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Where To Get 1040ez Form

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Where to get 1040ez form Publication 584 - Main Content Table of Contents LossesCost or other basis. Where to get 1040ez form Fair market value. Where to get 1040ez form Exception for personal-use real property. Where to get 1040ez form More information. Where to get 1040ez form Comments and SuggestionsOrdering forms and publications. Where to get 1040ez form Tax questions. Where to get 1040ez form How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Where to get 1040ez form Losses Generally, you may deduct losses to your home, household goods, and motor vehicles on your federal income tax return. Where to get 1040ez form However, you may not deduct a casualty or theft loss that is covered by insurance unless you filed a timely insurance claim for reimbursement. Where to get 1040ez form Any reimbursement you receive will reduce the loss. Where to get 1040ez form If you did not file an insurance claim, you may deduct only the part of the loss that was not covered by insurance. Where to get 1040ez form Amount of loss. Where to get 1040ez form   You figure the amount of your loss using the following steps. Where to get 1040ez form Determine your cost or other basis in the property before the casualty or theft. Where to get 1040ez form Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. Where to get 1040ez form (The decrease in FMV is the difference between the property's value immediately before and immediately after the casualty or theft. Where to get 1040ez form ) From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Where to get 1040ez form Apply the deduction limits, discussed later, to determine the amount of your deductible loss. Where to get 1040ez form Cost or other basis. Where to get 1040ez form   Cost or other basis usually means original cost plus improvements. Where to get 1040ez form If you did not acquire the property by purchasing it, your basis is determined as discussed in Publication 551, Basis of Assets. Where to get 1040ez form If you inherited the property from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Where to get 1040ez form Fair market value. Where to get 1040ez form   FMV is the price for which you could sell your property to a willing buyer, when neither of you has to sell or buy and both of you know all the relevant facts. Where to get 1040ez form When filling out Schedules 1 through 20, you need to know the FMV of the property immediately before and immediately after the disaster, casualty, or theft. Where to get 1040ez form Separate computations. Where to get 1040ez form   Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. Where to get 1040ez form Then combine the losses to determine the total loss from that casualty or theft. Where to get 1040ez form Exception for personal-use real property. Where to get 1040ez form   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Where to get 1040ez form Figure the loss using the smaller of the following. Where to get 1040ez form The decrease in FMV of the entire property. Where to get 1040ez form The adjusted basis of the entire property. Where to get 1040ez form Deduction limits. Where to get 1040ez form   After you have figured the amount of your loss, as discussed earlier, you must figure how much of the loss you can deduct. Where to get 1040ez form You do this on Form 4684, section A. 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Where to get 1040ez form Please put “Publications Comment” on the subject line. Where to get 1040ez form You can also send us comments from www. Where to get 1040ez form irs. Where to get 1040ez form gov/formspubs. Where to get 1040ez form Select “Comment on Tax Forms and Publications” under “Information about. Where to get 1040ez form ” Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Where to get 1040ez form Ordering forms and publications. Where to get 1040ez form   Visit www. Where to get 1040ez form irs. Where to get 1040ez form gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Where to get 1040ez form Internal Revenue Service 1201 N. Where to get 1040ez form Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 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Where to get 1040ez form   Ordering forms, instructions, and publications. Where to get 1040ez form Call 1-800-TAX -FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Where to get 1040ez form You should receive your order within 10 days. Where to get 1040ez form Asking tax questions. Where to get 1040ez form Call the IRS with your tax questions at 1-800-829-1040. Where to get 1040ez form Solving problems. Where to get 1040ez form You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Where to get 1040ez form An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Where to get 1040ez form Call your local Taxpayer Assistance Center for an appointment. Where to get 1040ez form To find the number, go to www. Where to get 1040ez form irs. Where to get 1040ez form gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Where to get 1040ez form TTY/TDD equipment. Where to get 1040ez form If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Where to get 1040ez form TeleTax topics. Where to get 1040ez form Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Where to get 1040ez form Refund information. Where to get 1040ez form To check the status of your 2011 refund, call 1-800-829-1954 or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Where to get 1040ez form Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Where to get 1040ez form If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). 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Where to get 1040ez form Toll-free and email technical support. Where to get 1040ez form Two releases during the year. Where to get 1040ez form  – The first release will ship the beginning of January 2012. Where to get 1040ez form  – The final release will ship the beginning of March 2012. Where to get 1040ez form Purchase the DVD from National Technical Information Service (NTIS) at www. Where to get 1040ez form irs. Where to get 1040ez form gov/cdorders for $30 (no handling fee) or call 1-877-233-6767 toll free to buy the DVD for $30 (plus a $6 handling fee). Where to get 1040ez form Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Severe Storms in Illinois

IL/KS/MO-2013-50, Nov. 27, 2013

ST. LOUIS — Victims of severe storms, straight-line winds and tornadoes that began on Nov. 17, 2013 in parts of Illinois may qualify for tax relief from the Internal Revenue Service.

Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Illinois will receive tax relief, and other locations may be added in coming days based on additional damage assessments by FEMA.

The President has declared the counties of Champaign, Douglas, Fayette, Grundy, Jasper, La Salle, Massac, Pope, Tazewell, Vermilion, Wabash, Washington, Wayne, Will and Woodford a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Nov. 17, and on or before Feb. 28, 2014, have been postponed to Feb. 28, 2014.

The IRS is also waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Nov. 17, and on or before Dec. 2, as long as the deposits are made by Dec. 2, 2013.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Feb. 28, 2014, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Nov. 17 and on or before Feb. 28, 2014.

The IRS also gives affected taxpayers until Feb. 28, 2014, to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Nov. 17 and on or before Feb. 28, 2014.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Nov. 17 and on or before Dec. 2 provided the taxpayer makes these deposits by Dec. 2.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Illinois/ Severe Storms, Straight-line Winds, and Tornadoes” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

Related Information

Disaster Assistance and Emergency Relief for Individuals and Businesses

Recent IRS Disaster Relief Announcements

Page Last Reviewed or Updated: 27-Nov-2013

The Where To Get 1040ez Form

Where to get 1040ez form 1. Where to get 1040ez form   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 get 1040ez form Amount realized on a recourse debt. 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Where to get 1040ez form 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 get 1040ez form However, the rules for property held for personal use usually will not apply to taxpayers other than individuals. Where to get 1040ez form See chapter 5 for information about getting publications and forms. Where to get 1040ez form Sales and Exchanges A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. Where to get 1040ez form An exchange is a transfer of property for other property or services. 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Where to get 1040ez form 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 get 1040ez form Copyright. Where to get 1040ez form    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 get 1040ez form 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 get 1040ez form 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 get 1040ez form   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 get 1040ez form For more information, see Section 1231 Gains and Losses in chapter 3. Where to get 1040ez form Easement. Where to get 1040ez form   The amount received for granting an easement is subtracted from the basis of the property. Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form   Any amount received that is more than the basis to be reduced is a taxable gain. Where to get 1040ez form The transaction is reported as a sale of property. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form   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 get 1040ez form 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 get 1040ez form See Gain or Loss From Condemnations, later. Where to get 1040ez form Property transferred to satisfy debt. Where to get 1040ez form   A transfer of property to satisfy a debt is an exchange. Where to get 1040ez form Note's maturity date extended. Where to get 1040ez form   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 get 1040ez form Also, it is not considered a closed and completed transaction that would result in a gain or loss. Where to get 1040ez form 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 get 1040ez form Each case must be determined by its own facts. Where to get 1040ez form For more information, see Regulations section 1. Where to get 1040ez form 1001-3. Where to get 1040ez form Transfer on death. Where to get 1040ez form   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 get 1040ez form No taxable gain or deductible loss results from the transfer. Where to get 1040ez form Bankruptcy. Where to get 1040ez form   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 get 1040ez form Consequently, the transfer generally does not result in gain or loss. Where to get 1040ez form For more information, see Publication 908, Bankruptcy Tax Guide. Where to get 1040ez form Gain or Loss From Sales and Exchanges You usually realize gain or loss when property is sold or exchanged. Where to get 1040ez form A gain is the amount you realize from a sale or exchange of property that is more than its adjusted basis. Where to get 1040ez form A loss is the adjusted basis of the property that is more than the amount you realize. Where to get 1040ez form   Table 1-1. Where to get 1040ez form How To Figure Whether You Have a Gain or Loss IF your. Where to get 1040ez form . Where to get 1040ez form . Where to get 1040ez form THEN you have a. Where to get 1040ez form . Where to get 1040ez form . Where to get 1040ez form Adjusted basis is more than the amount realized, Loss. Where to get 1040ez form Amount realized is more than the adjusted basis, Gain. Where to get 1040ez form Basis. Where to get 1040ez form   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 get 1040ez form The basis of property you buy is usually its cost. Where to get 1040ez form 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 get 1040ez form See Basis Other Than Cost in Publication 551, Basis of Assets. Where to get 1040ez form 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 get 1040ez form See Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, for details. Where to get 1040ez form Adjusted basis. Where to get 1040ez form   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 get 1040ez form Increases include costs of any improvements having a useful life of more than 1 year. Where to get 1040ez form Decreases include depreciation and casualty losses. Where to get 1040ez form For more details and additional examples, see Adjusted Basis in Publication 551. Where to get 1040ez form Amount realized. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form Fair market value. Where to get 1040ez form   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 get 1040ez form If parties with adverse interests place a value on property in an arm's-length transaction, that is strong evidence of FMV. Where to get 1040ez form If there is a stated price for services, this price is treated as the FMV unless there is evidence to the contrary. Where to get 1040ez form Example. Where to get 1040ez form You used a building in your business that cost you $70,000. Where to get 1040ez form You made certain permanent improvements at a cost of $20,000 and deducted depreciation totaling $10,000. Where to get 1040ez form You sold the building for $100,000 plus property having an FMV of $20,000. Where to get 1040ez form The buyer assumed your real estate taxes of $3,000 and a mortgage of $17,000 on the building. Where to get 1040ez form The selling expenses were $4,000. Where to get 1040ez form Your gain on the sale is figured as follows. Where to get 1040ez form 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 get 1040ez form   Your gain or loss realized from a sale or exchange of property is usually a recognized gain or loss for tax purposes. Where to get 1040ez form Recognized gains must be included in gross income. Where to get 1040ez form Recognized losses are deductible from gross income. Where to get 1040ez form However, your gain or loss realized from certain exchanges of property is not recognized for tax purposes. Where to get 1040ez form See Nontaxable Exchanges, later. 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Where to get 1040ez form You decide to sell your life interest in the farm. Where to get 1040ez form The entire amount you receive is a recognized gain. Where to get 1040ez form Your basis in the farm is disregarded. Where to get 1040ez form Example 2. Where to get 1040ez form The facts are the same as in Example 1, except that your brother joins you in selling the farm. Where to get 1040ez form The entire interest in the property is sold, so your basis in the farm is not disregarded. Where to get 1040ez form Your gain or loss is the difference between your share of the sales price and your adjusted basis in the farm. Where to get 1040ez form Canceling a sale of real property. Where to get 1040ez form   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 get 1040ez form If the buyer returns the property in the year of sale, no gain or loss is recognized. Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form When the property is returned in a later year, you acquire a new basis in the property. Where to get 1040ez form That basis is equal to the amount you pay to the buyer. Where to get 1040ez form 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 get 1040ez form You have a gain if the amount realized is more than your adjusted basis in the property. Where to get 1040ez form However, you do not have a loss if the amount realized is less than the adjusted basis of the property. Where to get 1040ez form Bargain sales to charity. Where to get 1040ez form   A bargain sale of property to a charitable organization is partly a sale or exchange and partly a charitable contribution. Where to get 1040ez form 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 get 1040ez form The adjusted basis of the part sold is figured as follows. Where to get 1040ez form 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 get 1040ez form This allocation rule does not apply if a charitable contribution deduction is not allowable. Where to get 1040ez form   See Publication 526, Charitable Contributions, for information on figuring your charitable contribution. Where to get 1040ez form Example. Where to get 1040ez form 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 get 1040ez form Your adjusted basis in the property is $4,000. Where to get 1040ez form Your gain on the sale is $1,200, figured as follows. Where to get 1040ez form 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 get 1040ez form You must subtract depreciation you took or could have taken from the basis of the business or rental part. Where to get 1040ez form However, see the special rule below for a home used partly for business or rental. Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form Any gain on the personal part of the property is a capital gain. Where to get 1040ez form You cannot deduct a loss on the personal part. Where to get 1040ez form Home used partly for business or rental. Where to get 1040ez form    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 get 1040ez form See Property Used Partly for Business or Rental, in Publication 523. Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form 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 get 1040ez form Figure the loss you can deduct as follows. Where to get 1040ez form Use the lesser of the property's adjusted basis or fair market value at the time of the change. Where to get 1040ez form Add to (1) the cost of any improvements and other increases to basis since the change. Where to get 1040ez form Subtract from (2) depreciation and any other decreases to basis since the change. Where to get 1040ez form Subtract the amount you realized on the sale from the result in (3). Where to get 1040ez form If the amount you realized is more than the result in (3), treat this result as zero. Where to get 1040ez form The result in (4) is the loss you can deduct. Where to get 1040ez form Example. Where to get 1040ez form You changed your main home to rental property 5 years ago. Where to get 1040ez form 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 get 1040ez form This year, you sold the property for $55,000. Where to get 1040ez form You made no improvements to the property but you have depreciation expense of $12,620 over the 5 prior years. Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form   If you have a gain on the sale, you generally must recognize the full amount of the gain. Where to get 1040ez form You figure the gain by subtracting your adjusted basis from your amount realized, as described earlier. Where to get 1040ez form   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 get 1040ez form However, you may not be able to exclude the part of the gain allocated to any period of nonqualified use. Where to get 1040ez form   For more information, see Business Use or Rental of Home in Publication 523. Where to get 1040ez form In addition, special rules apply if the home sold was acquired in a like-kind exchange. Where to get 1040ez form See Special Situations in Publication 523. Where to get 1040ez form Also see Like-Kind Exchanges, later. Where to get 1040ez form Abandonments The abandonment of property is a disposition of property. Where to get 1040ez form 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 get 1040ez form Generally, abandonment is not treated as a sale or exchange of the property. Where to get 1040ez form If the amount you realize (if any) is more than your adjusted basis, then you have a gain. Where to get 1040ez form If your adjusted basis is more than the amount you realize (if any), then you have a loss. Where to get 1040ez form Loss from abandonment of business or investment property is deductible as a loss. Where to get 1040ez form 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 get 1040ez form This rule also applies to leasehold improvements the lessor made for the lessee that were abandoned. Where to get 1040ez form 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 get 1040ez form The abandonment loss is deducted in the tax year in which the loss is sustained. Where to get 1040ez form If the abandoned property is secured by debt, special rules apply. Where to get 1040ez form 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 get 1040ez form For more information, including examples, see chapter 3 of Publication 4681. Where to get 1040ez form You cannot deduct any loss from abandonment of your home or other property held for personal use only. Where to get 1040ez form Cancellation of debt. Where to get 1040ez form   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 get 1040ez form This income is separate from any loss realized from abandonment of the property. Where to get 1040ez form   You must report this income on your tax return unless one of the following applies. Where to get 1040ez form The cancellation is intended as a gift. Where to get 1040ez form The debt is qualified farm debt. Where to get 1040ez form The debt is qualified real property business debt. Where to get 1040ez form You are insolvent or bankrupt. Where to get 1040ez form The debt is qualified principal residence indebtedness. Where to get 1040ez form File Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), to report the income exclusion. Where to get 1040ez form For more information, including other exceptions and exclusion, see Publication 4681. Where to get 1040ez form Forms 1099-A and 1099-C. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form 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 get 1040ez form For abandonments of property and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. Where to get 1040ez form 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 get 1040ez form The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. Where to get 1040ez form This is true even if you voluntarily return the property to the lender. Where to get 1040ez form 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 get 1040ez form Buyer's (borrower's) gain or loss. Where to get 1040ez form   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 get 1040ez form The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. Where to get 1040ez form See Gain or Loss From Sales and Exchanges, earlier. Where to get 1040ez form You can use Table 1-2 to figure your gain or loss from a foreclosure or repossession. Where to get 1040ez form Amount realized on a nonrecourse debt. Where to get 1040ez form   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 get 1040ez form The full canceled debt is included even if the fair market value of the property is less than the canceled debt. Where to get 1040ez form Example 1. Where to get 1040ez form Chris bought a new car for $15,000. Where to get 1040ez form He paid $2,000 down and borrowed the remaining $13,000 from the dealer's credit company. Where to get 1040ez form Chris is not personally liable for the loan (nonrecourse debt), but pledges the new car as security. Where to get 1040ez form The credit company repossessed the car because he stopped making loan payments. Where to get 1040ez form The balance due after taking into account the payments Chris made was $10,000. Where to get 1040ez form The fair market value of the car when repossessed was $9,000. Where to get 1040ez form The amount Chris realized on the repossession is $10,000. Where to get 1040ez form 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 get 1040ez form Chris figures his gain or loss on the repossession by comparing the amount realized ($10,000) with his adjusted basis ($15,000). Where to get 1040ez form He has a $5,000 nondeductible loss. Where to get 1040ez form Example 2. Where to get 1040ez form Abena paid $200,000 for her home. Where to get 1040ez form She paid $15,000 down and borrowed the remaining $185,000 from a bank. Where to get 1040ez form Abena is not personally liable for the loan (nonrecourse debt), but pledges the house as security. Where to get 1040ez form The bank foreclosed on the loan because Abena stopped making payments. Where to get 1040ez form 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 get 1040ez form The amount Abena realized on the foreclosure is $180,000, the balance due and debt canceled by the foreclosure. Where to get 1040ez form She figures her gain or loss by comparing the amount realized ($180,000) with her adjusted basis ($175,000). Where to get 1040ez form She has a $5,000 realized gain. Where to get 1040ez form Amount realized on a recourse debt. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form The amount realized does not include the canceled debt that is your income from cancellation of debt. Where to get 1040ez form See Cancellation of debt, below. Where to get 1040ez form Seller's (lender's) gain or loss on repossession. Where to get 1040ez form   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 get 1040ez form For more information, see Repossession in Publication 537. Where to get 1040ez form    Table 1-2. Where to get 1040ez form Worksheet for Foreclosures and Repossessions Part 1. Where to get 1040ez form Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. Where to get 1040ez form Complete this part only  if you were personally liable for the debt. Where to get 1040ez form Otherwise,  go to Part 2. Where to get 1040ez form   1. Where to get 1040ez form 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 get 1040ez form Enter the fair market value of the transferred property   3. Where to get 1040ez form Ordinary income from cancellation of debt upon foreclosure or    repossession. Where to get 1040ez form * Subtract line 2 from line 1. Where to get 1040ez form   If less than zero, enter zero   Part 2. Where to get 1040ez form Figure your gain or loss from foreclosure or repossession. Where to get 1040ez form   4. Where to get 1040ez form If you completed Part 1, enter the smaller of line 1 or line 2. Where to get 1040ez form   If you did not complete Part 1, enter the outstanding debt immediately before   the transfer of property   5. Where to get 1040ez form Enter any proceeds you received from the foreclosure sale   6. Where to get 1040ez form Add lines 4 and 5   7. Where to get 1040ez form Enter the adjusted basis of the transferred property   8. Where to get 1040ez form Gain or loss from foreclosure or repossession. Where to get 1040ez form Subtract line 7  from line 6   * The income may not be taxable. Where to get 1040ez form See Cancellation of debt. Where to get 1040ez form Cancellation of debt. Where to get 1040ez form   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 get 1040ez form This income is separate from any gain or loss realized from the foreclosure or repossession. Where to get 1040ez form Report the income from cancellation of a debt related to a business or rental activity as business or rental income. Where to get 1040ez form    You can use Table 1-2 to figure your income from cancellation of debt. Where to get 1040ez form   You must report this income on your tax return unless one of the following applies. Where to get 1040ez form The cancellation is intended as a gift. Where to get 1040ez form The debt is qualified farm debt. Where to get 1040ez form The debt is qualified real property business debt. Where to get 1040ez form You are insolvent or bankrupt. Where to get 1040ez form The debt is qualified principal residence indebtedness. Where to get 1040ez form File Form 982 to report the income exclusion. Where to get 1040ez form Example 1. Where to get 1040ez form 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 get 1040ez form In this case, the amount he realizes is $9,000. Where to get 1040ez form This is the lesser of the canceled debt ($10,000) or the car's fair market value ($9,000). Where to get 1040ez form Chris figures his gain or loss on the repossession by comparing the amount realized ($9,000) with his adjusted basis ($15,000). Where to get 1040ez form He has a $6,000 nondeductible loss. Where to get 1040ez form He also is treated as receiving ordinary income from cancellation of debt. Where to get 1040ez form That income is $1,000 ($10,000 − $9,000). Where to get 1040ez form This is the part of the canceled debt not included in the amount realized. Where to get 1040ez form Example 2. Where to get 1040ez form 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 get 1040ez form In this case, the amount she realizes is $170,000. Where to get 1040ez form This is the lesser of the canceled debt ($180,000) or the fair market value of the house ($170,000). Where to get 1040ez form Abena figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($175,000). Where to get 1040ez form She has a $5,000 nondeductible loss. Where to get 1040ez form She also is treated as receiving ordinary income from cancellation of debt. Where to get 1040ez form (The debt is not exempt from tax as discussed under Cancellation of debt, above. Where to get 1040ez form ) That income is $10,000 ($180,000 − $170,000). Where to get 1040ez form This is the part of the canceled debt not included in the amount realized. Where to get 1040ez form Forms 1099-A and 1099-C. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form 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 get 1040ez form For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Where to get 1040ez form 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 get 1040ez form Involuntary conversions are also called involuntary exchanges. Where to get 1040ez form 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 get 1040ez form You report the gain or deduct the loss on your tax return for the year you realize it. Where to get 1040ez form 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 get 1040ez form However, depending on the type of property you receive, you may not have to report a gain on an involuntary conversion. Where to get 1040ez form 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 get 1040ez form Your basis for the new property is the same as your basis for the converted property. Where to get 1040ez form This means that the gain is deferred until a taxable sale or exchange occurs. Where to get 1040ez form 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 get 1040ez form This publication explains the treatment of a gain or loss from a condemnation or disposition under the threat of condemnation. Where to get 1040ez form If you have a gain or loss from the destruction or theft of property, see Publication 547. Where to get 1040ez form Condemnations A condemnation is the process by which private property is legally taken for public use without the owner's consent. Where to get 1040ez form 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 get 1040ez form The owner receives a condemnation award (money or property) in exchange for the property taken. Where to get 1040ez form A condemnation is like a forced sale, the owner being the seller and the condemning authority being the buyer. Where to get 1040ez form Example. Where to get 1040ez form A local government authorized to acquire land for public parks informed you that it wished to acquire your property. Where to get 1040ez form After the local government took action to condemn your property, you went to court to keep it. Where to get 1040ez form 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 get 1040ez form This is a condemnation of private property for public use. Where to get 1040ez form Threat of condemnation. Where to get 1040ez form   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 get 1040ez form You must have reasonable grounds to believe that, if you do not sell voluntarily, your property will be condemned. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form Reports of condemnation. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form 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 get 1040ez form Example. Where to get 1040ez form Your property lies along public utility lines. Where to get 1040ez form The utility company has the authority to condemn your property. Where to get 1040ez form The company informs you that it intends to acquire your property by negotiation or condemnation. Where to get 1040ez form A threat of condemnation exists when you receive the notice. Where to get 1040ez form Related property voluntarily sold. Where to get 1040ez form   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 get 1040ez form A substantial economic relationship exists if together the properties were one economic unit. Where to get 1040ez form You also must show that the condemned property could not reasonably or adequately be replaced. Where to get 1040ez form You can elect to postpone reporting the gain by buying replacement property. Where to get 1040ez form See Postponement of Gain, later. Where to get 1040ez form 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 get 1040ez form If your net condemnation award is more than the adjusted basis of the condemned property, you have a gain. Where to get 1040ez form You can postpone reporting gain from a condemnation if you buy replacement property. Where to get 1040ez form 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 get 1040ez form See Postponement of Gain, later. Where to get 1040ez form If your net condemnation award is less than your adjusted basis, you have a loss. Where to get 1040ez form If your loss is from property you held for personal use, you cannot deduct it. Where to get 1040ez form You must report any deductible loss in the tax year it happened. Where to get 1040ez form You can use Part 2 of Table 1-3 to figure your gain or loss from a condemnation award. Where to get 1040ez form Main home condemned. Where to get 1040ez form   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 get 1040ez form You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). Where to get 1040ez form For information on this exclusion, see Publication 523. Where to get 1040ez form 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 get 1040ez form See Postponement of Gain, later. Where to get 1040ez form Table 1-3. Where to get 1040ez form Worksheet for Condemnations Part 1. Where to get 1040ez form Gain from severance damages. Where to get 1040ez form  If you did not receive severance damages, skip Part 1 and go to Part 2. Where to get 1040ez form   1. Where to get 1040ez form Enter gross severance damages received   2. Where to get 1040ez form Enter your expenses in getting severance damages   3. Where to get 1040ez form Subtract line 2 from line 1. Where to get 1040ez form If less than zero, enter -0-   4. Where to get 1040ez form Enter any special assessment on remaining property taken out of your award   5. Where to get 1040ez form Net severance damages. Where to get 1040ez form Subtract line 4 from line 3. Where to get 1040ez form If less than zero, enter -0-   6. Where to get 1040ez form Enter the adjusted basis of the remaining property   7. Where to get 1040ez form Gain from severance damages. Where to get 1040ez form Subtract line 6 from line 5. Where to get 1040ez form If less than zero, enter -0-   8. Where to get 1040ez form Refigured adjusted basis of the remaining property. Where to get 1040ez form Subtract line 5 from line 6. Where to get 1040ez form If less than zero, enter -0-   Part 2. Where to get 1040ez form Gain or loss from condemnation award. Where to get 1040ez form   9. Where to get 1040ez form Enter the gross condemnation award received   10. Where to get 1040ez form Enter your expenses in getting the condemnation award   11. Where to get 1040ez form If you completed Part 1, and line 4 is more than line 3, subtract line 3 from line 4. Where to get 1040ez form If you did not complete Part 1, but a special assessment was taken out of your award, enter that amount. Where to get 1040ez form Otherwise, enter -0-   12. Where to get 1040ez form Add lines 10 and 11   13. Where to get 1040ez form Net condemnation award. Where to get 1040ez form Subtract line 12 from line 9   14. Where to get 1040ez form Enter the adjusted basis of the condemned property   15. Where to get 1040ez form Gain from condemnation award. Where to get 1040ez form If line 14 is more than line 13, enter -0-. Where to get 1040ez form Otherwise, subtract line 14 from  line 13 and skip line 16   16. Where to get 1040ez form Loss from condemnation award. Where to get 1040ez form 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 get 1040ez form )   Part 3. Where to get 1040ez form Postponed gain from condemnation. Where to get 1040ez form  (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 get 1040ez form )   17. Where to get 1040ez form If you completed Part 1, and line 7 is more than zero, enter the amount from line 5. Where to get 1040ez form Otherwise, enter -0-   18. Where to get 1040ez form If line 15 is more than zero, enter the amount from line 13. Where to get 1040ez form Otherwise, enter -0-   19. Where to get 1040ez form Add lines 17 and 18. Where to get 1040ez form 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 get 1040ez form Enter the total cost of replacement property and any expenses to restore the usefulness of your remaining property   21. Where to get 1040ez form Subtract line 20 from line 19. Where to get 1040ez form If less than zero, enter -0-   22. Where to get 1040ez form If you completed Part 1, add lines 7 and 15. Where to get 1040ez form Otherwise, enter the amount from line 15. Where to get 1040ez form 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 get 1040ez form Recognized gain. Where to get 1040ez form Enter the smaller of line 21 or line 22. Where to get 1040ez form   24. Where to get 1040ez form Postponed gain. Where to get 1040ez form Subtract line 23 from line 22. Where to get 1040ez form If less than zero, enter -0-   Condemnation award. Where to get 1040ez form   A condemnation award is the money you are paid or the value of other property you receive for your condemned property. Where to get 1040ez form The award is also the amount you are paid for the sale of your property under threat of condemnation. Where to get 1040ez form Payment of your debts. Where to get 1040ez form   Amounts taken out of the award to pay your debts are considered paid to you. Where to get 1040ez form 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 get 1040ez form Example. Where to get 1040ez form The state condemned your property for public use. Where to get 1040ez form The award was set at $200,000. Where to get 1040ez form 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 get 1040ez form You are considered to have received the entire $200,000 as a condemnation award. Where to get 1040ez form Interest on award. Where to get 1040ez form   If the condemning authority pays you interest for its delay in paying your award, it is not part of the condemnation award. Where to get 1040ez form You must report the interest separately as ordinary income. Where to get 1040ez form Payments to relocate. Where to get 1040ez form   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 get 1040ez form Do not include them in your income. Where to get 1040ez form Replacement housing payments used to buy new property are included in the property's basis as part of your cost. Where to get 1040ez form Net condemnation award. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form This is discussed later under Special assessment taken out of award. Where to get 1040ez form Severance damages. Where to get 1040ez form    Severance damages are not part of the award paid for the property condemned. Where to get 1040ez form 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 get 1040ez form   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 get 1040ez form 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 get 1040ez form   The contracting parties should agree on the specific amount of severance damages in writing. Where to get 1040ez form If this is not done, all proceeds from the condemning authority are considered awarded for your condemned property. Where to get 1040ez form   You cannot make a completely new allocation of the total award after the transaction is completed. Where to get 1040ez form However, you can show how much of the award both parties intended for severance damages. Where to get 1040ez form The severance damages part of the award is determined from all the facts and circumstances. Where to get 1040ez form Example. Where to get 1040ez form You sold part of your property to the state under threat of condemnation. Where to get 1040ez form The contract you and the condemning authority signed showed only the total purchase price. Where to get 1040ez form It did not specify a fixed sum for severance damages. Where to get 1040ez form 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 get 1040ez form You may treat this part as severance damages. Where to get 1040ez form Treatment of severance damages. Where to get 1040ez form   Your net severance damages are treated as the amount realized from an involuntary conversion of the remaining part of your property. Where to get 1040ez form Use them to reduce the basis of the remaining property. Where to get 1040ez form 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 get 1040ez form   If your net severance damages are more than the basis of your retained property, you have a gain. Where to get 1040ez form You may be able to postpone reporting the gain. Where to get 1040ez form See Postponement of Gain, later. Where to get 1040ez form    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 get 1040ez form Net severance damages. Where to get 1040ez form   To figure your net severance damages, you first must reduce your severance damages by your expenses in obtaining the damages. Where to get 1040ez form 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 get 1040ez form The balance is your net severance damages. Where to get 1040ez form Expenses of obtaining a condemnation award and severance damages. Where to get 1040ez form   Subtract the expenses of obtaining a condemnation award, such as legal, engineering, and appraisal fees, from the total award. Where to get 1040ez form Also, subtract the expenses of obtaining severance damages, which may include similar expenses, from the severance damages paid to you. Where to get 1040ez form 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 get 1040ez form Example. Where to get 1040ez form You receive a condemnation award and severance damages. Where to get 1040ez form One-fourth of the total was designated as severance damages in your agreement with the condemning authority. Where to get 1040ez form You had legal expenses for the entire condemnation proceeding. Where to get 1040ez form You cannot determine how much of your legal expenses is for each part of the condemnation proceeds. Where to get 1040ez form You must allocate one-fourth of your legal expenses to the severance damages and the other three-fourths to the condemnation award. Where to get 1040ez form Special assessment retained out of award. Where to get 1040ez form   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 get 1040ez form An assessment may be levied if the remaining part of your property benefited by the improvement resulting from the condemnation. Where to get 1040ez form Examples of improvements that may cause a special assessment are widening a street and installing a sewer. Where to get 1040ez form   To figure your net condemnation award, you must reduce the amount of the award by the assessment retained out of the award. Where to get 1040ez form Example. Where to get 1040ez form To widen the street in front of your home, the city condemned a 25-foot deep strip of your land. Where to get 1040ez form You were awarded $5,000 for this and spent $300 to get the award. Where to get 1040ez form Before paying the award, the city levied a special assessment of $700 for the street improvement against your remaining property. Where to get 1040ez form The city then paid you only $4,300. Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form The net award would not change, even if you later paid the assessment from the amount you received. Where to get 1040ez form Severance damages received. Where to get 1040ez form   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 get 1040ez form Any balance of the special assessment is used to reduce the condemnation award. Where to get 1040ez form Example. Where to get 1040ez form You were awarded $4,000 for the condemnation of your property and $1,000 for severance damages. Where to get 1040ez form You spent $300 to obtain the severance damages. Where to get 1040ez form A special assessment of $800 was retained out of the award. Where to get 1040ez form The $1,000 severance damages are reduced to zero by first subtracting the $300 expenses and then $700 of the special assessment. Where to get 1040ez form Your $4,000 condemnation award is reduced by the $100 balance of the special assessment, leaving a $3,900 net condemnation award. Where to get 1040ez form Part business or rental. Where to get 1040ez form   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 get 1040ez form Figure your gain or loss separately because gain or loss on each part may be treated differently. Where to get 1040ez form   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 get 1040ez form Example. Where to get 1040ez form You sold your building for $24,000 under threat of condemnation to a public utility company that had the authority to condemn. Where to get 1040ez form You rented half the building and lived in the other half. Where to get 1040ez form You paid $25,000 for the building and spent an additional $1,000 for a new roof. Where to get 1040ez form You claimed allowable depreciation of $4,600 on the rental half. Where to get 1040ez form You spent $200 in legal expenses to obtain the condemnation award. Where to get 1040ez form Figure your gain or loss as follows. Where to get 1040ez form     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 get 1040ez form 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 get 1040ez form Your basis for the new property is the same as your basis for the old. Where to get 1040ez form Money or unlike property received. Where to get 1040ez form   You ordinarily must report the gain if you receive money or unlike property. Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form See Controlling interest in a corporation, later. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form   The basis of the replacement property is its cost, reduced by the postponed gain. Where to get 1040ez form 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 get 1040ez form See Controlling interest in a corporation, later. Where to get 1040ez form You can use Part 3 of Table 1-3 to figure the gain you must report and your postponed gain. Where to get 1040ez form Postponing gain on severance damages. Where to get 1040ez form   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 get 1040ez form See Treatment of severance damages, earlier. Where to get 1040ez form 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 get 1040ez form   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 get 1040ez form 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 get 1040ez form   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 get 1040ez form Postponing gain on the sale of related property. Where to get 1040ez form   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 get 1040ez form You must meet the requirements explained earlier under Related property voluntarily sold. Where to get 1040ez form 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 get 1040ez form Buying replacement property from a related person. Where to get 1040ez form   Certain taxpayers cannot postpone reporting gain from a condemnation if they buy the replacement property from a related person. Where to get 1040ez form For information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2. Where to get 1040ez form   This rule applies to the following taxpayers. Where to get 1040ez form C corporations. Where to get 1040ez form Partnerships in which more than 50% of the capital or profits interest is owned by  C corporations. Where to get 1040ez form 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 get 1040ez form   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 get 1040ez form If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Where to get 1040ez form If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Where to get 1040ez form Exception. Where to get 1040ez form   This rule does not apply if the related person acquired the property from an unrelated person within the replacement period. Where to get 1040ez form Advance payment. Where to get 1040ez form   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 get 1040ez form Replacement property. Where to get 1040ez form   To postpone reporting gain, you must buy replacement property for the specific purpose of replacing your condemned property. Where to get 1040ez form You do not have to use the actual funds from the condemnation award to acquire the replacement property. Where to get 1040ez form Property you acquire by gift or inheritance does not qualify as replacement property. Where to get 1040ez form Similar or related in service or use. Where to get 1040ez form   Your replacement property must be similar or related in service or use to the property it replaces. Where to get 1040ez form   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 get 1040ez form For a discussion of like-kind property, see Like-Kind Property under Like-Kind Exchanges, later. Where to get 1040ez form Owner-user. Where to get 1040ez form   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 get 1040ez form Example. Where to get 1040ez form Your home was condemned and you invested the proceeds from the condemnation in a grocery store. Where to get 1040ez form Your replacement property is not similar or related in service or use to the condemned property. Where to get 1040ez form To be similar or related in service or use, your replacement property must also be used by you as your home. Where to get 1040ez form Owner-investor. Where to get 1040ez form   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 get 1040ez form You decide this by determining all the following information. Where to get 1040ez form Whether the properties are of similar service to you. Where to get 1040ez form The nature of the business risks connected with the properties. Where to get 1040ez form What the properties demand of you in the way of management, service, and relations to your tenants. Where to get 1040ez form Example. Where to get 1040ez form You owned land and a building you rented to a manufacturing company. Where to get 1040ez form The building was condemned. Where to get 1040ez form During the replacement period, you had a new building built on other land you already owned. Where to get 1040ez form You rented out the new building for use as a wholesale grocery warehouse. Where to get 1040ez form 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 get 1040ez form Your management activities. Where to get 1040ez form The amount and kind of services you provide to your tenants. Where to get 1040ez form The nature of your business risks connected with the properties. Where to get 1040ez form Leasehold replaced with fee simple property. Where to get 1040ez form   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 get 1040ez form   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 get 1040ez form A leasehold is property held under a lease, usually for a term of years. Where to get 1040ez form Outdoor advertising display replaced with real property. Where to get 1040ez form   You can elect to treat an outdoor advertising display as real property. Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form   You can make this election only if you did not claim a section 179 deduction for the display. Where to get 1040ez form You cannot cancel this election unless you get the consent of the IRS. Where to get 1040ez form   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 get 1040ez form Substituting replacement property. Where to get 1040ez form   Once you designate certain property as replacement property on your tax return, you cannot substitute other qualified property. Where to get 1040ez form 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 get 1040ez form Controlling interest in a corporation. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form Basis adjustment to corporation's property. Where to get 1040ez form   The basis of property held by the corporation at the time you acquired control must be reduced by your postponed gain, if any. 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Where to get 1040ez form 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 get 1040ez form 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 get 1040ez form 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 get 1040ez form Extended replacement period for taxpayers affected by other federally declared disasters. Where to get 1040ez form    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 get 1040ez form For more information visit www. Where to get 1040ez form irs. Where to get 1040ez form gov/uac/Tax-Relief-in-Disaster-Situations. Where to get 1040ez form Weather-related sales of livestock in an area eligible for federal assistance. Where to get 1040ez form   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. 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Where to get 1040ez form You can find Notice 2013-62 on page 466 of Internal Revenue Bulletin 2013-45 at www. Where to get 1040ez form irs. Where to get 1040ez form gov/irb/2013-45_IRB/ar04. Where to get 1040ez form html. Where to get 1040ez form 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 get 1040ez form Determining when gain is realized. Where to get 1040ez form   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 get 1040ez form 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 get 1040ez form   This applies even if the amounts received are only partial or advance payments and the full award has not yet been determined. Where to get 1040ez form 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 get 1040ez form   For accrual basis taxpayers, gain (if any) accrues in the earlier year when either of the following occurs. Where to get 1040ez form All events have occurred that fix the right to the condemnation award and the amount can be determined with reasonable accuracy. Where to get 1040ez form All or part of the award is actually or constructively received. Where to get 1040ez form 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 get 1040ez form Replacement property bought before the condemnation. 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