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How Do I Fill Out A 1040x Form

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How Do I Fill Out A 1040x Form

How do i fill out a 1040x form 6. How do i fill out a 1040x form   Basis of Assets Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Cost BasisReal Property Allocating the Basis Uniform Capitalization Rules Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostTaxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Received as a Gift Property Transferred From a Spouse Inherited Property Property Distributed From a Partnership or Corporation Introduction Your basis is the amount of your investment in property for tax purposes. How do i fill out a 1040x form Use basis to figure the gain or loss on the sale, exchange, or other disposition of property. How do i fill out a 1040x form Also use basis to figure depreciation, amortization, depletion, and casualty losses. How do i fill out a 1040x form If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. How do i fill out a 1040x form Only the basis allocated to the business or investment use of the property can be depreciated. How do i fill out a 1040x form Your original basis in property is adjusted (increased or decreased) by certain events. How do i fill out a 1040x form For example, if you make improvements to the property, increase your basis. How do i fill out a 1040x form If you take deductions for depreciation, or casualty losses, or claim certain credits, reduce your basis. How do i fill out a 1040x form Keep accurate records of all items that affect the basis of your assets. How do i fill out a 1040x form For information on keeping records, see chapter 1. How do i fill out a 1040x form Topics - This chapter discusses: Cost basis Adjusted basis Basis other than cost Useful Items - You may want to see: Publication 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property See chapter 16 for information about getting publications and forms. How do i fill out a 1040x form Cost Basis The basis of property you buy is usually its cost. How do i fill out a 1040x form Cost is the amount you pay in cash, debt obligations, other property, or services. How do i fill out a 1040x form Your cost includes amounts you pay for sales tax, freight, installation, and testing. How do i fill out a 1040x form The basis of real estate and business assets will include other items, discussed later. How do i fill out a 1040x form Basis generally does not include interest payments. How do i fill out a 1040x form However, see Carrying charges and Capitalized interest in chapter 4 of Publication 535. How do i fill out a 1040x form You also may have to capitalize (add to basis) certain other costs related to buying or producing property. How do i fill out a 1040x form Under the uniform capitalization rules, discussed later, you may have to capitalize direct costs and certain indirect costs of producing property. How do i fill out a 1040x form Loans with low or no interest. How do i fill out a 1040x form   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus the amount considered to be unstated interest. How do i fill out a 1040x form You generally have unstated interest if your interest rate is less than the applicable federal rate. How do i fill out a 1040x form See the discussion of unstated interest in Publication 537, Installment Sales. How do i fill out a 1040x form Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. How do i fill out a 1040x form If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. How do i fill out a 1040x form Some of these expenses are discussed next. How do i fill out a 1040x form Lump sum purchase. How do i fill out a 1040x form   If you buy improvements, such as buildings, and the land on which they stand for a lump sum, allocate your cost basis between the land and improvements. How do i fill out a 1040x form Allocate the cost basis according to the respective fair market values (FMVs) of the land and improvements at the time of purchase. How do i fill out a 1040x form Figure the basis of each asset by multiplying the lump sum by a fraction. How do i fill out a 1040x form The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. How do i fill out a 1040x form Fair market value (FMV). How do i fill out a 1040x form   FMV is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all necessary facts. How do i fill out a 1040x form Sales of similar property on or about the same date may help in figuring the FMV of the property. How do i fill out a 1040x form If you are not certain of the FMV of the land and improvements, you can allocate the basis according to their assessed values for real estate tax purposes. How do i fill out a 1040x form Real estate taxes. How do i fill out a 1040x form   If you pay the real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. How do i fill out a 1040x form   If you reimburse the seller for taxes the seller paid for you, you generally can deduct that amount as a tax expense. How do i fill out a 1040x form Whether or not you reimburse the seller, do not include that amount in the basis of your property. How do i fill out a 1040x form Settlement costs. How do i fill out a 1040x form   Your basis includes the settlement fees and closing costs for buying the property. How do i fill out a 1040x form See Publication 551 for a detailed list of items you can and cannot include in basis. How do i fill out a 1040x form   Do not include fees and costs for getting a loan on the property. How do i fill out a 1040x form Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. How do i fill out a 1040x form Points. How do i fill out a 1040x form   If you pay points to get a loan (including a mortgage, second mortgage, or line-of-credit), do not add the points to the basis of the related property. How do i fill out a 1040x form You may be able to deduct the points currently or over the term of the loan. How do i fill out a 1040x form For more information about deducting points, see Points in chapter 4 of Publication 535. How do i fill out a 1040x form Assumption of a mortgage. How do i fill out a 1040x form   If you buy property and assume (or buy the property subject to) an existing mortgage, your basis includes the amount you pay for the property plus the amount you owe on the mortgage. How do i fill out a 1040x form Example. How do i fill out a 1040x form If you buy a farm for $100,000 cash and assume a mortgage of $400,000, your basis is $500,000. How do i fill out a 1040x form Constructing assets. How do i fill out a 1040x form   If you build property or have assets built for you, your expenses for this construction are part of your basis. How do i fill out a 1040x form Some of these expenses include the following costs: Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. How do i fill out a 1040x form   In addition, if you use your own employees, farm materials, and equipment to build an asset, do not deduct the following expenses. How do i fill out a 1040x form You must capitalize them (include them in the asset's basis). How do i fill out a 1040x form Employee wages paid for the construction work, reduced by any employment credits allowed. How do i fill out a 1040x form Depreciation on equipment you own while it is used in the construction. How do i fill out a 1040x form Operating and maintenance costs for equipment used in the construction. How do i fill out a 1040x form The cost of business supplies and materials used in the construction. How do i fill out a 1040x form    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. How do i fill out a 1040x form Allocating the Basis In some instances, the rules for determining basis apply to a group of assets acquired in the same transaction or to property that consists of separate items. How do i fill out a 1040x form To determine the basis of these assets or separate items, there must be an allocation of basis. How do i fill out a 1040x form Group of assets acquired. How do i fill out a 1040x form   If you buy multiple assets for a lump sum, allocate the amount you pay among the assets. How do i fill out a 1040x form Use this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. How do i fill out a 1040x form You and the seller may agree in the sales contract to a specific allocation of the purchase price among the assets. How do i fill out a 1040x form If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. How do i fill out a 1040x form Farming business acquired. How do i fill out a 1040x form   If you buy a group of assets that makes up a farming business, there are special rules you must use to allocate the purchase price among the assets. How do i fill out a 1040x form Generally, reduce the purchase price by any cash received. How do i fill out a 1040x form Allocate the remaining purchase price to the other business assets received in proportion to (but not more than) their FMV and in a certain order. How do i fill out a 1040x form See Trade or Business Acquired under Allocating the Basis in Publication 551 for more information. How do i fill out a 1040x form Transplanted embryo. How do i fill out a 1040x form   If you buy a cow that is pregnant with a transplanted embryo, allocate to the basis of the cow the part of the purchase price equal to the FMV of the cow without the implant. How do i fill out a 1040x form Allocate the rest of the purchase price to the basis of the calf. How do i fill out a 1040x form Neither the cost allocated to the cow nor the cost allocated to the calf is deductible as a current business expense. How do i fill out a 1040x form Uniform Capitalization Rules Under the uniform capitalization rules, you must include certain direct and indirect costs in the basis of property you produce or in your inventory costs, rather than claim them as a current deduction. How do i fill out a 1040x form You recover these costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. How do i fill out a 1040x form Generally, you are subject to the uniform capitalization rules if you do any of the following: Produce real or tangible personal property, or Acquire property for resale. How do i fill out a 1040x form However, this rule does not apply to personal property if your average annual gross receipts for the 3-tax-year period ending with the year preceding the current tax year are $10 million or less. How do i fill out a 1040x form You produce property if you construct, build, install, manufacture, develop, improve, or create the property. How do i fill out a 1040x form You are not subject to the uniform capitalization rules if the property is produced for personal use. How do i fill out a 1040x form In a farming business, you produce property if you raise or grow any agricultural or horticultural commodity, including plants and animals. How do i fill out a 1040x form Plants. How do i fill out a 1040x form   A plant produced in a farming business includes the following items: A fruit, nut, or other crop-bearing tree; An ornamental tree; A vine; A bush; Sod; and The crop or yield of a plant that will have more than one crop or yield. How do i fill out a 1040x form Animals. How do i fill out a 1040x form   An animal produced in a farming business includes any stock, poultry or other bird, and fish or other sea life. How do i fill out a 1040x form The direct and indirect costs of producing plants or animals include preparatory costs and preproductive period costs. How do i fill out a 1040x form Preparatory costs include the acquisition costs of the seed, seedling, plant, or animal. How do i fill out a 1040x form For plants, preproductive period costs include the costs of items such as irrigation, pruning, frost protection, spraying, and harvesting. How do i fill out a 1040x form For animals, preproductive period costs include the costs of items such as feed, maintaining pasture or pen areas, breeding, veterinary services, and bedding. How do i fill out a 1040x form Exceptions. How do i fill out a 1040x form   In a farming business, the uniform capitalization rules do not apply to: Any animal, Any plant with a preproductive period of 2 years or less, or Any costs of replanting certain plants lost or damaged due to casualty. How do i fill out a 1040x form   Exceptions (1) and (2) do not apply to a corporation, partnership, or tax shelter required to use an accrual method of accounting. How do i fill out a 1040x form See Accrual Method Required under Accounting Methods in chapter 2. How do i fill out a 1040x form   In addition, you can elect not to use the uniform capitalization rules for plants with a preproductive period of more than 2 years. How do i fill out a 1040x form If you make this election, special rules apply. How do i fill out a 1040x form This election cannot be made by a corporation, partnership, or tax shelter required to use an accrual method of accounting. How do i fill out a 1040x form This election also does not apply to any costs incurred for the planting, cultivation, maintenance, or development of any citrus or almond grove (or any part thereof) within the first 4 years the trees were planted. How do i fill out a 1040x form    If you elect not to use the uniform capitalization rules, you must use the alternative depreciation system for all property used in any of your farming businesses and placed in service in any tax year during which the election is in effect. How do i fill out a 1040x form See chapter 7, for additional information on depreciation. How do i fill out a 1040x form Example. How do i fill out a 1040x form You grow trees that have a preproductive period of more than 2 years. How do i fill out a 1040x form The trees produce an annual crop. How do i fill out a 1040x form You are an individual and the uniform capitalization rules apply to your farming business. How do i fill out a 1040x form You must capitalize the direct costs and an allocable part of indirect costs incurred due to the production of the trees. How do i fill out a 1040x form You are not required to capitalize the costs of producing the annual crop because its preproductive period is 2 years or less. How do i fill out a 1040x form Preproductive period of more than 2 years. How do i fill out a 1040x form   The preproductive period of plants grown in commercial quantities in the United States is based on their nationwide weighted average preproductive period. How do i fill out a 1040x form Plants producing the crops or yields shown in Table 6-1 have a nationwide weighted average preproductive period of more than 2 years. How do i fill out a 1040x form Other plants (not shown in Table 6-1) may also have a nationwide weighted average preproductive period of more than 2 years. How do i fill out a 1040x form More information. How do i fill out a 1040x form   For more information on the uniform capitalization rules that apply to property produced in a farming business, see Regulations section 1. How do i fill out a 1040x form 263A-4. How do i fill out a 1040x form Table 6-1. How do i fill out a 1040x form Plants With a Preproductive Period of More Than 2 Years Plants producing the following crops or yields have a nationwide weighted average preproductive period of more than 2 years. How do i fill out a 1040x form Almonds Apples Apricots Avocados Blueberries Cherries Chestnuts Coffee beans Currants Dates Figs Grapefruit Grapes Guavas Kiwifruit Kumquats Lemons Limes Macadamia nuts Mangoes Nectarines Olives Oranges Peaches Pears Pecans Persimmons Pistachio nuts Plums Pomegranates Prunes Tangelos Tangerines Tangors Walnuts Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the cost basis or basis other than cost (discussed later) of the property. How do i fill out a 1040x form The adjustments to the original basis are increases or decreases to the cost basis or other basis which result in the adjusted basis of the property. How do i fill out a 1040x form Increases to Basis Increase the basis of any property by all items properly added to a capital account. How do i fill out a 1040x form These include the cost of any improvements having a useful life of more than 1 year. How do i fill out a 1040x form The following costs increase the basis of property. How do i fill out a 1040x form The cost of extending utility service lines to property. How do i fill out a 1040x form Legal fees, such as the cost of defending and perfecting title. How do i fill out a 1040x form Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements. How do i fill out a 1040x form Assessments for items such as paving roads and building ditches that increase the value of the property assessed. How do i fill out a 1040x form Do not deduct these expenses as taxes. How do i fill out a 1040x form However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements. How do i fill out a 1040x form If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. How do i fill out a 1040x form See chapter 7. How do i fill out a 1040x form Deducting vs. How do i fill out a 1040x form capitalizing costs. How do i fill out a 1040x form   Do not add to your basis costs you can deduct as current expenses. How do i fill out a 1040x form For example, amounts paid for incidental repairs or maintenance are deductible as business expenses and are not added to basis. How do i fill out a 1040x form However, you can elect either to deduct or to capitalize certain other costs. How do i fill out a 1040x form See chapter 7 in Publication 535. How do i fill out a 1040x form Decreases to Basis The following are some items that reduce the basis of property. How do i fill out a 1040x form Section 179 deduction. How do i fill out a 1040x form Deductions previously allowed or allowable for amortization, depreciation, and depletion. How do i fill out a 1040x form Alternative motor vehicle credit. How do i fill out a 1040x form See Form 8910. How do i fill out a 1040x form Alternative fuel vehicle refueling property credit. How do i fill out a 1040x form See Form 8911. How do i fill out a 1040x form Residential energy efficient property credits. How do i fill out a 1040x form See Form 5695. How do i fill out a 1040x form Investment credit (part or all) taken. How do i fill out a 1040x form Casualty and theft losses and insurance reimbursements. How do i fill out a 1040x form Payments you receive for granting an easement. How do i fill out a 1040x form Exclusion from income of subsidies for energy conservation measures. How do i fill out a 1040x form Certain canceled debt excluded from income. How do i fill out a 1040x form Rebates from a manufacturer or seller. How do i fill out a 1040x form Patronage dividends received from a cooperative association as a result of a purchase of property. How do i fill out a 1040x form See Patronage Dividends in chapter 3. How do i fill out a 1040x form Gas-guzzler tax. How do i fill out a 1040x form See Form 6197. How do i fill out a 1040x form Some of these items are discussed next. How do i fill out a 1040x form For a more detailed list of items that decrease basis, see section 1016 of the Internal Revenue Code and Publication 551. How do i fill out a 1040x form Depreciation and section 179 deduction. How do i fill out a 1040x form   The adjustments you must make to the basis of the property if you take the section 179 deduction or depreciate the property are explained next. How do i fill out a 1040x form For more information on these deductions, see chapter 7. How do i fill out a 1040x form Section 179 deduction. How do i fill out a 1040x form   If you take the section 179 expense deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. How do i fill out a 1040x form Depreciation. How do i fill out a 1040x form   Decrease the basis of property by the depreciation you deducted or could have deducted on your tax returns under the method of depreciation you chose. How do i fill out a 1040x form If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. How do i fill out a 1040x form If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. How do i fill out a 1040x form   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for any year. How do i fill out a 1040x form   See chapter 7 for information on figuring the depreciation you should have claimed. How do i fill out a 1040x form   In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation you must capitalize under the uniform capitalization rules. How do i fill out a 1040x form Casualty and theft losses. How do i fill out a 1040x form   If you have a casualty or theft loss, decrease the basis of the property by any insurance or other reimbursement. How do i fill out a 1040x form Also, decrease it by any deductible loss not covered by insurance. How do i fill out a 1040x form See chapter 11 for information about figuring your casualty or theft loss. How do i fill out a 1040x form   You must increase your basis in the property by the amount you spend on clean-up costs (such as debris removal) and repairs that restore the property to its pre-casualty condition. How do i fill out a 1040x form To make this determination, compare the repaired property to the property before the casualty. How do i fill out a 1040x form Easements. How do i fill out a 1040x form   The amount you receive for granting an easement is usually considered to be proceeds from the sale of an interest in the real property. How do i fill out a 1040x form It reduces the basis of the affected part of the property. How do i fill out a 1040x form If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. How do i fill out a 1040x form See Easements and rights-of-way in chapter 3. How do i fill out a 1040x form Exclusion from income of subsidies for energy conservation measures. How do i fill out a 1040x form   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. How do i fill out a 1040x form Reduce the basis of the property by the excluded amount. How do i fill out a 1040x form Canceled debt excluded from income. How do i fill out a 1040x form   If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. How do i fill out a 1040x form A debt includes any indebtedness for which you are liable or which attaches to property you hold. How do i fill out a 1040x form   You can exclude your canceled debt from income if the debt is any of the following. How do i fill out a 1040x form Debt canceled in a bankruptcy case or when you are insolvent. How do i fill out a 1040x form Qualified farm debt. How do i fill out a 1040x form Qualified real property business debt (provided you are not a C corporation). How do i fill out a 1040x form Qualified principal residence indebtedness. How do i fill out a 1040x form Discharge of certain indebtedness of a qualified individual because of Midwestern disasters. How do i fill out a 1040x form If you exclude canceled debt described in (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. How do i fill out a 1040x form If you exclude canceled debt described in (3), you must only reduce the basis of your depreciable property by the excluded amount. How do i fill out a 1040x form   For more information about canceled debt in a bankruptcy case, see Publication 908, Bankruptcy Tax Guide. How do i fill out a 1040x form For more information about insolvency and canceled debt that is qualified farm debt or qualified principal residence indebtedness, see chapter 3. How do i fill out a 1040x form For more information about qualified real property business debt, see Publication 334, Tax Guide for Small Business. How do i fill out a 1040x form For more information about canceled debt in Midwestern disaster areas, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. How do i fill out a 1040x form Basis Other Than Cost There are times when you cannot use cost as basis. How do i fill out a 1040x form In these situations, the fair market value or the adjusted basis of property may be used. How do i fill out a 1040x form Examples are discussed next. How do i fill out a 1040x form Property changed from personal to business or rental use. How do i fill out a 1040x form   When you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. How do i fill out a 1040x form An example of changing property from personal to business use would be changing the use of your pickup truck that you originally purchased for your personal use to use in your farming business. How do i fill out a 1040x form   The basis for depreciation is the lesser of: The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. How do i fill out a 1040x form   If you later sell or dispose of this property, the basis you use will depend on whether you are figuring a gain or loss. How do i fill out a 1040x form The basis for figuring a gain is your adjusted basis in the property when you sell the property. How do i fill out a 1040x form Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. How do i fill out a 1040x form Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . How do i fill out a 1040x form Property received for services. How do i fill out a 1040x form   If you receive property for services, include the property's FMV in income. How do i fill out a 1040x form The amount you include in income becomes your basis. How do i fill out a 1040x form If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. How do i fill out a 1040x form Example. How do i fill out a 1040x form George Smith is an accountant and also operates a farming business. How do i fill out a 1040x form George agreed to do some accounting work for his neighbor in exchange for a dairy cow. How do i fill out a 1040x form The accounting work and the cow are each worth $1,500. How do i fill out a 1040x form George must include $1,500 in income for his accounting services. How do i fill out a 1040x form George's basis in the cow is $1,500. How do i fill out a 1040x form Taxable Exchanges A taxable exchange is one in which the gain is taxable, or the loss is deductible. How do i fill out a 1040x form A taxable gain or deductible loss also is known as a recognized gain or loss. How do i fill out a 1040x form A taxable exchange occurs when you receive cash or get property that is not similar or related in use to the property exchanged. How do i fill out a 1040x form If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. How do i fill out a 1040x form Example. How do i fill out a 1040x form You trade a tract of farmland with an adjusted basis of $2,000 for a tractor that has an FMV of $6,000. How do i fill out a 1040x form You must report a taxable gain of $4,000 for the land. How do i fill out a 1040x form The tractor has a basis of $6,000. How do i fill out a 1040x form Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property you receive using the basis of the converted property. How do i fill out a 1040x form Similar or related property. How do i fill out a 1040x form   If the replacement property is similar or related in service or use to the converted property, the replacement property's basis is the same as the old property's basis on the date of the conversion. How do i fill out a 1040x form However, make the following adjustments. How do i fill out a 1040x form Decrease the basis by the following amounts. How do i fill out a 1040x form Any loss you recognize on the involuntary conversion. How do i fill out a 1040x form Any money you receive that you do not spend on similar property. How do i fill out a 1040x form Increase the basis by the following amounts. How do i fill out a 1040x form Any gain you recognize on the involuntary conversion. How do i fill out a 1040x form Any cost of acquiring the replacement property. How do i fill out a 1040x form Money or property not similar or related. How do i fill out a 1040x form   If you receive money or property not similar or related in service or use to the converted property and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the involuntary conversion. How do i fill out a 1040x form Allocating the basis. How do i fill out a 1040x form   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. How do i fill out a 1040x form Basis for depreciation. How do i fill out a 1040x form   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. How do i fill out a 1040x form For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. How do i fill out a 1040x form For more information about involuntary conversions, see chapter 11. How do i fill out a 1040x form Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. How do i fill out a 1040x form A nontaxable gain or loss also is known as an unrecognized gain or loss. How do i fill out a 1040x form If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. How do i fill out a 1040x form Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. How do i fill out a 1040x form For an exchange to qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. How do i fill out a 1040x form There must also be an exchange of like-kind property. How do i fill out a 1040x form For more information, see Like-Kind Exchanges in  chapter 8. How do i fill out a 1040x form The basis of the property you receive generally is the same as the adjusted basis of the property you gave up. How do i fill out a 1040x form Example 1. How do i fill out a 1040x form You traded a truck you used in your farming business for a new smaller truck to use in farming. How do i fill out a 1040x form The adjusted basis of the old truck was $10,000. How do i fill out a 1040x form The FMV of the new truck is $30,000. How do i fill out a 1040x form Because this is a nontaxable exchange, you do not recognize any gain, and your basis in the new truck is $10,000, the same as the adjusted basis of the truck you traded. How do i fill out a 1040x form Example 2. How do i fill out a 1040x form You trade a field cultivator (adjusted basis of $8,000) for a planter (FMV of $9,000). How do i fill out a 1040x form You use both the field cultivator and the planter in your farming business. How do i fill out a 1040x form The basis of the planter you receive is $8,000, the same as the field cultivator traded Exchange expenses. How do i fill out a 1040x form   Exchange expenses generally are the closing costs that you pay. How do i fill out a 1040x form They include such items as brokerage commissions, attorney fees, and deed preparation fees. How do i fill out a 1040x form Add them to the basis of the like-kind property you receive. How do i fill out a 1040x form Property plus cash. How do i fill out a 1040x form   If you trade property in a like-kind exchange and also pay money, the basis of the property you receive is the adjusted basis of the property you gave up plus the money you paid. How do i fill out a 1040x form Example. How do i fill out a 1040x form You trade in a truck (adjusted basis of $3,000) for another truck (FMV of $7,500) and pay $4,000. How do i fill out a 1040x form Your basis in the new truck is $7,000 (the $3,000 adjusted basis of the old truck plus the $4,000 cash). How do i fill out a 1040x form Special rules for related persons. How do i fill out a 1040x form   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. How do i fill out a 1040x form Each person must report any gain or loss not recognized on the original exchange unless the loss is not deductible under the related party rules. How do i fill out a 1040x form Each person reports it on the tax return filed for the year in which the later disposition occurred. How do i fill out a 1040x form If this rule applies, the basis of the property received in the original exchange will be its FMV. How do i fill out a 1040x form For more information, see chapter 8. How do i fill out a 1040x form Exchange of business property. How do i fill out a 1040x form   Exchanging the property of one business for the property of another business generally is a multiple property exchange. How do i fill out a 1040x form For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. How do i fill out a 1040x form Basis for depreciation. How do i fill out a 1040x form   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind transaction. How do i fill out a 1040x form For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. How do i fill out a 1040x form Partially Nontaxable Exchanges A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. How do i fill out a 1040x form The basis of the property you receive is the same as the adjusted basis of the property you gave up with the following adjustments. How do i fill out a 1040x form Decrease the basis by the following amounts. How do i fill out a 1040x form Any money you receive. How do i fill out a 1040x form Any loss you recognize on the exchange. How do i fill out a 1040x form Increase the basis by the following amounts. How do i fill out a 1040x form Any additional costs you incur. How do i fill out a 1040x form Any gain you recognize on the exchange. How do i fill out a 1040x form If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. How do i fill out a 1040x form Example 1. How do i fill out a 1040x form You trade farmland (basis of $100,000) for another tract of farmland (FMV of $110,000) and $30,000 cash. How do i fill out a 1040x form You realize a gain of $40,000. How do i fill out a 1040x form This is the FMV of the land received plus the cash minus the basis of the land you traded ($110,000 + $30,000 − $100,000). How do i fill out a 1040x form Include your gain in income (recognize gain) only to the extent of the cash received. How do i fill out a 1040x form Your basis in the land you received is figured as follows. How do i fill out a 1040x form Basis of land traded $100,000 Minus: Cash received (adjustment 1(a)) − 30,000   $70,000 Plus: Gain recognized (adjustment 2(b)) + 30,000 Basis of land received $100,000 Example 2. How do i fill out a 1040x form You trade a truck (adjusted basis of $22,750) for another truck (FMV of $20,000) and $10,000 cash. How do i fill out a 1040x form You realize a gain of $7,250. How do i fill out a 1040x form This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($20,000 + $10,000 − $22,750). How do i fill out a 1040x form You include all the gain in your income (recognize gain) because the gain is less than the cash you received. How do i fill out a 1040x form Your basis in the truck you received is figured as follows. How do i fill out a 1040x form Adjusted basis of truck traded $22,750 Minus: Cash received (adjustment 1(a)) −10,000   $12,750 Plus: Gain recognized (adjustment 2(b)) + 7,250 Basis of truck received $20,000 Allocation of basis. How do i fill out a 1040x form   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. How do i fill out a 1040x form The rest is the basis of the like-kind property. How do i fill out a 1040x form Example. How do i fill out a 1040x form You traded a tractor with an adjusted basis of $15,000 for another tractor that had an FMV of $12,500. How do i fill out a 1040x form You also received $1,000 cash and a truck that had an FMV of $3,000. How do i fill out a 1040x form The truck is unlike property. How do i fill out a 1040x form You realized a gain of $1,500. How do i fill out a 1040x form This is the FMV of the tractor received plus the FMV of the truck received plus the cash minus the adjusted basis of the tractor you traded ($12,500 + $3,000 + $1,000 − $15,000). How do i fill out a 1040x form You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. How do i fill out a 1040x form Your basis in the properties you received is figured as follows. How do i fill out a 1040x form Adjusted basis of old tractor $15,000 Minus: Cash received (adjustment 1(a)) − 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) + 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property—the truck ($3,000). How do i fill out a 1040x form This is the truck's FMV. How do i fill out a 1040x form The rest ($12,500) is the basis of the tractor. How do i fill out a 1040x form Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. How do i fill out a 1040x form Example. How do i fill out a 1040x form You used a tractor on your farm for 3 years. How do i fill out a 1040x form Its adjusted basis is $22,000 and its FMV is $40,000. How do i fill out a 1040x form You are interested in a new tractor, which sells for $60,000. How do i fill out a 1040x form Ordinarily, you would trade your old tractor for the new one and pay the dealer $20,000. How do i fill out a 1040x form Your basis for depreciating the new tractor would then be $42,000 ($20,000 + $22,000, the adjusted basis of your old tractor). How do i fill out a 1040x form However, you want a higher basis for depreciating the new tractor, so you agree to pay the dealer $60,000 for the new tractor if he will pay you $40,000 for your old tractor. How do i fill out a 1040x form Because the two transactions are dependent on each other, you are treated as having exchanged your old tractor for the new one and paid $20,000 ($60,000 − $40,000). How do i fill out a 1040x form Your basis for depreciating the new tractor is $42,000, the same as if you traded the old tractor. How do i fill out a 1040x form Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you. How do i fill out a 1040x form You also must know its FMV at the time it was given to you and any gift tax paid on it. How do i fill out a 1040x form FMV equal to or greater than donor's adjusted basis. How do i fill out a 1040x form   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis when you received the gift. How do i fill out a 1040x form Increase your basis by all or part of any gift tax paid, depending on the date of the gift. How do i fill out a 1040x form   Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. How do i fill out a 1040x form See Adjusted Basis , earlier. How do i fill out a 1040x form   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. How do i fill out a 1040x form Figure the increase by multiplying the gift tax paid by the following fraction. How do i fill out a 1040x form Net increase in value of the gift Amount of the gift   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. How do i fill out a 1040x form The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. How do i fill out a 1040x form Example. How do i fill out a 1040x form In 2013, you received a gift of property from your mother that had an FMV of $50,000. How do i fill out a 1040x form Her adjusted basis was $20,000. How do i fill out a 1040x form The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). How do i fill out a 1040x form She paid a gift tax of $7,320. How do i fill out a 1040x form Your basis, $26,076, is figured as follows. How do i fill out a 1040x form Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000 Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . How do i fill out a 1040x form 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. How do i fill out a 1040x form If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. How do i fill out a 1040x form However, your basis cannot exceed the FMV of the gift when it was given to you. How do i fill out a 1040x form FMV less than donor's adjusted basis. How do i fill out a 1040x form   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. How do i fill out a 1040x form Your basis for figuring gain is the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. How do i fill out a 1040x form Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. How do i fill out a 1040x form (See Adjusted Basis , earlier. How do i fill out a 1040x form )   If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither gain nor loss on the sale or other disposition of the property. How do i fill out a 1040x form Example. How do i fill out a 1040x form You received farmland as a gift from your parents when they retired from farming. How do i fill out a 1040x form At the time of the gift, the land had an FMV of $80,000. How do i fill out a 1040x form Your parents' adjusted basis was $100,000. How do i fill out a 1040x form After you received the land, no events occurred that would increase or decrease your basis. How do i fill out a 1040x form If you sell the land for $120,000, you will have a $20,000 gain because you must use the donor's adjusted basis at the time of the gift ($100,000) as your basis to figure a gain. How do i fill out a 1040x form If you sell the land for $70,000, you will have a $10,000 loss because you must use the FMV at the time of the gift ($80,000) as your basis to figure a loss. How do i fill out a 1040x form If the sales price is between $80,000 and $100,000, you have neither gain nor loss. How do i fill out a 1040x form For instance, if the sales price was $90,000 and you tried to figure a gain using the donor's adjusted basis ($100,000), you would get a $10,000 loss. How do i fill out a 1040x form If you then tried to figure a loss using the FMV ($80,000), you would get a $10,000 gain. How do i fill out a 1040x form Business property. How do i fill out a 1040x form   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. How do i fill out a 1040x form Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. How do i fill out a 1040x form The same rule applies to a transfer by your former spouse if the transfer is incident to divorce. How do i fill out a 1040x form However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed plus the liabilities to which the property is subject are more than the adjusted basis of the property transferred. How do i fill out a 1040x form The transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. How do i fill out a 1040x form For more information, see Property Settlements in Publication 504, Divorced or Separated Individuals. How do i fill out a 1040x form Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. How do i fill out a 1040x form If a federal estate return is filed, you can use its appraised value. How do i fill out a 1040x form The FMV on the alternate valuation date, if the personal representative for the estate elects to use alternate valuation. How do i fill out a 1040x form For information on the alternate valuation, see the Instructions for Form 706. How do i fill out a 1040x form The decedent's adjusted basis in land to the extent of the value that is excluded from the decedent's taxable estate as a qualified conservation easement. How do i fill out a 1040x form If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. How do i fill out a 1040x form Special-use valuation method. How do i fill out a 1040x form   Under certain conditions, when a person dies, the executor or personal representative of that person's estate may elect to value qualified real property at other than its FMV. How do i fill out a 1040x form If so, the executor or personal representative values the qualified real property based on its use as a farm or other closely held business. How do i fill out a 1040x form If the executor or personal representative elects this method of valuation for estate tax purposes, this value is the basis of the property for the qualified heirs. How do i fill out a 1040x form The qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. How do i fill out a 1040x form   If you are a qualified heir who received special-use valuation property, increase your basis by any gain recognized by the estate or trust because of post-death appreciation. How do i fill out a 1040x form Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or on the alternate valuation date. How do i fill out a 1040x form Figure all FMVs without regard to the special-use valuation. How do i fill out a 1040x form   You may be liable for an additional estate tax if, within 10 years after the death of the decedent, you transfer the property or the property stops being used as a farm. How do i fill out a 1040x form This tax does not apply if you dispose of the property in a like-kind exchange or in an involuntary conversion in which all of the proceeds are reinvested in qualified replacement property. How do i fill out a 1040x form The tax also does not apply if you transfer the property to a member of your family and certain requirements are met. How do i fill out a 1040x form   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. How do i fill out a 1040x form To increase your basis, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of payment of the additional estate tax. How do i fill out a 1040x form If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. How do i fill out a 1040x form The increase in your basis is considered to have occurred immediately before the event that resulted in the additional estate tax. How do i fill out a 1040x form   You make the election by filing, with Form 706-A, United States Additional Estate Tax Return, a statement that: Contains your (and the estate's) name, address, and taxpayer identification number; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which you are making the election; and Provides any additional information required by the Form 706-A instructions. How do i fill out a 1040x form   For more information, see Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Form 706-A, and the related instructions. How do i fill out a 1040x form Property inherited from a decedent who died in 2010. How do i fill out a 1040x form   If you inherited property from a decedent who died in 2010, different rules may apply. How do i fill out a 1040x form See Publication 4895, Tax Treatment of Property Acquired From a Decendent Dying in 2010, for details. How do i fill out a 1040x form Property Distributed From a Partnership or Corporation The following rules apply to determine a partner's basis and a shareholder's basis in property distributed respectively from a partnership to the partner with respect to the partner's interest in the partnership and from a corporation to the shareholder with respect to the shareholder's ownership of stock in the corporation. How do i fill out a 1040x form Partner's basis. How do i fill out a 1040x form   Unless there is a complete liquidation of a partner's interest, the basis of property (other than money) distributed by a partnership to the partner is its adjusted basis to the partnership immediately before the distribution. How do i fill out a 1040x form However, the basis of the property to the partner cannot be more than the adjusted basis of his or her interest in the partnership reduced by any money received in the same transaction. How do i fill out a 1040x form For more information, see Partner's Basis for Distributed Property in Publication 541, Partnerships. How do i fill out a 1040x form Shareholder's basis. How do i fill out a 1040x form   The basis of property distributed by a corporation to a shareholder is its fair market value. How do i fill out a 1040x form For more information about corporate distributions, see Distributions to Shareholders in Publication 542, Corporations. 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The How Do I Fill Out A 1040x Form

How do i fill out a 1040x form 1. How do i fill out a 1040x form   Scholarships, Fellowships, Grants, and Tuition Reductions Table of Contents Reminder Introduction Scholarships and FellowshipsTax-Free Scholarships and Fellowships Taxable Scholarships and Fellowships Reporting Scholarships and Fellowships Other Types of Educational AssistanceFulbright Grants Pell Grants and Other Title IV Need-Based Education Grants Payment to Service Academy Cadets Veterans' Benefits Qualified Tuition Reduction Reminder Individual retirement arrangements (IRAs). How do i fill out a 1040x form  You can set up and make contributions to an IRA if you receive taxable compensation. How do i fill out a 1040x form Under this rule, a taxable scholarship or fellowship is compensation only if it is shown in box 1 of your Form W-2, Wage and Tax Statement. How do i fill out a 1040x form For more information about IRAs, see Publication 590. How do i fill out a 1040x form Introduction This chapter discusses the income tax treatment of various types of educational assistance you may receive if you are studying, teaching, or researching in the United States. How do i fill out a 1040x form The educational assistance can be for a primary or secondary school, a college or university, or a vocational school. How do i fill out a 1040x form Included are discussions of: Scholarships, Fellowships, Need-based education grants, such as a Pell Grant, and Qualified tuition reductions. How do i fill out a 1040x form Many types of educational assistance are tax free if they meet the requirements discussed here. How do i fill out a 1040x form Special rules apply to U. How do i fill out a 1040x form S. How do i fill out a 1040x form citizens and resident aliens who have received scholarships or fellowships for studying, teaching, or researching abroad. How do i fill out a 1040x form For information about these rules, see Publication 54, Tax Guide for U. How do i fill out a 1040x form S. How do i fill out a 1040x form Citizens and Resident Aliens Abroad. How do i fill out a 1040x form Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student (whether an undergraduate or a graduate) at an educational institution to aid in the pursuit of his or her studies. How do i fill out a 1040x form A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. How do i fill out a 1040x form Amount of scholarship or fellowship. How do i fill out a 1040x form   The amount of a scholarship or fellowship includes the following: The value of contributed services and accommodations. How do i fill out a 1040x form This includes such services and accommodations as room (lodging), board (meals), laundry service, and similar services or accommodations that are received by an individual as a part of a scholarship or fellowship. How do i fill out a 1040x form The amount of tuition, matriculation, and other fees that are paid or remitted to the student to aid the student in pursuing study or research. How do i fill out a 1040x form Any amount received in the nature of a family allowance as a part of a scholarship or fellowship. How do i fill out a 1040x form Tax-Free Scholarships and Fellowships A scholarship or fellowship is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. How do i fill out a 1040x form A scholarship or fellowship is tax free only to the extent: It does not exceed your expenses; It is not designated or earmarked for other purposes (such as room and board), and does not require (by its terms) that it cannot be used for qualified education expenses; and It does not represent payment for teaching, research, or other services required as a condition for receiving the scholarship. How do i fill out a 1040x form (But for exceptions, see Payment for services,later. How do i fill out a 1040x form Use Worksheet 1–1 to figure the amount of a scholarship or fellowship you can exclude from gross income. How do i fill out a 1040x form Candidate for a degree. How do i fill out a 1040x form   You are a candidate for a degree if you: Attend a primary or secondary school or are pursuing a degree at a college or university, or Attend an educational institution that: Provides a program that is acceptable for full credit toward a bachelor's or higher degree, or offers a program of training to prepare students for gainful employment in a recognized occupation; and Is authorized under federal or state law to provide such a program and is accredited by a nationally recognized accreditation agency. How do i fill out a 1040x form Eligible educational institution. How do i fill out a 1040x form   An eligible educational institution is one whose primary function is the presentation of formal instruction and that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. How do i fill out a 1040x form Qualified education expenses. How do i fill out a 1040x form   For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution, and Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. How do i fill out a 1040x form These items must be required of all students in your course of instruction. How do i fill out a 1040x form Expenses that do not qualify. How do i fill out a 1040x form   Qualified education expenses do not include the cost of: Room and board, Travel, Research, Clerical help, or Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. How do i fill out a 1040x form Payment for services. How do i fill out a 1040x form   Generally, you cannot exclude from your gross income the part of any scholarship or fellowship that represents payment for teaching, research, or other services required as a condition for receiving the scholarship. How do i fill out a 1040x form This applies even if all candidates for a degree must perform the services to receive the degree. How do i fill out a 1040x form (See exceptions next. How do i fill out a 1040x form ) Exceptions. How do i fill out a 1040x form   You do not have to treat as payment for services the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. How do i fill out a 1040x form Example 1. How do i fill out a 1040x form You received a scholarship of $2,500. How do i fill out a 1040x form The scholarship was not received under either of the exceptions mentioned above. How do i fill out a 1040x form As a condition for receiving the scholarship, you must serve as a part-time teaching assistant. How do i fill out a 1040x form Of the $2,500 scholarship, $1,000 represents payment for teaching. How do i fill out a 1040x form The provider of your scholarship gives you a Form W-2 showing $1,000 as income. How do i fill out a 1040x form Your qualified education expenses were at least $1,500. How do i fill out a 1040x form Assuming that all other conditions are met, $1,500 of your scholarship is tax free. How do i fill out a 1040x form The $1,000 you received for teaching is taxable. How do i fill out a 1040x form Example 2. How do i fill out a 1040x form You are a candidate for a degree at a medical school. How do i fill out a 1040x form You receive a scholarship (not under either of the exceptions mentioned above) for your medical education and training. How do i fill out a 1040x form The terms of your scholarship require you to perform future services. How do i fill out a 1040x form A substantial penalty applies if you do not comply. How do i fill out a 1040x form The entire amount of your grant is taxable as payment for services in the year it is received. How do i fill out a 1040x form Athletic Scholarships An athletic scholarship is tax free only if and to the extent it meets the requirements discussed later. How do i fill out a 1040x form Worksheet 1-1. How do i fill out a 1040x form    You can use Worksheet 1-1, Taxable Scholarship and Fellowship Income , later, to figure the tax-free and taxable parts of your athletic scholarship. How do i fill out a 1040x form    Worksheet 1-1. How do i fill out a 1040x form Taxable Scholarship and Fellowship Income 1. How do i fill out a 1040x form Enter the total amount of any scholarship or fellowship for 2013. How do i fill out a 1040x form See Amount of scholarship or fellowship, earlier. How do i fill out a 1040x form 1. How do i fill out a 1040x form       If you are a degree candidate at an eligible educational institution, go to line 2. How do i fill out a 1040x form If you are not a degree candidate at an eligible educational institution, stop here. How do i fill out a 1040x form The entire amount is taxable. How do i fill out a 1040x form For information on how to report this amount on your tax return, see Reporting Scholarships and Fellowships , earlier, in this chapter. How do i fill out a 1040x form       2. How do i fill out a 1040x form Enter the amount from line 1 that was for teaching, research, or any other services required as a condition for receiving the scholarship. How do i fill out a 1040x form (Do not include amounts received for these items under the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program. How do i fill out a 1040x form ) 2. How do i fill out a 1040x form     3. How do i fill out a 1040x form Subtract line 2 from line 1 3. How do i fill out a 1040x form     4. How do i fill out a 1040x form Enter the amount from line 3 that your scholarship or fellowship required you to use for other than qualified education expenses 4. How do i fill out a 1040x form     5. How do i fill out a 1040x form Subtract line 4 from line 3 5. How do i fill out a 1040x form     6. How do i fill out a 1040x form Enter the amount of your qualified education expenses 6. How do i fill out a 1040x form     7. How do i fill out a 1040x form Enter the smaller of line 5 or line 6. How do i fill out a 1040x form This amount is the most you can exclude from your gross income (the tax-free part of the scholarship or fellowship) 7. How do i fill out a 1040x form     8. How do i fill out a 1040x form Subtract line 7 from line 5 8. How do i fill out a 1040x form     9. How do i fill out a 1040x form Taxable part. How do i fill out a 1040x form Add lines 2, 4, and 8. How do i fill out a 1040x form See Reporting Scholarships and Fellowships , earlier, for how to report this amount on your tax return 9. How do i fill out a 1040x form     Taxable Scholarships and Fellowships If and to the extent your scholarship or fellowship does not meet the requirements described earlier, it is taxable and must be included in gross income. How do i fill out a 1040x form You can use Worksheet 1–1, Taxable Scholarship and Fellowship Income, later, to figure the tax-free and taxable parts of your scholarship or fellowship. How do i fill out a 1040x form Reporting Scholarships and Fellowships Whether you must report your scholarship or fellowship depends on whether you must file a return and whether any part of your scholarship or fellowship is taxable. How do i fill out a 1040x form If your only income is a completely tax-free scholarship or fellowship, you do not have to file a tax return and no reporting is necessary. How do i fill out a 1040x form If all or part of your scholarship or fellowship is taxable and you are required to file a tax return, report the taxable amount as explained below. How do i fill out a 1040x form You must report the taxable amount whether or not you received a Form W-2. How do i fill out a 1040x form If you receive an incorrect Form W-2, ask the payer for a corrected one. How do i fill out a 1040x form For information on whether you must file a return, see Publication 501, Exemptions, Standard Deduction, and Filing Information, or your income tax form instructions. How do i fill out a 1040x form How To Report How you report any taxable scholarship or fellowship income depends on which return you file. How do i fill out a 1040x form Form 1040EZ. How do i fill out a 1040x form   If you file Form 1040EZ, include the taxable amount in the total on line 1. How do i fill out a 1040x form If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 1. How do i fill out a 1040x form Form 1040A. How do i fill out a 1040x form   If you file Form 1040A, include the taxable amount in the total on line 7. How do i fill out a 1040x form If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount in the space to the left of line 7. How do i fill out a 1040x form Form 1040. How do i fill out a 1040x form   If you file Form 1040, include the taxable amount in the total on line 7. How do i fill out a 1040x form If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7. How do i fill out a 1040x form Schedule SE (Form 1040). How do i fill out a 1040x form   To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. How do i fill out a 1040x form If your net earnings are $400 or more, you must pay self-employment tax. How do i fill out a 1040x form Use Schedule SE, Self-Employment Tax, to figure this tax. How do i fill out a 1040x form Form 1040NR. How do i fill out a 1040x form   If you file Form 1040NR, report the taxable amount on line 12. How do i fill out a 1040x form Generally, you must report the amount shown in box 2 of Form(s) 1042-S, Foreign Person's U. How do i fill out a 1040x form S. How do i fill out a 1040x form Source Income Subject to Withholding. How do i fill out a 1040x form See the Instructions for Form 1040NR for more information. How do i fill out a 1040x form Form 1040NR-EZ. How do i fill out a 1040x form   If you file Form 1040NR-EZ, report the taxable amount on line 5. How do i fill out a 1040x form Generally, you must report the amount shown in box 2 of Form(s) 1042-S. How do i fill out a 1040x form See the Instructions for Form 1040NR-EZ for more information. How do i fill out a 1040x form Other Types of Educational Assistance The following discussions deal with other common types of educational assistance. How do i fill out a 1040x form Fulbright Grants A Fulbright grant is generally treated as a scholarship or fellowship in figuring how much of the grant is tax free. How do i fill out a 1040x form Pell Grants and Other Title IV Need-Based Education Grants These need-based grants are treated as scholarships for purposes of determining their tax treatment. How do i fill out a 1040x form They are tax free to the extent used for qualified education expenses during the period for which a grant is awarded. How do i fill out a 1040x form Payment to Service Academy Cadets An appointment to a United States military academy is not a scholarship or fellowship. How do i fill out a 1040x form Payment you receive as a cadet or midshipman at an armed services academy is pay for personal services and will be reported to you in box 1 of Form W-2. How do i fill out a 1040x form Include this pay in your income in the year you receive it unless one of the exceptions, discussed earlier under Payment for services , applies. How do i fill out a 1040x form Veterans' Benefits Payments you receive for education, training, or subsistence under any law administered by the Department of Veterans Affairs (VA) are tax free. How do i fill out a 1040x form Do not include these payments as income on your federal tax return. How do i fill out a 1040x form If you qualify for one or more of the education benefits discussed in chapters 2 through 12, you may have to reduce the amount of education expenses qualifying for a specific benefit by part or all of your VA payments. How do i fill out a 1040x form This applies only to the part of your VA payments that is required to be used for education expenses. How do i fill out a 1040x form You may want to visit the Veteran's Administration website at www. How do i fill out a 1040x form gibill. How do i fill out a 1040x form va. How do i fill out a 1040x form gov for specific information about the various VA benefits for education. How do i fill out a 1040x form Example. How do i fill out a 1040x form You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. How do i fill out a 1040x form Neither of these benefits is taxable and you do not report them on your tax return. How do i fill out a 1040x form You also want to claim an American opportunity credit on your return. How do i fill out a 1040x form You paid $5,000 in qualified education expenses (see chapter 2, American Opportunity Credit , later). How do i fill out a 1040x form To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. How do i fill out a 1040x form You do not subtract any amount of the BHA because it was paid to you and its use was not restricted. How do i fill out a 1040x form Qualified Tuition Reduction If you are allowed to study tuition free or for a reduced rate of tuition, you may not have to pay tax on this benefit. How do i fill out a 1040x form This is called a “tuition reduction. How do i fill out a 1040x form ” You do not have to include a qualified tuition reduction in your income. How do i fill out a 1040x form A tuition reduction is qualified only if you receive it from, and use it at, an eligible educational institution. How do i fill out a 1040x form You do not have to use the tuition reduction at the eligible educational institution from which you received it. How do i fill out a 1040x form In other words, if you work for an eligible educational institution and the institution arranges for you to take courses at another eligible educational institution without paying any tuition, you may not have to include the value of the free courses in your income. How do i fill out a 1040x form The rules for determining if a tuition reduction is qualified, and therefore tax free, are different if the education provided is below the graduate level or is graduate education. How do i fill out a 1040x form You must include in your income any tuition reduction you receive that is payment for your services. How do i fill out a 1040x form Eligible educational institution. How do i fill out a 1040x form   An eligible educational institution is one that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. How do i fill out a 1040x form Officers, owners, and highly compensated employees. How do i fill out a 1040x form   Qualified tuition reductions apply to officers, owners, or highly compensated employees only if benefits are available to employees on a nondiscriminatory basis. How do i fill out a 1040x form This means that the tuition reduction benefits must be available on substantially the same basis to each member of a group of employees. How do i fill out a 1040x form The group must be defined under a reasonable classification set up by the employer. How do i fill out a 1040x form The classification must not discriminate in favor of owners, officers, or highly compensated employees. How do i fill out a 1040x form Payment for services. How do i fill out a 1040x form   Generally, you must include in income the part of any qualified tuition reduction that represents payment for teaching, research, or other services by the student required as a condition of receiving the qualified tuition reduction. How do i fill out a 1040x form This applies even if all candidates for a degree must perform the services to receive the degree. How do i fill out a 1040x form (See below for exceptions. How do i fill out a 1040x form ) Exceptions. How do i fill out a 1040x form   You do not have to include in income the part of any scholarship or fellowship that represents payment for teaching, research, or other services if you receive the amount under: The National Health Service Corps Scholarship Program, or The Armed Forces Health Professions Scholarship and Financial Assistance Program. How do i fill out a 1040x form Education Below the Graduate Level If you receive a tuition reduction for education below the graduate level (including primary, secondary, or high school), it is a qualified tuition reduction, and therefore tax free, only if your relationship to the educational institution providing the benefit is described below. How do i fill out a 1040x form You are an employee of the eligible educational institution. How do i fill out a 1040x form You were an employee of the eligible educational institution, but you retired or left on disability. How do i fill out a 1040x form You are a widow or widower of an individual who died while an employee of the eligible educational institution or who retired or left on disability. How do i fill out a 1040x form You are the dependent child or spouse of an individual described in (1) through (3), above. How do i fill out a 1040x form Child of deceased parents. How do i fill out a 1040x form   For purposes of the qualified tuition reduction, a child is a dependent child if the child is under age 25 and both parents have died. How do i fill out a 1040x form Child of divorced parents. How do i fill out a 1040x form   For purposes of the qualified tuition reduction, a dependent child of divorced parents is treated as the dependent of both parents. How do i fill out a 1040x form Graduate Education A tuition reduction you receive for graduate education is qualified, and therefore tax free, if both of the following requirements are met. How do i fill out a 1040x form It is provided by an eligible educational institution. How do i fill out a 1040x form You are a graduate student who performs teaching or research activities for the educational institution. How do i fill out a 1040x form You must include in income any other tuition reductions for graduate education that you receive. How do i fill out a 1040x form How To Report Any tuition reduction that is taxable should be included as wages in box 1 of your Form W-2. How do i fill out a 1040x form Report the amount from Form W-2, box 1, on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). How do i fill out a 1040x form Prev  Up  Next   Home   More Online Publications