Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Free 2006 Tax Software

Irs Tax Forms 2011 DownloadDo Unemployed People File Taxes2012 1040 Ez FormTax Act Amended ReturnFiling And Amended Tax ReturnFree State TaxsOn Line 1040x2009 Tax Return FormsH & R BlockForm 1040x 2013Filing An Amendment To TaxesFile 2007 Tax Return OnlineHow To File An Amended Return For 2011File 2012 Taxes Late OnlineIrs Gov FreefilefillableformsFederal Income Tax Amendment FormCan I Still File My 2012 TaxesIrs Com Gov2012 Tax Return FilingH&r Block At HomeHr Block 1040nrState Income Tax Return FormsTax Act Free 2012Free 1040ez 2013I Need To File My State Taxes OnlyAmend State Tax ReturnFree Amended Tax Return1040 EzIrs Amended Tax Form2012 Federal Income Tax1040ez Online FilingAmend Tax ReturnsWwwhrblock ComAmend A Tax ReturnHr Block TaxFree E File 20112011 Tax FormWhere Can I File State Taxes For FreeIrs 1040ez Online FileH & R Block Online

Free 2006 Tax Software

Free 2006 tax software 8. Free 2006 tax software   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. Free 2006 tax software Ordinary gain is taxed at the same rates as wages and interest income while capital gain is generally taxed at lower rates. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software Sales and Exchanges If you sell, exchange, or otherwise dispose of your property, you usually have a gain or a loss. Free 2006 tax software This section explains certain rules for determining whether any gain you have is taxable, and whether any loss you have is deductible. Free 2006 tax software A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. Free 2006 tax software An exchange is a transfer of property for other property or services. Free 2006 tax software Determining Gain or Loss You usually realize a gain or loss when you sell or exchange property. Free 2006 tax software If the amount you realize from a sale or exchange of property is more than its adjusted basis, you will have a gain. Free 2006 tax software If the adjusted basis of the property is more than the amount you realize, you will have a loss. Free 2006 tax software Basis and adjusted basis. Free 2006 tax software   The basis of property you buy is usually its cost. Free 2006 tax software The adjusted basis of property is basis plus certain additions and minus certain deductions. Free 2006 tax software See chapter 6 for more information about basis and adjusted basis. Free 2006 tax software Amount realized. Free 2006 tax software   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. Free 2006 tax software 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. Free 2006 tax software   If the liabilities relate to an exchange of multiple properties, see Multiple Property Exchanges in chapter 1 of Publication 544. Free 2006 tax software Amount recognized. Free 2006 tax software   Your gain or loss realized from a sale or exchange of certain property is usually a recognized gain or loss for tax purposes. Free 2006 tax software A recognized gain is a gain you must include in gross income and report on your income tax return. Free 2006 tax software A recognized loss is a loss you deduct from gross income. Free 2006 tax software However, your gain or loss realized from the exchange of certain property may not be recognized for tax purposes. Free 2006 tax software See Like-Kind Exchanges next. Free 2006 tax software Also, a loss from the disposition of property held for personal use is not deductible. Free 2006 tax software Like-Kind Exchanges Certain exchanges of property are not taxable. Free 2006 tax software This means any gain from the exchange is not recognized, and any loss cannot be deducted. Free 2006 tax software Your gain or loss will not be recognized until you sell or otherwise dispose of the property you receive. Free 2006 tax software The exchange of property for the same kind of property is the most common type of nontaxable exchange. Free 2006 tax software To qualify for treatment as a like-kind exchange, the property traded and the property received must be both of the following. Free 2006 tax software Qualifying property. Free 2006 tax software Like-kind property. Free 2006 tax software These two requirements are discussed later. Free 2006 tax software Multiple-party transactions. Free 2006 tax software   The like-kind exchange rules also apply to property exchanges that involve three and four-party transactions. Free 2006 tax software Any part of these multiple-party transactions can qualify as a like-kind exchange if it meets all the requirements described in this section. Free 2006 tax software Receipt of title from third party. Free 2006 tax software   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. Free 2006 tax software Basis of property received. Free 2006 tax software   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. Free 2006 tax software See chapter 6 for more information. Free 2006 tax software Money paid. Free 2006 tax software   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. Free 2006 tax software The basis of the property received is the basis of the property given up, increased by the money paid. Free 2006 tax software Example. Free 2006 tax software You traded an old tractor with an adjusted basis of $15,000 for a new one. Free 2006 tax software The new tractor costs $300,000. Free 2006 tax software You were allowed $80,000 for the old tractor and paid $220,000 cash. Free 2006 tax software 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). Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software Reporting the exchange. Free 2006 tax software   Report the exchange of like-kind property, even though no gain or loss is recognized, on Form 8824, Like-Kind Exchanges. Free 2006 tax software The Instructions for Form 8824 explain how to report the details of the exchange. Free 2006 tax software   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. Free 2006 tax software You may also have to report the recognized gain as ordinary income because of depreciation recapture on Form 4797. Free 2006 tax software See chapter 9 for more information. Free 2006 tax software Qualifying property. Free 2006 tax software   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. Free 2006 tax software Machinery, buildings, land, trucks, breeding livestock, rental houses, and certain mutual ditch, reservoir, or irrigation company stock are examples of property that may qualify. Free 2006 tax software Nonqualifying property. Free 2006 tax software   The rules for like-kind exchanges do not apply to exchanges of the following property. Free 2006 tax software Property you use for personal purposes, such as your home and family car. Free 2006 tax software Stock in trade or other property held primarily for sale, such as crops and produce. Free 2006 tax software Stocks, bonds, or notes. Free 2006 tax software However, see Qualifying property above. Free 2006 tax software Other securities or evidences of indebtedness, such as accounts receivable. Free 2006 tax software Partnership interests. Free 2006 tax software However, you may have a nontaxable exchange under other rules. Free 2006 tax software See Other Nontaxable Exchanges in chapter 1 of Publication 544. Free 2006 tax software Like-kind property. Free 2006 tax software   To qualify as a nontaxable exchange, the properties exchanged must be of like kind. Free 2006 tax software Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Free 2006 tax software Generally, real property exchanged for real property qualifies as an exchange of like-kind property. Free 2006 tax software For example, an exchange of city property for farm property or improved property for unimproved property is a like-kind exchange. Free 2006 tax software   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. Free 2006 tax software An exchange of a tractor for acreage, however, is not an exchange of like-kind property. Free 2006 tax software The exchange of livestock of one sex for livestock of the other sex is not a like-kind exchange. Free 2006 tax software For example, the exchange of a bull for a cow is not a like-kind exchange. Free 2006 tax software 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. Free 2006 tax software    Note. Free 2006 tax software Whether you engaged in a like-kind exchange depends on an analysis of each asset involved in the exchange. Free 2006 tax software Personal property. Free 2006 tax software   Depreciable tangible personal property can be either like kind or like class to qualify for nontaxable exchange treatment. Free 2006 tax software Like-class properties are depreciable tangible personal properties within the same General Asset Class or Product Class. Free 2006 tax software Property classified in any General Asset Class may not be classified within a Product Class. Free 2006 tax software Assets that are not in the same class will qualify as like-kind property if they are of the same nature or character. Free 2006 tax software General Asset Classes. Free 2006 tax software   General Asset Classes describe the types of property frequently used in many businesses. Free 2006 tax software They include, but are not limited to, the following property. Free 2006 tax software Office furniture, fixtures, and equipment (asset class 00. Free 2006 tax software 11). Free 2006 tax software Information systems, such as computers and peripheral equipment (asset class 00. Free 2006 tax software 12). Free 2006 tax software Data handling equipment except computers (asset class 00. Free 2006 tax software 13). Free 2006 tax software Automobiles and taxis (asset class 00. Free 2006 tax software 22). Free 2006 tax software Light general purpose trucks (asset class 00. Free 2006 tax software 241). Free 2006 tax software Heavy general purpose trucks (asset class 00. Free 2006 tax software 242). Free 2006 tax software Tractor units for use over-the-road (asset class 00. Free 2006 tax software 26). Free 2006 tax software Trailers and trailer-mounted containers (asset class 00. Free 2006 tax software 27). Free 2006 tax software Industrial steam and electric generation and/or distribution systems (asset class 00. Free 2006 tax software 4). Free 2006 tax software Product Classes. Free 2006 tax software   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). Free 2006 tax software The latest version of the manual can be accessed at www. Free 2006 tax software census. Free 2006 tax software gov/eos/www/naics/. Free 2006 tax software Copies of the printed manual may be purchased from the National Technical Information Service (NTIS) at  www. Free 2006 tax software ntis. Free 2006 tax software gov/products/naics. Free 2006 tax software aspx or by calling 1-800-553-NTIS (1-800-553-6847) or (703) 605-6000. Free 2006 tax software A CD-ROM version with search and retrieval software is also available from NTIS. Free 2006 tax software    NAICS class 333111, Farm Machinery and Equipment Manufacturing, includes most machinery and equipment used in a farming business. Free 2006 tax software Partially nontaxable exchange. Free 2006 tax software   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. Free 2006 tax software 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. Free 2006 tax software A loss is not deductible. Free 2006 tax software Example 1. Free 2006 tax software 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. Free 2006 tax software 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). Free 2006 tax software However, only $10,000, the cash received, is recognized (included in income). Free 2006 tax software Example 2. Free 2006 tax software Assume the same facts as in Example 1, except that, instead of money, you received a tractor with a FMV of $10,000. Free 2006 tax software Your recognized gain is still limited to $10,000, the value of the tractor (the unlike property). Free 2006 tax software Example 3. Free 2006 tax software Assume in Example 1 that the FMV of the land you received was only $15,000. Free 2006 tax software Your $5,000 loss is not recognized. Free 2006 tax software Unlike property given up. Free 2006 tax software   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. Free 2006 tax software The gain or loss is the difference between the FMV of the unlike property and the adjusted basis of the unlike property. Free 2006 tax software Like-kind exchanges between related persons. Free 2006 tax software   Special rules apply to like-kind exchanges between related persons. Free 2006 tax software These rules affect both direct and indirect exchanges. Free 2006 tax software Under these rules, if either person disposes of the property within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. Free 2006 tax software The gain or loss on the original exchange must be recognized as of the date of the later disposition. Free 2006 tax software The 2-year holding period begins on the date of the last transfer of property that was part of the like-kind exchange. Free 2006 tax software Related persons. Free 2006 tax software   Under these rules, related persons include, for example, you and a member of your family (spouse, brother, sister, parent, child, etc. Free 2006 tax software ), 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. Free 2006 tax software   For the complete list of related persons, see Related persons in chapter 2 of Publication 544. Free 2006 tax software Example. Free 2006 tax software You used a grey pickup truck in your farming business. Free 2006 tax software Your sister used a red pickup truck in her landscaping business. Free 2006 tax software In December 2012, you exchanged your grey pickup truck, plus $200, for your sister's red pickup truck. Free 2006 tax software At that time, the FMV of the grey pickup truck was $7,000 and its adjusted basis was $6,000. Free 2006 tax software The FMV of the red pickup truck was $7,200 and its adjusted basis was $1,000. Free 2006 tax software 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). Free 2006 tax software 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). Free 2006 tax software However, because this was a like-kind exchange, you recognized no gain. Free 2006 tax software 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). Free 2006 tax software She recognized gain only to the extent of the money she received, $200. Free 2006 tax software 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). Free 2006 tax software In 2013, you sold the red pickup truck to a third party for $7,000. Free 2006 tax software Because you sold it within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. Free 2006 tax software On your tax return for 2013, you must report your $1,000 gain on the 2012 exchange. Free 2006 tax software 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). Free 2006 tax software In addition, your sister must report on her tax return for 2013 the $6,000 balance of her gain on the 2012 exchange. Free 2006 tax software Her adjusted basis in the grey pickup truck is increased to $7,000 (its $1,000 basis plus the $6,000 gain recognized). Free 2006 tax software Exceptions to the rules for related persons. Free 2006 tax software   The following property dispositions are excluded from these rules. Free 2006 tax software Dispositions due to the death of either related person. Free 2006 tax software Involuntary conversions. Free 2006 tax software 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. Free 2006 tax software Multiple property exchanges. Free 2006 tax software   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. Free 2006 tax software However, for exchanges of multiple properties, you do not make a property-by-property comparison if you do either of the following. Free 2006 tax software Transfer and receive properties in two or more exchange groups. Free 2006 tax software Transfer or receive more than one property within a single exchange group. Free 2006 tax software   For more information, see Multiple Property Exchanges in chapter 1 of Publication 544. Free 2006 tax software Deferred exchange. Free 2006 tax software   A deferred exchange for like-kind property may qualify for nonrecognition of gain or loss. Free 2006 tax software 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. Free 2006 tax software The property you receive is replacement property. Free 2006 tax software The transaction must be an exchange of property for property rather than a transfer of property for money used to buy replacement property. Free 2006 tax software In addition, the replacement property will not be treated as like-kind property unless certain identification and receipt requirements are met. Free 2006 tax software   For more information see Deferred Exchanges in chapter 1 of Publication 544. Free 2006 tax software 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. Free 2006 tax software This rule does not apply if the recipient is a nonresident alien. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. Free 2006 tax software 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. Free 2006 tax software This rule applies for determining loss as well as gain. Free 2006 tax software Any gain recognized on a transfer in trust increases the basis. Free 2006 tax software For more information on transfers of property incident to divorce, see Property Settlements in Publication 504, Divorced or Separated Individuals. Free 2006 tax software 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). Free 2006 tax software You may also have a capital gain if your section 1231 transactions result in a net gain. Free 2006 tax software See Section 1231 Gains and Losses in  chapter 9. Free 2006 tax software 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). Free 2006 tax software Your net capital gains may be taxed at a lower tax rate than ordinary income. Free 2006 tax software See Capital Gains Tax Rates , later. Free 2006 tax software Your deduction for a net capital loss may be limited. Free 2006 tax software See Treatment of Capital Losses , later. Free 2006 tax software Capital Assets Almost everything you own and use for personal purposes or investment is a capital asset. Free 2006 tax software The following items are examples of capital assets. Free 2006 tax software A home owned and occupied by you and your family. Free 2006 tax software Household furnishings. Free 2006 tax software A car used for pleasure. Free 2006 tax software 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. Free 2006 tax software Stocks and bonds. Free 2006 tax software However, there are special rules for gains on qualified small business stock. Free 2006 tax software 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. Free 2006 tax software Personal-use property. Free 2006 tax software   Gain from a sale or exchange of personal-use property is a capital gain and is taxable. Free 2006 tax software Loss from the sale or exchange of personal-use property is not deductible. Free 2006 tax software You can deduct a loss relating to personal-use property only if it results from a casualty or theft. Free 2006 tax software For information on casualties and thefts, see chapter 11. Free 2006 tax software 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. Free 2006 tax software The time you own an asset before disposing of it is the holding period. Free 2006 tax software If you hold a capital asset 1 year or less, the gain or loss resulting from its disposition is short term. Free 2006 tax software Report it in Part I of Schedule D (Form 1040). Free 2006 tax software If you hold a capital asset longer than 1 year, the gain or loss resulting from its disposition is long term. Free 2006 tax software Report it in Part II of Schedule D (Form 1040). Free 2006 tax software Holding period. Free 2006 tax software   To figure if you held property longer than 1 year, start counting on the day after the day you acquired the property. Free 2006 tax software The day you disposed of the property is part of your holding period. Free 2006 tax software Example. Free 2006 tax software If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. Free 2006 tax software 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. Free 2006 tax software Inherited property. Free 2006 tax software   If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it. Free 2006 tax software This rule does not apply to livestock used in a farm business. Free 2006 tax software See Holding period under Livestock , later. Free 2006 tax software Nonbusiness bad debt. Free 2006 tax software   A nonbusiness bad debt is a short-term capital loss, deductible in the year the debt becomes worthless. Free 2006 tax software See chapter 4 of Publication 550. Free 2006 tax software Nontaxable exchange. Free 2006 tax software   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. Free 2006 tax software That is, it begins on the same day as your holding period for the old property. Free 2006 tax software Gift. Free 2006 tax software   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. Free 2006 tax software Real property. Free 2006 tax software   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. Free 2006 tax software   However, taking possession of real property under an option agreement is not enough to start the holding period. Free 2006 tax software The holding period cannot start until there is an actual contract of sale. Free 2006 tax software The holding period of the seller cannot end before that time. Free 2006 tax software 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. Free 2006 tax software Net short-term capital gain or loss. Free 2006 tax software   Combine your short-term capital gains and losses. Free 2006 tax software Do this by adding all of your short-term capital gains. Free 2006 tax software Then add all of your short-term capital losses. Free 2006 tax software Subtract the lesser total from the greater. Free 2006 tax software The difference is your net short-term capital gain or loss. Free 2006 tax software Net long-term capital gain or loss. Free 2006 tax software   Follow the same steps to combine your long-term capital gains and losses. Free 2006 tax software The result is your net long-term capital gain or loss. Free 2006 tax software Net gain. Free 2006 tax software   If the total of your capital gains is more than the total of your capital losses, the difference is taxable. Free 2006 tax software 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. Free 2006 tax software See Capital Gains Tax Rates , later. Free 2006 tax software Net loss. Free 2006 tax software   If the total of your capital losses is more than the total of your capital gains, the difference is deductible. Free 2006 tax software But there are limits on how much loss you can deduct and when you can deduct it. Free 2006 tax software See Treatment of Capital Losses next. Free 2006 tax software 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. Free 2006 tax software 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). Free 2006 tax software If your other income is low, you may not be able to use the full $3,000. Free 2006 tax software The part of the $3,000 you cannot use becomes part of your capital loss carryover (discussed next). Free 2006 tax software Capital loss carryover. Free 2006 tax software   Generally, you have a capital loss carryover if either of the following situations applies to you. Free 2006 tax software Your net loss on Schedule D (Form 1040), is more than the yearly limit. Free 2006 tax software Your taxable income without your deduction for exemptions is less than zero. Free 2006 tax software 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. Free 2006 tax software    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). Free 2006 tax software 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. Free 2006 tax software These lower rates are called the maximum capital gains rates. Free 2006 tax software 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. Free 2006 tax software See Schedule D (Form 1040) and the Instructions for Schedule D (Form 1040). Free 2006 tax software Also see Publication 550. Free 2006 tax software Noncapital Assets Noncapital assets include property such as inventory and depreciable property used in a trade or business. Free 2006 tax software A list of properties that are not capital assets is provided in the Instructions for Schedule D (Form 1040). Free 2006 tax software Property held for sale in the ordinary course of your farm business. Free 2006 tax software   Property you hold mainly for sale to customers, such as livestock, poultry, livestock products, and crops, is a noncapital asset. Free 2006 tax software 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). Free 2006 tax software The treatment of this property is discussed in chapter 3. Free 2006 tax software Land and depreciable properties. Free 2006 tax software   Land and depreciable property you use in farming are not capital assets. Free 2006 tax software Noncapital assets also include livestock held for draft, breeding, dairy, or sporting purposes. Free 2006 tax software 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. Free 2006 tax software The sales of these business assets are reported on Form 4797. Free 2006 tax software See chapter 9 for more information. Free 2006 tax software 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. Free 2006 tax software Ordinary property or obligations are those that cannot produce capital gain or loss if sold or exchanged. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software A forward contract is generally similar to a futures contract except that the terms are not standardized and the contract is not exchange traded. Free 2006 tax software Businesses may enter into commodity futures contracts or forward contracts and may acquire options on commodity futures contracts as either of the following. Free 2006 tax software Hedging transactions. Free 2006 tax software Transactions that are not hedging transactions. Free 2006 tax software 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. Free 2006 tax software There is a limit on the amount of capital losses you can deduct each year. Free 2006 tax software Hedging transactions are not subject to the mark-to-market rules. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software The gain or loss on the termination of these hedges is generally ordinary gain or loss. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software Examples include fuel and feed. Free 2006 tax software If you have numerous transactions in the commodity futures market during the year, you must be able to show which transactions are hedging transactions. Free 2006 tax software Clearly identify a hedging transaction on your books and records before the end of the day you entered into the transaction. Free 2006 tax software It may be helpful to have separate brokerage accounts for your hedging and speculation transactions. Free 2006 tax software Retain the identification of each hedging transaction with your books and records. Free 2006 tax software Also, identify the item(s) or aggregate risk that is being hedged in your records. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software Accounting methods for hedging transactions. Free 2006 tax software   The accounting method you use for a hedging transaction must clearly reflect income. Free 2006 tax software 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. Free 2006 tax software There are requirements and limits on the method you can use for certain hedging transactions. Free 2006 tax software See Regulations section 1. Free 2006 tax software 446-4(e) for those requirements and limits. Free 2006 tax software   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. Free 2006 tax software Cash method. Free 2006 tax software Farm-price method. Free 2006 tax software Unit-livestock-price method. Free 2006 tax software   Once you adopt a method, you must apply it consistently and must have IRS approval before changing it. Free 2006 tax software   Your books and records must describe the accounting method used for each type of hedging transaction. Free 2006 tax software They must also contain any additional identification necessary to verify the application of the accounting method you used for the transaction. Free 2006 tax software You must make the additional identification no more than 35 days after entering into the hedging transaction. Free 2006 tax software Example of a hedging transaction. Free 2006 tax software   You file your income tax returns on the cash method. Free 2006 tax software On July 2 you anticipate a yield of 50,000 bushels of corn this year. Free 2006 tax software The December futures price is $5. Free 2006 tax software 75 a bushel, but there are indications that by harvest time the price will drop. Free 2006 tax software To protect yourself against a drop in the price, you enter into the following hedging transaction. Free 2006 tax software You sell ten December futures contracts of 5,000 bushels each for a total of 50,000 bushels of corn at $5. Free 2006 tax software 75 a bushel. Free 2006 tax software   The price did not drop as anticipated but rose to $6 a bushel. Free 2006 tax software In November, you sell your crop at a local elevator for $6 a bushel. Free 2006 tax software You also close out your futures position by buying ten December contracts for $6 a bushel. Free 2006 tax software You paid a broker's commission of $1,400 ($70 per contract) for the complete in and out position in the futures market. Free 2006 tax software   The result is that the price of corn rose 25 cents a bushel and the actual selling price is $6 a bushel. Free 2006 tax software Your loss on the hedge is 25 cents a bushel. Free 2006 tax software In effect, the net selling price of your corn is $5. Free 2006 tax software 75 a bushel. Free 2006 tax software   Report the results of your futures transactions and your sale of corn separately on Schedule F. Free 2006 tax software See the instructions for the 2013 Schedule F (Form 1040). Free 2006 tax software   The loss on your futures transactions is $13,900, figured as follows. Free 2006 tax software July 2 - Sold December corn futures (50,000 bu. Free 2006 tax software @$5. Free 2006 tax software 75) $287,500 November 6 - Bought December corn futures (50,000 bu. Free 2006 tax software @$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. Free 2006 tax software   The proceeds from your corn sale at the local elevator are $300,000 (50,000 bu. Free 2006 tax software × $6). Free 2006 tax software Report it on Schedule F, Part I, line 2, as income from sales of products you raised. Free 2006 tax software   Assume you were right and the price went down 25 cents a bushel. Free 2006 tax software In effect, you would still net $5. Free 2006 tax software 75 a bushel, figured as follows. Free 2006 tax software Sold cash corn, per bushel $5. Free 2006 tax software 50 Gain on hedge, per bushel . Free 2006 tax software 25 Net price, per bushel $5. Free 2006 tax software 75       The gain on your futures transactions would have been $11,100, figured as follows. Free 2006 tax software July 2 - Sold December corn futures (50,000 bu. Free 2006 tax software @$5. Free 2006 tax software 75) $287,500 November 6 - Bought December corn futures (50,000 bu. Free 2006 tax software @$5. Free 2006 tax software 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. Free 2006 tax software   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. Free 2006 tax software Livestock This part discusses the sale or exchange of livestock used in your farm business. Free 2006 tax software Gain or loss from the sale or exchange of this livestock may qualify as a section 1231 gain or loss. Free 2006 tax software However, any part of the gain that is ordinary income from the recapture of depreciation is not included as section 1231 gain. Free 2006 tax software See chapter 9 for more information on section 1231 gains and losses and the recapture of depreciation under section 1245. Free 2006 tax software The rules discussed here do not apply to the sale of livestock held primarily for sale to customers. Free 2006 tax software The sale of this livestock is reported on Schedule F. Free 2006 tax software See chapter 3. Free 2006 tax software Also, special rules apply to sales or exchanges caused by weather-related conditions. Free 2006 tax software See chapter 3. Free 2006 tax software Holding period. Free 2006 tax software   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). Free 2006 tax software Livestock. Free 2006 tax software   For section 1231 transactions, livestock includes cattle, hogs, horses, mules, donkeys, sheep, goats, fur-bearing animals, and other mammals. Free 2006 tax software Also, for section 1231 transactions, livestock does not include chickens, turkeys, pigeons, geese, emus, ostriches, rheas, or other birds, fish, frogs, reptiles, etc. Free 2006 tax software Livestock used in farm business. Free 2006 tax software   If livestock is held primarily for draft, breeding, dairy, or sporting purposes, it is used in your farm business. Free 2006 tax software The purpose for which an animal is held ordinarily is determined by a farmer's actual use of the animal. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software Example 1. Free 2006 tax software You discover an animal that you intend to use for breeding purposes is sterile. Free 2006 tax software You dispose of it within a reasonable time. Free 2006 tax software This animal was held for breeding purposes. Free 2006 tax software Example 2. Free 2006 tax software 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. Free 2006 tax software These young animals were held for breeding or dairy purposes. Free 2006 tax software 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. Free 2006 tax software See Sales Caused by Weather-Related Conditions in chapter 3. Free 2006 tax software Example 3. Free 2006 tax software You are in the business of raising hogs for slaughter. Free 2006 tax software Customarily, before selling your sows, you obtain a single litter of pigs that you will raise for sale. Free 2006 tax software You sell the brood sows after obtaining the litter. Free 2006 tax software 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. Free 2006 tax software Example 4. Free 2006 tax software You are in the business of raising registered cattle for sale to others for use as breeding cattle. Free 2006 tax software The business practice is to breed the cattle before sale to establish their fitness as registered breeding cattle. Free 2006 tax software Your use of the young cattle for breeding purposes is ordinary and necessary for selling them as registered breeding cattle. Free 2006 tax software Such use does not demonstrate that you are holding the cattle for breeding purposes. Free 2006 tax software 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. Free 2006 tax software The same applies to hog and sheep breeders. Free 2006 tax software Example 5. Free 2006 tax software You breed, raise, and train horses for racing purposes. Free 2006 tax software Every year you cull horses from your racing stable. Free 2006 tax software 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. Free 2006 tax software These horses are all considered held for sporting purposes. Free 2006 tax software Figuring gain or loss on the cash method. Free 2006 tax software   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. Free 2006 tax software Raised livestock. Free 2006 tax software   Gain on the sale of raised livestock is generally the gross sales price reduced by any expenses of the sale. Free 2006 tax software Expenses of sale include sales commissions, freight or hauling from farm to commission company, and other similar expenses. Free 2006 tax software The basis of the animal sold is zero if the costs of raising it were deducted during the years the animal was being raised. Free 2006 tax software However, see Uniform Capitalization Rules in chapter 6. Free 2006 tax software Purchased livestock. Free 2006 tax software   The gross sales price minus your adjusted basis and any expenses of sale is the gain or loss. Free 2006 tax software Example. Free 2006 tax software A farmer sold a breeding cow on January 8, 2013, for $1,250. Free 2006 tax software Expenses of the sale were $125. Free 2006 tax software The cow was bought July 2, 2009, for $1,300. Free 2006 tax software Depreciation (not less than the amount allowable) was $867. Free 2006 tax software 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. Free 2006 tax software Any gain realized on the disposition of converted wetland or highly erodible cropland is treated as ordinary income. Free 2006 tax software Any loss on the disposition of such property is treated as a long-term capital loss. Free 2006 tax software Converted wetland. Free 2006 tax software   This is generally land that was drained or filled to make the production of agricultural commodities possible. Free 2006 tax software 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. Free 2006 tax software   A wetland (before conversion) is land that meets all the following conditions. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software It supports, under normal circumstances, mostly plants that grow in saturated soil. Free 2006 tax software Highly erodible cropland. Free 2006 tax software   This is cropland subject to erosion that you used at any time for farming purposes other than grazing animals. Free 2006 tax software Generally, highly erodible cropland is land currently classified by the Department of Agriculture as Class IV, VI, VII, or VIII under its classification system. Free 2006 tax software 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. Free 2006 tax software Successor. Free 2006 tax software   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. Free 2006 tax software Timber Standing timber you held as investment property is a capital asset. Free 2006 tax software Gain or loss from its sale is capital gain or loss reported on Form 8949 and Schedule D (Form 1040), as applicable. Free 2006 tax software If you held the timber primarily for sale to customers, it is not a capital asset. Free 2006 tax software Gain or loss on its sale is ordinary business income or loss. Free 2006 tax software It is reported on Schedule F, line 1 (purchased timber) or line 2 (raised timber). Free 2006 tax software See the Instructions for Schedule F (Form 1040). Free 2006 tax software 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. Free 2006 tax software Amounts realized from these sales, and the expenses incurred in cutting, hauling, etc. Free 2006 tax software , are ordinary farm income and expenses reported on Schedule F. Free 2006 tax software 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. Free 2006 tax software Timber considered cut. Free 2006 tax software   Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. Free 2006 tax software This is true whether the timber is cut under contract or whether you cut it yourself. Free 2006 tax software Christmas trees. Free 2006 tax software   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. Free 2006 tax software They qualify for both rules discussed below. Free 2006 tax software Election to treat cutting as a sale or exchange. Free 2006 tax software   Under the general rule, the cutting of timber results in no gain or loss. Free 2006 tax software It is not until a sale or exchange occurs that gain or loss is realized. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software Any later sale results in ordinary business income or loss. Free 2006 tax software See the example below. Free 2006 tax software   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. Free 2006 tax software Making the election. Free 2006 tax software   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. Free 2006 tax software You do not have to make the election in the first year you cut the timber. Free 2006 tax software You can make it in any year to which the election would apply. Free 2006 tax software If the timber is partnership property, the election is made on the partnership return. Free 2006 tax software This election cannot be made on an amended return. Free 2006 tax software   Once you have made the election, it remains in effect for all later years unless you revoke it. Free 2006 tax software Election under section 631(a) may be revoked. Free 2006 tax software   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. Free 2006 tax software The prior election (and revocation) is disregarded for purposes of making a subsequent election. Free 2006 tax software See Form T (Timber), Forest Activities Schedule, for more information. Free 2006 tax software Gain or loss. Free 2006 tax software   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. Free 2006 tax software   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. Free 2006 tax software 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. Free 2006 tax software 611-3. Free 2006 tax software   Depletion of timber is discussed in chapter 7. Free 2006 tax software Example. Free 2006 tax software   In April 2013, you owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. Free 2006 tax software It had an adjusted basis for depletion of $40 per MBF. Free 2006 tax software You are a calendar year taxpayer. Free 2006 tax software On January 1, 2013, the timber had a FMV of $350 per MBF. Free 2006 tax software It was cut in April for sale. Free 2006 tax software On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. Free 2006 tax software You report the difference between the FMV and your adjusted basis for depletion as a gain. Free 2006 tax software 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. Free 2006 tax software You figure your gain as follows. Free 2006 tax software 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. Free 2006 tax software Outright sales of timber. Free 2006 tax software   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). Free 2006 tax software 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). Free 2006 tax software Cutting contract. Free 2006 tax software   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. Free 2006 tax software You are the owner of the timber. Free 2006 tax software You held the timber longer than 1 year before its disposal. Free 2006 tax software You kept an economic interest in the timber. Free 2006 tax software   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. Free 2006 tax software   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. Free 2006 tax software Include this amount on Form 4797 along with your other section 1231 gains or losses. Free 2006 tax software Date of disposal. Free 2006 tax software   The date of disposal is the date the timber is cut. Free 2006 tax software 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. Free 2006 tax software   This election applies only to figure the holding period of the timber. Free 2006 tax software It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). Free 2006 tax software   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. Free 2006 tax software The statement must identify the advance payments subject to the election and the contract under which they were made. Free 2006 tax software   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). Free 2006 tax software Attach the statement to the amended return and write “Filed pursuant to section 301. Free 2006 tax software 9100-2” at the top of the statement. Free 2006 tax software File the amended return at the same address the original return was filed. Free 2006 tax software Owner. Free 2006 tax software   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. Free 2006 tax software 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. Free 2006 tax software Tree stumps. Free 2006 tax software   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. Free 2006 tax software Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. Free 2006 tax software However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. Free 2006 tax software Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. Free 2006 tax software   See Form T (Timber) and its separate instructions for more information about dispositions of timber. Free 2006 tax software 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). Free 2006 tax software If you have a gain from the sale, you may be allowed to exclude the gain on your home. Free 2006 tax software For more information, see Publication 523, Selling Your Home. Free 2006 tax software The gain on the sale of your business property is taxable. Free 2006 tax software A loss on the sale of your business property to an unrelated person is deducted as an ordinary loss. Free 2006 tax software Your taxable gain or loss on the sale of property used in your farm business is taxed under the rules for section 1231 transactions. Free 2006 tax software See chapter 9. Free 2006 tax software Losses from personal-use property, other than casualty or theft losses, are not deductible. Free 2006 tax software 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. Free 2006 tax software See chapter 10 for information about installment sales. Free 2006 tax software When you sell your farm, the gain or loss on each asset is figured separately. Free 2006 tax software The tax treatment of gain or loss on the sale of each asset is determined by the classification of the asset. Free 2006 tax software Each of the assets sold must be classified as one of the following. Free 2006 tax software Capital asset held 1 year or less. Free 2006 tax software Capital asset held longer than 1 year. Free 2006 tax software 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 ). Free 2006 tax software 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). Free 2006 tax software 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. Free 2006 tax software Allocation of consideration paid for a farm. Free 2006 tax software   The sale of a farm for a lump sum is considered a sale of each individual asset rather than a single asset. Free 2006 tax software The residual method is required only if the group of assets sold constitutes a trade or business. Free 2006 tax software This method determines gain or loss from the transfer of each asset. Free 2006 tax software It also determines the buyer's basis in the business assets. Free 2006 tax software For more information, see Sale of a Business in chapter 2 of Publication 544. Free 2006 tax software Property used in farm operation. Free 2006 tax software   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. Free 2006 tax software Recognized gains and losses on business property must be reported on your return for the year of the sale. Free 2006 tax software If the property was held longer than 1 year, it may qualify for section 1231 treatment (see chapter 9). Free 2006 tax software Example. Free 2006 tax software You sell your farm, including your main home, which you have owned since December 2001. Free 2006 tax software You realize gain on the sale as follows. Free 2006 tax software   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. Free 2006 tax software 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. Free 2006 tax software Treat the balance as section 1231 gain. Free 2006 tax software 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 . Free 2006 tax software Partial sale. Free 2006 tax software   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. Free 2006 tax software You cannot wait until you have sold enough of the farm to recover its entire cost before reporting gain or loss. Free 2006 tax software For a detailed discussion on installment sales, see Publication 544. Free 2006 tax software Adjusted basis of the part sold. Free 2006 tax software   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. Free 2006 tax software , on the part sold. Free 2006 tax software 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 . Free 2006 tax software Example. Free 2006 tax software You bought a 600-acre farm for $700,000. Free 2006 tax software The farm included land and buildings. Free 2006 tax software The purchase contract designated $600,000 of the purchase price to the land. Free 2006 tax software You later sold 60 acres of land on which you had installed a fence. Free 2006 tax software 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. Free 2006 tax software Use this amount to determine your gain or loss on the sale of the 60 acres. Free 2006 tax software Assessed values for local property taxes. Free 2006 tax software   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. Free 2006 tax software Example. Free 2006 tax software Assume that in the preceding example there was no breakdown of the $700,000 purchase price between land and buildings. Free 2006 tax software 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. Free 2006 tax software The assessed valuation of the land is 3/4 (75%) of the total assessed valuation. Free 2006 tax software Multiply the $700,000 total purchase price by 75% to figure basis of $525,000 for the 600 acres of land. Free 2006 tax software The unadjusted basis of the 60 acres you sold would then be $52,500 (1/10 of $525,000). Free 2006 tax software Sale of your home. Free 2006 tax software   Your home is a capital asset and not property used in the trade or business of farming. Free 2006 tax software 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. Free 2006 tax software Your home includes the immediate surroundings and outbuildings relating to it that are not used for business purposes. Free 2006 tax software   If you use part of your home for business, you must make an appropriate adjustment to the basis for depreciation allowed or allowable. Free 2006 tax software For more information on basis, see chapter 6. Free 2006 tax software More information. Free 2006 tax software   For more information on selling your home, see Publication 523. Free 2006 tax software Gain from condemnation. Free 2006 tax software   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. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. Free 2006 tax software This is true even if you voluntarily return the property to the lender. Free 2006 tax software You may also realize ordinary income from cancellation of debt if the loan balance is more than the FMV of the property. Free 2006 tax software Buyer's (borrower's) gain or loss. Free 2006 tax software   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. Free 2006 tax software The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. Free 2006 tax software See Determining Gain or Loss , earlier. Free 2006 tax software Worksheet 8-1. Free 2006 tax software Worksheet for Foreclosures andRepossessions Part 1. Free 2006 tax software Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. Free 2006 tax software Complete this part only if you were personally liable for the debt. Free 2006 tax software Otherwise, go to Part 2. Free 2006 tax software   1. Free 2006 tax software 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. Free 2006 tax software Enter the Fair Market Value of the transferred property   3. Free 2006 tax software Ordinary income from cancellation of debt upon foreclosure or repossession. Free 2006 tax software * Subtract line 2 from line 1. Free 2006 tax software If zero or less, enter -0-   Part 2. Free 2006 tax software Figure your gain or loss from foreclosure or repossession. Free 2006 tax software   4. Free 2006 tax software If you completed Part 1, enter the smaller of line 1 or line 2. Free 2006 tax software If you did not complete Part 1, enter the outstanding debt immediately before the transfer of property   5. Free 2006 tax software Enter any proceeds you received from the foreclosure sale   6. Free 2006 tax software Add lines 4 and 5   7. Free 2006 tax software Enter the adjusted basis of the transferred property   8. Free 2006 tax software Gain or loss from foreclosure or repossession. Free 2006 tax software Subtract line 7  from line 6   * The income may not be taxable. Free 2006 tax software See Cancellation of debt . Free 2006 tax software    You can use Worksheet 8-1 to figure your gain or loss from a foreclosure or repossession. Free 2006 tax software Amount realized on a nonrecourse debt. Free 2006 tax software   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. Free 2006 tax software 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. Free 2006 tax software Example 1. Free 2006 tax software Ann paid $200,000 for land used in her farming business. Free 2006 tax software She paid $15,000 down and borrowed the remaining $185,000 from a bank. Free 2006 tax software Ann is not personally liable for the loan (nonrecourse debt), but pledges the land as security. Free 2006 tax software The bank foreclosed on the loan 2 years after Ann stopped making payments. Free 2006 tax software When the bank foreclosed, the balance due on the loan was $180,000 and the FMV of the land was $170,000. Free 2006 tax software The amount Ann realized on the foreclosure was $180,000, the debt canceled by the foreclosure. Free 2006 tax software She figures her gain or loss on Form 4797, Part I, by comparing the amount realized ($180,000) with her adjusted basis ($200,000). Free 2006 tax software She has a $20,000 deductible loss. Free 2006 tax software Example 2. Free 2006 tax software Assume the same facts as in Example 1 except the FMV of the land was $210,000. Free 2006 tax software The result is the same. Free 2006 tax software The amount Ann realized on the foreclosure is $180,000, the debt canceled by the foreclosure. Free 2006 tax software Because her adjusted basis is $200,000, she has a deductible loss of $20,000, which she reports on Form 4797, Part I. Free 2006 tax software Amount realized on a recourse debt. Free 2006 tax software   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. Free 2006 tax software   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. Free 2006 tax software The amount realized does not include the canceled debt that is your income from cancellation of debt. Free 2006 tax software See Cancellation of debt , later. Free 2006 tax software Example 3. Free 2006 tax software Assume the same facts as in Example 1 above except Ann is personally liable for the loan (recourse debt). Free 2006 tax software In this case, the amount she realizes is $170,000. Free 2006 tax software This is the canceled debt ($180,000) up to the FMV of the land ($170,000). Free 2006 tax software Ann figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($200,000). Free 2006 tax software She has a $30,000 deductible loss, which she figures on Form 4797, Part I. Free 2006 tax software She is also treated as receiving ordinary income from cancellation of debt. Free 2006 tax software That income is $10,000 ($180,000 − $170,000). Free 2006 tax software This is the part of the canceled debt not included in the amount realized. Free 2006 tax software She reports this as other income on Schedule F, line 8. Free 2006 tax software Seller's (lender's) gain or loss on repossession. Free 2006 tax software   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. Free 2006 tax software For more information, see Repossession in Publication 537, Installment Sales. Free 2006 tax software Cancellation of debt. Free 2006 tax software   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. Free 2006 tax software This income is separate from any gain or loss realized from the foreclosure or repossession. Free 2006 tax software Report the income from cancellation of a business debt on Schedule F, line 8. Free 2006 tax software Report the income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. Free 2006 tax software    You can use Worksheet 8-1 to figure your income from cancellation of debt. Free 2006 tax software   However, income from cancellation of debt is not taxed if any of the following apply. Free 2006 tax software The cancellation is intended as a gift. Free 2006 tax software The debt is qualified farm debt (see chapter 3). Free 2006 tax software The debt is qualified real property business debt (see chapter 5 of Publication 334). Free 2006 tax software You are insolvent or bankrupt (see  chapter 3). Free 2006 tax software The debt is qualified principal residence indebtedness (see chapter 3). Free 2006 tax software   Use Form 982 to report the income exclusion. Free 2006 tax software Abandonment The abandonment of property is a disposition of property. Free 2006 tax software 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. Free 2006 tax software Business or investment property. Free 2006 tax software   Loss from abandonment of business or investment property is deductible as a loss. Free 2006 tax software Loss from abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. Free 2006 tax software If your adjusted basis is more than the amount you realize (if any), then you have a loss. Free 2006 tax software If the amount you realize (if any) is more than your adjusted basis, then you have a gain. Free 2006 tax software This rule also applies to leasehold improvements the lessor made for the lessee. Free 2006 tax software 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 . Free 2006 tax software   If the abandoned property is secured by debt, special rules apply. Free 2006 tax software 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). Free 2006 tax software For more information, see chapter 3 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Free 2006 tax software The abandonment loss is deducted in the tax year in which the loss is sustained. Free 2006 tax software Report the loss on Form 4797, Part II, line 10. Free 2006 tax software Personal-use property. Free 2006 tax software   You cannot deduct any loss from abandonment of your home or other property held for personal use. Free 2006 tax software Canceled debt. Free 2006 tax software   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. Free 2006 tax software This income is separate from any loss realized from abandonment of the property. Free 2006 tax software Report income from cancellation of a debt related to a business or rental activity as business or rental income. Free 2006 tax software Report income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. Free 2006 tax software   However, income from cancellation of debt is not taxed in certain circumstances. Free 2006 tax software See Cancellation of debt earlier under Foreclosure or Repossession . Free 2006 tax software Forms 1099-A and 1099-C. Free 2006 tax software   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. Free 2006 tax software 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. Free 2006 tax software 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. Free 2006 tax software For foreclosures, repossessions, abandonments of property, and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. Free 2006 tax software Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Tax Relief for Victims of Severe Storms, Straight-line Winds and Flooding in Illinois

Updated 7/03/2013 to include Putnam and Warren counties.

Updated 5/31/2013 to include Brown, Calhoun, Clark,  Douglas, Henry, Pike, Whiteside, and Winnebago counties.

Updated 5/23/2013 to include Bureau, Crawford, Henderson, Knox, Livingston, Marshall, Mason, McDonough, Peoria, Rock Island, Schuyler, Stark, Tazewell and Woodford counties.

IL/KS/MO 2013-28, May. 14, 2013

CHICAGO — Victims of severe storms, straight-line winds, and flooding that began on April 16, 2013 in parts of Illinois may qualify for tax relief from the Internal Revenue Service.

The President has declared Brown, Bureau, Calhoun, Clark, Cook, Crawford, DeKalb, Douglas, DuPage, Fulton, Grundy, Henderson, Henry, Kane, Kendall, Knox, Lake, LaSalle, Livingston, Marshall, Mason, McDonough, McHenry, Peoria, Pike, Putnam, Rock Island, Schuyler, Stark, Tazewell,  Warren, Whiteside, Will, Winnebago and Woodford  counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after April 16, and on or before July 1, have been postponed to July 1, 2013. This includes the June 17 deadline for second quarter estimated tax payments.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after April 16, and on or before May 1, as long as the deposits are made by May 1, 2013.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until July 1 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after April 16 and on or before July 1.

The IRS also gives affected taxpayers until July 1 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after April 16 and on or before July 1.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after April 16 and on or before May 1provided the taxpayer makes these deposits by May 1.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Illinois/Severe Storms, Straight-line Winds, and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, irs.gov, or order them by calling 800-TAX-FORM (800-829-3676). The IRS toll-free number for general tax questions is 800-829-1040.

 

Related Information

Disaster Assistance and Emergency Relief for Individuals and Businesses

Recent IRS Disaster Relief Announcements

 

Page Last Reviewed or Updated: 03-Jul-2013

The Free 2006 Tax Software

Free 2006 tax software Publication 972 - Introductory Material Table of Contents Future Developments Reminder IntroductionOrdering forms and publications. Free 2006 tax software Tax questions. Free 2006 tax software Future Developments For the latest information about developments related to Publication 972, such as legislation enacted after it was published, go to www. Free 2006 tax software irs. Free 2006 tax software gov/pub972. Free 2006 tax software Reminder Photographs of missing children. Free 2006 tax software  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free 2006 tax software Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free 2006 tax software You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free 2006 tax software Introduction The purpose of this publication is: To figure the child tax credit you claim on Form 1040, line 51; Form 1040A, line 33; or Form 1040NR, line 48; and To figure the amount of earned income you enter on line 4a of Schedule 8812 (Form 1040A or 1040), Child Tax Credit. Free 2006 tax software This publication is intended primarily for individuals sent here by the instructions to Forms 1040, 1040A, or 1040NR, or Schedule 8812. Free 2006 tax software Even if you were not sent here by the instructions to one of the forms or the schedule, you can still choose to use this publication to figure your credit. Free 2006 tax software However, most individuals can use a simpler worksheet in their tax form instructions. Free 2006 tax software If you were sent here from your Form 1040, Form 1040A, or Form 1040NR instructions. Free 2006 tax software   Complete the Child Tax Credit Worksheet , later in this publication. Free 2006 tax software If you were sent here from your Schedule 8812 instructions. Free 2006 tax software   Complete the 1040 and 1040NR Filers — Earned Income Worksheet , later in this publication. Free 2006 tax software If you have not read your Form 1040, Form 1040A, or Form 1040NR instructions. Free 2006 tax software   Read the explanation of who must use this publication next. Free 2006 tax software If you find that you are not required to use this publication to figure your child tax credit, you can use the simpler worksheet in the Form 1040, Form 1040A, or Form 1040NR instructions to figure your credit. Free 2006 tax software Who must use this publication. Free 2006 tax software   If you answer “Yes” to either of the following questions, you must use this publication to figure your child tax credit. Free 2006 tax software Are you excluding income from Puerto Rico or filing any of the following forms? Form 2555 or 2555-EZ (relating to foreign earned income). Free 2006 tax software Form 4563 (exclusion of income for residents of American Samoa). Free 2006 tax software Are you claiming any of the following credits? Mortgage interest credit, Form 8396. Free 2006 tax software Adoption credit, Form 8839. Free 2006 tax software Residential energy efficient property credit, Form 5695, Part I. Free 2006 tax software District of Columbia first-time homebuyer credit, Form 8859. Free 2006 tax software Comments and suggestions. Free 2006 tax software   We welcome your comments about this publication and your suggestions for future editions. Free 2006 tax software   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free 2006 tax software NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free 2006 tax software Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free 2006 tax software   You can send your comments from www. Free 2006 tax software irs. Free 2006 tax software gov/formspubs/. Free 2006 tax software Click on “More Information” and then on “Comment on Tax Forms and Publications. Free 2006 tax software ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free 2006 tax software Ordering forms and publications. Free 2006 tax software   Visit www. Free 2006 tax software irs. Free 2006 tax software gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free 2006 tax software Internal Revenue Service 1201 N. Free 2006 tax software Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free 2006 tax software   If you have a tax question, check the information available on IRS. Free 2006 tax software gov or call 1-800-829-1040. Free 2006 tax software We cannot answer tax questions sent to either of the above addresses. Free 2006 tax software Prev  Up  Next   Home   More Online Publications