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2010 Taxes Cheap 1099g Form W 2

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2010 Taxes Cheap 1099g Form W 2

2010 taxes cheap 1099g form w 2 14. 2010 taxes cheap 1099g form w 2   Sale of Property Table of Contents Reminder Introduction Useful Items - You may want to see: Sales and TradesWhat Is a Sale or Trade? How To Figure Gain or Loss Nontaxable Trades Transfers Between Spouses Related Party Transactions Capital Gains and LossesCapital or Ordinary Gain or Loss Capital Assets and Noncapital Assets Holding Period Nonbusiness Bad Debts Wash Sales Rollover of Gain From Publicly Traded Securities Reminder Foreign income. 2010 taxes cheap 1099g form w 2  If you are a U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 citizen who sells property located outside the United States, you must report all gains and losses from the sale of that property on your tax return unless it is exempt by U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 law. 2010 taxes cheap 1099g form w 2 This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the payer. 2010 taxes cheap 1099g form w 2 Introduction This chapter discusses the tax consequences of selling or trading investment property. 2010 taxes cheap 1099g form w 2 It explains the following. 2010 taxes cheap 1099g form w 2 What a sale or trade is. 2010 taxes cheap 1099g form w 2 Figuring gain or loss. 2010 taxes cheap 1099g form w 2 Nontaxable trades. 2010 taxes cheap 1099g form w 2 Related party transactions. 2010 taxes cheap 1099g form w 2 Capital gains or losses. 2010 taxes cheap 1099g form w 2 Capital assets and noncapital assets. 2010 taxes cheap 1099g form w 2 Holding period. 2010 taxes cheap 1099g form w 2 Rollover of gain from publicly traded securities. 2010 taxes cheap 1099g form w 2 Other property transactions. 2010 taxes cheap 1099g form w 2   Certain transfers of property are not discussed here. 2010 taxes cheap 1099g form w 2 They are discussed in other IRS publications. 2010 taxes cheap 1099g form w 2 These include the following. 2010 taxes cheap 1099g form w 2 Sales of a main home, covered in chapter 15. 2010 taxes cheap 1099g form w 2 Installment sales, covered in Publication 537, Installment Sales. 2010 taxes cheap 1099g form w 2 Transactions involving business property, covered in Publication 544, Sales and Other Dispositions of Assets. 2010 taxes cheap 1099g form w 2 Dispositions of an interest in a passive activity, covered in Publication 925, Passive Activity and At-Risk Rules. 2010 taxes cheap 1099g form w 2    Publication 550, Investment Income and Expenses (Including Capital Gains and Losses), provides a more detailed discussion about sales and trades of investment property. 2010 taxes cheap 1099g form w 2 Publication 550 includes information about the rules covering nonbusiness bad debts, straddles, section 1256 contracts, puts and calls, commodity futures, short sales, and wash sales. 2010 taxes cheap 1099g form w 2 It also discusses investment-related expenses. 2010 taxes cheap 1099g form w 2 Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 8949 Sales and Other Dispositions of Capital Assets 8824 Like-Kind Exchanges Sales and Trades If you sold property such as stocks, bonds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. 2010 taxes cheap 1099g form w 2 Generally, you should receive the statement by February 15 of the next year. 2010 taxes cheap 1099g form w 2 It will show the gross proceeds from the sale. 2010 taxes cheap 1099g form w 2 If you sold a covered security in 2013, your 1099-B (or substitute statement) will show your basis. 2010 taxes cheap 1099g form w 2 Generally, a covered security is a security you acquired after 2010, with certain exceptions. 2010 taxes cheap 1099g form w 2 See the Instructions for Form 8949. 2010 taxes cheap 1099g form w 2 The IRS will also get a copy of Form 1099-B from the broker. 2010 taxes cheap 1099g form w 2 Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. 2010 taxes cheap 1099g form w 2 What Is a Sale or Trade? This section explains what is a sale or trade. 2010 taxes cheap 1099g form w 2 It also explains certain transactions and events that are treated as sales or trades. 2010 taxes cheap 1099g form w 2 A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. 2010 taxes cheap 1099g form w 2 A trade is a transfer of property for other property or services and may be taxed in the same way as a sale. 2010 taxes cheap 1099g form w 2 Sale and purchase. 2010 taxes cheap 1099g form w 2   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. 2010 taxes cheap 1099g form w 2 The sale and purchase are two separate transactions. 2010 taxes cheap 1099g form w 2 But see Like-kind exchanges under Nontaxable Trades, later. 2010 taxes cheap 1099g form w 2 Redemption of stock. 2010 taxes cheap 1099g form w 2   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. 2010 taxes cheap 1099g form w 2 Dividend versus sale or trade. 2010 taxes cheap 1099g form w 2   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. 2010 taxes cheap 1099g form w 2 Both direct and indirect ownership of stock will be considered. 2010 taxes cheap 1099g form w 2 The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend (see chapter 8), There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. 2010 taxes cheap 1099g form w 2 Redemption or retirement of bonds. 2010 taxes cheap 1099g form w 2   A redemption or retirement of bonds or notes at their maturity is generally treated as a sale or trade. 2010 taxes cheap 1099g form w 2   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. 2010 taxes cheap 1099g form w 2 For details, see Regulations section 1. 2010 taxes cheap 1099g form w 2 1001-3. 2010 taxes cheap 1099g form w 2 Surrender of stock. 2010 taxes cheap 1099g form w 2   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. 2010 taxes cheap 1099g form w 2 The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. 2010 taxes cheap 1099g form w 2 Worthless securities. 2010 taxes cheap 1099g form w 2    Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. 2010 taxes cheap 1099g form w 2 This affects whether your capital loss is long term or short term. 2010 taxes cheap 1099g form w 2 See Holding Period , later. 2010 taxes cheap 1099g form w 2   Worthless securities also include securities that you abandon after March 12, 2008. 2010 taxes cheap 1099g form w 2 To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. 2010 taxes cheap 1099g form w 2 All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. 2010 taxes cheap 1099g form w 2    If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. 2010 taxes cheap 1099g form w 2 Do not deduct them in the year the stock became worthless. 2010 taxes cheap 1099g form w 2 How to report loss. 2010 taxes cheap 1099g form w 2    Report worthless securities in Part I or Part II, whichever applies, of Form 8949. 2010 taxes cheap 1099g form w 2 In column (a), enter “Worthless. 2010 taxes cheap 1099g form w 2 ”    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. 2010 taxes cheap 1099g form w 2 See Form 8949 and the Instructions for Form 8949. 2010 taxes cheap 1099g form w 2 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. 2010 taxes cheap 1099g form w 2 See also Schedule D (Form 1040), Form 8949, and their separate instructions. 2010 taxes cheap 1099g form w 2 Filing a claim for refund. 2010 taxes cheap 1099g form w 2   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. 2010 taxes cheap 1099g form w 2 You must use Form 1040X, Amended U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 Individual Income Tax Return, to amend your return for the year the security became worthless. 2010 taxes cheap 1099g form w 2 You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. 2010 taxes cheap 1099g form w 2 For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. 2010 taxes cheap 1099g form w 2 How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. 2010 taxes cheap 1099g form w 2 Gain. 2010 taxes cheap 1099g form w 2   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. 2010 taxes cheap 1099g form w 2 Loss. 2010 taxes cheap 1099g form w 2   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. 2010 taxes cheap 1099g form w 2 Adjusted basis. 2010 taxes cheap 1099g form w 2   The adjusted basis of property is your original cost or other original basis properly adjusted (increased or decreased) for certain items. 2010 taxes cheap 1099g form w 2 See chapter 13 for more information about determining the adjusted basis of property. 2010 taxes cheap 1099g form w 2 Amount realized. 2010 taxes cheap 1099g form w 2   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). 2010 taxes cheap 1099g form w 2 Amount realized includes the money you receive plus the fair market value of any property or services you receive. 2010 taxes cheap 1099g form w 2 If you received a note or other debt instrument for the property, see How To Figure Gain or Loss in chapter 4 of Publication 550 to figure the amount realized. 2010 taxes cheap 1099g form w 2 If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. 2010 taxes cheap 1099g form w 2 For more information, see Publication 537. 2010 taxes cheap 1099g form w 2 Fair market value. 2010 taxes cheap 1099g form w 2   Fair market value is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. 2010 taxes cheap 1099g form w 2 Your gain is $3,000 ($10,000 − $7,000). 2010 taxes cheap 1099g form w 2 Debt paid off. 2010 taxes cheap 1099g form w 2    A debt against the property, or against you, that is paid off as a part of the transaction, or that is assumed by the buyer, must be included in the amount realized. 2010 taxes cheap 1099g form w 2 This is true even if neither you nor the buyer is personally liable for the debt. 2010 taxes cheap 1099g form w 2 For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 You sell stock that you had pledged as security for a bank loan of $8,000. 2010 taxes cheap 1099g form w 2 Your basis in the stock is $6,000. 2010 taxes cheap 1099g form w 2 The buyer pays off your bank loan and pays you $20,000 in cash. 2010 taxes cheap 1099g form w 2 The amount realized is $28,000 ($20,000 + $8,000). 2010 taxes cheap 1099g form w 2 Your gain is $22,000 ($28,000 − $6,000). 2010 taxes cheap 1099g form w 2 Payment of cash. 2010 taxes cheap 1099g form w 2   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. 2010 taxes cheap 1099g form w 2 Determine your gain or loss by subtracting the cash you pay plus the adjusted basis of the property you trade in from the amount you realize. 2010 taxes cheap 1099g form w 2 If the result is a positive number, it is a gain. 2010 taxes cheap 1099g form w 2 If the result is a negative number, it is a loss. 2010 taxes cheap 1099g form w 2 No gain or loss. 2010 taxes cheap 1099g form w 2   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. 2010 taxes cheap 1099g form w 2 In this case, you may have neither a gain nor a loss. 2010 taxes cheap 1099g form w 2 See Basis Other Than Cost in chapter 13. 2010 taxes cheap 1099g form w 2 Nontaxable Trades This section discusses trades that generally do not result in a taxable gain or deductible loss. 2010 taxes cheap 1099g form w 2 For more information on nontaxable trades, see chapter 1 of Publication 544. 2010 taxes cheap 1099g form w 2 Like-kind exchanges. 2010 taxes cheap 1099g form w 2   If you trade business or investment property for other business or investment property of a like kind, you do not pay tax on any gain or deduct any loss until you sell or dispose of the property you receive. 2010 taxes cheap 1099g form w 2 To be nontaxable, a trade must meet all six of the following conditions. 2010 taxes cheap 1099g form w 2 The property must be business or investment property. 2010 taxes cheap 1099g form w 2 You must hold both the property you trade and the property you receive for productive use in your trade or business or for investment. 2010 taxes cheap 1099g form w 2 Neither property may be property used for personal purposes, such as your home or family car. 2010 taxes cheap 1099g form w 2 The property must not be held primarily for sale. 2010 taxes cheap 1099g form w 2 The property you trade and the property you receive must not be property you sell to customers, such as merchandise. 2010 taxes cheap 1099g form w 2 The property must not be stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest, including partnership interests. 2010 taxes cheap 1099g form w 2 However, see Special rules for mutual ditch, reservoir, or irrigation company stock, in chapter 4 of Publication 550 for an exception. 2010 taxes cheap 1099g form w 2 Also, you can have a nontaxable trade of corporate stocks under a different rule, as discussed later. 2010 taxes cheap 1099g form w 2 There must be a trade of like property. 2010 taxes cheap 1099g form w 2 The trade of real estate for real estate, or personal property for similar personal property, is a trade of like property. 2010 taxes cheap 1099g form w 2 The trade of an apartment house for a store building, or a panel truck for a pickup truck, is a trade of like property. 2010 taxes cheap 1099g form w 2 The trade of a piece of machinery for a store building is not a trade of like property. 2010 taxes cheap 1099g form w 2 Real property located in the United States and real property located outside the United States are not like property. 2010 taxes cheap 1099g form w 2 Also, personal property used predominantly within the United States and personal property used predominantly outside the United States are not like property. 2010 taxes cheap 1099g form w 2 The property to be received must be identified in writing within 45 days after the date you transfer the property given up in the trade. 2010 taxes cheap 1099g form w 2 The property to be received must be received by the earlier of: The 180th day after the date on which you transfer the property given up in the trade, or The due date, including extensions, for your tax return for the year in which the transfer of the property given up occurs. 2010 taxes cheap 1099g form w 2    If you trade property with a related party in a like-kind exchange, a special rule may apply. 2010 taxes cheap 1099g form w 2 See Related Party Transactions , later in this chapter. 2010 taxes cheap 1099g form w 2 Also, see chapter 1 of Publication 544 for more information on exchanges of business property and special rules for exchanges using qualified intermediaries or involving multiple properties. 2010 taxes cheap 1099g form w 2 Partly nontaxable exchange. 2010 taxes cheap 1099g form w 2   If you receive money or unlike property in addition to like property, and the above six conditions are met, you have a partly nontaxable trade. 2010 taxes cheap 1099g form w 2 You are taxed on any gain you realize, but only up to the amount of the money and the fair market value of the unlike property you receive. 2010 taxes cheap 1099g form w 2 You cannot deduct a loss. 2010 taxes cheap 1099g form w 2 Like property and unlike property transferred. 2010 taxes cheap 1099g form w 2   If you give up unlike property in addition to the like property, you must recognize gain or loss on the unlike property you give up. 2010 taxes cheap 1099g form w 2 The gain or loss is the difference between the adjusted basis of the unlike property and its fair market value. 2010 taxes cheap 1099g form w 2 Like property and money transferred. 2010 taxes cheap 1099g form w 2   If all of the above conditions (1) – (6) are met, you have a nontaxable trade even if you pay money in addition to the like property. 2010 taxes cheap 1099g form w 2 Basis of property received. 2010 taxes cheap 1099g form w 2   To figure the basis of the property received, see Nontaxable Exchanges in chapter 13. 2010 taxes cheap 1099g form w 2 How to report. 2010 taxes cheap 1099g form w 2   You must report the trade of like property on Form 8824. 2010 taxes cheap 1099g form w 2 If you figure a recognized gain or loss on Form 8824, report it on Schedule D (Form 1040), or on Form 4797, Sales of Business Property, whichever applies. 2010 taxes cheap 1099g form w 2 See the instructions for Line 22 in the Instructions for Form 8824. 2010 taxes cheap 1099g form w 2   For information on using Form 4797, see chapter 4 of Publication 544. 2010 taxes cheap 1099g form w 2 Corporate stocks. 2010 taxes cheap 1099g form w 2   The following trades of corporate stocks generally do not result in a taxable gain or a deductible loss. 2010 taxes cheap 1099g form w 2 Corporate reorganizations. 2010 taxes cheap 1099g form w 2   In some instances, a company will give you common stock for preferred stock, preferred stock for common stock, or stock in one corporation for stock in another corporation. 2010 taxes cheap 1099g form w 2 If this is a result of a merger, recapitalization, transfer to a controlled corporation, bankruptcy, corporate division, corporate acquisition, or other corporate reorganization, you do not recognize gain or loss. 2010 taxes cheap 1099g form w 2 Stock for stock of the same corporation. 2010 taxes cheap 1099g form w 2   You can exchange common stock for common stock or preferred stock for preferred stock in the same corporation without having a recognized gain or loss. 2010 taxes cheap 1099g form w 2 This is true for a trade between two stockholders as well as a trade between a stockholder and the corporation. 2010 taxes cheap 1099g form w 2 Convertible stocks and bonds. 2010 taxes cheap 1099g form w 2   You generally will not have a recognized gain or loss if you convert bonds into stock or preferred stock into common stock of the same corporation according to a conversion privilege in the terms of the bond or the preferred stock certificate. 2010 taxes cheap 1099g form w 2 Property for stock of a controlled corporation. 2010 taxes cheap 1099g form w 2   If you transfer property to a corporation solely in exchange for stock in that corporation, and immediately after the trade you are in control of the corporation, you ordinarily will not recognize a gain or loss. 2010 taxes cheap 1099g form w 2 This rule applies both to individuals and to groups who transfer property to a corporation. 2010 taxes cheap 1099g form w 2 It does not apply if the corporation is an investment company. 2010 taxes cheap 1099g form w 2   For this purpose, to be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock of the corporation. 2010 taxes cheap 1099g form w 2   If this provision applies to you, you may have to attach to your return a complete statement of all facts pertinent to the exchange. 2010 taxes cheap 1099g form w 2 For details, see Regulations section 1. 2010 taxes cheap 1099g form w 2 351-3. 2010 taxes cheap 1099g form w 2 Additional information. 2010 taxes cheap 1099g form w 2   For more information on trades of stock, see Nontaxable Trades in chapter 4 of Publication 550. 2010 taxes cheap 1099g form w 2 Insurance policies and annuities. 2010 taxes cheap 1099g form w 2   You will not have a recognized gain or loss if the insured or annuitant is the same under both contracts and you trade: A life insurance contract for another life insurance contract or for an endowment or annuity contract or for a qualified long-term care insurance contract, An endowment contract for another endowment contract that provides for regular payments beginning at a date no later than the beginning date under the old contract or for an annuity contract or for a qualified long-term insurance contract, An annuity contract for annuity contract or for a qualified long-term care insurance contract, or A qualified long-term care insurance contract for a qualified long-term care insurance contract. 2010 taxes cheap 1099g form w 2   You also may not have to recognize gain or loss on an exchange of a portion of an annuity contract for another annuity contract. 2010 taxes cheap 1099g form w 2 For transfers completed before October 24, 2011, see Revenue Ruling 2003-76 in Internal Revenue Bulletin 2003-33 and Revenue Procedure 2008-24 in Internal Revenue Bulletin 2008-13. 2010 taxes cheap 1099g form w 2 Revenue Ruling 2003-76 is available at www. 2010 taxes cheap 1099g form w 2 irs. 2010 taxes cheap 1099g form w 2 gov/irb/2003-33_IRB/ar11. 2010 taxes cheap 1099g form w 2 html. 2010 taxes cheap 1099g form w 2 Revenue Procedure 2008-24 is available at www. 2010 taxes cheap 1099g form w 2 irs. 2010 taxes cheap 1099g form w 2 gov/irb/2008-13_IRB/ar13. 2010 taxes cheap 1099g form w 2 html. 2010 taxes cheap 1099g form w 2 For transfers completed on or after October 24, 2011, see Revenue Ruling 2003-76, above, and Revenue Procedure 2011-38, in Internal Revenue Bulletin 2011-30. 2010 taxes cheap 1099g form w 2 Revenue Procedure 2011-38 is available at www. 2010 taxes cheap 1099g form w 2 irs. 2010 taxes cheap 1099g form w 2 gov/irb/2011-30_IRB/ar09. 2010 taxes cheap 1099g form w 2 html. 2010 taxes cheap 1099g form w 2   For tax years beginning after December 31, 2010, amounts received as an annuity for a period of 10 years or more, or for the lives of one or more individuals, under any portion of an annuity, endowment, or life insurance contract, are treated as a separate contract and are considered partial annuities. 2010 taxes cheap 1099g form w 2 A portion of an annuity, endowment, or life insurance contract may be annuitized, provided that the annuitization period is for 10 years or more or for the lives of one or more individuals. 2010 taxes cheap 1099g form w 2 The investment in the contract is allocated between the part of the contract from which amounts are received as an annuity and the part of the contract from which amounts are not received as an annuity. 2010 taxes cheap 1099g form w 2   Exchanges of contracts not included in this list, such as an annuity contract for an endowment contract, or an annuity or endowment contract for a life insurance contract, are taxable. 2010 taxes cheap 1099g form w 2 Demutualization of life insurance companies. 2010 taxes cheap 1099g form w 2   If you received stock in exchange for your equity interest as a policyholder or an annuitant, you generally will not have a recognized gain or loss. 2010 taxes cheap 1099g form w 2 See Demutualization of Life Insurance Companies in Publication 550. 2010 taxes cheap 1099g form w 2 U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 Treasury notes or bonds. 2010 taxes cheap 1099g form w 2   You can trade certain issues of U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 Treasury obligations for other issues designated by the Secretary of the Treasury, with no gain or loss recognized on the trade. 2010 taxes cheap 1099g form w 2 See Savings bonds traded in chapter 1 of Publication 550 for more information. 2010 taxes cheap 1099g form w 2 Transfers Between Spouses Generally, no gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or if incident to a divorce, a former spouse. 2010 taxes cheap 1099g form w 2 This nonrecognition rule does not apply in the following situations. 2010 taxes cheap 1099g form w 2 The recipient spouse or former spouse is a nonresident alien. 2010 taxes cheap 1099g form w 2 Property is transferred in trust and liability exceeds basis. 2010 taxes cheap 1099g form w 2 Gain must be recognized to the extent the amount of the liabilities assumed by the trust, plus any liabilities on the property, exceed the adjusted basis of the property. 2010 taxes cheap 1099g form w 2 For other situations, see Transfers Between Spouses in chapter 4 of Publication 550. 2010 taxes cheap 1099g form w 2 Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. 2010 taxes cheap 1099g form w 2 The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. 2010 taxes cheap 1099g form w 2 This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its fair market value at the time of transfer or any consideration paid by the recipient. 2010 taxes cheap 1099g form w 2 This rule applies for purposes of determining loss as well as gain. 2010 taxes cheap 1099g form w 2 Any gain recognized on a transfer in trust increases the basis. 2010 taxes cheap 1099g form w 2 A transfer of property is incident to a divorce if the transfer occurs within 1 year after the date on which the marriage ends, or if the transfer is related to the ending of the marriage. 2010 taxes cheap 1099g form w 2 Related Party Transactions Special rules apply to the sale or trade of property between related parties. 2010 taxes cheap 1099g form w 2 Gain on sale or trade of depreciable property. 2010 taxes cheap 1099g form w 2   Your gain from the sale or trade of property to a related party may be ordinary income, rather than capital gain, if the property can be depreciated by the party receiving it. 2010 taxes cheap 1099g form w 2 See chapter 3 of Publication 544 for more information. 2010 taxes cheap 1099g form w 2 Like-kind exchanges. 2010 taxes cheap 1099g form w 2   Generally, if you trade business or investment property for other business or investment property of a like kind, no gain or loss is recognized. 2010 taxes cheap 1099g form w 2 See Like-kind exchanges , earlier, under Nontaxable Trades. 2010 taxes cheap 1099g form w 2   This rule also applies to trades of property between related parties, defined next under Losses on sales or trades of property. 2010 taxes cheap 1099g form w 2 However, if either you or the related party disposes of the like property within 2 years after the trade, you both must report any gain or loss not recognized on the original trade on your return filed for the year in which the later disposition occurs. 2010 taxes cheap 1099g form w 2 See Related Party Transactions in chapter 4 of Publication 550 for exceptions. 2010 taxes cheap 1099g form w 2 Losses on sales or trades of property. 2010 taxes cheap 1099g form w 2   You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties. 2010 taxes cheap 1099g form w 2 Members of your family. 2010 taxes cheap 1099g form w 2 This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. 2010 taxes cheap 1099g form w 2 ), and lineal descendants (children, grandchildren, etc. 2010 taxes cheap 1099g form w 2 ). 2010 taxes cheap 1099g form w 2 A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. 2010 taxes cheap 1099g form w 2 A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. 2010 taxes cheap 1099g form w 2 (See Constructive ownership of stock , later. 2010 taxes cheap 1099g form w 2 ) A tax-exempt charitable or educational organization directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. 2010 taxes cheap 1099g form w 2   In addition, a loss on the sale or trade of property is not deductible if the transaction is directly or indirectly between the following related parties. 2010 taxes cheap 1099g form w 2 A grantor and fiduciary, or the fiduciary and beneficiary, of any trust. 2010 taxes cheap 1099g form w 2 Fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. 2010 taxes cheap 1099g form w 2 A trust fiduciary and a corporation of which more than 50% in value of the outstanding stock is directly or indirectly owned by or for the trust, or by or for the grantor of the trust. 2010 taxes cheap 1099g form w 2 A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest, or the profits interest, in the partnership. 2010 taxes cheap 1099g form w 2 Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. 2010 taxes cheap 1099g form w 2 Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. 2010 taxes cheap 1099g form w 2 An executor and a beneficiary of an estate (except in the case of a sale or trade to satisfy a pecuniary bequest). 2010 taxes cheap 1099g form w 2 Two corporations that are members of the same controlled group. 2010 taxes cheap 1099g form w 2 (Under certain conditions, however, these losses are not disallowed but must be deferred. 2010 taxes cheap 1099g form w 2 ) Two partnerships if the same persons own, directly or indirectly, more than 50% of the capital interests or the profit interests in both partnerships. 2010 taxes cheap 1099g form w 2 Multiple property sales or trades. 2010 taxes cheap 1099g form w 2   If you sell or trade to a related party a number of blocks of stock or pieces of property in a lump sum, you must figure the gain or loss separately for each block of stock or piece of property. 2010 taxes cheap 1099g form w 2 The gain on each item may be taxable. 2010 taxes cheap 1099g form w 2 However, you cannot deduct the loss on any item. 2010 taxes cheap 1099g form w 2 Also, you cannot reduce gains from the sales of any of these items by losses on the sales of any of the other items. 2010 taxes cheap 1099g form w 2 Indirect transactions. 2010 taxes cheap 1099g form w 2   You cannot deduct your loss on the sale of stock through your broker if, under a prearranged plan, a related party buys the same stock you had owned. 2010 taxes cheap 1099g form w 2 This does not apply to a trade between related parties through an exchange that is purely coincidental and is not prearranged. 2010 taxes cheap 1099g form w 2 Constructive ownership of stock. 2010 taxes cheap 1099g form w 2   In determining whether a person directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. 2010 taxes cheap 1099g form w 2 Rule 1. 2010 taxes cheap 1099g form w 2   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. 2010 taxes cheap 1099g form w 2 Rule 2. 2010 taxes cheap 1099g form w 2   An individual is considered to own the stock directly or indirectly owned by or for his or her family. 2010 taxes cheap 1099g form w 2 Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. 2010 taxes cheap 1099g form w 2 Rule 3. 2010 taxes cheap 1099g form w 2   An individual owning, other than by applying rule 2, any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. 2010 taxes cheap 1099g form w 2 Rule 4. 2010 taxes cheap 1099g form w 2   When applying rule 1, 2, or 3, stock constructively owned by a person under rule 1 is treated as actually owned by that person. 2010 taxes cheap 1099g form w 2 But stock constructively owned by an individual under rule 2 or rule 3 is not treated as owned by that individual for again applying either rule 2 or rule 3 to make another person the constructive owner of the stock. 2010 taxes cheap 1099g form w 2 Property received from a related party. 2010 taxes cheap 1099g form w 2    If you sell or trade at a gain property you acquired from a related party, you recognize the gain only to the extent it is more than the loss previously disallowed to the related party. 2010 taxes cheap 1099g form w 2 This rule applies only if you are the original transferee and you acquired the property by purchase or exchange. 2010 taxes cheap 1099g form w 2 This rule does not apply if the related party's loss was disallowed because of the wash sale rules described in chapter 4 of Publication 550 under Wash Sales. 2010 taxes cheap 1099g form w 2   If you sell or trade at a loss property you acquired from a related party, you cannot recognize the loss that was not allowed to the related party. 2010 taxes cheap 1099g form w 2 Example 1. 2010 taxes cheap 1099g form w 2 Your brother sells you stock for $7,600. 2010 taxes cheap 1099g form w 2 His cost basis is $10,000. 2010 taxes cheap 1099g form w 2 Your brother cannot deduct the loss of $2,400. 2010 taxes cheap 1099g form w 2 Later, you sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900. 2010 taxes cheap 1099g form w 2 Your reportable gain is $500 (the $2,900 gain minus the $2,400 loss not allowed to your brother). 2010 taxes cheap 1099g form w 2 Example 2. 2010 taxes cheap 1099g form w 2 If, in Example 1, you sold the stock for $6,900 instead of $10,500, your recognized loss is only $700 (your $7,600 basis minus $6,900). 2010 taxes cheap 1099g form w 2 You cannot deduct the loss that was not allowed to your brother. 2010 taxes cheap 1099g form w 2 Capital Gains and Losses This section discusses the tax treatment of gains and losses from different types of investment transactions. 2010 taxes cheap 1099g form w 2 Character of gain or loss. 2010 taxes cheap 1099g form w 2   You need to classify your gains and losses as either ordinary or capital gains or losses. 2010 taxes cheap 1099g form w 2 You then need to classify your capital gains and losses as either short term or long term. 2010 taxes cheap 1099g form w 2 If you have long-term gains and losses, you must identify your 28% rate gains and losses. 2010 taxes cheap 1099g form w 2 If you have a net capital gain, you must also identify any unrecaptured section 1250 gain. 2010 taxes cheap 1099g form w 2   The correct classification and identification helps you figure the limit on capital losses and the correct tax on capital gains. 2010 taxes cheap 1099g form w 2 Reporting capital gains and losses is explained in chapter 16. 2010 taxes cheap 1099g form w 2 Capital or Ordinary Gain or Loss If you have a taxable gain or a deductible loss from a transaction, it may be either a capital gain or loss or an ordinary gain or loss, depending on the circumstances. 2010 taxes cheap 1099g form w 2 Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss. 2010 taxes cheap 1099g form w 2 A sale or trade of a noncapital asset generally results in ordinary gain or loss. 2010 taxes cheap 1099g form w 2 Depending on the circumstances, a gain or loss on a sale or trade of property used in a trade or business may be treated as either capital or ordinary, as explained in Publication 544. 2010 taxes cheap 1099g form w 2 In some situations, part of your gain or loss may be a capital gain or loss and part may be an ordinary gain or loss. 2010 taxes cheap 1099g form w 2 Capital Assets and Noncapital Assets For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. 2010 taxes cheap 1099g form w 2 Some examples are: Stocks or bonds held in your personal account, A house owned and used by you and your family, Household furnishings, A car used for pleasure or commuting, Coin or stamp collections, Gems and jewelry, and Gold, silver, or any other metal. 2010 taxes cheap 1099g form w 2 Any property you own is a capital asset, except the following noncapital assets. 2010 taxes cheap 1099g form w 2 Property held mainly for sale to customers or property that will physically become a part of the merchandise for sale to customers. 2010 taxes cheap 1099g form w 2 For an exception, see Capital Asset Treatment for Self-Created Musical Works , later. 2010 taxes cheap 1099g form w 2 Depreciable property used in your trade or business, even if fully depreciated. 2010 taxes cheap 1099g form w 2 Real property used in your trade or business. 2010 taxes cheap 1099g form w 2 A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property that is: Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Acquired under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. 2010 taxes cheap 1099g form w 2 For an exception to this rule, see Capital Asset Treatment for Self-Created Musical Works , later. 2010 taxes cheap 1099g form w 2 Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of property described in (1). 2010 taxes cheap 1099g form w 2 U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 Government publications that you received from the government free or for less than the normal sales price, or that you acquired under circumstances entitling you to the basis of someone who received the publications free or for less than the normal sales price. 2010 taxes cheap 1099g form w 2 Certain commodities derivative financial instruments held by commodities derivatives dealers. 2010 taxes cheap 1099g form w 2 Hedging transactions, but only if the transaction is clearly identified as a hedging transaction before the close of the day on which it was acquired, originated, or entered into. 2010 taxes cheap 1099g form w 2 Supplies of a type you regularly use or consume in the ordinary course of your trade or business. 2010 taxes cheap 1099g form w 2 Investment Property Investment property is a capital asset. 2010 taxes cheap 1099g form w 2 Any gain or loss from its sale or trade is generally a capital gain or loss. 2010 taxes cheap 1099g form w 2 Gold, silver, stamps, coins, gems, etc. 2010 taxes cheap 1099g form w 2   These are capital assets except when they are held for sale by a dealer. 2010 taxes cheap 1099g form w 2 Any gain or loss you have from their sale or trade generally is a capital gain or loss. 2010 taxes cheap 1099g form w 2 Stocks, stock rights, and bonds. 2010 taxes cheap 1099g form w 2   All of these (including stock received as a dividend) are capital assets except when held for sale by a securities dealer. 2010 taxes cheap 1099g form w 2 However, if you own small business stock, see Losses on Section 1244 (Small Business) Stock , later, and Losses on Small Business Investment Company Stock, in chapter 4 of Publication 550. 2010 taxes cheap 1099g form w 2 Personal Use Property Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. 2010 taxes cheap 1099g form w 2 However, you cannot deduct a loss from selling personal use property. 2010 taxes cheap 1099g form w 2 Capital Asset Treatment for Self-Created Musical Works You can elect to treat musical compositions and copyrights in musical works as capital assets when you sell or exchange them if: Your personal efforts created the property, or You acquired the property under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. 2010 taxes cheap 1099g form w 2 You must make a separate election for each musical composition (or copyright in a musical work) sold or exchanged during the tax year. 2010 taxes cheap 1099g form w 2 You must make the election on or before the due date (including extensions) of the income tax return for the tax year of the sale or exchange. 2010 taxes cheap 1099g form w 2 You must make the election on Form 8949 by treating the sale or exchange as the sale or exchange of a capital asset, according to Form 8949, Schedule D (Form 1040), and their separate instructions. 2010 taxes cheap 1099g form w 2 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. 2010 taxes cheap 1099g form w 2 See also Schedule D (Form 1040), Form 8949, and their separate instructions. 2010 taxes cheap 1099g form w 2 You can revoke the election if you have IRS approval. 2010 taxes cheap 1099g form w 2 To get IRS approval, you must submit a request for a letter ruling under the appropriate IRS revenue procedure. 2010 taxes cheap 1099g form w 2 See, for example, Rev. 2010 taxes cheap 1099g form w 2 Proc. 2010 taxes cheap 1099g form w 2 2013-1, corrected by Announcement 2013–9, and amplified and modified by Rev. 2010 taxes cheap 1099g form w 2 Proc. 2010 taxes cheap 1099g form w 2 2013–32, available at www. 2010 taxes cheap 1099g form w 2 irs. 2010 taxes cheap 1099g form w 2 gov/irb/2013-01_IRB/ar06. 2010 taxes cheap 1099g form w 2 html. 2010 taxes cheap 1099g form w 2 Alternatively, you are granted an automatic 6-month extension from the due date of your income tax return (excluding extensions) to revoke the election, provided you timely file your income tax return, and within this 6-month extension period, you file Form 1040X that treats the sale or exchange as the sale or exchange of property that is not a capital asset. 2010 taxes cheap 1099g form w 2 Discounted Debt Instruments Treat your gain or loss on the sale, redemption, or retirement of a bond or other debt instrument originally issued at a discount or bought at a discount as capital gain or loss, except as explained in the following discussions. 2010 taxes cheap 1099g form w 2 Short-term government obligations. 2010 taxes cheap 1099g form w 2   Treat gains on short-term federal, state, or local government obligations (other than tax-exempt obligations) as ordinary income up to your ratable share of the acquisition discount. 2010 taxes cheap 1099g form w 2 This treatment applies to obligations with a fixed maturity date not more than 1 year from the date of issue. 2010 taxes cheap 1099g form w 2 Acquisition discount is the stated redemption price at maturity minus your basis in the obligation. 2010 taxes cheap 1099g form w 2   However, do not treat these gains as income to the extent you previously included the discount in income. 2010 taxes cheap 1099g form w 2 See Discount on Short-Term Obligations in chapter 1 of Publication 550. 2010 taxes cheap 1099g form w 2 Short-term nongovernment obligations. 2010 taxes cheap 1099g form w 2   Treat gains on short-term nongovernment obligations as ordinary income up to your ratable share of original issue discount (OID). 2010 taxes cheap 1099g form w 2 This treatment applies to obligations with a fixed maturity date of not more than 1 year from the date of issue. 2010 taxes cheap 1099g form w 2   However, to the extent you previously included the discount in income, you do not have to include it in income again. 2010 taxes cheap 1099g form w 2 See Discount on Short-Term Obligations in chapter 1 of Publication 550. 2010 taxes cheap 1099g form w 2 Tax-exempt state and local government bonds. 2010 taxes cheap 1099g form w 2   If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. 2010 taxes cheap 1099g form w 2 To figure your gain or loss on the sale or trade of these bonds, reduce the amount realized by your part of OID. 2010 taxes cheap 1099g form w 2   If the bonds were issued after September 3, 1982, and acquired after March 1, 1984, increase the adjusted basis by your part of OID to figure gain or loss. 2010 taxes cheap 1099g form w 2 For more information on the basis of these bonds, see Discounted Debt Instruments in chapter 4 of Publication 550. 2010 taxes cheap 1099g form w 2   Any gain from market discount is usually taxable on disposition or redemption of tax-exempt bonds. 2010 taxes cheap 1099g form w 2 If you bought the bonds before May 1, 1993, the gain from market discount is capital gain. 2010 taxes cheap 1099g form w 2 If you bought the bonds after April 30, 1993, the gain is ordinary income. 2010 taxes cheap 1099g form w 2   You figure the market discount by subtracting the price you paid for the bond from the sum of the original issue price of the bond and the amount of accumulated OID from the date of issue that represented interest to any earlier holders. 2010 taxes cheap 1099g form w 2 For more information, see Market Discount Bonds in chapter 1 of Publication 550. 2010 taxes cheap 1099g form w 2    A loss on the sale or other disposition of a tax-exempt state or local government bond is deductible as a capital loss. 2010 taxes cheap 1099g form w 2 Redeemed before maturity. 2010 taxes cheap 1099g form w 2   If a state or local bond issued before June 9, 1980, is redeemed before it matures, the OID is not taxable to you. 2010 taxes cheap 1099g form w 2   If a state or local bond issued after June 8, 1980, is redeemed before it matures, the part of OID earned while you hold the bond is not taxable to you. 2010 taxes cheap 1099g form w 2 However, you must report the unearned part of OID as a capital gain. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 On July 2, 2002, the date of issue, you bought a 20-year, 6% municipal bond for $800. 2010 taxes cheap 1099g form w 2 The face amount of the bond was $1,000. 2010 taxes cheap 1099g form w 2 The $200 discount was OID. 2010 taxes cheap 1099g form w 2 At the time the bond was issued, the issuer had no intention of redeeming it before it matured. 2010 taxes cheap 1099g form w 2 The bond was callable at its face amount beginning 10 years after the issue date. 2010 taxes cheap 1099g form w 2 The issuer redeemed the bond at the end of 11 years (July 2, 2013) for its face amount of $1,000 plus accrued annual interest of $60. 2010 taxes cheap 1099g form w 2 The OID earned during the time you held the bond, $73, is not taxable. 2010 taxes cheap 1099g form w 2 The $60 accrued annual interest also is not taxable. 2010 taxes cheap 1099g form w 2 However, you must report the unearned part of OID ($127) as a capital gain. 2010 taxes cheap 1099g form w 2 Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). 2010 taxes cheap 1099g form w 2   If you sell, trade, or redeem for a gain one of these debt instruments, the part of your gain that is not more than your ratable share of the OID at the time of the sale or redemption is ordinary income. 2010 taxes cheap 1099g form w 2 The rest of the gain is capital gain. 2010 taxes cheap 1099g form w 2 If, however, there was an intention to call the debt instrument before maturity, all of your gain that is not more than the entire OID is treated as ordinary income at the time of the sale. 2010 taxes cheap 1099g form w 2 This treatment of taxable gain also applies to corporate instruments issued after May 27, 1969, under a written commitment that was binding on May 27, 1969, and at all times thereafter. 2010 taxes cheap 1099g form w 2 Long-term debt instruments issued after May 27, 1969 (or after July 1, 1982, if a government instrument). 2010 taxes cheap 1099g form w 2   If you hold one of these debt instruments, you must include a part of OID in your gross income each year you own the instrument. 2010 taxes cheap 1099g form w 2 Your basis in that debt instrument is increased by the amount of OID that you have included in your gross income. 2010 taxes cheap 1099g form w 2 See Original Issue Discount (OID) in chapter 7 for information about OID that you must report on your tax return. 2010 taxes cheap 1099g form w 2   If you sell or trade the debt instrument before maturity, your gain is a capital gain. 2010 taxes cheap 1099g form w 2 However, if at the time the instrument was originally issued there was an intention to call it before its maturity, your gain generally is ordinary income to the extent of the entire OID reduced by any amounts of OID previously includible in your income. 2010 taxes cheap 1099g form w 2 In this case, the rest of the gain is capital gain. 2010 taxes cheap 1099g form w 2 Market discount bonds. 2010 taxes cheap 1099g form w 2   If the debt instrument has market discount and you chose to include the discount in income as it accrued, increase your basis in the debt instrument by the accrued discount to figure capital gain or loss on its disposition. 2010 taxes cheap 1099g form w 2 If you did not choose to include the discount in income as it accrued, you must report gain as ordinary interest income up to the instrument's accrued market discount. 2010 taxes cheap 1099g form w 2 The rest of the gain is capital gain. 2010 taxes cheap 1099g form w 2 See Market Discount Bonds in chapter 1 of Publication 550. 2010 taxes cheap 1099g form w 2   A different rule applies to market discount bonds issued before July 19, 1984, and purchased by you before May 1, 1993. 2010 taxes cheap 1099g form w 2 See Market discount bonds under Discounted Debt Instruments in chapter 4 of Publication 550. 2010 taxes cheap 1099g form w 2 Retirement of debt instrument. 2010 taxes cheap 1099g form w 2   Any amount you receive on the retirement of a debt instrument is treated in the same way as if you had sold or traded that instrument. 2010 taxes cheap 1099g form w 2 Notes of individuals. 2010 taxes cheap 1099g form w 2   If you hold an obligation of an individual issued with OID after March 1, 1984, you generally must include the OID in your income currently, and your gain or loss on its sale or retirement is generally capital gain or loss. 2010 taxes cheap 1099g form w 2 An exception to this treatment applies if the obligation is a loan between individuals and all the following requirements are met. 2010 taxes cheap 1099g form w 2 The lender is not in the business of lending money. 2010 taxes cheap 1099g form w 2 The amount of the loan, plus the amount of any outstanding prior loans, is $10,000 or less. 2010 taxes cheap 1099g form w 2 Avoiding federal tax is not one of the principal purposes of the loan. 2010 taxes cheap 1099g form w 2   If the exception applies, or the obligation was issued before March 2, 1984, you do not include the OID in your income currently. 2010 taxes cheap 1099g form w 2 When you sell or redeem the obligation, the part of your gain that is not more than your accrued share of OID at that time is ordinary income. 2010 taxes cheap 1099g form w 2 The rest of the gain, if any, is capital gain. 2010 taxes cheap 1099g form w 2 Any loss on the sale or redemption is capital loss. 2010 taxes cheap 1099g form w 2 Deposit in Insolvent or Bankrupt Financial Institution If you lose money you have on deposit in a bank, credit union, or other financial institution that becomes insolvent or bankrupt, you may be able to deduct your loss in one of three ways. 2010 taxes cheap 1099g form w 2 Ordinary loss. 2010 taxes cheap 1099g form w 2 Casualty loss. 2010 taxes cheap 1099g form w 2 Nonbusiness bad debt (short-term capital loss). 2010 taxes cheap 1099g form w 2  For more information, see Deposit in Insolvent or Bankrupt Financial Institution, in chapter 4 of Publication 550. 2010 taxes cheap 1099g form w 2 Sale of Annuity The part of any gain on the sale of an annuity contract before its maturity date that is based on interest accumulated on the contract is ordinary income. 2010 taxes cheap 1099g form w 2 Losses on Section 1244 (Small Business) Stock You can deduct as an ordinary loss, rather than as a capital loss, your loss on the sale, trade, or worthlessness of section 1244 stock. 2010 taxes cheap 1099g form w 2 Report the loss on Form 4797, line 10. 2010 taxes cheap 1099g form w 2 Any gain on section 1244 stock is a capital gain if the stock is a capital asset in your hands. 2010 taxes cheap 1099g form w 2 Report the gain on Form 8949. 2010 taxes cheap 1099g form w 2 See Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. 2010 taxes cheap 1099g form w 2 For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. 2010 taxes cheap 1099g form w 2 See also Schedule D (Form 1040), Form 8949, and their separate instructions. 2010 taxes cheap 1099g form w 2 Holding Period If you sold or traded investment property, you must determine your holding period for the property. 2010 taxes cheap 1099g form w 2 Your holding period determines whether any capital gain or loss was a short-term or long-term capital gain or loss. 2010 taxes cheap 1099g form w 2 Long-term or short-term. 2010 taxes cheap 1099g form w 2   If you hold investment property more than 1 year, any capital gain or loss is a long-term capital gain or loss. 2010 taxes cheap 1099g form w 2 If you hold the property 1 year or less, any capital gain or loss is a short-term capital gain or loss. 2010 taxes cheap 1099g form w 2   To determine how long you held the investment property, begin counting on the date after the day you acquired the property. 2010 taxes cheap 1099g form w 2 The day you disposed of the property is part of your holding period. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 If you bought investment property on February 6, 2012, and sold it on February 6, 2013, your holding period is not more than 1 year and you have a short-term capital gain or loss. 2010 taxes cheap 1099g form w 2 If you sold it on February 7, 2013, your holding period is more than 1 year and you will have a long-term capital gain or loss. 2010 taxes cheap 1099g form w 2 Securities traded on established market. 2010 taxes cheap 1099g form w 2   For securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities, and ends on the trade date you sold them. 2010 taxes cheap 1099g form w 2    Do not confuse the trade date with the settlement date, which is the date by which the stock must be delivered and payment must be made. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 You are a cash method, calendar year taxpayer. 2010 taxes cheap 1099g form w 2 You sold stock at a gain on December 30, 2013. 2010 taxes cheap 1099g form w 2 According to the rules of the stock exchange, the sale was closed by delivery of the stock 4 trading days after the sale, on January 6, 2014. 2010 taxes cheap 1099g form w 2 You received payment of the sales price on that same day. 2010 taxes cheap 1099g form w 2 Report your gain on your 2013 return, even though you received the payment in 2014. 2010 taxes cheap 1099g form w 2 The gain is long term or short term depending on whether you held the stock more than 1 year. 2010 taxes cheap 1099g form w 2 Your holding period ended on December 30. 2010 taxes cheap 1099g form w 2 If you had sold the stock at a loss, you would also report it on your 2013 return. 2010 taxes cheap 1099g form w 2 U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 Treasury notes and bonds. 2010 taxes cheap 1099g form w 2   The holding period of U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 Treasury notes and bonds sold at auction on the basis of yield starts the day after the Secretary of the Treasury, through news releases, gives notification of acceptance to successful bidders. 2010 taxes cheap 1099g form w 2 The holding period of U. 2010 taxes cheap 1099g form w 2 S. 2010 taxes cheap 1099g form w 2 Treasury notes and bonds sold through an offering on a subscription basis at a specified yield starts the day after the subscription is submitted. 2010 taxes cheap 1099g form w 2 Automatic investment service. 2010 taxes cheap 1099g form w 2   In determining your holding period for shares bought by the bank or other agent, full shares are considered bought first and any fractional shares are considered bought last. 2010 taxes cheap 1099g form w 2 Your holding period starts on the day after the bank's purchase date. 2010 taxes cheap 1099g form w 2 If a share was bought over more than one purchase date, your holding period for that share is a split holding period. 2010 taxes cheap 1099g form w 2 A part of the share is considered to have been bought on each date that stock was bought by the bank with the proceeds of available funds. 2010 taxes cheap 1099g form w 2 Nontaxable trades. 2010 taxes cheap 1099g form w 2   If you acquire investment property in a trade for other investment property and your basis for the new property is determined, in whole or in part, by your basis in the old property, your holding period for the new property begins on the day following the date you acquired the old property. 2010 taxes cheap 1099g form w 2 Property received as a gift. 2010 taxes cheap 1099g form w 2   If you receive a gift of property and your basis is determined by the donor's adjusted basis, your holding period is considered to have started on the same day the donor's holding period started. 2010 taxes cheap 1099g form w 2   If your basis is determined by the fair market value of the property, your holding period starts on the day after the date of the gift. 2010 taxes cheap 1099g form w 2 Inherited property. 2010 taxes cheap 1099g form w 2   Generally, if you inherited investment property, your capital gain or loss on any later disposition of that property is long-term capital gain or loss. 2010 taxes cheap 1099g form w 2 This is true regardless of how long you actually held the property. 2010 taxes cheap 1099g form w 2 However, if you inherited property from someone who died in 2010, see the information below. 2010 taxes cheap 1099g form w 2 Inherited property from someone who died in 2010. 2010 taxes cheap 1099g form w 2   If you inherit investment property from a decedent who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your holding period. 2010 taxes cheap 1099g form w 2 Real property bought. 2010 taxes cheap 1099g form w 2   To figure how long you have held real property bought under an unconditional contract, begin counting on the day after you received title to it or on the day after you took possession of it and assumed the burdens and privileges of ownership, whichever happened first. 2010 taxes cheap 1099g form w 2 However, taking delivery or possession of real property under an option agreement is not enough to start the holding period. 2010 taxes cheap 1099g form w 2 The holding period cannot start until there is an actual contract of sale. 2010 taxes cheap 1099g form w 2 The holding period of the seller cannot end before that time. 2010 taxes cheap 1099g form w 2 Real property repossessed. 2010 taxes cheap 1099g form w 2   If you sell real property but keep a security interest in it, and then later repossess the property under the terms of the sales contract, your holding period for a later sale includes the period you held the property before the original sale and the period after the repossession. 2010 taxes cheap 1099g form w 2 Your holding period does not include the time between the original sale and the repossession. 2010 taxes cheap 1099g form w 2 That is, it does not include the period during which the first buyer held the property. 2010 taxes cheap 1099g form w 2 Stock dividends. 2010 taxes cheap 1099g form w 2   The holding period for stock you received as a taxable stock dividend begins on the date of distribution. 2010 taxes cheap 1099g form w 2   The holding period for new stock you received as a nontaxable stock dividend begins on the same day as the holding period of the old stock. 2010 taxes cheap 1099g form w 2 This rule also applies to stock acquired in a “spin-off,” which is a distribution of stock or securities in a controlled corporation. 2010 taxes cheap 1099g form w 2 Nontaxable stock rights. 2010 taxes cheap 1099g form w 2   Your holding period for nontaxable stock rights begins on the same day as the holding period of the underlying stock. 2010 taxes cheap 1099g form w 2 The holding period for stock acquired through the exercise of stock rights begins on the date the right was exercised. 2010 taxes cheap 1099g form w 2 Nonbusiness Bad Debts If someone owes you money that you cannot collect, you have a bad debt. 2010 taxes cheap 1099g form w 2 You may be able to deduct the amount owed to you when you figure your tax for the year the debt becomes worthless. 2010 taxes cheap 1099g form w 2 Generally, nonbusiness bad debts are bad debts that did not come from operating your trade or business, and are deductible as short-term capital losses. 2010 taxes cheap 1099g form w 2 To be deductible, nonbusiness bad debts must be totally worthless. 2010 taxes cheap 1099g form w 2 You cannot deduct a partly worthless nonbusiness debt. 2010 taxes cheap 1099g form w 2 Genuine debt required. 2010 taxes cheap 1099g form w 2   A debt must be genuine for you to deduct a loss. 2010 taxes cheap 1099g form w 2 A debt is genuine if it arises from a debtor-creditor relationship based on a valid and enforceable obligation to repay a fixed or determinable sum of money. 2010 taxes cheap 1099g form w 2 Basis in bad debt required. 2010 taxes cheap 1099g form w 2    To deduct a bad debt, you must have a basis in it—that is, you must have already included the amount in your income or loaned out your cash. 2010 taxes cheap 1099g form w 2 For example, you cannot claim a bad debt deduction for court-ordered child support not paid to you by your former spouse. 2010 taxes cheap 1099g form w 2 If you are a cash method taxpayer (as most individuals are), you generally cannot take a bad debt deduction for unpaid salaries, wages, rents, fees, interest, dividends, and similar items. 2010 taxes cheap 1099g form w 2 When deductible. 2010 taxes cheap 1099g form w 2   You can take a bad debt deduction only in the year the debt becomes worthless. 2010 taxes cheap 1099g form w 2 You do not have to wait until a debt is due to determine whether it is worthless. 2010 taxes cheap 1099g form w 2 A debt becomes worthless when there is no longer any chance that the amount owed will be paid. 2010 taxes cheap 1099g form w 2   It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. 2010 taxes cheap 1099g form w 2 You must only show that you have taken reasonable steps to collect the debt. 2010 taxes cheap 1099g form w 2 Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. 2010 taxes cheap 1099g form w 2 How to report bad debts. 2010 taxes cheap 1099g form w 2    Deduct nonbusiness bad debts as short-term capital losses on Form 8949. 2010 taxes cheap 1099g form w 2    Make sure you report your bad debt(s) (and any other short-term transactions for which you did not receive a Form 1099-B) on Form 8949, Part I, with box C checked. 2010 taxes cheap 1099g form w 2    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. 2010 taxes cheap 1099g form w 2 See also Schedule D (Form 1040), Form 8949, and their separate instructions. 2010 taxes cheap 1099g form w 2   For each bad debt, attach a statement to your return that contains: A description of the debt, including the amount, and the date it became due, The name of the debtor, and any business or family relationship between you and the debtor, The efforts you made to collect the debt, and Why you decided the debt was worthless. 2010 taxes cheap 1099g form w 2 For example, you could show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt. 2010 taxes cheap 1099g form w 2 Filing a claim for refund. 2010 taxes cheap 1099g form w 2    If you do not deduct a bad debt on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the bad debt. 2010 taxes cheap 1099g form w 2 To do this, use Form 1040X to amend your return for the year the debt became worthless. 2010 taxes cheap 1099g form w 2 You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. 2010 taxes cheap 1099g form w 2 For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. 2010 taxes cheap 1099g form w 2 Additional information. 2010 taxes cheap 1099g form w 2   For more information, see Nonbusiness Bad Debts in Publication 550. 2010 taxes cheap 1099g form w 2 For information on business bad debts, see chapter 10 of Publication 535, Business Expenses. 2010 taxes cheap 1099g form w 2 Wash Sales You cannot deduct losses from sales or trades of stock or securities in a wash sale. 2010 taxes cheap 1099g form w 2 A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. 2010 taxes cheap 1099g form w 2 If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). 2010 taxes cheap 1099g form w 2 The result is your basis in the new stock or securities. 2010 taxes cheap 1099g form w 2 This adjustment postpones the loss deduction until the disposition of the new stock or securities. 2010 taxes cheap 1099g form w 2 Your holding period for the new stock or securities includes the holding period of the stock or securities sold. 2010 taxes cheap 1099g form w 2 For more information, see Wash Sales, in chapter 4 of Publication 550. 2010 taxes cheap 1099g form w 2 Rollover of Gain From Publicly Traded Securities You may qualify for a tax-free rollover of certain gains from the sale of publicly traded securities. 2010 taxes cheap 1099g form w 2 This means that if you buy certain replacement property and make the choice described in this section, you postpone part or all of your gain. 2010 taxes cheap 1099g form w 2 You postpone the gain by adjusting the basis of the replacement property as described in Basis of replacement property , later. 2010 taxes cheap 1099g form w 2 This postpones your gain until the year you dispose of the replacement property. 2010 taxes cheap 1099g form w 2 You qualify to make this choice if you meet all the following tests. 2010 taxes cheap 1099g form w 2 You sell publicly traded securities at a gain. 2010 taxes cheap 1099g form w 2 Publicly traded securities are securities traded on an established securities market. 2010 taxes cheap 1099g form w 2 Your gain from the sale is a capital gain. 2010 taxes cheap 1099g form w 2 During the 60-day period beginning on the date of the sale, you buy replacement property. 2010 taxes cheap 1099g form w 2 This replacement property must be either common stock of, or a partnership interest in a specialized small business investment company (SSBIC). 2010 taxes cheap 1099g form w 2 This is any partnership or corporation licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958, as in effect on May 13, 1993. 2010 taxes cheap 1099g form w 2 Amount of gain recognized. 2010 taxes cheap 1099g form w 2   If you make the choice described in this section, you must recognize gain only up to the following amount. 2010 taxes cheap 1099g form w 2 The amount realized on the sale, minus The cost of any common stock or partnership interest in an SSBIC that you bought during the 60-day period beginning on the date of sale (and did not previously take into account on an earlier sale of publicly traded securities). 2010 taxes cheap 1099g form w 2  If this amount is less than the amount of your gain, you can postpone the rest of your gain, subject to the limit described next. 2010 taxes cheap 1099g form w 2 If this amount is equal to or more than the amount of your gain, you must recognize the full amount of your gain. 2010 taxes cheap 1099g form w 2 Limit on gain postponed. 2010 taxes cheap 1099g form w 2   The amount of gain you can postpone each year is limited to the smaller of: $50,000 ($25,000 if you are married and file a separate return), or $500,000 ($250,000 if you are married and file a separate return), minus the amount of gain you postponed for all earlier years. 2010 taxes cheap 1099g form w 2 Basis of replacement property. 2010 taxes cheap 1099g form w 2   You must subtract the amount of postponed gain from the basis of your replacement property. 2010 taxes cheap 1099g form w 2 How to report and postpone gain. 2010 taxes cheap 1099g form w 2    See How to report and postpone gain under Rollover of Gain From Publicly Traded Securities in chapter 4 of Publication 550 for details. 2010 taxes cheap 1099g form w 2 Prev  Up  Next   Home   More Online Publications
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The 2010 Taxes Cheap 1099g Form W 2

2010 taxes cheap 1099g form w 2 9. 2010 taxes cheap 1099g form w 2   Dispositions of Property Used in Farming Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. 2010 taxes cheap 1099g form w 2 Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sale Other Dispositions Other GainsExceptions. 2010 taxes cheap 1099g form w 2 Amount to report as ordinary income. 2010 taxes cheap 1099g form w 2 Applicable percentage. 2010 taxes cheap 1099g form w 2 Amount to report as ordinary income. 2010 taxes cheap 1099g form w 2 Applicable percentage. 2010 taxes cheap 1099g form w 2 Introduction When you dispose of property used in your farm business, your taxable gain or loss is usually treated as ordinary income (which is taxed at the same rates as wages and interest income) or capital gain (which is generally taxed at lower rates) under the rules for section 1231 transactions. 2010 taxes cheap 1099g form w 2 When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. 2010 taxes cheap 1099g form w 2 Any gain remaining after applying the depreciation recapture rules is a section 1231 gain, which may be taxed as a capital gain. 2010 taxes cheap 1099g form w 2 Gains and losses from property used in farming are reported on Form 4797, Sales of Business Property. 2010 taxes cheap 1099g form w 2 Table 9-1 contains examples of items reported on Form 4797 and refers to the part of that form on which they first should be reported. 2010 taxes cheap 1099g form w 2 Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Other gains Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. 2010 taxes cheap 1099g form w 2 Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (explained below). 2010 taxes cheap 1099g form w 2 Their treatment as ordinary or capital gains depends on whether you have a net gain or a net loss from all of your section 1231 transactions in the tax year. 2010 taxes cheap 1099g form w 2 Table 9-1. 2010 taxes cheap 1099g form w 2 Where to First Report Certain Items on Form 4797 Type of property Held 1 year  or less Held more than  1 year 1 Depreciable trade or business property:       a Sold or exchanged at a gain Part II Part III (1245, 1250)   b Sold or exchanged at a loss Part II Part I 2 Farmland held less than 10 years for which soil, water, or land clearing expenses were deducted:       a Sold at a gain Part II Part III (1252)   b Sold at a loss Part II Part I 3 All other farmland Part II Part I 4 Disposition of cost-sharing payment property described in section 126 Part II Part III (1255) 5 Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 24 mos. 2010 taxes cheap 1099g form w 2 Held 24 mos. 2010 taxes cheap 1099g form w 2  or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised cattle and horses sold at a gain Part II Part I 6 Livestock other than cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 12 mos. 2010 taxes cheap 1099g form w 2 Held 12 mos. 2010 taxes cheap 1099g form w 2   or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised livestock sold at a gain Part II Part I If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). 2010 taxes cheap 1099g form w 2 Do not take that gain into account as section 1231 gain. 2010 taxes cheap 1099g form w 2 Section 1231 transactions. 2010 taxes cheap 1099g form w 2   Gain or loss on the following transactions is subject to section 1231 treatment. 2010 taxes cheap 1099g form w 2 Sale or exchange of cattle and horses. 2010 taxes cheap 1099g form w 2 The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 24 months or longer. 2010 taxes cheap 1099g form w 2 Sale or exchange of other livestock. 2010 taxes cheap 1099g form w 2 This livestock must be held for draft, breeding, dairy, or sporting purposes and held for 12 months or longer. 2010 taxes cheap 1099g form w 2 Other livestock includes hogs, mules, sheep, goats, donkeys, and other fur-bearing animals. 2010 taxes cheap 1099g form w 2 Other livestock does not include poultry. 2010 taxes cheap 1099g form w 2 Sale or exchange of depreciable personal property. 2010 taxes cheap 1099g form w 2 This property must be used in your business and held longer than 1 year. 2010 taxes cheap 1099g form w 2 Generally, property held for the production of rents or royalties is considered to be used in a trade or business. 2010 taxes cheap 1099g form w 2 Examples of depreciable personal property include farm machinery and trucks. 2010 taxes cheap 1099g form w 2 It also includes amortizable section 197 intangibles. 2010 taxes cheap 1099g form w 2 Sale or exchange of real estate. 2010 taxes cheap 1099g form w 2 This property must be used in your business and held longer than 1 year. 2010 taxes cheap 1099g form w 2 Examples are your farm or ranch (including barns and sheds). 2010 taxes cheap 1099g form w 2 Sale or exchange of unharvested crops. 2010 taxes cheap 1099g form w 2 The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person, and the land must have been held longer than 1 year. 2010 taxes cheap 1099g form w 2 You cannot keep any right or option to reacquire the land directly or indirectly (other than a right customarily incident to a mortgage or other security transaction). 2010 taxes cheap 1099g form w 2 Growing crops sold with a leasehold on the land, even if sold to the same person in a single transaction, are not included. 2010 taxes cheap 1099g form w 2 Distributive share of partnership gains and losses. 2010 taxes cheap 1099g form w 2 Your distributive share must be from the sale or exchange of property listed above and held longer than 1 year (or for the required period for certain livestock). 2010 taxes cheap 1099g form w 2 Cutting or disposal of timber. 2010 taxes cheap 1099g form w 2 Special rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange, or you enter into a cutting contract, as described in chapter 8 under Timber . 2010 taxes cheap 1099g form w 2 Condemnation. 2010 taxes cheap 1099g form w 2 The condemned property (defined in chapter 11) must have been held longer than 1 year. 2010 taxes cheap 1099g form w 2 It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. 2010 taxes cheap 1099g form w 2 It cannot be property held for personal use. 2010 taxes cheap 1099g form w 2 Casualty or theft. 2010 taxes cheap 1099g form w 2 The casualty or theft must have affected business property, property held for the production of rents or royalties, or investment property (such as notes and bonds). 2010 taxes cheap 1099g form w 2 You must have held the property longer than 1 year. 2010 taxes cheap 1099g form w 2 However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. 2010 taxes cheap 1099g form w 2 Section 1231 does not apply to personal casualty gains and losses. 2010 taxes cheap 1099g form w 2 See chapter 11 for information on how to treat those gains and losses. 2010 taxes cheap 1099g form w 2 If the property is not held for the required holding period, the transaction is not subject to section 1231 treatment, and any gain or loss is ordinary income reported in Part II of Form 4797. 2010 taxes cheap 1099g form w 2 See Table 9-1. 2010 taxes cheap 1099g form w 2 Property for sale to customers. 2010 taxes cheap 1099g form w 2   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. 2010 taxes cheap 1099g form w 2 If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. 2010 taxes cheap 1099g form w 2 Treatment as ordinary or capital. 2010 taxes cheap 1099g form w 2   To determine the treatment of section 1231 gains and losses, combine all of your section 1231 gains and losses for the year. 2010 taxes cheap 1099g form w 2 If you have a net section 1231 loss, it is an ordinary loss. 2010 taxes cheap 1099g form w 2 If you have a net section 1231 gain, it is ordinary income up to your nonrecaptured section 1231 losses from previous years, explained next. 2010 taxes cheap 1099g form w 2 The rest, if any, is long-term capital gain. 2010 taxes cheap 1099g form w 2 Nonrecaptured section 1231 losses. 2010 taxes cheap 1099g form w 2   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain by treating the gain as ordinary income. 2010 taxes cheap 1099g form w 2 These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 In 2013, Ben has a $2,000 net section 1231 gain. 2010 taxes cheap 1099g form w 2 To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. 2010 taxes cheap 1099g form w 2 From 2008 through 2012 he had the following section 1231 gains and losses. 2010 taxes cheap 1099g form w 2 Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800   Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. 2010 taxes cheap 1099g form w 2 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 His remaining net section 1231 loss from 2010 is completely recaptured in 2013. 2010 taxes cheap 1099g form w 2 Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if it is otherwise nontaxable) as ordinary income. 2010 taxes cheap 1099g form w 2 To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. 2010 taxes cheap 1099g form w 2 For more information, see chapter 3 of Publication 544. 2010 taxes cheap 1099g form w 2 Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable. 2010 taxes cheap 1099g form w 2 Any recognized gain that is more than the part that is ordinary income is a section 1231 gain. 2010 taxes cheap 1099g form w 2 See Treatment as ordinary or capital under Section 1231 Gains and Losses , earlier. 2010 taxes cheap 1099g form w 2 Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. 2010 taxes cheap 1099g form w 2 Personal property (either tangible or intangible). 2010 taxes cheap 1099g form w 2 Other tangible property (except buildings and their structural components) used as any of the following. 2010 taxes cheap 1099g form w 2 See Buildings and structural components below. 2010 taxes cheap 1099g form w 2 An integral part of manufacturing, production, or extraction, or of furnishing certain services. 2010 taxes cheap 1099g form w 2 A research facility in any of the activities in (a). 2010 taxes cheap 1099g form w 2 A facility in any of the activities in (a) above, for the bulk storage of fungible commodities (discussed later). 2010 taxes cheap 1099g form w 2 That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. 2010 taxes cheap 1099g form w 2 Amortization of certified pollution control facilities. 2010 taxes cheap 1099g form w 2 The section 179 expense deduction. 2010 taxes cheap 1099g form w 2 Deduction for clean-fuel vehicles and certain refueling property. 2010 taxes cheap 1099g form w 2 Expenditures to remove architectural and transportation barriers to the handicapped and elderly. 2010 taxes cheap 1099g form w 2 Certain reforestation expenditures (as described under Reforestation Costs in chapter 7. 2010 taxes cheap 1099g form w 2 Single purpose agricultural (livestock) or horticultural structures. 2010 taxes cheap 1099g form w 2 Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. 2010 taxes cheap 1099g form w 2 Buildings and structural components. 2010 taxes cheap 1099g form w 2   Section 1245 property does not include buildings and structural components. 2010 taxes cheap 1099g form w 2 The term building includes a house, barn, warehouse, or garage. 2010 taxes cheap 1099g form w 2 The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. 2010 taxes cheap 1099g form w 2   Do not treat a structure that is essentially machinery or equipment as a building or structural component. 2010 taxes cheap 1099g form w 2 Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. 2010 taxes cheap 1099g form w 2   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. 2010 taxes cheap 1099g form w 2 Structures such as oil and gas storage tanks, grain storage bins, and silos are not treated as buildings, but as section 1245 property. 2010 taxes cheap 1099g form w 2 Facility for bulk storage of fungible commodities. 2010 taxes cheap 1099g form w 2   This is a facility used mainly for the bulk storage of fungible commodities. 2010 taxes cheap 1099g form w 2 Bulk storage means storage of a commodity in a large mass before it is used. 2010 taxes cheap 1099g form w 2 For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. 2010 taxes cheap 1099g form w 2 To be fungible, a commodity must be such that one part may be used in place of another. 2010 taxes cheap 1099g form w 2 Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. 2010 taxes cheap 1099g form w 2 The depreciation (which includes any section 179 deduction claimed) and amortization allowed or allowable on the property. 2010 taxes cheap 1099g form w 2 The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). 2010 taxes cheap 1099g form w 2 For any other disposition of section 1245 property, ordinary income is the lesser of (1) above or the amount by which its fair market value (FMV) is more than its adjusted basis. 2010 taxes cheap 1099g form w 2 For details, see chapter 3 of Publication 544. 2010 taxes cheap 1099g form w 2 Use Part III of Form 4797 to figure the ordinary income part of the gain. 2010 taxes cheap 1099g form w 2 Depreciation claimed on other property or claimed by other taxpayers. 2010 taxes cheap 1099g form w 2   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. 2010 taxes cheap 1099g form w 2 Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. 2010 taxes cheap 1099g form w 2 For details on exchanges of property that are not taxable, see Like-Kind Exchanges in chapter 8. 2010 taxes cheap 1099g form w 2 Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift and part of the transfer is a sale or exchange). 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 Jeff Free paid $120,000 for a tractor in 2012. 2010 taxes cheap 1099g form w 2 On February 23, 2013, he traded it for a chopper and paid an additional $30,000. 2010 taxes cheap 1099g form w 2 To figure his depreciation deduction on the chopper for the current year, Jeff continues to use the basis of the tractor as he would have before the trade. 2010 taxes cheap 1099g form w 2 Jeff can also depreciate the additional $30,000 for the chopper. 2010 taxes cheap 1099g form w 2 Depreciation and amortization. 2010 taxes cheap 1099g form w 2   Depreciation and amortization deductions that must be recaptured as ordinary income include (but are not limited to) the following items. 2010 taxes cheap 1099g form w 2 See Depreciation Recapture in chapter 3 of Publication 544 for more details. 2010 taxes cheap 1099g form w 2 Ordinary depreciation deductions. 2010 taxes cheap 1099g form w 2 Section 179 deduction (see chapter 7). 2010 taxes cheap 1099g form w 2 Any special depreciation allowance. 2010 taxes cheap 1099g form w 2 Amortization deductions for all the following costs. 2010 taxes cheap 1099g form w 2 Acquiring a lease. 2010 taxes cheap 1099g form w 2 Lessee improvements. 2010 taxes cheap 1099g form w 2 Pollution control facilities. 2010 taxes cheap 1099g form w 2 Reforestation expenses. 2010 taxes cheap 1099g form w 2 Section 197 intangibles. 2010 taxes cheap 1099g form w 2 Qualified disaster expenses. 2010 taxes cheap 1099g form w 2 Franchises, trademarks, and trade names acquired before August 11, 1993. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 You file your returns on a calendar year basis. 2010 taxes cheap 1099g form w 2 In February 2011, you bought and placed in service for 100% use in your farming business a light-duty truck (5-year property) that cost $10,000. 2010 taxes cheap 1099g form w 2 You used the half-year convention and your MACRS deductions for the truck were $1,500 in 2011 and $2,550 in 2012. 2010 taxes cheap 1099g form w 2 You did not claim the section 179 expense deduction for the truck. 2010 taxes cheap 1099g form w 2 You sold it in May 2013 for $7,000. 2010 taxes cheap 1099g form w 2 The MACRS deduction in 2013, the year of sale, is $893 (½ of $1,785). 2010 taxes cheap 1099g form w 2 Figure the gain treated as ordinary income as follows. 2010 taxes cheap 1099g form w 2 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $1,500 + $2,550 + $893) 4,943   4) Adjusted basis (subtract line 3 from line 2) $5,057 5) Gain realized (subtract line 4 from line 1) 1,943 6) Gain treated as ordinary income (lesser of line 3 or line 5) $1,943 Depreciation allowed or allowable. 2010 taxes cheap 1099g form w 2   You generally use the greater of the depreciation allowed or allowable when figuring the part of gain to report as ordinary income. 2010 taxes cheap 1099g form w 2 If, in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. 2010 taxes cheap 1099g form w 2 If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. 2010 taxes cheap 1099g form w 2 This treatment applies only when figuring what part of the gain is treated as ordinary income under the rules for section 1245 depreciation recapture. 2010 taxes cheap 1099g form w 2 Disposition of plants and animals. 2010 taxes cheap 1099g form w 2   If you elect not to use the uniform capitalization rules (see chapter 6), you must treat any plant you produce as section 1245 property. 2010 taxes cheap 1099g form w 2 If you have a gain on the property's disposition, you must recapture the pre-productive expenses you would have capitalized if you had not made the election by treating the gain, up to the amount of these expenses, as ordinary income. 2010 taxes cheap 1099g form w 2 For section 1231 transactions, show these expenses as depreciation on Form 4797, Part III, line 22. 2010 taxes cheap 1099g form w 2 For plant sales that are reported on Schedule F (1040), Profit or Loss From Farming, this recapture rule does not change the reporting of income because the gain is already ordinary income. 2010 taxes cheap 1099g form w 2 You can use the farm-price method or the unit-livestock-price method discussed in  chapter 2 to figure these expenses. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 Janet Maple sold her apple orchard in 2013 for $80,000. 2010 taxes cheap 1099g form w 2 Her adjusted basis at the time of sale was $60,000. 2010 taxes cheap 1099g form w 2 She bought the orchard in 2006, but the trees did not produce a crop until 2009. 2010 taxes cheap 1099g form w 2 Her pre-productive expenses were $6,000. 2010 taxes cheap 1099g form w 2 She elected not to use the uniform capitalization rules. 2010 taxes cheap 1099g form w 2 Janet must treat $6,000 of the gain as ordinary income. 2010 taxes cheap 1099g form w 2 Section 1250 Property Section 1250 property includes all real property subject to an allowance for depreciation that is not and never has been section 1245 property. 2010 taxes cheap 1099g form w 2 It includes buildings and structural components that are not section 1245 property (discussed earlier). 2010 taxes cheap 1099g form w 2 It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. 2010 taxes cheap 1099g form w 2 A fee simple interest in land is not section 1250 property because, like land, it is not depreciable. 2010 taxes cheap 1099g form w 2 Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable. 2010 taxes cheap 1099g form w 2 To determine the additional depreciation on section 1250 property, see Depreciation Recapture in chapter 3 of Publication 544. 2010 taxes cheap 1099g form w 2 You will not have additional depreciation if any of the following apply to the property disposed of. 2010 taxes cheap 1099g form w 2 You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method and you have held the property longer than 1 year. 2010 taxes cheap 1099g form w 2 You chose the alternate ACRS (straight line) method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. 2010 taxes cheap 1099g form w 2 The property was nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made) and you held it longer than 1 year. 2010 taxes cheap 1099g form w 2 These properties are depreciated using the straight line method. 2010 taxes cheap 1099g form w 2 Installment Sale If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. 2010 taxes cheap 1099g form w 2 This applies even if no payments are received in that year. 2010 taxes cheap 1099g form w 2 If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. 2010 taxes cheap 1099g form w 2 For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. 2010 taxes cheap 1099g form w 2 If you dispose of more than one asset in a single transaction, you must separately figure the gain on each asset so that it may be properly reported. 2010 taxes cheap 1099g form w 2 To do this, allocate the selling price and the payments you receive in the year of sale to each asset. 2010 taxes cheap 1099g form w 2 Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. 2010 taxes cheap 1099g form w 2 For more information on installment sales, see chapter 10. 2010 taxes cheap 1099g form w 2 Other Dispositions Chapter 3 of Publication 544 discusses the tax treatment of the following transfers of depreciable property. 2010 taxes cheap 1099g form w 2 By gift. 2010 taxes cheap 1099g form w 2 At death. 2010 taxes cheap 1099g form w 2 In like-kind exchanges. 2010 taxes cheap 1099g form w 2 In involuntary conversions. 2010 taxes cheap 1099g form w 2 Publication 544 also explains how to handle a single transaction involving multiple properties. 2010 taxes cheap 1099g form w 2 Other Gains This section discusses gain on the disposition of farmland for which you were allowed either of the following. 2010 taxes cheap 1099g form w 2 Deductions for soil and water conservation expenditures (section 1252 property). 2010 taxes cheap 1099g form w 2 Exclusions from income for certain cost sharing payments (section 1255 property). 2010 taxes cheap 1099g form w 2 Section 1252 property. 2010 taxes cheap 1099g form w 2   If you disposed of farmland you held more than 1 year and less than 10 years at a gain and you were allowed deductions for soil and water conservation expenses for the land, as discussed in chapter 5, you must treat part of the gain as ordinary income and treat the balance as section 1231 gain. 2010 taxes cheap 1099g form w 2 Exceptions. 2010 taxes cheap 1099g form w 2   Do not treat gain on the following transactions as gain on section 1252 property. 2010 taxes cheap 1099g form w 2 Disposition of farmland by gift. 2010 taxes cheap 1099g form w 2 Transfer of farm property at death (except for income in respect of a decedent). 2010 taxes cheap 1099g form w 2 For more information, see Regulations section 1. 2010 taxes cheap 1099g form w 2 1252-2. 2010 taxes cheap 1099g form w 2 Amount to report as ordinary income. 2010 taxes cheap 1099g form w 2   You report as ordinary income the lesser of the following amounts. 2010 taxes cheap 1099g form w 2 Your gain (determined by subtracting the adjusted basis from the amount realized from a sale, exchange, or involuntary conversion, or the FMV for all other dispositions). 2010 taxes cheap 1099g form w 2 The total deductions allowed for soil and water conservation expenses multiplied by the applicable percentage, discussed next. 2010 taxes cheap 1099g form w 2 Applicable percentage. 2010 taxes cheap 1099g form w 2   The applicable percentage is based on the length of time you held the land. 2010 taxes cheap 1099g form w 2 If you dispose of your farmland within 5 years after the date you acquired it, the percentage is 100%. 2010 taxes cheap 1099g form w 2 If you dispose of the land within the 6th through 9th year after you acquired it, the applicable percentage is reduced by 20% a year for each year or part of a year you hold the land after the 5th year. 2010 taxes cheap 1099g form w 2 If you dispose of the land 10 or more years after you acquired it, the percentage is 0%, and the entire gain is a section 1231 gain. 2010 taxes cheap 1099g form w 2 Example. 2010 taxes cheap 1099g form w 2 You acquired farmland on January 19, 2005. 2010 taxes cheap 1099g form w 2 On October 3, 2013, you sold the land at a $30,000 gain. 2010 taxes cheap 1099g form w 2 Between January 1 and October 3, 2013, you incur soil and water conservation expenditures of $15,000 for the land that are fully deductible in 2013. 2010 taxes cheap 1099g form w 2 The applicable percentage is 40% since you sold the land within the 8th year after you acquired it. 2010 taxes cheap 1099g form w 2 You treat $6,000 (40% of $15,000) of the $30,000 gain as ordinary income and the $24,000 balance as a section 1231 gain. 2010 taxes cheap 1099g form w 2 Section 1255 property. 2010 taxes cheap 1099g form w 2   If you receive certain cost-sharing payments on property and you exclude those payments from income (as discussed in chapter 3), you may have to treat part of any gain as ordinary income and treat the balance as a section 1231 gain. 2010 taxes cheap 1099g form w 2 If you chose not to exclude these payments, you will not have to recognize ordinary income under this provision. 2010 taxes cheap 1099g form w 2 Amount to report as ordinary income. 2010 taxes cheap 1099g form w 2   You report as ordinary income the lesser of the following amounts. 2010 taxes cheap 1099g form w 2 The applicable percentage of the total excluded cost-sharing payments. 2010 taxes cheap 1099g form w 2 The gain on the disposition of the property. 2010 taxes cheap 1099g form w 2 You do not report ordinary income under this rule to the extent the gain is recognized as ordinary income under sections 1231 through 1254, 1256, and 1257. 2010 taxes cheap 1099g form w 2 However, if applicable, gain reported under this rule must be reported regardless of any contrary provisions (including nonrecognition provisions) under any other section. 2010 taxes cheap 1099g form w 2 Applicable percentage. 2010 taxes cheap 1099g form w 2   The applicable percentage of the excluded cost-sharing payments to be reported as ordinary income is based on the length of time you hold the property after receiving the payments. 2010 taxes cheap 1099g form w 2 If the property is held less than 10 years after you receive the payments, the percentage is 100%. 2010 taxes cheap 1099g form w 2 After 10 years, the percentage is reduced by 10% a year, or part of a year, until the rate is 0%. 2010 taxes cheap 1099g form w 2 Form 4797, Part III. 2010 taxes cheap 1099g form w 2   Use Form 4797, Part III, to figure the ordinary income part of a gain from the sale, exchange, or involuntary conversion of section 1252 property and section 1255 property. 2010 taxes cheap 1099g form w 2 Prev  Up  Next   Home   More Online Publications