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Turbotax Free 1040ez

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Turbotax Free 1040ez

Turbotax free 1040ez Index A Activities not for profit, Hobby Expenses Adjustments to gross income Armed forces reservists' travel expenses, Armed Forces reservists traveling more than 100 miles from home. Turbotax free 1040ez Performing artists, Performing Artists State or local government officials paid on fee basis, Officials Paid on a Fee Basis Unlawful discrimination claims, Unlawful discrimination claims. Turbotax free 1040ez Administrative fees IRA trustees, Trustee's Administrative Fees for IRA Adoption expenses, Adoption Expenses Amortizable bond premium, Amortizable Premium on Taxable Bonds, More information. Turbotax free 1040ez Appraisal fees, Appraisal Fees Armed forces Military uniforms, Military uniforms. Turbotax free 1040ez Reservists, travel expenses, Armed Forces reservists traveling more than 100 miles from home. Turbotax free 1040ez Assistance (see Tax help) B Bad debts, Business Bad Debt Bank accounts Check-writing fees, Check-Writing Fees on Personal Account Losses on deposits, Loss on Deposits Bonds Amortizable premium, Amortizable Premium on Taxable Bonds Breach of contract Damages, Damages for Breach of Employment Contract Bribes, List of Nondeductible Expenses Burial expenses, List of Nondeductible Expenses Business expenses (see Employee business expenses) Business gifts, Gift expenses. Turbotax free 1040ez C Campaign contributions, Lobbying and political activities. Turbotax free 1040ez , Political Contributions Campaign expenses, Campaign Expenses Capital expenditures, Capital Expenses Casualty losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Cell phones, Depreciation on Computers Chambers of Commerce dues, Lobbying and political activities. Turbotax free 1040ez Check-writing fees, Check-Writing Fees on Personal Account Claim of right repayments, Repayments Under Claim of Right Clerical help, deductibility of, Clerical Help and Office Rent Clothes Protective, Protective clothing. Turbotax free 1040ez Work, Work Clothes and Uniforms Club dues, Club Dues Commissions, Commissions Commuting expenses, Commuting Expenses Computers Depreciation, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Convenience fees, Credit or Debit Card Convenience Fees Criminal prosecutions Travel expenses for federal staff, Federal crime investigation and prosecution. Turbotax free 1040ez D Damages Breach of employment contract, Damages for Breach of Employment Contract Deposits Losses on, Loss on Deposits Depreciation Computers, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Disabilities, persons with Work-related expenses, Impairment-Related Work Expenses Dividends Fees to collect, Fees To Collect Interest and Dividends Service charges on reinvestment plans, Service Charges on Dividend Reinvestment Plans Dues, Dues to Chambers of Commerce and Professional Societies (see also Expenses) (see also Fees) Chambers of Commerce, Dues to Chambers of Commerce and Professional Societies Club, Club Dues Lobbying, Dues used for lobbying. Turbotax free 1040ez Professional societies, Dues to Chambers of Commerce and Professional Societies Union, Union Dues and Expenses E Education, Educator Expenses, Education Expenses During Unemployment Education expenses, Work-Related Education, More information. Turbotax free 1040ez Employee business expenses Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. Turbotax free 1040ez Performing artists, Performing Artists Unreimbursed, Unreimbursed Employee Expenses Employment Agency fees, Employment and outplacement agency fees. Turbotax free 1040ez Breach of contract, Damages for Breach of Employment Contract Entertainers and musicians (see Performing artists) Entertainment expenses, Meals and entertainment. Turbotax free 1040ez Estates Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Expenses, Dues to Chambers of Commerce and Professional Societies, Education Expenses During Unemployment (see also Dues) (see also Fees) Adoption, Adoption Expenses Campaign, Campaign Expenses Capital, Capital Expenses Commuting, Commuting Expenses Education Work-related, Work-Related Education Educator, Educator Expenses Qualified, Qualified expenses. Turbotax free 1040ez Educator Expenses, Eligible educator. Turbotax free 1040ez Employee business (see Employee business expenses) Entertainment, Meals and entertainment. Turbotax free 1040ez Funeral and burial, List of Nondeductible Expenses Gifts, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging, Gift expenses. Turbotax free 1040ez Health spa, Health Spa Expenses Hobby, Hobby Expenses Home office, Home Office Impairment-related, Impairment-Related Work Expenses Investment, Investment Fees and Expenses, Investment-Related Seminars Job search, Job Search Expenses Legal (see Legal expenses) Local lodging, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Meals, Meals and entertainment. Turbotax free 1040ez , Lunches With Co-workers Meals and entertainment, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Nondeductible, Nondeductible Expenses Over limit, educator, Educator expenses over limit. Turbotax free 1040ez Personal, Nondeductible Expenses Production of income, Other Expenses Professional promotion, Professional Reputation Tax-exempt income, Tax-Exempt Income Expenses Travel and transportation, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Travel as education, Travel as education. Turbotax free 1040ez F Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Fees, Dues to Chambers of Commerce and Professional Societies (see also Dues) (see also Expenses) Appraisal, Appraisal Fees Check-writing, Check-Writing Fees on Personal Account Employment and outplacement agency, Employment and outplacement agency fees. Turbotax free 1040ez Investment, Fees To Collect Interest and Dividends, Investment Fees and Expenses IRA trustee, Trustee's Administrative Fees for IRA Legal (see Legal expenses) License, Licenses and Regulatory Fees Professional accreditation, Professional Accreditation Fees Fines, Fines or Penalties Form 2106 Employee business expenses, Form 2106 and Form 2106-EZ. Turbotax free 1040ez Form 2106-EZ Employee business expenses, Form 2106 and Form 2106-EZ. Turbotax free 1040ez Form 4562 Depreciation and amortization, Reporting your depreciation deduction. Turbotax free 1040ez , Depreciation. Turbotax free 1040ez , Computer used in a home office. Turbotax free 1040ez Free tax services, Free help with your tax return. Turbotax free 1040ez Funeral expenses, List of Nondeductible Expenses G Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Government employees Federal criminal investigation and prosecution travel expenses, Federal crime investigation and prosecution. Turbotax free 1040ez State or local government officials paid on fee basis, Officials Paid on a Fee Basis H Health spa, Health Spa Expenses Help (see Tax help) Hobbies, Hobby Expenses Home Security system, Home Security System Telephone service, Residential Telephone Service Home office Computers, Computer used in a home office. Turbotax free 1040ez Expenses, Home Office Principal place of business, Principal place of business. Turbotax free 1040ez Travel and transportation expenses, Home office. Turbotax free 1040ez I Impairment-related work expenses, Impairment-Related Work Expenses Income aid payment, Repayment of Income Aid Payment Income in respect of decedent Estate tax, Federal Estate Tax on Income in Respect of a Decedent Individual retirement arrangements (IRAs) Trustees' fees, Trustee's Administrative Fees for IRA Insurance Business liability, Business Liability Insurance Life insurance, Life Insurance Premiums Malpractice, Unreimbursed Employee Expenses Personal disability, List of Nondeductible Expenses Interest income Fees to collect, Fees To Collect Interest and Dividends Investments Annuity, unrecovered investment in, Unrecovered Investment in Annuity Deposits, losses on, Loss on Deposits Fees and expenses, Investment Fees and Expenses Seminars, Investment-Related Seminars Itemized deductions Deductions not subject to 2% limit, Deductions Not Subject to the 2% Limit Deductions subject to 2% limit, Introduction, Deductions Subject to the 2% Limit How to report, How To Report J Job search, Job Search Expenses, Travel and transportation expenses. Turbotax free 1040ez K Kickbacks, List of Nondeductible Expenses L Legal expenses Job-related, Legal Fees Personal, Personal Legal Expenses Political campaigns, Legal fees. Turbotax free 1040ez Production of income, Legal Expenses Unlawful discrimination claims, Legal Expenses Licenses Fees, Licenses and Regulatory Fees Life insurance, Life Insurance Premiums Lobbying, Lobbying and political activities. Turbotax free 1040ez , Lobbying Expenses, Exceptions. Turbotax free 1040ez Local transportation, Local transportation expenses. Turbotax free 1040ez Losses Casualties and thefts, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Deposits, Loss on Deposits Gambling, Gambling Losses Up to the Amount of Gambling Winnings IRA, Loss on IRA Mislaid cash or property, Lost or Mislaid Cash or Property Partnership, Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 Roth IRA, Loss on IRA M Mail carriers, rural, Rural Mail Carriers' Vehicle Expenses Malpractice insurance, Unreimbursed Employee Expenses Meal and lodging expenses, Meals and entertainment. Turbotax free 1040ez Lunches with coworkers, Lunches With Co-workers Working late, Meals While Working Late Medical examinations, Unreimbursed Employee Expenses Mileage rate, What's New Missing children, photographs of, Reminders Mutual funds Indirect deductions, Indirect Deductions of Pass-Through Entities N Nondeductible expenses, Nondeductible Expenses, Wristwatches Not-for-profit activities, Hobby Expenses O Occupational taxes, Occupational Taxes Office Home (see Home office) Rent, Clerical Help and Office Rent Outplacement agency fees, Employment and outplacement agency fees. Turbotax free 1040ez P Partnerships Indirect deductions, Indirect Deductions of Pass-Through Entities Pass-through entities, Indirect Deductions of Pass-Through Entities Passport expense, Unreimbursed Employee Expenses Penalties, Fines or Penalties Performing artists, Performing Artists Work clothes, Work Clothes and Uniforms Personal expenses, Nondeductible Expenses, Wristwatches Political contributions, Lobbying and political activities. Turbotax free 1040ez , Political Contributions Campaign expenses, Campaign Expenses Ponzi-type investment schemes, Losses From Ponzi-type Investment Schemes Postal workers, Rural Mail Carriers' Vehicle Expenses Production of income expenses, Other Expenses, Loss on IRA Professional accreditation fees, Professional Accreditation Fees Professional journals, Unreimbursed Employee Expenses Professional reputation and marketing, Professional Reputation Professional societies dues, Lobbying and political activities. Turbotax free 1040ez Prosecution travel expenses, Federal crime investigation and prosecution. Turbotax free 1040ez Protective clothing, Protective clothing. Turbotax free 1040ez Publications (see Tax help) R Recordkeeping requirements Computer used for home and business, Depreciation on Computers Deductions, to verify, Introduction Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Home office, Home Office Relief fund contributions, Relief Fund Contributions Rent Office, Clerical Help and Office Rent Safe deposit box, Safe Deposit Box Rent Repayments Claim of right, Repayments Under Claim of Right Income, Repayments of Income Income aid payments, Unreimbursed Employee Expenses Social Security benefits, Repayments of Social Security Benefits Reporting requirements Armed Forces reservists, Armed Forces reservists. Turbotax free 1040ez Computer used in a home office, Computer used in a home office. Turbotax free 1040ez Depreciation, Depreciation. Turbotax free 1040ez Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. Turbotax free 1040ez Impairment-related work expenses, Impairment-related work expenses. Turbotax free 1040ez Itemized deductions, How To Report Tax preparation fees, Tax preparation fees. Turbotax free 1040ez Research expenses, Research Expenses of a College Professor Résumé, Résumé. Turbotax free 1040ez Rural mail carriers, Rural Mail Carriers' Vehicle Expenses S S corporations Indirect deductions, Indirect Deductions of Pass-Through Entities Safe deposit box, Safe Deposit Box Rent Security systems, home, Home Security System Seminars, investment-related, Investment-Related Seminars Service charges on dividend reinvestment plans, Service Charges on Dividend Reinvestment Plans Social Security repayments, Repayments of Social Security Benefits State or local governments Officials paid on fee basis, Officials Paid on a Fee Basis Stockholders' meeting expenses, Stockholders' Meetings T Tax help, How To Get Tax Help Tax-exempt income expenses, Tax-Exempt Income Expenses Taxes Estate tax, Federal Estate Tax on Income in Respect of a Decedent Occupational, Occupational Taxes Telephones Cell phone, Depreciation on Computers Residential service, Residential Telephone Service Theft losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Tools, Tools Used in Your Work Travel and transportation expenses, Local lodging. Turbotax free 1040ez , Additional information. Turbotax free 1040ez Another individual, paid by taxpayer, Travel Expenses for Another Individual Armed forces reservists, Armed Forces reservists traveling more than 100 miles from home. Turbotax free 1040ez Commuting, Commuting Expenses Criminal investigations and prosecutions, Federal crime investigation and prosecution. Turbotax free 1040ez Education, Travel as education. Turbotax free 1040ez Indefinite work assignments, Indefinite work assignment. Turbotax free 1040ez Job search, Travel and transportation expenses. Turbotax free 1040ez Local transportation, Local transportation expenses. Turbotax free 1040ez Research, Research Expenses of a College Professor Temporary work assignments, Temporary work assignment. Turbotax free 1040ez Trustees IRA administrative fees, Trustee's Administrative Fees for IRA TTY/TDD information, How To Get Tax Help U Unemployment and education expenses, Education Expenses During Unemployment Unemployment benefit fund contributions, Voluntary Unemployment Benefit Fund Contributions Uniforms, military, Military uniforms. Turbotax free 1040ez Union dues, Union Dues and Expenses Unreimbursed employee expenses, Unreimbursed Employee Expenses, Military uniforms. Turbotax free 1040ez W Wagering winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Work Clothes and uniforms, Work Clothes and Uniforms Impairment-related expenses, Impairment-Related Work Expenses Supplies, Unreimbursed Employee Expenses Tools, Unreimbursed Employee Expenses, Tools Used in Your Work Travel and transportation expenses, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Wristwatches, List of Nondeductible Expenses, Wristwatches Prev  Up     Home   More Online Publications
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The Turbotax Free 1040ez

Turbotax free 1040ez Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. Turbotax free 1040ez Proc. Turbotax free 1040ez 2013-16 Table of Contents SECTION 1. Turbotax free 1040ez PURPOSE SECTION 2. Turbotax free 1040ez BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. Turbotax free 1040ez BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. Turbotax free 1040ez FEDERAL INCOME TAX TREATMENT SECTION 5. Turbotax free 1040ez INFORMATION-REPORTING OBLIGATIONS SECTION 6. Turbotax free 1040ez HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. Turbotax free 1040ez PENALTY RELIEF FOR 2012 SECTION 8. Turbotax free 1040ez SCOPE AND EFFECTIVE DATE SECTION 9. Turbotax free 1040ez DRAFTING INFORMATION SECTION 1. Turbotax free 1040ez PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). Turbotax free 1040ez Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). Turbotax free 1040ez In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. Turbotax free 1040ez Current plans call for HAMP to continue accepting new borrowers through the end of 2013. Turbotax free 1040ez The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. Turbotax free 1040ez SECTION 2. Turbotax free 1040ez BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . Turbotax free 1040ez 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Turbotax free 1040ez A description of the program can be found at www. Turbotax free 1040ez makinghomeaffordable. Turbotax free 1040ez gov. Turbotax free 1040ez . Turbotax free 1040ez 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. Turbotax free 1040ez These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. Turbotax free 1040ez . Turbotax free 1040ez 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. Turbotax free 1040ez The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. Turbotax free 1040ez However, as noted in section 2. Turbotax free 1040ez 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. Turbotax free 1040ez (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. Turbotax free 1040ez ”) . Turbotax free 1040ez 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. Turbotax free 1040ez . Turbotax free 1040ez 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. Turbotax free 1040ez The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. Turbotax free 1040ez (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. Turbotax free 1040ez ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). Turbotax free 1040ez Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. Turbotax free 1040ez Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. Turbotax free 1040ez . Turbotax free 1040ez 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. Turbotax free 1040ez (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. Turbotax free 1040ez ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. Turbotax free 1040ez . Turbotax free 1040ez 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). Turbotax free 1040ez If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. Turbotax free 1040ez These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. Turbotax free 1040ez The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. Turbotax free 1040ez The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. Turbotax free 1040ez For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. Turbotax free 1040ez ” . Turbotax free 1040ez 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). Turbotax free 1040ez . Turbotax free 1040ez 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. Turbotax free 1040ez 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. Turbotax free 1040ez . Turbotax free 1040ez 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. Turbotax free 1040ez SECTION 3. Turbotax free 1040ez BACKGROUND—APPLICABLE PROVISIONS OF LAW . Turbotax free 1040ez 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. Turbotax free 1040ez See § 61(a)(12). Turbotax free 1040ez . Turbotax free 1040ez 02 Under § 1. Turbotax free 1040ez 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. Turbotax free 1040ez In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. Turbotax free 1040ez However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. Turbotax free 1040ez See § 1. Turbotax free 1040ez 1001-3(c)(6). Turbotax free 1040ez . Turbotax free 1040ez 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. Turbotax free 1040ez 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. Turbotax free 1040ez If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. Turbotax free 1040ez See also § 1. Turbotax free 1040ez 61-12(c). Turbotax free 1040ez . Turbotax free 1040ez 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. Turbotax free 1040ez If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. Turbotax free 1040ez See, e. Turbotax free 1040ez g. Turbotax free 1040ez , §§ 1. Turbotax free 1040ez 1272-1(c)(5) and 1. Turbotax free 1040ez 1274-2(d). Turbotax free 1040ez . Turbotax free 1040ez 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. Turbotax free 1040ez Section 108(a)(1)(E) and 108(a)(1)(B). Turbotax free 1040ez (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. Turbotax free 1040ez ) . Turbotax free 1040ez 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. Turbotax free 1040ez . Turbotax free 1040ez 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. Turbotax free 1040ez See §§ 108(h) and 163(h)(3)(B)(i). Turbotax free 1040ez . Turbotax free 1040ez 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). Turbotax free 1040ez Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. Turbotax free 1040ez . Turbotax free 1040ez 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. Turbotax free 1040ez . Turbotax free 1040ez 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. Turbotax free 1040ez Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. Turbotax free 1040ez . Turbotax free 1040ez 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. Turbotax free 1040ez See § 108(h)(1). Turbotax free 1040ez If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). Turbotax free 1040ez See § 108(b). Turbotax free 1040ez For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Turbotax free 1040ez . Turbotax free 1040ez 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). Turbotax free 1040ez See Form 982 instructions and Publication 4681. Turbotax free 1040ez This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. Turbotax free 1040ez . Turbotax free 1040ez 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. Turbotax free 1040ez See Notice 2003-18, 2003-1 C. Turbotax free 1040ez B. Turbotax free 1040ez 699, and Rev. Turbotax free 1040ez Rul. Turbotax free 1040ez 79-356, 1979-2 C. Turbotax free 1040ez B. Turbotax free 1040ez 28. Turbotax free 1040ez However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). Turbotax free 1040ez See Rev. Turbotax free 1040ez Rul. Turbotax free 1040ez 2005-46, 2005-2 C. Turbotax free 1040ez B. Turbotax free 1040ez 120, and Rev. Turbotax free 1040ez Rul. Turbotax free 1040ez 75-246, 1975-1 C. Turbotax free 1040ez B. Turbotax free 1040ez 24. Turbotax free 1040ez . Turbotax free 1040ez 14 Under § 451 and § 1. Turbotax free 1040ez 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. Turbotax free 1040ez . Turbotax free 1040ez 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. Turbotax free 1040ez See § 6041(a) and (d) and § 1. Turbotax free 1040ez 6041-1(a)(1) and (b). Turbotax free 1040ez . Turbotax free 1040ez 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. Turbotax free 1040ez See § 6050P(a)-(c) and §§ 1. Turbotax free 1040ez 6050P-1(a) and 1. Turbotax free 1040ez 6050P-2(a) and (d). Turbotax free 1040ez . Turbotax free 1040ez 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. Turbotax free 1040ez These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. Turbotax free 1040ez Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. Turbotax free 1040ez ” . Turbotax free 1040ez 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. Turbotax free 1040ez These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. Turbotax free 1040ez Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. Turbotax free 1040ez SECTION 4. Turbotax free 1040ez FEDERAL INCOME TAX TREATMENT . Turbotax free 1040ez 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. Turbotax free 1040ez See § 1. Turbotax free 1040ez 1001-3. Turbotax free 1040ez At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. Turbotax free 1040ez See also § 61(a)(12) and § 1. Turbotax free 1040ez 61-12(c). Turbotax free 1040ez . Turbotax free 1040ez 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. Turbotax free 1040ez Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. Turbotax free 1040ez Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. Turbotax free 1040ez . Turbotax free 1040ez 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. Turbotax free 1040ez Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. Turbotax free 1040ez . Turbotax free 1040ez 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. Turbotax free 1040ez Therefore, for purposes of § 1. Turbotax free 1040ez 1001-3, the date of the modification is the date of the permanent modification. Turbotax free 1040ez . Turbotax free 1040ez 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. Turbotax free 1040ez 01 of this revenue procedure for the taxable year in which the permanent modification occurs. Turbotax free 1040ez Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. Turbotax free 1040ez The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. Turbotax free 1040ez . Turbotax free 1040ez 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. Turbotax free 1040ez . Turbotax free 1040ez 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. Turbotax free 1040ez This is consistent with Rev. Turbotax free 1040ez Rul. Turbotax free 1040ez 2009-19, 2009-28 I. Turbotax free 1040ez R. Turbotax free 1040ez B. Turbotax free 1040ez 111, which addressed the treatment of Pay-for-Performance Success Payments. Turbotax free 1040ez . Turbotax free 1040ez 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. Turbotax free 1040ez If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. Turbotax free 1040ez . Turbotax free 1040ez 09 As described in section 2. Turbotax free 1040ez 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. Turbotax free 1040ez To the extent that the HAMP-PRA borrower is described in section 4. Turbotax free 1040ez 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. Turbotax free 1040ez To the extent that the HAMP-PRA borrower is described in section 4. Turbotax free 1040ez 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. Turbotax free 1040ez SECTION 5. Turbotax free 1040ez INFORMATION-REPORTING OBLIGATIONS . Turbotax free 1040ez 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. Turbotax free 1040ez A copy of this form is required to be furnished to the borrower. Turbotax free 1040ez . Turbotax free 1040ez 02 As stated in sections 4. Turbotax free 1040ez 01 and 4. Turbotax free 1040ez 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. Turbotax free 1040ez . Turbotax free 1040ez 03 An investor is an applicable entity that is required under § 1. Turbotax free 1040ez 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. Turbotax free 1040ez Under § 1. Turbotax free 1040ez 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. Turbotax free 1040ez Identifiable events determine when Forms 1099-C have to be issued. Turbotax free 1040ez Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. Turbotax free 1040ez This rule under § 1. Turbotax free 1040ez 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. Turbotax free 1040ez . Turbotax free 1040ez 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. Turbotax free 1040ez That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). Turbotax free 1040ez . Turbotax free 1040ez 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Turbotax free 1040ez 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. Turbotax free 1040ez Under § 6041, these payments are not subject to information reporting. Turbotax free 1040ez See Notice 2011-14, 2011-11 I. Turbotax free 1040ez R. Turbotax free 1040ez B. Turbotax free 1040ez 544, 546. Turbotax free 1040ez . Turbotax free 1040ez 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Turbotax free 1040ez 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. Turbotax free 1040ez The payment is subject to the information reporting requirements of § 6041, as described in section 3. Turbotax free 1040ez 15 of this revenue procedure. Turbotax free 1040ez Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. Turbotax free 1040ez SECTION 6. Turbotax free 1040ez HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . Turbotax free 1040ez 01 In general. Turbotax free 1040ez The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). Turbotax free 1040ez As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. Turbotax free 1040ez Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. Turbotax free 1040ez A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. Turbotax free 1040ez 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. Turbotax free 1040ez Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. Turbotax free 1040ez 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. Turbotax free 1040ez . Turbotax free 1040ez 02 HAMP-PRA borrower options. Turbotax free 1040ez A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. Turbotax free 1040ez 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. Turbotax free 1040ez If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. Turbotax free 1040ez 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. Turbotax free 1040ez . Turbotax free 1040ez 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. Turbotax free 1040ez (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. Turbotax free 1040ez (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. Turbotax free 1040ez 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. Turbotax free 1040ez 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. Turbotax free 1040ez This section 6. Turbotax free 1040ez 03(2) applies only if the change to reporting the discharge using the method described in section 6. Turbotax free 1040ez 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. Turbotax free 1040ez To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. Turbotax free 1040ez (3) Example. Turbotax free 1040ez The following example illustrates the application of section 6. Turbotax free 1040ez 03(2) of this revenue procedure. Turbotax free 1040ez In 2010, B’s basis in B’s principal residence was $330,000. Turbotax free 1040ez In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. Turbotax free 1040ez B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). Turbotax free 1040ez The trial period plan effective date also fell in 2010. Turbotax free 1040ez B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. Turbotax free 1040ez 02(2) of this revenue procedure. Turbotax free 1040ez That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. Turbotax free 1040ez The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. Turbotax free 1040ez For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. Turbotax free 1040ez 02(1) of this revenue procedure. Turbotax free 1040ez Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. Turbotax free 1040ez 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). Turbotax free 1040ez (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. Turbotax free 1040ez 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. Turbotax free 1040ez 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. Turbotax free 1040ez Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. Turbotax free 1040ez 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. Turbotax free 1040ez Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. Turbotax free 1040ez (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. Turbotax free 1040ez 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. Turbotax free 1040ez The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. Turbotax free 1040ez (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. Turbotax free 1040ez The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). Turbotax free 1040ez The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. Turbotax free 1040ez . Turbotax free 1040ez 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. Turbotax free 1040ez (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. Turbotax free 1040ez Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. Turbotax free 1040ez Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. Turbotax free 1040ez If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. Turbotax free 1040ez (2) A HAMP-PRA borrower who has been using the method described in section 6. Turbotax free 1040ez 02(1) of this revenue procedure may change to the method described in section 6. Turbotax free 1040ez 02(2) but must comply with the consistency and open-year requirements described in section 6. Turbotax free 1040ez 01 of this revenue procedure. Turbotax free 1040ez SECTION 7. Turbotax free 1040ez PENALTY RELIEF FOR 2012 . Turbotax free 1040ez 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. Turbotax free 1040ez 03 through 5. Turbotax free 1040ez 04 and section 8. Turbotax free 1040ez 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. Turbotax free 1040ez 01 through 4. Turbotax free 1040ez 04 of this revenue procedure) that is required to be reported for 2012. Turbotax free 1040ez (2) Not later than March 28, 2013, a statement is sent to the Service. Turbotax free 1040ez It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. Turbotax free 1040ez 01(1) of this revenue procedure. Turbotax free 1040ez The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . Turbotax free 1040ez 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. Turbotax free 1040ez 06 and 8. Turbotax free 1040ez 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. Turbotax free 1040ez . Turbotax free 1040ez 03 Section 8. Turbotax free 1040ez 03 and 8. Turbotax free 1040ez 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. Turbotax free 1040ez SECTION 8. Turbotax free 1040ez SCOPE AND EFFECTIVE DATE . Turbotax free 1040ez 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. Turbotax free 1040ez . Turbotax free 1040ez 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. Turbotax free 1040ez . Turbotax free 1040ez 03 Because of the effective date in section 8. Turbotax free 1040ez 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. Turbotax free 1040ez 03 through 5. Turbotax free 1040ez 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. Turbotax free 1040ez 03 through 5. Turbotax free 1040ez 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. Turbotax free 1040ez . Turbotax free 1040ez 04 Because of the effective date in section 8. Turbotax free 1040ez 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. Turbotax free 1040ez 06 of this revenue procedure. Turbotax free 1040ez SECTION 9. Turbotax free 1040ez DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. Turbotax free 1040ez Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. Turbotax free 1040ez Pflanz and Sheldon A. Turbotax free 1040ez Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. Turbotax free 1040ez Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). Turbotax free 1040ez For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). Turbotax free 1040ez Prev  Up  Next   Home   More Internal Revenue Bulletins