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2012 Tax Forms 1040ez

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2012 Tax Forms 1040ez

2012 tax forms 1040ez Publication 901 - Main Content Table of Contents Application of Treaties Tax Exemptions Provided by TreatiesPersonal Services Income Professors, Teachers, and Researchers Students and Apprentices Wages and Pensions Paid by a Foreign Government Explanation of TablesTable 1 Table 2 Table 3 Application of Treaties The United States has income tax treaties with a number of foreign countries. 2012 tax forms 1040ez Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income taxes on certain items of income they receive from sources within the United States. 2012 tax forms 1040ez These reduced rates and exemptions vary among countries and specific items of income. 2012 tax forms 1040ez If there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for Form 1040NR. 2012 tax forms 1040ez Also see Publication 519. 2012 tax forms 1040ez Many of the individual states of the United States tax the income of their residents. 2012 tax forms 1040ez Therefore, you should consult the tax authorities of the state in which you live to find out if that state taxes the income of individuals and, if so, whether the tax applies to any of your income. 2012 tax forms 1040ez Tax treaties reduce the U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez taxes of residents of foreign countries. 2012 tax forms 1040ez With certain exceptions, they do not reduce the U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez taxes of U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez citizens or residents. 2012 tax forms 1040ez U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez citizens and residents are subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax on their worldwide income. 2012 tax forms 1040ez Treaty provisions generally are reciprocal (apply to both treaty countries); therefore, a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez citizen or resident who receives income from a treaty country may refer to the tables in this publication to see if a tax treaty might affect the tax to be paid to that foreign country. 2012 tax forms 1040ez Foreign taxing authorities sometimes require certification from the U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez Government that an applicant filed an income tax return as a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez citizen or resident, as part of the proof of entitlement to the treaty benefits. 2012 tax forms 1040ez See Form 8802, Application for United States Residency Certification, to request a certification. 2012 tax forms 1040ez Disclosure of a treaty-based position that reduces your tax. 2012 tax forms 1040ez   If you take the position that any U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax is overruled or otherwise reduced by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez treaty (a treaty-based position), you generally must disclose that position on Form 8833 and attach it to your return. 2012 tax forms 1040ez If you are not required to file a return because of your treaty-based position, you must file a return anyway to report your position. 2012 tax forms 1040ez The filing of Form 8833 does not apply to a reduced rate of withholding tax on noneffectively connected income, such as dividends, interest, rents or royalties, or to a reduced rate of tax on pay received for services performed as an employee, including pensions, annuities, and social security. 2012 tax forms 1040ez For more information, see Publication 519 and the Form 8833 instructions. 2012 tax forms 1040ez   If you fail to file Form 8833, you may have to pay a $1,000 penalty. 2012 tax forms 1040ez Corporations are subject to a $10,000 penalty for each failure. 2012 tax forms 1040ez Tax Exemptions Provided by Treaties In addition to the tables in the back of this publication, this publication contains discussions of the exemptions from tax and certain other effects of the tax treaties on the following types of income. 2012 tax forms 1040ez Pay for certain personal services performed in the United States. 2012 tax forms 1040ez Pay of a professor, teacher, or researcher who teaches or performs research in the United States for a limited time. 2012 tax forms 1040ez Amounts received for maintenance and studies by a foreign student or apprentice who is here for study or experience. 2012 tax forms 1040ez Wages, salaries, and pensions paid by a foreign government. 2012 tax forms 1040ez Personal Services Income Pay for certain personal services performed in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if you are a resident of one of the countries discussed below, if you are in the United States for a limited number of days, and if you meet certain other conditions. 2012 tax forms 1040ez For this purpose, the word “day” means a day during any part of which you are physically present in the United States. 2012 tax forms 1040ez Terms defined. 2012 tax forms 1040ez   Several terms appear in many of the discussions that follow. 2012 tax forms 1040ez The exact meanings of the terms are determined by the particular tax treaty under discussion; thus, the meanings vary among treaties. 2012 tax forms 1040ez The definitions that follow are, therefore, general definitions that may not give the exact meaning intended by a particular treaty. 2012 tax forms 1040ez   The terms fixed base and permanent establishment generally mean a fixed place of business, such as a place of management, a branch, an office, a factory, a warehouse, or a mining site, through which an enterprise carries on its business. 2012 tax forms 1040ez   The term borne by generally means having ultimate financial accounting responsibility for, or providing the monetary resources for, an expenditure or payment, even if another entity in another location actually made the expenditure or payment. 2012 tax forms 1040ez Australia Income that residents of Australia receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 183 days during the tax year, and Do not have a fixed base regularly available to them in the United States for the purpose of performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Pay that residents of Australia receive for labor or personal services performed in the United States as employees (dependent personal services), including services as a director of a company, is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if: The residents are in the United States for no more than 183 days during the tax year, The pay is paid by, or on behalf of, an employer or company that is not a resident of the United States, and The pay is not deductible in determining the taxable income of the trade or business of the employer (or company) in the United States. 2012 tax forms 1040ez These exemptions do not apply to public entertainers (such as theater, motion picture, radio, or television entertainers, musicians, and athletes) from Australia who earn more than $10,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year. 2012 tax forms 1040ez Austria Income that residents of Austria receive for personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Austria receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to public entertainers (such as theater, motion picture, radio, or television entertainers, musicians, and athletes) from Austria who earn more than $20,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year. 2012 tax forms 1040ez Income received by a resident of Austria for services performed as an employee and member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax. 2012 tax forms 1040ez Bangladesh Income that residents of Bangladesh receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year, or Do not have a fixed base regularly available to them in the United States for the purpose of performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Bangladesh receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to pubic entertainers (such as theater, motion picture, radio, or television entertainers, musicians, and athletes) from Bangladesh who earn more than $10,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year. 2012 tax forms 1040ez Regardless of these limits, income of Bangladesh entertainers is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if their visit to the United States is wholly or mainly supported by public funds of Bangladesh, its political subdivisions, or local authorities. 2012 tax forms 1040ez Income received from employment as a member of the regular complement of a ship or an aircraft operated by a Bangladesh enterprise in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez If the ship or aircraft is operated by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise, the income is subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez If the resident of Bangladesh is a shareholder in a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez corporation, these exemptions do not apply to directors' fees received as a member of the board of directors of the U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez corporation. 2012 tax forms 1040ez The amount received by the shareholder that is more than the amount paid to a director that is not a shareholder is subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax at the rate of 15%. 2012 tax forms 1040ez Barbados Income that residents of Barbados receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 89 days during the tax year, Earn net income for independent services provided to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez residents that is not more than $5,000 (there is no dollar limit if the contractors are not U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez residents), and Do not have a regular base available in the United States for performing the services. 2012 tax forms 1040ez If they have a regular base available in the United States but otherwise meet the conditions for exemption, they are taxed only on the income attributable to the regular base. 2012 tax forms 1040ez Income that residents of Barbados receive for personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if the residents meet four requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days during the calendar year. 2012 tax forms 1040ez The income earned in the calendar year in the United States is not more than $5,000. 2012 tax forms 1040ez Their income is paid by or for an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez The income is not borne by a permanent establishment or regular base of the employer in the United States. 2012 tax forms 1040ez Income of a Barbadian resident from employment as a member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez These exemptions do not apply to Barbadian resident public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) who receive gross receipts of more than $250 per day or $4,000 in the tax year, not including reimbursed expenses, from their entertainment activities in the United States. 2012 tax forms 1040ez However, the exemptions do apply regardless of these limits on gross receipts if the entertainer's visit to the United States is substantially supported by Barbadian public funds or if the entertainer's services are provided to a nonprofit organization. 2012 tax forms 1040ez Belgium Income that residents of Belgium receive for personal services as independent contractors or self-employed individuals are subject to the provisions of Article 7 (Business Profits) of the treaty. 2012 tax forms 1040ez Under that provision, business profits are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax unless the individual has a permanent establishment in the United States. 2012 tax forms 1040ez If they have a permanent establishment in the United States, they are taxed on the profit attributable to the permanent establishment. 2012 tax forms 1040ez Income that residents of Belgium receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to directors' fees and similar payments received by a resident of Belgium for services performed in the United States as a member of the board of directors of a company that is a resident of the United States. 2012 tax forms 1040ez Public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) from Belgium who earn more than $20,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year are subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Income received by a resident of Belgium for services performed as an employee and member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax. 2012 tax forms 1040ez Bulgaria Income that residents of Bulgaria receive for personal services as independent contractors or self-employed individuals is subject to the provisions of Article 7 (Business Profits) of the treaty. 2012 tax forms 1040ez Under that provision, business profits are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax unless the individual has a permanent establishment in the United States. 2012 tax forms 1040ez If they have a permanent establishment in the United States, they are taxed on the profit attributable to the permanent establishment. 2012 tax forms 1040ez Under Article 5 (Permanent Establishment), you may be considered to provide services through a permanent establishment in the United States even if you do not have a fixed place of business. 2012 tax forms 1040ez Income that residents of Bulgaria receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to directors' fees and similar payments received by a resident of Bulgaria as a member of the board of directors of a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez company. 2012 tax forms 1040ez Public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) from Bulgaria who earn more than $15,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year are subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Income received by a resident of Bulgaria for services performed as an employee and member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax. 2012 tax forms 1040ez Canada Income that residents of Canada receive for personal services as independent contractors or self-employed individuals is subject to the provisions of Article VII (Business Profits) of the treaty. 2012 tax forms 1040ez Under that provision, business profits are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax unless the individual has a permanent establishment in the United States. 2012 tax forms 1040ez If they have a permanent establishment in the United States, they are taxed on the profit attributable to the permanent establishment. 2012 tax forms 1040ez Under Article V (Permanent Establishment), you may be considered to provide services through a permanent establishment in the United States even if you do not have a fixed place of business. 2012 tax forms 1040ez Income that residents of Canada receive for personal services performed as employees (dependent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if it is not more than $10,000 for the year. 2012 tax forms 1040ez If the income is more than $10,000 for the year, it is exempt only if: The residents are present in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year, and The income is not paid by, or on behalf of, a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident, and is not borne by a permanent establishment in the United States. 2012 tax forms 1040ez Public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) from Canada who derive more than $15,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the calendar year are subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez However, this article does not apply to athletes participating in team sports in leagues with regularly scheduled games in both Canada and the United States. 2012 tax forms 1040ez Pay received by a resident of Canada for employment regularly done in more than one country on a ship, aircraft, motor vehicle, or train operated by a Canadian resident is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez China, People's Republic of Income that residents of the People's Republic of China receive for personal services as independent contractors or self-employed individuals (independent personal services) that they perform during the tax year in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are present in the United States for no more than 183 days in the calendar year, and Do not have a fixed base regularly available in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxable on the income attributable to the fixed base. 2012 tax forms 1040ez Pay received by residents of the People's Republic of China for services performed as employees (dependent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if: The residents are present in the United States for no more than 183 days in the calendar year, The pay is paid by or for an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident, and The pay is not borne by a permanent establishment or fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to directors' fees for service on the board of directors of a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez corporation. 2012 tax forms 1040ez These exemptions generally do not apply to income received as a public entertainer (such as a theater, motion picture, radio, or television artist, musician, or athlete). 2012 tax forms 1040ez However, income of athletes or public entertainers from China participating in a cultural exchange program agreed upon by the U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez and Chinese governments is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Commonwealth of Independent States Income that residents of a C. 2012 tax forms 1040ez I. 2012 tax forms 1040ez S. 2012 tax forms 1040ez member receive for performing personal services in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if those residents are in the United States for no more than 183 days during the tax year. 2012 tax forms 1040ez Pay received by an employee who is a member of the regular complement of a ship or aircraft operated in international traffic by a C. 2012 tax forms 1040ez I. 2012 tax forms 1040ez S. 2012 tax forms 1040ez member or a resident of a C. 2012 tax forms 1040ez I. 2012 tax forms 1040ez S. 2012 tax forms 1040ez member is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Cyprus Income that residents of Cyprus receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are present in the United States for less than 183 days in the tax year, and Do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxable on the income attributable to the fixed base. 2012 tax forms 1040ez Pay received by residents of Cyprus from services performed as employees (dependent personal services), including services as an officer of a corporation, is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if: The residents are in the United States for less than 183 days during the tax year, The pay is paid by or for an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident, and The pay is not borne by a permanent establishment, fixed base, or trade or business that the employer has in the United States. 2012 tax forms 1040ez Pay received by a Cyprus resident for performing personal services as an employee and member of the regular complement of a ship or aircraft operated in international traffic by a resident of Cyprus is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez These exemptions do not apply to Cyprus resident public entertainers (theater, motion picture, radio, or television artists, musicians, or athletes) who receive gross receipts of more than $500 per day or $5,000 for the tax year, not including reimbursed expenses, from their entertainment activities in the United States. 2012 tax forms 1040ez Directors' fees received by residents of Cyprus for service on the board of directors of a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez corporation are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax to the extent of a reasonable fixed amount payable to all directors for each day of attendance at directors' meetings held in the United States. 2012 tax forms 1040ez Czech Republic Income that residents of the Czech Republic receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are present in the United States for no more than 183 days in any 12-month period, and Do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available, they are taxed only on income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of the Czech Republic receive for employment in the United States (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the following three requirements are met. 2012 tax forms 1040ez The resident is present in the United States for no more than 183 days in any 12-month period. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez The income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to income residents of the Czech Republic receive as public entertainers (such as theater, motion picture, radio, or television artists, or musicians) or sportsmen if their gross receipts, including reimbursed expenses, are more than $20,000 during the tax year. 2012 tax forms 1040ez Regardless of these limits, income of Czech entertainers and sportsmen is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if their visit to the United States is substantially supported by public funds of the Czech Republic, its political subdivisions, or local authorities, or the visit is made pursuant to a specific arrangement between the United States and the Czech Republic. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by a resident of the Czech Republic as a member of the board of directors of a company that is a resident of the United States. 2012 tax forms 1040ez Income from employment as a member of the regular complement of a ship or aircraft operated by a Czech enterprise in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax. 2012 tax forms 1040ez If the ship or aircraft is operated by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise, the income is subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Denmark Income that residents of Denmark receive for personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Denmark receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by a resident of Denmark as a member of the board of directors of a company that is a resident of the United States. 2012 tax forms 1040ez These exemptions do not apply to public entertainers (such as theater, motion picture, radio, or television artists, musicians, and athletes) from Denmark who earn more than $20,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year. 2012 tax forms 1040ez Income received by a resident of Denmark for services performed as an employee and member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax. 2012 tax forms 1040ez Egypt Income that residents of Egypt receive for performing personal services as independent contractors or as self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they are in the United States for no more than 89 days during the tax year. 2012 tax forms 1040ez Income that residents of Egypt receive for labor or personal services performed in the United States as employees (dependent personal services), including income for services performed by an officer of a corporation or company, is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet four requirements. 2012 tax forms 1040ez They are in the United States for no more than 89 days during the tax year. 2012 tax forms 1040ez They are employees of a resident of, or a permanent establishment in, Egypt. 2012 tax forms 1040ez Their income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez Their income is subject to Egyptian tax. 2012 tax forms 1040ez This exemption does not apply to pay received by a resident of Egypt who is an employee and member of the regular complement of a ship or an aircraft operated in international traffic by a resident of the United States. 2012 tax forms 1040ez These exemptions do not apply to Egyptian resident public entertainers (theater, motion picture, radio, or television artists, musicians, or athletes), who earn income for services as public entertainers if the gross amount of the income is more than $400 for each day they are in the United States performing the services. 2012 tax forms 1040ez Estonia Income that residents of Estonia receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year, and Do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Estonia receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the following requirements are met. 2012 tax forms 1040ez The resident is in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez The income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by a resident of Estonia as a member of the board of directors or similar body of a company that is a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Pay received for employment as a member of the regular complement of a ship or an aircraft operated in international traffic by a United States enterprise is subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez These exemptions do not apply to income residents of Estonia receive as public entertainers (such as theater, motion picture, radio, or television artists, or musicians) or sportsmen if their gross receipts, including reimbursed expenses, are more than $20,000 for their personal activities in the United States during the tax year. 2012 tax forms 1040ez Regardless of these limits, income of Estonian entertainers or athletes is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if their visit to the United States is wholly or mainly supported by public funds of Estonia, its political subdivisions, or local authorities. 2012 tax forms 1040ez Finland Income that residents of Finland receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Finland receive for labor or personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet three requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days during any 12-month period. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a resident of the United States. 2012 tax forms 1040ez Their income is not borne by a permanent establishment, fixed base, or trade or business that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to pay received by a resident of Finland who is an employee and member of the regular complement of a ship or aircraft operated in international traffic by a resident of the United States. 2012 tax forms 1040ez These exemptions do not apply to income residents of Finland receive as public entertainers or sportsmen if the gross income, including reimbursed expenses, is more than $20,000 for their personal activities in the United States during the calendar year. 2012 tax forms 1040ez France Income that residents of France receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of France receive for labor or personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet three requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a resident of the United States. 2012 tax forms 1040ez Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez Income for services performed by a resident of France as an employee and member of the regular complement of a ship or an aircraft operated in international traffic is exempt from tax in the United States. 2012 tax forms 1040ez These exemptions do not apply to public entertainers (such as theater, motion picture, radio, or television artists, or musicians), or sportsmen from France who earn more than $10,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year. 2012 tax forms 1040ez Regardless of these limits, income of French entertainers or sportsmen is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if their visit is principally supported by public funds of France. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by a resident of France as a member of the board of directors of a company that is a resident of the United States. 2012 tax forms 1040ez Germany Income that residents of Germany receive for personal services as independent contractors or self-employed individuals are subject to the provisions of Article 7 (Business Profits) of the treaty. 2012 tax forms 1040ez Under that provision, business profits are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax unless the individual has a permanent establishment in the United States. 2012 tax forms 1040ez If they have a permanent establishment in the United States, they are taxed on the profit attributable to the permanent establishment. 2012 tax forms 1040ez Income that residents of Germany receive for labor or personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if the residents meet three requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days during the calendar year. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a resident of the United States. 2012 tax forms 1040ez The income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez Pay received by a resident of Germany for services performed as an employee and member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez The exemption does not apply to directors' fees and other similar payments received by a resident of Germany for services performed in the United States as a member of the board of directors of a company resident in the United States. 2012 tax forms 1040ez Income residents of Germany receive as public entertainers (such as theater, motion picture, radio, or television artists, or musicians) or athletes is subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if their gross receipts, including reimbursed expenses, from their entertainment activities in the United States are more than $20,000 during the calendar year. 2012 tax forms 1040ez Income of German entertainers or athletes is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if their visit to the United States is substantially supported by public funds of Germany, its political subdivisions, or local authorities. 2012 tax forms 1040ez Greece Income that residents of Greece receive for labor or personal services (including practicing liberal and artistic professions) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they are in the United States for no more than 183 days during the tax year and the pay is not more than $10,000. 2012 tax forms 1040ez The pay, regardless of amount, is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if it is for labor or personal services performed as employees of, or under contract with, a resident of Greece or a Greek corporation or other entity of Greece, and if the residents are in the United States for no more than 183 days during the tax year. 2012 tax forms 1040ez Hungary Income that residents of Hungary receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if the residents: Are in the United States for no more than 183 days during the tax year, and Do not have a fixed base regularly available in the United States. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Hungary receive for labor or personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet three requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days during the tax year. 2012 tax forms 1040ez Their income is paid by or on behalf of an employer who is not a resident of the United States. 2012 tax forms 1040ez Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez Pay received by an employee who is a member of the regular complement of a ship or aircraft operated by a Hungarian enterprise in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez If the ship or aircraft is operated by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise, the pay is subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Iceland Income that residents of Iceland receive for personal services as independent contractors or self-employed individuals is subject to the provisions of Article 7 (Business Profits) of the treaty. 2012 tax forms 1040ez Under that provision, business profits are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax unless the individual has a permanent establishment in the United States. 2012 tax forms 1040ez If they have a permanent establishment in the United States, they are taxed on the profit attributable to the permanent establishment. 2012 tax forms 1040ez Income that residents of Iceland receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to directors' fees and similar payments received by a resident of Iceland as a member of the board of directors of a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez company. 2012 tax forms 1040ez Public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) from Iceland who earn more than $20,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year are subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Income received by a resident of Iceland for services performed as an employee and member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax. 2012 tax forms 1040ez India Income that residents of India receive for performing personal services in the United States during the tax year as independent contractors or self-employed individuals (independent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are present in the United States for no more than 89 days during the tax year, and Do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available, they are taxed only on income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of India receive for personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet three requirements. 2012 tax forms 1040ez They are present in the United States for no more than 183 days during the tax year. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a resident of the United States. 2012 tax forms 1040ez The income is not borne by a permanent establishment, fixed base, or trade or business the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to pay received by a resident of India for services performed as an employee aboard a ship or aircraft operated in international traffic by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by an Indian resident as a member of the board of directors of a company that is a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez These exemptions do not apply to income residents of India receive as public entertainers (such as theater, motion picture, radio, or television artists, or musicians) or athletes if their net income is more than $1,500 during the tax year for their entertainment activities in the United States. 2012 tax forms 1040ez Regardless of this limit, the income of Indian entertainers and athletes is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if their visit to the United States is wholly or substantially supported from the public funds of the Indian Government, its political subdivisions, or local authorities. 2012 tax forms 1040ez Indonesia Income that residents of Indonesia receive for performing personal services as individual contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are present in the United States for no more than 119 days during any consecutive 12-month period, and Do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available, they are taxed only on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Indonesia receive for personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet three requirements. 2012 tax forms 1040ez They are present in the United States no more than 119 days during any consecutive 12-month period. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a resident of the United States. 2012 tax forms 1040ez The income is not borne or reimbursed by a permanent establishment the employer has in the United States. 2012 tax forms 1040ez Pay received by an individual for services performed as an employee aboard a ship or aircraft operated by an Indonesian resident in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if the individual is a member of the regular complement of the ship or aircraft. 2012 tax forms 1040ez These exemptions do not apply to income residents of Indonesia receive as public entertainers (such as theater, motion picture, radio, or television artists, or musicians) or athletes if their gross receipts, including reimbursed expenses, are more than $2,000 during any consecutive 12-month period. 2012 tax forms 1040ez Regardless of these limits, income of Indonesian entertainers and athletes is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if their visit to the United States is substantially supported or sponsored by the Indonesian Government and the Indonesian competent authority certifies that the entertainers or athletes qualify for this exemption. 2012 tax forms 1040ez Ireland Income that residents of Ireland receive for personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Ireland receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by a resident of Ireland as a member of the board of directors of a company that is a resident of the United States. 2012 tax forms 1040ez However, amounts received for attending meetings in Ireland are not subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax. 2012 tax forms 1040ez Income received by a resident of Ireland for services performed as an employee and member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax. 2012 tax forms 1040ez These exemptions do not apply to public entertainers (such as theater, motion picture, radio, or television entertainers, musicians, and athletes) from Ireland who earn more than $20,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year. 2012 tax forms 1040ez Israel Income that residents of Israel receive for performing personal services as independent contractors or as self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they are in the United States for no more than 182 days during the tax year. 2012 tax forms 1040ez Income that residents of Israel receive for labor or personal services performed in the United States as employees (dependent personal services), including income for services performed by an officer of a corporation or company, is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet four requirements. 2012 tax forms 1040ez They are in the United States for no more than 182 days during the tax year. 2012 tax forms 1040ez They are employees of a resident of, or a permanent establishment in, Israel. 2012 tax forms 1040ez Their income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez Their income is subject to Israeli tax. 2012 tax forms 1040ez The exemption does not apply to pay received by an employee for labor or personal services performed as a member of the regular complement of a ship or an aircraft operated in international traffic by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez These exemptions do not apply to income that residents of Israel receive as public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes), if the gross amount of the income is more than $400 for each day they are in the United States performing the services. 2012 tax forms 1040ez Italy Income that residents of Italy receive for personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Italy receive for labor or personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the following requirements are met. 2012 tax forms 1040ez The residents are in the United States for no more than 183 days during the tax year. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a resident of the United States. 2012 tax forms 1040ez The income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by a resident of Italy for services performed in the United States as a member of the board of directors of a company that is a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Pay received for employment regularly exercised aboard a ship or aircraft operated by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise is subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez These exemptions do not apply to income residents of Italy receive as public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) if they are present in the United States for more than 90 days during the tax year or their gross receipts, including reimbursed expenses, are more than $20,000 during the tax year for their entertainment activities in the United States. 2012 tax forms 1040ez Jamaica Income that residents of Jamaica receive for the performance of personal services as independent contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 89 days during the tax year, Do not have a fixed base regularly available to them in the United States for performing their services, and Earn net income for those services that is not more than $5,000 during the tax year if the income is from a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez contractor. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed only on the income that is attributable to the fixed base. 2012 tax forms 1040ez There is no dollar limit for condition (3) if the contractor is from a country other than the United States. 2012 tax forms 1040ez Income that residents of Jamaica receive for personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet four requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days during the tax year. 2012 tax forms 1040ez Their income is paid by or for an employer who is not a resident of the United States. 2012 tax forms 1040ez Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez Their net income received for the services is not more than $5,000 during the tax year. 2012 tax forms 1040ez Pay received from employment as a member of the regular complement of a ship or an aircraft operated in international traffic by a Jamaican enterprise is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez If the ship or aircraft is operated by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise, the pay is subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez These exemptions do not apply to income that residents of Jamaica receive for performing services in the United States as entertainers, such as theater, motion picture, radio, or television artists, musicians, or athletes, if the gross receipts (excluding reimbursements for expenses) from the services are more than $400 a day or $5,000 for the tax year. 2012 tax forms 1040ez Directors' fees received by residents of Jamaica for services performed in the United States as members of boards of directors of U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez corporations are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if the fees (excluding reimbursed expenses) are not more than $400 per day for each day the directors are present in the United States to perform the services. 2012 tax forms 1040ez Japan Income that residents of Japan receive for personal services as independent contractors or self-employed individuals is subject to the provisions of Article 7 (business profits) of the treaty. 2012 tax forms 1040ez Under that provision, business profits are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax unless the individual has a permanent establishment in the United States. 2012 tax forms 1040ez If they have a permanent establishment in the United States, they are taxed on the profits attributable to the permanent establishment. 2012 tax forms 1040ez Income that residents of Japan receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to directors' fees and similar payments received by a resident of Japan for services performed as a member of the board of directors of a company that is a resident of the United States. 2012 tax forms 1040ez The exemption does not apply to a resident of Japan who performs services as an employee aboard a ship or an aircraft operated in international traffic by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) from Japan who earn more than $10,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year are subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Kazakhstan Income that residents of Kazakhstan receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if: The residents are in the United States for no more than 183 days in any consecutive 12-month period, and The income is not attributable to a fixed base in the United States which is regularly available to the residents. 2012 tax forms 1040ez If the residents have a fixed base available, they are taxed only on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Kazakhstan receive for employment in the United States (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the following three requirements are met. 2012 tax forms 1040ez The resident is in the United States for no more than 183 days in any 12-month period. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a resident of the United States. 2012 tax forms 1040ez The income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez Income derived by a resident of Kazakhstan from employment as a member of the regular complement of a ship or aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by a resident of Kazakhstan as a member of the board of directors or similar body of a company that is a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Korea, South Income that residents of South Korea receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if the residents: Are in the United States for no more than 182 days during the tax year, Earn income for those services that is not more than $3,000 during the tax year, and Do not maintain a fixed base in the United States for more than 182 days during the tax year. 2012 tax forms 1040ez If they maintain a fixed base in the United States for more than 182 days, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Korea receive for labor or personal services performed in the United States as employees (dependent personal services), including pay for services performed as an officer of a corporation, is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if the residents meet four requirements. 2012 tax forms 1040ez They are in the United States for no more than 182 days during the tax year. 2012 tax forms 1040ez They are employees of a resident of Korea or of a permanent establishment maintained in Korea. 2012 tax forms 1040ez Their compensation is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez Their income for those services is not more than $3,000. 2012 tax forms 1040ez Pay received by employees who are members of the regular complement of a ship or aircraft operated by a resident of Korea in international traffic is exempt. 2012 tax forms 1040ez Latvia Income that residents of Latvia receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year, and Do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available, they are taxed only on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Latvia receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the following requirements are met. 2012 tax forms 1040ez The resident is in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez The income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to pay received for employment as a member of the regular complement of a ship or an aircraft operated in international traffic by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise. 2012 tax forms 1040ez The exemptions do not apply to directors' fees and similar payments received by a resident of Latvia as a member of the board of directors or similar body of a company that is a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez The exemptions do not apply to income residents of Latvia receive as public entertainers (such as theater, motion picture, radio, or television artists, or musicians) or sportsmen if their gross receipts, including reimbursed expenses, are more than $20,000 for their personal activities in the United States during the tax year. 2012 tax forms 1040ez Regardless of these limits, income of Latvian entertainers or athletes is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if their visit to the United States is wholly or mainly supported by public funds of Latvia, its political subdivisions, or local authorities. 2012 tax forms 1040ez Lithuania Income that residents of Lithuania receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year, and Do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available, they are taxed only on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Lithuania receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the following requirements are met. 2012 tax forms 1040ez The resident is in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez The income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to pay received for employment as a member of the regular complement of a ship or an aircraft operated in international traffic by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise. 2012 tax forms 1040ez The exemptions do not apply to directors' fees and similar payments received by a resident of Lithuania as a member of the board of directors or similar body of a company that is a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez The exemptions do not apply to income residents of Lithuania receive as public entertainers (such as theater, motion picture, radio, or television artists, or musicians) or sportsmen if their gross receipts, including reimbursed expenses, are more than $20,000 for their personal activities in the United States during the tax year. 2012 tax forms 1040ez Regardless of these limits, income of Lithuanian entertainers or athletes is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if their visit to the United States is wholly or mainly supported by public funds of Lithuania, its political subdivisions, or local authorities. 2012 tax forms 1040ez Luxembourg Income that residents of Luxembourg receive for personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if they do not have a fixed base regularly available to them in the United States for performing the services. 2012 tax forms 1040ez If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Luxembourg receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment or a fixed base that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to pay received for employment exercised continuously or predominantly aboard a ship or aircraft operated in international traffic by a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez enterprise. 2012 tax forms 1040ez The exemptions do not apply to directors' fees and similar payments received by a resident of Luxembourg for services performed in the United States as a member of the board of directors of a company that is a resident of the United States. 2012 tax forms 1040ez The exemptions do not apply to public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) from Luxembourg who earn more than $10,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year. 2012 tax forms 1040ez Malta Income that residents of Malta receive for personal services as independent contractors or self-employed individuals is subject to the provisions of Article 7 (Business Profits) of the treaty. 2012 tax forms 1040ez Under that provision, business profits are exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax unless the individual has a permanent establishment in the United States. 2012 tax forms 1040ez If they have a permanent establishment in the United States, they are taxed on the profits attributable to the permanent establishment. 2012 tax forms 1040ez Income that residents of Malta receive for services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet the following requirements. 2012 tax forms 1040ez They are in the United States for no more than 183 days in any 12-month period beginning or ending in the tax year. 2012 tax forms 1040ez Their income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez Their income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez The exemption does not apply to directors' fees and similar payments received by a resident of Malta for services performed in the United States as a member of the board of directors of a company that is a resident of the United States. 2012 tax forms 1040ez Public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) from Malta who earn more than $20,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the tax year are subject to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax. 2012 tax forms 1040ez Income received by a resident of Malta for employment aboard a ship or an aircraft operated in international traffic is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the individual is a member of the regular complement of the ship or aircraft. 2012 tax forms 1040ez Mexico Income that residents of Mexico receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 182 days in a 12-month period, and Do not have a fixed base that they regularly use for performing the services. 2012 tax forms 1040ez If they have a fixed base available, they are taxed only on income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Mexico receive for employment in the United States (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if the following three requirements are met. 2012 tax forms 1040ez The resident is present in the United States for no more than 183 days in a 12-month period. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a resident of the United States. 2012 tax forms 1040ez The income is not borne by a permanent establishment or fixed base that the employer has in the United States. 2012 tax forms 1040ez These exemptions do not apply to directors' fees and similar payments received by a resident of Mexico for services performed outside Mexico as a director or overseer of a company that is a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez These exemptions do not apply to income residents of Mexico receive as public entertainers (such as theater, motion picture, radio, or television artists, or musicians) or athletes if the income, including reimbursed expenses, is more than $3,000 during the tax year for their entertainment activities in the United States. 2012 tax forms 1040ez This includes income from activities performed in the United States relating to the entertainer or athlete's reputation, such as endorsements of commercial products. 2012 tax forms 1040ez Regardless of this limit, the income of Mexican entertainers and athletes is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez tax if their visit to the United States is substantially supported by public funds of Mexico, its political subdivisions, or local authorities. 2012 tax forms 1040ez Morocco Income that residents of Morocco receive for performing personal services as independent contractors or as self-employed persons (independent personal services) in the United States during the tax year is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents: Are in the United States for no more than 182 days during the tax year, Do not maintain a fixed base in the United States for more than 89 days during the tax year, and Earn total income for those services that is not more than $5,000. 2012 tax forms 1040ez If they have a fixed base in the United States for more than 89 days, they are taxed only on the income attributable to the fixed base. 2012 tax forms 1040ez Income that residents of Morocco receive for labor or personal services performed in the United States as employees (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the residents meet three requirements. 2012 tax forms 1040ez They are in the United States for less than 183 days during the tax year. 2012 tax forms 1040ez They are employees of a resident of Morocco or of a permanent establishment of a resident of a country other than Morocco if the permanent establishment is located in Morocco. 2012 tax forms 1040ez Their income is not borne by a permanent establishment that the employer has in the United States. 2012 tax forms 1040ez Compensation received for services performed by a member of the board of directors of a corporation does not qualify for this exemption. 2012 tax forms 1040ez Income received by an individual for performing labor or personal services as an employee aboard a ship or an aircraft operated in international traffic by a Moroccan resident is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the individual is a member of the regular complement of the ship or aircraft. 2012 tax forms 1040ez These exemptions do not apply to income received for services performed in the United States by professional entertainers, including theater, film, radio, and television performers, musicians, and athletes, unless the services are performed by, or for the account of, a Moroccan nonprofit organization. 2012 tax forms 1040ez Netherlands Income that residents of the Netherlands receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the income is not attributable to a fixed base in the United States that is regularly available for performing the services. 2012 tax forms 1040ez Income that residents of the Netherlands receive for employment in the United States (dependent personal services) is exempt from U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez income tax if the following three requirements are met. 2012 tax forms 1040ez The resident is in the United States for no more than 183 days during the tax year. 2012 tax forms 1040ez The income is paid by, or on behalf of, an employer who is not a U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez resident. 2012 tax forms 1040ez The income is not borne by a permanent establishment or fixed base the employer has in the United States. 2012 tax forms 1040ez Income received by a Netherlands resident for employment as a member of the regular complement of a ship or
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IRS Gives Tax Relief To Oklahoma Tornado Victims; Return Filing and Tax Payment Deadlines Extended to Sept. 30

Updated 7/02/2013 to include LeFlore, Okfuskee and Okmulgee counties.
Updated 6/13/2013 to include Canadian County.

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IR-2013-53, May 21, 2013

WASHINGTON –– After Monday’s devastating tornado in Moore and Oklahoma City,   the Internal Revenue Service today provided tax relief to individuals and businesses affected by this and other severe storms occurring in parts of Oklahoma.

Following Monday’s disaster declaration for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Canadian, Cleveland, LeFlore, Lincoln, McClain, Okfuskee, Oklahoma, Okmulgee and Pottawatomie counties will receive special tax relief. Other locations may be added in coming days based on additional damage assessments by FEMA.

The tax relief postpones various tax filing and payment deadlines that occurred starting on May 18, 2013. As a result, affected individuals and businesses will have until Sept. 30, 2013 to file these returns and pay any taxes due. This includes the June 17 and Sept. 16 deadlines for making estimated tax payments. A variety of business tax deadlines are also affected including the July 31 deadline for second quarter payroll and excise tax returns and the Sept. 3 deadline for truckers filing highway use tax returns.

The IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply. The agency automatically provides this relief to any taxpayer located in the disaster area. Taxpayers need not contact the IRS to get this relief.

Beyond the relief provided to taxpayers in the FEMA-designated counties, the IRS will work with any taxpayer who lives outside the disaster area but whose books, records or tax professional are located in the areas affected by these storms. All workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization also qualify for relief. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227.

Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either last year’s or this year’s return. Claiming these casualty loss deductions on either an original or amended 2012 return will get the taxpayer an earlier refund but waiting to claim them on a 2013 return could result in greater tax savings depending upon other income factors.

In addition, the IRS is waiving failure-to-deposit penalties for federal payroll and excise tax deposits normally due on or after May 18 and before June 3 if the deposits are made by June 3, 2013. Details on available relief can be found on the disaster relief page on IRS.gov.

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

The IRS is actively monitoring the situation and will provide additional relief if needed.

See also: 

Tax Relief for Victims of Severe Storms and Tornadoes in Oklahoma

Extra Time Granted for Tax-Exempt Bond Issuers Affected by Severe Storms and Tornados in Oklahoma

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Page Last Reviewed or Updated: 04-Sep-2013

The 2012 Tax Forms 1040ez

2012 tax forms 1040ez 2. 2012 tax forms 1040ez   Ordinary or Capital Gain or Loss Table of Contents IntroductionSection 1231 transactions. 2012 tax forms 1040ez Topics - This chapter discusses: Useful Items - You may want to see: Capital Assets Noncapital AssetsCommodities derivative dealer. 2012 tax forms 1040ez Sales and Exchanges Between Related PersonsGain Is Ordinary Income Nondeductible Loss Other DispositionsSale of a Business Dispositions of Intangible Property Subdivision of Land Timber Precious Metals and Stones, Stamps, and Coins Coal and Iron Ore Conversion Transactions Introduction You must classify your gains and losses as either ordinary or capital (and your capital gains or losses as either short-term or long-term). 2012 tax forms 1040ez You must do this to figure your net capital gain or loss. 2012 tax forms 1040ez For individuals, a net capital gain may be taxed at a different tax rate than ordinary income. 2012 tax forms 1040ez See Capital Gains Tax Rates in chapter 4. 2012 tax forms 1040ez Your deduction for a net capital loss may be limited. 2012 tax forms 1040ez See Treatment of Capital Losses in chapter 4. 2012 tax forms 1040ez Capital gain or loss. 2012 tax forms 1040ez   Generally, you will have a capital gain or loss if you sell or exchange a capital asset. 2012 tax forms 1040ez You also may have a capital gain if your section 1231 transactions result in a net gain. 2012 tax forms 1040ez Section 1231 transactions. 2012 tax forms 1040ez   Section 1231 transactions are sales and exchanges of property held longer than 1 year and either used in a trade or business or held for the production of rents or royalties. 2012 tax forms 1040ez They also include certain involuntary conversions of business or investment property, including capital assets. 2012 tax forms 1040ez See Section 1231 Gains and Losses in chapter 3 for more information. 2012 tax forms 1040ez Topics - This chapter discusses: Capital assets Noncapital assets Sales and exchanges between  related persons Other dispositions Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 4797 Sales of Business Property 8594 Asset Acquisition Statement Under Section 1060 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. 2012 tax forms 1040ez Capital Assets Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. 2012 tax forms 1040ez For exceptions, see Noncapital Assets, later. 2012 tax forms 1040ez The following items are examples of capital assets. 2012 tax forms 1040ez Stocks and bonds. 2012 tax forms 1040ez A home owned and occupied by you and your family. 2012 tax forms 1040ez Timber grown on your home property or investment property, even if you make casual sales of the timber. 2012 tax forms 1040ez Household furnishings. 2012 tax forms 1040ez A car used for pleasure or commuting. 2012 tax forms 1040ez Coin or stamp collections. 2012 tax forms 1040ez Gems and jewelry. 2012 tax forms 1040ez Gold, silver, and other metals. 2012 tax forms 1040ez Personal-use property. 2012 tax forms 1040ez   Generally, property held for personal use is a capital asset. 2012 tax forms 1040ez Gain from a sale or exchange of that property is a capital gain. 2012 tax forms 1040ez Loss from the sale or exchange of that property is not deductible. 2012 tax forms 1040ez You can deduct a loss relating to personal-use property only if it results from a casualty or theft. 2012 tax forms 1040ez Investment property. 2012 tax forms 1040ez   Investment property (such as stocks and bonds) is a capital asset, and a gain or loss from its sale or exchange is a capital gain or loss. 2012 tax forms 1040ez This treatment does not apply to property used to produce rental income. 2012 tax forms 1040ez See Business assets, later, under Noncapital Assets. 2012 tax forms 1040ez Release of restriction on land. 2012 tax forms 1040ez   Amounts you receive for the release of a restrictive covenant in a deed to land are treated as proceeds from the sale of a capital asset. 2012 tax forms 1040ez Noncapital Assets A noncapital asset is property that is not a capital asset. 2012 tax forms 1040ez The following kinds of property are not capital assets. 2012 tax forms 1040ez Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business. 2012 tax forms 1040ez Inventories are discussed in Publication 538, Accounting Periods and Methods. 2012 tax forms 1040ez But, see the Tip below. 2012 tax forms 1040ez Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of any properties described in (1), above. 2012 tax forms 1040ez Depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later), even if the property is fully depreciated (or amortized). 2012 tax forms 1040ez Sales of this type of property are discussed in chapter 3. 2012 tax forms 1040ez Real property used in your trade or business or as rental property, even if the property is fully depreciated. 2012 tax forms 1040ez A copyright; a literary, musical, or artistic composition; a letter; a memorandum; or similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs): Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Received from a person who created the property or for whom the property was prepared 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. 2012 tax forms 1040ez But, see the Tip below. 2012 tax forms 1040ez U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez Government publications you got from the government for free or for less than the normal sales price or that you acquired under circumstances entitling you to the basis of someone who got the publications for free or for less than the normal sales price. 2012 tax forms 1040ez Any commodities derivative financial instrument (discussed later) held by a commodities derivatives dealer unless it meets both of the following requirements. 2012 tax forms 1040ez It is established to the satisfaction of the IRS that the instrument has no connection to the activities of the dealer as a dealer. 2012 tax forms 1040ez The instrument is clearly identified in the dealer's records as meeting (a) by the end of the day on which it was acquired, originated, or entered into. 2012 tax forms 1040ez Any hedging transaction (defined later) that is clearly identified as a hedging transaction by the end of the day on which it was acquired, originated, or entered into. 2012 tax forms 1040ez Supplies of a type you regularly use or consume in the ordinary course of your trade or business. 2012 tax forms 1040ez You can elect to treat as capital assets certain self-created musical compositions or copyrights you sold or exchanged. 2012 tax forms 1040ez See chapter 4 of Publication 550 for details. 2012 tax forms 1040ez Property held mainly for sale to customers. 2012 tax forms 1040ez   Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business are not capital assets. 2012 tax forms 1040ez Inventories are discussed in Publication 538. 2012 tax forms 1040ez Business assets. 2012 tax forms 1040ez   Real property and depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later under Dispositions of Intangible Property) are not capital assets. 2012 tax forms 1040ez The sale or disposition of business property is discussed in chapter 3. 2012 tax forms 1040ez Letters and memoranda. 2012 tax forms 1040ez   Letters, memoranda, and similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs) are not treated as capital assets (as discussed earlier) if your personal efforts created them or if they were prepared or produced for you. 2012 tax forms 1040ez Nor is this property a capital asset if your basis in it is determined by reference to the person who created it or the person for whom it was prepared. 2012 tax forms 1040ez For this purpose, letters and memoranda addressed to you are considered prepared for you. 2012 tax forms 1040ez If letters or memoranda are prepared by persons under your administrative control, they are considered prepared for you whether or not you review them. 2012 tax forms 1040ez Commodities derivative financial instrument. 2012 tax forms 1040ez   A commodities derivative financial instrument is a commodities contract or other financial instrument for commodities (other than a share of corporate stock, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract) the value or settlement price of which is calculated or determined by reference to a specified index (as defined in section 1221(b) of the Internal Revenue Code). 2012 tax forms 1040ez Commodities derivative dealer. 2012 tax forms 1040ez   A commodities derivative dealer is a person who regularly offers to enter into, assume, offset, assign, or terminate positions in commodities derivative financial instruments with customers in the ordinary course of a trade or business. 2012 tax forms 1040ez Hedging transaction. 2012 tax forms 1040ez   A hedging transaction is any transaction you enter into in the normal course of your trade or business primarily to manage any of the following. 2012 tax forms 1040ez Risk of price changes or currency fluctuations involving ordinary property you hold or will hold. 2012 tax forms 1040ez Risk of interest rate or price changes or currency fluctuations for borrowings you make or will make, or ordinary obligations you incur or will incur. 2012 tax forms 1040ez Sales and Exchanges Between Related Persons This section discusses the rules that may apply to the sale or exchange of property between related persons. 2012 tax forms 1040ez If these rules apply, gains may be treated as ordinary income and losses may not be deductible. 2012 tax forms 1040ez See Transfers to Spouse in chapter 1 for rules that apply to spouses. 2012 tax forms 1040ez Gain Is Ordinary Income If a gain is recognized on the sale or exchange of property to a related person, the gain may be ordinary income even if the property is a capital asset. 2012 tax forms 1040ez It is ordinary income if the sale or exchange is a depreciable property transaction or a controlled partnership transaction. 2012 tax forms 1040ez Depreciable property transaction. 2012 tax forms 1040ez   Gain on the sale or exchange of property, including a leasehold or a patent application, that is depreciable property in the hands of the person who receives it is ordinary income if the transaction is either directly or indirectly between any of the following pairs of entities. 2012 tax forms 1040ez A person and the person's controlled entity or entities. 2012 tax forms 1040ez A taxpayer and any trust in which the taxpayer (or his or her spouse) is a beneficiary unless the beneficiary's interest in the trust is a remote contingent interest; that is, the value of the interest computed actuarially is 5% or less of the value of the trust property. 2012 tax forms 1040ez An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest (a bequest for a sum of money). 2012 tax forms 1040ez An employer (or any person related to the employer under rules (1), (2), or (3)) and a welfare benefit fund (within the meaning of section 419(e) of the Internal Revenue Code) that is controlled directly or indirectly by the employer (or any person related to the employer). 2012 tax forms 1040ez Controlled entity. 2012 tax forms 1040ez   A person's controlled entity is either of the following. 2012 tax forms 1040ez A corporation in which more than 50% of the value of all outstanding stock, or a partnership in which more than 50% of the capital interest or profits interest, is directly or indirectly owned by or for that person. 2012 tax forms 1040ez An entity whose relationship with that person is one of the following. 2012 tax forms 1040ez 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 profits interest in the partnership. 2012 tax forms 1040ez Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 50%” is substituted for “at least 80%” in that definition. 2012 tax forms 1040ez Two S corporations, if the same persons own more than 50% in value of the outstanding stock of each corporation. 2012 tax forms 1040ez 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. 2012 tax forms 1040ez Controlled partnership transaction. 2012 tax forms 1040ez   A gain recognized in a controlled partnership transaction may be ordinary income. 2012 tax forms 1040ez The gain is ordinary income if it results from the sale or exchange of property that, in the hands of the party who receives it, is a noncapital asset such as trade accounts receivable, inventory, stock in trade, or depreciable or real property used in a trade or business. 2012 tax forms 1040ez   A controlled partnership transaction is a transaction directly or indirectly between either of the following pairs of entities. 2012 tax forms 1040ez A partnership and a person who directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. 2012 tax forms 1040ez Two partnerships, if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. 2012 tax forms 1040ez Determining ownership. 2012 tax forms 1040ez   In the transactions under Depreciable property transaction and Controlled partnership transaction, earlier, use the following rules to determine the ownership of stock or a partnership interest. 2012 tax forms 1040ez Stock or a partnership interest 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. 2012 tax forms 1040ez (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. 2012 tax forms 1040ez ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. 2012 tax forms 1040ez Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. 2012 tax forms 1040ez For purposes of applying (1) or (2), above, stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. 2012 tax forms 1040ez But stock or a partnership interest constructively owned by an individual under (2) is not treated as owned by the individual for reapplying (2) to make another person the constructive owner of that stock or partnership interest. 2012 tax forms 1040ez Nondeductible Loss A loss on the sale or exchange of property between related persons is not deductible. 2012 tax forms 1040ez This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. 2012 tax forms 1040ez For the list of related persons, see Related persons next. 2012 tax forms 1040ez If a sale or exchange is between any of these related persons and involves the lump-sum sale of a number of blocks of stock or pieces of property, the gain or loss must be figured separately for each block of stock or piece of property. 2012 tax forms 1040ez The gain on each item is taxable. 2012 tax forms 1040ez The loss on any item is nondeductible. 2012 tax forms 1040ez Gains from the sales of any of these items may not be offset by losses on the sales of any of the other items. 2012 tax forms 1040ez Related persons. 2012 tax forms 1040ez   The following is a list of related persons. 2012 tax forms 1040ez Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. 2012 tax forms 1040ez ), and lineal descendants (children, grandchildren, etc. 2012 tax forms 1040ez ). 2012 tax forms 1040ez An individual and a corporation if the individual directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. 2012 tax forms 1040ez Two corporations that are members of the same controlled group as defined in section 267(f) of the Internal Revenue Code. 2012 tax forms 1040ez A trust fiduciary and a corporation if the trust or the grantor of the trust directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. 2012 tax forms 1040ez A grantor and fiduciary, and the fiduciary and beneficiary, of any trust. 2012 tax forms 1040ez Fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. 2012 tax forms 1040ez A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization, or a member of that person's family. 2012 tax forms 1040ez 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 profits interest in the partnership. 2012 tax forms 1040ez Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. 2012 tax forms 1040ez 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. 2012 tax forms 1040ez An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest. 2012 tax forms 1040ez Two partnerships if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. 2012 tax forms 1040ez A person and a partnership if the person directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. 2012 tax forms 1040ez Partnership interests. 2012 tax forms 1040ez   The nondeductible loss rule does not apply to a sale or exchange of an interest in the partnership between the related persons described in (12) or (13) above. 2012 tax forms 1040ez Controlled groups. 2012 tax forms 1040ez   Losses on transactions between members of the same controlled group described in (3) earlier are deferred rather than denied. 2012 tax forms 1040ez   For more information, see section 267(f) of the Internal Revenue Code. 2012 tax forms 1040ez Ownership of stock or partnership interests. 2012 tax forms 1040ez   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation or an interest in a partnership for a loss on a sale or exchange, the following rules apply. 2012 tax forms 1040ez Stock or a partnership interest 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. 2012 tax forms 1040ez (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. 2012 tax forms 1040ez ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. 2012 tax forms 1040ez Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. 2012 tax forms 1040ez An individual owning (other than by applying (2)) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. 2012 tax forms 1040ez For purposes of applying (1), (2), or (3), stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. 2012 tax forms 1040ez But stock or a partnership interest constructively owned by an individual under (2) or (3) is not treated as owned by the individual for reapplying either (2) or (3) to make another person the constructive owner of that stock or partnership interest. 2012 tax forms 1040ez Indirect transactions. 2012 tax forms 1040ez   You cannot deduct your loss on the sale of stock through your broker if under a prearranged plan a related person or entity buys the same stock you had owned. 2012 tax forms 1040ez This does not apply to a cross-trade between related parties through an exchange that is purely coincidental and is not prearranged. 2012 tax forms 1040ez Property received from a related person. 2012 tax forms 1040ez   If, in a purchase or exchange, you received property from a related person who had a loss that was not allowable and you later sell or exchange the property at a gain, you recognize the gain only to the extent it is more than the loss previously disallowed to the related person. 2012 tax forms 1040ez This rule applies only to the original transferee. 2012 tax forms 1040ez Example 1. 2012 tax forms 1040ez Your brother sold stock to you for $7,600. 2012 tax forms 1040ez His cost basis was $10,000. 2012 tax forms 1040ez His loss of $2,400 was not deductible. 2012 tax forms 1040ez You later sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900 ($10,500 − $7,600). 2012 tax forms 1040ez Your recognized gain is only $500, the gain that is more than the $2,400 loss not allowed to your brother. 2012 tax forms 1040ez Example 2. 2012 tax forms 1040ez Assume the same facts as in Example 1, except that you sell the stock for $6,900 instead of $10,500. 2012 tax forms 1040ez Your recognized loss is only $700 ($7,600 − $6,900). 2012 tax forms 1040ez You cannot deduct the loss not allowed to your brother. 2012 tax forms 1040ez Other Dispositions This section discusses rules for determining the treatment of gain or loss from various dispositions of property. 2012 tax forms 1040ez Sale of a Business The sale of a business usually is not a sale of one asset. 2012 tax forms 1040ez Instead, all the assets of the business are sold. 2012 tax forms 1040ez Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. 2012 tax forms 1040ez A business usually has many assets. 2012 tax forms 1040ez When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade. 2012 tax forms 1040ez The gain or loss on each asset is figured separately. 2012 tax forms 1040ez The sale of capital assets results in capital gain or loss. 2012 tax forms 1040ez The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction (discussed in chapter 3). 2012 tax forms 1040ez The sale of inventory results in ordinary income or loss. 2012 tax forms 1040ez Partnership interests. 2012 tax forms 1040ez   An interest in a partnership or joint venture is treated as a capital asset when sold. 2012 tax forms 1040ez The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary gain or loss. 2012 tax forms 1040ez For more information, see Disposition of Partner's Interest in Publication 541. 2012 tax forms 1040ez Corporation interests. 2012 tax forms 1040ez   Your interest in a corporation is represented by stock certificates. 2012 tax forms 1040ez When you sell these certificates, you usually realize capital gain or loss. 2012 tax forms 1040ez For information on the sale of stock, see chapter 4 in Publication 550. 2012 tax forms 1040ez Corporate liquidations. 2012 tax forms 1040ez   Corporate liquidations of property generally are treated as a sale or exchange. 2012 tax forms 1040ez Gain or loss generally is recognized by the corporation on a liquidating sale of its assets. 2012 tax forms 1040ez Gain or loss generally is recognized also on a liquidating distribution of assets as if the corporation sold the assets to the distributee at fair market value. 2012 tax forms 1040ez   In certain cases in which the distributee is a corporation in control of the distributing corporation, the distribution may not be taxable. 2012 tax forms 1040ez For more information, see section 332 of the Internal Revenue Code and the related regulations. 2012 tax forms 1040ez Allocation of consideration paid for a business. 2012 tax forms 1040ez   The sale of a trade or business for a lump sum is considered a sale of each individual asset rather than of a single asset. 2012 tax forms 1040ez Except for assets exchanged under any nontaxable exchange rules, both the buyer and seller of a business must use the residual method (explained later) to allocate the consideration to each business asset transferred. 2012 tax forms 1040ez This method determines gain or loss from the transfer of each asset and how much of the consideration is for goodwill and certain other intangible property. 2012 tax forms 1040ez It also determines the buyer's basis in the business assets. 2012 tax forms 1040ez Consideration. 2012 tax forms 1040ez   The buyer's consideration is the cost of the assets acquired. 2012 tax forms 1040ez The seller's consideration is the amount realized (money plus the fair market value of property received) from the sale of assets. 2012 tax forms 1040ez Residual method. 2012 tax forms 1040ez   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. 2012 tax forms 1040ez This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b) of the Internal Revenue Code. 2012 tax forms 1040ez Section 743(b) applies if a partnership has an election in effect under section 754 of the Internal Revenue Code. 2012 tax forms 1040ez   A group of assets constitutes a trade or business if either of the following applies. 2012 tax forms 1040ez Goodwill or going concern value could, under any circumstances, attach to them. 2012 tax forms 1040ez The use of the assets would constitute an active trade or business under section 355 of the Internal Revenue Code. 2012 tax forms 1040ez   The residual method provides for the consideration to be reduced first by the amount of Class I assets (defined below). 2012 tax forms 1040ez The consideration remaining after this reduction must be allocated among the various business assets in a certain order. 2012 tax forms 1040ez See Classes of assets next for the complete order. 2012 tax forms 1040ez Classes of assets. 2012 tax forms 1040ez   The following definitions are the classifications for deemed or actual asset acquisitions. 2012 tax forms 1040ez Allocate the consideration among the assets in the following order. 2012 tax forms 1040ez The amount allocated to an asset, other than a Class VII asset, cannot exceed its fair market value on the purchase date. 2012 tax forms 1040ez The amount you can allocate to an asset also is subject to any applicable limits under the Internal Revenue Code or general principles of tax law. 2012 tax forms 1040ez Class I assets are cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). 2012 tax forms 1040ez Class II assets are certificates of deposit, U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez Government securities, foreign currency, and actively traded personal property, including stock and securities. 2012 tax forms 1040ez Class III assets are accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. 2012 tax forms 1040ez However, see section 1. 2012 tax forms 1040ez 338-6(b)(2)(iii) of the regulations for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. 2012 tax forms 1040ez Class IV assets are property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. 2012 tax forms 1040ez Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets. 2012 tax forms 1040ez    Note. 2012 tax forms 1040ez Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business are generally Class V assets. 2012 tax forms 1040ez Class VI assets are section 197 intangibles (other than goodwill and going concern value). 2012 tax forms 1040ez Class VII assets are goodwill and going concern value (whether the goodwill or going concern value qualifies as a section 197 intangible). 2012 tax forms 1040ez   If an asset described in one of the classifications described above can be included in more than one class, include it in the lower numbered class. 2012 tax forms 1040ez For example, if an asset is described in both Class II and Class IV, choose Class II. 2012 tax forms 1040ez Example. 2012 tax forms 1040ez The total paid in the sale of the assets of Company SKB is $21,000. 2012 tax forms 1040ez No cash or deposit accounts or similar accounts were sold. 2012 tax forms 1040ez The company's U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez Government securities sold had a fair market value of $3,200. 2012 tax forms 1040ez The only other asset transferred (other than goodwill and going concern value) was inventory with a fair market value of $15,000. 2012 tax forms 1040ez Of the $21,000 paid for the assets of Company SKB, $3,200 is allocated to U. 2012 tax forms 1040ez S. 2012 tax forms 1040ez Government securities, $15,000 to inventory assets, and the remaining $2,800 to goodwill and going concern value. 2012 tax forms 1040ez Agreement. 2012 tax forms 1040ez   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. 2012 tax forms 1040ez This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. 2012 tax forms 1040ez Reporting requirement. 2012 tax forms 1040ez   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. 2012 tax forms 1040ez Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. 2012 tax forms 1040ez Generally, the buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. 2012 tax forms 1040ez See the Instructions for Form 8594. 2012 tax forms 1040ez Dispositions of Intangible Property Intangible property is any personal property that has value but cannot be seen or touched. 2012 tax forms 1040ez It includes such items as patents, copyrights, and the goodwill value of a business. 2012 tax forms 1040ez Gain or loss on the sale or exchange of amortizable or depreciable intangible property held longer than 1 year (other than an amount recaptured as ordinary income) is a section 1231 gain or loss. 2012 tax forms 1040ez The treatment of section 1231 gain or loss and the recapture of amortization and depreciation as ordinary income are explained in chapter 3. 2012 tax forms 1040ez See chapter 8 of Publication 535, Business Expenses, for information on amortizable intangible property and chapter 1 of Publication 946, How To Depreciate Property, for information on intangible property that can and cannot be depreciated. 2012 tax forms 1040ez Gain or loss on dispositions of other intangible property is ordinary or capital depending on whether the property is a capital asset or a noncapital asset. 2012 tax forms 1040ez The following discussions explain special rules that apply to certain dispositions of intangible property. 2012 tax forms 1040ez Section 197 Intangibles Section 197 intangibles are certain intangible assets acquired after August 10, 1993 (after July 25, 1991, if chosen), and held in connection with the conduct of a trade or business or an activity entered into for profit whose costs are amortized over 15 years. 2012 tax forms 1040ez They include the following assets. 2012 tax forms 1040ez Goodwill. 2012 tax forms 1040ez Going concern value. 2012 tax forms 1040ez Workforce in place. 2012 tax forms 1040ez Business books and records, operating systems, and other information bases. 2012 tax forms 1040ez Patents, copyrights, formulas, processes, designs, patterns, know how, formats, and similar items. 2012 tax forms 1040ez Customer-based intangibles. 2012 tax forms 1040ez Supplier-based intangibles. 2012 tax forms 1040ez Licenses, permits, and other rights granted by a governmental unit. 2012 tax forms 1040ez Covenants not to compete entered into in connection with the acquisition of a business. 2012 tax forms 1040ez Franchises, trademarks, and trade names. 2012 tax forms 1040ez See chapter 8 of Publication 535 for a description of each intangible. 2012 tax forms 1040ez Dispositions. 2012 tax forms 1040ez   You cannot deduct a loss from the disposition or worthlessness of a section 197 intangible you acquired in the same transaction (or series of related transactions) as another section 197 intangible you still hold. 2012 tax forms 1040ez Instead, you must increase the adjusted basis of your retained section 197 intangible by the nondeductible loss. 2012 tax forms 1040ez If you retain more than one section 197 intangible, increase each intangible's adjusted basis. 2012 tax forms 1040ez Figure the increase by multiplying the nondeductible loss by a fraction, the numerator (top number) of which is the retained intangible's adjusted basis on the date of the loss and the denominator (bottom number) of which is the total adjusted basis of all retained intangibles on the date of the loss. 2012 tax forms 1040ez   In applying this rule, members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity. 2012 tax forms 1040ez For example, a corporation cannot deduct a loss on the sale of a section 197 intangible if, after the sale, a member of the same controlled group retains other section 197 intangibles acquired in the same transaction as the intangible sold. 2012 tax forms 1040ez Covenant not to compete. 2012 tax forms 1040ez   A covenant not to compete (or similar arrangement) that is a section 197 intangible cannot be treated as disposed of or worthless before you have disposed of your entire interest in the trade or business for which the covenant was entered into. 2012 tax forms 1040ez Members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity in determining whether a member has disposed of its entire interest in a trade or business. 2012 tax forms 1040ez Anti-churning rules. 2012 tax forms 1040ez   Anti-churning rules prevent a taxpayer from converting section 197 intangibles that do not qualify for amortization into property that would qualify for amortization. 2012 tax forms 1040ez However, these rules do not apply to part of the basis of property acquired by certain related persons if the transferor elects to do both the following. 2012 tax forms 1040ez Recognize gain on the transfer of the property. 2012 tax forms 1040ez Pay income tax on the gain at the highest tax rate. 2012 tax forms 1040ez   If the transferor is a partnership or S corporation, the partnership or S corporation (not the partners or shareholders) can make the election. 2012 tax forms 1040ez But each partner or shareholder must pay the tax on his or her share of gain. 2012 tax forms 1040ez   To make the election, you, as the transferor, must attach a statement containing certain information to your income tax return for the year of the transfer. 2012 tax forms 1040ez You must file the tax return by the due date (including extensions). 2012 tax forms 1040ez You must also notify the transferee of the election in writing by the due date of the return. 2012 tax forms 1040ez   If you timely filed your return without making the election, you can make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). 2012 tax forms 1040ez Attach the statement to the amended return and write “Filed pursuant to section 301. 2012 tax forms 1040ez 9100-2” at the top of the statement. 2012 tax forms 1040ez File the amended return at the same address the original return was filed. 2012 tax forms 1040ez For more information about making the election, see Regulations section 1. 2012 tax forms 1040ez 197-2(h)(9). 2012 tax forms 1040ez For information about reporting the tax on your income tax return, see the Instructions for Form 4797. 2012 tax forms 1040ez Patents The transfer of a patent by an individual is treated as a sale or exchange of a capital asset held longer than 1 year. 2012 tax forms 1040ez This applies even if the payments for the patent are made periodically during the transferee's use or are contingent on the productivity, use, or disposition of the patent. 2012 tax forms 1040ez For information on the treatment of gain or loss on the transfer of capital assets, see chapter 4. 2012 tax forms 1040ez This treatment applies to your transfer of a patent if you meet all the following conditions. 2012 tax forms 1040ez You are the holder of the patent. 2012 tax forms 1040ez You transfer the patent other than by gift, inheritance, or devise. 2012 tax forms 1040ez You transfer all substantial rights to the patent or an undivided interest in all such rights. 2012 tax forms 1040ez You do not transfer the patent to a related person. 2012 tax forms 1040ez Holder. 2012 tax forms 1040ez   You are the holder of a patent if you are either of the following. 2012 tax forms 1040ez The individual whose effort created the patent property and who qualifies as the original and first inventor. 2012 tax forms 1040ez The individual who bought an interest in the patent from the inventor before the invention was tested and operated successfully under operating conditions and who is neither related to, nor the employer of, the inventor. 2012 tax forms 1040ez All substantial rights. 2012 tax forms 1040ez   All substantial rights to patent property are all rights that have value when they are transferred. 2012 tax forms 1040ez A security interest (such as a lien), or a reservation calling for forfeiture for nonperformance, is not treated as a substantial right for these rules and may be kept by you as the holder of the patent. 2012 tax forms 1040ez   All substantial rights to a patent are not transferred if any of the following apply to the transfer. 2012 tax forms 1040ez The rights are limited geographically within a country. 2012 tax forms 1040ez The rights are limited to a period less than the remaining life of the patent. 2012 tax forms 1040ez The rights are limited to fields of use within trades or industries and are less than all the rights that exist and have value at the time of the transfer. 2012 tax forms 1040ez The rights are less than all the claims or inventions covered by the patent that exist and have value at the time of the transfer. 2012 tax forms 1040ez Related persons. 2012 tax forms 1040ez   This tax treatment does not apply if the transfer is directly or indirectly between you and a related person as defined earlier in the list under Nondeductible Loss, with the following changes. 2012 tax forms 1040ez Members of your family include your spouse, ancestors, and lineal descendants, but not your brothers, sisters, half-brothers, or half-sisters. 2012 tax forms 1040ez Substitute “25% or more” ownership for “more than 50%. 2012 tax forms 1040ez ”   If you fit within the definition of a related person independent of family status, the brother-sister exception in (1), earlier, does not apply. 2012 tax forms 1040ez For example, a transfer between a brother and a sister as beneficiary and fiduciary of the same trust is a transfer between related persons. 2012 tax forms 1040ez The brother-sister exception does not apply because the trust relationship is independent of family status. 2012 tax forms 1040ez Franchise, Trademark, or Trade Name If you transfer or renew a franchise, trademark, or trade name for a price contingent on its productivity, use, or disposition, the amount you receive generally is treated as an amount realized from the sale of a noncapital asset. 2012 tax forms 1040ez A franchise includes an agreement that gives one of the parties the right to distribute, sell, or provide goods, services, or facilities within a specified area. 2012 tax forms 1040ez Significant power, right, or continuing interest. 2012 tax forms 1040ez   If you keep any significant power, right, or continuing interest in the subject matter of a franchise, trademark, or trade name that you transfer or renew, the amount you receive is ordinary royalty income rather than an amount realized from a sale or exchange. 2012 tax forms 1040ez   A significant power, right, or continuing interest in a franchise, trademark, or trade name includes, but is not limited to, the following rights in the transferred interest. 2012 tax forms 1040ez A right to disapprove any assignment of the interest, or any part of it. 2012 tax forms 1040ez A right to end the agreement at will. 2012 tax forms 1040ez A right to set standards of quality for products used or sold, or for services provided, and for the equipment and facilities used to promote such products or services. 2012 tax forms 1040ez A right to make the recipient sell or advertise only your products or services. 2012 tax forms 1040ez A right to make the recipient buy most supplies and equipment from you. 2012 tax forms 1040ez A right to receive payments based on the productivity, use, or disposition of the transferred item of interest if those payments are a substantial part of the transfer agreement. 2012 tax forms 1040ez Subdivision of Land If you own a tract of land and, to sell or exchange it, you subdivide it into individual lots or parcels, the gain normally is ordinary income. 2012 tax forms 1040ez However, you may receive capital gain treatment on at least part of the proceeds provided you meet certain requirements. 2012 tax forms 1040ez See section 1237 of the Internal Revenue Code. 2012 tax forms 1040ez Timber Standing timber held as investment property is a capital asset. 2012 tax forms 1040ez Gain or loss from its sale is reported as a capital gain or loss on Form 8949, and Schedule D (Form 1040), as applicable. 2012 tax forms 1040ez If you held the timber primarily for sale to customers, it is not a capital asset. 2012 tax forms 1040ez Gain or loss on its sale is ordinary business income or loss. 2012 tax forms 1040ez It is reported in the gross receipts or sales and cost of goods sold items of your return. 2012 tax forms 1040ez Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. 2012 tax forms 1040ez These sales constitute a very minor part of their farm businesses. 2012 tax forms 1040ez In these cases, amounts realized from such sales, and the expenses of cutting, hauling, etc. 2012 tax forms 1040ez , are ordinary farm income and expenses reported on Schedule F (Form 1040), Profit or Loss From Farming. 2012 tax forms 1040ez Different rules apply if you owned the timber longer than 1 year and elect to either: Treat timber cutting as a sale or exchange, or Enter into a cutting contract. 2012 tax forms 1040ez Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. 2012 tax forms 1040ez This is true whether the timber is cut under contract or whether you cut it yourself. 2012 tax forms 1040ez Under the rules discussed below, disposition of the timber is treated as a section 1231 transaction. 2012 tax forms 1040ez See chapter 3. 2012 tax forms 1040ez Gain or loss is reported on Form 4797. 2012 tax forms 1040ez Christmas trees. 2012 tax forms 1040ez   Evergreen trees, such as Christmas trees, that are more than 6 years old when severed from their roots and sold for ornamental purposes are included in the term timber. 2012 tax forms 1040ez They qualify for both rules discussed below. 2012 tax forms 1040ez Election to treat cutting as a sale or exchange. 2012 tax forms 1040ez   Under the general rule, the cutting of timber results in no gain or loss. 2012 tax forms 1040ez It is not until a sale or exchange occurs that gain or loss is realized. 2012 tax forms 1040ez But if you owned or had a contractual right to cut timber, you can elect to treat the cutting of timber as a section 1231 transaction in the year the timber is cut. 2012 tax forms 1040ez Even though the cut timber is not actually sold or exchanged, you report your gain or loss on the cutting for the year the timber is cut. 2012 tax forms 1040ez Any later sale results in ordinary business income or loss. 2012 tax forms 1040ez See Example, later. 2012 tax forms 1040ez   To elect this treatment, you must: Own or hold a contractual right to cut the timber for a period of more than 1 year before it is cut, and Cut the timber for sale or for use in your trade or business. 2012 tax forms 1040ez Making the election. 2012 tax forms 1040ez   You make the election on your return for the year the cutting takes place by including in income the gain or loss on the cutting and including a computation of the gain or loss. 2012 tax forms 1040ez You do not have to make the election in the first year you cut timber. 2012 tax forms 1040ez You can make it in any year to which the election would apply. 2012 tax forms 1040ez If the timber is partnership property, the election is made on the partnership return. 2012 tax forms 1040ez This election cannot be made on an amended return. 2012 tax forms 1040ez   Once you have made the election, it remains in effect for all later years unless you cancel it. 2012 tax forms 1040ez   If you previously elected to treat the cutting of timber as a sale or exchange, you may revoke this election without the consent of the IRS. 2012 tax forms 1040ez The prior election (and revocation) is disregarded for purposes of making a subsequent election. 2012 tax forms 1040ez See Form T (Timber), Forest Activities Schedule, for more information. 2012 tax forms 1040ez Gain or loss. 2012 tax forms 1040ez   Your gain or loss on the cutting of standing timber is the difference between its adjusted basis for depletion and its fair market value on the first day of your tax year in which it is cut. 2012 tax forms 1040ez   Your adjusted basis for depletion of cut timber is based on the number of units (feet board measure, log scale, or other units) of timber cut during the tax year and considered to be sold or exchanged. 2012 tax forms 1040ez Your adjusted basis for depletion is also based on the depletion unit of timber in the account used for the cut timber, and should be figured in the same manner as shown in section 611 of the Internal Revenue Code and the related regulations. 2012 tax forms 1040ez   Timber depletion is discussed in chapter 9 of Publication 535. 2012 tax forms 1040ez Example. 2012 tax forms 1040ez In April 2013, you had owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. 2012 tax forms 1040ez It had an adjusted basis for depletion of $40 per MBF. 2012 tax forms 1040ez You are a calendar year taxpayer. 2012 tax forms 1040ez On January 1, 2013, the timber had a fair market value (FMV) of $350 per MBF. 2012 tax forms 1040ez It was cut in April for sale. 2012 tax forms 1040ez On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. 2012 tax forms 1040ez You report the difference between the fair market value and your adjusted basis for depletion as a gain. 2012 tax forms 1040ez This amount is reported on Form 4797 along with your other section 1231 gains and losses to figure whether it is treated as capital gain or as ordinary gain. 2012 tax forms 1040ez You figure your gain as follows. 2012 tax forms 1040ez FMV of timber January 1, 2013 $1,400,000 Minus: Adjusted basis for depletion 160,000 Section 1231 gain $1,240,000 The fair market value becomes your basis in the cut timber and a later sale of the cut timber including any by-product or tree tops will result in ordinary business income or loss. 2012 tax forms 1040ez Outright sales of timber. 2012 tax forms 1040ez   Outright sales of timber by landowners qualify for capital gains treatment using rules similar to the rules for certain disposal of timber under a contract with retained economic interest (defined below). 2012 tax forms 1040ez However, for outright sales, the date of disposal is not deemed to be the date the timber is cut because the landowner can elect to treat the payment date as the date of disposal (see below). 2012 tax forms 1040ez Cutting contract. 2012 tax forms 1040ez   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. 2012 tax forms 1040ez You are the owner of the timber. 2012 tax forms 1040ez You held the timber longer than 1 year before its disposal. 2012 tax forms 1040ez You kept an economic interest in the timber. 2012 tax forms 1040ez   You have kept an economic interest in standing timber if, under the cutting contract, the expected return on your investment is conditioned on the cutting of the timber. 2012 tax forms 1040ez   The difference between the amount realized from the disposal of the timber and its adjusted basis for depletion is treated as gain or loss on its sale. 2012 tax forms 1040ez Include this amount on Form 4797 along with your other section 1231 gains or losses to figure whether it is treated as capital or ordinary gain or loss. 2012 tax forms 1040ez Date of disposal. 2012 tax forms 1040ez   The date of disposal is the date the timber is cut. 2012 tax forms 1040ez However, for outright sales by landowners or if you receive payment under the contract before the timber is cut, you can elect to treat the date of payment as the date of disposal. 2012 tax forms 1040ez   This election applies only to figure the holding period of the timber. 2012 tax forms 1040ez It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). 2012 tax forms 1040ez   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. 2012 tax forms 1040ez The statement must identify the advance payments subject to the election and the contract under which they were made. 2012 tax forms 1040ez   If you timely filed your return for the year you received payment without making the election, you still can make the election by filing an amended return within 6 months after the due date for that year's return (excluding extensions). 2012 tax forms 1040ez Attach the statement to the amended return and write “Filed pursuant to section 301. 2012 tax forms 1040ez 9100-2” at the top of the statement. 2012 tax forms 1040ez File the amended return at the same address the original return was filed. 2012 tax forms 1040ez Owner. 2012 tax forms 1040ez   The owner of timber is any person who owns an interest in it, including a sublessor and the holder of a contract to cut the timber. 2012 tax forms 1040ez You own an interest in timber if you have the right to cut it for sale on your own account or for use in your business. 2012 tax forms 1040ez Tree stumps. 2012 tax forms 1040ez   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. 2012 tax forms 1040ez Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. 2012 tax forms 1040ez However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. 2012 tax forms 1040ez Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. 2012 tax forms 1040ez   See Form T (Timber) and its separate instructions for more information about dispositions of timber. 2012 tax forms 1040ez Precious Metals and Stones, Stamps, and Coins Gold, silver, gems, stamps, coins, etc. 2012 tax forms 1040ez , are capital assets except when they are held for sale by a dealer. 2012 tax forms 1040ez Any gain or loss from their sale or exchange generally is a capital gain or loss. 2012 tax forms 1040ez If you are a dealer, the amount received from the sale is ordinary business income. 2012 tax forms 1040ez Coal and Iron Ore You must treat the disposal of coal (including lignite) or iron ore mined in the United States as a section 1231 transaction if both the following apply to you. 2012 tax forms 1040ez You owned the coal or iron ore longer than 1 year before its disposal. 2012 tax forms 1040ez You kept an economic interest in the coal or iron ore. 2012 tax forms 1040ez For this rule, the date the coal or iron ore is mined is considered the date of its disposal. 2012 tax forms 1040ez Your gain or loss is the difference between the amount realized from disposal of the coal or iron ore and the adjusted basis you use to figure cost depletion (increased by certain expenses not allowed as deductions for the tax year). 2012 tax forms 1040ez This amount is included on Form 4797 along with your other section 1231 gains and losses. 2012 tax forms 1040ez You are considered an owner if you own or sublet an economic interest in the coal or iron ore in place. 2012 tax forms 1040ez If you own only an option to buy the coal in place, you do not qualify as an owner. 2012 tax forms 1040ez In addition, this gain or loss treatment does not apply to income realized by an owner who is a co-adventurer, partner, or principal in the mining of coal or iron ore. 2012 tax forms 1040ez The expenses of making and administering the contract under which the coal or iron ore was disposed of and the expenses of preserving the economic interest kept under the contract are not allowed as deductions in figuring taxable income. 2012 tax forms 1040ez Rather, their total, along with the adjusted depletion basis, is deducted from the amount received to determine gain. 2012 tax forms 1040ez If the total of these expenses plus the adjusted depletion basis is more than the amount received, the result is a loss. 2012 tax forms 1040ez Special rule. 2012 tax forms 1040ez   The above treatment does not apply if you directly or indirectly dispose of the iron ore or coal to any of the following persons. 2012 tax forms 1040ez A related person whose relationship to you would result in the disallowance of a loss (see Nondeductible Loss under Sales and Exchanges Between Related Persons, earlier). 2012 tax forms 1040ez An individual, trust, estate, partnership, association, company, or corporation owned or controlled directly or indirectly by the same interests that own or control your business. 2012 tax forms 1040ez Conversion Transactions Recognized gain on the disposition or termination of any position held as part of certain conversion transactions is treated as ordinary income. 2012 tax forms 1040ez This applies if substantially all your expected return is attributable to the time value of your net investment (like interest on a loan) and the transaction is any of the following. 2012 tax forms 1040ez An applicable straddle (generally, any set of offsetting positions with respect to personal property, including stock). 2012 tax forms 1040ez A transaction in which you acquire property and, at or about the same time, you contract to sell the same or substantially identical property at a specified price. 2012 tax forms 1040ez Any other transaction that is marketed and sold as producing capital gain from a transaction in which substantially all of your expected return is due to the time value of your net investment. 2012 tax forms 1040ez For more information, see chapter 4 of Publication 550. 2012 tax forms 1040ez Prev  Up  Next   Home   More Online Publications