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Where To File My 2012 Federal Tax Return

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Where To File My 2012 Federal Tax Return

Where to file my 2012 federal tax return 1. Where to file my 2012 federal tax return   Gain or Loss Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Sales and ExchangesGain or Loss From Sales and Exchanges Abandonments Foreclosures and RepossessionsAmount realized on a nonrecourse debt. Where to file my 2012 federal tax return Amount realized on a recourse debt. Where to file my 2012 federal tax return Involuntary ConversionsCondemnations Nontaxable ExchangesLike-Kind Exchanges Other Nontaxable Exchanges Transfers to Spouse Rollover of Gain From Publicly Traded Securities Gains on Sales of Qualified Small Business Stock Exclusion of Gain From Sale of DC Zone Assets Topics - This chapter discusses: Sales and exchanges Abandonments Foreclosures and repossessions Involuntary conversions Nontaxable exchanges Transfers to spouse Rollovers and exclusions for certain capital gains Useful Items - You may want to see: Publication 523 Selling Your Home 537 Installment Sales 547 Casualties, Disasters, and Thefts 550 Investment Income and Expenses 551 Basis of Assets 908 Bankruptcy Tax Guide 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 1040 U. Where to file my 2012 federal tax return S. Where to file my 2012 federal tax return Individual Income Tax Return 1040X Amended U. Where to file my 2012 federal tax return S. Where to file my 2012 federal tax return Individual Income Tax Return 1099-A Acquisition or Abandonment of Secured Property 1099-C Cancellation of Debt 4797 Sales of Business Property 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets Although the discussions in this chapter may at times refer mainly to individuals, many of the rules discussed also apply to taxpayers other than individuals. Where to file my 2012 federal tax return However, the rules for property held for personal use usually will not apply to taxpayers other than individuals. Where to file my 2012 federal tax return See chapter 5 for information about getting publications and forms. Where to file my 2012 federal tax return Sales and Exchanges A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. Where to file my 2012 federal tax return An exchange is a transfer of property for other property or services. Where to file my 2012 federal tax return The following discussions describe the kinds of transactions that are treated as sales or exchanges and explain how to figure gain or loss. Where to file my 2012 federal tax return Sale or lease. Where to file my 2012 federal tax return    Some agreements that seem to be leases may really be conditional sales contracts. Where to file my 2012 federal tax return The intention of the parties to the agreement can help you distinguish between a sale and a lease. Where to file my 2012 federal tax return   There is no test or group of tests to prove what the parties intended when they made the agreement. Where to file my 2012 federal tax return You should consider each agreement based on its own facts and circumstances. Where to file my 2012 federal tax return For more information, see chapter 3 in Publication 535, Business Expenses. Where to file my 2012 federal tax return Cancellation of a lease. Where to file my 2012 federal tax return    Payments received by a tenant for the cancellation of a lease are treated as an amount realized from the sale of property. Where to file my 2012 federal tax return Payments received by a landlord (lessor) for the cancellation of a lease are essentially a substitute for rental payments and are taxed as ordinary income in the year in which they are received. Where to file my 2012 federal tax return Copyright. Where to file my 2012 federal tax return    Payments you receive for granting the exclusive use of (or right to exploit) a copyright throughout its life in a particular medium are treated as received from the sale of property. Where to file my 2012 federal tax return It does not matter if the payments are a fixed amount or a percentage of receipts from the sale, performance, exhibition, or publication of the copyrighted work, or an amount based on the number of copies sold, performances given, or exhibitions made. Where to file my 2012 federal tax return Nor does it matter if the payments are made over the same period as that covering the grantee's use of the copyrighted work. Where to file my 2012 federal tax return   If the copyright was used in your trade or business and you held it longer than a year, the gain or loss may be a section 1231 gain or loss. Where to file my 2012 federal tax return For more information, see Section 1231 Gains and Losses in chapter 3. Where to file my 2012 federal tax return Easement. Where to file my 2012 federal tax return   The amount received for granting an easement is subtracted from the basis of the property. Where to file my 2012 federal tax return If only a specific part of the entire tract of property is affected by the easement, only the basis of that part is reduced by the amount received. Where to file my 2012 federal tax return If it is impossible or impractical to separate the basis of the part of the property on which the easement is granted, the basis of the whole property is reduced by the amount received. Where to file my 2012 federal tax return   Any amount received that is more than the basis to be reduced is a taxable gain. Where to file my 2012 federal tax return The transaction is reported as a sale of property. Where to file my 2012 federal tax return   If you transfer a perpetual easement for consideration and do not keep any beneficial interest in the part of the property affected by the easement, the transaction will be treated as a sale of property. Where to file my 2012 federal tax return However, if you make a qualified conservation contribution of a restriction or easement granted in perpetuity, it is treated as a charitable contribution and not a sale or exchange, even though you keep a beneficial interest in the property affected by the easement. Where to file my 2012 federal tax return   If you grant an easement on your property (for example, a right-of-way over it) under condemnation or threat of condemnation, you are considered to have made a forced sale, even though you keep the legal title. Where to file my 2012 federal tax return Although you figure gain or loss on the easement in the same way as a sale of property, the gain or loss is treated as a gain or loss from a condemnation. Where to file my 2012 federal tax return See Gain or Loss From Condemnations, later. Where to file my 2012 federal tax return Property transferred to satisfy debt. Where to file my 2012 federal tax return   A transfer of property to satisfy a debt is an exchange. Where to file my 2012 federal tax return Note's maturity date extended. Where to file my 2012 federal tax return   The extension of a note's maturity date is not treated as an exchange of an outstanding note for a new and different note. Where to file my 2012 federal tax return Also, it is not considered a closed and completed transaction that would result in a gain or loss. Where to file my 2012 federal tax return However, an extension will be treated as a taxable exchange of the outstanding note for a new and materially different note if the changes in the terms of the note are significant. Where to file my 2012 federal tax return Each case must be determined by its own facts. Where to file my 2012 federal tax return For more information, see Regulations section 1. Where to file my 2012 federal tax return 1001-3. Where to file my 2012 federal tax return Transfer on death. Where to file my 2012 federal tax return   The transfer of property of a decedent to an executor or administrator of the estate, or to the heirs or beneficiaries, is not a sale or exchange or other disposition. Where to file my 2012 federal tax return No taxable gain or deductible loss results from the transfer. Where to file my 2012 federal tax return Bankruptcy. Where to file my 2012 federal tax return   Generally, a transfer (other than by sale or exchange) of property from a debtor to a bankruptcy estate is not treated as a disposition. Where to file my 2012 federal tax return Consequently, the transfer generally does not result in gain or loss. Where to file my 2012 federal tax return For more information, see Publication 908, Bankruptcy Tax Guide. Where to file my 2012 federal tax return Gain or Loss From Sales and Exchanges You usually realize gain or loss when property is sold or exchanged. Where to file my 2012 federal tax return A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. Where to file my 2012 federal tax return A loss is the adjusted basis of the property that is more than the amount you realize. Where to file my 2012 federal tax return   Table 1-1. Where to file my 2012 federal tax return How To Figure Whether You Have a Gain or Loss IF your. Where to file my 2012 federal tax return . Where to file my 2012 federal tax return . Where to file my 2012 federal tax return THEN you have a. Where to file my 2012 federal tax return . Where to file my 2012 federal tax return . Where to file my 2012 federal tax return Adjusted basis is more than the amount realized, Loss. Where to file my 2012 federal tax return Amount realized is more than the adjusted basis, Gain. Where to file my 2012 federal tax return Basis. Where to file my 2012 federal tax return   You must know the basis of your property to determine whether you have a gain or loss from its sale or other disposition. Where to file my 2012 federal tax return The basis of property you buy is usually its cost. Where to file my 2012 federal tax return However, if you acquired the property by gift, inheritance, or in some way other than buying it, you must use a basis other than its cost. Where to file my 2012 federal tax return See Basis Other Than Cost in Publication 551, Basis of Assets. Where to file my 2012 federal tax return Special rules apply to property acquired from a decedent who died in 2010 and the executor made the election to file Form 8939, Allocation of Increase in Basis for Property Received From a Decedent. Where to file my 2012 federal tax return See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. Where to file my 2012 federal tax return Adjusted basis. Where to file my 2012 federal tax return   The adjusted basis of property is your original cost or other basis plus (increased by) certain additions and minus (decreased by) certain deductions. Where to file my 2012 federal tax return Increases include costs of any improvements having a useful life of more than 1 year. Where to file my 2012 federal tax return Decreases include depreciation and casualty losses. Where to file my 2012 federal tax return For more details and additional examples, see Adjusted Basis in Publication 551. Where to file my 2012 federal tax return Amount realized. Where to file my 2012 federal tax return   The amount you realize from a sale or exchange is the total of all money you receive plus the fair market value (defined below) of all property or services you receive. Where to file my 2012 federal tax return The amount you realize also includes any of your liabilities that were assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage. Where to file my 2012 federal tax return Fair market value. Where to file my 2012 federal tax return   Fair market value (FMV) is the price at which the property would change hands between a buyer and a seller when both have reasonable knowledge of all the necessary facts and neither is being forced to buy or sell. Where to file my 2012 federal tax return If parties with adverse interests place a value on property in an arm's-length transaction, that is strong evidence of FMV. Where to file my 2012 federal tax return If there is a stated price for services, this price is treated as the FMV unless there is evidence to the contrary. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return You used a building in your business that cost you $70,000. Where to file my 2012 federal tax return You made certain permanent improvements at a cost of $20,000 and deducted depreciation totaling $10,000. Where to file my 2012 federal tax return You sold the building for $100,000 plus property having an FMV of $20,000. Where to file my 2012 federal tax return The buyer assumed your real estate taxes of $3,000 and a mortgage of $17,000 on the building. Where to file my 2012 federal tax return The selling expenses were $4,000. Where to file my 2012 federal tax return Your gain on the sale is figured as follows. Where to file my 2012 federal tax return Amount realized:     Cash $100,000   FMV of property received 20,000   Real estate taxes assumed by buyer 3,000   Mortgage assumed by  buyer 17,000   Total 140,000   Minus: Selling expenses 4,000 $136,000 Adjusted basis:     Cost of building $70,000   Improvements 20,000   Total $90,000   Minus: Depreciation 10,000   Adjusted basis   $80,000 Gain on sale $56,000 Amount recognized. Where to file my 2012 federal tax return   Your gain or loss realized from a sale or exchange of property is usually a recognized gain or loss for tax purposes. Where to file my 2012 federal tax return Recognized gains must be included in gross income. Where to file my 2012 federal tax return Recognized losses are deductible from gross income. Where to file my 2012 federal tax return However, your gain or loss realized from certain exchanges of property is not recognized for tax purposes. Where to file my 2012 federal tax return See Nontaxable Exchanges, later. Where to file my 2012 federal tax return Also, a loss from the sale or other disposition of property held for personal use is not deductible, except in the case of a casualty or theft. Where to file my 2012 federal tax return Interest in property. Where to file my 2012 federal tax return   The amount you realize from the disposition of a life interest in property, an interest in property for a set number of years, or an income interest in a trust is a recognized gain under certain circumstances. Where to file my 2012 federal tax return If you received the interest as a gift, inheritance, or in a transfer from a spouse or former spouse incident to a divorce, the amount realized is a recognized gain. Where to file my 2012 federal tax return Your basis in the property is disregarded. Where to file my 2012 federal tax return This rule does not apply if all interests in the property are disposed of at the same time. Where to file my 2012 federal tax return Example 1. Where to file my 2012 federal tax return Your father dies and leaves his farm to you for life with a remainder interest to your younger brother. Where to file my 2012 federal tax return You decide to sell your life interest in the farm. Where to file my 2012 federal tax return The entire amount you receive is a recognized gain. Where to file my 2012 federal tax return Your basis in the farm is disregarded. Where to file my 2012 federal tax return Example 2. Where to file my 2012 federal tax return The facts are the same as in Example 1, except that your brother joins you in selling the farm. Where to file my 2012 federal tax return The entire interest in the property is sold, so your basis in the farm is not disregarded. Where to file my 2012 federal tax return Your gain or loss is the difference between your share of the sales price and your adjusted basis in the farm. Where to file my 2012 federal tax return Canceling a sale of real property. Where to file my 2012 federal tax return   If you sell real property under a sales contract that allows the buyer to return the property for a full refund and the buyer does so, you may not have to recognize gain or loss on the sale. Where to file my 2012 federal tax return If the buyer returns the property in the year of sale, no gain or loss is recognized. Where to file my 2012 federal tax return This cancellation of the sale in the same year it occurred places both you and the buyer in the same positions you were in before the sale. Where to file my 2012 federal tax return If the buyer returns the property in a later tax year, you must recognize gain (or loss, if allowed) in the year of the sale. Where to file my 2012 federal tax return When the property is returned in a later year, you acquire a new basis in the property. Where to file my 2012 federal tax return That basis is equal to the amount you pay to the buyer. Where to file my 2012 federal tax return Bargain Sale If you sell or exchange property for less than fair market value with the intent of making a gift, the transaction is partly a sale or exchange and partly a gift. Where to file my 2012 federal tax return You have a gain if the amount realized is more than your adjusted basis in the property. Where to file my 2012 federal tax return However, you do not have a loss if the amount realized is less than the adjusted basis of the property. Where to file my 2012 federal tax return Bargain sales to charity. Where to file my 2012 federal tax return   A bargain sale of property to a charitable organization is partly a sale or exchange and partly a charitable contribution. Where to file my 2012 federal tax return If a charitable deduction for the contribution is allowable, you must allocate your adjusted basis in the property between the part sold and the part contributed based on the fair market value of each. Where to file my 2012 federal tax return The adjusted basis of the part sold is figured as follows. Where to file my 2012 federal tax return Adjusted basis of entire property × Amount realized (fair market value of part sold)   Fair market value of entire property   Based on this allocation rule, you will have a gain even if the amount realized is not more than your adjusted basis in the property. Where to file my 2012 federal tax return This allocation rule does not apply if a charitable contribution deduction is not allowable. Where to file my 2012 federal tax return   See Publication 526, Charitable Contributions, for information on figuring your charitable contribution. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return You sold property with a fair market value of $10,000 to a charitable organization for $2,000 and are allowed a deduction for your contribution. Where to file my 2012 federal tax return Your adjusted basis in the property is $4,000. Where to file my 2012 federal tax return Your gain on the sale is $1,200, figured as follows. Where to file my 2012 federal tax return Sales price $2,000 Minus: Adjusted basis of part sold ($4,000 × ($2,000 ÷ $10,000)) 800 Gain on the sale $1,200 Property Used Partly for Business or Rental Generally, if you sell or exchange property you used partly for business or rental purposes and partly for personal purposes, you must figure the gain or loss on the sale or exchange as though you had sold two separate pieces of property. Where to file my 2012 federal tax return You must subtract depreciation you took or could have taken from the basis of the business or rental part. Where to file my 2012 federal tax return However, see the special rule below for a home used partly for business or rental. Where to file my 2012 federal tax return You must allocate the selling price, selling expenses, and the basis of the property between the business or rental part and the personal part. Where to file my 2012 federal tax return Gain or loss on the business or rental part of the property may be a capital gain or loss or an ordinary gain or loss, as discussed in chapter 3 under Section 1231 Gains and Losses. Where to file my 2012 federal tax return Any gain on the personal part of the property is a capital gain. Where to file my 2012 federal tax return You cannot deduct a loss on the personal part. Where to file my 2012 federal tax return Home used partly for business or rental. Where to file my 2012 federal tax return    If you use property partly as a home and partly for business or to produce rental income, the computation and treatment of any gain on the sale depends partly on whether the business or rental part of the property is part of your home or separate from it. Where to file my 2012 federal tax return See Property Used Partly for Business or Rental, in Publication 523. Where to file my 2012 federal tax return Property Changed to Business or Rental Use You cannot deduct a loss on the sale of property you purchased or constructed for use as your home and used as your home until the time of sale. Where to file my 2012 federal tax return You can deduct a loss on the sale of property you acquired for use as your home but changed to business or rental property and used as business or rental property at the time of sale. Where to file my 2012 federal tax return However, if the adjusted basis of the property at the time of the change was more than its fair market value, the loss you can deduct is limited. Where to file my 2012 federal tax return Figure the loss you can deduct as follows. Where to file my 2012 federal tax return Use the lesser of the property's adjusted basis or fair market value at the time of the change. Where to file my 2012 federal tax return Add to (1) the cost of any improvements and other increases to basis since the change. Where to file my 2012 federal tax return Subtract from (2) depreciation and any other decreases to basis since the change. Where to file my 2012 federal tax return Subtract the amount you realized on the sale from the result in (3). Where to file my 2012 federal tax return If the amount you realized is more than the result in (3), treat this result as zero. Where to file my 2012 federal tax return The result in (4) is the loss you can deduct. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return You changed your main home to rental property 5 years ago. Where to file my 2012 federal tax return At the time of the change, the adjusted basis of your home was $75,000 and the fair market value was $70,000. Where to file my 2012 federal tax return This year, you sold the property for $55,000. Where to file my 2012 federal tax return You made no improvements to the property but you have depreciation expense of $12,620 over the 5 prior years. Where to file my 2012 federal tax return Although your loss on the sale is $7,380 [($75,000 − $12,620) − $55,000], the amount you can deduct as a loss is limited to $2,380, figured as follows. Where to file my 2012 federal tax return Lesser of adjusted basis or fair market value at time of the change $70,000 Plus: Cost of any improvements and any other additions to basis after the change -0-   70,000 Minus: Depreciation and any other decreases to basis after the change 12,620   57,380 Minus: Amount you realized from the sale 55,000 Deductible loss $2,380 Gain. Where to file my 2012 federal tax return   If you have a gain on the sale, you generally must recognize the full amount of the gain. Where to file my 2012 federal tax return You figure the gain by subtracting your adjusted basis from your amount realized, as described earlier. Where to file my 2012 federal tax return   You may be able to exclude all or part of the gain if you owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. Where to file my 2012 federal tax return However, you may not be able to exclude the part of the gain allocated to any period of nonqualified use. Where to file my 2012 federal tax return   For more information, see Business Use or Rental of Home in Publication 523. Where to file my 2012 federal tax return In addition, special rules apply if the home sold was acquired in a like-kind exchange. Where to file my 2012 federal tax return See Special Situations in Publication 523. Where to file my 2012 federal tax return Also see Like-Kind Exchanges, later. Where to file my 2012 federal tax return Abandonments The abandonment of property is a disposition of property. Where to file my 2012 federal tax return You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. Where to file my 2012 federal tax return Generally, abandonment is not treated as a sale or exchange of the property. Where to file my 2012 federal tax return If the amount you realize (if any) is more than your adjusted basis, then you have a gain. Where to file my 2012 federal tax return If your adjusted basis is more than the amount you realize (if any), then you have a loss. Where to file my 2012 federal tax return Loss from abandonment of business or investment property is deductible as a loss. Where to file my 2012 federal tax return A loss from an abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. Where to file my 2012 federal tax return This rule also applies to leasehold improvements the lessor made for the lessee that were abandoned. Where to file my 2012 federal tax return If the property is foreclosed on or repossessed in lieu of abandonment, gain or loss is figured as discussed later under Foreclosure and Repossessions. Where to file my 2012 federal tax return The abandonment loss is deducted in the tax year in which the loss is sustained. Where to file my 2012 federal tax return If the abandoned property is secured by debt, special rules apply. Where to file my 2012 federal tax return The tax consequences of abandonment of property that is secured by debt depend on whether you are personally liable for the debt (recourse debt) or you are not personally liable for the debt (nonrecourse debt). Where to file my 2012 federal tax return For more information, including examples, see chapter 3 of Publication 4681. Where to file my 2012 federal tax return You cannot deduct any loss from abandonment of your home or other property held for personal use only. Where to file my 2012 federal tax return Cancellation of debt. Where to file my 2012 federal tax return   If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you may realize ordinary income equal to the canceled debt. Where to file my 2012 federal tax return This income is separate from any loss realized from abandonment of the property. Where to file my 2012 federal tax return   You must report this income on your tax return unless one of the following applies. Where to file my 2012 federal tax return The cancellation is intended as a gift. Where to file my 2012 federal tax return The debt is qualified farm debt. Where to file my 2012 federal tax return The debt is qualified real property business debt. Where to file my 2012 federal tax return You are insolvent or bankrupt. Where to file my 2012 federal tax return The debt is qualified principal residence indebtedness. Where to file my 2012 federal tax return File Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), to report the income exclusion. Where to file my 2012 federal tax return For more information, including other exceptions and exclusion, see Publication 4681. Where to file my 2012 federal tax return Forms 1099-A and 1099-C. Where to file my 2012 federal tax return   If you abandon property that secures a loan and the lender knows the property has been abandoned, the lender should send you Form 1099-A showing information you need to figure your loss from the abandonment. Where to file my 2012 federal tax return However, if your debt is canceled and the lender must file Form 1099-C, the lender may include the information about the abandonment on that form instead of on Form 1099-A, and send you Form 1099-C only. Where to file my 2012 federal tax return The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Where to file my 2012 federal tax return For abandonments of property and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. Where to file my 2012 federal tax return Foreclosures and Repossessions If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Where to file my 2012 federal tax return The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. Where to file my 2012 federal tax return This is true even if you voluntarily return the property to the lender. Where to file my 2012 federal tax return You also may realize ordinary income from cancellation of debt if the loan balance is more than the fair market value of the property. Where to file my 2012 federal tax return Buyer's (borrower's) gain or loss. Where to file my 2012 federal tax return   You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale or exchange. Where to file my 2012 federal tax return The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. Where to file my 2012 federal tax return See Gain or Loss From Sales and Exchanges, earlier. Where to file my 2012 federal tax return You can use Table 1-2 to figure your gain or loss from a foreclosure or repossession. Where to file my 2012 federal tax return Amount realized on a nonrecourse debt. Where to file my 2012 federal tax return   If you are not personally liable for repaying the debt (nonrecourse debt) secured by the transferred property, the amount you realize includes the full debt canceled by the transfer. Where to file my 2012 federal tax return The full canceled debt is included even if the fair market value of the property is less than the canceled debt. Where to file my 2012 federal tax return Example 1. Where to file my 2012 federal tax return Chris bought a new car for $15,000. Where to file my 2012 federal tax return He paid $2,000 down and borrowed the remaining $13,000 from the dealer's credit company. Where to file my 2012 federal tax return Chris is not personally liable for the loan (nonrecourse debt), but pledges the new car as security. Where to file my 2012 federal tax return The credit company repossessed the car because he stopped making loan payments. Where to file my 2012 federal tax return The balance due after taking into account the payments Chris made was $10,000. Where to file my 2012 federal tax return The fair market value of the car when repossessed was $9,000. Where to file my 2012 federal tax return The amount Chris realized on the repossession is $10,000. Where to file my 2012 federal tax return That is the outstanding amount of the debt canceled by the repossession, even though the car's fair market value is less than $10,000. Where to file my 2012 federal tax return Chris figures his gain or loss on the repossession by comparing the amount realized ($10,000) with his adjusted basis ($15,000). Where to file my 2012 federal tax return He has a $5,000 nondeductible loss. Where to file my 2012 federal tax return Example 2. Where to file my 2012 federal tax return Abena paid $200,000 for her home. Where to file my 2012 federal tax return She paid $15,000 down and borrowed the remaining $185,000 from a bank. Where to file my 2012 federal tax return Abena is not personally liable for the loan (nonrecourse debt), but pledges the house as security. Where to file my 2012 federal tax return The bank foreclosed on the loan because Abena stopped making payments. Where to file my 2012 federal tax return When the bank foreclosed on the loan, the balance due was $180,000, the fair market value of the house was $170,000, and Abena's adjusted basis was $175,000 due to a casualty loss she had deducted. Where to file my 2012 federal tax return The amount Abena realized on the foreclosure is $180,000, the balance due and debt canceled by the foreclosure. Where to file my 2012 federal tax return She figures her gain or loss by comparing the amount realized ($180,000) with her adjusted basis ($175,000). Where to file my 2012 federal tax return She has a $5,000 realized gain. Where to file my 2012 federal tax return Amount realized on a recourse debt. Where to file my 2012 federal tax return   If you are personally liable for the debt (recourse debt), the amount realized on the foreclosure or repossession includes the lesser of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The fair market value of the transferred property. Where to file my 2012 federal tax return You are treated as receiving ordinary income from the canceled debt for the part of the debt that is more than the fair market value. Where to file my 2012 federal tax return The amount realized does not include the canceled debt that is your income from cancellation of debt. Where to file my 2012 federal tax return See Cancellation of debt, below. Where to file my 2012 federal tax return Seller's (lender's) gain or loss on repossession. Where to file my 2012 federal tax return   If you finance a buyer's purchase of property and later acquire an interest in it through foreclosure or repossession, you may have a gain or loss on the acquisition. Where to file my 2012 federal tax return For more information, see Repossession in Publication 537. Where to file my 2012 federal tax return    Table 1-2. Where to file my 2012 federal tax return Worksheet for Foreclosures and Repossessions Part 1. Where to file my 2012 federal tax return Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. Where to file my 2012 federal tax return Complete this part only  if you were personally liable for the debt. Where to file my 2012 federal tax return Otherwise,  go to Part 2. Where to file my 2012 federal tax return   1. Where to file my 2012 federal tax return Enter the amount of outstanding debt immediately before the transfer of   property reduced by any amount for which you remain personally liable after   the transfer of property   2. Where to file my 2012 federal tax return Enter the fair market value of the transferred property   3. Where to file my 2012 federal tax return Ordinary income from cancellation of debt upon foreclosure or    repossession. Where to file my 2012 federal tax return * Subtract line 2 from line 1. Where to file my 2012 federal tax return   If less than zero, enter zero   Part 2. Where to file my 2012 federal tax return Figure your gain or loss from foreclosure or repossession. Where to file my 2012 federal tax return   4. Where to file my 2012 federal tax return If you completed Part 1, enter the smaller of line 1 or line 2. Where to file my 2012 federal tax return   If you did not complete Part 1, enter the outstanding debt immediately before   the transfer of property   5. Where to file my 2012 federal tax return Enter any proceeds you received from the foreclosure sale   6. Where to file my 2012 federal tax return Add lines 4 and 5   7. Where to file my 2012 federal tax return Enter the adjusted basis of the transferred property   8. Where to file my 2012 federal tax return Gain or loss from foreclosure or repossession. Where to file my 2012 federal tax return Subtract line 7  from line 6   * The income may not be taxable. Where to file my 2012 federal tax return See Cancellation of debt. Where to file my 2012 federal tax return Cancellation of debt. Where to file my 2012 federal tax return   If property that is repossessed or foreclosed on secures a debt for which you are personally liable (recourse debt), you generally must report as ordinary income the amount by which the canceled debt is more than the fair market value of the property. Where to file my 2012 federal tax return This income is separate from any gain or loss realized from the foreclosure or repossession. Where to file my 2012 federal tax return Report the income from cancellation of a debt related to a business or rental activity as business or rental income. Where to file my 2012 federal tax return    You can use Table 1-2 to figure your income from cancellation of debt. Where to file my 2012 federal tax return   You must report this income on your tax return unless one of the following applies. Where to file my 2012 federal tax return The cancellation is intended as a gift. Where to file my 2012 federal tax return The debt is qualified farm debt. Where to file my 2012 federal tax return The debt is qualified real property business debt. Where to file my 2012 federal tax return You are insolvent or bankrupt. Where to file my 2012 federal tax return The debt is qualified principal residence indebtedness. Where to file my 2012 federal tax return File Form 982 to report the income exclusion. Where to file my 2012 federal tax return Example 1. Where to file my 2012 federal tax return Assume the same facts as in Example 1 under Amount realized on a nonrecourse debt, earlier, except Chris is personally liable for the car loan (recourse debt). Where to file my 2012 federal tax return In this case, the amount he realizes is $9,000. Where to file my 2012 federal tax return This is the lesser of the canceled debt ($10,000) or the car's fair market value ($9,000). Where to file my 2012 federal tax return Chris figures his gain or loss on the repossession by comparing the amount realized ($9,000) with his adjusted basis ($15,000). Where to file my 2012 federal tax return He has a $6,000 nondeductible loss. Where to file my 2012 federal tax return He also is treated as receiving ordinary income from cancellation of debt. Where to file my 2012 federal tax return That income is $1,000 ($10,000 − $9,000). Where to file my 2012 federal tax return This is the part of the canceled debt not included in the amount realized. Where to file my 2012 federal tax return Example 2. Where to file my 2012 federal tax return Assume the same facts as in Example 2 under Amount realized on a nonrecourse debt, earlier, except Abena is personally liable for the loan (recourse debt). Where to file my 2012 federal tax return In this case, the amount she realizes is $170,000. Where to file my 2012 federal tax return This is the lesser of the canceled debt ($180,000) or the fair market value of the house ($170,000). Where to file my 2012 federal tax return Abena figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($175,000). Where to file my 2012 federal tax return She has a $5,000 nondeductible loss. Where to file my 2012 federal tax return She also is treated as receiving ordinary income from cancellation of debt. Where to file my 2012 federal tax return (The debt is not exempt from tax as discussed under Cancellation of debt, above. Where to file my 2012 federal tax return ) That income is $10,000 ($180,000 − $170,000). Where to file my 2012 federal tax return This is the part of the canceled debt not included in the amount realized. Where to file my 2012 federal tax return Forms 1099-A and 1099-C. Where to file my 2012 federal tax return   A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A showing the information you need to figure your gain or loss. Where to file my 2012 federal tax return However, if the lender also cancels part of your debt and must file Form 1099-C, the lender may include the information about the foreclosure or repossession on that form instead of on Form 1099-A and send you Form 1099-C only. Where to file my 2012 federal tax return The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Where to file my 2012 federal tax return For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Where to file my 2012 federal tax return Involuntary Conversions An involuntary conversion occurs when your property is destroyed, stolen, condemned, or disposed of under the threat of condemnation and you receive other property or money in payment, such as insurance or a condemnation award. Where to file my 2012 federal tax return Involuntary conversions are also called involuntary exchanges. Where to file my 2012 federal tax return Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes unless the property is your main home. Where to file my 2012 federal tax return You report the gain or deduct the loss on your tax return for the year you realize it. Where to file my 2012 federal tax return You cannot deduct a loss from an involuntary conversion of property you held for personal use unless the loss resulted from a casualty or theft. Where to file my 2012 federal tax return However, depending on the type of property you receive, you may not have to report a gain on an involuntary conversion. Where to file my 2012 federal tax return Generally, you do not report the gain if you receive property that is similar or related in service or use to the converted property. Where to file my 2012 federal tax return Your basis for the new property is the same as your basis for the converted property. Where to file my 2012 federal tax return This means that the gain is deferred until a taxable sale or exchange occurs. Where to file my 2012 federal tax return If you receive money or property that is not similar or related in service or use to the involuntarily converted property and you buy qualifying replacement property within a certain period of time, you can elect to postpone reporting the gain on the property purchased. Where to file my 2012 federal tax return This publication explains the treatment of a gain or loss from a condemnation or disposition under the threat of condemnation. Where to file my 2012 federal tax return If you have a gain or loss from the destruction or theft of property, see Publication 547. Where to file my 2012 federal tax return Condemnations A condemnation is the process by which private property is legally taken for public use without the owner's consent. Where to file my 2012 federal tax return The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take it. Where to file my 2012 federal tax return The owner receives a condemnation award (money or property) in exchange for the property taken. Where to file my 2012 federal tax return A condemnation is like a forced sale, the owner being the seller and the condemning authority being the buyer. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return A local government authorized to acquire land for public parks informed you that it wished to acquire your property. Where to file my 2012 federal tax return After the local government took action to condemn your property, you went to court to keep it. Where to file my 2012 federal tax return But, the court decided in favor of the local government, which took your property and paid you an amount fixed by the court. Where to file my 2012 federal tax return This is a condemnation of private property for public use. Where to file my 2012 federal tax return Threat of condemnation. Where to file my 2012 federal tax return   A threat of condemnation exists if a representative of a government body or a public official authorized to acquire property for public use informs you that the government body or official has decided to acquire your property. Where to file my 2012 federal tax return You must have reasonable grounds to believe that, if you do not sell voluntarily, your property will be condemned. Where to file my 2012 federal tax return   The sale of your property to someone other than the condemning authority will also qualify as an involuntary conversion, provided you have reasonable grounds to believe that your property will be condemned. Where to file my 2012 federal tax return If the buyer of this property knows at the time of purchase that it will be condemned and sells it to the condemning authority, this sale also qualifies as an involuntary conversion. Where to file my 2012 federal tax return Reports of condemnation. Where to file my 2012 federal tax return   A threat of condemnation exists if you learn of a decision to acquire your property for public use through a report in a newspaper or other news medium, and this report is confirmed by a representative of the government body or public official involved. Where to file my 2012 federal tax return You must have reasonable grounds to believe that they will take necessary steps to condemn your property if you do not sell voluntarily. Where to file my 2012 federal tax return If you relied on oral statements made by a government representative or public official, the Internal Revenue Service (IRS) may ask you to get written confirmation of the statements. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return Your property lies along public utility lines. Where to file my 2012 federal tax return The utility company has the authority to condemn your property. Where to file my 2012 federal tax return The company informs you that it intends to acquire your property by negotiation or condemnation. Where to file my 2012 federal tax return A threat of condemnation exists when you receive the notice. Where to file my 2012 federal tax return Related property voluntarily sold. Where to file my 2012 federal tax return   A voluntary sale of your property may be treated as a forced sale that qualifies as an involuntary conversion if the property had a substantial economic relationship to property of yours that was condemned. Where to file my 2012 federal tax return A substantial economic relationship exists if together the properties were one economic unit. Where to file my 2012 federal tax return You also must show that the condemned property could not reasonably or adequately be replaced. Where to file my 2012 federal tax return You can elect to postpone reporting the gain by buying replacement property. Where to file my 2012 federal tax return See Postponement of Gain, later. Where to file my 2012 federal tax return Gain or Loss From Condemnations If your property was condemned or disposed of under the threat of condemnation, figure your gain or loss by comparing the adjusted basis of your condemned property with your net condemnation award. Where to file my 2012 federal tax return If your net condemnation award is more than the adjusted basis of the condemned property, you have a gain. Where to file my 2012 federal tax return You can postpone reporting gain from a condemnation if you buy replacement property. Where to file my 2012 federal tax return If only part of your property is condemned, you can treat the cost of restoring the remaining part to its former usefulness as the cost of replacement property. Where to file my 2012 federal tax return See Postponement of Gain, later. Where to file my 2012 federal tax return If your net condemnation award is less than your adjusted basis, you have a loss. Where to file my 2012 federal tax return If your loss is from property you held for personal use, you cannot deduct it. Where to file my 2012 federal tax return You must report any deductible loss in the tax year it happened. Where to file my 2012 federal tax return You can use Part 2 of Table 1-3 to figure your gain or loss from a condemnation award. Where to file my 2012 federal tax return Main home condemned. Where to file my 2012 federal tax return   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. Where to file my 2012 federal tax return You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). Where to file my 2012 federal tax return For information on this exclusion, see Publication 523. Where to file my 2012 federal tax return If your gain is more than you can exclude but you buy replacement property, you may be able to postpone reporting the rest of the gain. Where to file my 2012 federal tax return See Postponement of Gain, later. Where to file my 2012 federal tax return Table 1-3. Where to file my 2012 federal tax return Worksheet for Condemnations Part 1. Where to file my 2012 federal tax return Gain from severance damages. Where to file my 2012 federal tax return  If you did not receive severance damages, skip Part 1 and go to Part 2. Where to file my 2012 federal tax return   1. Where to file my 2012 federal tax return Enter gross severance damages received   2. Where to file my 2012 federal tax return Enter your expenses in getting severance damages   3. Where to file my 2012 federal tax return Subtract line 2 from line 1. Where to file my 2012 federal tax return If less than zero, enter -0-   4. Where to file my 2012 federal tax return Enter any special assessment on remaining property taken out of your award   5. Where to file my 2012 federal tax return Net severance damages. Where to file my 2012 federal tax return Subtract line 4 from line 3. Where to file my 2012 federal tax return If less than zero, enter -0-   6. Where to file my 2012 federal tax return Enter the adjusted basis of the remaining property   7. Where to file my 2012 federal tax return Gain from severance damages. Where to file my 2012 federal tax return Subtract line 6 from line 5. Where to file my 2012 federal tax return If less than zero, enter -0-   8. Where to file my 2012 federal tax return Refigured adjusted basis of the remaining property. Where to file my 2012 federal tax return Subtract line 5 from line 6. Where to file my 2012 federal tax return If less than zero, enter -0-   Part 2. Where to file my 2012 federal tax return Gain or loss from condemnation award. Where to file my 2012 federal tax return   9. Where to file my 2012 federal tax return Enter the gross condemnation award received   10. Where to file my 2012 federal tax return Enter your expenses in getting the condemnation award   11. Where to file my 2012 federal tax return If you completed Part 1, and line 4 is more than line 3, subtract line 3 from line 4. Where to file my 2012 federal tax return If you did not complete Part 1, but a special assessment was taken out of your award, enter that amount. Where to file my 2012 federal tax return Otherwise, enter -0-   12. Where to file my 2012 federal tax return Add lines 10 and 11   13. Where to file my 2012 federal tax return Net condemnation award. Where to file my 2012 federal tax return Subtract line 12 from line 9   14. Where to file my 2012 federal tax return Enter the adjusted basis of the condemned property   15. Where to file my 2012 federal tax return Gain from condemnation award. Where to file my 2012 federal tax return If line 14 is more than line 13, enter -0-. Where to file my 2012 federal tax return Otherwise, subtract line 14 from  line 13 and skip line 16   16. Where to file my 2012 federal tax return Loss from condemnation award. Where to file my 2012 federal tax return Subtract line 13 from line 14     (Note: You cannot deduct the amount on line 16 if the condemned property was held for personal use. Where to file my 2012 federal tax return )   Part 3. Where to file my 2012 federal tax return Postponed gain from condemnation. Where to file my 2012 federal tax return  (Complete only if line 7 or line 15 is more than zero and you bought qualifying replacement property or made expenditures to restore the usefulness of your remaining property. Where to file my 2012 federal tax return )   17. Where to file my 2012 federal tax return If you completed Part 1, and line 7 is more than zero, enter the amount from line 5. Where to file my 2012 federal tax return Otherwise, enter -0-   18. Where to file my 2012 federal tax return If line 15 is more than zero, enter the amount from line 13. Where to file my 2012 federal tax return Otherwise, enter -0-   19. Where to file my 2012 federal tax return Add lines 17 and 18. Where to file my 2012 federal tax return If the condemned property was your main home, subtract from this total the gain you excluded from your income and enter the result   20. Where to file my 2012 federal tax return Enter the total cost of replacement property and any expenses to restore the usefulness of your remaining property   21. Where to file my 2012 federal tax return Subtract line 20 from line 19. Where to file my 2012 federal tax return If less than zero, enter -0-   22. Where to file my 2012 federal tax return If you completed Part 1, add lines 7 and 15. Where to file my 2012 federal tax return Otherwise, enter the amount from line 15. Where to file my 2012 federal tax return If the condemned property was your main home, subtract from this total the gain you excluded from your income and enter the result   23. Where to file my 2012 federal tax return Recognized gain. Where to file my 2012 federal tax return Enter the smaller of line 21 or line 22. Where to file my 2012 federal tax return   24. Where to file my 2012 federal tax return Postponed gain. Where to file my 2012 federal tax return Subtract line 23 from line 22. Where to file my 2012 federal tax return If less than zero, enter -0-   Condemnation award. Where to file my 2012 federal tax return   A condemnation award is the money you are paid or the value of other property you receive for your condemned property. Where to file my 2012 federal tax return The award is also the amount you are paid for the sale of your property under threat of condemnation. Where to file my 2012 federal tax return Payment of your debts. Where to file my 2012 federal tax return   Amounts taken out of the award to pay your debts are considered paid to you. Where to file my 2012 federal tax return Amounts the government pays directly to the holder of a mortgage or lien against your property are part of your award, even if the debt attaches to the property and is not your personal liability. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return The state condemned your property for public use. Where to file my 2012 federal tax return The award was set at $200,000. Where to file my 2012 federal tax return The state paid you only $148,000 because it paid $50,000 to your mortgage holder and $2,000 accrued real estate taxes. Where to file my 2012 federal tax return You are considered to have received the entire $200,000 as a condemnation award. Where to file my 2012 federal tax return Interest on award. Where to file my 2012 federal tax return   If the condemning authority pays you interest for its delay in paying your award, it is not part of the condemnation award. Where to file my 2012 federal tax return You must report the interest separately as ordinary income. Where to file my 2012 federal tax return Payments to relocate. Where to file my 2012 federal tax return   Payments you receive to relocate and replace housing because you have been displaced from your home, business, or farm as a result of federal or federally assisted programs are not part of the condemnation award. Where to file my 2012 federal tax return Do not include them in your income. Where to file my 2012 federal tax return Replacement housing payments used to buy new property are included in the property's basis as part of your cost. Where to file my 2012 federal tax return Net condemnation award. Where to file my 2012 federal tax return   A net condemnation award is the total award you received, or are considered to have received, for the condemned property minus your expenses of obtaining the award. Where to file my 2012 federal tax return If only a part of your property was condemned, you also must reduce the award by any special assessment levied against the part of the property you retain. Where to file my 2012 federal tax return This is discussed later under Special assessment taken out of award. Where to file my 2012 federal tax return Severance damages. Where to file my 2012 federal tax return    Severance damages are not part of the award paid for the property condemned. Where to file my 2012 federal tax return They are paid to you if part of your property is condemned and the value of the part you keep is decreased because of the condemnation. Where to file my 2012 federal tax return   For example, you may receive severance damages if your property is subject to flooding because you sell flowage easement rights (the condemned property) under threat of condemnation. Where to file my 2012 federal tax return Severance damages also may be given to you if, because part of your property is condemned for a highway, you must replace fences, dig new wells or ditches, or plant trees to restore your remaining property to the same usefulness it had before the condemnation. Where to file my 2012 federal tax return   The contracting parties should agree on the specific amount of severance damages in writing. Where to file my 2012 federal tax return If this is not done, all proceeds from the condemning authority are considered awarded for your condemned property. Where to file my 2012 federal tax return   You cannot make a completely new allocation of the total award after the transaction is completed. Where to file my 2012 federal tax return However, you can show how much of the award both parties intended for severance damages. Where to file my 2012 federal tax return The severance damages part of the award is determined from all the facts and circumstances. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return You sold part of your property to the state under threat of condemnation. Where to file my 2012 federal tax return The contract you and the condemning authority signed showed only the total purchase price. Where to file my 2012 federal tax return It did not specify a fixed sum for severance damages. Where to file my 2012 federal tax return However, at settlement, the condemning authority gave you closing papers showing clearly the part of the purchase price that was for severance damages. Where to file my 2012 federal tax return You may treat this part as severance damages. Where to file my 2012 federal tax return Treatment of severance damages. Where to file my 2012 federal tax return   Your net severance damages are treated as the amount realized from an involuntary conversion of the remaining part of your property. Where to file my 2012 federal tax return Use them to reduce the basis of the remaining property. Where to file my 2012 federal tax return If the amount of severance damages is based on damage to a specific part of the property you kept, reduce the basis of only that part by the net severance damages. Where to file my 2012 federal tax return   If your net severance damages are more than the basis of your retained property, you have a gain. Where to file my 2012 federal tax return You may be able to postpone reporting the gain. Where to file my 2012 federal tax return See Postponement of Gain, later. Where to file my 2012 federal tax return    You can use Part 1 of Table 1-3 to figure any gain from severance damages and to refigure the adjusted basis of the remaining part of your property. Where to file my 2012 federal tax return Net severance damages. Where to file my 2012 federal tax return   To figure your net severance damages, you first must reduce your severance damages by your expenses in obtaining the damages. Where to file my 2012 federal tax return You then reduce them by any special assessment (described later) levied against the remaining part of the property and retained out of the award by the condemning authority. Where to file my 2012 federal tax return The balance is your net severance damages. Where to file my 2012 federal tax return Expenses of obtaining a condemnation award and severance damages. Where to file my 2012 federal tax return   Subtract the expenses of obtaining a condemnation award, such as legal, engineering, and appraisal fees, from the total award. Where to file my 2012 federal tax return Also, subtract the expenses of obtaining severance damages, which may include similar expenses, from the severance damages paid to you. Where to file my 2012 federal tax return If you cannot determine which part of your expenses is for each part of the condemnation proceeds, you must make a proportionate allocation. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return You receive a condemnation award and severance damages. Where to file my 2012 federal tax return One-fourth of the total was designated as severance damages in your agreement with the condemning authority. Where to file my 2012 federal tax return You had legal expenses for the entire condemnation proceeding. Where to file my 2012 federal tax return You cannot determine how much of your legal expenses is for each part of the condemnation proceeds. Where to file my 2012 federal tax return You must allocate one-fourth of your legal expenses to the severance damages and the other three-fourths to the condemnation award. Where to file my 2012 federal tax return Special assessment retained out of award. Where to file my 2012 federal tax return   When only part of your property is condemned, a special assessment levied against the remaining property may be retained by the governing body out of your condemnation award. Where to file my 2012 federal tax return An assessment may be levied if the remaining part of your property benefited by the improvement resulting from the condemnation. Where to file my 2012 federal tax return Examples of improvements that may cause a special assessment are widening a street and installing a sewer. Where to file my 2012 federal tax return   To figure your net condemnation award, you must reduce the amount of the award by the assessment retained out of the award. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return To widen the street in front of your home, the city condemned a 25-foot deep strip of your land. Where to file my 2012 federal tax return You were awarded $5,000 for this and spent $300 to get the award. Where to file my 2012 federal tax return Before paying the award, the city levied a special assessment of $700 for the street improvement against your remaining property. Where to file my 2012 federal tax return The city then paid you only $4,300. Where to file my 2012 federal tax return Your net award is $4,000 ($5,000 total award minus $300 expenses in obtaining the award and $700 for the special assessment retained). Where to file my 2012 federal tax return If the $700 special assessment was not retained out of the award and you were paid $5,000, your net award would be $4,700 ($5,000 − $300). Where to file my 2012 federal tax return The net award would not change, even if you later paid the assessment from the amount you received. Where to file my 2012 federal tax return Severance damages received. Where to file my 2012 federal tax return   If severance damages are included in the condemnation proceeds, the special assessment retained out of the severance damages is first used to reduce the severance damages. Where to file my 2012 federal tax return Any balance of the special assessment is used to reduce the condemnation award. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return You were awarded $4,000 for the condemnation of your property and $1,000 for severance damages. Where to file my 2012 federal tax return You spent $300 to obtain the severance damages. Where to file my 2012 federal tax return A special assessment of $800 was retained out of the award. Where to file my 2012 federal tax return The $1,000 severance damages are reduced to zero by first subtracting the $300 expenses and then $700 of the special assessment. Where to file my 2012 federal tax return Your $4,000 condemnation award is reduced by the $100 balance of the special assessment, leaving a $3,900 net condemnation award. Where to file my 2012 federal tax return Part business or rental. Where to file my 2012 federal tax return   If you used part of your condemned property as your home and part as business or rental property, treat each part as a separate property. Where to file my 2012 federal tax return Figure your gain or loss separately because gain or loss on each part may be treated differently. Where to file my 2012 federal tax return   Some examples of this type of property are a building in which you live and operate a grocery, and a building in which you live on the first floor and rent out the second floor. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return You sold your building for $24,000 under threat of condemnation to a public utility company that had the authority to condemn. Where to file my 2012 federal tax return You rented half the building and lived in the other half. Where to file my 2012 federal tax return You paid $25,000 for the building and spent an additional $1,000 for a new roof. Where to file my 2012 federal tax return You claimed allowable depreciation of $4,600 on the rental half. Where to file my 2012 federal tax return You spent $200 in legal expenses to obtain the condemnation award. Where to file my 2012 federal tax return Figure your gain or loss as follows. Where to file my 2012 federal tax return     Resi- dential Part Busi- ness Part 1) Condemnation award received $12,000 $12,000 2) Minus: Legal expenses, $200 100 100 3) Net condemnation award $11,900 $11,900 4) Adjusted basis:       ½ of original cost, $25,000 $12,500 $12,500   Plus: ½ of cost of roof, $1,000 500 500   Total $13,000 $13,000 5) Minus: Depreciation   4,600 6) Adjusted basis, business part   $8,400 7) (Loss) on residential property ($1,100)   8) Gain on business property $3,500 The loss on the residential part of the property is not deductible. Where to file my 2012 federal tax return Postponement of Gain Do not report the gain on condemned property if you receive only property that is similar or related in service or use to the condemned property. Where to file my 2012 federal tax return Your basis for the new property is the same as your basis for the old. Where to file my 2012 federal tax return Money or unlike property received. Where to file my 2012 federal tax return   You ordinarily must report the gain if you receive money or unlike property. Where to file my 2012 federal tax return You can elect to postpone reporting the gain if you buy property that is similar or related in service or use to the condemned property within the replacement period, discussed later. Where to file my 2012 federal tax return You also can elect to postpone reporting the gain if you buy a controlling interest (at least 80%) in a corporation owning property that is similar or related in service or use to the condemned property. Where to file my 2012 federal tax return See Controlling interest in a corporation, later. Where to file my 2012 federal tax return   To postpone reporting all the gain, you must buy replacement property costing at least as much as the amount realized for the condemned property. Where to file my 2012 federal tax return If the cost of the replacement property is less than the amount realized, you must report the gain up to the unspent part of the amount realized. Where to file my 2012 federal tax return   The basis of the replacement property is its cost, reduced by the postponed gain. Where to file my 2012 federal tax return Also, if your replacement property is stock in a corporation that owns property similar or related in service or use, the corporation generally will reduce its basis in its assets by the amount by which you reduce your basis in the stock. Where to file my 2012 federal tax return See Controlling interest in a corporation, later. Where to file my 2012 federal tax return You can use Part 3 of Table 1-3 to figure the gain you must report and your postponed gain. Where to file my 2012 federal tax return Postponing gain on severance damages. Where to file my 2012 federal tax return   If you received severance damages for part of your property because another part was condemned and you buy replacement property, you can elect to postpone reporting gain. Where to file my 2012 federal tax return See Treatment of severance damages, earlier. Where to file my 2012 federal tax return You can postpone reporting all your gain if the replacement property costs at least as much as your net severance damages plus your net condemnation award (if resulting in gain). Where to file my 2012 federal tax return   You also can make this election if you spend the severance damages, together with other money you received for the condemned property (if resulting in gain), to acquire nearby property that will allow you to continue your business. Where to file my 2012 federal tax return If suitable nearby property is not available and you are forced to sell the remaining property and relocate in order to continue your business, see Postponing gain on the sale of related property, next. Where to file my 2012 federal tax return   If you restore the remaining property to its former usefulness, you can treat the cost of restoring it as the cost of replacement property. Where to file my 2012 federal tax return Postponing gain on the sale of related property. Where to file my 2012 federal tax return   If you sell property that is related to the condemned property and then buy replacement property, you can elect to postpone reporting gain on the sale. Where to file my 2012 federal tax return You must meet the requirements explained earlier under Related property voluntarily sold. Where to file my 2012 federal tax return You can postpone reporting all your gain if the replacement property costs at least as much as the amount realized from the sale plus your net condemnation award (if resulting in gain) plus your net severance damages, if any (if resulting in gain). Where to file my 2012 federal tax return Buying replacement property from a related person. Where to file my 2012 federal tax return   Certain taxpayers cannot postpone reporting gain from a condemnation if they buy the replacement property from a related person. Where to file my 2012 federal tax return For information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2. Where to file my 2012 federal tax return   This rule applies to the following taxpayers. Where to file my 2012 federal tax return C corporations. Where to file my 2012 federal tax return Partnerships in which more than 50% of the capital or profits interest is owned by  C corporations. Where to file my 2012 federal tax return All others (including individuals, partnerships (other than those in (2)), and S corporations) if the total realized gain for the tax year on all involuntarily converted properties on which there is realized gain of more than $100,000. Where to file my 2012 federal tax return   For taxpayers described in (3) above, gains cannot be offset with any losses when determining whether the total gain is more than $100,000. Where to file my 2012 federal tax return If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Where to file my 2012 federal tax return If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Where to file my 2012 federal tax return Exception. Where to file my 2012 federal tax return   This rule does not apply if the related person acquired the property from an unrelated person within the replacement period. Where to file my 2012 federal tax return Advance payment. Where to file my 2012 federal tax return   If you pay a contractor in advance to build your replacement property, you have not bought replacement property unless it is finished before the end of the replacement period (discussed later). Where to file my 2012 federal tax return Replacement property. Where to file my 2012 federal tax return   To postpone reporting gain, you must buy replacement property for the specific purpose of replacing your condemned property. Where to file my 2012 federal tax return You do not have to use the actual funds from the condemnation award to acquire the replacement property. Where to file my 2012 federal tax return Property you acquire by gift or inheritance does not qualify as replacement property. Where to file my 2012 federal tax return Similar or related in service or use. Where to file my 2012 federal tax return   Your replacement property must be similar or related in service or use to the property it replaces. Where to file my 2012 federal tax return   If the condemned property is real property you held for productive use in your trade or business or for investment (other than property held mainly for sale), like-kind property to be held either for productive use in trade or business or for investment will be treated as property similar or related in service or use. Where to file my 2012 federal tax return For a discussion of like-kind property, see Like-Kind Property under Like-Kind Exchanges, later. Where to file my 2012 federal tax return Owner-user. Where to file my 2012 federal tax return   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return Your home was condemned and you invested the proceeds from the condemnation in a grocery store. Where to file my 2012 federal tax return Your replacement property is not similar or related in service or use to the condemned property. Where to file my 2012 federal tax return To be similar or related in service or use, your replacement property must also be used by you as your home. Where to file my 2012 federal tax return Owner-investor. Where to file my 2012 federal tax return   If you are an owner-investor, similar or related in service or use means that any replacement property must have the same relationship of services or uses to you as the property it replaces. Where to file my 2012 federal tax return You decide this by determining all the following information. Where to file my 2012 federal tax return Whether the properties are of similar service to you. Where to file my 2012 federal tax return The nature of the business risks connected with the properties. Where to file my 2012 federal tax return What the properties demand of you in the way of management, service, and relations to your tenants. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return You owned land and a building you rented to a manufacturing company. Where to file my 2012 federal tax return The building was condemned. Where to file my 2012 federal tax return During the replacement period, you had a new building built on other land you already owned. Where to file my 2012 federal tax return You rented out the new building for use as a wholesale grocery warehouse. Where to file my 2012 federal tax return The replacement property is also rental property, so the two properties are considered similar or related in service or use if there is a similarity in all the following areas. Where to file my 2012 federal tax return Your management activities. Where to file my 2012 federal tax return The amount and kind of services you provide to your tenants. Where to file my 2012 federal tax return The nature of your business risks connected with the properties. Where to file my 2012 federal tax return Leasehold replaced with fee simple property. Where to file my 2012 federal tax return   Fee simple property you will use in your trade or business or for investment can qualify as replacement property that is similar or related in service or use to a condemned leasehold if you use it in the same business and for the identical purpose as the condemned leasehold. Where to file my 2012 federal tax return   A fee simple property interest generally is a property interest that entitles the owner to the entire property with unconditional power to dispose of it during his or her lifetime. Where to file my 2012 federal tax return A leasehold is property held under a lease, usually for a term of years. Where to file my 2012 federal tax return Outdoor advertising display replaced with real property. Where to file my 2012 federal tax return   You can elect to treat an outdoor advertising display as real property. Where to file my 2012 federal tax return If you make this election and you replace the display with real property in which you hold a different kind of interest, your replacement property can qualify as like-kind property. Where to file my 2012 federal tax return For example, real property bought to replace a destroyed billboard and leased property on which the billboard was located qualify as property of a like-kind. Where to file my 2012 federal tax return   You can make this election only if you did not claim a section 179 deduction for the display. Where to file my 2012 federal tax return You cannot cancel this election unless you get the consent of the IRS. Where to file my 2012 federal tax return   An outdoor advertising display is a sign or device rigidly assembled and permanently attached to the ground, a building, or any other permanent structure used to display a commercial or other advertisement to the public. Where to file my 2012 federal tax return Substituting replacement property. Where to file my 2012 federal tax return   Once you designate certain property as replacement property on your tax return, you cannot substitute other qualified property. Where to file my 2012 federal tax return But, if your previously designated replacement property does not qualify, you can substitute qualified property if you acquire it within the replacement period. Where to file my 2012 federal tax return Controlling interest in a corporation. Where to file my 2012 federal tax return   You can replace property by acquiring a controlling interest in a corporation that owns property similar or related in service or use to your condemned property. Where to file my 2012 federal tax return You have controlling interest if you own stock having at least 80% of the combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of all other classes of stock of the corporation. Where to file my 2012 federal tax return Basis adjustment to corporation's property. Where to file my 2012 federal tax return   The basis of property held by the corporation at the time you acquired control must be reduced by your postponed gain, if any. Where to file my 2012 federal tax return You are not required to reduce the adjusted basis of the corporation's properties below your adjusted basis in the corporation's stock (determined after reduction by your postponed gain). Where to file my 2012 federal tax return   Allocate this reduction to the following classes of property in the order shown below. Where to file my 2012 federal tax return Property that is similar or related in service or use to the condemned property. Where to file my 2012 federal tax return Depreciable property not reduced in (1). Where to file my 2012 federal tax return All other property. Where to file my 2012 federal tax return If two or more properties fall in the same class, allocate the reduction to each property in proportion to the adjusted basis of all the properties in that class. Where to file my 2012 federal tax return The reduced basis of any single property cannot be less than zero. Where to file my 2012 federal tax return Main home replaced. Where to file my 2012 federal tax return   If your gain from a condemnation of your main home is more than you can exclude from your income (see Main home condemned under Gain or Loss From Condemnations, earlier), you can postpone reporting the rest of the gain by buying replacement property that is similar or related in service or use. Where to file my 2012 federal tax return The replacement property must cost at least as much as the amount realized from the condemnation minus the excluded gain. Where to file my 2012 federal tax return   You must reduce the basis of your replacement property by the postponed gain. Where to file my 2012 federal tax return Also, if you postpone reporting any part of your gain under these rules, you are treated as having owned and used the replacement property as your main home for the period you owned and used the condemned property as your main home. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return City authorities condemned your home that you had used as a personal residence for 5 years prior to the condemnation. Where to file my 2012 federal tax return The city paid you a condemnation award of $400,000. Where to file my 2012 federal tax return Your adjusted basis in the property was $80,000. Where to file my 2012 federal tax return You realize a gain of $320,000 ($400,000 − $80,000). Where to file my 2012 federal tax return You purchased a new home for $100,000. Where to file my 2012 federal tax return You can exclude $250,000 of the realized gain from your gross income. Where to file my 2012 federal tax return The amount realized is then treated as being $150,000 ($400,000 − $250,000) and the gain realized is $70,000 ($150,000 amount realized − $80,000 adjusted basis). Where to file my 2012 federal tax return You must recognize $50,000 of the gain ($150,000 amount realized − $100,000 cost of new home). Where to file my 2012 federal tax return The remaining $20,000 of realized gain is postponed. Where to file my 2012 federal tax return Your basis in the new home is $80,000 ($100,000 cost − $20,000 gain postponed). Where to file my 2012 federal tax return Replacement period. Where to file my 2012 federal tax return   To postpone reporting your gain from a condemnation, you must buy replacement property within a certain period of time. Where to file my 2012 federal tax return This is the replacement period. Where to file my 2012 federal tax return   The replacement period for a condemnation begins on the earlier of the following dates. Where to file my 2012 federal tax return The date on which you disposed of the condemned property. Where to file my 2012 federal tax return The date on which the threat of condemnation began. Where to file my 2012 federal tax return   The replacement period generally ends 2 years after the end of the first tax year in which any part of the gain on the condemnation is realized. Where to file my 2012 federal tax return However, see the exceptions below. Where to file my 2012 federal tax return Three-year replacement period for certain property. Where to file my 2012 federal tax return   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the end of the first tax year in which any part of the gain on the condemnation is realized. Where to file my 2012 federal tax return However, this 3-year replacement period cannot be used if you replace the condemned property by acquiring control of a corporation owning property that is similar or related in service or use. Where to file my 2012 federal tax return Five-year replacement period for certain property. Where to file my 2012 federal tax return   The replacement period ends 5 years after the end of the first tax year in which any part of the gain is realized on the compulsory or involuntary conversion of the following qualified property. Where to file my 2012 federal tax return Property in any Midwestern disaster area compulsorily or involuntarily converted on or after the applicable disaster date as a result of severe storms, tornadoes, or flooding, but only if substantially all of the use of the replacement property is in a Midwestern disaster area. Where to file my 2012 federal tax return Property in the Kansas disaster area compulsorily or involuntarily converted after May 3, 2007, but only if substantially all of the use of the replacement property is in the Kansas disaster area. Where to file my 2012 federal tax return Property in the Hurricane Katrina disaster area compulsorily or involuntarily converted after August 24, 2005, as a result of Hurricane Katrina, but only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Where to file my 2012 federal tax return Extended replacement period for taxpayers affected by other federally declared disasters. Where to file my 2012 federal tax return    If you are affected by a federally declared disaster, the IRS may grant disaster relief by extending the periods to perform certain tax-related acts for 2013, including the replacement period, by up to one year. Where to file my 2012 federal tax return For more information visit www. Where to file my 2012 federal tax return irs. Where to file my 2012 federal tax return gov/uac/Tax-Relief-in-Disaster-Situations. Where to file my 2012 federal tax return Weather-related sales of livestock in an area eligible for federal assistance. Where to file my 2012 federal tax return   Generally, if the sale or exchange of livestock is due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. Where to file my 2012 federal tax return    If the weather-related conditions continue for longer than 3 years, the replacement period may be extended on a regional basis until the end of your first drought-free year for the applicable region. Where to file my 2012 federal tax return See Notice 2006-82. Where to file my 2012 federal tax return You can find Notice 2006-82 on page 529 of Internal Revenue Bulletin 2006-39 at www. Where to file my 2012 federal tax return irs. Where to file my 2012 federal tax return gov/irb/2006-39_IRB/ar13. Where to file my 2012 federal tax return html. Where to file my 2012 federal tax return    Each year, the IRS publishes a list of counties, districts, cities, or parishes for which exceptional, extreme, or severe drought was reported during the preceding 12 months. Where to file my 2012 federal tax return If you qualified for a 4-year replacement period for livestock sold or exchanged on account of drought and your replacement period is scheduled to expire at the end of 2013 (or at the end of the tax year that includes August 31, 2013), see Notice 2013-62. Where to file my 2012 federal tax return You can find Notice 2013-62 on page 466 of Internal Revenue Bulletin 2013-45 at www. Where to file my 2012 federal tax return irs. Where to file my 2012 federal tax return gov/irb/2013-45_IRB/ar04. Where to file my 2012 federal tax return html. Where to file my 2012 federal tax return The replacement period will be extended under Notice 2006-82 if the applicable region is on the list included in Notice 2013-62. Where to file my 2012 federal tax return Determining when gain is realized. Where to file my 2012 federal tax return   If you are a cash basis taxpayer, you realize gain when you receive payments that are more than your basis in the property. Where to file my 2012 federal tax return If the condemning authority makes deposits with the court, you realize gain when you withdraw (or have the right to withdraw) amounts that are more than your basis. Where to file my 2012 federal tax return   This applies even if the amounts received are only partial or advance payments and the full award has not yet been determined. Where to file my 2012 federal tax return A replacement will be too late if you wait for a final determination that does not take place in the applicable replacement period after you first realize gain. Where to file my 2012 federal tax return   For accrual basis taxpayers, gain (if any) accrues in the earlier year when either of the following occurs. Where to file my 2012 federal tax return All events have occurred that fix the right to the condemnation award and the amount can be determined with reasonable accuracy. Where to file my 2012 federal tax return All or part of the award is actually or constructively received. Where to file my 2012 federal tax return For example, if you have an absolute right to a part of a condemnation award when it is deposited with the court, the amount deposited accrues in the year the deposit is made even though the full amount of the award is still contested. Where to file my 2012 federal tax return Replacement property bought before the condemnation. Where to file my 2012 federal tax return   If you buy your replacement property after there is a threat of condemnation but before the actual condemnation and you still hold the replacement property at the time of the condemnation, you have bought your replacement property within the replacement period. Where to file my 2012 federal tax return Property you acquire before there is a threat of condemnation does not qualify as replacement property acquired within the replacement period. Where to file my 2012 federal tax return Example. Where to file my 2012 federal tax return On April 3, 2012, city authorities notified you that your property would be condemned. Where to file my 2012 federal tax return On June 5, 2012, you acquired property to replace the property to be condemned. Where to file my 2012 federal tax return You still had the new property when the city took possession of your old property on September 4, 2013. Where to file my 2012 federal tax return You have made a replacement within the replacement period. Where to file my 2012 federal tax return Extension. Where to file my 2012 federal tax return   You can request an extension of the replacement period from the IRS director for your area. Where to file my 2012 federal tax return You should apply before the end of the replacement period. Where to file my 2012 federal tax return Your request should explain in detail why you need an extension. Where to file my 2012 federal tax return The IRS will consider a request filed within a reasonable time after the replacement period if you can show reasonable cause for the delay. Where to file my 2012 federal tax return An extension of the replacement period will be granted if you can show reasonable cause for not making the replacement within the regular period. Where to file my 2012 federal tax return   Ordinarily, requests for extensions are granted near the end of the replacement period or the extended replacement period. Where to file my 2012 federal tax return Extensions are usually limited to a period of 1 year or less. Where to file my 2012 federal tax return The high market value or scarcity of replacement property is not a sufficient reason for granting an extension. Where to file my 2012 federal tax return If your replacement property is being built and you clearly show that the replacement or restoration cannot be made within the replacement peri
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Council on Environmental Quality

The Counicl on Environmental Quality coordinates federal environmental activities, and assists in the development of environmental policy across the executive branch.

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Website: Council on Environmental Quality

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The Where To File My 2012 Federal Tax Return

Where to file my 2012 federal tax return 3. Where to file my 2012 federal tax return   Environmental Taxes Table of Contents Oil Spill Liability Tax ODCs Imported Taxable Products Floor Stocks Tax Environmental taxes are imposed on crude oil and petroleum products (oil spill liability), the sale or use of ozone-depleting chemicals (ODCs), and imported products containing or manufactured with ODCs. Where to file my 2012 federal tax return In addition, a floor stocks tax is imposed on ODCs held on January 1 by any person (other than the manufacturer or importer of the ODCs) for sale or for use in further manufacture. Where to file my 2012 federal tax return Figure the environmental tax on Form 6627. Where to file my 2012 federal tax return Enter the tax on the appropriate lines of Form 720 and attach Form 6627 to Form 720. Where to file my 2012 federal tax return For environmental tax purposes, United States includes the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, any possession of the United States, the Commonwealth of the Northern Mariana Islands, the Trust Territory of the Pacific Islands, the continental shelf areas (applying the principles of section 638), and foreign trade zones. Where to file my 2012 federal tax return No one is exempt from the environmental taxes, including the federal government, state and local governments, Indian tribal governments, and nonprofit educational organizations. Where to file my 2012 federal tax return Oil Spill Liability Tax The oil spill liability tax is reported on Form 6627, Environmental Taxes, and Form 720, Quarterly Federal Excise Tax Return (IRS Nos. Where to file my 2012 federal tax return 18 and 21). Where to file my 2012 federal tax return The oil spill liability tax rate is $. Where to file my 2012 federal tax return 08 per barrel and generally applies to crude oil received at a U. Where to file my 2012 federal tax return S. Where to file my 2012 federal tax return refinery and to petroleum products entered into the United States for consumption, use, or warehousing. Where to file my 2012 federal tax return The tax also applies to certain uses and the exportation of domestic crude oil. Where to file my 2012 federal tax return Crude oil includes crude oil condensates and natural gasoline. Where to file my 2012 federal tax return Petroleum products include crude oil, refined and residual oil, and other liquid hydrocarbon refinery products. Where to file my 2012 federal tax return Crude oil. Where to file my 2012 federal tax return   Tax is imposed on crude oil when it is received at a United Sates refinery. Where to file my 2012 federal tax return The operator of the refinery is liable for the tax. Where to file my 2012 federal tax return   Tax is imposed on domestic crude oil used or exported before it is received at a United States refinery. Where to file my 2012 federal tax return However, the use of crude oil for extracting oil or natural gas on the premises where such crude oil was produced is not taxable. Where to file my 2012 federal tax return The user or exporter is liable for the tax. Where to file my 2012 federal tax return Imported petroleum products. Where to file my 2012 federal tax return   Tax is imposed on petroleum products when they enter the United States for consumption, use, or warehousing. Where to file my 2012 federal tax return The person entering the petroleum product into the country is liable for the tax, including the tax on imported crude oil, even if it is subsequently received at a U. Where to file my 2012 federal tax return S. Where to file my 2012 federal tax return refinery. Where to file my 2012 federal tax return   Tax is imposed only once on any imported petroleum product. Where to file my 2012 federal tax return Thus, the operator of a U. Where to file my 2012 federal tax return S. Where to file my 2012 federal tax return refinery that receives imported crude oil must establish that the petroleum tax has already been imposed on such crude oil in order not to be liable for the tax. Where to file my 2012 federal tax return ODCs For a list of the taxable ODCs and tax rates, see the Form 6627 instructions. Where to file my 2012 federal tax return Taxable event. Where to file my 2012 federal tax return   Tax is imposed on an ODC when it is first used or sold by its manufacturer or importer. Where to file my 2012 federal tax return The manufacturer or importer is liable for the tax. Where to file my 2012 federal tax return Use of ODCs. Where to file my 2012 federal tax return   You use an ODC if you put it into service in a trade or business or for the production of income. Where to file my 2012 federal tax return Also, an ODC is used if you use it in the making of an article, including incorporation into the article, chemical transformation, or release into the air. Where to file my 2012 federal tax return The loss, destruction, packaging, repackaging, or warehousing of ODCs is not a use of the ODC. Where to file my 2012 federal tax return   The creation of a mixture containing an ODC is treated as a taxable use of the ODC contained in the mixture. Where to file my 2012 federal tax return An ODC is contained in a mixture only if the chemical identity of the ODC is not changed. Where to file my 2012 federal tax return Generally, tax is imposed when the mixture is created and not on its sale or use. Where to file my 2012 federal tax return However, you can choose to have the tax imposed on its sale or use by checking the appropriate box on Form 6627. Where to file my 2012 federal tax return You can revoke this choice only with IRS consent. Where to file my 2012 federal tax return   The creation of a mixture for export or for use as a feedstock is not a taxable use of the ODCs contained in the mixture. Where to file my 2012 federal tax return Exceptions. Where to file my 2012 federal tax return   The following may be exempt from the tax on ODCs. Where to file my 2012 federal tax return Metered-dose inhalers. Where to file my 2012 federal tax return Recycled ODCs. Where to file my 2012 federal tax return Exported ODCs. Where to file my 2012 federal tax return ODCs used as feedstock. Where to file my 2012 federal tax return Metered-dose inhalers. Where to file my 2012 federal tax return   There is no tax on ODCs used or sold for use as propellants in metered-dose inhalers. Where to file my 2012 federal tax return For a sale to be nontaxable, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Where to file my 2012 federal tax return The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Where to file my 2012 federal tax return 4682-2(d)(5). Where to file my 2012 federal tax return The certificate may be included as part of the sales documentation. Where to file my 2012 federal tax return Keep the certificate with your records. Where to file my 2012 federal tax return Recycled ODCs. Where to file my 2012 federal tax return   There is no tax on any ODC diverted or recovered in the United States as part of a recycling process (and not as part of the original manufacturing or production process). Where to file my 2012 federal tax return There is no tax on recycled Halon-1301 or recycled Halon-2402 imported from a country that has signed the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol). Where to file my 2012 federal tax return   The Montreal Protocol is administered by the United Nations (U. Where to file my 2012 federal tax return N. Where to file my 2012 federal tax return ). Where to file my 2012 federal tax return To determine if a country has signed the Montreal Protocol, contact the U. Where to file my 2012 federal tax return N. Where to file my 2012 federal tax return The website is untreaty. Where to file my 2012 federal tax return un. Where to file my 2012 federal tax return org. Where to file my 2012 federal tax return Exported ODCs. Where to file my 2012 federal tax return   Generally, there is no tax on ODCs sold for export if certain requirements are met. Where to file my 2012 federal tax return For a sale to be nontaxable, you and the purchaser must be registered. Where to file my 2012 federal tax return See Form 637, Application for Registration (for Certain Excise Tax Activities). Where to file my 2012 federal tax return Also, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Where to file my 2012 federal tax return Keep the certificate with your records. Where to file my 2012 federal tax return The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Where to file my 2012 federal tax return 4682-5(d)(3). Where to file my 2012 federal tax return The tax benefit of this exemption is limited. Where to file my 2012 federal tax return For more information, see Regulations section 52. Where to file my 2012 federal tax return 4682-5. Where to file my 2012 federal tax return ODCs used as feedstock. Where to file my 2012 federal tax return   There is no tax on ODCs sold for use or used as a feedstock. Where to file my 2012 federal tax return An ODC is used as a feedstock only if the ODC is entirely consumed in the manufacture of another chemical. Where to file my 2012 federal tax return The transformation of an ODC into one or more new compounds qualifies as use as a feedstock, but use of an ODC in a mixture does not qualify. Where to file my 2012 federal tax return   For a sale to be nontaxable, you must obtain from the purchaser an exemption certificate that you rely on in good faith. Where to file my 2012 federal tax return The certificate must be in substantially the form as the sample certificate set forth in Regulations section 52. Where to file my 2012 federal tax return 4682-2(d)(2). Where to file my 2012 federal tax return Keep the certificate with your records. Where to file my 2012 federal tax return Credits or refunds. Where to file my 2012 federal tax return   A credit or refund (without interest) of tax paid on ODCs may be claimed if a taxed ODC is: Used as a propellant in a metered-dose inhaler (the person who used the ODC as a propellant may file a claim), Exported (the manufacturer may file a claim), or Used as a feedstock (the person who used the ODC may file a claim). Where to file my 2012 federal tax return For information on how to file for credits or refunds, see the Instructions for Form 720 or Schedule 6 (Form 8849). Where to file my 2012 federal tax return Conditions to allowance for ODCs exported. Where to file my 2012 federal tax return   To claim a credit or refund for ODCs that are exported, you must have repaid or agreed to repay the tax to the exporter, or obtained the exporter's written consent to allowance of the credit or refund. Where to file my 2012 federal tax return You must also have the evidence required by the EPA as proof that the ODCs were exported. Where to file my 2012 federal tax return Imported Taxable Products An imported product containing or manufactured with ODCs is subject to tax if it is entered into the United States for consumption, use, or warehousing and is listed in the Imported Products Table. Where to file my 2012 federal tax return The Imported Products Table is listed in Regulations section 52. Where to file my 2012 federal tax return 4682-3(f)(6). Where to file my 2012 federal tax return The tax is based on the weight of the ODCs used in the manufacture of the product. Where to file my 2012 federal tax return Use the following methods to figure the ODC weight. Where to file my 2012 federal tax return The actual (exact) weight of each ODC used as a material in manufacturing the product. Where to file my 2012 federal tax return If the actual weight cannot be determined, the ODC weight listed for the product in the Imported Products Table. Where to file my 2012 federal tax return However, if you cannot determine the actual weight and the table does not list an ODC weight for the product, the rate of tax is 1% of the entry value of the product. Where to file my 2012 federal tax return Taxable event. Where to file my 2012 federal tax return   Tax is imposed on an imported taxable product when the product is first sold or used by its importer. Where to file my 2012 federal tax return The importer is liable for the tax. Where to file my 2012 federal tax return Use of imported products. Where to file my 2012 federal tax return   You use an imported product if you put it into service in a trade or business or for the production of income or use it in the making of an article, including incorporation into the article. Where to file my 2012 federal tax return The loss, destruction, packaging, repackaging, warehousing, or repair of an imported product is not a use of that product. Where to file my 2012 federal tax return Entry as use. Where to file my 2012 federal tax return   The importer may choose to treat the entry of a product into the United States as the use of the product. Where to file my 2012 federal tax return Tax is imposed on the date of entry instead of when the product is sold or used. Where to file my 2012 federal tax return The choice applies to all imported taxable products that you own and have not used when you make the choice and all later entries. Where to file my 2012 federal tax return Make the choice by checking the box in Part II of Form 6627. Where to file my 2012 federal tax return The choice is effective as of the beginning of the calendar quarter to which the Form 6627 applies. Where to file my 2012 federal tax return You can revoke this choice only with IRS consent. Where to file my 2012 federal tax return Sale of article incorporating imported product. Where to file my 2012 federal tax return   The importer may treat the sale of an article manufactured or assembled in the United States as the first sale or use of an imported taxable product incorporated in that article if both the following apply. Where to file my 2012 federal tax return The importer has consistently treated the sale of similar items as the first sale or use of similar taxable imported products. Where to file my 2012 federal tax return The importer has not chosen to treat entry into the United States as use of the product. Where to file my 2012 federal tax return Imported products table. Where to file my 2012 federal tax return   The table lists all the products that are subject to the tax on imported taxable products and specifies the ODC weight (discussed later) of each product. Where to file my 2012 federal tax return   Each listing in the table identifies a product by name and includes only products that are described by that name. Where to file my 2012 federal tax return Most listings identify a product by both name and Harmonized Tariff Schedule (HTS) heading. Where to file my 2012 federal tax return In those cases, a product is included in that listing only if the product is described by that name and the rate of duty on the product is determined by reference to that HTS heading. Where to file my 2012 federal tax return A product is included in the listing even if it is manufactured with or contains a different ODC than the one specified in the table. Where to file my 2012 federal tax return   Part II of the table lists electronic items that are not included within any other list in the table. Where to file my 2012 federal tax return An imported product is included in this list only if the product meets one of the following tests. Where to file my 2012 federal tax return It is an electronic component whose operation involves the use of nonmechanical amplification or switching devices such as tubes, transistors, and integrated circuits. Where to file my 2012 federal tax return It contains components described in (1), which account for more than 15% of the cost of the product. Where to file my 2012 federal tax return   These components do not include passive electrical devices, such as resistors and capacitors. Where to file my 2012 federal tax return Items such as screws, nuts, bolts, plastic parts, and similar specially fabricated parts that may be used to construct an electronic item are not themselves included in the listing for electronic items. Where to file my 2012 federal tax return Rules for listing products. Where to file my 2012 federal tax return   Products are listed in the table according to the following rules. Where to file my 2012 federal tax return A product is listed in Part I of the table if it is a mixture containing ODCs. Where to file my 2012 federal tax return A product is listed in Part II of the table if the Commissioner has determined that the ODCs used as materials in the manufacture of the product under the predominant method are used for purposes of refrigeration or air conditioning, creating an aerosol or foam, or manufacturing electronic components. Where to file my 2012 federal tax return A product is listed in Part III of the table if the Commissioner has determined that the product meets both the following tests. Where to file my 2012 federal tax return It is not an imported taxable product. Where to file my 2012 federal tax return It would otherwise be included within a list in Part II of the table. Where to file my 2012 federal tax return   For example, floppy disk drive units are listed in Part III because they are not imported taxable products and would have been included in the Part II list for electronic items not specifically identified, but for their listing in Part III. Where to file my 2012 federal tax return ODC weight. Where to file my 2012 federal tax return   The Table ODC weight of a product is the weight, determined by the Commissioner, of the ODCs used as materials in the manufacture of the product under the predominant method of manufacturing. Where to file my 2012 federal tax return The ODC weight is listed in Part II in pounds per single unit of product unless otherwise specified. Where to file my 2012 federal tax return Modifying the table. Where to file my 2012 federal tax return   A manufacturer or importer of a product may request the IRS add a product and its ODC weight to the table. Where to file my 2012 federal tax return They also may request the IRS remove a product from the table, or change or specify the ODC weight of a product. Where to file my 2012 federal tax return To request a modification, see Regulations section 52. Where to file my 2012 federal tax return 4682-3(g) for the mailing address and information that must be included in the request. Where to file my 2012 federal tax return Floor Stocks Tax Tax is imposed on any ODC held (other than by the manufacturer or importer of the ODC) on January 1 for sale or use in further manufacturing. Where to file my 2012 federal tax return The person holding title (as determined under local law) to the ODC is liable for the tax, whether or not delivery has been made. Where to file my 2012 federal tax return These chemicals are taxable without regard to the type or size of storage container in which the ODCs are held. Where to file my 2012 federal tax return The tax may apply to an ODC whether it is in a 14-ounce can or a 30-pound tank. Where to file my 2012 federal tax return You are liable for the floor stocks tax if you hold any of the following on January 1. Where to file my 2012 federal tax return At least 400 pounds of ODCs other than halons or methyl chloroform, At least 50 pounds of halons, or At least 1,000 pounds of methyl chloroform. Where to file my 2012 federal tax return If you are liable for the tax, prepare an inventory on January 1 of the taxable ODCs held on that date for sale or for use in further manufacturing. Where to file my 2012 federal tax return You must pay this floor stocks tax by June 30 of each year. Where to file my 2012 federal tax return Report the tax on Form 6627 and Part II of Form 720 for the second calendar quarter. Where to file my 2012 federal tax return For the tax rates, see the Form 6627 instructions. Where to file my 2012 federal tax return ODCs not subject to floor stocks tax. Where to file my 2012 federal tax return   The floor stocks tax is not imposed on any of the following ODCs. Where to file my 2012 federal tax return ODCs mixed with other ingredients that contribute to achieving the purpose for which the mixture will be used, unless the mixture contains only ODCs and one or more stabilizers. Where to file my 2012 federal tax return ODCs contained in a manufactured article in which the ODCs will be used for their intended purpose without being released from the article. Where to file my 2012 federal tax return ODCs that have been reclaimed or recycled. Where to file my 2012 federal tax return ODCs sold in a qualifying sale for: Use as a feedstock, Export, or Use as a propellant in a metered-dose inhaler. Where to file my 2012 federal tax return Prev  Up  Next   Home   More Online Publications