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E File State Taxes

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E File State Taxes

E file state taxes Publication 969 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. E file state taxes Tax questions. E file state taxes What's New Federal tax benefits for same-sex married couples. E file state taxes   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. E file state taxes For more information, see Publication 501. E file state taxes Health flexible spending arrangements (FSAs). E file state taxes  The following rules apply to health FSAs for plan years beginning after December 31, 2012. E file state taxes Salary reduction contributions to your health FSA cannot be more than $2,500 a year (indexed for inflation). E file state taxes Your employer may choose to change your cafeteria plan to allow you to carry over up to $500 of unused amounts remaining at the end of the plan year in a health FSA to be paid or reimbursed for qualified medical expenses incurred during the following plan year. E file state taxes For more information, see Balance in an FSA under Flexible Spending Arrangements (FSAs), later. E file state taxes Reminders Future Developments. E file state taxes  For the latest information about developments related to Publication 969, such as legislation enacted after it was published, go to www. E file state taxes IRS. E file state taxes gov/pub969. E file state taxes Photographs of missing children. E file state taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. E file state taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. E file state taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. E file state taxes Introduction Various programs are designed to give individuals tax advantages to offset health care costs. E file state taxes This publication explains the following programs. E file state taxes Health savings accounts (HSAs). E file state taxes Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). E file state taxes Health flexible spending arrangements (FSAs). E file state taxes Health reimbursement arrangements (HRAs). E file state taxes An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual. E file state taxes Contributions, other than employer contributions, are deductible on the eligible individual's return whether or not the individual itemizes deductions. E file state taxes Employer contributions are not included in income. E file state taxes Distributions from an HSA that are used to pay qualified medical expenses are not taxed. E file state taxes An Archer MSA may receive contributions from an eligible individual and his or her employer, but not both in the same year. E file state taxes Contributions by the individual are deductible whether or not the individual itemizes deductions. E file state taxes Employer contributions are not included in income. E file state taxes Distributions from an Archer MSA that are used to pay qualified medical expenses are not taxed. E file state taxes A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is enrolled in Medicare. E file state taxes Contributions can only be made by Medicare. E file state taxes The contributions are not included in your income. E file state taxes Distributions from a Medicare Advantage MSA that are used to pay qualified medical expenses are not taxed. E file state taxes A health FSA may receive contributions from an eligible individual. E file state taxes Employers may also contribute. E file state taxes Contributions are not includible in income. E file state taxes Reimbursements from an FSA that are used to pay qualified medical expenses are not taxed. E file state taxes An HRA must receive contributions from the employer only. E file state taxes Employees may not contribute. E file state taxes Contributions are not includible in income. E file state taxes Reimbursements from an HRA that are used to pay qualified medical expenses are not taxed. E file state taxes Comments and suggestions. E file state taxes   We welcome your comments about this publication and your suggestions for future editions. E file state taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. E file state taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. E file state taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. E file state taxes   You can send your comments from www. E file state taxes irs. E file state taxes gov/formspubs. E file state taxes Click on “More Information” and then on “Comment on Tax Forms and Publications. E file state taxes ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. E file state taxes Ordering forms and publications. E file state taxes   Visit www. E file state taxes irs. E file state taxes gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. E file state taxes Internal Revenue Service 1201 N. E file state taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. E file state taxes   If you have a tax question, check the information available on IRS. E file state taxes gov or call 1-800-829-1040. E file state taxes We cannot answer tax questions sent to either of the above addresses. E file state taxes Prev  Up  Next   Home   More Online Publications
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The E File State Taxes

E file state taxes 13. E file state taxes   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. E file state taxes It is divided into the following sections. E file state taxes Cost basis. E file state taxes Adjusted basis. E file state taxes Basis other than cost. E file state taxes Your basis is the amount of your investment in property for tax purposes. E file state taxes Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. E file state taxes Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. E file state taxes If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. E file state taxes Only the basis allocated to the business or investment use of the property can be depreciated. E file state taxes Your original basis in property is adjusted (increased or decreased) by certain events. E file state taxes For example, if you make improvements to the property, increase your basis. E file state taxes If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. E file state taxes Keep accurate records of all items that affect the basis of your property. E file state taxes For more information on keeping records, see chapter 1. E file state taxes Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. E file state taxes The cost is the amount you pay in cash, debt obligations, other property, or services. E file state taxes Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). E file state taxes In addition, the basis of real estate and business assets may include other items. E file state taxes Loans with low or no interest. E file state taxes    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. E file state taxes You generally have unstated interest if your interest rate is less than the applicable federal rate. E file state taxes   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. E file state taxes Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. E file state taxes If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. E file state taxes Lump sum purchase. E file state taxes   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. E file state taxes Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. E file state taxes Figure the basis of each asset by multiplying the lump sum by a fraction. E file state taxes The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. E file state taxes    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. E file state taxes Fair market value (FMV). E file state taxes   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. E file state taxes Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. E file state taxes Assumption of mortgage. E file state taxes   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. E file state taxes Settlement costs. E file state taxes   Your basis includes the settlement fees and closing costs you paid for buying the property. E file state taxes (A fee for buying property is a cost that must be paid even if you buy the property for cash. E file state taxes ) Do not include fees and costs for getting a loan on the property in your basis. E file state taxes   The following are some of the settlement fees or closing costs you can include in the basis of your property. E file state taxes Abstract fees (abstract of title fees). E file state taxes Charges for installing utility services. E file state taxes Legal fees (including fees for the title search and preparation of the sales contract and deed). E file state taxes Recording fees. E file state taxes Survey fees. E file state taxes Transfer taxes. E file state taxes Owner's title insurance. E file state taxes Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. E file state taxes   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. E file state taxes   The following are some of the settlement fees and closing costs you cannot include in the basis of property. E file state taxes Casualty insurance premiums. E file state taxes Rent for occupancy of the property before closing. E file state taxes Charges for utilities or other services related to occupancy of the property before closing. E file state taxes Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. E file state taxes Fees for refinancing a mortgage. E file state taxes Real estate taxes. E file state taxes   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. E file state taxes You cannot deduct them as an expense. E file state taxes    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. E file state taxes Do not include that amount in the basis of your property. E file state taxes If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. E file state taxes Points. E file state taxes   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. E file state taxes Generally, you deduct the points over the term of the loan. E file state taxes For more information on how to deduct points, see chapter 23. E file state taxes Points on home mortgage. E file state taxes   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. E file state taxes If certain requirements are met, you can deduct the points in full for the year in which they are paid. E file state taxes Reduce the basis of your home by any seller-paid points. E file state taxes Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. E file state taxes The result is the adjusted basis. E file state taxes Increases to Basis Increase the basis of any property by all items properly added to a capital account. E file state taxes Examples of items that increase basis are shown in Table 13-1. E file state taxes These include the items discussed below. E file state taxes Improvements. E file state taxes   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. E file state taxes For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. E file state taxes Assessments for local improvements. E file state taxes   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. E file state taxes Do not deduct them as taxes. E file state taxes However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. E file state taxes Example. E file state taxes Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. E file state taxes Add the assessment to your property's basis. E file state taxes In this example, the assessment is a depreciable asset. E file state taxes Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. E file state taxes Examples of items that decrease basis are shown in Table 13-1. E file state taxes These include the items discussed below. E file state taxes Table 13-1. E file state taxes Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. E file state taxes   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. E file state taxes    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. E file state taxes   For more information on casualty and theft losses, see chapter 25. E file state taxes Depreciation and section 179 deduction. E file state taxes   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. E file state taxes   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. E file state taxes Example. E file state taxes You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. E file state taxes You added an improvement to the duplex that cost $10,000. E file state taxes In February last year, the duplex was damaged by fire. E file state taxes Up to that time, you had been allowed depreciation of $23,000. E file state taxes You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. E file state taxes You deducted a casualty loss of $1,000 on your income tax return for last year. E file state taxes You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. E file state taxes You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. E file state taxes Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. E file state taxes Your basis in the land is its original cost of $5,000. E file state taxes Easements. E file state taxes   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. E file state taxes It reduces the basis of the affected part of the property. E file state taxes If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. E file state taxes   If the gain is on a capital asset, see chapter 16 for information about how to report it. E file state taxes If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. E file state taxes Exclusion of subsidies for energy conservation measures. E file state taxes   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. E file state taxes Reduce the basis of the property for which you received the subsidy by the excluded amount. E file state taxes For more information about this subsidy, see chapter 12. E file state taxes Postponed gain from sale of home. E file state taxes    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. E file state taxes For more information on the rules for the sale of a home, see chapter 15. E file state taxes Basis Other Than Cost There are many times when you cannot use cost as basis. E file state taxes In these cases, the fair market value or the adjusted basis of the property can be used. E file state taxes Fair market value (FMV) and adjusted basis were discussed earlier. E file state taxes Property Received for Services If you receive property for your services, include the FMV of the property in income. E file state taxes The amount you include in income becomes your basis. E file state taxes If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. E file state taxes Restricted property. E file state taxes   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. E file state taxes However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. E file state taxes Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). E file state taxes For more information, see Restricted Property in Publication 525. E file state taxes Bargain purchases. E file state taxes   A bargain purchase is a purchase of an item for less than its FMV. E file state taxes If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. E file state taxes Your basis in the property is its FMV (your purchase price plus the amount you include in income). E file state taxes   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. E file state taxes However, your basis in the property is still its FMV. E file state taxes See Employee Discounts in Publication 15-B. E file state taxes Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. E file state taxes A taxable gain or deductible loss also is known as a recognized gain or loss. E file state taxes If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. E file state taxes Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. E file state taxes Similar or related property. E file state taxes   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. E file state taxes Decrease the basis by the following. E file state taxes Any loss you recognize on the involuntary conversion. E file state taxes Any money you receive that you do not spend on similar property. E file state taxes Increase the basis by the following. E file state taxes Any gain you recognize on the involuntary conversion. E file state taxes Any cost of acquiring the replacement property. E file state taxes Money or property not similar or related. E file state taxes    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. E file state taxes Example. E file state taxes The state condemned your property. E file state taxes The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. E file state taxes You realized a gain of $5,000 ($31,000 − $26,000). E file state taxes You bought replacement property similar in use to the converted property for $29,000. E file state taxes You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. E file state taxes Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. E file state taxes The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. E file state taxes   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. E file state taxes Basis for depreciation. E file state taxes   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. E file state taxes For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. E file state taxes Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. E file state taxes If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. E file state taxes See Nontaxable Trades in chapter 14. E file state taxes Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. E file state taxes To qualify as a like-kind exchange, the property traded and the property received must be both of the following. E file state taxes Qualifying property. E file state taxes Like-kind property. E file state taxes The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. E file state taxes If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. E file state taxes Qualifying property. E file state taxes   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. E file state taxes Like-kind property. E file state taxes   There must be an exchange of like-kind property. E file state taxes Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. E file state taxes The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. E file state taxes Example. E file state taxes You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. E file state taxes The dealer allows you $2,000 on the old truck, and you pay $4,800. E file state taxes This is a like-kind exchange. E file state taxes The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). E file state taxes If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). E file state taxes The basis of the new truck is the price you pay the dealer. E file state taxes Partially nontaxable exchanges. E file state taxes   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. E file state taxes The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. E file state taxes Decrease the basis by the following amounts. E file state taxes Any money you receive. E file state taxes Any loss you recognize on the exchange. E file state taxes Increase the basis by the following amounts. E file state taxes Any additional costs you incur. E file state taxes Any gain you recognize on the exchange. E file state taxes If the other party to the exchange assumes you