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Ammended Tax Return

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Ammended Tax Return

Ammended tax return 11. Ammended tax return   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Ammended tax return Nondeductible losses. Ammended tax return Family pet. Ammended tax return Progressive deterioration. Ammended tax return Decline in market value of stock. Ammended tax return Mislaid or lost property. Ammended tax return Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. Ammended tax return Related persons. Ammended tax return Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Ammended tax return Covered disaster area. Ammended tax return Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Ammended tax return A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Ammended tax return A theft occurs when property is stolen. Ammended tax return A condemnation occurs when private property is legally taken for public use without the owner's consent. Ammended tax return A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Ammended tax return You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. Ammended tax return An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. Ammended tax return If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. Ammended tax return For more information, see Postponing Gain , later. Ammended tax return Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Ammended tax return Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Ammended tax return If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. Ammended tax return Casualty. Ammended tax return   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Ammended tax return A sudden event is one that is swift, not gradual or progressive. Ammended tax return An unexpected event is one that is ordinarily unanticipated and unintended. Ammended tax return An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged. Ammended tax return Deductible losses. Ammended tax return   Deductible casualty losses can result from a number of different causes, including the following. Ammended tax return Airplane crashes. Ammended tax return Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Ammended tax return Earthquakes. Ammended tax return Fires (but see Nondeductible losses next for exceptions). Ammended tax return Floods. Ammended tax return Freezing. Ammended tax return Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses, in Publication 547. Ammended tax return Lightning. Ammended tax return Storms, including hurricanes and tornadoes. Ammended tax return Terrorist attacks. Ammended tax return Vandalism. Ammended tax return Volcanic eruptions. Ammended tax return Nondeductible losses. Ammended tax return   A casualty loss is not deductible if the damage or destruction is caused by the following. Ammended tax return Accidentally breaking articles such as glassware or china under normal conditions. Ammended tax return A family pet (explained below). Ammended tax return A fire if you willfully set it, or pay someone else to set it. Ammended tax return A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Ammended tax return The same is true if the willful act or willful negligence of someone acting for you caused the accident. Ammended tax return Progressive deterioration (explained below). Ammended tax return Family pet. Ammended tax return   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. Ammended tax return Example. Ammended tax return You keep your horse in your yard. Ammended tax return The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Ammended tax return Some of the trees were completely girdled and died. Ammended tax return Because the damage was not unexpected or unusual, the loss is not deductible. Ammended tax return Progressive deterioration. Ammended tax return   Loss of property due to progressive deterioration is not deductible as a casualty loss. Ammended tax return This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Ammended tax return Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Ammended tax return However, weather-related conditions or disease may cause another type of involuntary conversion. Ammended tax return See Other Involuntary Conversions , later. Ammended tax return Theft. Ammended tax return   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Ammended tax return The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Ammended tax return You do not need to show a conviction for theft. Ammended tax return   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Ammended tax return The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Ammended tax return Decline in market value of stock. Ammended tax return   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. Ammended tax return However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. Ammended tax return You report a capital loss on Schedule D (Form 1040). Ammended tax return For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Ammended tax return Mislaid or lost property. Ammended tax return   The simple disappearance of money or property is not a theft. Ammended tax return However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Ammended tax return Example. Ammended tax return A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Ammended tax return The diamond falls from the ring and is never found. Ammended tax return The loss of the diamond is a casualty. Ammended tax return Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Ammended tax return The following is a discussion of some losses you can deduct and some you cannot deduct. Ammended tax return Livestock or produce bought for resale. Ammended tax return   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Ammended tax return If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. Ammended tax return You cannot take a separate deduction. Ammended tax return Livestock, plants, produce, and crops raised for sale. Ammended tax return   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Ammended tax return You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Ammended tax return   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. Ammended tax return You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Ammended tax return The uniform capitalization rules are discussed in chapter 6. Ammended tax return   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. Ammended tax return You get the deduction by omitting the item from your inventory at the close of your tax year. Ammended tax return You cannot take a separate casualty or theft deduction. Ammended tax return Income loss. Ammended tax return   A loss of future income is not deductible. Ammended tax return Example. Ammended tax return A severe flood destroyed your crops. Ammended tax return Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . Ammended tax return You estimate that the crop loss will reduce your farm income by $25,000. Ammended tax return This loss of future income is also not deductible. Ammended tax return Loss of timber. Ammended tax return   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Ammended tax return If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Ammended tax return See Postponing Gain , later. Ammended tax return Property used in farming. Ammended tax return   Casualty and theft losses of property used in your farm business usually result in deductible losses. Ammended tax return If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. Ammended tax return See How To Figure a Loss , later. Ammended tax return Raised draft, breeding, dairy, or sporting animals. Ammended tax return   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. Ammended tax return However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. Ammended tax return You use inventories to determine your income and you included the animals in your inventory. Ammended tax return You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. Ammended tax return When you include livestock in inventory, its last inventory value is its basis. Ammended tax return When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. Ammended tax return You cannot take a separate deduction. Ammended tax return How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. Ammended tax return Farm property. Ammended tax return   Farm property is the property you use in your farming business. Ammended tax return If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. Ammended tax return   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Ammended tax return However, the deduction limits, discussed later, do not apply to farm property. Ammended tax return Personal-use property. Ammended tax return   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. Ammended tax return The following items are examples of personal-use property: Your main home. Ammended tax return Furniture and electronics used in your main home and not used in a home office or for business purposes. Ammended tax return Clothing and jewelry. Ammended tax return An automobile used for nonbusiness purposes. Ammended tax return You figure the casualty or theft loss on this property by taking the following steps. Ammended tax return Determine your adjusted basis in the property before the casualty or theft. Ammended tax return Determine the decrease in fair market value of the property as a result of the casualty or theft. Ammended tax return From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Ammended tax return You must apply the deduction limits, discussed later, to determine your deductible loss. Ammended tax return    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Ammended tax return It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Ammended tax return Adjusted basis. Ammended tax return   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Ammended tax return For more information about adjusted basis, see chapter 6. Ammended tax return Decrease in fair market value (FMV). Ammended tax return   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Ammended tax return FMV is defined in chapter 10 under Payments Received or Considered Received . Ammended tax return Appraisal. Ammended tax return   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Ammended tax return But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Ammended tax return   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. Ammended tax return The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Ammended tax return This information is needed to limit any deduction to the actual loss resulting from damage to the property. Ammended tax return Cost of cleaning up or making repairs. Ammended tax return   The cost of cleaning up after a casualty is not part of a casualty loss. Ammended tax return Neither is the cost of repairing damaged property after a casualty. Ammended tax return But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Ammended tax return The repairs are actually made. Ammended tax return The repairs are necessary to bring the property back to its condition before the casualty. Ammended tax return The amount spent for repairs is not excessive. Ammended tax return The repairs fix the damage only. Ammended tax return The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Ammended tax return Related expenses. Ammended tax return   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. Ammended tax return However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Ammended tax return Separate computations for more than one item of property. Ammended tax return   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. Ammended tax return Then combine the losses to determine your total loss. Ammended tax return    There is an exception to this rule for personal-use real property. Ammended tax return See Exception for personal-use real property, later. Ammended tax return Example. Ammended tax return A fire on your farm damaged a tractor and the barn in which it was stored. Ammended tax return The tractor had an adjusted basis of $3,300. Ammended tax return Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Ammended tax return The barn had an adjusted basis of $28,000. Ammended tax return Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Ammended tax return You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Ammended tax return Figure your deductible casualty loss separately for the two items of property. Ammended tax return     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. Ammended tax return   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Ammended tax return Figure the loss using the smaller of the following. Ammended tax return The decrease in FMV of the entire property. Ammended tax return The adjusted basis of the entire property. Ammended tax return Example. Ammended tax return You bought a farm in 1990 for $160,000. Ammended tax return The adjusted basis of the residential part is now $128,000. Ammended tax return In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Ammended tax return The adjusted basis of the residential part includes the $7,500. Ammended tax return The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Ammended tax return The trees were not covered by insurance. Ammended tax return 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. Ammended tax return   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Ammended tax return You do not have a casualty or theft loss to the extent you are reimbursed. Ammended tax return   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Ammended tax return You must reduce your loss even if you do not receive payment until a later tax year. Ammended tax return    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. Ammended tax return You may have to include a portion of these payments in your income. Ammended tax return See Insurance payments for living expenses in Publication 547 for details. Ammended tax return Disaster relief. Ammended tax return   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss, unless they are replacements for lost or destroyed property. Ammended tax return Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Ammended tax return   Generally, disaster relief grants received under the Robert T. Ammended tax return Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Ammended tax return See Federal disaster relief grants , later, under Disaster Area Losses . Ammended tax return   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Ammended tax return See Qualified disaster relief payments , later, under Disaster Area Losses . Ammended tax return Reimbursement received after deducting loss. Ammended tax return   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Ammended tax return Actual reimbursement less than expected. Ammended tax return   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. Ammended tax return Actual reimbursement more than expected. Ammended tax return   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Ammended tax return However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Ammended tax return Do not refigure your tax for the year you claimed the deduction. Ammended tax return See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Ammended tax return If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. Ammended tax return See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. Ammended tax return Actual reimbursement same as expected. Ammended tax return   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. Ammended tax return Lump-sum reimbursement. Ammended tax return   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. Ammended tax return Figure the gain or loss separately for each asset that has a separate basis. Ammended tax return Adjustments to basis. Ammended tax return   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any deductible loss. Ammended tax return The result is your adjusted basis in the property. Ammended tax return Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Ammended tax return See Adjusted Basis in chapter 6 for more information. Ammended tax return Example. Ammended tax return You built a new silo for $25,000. Ammended tax return This is the basis in your silo because that is the total cost you incurred to build it. Ammended tax return During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Ammended tax return In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. Ammended tax return Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Ammended tax return Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). Ammended tax return There are two limits on the deduction for casualty or theft loss of personal-use property. Ammended tax return You figure these limits on Form 4684. Ammended tax return $100 rule. Ammended tax return   You must reduce each casualty or theft loss on personal-use property by $100. Ammended tax return This rule applies after you have subtracted any reimbursement. Ammended tax return 10% rule. Ammended tax return   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Ammended tax return Apply this rule after you reduce each loss by $100. Ammended tax return Adjusted gross income is on line 38 of Form 1040. Ammended tax return Example. Ammended tax return In June, you discovered that your house had been burglarized. Ammended tax return Your loss after insurance reimbursement was $2,000. Ammended tax return Your adjusted gross income for the year you discovered the burglary is $57,000. Ammended tax return Figure your theft loss deduction as follows: 1. Ammended tax return Loss after insurance $2,000 2. Ammended tax return Subtract $100 100 3. Ammended tax return Loss after $100 rule $1,900 4. Ammended tax return Subtract 10% (. Ammended tax return 10) × $57,000 AGI $5,700 5. Ammended tax return Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). Ammended tax return    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. Ammended tax return See 10% Rule in Publication 547. Ammended tax return When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Ammended tax return You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Ammended tax return However, losses in federally declared disaster areas are subject to different rules. Ammended tax return See Disaster Area Losses , later, for an exception. Ammended tax return If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. Ammended tax return Leased property. Ammended tax return   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. Ammended tax return This is true even if the loss occurred or the liability was paid in a different year. Ammended tax return You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Ammended tax return Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Ammended tax return Example. Ammended tax return Robert leased a tractor from First Implement, Inc. Ammended tax return , for use in his farm business. Ammended tax return The tractor was destroyed by a tornado in June 2012. Ammended tax return The loss was not insured. Ammended tax return First Implement billed Robert for the fair market value of the tractor on the date of the loss. Ammended tax return Robert disagreed with the bill and refused to pay it. Ammended tax return First Implement later filed suit in court against Robert. Ammended tax return In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. Ammended tax return Robert paid $20,000 in June 2013. Ammended tax return He can claim the $20,000 as a loss on his 2013 tax return. Ammended tax return Net operating loss (NOL). Ammended tax return   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Ammended tax return An NOL can be carried back or carried forward and deducted from income in other years. Ammended tax return See Publication 536 for more information on NOLs. Ammended tax return Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Ammended tax return You must have records to support the amount you claim for the loss. Ammended tax return Casualty loss proof. Ammended tax return   For a casualty loss, your records should show all the following information. Ammended tax return The type of casualty (car accident, fire, storm, etc. Ammended tax return ) and when it occurred. Ammended tax return That the loss was a direct result of the casualty. Ammended tax return That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. Ammended tax return Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Ammended tax return Theft loss proof. Ammended tax return   For a theft loss, your records should show all the following information. Ammended tax return When you discovered your property was missing. Ammended tax return That your property was stolen. Ammended tax return That you were the owner of the property. Ammended tax return Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Ammended tax return Figuring a Gain A casualty or theft may result in a taxable gain. Ammended tax return If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Ammended tax return You generally report your gain as income in the year you receive the reimbursement. Ammended tax return However, depending on the type of property you receive, you may not have to report your gain. Ammended tax return See Postponing Gain , later. Ammended tax return Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. Ammended tax return Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. Ammended tax return Amount you receive. Ammended tax return   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Ammended tax return It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Ammended tax return Example. Ammended tax return A tornado severely damaged your barn. Ammended tax return The adjusted basis of the barn was $25,000. Ammended tax return Your insurance company reimbursed you $40,000 for the damaged barn. Ammended tax return However, you had legal expenses of $2,000 to collect that insurance. Ammended tax return Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Ammended tax return 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. Ammended tax return Some of these are discussed in the following paragraphs. Ammended tax return Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Ammended tax return You report the gain or deduct the loss on your tax return for the year you realize it. Ammended tax return However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Ammended tax return See Postponing Gain , later. Ammended tax return Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Ammended tax return The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. Ammended tax return The owner receives a condemnation award (money or property) in exchange for the property taken. Ammended tax return A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Ammended tax return Threat of condemnation. Ammended tax return   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. Ammended tax return Main home condemned. Ammended tax return   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. Ammended tax return For information on this exclusion, see Publication 523. Ammended tax return If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. Ammended tax return See Postponing Gain , later. Ammended tax return (You cannot deduct a loss from the condemnation of your main home. Ammended tax return ) More information. Ammended tax return   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Ammended tax return Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Ammended tax return Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. Ammended tax return Livestock Losses Diseased livestock. Ammended tax return   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. Ammended tax return If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Ammended tax return Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Ammended tax return If you replace the livestock, you may be able to postpone reporting the gain. Ammended tax return See Postponing Gain below. Ammended tax return Reporting dispositions of diseased livestock. Ammended tax return   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. Ammended tax return You must also include other information on this statement. Ammended tax return See How To Postpone Gain , later, under Postponing Gain . Ammended tax return Weather-related sales of livestock. Ammended tax return   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. Ammended tax return Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. Ammended tax return Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Ammended tax return If you replace the livestock, you may be able to postpone reporting the gain. Ammended tax return See Postponing Gain below. Ammended tax return Example. Ammended tax return It is your usual business practice to sell five of your dairy animals during the year. Ammended tax return This year you sold 20 dairy animals because of drought. Ammended tax return The sale of 15 animals is treated as an involuntary conversion. Ammended tax return    If you do not replace the livestock, you may be able to report the gain in the following year's income. Ammended tax return This rule also applies to other livestock (including poultry). Ammended tax return See Sales Caused by Weather-Related Conditions in chapter 3. Ammended tax return Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. Ammended tax return Treat the loss as a loss from an involuntary conversion. Ammended tax return The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Ammended tax return You deduct the loss on the return for the year the seedlings died. Ammended tax return Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. Ammended tax return Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Ammended tax return You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Ammended tax return However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. Ammended tax return If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Ammended tax return To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Ammended tax return If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. Ammended tax return Example 1. Ammended tax return In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Ammended tax return In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Ammended tax return In May of this year, the property was worth $100,000. Ammended tax return In June the barn and silo were destroyed by a tornado. Ammended tax return At the time of the tornado, you had an adjusted basis of $0 in the property. Ammended tax return You received $85,000 from the insurance company. Ammended tax return You had a gain of $85,000 ($85,000 – $0). Ammended tax return You spent $80,000 to rebuild the barn and silo. Ammended tax return Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Ammended tax return Example 2. Ammended tax return In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Ammended tax return You made no further improvements or additions to it. Ammended tax return When a storm destroyed the cabin this January, the cabin was worth $250,000. Ammended tax return You received $146,000 from the insurance company in March. Ammended tax return You had a gain of $128,000 ($146,000 − $18,000). Ammended tax return You spent $144,000 to rebuild the cabin. Ammended tax return Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Ammended tax return Buying replacement property from a related person. Ammended tax return   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). Ammended tax return This rule applies to the following taxpayers. Ammended tax return C corporations. Ammended tax return Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Ammended tax return Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. Ammended tax return For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Ammended tax return If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Ammended tax return If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Ammended tax return Exception. Ammended tax return   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. Ammended tax return Related persons. Ammended tax return   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. Ammended tax return For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Ammended tax return Death of a taxpayer. Ammended tax return   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. Ammended tax return The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. Ammended tax return Replacement Property You must buy replacement property for the specific purpose of replacing your property. Ammended tax return Your replacement property must be similar or related in service or use to the property it replaces. Ammended tax return You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Ammended tax return If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. Ammended tax return Property you acquire by gift or inheritance does not qualify as replacement property. Ammended tax return Owner-user. Ammended tax return   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. Ammended tax return Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. Ammended tax return A grinding mill that replaces a tractor does not qualify. Ammended tax return Neither does a breeding or draft animal that replaces a dairy cow. Ammended tax return Soil or other environmental contamination. Ammended tax return   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. Ammended tax return Weather-related conditions. Ammended tax return   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. Ammended tax return Example. Ammended tax return Each year you normally sell 25 cows from your beef herd. Ammended tax return However, this year you had to sell 50 cows. Ammended tax return This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. Ammended tax return Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. Ammended tax return Standing crop destroyed by casualty. Ammended tax return   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. Ammended tax return The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). Ammended tax return In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. Ammended tax return Timber loss. Ammended tax return   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. Ammended tax return If you bought the standing timber within the replacement period, you can postpone reporting the gain. Ammended tax return Business or income-producing property located in a federally declared disaster area. Ammended tax return   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. Ammended tax return For more information, see Disaster Area Losses in Publication 547. Ammended tax return Substituting replacement property. Ammended tax return   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. Ammended tax return This is true even if you acquire the other property within the replacement period. Ammended tax return However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. Ammended tax return Basis of replacement property. Ammended tax return   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Ammended tax return In this way, tax on the gain is postponed until you dispose of the replacement property. Ammended tax return Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Ammended tax return This is the replacement period. Ammended tax return The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Ammended tax return The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Ammended tax return Example. Ammended tax return You are a calendar year taxpayer. Ammended tax return While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Ammended tax return You discovered the theft when you returned to your farm on November 11, 2012. Ammended tax return Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Ammended tax return You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Ammended tax return Main home in disaster area. Ammended tax return   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Ammended tax return See Disaster Area Losses , later. Ammended tax return Property in the Midwestern disaster areas. Ammended tax return   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Ammended tax return This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Ammended tax return Property in the Kansas disaster area. Ammended tax return   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Ammended tax return This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Ammended tax return Property in the Hurricane Katrina disaster area. Ammended tax return   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Ammended tax return This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Ammended tax return Weather-related sales of livestock in an area eligible for federal assistance. Ammended tax return   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. Ammended tax return The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Ammended tax return   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Ammended tax return R. Ammended tax return B. Ammended tax return 529, available at  www. Ammended tax return irs. Ammended tax return gov/irb/2006-39_IRB/ar11. Ammended tax return html. Ammended tax return For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. Ammended tax return gov. Ammended tax return Condemnation. Ammended tax return   The replacement period for a condemnation begins on the earlier of the following dates. Ammended tax return The date on which you disposed of the condemned property. Ammended tax return The date on which the threat of condemnation began. Ammended tax return The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Ammended tax return But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. Ammended tax return Business or investment real property. Ammended tax return   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Ammended tax return Extension. Ammended tax return   You can apply for an extension of the replacement period. Ammended tax return Send your written application to the Internal Revenue Service Center where you file your tax return. Ammended tax return See your tax return instructions for the address. Ammended tax return Include all the details about your need for an extension. Ammended tax return Make your application before the end of the replacement period. Ammended tax return However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. Ammended tax return You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Ammended tax return How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Ammended tax return You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Ammended tax return Required statement. Ammended tax return   You should attach a statement to your return for the year you have the gain. Ammended tax return This statement should include all the following information. Ammended tax return The date and details of the casualty, theft, or other involuntary conversion. Ammended tax return The insurance or other reimbursement you received. Ammended tax return How you figured the gain. Ammended tax return Replacement property acquired before return filed. Ammended tax return   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. Ammended tax return The replacement property. Ammended tax return The postponed gain. Ammended tax return The basis adjustment that reflects the postponed gain. Ammended tax return Any gain you are reporting as income. Ammended tax return Replacement property acquired after return filed. Ammended tax return   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. Ammended tax return   You should then attach another statement to your return for the year in which you buy the replacement property. Ammended tax return This statement should contain detailed information on the replacement property. Ammended tax return If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. Ammended tax return Include in the statement detailed information on the replacement property bought in that year. Ammended tax return Reporting weather-related sales of livestock. Ammended tax return   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. Ammended tax return Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Ammended tax return The gain realized on the sale or exchange. Ammended tax return The number and kind of livestock sold or exchanged. Ammended tax return The number of livestock of each kind you would have sold or exchanged under your usual business practice. Ammended tax return   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Ammended tax return The dates you bought the replacement property. Ammended tax return The cost of the replacement property. Ammended tax return Description of the replacement property (for example, the number and kind of the replacement livestock). Ammended tax return Amended return. Ammended tax return   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Ammended tax return You do not acquire replacement property within the replacement period, plus extensions. Ammended tax return On this amended return, you must report the gain and pay any additional tax due. Ammended tax return You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. Ammended tax return On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Ammended tax return Disaster Area Losses Special rules apply to federally declared disaster area losses. Ammended tax return A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. Ammended tax return Stafford Disaster Relief and Emergency Assistance Act. Ammended tax return It includes a major disaster or emergency declaration under the act. Ammended tax return A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. Ammended tax return fema. Ammended tax return gov. Ammended tax return This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Ammended tax return For other special rules, see Disaster Area Losses in Publication 547. Ammended tax return When to deduct the loss. Ammended tax return   You generally must deduct a casualty loss in the year it occurred. Ammended tax return However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. Ammended tax return If you make this choice, the loss is treated as having occurred in the preceding year. Ammended tax return    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. Ammended tax return   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Ammended tax return The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Ammended tax return The due date (with extensions) for the return for the preceding tax year. Ammended tax return Federal disaster relief grants. Ammended tax return   Do not include post-disaster relief grants received under the Robert T. Ammended tax return Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Ammended tax return Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Ammended tax return If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. Ammended tax return Unemployment assistance payments under the Act are taxable unemployment compensation. Ammended tax return Qualified disaster relief payments. Ammended tax return   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. Ammended tax return These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Ammended tax return No withholding applies to these payments. Ammended tax return   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Ammended tax return Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Ammended tax return Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Ammended tax return (A personal residence can be a rented residence or one you own. Ammended tax return ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Ammended tax return   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. Ammended tax return    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Ammended tax return Qualified disaster mitigation payments. Ammended tax return   Qualified disaster mitigation payments made under the Robert T. Ammended tax return Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. Ammended tax return These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Ammended tax return You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Ammended tax return Sale of property under hazard mitigation program. Ammended tax return   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. Ammended tax return You report the gain or deduct the loss on your tax return for the year you realize it. Ammended tax return (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Ammended tax return ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. Ammended tax return See Postponing Gain , earlier, for the rules that apply. Ammended tax return Other federal assistance programs. Ammended tax return    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Ammended tax return Postponed tax deadlines. Ammended tax return   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Ammended tax return The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. Ammended tax return   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Ammended tax return Go to http://www. Ammended tax return irs. Ammended tax return gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Ammended tax return Who is eligible. Ammended tax return   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Ammended tax return Any individual whose main home is located in a covered disaster area (defined next). Ammended tax return Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Ammended tax return Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Ammended tax return Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Ammended tax return The main home or principal place of business does not have to be located in the covered disaster area. Ammended tax return Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Ammended tax return The spouse on a joint return with a taxpayer who is eligible for postponements. Ammended tax return Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. Ammended tax return Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Ammended tax return Any other person determined by the IRS to be affected by a federally declared disaster. Ammended tax return Covered disaster area. Ammended tax return   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. Ammended tax return Abatement of interest and penalties. Ammended tax return   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Ammended tax return Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. Ammended tax return Form 4684. Ammended tax return   Use this form to report your gains and losses from casualties and thefts. Ammended tax return Form 4797. Ammended tax return   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Ammended tax return Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. Ammended tax return Form 8949. Ammended tax return   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Ammended tax return Schedule A (Form 1040). Ammended tax return   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. Ammended tax return Schedule D (Form 1040). Ammended tax return   Use this form to carry over the following gains. Ammended tax return Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Ammended tax return Net gain shown on Form 4684 from the casualty or theft of personal-use property. Ammended tax return    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Ammended tax return Schedule F (Form 1040). Ammended tax return   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. 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Understanding Your CP282 Notice

You received this notice because you indicated on your Form 1065, U.S. Return of Partnership Income, or Form1065-B, U.S. Return of Income for Electing Large Partnerships, that you have foreign partners.

Generally, when a foreign person engages in a trade or business in the United States, all income from sources in the United States connected with the conduct of that trade or business is considered to be Effectively Connected Taxable Income (ECTI). A partnership (foreign or domestic) that has income effectively connected with a U.S. trade or business (or income treated as effectively connected) must pay a withholding tax on the ECTI that it allocates to its foreign partners (Section 1446 of the Internal Revenue Code). The partnership, or a withholding agent for the partnership, must pay the withholding tax. A partnership that must pay the withholding tax but fails to do so may be liable for the payment of the tax plus any penalties and interest.


What you need to do if you determine you are liable for withholding:

Page Last Reviewed or Updated: 30-Jan-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Ammended Tax Return

Ammended tax return Index A Adoption Child tax credit, Adopted child. Ammended tax return (see also Child tax credit) Afghanistan, Afghanistan area. Ammended tax return Aliens, Alien Status Amount of exclusion, Amount of Exclusion Arabian peninsula, Arabian peninsula. Ammended tax return Assistance (see Tax help) C Child tax credit, Child Tax Credit Limits Modified adjusted gross income, Modified AGI. Ammended tax return Qualifying child, Qualifying Child Child, qualifying, Qualifying child. Ammended tax return Claims for tax forgiveness, Claims for Tax Forgiveness Codes, W-2, Form W-2 Codes Combat zone Election to include pay for earned income credit, Nontaxable combat pay election. Ammended tax return Exclusion, Combat Zone Exclusion Extension of deadlines, Service That Qualifies for an Extension of Deadline Related forgiveness, Combat Zone Related Forgiveness Community property, Community Property, Residents of community property states. Ammended tax return Contingency operation, Service That Qualifies for an Extension of Deadline Credits Child tax, Child Tax Credit Earned income, Earned Income Credit Excess social security tax withheld, Credit for Excess Social Security Tax Withheld First-time homebuyer, First-Time Homebuyer Credit D Decedents, Forgiveness of Decedent's Tax Liability Deductions, itemized, Itemized Deductions Domicile, Domicile. Ammended tax return Dual-status aliens, Dual-Status Aliens E Earned income credit, Earned Income Credit Social security card, Social security number. Ammended tax return Social security number, Social security number. Ammended tax return Educational expenses, Educational Expenses Employee business expenses, Employee Business Expenses Excess social security tax withholding credit, Credit for Excess Social Security Tax Withheld Excess withholding credit How to take, How to take the credit. Ammended tax return Expenses Employee business, Employee Business Expenses Moving, Moving Expenses Extension of deadlines, Extension of Deadlines Extension of time to file, Extensions F Family, Adopted child. Ammended tax return (see also Child tax credit) Filing returns, Filing Returns First-time homebuyer credit, First-Time Homebuyer Credit Foreclosures Mortgage settlement payouts, Foreclosures Foreign income, Foreign Source Income Foreign moves, Foreign Moves Forms 1040, Foreign Moves, Itemized Deductions, Where To File 1040A, Where To File 1040EZ, Where To File 1040NR, Nonresident Aliens 2106, Employee Business Expenses, Reimbursement. Ammended tax return 2106-EZ, Employee Business Expenses 2848, Signing Returns, Spouse overseas. Ammended tax return 3903, Moving Expenses 4868, Extensions W-2, Form W-2 Codes, Form W-2. Ammended tax return , Nontaxable combat pay election. Ammended tax return Foster care Child tax credit, Qualifying Child Free tax services, Free help with your tax return. Ammended tax return G Gross income, Gross Income H Help (see Tax help) Home Away from, Away from home. Ammended tax return Definition of, Away from home. Ammended tax return Sale of, Sale of Home Homebuyer credit, First-Time Homebuyer Credit Hospitalization, Hospitalized While Serving in a Combat Zone, Hospitalized After Leaving a Combat Zone, Qualified hospitalization. Ammended tax return I Income Foreign source, Foreign Source Income Gross, Gross Income Individual retirement arrangements, Individual Retirement Arrangements Installment agreement Payment deferment, Request for deferment. Ammended tax return Interest rate (maximum), Maximum Rate of Interest Iraq, Arabian peninsula. Ammended tax return Itemized deductions, Itemized Deductions J Joint returns, Joint returns. Ammended tax return , Joint returns. Ammended tax return , Joint returns. Ammended tax return K Kosovo, The Kosovo area. Ammended tax return M Military action related forgiveness, Terrorist or Military Action Related Forgiveness Military Spouses Residency Relief Act Domicile, Military Spouses Residency Relief Act (MSRRA) Miscellaneous itemized deductions, Employee Business Expenses Missing status, Missing status. Ammended tax return , Spouse in missing status. Ammended tax return , Missing status. Ammended tax return Modified adjusted gross income (MAGI) Child tax credit limits, Modified AGI. Ammended tax return Moving expenses, Moving Expenses N Nonresident aliens, Nonresident Aliens P Permanent change of station, Permanent change of station. Ammended tax return Personal representative, Forgiveness of Decedent's Tax Liability Power of attorney, Signing Returns Professional dues, Professional Dues Publications (see Tax help) Q Qualifying child, Qualifying child. Ammended tax return R Reimbursements Employee business expenses, Reimbursement. Ammended tax return Moving and storage, Services or reimbursements provided by the government. Ammended tax return Uniforms, Uniforms Reservists, Armed Forces reservists. Ammended tax return Travel, Armed Forces Reservists Uniforms, Uniforms Resident aliens, Resident Aliens Returns Filing, Filing Returns Signing, Signing Returns S Sale of home, Sale of Home Same-sex marriage, Same-Sex Marriage SCRA violation payouts, Foreclosures Separate returns, Separate returns. Ammended tax return Servicemembers Civil Relief Act, Maximum Rate of Interest Serving in a combat zone, Serving in a Combat Zone Social security numbers (SSNs) Earned income credit, Residency test. Ammended tax return Spouse Deadline extension, Spouses. Ammended tax return Died, Spouse died during the year. Ammended tax return Incapacitated, Spouse incapacitated. Ammended tax return Missing, Spouse in missing status. Ammended tax return Nonresident alien, Treating nonresident alien spouse as resident alien. Ammended tax return Overseas, Spouse overseas. Ammended tax return State bonus payments, State bonus payments. Ammended tax return T Tax forgiven, Combat Zone Related Forgiveness Tax help, How To Get Tax Help Temporary work location, Temporary work location. Ammended tax return Terrorist related forgiveness, Terrorist or Military Action Related Forgiveness Transportation, Armed Forces reservists. Ammended tax return Transportation expenses, Transportation Expenses Travel expenses, Travel Expenses TTY/TDD information, How To Get Tax Help U Uniforms, Uniforms W When to file, When To File Where to file, Where To File Y Yugoslavia, The Kosovo area. Ammended tax return Prev  Up     Home   More Online Publications