide the personal property in connection with the real property or the real property in connection with the personal property. Tax return 2011 deadline Certain activities may not be grouped. Tax return 2011 deadline   In general, if you own an interest as a limited partner or a limited entrepreneur in one of the following activities, you may not group that activity with any other activity in another type of business. Tax return 2011 deadline Holding, producing, or distributing motion picture films or video tapes. Tax return 2011 deadline Farming. Tax return 2011 deadline Leasing any section 1245 property (as defined in section 1245(a)(3) of the Internal Revenue Code). Tax return 2011 deadline For a list of section 1245 property, see Section 1245 property under Activities Covered by the At-Risk Rules , later. Tax return 2011 deadline Exploring for, or exploiting, oil and gas resources. Tax return 2011 deadline Exploring for, or exploiting, geothermal deposits. Tax return 2011 deadline   If you own an interest as a limited partner or a limited entrepreneur in an activity described in the list above, you may group that activity with another activity in the same type of business if the grouping forms an appropriate economic unit as discussed earlier. Tax return 2011 deadline Limited entrepreneur. Tax return 2011 deadline   A limited entrepreneur is a person who: Has an interest in an enterprise other than as a limited partner, and Does not actively participate in the management of the enterprise. Tax return 2011 deadline Activities conducted through another entity. Tax return 2011 deadline   A personal service corporation, closely held corporation, partnership, or S corporation must group its activities using the rules discussed in this section. Tax return 2011 deadline Once the entity groups its activities, you, as the partner or shareholder of the entity, may group those activities (following the rules of this section): With each other, With activities conducted directly by you, or With activities conducted through other entities. Tax return 2011 deadline    You may not treat activities grouped together by the entity as separate activities. Tax return 2011 deadline Personal service and closely held corporations. Tax return 2011 deadline   You may group an activity conducted through a personal service or closely held corporation with your other activities only to determine whether you materially or significantly participated in those other activities. Tax return 2011 deadline See Material Participation , earlier, and Significant Participation Passive Activities , later. Tax return 2011 deadline Publicly traded partnership (PTP). Tax return 2011 deadline   You may not group activities conducted through a PTP with any other activity, including an activity conducted through another PTP. Tax return 2011 deadline Partial dispositions. Tax return 2011 deadline   If you dispose of substantially all of an activity during your tax year, you may treat the part disposed of as a separate activity. Tax return 2011 deadline However, you can do this only if you can show with reasonable certainty: The amount of deductions and credits disallowed in prior years under the passive activity rules that is allocable to the part of the activity disposed of, and The amount of gross income and any other deductions and credits for the current tax year that is allocable to the part of the activity disposed of. Tax return 2011 deadline Disclosure Requirement For tax years beginning after January 24, 2010, the following disclosure requirements for groupings apply. Tax return 2011 deadline You are required to report certain changes to your groupings that occur during the tax year to the IRS. Tax return 2011 deadline If you fail to report these changes, each trade or business activity or rental activity will be treated as a separate activity. Tax return 2011 deadline You will be considered to have made a timely disclosure if you filed all affected income tax returns consistent with the claimed grouping and make the required disclosure on the income tax return for the year in which you first discovered the failure to disclose. Tax return 2011 deadline If the IRS discovered the failure to disclose, you must have reasonable cause for not making the required disclosure. Tax return 2011 deadline New grouping. Tax return 2011 deadline   You must file a written statement with your original income tax return for the first tax year in which two or more activities are originally grouped into a single activity. Tax return 2011 deadline The statement must provide the names, addresses, and employer identification numbers (EINs), if applicable, for the activities being grouped as a single activity. Tax return 2011 deadline In addition, the statement must contain a declaration that the grouped activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Tax return 2011 deadline Addition to an existing grouping. Tax return 2011 deadline   You must file a written statement with your original income tax return for the tax year in which you add a new activity to an existing group. Tax return 2011 deadline The statement must provide the name, address, and EIN, if applicable, for the activity that is being added and for the activities in the existing group. Tax return 2011 deadline In addition, the statement must contain a declaration that the activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Tax return 2011 deadline Regrouping. Tax return 2011 deadline   You must file a written statement with your original income tax return for the tax year in which you regroup the activities. Tax return 2011 deadline The statement must provide the names, addresses, and EINs, if applicable, for the activities that are being regrouped. Tax return 2011 deadline If two or more activities are being regrouped into a single activity, the statement must contain a declaration that the regrouped activities make up an appropriate economic unit for the measurement of gain or loss under the passive activity rules. Tax return 2011 deadline In addition, the statement must contain an explanation of the material change in the facts and circumstances that made the original grouping clearly inappropriate. Tax return 2011 deadline Groupings by partnerships and S corporations. Tax return 2011 deadline   Partnerships and S corporations are not subject to the rules for new grouping, addition to an existing grouping, or regrouping. Tax return 2011 deadline Instead, they must comply with the disclosure instructions for grouping activities provided in their Form 1065, U. Tax return 2011 deadline S. Tax return 2011 deadline Return of Partnership Income, or Form 1120S, U. Tax return 2011 deadline S. Tax return 2011 deadline Income Tax Return for an S Corporation, whichever is applicable. Tax return 2011 deadline   The partner or shareholder is not required to make a separate disclosure of the groupings disclosed by the entity unless the partner or shareholder: Groups together any of the activities that the entity does not group together, Groups the entity's activities with activities conducted directly by the partner or shareholder, or Groups an entity's activities with activities conducted through another entity. Tax return 2011 deadline   A partner or shareholder may not treat activities grouped together by the entity as separate activities. Tax return 2011 deadline Recharacterization of Passive Income Net income from the following passive activities may have to be recharacterized and excluded from passive activity income. Tax return 2011 deadline Significant participation passive activities, Rental of property when less than 30% of the unadjusted basis of the property is subject to depreciation, Equity-financed lending activities, Rental of property incidental to development activities, Rental of property to nonpassive activities, and Licensing of intangible property by  pass-through entities. Tax return 2011 deadline If you are engaged in or have an interest in one of these activities during the tax year (either directly or through a partnership or an S corporation), combine the income and losses from the activity to determine if you have a net loss or net income from that activity. Tax return 2011 deadline If the result is a net loss, treat the income and losses the same as any other income or losses from that type of passive activity (trade or business activity or rental activity). Tax return 2011 deadline If the result is net income, do not enter any of the income or losses from the activity or property on Form 8582 or its worksheets. Tax return 2011 deadline Instead, enter income or losses on the form and schedules you normally use. Tax return 2011 deadline However, see Significant Participation Passive Activities , later, if the activity is a significant participation passive activity and you also have a net loss from a different significant participation passive activity. Tax return 2011 deadline Limit on recharacterized passive income. Tax return 2011 deadline   The total amount that you treat as nonpassive income under the rules described later in this discussion for significant participation passive activities, rental of nondepreciable property, and equity-financed lending activities cannot exceed the greatest amount that you treat as nonpassive income under any one of these rules. Tax return 2011 deadline Investment income and investment expense. Tax return 2011 deadline   To figure your investment interest expense limitation on Form 4952, treat as investment income any net passive income recharacterized as nonpassive income from rental of nondepreciable property, equity-financed lending activity, or licensing of intangible property by a pass-through entity. Tax return 2011 deadline Significant Participation Passive Activities A significant participation passive activity is any trade or business activity in which you participated for more than 100 hours during the tax year but did not materially participate. Tax return 2011 deadline If your gross income from all significant participation passive activities is more than your deductions from those activities, a part of your net income from each significant participation passive activity is treated as nonpassive income. Tax return 2011 deadline Corporations. Tax return 2011 deadline   An activity of a personal service corporation or closely held corporation is a significant participation passive activity if both of the following statements are true. Tax return 2011 deadline The corporation is not treated as materially participating in the activity for the year. Tax return 2011 deadline One or more individuals, each of whom is treated as significantly participating in the activity, directly or indirectly hold (in total) more than 50% (by value) of the corporation's outstanding stock. Tax return 2011 deadline Worksheet A. Tax return 2011 deadline   Complete Worksheet A. Tax return 2011 deadline Significant Participation Passive Activities , below, if you have income or losses from any significant participation activity. Tax return 2011 deadline Begin by entering the name of each activity in the left column. Tax return 2011 deadline Column (a). Tax return 2011 deadline   Enter the number of hours you participated in each activity and total the column. Tax return 2011 deadline   If the total is more than 500, do not complete Worksheet A or B. Tax return 2011 deadline None of the activities are passive activities because you satisfy test 4 for material participation. Tax return 2011 deadline (See Material participation tests , earlier. Tax return 2011 deadline ) Report all the income and losses from these activities on the forms and schedules you normally use. Tax return 2011 deadline Do not include the income and losses on Form 8582. Tax return 2011 deadline Column (b). Tax return 2011 deadline   Enter the net loss, if any, from the activity. Tax return 2011 deadline Net loss from an activity means either: The activity's current year net loss (if any) plus prior year unallowed losses (if any), or The excess of prior year unallowed losses over the current year net income (if any). Tax return 2011 deadline Enter -0- here if the prior year unallowed loss is the same as the current year net income. Tax return 2011 deadline Column (c). Tax return 2011 deadline   Enter net income (if any) from the activity. Tax return 2011 deadline Net income means the excess of the current year's net income from the activity over any prior year unallowed losses from the activity. Tax return 2011 deadline Column (d). Tax return 2011 deadline   Combine amounts in the Totals row for columns (b) and (c) and enter the total net income or net loss in the Totals row of column (d). Tax return 2011 deadline If column (d) is a net loss, skip Worksheet B, Significant Participation Activities With Net Income. Tax return 2011 deadline Include the income and losses in Worksheet 3 of Form 8582 (or Worksheet 2 in the Form 88
Español

Assess Your Needs

Only you can decide if you need these features. Sellers of cars, major appliances and other expensive items may try to sell you a service contract or "extended warranty." Service contracts or "extended warranties" can add hundreds to your purchase price and are rarely worth the cost. Some sellers may try to frighten you or lead you to believe that purchasing an extended warranty is required. Some duplicate warranty coverage you get automatically from a manufacturer or dealer. Ask these questions before you agree to one of these contracts:

  • Does the dealer, the manufacturer, or an independent company back the service contract?
  • How are claims handled? Who will do the work and where it will be done?
  • What happens to your coverage if the dealer or administrator goes out of business?
  • Do you need prior authorization for repair work?
  • Are there any situations when coverage can be denied? You may not have protection from common wear and tear. And some manufacturers do not honor contracts if you fail to follow their recommendations for routine maintenance.

The Tax Return 2011 Deadline

Tax return 2011 deadline Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). Tax return 2011 deadline Low Income Taxpayer Clinics (LITCs). Tax return 2011 deadline Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. Tax return 2011 deadline All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. Tax return 2011 deadline The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). Tax return 2011 deadline After notice and hearing, the bankruptcy court may extend the period for another 30 days. Tax return 2011 deadline Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. Tax return 2011 deadline Note. Tax return 2011 deadline Individual debtors should use their home address when filing Form 1040 with the IRS. Tax return 2011 deadline Returns should not be filed “in care of” the trustee's address. Tax return 2011 deadline Ordering tax transcripts and copies of returns. Tax return 2011 deadline   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. Tax return 2011 deadline The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. Tax return 2011 deadline If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. Tax return 2011 deadline Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. Tax return 2011 deadline Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. Tax return 2011 deadline A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. Tax return 2011 deadline To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. Tax return 2011 deadline It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. Tax return 2011 deadline 00 per tax return for copies of the returns. Tax return 2011 deadline Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. Tax return 2011 deadline If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. Tax return 2011 deadline Tax returns and payment of taxes in chapter 11 cases. Tax return 2011 deadline   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. Tax return 2011 deadline Disclosure of debtor's return information to trustee. Tax return 2011 deadline   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. Tax return 2011 deadline If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. Tax return 2011 deadline    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. Tax return 2011 deadline Material interest is generally defined as a financial or monetary interest. Tax return 2011 deadline Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Tax return 2011 deadline   However, the U. Tax return 2011 deadline S. Tax return 2011 deadline Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. Tax return 2011 deadline Disclosure of bankruptcy estate's return information to debtor. Tax return 2011 deadline    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. Tax return 2011 deadline Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. Tax return 2011 deadline Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. Tax return 2011 deadline Chapter 13 relief is not available to corporations or partnerships. Tax return 2011 deadline The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. Tax return 2011 deadline In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. Tax return 2011 deadline S. Tax return 2011 deadline Individual Income Tax Return. Tax return 2011 deadline On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. Tax return 2011 deadline Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. Tax return 2011 deadline To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. Tax return 2011 deadline See Debt Cancellation, later. Tax return 2011 deadline Interest on trust accounts in chapter 13 cases. Tax return 2011 deadline   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. Tax return 2011 deadline This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. Tax return 2011 deadline S. Tax return 2011 deadline Trustee system. Tax return 2011 deadline The interest is also not taxable to the trustee as income. Tax return 2011 deadline Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. Tax return 2011 deadline The bankruptcy estate in a chapter 7 case is represented by a trustee. Tax return 2011 deadline The trustee is appointed to administer the estate and liquidate any nonexempt assets. Tax return 2011 deadline In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. Tax return 2011 deadline However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. Tax return 2011 deadline During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. Tax return 2011 deadline The bankruptcy trustee files a Form 1041 for the bankruptcy estate. Tax return 2011 deadline However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). Tax return 2011 deadline Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. Tax return 2011 deadline Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). Tax return 2011 deadline For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Tax return 2011 deadline Debtor's Election To End Tax Year – Form 1040 Short tax years. Tax return 2011 deadline   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. Tax return 2011 deadline If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. Tax return 2011 deadline The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. Tax return 2011 deadline   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. Tax return 2011 deadline Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. Tax return 2011 deadline    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. Tax return 2011 deadline Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. Tax return 2011 deadline Note. Tax return 2011 deadline The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. Tax return 2011 deadline Making the Election - Filing Requirements First short tax year. Tax return 2011 deadline   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. Tax return 2011 deadline The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. Tax return 2011 deadline Second short tax year. Tax return 2011 deadline   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. Tax return 2011 deadline   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. Tax return 2011 deadline To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. Tax return 2011 deadline Example. Tax return 2011 deadline Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. Tax return 2011 deadline If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. Tax return 2011 deadline Jane's second short year runs from May 8, 2012, through December 31, 2012. Tax return 2011 deadline To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. Tax return 2011 deadline To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. Tax return 2011 deadline The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. Tax return 2011 deadline S. Tax return 2011 deadline Individual Tax Return. Tax return 2011 deadline The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. Tax return 2011 deadline The debtor must file Form 4868 by the due date of the return for the first short tax year. Tax return 2011 deadline The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. Tax return 2011 deadline Election by debtor's spouse. Tax return 2011 deadline   If the debtor is married, the debtor's spouse may join in the election to end the tax year. Tax return 2011 deadline If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. Tax return 2011 deadline The debtor must elect by the due date for filing the return for the first short tax year. Tax return 2011 deadline Once the election is made, it cannot be revoked for the first short tax year. Tax return 2011 deadline However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. Tax return 2011 deadline Later bankruptcy of spouse. Tax return 2011 deadline    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. Tax return 2011 deadline   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. Tax return 2011 deadline If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. Tax return 2011 deadline However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. Tax return 2011 deadline The debtor and the spouse are precluded from this election because they have different tax years. Tax return 2011 deadline This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. Tax return 2011 deadline Example 1. Tax return 2011 deadline Paul and Mary Harris are calendar-year taxpayers. Tax return 2011 deadline Paul's voluntary chapter 7 bankruptcy case begins on March 4. Tax return 2011 deadline If Paul does not make an election, his tax year does not end on March 3. Tax return 2011 deadline If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. Tax return 2011 deadline Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. Tax return 2011 deadline They must make the election by July 15, the due date for filing the joint return. Tax return 2011 deadline Example 2. Tax return 2011 deadline Fred and Ethel Barnes are calendar-year taxpayers. Tax return 2011 deadline Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. Tax return 2011 deadline Ethel could elect to end her tax year on October 31. Tax return 2011 deadline If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. Tax return 2011 deadline Her first tax year is January 1–October 31, and her second year is November 1–December 31. Tax return 2011 deadline If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. Tax return 2011 deadline If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. Tax return 2011 deadline Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. Tax return 2011 deadline Example 3. Tax return 2011 deadline Jack and Karen Thomas are calendar-year taxpayers. Tax return 2011 deadline Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. Tax return 2011 deadline Karen elected to close her tax year on April 9 and Jack joins in Karen's election. Tax return 2011 deadline Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. Tax return 2011 deadline The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. Tax return 2011 deadline Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). Tax return 2011 deadline If Karen does join in, she would have the same 3 short tax years as Jack. Tax return 2011 deadline Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. Tax return 2011 deadline Annualizing taxable income. Tax return 2011 deadline   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. Tax return 2011 deadline See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. Tax return 2011 deadline Dismissal of bankruptcy case. Tax return 2011 deadline   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. Tax return 2011 deadline It is as if no bankruptcy estate was created for tax purposes. Tax return 2011 deadline In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. Tax return 2011 deadline Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. Tax return 2011 deadline Attach a statement to the amended returns explaining why the debtor is filing an amended return. Tax return 2011 deadline Taxes and the Bankruptcy Estate Property of the bankruptcy estate. Tax return 2011 deadline   At the commencement of a bankruptcy case a bankruptcy estate is created. Tax return 2011 deadline Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. Tax return 2011 deadline This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. Tax return 2011 deadline However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. Tax return 2011 deadline Note. Tax return 2011 deadline Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. Tax return 2011 deadline Excluded property is never included in the estate. Tax return 2011 deadline Transfer of assets between debtor and bankruptcy estate. Tax return 2011 deadline   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. Tax return 2011 deadline The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. Tax return 2011 deadline For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. Tax return 2011 deadline The estate assumes the same basis, holding period, and character of the transferred assets. Tax return 2011 deadline Also, the estate generally accounts for the transferred assets in the same manner as debtor. Tax return 2011 deadline   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. Tax return 2011 deadline The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. Tax return 2011 deadline Abandoned property. Tax return 2011 deadline    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. Tax return 2011 deadline If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. Tax return 2011 deadline Separate taxable entity. Tax return 2011 deadline   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. Tax return 2011 deadline The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. Tax return 2011 deadline S. Tax return 2011 deadline Income Tax Return for Estates and Trusts, and paying its taxes. Tax return 2011 deadline The debtor remains responsible for filing his or her own returns on Form 1040, U. Tax return 2011 deadline S. Tax return 2011 deadline Individual Income Tax Return, and paying taxes on income that does not belong to the estate. Tax return 2011 deadline Employer identification number. Tax return 2011 deadline   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Tax return 2011 deadline The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Tax return 2011 deadline See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. Tax return 2011 deadline    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Tax return 2011 deadline Income, deductions, and credits – Form 1040. Tax return 2011 deadline   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). Tax return 2011 deadline Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. Tax return 2011 deadline The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. Tax return 2011 deadline See Debt Cancellation, below. Tax return 2011 deadline Note. Tax return 2011 deadline The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. Tax return 2011 deadline Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. Tax return 2011 deadline However, other exclusions, such as the insolvency exclusion, may apply. Tax return 2011 deadline Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. Tax return 2011 deadline    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. Tax return 2011 deadline Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. Tax return 2011 deadline   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. Tax return 2011 deadline Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. Tax return 2011 deadline Income of the estate in individual chapter 11 cases. Tax return 2011 deadline    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. Tax return 2011 deadline Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. Tax return 2011 deadline S. Tax return 2011 deadline C. Tax return 2011 deadline section 1115). Tax return 2011 deadline Note. Tax return 2011 deadline A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. Tax return 2011 deadline Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). Tax return 2011 deadline Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. Tax return 2011 deadline See Administrative expenses, below. Tax return 2011 deadline Conversion or dismissal of chapter 11 cases. Tax return 2011 deadline   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. Tax return 2011 deadline If the chapter 11 case is converted to a chapter 7 case, 11 U. Tax return 2011 deadline S. Tax return 2011 deadline C. Tax return 2011 deadline section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. Tax return 2011 deadline Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. Tax return 2011 deadline If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. Tax return 2011 deadline Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. Tax return 2011 deadline Note. Tax return 2011 deadline Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). Tax return 2011 deadline Administrative expenses. Tax return 2011 deadline   Allowable expenses include administrative expenses. Tax return 2011 deadline    Administrative expenses can only be deducted by the estate, never by the debtor. Tax return 2011 deadline   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. Tax return 2011 deadline These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. Tax return 2011 deadline See IRC section 67(e). Tax return 2011 deadline Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. Tax return 2011 deadline Note. Tax return 2011 deadline The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. Tax return 2011 deadline See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. Tax return 2011 deadline Administrative expense loss. Tax return 2011 deadline   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. Tax return 2011 deadline The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. Tax return 2011 deadline The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. Tax return 2011 deadline For a discussion of NOLs, see Publication 536. Tax return 2011 deadline Attribute carryovers. Tax return 2011 deadline   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. Tax return 2011 deadline These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. Tax return 2011 deadline The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. Tax return 2011 deadline   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. Tax return 2011 deadline See Debt Cancellation, later. Tax return 2011 deadline   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. Tax return 2011 deadline The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. Tax return 2011 deadline Note. Tax return 2011 deadline The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. Tax return 2011 deadline See Administrative expense loss, above. Tax return 2011 deadline Passive and at-risk activities. Tax return 2011 deadline   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. Tax return 2011 deadline Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. Tax return 2011 deadline These transfers include the return of exempt property and abandonment of estate property to the debtor. Tax return 2011 deadline Carrybacks from the debtor's activities. Tax return 2011 deadline   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. Tax return 2011 deadline Carrybacks from the bankruptcy estate. Tax return 2011 deadline   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. Tax return 2011 deadline The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. Tax return 2011 deadline Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. Tax return 2011 deadline    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. Tax return 2011 deadline The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. Tax return 2011 deadline These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. Tax return 2011 deadline The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. Tax return 2011 deadline The same method must be used to allocate the income and the withheld tax. Tax return 2011 deadline Example. Tax return 2011 deadline If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. Tax return 2011 deadline Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. Tax return 2011 deadline See IRC section 31(a). Tax return 2011 deadline   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. Tax return 2011 deadline In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. Tax return 2011 deadline    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. Tax return 2011 deadline The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. Tax return 2011 deadline Note. Tax return 2011 deadline The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). Tax return 2011 deadline   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. Tax return 2011 deadline Self-employment taxes in individual chapter 11 cases. Tax return 2011 deadline   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. Tax return 2011 deadline Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. Tax return 2011 deadline   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. Tax return 2011 deadline Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. Tax return 2011 deadline This schedule includes self-employment income earned post-petition and the attributable deductions. Tax return 2011 deadline The debtor must pay any self-employment tax imposed by IRC section 1401. Tax return 2011 deadline Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. Tax return 2011 deadline   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. Tax return 2011 deadline However, section 1115 of the Bankruptcy Code (11 U. Tax return 2011 deadline S. Tax return 2011 deadline C. Tax return 2011 deadline section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. Tax return 2011 deadline See Notice 2006-83. Tax return 2011 deadline   The reporting and withholding obligations of a debtor's employer also do not change. Tax return 2011 deadline An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. Tax return 2011 deadline Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. Tax return 2011 deadline   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. Tax return 2011 deadline See IRC section 6109(a)(2). Tax return 2011 deadline As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). Tax return 2011 deadline   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. Tax return 2011 deadline See Notice 2006-83. Tax return 2011 deadline An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. Tax return 2011 deadline   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. Tax return 2011 deadline However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. Tax return 2011 deadline See Employment Tax Regulations section 31. Tax return 2011 deadline 3402(f)(2)-1. Tax return 2011 deadline Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. Tax return 2011 deadline See IRC section 6654(a). Tax return 2011 deadline Notice required in converted and dismissed cases. Tax return 2011 deadline   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. Tax return 2011 deadline The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. Tax return 2011 deadline This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. Tax return 2011 deadline   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. Tax return 2011 deadline Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. Tax return 2011 deadline However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. Tax return 2011 deadline After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. Tax return 2011 deadline Employment taxes. Tax return 2011 deadline   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Tax return 2011 deadline See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. Tax return 2011 deadline   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Tax return 2011 deadline For a further discussion of employment taxes, see Employment Taxes, later. Tax return 2011 deadline Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . Tax return 2011 deadline The bankruptcy court case number is . Tax return 2011 deadline Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. Tax return 2011 deadline   Year Taxpayer   Estate 1. Tax return 2011 deadline Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. Tax return 2011 deadline Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. Tax return 2011 deadline Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. Tax return 2011 deadline Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. Tax return 2011 deadline   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. Tax return 2011 deadline This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. Tax return 2011 deadline   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). Tax return 2011 deadline   These amounts are generally adjusted annually. Tax return 2011 deadline See the present year Form 1041 Instructions at www. Tax return 2011 deadline irs. Tax return 2011 deadline gov/form1041 for the current dollar amounts. Tax return 2011 deadline Accounting period. Tax return 2011 deadline   A bankruptcy estate may have a fiscal year. Tax return 2011 deadline However, this period cannot be longer than 12 months. Tax return 2011 deadline Change of accounting period. Tax return 2011 deadline   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. Tax return 2011 deadline This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. Tax return 2011 deadline The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. Tax return 2011 deadline Employer identification number. Tax return 2011 deadline   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. Tax return 2011 deadline The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. Tax return 2011 deadline    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. Tax return 2011 deadline   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. Tax return 2011 deadline irs. Tax return 2011 deadline gov/businesses/small. Tax return 2011 deadline The EIN is issued immediately once the application information is validated. Tax return 2011 deadline By telephone at 1-800-829-4933 from 7:00 a. Tax return 2011 deadline m. Tax return 2011 deadline to 7:00 p. Tax return 2011 deadline m. Tax return 2011 deadline in the trustee's or debtor-in-possession's local time zone. Tax return 2011 deadline Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. Tax return 2011 deadline   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. Tax return 2011 deadline For more details, see Pub. Tax return 2011 deadline 583, Starting a Business and Keeping Records. Tax return 2011 deadline   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. Tax return 2011 deadline Figuring tax due. Tax return 2011 deadline   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. Tax return 2011 deadline However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. Tax return 2011 deadline The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. Tax return 2011 deadline The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. Tax return 2011 deadline Tax rate schedule. Tax return 2011 deadline The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. Tax return 2011 deadline When to file. Tax return 2011 deadline   Calendar year bankruptcy estates must file Form 1041 by April 15th. Tax return 2011 deadline Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. Tax return 2011 deadline For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. Tax return 2011 deadline If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. Tax return 2011 deadline Note. Tax return 2011 deadline The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. Tax return 2011 deadline Transmittal for Form 1040. Tax return 2011 deadline   Form 1041 is used as a transmittal for Form 1040. Tax return 2011 deadline If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. Tax return 2011 deadline   Prepare the bankruptcy estate's return by completing Form 1040. Tax return 2011 deadline In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. Tax return 2011 deadline ” Then, attach Form 1040 to the Form 1041 transmittal. Tax return 2011 deadline Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. Tax return 2011 deadline An example of a bankruptcy estate's tax return is prepared below. Tax return 2011 deadline Note. Tax return 2011 deadline The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. Tax return 2011 deadline Payment of Tax Due Payment methods. Tax return 2011 deadline   Payment of tax due may be made by check or money order or by credit or debit card. Tax return 2011 deadline For information on how to make payments electronically by credit or debit card, go to irs. Tax return 2011 deadline gov/e-pay. Tax return 2011 deadline      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. Tax return 2011 deadline To enroll in EFTPS, go to eftps. Tax return 2011 deadline gov or call 1-800-555-4477. Tax return 2011 deadline For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. Tax return 2011 deadline Payment voucher – Form 1041-V. Tax return 2011 deadline   Form 1041-V accompanies payments made by check or money order for Form 1041. Tax return 2011 deadline The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. Tax return 2011 deadline Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. Tax return 2011 deadline We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. Tax return 2011 deadline Estimated tax – Form 1041-ES. Tax return 2011 deadline   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. Tax return 2011 deadline See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. Tax return 2011 deadline Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. Tax return 2011 deadline Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. Tax return 2011 deadline If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. Tax return 2011 deadline   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. Tax return 2011 deadline Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. Tax return 2011 deadline The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. Tax return 2011 deadline If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Tax return 2011 deadline , with their individual income tax returns. Tax return 2011 deadline Tax Return Example – Form 1041 This publication is not revised annually. Tax return 2011 deadline Future changes to the forms and their instructions may not be reflected in this example. Tax return 2011 deadline Note. Tax return 2011 deadline The following return was prepared for tax year 2011. Tax return 2011 deadline In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). Tax return 2011 deadline Facts and circumstances. Tax return 2011 deadline   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. Tax return 2011 deadline Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. Tax return 2011 deadline   The estate received the following assets from Mr. Tax return 2011 deadline Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. Tax return 2011 deadline   Also, the estate received a $251,500 capital loss carryover. Tax return 2011 deadline   Mr. Tax return 2011 deadline Smith's bankruptcy case was closed on December 31, 2011. Tax return 2011 deadline During 2011, Mr. Tax return 2011 deadline Smith was relieved of $70,000 of debt by the bankruptcy court. Tax return 2011 deadline The estate chose a calendar year as its tax year. Tax return 2011 deadline Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. Tax return 2011 deadline Schedule B (Form 1040). Tax return 2011 deadline    The certificate of deposit earned $5,500 of interest during 2011. Tax return 2011 deadline Joan reports this interest on Schedule B. Tax return 2011 deadline She completes this schedule and enters the result on Form 1040. Tax return 2011 deadline Form 4562. Tax return 2011 deadline   Joan enters the depreciation allowed on Form 4562. Tax return 2011 deadline She completes the form and enters the result on Schedule E. Tax return 2011 deadline Schedule E (Form 1040). Tax return 2011 deadline   The commercial real estate was rented through the date of sale. Tax return 2011 deadline Joan reports the income and expenses on Schedule E. Tax return 2011 deadline She enters the net income on Form 1040. Tax return 2011 deadline Form 4797. Tax return 2011 deadline   The commercial real estate was sold on July 1, 2011, for $280,000. Tax return 2011 deadline The property was purchased in 2001 at a cost of $250,000. Tax return 2011 deadline The total depreciation allowable as of the date of sale was $120,000. Tax return 2011 deadline Additionally, $25,000 of selling expenses were incurred. Tax return 2011 deadline Joan reports the gain or loss from the sale on Form 4797. Tax return 2011 deadline She completes the form and enters the gain on Schedule D (Form 1040). Tax return 2011 deadline   Mr. Tax return 2011 deadline Smith's former residence was sold on September 30, 2011. Tax return 2011 deadline The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. Tax return 2011 deadline This sale is excluded from gross income under IRC section 121. Tax return 2011 deadline Note. Tax return 2011 deadline Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). Tax return 2011 deadline Bankruptcy estates succeed to this exclusion at the commencement of the case. Tax return 2011 deadline See Regulation section 1. Tax return 2011 deadline 1398-3. Tax return 2011 deadline Schedule D (Form 1040). Tax return 2011 deadline   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). Tax return 2011 deadline She enters the results on Form 1040. Tax return 2011 deadline Form 1040, page 1. Tax return 2011 deadline   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. Tax return 2011 deadline Schedule A (Form 1040). Tax return 2011 deadline   During 2011, the estate paid mortgage interest and real property tax on Mr. Tax return 2011 deadline Smith's former residence. Tax return 2011 deadline It also paid income tax to the state. Tax return 2011 deadline Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. Tax return 2011 deadline Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. Tax return 2011 deadline She completes the Schedule A and enters the result on page 2 of Form 1040. Tax return 2011 deadline Form 1040, page 2. Tax return 2011 deadline   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. Tax return 2011 deadline She then enters the estate's estimated tax payments and figures the amount the estate still owes. Tax return 2011 deadline Form 982. Tax return 2011 deadline   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. Tax return 2011 deadline Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. Tax return 2011 deadline See Debt Cancellation, later. Tax return 2011 deadline After the bankruptcy case ends, Mr. Tax return 2011 deadline Smith will assume the estate's tax attributes. Tax return 2011 deadline Mr. Tax return 2011 deadline Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). Tax return 2011 deadline Note. Tax return 2011 deadline If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. Tax return 2011 deadline Form 1041. Tax return 2011 deadline   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. Tax return 2011 deadline She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. Tax return 2011 deadline This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Schedule A This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Schedule B This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Schedule D This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Schedule E This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Form 2119 This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Form 4562 This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. Tax return 2011 deadline Please click the link to view the image. Tax return 2011 deadline Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. Tax return 2011 deadline Otherwise, you do not have any carryovers. Tax return 2011 deadline 1. Tax return 2011 deadline Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. Tax return 2011 deadline If a loss, enclose the amount in parentheses 1. Tax return 2011 deadline 19,880   2. Tax return 2011 deadline Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. Tax return 2011 deadline 1,500   3. Tax return 2011 deadline Combine lines 1 and 2. Tax return 2011 deadline If zero or less, enter -0- 3. Tax return 2011 deadline 21,380   4. Tax return 2011 deadline Enter the smaller of line 2 or line 3 4. Tax return 2011 deadline 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. Tax return 2011 deadline       5. Tax return 2011 deadline Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. Tax return 2011 deadline 0   6. Tax return 2011 deadline Enter any gain from your 2010 Schedule D, line 15. Tax return 2011 deadline If a loss, enter -0- 6. Tax return 2011 deadline         7. Tax return 2011 deadline Add lines 4 and 6 7. Tax return 2011 deadline 1,500   8. Tax return 2011 deadline Short-term capital loss carryover for 2011. Tax return 2011 deadline Subtract line 7 from line 5. Tax return 2011 deadline If zero or less, enter -0-. Tax return 2011 deadline If more than zero, also enter this amount on Schedule D, line 6 8. Tax return 2011 deadline 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. Tax return 2011 deadline       9. Tax return 2011 deadline Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. Tax return 2011 deadline 251,500   10. Tax return 2011 deadline Enter any gain from your 2010 Schedule D, line 7. Tax return 2011 deadline If a loss, enter -0- 10. Tax return 2011 deadline 0       11. Tax return 2011 deadline Subtract line 5 from line 4. Tax return 2011 deadline If zero or less, enter -0- 11. Tax return 2011 deadline 1,500       12. Tax return 2011 deadline Add lines 10 and 11 12. Tax return 2011 deadline 1,500   13. Tax return 2011 deadline Long-term capital loss carryover for 2011. Tax return 2011 deadline Subtract line 12 from line 9. Tax return 2011 deadline If zero or less, enter -0-. Tax return 2011 deadline If more than zero, also enter this amount on Schedule D, line 14 13. Tax return 2011 deadline 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. Tax return 2011 deadline The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. Tax return 2011 deadline In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. Tax return 2011 deadline The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. Tax return 2011 deadline Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. Tax return 2011 deadline However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. Tax return 2011 deadline A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. Tax return 2011 deadline However, It may or may not be included in the individual partners' income. Tax return 2011 deadline See Partnerships, below under Debt Cancellation. Tax return 2011 deadline Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. Tax return 2011 deadline A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. Tax return 2011 deadline The following discussion only highlights bankruptcy tax rules applying to corporations. Tax return 2011 deadline The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. Tax return 2011 deadline Therefore, you may wish to seek the help of a professional tax advisor. Tax return 2011 deadline See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. Tax return 2011 deadline Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. Tax return 2011 deadline However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. Tax return 2011 deadline A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. Tax return 2011 deadline In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. Tax return 2011 deadline In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. Tax return 2011 deadline Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. Tax return 2011 deadline In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. Tax return 2011 deadline IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. Tax return 2011 deadline IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. Tax return 2011 deadline In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. Tax return 2011 deadline No loss is recognized in this situation. Tax return 2011 deadline Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. Tax return 2011 deadline To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. Tax return 2011 deadline The exemption request must be submitted to the local IRS Insolvency Office handling the case. Tax return 2011 deadline The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. Tax return 2011 deadline The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. Tax return 2011 deadline ” The statement must be signed by the trustee, receiver or assignee. Tax return 2011 deadline The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). Tax return 2011 deadline The IRS will act on your request within 90 days. Tax return 2011 deadline Disclosure of return information to trustee. Tax return 2011 deadline   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. Tax return 2011 deadline However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. Tax return 2011 deadline Material interest is generally defined as a financial or monetary interest. Tax return 2011 deadline Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. Tax return 2011 deadline Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. Tax return 2011 deadline Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. Tax return 2011 deadline QSFs are required to file an annual income tax return, Form 1120-SF, U. Tax return 2011 deadline S. Tax return 2011 deadline Income Tax Return for Settlement Funds. Tax return 2011 deadline More information about QSFs may be found in Treasury Regulation sections 1. Tax return 2011 deadline 468B-1 through -5. Tax return 2011 deadline Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. Tax return 2011 deadline After a return is filed, the IRS will either accept the return as filed or select the return for examination. Tax return 2011 deadline Under examination the IRS may redetermine the tax liability shown on the return. Tax return 2011 deadline If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. Tax return 2011 deadline See Court Jurisdiction over Tax Matters, later. Tax return 2011 deadline Prompt Determination Requests Pursuant to Rev. Tax return 2011 deadline Proc. Tax return 2011 deadline 2006-24, 2006-22 I. Tax return 2011 deadline R. Tax return 2011 deadline B. Tax return 2011 deadline 943, www. Tax return 2011 deadline irs. Tax return 2011 deadline gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. Tax return 2011 deadline irs. Tax return 2011 deadline gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. Tax return 2011 deadline Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). Tax return 2011 deadline Making the request for determination. Tax return 2011 deadline   As detailed in Rev. Tax return 2011 deadline Proc. Tax return 2011 deadline 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. Tax return 2011 deadline O. Tax return 2011 deadline Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). Tax return 2011 deadline   The request must be submitted in duplicate and must be executed under penalties of perjury. Tax return 2011 deadline In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. Tax return 2011 deadline The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. Tax return 2011 deadline The name and location of the office where the return was filed. Tax return 2011 deadline The name of the debtor. Tax return 2011 deadline Debtor's social security number, TIN, or EIN. Tax return 2011 deadline Type of bankruptcy estate. Tax return 2011 deadline Bankruptcy case number. Tax return 2011 deadline Court where the bankruptcy case is pending. Tax return 2011 deadline   The copy of the return(s) submitted with the request must be an exact copy of a valid return. Tax return 2011 deadline A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. Tax return 2011 deadline    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. Tax return 2011 deadline A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. Tax return 2011 deadline Examination of return. Tax return 2011 deadline   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. Tax return 2011 deadline If the return is selected for examination, it will be examined as soon as possible. Tax return 2011 deadline The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. Tax return 2011 deadline   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. Tax return 2011 deadline   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. Tax return 2011 deadline   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. Tax return 2011 deadline Note. Tax return 2011 deadline An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. Tax return 2011 deadline   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei