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Efile free federal and state 8. Efile free federal and state   Gains and Losses Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Sales and ExchangesDetermining Gain or Loss Like-Kind Exchanges Transfer to Spouse Ordinary or Capital Gain or LossCapital Assets Noncapital Assets Hedging (Commodity Futures) Livestock Converted Wetland and Highly Erodible Cropland Timber Sale of a Farm Foreclosure or Repossession Abandonment Introduction This chapter explains how to figure, and report on your tax return, your gain or loss on the disposition of your property or debt and whether such gain or loss is ordinary or capital. Efile free federal and state Ordinary gain is taxed at the same rates as wages and interest income while capital gain is generally taxed at lower rates. Efile free federal and state Dispositions discussed in this chapter include sales, exchanges, foreclosures, repossessions, canceled debts, hedging transactions, and elections to treat cutting of timber as a sale or exchange. Efile free federal and state Topics - This chapter discusses: Sales and exchanges Ordinary or capital gain or loss Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 523 Selling Your Home 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 908 Bankruptcy Tax Guide Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 1099-A Acquisition or Abandonment of Secured Property 1099-C Cancellation of Debt 4797 Sales of Business Property 8949 Sales and Other Dispositions of Capital Assets See chapter 16 for information about getting publications and forms. Efile free federal and state Sales and Exchanges If you sell, exchange, or otherwise dispose of your property, you usually have a gain or a loss. Efile free federal and state This section explains certain rules for determining whether any gain you have is taxable, and whether any loss you have is deductible. Efile free federal and state A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. Efile free federal and state An exchange is a transfer of property for other property or services. Efile free federal and state Determining Gain or Loss You usually realize a gain or loss when you sell or exchange property. Efile free federal and state If the amount you realize from a sale or exchange of property is more than its adjusted basis, you will have a gain. Efile free federal and state If the adjusted basis of the property is more than the amount you realize, you will have a loss. Efile free federal and state Basis and adjusted basis. Efile free federal and state   The basis of property you buy is usually its cost. Efile free federal and state The adjusted basis of property is basis plus certain additions and minus certain deductions. Efile free federal and state See chapter 6 for more information about basis and adjusted basis. Efile free federal and state Amount realized. Efile free federal and state   The amount you realize from a sale or exchange is the total of all money you receive plus the fair market value (FMV) (defined in chapter 6) of all property or services you receive. Efile free federal and state The amount you realize also includes any of your liabilities assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage. Efile free federal and state   If the liabilities relate to an exchange of multiple properties, see Multiple Property Exchanges in chapter 1 of Publication 544. Efile free federal and state Amount recognized. Efile free federal and state   Your gain or loss realized from a sale or exchange of certain property is usually a recognized gain or loss for tax purposes. Efile free federal and state A recognized gain is a gain you must include in gross income and report on your income tax return. Efile free federal and state A recognized loss is a loss you deduct from gross income. Efile free federal and state However, your gain or loss realized from the exchange of certain property may not be recognized for tax purposes. Efile free federal and state See Like-Kind Exchanges next. Efile free federal and state Also, a loss from the disposition of property held for personal use is not deductible. Efile free federal and state Like-Kind Exchanges Certain exchanges of property are not taxable. Efile free federal and state This means any gain from the exchange is not recognized, and any loss cannot be deducted. Efile free federal and state Your gain or loss will not be recognized until you sell or otherwise dispose of the property you receive. Efile free federal and state The exchange of property for the same kind of property is the most common type of nontaxable exchange. Efile free federal and state To qualify for treatment as a like-kind exchange, the property traded and the property received must be both of the following. Efile free federal and state Qualifying property. Efile free federal and state Like-kind property. Efile free federal and state These two requirements are discussed later. Efile free federal and state Multiple-party transactions. Efile free federal and state   The like-kind exchange rules also apply to property exchanges that involve three and four-party transactions. Efile free federal and state Any part of these multiple-party transactions can qualify as a like-kind exchange if it meets all the requirements described in this section. Efile free federal and state Receipt of title from third party. Efile free federal and state   If you receive property in a like-kind exchange and the other party who transfers the property to you does not give you the title, but a third party does, you can still treat this transaction as a like-kind exchange if it meets all the requirements. Efile free federal and state Basis of property received. Efile free federal and state   If you receive property in a like-kind exchange, the basis of the property will be the same as the basis of the property you gave up. Efile free federal and state See chapter 6 for more information. Efile free federal and state Money paid. Efile free federal and state   If, in addition to giving up like-kind property, you pay money in a like-kind exchange, you still have no recognized gain or loss. Efile free federal and state The basis of the property received is the basis of the property given up, increased by the money paid. Efile free federal and state Example. Efile free federal and state You traded an old tractor with an adjusted basis of $15,000 for a new one. Efile free federal and state The new tractor costs $300,000. Efile free federal and state You were allowed $80,000 for the old tractor and paid $220,000 cash. Efile free federal and state You have no recognized gain or loss on the transaction regardless of the adjusted basis of your old tractor and the basis of the new tractor is $235,000, the adjusted basis of the old tractor plus the cash paid ($15,000 + $220,000). Efile free federal and state If you had sold the old tractor to a third party for $80,000 and bought a new one, you would have a recognized gain or loss on the sale of your old tractor equal to the difference between the amount realized and the adjusted basis of the old tractor. Efile free federal and state In this case, the taxable gain would be $65,000 ($80,000 − $15,000) and the basis of the new tractor would be $300,000. Efile free federal and state Reporting the exchange. Efile free federal and state   Report the exchange of like-kind property, even though no gain or loss is recognized, on Form 8824, Like-Kind Exchanges. Efile free federal and state The Instructions for Form 8824 explain how to report the details of the exchange. Efile free federal and state   If you have any recognized gain because you received money or unlike property, report it on Schedule D (Form 1040) or Form 4797, whichever applies. Efile free federal and state You may also have to report the recognized gain as ordinary income because of depreciation recapture on Form 4797. Efile free federal and state See chapter 9 for more information. Efile free federal and state Qualifying property. Efile free federal and state   In a like-kind exchange, both the property you give up and the property you receive must be held by you for investment or for productive use in your trade or business. Efile free federal and state Machinery, buildings, land, trucks, breeding livestock, rental houses, and certain mutual ditch, reservoir, or irrigation company stock are examples of property that may qualify. Efile free federal and state Nonqualifying property. Efile free federal and state   The rules for like-kind exchanges do not apply to exchanges of the following property. Efile free federal and state Property you use for personal purposes, such as your home and family car. Efile free federal and state Stock in trade or other property held primarily for sale, such as crops and produce. Efile free federal and state Stocks, bonds, or notes. Efile free federal and state However, see Qualifying property above. Efile free federal and state Other securities or evidences of indebtedness, such as accounts receivable. Efile free federal and state Partnership interests. Efile free federal and state However, you may have a nontaxable exchange under other rules. Efile free federal and state See Other Nontaxable Exchanges in chapter 1 of Publication 544. Efile free federal and state Like-kind property. Efile free federal and state   To qualify as a nontaxable exchange, the properties exchanged must be of like kind. Efile free federal and state Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Efile free federal and state Generally, real property exchanged for real property qualifies as an exchange of like-kind property. Efile free federal and state For example, an exchange of city property for farm property or improved property for unimproved property is a like-kind exchange. Efile free federal and state   An exchange of a tractor for a new tractor is an exchange of like-kind property, and so is an exchange of timber land for crop acreage. Efile free federal and state An exchange of a tractor for acreage, however, is not an exchange of like-kind property. Efile free federal and state The exchange of livestock of one sex for livestock of the other sex is not a like-kind exchange. Efile free federal and state For example, the exchange of a bull for a cow is not a like-kind exchange. Efile free federal and state An exchange of the assets of a business for the assets of a similar business cannot be treated as an exchange of one property for another property. Efile free federal and state    Note. Efile free federal and state Whether you engaged in a like-kind exchange depends on an analysis of each asset involved in the exchange. Efile free federal and state Personal property. Efile free federal and state   Depreciable tangible personal property can be either like kind or like class to qualify for nontaxable exchange treatment. Efile free federal and state Like-class properties are depreciable tangible personal properties within the same General Asset Class or Product Class. Efile free federal and state Property classified in any General Asset Class may not be classified within a Product Class. Efile free federal and state Assets that are not in the same class will qualify as like-kind property if they are of the same nature or character. Efile free federal and state General Asset Classes. Efile free federal and state   General Asset Classes describe the types of property frequently used in many businesses. Efile free federal and state They include, but are not limited to, the following property. Efile free federal and state Office furniture, fixtures, and equipment (asset class 00. Efile free federal and state 11). Efile free federal and state Information systems, such as computers and peripheral equipment (asset class 00. Efile free federal and state 12). Efile free federal and state Data handling equipment except computers (asset class 00. Efile free federal and state 13). Efile free federal and state Automobiles and taxis (asset class 00. Efile free federal and state 22). Efile free federal and state Light general purpose trucks (asset class 00. Efile free federal and state 241). Efile free federal and state Heavy general purpose trucks (asset class 00. Efile free federal and state 242). Efile free federal and state Tractor units for use over-the-road (asset class 00. Efile free federal and state 26). Efile free federal and state Trailers and trailer-mounted containers (asset class 00. Efile free federal and state 27). Efile free federal and state Industrial steam and electric generation and/or distribution systems (asset class 00. Efile free federal and state 4). Efile free federal and state Product Classes. Efile free federal and state   Product Classes include property listed in a 6-digit product class in sectors 31 through 33 of the North American Industry Classification System (NAICS) of the Executive Office of the President, Office of Management and Budget, United States, (NAICS Manual). Efile free federal and state The latest version of the manual can be accessed at www. Efile free federal and state census. Efile free federal and state gov/eos/www/naics/. Efile free federal and state Copies of the printed manual may be purchased from the National Technical Information Service (NTIS) at  www. Efile free federal and state ntis. Efile free federal and state gov/products/naics. Efile free federal and state aspx or by calling 1-800-553-NTIS (1-800-553-6847) or (703) 605-6000. Efile free federal and state A CD-ROM version with search and retrieval software is also available from NTIS. Efile free federal and state    NAICS class 333111, Farm Machinery and Equipment Manufacturing, includes most machinery and equipment used in a farming business. Efile free federal and state Partially nontaxable exchange. Efile free federal and state   If, in addition to like-kind property, you receive money or unlike property in an exchange on which you realize gain, you have a partially nontaxable exchange. Efile free federal and state You are taxed on the gain you realize, but only to the extent of the money and the FMV of the unlike property you receive. Efile free federal and state A loss is not deductible. Efile free federal and state Example 1. Efile free federal and state You trade farmland that cost $30,000 for $10,000 cash and other land to be used in farming with a FMV of $50,000. Efile free federal and state You have a realized gain of $30,000 ($50,000 FMV of new land + $10,000 cash − $30,000 basis of old farmland = $30,000 realized gain). Efile free federal and state However, only $10,000, the cash received, is recognized (included in income). Efile free federal and state Example 2. Efile free federal and state Assume the same facts as in Example 1, except that, instead of money, you received a tractor with a FMV of $10,000. Efile free federal and state Your recognized gain is still limited to $10,000, the value of the tractor (the unlike property). Efile free federal and state Example 3. Efile free federal and state Assume in Example 1 that the FMV of the land you received was only $15,000. Efile free federal and state Your $5,000 loss is not recognized. Efile free federal and state Unlike property given up. Efile free federal and state   If, in addition to like-kind property, you give up unlike property, you must recognize gain or loss on the unlike property you give up. Efile free federal and state The gain or loss is the difference between the FMV of the unlike property and the adjusted basis of the unlike property. Efile free federal and state Like-kind exchanges between related persons. Efile free federal and state   Special rules apply to like-kind exchanges between related persons. Efile free federal and state These rules affect both direct and indirect exchanges. Efile free federal and state Under these rules, if either person disposes of the property within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. Efile free federal and state The gain or loss on the original exchange must be recognized as of the date of the later disposition. Efile free federal and state The 2-year holding period begins on the date of the last transfer of property that was part of the like-kind exchange. Efile free federal and state Related persons. Efile free federal and state   Under these rules, related persons include, for example, you and a member of your family (spouse, brother, sister, parent, child, etc. Efile free federal and state ), you and a corporation in which you have more than 50% ownership, you and a partnership in which you directly or indirectly own more than a 50% interest of the capital or profits, and two partnerships in which you directly or indirectly own more than 50% of the capital interests or profits. Efile free federal and state   For the complete list of related persons, see Related persons in chapter 2 of Publication 544. Efile free federal and state Example. Efile free federal and state You used a grey pickup truck in your farming business. Efile free federal and state Your sister used a red pickup truck in her landscaping business. Efile free federal and state In December 2012, you exchanged your grey pickup truck, plus $200, for your sister's red pickup truck. Efile free federal and state At that time, the FMV of the grey pickup truck was $7,000 and its adjusted basis was $6,000. Efile free federal and state The FMV of the red pickup truck was $7,200 and its adjusted basis was $1,000. Efile free federal and state You realized a gain of $1,000 (the $7,200 FMV of the red pickup truck, minus the grey pickup truck's $6,000 adjusted basis, minus the $200 you paid). Efile free federal and state Your sister realized a gain of $6,200 (the $7,000 FMV of the grey pickup truck plus the $200 you paid, minus the $1,000 adjusted basis of the red pickup truck). Efile free federal and state However, because this was a like-kind exchange, you recognized no gain. Efile free federal and state Your basis in the red pickup truck was $6,200 (the $6,000 adjusted basis of the grey pickup truck plus the $200 you paid). Efile free federal and state She recognized gain only to the extent of the money she received, $200. Efile free federal and state Her basis in the grey pickup truck was $1,000 (the $1,000 adjusted basis of the red pickup truck minus the $200 received, plus the $200 gain recognized). Efile free federal and state In 2013, you sold the red pickup truck to a third party for $7,000. Efile free federal and state Because you sold it within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. Efile free federal and state On your tax return for 2013, you must report your $1,000 gain on the 2012 exchange. Efile free federal and state You also report a loss on the sale as $200 (the adjusted basis of the red pickup truck, $7,200 (its $6,200 basis plus the $1,000 gain recognized), minus the $7,000 realized from the sale). Efile free federal and state In addition, your sister must report on her tax return for 2013 the $6,000 balance of her gain on the 2012 exchange. Efile free federal and state Her adjusted basis in the grey pickup truck is increased to $7,000 (its $1,000 basis plus the $6,000 gain recognized). Efile free federal and state Exceptions to the rules for related persons. Efile free federal and state   The following property dispositions are excluded from these rules. Efile free federal and state Dispositions due to the death of either related person. Efile free federal and state Involuntary conversions. Efile free federal and state Dispositions where it is established to the satisfaction of the IRS that neither the exchange nor the disposition has, as a main purpose, the avoidance of federal income tax. Efile free federal and state Multiple property exchanges. Efile free federal and state   Under the like-kind exchange rules, you must generally make a property-by-property comparison to figure your recognized gain and the basis of the property you receive in the exchange. Efile free federal and state However, for exchanges of multiple properties, you do not make a property-by-property comparison if you do either of the following. Efile free federal and state Transfer and receive properties in two or more exchange groups. Efile free federal and state Transfer or receive more than one property within a single exchange group. Efile free federal and state   For more information, see Multiple Property Exchanges in chapter 1 of Publication 544. Efile free federal and state Deferred exchange. Efile free federal and state   A deferred exchange for like-kind property may qualify for nonrecognition of gain or loss. Efile free federal and state A deferred exchange is an exchange in which you transfer property you use in business or hold for investment and later receive like-kind property you will use in business or hold for investment. Efile free federal and state The property you receive is replacement property. Efile free federal and state The transaction must be an exchange of property for property rather than a transfer of property for money used to buy replacement property. Efile free federal and state In addition, the replacement property will not be treated as like-kind property unless certain identification and receipt requirements are met. Efile free federal and state   For more information see Deferred Exchanges in chapter 1 of Publication 544. Efile free federal and state Transfer to Spouse No gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or a former spouse if incident to divorce. Efile free federal and state This rule does not apply if the recipient is a nonresident alien. Efile free federal and state Nor does this rule apply to a transfer in trust to the extent the liabilities assumed and the liabilities on the property are more than the property's adjusted basis. Efile free federal and state Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is not considered a sale or exchange. Efile free federal and state The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. Efile free federal and state This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its FMV at the time of transfer or any consideration paid by the recipient. Efile free federal and state This rule applies for determining loss as well as gain. Efile free federal and state Any gain recognized on a transfer in trust increases the basis. Efile free federal and state For more information on transfers of property incident to divorce, see Property Settlements in Publication 504, Divorced or Separated Individuals. Efile free federal and state Ordinary or Capital Gain or Loss Generally, you will have a capital gain or loss if you sell or exchange a capital asset (defined below). Efile free federal and state You may also have a capital gain if your section 1231 transactions result in a net gain. Efile free federal and state See Section 1231 Gains and Losses in  chapter 9. Efile free federal and state To figure your net capital gain or loss, you must classify your gains and losses as either ordinary or capital (and your capital gains or losses as either short-term or long-term). Efile free federal and state Your net capital gains may be taxed at a lower tax rate than ordinary income. Efile free federal and state See Capital Gains Tax Rates , later. Efile free federal and state Your deduction for a net capital loss may be limited. Efile free federal and state See Treatment of Capital Losses , later. Efile free federal and state Capital Assets Almost everything you own and use for personal purposes or investment is a capital asset. Efile free federal and state The following items are examples of capital assets. Efile free federal and state A home owned and occupied by you and your family. Efile free federal and state Household furnishings. Efile free federal and state A car used for pleasure. Efile free federal and state If your car is used both for pleasure and for farm business, it is partly a capital asset and partly a noncapital asset, defined later. Efile free federal and state Stocks and bonds. Efile free federal and state However, there are special rules for gains on qualified small business stock. Efile free federal and state For more information on this subject, see Gains on Qualified Small Business Stock and Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. Efile free federal and state Personal-use property. Efile free federal and state   Gain from a sale or exchange of personal-use property is a capital gain and is taxable. Efile free federal and state Loss from the sale or exchange of personal-use property is not deductible. Efile free federal and state You can deduct a loss relating to personal-use property only if it results from a casualty or theft. Efile free federal and state For information on casualties and thefts, see chapter 11. Efile free federal and state Long and Short Term Where you report a capital gain or loss depends on how long you own the asset before you sell or exchange it. Efile free federal and state The time you own an asset before disposing of it is the holding period. Efile free federal and state If you hold a capital asset 1 year or less, the gain or loss resulting from its disposition is short term. Efile free federal and state Report it in Part I of Schedule D (Form 1040). Efile free federal and state If you hold a capital asset longer than 1 year, the gain or loss resulting from its disposition is long term. Efile free federal and state Report it in Part II of Schedule D (Form 1040). Efile free federal and state Holding period. Efile free federal and state   To figure if you held property longer than 1 year, start counting on the day after the day you acquired the property. Efile free federal and state The day you disposed of the property is part of your holding period. Efile free federal and state Example. Efile free federal and state If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. Efile free federal and state If you sold the asset on June 19, 2013, your holding period is not longer than 1 year, but if you sold it on June 20, 2013, your holding period is longer than 1 year. Efile free federal and state Inherited property. Efile free federal and state   If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it. Efile free federal and state This rule does not apply to livestock used in a farm business. Efile free federal and state See Holding period under Livestock , later. Efile free federal and state Nonbusiness bad debt. Efile free federal and state   A nonbusiness bad debt is a short-term capital loss, deductible in the year the debt becomes worthless. Efile free federal and state See chapter 4 of Publication 550. Efile free federal and state Nontaxable exchange. Efile free federal and state   If you acquire an asset in exchange for another asset and your basis for the new asset is figured, in whole or in part, by using your basis in the old property, the holding period of the new property includes the holding period of the old property. Efile free federal and state That is, it begins on the same day as your holding period for the old property. Efile free federal and state Gift. Efile free federal and state   If you receive a gift of property and your basis in it is figured using the donor's basis, your holding period includes the donor's holding period. Efile free federal and state Real property. Efile free federal and state   To figure how long you held real property, start counting on the day after you received title to it or, if earlier, on the day after you took possession of it and assumed the burdens and privileges of ownership. Efile free federal and state   However, taking possession of real property under an option agreement is not enough to start the holding period. Efile free federal and state The holding period cannot start until there is an actual contract of sale. Efile free federal and state The holding period of the seller cannot end before that time. Efile free federal and state Figuring Net Gain or Loss The totals for short-term capital gains and losses and the totals for long-term capital gains and losses must be figured separately. Efile free federal and state Net short-term capital gain or loss. Efile free federal and state   Combine your short-term capital gains and losses. Efile free federal and state Do this by adding all of your short-term capital gains. Efile free federal and state Then add all of your short-term capital losses. Efile free federal and state Subtract the lesser total from the greater. Efile free federal and state The difference is your net short-term capital gain or loss. Efile free federal and state Net long-term capital gain or loss. Efile free federal and state   Follow the same steps to combine your long-term capital gains and losses. Efile free federal and state The result is your net long-term capital gain or loss. Efile free federal and state Net gain. Efile free federal and state   If the total of your capital gains is more than the total of your capital losses, the difference is taxable. Efile free federal and state However, part of your gain (but not more than your net capital gain) may be taxed at a lower rate than the rate of tax on your ordinary income. Efile free federal and state See Capital Gains Tax Rates , later. Efile free federal and state Net loss. Efile free federal and state   If the total of your capital losses is more than the total of your capital gains, the difference is deductible. Efile free federal and state But there are limits on how much loss you can deduct and when you can deduct it. Efile free federal and state See Treatment of Capital Losses next. Efile free federal and state Treatment of Capital Losses If your capital losses are more than your capital gains, you must claim the difference even if you do not have ordinary income to offset it. Efile free federal and state For taxpayers other than corporations, the yearly limit on the capital loss you can deduct is $3,000 ($1,500 if you are married and file a separate return). Efile free federal and state If your other income is low, you may not be able to use the full $3,000. Efile free federal and state The part of the $3,000 you cannot use becomes part of your capital loss carryover (discussed next). Efile free federal and state Capital loss carryover. Efile free federal and state   Generally, you have a capital loss carryover if either of the following situations applies to you. Efile free federal and state Your net loss on Schedule D (Form 1040), is more than the yearly limit. Efile free federal and state Your taxable income without your deduction for exemptions is less than zero. Efile free federal and state If either of these situations applies to you for 2013, see Capital Losses under Reporting Capital Gains and Losses in chapter 4 of Publication 550 to figure the amount you can carry over to 2014. Efile free federal and state    To figure your capital loss carryover from 2013 to 2014, you will need a copy of your 2013 Form 1040 and Schedule D (Form 1040). Efile free federal and state Capital Gains Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. Efile free federal and state These lower rates are called the maximum capital gains rates. Efile free federal and state The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Efile free federal and state See Schedule D (Form 1040) and the Instructions for Schedule D (Form 1040). Efile free federal and state Also see Publication 550. Efile free federal and state Noncapital Assets Noncapital assets include property such as inventory and depreciable property used in a trade or business. Efile free federal and state A list of properties that are not capital assets is provided in the Instructions for Schedule D (Form 1040). Efile free federal and state Property held for sale in the ordinary course of your farm business. Efile free federal and state   Property you hold mainly for sale to customers, such as livestock, poultry, livestock products, and crops, is a noncapital asset. Efile free federal and state Gain or loss from sales or other dispositions of this property is reported on Schedule F (Form 1040) (not on Schedule D (Form 1040) or Form 4797). Efile free federal and state The treatment of this property is discussed in chapter 3. Efile free federal and state Land and depreciable properties. Efile free federal and state   Land and depreciable property you use in farming are not capital assets. Efile free federal and state Noncapital assets also include livestock held for draft, breeding, dairy, or sporting purposes. Efile free federal and state However, your gains and losses from sales and exchanges of your farmland and depreciable properties must be considered together with certain other transactions to determine whether the gains and losses are treated as capital or ordinary gains and losses. Efile free federal and state The sales of these business assets are reported on Form 4797. Efile free federal and state See chapter 9 for more information. Efile free federal and state Hedging (Commodity Futures) Hedging transactions are transactions that you enter into in the normal course of business primarily to manage the risk of interest rate or price changes, or currency fluctuations, with respect to borrowings, ordinary property, or ordinary obligations. Efile free federal and state Ordinary property or obligations are those that cannot produce capital gain or loss if sold or exchanged. Efile free federal and state A commodity futures contract is a standardized, exchange-traded contract for the sale or purchase of a fixed amount of a commodity at a future date for a fixed price. Efile free federal and state The holder of an option on a futures contract has the right (but not the obligation) for a specified period of time to enter into a futures contract to buy or sell at a particular price. Efile free federal and state A forward contract is generally similar to a futures contract except that the terms are not standardized and the contract is not exchange traded. Efile free federal and state Businesses may enter into commodity futures contracts or forward contracts and may acquire options on commodity futures contracts as either of the following. Efile free federal and state Hedging transactions. Efile free federal and state Transactions that are not hedging transactions. Efile free federal and state Futures transactions with exchange-traded commodity futures contracts that are not hedging transactions, generally, result in capital gain or loss and are subject to the mark-to-market rules discussed in Publication 550. Efile free federal and state There is a limit on the amount of capital losses you can deduct each year. Efile free federal and state Hedging transactions are not subject to the mark-to-market rules. Efile free federal and state If, as a farmer-producer, to protect yourself from the risk of unfavorable price fluctuations, you enter into commodity forward contracts, futures contracts, or options on futures contracts and the contracts cover an amount of the commodity within your range of production, the transactions are generally considered hedging transactions. Efile free federal and state They can take place at any time you have the commodity under production, have it on hand for sale, or reasonably expect to have it on hand. Efile free federal and state The gain or loss on the termination of these hedges is generally ordinary gain or loss. Efile free federal and state Farmers who file their income tax returns on the cash method report any profit or loss on the hedging transaction on Schedule F, line 8. Efile free federal and state Gains or losses from hedging transactions that hedge supplies of a type regularly used or consumed in the ordinary course of your trade or business may be ordinary gains or losses. Efile free federal and state Examples include fuel and feed. Efile free federal and state If you have numerous transactions in the commodity futures market during the year, you must be able to show which transactions are hedging transactions. Efile free federal and state Clearly identify a hedging transaction on your books and records before the end of the day you entered into the transaction. Efile free federal and state It may be helpful to have separate brokerage accounts for your hedging and speculation transactions. Efile free federal and state Retain the identification of each hedging transaction with your books and records. Efile free federal and state Also, identify the item(s) or aggregate risk that is being hedged in your records. Efile free federal and state Although the identification of the hedging transaction must be made before the end of the day it was entered into, you have 35 days after entering into the transaction to identify the hedged item(s) or risk. Efile free federal and state For more information on the tax treatment of futures and options contracts, see Commodity Futures and Section 1256 Contracts Marked to Market in Publication 550. Efile free federal and state Accounting methods for hedging transactions. Efile free federal and state   The accounting method you use for a hedging transaction must clearly reflect income. Efile free federal and state This means that your accounting method must reasonably match the timing of income, deduction, gain, or loss from a hedging transaction with the timing of income, deduction, gain, or loss from the item or items being hedged. Efile free federal and state There are requirements and limits on the method you can use for certain hedging transactions. Efile free federal and state See Regulations section 1. Efile free federal and state 446-4(e) for those requirements and limits. Efile free federal and state   Hedging transactions must be accounted for under the rules stated above unless the transaction is subject to mark-to-market accounting under section 475 or you use an accounting method other than the following methods. Efile free federal and state Cash method. Efile free federal and state Farm-price method. Efile free federal and state Unit-livestock-price method. Efile free federal and state   Once you adopt a method, you must apply it consistently and must have IRS approval before changing it. Efile free federal and state   Your books and records must describe the accounting method used for each type of hedging transaction. Efile free federal and state They must also contain any additional identification necessary to verify the application of the accounting method you used for the transaction. Efile free federal and state You must make the additional identification no more than 35 days after entering into the hedging transaction. Efile free federal and state Example of a hedging transaction. Efile free federal and state   You file your income tax returns on the cash method. Efile free federal and state On July 2 you anticipate a yield of 50,000 bushels of corn this year. Efile free federal and state The December futures price is $5. Efile free federal and state 75 a bushel, but there are indications that by harvest time the price will drop. Efile free federal and state To protect yourself against a drop in the price, you enter into the following hedging transaction. Efile free federal and state You sell ten December futures contracts of 5,000 bushels each for a total of 50,000 bushels of corn at $5. Efile free federal and state 75 a bushel. Efile free federal and state   The price did not drop as anticipated but rose to $6 a bushel. Efile free federal and state In November, you sell your crop at a local elevator for $6 a bushel. Efile free federal and state You also close out your futures position by buying ten December contracts for $6 a bushel. Efile free federal and state You paid a broker's commission of $1,400 ($70 per contract) for the complete in and out position in the futures market. Efile free federal and state   The result is that the price of corn rose 25 cents a bushel and the actual selling price is $6 a bushel. Efile free federal and state Your loss on the hedge is 25 cents a bushel. Efile free federal and state In effect, the net selling price of your corn is $5. Efile free federal and state 75 a bushel. Efile free federal and state   Report the results of your futures transactions and your sale of corn separately on Schedule F. Efile free federal and state See the instructions for the 2013 Schedule F (Form 1040). Efile free federal and state   The loss on your futures transactions is $13,900, figured as follows. Efile free federal and state July 2 - Sold December corn futures (50,000 bu. Efile free federal and state @$5. Efile free federal and state 75) $287,500 November 6 - Bought December corn futures (50,000 bu. Efile free federal and state @$6 plus $1,400 broker's commission) 301,400 Futures loss ($13,900) This loss is reported as a negative figure on Schedule F, Part I, line 8, as other income. Efile free federal and state   The proceeds from your corn sale at the local elevator are $300,000 (50,000 bu. Efile free federal and state × $6). Efile free federal and state Report it on Schedule F, Part I, line 2, as income from sales of products you raised. Efile free federal and state   Assume you were right and the price went down 25 cents a bushel. Efile free federal and state In effect, you would still net $5. Efile free federal and state 75 a bushel, figured as follows. Efile free federal and state Sold cash corn, per bushel $5. Efile free federal and state 50 Gain on hedge, per bushel . Efile free federal and state 25 Net price, per bushel $5. Efile free federal and state 75       The gain on your futures transactions would have been $11,100, figured as follows. Efile free federal and state July 2 - Sold December corn futures (50,000 bu. Efile free federal and state @$5. Efile free federal and state 75) $287,500 November 6 - Bought December corn futures (50,000 bu. Efile free federal and state @$5. Efile free federal and state 50 plus $1,400 broker's commission) 276,400 Futures gain $11,100 The $11,100 is reported on Schedule F, Part I, line 8, as other income. Efile free federal and state   The proceeds from the sale of your corn at the local elevator, $275,000, are reported on Schedule F, Part I, line 2, as income from sales of products you raised. Efile free federal and state Livestock This part discusses the sale or exchange of livestock used in your farm business. Efile free federal and state Gain or loss from the sale or exchange of this livestock may qualify as a section 1231 gain or loss. Efile free federal and state However, any part of the gain that is ordinary income from the recapture of depreciation is not included as section 1231 gain. Efile free federal and state See chapter 9 for more information on section 1231 gains and losses and the recapture of depreciation under section 1245. Efile free federal and state The rules discussed here do not apply to the sale of livestock held primarily for sale to customers. Efile free federal and state The sale of this livestock is reported on Schedule F. Efile free federal and state See chapter 3. Efile free federal and state Also, special rules apply to sales or exchanges caused by weather-related conditions. Efile free federal and state See chapter 3. Efile free federal and state Holding period. Efile free federal and state   The sale or exchange of livestock used in your farm business (defined below) qualifies as a section 1231 transaction if you held the livestock for 12 months or more (24 months or more for horses and cattle). Efile free federal and state Livestock. Efile free federal and state   For section 1231 transactions, livestock includes cattle, hogs, horses, mules, donkeys, sheep, goats, fur-bearing animals, and other mammals. Efile free federal and state Also, for section 1231 transactions, livestock does not include chickens, turkeys, pigeons, geese, emus, ostriches, rheas, or other birds, fish, frogs, reptiles, etc. Efile free federal and state Livestock used in farm business. Efile free federal and state   If livestock is held primarily for draft, breeding, dairy, or sporting purposes, it is used in your farm business. Efile free federal and state The purpose for which an animal is held ordinarily is determined by a farmer's actual use of the animal. Efile free federal and state An animal is not held for draft, breeding, dairy, or sporting purposes merely because it is suitable for that purpose, or because it is held for sale to other persons for use by them for that purpose. Efile free federal and state However, a draft, breeding, or sporting purpose may be present if an animal is disposed of within a reasonable time after it is prevented from its intended use or made undesirable as a result of an accident, disease, drought, or unfitness of the animal. Efile free federal and state Example 1. Efile free federal and state You discover an animal that you intend to use for breeding purposes is sterile. Efile free federal and state You dispose of it within a reasonable time. Efile free federal and state This animal was held for breeding purposes. Efile free federal and state Example 2. Efile free federal and state You retire and sell your entire herd, including young animals that you would have used for breeding or dairy purposes had you remained in business. Efile free federal and state These young animals were held for breeding or dairy purposes. Efile free federal and state Also, if you sell young animals to reduce your breeding or dairy herd because of drought, these animals are treated as having been held for breeding or dairy purposes. Efile free federal and state See Sales Caused by Weather-Related Conditions in chapter 3. Efile free federal and state Example 3. Efile free federal and state You are in the business of raising hogs for slaughter. Efile free federal and state Customarily, before selling your sows, you obtain a single litter of pigs that you will raise for sale. Efile free federal and state You sell the brood sows after obtaining the litter. Efile free federal and state Even though you hold these brood sows for ultimate sale to customers in the ordinary course of your business, they are considered to be held for breeding purposes. Efile free federal and state Example 4. Efile free federal and state You are in the business of raising registered cattle for sale to others for use as breeding cattle. Efile free federal and state The business practice is to breed the cattle before sale to establish their fitness as registered breeding cattle. Efile free federal and state Your use of the young cattle for breeding purposes is ordinary and necessary for selling them as registered breeding cattle. Efile free federal and state Such use does not demonstrate that you are holding the cattle for breeding purposes. Efile free federal and state However, those cattle you held as additions or replacements to your own breeding herd to produce calves are considered to be held for breeding purposes, even though they may not actually have produced calves. Efile free federal and state The same applies to hog and sheep breeders. Efile free federal and state Example 5. Efile free federal and state You breed, raise, and train horses for racing purposes. Efile free federal and state Every year you cull horses from your racing stable. Efile free federal and state In 2013, you decided that to prevent your racing stable from getting too large to be effectively operated, you must cull six horses that had been raced at public tracks in 2012. Efile free federal and state These horses are all considered held for sporting purposes. Efile free federal and state Figuring gain or loss on the cash method. Efile free federal and state   Farmers or ranchers who use the cash method of accounting figure their gain or loss on the sale of livestock used in their farming business as follows. Efile free federal and state Raised livestock. Efile free federal and state   Gain on the sale of raised livestock is generally the gross sales price reduced by any expenses of the sale. Efile free federal and state Expenses of sale include sales commissions, freight or hauling from farm to commission company, and other similar expenses. Efile free federal and state The basis of the animal sold is zero if the costs of raising it were deducted during the years the animal was being raised. Efile free federal and state However, see Uniform Capitalization Rules in chapter 6. Efile free federal and state Purchased livestock. Efile free federal and state   The gross sales price minus your adjusted basis and any expenses of sale is the gain or loss. Efile free federal and state Example. Efile free federal and state A farmer sold a breeding cow on January 8, 2013, for $1,250. Efile free federal and state Expenses of the sale were $125. Efile free federal and state The cow was bought July 2, 2009, for $1,300. Efile free federal and state Depreciation (not less than the amount allowable) was $867. Efile free federal and state Gross sales price $1,250 Cost (basis) $1,300   Minus: Depreciation deduction 867   Unrecovered cost (adjusted basis) $ 433   Expense of sale 125 558 Gain realized $ 692 Converted Wetland and Highly Erodible Cropland Special rules apply to dispositions of land converted to farming use after March 1, 1986. Efile free federal and state Any gain realized on the disposition of converted wetland or highly erodible cropland is treated as ordinary income. Efile free federal and state Any loss on the disposition of such property is treated as a long-term capital loss. Efile free federal and state Converted wetland. Efile free federal and state   This is generally land that was drained or filled to make the production of agricultural commodities possible. Efile free federal and state It includes converted wetland held by the person who originally converted it or held by any other person who used the converted wetland at any time after conversion for farming. Efile free federal and state   A wetland (before conversion) is land that meets all the following conditions. Efile free federal and state It is mostly soil that, in its undrained condition, is saturated, flooded, or ponded long enough during a growing season to develop an oxygen-deficient state that supports the growth and regeneration of plants growing in water. Efile free federal and state It is saturated by surface or groundwater at a frequency and duration sufficient to support mostly plants that are adapted for life in saturated soil. Efile free federal and state It supports, under normal circumstances, mostly plants that grow in saturated soil. Efile free federal and state Highly erodible cropland. Efile free federal and state   This is cropland subject to erosion that you used at any time for farming purposes other than grazing animals. Efile free federal and state Generally, highly erodible cropland is land currently classified by the Department of Agriculture as Class IV, VI, VII, or VIII under its classification system. Efile free federal and state Highly erodible cropland also includes land that would have an excessive average annual erosion rate in relation to the soil loss tolerance level, as determined by the Department of Agriculture. Efile free federal and state Successor. Efile free federal and state   Converted wetland or highly erodible cropland is also land held by any person whose basis in the land is figured by reference to the adjusted basis of a person in whose hands the property was converted wetland or highly erodible cropland. Efile free federal and state Timber Standing timber you held as investment property is a capital asset. Efile free federal and state Gain or loss from its sale is capital gain or loss reported on Form 8949 and Schedule D (Form 1040), as applicable. Efile free federal and state If you held the timber primarily for sale to customers, it is not a capital asset. Efile free federal and state Gain or loss on its sale is ordinary business income or loss. Efile free federal and state It is reported on Schedule F, line 1 (purchased timber) or line 2 (raised timber). Efile free federal and state See the Instructions for Schedule F (Form 1040). Efile free federal and state Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. Efile free federal and state Amounts realized from these sales, and the expenses incurred in cutting, hauling, etc. Efile free federal and state , are ordinary farm income and expenses reported on Schedule F. Efile free federal and state Different rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange or you enter into a cutting contract, discussed below. Efile free federal and state Timber considered cut. Efile free federal and state   Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. Efile free federal and state This is true whether the timber is cut under contract or whether you cut it yourself. Efile free federal and state Christmas trees. Efile free federal and state   Evergreen trees, such as Christmas trees, that are more than 6 years old when severed from their roots and sold for ornamental purposes are included in the term timber. Efile free federal and state They qualify for both rules discussed below. Efile free federal and state Election to treat cutting as a sale or exchange. Efile free federal and state   Under the general rule, the cutting of timber results in no gain or loss. Efile free federal and state It is not until a sale or exchange occurs that gain or loss is realized. Efile free federal and state But if you owned or had a contractual right to cut timber, you can elect to treat the cutting of timber as a section 1231 transaction in the year it is cut. Efile free federal and state Even though the cut timber is not actually sold or exchanged, you report your gain or loss on the cutting for the year the timber is cut. Efile free federal and state Any later sale results in ordinary business income or loss. Efile free federal and state See the example below. Efile free federal and state   To elect this treatment, you must: Own or hold a contractual right to cut the timber for a period of more than 1 year before it is cut, and Cut the timber for sale or use in your trade or business. Efile free federal and state Making the election. Efile free federal and state   You make the election on your return for the year the cutting takes place by including in income the gain or loss on the cutting and including a computation of your gain or loss. Efile free federal and state You do not have to make the election in the first year you cut the timber. Efile free federal and state You can make it in any year to which the election would apply. Efile free federal and state If the timber is partnership property, the election is made on the partnership return. Efile free federal and state This election cannot be made on an amended return. Efile free federal and state   Once you have made the election, it remains in effect for all later years unless you revoke it. Efile free federal and state Election under section 631(a) may be revoked. Efile free federal and state   If you previously elected for any tax year ending before October 23, 2004, to treat the cutting of timber as a sale or exchange under section 631(a), you may revoke this election without the consent of the IRS for any tax year ending after October 22, 2004. Efile free federal and state The prior election (and revocation) is disregarded for purposes of making a subsequent election. Efile free federal and state See Form T (Timber), Forest Activities Schedule, for more information. Efile free federal and state Gain or loss. Efile free federal and state   Your gain or loss on the cutting of standing timber is the difference between its adjusted basis for depletion and its FMV on the first day of your tax year in which it is cut. Efile free federal and state   Your adjusted basis for depletion of cut timber is based on the number of units (board feet, log scale, or other units) of timber cut during the tax year and considered to be sold or exchanged. Efile free federal and state Your adjusted basis for depletion is also based on the depletion unit of timber in the account used for the cut timber, and should be figured in the same manner as shown in section 611 and Regulations section 1. Efile free federal and state 611-3. Efile free federal and state   Depletion of timber is discussed in chapter 7. Efile free federal and state Example. Efile free federal and state   In April 2013, you owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. Efile free federal and state It had an adjusted basis for depletion of $40 per MBF. Efile free federal and state You are a calendar year taxpayer. Efile free federal and state On January 1, 2013, the timber had a FMV of $350 per MBF. Efile free federal and state It was cut in April for sale. Efile free federal and state On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. Efile free federal and state You report the difference between the FMV and your adjusted basis for depletion as a gain. Efile free federal and state This amount is reported on Form 4797 along with your other section 1231 gains and losses to figure whether it is treated as a capital gain or as ordinary gain. Efile free federal and state You figure your gain as follows. Efile free federal and state FMV of timber January 1, 2013 $1,400,000 Minus: Adjusted basis for depletion 160,000 Section 1231 gain $1,240,000   The FMV becomes your basis in the cut timber, and a later sale of the cut timber, including any by-product or tree tops, will result in ordinary business income or loss. Efile free federal and state Outright sales of timber. Efile free federal and state   Outright sales of timber by landowners qualify for capital gains treatment using rules similar to the rules for certain disposal of timber under a contract with retained economic interest (defined later). Efile free federal and state However, for outright sales, the date of disposal is not deemed to be the date the timber is cut because the landowner can elect to treat the payment date as the date of disposal (see Date of disposal below). Efile free federal and state Cutting contract. Efile free federal and state   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. Efile free federal and state You are the owner of the timber. Efile free federal and state You held the timber longer than 1 year before its disposal. Efile free federal and state You kept an economic interest in the timber. Efile free federal and state   You have kept an economic interest in standing timber if, under the cutting contract, the expected return on your investment is conditioned on the cutting of the timber. Efile free federal and state   The difference between the amount realized from the disposal of the timber and its adjusted basis for depletion is treated as gain or loss on its sale. Efile free federal and state Include this amount on Form 4797 along with your other section 1231 gains or losses. Efile free federal and state Date of disposal. Efile free federal and state   The date of disposal is the date the timber is cut. Efile free federal and state However, for outright sales by landowners or if you receive payment under the contract before the timber is cut, you can elect to treat the date of payment as the date of disposal. Efile free federal and state   This election applies only to figure the holding period of the timber. Efile free federal and state It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). Efile free federal and state   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. Efile free federal and state The statement must identify the advance payments subject to the election and the contract under which they were made. Efile free federal and state   If you timely filed your return for the year you received payment without making the election, you can still make the election by filing an amended return within 6 months after the due date for that year's return (excluding extensions). Efile free federal and state Attach the statement to the amended return and write “Filed pursuant to section 301. Efile free federal and state 9100-2” at the top of the statement. Efile free federal and state File the amended return at the same address the original return was filed. Efile free federal and state Owner. Efile free federal and state   An owner is any person who owns an interest in the timber, including a sublessor and the holder of a contract to cut the timber. Efile free federal and state You own an interest in timber if you have the right to cut it for sale on your own account or for use in your business. Efile free federal and state Tree stumps. Efile free federal and state   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. Efile free federal and state Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. Efile free federal and state However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. Efile free federal and state Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. Efile free federal and state   See Form T (Timber) and its separate instructions for more information about dispositions of timber. Efile free federal and state Sale of a Farm The sale of your farm will usually involve the sale of both nonbusiness property (your home) and business property (the land and buildings used in the farm operation and perhaps machinery and livestock). Efile free federal and state If you have a gain from the sale, you may be allowed to exclude the gain on your home. Efile free federal and state For more information, see Publication 523, Selling Your Home. Efile free federal and state The gain on the sale of your business property is taxable. Efile free federal and state A loss on the sale of your business property to an unrelated person is deducted as an ordinary loss. Efile free federal and state Your taxable gain or loss on the sale of property used in your farm business is taxed under the rules for section 1231 transactions. Efile free federal and state See chapter 9. Efile free federal and state Losses from personal-use property, other than casualty or theft losses, are not deductible. Efile free federal and state If you receive payments for your farm in installments, your gain is taxed over the period of years the payments are received, unless you elect not to use the installment method of reporting the gain. Efile free federal and state See chapter 10 for information about installment sales. Efile free federal and state When you sell your farm, the gain or loss on each asset is figured separately. Efile free federal and state The tax treatment of gain or loss on the sale of each asset is determined by the classification of the asset. Efile free federal and state Each of the assets sold must be classified as one of the following. Efile free federal and state Capital asset held 1 year or less. Efile free federal and state Capital asset held longer than 1 year. Efile free federal and state Property (including real estate) used in your business and held 1 year or less (including draft, breeding, dairy, and sporting animals held less than the holding periods discussed earlier under Livestock ). Efile free federal and state Property (including real estate) used in your business and held longer than 1 year (including only draft, breeding, dairy, and sporting animals held for the holding periods discussed earlier). Efile free federal and state Property held primarily for sale or which is of the kind that would be included in inventory if on hand at the end of your tax year. Efile free federal and state Allocation of consideration paid for a farm. Efile free federal and state   The sale of a farm for a lump sum is considered a sale of each individual asset rather than a single asset. Efile free federal and state The residual method is required only if the group of assets sold constitutes a trade or business. Efile free federal and state This method determines gain or loss from the transfer of each asset. Efile free federal and state It also determines the buyer's basis in the business assets. Efile free federal and state For more information, see Sale of a Business in chapter 2 of Publication 544. Efile free federal and state Property used in farm operation. Efile free federal and state   The rules for excluding the gain on the sale of your home, described later under Sale of your home , do not apply to the property used for your farming business. Efile free federal and state Recognized gains and losses on business property must be reported on your return for the year of the sale. Efile free federal and state If the property was held longer than 1 year, it may qualify for section 1231 treatment (see chapter 9). Efile free federal and state Example. Efile free federal and state You sell your farm, including your main home, which you have owned since December 2001. Efile free federal and state You realize gain on the sale as follows. Efile free federal and state   Farm   Farm   With Home Without   Home Only Home Selling price $382,000 $158,000 $224,000 Cost (or other basis) 240,000 110,000 130,000 Gain $142,000 $48,000 $94,000 You must report the $94,000 gain from the sale of the property used in your farm business. Efile free federal and state All or a part of that gain may have to be reported as ordinary income from the recapture of depreciation or soil and water conservation expenses. Efile free federal and state Treat the balance as section 1231 gain. Efile free federal and state The $48,000 gain from the sale of your home is not taxable as long as you meet the requirements explained later under Sale of your home . Efile free federal and state Partial sale. Efile free federal and state   If you sell only part of your farm, you must report any recognized gain or loss on the sale of that part on your tax return for the year of the sale. Efile free federal and state You cannot wait until you have sold enough of the farm to recover its entire cost before reporting gain or loss. Efile free federal and state For a detailed discussion on installment sales, see Publication 544. Efile free federal and state Adjusted basis of the part sold. Efile free federal and state   This is the properly allocated part of your original cost or other basis of the entire farm plus or minus necessary adjustments for improvements, depreciation, etc. Efile free federal and state , on the part sold. Efile free federal and state If your home is on the farm, you must properly adjust the basis to exclude those costs from your farm asset costs, as discussed below under Sale of your home . Efile free federal and state Example. Efile free federal and state You bought a 600-acre farm for $700,000. Efile free federal and state The farm included land and buildings. Efile free federal and state The purchase contract designated $600,000 of the purchase price to the land. Efile free federal and state You later sold 60 acres of land on which you had installed a fence. Efile free federal and state Your adjusted basis for the part of your farm sold is $60,000 (1/10 of $600,000), plus any unrecovered cost (cost not depreciated) of the fence on the 60 acres at the time of sale. Efile free federal and state Use this amount to determine your gain or loss on the sale of the 60 acres. Efile free federal and state Assessed values for local property taxes. Efile free federal and state   If you paid a flat sum for the entire farm and no other facts are available for properly allocating your original cost or other basis between the land and the buildings, you can use the assessed values for local property taxes for the year of purchase to allocate the costs. Efile free federal and state Example. Efile free federal and state Assume that in the preceding example there was no breakdown of the $700,000 purchase price between land and buildings. Efile free federal and state However, in the year of purchase, local taxes on the entire property were based on assessed valuations of $420,000 for land and $140,000 for improvements, or a total of $560,000. Efile free federal and state The assessed valuation of the land is 3/4 (75%) of the total assessed valuation. Efile free federal and state Multiply the $700,000 total purchase price by 75% to figure basis of $525,000 for the 600 acres of land. Efile free federal and state The unadjusted basis of the 60 acres you sold would then be $52,500 (1/10 of $525,000). Efile free federal and state Sale of your home. Efile free federal and state   Your home is a capital asset and not property used in the trade or business of farming. Efile free federal and state If you sell a farm that includes a house you and your family occupy, you must determine the part of the selling price and the part of the cost or other basis allocable to your home. Efile free federal and state Your home includes the immediate surroundings and outbuildings relating to it that are not used for business purposes. Efile free federal and state   If you use part of your home for business, you must make an appropriate adjustment to the basis for depreciation allowed or allowable. Efile free federal and state For more information on basis, see chapter 6. Efile free federal and state More information. Efile free federal and state   For more information on selling your home, see Publication 523. Efile free federal and state Gain from condemnation. Efile free federal and state   If you have a gain from a condemnation or sale under threat of condemnation, you may use the preceding rules for excluding the gain, rather than the rules discussed under Postponing Gain in chapter 11. Efile free federal and state However, any gain that cannot be excluded (because it is more than the limit) may be postponed under the rules discussed under Postponing Gain in chapter 11. Efile free federal and state Foreclosure or Repossession If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Efile free federal and state The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. Efile free federal and state This is true even if you voluntarily return the property to the lender. Efile free federal and state You may also realize ordinary income from cancellation of debt if the loan balance is more than the FMV of the property. Efile free federal and state Buyer's (borrower's) gain or loss. Efile free federal and state   You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale or exchange. Efile free federal and state The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. Efile free federal and state See Determining Gain or Loss , earlier. Efile free federal and state Worksheet 8-1. Efile free federal and state Worksheet for Foreclosures andRepossessions Part 1. Efile free federal and state Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. Efile free federal and state Complete this part only if you were personally liable for the debt. Efile free federal and state Otherwise, go to Part 2. Efile free federal and state   1. Efile free federal and state Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable after the transfer of property   2. Efile free federal and state Enter the Fair Market Value of the transferred property   3. Efile free federal and state Ordinary income from cancellation of debt upon foreclosure or repossession. Efile free federal and state * Subtract line 2 from line 1. Efile free federal and state If zero or less, enter -0-   Part 2. Efile free federal and state Figure your gain or loss from foreclosure or repossession. Efile free federal and state   4. Efile free federal and state If you completed Part 1, enter the smaller of line 1 or line 2. Efile free federal and state If you did not complete Part 1, enter the outstanding debt immediately before the transfer of property   5. Efile free federal and state Enter any proceeds you received from the foreclosure sale   6. Efile free federal and state Add lines 4 and 5   7. Efile free federal and state Enter the adjusted basis of the transferred property   8. Efile free federal and state Gain or loss from foreclosure or repossession. Efile free federal and state Subtract line 7  from line 6   * The income may not be taxable. Efile free federal and state See Cancellation of debt . Efile free federal and state    You can use Worksheet 8-1 to figure your gain or loss from a foreclosure or repossession. Efile free federal and state Amount realized on a nonrecourse debt. Efile free federal and state   If you are not personally liable for repaying the debt (nonrecourse debt) secured by the transferred property, the amount you realize includes the full amount of the debt canceled by the transfer. Efile free federal and state The full canceled debt is included in the amount realized even if the fair market value of the property is less than the canceled debt. Efile free federal and state Example 1. Efile free federal and state Ann paid $200,000 for land used in her farming business. Efile free federal and state She paid $15,000 down and borrowed the remaining $185,000 from a bank. Efile free federal and state Ann is not personally liable for the loan (nonrecourse debt), but pledges the land as security. Efile free federal and state The bank foreclosed on the loan 2 years after Ann stopped making payments. Efile free federal and state When the bank foreclosed, the balance due on the loan was $180,000 and the FMV of the land was $170,000. Efile free federal and state The amount Ann realized on the foreclosure was $180,000, the debt canceled by the foreclosure. Efile free federal and state She figures her gain or loss on Form 4797, Part I, by comparing the amount realized ($180,000) with her adjusted basis ($200,000). Efile free federal and state She has a $20,000 deductible loss. Efile free federal and state Example 2. Efile free federal and state Assume the same facts as in Example 1 except the FMV of the land was $210,000. Efile free federal and state The result is the same. Efile free federal and state The amount Ann realized on the foreclosure is $180,000, the debt canceled by the foreclosure. Efile free federal and state Because her adjusted basis is $200,000, she has a deductible loss of $20,000, which she reports on Form 4797, Part I. Efile free federal and state Amount realized on a recourse debt. Efile free federal and state   If you are personally liable for the debt (recourse debt), the amount realized on the foreclosure or repossession includes the lesser of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The fair market value of the transferred property. Efile free federal and state   You are treated as receiving ordinary income from the canceled debt for the part of the debt that is more than the fair market value. Efile free federal and state The amount realized does not include the canceled debt that is your income from cancellation of debt. Efile free federal and state See Cancellation of debt , later. Efile free federal and state Example 3. Efile free federal and state Assume the same facts as in Example 1 above except Ann is personally liable for the loan (recourse debt). Efile free federal and state In this case, the amount she realizes is $170,000. Efile free federal and state This is the canceled debt ($180,000) up to the FMV of the land ($170,000). Efile free federal and state Ann figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($200,000). Efile free federal and state She has a $30,000 deductible loss, which she figures on Form 4797, Part I. Efile free federal and state She is also treated as receiving ordinary income from cancellation of debt. Efile free federal and state That income is $10,000 ($180,000 − $170,000). Efile free federal and state This is the part of the canceled debt not included in the amount realized. Efile free federal and state She reports this as other income on Schedule F, line 8. Efile free federal and state Seller's (lender's) gain or loss on repossession. Efile free federal and state   If you finance a buyer's purchase of property and later acquire an interest in it through foreclosure or repossession, you may have a gain or loss on the acquisition. Efile free federal and state For more information, see Repossession in Publication 537, Installment Sales. Efile free federal and state Cancellation of debt. Efile free federal and state   If property that is repossessed or foreclosed upon secures a debt for which you are personally liable (recourse debt), you generally must report as ordinary income the amount by which the canceled debt is more than the FMV of the property. Efile free federal and state This income is separate from any gain or loss realized from the foreclosure or repossession. Efile free federal and state Report the income from cancellation of a business debt on Schedule F, line 8. Efile free federal and state Report the income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. Efile free federal and state    You can use Worksheet 8-1 to figure your income from cancellation of debt. Efile free federal and state   However, income from cancellation of debt is not taxed if any of the following apply. Efile free federal and state The cancellation is intended as a gift. Efile free federal and state The debt is qualified farm debt (see chapter 3). Efile free federal and state The debt is qualified real property business debt (see chapter 5 of Publication 334). Efile free federal and state You are insolvent or bankrupt (see  chapter 3). Efile free federal and state The debt is qualified principal residence indebtedness (see chapter 3). Efile free federal and state   Use Form 982 to report the income exclusion. Efile free federal and state Abandonment The abandonment of property is a disposition of property. Efile free federal and state You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership, but without passing it on to anyone else. Efile free federal and state Business or investment property. Efile free federal and state   Loss from abandonment of business or investment property is deductible as a loss. Efile free federal and state Loss from abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. Efile free federal and state If your adjusted basis is more than the amount you realize (if any), then you have a loss. Efile free federal and state If the amount you realize (if any) is more than your adjusted basis, then you have a gain. Efile free federal and state This rule also applies to leasehold improvements the lessor made for the lessee. Efile free federal and state However, if the property is foreclosed on or repossessed in lieu of abandonment, gain or loss is figured as discussed earlier under Foreclosure or Repossession . Efile free federal and state   If the abandoned property is secured by debt, special rules apply. Efile free federal and state The tax consequences of abandonment of property that secures a debt depend on whether you are personally liable for the debt (recourse debt) or were not personally liable for the debt (nonrecourse debt). Efile free federal and state For more information, see chapter 3 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Efile free federal and state The abandonment loss is deducted in the tax year in which the loss is sustained. Efile free federal and state Report the loss on Form 4797, Part II, line 10. Efile free federal and state Personal-use property. Efile free federal and state   You cannot deduct any loss from abandonment of your home or other property held for personal use. Efile free federal and state Canceled debt. Efile free federal and state   If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you will realize ordinary income equal to the canceled debt. Efile free federal and state This income is separate from any loss realized from abandonment of the property. Efile free federal and state Report income from cancellation of a debt related to a business or rental activity as business or rental income. Efile free federal and state Report income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. Efile free federal and state   However, income from cancellation of debt is not taxed in certain circumstances. Efile free federal and state See Cancellation of debt earlier under Foreclosure or Repossession . Efile free federal and state Forms 1099-A and 1099-C. Efile free federal and state   A lender who acquires an interest in your property in a foreclosure, repossession, or abandonment should send you Form 1099-A showing the information you need to figure your loss from the foreclosure, repossession, or abandonment. Efile free federal and state However, if the lender cancels part of your debt and the lender must file Form 1099-C, the lender may include the information about the foreclosure, repossession, or abandonment on that form instead of Form 1099-A. Efile free federal and state The lender must file Form 1099-C and send you a copy if the canceled debt is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Efile free federal and state For foreclosures, repossessions, abandonments of property, and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. 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Understanding Your CP15B Notice

We charged you a Trust Fund Recovery Penalty (TFRP) for not paying employment or excise taxes.


What you need to do

  • Read your notice carefully — it explains your due date, amount due, and payment options.
  • Make your payment by your due date. Go to the payments page to find out more about your payment options.

You may want to


Answers to Common Questions

Q. Why was I assessed this penalty?

A. We charged you the Trust Fund Recovery Penalty for willfully failing to collect, account for, or pay over employment (or excise) taxes. Find additional information for Employment Taxes and the Trust Fund Recovery Penalty (TFRP).

Q. What happens if I can't pay the full amount I owe now?

A. See if you may be able to set up a payment plan through our Online Payment Agreement Application.

Q. What happens if I don’t respond to this notice?

A. Interest will continue to be charged until the balance is paid.

Q. Am I charged interest on the money I owe?

A. Not if you pay the full amount you owe by the date on the payment coupon. However, interest adds up on the unpaid amount after that date.

Q. What should I do if I disagree with the notice?

A. If you disagree with the penalty charge you may file a suit for refund. To do so, you must:

If you want to suspend collection of the penalty while the suit is pending, you must post a bond with the IRS for one and half times the balance.

 

Page Last Reviewed or Updated: 21-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 Efile Free Federal And State

Efile free federal and state Index A Abatement of interest and penalties, Abatement of interest and penalties. Efile free federal and state Accidents, Deductible losses. Efile free federal and state , Nondeductible losses. Efile free federal and state Adjusted basis, Adjusted Basis Adjustments to basis, Basis adjustment to corporation's property. Efile free federal and state , Adjustments to Basis Amended returns, Amended return. Efile free federal and state Appraisals, Appraisal. Efile free federal and state , Costs of photographs and appraisals. Efile free federal and state Assistance (see Tax help) B Bad debts, Nonbusiness bad debt. Efile free federal and state Basis Adjusted, Adjusted Basis Adjustments to, Basis adjustment to corporation's property. Efile free federal and state , Adjustments to Basis Replacement property, Basis of replacement property. Efile free federal and state Business or income-producing property, Business or income-producing property. Efile free federal and state Business purposes, property used partly for, Property used partly for business and partly for personal purposes. Efile free federal and state C Cars Accidents, Deductible losses. Efile free federal and state Fair market value of, Car value. Efile free federal and state Cash gifts, Cash gifts. Efile free federal and state Casualty losses, Table 3. Efile free federal and state When To Deduct a Casualty or Theft Loss Deductible losses, Deductible losses. Efile free federal and state Definition, Casualty Deposits, loss on, Casualty loss or ordinary loss. Efile free federal and state Nondeductible losses, Nondeductible losses. Efile free federal and state Progressive deterioration, Progressive deterioration. Efile free federal and state Proof of, Casualty loss proof. Efile free federal and state When to report, Losses. Efile free federal and state Workbooks for listing property, Workbooks for casualties and thefts. Efile free federal and state Clean up costs, Cost of cleaning up or making repairs. Efile free federal and state Condemnation, Condemnations. Efile free federal and state Corrosive drywall, Special Procedure for Damage From Corrosive Drywall Costs Appraisals, Costs of photographs and appraisals. Efile free federal and state Clean up, Cost of cleaning up or making repairs. Efile free federal and state Incidental expenses, Related expenses. Efile free federal and state Landscaping, Landscaping. Efile free federal and state Photographs taken after loss, Costs of photographs and appraisals. Efile free federal and state Protection, Cost of protection. Efile free federal and state Repair, Cost of cleaning up or making repairs. Efile free federal and state Replacement, Replacement cost. Efile free federal and state D Death of taxpayer Postponement of gain, Death of a taxpayer. Efile free federal and state Deductible losses, Deductible losses. Efile free federal and state Deduction limits, Deduction Limits $100 rule, $100 Rule 10% rule, 10% Rule 2% rule, 2% Rule Deposit losses, Mislaid or lost property. Efile free federal and state , Table 3. Efile free federal and state When To Deduct a Casualty or Theft Loss Reporting of (Table 1), Table 1. Efile free federal and state Reporting Loss on Deposits When to report, Loss on deposits. Efile free federal and state Disaster area losses, Lessee's loss. Efile free federal and state Claiming on amended return, Claiming a disaster loss on an amended return. Efile free federal and state Federal loan canceled, Federal loan canceled. Efile free federal and state Federally declared disaster, Business or income-producing property located in a federally declared disaster area. Efile free federal and state , Disaster Area Losses Figuring loss deduction, Figuring the loss deduction. Efile free federal and state Form 1040X, How to report the loss on Form 1040X. Efile free federal and state Home made unsafe, Home made unsafe by disaster. Efile free federal and state How to deduct loss in preceding year, How to deduct your loss in the preceding year. Efile free federal and state Inventory, Disaster loss to inventory. Efile free federal and state Main home rules, Main home in disaster area. Efile free federal and state , Gains. Efile free federal and state Qualified disaster mitigation payments, Qualified disaster mitigation payments. Efile free federal and state Qualified disaster relief payments, Qualified disaster relief payments. Efile free federal and state Records to keep, Records. Efile free federal and state Tax deadlines postponed, Covered disaster area. Efile free federal and state When to deduct, When to deduct the loss. Efile free federal and state Table 3, Table 3. Efile free federal and state When To Deduct a Casualty or Theft Loss Disaster mitigation payments, Qualified disaster mitigation payments. Efile free federal and state Disaster relief grants, Disaster relief. Efile free federal and state Drywall, corrosive, Special Procedure for Damage From Corrosive Drywall Due dates Tax deadlines postponed, Postponed Tax Deadlines E Employer's emergency disaster fund, Employer's emergency disaster fund. Efile free federal and state F Fair market value (FMV) Decline in value of property in or near casualty area, Decline in market value of property in or near casualty area. Efile free federal and state Measuring decrease in, Decrease in Fair Market Value Items not to consider, Figuring Decrease in FMV — Items Not To Consider Items to consider, Figuring Decrease in FMV — Items To Consider Federal disaster relief grants, Federal disaster relief grants. Efile free federal and state Federal Emergency Management Agency (FEMA), contacting, Contacting the Federal Emergency Management Agency (FEMA) Federally declared disasters, Business or income-producing property located in a federally declared disaster area. Efile free federal and state , Disaster Area Losses Figuring gain, Property used partly for business and partly for personal purposes. Efile free federal and state Figuring loss, Theft loss proof. Efile free federal and state , Figuring the Deduction Adjusted basis, Adjusted Basis Disaster area losses, Figuring the loss deduction. Efile free federal and state Insurance and other reimbursements, Insurance and Other Reimbursements Form 1040, Schedule A, Personal-use property. Efile free federal and state Form 1040, Schedule D, Personal-use property. Efile free federal and state Form 1040X Disaster area losses, How to report the loss on Form 1040X. Efile free federal and state Form 4684 Reporting gains and losses on personal-use property, Personal-use property. Efile free federal and state Free tax services, Free help with your tax return. Efile free federal and state G Gains Figuring, Figuring a Gain Postponement of, Postponement of Gain, How To Postpone a Gain Reimbursements, Gain from reimbursement. Efile free federal and state Reporting of, Contacting the Federal Emergency Management Agency (FEMA) When to report, Changing your mind. Efile free federal and state H Help (see Tax help) I Incidental expenses, Related expenses. Efile free federal and state Insurance, Insurance and Other Reimbursements Living expenses, payments for, Insurance payments for living expenses. Efile free federal and state Interest abatement, Abatement of interest and penalties. Efile free federal and state Inventory losses, Loss of inventory. Efile free federal and state Disaster area losses, Disaster loss to inventory. Efile free federal and state L Landscaping, Landscaping. Efile free federal and state Leased property, Leased property. Efile free federal and state When to report, Lessee's loss. Efile free federal and state Losses Casualty (see Casualty losses) Deposits (see Deposit losses) Disaster areas (see Disaster area losses) Figuring amount (see Figuring loss) Proof of, Deducted loss recovered. Efile free federal and state Records of, Theft loss proof. Efile free federal and state Reporting of, Contacting the Federal Emergency Management Agency (FEMA) Theft (see Theft losses) When to report, Changing your mind. Efile free federal and state (Table 3), Table 3. Efile free federal and state When To Deduct a Casualty or Theft Loss M Married taxpayers Deduction limits, Married taxpayers. Efile free federal and state , Married taxpayers. Efile free federal and state Mislaid or lost property, Mislaid or lost property. Efile free federal and state Missing children, photographs of, Reminders N Nonbusiness bad debts, Nonbusiness bad debt. Efile free federal and state Nondeductible losses, Nondeductible losses. Efile free federal and state P Payments for living expenses, Insurance payments for living expenses. Efile free federal and state Penalty abatement, Abatement of interest and penalties. Efile free federal and state Personal property Loss deduction, figuring of, Personal property. Efile free federal and state Personal-use property Reporting gains and losses, Personal-use property. Efile free federal and state Personal-use real property, Exception for personal-use real property. Efile free federal and state Photographs Documentation of loss, Costs of photographs and appraisals. Efile free federal and state Ponzi-type investment schemes, Losses from Ponzi-type investment schemes. Efile free federal and state Postponed tax deadlines, Postponed Tax Deadlines Postponement of gain, Postponement of Gain, How To Postpone a Gain Amended return, Amended return. Efile free federal and state Changing mind, Changing your mind. Efile free federal and state Replacement property acquired after return filed, Replacement property acquired after return filed. Efile free federal and state Replacement property acquired before return filed, Replacement property acquired before return filed. Efile free federal and state Required statement, Required statement. Efile free federal and state Substituting replacement property, Substituting replacement property. Efile free federal and state Three-year limit, Three-year limit. Efile free federal and state Proof of loss, Proof of Loss Protection costs, Cost of protection. Efile free federal and state Publications (see Tax help) R Records of loss, Theft loss proof. Efile free federal and state Recovered stolen property, Recovered stolen property. Efile free federal and state Reimbursements Cash gifts, Cash gifts. Efile free federal and state Disaster relief, Disaster relief. Efile free federal and state Employer's emergency disaster fund, Employer's emergency disaster fund. Efile free federal and state Failure to file a claim, Failure to file a claim for reimbursement. Efile free federal and state Received after deducting loss, Reimbursement Received After Deducting Loss Types of, Types of Reimbursements Related expenses, Related expenses. Efile free federal and state Related person, replacement property bought from, Buying replacement property from a related person. Efile free federal and state Repair costs, Cost of cleaning up or making repairs. Efile free federal and state Replacement cost, Replacement cost. Efile free federal and state Replacement period, Replacement Period Extension of, Extension. Efile free federal and state Replacement property, Replacement Property Advance payment, Advance payment. Efile free federal and state Basis adjustment to corporation's property, Basis adjustment to corporation's property. Efile free federal and state Basis of, Basis of replacement property. Efile free federal and state Main home, Main home replaced. Efile free federal and state In disaster area, Main home in disaster area. Efile free federal and state Postponement of gain, Replacement property acquired before return filed. Efile free federal and state Reporting gains and losses, Reporting a gain. Efile free federal and state , How To Report Gains and Losses Basis, adjustments to, Adjustments to Basis Business and income-producing property, Business and income-producing property. Efile free federal and state Deductions exceeding income, If Deductions Are More Than Income Deposits, How to report. Efile free federal and state Table 1, Table 1. Efile free federal and state Reporting Loss on Deposits Disaster area losses, How to report the loss on Form 1040X. Efile free federal and state Personal-use property, Personal-use property. Efile free federal and state Timing of, When To Report Gains and Losses S Sentimental value, Sentimental value. Efile free federal and state State disaster relief grants for businesses, State disaster relief grants for businesses. Efile free federal and state Stolen property (see Theft losses) T Tables and figures Reporting loss on deposits (Table 1), Table 1. Efile free federal and state Reporting Loss on Deposits When to deduct losses (Table 3), Table 3. Efile free federal and state When To Deduct a Casualty or Theft Loss Tax help, How To Get Tax Help Theft losses, Theft FMV of stolen property, FMV of stolen property. Efile free federal and state Mislaid or lost property, Mislaid or lost property. Efile free federal and state Proof of, Theft loss proof. Efile free federal and state When to deduct (Table 3), Table 3. Efile free federal and state When To Deduct a Casualty or Theft Loss When to report, Losses. Efile free federal and state Workbooks for listing property, Workbooks for casualties and thefts. Efile free federal and state Timber loss, Timber loss. Efile free federal and state W Workbooks for property lost due to casualties and thefts, Workbooks for casualties and thefts. Efile free federal and state Prev  Up     Home   More Online Publications