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File Amended Return

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File Amended Return

File amended return 8. File amended return   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. File amended return Ordinary gain is taxed at the same rates as wages and interest income while capital gain is generally taxed at lower rates. File amended return 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. File amended return 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. File amended return Sales and Exchanges If you sell, exchange, or otherwise dispose of your property, you usually have a gain or a loss. File amended return This section explains certain rules for determining whether any gain you have is taxable, and whether any loss you have is deductible. File amended return A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. File amended return An exchange is a transfer of property for other property or services. File amended return Determining Gain or Loss You usually realize a gain or loss when you sell or exchange property. File amended return If the amount you realize from a sale or exchange of property is more than its adjusted basis, you will have a gain. File amended return If the adjusted basis of the property is more than the amount you realize, you will have a loss. File amended return Basis and adjusted basis. File amended return   The basis of property you buy is usually its cost. File amended return The adjusted basis of property is basis plus certain additions and minus certain deductions. File amended return See chapter 6 for more information about basis and adjusted basis. File amended return Amount realized. File amended return   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. File amended return 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. File amended return   If the liabilities relate to an exchange of multiple properties, see Multiple Property Exchanges in chapter 1 of Publication 544. File amended return Amount recognized. File amended return   Your gain or loss realized from a sale or exchange of certain property is usually a recognized gain or loss for tax purposes. File amended return A recognized gain is a gain you must include in gross income and report on your income tax return. File amended return A recognized loss is a loss you deduct from gross income. File amended return However, your gain or loss realized from the exchange of certain property may not be recognized for tax purposes. File amended return See Like-Kind Exchanges next. File amended return Also, a loss from the disposition of property held for personal use is not deductible. File amended return Like-Kind Exchanges Certain exchanges of property are not taxable. File amended return This means any gain from the exchange is not recognized, and any loss cannot be deducted. File amended return Your gain or loss will not be recognized until you sell or otherwise dispose of the property you receive. File amended return The exchange of property for the same kind of property is the most common type of nontaxable exchange. File amended return To qualify for treatment as a like-kind exchange, the property traded and the property received must be both of the following. File amended return Qualifying property. File amended return Like-kind property. File amended return These two requirements are discussed later. File amended return Multiple-party transactions. File amended return   The like-kind exchange rules also apply to property exchanges that involve three and four-party transactions. File amended return Any part of these multiple-party transactions can qualify as a like-kind exchange if it meets all the requirements described in this section. File amended return Receipt of title from third party. File amended return   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. File amended return Basis of property received. File amended return   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. File amended return See chapter 6 for more information. File amended return Money paid. File amended return   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. File amended return The basis of the property received is the basis of the property given up, increased by the money paid. File amended return Example. File amended return You traded an old tractor with an adjusted basis of $15,000 for a new one. File amended return The new tractor costs $300,000. File amended return You were allowed $80,000 for the old tractor and paid $220,000 cash. File amended return 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). File amended return 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. File amended return 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. File amended return Reporting the exchange. File amended return   Report the exchange of like-kind property, even though no gain or loss is recognized, on Form 8824, Like-Kind Exchanges. File amended return The Instructions for Form 8824 explain how to report the details of the exchange. File amended return   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. File amended return You may also have to report the recognized gain as ordinary income because of depreciation recapture on Form 4797. File amended return See chapter 9 for more information. File amended return Qualifying property. File amended return   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. File amended return Machinery, buildings, land, trucks, breeding livestock, rental houses, and certain mutual ditch, reservoir, or irrigation company stock are examples of property that may qualify. File amended return Nonqualifying property. File amended return   The rules for like-kind exchanges do not apply to exchanges of the following property. File amended return Property you use for personal purposes, such as your home and family car. File amended return Stock in trade or other property held primarily for sale, such as crops and produce. File amended return Stocks, bonds, or notes. File amended return However, see Qualifying property above. File amended return Other securities or evidences of indebtedness, such as accounts receivable. File amended return Partnership interests. File amended return However, you may have a nontaxable exchange under other rules. File amended return See Other Nontaxable Exchanges in chapter 1 of Publication 544. File amended return Like-kind property. File amended return   To qualify as a nontaxable exchange, the properties exchanged must be of like kind. File amended return Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. File amended return Generally, real property exchanged for real property qualifies as an exchange of like-kind property. File amended return For example, an exchange of city property for farm property or improved property for unimproved property is a like-kind exchange. File amended return   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. File amended return An exchange of a tractor for acreage, however, is not an exchange of like-kind property. File amended return The exchange of livestock of one sex for livestock of the other sex is not a like-kind exchange. File amended return For example, the exchange of a bull for a cow is not a like-kind exchange. File amended return 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. File amended return    Note. File amended return Whether you engaged in a like-kind exchange depends on an analysis of each asset involved in the exchange. File amended return Personal property. File amended return   Depreciable tangible personal property can be either like kind or like class to qualify for nontaxable exchange treatment. File amended return Like-class properties are depreciable tangible personal properties within the same General Asset Class or Product Class. File amended return Property classified in any General Asset Class may not be classified within a Product Class. File amended return Assets that are not in the same class will qualify as like-kind property if they are of the same nature or character. File amended return General Asset Classes. File amended return   General Asset Classes describe the types of property frequently used in many businesses. File amended return They include, but are not limited to, the following property. File amended return Office furniture, fixtures, and equipment (asset class 00. File amended return 11). File amended return Information systems, such as computers and peripheral equipment (asset class 00. File amended return 12). File amended return Data handling equipment except computers (asset class 00. File amended return 13). File amended return Automobiles and taxis (asset class 00. File amended return 22). File amended return Light general purpose trucks (asset class 00. File amended return 241). File amended return Heavy general purpose trucks (asset class 00. File amended return 242). File amended return Tractor units for use over-the-road (asset class 00. File amended return 26). File amended return Trailers and trailer-mounted containers (asset class 00. File amended return 27). File amended return Industrial steam and electric generation and/or distribution systems (asset class 00. File amended return 4). File amended return Product Classes. File amended return   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). File amended return The latest version of the manual can be accessed at www. File amended return census. File amended return gov/eos/www/naics/. File amended return Copies of the printed manual may be purchased from the National Technical Information Service (NTIS) at  www. File amended return ntis. File amended return gov/products/naics. File amended return aspx or by calling 1-800-553-NTIS (1-800-553-6847) or (703) 605-6000. File amended return A CD-ROM version with search and retrieval software is also available from NTIS. File amended return    NAICS class 333111, Farm Machinery and Equipment Manufacturing, includes most machinery and equipment used in a farming business. File amended return Partially nontaxable exchange. File amended return   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. File amended return 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. File amended return A loss is not deductible. File amended return Example 1. File amended return 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. File amended return 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). File amended return However, only $10,000, the cash received, is recognized (included in income). File amended return Example 2. File amended return Assume the same facts as in Example 1, except that, instead of money, you received a tractor with a FMV of $10,000. File amended return Your recognized gain is still limited to $10,000, the value of the tractor (the unlike property). File amended return Example 3. File amended return Assume in Example 1 that the FMV of the land you received was only $15,000. File amended return Your $5,000 loss is not recognized. File amended return Unlike property given up. File amended return   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. File amended return The gain or loss is the difference between the FMV of the unlike property and the adjusted basis of the unlike property. File amended return Like-kind exchanges between related persons. File amended return   Special rules apply to like-kind exchanges between related persons. File amended return These rules affect both direct and indirect exchanges. File amended return Under these rules, if either person disposes of the property within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. File amended return The gain or loss on the original exchange must be recognized as of the date of the later disposition. File amended return The 2-year holding period begins on the date of the last transfer of property that was part of the like-kind exchange. File amended return Related persons. File amended return   Under these rules, related persons include, for example, you and a member of your family (spouse, brother, sister, parent, child, etc. File amended return ), 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. File amended return   For the complete list of related persons, see Related persons in chapter 2 of Publication 544. File amended return Example. File amended return You used a grey pickup truck in your farming business. File amended return Your sister used a red pickup truck in her landscaping business. File amended return In December 2012, you exchanged your grey pickup truck, plus $200, for your sister's red pickup truck. File amended return At that time, the FMV of the grey pickup truck was $7,000 and its adjusted basis was $6,000. File amended return The FMV of the red pickup truck was $7,200 and its adjusted basis was $1,000. File amended return 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). File amended return 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). File amended return However, because this was a like-kind exchange, you recognized no gain. File amended return 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). File amended return She recognized gain only to the extent of the money she received, $200. File amended return 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). File amended return In 2013, you sold the red pickup truck to a third party for $7,000. File amended return Because you sold it within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. File amended return On your tax return for 2013, you must report your $1,000 gain on the 2012 exchange. File amended return 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). File amended return In addition, your sister must report on her tax return for 2013 the $6,000 balance of her gain on the 2012 exchange. File amended return Her adjusted basis in the grey pickup truck is increased to $7,000 (its $1,000 basis plus the $6,000 gain recognized). File amended return Exceptions to the rules for related persons. File amended return   The following property dispositions are excluded from these rules. File amended return Dispositions due to the death of either related person. File amended return Involuntary conversions. File amended return 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. File amended return Multiple property exchanges. File amended return   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. File amended return However, for exchanges of multiple properties, you do not make a property-by-property comparison if you do either of the following. File amended return Transfer and receive properties in two or more exchange groups. File amended return Transfer or receive more than one property within a single exchange group. File amended return   For more information, see Multiple Property Exchanges in chapter 1 of Publication 544. File amended return Deferred exchange. File amended return   A deferred exchange for like-kind property may qualify for nonrecognition of gain or loss. File amended return 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. File amended return The property you receive is replacement property. File amended return The transaction must be an exchange of property for property rather than a transfer of property for money used to buy replacement property. File amended return In addition, the replacement property will not be treated as like-kind property unless certain identification and receipt requirements are met. File amended return   For more information see Deferred Exchanges in chapter 1 of Publication 544. File amended return 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. File amended return This rule does not apply if the recipient is a nonresident alien. File amended return 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. File amended return 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. File amended return The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. File amended return 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. File amended return This rule applies for determining loss as well as gain. File amended return Any gain recognized on a transfer in trust increases the basis. File amended return For more information on transfers of property incident to divorce, see Property Settlements in Publication 504, Divorced or Separated Individuals. File amended return 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). File amended return You may also have a capital gain if your section 1231 transactions result in a net gain. File amended return See Section 1231 Gains and Losses in  chapter 9. File amended return 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). File amended return Your net capital gains may be taxed at a lower tax rate than ordinary income. File amended return See Capital Gains Tax Rates , later. File amended return Your deduction for a net capital loss may be limited. File amended return See Treatment of Capital Losses , later. File amended return Capital Assets Almost everything you own and use for personal purposes or investment is a capital asset. File amended return The following items are examples of capital assets. File amended return A home owned and occupied by you and your family. File amended return Household furnishings. File amended return A car used for pleasure. File amended return 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. File amended return Stocks and bonds. File amended return However, there are special rules for gains on qualified small business stock. File amended return 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. File amended return Personal-use property. File amended return   Gain from a sale or exchange of personal-use property is a capital gain and is taxable. File amended return Loss from the sale or exchange of personal-use property is not deductible. File amended return You can deduct a loss relating to personal-use property only if it results from a casualty or theft. File amended return For information on casualties and thefts, see chapter 11. File amended return 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. File amended return The time you own an asset before disposing of it is the holding period. File amended return If you hold a capital asset 1 year or less, the gain or loss resulting from its disposition is short term. File amended return Report it in Part I of Schedule D (Form 1040). File amended return If you hold a capital asset longer than 1 year, the gain or loss resulting from its disposition is long term. File amended return Report it in Part II of Schedule D (Form 1040). File amended return Holding period. File amended return   To figure if you held property longer than 1 year, start counting on the day after the day you acquired the property. File amended return The day you disposed of the property is part of your holding period. File amended return Example. File amended return If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. File amended return 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. File amended return Inherited property. File amended return   If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it. File amended return This rule does not apply to livestock used in a farm business. File amended return See Holding period under Livestock , later. File amended return Nonbusiness bad debt. File amended return   A nonbusiness bad debt is a short-term capital loss, deductible in the year the debt becomes worthless. File amended return See chapter 4 of Publication 550. File amended return Nontaxable exchange. File amended return   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. File amended return That is, it begins on the same day as your holding period for the old property. File amended return Gift. File amended return   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. File amended return Real property. File amended return   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. File amended return   However, taking possession of real property under an option agreement is not enough to start the holding period. File amended return The holding period cannot start until there is an actual contract of sale. File amended return The holding period of the seller cannot end before that time. File amended return 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. File amended return Net short-term capital gain or loss. File amended return   Combine your short-term capital gains and losses. File amended return Do this by adding all of your short-term capital gains. File amended return Then add all of your short-term capital losses. File amended return Subtract the lesser total from the greater. File amended return The difference is your net short-term capital gain or loss. File amended return Net long-term capital gain or loss. File amended return   Follow the same steps to combine your long-term capital gains and losses. File amended return The result is your net long-term capital gain or loss. File amended return Net gain. File amended return   If the total of your capital gains is more than the total of your capital losses, the difference is taxable. File amended return 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. File amended return See Capital Gains Tax Rates , later. File amended return Net loss. File amended return   If the total of your capital losses is more than the total of your capital gains, the difference is deductible. File amended return But there are limits on how much loss you can deduct and when you can deduct it. File amended return See Treatment of Capital Losses next. File amended return 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. File amended return 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). File amended return If your other income is low, you may not be able to use the full $3,000. File amended return The part of the $3,000 you cannot use becomes part of your capital loss carryover (discussed next). File amended return Capital loss carryover. File amended return   Generally, you have a capital loss carryover if either of the following situations applies to you. File amended return Your net loss on Schedule D (Form 1040), is more than the yearly limit. File amended return Your taxable income without your deduction for exemptions is less than zero. File amended return 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. File amended return    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). File amended return 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. File amended return These lower rates are called the maximum capital gains rates. File amended return 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. File amended return See Schedule D (Form 1040) and the Instructions for Schedule D (Form 1040). File amended return Also see Publication 550. File amended return Noncapital Assets Noncapital assets include property such as inventory and depreciable property used in a trade or business. File amended return A list of properties that are not capital assets is provided in the Instructions for Schedule D (Form 1040). File amended return Property held for sale in the ordinary course of your farm business. File amended return   Property you hold mainly for sale to customers, such as livestock, poultry, livestock products, and crops, is a noncapital asset. File amended return 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). File amended return The treatment of this property is discussed in chapter 3. File amended return Land and depreciable properties. File amended return   Land and depreciable property you use in farming are not capital assets. File amended return Noncapital assets also include livestock held for draft, breeding, dairy, or sporting purposes. File amended return 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. File amended return The sales of these business assets are reported on Form 4797. File amended return See chapter 9 for more information. File amended return 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. File amended return Ordinary property or obligations are those that cannot produce capital gain or loss if sold or exchanged. File amended return 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. File amended return 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. File amended return A forward contract is generally similar to a futures contract except that the terms are not standardized and the contract is not exchange traded. File amended return Businesses may enter into commodity futures contracts or forward contracts and may acquire options on commodity futures contracts as either of the following. File amended return Hedging transactions. File amended return Transactions that are not hedging transactions. File amended return 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. File amended return There is a limit on the amount of capital losses you can deduct each year. File amended return Hedging transactions are not subject to the mark-to-market rules. File amended return 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. File amended return 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. File amended return The gain or loss on the termination of these hedges is generally ordinary gain or loss. File amended return 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. File amended return 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. File amended return Examples include fuel and feed. File amended return If you have numerous transactions in the commodity futures market during the year, you must be able to show which transactions are hedging transactions. File amended return Clearly identify a hedging transaction on your books and records before the end of the day you entered into the transaction. File amended return It may be helpful to have separate brokerage accounts for your hedging and speculation transactions. File amended return Retain the identification of each hedging transaction with your books and records. File amended return Also, identify the item(s) or aggregate risk that is being hedged in your records. File amended return 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. File amended return 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. File amended return Accounting methods for hedging transactions. File amended return   The accounting method you use for a hedging transaction must clearly reflect income. File amended return 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. File amended return There are requirements and limits on the method you can use for certain hedging transactions. File amended return See Regulations section 1. File amended return 446-4(e) for those requirements and limits. File amended return   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. File amended return Cash method. File amended return Farm-price method. File amended return Unit-livestock-price method. File amended return   Once you adopt a method, you must apply it consistently and must have IRS approval before changing it. File amended return   Your books and records must describe the accounting method used for each type of hedging transaction. File amended return They must also contain any additional identification necessary to verify the application of the accounting method you used for the transaction. File amended return You must make the additional identification no more than 35 days after entering into the hedging transaction. File amended return Example of a hedging transaction. File amended return   You file your income tax returns on the cash method. File amended return On July 2 you anticipate a yield of 50,000 bushels of corn this year. File amended return The December futures price is $5. File amended return 75 a bushel, but there are indications that by harvest time the price will drop. File amended return To protect yourself against a drop in the price, you enter into the following hedging transaction. File amended return You sell ten December futures contracts of 5,000 bushels each for a total of 50,000 bushels of corn at $5. File amended return 75 a bushel. File amended return   The price did not drop as anticipated but rose to $6 a bushel. File amended return In November, you sell your crop at a local elevator for $6 a bushel. File amended return You also close out your futures position by buying ten December contracts for $6 a bushel. File amended return You paid a broker's commission of $1,400 ($70 per contract) for the complete in and out position in the futures market. File amended return   The result is that the price of corn rose 25 cents a bushel and the actual selling price is $6 a bushel. File amended return Your loss on the hedge is 25 cents a bushel. File amended return In effect, the net selling price of your corn is $5. File amended return 75 a bushel. File amended return   Report the results of your futures transactions and your sale of corn separately on Schedule F. File amended return See the instructions for the 2013 Schedule F (Form 1040). File amended return   The loss on your futures transactions is $13,900, figured as follows. File amended return July 2 - Sold December corn futures (50,000 bu. File amended return @$5. File amended return 75) $287,500 November 6 - Bought December corn futures (50,000 bu. File amended return @$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. File amended return   The proceeds from your corn sale at the local elevator are $300,000 (50,000 bu. File amended return × $6). File amended return Report it on Schedule F, Part I, line 2, as income from sales of products you raised. File amended return   Assume you were right and the price went down 25 cents a bushel. File amended return In effect, you would still net $5. File amended return 75 a bushel, figured as follows. File amended return Sold cash corn, per bushel $5. File amended return 50 Gain on hedge, per bushel . File amended return 25 Net price, per bushel $5. File amended return 75       The gain on your futures transactions would have been $11,100, figured as follows. File amended return July 2 - Sold December corn futures (50,000 bu. File amended return @$5. File amended return 75) $287,500 November 6 - Bought December corn futures (50,000 bu. File amended return @$5. File amended return 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. File amended return   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. File amended return Livestock This part discusses the sale or exchange of livestock used in your farm business. File amended return Gain or loss from the sale or exchange of this livestock may qualify as a section 1231 gain or loss. File amended return However, any part of the gain that is ordinary income from the recapture of depreciation is not included as section 1231 gain. File amended return See chapter 9 for more information on section 1231 gains and losses and the recapture of depreciation under section 1245. File amended return The rules discussed here do not apply to the sale of livestock held primarily for sale to customers. File amended return The sale of this livestock is reported on Schedule F. File amended return See chapter 3. File amended return Also, special rules apply to sales or exchanges caused by weather-related conditions. File amended return See chapter 3. File amended return Holding period. File amended return   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). File amended return Livestock. File amended return   For section 1231 transactions, livestock includes cattle, hogs, horses, mules, donkeys, sheep, goats, fur-bearing animals, and other mammals. File amended return Also, for section 1231 transactions, livestock does not include chickens, turkeys, pigeons, geese, emus, ostriches, rheas, or other birds, fish, frogs, reptiles, etc. File amended return Livestock used in farm business. File amended return   If livestock is held primarily for draft, breeding, dairy, or sporting purposes, it is used in your farm business. File amended return The purpose for which an animal is held ordinarily is determined by a farmer's actual use of the animal. File amended return 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. File amended return 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. File amended return Example 1. File amended return You discover an animal that you intend to use for breeding purposes is sterile. File amended return You dispose of it within a reasonable time. File amended return This animal was held for breeding purposes. File amended return Example 2. File amended return 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. File amended return These young animals were held for breeding or dairy purposes. File amended return 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. File amended return See Sales Caused by Weather-Related Conditions in chapter 3. File amended return Example 3. File amended return You are in the business of raising hogs for slaughter. File amended return Customarily, before selling your sows, you obtain a single litter of pigs that you will raise for sale. File amended return You sell the brood sows after obtaining the litter. File amended return 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. File amended return Example 4. File amended return You are in the business of raising registered cattle for sale to others for use as breeding cattle. File amended return The business practice is to breed the cattle before sale to establish their fitness as registered breeding cattle. File amended return Your use of the young cattle for breeding purposes is ordinary and necessary for selling them as registered breeding cattle. File amended return Such use does not demonstrate that you are holding the cattle for breeding purposes. File amended return 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. File amended return The same applies to hog and sheep breeders. File amended return Example 5. File amended return You breed, raise, and train horses for racing purposes. File amended return Every year you cull horses from your racing stable. File amended return 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. File amended return These horses are all considered held for sporting purposes. File amended return Figuring gain or loss on the cash method. File amended return   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. File amended return Raised livestock. File amended return   Gain on the sale of raised livestock is generally the gross sales price reduced by any expenses of the sale. File amended return Expenses of sale include sales commissions, freight or hauling from farm to commission company, and other similar expenses. File amended return The basis of the animal sold is zero if the costs of raising it were deducted during the years the animal was being raised. File amended return However, see Uniform Capitalization Rules in chapter 6. File amended return Purchased livestock. File amended return   The gross sales price minus your adjusted basis and any expenses of sale is the gain or loss. File amended return Example. File amended return A farmer sold a breeding cow on January 8, 2013, for $1,250. File amended return Expenses of the sale were $125. File amended return The cow was bought July 2, 2009, for $1,300. File amended return Depreciation (not less than the amount allowable) was $867. File amended return 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. File amended return Any gain realized on the disposition of converted wetland or highly erodible cropland is treated as ordinary income. File amended return Any loss on the disposition of such property is treated as a long-term capital loss. File amended return Converted wetland. File amended return   This is generally land that was drained or filled to make the production of agricultural commodities possible. File amended return 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. File amended return   A wetland (before conversion) is land that meets all the following conditions. File amended return 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. File amended return 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. File amended return It supports, under normal circumstances, mostly plants that grow in saturated soil. File amended return Highly erodible cropland. File amended return   This is cropland subject to erosion that you used at any time for farming purposes other than grazing animals. File amended return Generally, highly erodible cropland is land currently classified by the Department of Agriculture as Class IV, VI, VII, or VIII under its classification system. File amended return 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. File amended return Successor. File amended return   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. File amended return Timber Standing timber you held as investment property is a capital asset. File amended return Gain or loss from its sale is capital gain or loss reported on Form 8949 and Schedule D (Form 1040), as applicable. File amended return If you held the timber primarily for sale to customers, it is not a capital asset. File amended return Gain or loss on its sale is ordinary business income or loss. File amended return It is reported on Schedule F, line 1 (purchased timber) or line 2 (raised timber). File amended return See the Instructions for Schedule F (Form 1040). File amended return 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. File amended return Amounts realized from these sales, and the expenses incurred in cutting, hauling, etc. File amended return , are ordinary farm income and expenses reported on Schedule F. File amended return 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. File amended return Timber considered cut. File amended return   Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. File amended return This is true whether the timber is cut under contract or whether you cut it yourself. File amended return Christmas trees. File amended return   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. File amended return They qualify for both rules discussed below. File amended return Election to treat cutting as a sale or exchange. File amended return   Under the general rule, the cutting of timber results in no gain or loss. File amended return It is not until a sale or exchange occurs that gain or loss is realized. File amended return 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. File amended return 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. File amended return Any later sale results in ordinary business income or loss. File amended return See the example below. File amended return   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. File amended return Making the election. File amended return   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. File amended return You do not have to make the election in the first year you cut the timber. File amended return You can make it in any year to which the election would apply. File amended return If the timber is partnership property, the election is made on the partnership return. File amended return This election cannot be made on an amended return. File amended return   Once you have made the election, it remains in effect for all later years unless you revoke it. File amended return Election under section 631(a) may be revoked. File amended return   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. File amended return The prior election (and revocation) is disregarded for purposes of making a subsequent election. File amended return See Form T (Timber), Forest Activities Schedule, for more information. File amended return Gain or loss. File amended return   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. File amended return   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. File amended return 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. File amended return 611-3. File amended return   Depletion of timber is discussed in chapter 7. File amended return Example. File amended return   In April 2013, you owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. File amended return It had an adjusted basis for depletion of $40 per MBF. File amended return You are a calendar year taxpayer. File amended return On January 1, 2013, the timber had a FMV of $350 per MBF. File amended return It was cut in April for sale. File amended return On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. File amended return You report the difference between the FMV and your adjusted basis for depletion as a gain. File amended return 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. File amended return You figure your gain as follows. File amended return 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. File amended return Outright sales of timber. File amended return   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). File amended return 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). File amended return Cutting contract. File amended return   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. File amended return You are the owner of the timber. File amended return You held the timber longer than 1 year before its disposal. File amended return You kept an economic interest in the timber. File amended return   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. File amended return   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. File amended return Include this amount on Form 4797 along with your other section 1231 gains or losses. File amended return Date of disposal. File amended return   The date of disposal is the date the timber is cut. File amended return 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. File amended return   This election applies only to figure the holding period of the timber. File amended return It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). File amended return   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. File amended return The statement must identify the advance payments subject to the election and the contract under which they were made. File amended return   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). File amended return Attach the statement to the amended return and write “Filed pursuant to section 301. File amended return 9100-2” at the top of the statement. File amended return File the amended return at the same address the original return was filed. File amended return Owner. File amended return   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. File amended return 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. File amended return Tree stumps. File amended return   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. File amended return Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. File amended return However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. File amended return Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. File amended return   See Form T (Timber) and its separate instructions for more information about dispositions of timber. File amended return 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). File amended return If you have a gain from the sale, you may be allowed to exclude the gain on your home. File amended return For more information, see Publication 523, Selling Your Home. File amended return The gain on the sale of your business property is taxable. File amended return A loss on the sale of your business property to an unrelated person is deducted as an ordinary loss. File amended return Your taxable gain or loss on the sale of property used in your farm business is taxed under the rules for section 1231 transactions. File amended return See chapter 9. File amended return Losses from personal-use property, other than casualty or theft losses, are not deductible. File amended return 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. File amended return See chapter 10 for information about installment sales. File amended return When you sell your farm, the gain or loss on each asset is figured separately. File amended return The tax treatment of gain or loss on the sale of each asset is determined by the classification of the asset. File amended return Each of the assets sold must be classified as one of the following. File amended return Capital asset held 1 year or less. File amended return Capital asset held longer than 1 year. File amended return 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 ). File amended return 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). File amended return 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. File amended return Allocation of consideration paid for a farm. File amended return   The sale of a farm for a lump sum is considered a sale of each individual asset rather than a single asset. File amended return The residual method is required only if the group of assets sold constitutes a trade or business. File amended return This method determines gain or loss from the transfer of each asset. File amended return It also determines the buyer's basis in the business assets. File amended return For more information, see Sale of a Business in chapter 2 of Publication 544. File amended return Property used in farm operation. File amended return   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. File amended return Recognized gains and losses on business property must be reported on your return for the year of the sale. File amended return If the property was held longer than 1 year, it may qualify for section 1231 treatment (see chapter 9). File amended return Example. File amended return You sell your farm, including your main home, which you have owned since December 2001. File amended return You realize gain on the sale as follows. File amended return   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. File amended return 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. File amended return Treat the balance as section 1231 gain. File amended return 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 . File amended return Partial sale. File amended return   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. File amended return You cannot wait until you have sold enough of the farm to recover its entire cost before reporting gain or loss. File amended return For a detailed discussion on installment sales, see Publication 544. File amended return Adjusted basis of the part sold. File amended return   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. File amended return , on the part sold. File amended return 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 . File amended return Example. File amended return You bought a 600-acre farm for $700,000. File amended return The farm included land and buildings. File amended return The purchase contract designated $600,000 of the purchase price to the land. File amended return You later sold 60 acres of land on which you had installed a fence. File amended return 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. File amended return Use this amount to determine your gain or loss on the sale of the 60 acres. File amended return Assessed values for local property taxes. File amended return   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. File amended return Example. File amended return Assume that in the preceding example there was no breakdown of the $700,000 purchase price between land and buildings. File amended return 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. File amended return The assessed valuation of the land is 3/4 (75%) of the total assessed valuation. File amended return Multiply the $700,000 total purchase price by 75% to figure basis of $525,000 for the 600 acres of land. File amended return The unadjusted basis of the 60 acres you sold would then be $52,500 (1/10 of $525,000). File amended return Sale of your home. File amended return   Your home is a capital asset and not property used in the trade or business of farming. File amended return 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. File amended return Your home includes the immediate surroundings and outbuildings relating to it that are not used for business purposes. File amended return   If you use part of your home for business, you must make an appropriate adjustment to the basis for depreciation allowed or allowable. File amended return For more information on basis, see chapter 6. File amended return More information. File amended return   For more information on selling your home, see Publication 523. File amended return Gain from condemnation. File amended return   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. File amended return 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. File amended return 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. File amended return The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. File amended return This is true even if you voluntarily return the property to the lender. File amended return You may also realize ordinary income from cancellation of debt if the loan balance is more than the FMV of the property. File amended return Buyer's (borrower's) gain or loss. File amended return   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. File amended return The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. File amended return See Determining Gain or Loss , earlier. File amended return Worksheet 8-1. File amended return Worksheet for Foreclosures andRepossessions Part 1. File amended return Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. File amended return Complete this part only if you were personally liable for the debt. File amended return Otherwise, go to Part 2. File amended return   1. File amended return 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. File amended return Enter the Fair Market Value of the transferred property   3. File amended return Ordinary income from cancellation of debt upon foreclosure or repossession. File amended return * Subtract line 2 from line 1. File amended return If zero or less, enter -0-   Part 2. File amended return Figure your gain or loss from foreclosure or repossession. File amended return   4. File amended return If you completed Part 1, enter the smaller of line 1 or line 2. File amended return If you did not complete Part 1, enter the outstanding debt immediately before the transfer of property   5. File amended return Enter any proceeds you received from the foreclosure sale   6. File amended return Add lines 4 and 5   7. File amended return Enter the adjusted basis of the transferred property   8. File amended return Gain or loss from foreclosure or repossession. File amended return Subtract line 7  from line 6   * The income may not be taxable. File amended return See Cancellation of debt . File amended return    You can use Worksheet 8-1 to figure your gain or loss from a foreclosure or repossession. File amended return Amount realized on a nonrecourse debt. File amended return   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. File amended return 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. File amended return Example 1. File amended return Ann paid $200,000 for land used in her farming business. File amended return She paid $15,000 down and borrowed the remaining $185,000 from a bank. File amended return Ann is not personally liable for the loan (nonrecourse debt), but pledges the land as security. File amended return The bank foreclosed on the loan 2 years after Ann stopped making payments. File amended return When the bank foreclosed, the balance due on the loan was $180,000 and the FMV of the land was $170,000. File amended return The amount Ann realized on the foreclosure was $180,000, the debt canceled by the foreclosure. File amended return She figures her gain or loss on Form 4797, Part I, by comparing the amount realized ($180,000) with her adjusted basis ($200,000). File amended return She has a $20,000 deductible loss. File amended return Example 2. File amended return Assume the same facts as in Example 1 except the FMV of the land was $210,000. File amended return The result is the same. File amended return The amount Ann realized on the foreclosure is $180,000, the debt canceled by the foreclosure. File amended return Because her adjusted basis is $200,000, she has a deductible loss of $20,000, which she reports on Form 4797, Part I. File amended return Amount realized on a recourse debt. File amended return   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. File amended return   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. File amended return The amount realized does not include the canceled debt that is your income from cancellation of debt. File amended return See Cancellation of debt , later. File amended return Example 3. File amended return Assume the same facts as in Example 1 above except Ann is personally liable for the loan (recourse debt). File amended return In this case, the amount she realizes is $170,000. File amended return This is the canceled debt ($180,000) up to the FMV of the land ($170,000). File amended return Ann figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($200,000). File amended return She has a $30,000 deductible loss, which she figures on Form 4797, Part I. File amended return She is also treated as receiving ordinary income from cancellation of debt. File amended return That income is $10,000 ($180,000 − $170,000). File amended return This is the part of the canceled debt not included in the amount realized. File amended return She reports this as other income on Schedule F, line 8. File amended return Seller's (lender's) gain or loss on repossession. File amended return   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. File amended return For more information, see Repossession in Publication 537, Installment Sales. File amended return Cancellation of debt. File amended return   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. File amended return This income is separate from any gain or loss realized from the foreclosure or repossession. File amended return Report the income from cancellation of a business debt on Schedule F, line 8. File amended return Report the income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. File amended return    You can use Worksheet 8-1 to figure your income from cancellation of debt. File amended return   However, income from cancellation of debt is not taxed if any of the following apply. File amended return The cancellation is intended as a gift. File amended return The debt is qualified farm debt (see chapter 3). File amended return The debt is qualified real property business debt (see chapter 5 of Publication 334). File amended return You are insolvent or bankrupt (see  chapter 3). File amended return The debt is qualified principal residence indebtedness (see chapter 3). File amended return   Use Form 982 to report the income exclusion. File amended return Abandonment The abandonment of property is a disposition of property. File amended return 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. File amended return Business or investment property. File amended return   Loss from abandonment of business or investment property is deductible as a loss. File amended return Loss from abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. File amended return If your adjusted basis is more than the amount you realize (if any), then you have a loss. File amended return If the amount you realize (if any) is more than your adjusted basis, then you have a gain. File amended return This rule also applies to leasehold improvements the lessor made for the lessee. File amended return 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 . File amended return   If the abandoned property is secured by debt, special rules apply. File amended return 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). File amended return For more information, see chapter 3 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). File amended return The abandonment loss is deducted in the tax year in which the loss is sustained. File amended return Report the loss on Form 4797, Part II, line 10. File amended return Personal-use property. File amended return   You cannot deduct any loss from abandonment of your home or other property held for personal use. File amended return Canceled debt. File amended return   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. File amended return This income is separate from any loss realized from abandonment of the property. File amended return Report income from cancellation of a debt related to a business or rental activity as business or rental income. File amended return Report income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. File amended return   However, income from cancellation of debt is not taxed in certain circumstances. File amended return See Cancellation of debt earlier under Foreclosure or Repossession . File amended return Forms 1099-A and 1099-C. File amended return   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. File amended return 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. File amended return 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. File amended return For foreclosures, repossessions, abandonments of property, and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. File amended return Prev  Up  Next   Home   More Online Publications
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Se Pudiera Estar Terminando el Plazo – Marzo 31 Es Una Fecha Importante

Consideraciones de La Ley del Cuidado de Salud para 2014

 

HC-TT-2014-11SP

Para la mayoría de personas, la Ley de Cuidado de Salud a Bajo Precio no afecta las declaraciones de impuestos por ingresos de 2013 que están presentando en 2014. Sin embargo, algunas personas pudieran tener que tomar decisiones importantes para el 31 de marzo de 2014, la fecha límite para la matrícula abierta. 

A continuación hay cinco cosas acerca de la ley del cuidado de salud que usted pudiera tener que tomar en consideración pronto.

  •  Asegurado Actualmente – Sin Cambio: Si usted está asegurado actualmente no necesita hacer nada más que seguir con su seguro.

  • No Está Asegurado – Regístrese para el 31 de Marzo: El periodo de matricula abierta para comprar cobertura de seguro médico a través del Mercado de Seguros de Salud para 2014 continua hasta el 31 de marzo de 2014. Cuando usted obtiene seguro médico a través del mercado, usted pudiera tener disponibles pagos adelantados del crédito tributario de primas que le ayudarán a reducir de inmediato sus primas mensuales. Infórmese en CuidadoDeSalud.gov.

  • Crédito Tributario de Primas para Reducir Su Prima Mensual: Si usted obtiene seguro a través del Mercado, usted pudiera ser elegible para reclamar el crédito tributario de primas. Usted puede elegir que pagos adelantados del crédito tributario sean enviados directamente a su asegurador durante el 2014, o esperar a reclamar el crédito al presentar su declaración de impuestos en el 2015. Si usted elije que se envíen pagos adelantados a su asegurador, usted tendrá que reconciliar los pagos en su declaración de impuestos de 2014, la cual será presentada en 2015. Si usted ya está recibiendo pagos adelantados del crédito, no tendrá que hacer nada por el momento a menos que haya un cambio en sus circunstancias. Obtenga más información.

  • Cambio de Circunstancias: Si está recibiendo pagos adelantados del crédito tributario de primas para ayudarle a pagar por su cobertura de seguro médico, usted debería reportar los cambios en su vida, tales como cambios en sus ingresos, estado civil o en el tamaño de su familia, al Mercado. Reportar los cambios le ayudará a cerciorarse de que está recibiendo la cantidad adecuada en pagos por adelantado del crédito tributario de primas.

  • Pagos de Responsabilidad Compartida para Individuos: A partir de enero de 2014, usted y su familia han tenido el requisito de tener cobertura de seguro médico o tener una exención de cobertura.  La mayoría de personas ya tiene cobertura de seguro médico calificada. Estas personas no tendrán que hacer nada más que mantener esa cobertura a lo largo de 2014. Si usted puede costear cobertura pero decide no comprarla y permanecer sin seguro, usted podría tener que efectuar un pago de responsabilidad compartida para personas físicas al presentar su declaración de impuestos en el 2015. Obtenga más información.

 

Información Adicional

Infórmese sobre las disposiciones tributarias de la ley del cuidado de salud en IRS.gov/aca (español). 

Infórmese sobre el Mercado de Seguros de Salud en CuidadoDeSalud.gov.

Para recibir por email copias de los consejos tributarios del IRS en inglés, suscríbase en www.irs.gov/uac/Subscribe-to-IRS-Tax-Tips. Para los consejos tributarios del IRS en español visite IRS.gov.

 

Page Last Reviewed or Updated: 24-Mar-2014

The File Amended Return

File amended return 5. File amended return   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. File amended return Free help with your tax return. File amended return   You can get free help preparing your return nationwide from IRS-certified volunteers. File amended return The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. File amended return The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File amended return Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. File amended return In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. File amended return To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. File amended return gov, download the IRS2Go app, or call 1-800-906-9887. File amended return   As part of the TCE program, AARP offers the Tax-Aide counseling program. File amended return To find the nearest AARP Tax-Aide site, visit AARP's website at www. File amended return aarp. File amended return org/money/taxaide or call 1-888-227-7669. File amended return For more information on these programs, go to IRS. File amended return gov and enter “VITA” in the search box. File amended return Internet. File amended return    IRS. File amended return gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. File amended return Download the free IRS2Go app from the iTunes app store or from Google Play. File amended return Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. File amended return Check the status of your 2013 refund with the Where's My Refund? application on IRS. File amended return gov or download the IRS2Go app and select the Refund Status option. File amended return The IRS issues more than 9 out of 10 refunds in less than 21 days. File amended return Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. File amended return You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. File amended return The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File amended return Use the Interactive Tax Assistant (ITA) to research your tax questions. File amended return No need to wait on the phone or stand in line. File amended return The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. File amended return When you reach the response screen, you can print the entire interview and the final response for your records. File amended return New subject areas are added on a regular basis. File amended return  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. File amended return gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. File amended return You can use the IRS Tax Map, to search publications and instructions by topic or keyword. File amended return The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. File amended return When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. File amended return Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. File amended return You can also ask the IRS to mail a return or an account transcript to you. File amended return Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. File amended return gov or by calling 1-800-908-9946. File amended return Tax return and tax account transcripts are generally available for the current year and the past three years. File amended return Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. File amended return Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. File amended return If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. File amended return Check the status of your amended return using Where's My Amended Return? Go to IRS. File amended return gov and enter Where's My Amended Return? in the search box. File amended return You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File amended return It can take up to 3 weeks from the date you mailed it to show up in our system. File amended return Make a payment using one of several safe and convenient electronic payment options available on IRS. File amended return gov. File amended return Select the Payment tab on the front page of IRS. File amended return gov for more information. File amended return Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. File amended return Figure your income tax withholding with the IRS Withholding Calculator on IRS. File amended return gov. File amended return Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. File amended return Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. File amended return gov. File amended return Request an Electronic Filing PIN by going to IRS. File amended return gov and entering Electronic Filing PIN in the search box. File amended return Download forms, instructions and publications, including accessible versions for people with disabilities. File amended return Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. File amended return gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. File amended return An employee can answer questions about your tax account or help you set up a payment plan. File amended return Before you visit, check the Office Locator on IRS. File amended return gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. File amended return If you have a special need, such as a disability, you can request an appointment. File amended return Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. File amended return Apply for an Employer Identification Number (EIN). File amended return Go to IRS. File amended return gov and enter Apply for an EIN in the search box. File amended return Read the Internal Revenue Code, regulations, or other official guidance. File amended return Read Internal Revenue Bulletins. File amended return Sign up to receive local and national tax news and more by email. File amended return Just click on “subscriptions” above the search box on IRS. File amended return gov and choose from a variety of options. File amended return Phone. File amended return   You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. File amended return Download the free IRS2Go app from the iTunes app store or from Google Play. File amended return Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. File amended return gov, or download the IRS2Go app. File amended return Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File amended return The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. File amended return Most VITA and TCE sites offer free electronic filing. File amended return Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. File amended return Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. File amended return Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. File amended return If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File amended return The IRS issues more than 9 out of 10 refunds in less than 21 days. File amended return Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. File amended return Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. File amended return The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. File amended return Note, the above information is for our automated hotline. File amended return Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. File amended return Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. File amended return You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. File amended return It can take up to 3 weeks from the date you mailed it to show up in our system. File amended return Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). File amended return You should receive your order within 10 business days. File amended return Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. File amended return If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. File amended return Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. File amended return The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. File amended return These individuals can also contact the IRS through relay services such as the Federal Relay Service. File amended return Walk-in. File amended return   You can find a selection of forms, publications and services — in-person. File amended return Products. File amended return You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. File amended return Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. File amended return Services. File amended return You can walk in to your local TAC for face-to-face tax help. File amended return An employee can answer questions about your tax account or help you set up a payment plan. File amended return Before visiting, use the Office Locator tool on IRS. File amended return gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. File amended return Mail. File amended return   You can send your order for forms, instructions, and publications to the address below. File amended return You should receive a response within 10 business days after your request is received. File amended return Internal Revenue Service 1201 N. File amended return Mitsubishi Motorway Bloomington, IL 61705-6613   The Taxpayer Advocate Service Is Here to Help You. File amended return The Taxpayer Advocate Service (TAS) is your voice at the IRS. File amended return Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. File amended return   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. File amended return We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. File amended return You face (or your business is facing) an immediate threat of adverse action. File amended return You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. File amended return   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. File amended return Here's why we can help: TAS is an independent organization within the IRS. File amended return Our advocates know how to work with the IRS. File amended return Our services are free and tailored to meet your needs. File amended return We have offices in every state, the District of Columbia, and Puerto Rico. File amended return   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. File amended return   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. File amended return If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. File amended return Prev  Up  Next   Home   More Online Publications