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1040ez Filing Instructions

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1040ez Filing Instructions

1040ez filing instructions 6. 1040ez filing instructions   Basis of Assets Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Cost BasisReal Property Allocating the Basis Uniform Capitalization Rules Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostTaxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Received as a Gift Property Transferred From a Spouse Inherited Property Property Distributed From a Partnership or Corporation Introduction Your basis is the amount of your investment in property for tax purposes. 1040ez filing instructions Use basis to figure the gain or loss on the sale, exchange, or other disposition of property. 1040ez filing instructions Also use basis to figure depreciation, amortization, depletion, and casualty losses. 1040ez filing instructions If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. 1040ez filing instructions Only the basis allocated to the business or investment use of the property can be depreciated. 1040ez filing instructions Your original basis in property is adjusted (increased or decreased) by certain events. 1040ez filing instructions For example, if you make improvements to the property, increase your basis. 1040ez filing instructions If you take deductions for depreciation, or casualty losses, or claim certain credits, reduce your basis. 1040ez filing instructions Keep accurate records of all items that affect the basis of your assets. 1040ez filing instructions For information on keeping records, see chapter 1. 1040ez filing instructions Topics - This chapter discusses: Cost basis Adjusted basis Basis other than cost Useful Items - You may want to see: Publication 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property See chapter 16 for information about getting publications and forms. 1040ez filing instructions Cost Basis The basis of property you buy is usually its cost. 1040ez filing instructions Cost is the amount you pay in cash, debt obligations, other property, or services. 1040ez filing instructions Your cost includes amounts you pay for sales tax, freight, installation, and testing. 1040ez filing instructions The basis of real estate and business assets will include other items, discussed later. 1040ez filing instructions Basis generally does not include interest payments. 1040ez filing instructions However, see Carrying charges and Capitalized interest in chapter 4 of Publication 535. 1040ez filing instructions You also may have to capitalize (add to basis) certain other costs related to buying or producing property. 1040ez filing instructions Under the uniform capitalization rules, discussed later, you may have to capitalize direct costs and certain indirect costs of producing property. 1040ez filing instructions Loans with low or no interest. 1040ez filing instructions   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus the amount considered to be unstated interest. 1040ez filing instructions You generally have unstated interest if your interest rate is less than the applicable federal rate. 1040ez filing instructions See the discussion of unstated interest in Publication 537, Installment Sales. 1040ez filing instructions Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. 1040ez filing instructions If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. 1040ez filing instructions Some of these expenses are discussed next. 1040ez filing instructions Lump sum purchase. 1040ez filing instructions   If you buy improvements, such as buildings, and the land on which they stand for a lump sum, allocate your cost basis between the land and improvements. 1040ez filing instructions Allocate the cost basis according to the respective fair market values (FMVs) of the land and improvements at the time of purchase. 1040ez filing instructions Figure the basis of each asset by multiplying the lump sum by a fraction. 1040ez filing instructions The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. 1040ez filing instructions Fair market value (FMV). 1040ez filing instructions   FMV is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. 1040ez filing instructions Sales of similar property on or about the same date may help in figuring the FMV of the property. 1040ez filing instructions If you are not certain of the FMV of the land and improvements, you can allocate the basis according to their assessed values for real estate tax purposes. 1040ez filing instructions Real estate taxes. 1040ez filing instructions   If you pay the real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. 1040ez filing instructions   If you reimburse the seller for taxes the seller paid for you, you generally can deduct that amount as a tax expense. 1040ez filing instructions Whether or not you reimburse the seller, do not include that amount in the basis of your property. 1040ez filing instructions Settlement costs. 1040ez filing instructions   Your basis includes the settlement fees and closing costs for buying the property. 1040ez filing instructions See Publication 551 for a detailed list of items you can and cannot include in basis. 1040ez filing instructions   Do not include fees and costs for getting a loan on the property. 1040ez filing instructions Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. 1040ez filing instructions Points. 1040ez filing instructions   If you pay points to get a loan (including a mortgage, second mortgage, or line-of-credit), do not add the points to the basis of the related property. 1040ez filing instructions You may be able to deduct the points currently or over the term of the loan. 1040ez filing instructions For more information about deducting points, see Points in chapter 4 of Publication 535. 1040ez filing instructions Assumption of a mortgage. 1040ez filing instructions   If you buy property and assume (or buy the property subject to) an existing mortgage, your basis includes the amount you pay for the property plus the amount you owe on the mortgage. 1040ez filing instructions Example. 1040ez filing instructions If you buy a farm for $100,000 cash and assume a mortgage of $400,000, your basis is $500,000. 1040ez filing instructions Constructing assets. 1040ez filing instructions   If you build property or have assets built for you, your expenses for this construction are part of your basis. 1040ez filing instructions Some of these expenses include the following costs: Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. 1040ez filing instructions   In addition, if you use your own employees, farm materials, and equipment to build an asset, do not deduct the following expenses. 1040ez filing instructions You must capitalize them (include them in the asset's basis). 1040ez filing instructions Employee wages paid for the construction work, reduced by any employment credits allowed. 1040ez filing instructions Depreciation on equipment you own while it is used in the construction. 1040ez filing instructions Operating and maintenance costs for equipment used in the construction. 1040ez filing instructions The cost of business supplies and materials used in the construction. 1040ez filing instructions    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. 1040ez filing instructions Allocating the Basis In some instances, the rules for determining basis apply to a group of assets acquired in the same transaction or to property that consists of separate items. 1040ez filing instructions To determine the basis of these assets or separate items, there must be an allocation of basis. 1040ez filing instructions Group of assets acquired. 1040ez filing instructions   If you buy multiple assets for a lump sum, allocate the amount you pay among the assets. 1040ez filing instructions Use this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. 1040ez filing instructions You and the seller may agree in the sales contract to a specific allocation of the purchase price among the assets. 1040ez filing instructions If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. 1040ez filing instructions Farming business acquired. 1040ez filing instructions   If you buy a group of assets that makes up a farming business, there are special rules you must use to allocate the purchase price among the assets. 1040ez filing instructions Generally, reduce the purchase price by any cash received. 1040ez filing instructions Allocate the remaining purchase price to the other business assets received in proportion to (but not more than) their FMV and in a certain order. 1040ez filing instructions See Trade or Business Acquired under Allocating the Basis in Publication 551 for more information. 1040ez filing instructions Transplanted embryo. 1040ez filing instructions   If you buy a cow that is pregnant with a transplanted embryo, allocate to the basis of the cow the part of the purchase price equal to the FMV of the cow without the implant. 1040ez filing instructions Allocate the rest of the purchase price to the basis of the calf. 1040ez filing instructions Neither the cost allocated to the cow nor the cost allocated to the calf is deductible as a current business expense. 1040ez filing instructions Uniform Capitalization Rules Under the uniform capitalization rules, you must include certain direct and indirect costs in the basis of property you produce or in your inventory costs, rather than claim them as a current deduction. 1040ez filing instructions You recover these costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. 1040ez filing instructions Generally, you are subject to the uniform capitalization rules if you do any of the following: Produce real or tangible personal property, or Acquire property for resale. 1040ez filing instructions However, this rule does not apply to personal property if your average annual gross receipts for the 3-tax-year period ending with the year preceding the current tax year are $10 million or less. 1040ez filing instructions You produce property if you construct, build, install, manufacture, develop, improve, or create the property. 1040ez filing instructions You are not subject to the uniform capitalization rules if the property is produced for personal use. 1040ez filing instructions In a farming business, you produce property if you raise or grow any agricultural or horticultural commodity, including plants and animals. 1040ez filing instructions Plants. 1040ez filing instructions   A plant produced in a farming business includes the following items: A fruit, nut, or other crop-bearing tree; An ornamental tree; A vine; A bush; Sod; and The crop or yield of a plant that will have more than one crop or yield. 1040ez filing instructions Animals. 1040ez filing instructions   An animal produced in a farming business includes any stock, poultry or other bird, and fish or other sea life. 1040ez filing instructions The direct and indirect costs of producing plants or animals include preparatory costs and preproductive period costs. 1040ez filing instructions Preparatory costs include the acquisition costs of the seed, seedling, plant, or animal. 1040ez filing instructions For plants, preproductive period costs include the costs of items such as irrigation, pruning, frost protection, spraying, and harvesting. 1040ez filing instructions For animals, preproductive period costs include the costs of items such as feed, maintaining pasture or pen areas, breeding, veterinary services, and bedding. 1040ez filing instructions Exceptions. 1040ez filing instructions   In a farming business, the uniform capitalization rules do not apply to: Any animal, Any plant with a preproductive period of 2 years or less, or Any costs of replanting certain plants lost or damaged due to casualty. 1040ez filing instructions   Exceptions (1) and (2) do not apply to a corporation, partnership, or tax shelter required to use an accrual method of accounting. 1040ez filing instructions See Accrual Method Required under Accounting Methods in chapter 2. 1040ez filing instructions   In addition, you can elect not to use the uniform capitalization rules for plants with a preproductive period of more than 2 years. 1040ez filing instructions If you make this election, special rules apply. 1040ez filing instructions This election cannot be made by a corporation, partnership, or tax shelter required to use an accrual method of accounting. 1040ez filing instructions This election also does not apply to any costs incurred for the planting, cultivation, maintenance, or development of any citrus or almond grove (or any part thereof) within the first 4 years the trees were planted. 1040ez filing instructions    If you elect not to use the uniform capitalization rules, you must use the alternative depreciation system for all property used in any of your farming businesses and placed in service in any tax year during which the election is in effect. 1040ez filing instructions See chapter 7, for additional information on depreciation. 1040ez filing instructions Example. 1040ez filing instructions You grow trees that have a preproductive period of more than 2 years. 1040ez filing instructions The trees produce an annual crop. 1040ez filing instructions You are an individual and the uniform capitalization rules apply to your farming business. 1040ez filing instructions You must capitalize the direct costs and an allocable part of indirect costs incurred due to the production of the trees. 1040ez filing instructions You are not required to capitalize the costs of producing the annual crop because its preproductive period is 2 years or less. 1040ez filing instructions Preproductive period of more than 2 years. 1040ez filing instructions   The preproductive period of plants grown in commercial quantities in the United States is based on their nationwide weighted average preproductive period. 1040ez filing instructions Plants producing the crops or yields shown in Table 6-1 have a nationwide weighted average preproductive period of more than 2 years. 1040ez filing instructions Other plants (not shown in Table 6-1) may also have a nationwide weighted average preproductive period of more than 2 years. 1040ez filing instructions More information. 1040ez filing instructions   For more information on the uniform capitalization rules that apply to property produced in a farming business, see Regulations section 1. 1040ez filing instructions 263A-4. 1040ez filing instructions Table 6-1. 1040ez filing instructions Plants With a Preproductive Period of More Than 2 Years Plants producing the following crops or yields have a nationwide weighted average preproductive period of more than 2 years. 1040ez filing instructions Almonds Apples Apricots Avocados Blueberries Cherries Chestnuts Coffee beans Currants Dates Figs Grapefruit Grapes Guavas Kiwifruit Kumquats Lemons Limes Macadamia nuts Mangoes Nectarines Olives Oranges Peaches Pears Pecans Persimmons Pistachio nuts Plums Pomegranates Prunes Tangelos Tangerines Tangors Walnuts Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the cost basis or basis other than cost (discussed later) of the property. 1040ez filing instructions The adjustments to the original basis are increases or decreases to the cost basis or other basis which result in the adjusted basis of the property. 1040ez filing instructions Increases to Basis Increase the basis of any property by all items properly added to a capital account. 1040ez filing instructions These include the cost of any improvements having a useful life of more than 1 year. 1040ez filing instructions The following costs increase the basis of property. 1040ez filing instructions The cost of extending utility service lines to property. 1040ez filing instructions Legal fees, such as the cost of defending and perfecting title. 1040ez filing instructions Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements. 1040ez filing instructions Assessments for items such as paving roads and building ditches that increase the value of the property assessed. 1040ez filing instructions Do not deduct these expenses as taxes. 1040ez filing instructions However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements. 1040ez filing instructions If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. 1040ez filing instructions See chapter 7. 1040ez filing instructions Deducting vs. 1040ez filing instructions capitalizing costs. 1040ez filing instructions   Do not add to your basis costs you can deduct as current expenses. 1040ez filing instructions For example, amounts paid for incidental repairs or maintenance are deductible as business expenses and are not added to basis. 1040ez filing instructions However, you can elect either to deduct or to capitalize certain other costs. 1040ez filing instructions See chapter 7 in Publication 535. 1040ez filing instructions Decreases to Basis The following are some items that reduce the basis of property. 1040ez filing instructions Section 179 deduction. 1040ez filing instructions Deductions previously allowed or allowable for amortization, depreciation, and depletion. 1040ez filing instructions Alternative motor vehicle credit. 1040ez filing instructions See Form 8910. 1040ez filing instructions Alternative fuel vehicle refueling property credit. 1040ez filing instructions See Form 8911. 1040ez filing instructions Residential energy efficient property credits. 1040ez filing instructions See Form 5695. 1040ez filing instructions Investment credit (part or all) taken. 1040ez filing instructions Casualty and theft losses and insurance reimbursements. 1040ez filing instructions Payments you receive for granting an easement. 1040ez filing instructions Exclusion from income of subsidies for energy conservation measures. 1040ez filing instructions Certain canceled debt excluded from income. 1040ez filing instructions Rebates from a manufacturer or seller. 1040ez filing instructions Patronage dividends received from a cooperative association as a result of a purchase of property. 1040ez filing instructions See Patronage Dividends in chapter 3. 1040ez filing instructions Gas-guzzler tax. 1040ez filing instructions See Form 6197. 1040ez filing instructions Some of these items are discussed next. 1040ez filing instructions For a more detailed list of items that decrease basis, see section 1016 of the Internal Revenue Code and Publication 551. 1040ez filing instructions Depreciation and section 179 deduction. 1040ez filing instructions   The adjustments you must make to the basis of the property if you take the section 179 deduction or depreciate the property are explained next. 1040ez filing instructions For more information on these deductions, see chapter 7. 1040ez filing instructions Section 179 deduction. 1040ez filing instructions   If you take the section 179 expense deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. 1040ez filing instructions Depreciation. 1040ez filing instructions   Decrease the basis of property by the depreciation you deducted or could have deducted on your tax returns under the method of depreciation you chose. 1040ez filing instructions If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. 1040ez filing instructions If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. 1040ez filing instructions   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for any year. 1040ez filing instructions   See chapter 7 for information on figuring the depreciation you should have claimed. 1040ez filing instructions   In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation you must capitalize under the uniform capitalization rules. 1040ez filing instructions Casualty and theft losses. 1040ez filing instructions   If you have a casualty or theft loss, decrease the basis of the property by any insurance or other reimbursement. 1040ez filing instructions Also, decrease it by any deductible loss not covered by insurance. 1040ez filing instructions See chapter 11 for information about figuring your casualty or theft loss. 1040ez filing instructions   You must increase your basis in the property by the amount you spend on clean-up costs (such as debris removal) and repairs that restore the property to its pre-casualty condition. 1040ez filing instructions To make this determination, compare the repaired property to the property before the casualty. 1040ez filing instructions Easements. 1040ez filing instructions   The amount you receive for granting an easement is usually considered to be proceeds from the sale of an interest in the real property. 1040ez filing instructions It reduces the basis of the affected part of the property. 1040ez filing instructions If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. 1040ez filing instructions See Easements and rights-of-way in chapter 3. 1040ez filing instructions Exclusion from income of subsidies for energy conservation measures. 1040ez filing instructions   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. 1040ez filing instructions Reduce the basis of the property by the excluded amount. 1040ez filing instructions Canceled debt excluded from income. 1040ez filing instructions   If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. 1040ez filing instructions A debt includes any indebtedness for which you are liable or which attaches to property you hold. 1040ez filing instructions   You can exclude your canceled debt from income if the debt is any of the following. 1040ez filing instructions Debt canceled in a bankruptcy case or when you are insolvent. 1040ez filing instructions Qualified farm debt. 1040ez filing instructions Qualified real property business debt (provided you are not a C corporation). 1040ez filing instructions Qualified principal residence indebtedness. 1040ez filing instructions Discharge of certain indebtedness of a qualified individual because of Midwestern disasters. 1040ez filing instructions If you exclude canceled debt described in (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. 1040ez filing instructions If you exclude canceled debt described in (3), you must only reduce the basis of your depreciable property by the excluded amount. 1040ez filing instructions   For more information about canceled debt in a bankruptcy case, see Publication 908, Bankruptcy Tax Guide. 1040ez filing instructions For more information about insolvency and canceled debt that is qualified farm debt or qualified principal residence indebtedness, see chapter 3. 1040ez filing instructions For more information about qualified real property business debt, see Publication 334, Tax Guide for Small Business. 1040ez filing instructions For more information about canceled debt in Midwestern disaster areas, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. 1040ez filing instructions Basis Other Than Cost There are times when you cannot use cost as basis. 1040ez filing instructions In these situations, the fair market value or the adjusted basis of property may be used. 1040ez filing instructions Examples are discussed next. 1040ez filing instructions Property changed from personal to business or rental use. 1040ez filing instructions   When you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. 1040ez filing instructions An example of changing property from personal to business use would be changing the use of your pickup truck that you originally purchased for your personal use to use in your farming business. 1040ez filing instructions   The basis for depreciation is the lesser of: The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. 1040ez filing instructions   If you later sell or dispose of this property, the basis you use will depend on whether you are figuring a gain or loss. 1040ez filing instructions The basis for figuring a gain is your adjusted basis in the property when you sell the property. 1040ez filing instructions Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. 1040ez filing instructions Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . 1040ez filing instructions Property received for services. 1040ez filing instructions   If you receive property for services, include the property's FMV in income. 1040ez filing instructions The amount you include in income becomes your basis. 1040ez filing instructions If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. 1040ez filing instructions Example. 1040ez filing instructions George Smith is an accountant and also operates a farming business. 1040ez filing instructions George agreed to do some accounting work for his neighbor in exchange for a dairy cow. 1040ez filing instructions The accounting work and the cow are each worth $1,500. 1040ez filing instructions George must include $1,500 in income for his accounting services. 1040ez filing instructions George's basis in the cow is $1,500. 1040ez filing instructions Taxable Exchanges A taxable exchange is one in which the gain is taxable, or the loss is deductible. 1040ez filing instructions A taxable gain or deductible loss also is known as a recognized gain or loss. 1040ez filing instructions A taxable exchange occurs when you receive cash or get property that is not similar or related in use to the property exchanged. 1040ez filing instructions If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. 1040ez filing instructions Example. 1040ez filing instructions You trade a tract of farmland with an adjusted basis of $2,000 for a tractor that has an FMV of $6,000. 1040ez filing instructions You must report a taxable gain of $4,000 for the land. 1040ez filing instructions The tractor has a basis of $6,000. 1040ez filing instructions Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property you receive using the basis of the converted property. 1040ez filing instructions Similar or related property. 1040ez filing instructions   If the replacement property is similar or related in service or use to the converted property, the replacement property's basis is the same as the old property's basis on the date of the conversion. 1040ez filing instructions However, make the following adjustments. 1040ez filing instructions Decrease the basis by the following amounts. 1040ez filing instructions Any loss you recognize on the involuntary conversion. 1040ez filing instructions Any money you receive that you do not spend on similar property. 1040ez filing instructions Increase the basis by the following amounts. 1040ez filing instructions Any gain you recognize on the involuntary conversion. 1040ez filing instructions Any cost of acquiring the replacement property. 1040ez filing instructions Money or property not similar or related. 1040ez filing instructions   If you receive money or property not similar or related in service or use to the converted property and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the involuntary conversion. 1040ez filing instructions Allocating the basis. 1040ez filing instructions   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. 1040ez filing instructions Basis for depreciation. 1040ez filing instructions   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. 1040ez filing instructions For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. 1040ez filing instructions For more information about involuntary conversions, see chapter 11. 1040ez filing instructions Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. 1040ez filing instructions A nontaxable gain or loss also is known as an unrecognized gain or loss. 1040ez filing instructions If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. 1040ez filing instructions Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. 1040ez filing instructions For an exchange to qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. 1040ez filing instructions There must also be an exchange of like-kind property. 1040ez filing instructions For more information, see Like-Kind Exchanges in  chapter 8. 1040ez filing instructions The basis of the property you receive generally is the same as the adjusted basis of the property you gave up. 1040ez filing instructions Example 1. 1040ez filing instructions You traded a truck you used in your farming business for a new smaller truck to use in farming. 1040ez filing instructions The adjusted basis of the old truck was $10,000. 1040ez filing instructions The FMV of the new truck is $30,000. 1040ez filing instructions Because this is a nontaxable exchange, you do not recognize any gain, and your basis in the new truck is $10,000, the same as the adjusted basis of the truck you traded. 1040ez filing instructions Example 2. 1040ez filing instructions You trade a field cultivator (adjusted basis of $8,000) for a planter (FMV of $9,000). 1040ez filing instructions You use both the field cultivator and the planter in your farming business. 1040ez filing instructions The basis of the planter you receive is $8,000, the same as the field cultivator traded Exchange expenses. 1040ez filing instructions   Exchange expenses generally are the closing costs that you pay. 1040ez filing instructions They include such items as brokerage commissions, attorney fees, and deed preparation fees. 1040ez filing instructions Add them to the basis of the like-kind property you receive. 1040ez filing instructions Property plus cash. 1040ez filing instructions   If you trade property in a like-kind exchange and also pay money, the basis of the property you receive is the adjusted basis of the property you gave up plus the money you paid. 1040ez filing instructions Example. 1040ez filing instructions You trade in a truck (adjusted basis of $3,000) for another truck (FMV of $7,500) and pay $4,000. 1040ez filing instructions Your basis in the new truck is $7,000 (the $3,000 adjusted basis of the old truck plus the $4,000 cash). 1040ez filing instructions Special rules for related persons. 1040ez filing instructions   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. 1040ez filing instructions Each person must report any gain or loss not recognized on the original exchange unless the loss is not deductible under the related party rules. 1040ez filing instructions Each person reports it on the tax return filed for the year in which the later disposition occurred. 1040ez filing instructions If this rule applies, the basis of the property received in the original exchange will be its FMV. 1040ez filing instructions For more information, see chapter 8. 1040ez filing instructions Exchange of business property. 1040ez filing instructions   Exchanging the property of one business for the property of another business generally is a multiple property exchange. 1040ez filing instructions For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. 1040ez filing instructions Basis for depreciation. 1040ez filing instructions   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind transaction. 1040ez filing instructions For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. 1040ez filing instructions Partially Nontaxable Exchanges A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. 1040ez filing instructions The basis of the property you receive is the same as the adjusted basis of the property you gave up with the following adjustments. 1040ez filing instructions Decrease the basis by the following amounts. 1040ez filing instructions Any money you receive. 1040ez filing instructions Any loss you recognize on the exchange. 1040ez filing instructions Increase the basis by the following amounts. 1040ez filing instructions Any additional costs you incur. 1040ez filing instructions Any gain you recognize on the exchange. 1040ez filing instructions If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. 1040ez filing instructions Example 1. 1040ez filing instructions You trade farmland (basis of $100,000) for another tract of farmland (FMV of $110,000) and $30,000 cash. 1040ez filing instructions You realize a gain of $40,000. 1040ez filing instructions This is the FMV of the land received plus the cash minus the basis of the land you traded ($110,000 + $30,000 − $100,000). 1040ez filing instructions Include your gain in income (recognize gain) only to the extent of the cash received. 1040ez filing instructions Your basis in the land you received is figured as follows. 1040ez filing instructions Basis of land traded $100,000 Minus: Cash received (adjustment 1(a)) − 30,000   $70,000 Plus: Gain recognized (adjustment 2(b)) + 30,000 Basis of land received $100,000 Example 2. 1040ez filing instructions You trade a truck (adjusted basis of $22,750) for another truck (FMV of $20,000) and $10,000 cash. 1040ez filing instructions You realize a gain of $7,250. 1040ez filing instructions This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($20,000 + $10,000 − $22,750). 1040ez filing instructions You include all the gain in your income (recognize gain) because the gain is less than the cash you received. 1040ez filing instructions Your basis in the truck you received is figured as follows. 1040ez filing instructions Adjusted basis of truck traded $22,750 Minus: Cash received (adjustment 1(a)) −10,000   $12,750 Plus: Gain recognized (adjustment 2(b)) + 7,250 Basis of truck received $20,000 Allocation of basis. 1040ez filing instructions   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. 1040ez filing instructions The rest is the basis of the like-kind property. 1040ez filing instructions Example. 1040ez filing instructions You traded a tractor with an adjusted basis of $15,000 for another tractor that had an FMV of $12,500. 1040ez filing instructions You also received $1,000 cash and a truck that had an FMV of $3,000. 1040ez filing instructions The truck is unlike property. 1040ez filing instructions You realized a gain of $1,500. 1040ez filing instructions This is the FMV of the tractor received plus the FMV of the truck received plus the cash minus the adjusted basis of the tractor you traded ($12,500 + $3,000 + $1,000 − $15,000). 1040ez filing instructions You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. 1040ez filing instructions Your basis in the properties you received is figured as follows. 1040ez filing instructions Adjusted basis of old tractor $15,000 Minus: Cash received (adjustment 1(a)) − 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) + 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property—the truck ($3,000). 1040ez filing instructions This is the truck's FMV. 1040ez filing instructions The rest ($12,500) is the basis of the tractor. 1040ez filing instructions Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. 1040ez filing instructions Example. 1040ez filing instructions You used a tractor on your farm for 3 years. 1040ez filing instructions Its adjusted basis is $22,000 and its FMV is $40,000. 1040ez filing instructions You are interested in a new tractor, which sells for $60,000. 1040ez filing instructions Ordinarily, you would trade your old tractor for the new one and pay the dealer $20,000. 1040ez filing instructions Your basis for depreciating the new tractor would then be $42,000 ($20,000 + $22,000, the adjusted basis of your old tractor). 1040ez filing instructions However, you want a higher basis for depreciating the new tractor, so you agree to pay the dealer $60,000 for the new tractor if he will pay you $40,000 for your old tractor. 1040ez filing instructions Because the two transactions are dependent on each other, you are treated as having exchanged your old tractor for the new one and paid $20,000 ($60,000 − $40,000). 1040ez filing instructions Your basis for depreciating the new tractor is $42,000, the same as if you traded the old tractor. 1040ez filing instructions Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you. 1040ez filing instructions You also must know its FMV at the time it was given to you and any gift tax paid on it. 1040ez filing instructions FMV equal to or greater than donor's adjusted basis. 1040ez filing instructions   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis when you received the gift. 1040ez filing instructions Increase your basis by all or part of any gift tax paid, depending on the date of the gift. 1040ez filing instructions   Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. 1040ez filing instructions See Adjusted Basis , earlier. 1040ez filing instructions   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. 1040ez filing instructions Figure the increase by multiplying the gift tax paid by the following fraction. 1040ez filing instructions Net increase in value of the gift Amount of the gift   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. 1040ez filing instructions The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. 1040ez filing instructions Example. 1040ez filing instructions In 2013, you received a gift of property from your mother that had an FMV of $50,000. 1040ez filing instructions Her adjusted basis was $20,000. 1040ez filing instructions The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). 1040ez filing instructions She paid a gift tax of $7,320. 1040ez filing instructions Your basis, $26,076, is figured as follows. 1040ez filing instructions Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000 Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . 1040ez filing instructions 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. 1040ez filing instructions If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. 1040ez filing instructions However, your basis cannot exceed the FMV of the gift when it was given to you. 1040ez filing instructions FMV less than donor's adjusted basis. 1040ez filing instructions   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. 1040ez filing instructions Your basis for figuring gain is the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. 1040ez filing instructions Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. 1040ez filing instructions (See Adjusted Basis , earlier. 1040ez filing instructions )   If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither gain nor loss on the sale or other disposition of the property. 1040ez filing instructions Example. 1040ez filing instructions You received farmland as a gift from your parents when they retired from farming. 1040ez filing instructions At the time of the gift, the land had an FMV of $80,000. 1040ez filing instructions Your parents' adjusted basis was $100,000. 1040ez filing instructions After you received the land, no events occurred that would increase or decrease your basis. 1040ez filing instructions If you sell the land for $120,000, you will have a $20,000 gain because you must use the donor's adjusted basis at the time of the gift ($100,000) as your basis to figure a gain. 1040ez filing instructions If you sell the land for $70,000, you will have a $10,000 loss because you must use the FMV at the time of the gift ($80,000) as your basis to figure a loss. 1040ez filing instructions If the sales price is between $80,000 and $100,000, you have neither gain nor loss. 1040ez filing instructions For instance, if the sales price was $90,000 and you tried to figure a gain using the donor's adjusted basis ($100,000), you would get a $10,000 loss. 1040ez filing instructions If you then tried to figure a loss using the FMV ($80,000), you would get a $10,000 gain. 1040ez filing instructions Business property. 1040ez filing instructions   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. 1040ez filing instructions Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. 1040ez filing instructions The same rule applies to a transfer by your former spouse if the transfer is incident to divorce. 1040ez filing instructions However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed plus the liabilities to which the property is subject are more than the adjusted basis of the property transferred. 1040ez filing instructions The transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. 1040ez filing instructions For more information, see Property Settlements in Publication 504, Divorced or Separated Individuals. 1040ez filing instructions Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. 1040ez filing instructions If a federal estate return is filed, you can use its appraised value. 1040ez filing instructions The FMV on the alternate valuation date, if the personal representative for the estate elects to use alternate valuation. 1040ez filing instructions For information on the alternate valuation, see the Instructions for Form 706. 1040ez filing instructions The decedent's adjusted basis in land to the extent of the value that is excluded from the decedent's taxable estate as a qualified conservation easement. 1040ez filing instructions If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. 1040ez filing instructions Special-use valuation method. 1040ez filing instructions   Under certain conditions, when a person dies, the executor or personal representative of that person's estate may elect to value qualified real property at other than its FMV. 1040ez filing instructions If so, the executor or personal representative values the qualified real property based on its use as a farm or other closely held business. 1040ez filing instructions If the executor or personal representative elects this method of valuation for estate tax purposes, this value is the basis of the property for the qualified heirs. 1040ez filing instructions The qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. 1040ez filing instructions   If you are a qualified heir who received special-use valuation property, increase your basis by any gain recognized by the estate or trust because of post-death appreciation. 1040ez filing instructions Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or on the alternate valuation date. 1040ez filing instructions Figure all FMVs without regard to the special-use valuation. 1040ez filing instructions   You may be liable for an additional estate tax if, within 10 years after the death of the decedent, you transfer the property or the property stops being used as a farm. 1040ez filing instructions This tax does not apply if you dispose of the property in a like-kind exchange or in an involuntary conversion in which all of the proceeds are reinvested in qualified replacement property. 1040ez filing instructions The tax also does not apply if you transfer the property to a member of your family and certain requirements are met. 1040ez filing instructions   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. 1040ez filing instructions To increase your basis, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of payment of the additional estate tax. 1040ez filing instructions If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. 1040ez filing instructions The increase in your basis is considered to have occurred immediately before the event that resulted in the additional estate tax. 1040ez filing instructions   You make the election by filing, with Form 706-A, United States Additional Estate Tax Return, a statement that: Contains your (and the estate's) name, address, and taxpayer identification number; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which you are making the election; and Provides any additional information required by the Form 706-A instructions. 1040ez filing instructions   For more information, see Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Form 706-A, and the related instructions. 1040ez filing instructions Property inherited from a decedent who died in 2010. 1040ez filing instructions   If you inherited property from a decedent who died in 2010, different rules may apply. 1040ez filing instructions See Publication 4895, Tax Treatment of Property Acquired From a Decendent Dying in 2010, for details. 1040ez filing instructions Property Distributed From a Partnership or Corporation The following rules apply to determine a partner's basis and a shareholder's basis in property distributed respectively from a partnership to the partner with respect to the partner's interest in the partnership and from a corporation to the shareholder with respect to the shareholder's ownership of stock in the corporation. 1040ez filing instructions Partner's basis. 1040ez filing instructions   Unless there is a complete liquidation of a partner's interest, the basis of property (other than money) distributed by a partnership to the partner is its adjusted basis to the partnership immediately before the distribution. 1040ez filing instructions However, the basis of the property to the partner cannot be more than the adjusted basis of his or her interest in the partnership reduced by any money received in the same transaction. 1040ez filing instructions For more information, see Partner's Basis for Distributed Property in Publication 541, Partnerships. 1040ez filing instructions Shareholder's basis. 1040ez filing instructions   The basis of property distributed by a corporation to a shareholder is its fair market value. 1040ez filing instructions For more information about corporate distributions, see Distributions to Shareholders in Publication 542, Corporations. 1040ez filing instructions Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - International Individual Tax Statistics

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Here you will find links to the Statistics of Income studies relating to individual taxpayers in an international context. For each of these areas, there are text articles and/or statistical tables that include both recent and historical data.

International Business Tax Statistics

Overview of U.S. Taxes on International Income

Foreign Recipients of U.S. Income Provides data on income paid to nonresident aliens and the amount of tax withheld by the U.S. Government.  Data are taken from Form 1042-S.
Foreign Recipients of U.S. Partnership Income Provides data on the taxable income allocated by U.S. partnerships to foreign partners and the U.S. tax withheld on this income. This study is conducted anually. Data are taken from Forms 8805.
Foreign Trusts Provides data on foreign trusts that have U.S. "persons" as grantors, transferors, or beneficiaries.  This study is conducted every 4 years.  Data are taken from Forms 3520 and 3520-A.
Individual Foreign Earned Income/Foreign Tax Credit Provides data on foreign-source income, deductions, taxes, and foreign tax credit reported on individual income tax returns.  This study is conducted every 5 years.  Data are taken from Forms 2555 and 1116.
International Boycotts Provides data on the business operations of U.S. entities that participate in international economic boycotts not sanctioned by the U.S. Government.  Data are taken from Form 5713.
Nonresident Alien Estate Tax Returns Provides data on estate tax returns filed for non-U.S. citizens residing abroad who owned at least $60,000 worth of property within the U.S. at time of death. This study is conducted every 2 years.  Data are taken from Form 706-NA.
Page Last Reviewed or Updated: 10-Feb-2014

The 1040ez Filing Instructions

1040ez filing instructions Publication 4492-A - Main Contents Table of Contents DefinitionsKansas Disaster Area Storms and Tornadoes Casualty and Theft Losses Replacement Period for Nonrecognition of Gain Net Operating Losses IRAs and Other Retirement PlansDefinitions Taxation of Qualified Recovery Assistance Distributions Repayment of Qualified Recovery Assistance Distributions How To Report Qualified Recovery Assistance Distributions Repayment of Qualified Distributions for the Purchase or Construction of a Main Home Loans From Qualified Plans Additional Tax Relief for BusinessesSpecial Depreciation Allowance Increased Section 179 Deduction Employee Retention Credit Demolition and Clean-up Costs Request for Copy or Transcript of Tax Return How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). 1040ez filing instructions Definitions The following definitions are used throughout this publication. 1040ez filing instructions Kansas Disaster Area The Kansas disaster area covers the Kansas counties of Barton, Clay, Cloud, Comanche, Dickinson, Edwards, Ellsworth, Kiowa, Leavenworth, Lyon, McPherson, Osage, Osborne, Ottawa, Phillips, Pottawatomie, Pratt, Reno, Rice, Riley, Saline, Shawnee, Smith, and Stafford. 1040ez filing instructions Storms and Tornadoes The term “storms and tornadoes” as used in this publication, refers to the storms and tornadoes that began on May 4, 2007, and affected the Kansas disaster area (defined above). 1040ez filing instructions Casualty and Theft Losses The following paragraphs explain changes to casualty and theft losses that occurred in the Kansas disaster area. 1040ez filing instructions Limits on personal casualty or theft losses in the Kansas disaster area. 1040ez filing instructions   Losses of personal use property that arose in the Kansas disaster area after May 3, 2007, are not subject to the $100 or 10% of adjusted gross income limits. 1040ez filing instructions Qualifying losses include losses from casualties and thefts that arose in the disaster area and that were attributable to the storms and tornadoes. 1040ez filing instructions When to deduct the loss. 1040ez filing instructions   Casualty and theft losses are generally deductible only in the year the casualty occurred or the theft was discovered. 1040ez filing instructions However, the Kansas disaster area is a Presidentially declared disaster. 1040ez filing instructions Therefore, you could have elected to deduct losses from these storms and tornadoes on your tax return for the previous year. 1040ez filing instructions The deadline for making this election has expired. 1040ez filing instructions   The following special instructions explain how to complete your forms if you deduct the loss in 2007 or elected to deduct the loss in 2006. 1040ez filing instructions Special instructions for individuals who file Form 4684 to claim a Kansas disaster area casualty or theft loss for 2007 or are amending their 2006 return. 1040ez filing instructions   Individuals filing or amending their 2007 tax return or amending their 2006 tax return for casualty or theft losses that were attributable to the storms and tornadoes should enter “Kansas Disaster Area” at the top of Form 1040 or 1040X. 1040ez filing instructions They must also complete and attach the 2006 version of Form 4684 for either year and enter “Kansas Disaster Area” on the top and on the dotted line next to line 11 and enter -0- on line 11. 1040ez filing instructions Individuals filing or amending their 2007 tax return should cross out “2006” and enter “2007” at the top of Form 4684. 1040ez filing instructions They must also enter the amount from line 21 of that form on line 20 of Schedule A (Form 1040). 1040ez filing instructions Replacement Period for Nonrecognition of Gain Generally, an involuntary conversion occurs when property is damaged, destroyed, stolen, seized, requisitioned, or condemned, and you receive other property or money in payment, such as insurance or a condemnation award. 1040ez filing instructions Generally, you do not have to report a gain (if any) if you replace the property within 2 years (4 years for a main home in a Presidentially declared disaster area). 1040ez filing instructions However, for property that was involuntarily converted after May 3, 2007, as a result of the storms and tornadoes, a 5-year replacement period applies if substantially all of the use of the replacement property is in the Kansas disaster area. 1040ez filing instructions For more information, see the Instructions for Form 4684. 1040ez filing instructions Net Operating Losses Qualified recovery assistance loss. 1040ez filing instructions   Generally, you can carry a net operating loss (NOL) back to the 2 tax years before the NOL year. 1040ez filing instructions However, the portion of an NOL that is a qualified recovery assistance loss can be carried back to the 5 tax years before the NOL year. 1040ez filing instructions In addition, the 90% limit on the alternative tax NOL deduction (ATNOLD) does not apply to such portion of the ATNOLD. 1040ez filing instructions   A qualified recovery assistance loss is the smaller of: The excess of the NOL for the year over the specified liability loss for the year to which a 10-year carryback applies, or The total of the following deductions (to the extent they are taken into account in computing the NOL for the tax year): Qualified recovery assistance casualty loss (as defined below), Moving expenses paid or incurred after May 3, 2007, and before January 1, 2010, for the employment of an individual whose main home was in the Kansas disaster area before May 4, 2007, who was unable to remain in that home because of the storms and tornadoes, and whose main job location (after the move) is in the Kansas disaster area, Temporary housing expenses paid or incurred after May 3, 2007, and before January 1, 2010, to house employees of the taxpayer whose main job location is in the Kansas disaster area, Depreciation or amortization allowable for any qualified recovery assistance property (even if you elected not to claim the special recovery assistance depreciation allowance for such property) for the year placed in service, and Repair expenses (including expenses for the removal of debris) paid or incurred after May 3, 2007, and before January 1, 2010, for any damage from the storms and tornadoes to property located in the Kansas disaster area. 1040ez filing instructions Qualified recovery assistance casualty loss. 1040ez filing instructions   A qualified recovery assistance casualty loss is any deductible section 1231 loss of property located in the Kansas disaster area if the loss was caused by the storms and tornadoes. 1040ez filing instructions For this purpose, the amount of the loss is reduced by any recognized gain from an involuntary conversion caused by the storms and tornadoes of property located in the Kansas disaster area. 1040ez filing instructions Any such loss taken into account in figuring your qualified recovery assistance loss is not eligible for the election to be treated as having occurred in the previous tax year. 1040ez filing instructions Amended return. 1040ez filing instructions   If you have already filed your 2007 tax return and then carried your NOL back 2 years, you may file an amended return to carry back for 5 years your NOL attributable to a qualified recovery assistance loss. 1040ez filing instructions More information. 1040ez filing instructions    For more information on NOLs, see Publication 536. 1040ez filing instructions IRAs and Other Retirement Plans New rules provide for tax-favored withdrawals, repayments, and loans from certain retirement plans for individuals who suffered economic losses as a result of the storms and tornadoes. 1040ez filing instructions Definitions Qualified recovery assistance distribution. 1040ez filing instructions   Except as provided below, a qualified recovery assistance distribution is any distribution you received and designated as such from an eligible retirement plan if all of the following apply. 1040ez filing instructions The distribution was made after May 3, 2007, and before January 1, 2009. 1040ez filing instructions Your main home was located in the Kansas disaster area on May 4, 2007. 1040ez filing instructions You sustained an economic loss because of the storms and tornadoes. 1040ez filing instructions Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 1040ez filing instructions   If (1) through (3) above apply, you can generally designate any distribution (including periodic payments and required minimum distributions) from an eligible retirement plan as a qualified recovery assistance distribution, regardless of whether the distribution was made on account of the storms and tornadoes. 1040ez filing instructions Qualified recovery assistance distributions are permitted without regard to your need or the actual amount of your economic loss. 1040ez filing instructions   The total of your qualified recovery assistance distributions from all plans is limited to $100,000. 1040ez filing instructions If you have distributions in excess of $100,000 from more than one type of plan, such as a 401(k) plan and an IRA, you may allocate the $100,000 limit among the plans any way you choose. 1040ez filing instructions   A reduction or offset after May 3, 2007, of your account balance in an eligible retirement plan in order to repay a loan can also be designated as a qualified recovery assistance distribution. 1040ez filing instructions Eligible retirement plan. 1040ez filing instructions   An eligible retirement plan can be any of the following. 1040ez filing instructions A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan). 1040ez filing instructions A qualified annuity plan. 1040ez filing instructions A tax-sheltered annuity contract. 1040ez filing instructions A governmental section 457 deferred compensation plan. 1040ez filing instructions A traditional, SEP, SIMPLE, or Roth IRA. 1040ez filing instructions Main home. 1040ez filing instructions   Generally, your main home is the home where you live most of the time. 1040ez filing instructions A temporary absence due to special circumstances, such as illness, education, business, military service, evacuation, or vacation, will not change your main home. 1040ez filing instructions Taxation of Qualified Recovery Assistance Distributions Qualified recovery assistance distributions are included in income in equal amounts over three years. 1040ez filing instructions However, if you elect, you can include the entire distribution in your income in the year it was received. 1040ez filing instructions Qualified recovery assistance distributions are not subject to the additional 10% tax (or the additional 25% tax for certain distributions from SIMPLE IRAs) on early distributions from qualified retirement plans (including IRAs). 1040ez filing instructions However, any distributions you receive in excess of the $100,000 qualified recovery assistance distribution limit may be subject to the additional tax on early distributions. 1040ez filing instructions For more information, see How To Report Qualified Recovery Assistance Distributions on page 4. 1040ez filing instructions Repayment of Qualified Recovery Assistance Distributions If you choose, you generally can repay any portion of a qualified recovery assistance distribution that is eligible for tax-free rollover treatment to an eligible retirement plan. 1040ez filing instructions Also, you can repay a qualified recovery assistance distribution made on account of a hardship from a retirement plan. 1040ez filing instructions However, see Exceptions below for qualified recovery assistance distributions you cannot repay. 1040ez filing instructions You have three years from the day after the date you received the distribution to make a repayment. 1040ez filing instructions Amounts that are repaid are treated as a qualified rollover and are not included in income. 1040ez filing instructions Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. 1040ez filing instructions See Form 8915 for more information on how to report repayments. 1040ez filing instructions Exceptions. 1040ez filing instructions   You cannot repay the following types of distributions. 1040ez filing instructions Qualified recovery assistance distributions received as a beneficiary (other than a surviving spouse). 1040ez filing instructions Required minimum distributions. 1040ez filing instructions Periodic payments (other than from an IRA) that are for: A period of 10 years or more, Your life or life expectancy, or The joint lives or joint life expectancies of you and your beneficiary. 1040ez filing instructions How To Report Qualified Recovery Assistance Distributions You will need the following information to correctly report any 2007 or 2008 qualified recovery assistance distributions. 1040ez filing instructions 2007 Qualified Recovery Assistance Distributions If you received a distribution after May 3, 2007, from an eligible retirement plan, you may be able to designate it as a qualified recovery assistance distribution. 1040ez filing instructions See Qualified recovery assistance distribution on page 3. 1040ez filing instructions If you have not filed your 2007 income tax return, see Form 8915 and Form 8606 on this page to see how to complete these forms for any qualified recovery assistance distributions. 1040ez filing instructions Be sure to attach Form 8915 and Form 8606 (if required) to your 2007 income tax return. 1040ez filing instructions If you have filed your 2007 income tax return, you will need to amend your return to designate any distributions as qualified recovery assistance distributions. 1040ez filing instructions You can amend your 2007 income tax return by using Form 1040X. 1040ez filing instructions You will need to complete and attach Form 8915 and Form 8606 (if required) to your amended income tax return for any qualified recovery assistance distributions. 1040ez filing instructions See Form 8915 and Form 8606 on this page. 1040ez filing instructions Form 8915. 1040ez filing instructions   For a 2007 qualified recovery assistance distribution, complete the 2005 Form 8915, Qualified Hurricane Retirement Plan Distributions and Repayments. 1040ez filing instructions Before you complete the form, modify the form as follows. 1040ez filing instructions Cross out “Hurricane” in the title at the top of the form and enter “Recovery Assistance. 1040ez filing instructions ” To the right of the title, cross out “2005” and enter “2007. 1040ez filing instructions ” In Part I, at the top of column (a), cross out “2005” and enter “2007. 1040ez filing instructions ” In Part II, cross out “Hurricane” in the title and enter “Recovery Assistance. 1040ez filing instructions ” On lines 10 and 11, cross out “2005” and enter “2007. 1040ez filing instructions ” In Part III, cross out “Hurricane” in the title and enter “Recovery Assistance. 1040ez filing instructions ” On line 12, cross out “hurricane” and enter “recovery assistance. 1040ez filing instructions ” On lines 13 and 14, cross out “line 15b” and “line 25b. 1040ez filing instructions ” On lines 18 and 19, cross out “2005” and enter “2007. 1040ez filing instructions ”   You can now complete Form 8915. 1040ez filing instructions For the instructions, use the applicable dates and terms in this publication instead of those used in the 2005 Form 8915 instructions. 1040ez filing instructions See Example 1 on page 5 to see how to complete Form 8915. 1040ez filing instructions Form 8606. 1040ez filing instructions   For a 2007 qualified recovery assistance distribution, complete or amend the 2007 Form 8606, Nondeductible IRAs. 1040ez filing instructions Before you complete or amend the form, use the following additional instructions. 1040ez filing instructions Form 8606, Part I. 1040ez filing instructions    On line 6, subtract any repayments of qualified recovery assistance distributions from the amount you would otherwise enter on line 6. 1040ez filing instructions Do not enter an amount less than -0-. 1040ez filing instructions Include on line 7 the amount of any qualified recovery assistance distributions that you received even if they were later repaid. 1040ez filing instructions Complete line 15 as follows. 1040ez filing instructions If all of your distributions are qualified recovery assistance distributions, enter the amount from line 15 on Form 8915, line 13. 1040ez filing instructions Do not enter this amount on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. 1040ez filing instructions If you have qualified recovery assistance distributions as well as other distributions, you will need to multiply the amount on line 15 by a fraction. 1040ez filing instructions The numerator of the fraction is your total qualified recovery assistance distributions and the denominator is the amount from Form 8606, line 7. 1040ez filing instructions Enter the result in the white space in the bottom margin of the form under line 15. 1040ez filing instructions To the left of this amount, enter “Qualified recovery assistance distributions” and also enter this amount on Form 8915, line 13. 1040ez filing instructions Then, subtract this amount from the amount on line 15 and include the result on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. 1040ez filing instructions Also, enter this amount on Form 8606 under your qualified recovery assistance distributions. 1040ez filing instructions To the left of this amount, enter “Other distributions. 1040ez filing instructions ” Form 8606, Part III. 1040ez filing instructions    Include on line 19 the amount of any qualified recovery assistance distributions that you received even if they were later repaid. 1040ez filing instructions Complete line 25 as follows. 1040ez filing instructions If all of your distributions are qualified recovery assistance distributions, enter the amount from line 25 on Form 8915, line 14. 1040ez filing instructions Do not enter this amount on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. 1040ez filing instructions If you have qualified recovery assistance distributions as well as other distributions, you will need to multiply the amount on line 25 by a fraction. 1040ez filing instructions The numerator of the fraction is your total qualified recovery assistance distributions and the denominator is the amount from Form 8606, line 21. 1040ez filing instructions Enter the result in the white space in the bottom margin of the form under line 25. 1040ez filing instructions To the left of this amount, enter “Qualified recovery assistance distributions” and also enter this amount on Form 8915, line 14. 1040ez filing instructions Then, subtract this amount from the amount on line 25 and include the result on Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. 1040ez filing instructions Also, enter this amount on Form 8606 under your qualified recovery assistance distributions. 1040ez filing instructions To the left of this amount, enter “Other distributions. 1040ez filing instructions ” Example 1. 1040ez filing instructions   On May 4, 2007, Margaret Maple lost her home due to the tornadoes on that day. 1040ez filing instructions Her home was located in the Kansas disaster area. 1040ez filing instructions On July 31, 2007, Margaret took out $30,000 from her 401(k) plan and an additional $15,000 from her traditional IRA in order to rebuild her home. 1040ez filing instructions Margaret has not filed her 2007 return yet but would like to designate the $45,000 in distributions from her retirement plans as qualified recovery assistance distributions. 1040ez filing instructions Since the distributions occurred in 2007, Margaret would modify and complete the 2005 Form 8915 as discussed on page 4. 1040ez filing instructions Margaret would also need to complete Form 8606 since her distribution from her traditional IRA has nondeductible contributions from previous years. 1040ez filing instructions   In addition to the $15,000 qualified recovery assistance distribution on July 31, 2007, Margaret received an additional distribution of $15,000 from her traditional IRA on October 31, 2007, that she did not designate as a qualified recovery assistance distribution. 1040ez filing instructions Because Margaret has a qualified recovery assistance distribution as well as a distribution not so designated, Margaret must allocate the amount on Form 8606, line 15 to both distributions, as discussed earlier. 1040ez filing instructions Margaret's qualified recovery assistance distributions are $13,125 ($26,250 × $15,000 ÷ $30,000). 1040ez filing instructions Margaret enters in the white space in the bottom margin of Form 8606, the following, “Qualified recovery assistance distributions $13,125. 1040ez filing instructions ” This amount is then reported on Form 8915, line 13. 1040ez filing instructions Below this entry, Margaret enters “Other distributions $13,125,” and includes this amount on Form 1040, line 15b. 1040ez filing instructions See Margaret's modified 2005 Form 8915 and 2007 Form 8606 shown on pages 6 through 8. 1040ez filing instructions This image is too large to be displayed in the current screen. 1040ez filing instructions Please click the link to view the image. 1040ez filing instructions 2005 Form 8915, page 1, Illustrated Example 1. 1040ez filing instructions This image is too large to be displayed in the current screen. 1040ez filing instructions Please click the link to view the image. 1040ez filing instructions 2005 Form 8915, page 2, Illustrated Example 1 This image is too large to be displayed in the current screen. 1040ez filing instructions Please click the link to view the image. 1040ez filing instructions Form 8606, page 1, Illustrated Example 1 2008 Qualified Recovery Assistance Distributions If you received a distribution in 2008 from an eligible retirement plan, you may be able to designate it as a qualified recovery assistance distribution. 1040ez filing instructions See Qualified recovery assistance distribution on page 3. 1040ez filing instructions You will need to complete and attach Form 8915 and Form 8606 (if required) to your 2008 income tax return for any qualified recovery assistance distributions. 1040ez filing instructions See Form 8915 and Form 8606 below. 1040ez filing instructions Form 8915. 1040ez filing instructions   For a 2008 qualified recovery assistance distribution, you will need to complete the 2006 Form 8915. 1040ez filing instructions Before you complete the form, modify the form as follows. 1040ez filing instructions Cross out “Hurricane” in the title at the top of the form and enter “Recovery Assistance. 1040ez filing instructions ” To the right of the title, cross out “2006” and enter “2008. 1040ez filing instructions ” In the first sentence of Part I and on line 1, cross out “hurricane” and enter “recovery assistance,” cross out “2006” and enter “2008,” and cross out “2005” and enter “2007. 1040ez filing instructions ” At the top of column (a) cross out “2006” and enter “2008. 1040ez filing instructions ” In Part II, cross out “Hurricane” in the title and enter “Recovery Assistance. 1040ez filing instructions ” On lines 12, 14, and 15, cross out “2005” and enter “2007. 1040ez filing instructions ” On lines 17 and 19, cross out “2006” and enter “2008. 1040ez filing instructions ” In Part III, cross out “Hurricane” in the title and enter “Recovery Assistance. 1040ez filing instructions ” On line 21, cross out “hurricane” and enter “recovery assistance. 1040ez filing instructions ” On lines 22 and 23, cross out “line 15b” and “line 25b. 1040ez filing instructions ” On lines 27, 29, and 30, cross out “2005” and enter “2007. 1040ez filing instructions ” On lines 32 and 34, cross out “2006” and enter “2008. 1040ez filing instructions ”   You can now complete Form 8915. 1040ez filing instructions For the instructions, use the applicable dates and terms in this publication instead of those used in the 2006 Form 8915 instructions. 1040ez filing instructions Example 2. 1040ez filing instructions   On June 15, 2008, Margaret Maple, from the previous example, took out $15,000 from her 401(k) plan that she is designating as a qualified recovery assistance distribution. 1040ez filing instructions Since the distribution occurred in 2008, Margaret would modify and complete the 2006 Form 8915 as discussed above. 1040ez filing instructions Also, since Margaret is including her 2007 recovery assistance distributions in income over 3 years, she reports the applicable amount of those distributions on the modified 2006 Form 8915. 1040ez filing instructions See Margaret's modified 2006 Form 8915 shown on pages 9 and 10. 1040ez filing instructions This image is too large to be displayed in the current screen. 1040ez filing instructions Please click the link to view the image. 1040ez filing instructions 2006 Form 8915, page 1, Illustrated Example 2 This image is too large to be displayed in the current screen. 1040ez filing instructions Please click the link to view the image. 1040ez filing instructions 2006 Form 8915, page 2, Illustrated Example 2 Form 8606. 1040ez filing instructions   For a 2008 qualified recovery assistance distribution, you may need to complete the 2008 Form 8606. 1040ez filing instructions Before you complete Form 8606, use the additional instructions outlined in Form 8606, Part I, on page 4 and Form 8606, Part III, on this page. 1040ez filing instructions Repayment of Qualified Distributions for the Purchase or Construction of a Main Home If you received a qualified distribution to purchase or construct a main home in the Kansas disaster area, you can repay part or all of that distribution after May 3, 2007, but no later than October 22, 2008, to an eligible retirement plan. 1040ez filing instructions For this purpose, an eligible retirement plan is any plan, annuity, or IRA to which a qualified rollover can be made. 1040ez filing instructions To be a qualified distribution, the distribution must meet all of the following requirements. 1040ez filing instructions The distribution is a hardship distribution from a 401(k) plan, a hardship distribution from a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA. 1040ez filing instructions The distribution was received after November 4, 2006, and before May 5, 2007. 1040ez filing instructions The distribution was to be used to purchase or construct a main home in the Kansas disaster area that was not purchased or constructed because of the storms and tornadoes. 1040ez filing instructions Amounts that are repaid before October 23, 2008, are treated as a qualified rollover and are not included in income. 1040ez filing instructions Also, for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover. 1040ez filing instructions A qualified distribution not repaid before October 23, 2008, may be taxable for 2006 or 2007 and subject to the additional 10% tax (or the additional 25% tax for certain SIMPLE IRAs) on early distributions. 1040ez filing instructions You must file Form 8915 if you received a qualified distribution that you repaid, in whole or in part, before October 23, 2008. 1040ez filing instructions See How to report, next, for information on completing Form 8915. 1040ez filing instructions How to report. 1040ez filing instructions   To report the repayment of a qualified distribution for the purchase or construction of a main home that was not purchased or constructed due to the storms and tornadoes, use the 2005 Form 8915, Part IV. 1040ez filing instructions Before you complete the form, modify the form as follows. 1040ez filing instructions Cross out “Hurricane” in the title at the top of the form and enter “Recovery Assistance. 1040ez filing instructions ” To the right of the title, cross out “2005” and enter “2006” or “2007. 1040ez filing instructions ” Enter only the year the distribution was received. 1040ez filing instructions Cross out “Hurricane” in the title of Part IV and enter “Kansas. 1040ez filing instructions ” In the sentence below the title of Part IV, cross out “March 1, 2006” and enter “October 23, 2008. 1040ez filing instructions ” On line 24, cross out “March 1, 2006” and enter “October 23, 2008. 1040ez filing instructions ” You can now complete Part IV of Form 8915. 1040ez filing instructions Use the applicable dates and terms in this publication instead of those used in the 2005 Form 8915 instructions to complete the form. 1040ez filing instructions Attach Form 8915 to your original or amended return for the year of the distribution. 1040ez filing instructions Amended return. 1040ez filing instructions   If you repay part or all of a qualified distribution by October 22, 2008, you will need to file an amended return for that part of a distribution that was previously included in income. 1040ez filing instructions Loans From Qualified Plans The following benefits are available to qualified individuals. 1040ez filing instructions Increases to the limits for distributions treated as loans from employer plans. 1040ez filing instructions A 1-year suspension for payments due on plan loans. 1040ez filing instructions Qualified individual. 1040ez filing instructions   You are a qualified individual if your main home on May 4, 2007, was located in the Kansas disaster area and you had an economic loss because of the storms and tornadoes. 1040ez filing instructions Examples of an economic loss include, but are not limited to: Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause; Loss related to displacement from your home; or Loss of livelihood due to temporary or permanent layoffs. 1040ez filing instructions Limits on plan loans. 1040ez filing instructions   The $50,000 limit for distributions treated as plan loans is increased to $100,000. 1040ez filing instructions In addition, the limit based on 50% of your vested accrued benefit is increased to 100% of that benefit. 1040ez filing instructions If your home was located in the Kansas disaster area, the higher limits apply only to loans received during the period beginning on May 22, 2008, and ending on December 31, 2008. 1040ez filing instructions One-year suspension of loan payments. 1040ez filing instructions   Payments on plan loans outstanding after May 3, 2007, may be suspended for 1 year by the plan administrator. 1040ez filing instructions To qualify for the suspension, the due date for any loan payment must occur during the period beginning on May 4, 2007, and ending on December 31, 2008. 1040ez filing instructions Additional Tax Relief for Businesses Special Depreciation Allowance You can take a special depreciation allowance for qualified recovery assistance property (as defined below) you acquire after May 4, 2007. 1040ez filing instructions The special allowance is an additional deduction of 50% of the property's depreciable basis (after any section 179 deduction and before figuring your regular depreciation deduction). 1040ez filing instructions The special allowance applies only for the first year the property is placed in service. 1040ez filing instructions The special allowance is deductible for both the regular tax and the alternative minimum tax (AMT). 1040ez filing instructions There is no AMT adjustment required for any depreciation figured on the remaining basis of the property. 1040ez filing instructions You can elect not to deduct the special allowance for qualified recovery assistance property. 1040ez filing instructions If you make this election for any property, it applies to all property in the same class placed in service during the year. 1040ez filing instructions Qualified recovery assistance property. 1040ez filing instructions   Property that qualifies for the special allowance for qualified recovery assistance property includes the following. 1040ez filing instructions Tangible property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less. 1040ez filing instructions Water utility property. 1040ez filing instructions Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. 1040ez filing instructions (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. 1040ez filing instructions ) Qualified leasehold improvement property. 1040ez filing instructions Nonresidential real property and residential rental property. 1040ez filing instructions   For more information on this property, see Publication 946. 1040ez filing instructions Other tests to be met. 1040ez filing instructions   To be qualified recovery assistance property, the property must also meet all of the following tests. 1040ez filing instructions You must have acquired the property, by purchase, after May 4, 2007, but only if no binding written contract for the acquisition was in effect before May 5, 2007. 1040ez filing instructions The property must be placed in service before 2009 (2010 in the case of nonresidential real property and residential rental property). 1040ez filing instructions Substantially all of the use of the property must be in the Kansas disaster area and in the active conduct of your trade or business in the Kansas disaster area. 1040ez filing instructions The original use of the property in the Kansas disaster area must begin with you after May 4, 2007. 1040ez filing instructions Used property can be qualified recovery assistance property if it has not previously been used within the Kansas disaster area. 1040ez filing instructions Also, additional capital expenditures you incurred after May 4, 2007, to recondition or rebuild your property meet the original use test if the original use of the property in the Kansas disaster area began with you. 1040ez filing instructions Excepted property. 1040ez filing instructions   Qualified recovery assistance property does not include any of the following. 1040ez filing instructions Property required to be depreciated using the Alternative Depreciation System (ADS). 1040ez filing instructions Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103. 1040ez filing instructions Property for which you are claiming a commercial revitalization deduction. 1040ez filing instructions Property in the same class as that for which you elected not to claim the special allowance for qualified recovery assistance property. 1040ez filing instructions Property placed in service and disposed of in the same tax year. 1040ez filing instructions Property converted from business use to personal use in the same tax year it is placed in service. 1040ez filing instructions Property converted from personal use to business use in the same or later tax year may be qualified recovery assistance property. 1040ez filing instructions Recapture of special allowance. 1040ez filing instructions   If, in any year after the year you claim the special allowance, the property ceases to be qualified recovery assistance property, you may have to recapture as ordinary income any excess benefit you received from claiming the special allowance. 1040ez filing instructions Amended return. 1040ez filing instructions   If you have already filed your tax return, you may have to amend that return to claim any special allowance. 1040ez filing instructions Additional guidance will be published on how you may claim, or elect not to claim, the special allowance if you have already filed your tax return. 1040ez filing instructions Increased Section 179 Deduction An increased section 179 deduction is allowable for qualified section 179 recovery assistance property (as defined later) placed in service in the Kansas disaster area. 1040ez filing instructions Increased dollar limit. 1040ez filing instructions   The limit on the section 179 deduction ($125,000 for 2007, $250,000 for 2008) is increased by the smaller of: $100,000, or The cost of qualified section 179 recovery assistance property placed in service during the year (including such property placed in service by your spouse, even if you are filing a separate return). 1040ez filing instructions   The amount for which you can make the election is reduced if the cost of all section 179 property you placed in service during the year exceeds $500,000 for 2007 and $800,000 for 2008 increased by the smaller of: $600,000, or The cost of qualified section 179 recovery assistance property placed in service during the year. 1040ez filing instructions Qualified section 179 recovery assistance property. 1040ez filing instructions   Qualified section 179 recovery assistance property is section 179 property that is qualified recovery assistance property (explained earlier under Special Depreciation Allowance). 1040ez filing instructions Section 179 property does not include nonresidential real property or residential rental property. 1040ez filing instructions For more information, including the requirements that must be met for property to qualify for the section 179 deduction, see chapter 2 of Publication 946. 1040ez filing instructions Amended return. 1040ez filing instructions   If you have already filed your tax return, you may have to amend that return for any increased section 179 deduction. 1040ez filing instructions Employee Retention Credit An eligible employer who conducted an active trade or business in the Kansas disaster area can claim the employee retention credit. 1040ez filing instructions The credit is 40% of qualified wages for each eligible employee (up to a maximum of $6,000 in qualified wages per employee). 1040ez filing instructions Generally, you must reduce your deduction for salaries and wages by the amount of this credit (before the tax liability limit). 1040ez filing instructions Use Form 5884-A to claim the credit. 1040ez filing instructions See Form 5884-A later. 1040ez filing instructions The following rules and definitions apply. 1040ez filing instructions Employers affected by the storms and tornadoes. 1040ez filing instructions   The following definitions apply to employers affected by the storms and tornadoes. 1040ez filing instructions Eligible employer. 1040ez filing instructions   For this purpose, an eligible employer is any employer who meets all of the following. 1040ez filing instructions Employed an average of not more than 200 employees on business days during the tax year before May 4, 2007. 1040ez filing instructions Conducted an active trade or business on May 4, 2007, in the Kansas disaster area. 1040ez filing instructions Whose trade or business was inoperable on any day after May 4, 2007, and before January 1, 2008, because of damage caused by the storms and tornadoes. 1040ez filing instructions Eligible employee. 1040ez filing instructions   For this purpose, an eligible employee is an employee whose principal place of employment on May 4, 2007, with the eligible employer was in the Kansas disaster area. 1040ez filing instructions An employee is not an eligible employee for purposes of the storms and tornadoes if the employee is treated as an eligible employee for the work opportunity credit. 1040ez filing instructions Qualified wages. 1040ez filing instructions   Qualified wages are wages you paid or incurred before January 1, 2008, (up to $6,000 per employee) for an eligible employee beginning on the date your trade or business first became inoperable at the employee's principal place of employment immediately before May 4, 2007, and ending on the date your trade or business resumed significant operations at that place. 1040ez filing instructions In addition, the wages must have been paid or incurred after May 4, 2007. 1040ez filing instructions    This includes wages paid even if the employee performed no services, performed services at a place of employment other than the principal place of employment, or performed services at the principal place of employment before significant operations resumed. 1040ez filing instructions    Wages qualifying for the credit generally have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA). 1040ez filing instructions Qualified wages also include amounts you paid for medical or hospitalization expenses in connection with sickness or accident disability. 1040ez filing instructions Qualified wages for any employee must be reduced by the amount of any work supplementation payment you received under the Social Security Act. 1040ez filing instructions   For agricultural employees, if the work performed by any employee during more than half of any pay period qualified under FUTA as agricultural labor, that employee's wages subject to social security and Medicare taxes are qualified wages. 1040ez filing instructions For a special rule that applies to railroad employees, see section 51(h)(1)(B). 1040ez filing instructions   Qualified wages do not include the following. 1040ez filing instructions Wages paid to your dependent or a related individual. 1040ez filing instructions See section 51(i)(1). 1040ez filing instructions Wages paid to any employee during the period for which you received payment for the employee from a federally funded on-the-job training program. 1040ez filing instructions Wages for services of replacement workers during a strike or lockout. 1040ez filing instructions Form 5884-A. 1040ez filing instructions   Use Section A of Form 5884-A (Rev. 1040ez filing instructions October 2006) to claim the employer retention credit. 1040ez filing instructions Section B does not apply to the Kansas disaster area. 1040ez filing instructions Before you complete the form, modify the form as follows. 1040ez filing instructions Cross out “Hurricane Katrina, Rita, or Wilma” in the title at the top of the form and enter “Kansas Storms and Tornadoes. 1040ez filing instructions ” On line 1a cross out “Hurricane Katrina” and enter “Kansas Storms and Tornadoes,” cross out “August 28, 2005,” and enter “May 4, 2007,” and cross out “January 1, 2006,” and enter “January 1, 2008. 1040ez filing instructions ”   Complete the form as instructed. 1040ez filing instructions Lines 1b and 1c do not apply. 1040ez filing instructions Include the amount from Form 5884-A, line 4 in the amount entered on Form 3800, line 1x. 1040ez filing instructions On the dotted line to the left of line 1x, enter “5884-A. 1040ez filing instructions ” Use the applicable dates and terms in this publication instead of those used in the Form 5884-A instructions. 1040ez filing instructions Amended return. 1040ez filing instructions   You may have to amend a previously filed return to claim the employee retention credit. 1040ez filing instructions Demolition and Clean-up Costs You can elect to deduct 50% of any qualified recovery assistance clean-up costs for the tax year in which the costs are paid or incurred, instead of capitalizing them. 1040ez filing instructions Qualified recovery assistance clean-up costs are any amounts paid or incurred after May 3, 2007, and before January 1, 2010, for the removal of debris from, or the demolition of structures on, real property located in the Kansas disaster area that is: Held by you for use in a trade or business or for the production of income, or Inventory or other property held primarily for sale to customers in the ordinary course of your trade or business. 1040ez filing instructions Amended return. 1040ez filing instructions   If you have already filed your tax return, you may have to amend that return to claim the 50% of any qualified recovery assistance clean-up costs. 1040ez filing instructions Request for Copy or Transcript of Tax Return Request for copy of tax return. 1040ez filing instructions   You can use Form 4506 to order a copy of your tax return. 1040ez filing instructions Generally, there is a $39. 1040ez filing instructions 00 fee (subject to change) for requesting each copy of a tax return. 1040ez filing instructions If your main home, principal place of business, or tax records are located in a Presidentially declared disaster area, the fee will be waived if the assigned disaster designation (for example, “Kansas Storms”) is written in red across the top of the form when filed. 1040ez filing instructions Request for transcript of tax return. 1040ez filing instructions   You can use Form 4506-T to order a free transcript of your tax return. 1040ez filing instructions A transcript provides most of the line entries from a tax return and usually contains the information that a third party requires. 1040ez filing instructions You can also call 1-800-829-1040 to order a transcript. 1040ez filing instructions How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. 1040ez filing instructions By selecting the method that is best for you, you will have quick and easy access to tax help. 1040ez filing instructions Contacting your Taxpayer Advocate. 1040ez filing instructions   The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. 1040ez filing instructions   You can contact the TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059 to see if you are eligible for assistance. 1040ez filing instructions You can also call or write to your local taxpayer advocate, whose phone number and address are listed in your local telephone directory and in Publication 1546, Taxpayer Advocate Service — Your Voice at the IRS. 1040ez filing instructions You can file Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), or ask an IRS employee to complete it on your behalf. 1040ez filing instructions For more information, go to www. 1040ez filing instructions irs. 1040ez filing instructions gov/advocate. 1040ez filing instructions Low Income Taxpayer Clinics (LITCs). 1040ez filing instructions   LITCs are independent organizations that provide low income taxpayers with representation in federal tax controversies with the IRS for free or for a nominal charge. 1040ez filing instructions The clinics also provide tax education and outreach for taxpayers who speak English as a second language. 1040ez filing instructions Publication 4134, Low Income Taxpayer Clinic List, provides information on clinics in your area. 1040ez filing instructions It is available at www. 1040ez filing instructions irs. 1040ez filing instructions gov or your local IRS office. 1040ez filing instructions Free tax services. 1040ez filing instructions   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. 1040ez filing instructions It contains lists of free tax information sources, including publications, services, and free tax education and assistance programs. 1040ez filing instructions It also has an index of over 100 TeleTax topics, (recorded tax information) you can listen to on your telephone. 1040ez filing instructions   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. 1040ez filing instructions Free help with your return. 1040ez filing instructions   Free help in preparing your return is available nationwide from IRS-trained volunteers. 1040ez filing instructions The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers and Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. 1040ez filing instructions Many VITA sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. 1040ez filing instructions To find a site near you, call 1-800-829-1040. 1040ez filing instructions Or to find the nearest AARP TaxAide site, visit AARP's website at www. 1040ez filing instructions aarp. 1040ez filing instructions org/taxaide or call 1-888-227-7669. 1040ez filing instructions For more information on these programs, go to www. 1040ez filing instructions irs. 1040ez filing instructions gov and enter keyword “VITA” in the upper right-hand corner. 1040ez filing instructions Internet. 1040ez filing instructions You can access the IRS website at www. 1040ez filing instructions irs. 1040ez filing instructions gov 24 hours a day, 7 days a week to: E-file your return. 1040ez filing instructions Find out about commercial tax preparation and e-file services available free to eligible taxpayers. 1040ez filing instructions Check the status of your refund. 1040ez filing instructions Click on Where's My Refund. 1040ez filing instructions Wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). 1040ez filing instructions Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. 1040ez filing instructions Download forms, instructions, and publications. 1040ez filing instructions Order IRS products online. 1040ez filing instructions Research your tax questions online. 1040ez filing instructions Search publications online by topic or keyword. 1040ez filing instructions View Internal Revenue Bulletins (IRBs) published in the last few years. 1040ez filing instructions Figure your withholding allowances using the withholding calculator online at www. 1040ez filing instructions irs. 1040ez filing instructions gov/individuals. 1040ez filing instructions Determine if Form 6251 must be filed using our Alternative Minimum Tax (AMT) Assistant. 1040ez filing instructions Sign up to receive local and national tax news by email. 1040ez filing instructions Get information on starting and operating a small business. 1040ez filing instructions Phone. 1040ez filing instructions Many services are available by phone. 1040ez filing instructions Ordering forms, instructions, and publications. 1040ez filing instructions Call 1-800-829-3676 to order current-year forms, instructions, and publications, and prior-year forms and instructions. 1040ez filing instructions You should receive your order within 10 days. 1040ez filing instructions Asking tax questions. 1040ez filing instructions Call the IRS with your tax questions at 1-800-829-1040. 1040ez filing instructions Solving problems. 1040ez filing instructions You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. 1040ez filing instructions An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. 1040ez filing instructions Call your local Taxpayer Assistance Center for an appointment. 1040ez filing instructions To find the number, go to www. 1040ez filing instructions irs. 1040ez filing instructions gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 1040ez filing instructions TTY/TDD equipment. 1040ez filing instructions If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. 1040ez filing instructions TeleTax topics. 1040ez filing instructions Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. 1040ez filing instructions Refund information. 1040ez filing instructions To check the status of your refund, call 1-800-829-4477 and press 1 for automated refund information or call 1-800-829-1954. 1040ez filing instructions Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). 1040ez filing instructions Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. 1040ez filing instructions Evaluating the quality of our telephone services. 1040ez filing instructions To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. 1040ez filing instructions One method is for a second IRS representative to listen in on or record random telephone calls. 1040ez filing instructions Another is to ask some callers to complete a short survey at the end of the call. 1040ez filing instructions Walk-in. 1040ez filing instructions Many products and services are available on a walk-in basis. 1040ez filing instructions Products. 1040ez filing instructions You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. 1040ez filing instructions Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. 1040ez filing instructions Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. 1040ez filing instructions Services. 1040ez filing instructions You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. 1040ez filing instructions An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. 1040ez filing instructions If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you're more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. 1040ez filing instructions No appointment is necessary — just walk in. 1040ez filing instructions If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. 1040ez filing instructions A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. 1040ez filing instructions If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment may be requested. 1040ez filing instructions All other issues will be handled without an appointment. 1040ez filing instructions To find the number of your local office, go to www. 1040ez filing instructions irs. 1040ez filing instructions gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. 1040ez filing instructions Mail. 1040ez filing instructions You can send your order for forms, instructions, and publications to the address below. 1040ez filing instructions You should receive a response within 10 days after your request is received. 1040ez filing instructions Internal Revenue Service 1201 N. 1040ez filing instructions Mitsubishi Motorway Bloomington, IL 61705-6613 CD/DVD for tax products. 1040ez filing instructions You can order Publication 1796, IRS Tax Products CD/DVD, and obtain: Current-year forms, instructions, and publications. 1040ez filing instructions Prior-year forms, instructions, and publications. 1040ez filing instructions Bonus: Historical Tax Products DVD - Ships with the final release. 1040ez filing instructions IRS Tax Map: an electronic research tool and finding aid. 1040ez filing instructions Tax law frequently asked questions (FAQ). 1040ez filing instructions Tax Topics from the IRS telephone response system. 1040ez filing instructions Fill-in, print, and save features for most tax forms. 1040ez filing instructions Internal Revenue Bulletins. 1040ez filing instructions Toll-free and email technical support. 1040ez filing instructions The CD/DVD is released twice during the year in January and March. 1040ez filing instructions Purchase the CD/DVD from National Technical Information Service (NTIS) at www. 1040ez filing instructions irs. 1040ez filing instructions gov/cdorders for $35 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll free to buy the CD/DVD for $35 (plus a $5 handling fee). 1040ez filing instructions Price is subject to change. 1040ez filing instructions CD for small businesses. 1040ez filing instructions Publication 3207, The Small Business Resource Guide CD, is a must for every small business owner or any taxpayer about to start a business. 1040ez filing instructions This year's CD includes: Helpful information, such as how to prepare a business plan, find financing for your business, and much more. 1040ez filing instructions All the business tax forms, instructions, and publications needed to successfully manage a business. 1040ez filing instructions Tax law changes. 1040ez filing instructions Tax Map: an electronic research tool and finding aid. 1040ez filing instructions Web links to various government agencies, business associations, and IRS organizations. 1040ez filing instructions “Rate the Product” survey—your opportunity to suggest changes for future editions. 1040ez filing instructions A site map of the CD to help you navigate the pages of the CD with ease. 1040ez filing instructions An interactive “Teens in Biz” module that gives practical tips for teens about starting their own business, creating a business plan, and filing taxes. 1040ez filing instructions An updated version of this CD is available each year in early April. 1040ez filing instructions You can get a free copy by calling 1-800-829-3676 or by visiting www. 1040ez filing instructions irs. 1040ez filing instructions gov/smallbiz. 1040ez filing instructions Prev  Up  Next   Home   More Online Publications