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How To File 2010 Tax Return

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How To File 2010 Tax Return

How to file 2010 tax return Index A Adoption Taxpayer identification number, Adoption taxpayer identification number (ATIN). How to file 2010 tax return Aliens, Individual taxpayer identification number (ITIN) for aliens. How to file 2010 tax return Alternative minimum tax (AMT), Limit on credit. How to file 2010 tax return Amount of credit, Amount of Credit, Payments for prior year's expenses. How to file 2010 tax return Limit on, Limit on credit. How to file 2010 tax return Assistance (see Tax help) C Calculation of credit, How To Figure the Credit, Payments for prior year's expenses. How to file 2010 tax return Camp, overnight, Camp. How to file 2010 tax return Care Dependent care benefits, Dependent care benefits. How to file 2010 tax return , Dependent care benefits. How to file 2010 tax return Employer-provided benefits, Dependent Care Benefits Outside home, Care outside your home. How to file 2010 tax return Provider identification, Provider Identification Test Qualifying person, Care of a Qualifying Person Children Divorced or separated parents, Child of divorced or separated parents or parents living apart. How to file 2010 tax return Physically or mentally disabled, Qualifying Person Test Under age 13, Qualifying Person Test Work-related expense payments to relatives, Payments to Relatives or Dependents Church employee, Clergy or church employee. How to file 2010 tax return Claiming of credit, How To Claim the Credit Tests to claim credit, Tests To Claim the Credit Clergy, Clergy or church employee. How to file 2010 tax return Community property, Community property laws. How to file 2010 tax return D Death of spouse, Death of spouse. How to file 2010 tax return Dependent care benefits, Dependent care benefits. How to file 2010 tax return , Dependent Care Benefits Dependent care centers, Dependent care center. How to file 2010 tax return Dependent defined, Dependent defined. How to file 2010 tax return Dependents (see Qualifying person test) Deposits, Fees and deposits. How to file 2010 tax return Disabilities, persons with Dependents, Qualifying Person Test Physically or mentally not able to care for self, Physically or mentally not able to care for oneself. How to file 2010 tax return Spouse, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. How to file 2010 tax return , Working or Looking for Work, You or your spouse is a student or not able to care for self. How to file 2010 tax return Divorced parents, Child of divorced or separated parents or parents living apart. How to file 2010 tax return Dollar limit, Dollar Limit, Yearly limit. How to file 2010 tax return Reduced dollar limit, Tests To Claim the Credit, Reduced Dollar Limit Domestic help, Housekeeper. How to file 2010 tax return Due diligence, Due diligence. How to file 2010 tax return E Earned income Dependent care benefits, Exclusion or deduction. How to file 2010 tax return For figuring credit, Earned Income Test Limit on, Earned Income Limit Net loss, Net loss. How to file 2010 tax return Nonworking spouse, Rule for student-spouse or spouse not able to care for self. How to file 2010 tax return Self-employment earnings, Self-employment earnings. How to file 2010 tax return Statutory employees, Statutory employee. How to file 2010 tax return What is not, What is not earned income? Earned income test, Earned Income Test, Full-time student. How to file 2010 tax return Determination, Tests To Claim the Credit Education expenses, Education. How to file 2010 tax return Employer-provided dependent care benefits, Dependent care benefits. How to file 2010 tax return , Dependent Care Benefits Employment taxes, Reminders, Taxes paid on wages. How to file 2010 tax return , How To Claim the Credit Exclusion from income Employer-provided dependent care benefits, Dependent care benefits. How to file 2010 tax return , Exclusion or deduction. How to file 2010 tax return Expenses, How To Figure the Credit (see also Work-related expenses) 2012 expenses paid in 2013 (Worksheet A), Worksheet A. How to file 2010 tax return Worksheet for 2012 Expenses Paid in 2013 Education, Education. How to file 2010 tax return Medical, Medical expenses. How to file 2010 tax return Not for care, Expenses not for care. How to file 2010 tax return Prepaid, Expenses prepaid in an earlier year. How to file 2010 tax return Reimbursed, Expenses reimbursed. How to file 2010 tax return F Fees, Fees and deposits. How to file 2010 tax return Figures, Tests To Claim the Credit Figuring credit, How To Figure the Credit, Payments for prior year's expenses. How to file 2010 tax return Earned income, Earned income. How to file 2010 tax return Filing status Joint return test, Joint Return Test Tests to claim credit, Tests To Claim the Credit Form 1040 Claiming the credit, Tests To Claim the Credit, Form 1040, Form 1040A, or Form 1040NR. How to file 2010 tax return Form 1040A Claiming the credit, Tests To Claim the Credit Form 2441, Form 1040, Form 1040A, or Form 1040NR. How to file 2010 tax return Form 4029, Members of certain religious faiths opposed to social security. How to file 2010 tax return , Form 4029. How to file 2010 tax return Form 4361, Members of certain religious faiths opposed to social security. How to file 2010 tax return , Form 4361. How to file 2010 tax return Form W-10, Getting the information. How to file 2010 tax return Form W-2 Dependent care benefits, Statement for employee. How to file 2010 tax return Form W-7, Individual taxpayer identification number (ITIN) for aliens. How to file 2010 tax return Free tax services, Free help with your tax return. How to file 2010 tax return H Help (see Tax help) Household services, Care of a Qualifying Person, Household Services, Meals and lodging provided for housekeeper. How to file 2010 tax return Employment taxes, How To Claim the Credit Housekeepers, Housekeeper. How to file 2010 tax return I Identification of provider, Provider Identification Test, Provider refusal. How to file 2010 tax return Individual taxpayer identification numbers (ITINs) For aliens, Individual taxpayer identification number (ITIN) for aliens. How to file 2010 tax return Inmate, What is not earned income? J Joint return test, Joint Return Test, Costs of keeping up a home. How to file 2010 tax return Tests to claim credit, Tests To Claim the Credit L Limits Amount of credit, Limit on credit. How to file 2010 tax return Dollar, Dollar Limit Earned income, Earned Income Limit Reduced dollar, Tests To Claim the Credit, Reduced Dollar Limit Looking for work, Working or Looking for Work Losses, Net loss. How to file 2010 tax return M Married and living apart, Married and living apart. How to file 2010 tax return Meals and lodging for housekeeper, Meals and lodging provided for housekeeper. How to file 2010 tax return Medical expenses, Medical expenses. How to file 2010 tax return Minister, Clergy or church employee. How to file 2010 tax return Missing children, photographs of, Reminders N Nonrefundability of credit, Tax credit not refundable. How to file 2010 tax return Not able to care for self Qualifying person test, Physically or mentally not able to care for oneself. How to file 2010 tax return Spouse, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. How to file 2010 tax return , Working or Looking for Work, You or your spouse is a student or not able to care for self. How to file 2010 tax return O Outside of home care, Care outside your home. How to file 2010 tax return P Part of year Persons qualifying for, Person qualifying for part of year. How to file 2010 tax return Work or looking for work, Work for part of year. How to file 2010 tax return Part-time work, Part-time work. How to file 2010 tax return Prepaid expenses, Expenses prepaid in an earlier year. How to file 2010 tax return Prisoner, What is not earned income? Provider identification test, Tests To Claim the Credit, Provider Identification Test, Provider refusal. How to file 2010 tax return Publications (see Tax help) Q Qualifying child, Qualifying child. How to file 2010 tax return Qualifying person Care for, Care of a Qualifying Person Expenses not for care, Expenses not for care. How to file 2010 tax return Qualifying person test, Qualifying Person Test, Child of divorced or separated parents or parents living apart. How to file 2010 tax return Tests to claim credit, Tests To Claim the Credit R Recordkeeping requirements, How To Claim the Credit Reduced dollar limit, Reduced Dollar Limit Tests to claim credit, Tests To Claim the Credit Refusal by provider to give information, Provider refusal. How to file 2010 tax return Reimbursed expenses, Expenses reimbursed. How to file 2010 tax return Relatives, payments to, Tests To Claim the Credit, Payments to Relatives or Dependents Religious faiths opposed to social security programs, Members of certain religious faiths opposed to social security. How to file 2010 tax return S School expenses, Education. How to file 2010 tax return Self-employed persons, Self-employment earnings. How to file 2010 tax return Separated parents, Child of divorced or separated parents or parents living apart. How to file 2010 tax return , Legally separated. How to file 2010 tax return Separated spouse, Separated spouse. How to file 2010 tax return Sick days, Temporary absence from work. How to file 2010 tax return Social Security, Employment Taxes for Household Employers (see also Employment taxes) Religious faiths opposed to, Members of certain religious faiths opposed to social security. How to file 2010 tax return Social security numbers, Information needed. How to file 2010 tax return Spouse Both spouses qualifying, Both spouses qualify. How to file 2010 tax return Death of, Death of spouse. How to file 2010 tax return Nonworking, earned income, Rule for student-spouse or spouse not able to care for self. How to file 2010 tax return Not able to care for self, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. How to file 2010 tax return , Working or Looking for Work, You or your spouse is a student or not able to care for self. How to file 2010 tax return Qualifying person, Qualifying Person Test Separated, Separated spouse. How to file 2010 tax return Student, Rule for student-spouse or spouse not able to care for self. How to file 2010 tax return , You or your spouse is a student or not able to care for self. How to file 2010 tax return Surviving, Surviving spouse. How to file 2010 tax return Working, Spouse works. How to file 2010 tax return Students Full-time, Full-time student. How to file 2010 tax return Spouse, Rule for student-spouse or spouse not able to care for self. How to file 2010 tax return , You or your spouse is a student or not able to care for self. How to file 2010 tax return T Tax help, How To Get Tax Help Taxes on wages (see Employment taxes) Taxpayer identification number (TINs), Reminders, Taxpayer identification number. How to file 2010 tax return Adoption, Adoption taxpayer identification number (ATIN). How to file 2010 tax return Aliens, Individual taxpayer identification number (ITIN) for aliens. How to file 2010 tax return Providers, Information needed. How to file 2010 tax return Temporary absence, Temporary absence from work. How to file 2010 tax return Tests to claim credit, Tests To Claim the Credit, Exclusion or deduction. How to file 2010 tax return Determination, Tests To Claim the Credit Earned income, Earned Income Test Qualifying persons, Qualifying Person Test Work-related expenses, Work-Related Expense Test Transportation, Transportation. How to file 2010 tax return TTY/TDD information, How To Get Tax Help U Unearned income, What is not earned income? V Vacation, Temporary absence from work. How to file 2010 tax return Volunteer work, Volunteer work. How to file 2010 tax return W Wages, taxes on (see Employment taxes) Withholding Federal income tax, Employment Taxes for Household Employers Work-related expense test, Work-Related Expense Test, Payments to Relatives or Dependents Partly work-related expenses, Expenses partly work-related. How to file 2010 tax return Tests to claim credit, Tests To Claim the Credit Work-related expenses Earned income limit, Earned Income Limit Figuring of credit, Figuring Total Work-Related Expenses Medical, Medical expenses. How to file 2010 tax return Paid following year, Expenses not paid until the following year. How to file 2010 tax return , Payments for prior year's expenses. How to file 2010 tax return , Worksheet A. How to file 2010 tax return Worksheet for 2012 Expenses Paid in 2013 Partly work-related expenses, Expenses partly work-related. How to file 2010 tax return Prepaid, Expenses prepaid in an earlier year. How to file 2010 tax return Recordkeeping, How To Claim the Credit Reimbursed, Expenses reimbursed. How to file 2010 tax return Worksheets 2012 expenses paid in 2013 (Worksheet A), Worksheet A. How to file 2010 tax return Worksheet for 2012 Expenses Paid in 2013 Prev  Up     Home   More Online Publications
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The How To File 2010 Tax Return

How to file 2010 tax return 14. How to file 2010 tax return   Sale of Property Table of Contents Reminder Introduction Useful Items - You may want to see: Sales and TradesWhat Is a Sale or Trade? How To Figure Gain or Loss Nontaxable Trades Transfers Between Spouses Related Party Transactions Capital Gains and LossesCapital or Ordinary Gain or Loss Capital Assets and Noncapital Assets Holding Period Nonbusiness Bad Debts Wash Sales Rollover of Gain From Publicly Traded Securities Reminder Foreign income. How to file 2010 tax return  If you are a U. How to file 2010 tax return S. How to file 2010 tax return citizen who sells property located outside the United States, you must report all gains and losses from the sale of that property on your tax return unless it is exempt by U. How to file 2010 tax return S. How to file 2010 tax return law. How to file 2010 tax return This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the payer. How to file 2010 tax return Introduction This chapter discusses the tax consequences of selling or trading investment property. How to file 2010 tax return It explains the following. How to file 2010 tax return What a sale or trade is. How to file 2010 tax return Figuring gain or loss. How to file 2010 tax return Nontaxable trades. How to file 2010 tax return Related party transactions. How to file 2010 tax return Capital gains or losses. How to file 2010 tax return Capital assets and noncapital assets. How to file 2010 tax return Holding period. How to file 2010 tax return Rollover of gain from publicly traded securities. How to file 2010 tax return Other property transactions. How to file 2010 tax return   Certain transfers of property are not discussed here. How to file 2010 tax return They are discussed in other IRS publications. How to file 2010 tax return These include the following. How to file 2010 tax return Sales of a main home, covered in chapter 15. How to file 2010 tax return Installment sales, covered in Publication 537, Installment Sales. How to file 2010 tax return Transactions involving business property, covered in Publication 544, Sales and Other Dispositions of Assets. How to file 2010 tax return Dispositions of an interest in a passive activity, covered in Publication 925, Passive Activity and At-Risk Rules. How to file 2010 tax return    Publication 550, Investment Income and Expenses (Including Capital Gains and Losses), provides a more detailed discussion about sales and trades of investment property. How to file 2010 tax return Publication 550 includes information about the rules covering nonbusiness bad debts, straddles, section 1256 contracts, puts and calls, commodity futures, short sales, and wash sales. How to file 2010 tax return It also discusses investment-related expenses. How to file 2010 tax return Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 8949 Sales and Other Dispositions of Capital Assets 8824 Like-Kind Exchanges Sales and Trades If you sold property such as stocks, bonds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. How to file 2010 tax return Generally, you should receive the statement by February 15 of the next year. How to file 2010 tax return It will show the gross proceeds from the sale. How to file 2010 tax return If you sold a covered security in 2013, your 1099-B (or substitute statement) will show your basis. How to file 2010 tax return Generally, a covered security is a security you acquired after 2010, with certain exceptions. How to file 2010 tax return See the Instructions for Form 8949. How to file 2010 tax return The IRS will also get a copy of Form 1099-B from the broker. How to file 2010 tax return Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. How to file 2010 tax return What Is a Sale or Trade? This section explains what is a sale or trade. How to file 2010 tax return It also explains certain transactions and events that are treated as sales or trades. How to file 2010 tax return A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. How to file 2010 tax return A trade is a transfer of property for other property or services and may be taxed in the same way as a sale. How to file 2010 tax return Sale and purchase. How to file 2010 tax return   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. How to file 2010 tax return The sale and purchase are two separate transactions. How to file 2010 tax return But see Like-kind exchanges under Nontaxable Trades, later. How to file 2010 tax return Redemption of stock. How to file 2010 tax return   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. How to file 2010 tax return Dividend versus sale or trade. How to file 2010 tax return   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. How to file 2010 tax return Both direct and indirect ownership of stock will be considered. How to file 2010 tax return The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend (see chapter 8), There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. How to file 2010 tax return Redemption or retirement of bonds. How to file 2010 tax return   A redemption or retirement of bonds or notes at their maturity is generally treated as a sale or trade. How to file 2010 tax return   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. How to file 2010 tax return For details, see Regulations section 1. How to file 2010 tax return 1001-3. How to file 2010 tax return Surrender of stock. How to file 2010 tax return   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. How to file 2010 tax return The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. How to file 2010 tax return Worthless securities. How to file 2010 tax return    Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. How to file 2010 tax return This affects whether your capital loss is long term or short term. How to file 2010 tax return See Holding Period , later. How to file 2010 tax return   Worthless securities also include securities that you abandon after March 12, 2008. How to file 2010 tax return To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. How to file 2010 tax return All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. How to file 2010 tax return    If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. How to file 2010 tax return Do not deduct them in the year the stock became worthless. How to file 2010 tax return How to report loss. How to file 2010 tax return    Report worthless securities in Part I or Part II, whichever applies, of Form 8949. How to file 2010 tax return In column (a), enter “Worthless. How to file 2010 tax return ”    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. How to file 2010 tax return See Form 8949 and the Instructions for Form 8949. How to file 2010 tax return For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. How to file 2010 tax return See also Schedule D (Form 1040), Form 8949, and their separate instructions. How to file 2010 tax return Filing a claim for refund. How to file 2010 tax return   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. How to file 2010 tax return You must use Form 1040X, Amended U. How to file 2010 tax return S. How to file 2010 tax return Individual Income Tax Return, to amend your return for the year the security became worthless. How to file 2010 tax return You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. How to file 2010 tax return For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. How to file 2010 tax return How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. How to file 2010 tax return Gain. How to file 2010 tax return   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. How to file 2010 tax return Loss. How to file 2010 tax return   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. How to file 2010 tax return Adjusted basis. How to file 2010 tax return   The adjusted basis of property is your original cost or other original basis properly adjusted (increased or decreased) for certain items. How to file 2010 tax return See chapter 13 for more information about determining the adjusted basis of property. How to file 2010 tax return Amount realized. How to file 2010 tax return   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). How to file 2010 tax return Amount realized includes the money you receive plus the fair market value of any property or services you receive. How to file 2010 tax return If you received a note or other debt instrument for the property, see How To Figure Gain or Loss in chapter 4 of Publication 550 to figure the amount realized. How to file 2010 tax return If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. How to file 2010 tax return For more information, see Publication 537. How to file 2010 tax return Fair market value. How to file 2010 tax return   Fair market value is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. How to file 2010 tax return Example. How to file 2010 tax return You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. How to file 2010 tax return Your gain is $3,000 ($10,000 − $7,000). How to file 2010 tax return Debt paid off. How to file 2010 tax return    A debt against the property, or against you, that is paid off as a part of the transaction, or that is assumed by the buyer, must be included in the amount realized. How to file 2010 tax return This is true even if neither you nor the buyer is personally liable for the debt. How to file 2010 tax return For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. How to file 2010 tax return Example. How to file 2010 tax return You sell stock that you had pledged as security for a bank loan of $8,000. How to file 2010 tax return Your basis in the stock is $6,000. How to file 2010 tax return The buyer pays off your bank loan and pays you $20,000 in cash. How to file 2010 tax return The amount realized is $28,000 ($20,000 + $8,000). How to file 2010 tax return Your gain is $22,000 ($28,000 − $6,000). How to file 2010 tax return Payment of cash. How to file 2010 tax return   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. How to file 2010 tax return Determine your gain or loss by subtracting the cash you pay plus the adjusted basis of the property you trade in from the amount you realize. How to file 2010 tax return If the result is a positive number, it is a gain. How to file 2010 tax return If the result is a negative number, it is a loss. How to file 2010 tax return No gain or loss. How to file 2010 tax return   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. How to file 2010 tax return In this case, you may have neither a gain nor a loss. How to file 2010 tax return See Basis Other Than Cost in chapter 13. How to file 2010 tax return Nontaxable Trades This section discusses trades that generally do not result in a taxable gain or deductible loss. How to file 2010 tax return For more information on nontaxable trades, see chapter 1 of Publication 544. How to file 2010 tax return Like-kind exchanges. How to file 2010 tax return   If you trade business or investment property for other business or investment property of a like kind, you do not pay tax on any gain or deduct any loss until you sell or dispose of the property you receive. How to file 2010 tax return To be nontaxable, a trade must meet all six of the following conditions. How to file 2010 tax return The property must be business or investment property. How to file 2010 tax return You must hold both the property you trade and the property you receive for productive use in your trade or business or for investment. How to file 2010 tax return Neither property may be property used for personal purposes, such as your home or family car. How to file 2010 tax return The property must not be held primarily for sale. How to file 2010 tax return The property you trade and the property you receive must not be property you sell to customers, such as merchandise. How to file 2010 tax return The property must not be stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest, including partnership interests. How to file 2010 tax return However, see Special rules for mutual ditch, reservoir, or irrigation company stock, in chapter 4 of Publication 550 for an exception. How to file 2010 tax return Also, you can have a nontaxable trade of corporate stocks under a different rule, as discussed later. How to file 2010 tax return There must be a trade of like property. How to file 2010 tax return The trade of real estate for real estate, or personal property for similar personal property, is a trade of like property. How to file 2010 tax return The trade of an apartment house for a store building, or a panel truck for a pickup truck, is a trade of like property. How to file 2010 tax return The trade of a piece of machinery for a store building is not a trade of like property. How to file 2010 tax return Real property located in the United States and real property located outside the United States are not like property. How to file 2010 tax return Also, personal property used predominantly within the United States and personal property used predominantly outside the United States are not like property. How to file 2010 tax return The property to be received must be identified in writing within 45 days after the date you transfer the property given up in the trade. How to file 2010 tax return The property to be received must be received by the earlier of: The 180th day after the date on which you transfer the property given up in the trade, or The due date, including extensions, for your tax return for the year in which the transfer of the property given up occurs. How to file 2010 tax return    If you trade property with a related party in a like-kind exchange, a special rule may apply. How to file 2010 tax return See Related Party Transactions , later in this chapter. How to file 2010 tax return Also, see chapter 1 of Publication 544 for more information on exchanges of business property and special rules for exchanges using qualified intermediaries or involving multiple properties. How to file 2010 tax return Partly nontaxable exchange. How to file 2010 tax return   If you receive money or unlike property in addition to like property, and the above six conditions are met, you have a partly nontaxable trade. How to file 2010 tax return You are taxed on any gain you realize, but only up to the amount of the money and the fair market value of the unlike property you receive. How to file 2010 tax return You cannot deduct a loss. How to file 2010 tax return Like property and unlike property transferred. How to file 2010 tax return   If you give up unlike property in addition to the like property, you must recognize gain or loss on the unlike property you give up. How to file 2010 tax return The gain or loss is the difference between the adjusted basis of the unlike property and its fair market value. How to file 2010 tax return Like property and money transferred. How to file 2010 tax return   If all of the above conditions (1) – (6) are met, you have a nontaxable trade even if you pay money in addition to the like property. How to file 2010 tax return Basis of property received. How to file 2010 tax return   To figure the basis of the property received, see Nontaxable Exchanges in chapter 13. How to file 2010 tax return How to report. How to file 2010 tax return   You must report the trade of like property on Form 8824. How to file 2010 tax return If you figure a recognized gain or loss on Form 8824, report it on Schedule D (Form 1040), or on Form 4797, Sales of Business Property, whichever applies. How to file 2010 tax return See the instructions for Line 22 in the Instructions for Form 8824. How to file 2010 tax return   For information on using Form 4797, see chapter 4 of Publication 544. How to file 2010 tax return Corporate stocks. How to file 2010 tax return   The following trades of corporate stocks generally do not result in a taxable gain or a deductible loss. How to file 2010 tax return Corporate reorganizations. How to file 2010 tax return   In some instances, a company will give you common stock for preferred stock, preferred stock for common stock, or stock in one corporation for stock in another corporation. How to file 2010 tax return If this is a result of a merger, recapitalization, transfer to a controlled corporation, bankruptcy, corporate division, corporate acquisition, or other corporate reorganization, you do not recognize gain or loss. How to file 2010 tax return Stock for stock of the same corporation. How to file 2010 tax return   You can exchange common stock for common stock or preferred stock for preferred stock in the same corporation without having a recognized gain or loss. How to file 2010 tax return This is true for a trade between two stockholders as well as a trade between a stockholder and the corporation. How to file 2010 tax return Convertible stocks and bonds. How to file 2010 tax return   You generally will not have a recognized gain or loss if you convert bonds into stock or preferred stock into common stock of the same corporation according to a conversion privilege in the terms of the bond or the preferred stock certificate. How to file 2010 tax return Property for stock of a controlled corporation. How to file 2010 tax return   If you transfer property to a corporation solely in exchange for stock in that corporation, and immediately after the trade you are in control of the corporation, you ordinarily will not recognize a gain or loss. How to file 2010 tax return This rule applies both to individuals and to groups who transfer property to a corporation. How to file 2010 tax return It does not apply if the corporation is an investment company. How to file 2010 tax return   For this purpose, to be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock of the corporation. How to file 2010 tax return   If this provision applies to you, you may have to attach to your return a complete statement of all facts pertinent to the exchange. How to file 2010 tax return For details, see Regulations section 1. How to file 2010 tax return 351-3. How to file 2010 tax return Additional information. How to file 2010 tax return   For more information on trades of stock, see Nontaxable Trades in chapter 4 of Publication 550. How to file 2010 tax return Insurance policies and annuities. How to file 2010 tax return   You will not have a recognized gain or loss if the insured or annuitant is the same under both contracts and you trade: A life insurance contract for another life insurance contract or for an endowment or annuity contract or for a qualified long-term care insurance contract, An endowment contract for another endowment contract that provides for regular payments beginning at a date no later than the beginning date under the old contract or for an annuity contract or for a qualified long-term insurance contract, An annuity contract for annuity contract or for a qualified long-term care insurance contract, or A qualified long-term care insurance contract for a qualified long-term care insurance contract. How to file 2010 tax return   You also may not have to recognize gain or loss on an exchange of a portion of an annuity contract for another annuity contract. How to file 2010 tax return For transfers completed before October 24, 2011, see Revenue Ruling 2003-76 in Internal Revenue Bulletin 2003-33 and Revenue Procedure 2008-24 in Internal Revenue Bulletin 2008-13. How to file 2010 tax return Revenue Ruling 2003-76 is available at www. How to file 2010 tax return irs. How to file 2010 tax return gov/irb/2003-33_IRB/ar11. How to file 2010 tax return html. How to file 2010 tax return Revenue Procedure 2008-24 is available at www. How to file 2010 tax return irs. How to file 2010 tax return gov/irb/2008-13_IRB/ar13. How to file 2010 tax return html. How to file 2010 tax return For transfers completed on or after October 24, 2011, see Revenue Ruling 2003-76, above, and Revenue Procedure 2011-38, in Internal Revenue Bulletin 2011-30. How to file 2010 tax return Revenue Procedure 2011-38 is available at www. How to file 2010 tax return irs. How to file 2010 tax return gov/irb/2011-30_IRB/ar09. How to file 2010 tax return html. How to file 2010 tax return   For tax years beginning after December 31, 2010, amounts received as an annuity for a period of 10 years or more, or for the lives of one or more individuals, under any portion of an annuity, endowment, or life insurance contract, are treated as a separate contract and are considered partial annuities. How to file 2010 tax return A portion of an annuity, endowment, or life insurance contract may be annuitized, provided that the annuitization period is for 10 years or more or for the lives of one or more individuals. How to file 2010 tax return The investment in the contract is allocated between the part of the contract from which amounts are received as an annuity and the part of the contract from which amounts are not received as an annuity. How to file 2010 tax return   Exchanges of contracts not included in this list, such as an annuity contract for an endowment contract, or an annuity or endowment contract for a life insurance contract, are taxable. How to file 2010 tax return Demutualization of life insurance companies. How to file 2010 tax return   If you received stock in exchange for your equity interest as a policyholder or an annuitant, you generally will not have a recognized gain or loss. How to file 2010 tax return See Demutualization of Life Insurance Companies in Publication 550. How to file 2010 tax return U. How to file 2010 tax return S. How to file 2010 tax return Treasury notes or bonds. How to file 2010 tax return   You can trade certain issues of U. How to file 2010 tax return S. How to file 2010 tax return Treasury obligations for other issues designated by the Secretary of the Treasury, with no gain or loss recognized on the trade. How to file 2010 tax return See Savings bonds traded in chapter 1 of Publication 550 for more information. How to file 2010 tax return Transfers Between Spouses Generally, 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 if incident to a divorce, a former spouse. How to file 2010 tax return This nonrecognition rule does not apply in the following situations. How to file 2010 tax return The recipient spouse or former spouse is a nonresident alien. How to file 2010 tax return Property is transferred in trust and liability exceeds basis. How to file 2010 tax return Gain must be recognized to the extent the amount of the liabilities assumed by the trust, plus any liabilities on the property, exceed the adjusted basis of the property. How to file 2010 tax return For other situations, see Transfers Between Spouses in chapter 4 of Publication 550. How to file 2010 tax return Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. How to file 2010 tax return The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. How to file 2010 tax return This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its fair market value at the time of transfer or any consideration paid by the recipient. How to file 2010 tax return This rule applies for purposes of determining loss as well as gain. How to file 2010 tax return Any gain recognized on a transfer in trust increases the basis. How to file 2010 tax return A transfer of property is incident to a divorce if the transfer occurs within 1 year after the date on which the marriage ends, or if the transfer is related to the ending of the marriage. How to file 2010 tax return Related Party Transactions Special rules apply to the sale or trade of property between related parties. How to file 2010 tax return Gain on sale or trade of depreciable property. How to file 2010 tax return   Your gain from the sale or trade of property to a related party may be ordinary income, rather than capital gain, if the property can be depreciated by the party receiving it. How to file 2010 tax return See chapter 3 of Publication 544 for more information. How to file 2010 tax return Like-kind exchanges. How to file 2010 tax return   Generally, if you trade business or investment property for other business or investment property of a like kind, no gain or loss is recognized. How to file 2010 tax return See Like-kind exchanges , earlier, under Nontaxable Trades. How to file 2010 tax return   This rule also applies to trades of property between related parties, defined next under Losses on sales or trades of property. How to file 2010 tax return However, if either you or the related party disposes of the like property within 2 years after the trade, you both must report any gain or loss not recognized on the original trade on your return filed for the year in which the later disposition occurs. How to file 2010 tax return See Related Party Transactions in chapter 4 of Publication 550 for exceptions. How to file 2010 tax return Losses on sales or trades of property. How to file 2010 tax return   You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties. How to file 2010 tax return Members of your family. How to file 2010 tax return This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. How to file 2010 tax return ), and lineal descendants (children, grandchildren, etc. How to file 2010 tax return ). How to file 2010 tax return A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. How to file 2010 tax return A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. How to file 2010 tax return (See Constructive ownership of stock , later. How to file 2010 tax return ) A tax-exempt charitable or educational organization directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. How to file 2010 tax return   In addition, a loss on the sale or trade of property is not deductible if the transaction is directly or indirectly between the following related parties. How to file 2010 tax return A grantor and fiduciary, or the fiduciary and beneficiary, of any trust. How to file 2010 tax return Fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. How to file 2010 tax return A trust fiduciary and a corporation of which more than 50% in value of the outstanding stock is directly or indirectly owned by or for the trust, or by or for the grantor of the trust. How to file 2010 tax return A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest, or the profits interest, in the partnership. How to file 2010 tax return Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. How to file 2010 tax return Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. How to file 2010 tax return An executor and a beneficiary of an estate (except in the case of a sale or trade to satisfy a pecuniary bequest). How to file 2010 tax return Two corporations that are members of the same controlled group. How to file 2010 tax return (Under certain conditions, however, these losses are not disallowed but must be deferred. How to file 2010 tax return ) Two partnerships if the same persons own, directly or indirectly, more than 50% of the capital interests or the profit interests in both partnerships. How to file 2010 tax return Multiple property sales or trades. How to file 2010 tax return   If you sell or trade to a related party a number of blocks of stock or pieces of property in a lump sum, you must figure the gain or loss separately for each block of stock or piece of property. How to file 2010 tax return The gain on each item may be taxable. How to file 2010 tax return However, you cannot deduct the loss on any item. How to file 2010 tax return Also, you cannot reduce gains from the sales of any of these items by losses on the sales of any of the other items. How to file 2010 tax return Indirect transactions. How to file 2010 tax return   You cannot deduct your loss on the sale of stock through your broker if, under a prearranged plan, a related party buys the same stock you had owned. How to file 2010 tax return This does not apply to a trade between related parties through an exchange that is purely coincidental and is not prearranged. How to file 2010 tax return Constructive ownership of stock. How to file 2010 tax return   In determining whether a person directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. How to file 2010 tax return Rule 1. How to file 2010 tax return   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. How to file 2010 tax return Rule 2. How to file 2010 tax return   An individual is considered to own the stock directly or indirectly owned by or for his or her family. How to file 2010 tax return Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. How to file 2010 tax return Rule 3. How to file 2010 tax return   An individual owning, other than by applying rule 2, any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. How to file 2010 tax return Rule 4. How to file 2010 tax return   When applying rule 1, 2, or 3, stock constructively owned by a person under rule 1 is treated as actually owned by that person. How to file 2010 tax return But stock constructively owned by an individual under rule 2 or rule 3 is not treated as owned by that individual for again applying either rule 2 or rule 3 to make another person the constructive owner of the stock. How to file 2010 tax return Property received from a related party. How to file 2010 tax return    If you sell or trade at a gain property you acquired from a related party, you recognize the gain only to the extent it is more than the loss previously disallowed to the related party. How to file 2010 tax return This rule applies only if you are the original transferee and you acquired the property by purchase or exchange. How to file 2010 tax return This rule does not apply if the related party's loss was disallowed because of the wash sale rules described in chapter 4 of Publication 550 under Wash Sales. How to file 2010 tax return   If you sell or trade at a loss property you acquired from a related party, you cannot recognize the loss that was not allowed to the related party. How to file 2010 tax return Example 1. How to file 2010 tax return Your brother sells you stock for $7,600. How to file 2010 tax return His cost basis is $10,000. How to file 2010 tax return Your brother cannot deduct the loss of $2,400. How to file 2010 tax return Later, you sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900. How to file 2010 tax return Your reportable gain is $500 (the $2,900 gain minus the $2,400 loss not allowed to your brother). How to file 2010 tax return Example 2. How to file 2010 tax return If, in Example 1, you sold the stock for $6,900 instead of $10,500, your recognized loss is only $700 (your $7,600 basis minus $6,900). How to file 2010 tax return You cannot deduct the loss that was not allowed to your brother. How to file 2010 tax return Capital Gains and Losses This section discusses the tax treatment of gains and losses from different types of investment transactions. How to file 2010 tax return Character of gain or loss. How to file 2010 tax return   You need to classify your gains and losses as either ordinary or capital gains or losses. How to file 2010 tax return You then need to classify your capital gains and losses as either short term or long term. How to file 2010 tax return If you have long-term gains and losses, you must identify your 28% rate gains and losses. How to file 2010 tax return If you have a net capital gain, you must also identify any unrecaptured section 1250 gain. How to file 2010 tax return   The correct classification and identification helps you figure the limit on capital losses and the correct tax on capital gains. How to file 2010 tax return Reporting capital gains and losses is explained in chapter 16. How to file 2010 tax return Capital or Ordinary Gain or Loss If you have a taxable gain or a deductible loss from a transaction, it may be either a capital gain or loss or an ordinary gain or loss, depending on the circumstances. How to file 2010 tax return Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss. How to file 2010 tax return A sale or trade of a noncapital asset generally results in ordinary gain or loss. How to file 2010 tax return Depending on the circumstances, a gain or loss on a sale or trade of property used in a trade or business may be treated as either capital or ordinary, as explained in Publication 544. How to file 2010 tax return In some situations, part of your gain or loss may be a capital gain or loss and part may be an ordinary gain or loss. How to file 2010 tax return Capital Assets and Noncapital Assets For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. How to file 2010 tax return Some examples are: Stocks or bonds held in your personal account, A house owned and used by you and your family, Household furnishings, A car used for pleasure or commuting, Coin or stamp collections, Gems and jewelry, and Gold, silver, or any other metal. How to file 2010 tax return Any property you own is a capital asset, except the following noncapital assets. How to file 2010 tax return Property held mainly for sale to customers or property that will physically become a part of the merchandise for sale to customers. How to file 2010 tax return For an exception, see Capital Asset Treatment for Self-Created Musical Works , later. How to file 2010 tax return Depreciable property used in your trade or business, even if fully depreciated. How to file 2010 tax return Real property used in your trade or business. How to file 2010 tax return A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property that is: Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Acquired under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. How to file 2010 tax return For an exception to this rule, see Capital Asset Treatment for Self-Created Musical Works , later. How to file 2010 tax return Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of property described in (1). How to file 2010 tax return U. How to file 2010 tax return S. How to file 2010 tax return Government publications that you received from the government free or for less than the normal sales price, or that you acquired under circumstances entitling you to the basis of someone who received the publications free or for less than the normal sales price. How to file 2010 tax return Certain commodities derivative financial instruments held by commodities derivatives dealers. How to file 2010 tax return Hedging transactions, but only if the transaction is clearly identified as a hedging transaction before the close of the day on which it was acquired, originated, or entered into. How to file 2010 tax return Supplies of a type you regularly use or consume in the ordinary course of your trade or business. How to file 2010 tax return Investment Property Investment property is a capital asset. How to file 2010 tax return Any gain or loss from its sale or trade is generally a capital gain or loss. How to file 2010 tax return Gold, silver, stamps, coins, gems, etc. How to file 2010 tax return   These are capital assets except when they are held for sale by a dealer. How to file 2010 tax return Any gain or loss you have from their sale or trade generally is a capital gain or loss. How to file 2010 tax return Stocks, stock rights, and bonds. How to file 2010 tax return   All of these (including stock received as a dividend) are capital assets except when held for sale by a securities dealer. How to file 2010 tax return However, if you own small business stock, see Losses on Section 1244 (Small Business) Stock , later, and Losses on Small Business Investment Company Stock, in chapter 4 of Publication 550. How to file 2010 tax return Personal Use Property Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. How to file 2010 tax return However, you cannot deduct a loss from selling personal use property. How to file 2010 tax return Capital Asset Treatment for Self-Created Musical Works You can elect to treat musical compositions and copyrights in musical works as capital assets when you sell or exchange them if: Your personal efforts created the property, or You acquired the property under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. How to file 2010 tax return You must make a separate election for each musical composition (or copyright in a musical work) sold or exchanged during the tax year. How to file 2010 tax return You must make the election on or before the due date (including extensions) of the income tax return for the tax year of the sale or exchange. How to file 2010 tax return You must make the election on Form 8949 by treating the sale or exchange as the sale or exchange of a capital asset, according to Form 8949, Schedule D (Form 1040), and their separate instructions. How to file 2010 tax return For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. How to file 2010 tax return See also Schedule D (Form 1040), Form 8949, and their separate instructions. How to file 2010 tax return You can revoke the election if you have IRS approval. How to file 2010 tax return To get IRS approval, you must submit a request for a letter ruling under the appropriate IRS revenue procedure. How to file 2010 tax return See, for example, Rev. How to file 2010 tax return Proc. How to file 2010 tax return 2013-1, corrected by Announcement 2013–9, and amplified and modified by Rev. How to file 2010 tax return Proc. How to file 2010 tax return 2013–32, available at www. How to file 2010 tax return irs. How to file 2010 tax return gov/irb/2013-01_IRB/ar06. How to file 2010 tax return html. How to file 2010 tax return Alternatively, you are granted an automatic 6-month extension from the due date of your income tax return (excluding extensions) to revoke the election, provided you timely file your income tax return, and within this 6-month extension period, you file Form 1040X that treats the sale or exchange as the sale or exchange of property that is not a capital asset. How to file 2010 tax return Discounted Debt Instruments Treat your gain or loss on the sale, redemption, or retirement of a bond or other debt instrument originally issued at a discount or bought at a discount as capital gain or loss, except as explained in the following discussions. How to file 2010 tax return Short-term government obligations. How to file 2010 tax return   Treat gains on short-term federal, state, or local government obligations (other than tax-exempt obligations) as ordinary income up to your ratable share of the acquisition discount. How to file 2010 tax return This treatment applies to obligations with a fixed maturity date not more than 1 year from the date of issue. How to file 2010 tax return Acquisition discount is the stated redemption price at maturity minus your basis in the obligation. How to file 2010 tax return   However, do not treat these gains as income to the extent you previously included the discount in income. How to file 2010 tax return See Discount on Short-Term Obligations in chapter 1 of Publication 550. How to file 2010 tax return Short-term nongovernment obligations. How to file 2010 tax return   Treat gains on short-term nongovernment obligations as ordinary income up to your ratable share of original issue discount (OID). How to file 2010 tax return This treatment applies to obligations with a fixed maturity date of not more than 1 year from the date of issue. How to file 2010 tax return   However, to the extent you previously included the discount in income, you do not have to include it in income again. How to file 2010 tax return See Discount on Short-Term Obligations in chapter 1 of Publication 550. How to file 2010 tax return Tax-exempt state and local government bonds. How to file 2010 tax return   If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. How to file 2010 tax return To figure your gain or loss on the sale or trade of these bonds, reduce the amount realized by your part of OID. How to file 2010 tax return   If the bonds were issued after September 3, 1982, and acquired after March 1, 1984, increase the adjusted basis by your part of OID to figure gain or loss. How to file 2010 tax return For more information on the basis of these bonds, see Discounted Debt Instruments in chapter 4 of Publication 550. How to file 2010 tax return   Any gain from market discount is usually taxable on disposition or redemption of tax-exempt bonds. How to file 2010 tax return If you bought the bonds before May 1, 1993, the gain from market discount is capital gain. How to file 2010 tax return If you bought the bonds after April 30, 1993, the gain is ordinary income. How to file 2010 tax return   You figure the market discount by subtracting the price you paid for the bond from the sum of the original issue price of the bond and the amount of accumulated OID from the date of issue that represented interest to any earlier holders. How to file 2010 tax return For more information, see Market Discount Bonds in chapter 1 of Publication 550. How to file 2010 tax return    A loss on the sale or other disposition of a tax-exempt state or local government bond is deductible as a capital loss. How to file 2010 tax return Redeemed before maturity. How to file 2010 tax return   If a state or local bond issued before June 9, 1980, is redeemed before it matures, the OID is not taxable to you. How to file 2010 tax return   If a state or local bond issued after June 8, 1980, is redeemed before it matures, the part of OID earned while you hold the bond is not taxable to you. How to file 2010 tax return However, you must report the unearned part of OID as a capital gain. How to file 2010 tax return Example. How to file 2010 tax return On July 2, 2002, the date of issue, you bought a 20-year, 6% municipal bond for $800. How to file 2010 tax return The face amount of the bond was $1,000. How to file 2010 tax return The $200 discount was OID. How to file 2010 tax return At the time the bond was issued, the issuer had no intention of redeeming it before it matured. How to file 2010 tax return The bond was callable at its face amount beginning 10 years after the issue date. How to file 2010 tax return The issuer redeemed the bond at the end of 11 years (July 2, 2013) for its face amount of $1,000 plus accrued annual interest of $60. How to file 2010 tax return The OID earned during the time you held the bond, $73, is not taxable. How to file 2010 tax return The $60 accrued annual interest also is not taxable. How to file 2010 tax return However, you must report the unearned part of OID ($127) as a capital gain. How to file 2010 tax return Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). How to file 2010 tax return   If you sell, trade, or redeem for a gain one of these debt instruments, the part of your gain that is not more than your ratable share of the OID at the time of the sale or redemption is ordinary income. How to file 2010 tax return The rest of the gain is capital gain. How to file 2010 tax return If, however, there was an intention to call the debt instrument before maturity, all of your gain that is not more than the entire OID is treated as ordinary income at the time of the sale. How to file 2010 tax return This treatment of taxable gain also applies to corporate instruments issued after May 27, 1969, under a written commitment that was binding on May 27, 1969, and at all times thereafter. How to file 2010 tax return Long-term debt instruments issued after May 27, 1969 (or after July 1, 1982, if a government instrument). How to file 2010 tax return   If you hold one of these debt instruments, you must include a part of OID in your gross income each year you own the instrument. How to file 2010 tax return Your basis in that debt instrument is increased by the amount of OID that you have included in your gross income. How to file 2010 tax return See Original Issue Discount (OID) in chapter 7 for information about OID that you must report on your tax return. How to file 2010 tax return   If you sell or trade the debt instrument before maturity, your gain is a capital gain. How to file 2010 tax return However, if at the time the instrument was originally issued there was an intention to call it before its maturity, your gain generally is ordinary income to the extent of the entire OID reduced by any amounts of OID previously includible in your income. How to file 2010 tax return In this case, the rest of the gain is capital gain. How to file 2010 tax return Market discount bonds. How to file 2010 tax return   If the debt instrument has market discount and you chose to include the discount in income as it accrued, increase your basis in the debt instrument by the accrued discount to figure capital gain or loss on its disposition. How to file 2010 tax return If you did not choose to include the discount in income as it accrued, you must report gain as ordinary interest income up to the instrument's accrued market discount. How to file 2010 tax return The rest of the gain is capital gain. How to file 2010 tax return See Market Discount Bonds in chapter 1 of Publication 550. How to file 2010 tax return   A different rule applies to market discount bonds issued before July 19, 1984, and purchased by you before May 1, 1993. How to file 2010 tax return See Market discount bonds under Discounted Debt Instruments in chapter 4 of Publication 550. How to file 2010 tax return Retirement of debt instrument. How to file 2010 tax return   Any amount you receive on the retirement of a debt instrument is treated in the same way as if you had sold or traded that instrument. How to file 2010 tax return Notes of individuals. How to file 2010 tax return   If you hold an obligation of an individual issued with OID after March 1, 1984, you generally must include the OID in your income currently, and your gain or loss on its sale or retirement is generally capital gain or loss. How to file 2010 tax return An exception to this treatment applies if the obligation is a loan between individuals and all the following requirements are met. How to file 2010 tax return The lender is not in the business of lending money. How to file 2010 tax return The amount of the loan, plus the amount of any outstanding prior loans, is $10,000 or less. How to file 2010 tax return Avoiding federal tax is not one of the principal purposes of the loan. How to file 2010 tax return   If the exception applies, or the obligation was issued before March 2, 1984, you do not include the OID in your income currently. How to file 2010 tax return When you sell or redeem the obligation, the part of your gain that is not more than your accrued share of OID at that time is ordinary income. How to file 2010 tax return The rest of the gain, if any, is capital gain. How to file 2010 tax return Any loss on the sale or redemption is capital loss. How to file 2010 tax return Deposit in Insolvent or Bankrupt Financial Institution If you lose money you have on deposit in a bank, credit union, or other financial institution that becomes insolvent or bankrupt, you may be able to deduct your loss in one of three ways. How to file 2010 tax return Ordinary loss. How to file 2010 tax return Casualty loss. How to file 2010 tax return Nonbusiness bad debt (short-term capital loss). How to file 2010 tax return  For more information, see Deposit in Insolvent or Bankrupt Financial Institution, in chapter 4 of Publication 550. How to file 2010 tax return Sale of Annuity The part of any gain on the sale of an annuity contract before its maturity date that is based on interest accumulated on the contract is ordinary income. How to file 2010 tax return Losses on Section 1244 (Small Business) Stock You can deduct as an ordinary loss, rather than as a capital loss, your loss on the sale, trade, or worthlessness of section 1244 stock. How to file 2010 tax return Report the loss on Form 4797, line 10. How to file 2010 tax return Any gain on section 1244 stock is a capital gain if the stock is a capital asset in your hands. How to file 2010 tax return Report the gain on Form 8949. How to file 2010 tax return See Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. How to file 2010 tax return For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. How to file 2010 tax return See also Schedule D (Form 1040), Form 8949, and their separate instructions. How to file 2010 tax return Holding Period If you sold or traded investment property, you must determine your holding period for the property. How to file 2010 tax return Your holding period determines whether any capital gain or loss was a short-term or long-term capital gain or loss. How to file 2010 tax return Long-term or short-term. How to file 2010 tax return   If you hold investment property more than 1 year, any capital gain or loss is a long-term capital gain or loss. How to file 2010 tax return If you hold the property 1 year or less, any capital gain or loss is a short-term capital gain or loss. How to file 2010 tax return   To determine how long you held the investment property, begin counting on the date after the day you acquired the property. How to file 2010 tax return The day you disposed of the property is part of your holding period. How to file 2010 tax return Example. How to file 2010 tax return If you bought investment property on February 6, 2012, and sold it on February 6, 2013, your holding period is not more than 1 year and you have a short-term capital gain or loss. How to file 2010 tax return If you sold it on February 7, 2013, your holding period is more than 1 year and you will have a long-term capital gain or loss. How to file 2010 tax return Securities traded on established market. How to file 2010 tax return   For securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities, and ends on the trade date you sold them. How to file 2010 tax return    Do not confuse the trade date with the settlement date, which is the date by which the stock must be delivered and payment must be made. How to file 2010 tax return Example. How to file 2010 tax return You are a cash method, calendar year taxpayer. How to file 2010 tax return You sold stock at a gain on December 30, 2013. How to file 2010 tax return According to the rules of the stock exchange, the sale was closed by delivery of the stock 4 trading days after the sale, on January 6, 2014. How to file 2010 tax return You received payment of the sales price on that same day. How to file 2010 tax return Report your gain on your 2013 return, even though you received the payment in 2014. How to file 2010 tax return The gain is long term or short term depending on whether you held the stock more than 1 year. How to file 2010 tax return Your holding period ended on December 30. How to file 2010 tax return If you had sold the stock at a loss, you would also report it on your 2013 return. How to file 2010 tax return U. How to file 2010 tax return S. How to file 2010 tax return Treasury notes and bonds. How to file 2010 tax return   The holding period of U. How to file 2010 tax return S. How to file 2010 tax return Treasury notes and bonds sold at auction on the basis of yield starts the day after the Secretary of the Treasury, through news releases, gives notification of acceptance to successful bidders. How to file 2010 tax return The holding period of U. How to file 2010 tax return S. How to file 2010 tax return Treasury notes and bonds sold through an offering on a subscription basis at a specified yield starts the day after the subscription is submitted. How to file 2010 tax return Automatic investment service. How to file 2010 tax return   In determining your holding period for shares bought by the bank or other agent, full shares are considered bought first and any fractional shares are considered bought last. How to file 2010 tax return Your holding period starts on the day after the bank's purchase date. How to file 2010 tax return If a share was bought over more than one purchase date, your holding period for that share is a split holding period. How to file 2010 tax return A part of the share is considered to have been bought on each date that stock was bought by the bank with the proceeds of available funds. How to file 2010 tax return Nontaxable trades. How to file 2010 tax return   If you acquire investment property in a trade for other investment property and your basis for the new property is determined, in whole or in part, by your basis in the old property, your holding period for the new property begins on the day following the date you acquired the old property. How to file 2010 tax return Property received as a gift. How to file 2010 tax return   If you receive a gift of property and your basis is determined by the donor's adjusted basis, your holding period is considered to have started on the same day the donor's holding period started. How to file 2010 tax return   If your basis is determined by the fair market value of the property, your holding period starts on the day after the date of the gift. How to file 2010 tax return Inherited property. How to file 2010 tax return   Generally, if you inherited investment property, your capital gain or loss on any later disposition of that property is long-term capital gain or loss. How to file 2010 tax return This is true regardless of how long you actually held the property. How to file 2010 tax return However, if you inherited property from someone who died in 2010, see the information below. How to file 2010 tax return Inherited property from someone who died in 2010. How to file 2010 tax return   If you inherit investment property from a decedent who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your holding period. How to file 2010 tax return Real property bought. How to file 2010 tax return   To figure how long you have held real property bought under an unconditional contract, begin counting on the day after you received title to it or on the day after you took possession of it and assumed the burdens and privileges of ownership, whichever happened first. How to file 2010 tax return However, taking delivery or possession of real property under an option agreement is not enough to start the holding period. How to file 2010 tax return The holding period cannot start until there is an actual contract of sale. How to file 2010 tax return The holding period of the seller cannot end before that time. How to file 2010 tax return Real property repossessed. How to file 2010 tax return   If you sell real property but keep a security interest in it, and then later repossess the property under the terms of the sales contract, your holding period for a later sale includes the period you held the property before the original sale and the period after the repossession. How to file 2010 tax return Your holding period does not include the time between the original sale and the repossession. How to file 2010 tax return That is, it does not include the period during which the first buyer held the property. How to file 2010 tax return Stock dividends. How to file 2010 tax return   The holding period for stock you received as a taxable stock dividend begins on the date of distribution. How to file 2010 tax return   The holding period for new stock you received as a nontaxable stock dividend begins on the same day as the holding period of the old stock. How to file 2010 tax return This rule also applies to stock acquired in a “spin-off,” which is a distribution of stock or securities in a controlled corporation. How to file 2010 tax return Nontaxable stock rights. How to file 2010 tax return   Your holding period for nontaxable stock rights begins on the same day as the holding period of the underlying stock. How to file 2010 tax return The holding period for stock acquired through the exercise of stock rights begins on the date the right was exercised. How to file 2010 tax return Nonbusiness Bad Debts If someone owes you money that you cannot collect, you have a bad debt. How to file 2010 tax return You may be able to deduct the amount owed to you when you figure your tax for the year the debt becomes worthless. How to file 2010 tax return Generally, nonbusiness bad debts are bad debts that did not come from operating your trade or business, and are deductible as short-term capital losses. How to file 2010 tax return To be deductible, nonbusiness bad debts must be totally worthless. How to file 2010 tax return You cannot deduct a partly worthless nonbusiness debt. How to file 2010 tax return Genuine debt required. How to file 2010 tax return   A debt must be genuine for you to deduct a loss. How to file 2010 tax return A debt is genuine if it arises from a debtor-creditor relationship based on a valid and enforceable obligation to repay a fixed or determinable sum of money. How to file 2010 tax return Basis in bad debt required. How to file 2010 tax return    To deduct a bad debt, you must have a basis in it—that is, you must have already included the amount in your income or loaned out your cash. How to file 2010 tax return For example, you cannot claim a bad debt deduction for court-ordered child support not paid to you by your former spouse. How to file 2010 tax return If you are a cash method taxpayer (as most individuals are), you generally cannot take a bad debt deduction for unpaid salaries, wages, rents, fees, interest, dividends, and similar items. How to file 2010 tax return When deductible. How to file 2010 tax return   You can take a bad debt deduction only in the year the debt becomes worthless. How to file 2010 tax return You do not have to wait until a debt is due to determine whether it is worthless. How to file 2010 tax return A debt becomes worthless when there is no longer any chance that the amount owed will be paid. How to file 2010 tax return   It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. How to file 2010 tax return You must only show that you have taken reasonable steps to collect the debt. How to file 2010 tax return Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. How to file 2010 tax return How to report bad debts. How to file 2010 tax return    Deduct nonbusiness bad debts as short-term capital losses on Form 8949. How to file 2010 tax return    Make sure you report your bad debt(s) (and any other short-term transactions for which you did not receive a Form 1099-B) on Form 8949, Part I, with box C checked. How to file 2010 tax return    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. How to file 2010 tax return See also Schedule D (Form 1040), Form 8949, and their separate instructions. How to file 2010 tax return   For each bad debt, attach a statement to your return that contains: A description of the debt, including the amount, and the date it became due, The name of the debtor, and any business or family relationship between you and the debtor, The efforts you made to collect the debt, and Why you decided the debt was worthless. How to file 2010 tax return For example, you could show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt. How to file 2010 tax return Filing a claim for refund. How to file 2010 tax return    If you do not deduct a bad debt on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the bad debt. How to file 2010 tax return To do this, use Form 1040X to amend your return for the year the debt became worthless. How to file 2010 tax return You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. How to file 2010 tax return For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. How to file 2010 tax return Additional information. How to file 2010 tax return   For more information, see Nonbusiness Bad Debts in Publication 550. How to file 2010 tax return For information on business bad debts, see chapter 10 of Publication 535, Business Expenses. How to file 2010 tax return Wash Sales You cannot deduct losses from sales or trades of stock or securities in a wash sale. How to file 2010 tax return A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. How to file 2010 tax return If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). How to file 2010 tax return The result is your basis in the new stock or securities. How to file 2010 tax return This adjustment postpones the loss deduction until the disposition of the new stock or securities. How to file 2010 tax return Your holding period for the new stock or securities includes the holding period of the stock or securities sold. How to file 2010 tax return For more information, see Wash Sales, in chapter 4 of Publication 550. How to file 2010 tax return Rollover of Gain From Publicly Traded Securities You may qualify for a tax-free rollover of certain gains from the sale of publicly traded securities. How to file 2010 tax return This means that if you buy certain replacement property and make the choice described in this section, you postpone part or all of your gain. How to file 2010 tax return You postpone the gain by adjusting the basis of the replacement property as described in Basis of replacement property , later. How to file 2010 tax return This postpones your gain until the year you dispose of the replacement property. How to file 2010 tax return You qualify to make this choice if you meet all the following tests. How to file 2010 tax return You sell publicly traded securities at a gain. How to file 2010 tax return Publicly traded securities are securities traded on an established securities market. How to file 2010 tax return Your gain from the sale is a capital gain. How to file 2010 tax return During the 60-day period beginning on the date of the sale, you buy replacement property. How to file 2010 tax return This replacement property must be either common stock of, or a partnership interest in a specialized small business investment company (SSBIC). How to file 2010 tax return This is any partnership or corporation licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958, as in effect on May 13, 1993. How to file 2010 tax return Amount of gain recognized. How to file 2010 tax return   If you make the choice described in this section, you must recognize gain only up to the following amount. How to file 2010 tax return The amount realized on the sale, minus The cost of any common stock or partnership interest in an SSBIC that you bought during the 60-day period beginning on the date of sale (and did not previously take into account on an earlier sale of publicly traded securities). How to file 2010 tax return  If this amount is less than the amount of your gain, you can postpone the rest of your gain, subject to the limit described next. How to file 2010 tax return If this amount is equal to or more than the amount of your gain, you must recognize the full amount of your gain. How to file 2010 tax return Limit on gain postponed. How to file 2010 tax return   The amount of gain you can postpone each year is limited to the smaller of: $50,000 ($25,000 if you are married and file a separate return), or $500,000 ($250,000 if you are married and file a separate return), minus the amount of gain you postponed for all earlier years. How to file 2010 tax return Basis of replacement property. How to file 2010 tax return   You must subtract the amount of postponed gain from the basis of your replacement property. How to file 2010 tax return How to report and postpone gain. How to file 2010 tax return    See How to report and postpone gain under Rollover of Gain From Publicly Traded Securities in chapter 4 of Publication 550 for details. How to file 2010 tax return Prev  Up  Next   Home   More Online Publications