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H R Block 2011

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H R Block 2011

H r block 2011 8. H r block 2011   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. H r block 2011 Ordinary gain is taxed at the same rates as wages and interest income while capital gain is generally taxed at lower rates. H r block 2011 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. H r block 2011 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. H r block 2011 Sales and Exchanges If you sell, exchange, or otherwise dispose of your property, you usually have a gain or a loss. H r block 2011 This section explains certain rules for determining whether any gain you have is taxable, and whether any loss you have is deductible. H r block 2011 A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. H r block 2011 An exchange is a transfer of property for other property or services. H r block 2011 Determining Gain or Loss You usually realize a gain or loss when you sell or exchange property. H r block 2011 If the amount you realize from a sale or exchange of property is more than its adjusted basis, you will have a gain. H r block 2011 If the adjusted basis of the property is more than the amount you realize, you will have a loss. H r block 2011 Basis and adjusted basis. H r block 2011   The basis of property you buy is usually its cost. H r block 2011 The adjusted basis of property is basis plus certain additions and minus certain deductions. H r block 2011 See chapter 6 for more information about basis and adjusted basis. H r block 2011 Amount realized. H r block 2011   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. H r block 2011 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. H r block 2011   If the liabilities relate to an exchange of multiple properties, see Multiple Property Exchanges in chapter 1 of Publication 544. H r block 2011 Amount recognized. H r block 2011   Your gain or loss realized from a sale or exchange of certain property is usually a recognized gain or loss for tax purposes. H r block 2011 A recognized gain is a gain you must include in gross income and report on your income tax return. H r block 2011 A recognized loss is a loss you deduct from gross income. H r block 2011 However, your gain or loss realized from the exchange of certain property may not be recognized for tax purposes. H r block 2011 See Like-Kind Exchanges next. H r block 2011 Also, a loss from the disposition of property held for personal use is not deductible. H r block 2011 Like-Kind Exchanges Certain exchanges of property are not taxable. H r block 2011 This means any gain from the exchange is not recognized, and any loss cannot be deducted. H r block 2011 Your gain or loss will not be recognized until you sell or otherwise dispose of the property you receive. H r block 2011 The exchange of property for the same kind of property is the most common type of nontaxable exchange. H r block 2011 To qualify for treatment as a like-kind exchange, the property traded and the property received must be both of the following. H r block 2011 Qualifying property. H r block 2011 Like-kind property. H r block 2011 These two requirements are discussed later. H r block 2011 Multiple-party transactions. H r block 2011   The like-kind exchange rules also apply to property exchanges that involve three and four-party transactions. H r block 2011 Any part of these multiple-party transactions can qualify as a like-kind exchange if it meets all the requirements described in this section. H r block 2011 Receipt of title from third party. H r block 2011   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. H r block 2011 Basis of property received. H r block 2011   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. H r block 2011 See chapter 6 for more information. H r block 2011 Money paid. H r block 2011   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. H r block 2011 The basis of the property received is the basis of the property given up, increased by the money paid. H r block 2011 Example. H r block 2011 You traded an old tractor with an adjusted basis of $15,000 for a new one. H r block 2011 The new tractor costs $300,000. H r block 2011 You were allowed $80,000 for the old tractor and paid $220,000 cash. H r block 2011 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). H r block 2011 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. H r block 2011 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. H r block 2011 Reporting the exchange. H r block 2011   Report the exchange of like-kind property, even though no gain or loss is recognized, on Form 8824, Like-Kind Exchanges. H r block 2011 The Instructions for Form 8824 explain how to report the details of the exchange. H r block 2011   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. H r block 2011 You may also have to report the recognized gain as ordinary income because of depreciation recapture on Form 4797. H r block 2011 See chapter 9 for more information. H r block 2011 Qualifying property. H r block 2011   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. H r block 2011 Machinery, buildings, land, trucks, breeding livestock, rental houses, and certain mutual ditch, reservoir, or irrigation company stock are examples of property that may qualify. H r block 2011 Nonqualifying property. H r block 2011   The rules for like-kind exchanges do not apply to exchanges of the following property. H r block 2011 Property you use for personal purposes, such as your home and family car. H r block 2011 Stock in trade or other property held primarily for sale, such as crops and produce. H r block 2011 Stocks, bonds, or notes. H r block 2011 However, see Qualifying property above. H r block 2011 Other securities or evidences of indebtedness, such as accounts receivable. H r block 2011 Partnership interests. H r block 2011 However, you may have a nontaxable exchange under other rules. H r block 2011 See Other Nontaxable Exchanges in chapter 1 of Publication 544. H r block 2011 Like-kind property. H r block 2011   To qualify as a nontaxable exchange, the properties exchanged must be of like kind. H r block 2011 Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. H r block 2011 Generally, real property exchanged for real property qualifies as an exchange of like-kind property. H r block 2011 For example, an exchange of city property for farm property or improved property for unimproved property is a like-kind exchange. H r block 2011   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. H r block 2011 An exchange of a tractor for acreage, however, is not an exchange of like-kind property. H r block 2011 The exchange of livestock of one sex for livestock of the other sex is not a like-kind exchange. H r block 2011 For example, the exchange of a bull for a cow is not a like-kind exchange. H r block 2011 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. H r block 2011    Note. H r block 2011 Whether you engaged in a like-kind exchange depends on an analysis of each asset involved in the exchange. H r block 2011 Personal property. H r block 2011   Depreciable tangible personal property can be either like kind or like class to qualify for nontaxable exchange treatment. H r block 2011 Like-class properties are depreciable tangible personal properties within the same General Asset Class or Product Class. H r block 2011 Property classified in any General Asset Class may not be classified within a Product Class. H r block 2011 Assets that are not in the same class will qualify as like-kind property if they are of the same nature or character. H r block 2011 General Asset Classes. H r block 2011   General Asset Classes describe the types of property frequently used in many businesses. H r block 2011 They include, but are not limited to, the following property. H r block 2011 Office furniture, fixtures, and equipment (asset class 00. H r block 2011 11). H r block 2011 Information systems, such as computers and peripheral equipment (asset class 00. H r block 2011 12). H r block 2011 Data handling equipment except computers (asset class 00. H r block 2011 13). H r block 2011 Automobiles and taxis (asset class 00. H r block 2011 22). H r block 2011 Light general purpose trucks (asset class 00. H r block 2011 241). H r block 2011 Heavy general purpose trucks (asset class 00. H r block 2011 242). H r block 2011 Tractor units for use over-the-road (asset class 00. H r block 2011 26). H r block 2011 Trailers and trailer-mounted containers (asset class 00. H r block 2011 27). H r block 2011 Industrial steam and electric generation and/or distribution systems (asset class 00. H r block 2011 4). H r block 2011 Product Classes. H r block 2011   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). H r block 2011 The latest version of the manual can be accessed at www. H r block 2011 census. H r block 2011 gov/eos/www/naics/. H r block 2011 Copies of the printed manual may be purchased from the National Technical Information Service (NTIS) at  www. H r block 2011 ntis. H r block 2011 gov/products/naics. H r block 2011 aspx or by calling 1-800-553-NTIS (1-800-553-6847) or (703) 605-6000. H r block 2011 A CD-ROM version with search and retrieval software is also available from NTIS. H r block 2011    NAICS class 333111, Farm Machinery and Equipment Manufacturing, includes most machinery and equipment used in a farming business. H r block 2011 Partially nontaxable exchange. H r block 2011   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. H r block 2011 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. H r block 2011 A loss is not deductible. H r block 2011 Example 1. H r block 2011 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. H r block 2011 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). H r block 2011 However, only $10,000, the cash received, is recognized (included in income). H r block 2011 Example 2. H r block 2011 Assume the same facts as in Example 1, except that, instead of money, you received a tractor with a FMV of $10,000. H r block 2011 Your recognized gain is still limited to $10,000, the value of the tractor (the unlike property). H r block 2011 Example 3. H r block 2011 Assume in Example 1 that the FMV of the land you received was only $15,000. H r block 2011 Your $5,000 loss is not recognized. H r block 2011 Unlike property given up. H r block 2011   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. H r block 2011 The gain or loss is the difference between the FMV of the unlike property and the adjusted basis of the unlike property. H r block 2011 Like-kind exchanges between related persons. H r block 2011   Special rules apply to like-kind exchanges between related persons. H r block 2011 These rules affect both direct and indirect exchanges. H r block 2011 Under these rules, if either person disposes of the property within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. H r block 2011 The gain or loss on the original exchange must be recognized as of the date of the later disposition. H r block 2011 The 2-year holding period begins on the date of the last transfer of property that was part of the like-kind exchange. H r block 2011 Related persons. H r block 2011   Under these rules, related persons include, for example, you and a member of your family (spouse, brother, sister, parent, child, etc. H r block 2011 ), 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. H r block 2011   For the complete list of related persons, see Related persons in chapter 2 of Publication 544. H r block 2011 Example. H r block 2011 You used a grey pickup truck in your farming business. H r block 2011 Your sister used a red pickup truck in her landscaping business. H r block 2011 In December 2012, you exchanged your grey pickup truck, plus $200, for your sister's red pickup truck. H r block 2011 At that time, the FMV of the grey pickup truck was $7,000 and its adjusted basis was $6,000. H r block 2011 The FMV of the red pickup truck was $7,200 and its adjusted basis was $1,000. H r block 2011 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). H r block 2011 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). H r block 2011 However, because this was a like-kind exchange, you recognized no gain. H r block 2011 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). H r block 2011 She recognized gain only to the extent of the money she received, $200. H r block 2011 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). H r block 2011 In 2013, you sold the red pickup truck to a third party for $7,000. H r block 2011 Because you sold it within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. H r block 2011 On your tax return for 2013, you must report your $1,000 gain on the 2012 exchange. H r block 2011 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). H r block 2011 In addition, your sister must report on her tax return for 2013 the $6,000 balance of her gain on the 2012 exchange. H r block 2011 Her adjusted basis in the grey pickup truck is increased to $7,000 (its $1,000 basis plus the $6,000 gain recognized). H r block 2011 Exceptions to the rules for related persons. H r block 2011   The following property dispositions are excluded from these rules. H r block 2011 Dispositions due to the death of either related person. H r block 2011 Involuntary conversions. H r block 2011 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. H r block 2011 Multiple property exchanges. H r block 2011   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. H r block 2011 However, for exchanges of multiple properties, you do not make a property-by-property comparison if you do either of the following. H r block 2011 Transfer and receive properties in two or more exchange groups. H r block 2011 Transfer or receive more than one property within a single exchange group. H r block 2011   For more information, see Multiple Property Exchanges in chapter 1 of Publication 544. H r block 2011 Deferred exchange. H r block 2011   A deferred exchange for like-kind property may qualify for nonrecognition of gain or loss. H r block 2011 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. H r block 2011 The property you receive is replacement property. H r block 2011 The transaction must be an exchange of property for property rather than a transfer of property for money used to buy replacement property. H r block 2011 In addition, the replacement property will not be treated as like-kind property unless certain identification and receipt requirements are met. H r block 2011   For more information see Deferred Exchanges in chapter 1 of Publication 544. H r block 2011 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. H r block 2011 This rule does not apply if the recipient is a nonresident alien. H r block 2011 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. H r block 2011 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. H r block 2011 The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. H r block 2011 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. H r block 2011 This rule applies for determining loss as well as gain. H r block 2011 Any gain recognized on a transfer in trust increases the basis. H r block 2011 For more information on transfers of property incident to divorce, see Property Settlements in Publication 504, Divorced or Separated Individuals. H r block 2011 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). H r block 2011 You may also have a capital gain if your section 1231 transactions result in a net gain. H r block 2011 See Section 1231 Gains and Losses in  chapter 9. H r block 2011 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). H r block 2011 Your net capital gains may be taxed at a lower tax rate than ordinary income. H r block 2011 See Capital Gains Tax Rates , later. H r block 2011 Your deduction for a net capital loss may be limited. H r block 2011 See Treatment of Capital Losses , later. H r block 2011 Capital Assets Almost everything you own and use for personal purposes or investment is a capital asset. H r block 2011 The following items are examples of capital assets. H r block 2011 A home owned and occupied by you and your family. H r block 2011 Household furnishings. H r block 2011 A car used for pleasure. H r block 2011 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. H r block 2011 Stocks and bonds. H r block 2011 However, there are special rules for gains on qualified small business stock. H r block 2011 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. H r block 2011 Personal-use property. H r block 2011   Gain from a sale or exchange of personal-use property is a capital gain and is taxable. H r block 2011 Loss from the sale or exchange of personal-use property is not deductible. H r block 2011 You can deduct a loss relating to personal-use property only if it results from a casualty or theft. H r block 2011 For information on casualties and thefts, see chapter 11. H r block 2011 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. H r block 2011 The time you own an asset before disposing of it is the holding period. H r block 2011 If you hold a capital asset 1 year or less, the gain or loss resulting from its disposition is short term. H r block 2011 Report it in Part I of Schedule D (Form 1040). H r block 2011 If you hold a capital asset longer than 1 year, the gain or loss resulting from its disposition is long term. H r block 2011 Report it in Part II of Schedule D (Form 1040). H r block 2011 Holding period. H r block 2011   To figure if you held property longer than 1 year, start counting on the day after the day you acquired the property. H r block 2011 The day you disposed of the property is part of your holding period. H r block 2011 Example. H r block 2011 If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. H r block 2011 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. H r block 2011 Inherited property. H r block 2011   If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it. H r block 2011 This rule does not apply to livestock used in a farm business. H r block 2011 See Holding period under Livestock , later. H r block 2011 Nonbusiness bad debt. H r block 2011   A nonbusiness bad debt is a short-term capital loss, deductible in the year the debt becomes worthless. H r block 2011 See chapter 4 of Publication 550. H r block 2011 Nontaxable exchange. H r block 2011   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. H r block 2011 That is, it begins on the same day as your holding period for the old property. H r block 2011 Gift. H r block 2011   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. H r block 2011 Real property. H r block 2011   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. H r block 2011   However, taking possession of real property under an option agreement is not enough to start the holding period. H r block 2011 The holding period cannot start until there is an actual contract of sale. H r block 2011 The holding period of the seller cannot end before that time. H r block 2011 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. H r block 2011 Net short-term capital gain or loss. H r block 2011   Combine your short-term capital gains and losses. H r block 2011 Do this by adding all of your short-term capital gains. H r block 2011 Then add all of your short-term capital losses. H r block 2011 Subtract the lesser total from the greater. H r block 2011 The difference is your net short-term capital gain or loss. H r block 2011 Net long-term capital gain or loss. H r block 2011   Follow the same steps to combine your long-term capital gains and losses. H r block 2011 The result is your net long-term capital gain or loss. H r block 2011 Net gain. H r block 2011   If the total of your capital gains is more than the total of your capital losses, the difference is taxable. H r block 2011 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. H r block 2011 See Capital Gains Tax Rates , later. H r block 2011 Net loss. H r block 2011   If the total of your capital losses is more than the total of your capital gains, the difference is deductible. H r block 2011 But there are limits on how much loss you can deduct and when you can deduct it. H r block 2011 See Treatment of Capital Losses next. H r block 2011 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. H r block 2011 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). H r block 2011 If your other income is low, you may not be able to use the full $3,000. H r block 2011 The part of the $3,000 you cannot use becomes part of your capital loss carryover (discussed next). H r block 2011 Capital loss carryover. H r block 2011   Generally, you have a capital loss carryover if either of the following situations applies to you. H r block 2011 Your net loss on Schedule D (Form 1040), is more than the yearly limit. H r block 2011 Your taxable income without your deduction for exemptions is less than zero. H r block 2011 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. H r block 2011    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). H r block 2011 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. H r block 2011 These lower rates are called the maximum capital gains rates. H r block 2011 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. H r block 2011 See Schedule D (Form 1040) and the Instructions for Schedule D (Form 1040). H r block 2011 Also see Publication 550. H r block 2011 Noncapital Assets Noncapital assets include property such as inventory and depreciable property used in a trade or business. H r block 2011 A list of properties that are not capital assets is provided in the Instructions for Schedule D (Form 1040). H r block 2011 Property held for sale in the ordinary course of your farm business. H r block 2011   Property you hold mainly for sale to customers, such as livestock, poultry, livestock products, and crops, is a noncapital asset. H r block 2011 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). H r block 2011 The treatment of this property is discussed in chapter 3. H r block 2011 Land and depreciable properties. H r block 2011   Land and depreciable property you use in farming are not capital assets. H r block 2011 Noncapital assets also include livestock held for draft, breeding, dairy, or sporting purposes. H r block 2011 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. H r block 2011 The sales of these business assets are reported on Form 4797. H r block 2011 See chapter 9 for more information. H r block 2011 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. H r block 2011 Ordinary property or obligations are those that cannot produce capital gain or loss if sold or exchanged. H r block 2011 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. H r block 2011 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. H r block 2011 A forward contract is generally similar to a futures contract except that the terms are not standardized and the contract is not exchange traded. H r block 2011 Businesses may enter into commodity futures contracts or forward contracts and may acquire options on commodity futures contracts as either of the following. H r block 2011 Hedging transactions. H r block 2011 Transactions that are not hedging transactions. H r block 2011 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. H r block 2011 There is a limit on the amount of capital losses you can deduct each year. H r block 2011 Hedging transactions are not subject to the mark-to-market rules. H r block 2011 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. H r block 2011 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. H r block 2011 The gain or loss on the termination of these hedges is generally ordinary gain or loss. H r block 2011 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. H r block 2011 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. H r block 2011 Examples include fuel and feed. H r block 2011 If you have numerous transactions in the commodity futures market during the year, you must be able to show which transactions are hedging transactions. H r block 2011 Clearly identify a hedging transaction on your books and records before the end of the day you entered into the transaction. H r block 2011 It may be helpful to have separate brokerage accounts for your hedging and speculation transactions. H r block 2011 Retain the identification of each hedging transaction with your books and records. H r block 2011 Also, identify the item(s) or aggregate risk that is being hedged in your records. H r block 2011 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. H r block 2011 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. H r block 2011 Accounting methods for hedging transactions. H r block 2011   The accounting method you use for a hedging transaction must clearly reflect income. H r block 2011 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. H r block 2011 There are requirements and limits on the method you can use for certain hedging transactions. H r block 2011 See Regulations section 1. H r block 2011 446-4(e) for those requirements and limits. H r block 2011   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. H r block 2011 Cash method. H r block 2011 Farm-price method. H r block 2011 Unit-livestock-price method. H r block 2011   Once you adopt a method, you must apply it consistently and must have IRS approval before changing it. H r block 2011   Your books and records must describe the accounting method used for each type of hedging transaction. H r block 2011 They must also contain any additional identification necessary to verify the application of the accounting method you used for the transaction. H r block 2011 You must make the additional identification no more than 35 days after entering into the hedging transaction. H r block 2011 Example of a hedging transaction. H r block 2011   You file your income tax returns on the cash method. H r block 2011 On July 2 you anticipate a yield of 50,000 bushels of corn this year. H r block 2011 The December futures price is $5. H r block 2011 75 a bushel, but there are indications that by harvest time the price will drop. H r block 2011 To protect yourself against a drop in the price, you enter into the following hedging transaction. H r block 2011 You sell ten December futures contracts of 5,000 bushels each for a total of 50,000 bushels of corn at $5. H r block 2011 75 a bushel. H r block 2011   The price did not drop as anticipated but rose to $6 a bushel. H r block 2011 In November, you sell your crop at a local elevator for $6 a bushel. H r block 2011 You also close out your futures position by buying ten December contracts for $6 a bushel. H r block 2011 You paid a broker's commission of $1,400 ($70 per contract) for the complete in and out position in the futures market. H r block 2011   The result is that the price of corn rose 25 cents a bushel and the actual selling price is $6 a bushel. H r block 2011 Your loss on the hedge is 25 cents a bushel. H r block 2011 In effect, the net selling price of your corn is $5. H r block 2011 75 a bushel. H r block 2011   Report the results of your futures transactions and your sale of corn separately on Schedule F. H r block 2011 See the instructions for the 2013 Schedule F (Form 1040). H r block 2011   The loss on your futures transactions is $13,900, figured as follows. H r block 2011 July 2 - Sold December corn futures (50,000 bu. H r block 2011 @$5. H r block 2011 75) $287,500 November 6 - Bought December corn futures (50,000 bu. H r block 2011 @$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. H r block 2011   The proceeds from your corn sale at the local elevator are $300,000 (50,000 bu. H r block 2011 × $6). H r block 2011 Report it on Schedule F, Part I, line 2, as income from sales of products you raised. H r block 2011   Assume you were right and the price went down 25 cents a bushel. H r block 2011 In effect, you would still net $5. H r block 2011 75 a bushel, figured as follows. H r block 2011 Sold cash corn, per bushel $5. H r block 2011 50 Gain on hedge, per bushel . H r block 2011 25 Net price, per bushel $5. H r block 2011 75       The gain on your futures transactions would have been $11,100, figured as follows. H r block 2011 July 2 - Sold December corn futures (50,000 bu. H r block 2011 @$5. H r block 2011 75) $287,500 November 6 - Bought December corn futures (50,000 bu. H r block 2011 @$5. H r block 2011 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. H r block 2011   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. H r block 2011 Livestock This part discusses the sale or exchange of livestock used in your farm business. H r block 2011 Gain or loss from the sale or exchange of this livestock may qualify as a section 1231 gain or loss. H r block 2011 However, any part of the gain that is ordinary income from the recapture of depreciation is not included as section 1231 gain. H r block 2011 See chapter 9 for more information on section 1231 gains and losses and the recapture of depreciation under section 1245. H r block 2011 The rules discussed here do not apply to the sale of livestock held primarily for sale to customers. H r block 2011 The sale of this livestock is reported on Schedule F. H r block 2011 See chapter 3. H r block 2011 Also, special rules apply to sales or exchanges caused by weather-related conditions. H r block 2011 See chapter 3. H r block 2011 Holding period. H r block 2011   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). H r block 2011 Livestock. H r block 2011   For section 1231 transactions, livestock includes cattle, hogs, horses, mules, donkeys, sheep, goats, fur-bearing animals, and other mammals. H r block 2011 Also, for section 1231 transactions, livestock does not include chickens, turkeys, pigeons, geese, emus, ostriches, rheas, or other birds, fish, frogs, reptiles, etc. H r block 2011 Livestock used in farm business. H r block 2011   If livestock is held primarily for draft, breeding, dairy, or sporting purposes, it is used in your farm business. H r block 2011 The purpose for which an animal is held ordinarily is determined by a farmer's actual use of the animal. H r block 2011 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. H r block 2011 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. H r block 2011 Example 1. H r block 2011 You discover an animal that you intend to use for breeding purposes is sterile. H r block 2011 You dispose of it within a reasonable time. H r block 2011 This animal was held for breeding purposes. H r block 2011 Example 2. H r block 2011 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. H r block 2011 These young animals were held for breeding or dairy purposes. H r block 2011 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. H r block 2011 See Sales Caused by Weather-Related Conditions in chapter 3. H r block 2011 Example 3. H r block 2011 You are in the business of raising hogs for slaughter. H r block 2011 Customarily, before selling your sows, you obtain a single litter of pigs that you will raise for sale. H r block 2011 You sell the brood sows after obtaining the litter. H r block 2011 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. H r block 2011 Example 4. H r block 2011 You are in the business of raising registered cattle for sale to others for use as breeding cattle. H r block 2011 The business practice is to breed the cattle before sale to establish their fitness as registered breeding cattle. H r block 2011 Your use of the young cattle for breeding purposes is ordinary and necessary for selling them as registered breeding cattle. H r block 2011 Such use does not demonstrate that you are holding the cattle for breeding purposes. H r block 2011 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. H r block 2011 The same applies to hog and sheep breeders. H r block 2011 Example 5. H r block 2011 You breed, raise, and train horses for racing purposes. H r block 2011 Every year you cull horses from your racing stable. H r block 2011 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. H r block 2011 These horses are all considered held for sporting purposes. H r block 2011 Figuring gain or loss on the cash method. H r block 2011   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. H r block 2011 Raised livestock. H r block 2011   Gain on the sale of raised livestock is generally the gross sales price reduced by any expenses of the sale. H r block 2011 Expenses of sale include sales commissions, freight or hauling from farm to commission company, and other similar expenses. H r block 2011 The basis of the animal sold is zero if the costs of raising it were deducted during the years the animal was being raised. H r block 2011 However, see Uniform Capitalization Rules in chapter 6. H r block 2011 Purchased livestock. H r block 2011   The gross sales price minus your adjusted basis and any expenses of sale is the gain or loss. H r block 2011 Example. H r block 2011 A farmer sold a breeding cow on January 8, 2013, for $1,250. H r block 2011 Expenses of the sale were $125. H r block 2011 The cow was bought July 2, 2009, for $1,300. H r block 2011 Depreciation (not less than the amount allowable) was $867. H r block 2011 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. H r block 2011 Any gain realized on the disposition of converted wetland or highly erodible cropland is treated as ordinary income. H r block 2011 Any loss on the disposition of such property is treated as a long-term capital loss. H r block 2011 Converted wetland. H r block 2011   This is generally land that was drained or filled to make the production of agricultural commodities possible. H r block 2011 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. H r block 2011   A wetland (before conversion) is land that meets all the following conditions. H r block 2011 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. H r block 2011 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. H r block 2011 It supports, under normal circumstances, mostly plants that grow in saturated soil. H r block 2011 Highly erodible cropland. H r block 2011   This is cropland subject to erosion that you used at any time for farming purposes other than grazing animals. H r block 2011 Generally, highly erodible cropland is land currently classified by the Department of Agriculture as Class IV, VI, VII, or VIII under its classification system. H r block 2011 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. H r block 2011 Successor. H r block 2011   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. H r block 2011 Timber Standing timber you held as investment property is a capital asset. H r block 2011 Gain or loss from its sale is capital gain or loss reported on Form 8949 and Schedule D (Form 1040), as applicable. H r block 2011 If you held the timber primarily for sale to customers, it is not a capital asset. H r block 2011 Gain or loss on its sale is ordinary business income or loss. H r block 2011 It is reported on Schedule F, line 1 (purchased timber) or line 2 (raised timber). H r block 2011 See the Instructions for Schedule F (Form 1040). H r block 2011 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. H r block 2011 Amounts realized from these sales, and the expenses incurred in cutting, hauling, etc. H r block 2011 , are ordinary farm income and expenses reported on Schedule F. H r block 2011 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. H r block 2011 Timber considered cut. H r block 2011   Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. H r block 2011 This is true whether the timber is cut under contract or whether you cut it yourself. H r block 2011 Christmas trees. H r block 2011   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. H r block 2011 They qualify for both rules discussed below. H r block 2011 Election to treat cutting as a sale or exchange. H r block 2011   Under the general rule, the cutting of timber results in no gain or loss. H r block 2011 It is not until a sale or exchange occurs that gain or loss is realized. H r block 2011 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. H r block 2011 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. H r block 2011 Any later sale results in ordinary business income or loss. H r block 2011 See the example below. H r block 2011   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. H r block 2011 Making the election. H r block 2011   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. H r block 2011 You do not have to make the election in the first year you cut the timber. H r block 2011 You can make it in any year to which the election would apply. H r block 2011 If the timber is partnership property, the election is made on the partnership return. H r block 2011 This election cannot be made on an amended return. H r block 2011   Once you have made the election, it remains in effect for all later years unless you revoke it. H r block 2011 Election under section 631(a) may be revoked. H r block 2011   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. H r block 2011 The prior election (and revocation) is disregarded for purposes of making a subsequent election. H r block 2011 See Form T (Timber), Forest Activities Schedule, for more information. H r block 2011 Gain or loss. H r block 2011   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. H r block 2011   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. H r block 2011 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. H r block 2011 611-3. H r block 2011   Depletion of timber is discussed in chapter 7. H r block 2011 Example. H r block 2011   In April 2013, you owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. H r block 2011 It had an adjusted basis for depletion of $40 per MBF. H r block 2011 You are a calendar year taxpayer. H r block 2011 On January 1, 2013, the timber had a FMV of $350 per MBF. H r block 2011 It was cut in April for sale. H r block 2011 On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. H r block 2011 You report the difference between the FMV and your adjusted basis for depletion as a gain. H r block 2011 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. H r block 2011 You figure your gain as follows. H r block 2011 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. H r block 2011 Outright sales of timber. H r block 2011   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). H r block 2011 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). H r block 2011 Cutting contract. H r block 2011   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. H r block 2011 You are the owner of the timber. H r block 2011 You held the timber longer than 1 year before its disposal. H r block 2011 You kept an economic interest in the timber. H r block 2011   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. H r block 2011   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. H r block 2011 Include this amount on Form 4797 along with your other section 1231 gains or losses. H r block 2011 Date of disposal. H r block 2011   The date of disposal is the date the timber is cut. H r block 2011 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. H r block 2011   This election applies only to figure the holding period of the timber. H r block 2011 It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). H r block 2011   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. H r block 2011 The statement must identify the advance payments subject to the election and the contract under which they were made. H r block 2011   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). H r block 2011 Attach the statement to the amended return and write “Filed pursuant to section 301. H r block 2011 9100-2” at the top of the statement. H r block 2011 File the amended return at the same address the original return was filed. H r block 2011 Owner. H r block 2011   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. H r block 2011 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. H r block 2011 Tree stumps. H r block 2011   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. H r block 2011 Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. H r block 2011 However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. H r block 2011 Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. H r block 2011   See Form T (Timber) and its separate instructions for more information about dispositions of timber. H r block 2011 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). H r block 2011 If you have a gain from the sale, you may be allowed to exclude the gain on your home. H r block 2011 For more information, see Publication 523, Selling Your Home. H r block 2011 The gain on the sale of your business property is taxable. H r block 2011 A loss on the sale of your business property to an unrelated person is deducted as an ordinary loss. H r block 2011 Your taxable gain or loss on the sale of property used in your farm business is taxed under the rules for section 1231 transactions. H r block 2011 See chapter 9. H r block 2011 Losses from personal-use property, other than casualty or theft losses, are not deductible. H r block 2011 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. H r block 2011 See chapter 10 for information about installment sales. H r block 2011 When you sell your farm, the gain or loss on each asset is figured separately. H r block 2011 The tax treatment of gain or loss on the sale of each asset is determined by the classification of the asset. H r block 2011 Each of the assets sold must be classified as one of the following. H r block 2011 Capital asset held 1 year or less. H r block 2011 Capital asset held longer than 1 year. H r block 2011 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 ). H r block 2011 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). H r block 2011 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. H r block 2011 Allocation of consideration paid for a farm. H r block 2011   The sale of a farm for a lump sum is considered a sale of each individual asset rather than a single asset. H r block 2011 The residual method is required only if the group of assets sold constitutes a trade or business. H r block 2011 This method determines gain or loss from the transfer of each asset. H r block 2011 It also determines the buyer's basis in the business assets. H r block 2011 For more information, see Sale of a Business in chapter 2 of Publication 544. H r block 2011 Property used in farm operation. H r block 2011   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. H r block 2011 Recognized gains and losses on business property must be reported on your return for the year of the sale. H r block 2011 If the property was held longer than 1 year, it may qualify for section 1231 treatment (see chapter 9). H r block 2011 Example. H r block 2011 You sell your farm, including your main home, which you have owned since December 2001. H r block 2011 You realize gain on the sale as follows. H r block 2011   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. H r block 2011 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. H r block 2011 Treat the balance as section 1231 gain. H r block 2011 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 . H r block 2011 Partial sale. H r block 2011   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. H r block 2011 You cannot wait until you have sold enough of the farm to recover its entire cost before reporting gain or loss. H r block 2011 For a detailed discussion on installment sales, see Publication 544. H r block 2011 Adjusted basis of the part sold. H r block 2011   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. H r block 2011 , on the part sold. H r block 2011 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 . H r block 2011 Example. H r block 2011 You bought a 600-acre farm for $700,000. H r block 2011 The farm included land and buildings. H r block 2011 The purchase contract designated $600,000 of the purchase price to the land. H r block 2011 You later sold 60 acres of land on which you had installed a fence. H r block 2011 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. H r block 2011 Use this amount to determine your gain or loss on the sale of the 60 acres. H r block 2011 Assessed values for local property taxes. H r block 2011   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. H r block 2011 Example. H r block 2011 Assume that in the preceding example there was no breakdown of the $700,000 purchase price between land and buildings. H r block 2011 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. H r block 2011 The assessed valuation of the land is 3/4 (75%) of the total assessed valuation. H r block 2011 Multiply the $700,000 total purchase price by 75% to figure basis of $525,000 for the 600 acres of land. H r block 2011 The unadjusted basis of the 60 acres you sold would then be $52,500 (1/10 of $525,000). H r block 2011 Sale of your home. H r block 2011   Your home is a capital asset and not property used in the trade or business of farming. H r block 2011 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. H r block 2011 Your home includes the immediate surroundings and outbuildings relating to it that are not used for business purposes. H r block 2011   If you use part of your home for business, you must make an appropriate adjustment to the basis for depreciation allowed or allowable. H r block 2011 For more information on basis, see chapter 6. H r block 2011 More information. H r block 2011   For more information on selling your home, see Publication 523. H r block 2011 Gain from condemnation. H r block 2011   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. H r block 2011 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. H r block 2011 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. H r block 2011 The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. H r block 2011 This is true even if you voluntarily return the property to the lender. H r block 2011 You may also realize ordinary income from cancellation of debt if the loan balance is more than the FMV of the property. H r block 2011 Buyer's (borrower's) gain or loss. H r block 2011   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. H r block 2011 The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. H r block 2011 See Determining Gain or Loss , earlier. H r block 2011 Worksheet 8-1. H r block 2011 Worksheet for Foreclosures andRepossessions Part 1. H r block 2011 Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. H r block 2011 Complete this part only if you were personally liable for the debt. H r block 2011 Otherwise, go to Part 2. H r block 2011   1. H r block 2011 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. H r block 2011 Enter the Fair Market Value of the transferred property   3. H r block 2011 Ordinary income from cancellation of debt upon foreclosure or repossession. H r block 2011 * Subtract line 2 from line 1. H r block 2011 If zero or less, enter -0-   Part 2. H r block 2011 Figure your gain or loss from foreclosure or repossession. H r block 2011   4. H r block 2011 If you completed Part 1, enter the smaller of line 1 or line 2. H r block 2011 If you did not complete Part 1, enter the outstanding debt immediately before the transfer of property   5. H r block 2011 Enter any proceeds you received from the foreclosure sale   6. H r block 2011 Add lines 4 and 5   7. H r block 2011 Enter the adjusted basis of the transferred property   8. H r block 2011 Gain or loss from foreclosure or repossession. H r block 2011 Subtract line 7  from line 6   * The income may not be taxable. H r block 2011 See Cancellation of debt . H r block 2011    You can use Worksheet 8-1 to figure your gain or loss from a foreclosure or repossession. H r block 2011 Amount realized on a nonrecourse debt. H r block 2011   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. H r block 2011 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. H r block 2011 Example 1. H r block 2011 Ann paid $200,000 for land used in her farming business. H r block 2011 She paid $15,000 down and borrowed the remaining $185,000 from a bank. H r block 2011 Ann is not personally liable for the loan (nonrecourse debt), but pledges the land as security. H r block 2011 The bank foreclosed on the loan 2 years after Ann stopped making payments. H r block 2011 When the bank foreclosed, the balance due on the loan was $180,000 and the FMV of the land was $170,000. H r block 2011 The amount Ann realized on the foreclosure was $180,000, the debt canceled by the foreclosure. H r block 2011 She figures her gain or loss on Form 4797, Part I, by comparing the amount realized ($180,000) with her adjusted basis ($200,000). H r block 2011 She has a $20,000 deductible loss. H r block 2011 Example 2. H r block 2011 Assume the same facts as in Example 1 except the FMV of the land was $210,000. H r block 2011 The result is the same. H r block 2011 The amount Ann realized on the foreclosure is $180,000, the debt canceled by the foreclosure. H r block 2011 Because her adjusted basis is $200,000, she has a deductible loss of $20,000, which she reports on Form 4797, Part I. H r block 2011 Amount realized on a recourse debt. H r block 2011   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. H r block 2011   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. H r block 2011 The amount realized does not include the canceled debt that is your income from cancellation of debt. H r block 2011 See Cancellation of debt , later. H r block 2011 Example 3. H r block 2011 Assume the same facts as in Example 1 above except Ann is personally liable for the loan (recourse debt). H r block 2011 In this case, the amount she realizes is $170,000. H r block 2011 This is the canceled debt ($180,000) up to the FMV of the land ($170,000). H r block 2011 Ann figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($200,000). H r block 2011 She has a $30,000 deductible loss, which she figures on Form 4797, Part I. H r block 2011 She is also treated as receiving ordinary income from cancellation of debt. H r block 2011 That income is $10,000 ($180,000 − $170,000). H r block 2011 This is the part of the canceled debt not included in the amount realized. H r block 2011 She reports this as other income on Schedule F, line 8. H r block 2011 Seller's (lender's) gain or loss on repossession. H r block 2011   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. H r block 2011 For more information, see Repossession in Publication 537, Installment Sales. H r block 2011 Cancellation of debt. H r block 2011   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. H r block 2011 This income is separate from any gain or loss realized from the foreclosure or repossession. H r block 2011 Report the income from cancellation of a business debt on Schedule F, line 8. H r block 2011 Report the income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. H r block 2011    You can use Worksheet 8-1 to figure your income from cancellation of debt. H r block 2011   However, income from cancellation of debt is not taxed if any of the following apply. H r block 2011 The cancellation is intended as a gift. H r block 2011 The debt is qualified farm debt (see chapter 3). H r block 2011 The debt is qualified real property business debt (see chapter 5 of Publication 334). H r block 2011 You are insolvent or bankrupt (see  chapter 3). H r block 2011 The debt is qualified principal residence indebtedness (see chapter 3). H r block 2011   Use Form 982 to report the income exclusion. H r block 2011 Abandonment The abandonment of property is a disposition of property. H r block 2011 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. H r block 2011 Business or investment property. H r block 2011   Loss from abandonment of business or investment property is deductible as a loss. H r block 2011 Loss from abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. H r block 2011 If your adjusted basis is more than the amount you realize (if any), then you have a loss. H r block 2011 If the amount you realize (if any) is more than your adjusted basis, then you have a gain. H r block 2011 This rule also applies to leasehold improvements the lessor made for the lessee. H r block 2011 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 . H r block 2011   If the abandoned property is secured by debt, special rules apply. H r block 2011 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). H r block 2011 For more information, see chapter 3 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). H r block 2011 The abandonment loss is deducted in the tax year in which the loss is sustained. H r block 2011 Report the loss on Form 4797, Part II, line 10. H r block 2011 Personal-use property. H r block 2011   You cannot deduct any loss from abandonment of your home or other property held for personal use. H r block 2011 Canceled debt. H r block 2011   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. H r block 2011 This income is separate from any loss realized from abandonment of the property. H r block 2011 Report income from cancellation of a debt related to a business or rental activity as business or rental income. H r block 2011 Report income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. H r block 2011   However, income from cancellation of debt is not taxed in certain circumstances. H r block 2011 See Cancellation of debt earlier under Foreclosure or Repossession . H r block 2011 Forms 1099-A and 1099-C. H r block 2011   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. H r block 2011 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. H r block 2011 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. H r block 2011 For foreclosures, repossessions, abandonments of property, and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. H r block 2011 Prev  Up  Next   Home   More Online Publications
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The H R Block 2011

H r block 2011 Index A Additional Medicare Tax, Step 5. H r block 2011 , Line 18. H r block 2011 Address change, Change of address. H r block 2011 Adjustments to income Estimated tax, Adjustments to income. H r block 2011 Withholding allowances, Adjustments to income (worksheet line 4). H r block 2011 Worksheet instructions, Deductions and Adjustments Worksheet, Net deductions and adjustments (worksheet line 8). H r block 2011 AGI, AGI. H r block 2011 Expected AGI, Expected AGI—Line 1 Aliens Nonresident aliens, Aliens Amended returns, Form Received After Filing, Amended returns. H r block 2011 Annualized estimated tax worksheets, Worksheet 2-9. H r block 2011 2014 Annualized Estimated Tax Worksheet, Worksheet 2-9. H r block 2011 2014 Annualized Estimated Tax Worksheet(Continued) Annualized - Capital gains, Worksheet 2-12. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Annualized - Foreign Earned Income, Worksheet 2-13. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 12 Foreign Earned Income Tax Worksheet Annualized - Phaseout of itemized deductions, Worksheet 2-10. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 6 Phaseout of Itemized Deductions Annualized - Qualified dividends, Worksheet 2-12. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Annualized - Reduction of exemption amount, Worksheet 2-11. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 10 Reduction of Exemption Amount Annualized income installment method, Annualized Income Installment Method Capital gains worksheet, underpayment penalty, Worksheet 4-1. H r block 2011 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Form 2210, Schedule AI, Annualized Income Installment Method (Schedule AI) Qualified dividends worksheet, underpayment penalty, Worksheet 4-1. H r block 2011 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Underpayment penalty, (Schedule AI), Annualized Income Installment Method (Schedule AI) Annuities, Pensions and Annuities Assistance (see Tax help) B Backup withholding, Backup Withholding, Penalties. H r block 2011 Credit against income tax, Backup withholding. H r block 2011 C Capital gains and losses Annualized estimated tax, Tax on net capital gain. H r block 2011 Estimated tax on net capital gain, Tax on net capital gain. H r block 2011 Qualified dividends, Tax on qualified dividends and capital gains. H r block 2011 Casualty and theft losses, Itemized deductions (worksheet line 1). H r block 2011 Waiver of penalty, Waiver of Penalty Change of address, Change of address. H r block 2011 Change of name, Name changed. H r block 2011 Charitable contributions, Itemized deductions (worksheet line 1). H r block 2011 Child and dependent care credit Personal Allowances Worksheet (Form W-4), Child and dependent care credit (worksheet line F). H r block 2011 Child tax credit Personal Allowances Worksheet (Form W-4), Child tax credit (worksheet line G). H r block 2011 Claim of right, Itemized deductions (worksheet line 1). H r block 2011 Commodity credit corporation loans, Federal Payments Community property states, Community property states. H r block 2011 Compensation, Salaries and Wages Independent contractors, backup withholding, Backup Withholding Supplemental wages, Supplemental Wages Tips, Tips Wages and salaries, Salaries and Wages Crediting of overpayment, Credit an Overpayment Credits 2013 withholding and estimated taxes, Credit for Withholding and Estimated Tax for 2013 Deductions and Adjustments Worksheet (Form W-4), Tax credits (worksheet line 5). H r block 2011 Estimated tax against income tax, Estimated Tax Excess withholding on social security or railroad retirement taxes, Excess Social Security or Railroad Retirement Tax Withholding Expected taxes and credits, Expected Taxes and Credits— Lines 6–13c Withholding allowances, Tax credits (worksheet line 5). H r block 2011 Withholding tax, credit for, Withholding Criminal penalties Willfully false or fraudulent Form W-4, Penalties Crop insurance payments, Federal Payments Cumulative wage method of withholding, Cumulative Wage Method D Deductions Home mortgage interest, Itemized deductions (worksheet line 1). H r block 2011 Worksheet instructions, Deductions and Adjustments Worksheet Dependents Exemptions, Dependents. H r block 2011 Disabled persons Impairment-related work expenses, Itemized deductions (worksheet line 1). H r block 2011 Disaster Waiver of penalty, Waiver of Penalty Dividends Backup withholding, Backup Withholding Underreported, Underreported interest or dividends. H r block 2011 Divorced taxpayers Estimated tax credit, Divorced Taxpayers Form W-4, Single. H r block 2011 Domestic help, Household workers. H r block 2011 Definition, Household workers. H r block 2011 Withholding, Household workers. H r block 2011 E Earned income credit (EIC), What's New for 2014 Eligible rollover distributions, Eligible Rollover Distributions Employee business expenses Accountable plans, Accountable plan. H r block 2011 Nonaccountable plans, Nonaccountable plan. H r block 2011 Reimbursements, Expense allowances. H r block 2011 Employer Identification Numbers (EINs), Taxpayer identification number. H r block 2011 Employers Excess withholding on social security and railroad retirement taxes, Two or more employers. H r block 2011 , Employer's error. H r block 2011 Repaying withheld tax, Repaying withheld tax. H r block 2011 Tips, Tips Withholding rules, Rules Your Employer Must Follow Estate beneficiaries Underpayment penalty, Estate or trust payments of estimated tax. H r block 2011 Estate tax Income in respect of a decedent, Itemized deductions (worksheet line 1). H r block 2011 Estates Estimated tax, Estates and Trusts Estimated tax Adjustments to income, Adjustments to income. H r block 2011 Aliens, Aliens, Nonresident aliens. H r block 2011 Amended tax, Regular Installment Method Annualized income installment method, Annualized Income Installment Method Change in amount, Change in estimated tax. H r block 2011 Change of address, Change of address. H r block 2011 Change of name, Name changed. H r block 2011 Credit against income tax, Estimated Tax Crediting of overpayment, Credit an Overpayment Divorced taxpayers, Divorced Taxpayers Estates and trusts, Estates and Trusts Exemptions, Exemptions—line 4. H r block 2011 Expected AGI, Expected AGI—Line 1 Expected taxable income, Expected Taxable Income— Lines 2–5 Expected taxes and credits, Expected Taxes and Credits— Lines 6–13c Farmers and fishermen, Farmers and Fishermen, Farmers and fishermen. H r block 2011 , Farmers and Fishermen Fiscal year taxpayers, Fiscal year taxpayers. H r block 2011 Higher income individuals, Higher income taxpayers. H r block 2011 How to figure, How To Figure Estimated Tax, How To Figure Each Payment How to pay, How To Pay Estimated Tax Instructions for Worksheet 2-9, annualized estimated tax, Instructions for the 2014 Annualized Estimated Tax Worksheet (Worksheet 2-9) Itemized deductions, Itemized deductions—line 2. H r block 2011 Married taxpayers, Married Taxpayers Net capital gain, Tax on net capital gain. H r block 2011 , Tax on net capital gain. H r block 2011 No standard deduction, No standard deduction. H r block 2011 Nonresident aliens, Nonresident aliens. H r block 2011 Overpayment, Credit an Overpayment Payment vouchers, Pay by Check or Money Order Using the Estimated Tax Payment Voucher Payments not required, Estimated Tax Payments Not Required Regular installment method, Regular Installment Method Required annual payment, Required Annual Payment— Line 14c Self-employment income, Self-employment income. H r block 2011 Separate returns, Separate Returns Sick pay, Estimated tax. H r block 2011 Standard deduction, Standard deduction—line 2. H r block 2011 , Line 7. H r block 2011 Total estimated tax payments, Total Estimated Tax Payments Needed—Line 16a Types of taxes included, Introduction Underpayment penalty, Underpayment penalty. H r block 2011 , Underpayment Penalty for 2013 When to pay, When To Pay Estimated Tax When to start payments, When To Start Who does not have to pay, Who Does Not Have To Pay Estimated Tax Who must pay, Who Must Pay Estimated Tax Estimated tax worksheets, Worksheets for Chapter 2, Worksheet 2-1. H r block 2011 2014 Estimated Tax Worksheet, Worksheet 2-2. H r block 2011 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits 2014 annualized estimated tax worksheet, Worksheet 2-9. H r block 2011 2014 Annualized Estimated Tax Worksheet Capital gains, tax on, Tax on net capital gain. H r block 2011 Foreign earned income, Worksheet 2-8. H r block 2011 2014 Estimated Tax Worksheet—Line 6 Foreign Earned Income Tax Worksheet Form 1040-ES, Worksheet 2-1. H r block 2011 2014 Estimated Tax Worksheet Phaseout of itemized deductions, Worksheet 2-5. H r block 2011 2014 Estimated Tax Worksheet—Line 2 Phaseout of Itemized Deductions Railroad retirement benefits, Worksheet 2-2. H r block 2011 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Reduction of exemption amount, Worksheet 2-6. H r block 2011 2014 Estimated Tax Worksheet—Line 4 Reduction of Exemption Amount Self-employment tax, Worksheet 2-3. H r block 2011 2014 Estimated Tax Worksheet—Lines 1 and 11 Estimated Self-Employment Tax and Deduction Worksheet Social security benefits, Worksheet 2-2. H r block 2011 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Standard deduction, Worksheet 2-4. H r block 2011 2014 Estimated Tax Worksheet—Line 2 Standard Deduction Worksheet Excess social security or railroad retirement tax withholding, Excess Social Security or Railroad Retirement Tax Withholding, How to claim refund of excess tier 2 RRTA. H r block 2011 Nonrailroad employees worksheet, Worksheet for Nonrailroad Employees Railroad employees worksheets, Worksheets for Railroad Employees Exemption from withholding, Exemption From Withholding Claiming, Claiming exemption from withholding. H r block 2011 Good for only one year, An exemption is good for only 1 year. H r block 2011 Itemized deductions, Itemizing deductions or claiming exemptions or credits. H r block 2011 Students, Students. H r block 2011 Exemptions, Line 10. H r block 2011 Dependents, Dependents. H r block 2011 Expected taxable income, Exemptions—line 4. H r block 2011 Personal Allowances Worksheet, Exemptions (worksheet lines A, C, and D). H r block 2011 Self, Self. H r block 2011 Spouse, Spouse. H r block 2011 Withholding allowances, Withholding Allowances Expenses, Itemized deductions (worksheet line 1). H r block 2011 Allowances, Expense allowances. H r block 2011 F Farmers Estimated tax, Special Rules, Farmers and fishermen. H r block 2011 , Farmers and Fishermen Fiscal years, Fiscal year farmers and fishermen. H r block 2011 Gross income, Gross income from farming. H r block 2011 Joint returns, Joint returns. H r block 2011 Required annual payment, Farmers and fishermen. H r block 2011 Underpayment penalty, Farmers and fishermen. H r block 2011 , Farmers and Fishermen Waiver of underpayment penalty, Farmers and fishermen. H r block 2011 Withholding for farmworkers, Farmworkers. H r block 2011 Figures Tables and figures (see Tables and figures) Fiscal years Estimated tax, Fiscal year taxpayers. H r block 2011 Farmers and fishermen, Fiscal year farmers and fishermen. H r block 2011 Withholding tax credit, Fiscal Years (FY) Fishermen Estimated tax, Special Rules, Farmers and fishermen. H r block 2011 , Farmers and Fishermen Fiscal years, Fiscal year farmers and fishermen. H r block 2011 Gross income, Gross income from fishing. H r block 2011 Joint returns, Joint returns. H r block 2011 Required annual payment, Farmers and fishermen. H r block 2011 Underpayment penalty, Farmers and fishermen. H r block 2011 , Farmers and Fishermen Waiver of underpayment penalty, Farmers and fishermen. H r block 2011 Form 1040-ES, Introduction, How To Pay Estimated Tax Form 1040-ES (NR), Aliens Form 1040X, Form Received After Filing Form 1041-ES, Estates and Trusts Form 1099 series, Backup Withholding, The 1099 Series Form 2210, Form 2210. H r block 2011 , Figuring Your Required Annual Payment (Part I) Form 2210-F, Form 2210-F. H r block 2011 Form W-2, Form W-2 Form W-2c, Form Not Correct Form W-2G, Form W-2G. H r block 2011 , Form W-2G Form W-4 worksheets, Completing Form W-4 and Worksheets Completing of, Completing Form W-4 and Worksheets Deductions and adjustments worksheet, Deductions and Adjustments Worksheet IRS withholding calculator, IRS Withholding Calculator. H r block 2011 Number of allowances claimed, Only one job (worksheet line B). H r block 2011 Two-Earners/Multiple Jobs Worksheet, Two-Earners/Multiple Jobs Worksheet Withholding allowances, Completing Form W-4 and Worksheets, Form W-4 worksheets. H r block 2011 Form W-4, Employee's Allowance Withholding Certificate, Determining Amount of Tax Withheld Using Form W-4 Form W-4P, Periodic Payments Form W-4S, Form W-4S. H r block 2011 Form W-4V, Unemployment Compensation Form W-7, Taxpayer identification number. H r block 2011 Form W-9, Withholding rules. H r block 2011 Fraud Form W-4 statements, Penalties Free tax services, Free help with your tax return. H r block 2011 Fringe benefits, Taxable Fringe Benefits, More information. H r block 2011 G Gambling Form W-2G, Form W-2G Losses, Itemized deductions (worksheet line 1). H r block 2011 , Form W-2G Winnings, Form W-2G Gross income, Gross income. H r block 2011 Farming, Gross income from farming. H r block 2011 Fishing, Gross income from fishing. H r block 2011 H Head of household Personal Allowances Worksheet, Head of household filing status (worksheet line E). H r block 2011 Withholding allowance, Head of household filing status (worksheet line E). H r block 2011 Help (see Tax help) Higher income individuals Required annual payment, Higher income taxpayers. H r block 2011 Underpayment penalty, Higher income taxpayers. H r block 2011 Household workers, Household workers. H r block 2011 I Individual retirement arrangements (IRAs), Pensions and Annuities (see also Pensions) Interest income Backup withholding, Backup Withholding Underreported, Underreported interest or dividends. H r block 2011 IRS withholding calculator, IRS Withholding Calculator. H r block 2011 Itemized deductions Deductions and Adjustments Worksheet, Itemized deductions (worksheet line 1). H r block 2011 Estimated tax, expected taxable income, Itemized deductions—line 2. H r block 2011 Exemption from withholding, Itemizing deductions or claiming exemptions or credits. H r block 2011 Gambling losses, Itemized deductions (worksheet line 1). H r block 2011 , Form W-2G J Joint returns Excess withholding on social security and railroad retirement taxes, Joint returns. H r block 2011 Farmers and fishermen, Joint returns. H r block 2011 Underpayment penalty, 2012 separate returns and 2013 joint return. H r block 2011 M Marital status Form W-4 worksheet, Marital Status Withholding rate, Marital Status Married taxpayers, Joint returns. H r block 2011 (see also Joint returns) Estimated tax, Married Taxpayers Marital status, Married. H r block 2011 Withholding allowances, Married individuals. H r block 2011 Medical and dental expenses, Itemized deductions (worksheet line 1). H r block 2011 Military retirement pay, Military retirees. H r block 2011 , Periodic Payments Missing children, photographs of, Reminders Multiple jobs Excess social security and railroad retirement withholding, Excess Social Security or Railroad Retirement Tax Withholding Withholding allowances, Multiple jobs. H r block 2011 N Name change, Name changed. H r block 2011 Net investment income tax, Step 5. H r block 2011 , Line 18. H r block 2011 NIIT, Step 5. H r block 2011 , Line 18. H r block 2011 Noncitizens Estimated tax, Aliens Withholding, Single. H r block 2011 , Employees who are not citizens or residents. H r block 2011 Nonqualified deferred compensation, Periodic Payments Nonresident aliens Estimated tax, Aliens, Nonresident aliens. H r block 2011 Individual taxpayer identification numbers (ITINs), Taxpayer identification number. H r block 2011 O Overpayment Crediting to estimated tax, Credit an Overpayment P Part-year method of withholding, Part-Year Method Patronage dividends Backup withholding, Backup Withholding Payment vouchers, Pay by Check or Money Order Using the Estimated Tax Payment Voucher Penalties Backup withholding, Penalties. H r block 2011 Underpayment of estimated tax, Underpayment Penalty for 2013 Waiver of underpayment penalty, Waiver of Penalty Willfully false or fraudulent Form W-4, Penalties Withholding allowances, Penalties Pensions, Pensions and Annuities New job, Employee also receiving pension income. H r block 2011 Rollovers, Eligible Rollover Distributions Wages and salaries withholding rules compared, Withholding rules. H r block 2011 Personal Allowances Worksheet, Personal Allowances Worksheet, Total personal allowances (worksheet line H). H r block 2011 Publications (see Tax help) R Railroad retirement benefits Choosing to withhold, Federal Payments Railroad retirement tax Excess withholding, Excess Social Security or Railroad Retirement Tax Withholding, Worksheets for Railroad Employees Refund claims (tier 2), How to claim refund of excess tier 2 RRTA. H r block 2011 Regular installment method, estimated tax, Regular Installment Method Reimbursements, Expense allowances. H r block 2011 Excess, Accountable plan. H r block 2011 Reporting Fringe benefits, How your employer reports your benefits. H r block 2011 Gambling winnings, Information to give payer. H r block 2011 Tips to employer, Reporting tips to your employer. H r block 2011 Required annual payment, Required Annual Payment— Line 14c, Example. H r block 2011 Retirement plans Pension plans, Pensions and Annuities Pensions, Pensions and Annuities Rollovers, Eligible Rollover Distributions State or local deferred compensation plan payments, Periodic Payments Rollovers, Eligible Rollover Distributions Royalties Backup withholding, Backup Withholding S Salaries, Salaries and Wages Saturday, Sunday, holiday rule, Saturday, Sunday, holiday rule. H r block 2011 Self-employment tax, Self-employment income. H r block 2011 Separate returns Estimated tax credit, Separate Returns Underpayment penalty, 2012 joint return and 2013 separate returns. H r block 2011 Withholding tax credit, Separate Returns Sick pay, Sick Pay, Estimated tax. H r block 2011 Single marital status, Single. H r block 2011 Social security benefits Choosing to withhold, Federal Payments Social security taxes Excess withholding, Excess Social Security or Railroad Retirement Tax Withholding Taxpayer identification numbers (TINs), Taxpayer identification number. H r block 2011 Withholding obligation, Reminders Spouse, Marital Status (see also Married taxpayers) Exemption, Spouse. H r block 2011 Marital status, Marital Status Personal Allowances Worksheet, Spouse. H r block 2011 Standard deduction, Standard deduction—line 2. H r block 2011 , Line 7. H r block 2011 State and local income taxes and property taxes, Itemized deductions (worksheet line 1). H r block 2011 State or local deferred compensation plan payments, Periodic Payments Students, Students. H r block 2011 Supplemental wages, Supplemental Wages T Tables and figures Do you have to pay estimated tax? (Figure 2-A), Exemption from withholding on Form W-4 (Figure 1-A), Railroad retirement, maximum withholding (Table 3-2), Table 3-2. H r block 2011 Maximum Social Security and RRTA Withholding for 2013 Social security, maximum withholding (Table 3-2), Table 3-2. H r block 2011 Maximum Social Security and RRTA Withholding for 2013 Worksheets, where to find, Worksheets for Chapter 2 Tax help, How To Get Tax Help Tax Rate Schedules, 2014 Tax Rate Schedules Taxpayer identification numbers (TINs), Taxpayer identification number. H r block 2011 Tips, Tips, More information. H r block 2011 Total income, Total income. H r block 2011 Trust beneficiaries Underpayment penalty, Estate or trust payments of estimated tax. H r block 2011 TTY/TDD information, How To Get Tax Help Two-Earners/Multiple Jobs Worksheet, Two-Earners/Multiple Jobs Worksheet U Underpayment penalty, Underpayment Penalty for 2013, Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Actual withholding method, Actual withholding method. H r block 2011 Amended estimated tax, Underpayment penalty. H r block 2011 Amended returns, Amended returns. H r block 2011 Annualized income installment method, Annualized Income Installment Method (Schedule AI) Beneficiaries of estates and trusts, Estate or trust payments of estimated tax. H r block 2011 Capital gains (Worksheet 4-1), Worksheet 4-1. H r block 2011 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Exceptions, Exceptions Farmers and fishermen, Farmers and fishermen. H r block 2011 , Farmers and Fishermen, Farmers and fishermen. H r block 2011 Figuring, IRS can figure the penalty for you. H r block 2011 , Short Method for Figuring the Penalty (Part III), Regular Method for Figuring the Penalty (Part IV) Higher income individuals, Higher income taxpayers. H r block 2011 Joint returns, 2012 separate returns and 2013 joint return. H r block 2011 Lowering or eliminating, Lowering or eliminating the penalty. H r block 2011 Minimum required each period, Minimum required each period. H r block 2011 No penalty, No penalty. H r block 2011 No tax liability last year exception, No Tax Liability Last Year Paid through withholding, Paid through withholding. H r block 2011 , Actual withholding method. H r block 2011 Penalty figured for each period, Penalty figured separately for each period. H r block 2011 Penalty thresholds, General Rule Qualified dividends (Worksheet 4-1), Worksheet 4-1. H r block 2011 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Required annual payment, Figuring Your Required Annual Payment (Part I) Schedule AI, Annualized Income Installment Method (Schedule AI) Separate returns, 2012 joint return and 2013 separate returns. H r block 2011 Waiver, Waiver of Penalty When charged, When penalty is charged. H r block 2011 Unemployment compensation, Unemployment Compensation, Form 1099-G. H r block 2011 W Wages and salaries, Salaries and Wages Waiver of penalty, Waiver of Penalty Withholding Allowances, Withholding Allowances, Alternative method of figuring withholding allowances. H r block 2011 , Only one job (worksheet line B). H r block 2011 Personal Allowances Worksheet, Personal Allowances Worksheet Amended returns, Form Received After Filing Amount of tax withheld, Form W-4, Determining Amount of Tax Withheld Using Form W-4 Annuities, Pensions and Annuities Backup withholding, Backup Withholding Changing, Changing Your Withholding Checking amount of, Checking Your Withholding Choosing not to withhold, Choosing Not To Have Income Tax Withheld Community property states, Community property states. H r block 2011 Credit against income tax, Withholding Cumulative wage method, Cumulative Wage Method Deductions and adjustments worksheet, Deductions and Adjustments Worksheet Divorced taxpayers, Single. H r block 2011 Domestic help, Household workers. H r block 2011 Employers' rules, Rules Your Employer Must Follow Estimated tax, Withholding—line 15. H r block 2011 Excess social security and railroad retirement taxes, Excess Social Security or Railroad Retirement Tax Withholding Exemption from, Exemption From Withholding Farmworkers, Farmworkers. H r block 2011 Fiscal years, Fiscal Years (FY) Form received after filing, Form Received After Filing Form W-2, Form W-2 Form W-2c, Form Not Correct Form W-2G, Form W-2G. H r block 2011 , Form W-2G Form W-4, Determining Amount of Tax Withheld Using Form W-4 Fringe benefits, Taxable Fringe Benefits Gambling winnings, Gambling Winnings, Backup withholding on gambling winnings. H r block 2011 , Form W-2G Getting right amount of tax withheld, Getting the Right Amount of Tax Withheld, IRS Withholding Calculator. H r block 2011 Household workers, Household workers. H r block 2011 Marital status, Marital Status Married taxpayers, Married. H r block 2011 , Married individuals. H r block 2011 Multiple jobs, Multiple jobs. H r block 2011 Noncitizens, Single. H r block 2011 , Employees who are not citizens or residents. H r block 2011 Nonperiodic payments, Nonperiodic Payments Part-year method, Part-Year Method Penalties, Penalties Pensions, Pensions and Annuities Periodic payments, Periodic Payments Railroad retirement benefits, Federal Payments Repaying withheld tax, Repaying withheld tax. H r block 2011 Rollovers, Eligible Rollover Distributions Salaries and wages, Salaries and Wages Separate returns, Separate Returns Sick pay, Sick Pay Single taxpayers, Single. H r block 2011 Social security (FICA) tax, Reminders, Federal Payments Tips, Tips Types of income, Introduction, Salaries and Wages Underpayment penalty, Paid through withholding. H r block 2011 , Actual withholding method. H r block 2011 Unemployment compensation, Unemployment Compensation Worksheet for Form 2210, Part IV, Section B-Figure the Penalty Penalty Worksheet, Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Worksheets (blank) Annualized - Capital gains (Worksheet 2-12), Worksheet 2-12. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Annualized - Foreign Earned Income (Worksheet 2-13), Worksheet 2-13. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 12 Foreign Earned Income Tax Worksheet Annualized - Phaseout of itemized deductions (Worksheet 2-10), Worksheet 2-10. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 6 Phaseout of Itemized Deductions Annualized - Qualified dividends (Worksheet 2-12), Worksheet 2-12. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Annualized - Reduction of exemption amount (Worksheet 2-11), Worksheet 2-11. H r block 2011 2014 Annualized Estimated Tax Worksheet—Line 10 Reduction of Exemption Amount Annualized estimated tax (Worksheet 2-9), Worksheet 2-9. H r block 2011 2014 Annualized Estimated Tax Worksheet, Worksheet 2-9. H r block 2011 2014 Annualized Estimated Tax Worksheet(Continued) Capital gains tax worksheet Worksheet 4-1, Worksheet 4-1. H r block 2011 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Dependents (age 65 or older or blind) exemption from withholding (Worksheet 1-4), Worksheet 1-4. H r block 2011 Exemption From Withholding for Dependents Age 65 or Older or Blind Estimated tax worksheets (Worksheet 2-1), Worksheet 2-1. H r block 2011 2014 Estimated Tax Worksheet Foreign earned income (Worksheet 2-8), Worksheet 2-8. H r block 2011 2014 Estimated Tax Worksheet—Line 6 Foreign Earned Income Tax Worksheet Phaseout of itemized deductions (Worksheet 2-5), Worksheet 2-5. H r block 2011 2014 Estimated Tax Worksheet—Line 2 Phaseout of Itemized Deductions Qualified dividends Worksheet 4-1, Worksheet 4-1. H r block 2011 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Railroad retirement benefits (Worksheet 2-2), Worksheet 2-2. H r block 2011 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Reduction of exemption amount (Worksheet 2-6), Worksheet 2-6. H r block 2011 2014 Estimated Tax Worksheet—Line 4 Reduction of Exemption Amount Self-employment tax and deduction (Worksheet 2-3), Worksheet 2-3. H r block 2011 2014 Estimated Tax Worksheet—Lines 1 and 11 Estimated Self-Employment Tax and Deduction Worksheet Social security benefits (Worksheet 2-2), Worksheet 2-2. H r block 2011 2014 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits Standard deduction (Worksheet 2-4), Worksheet 2-4. H r block 2011 2014 Estimated Tax Worksheet—Line 2 Standard Deduction Worksheet Prev  Up     Home   More Online Publications