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Irs Amended Return Form

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Irs Amended Return Form

Irs amended return form 16. Irs amended return form   Cómo Declarar Ganancias y Pérdidas Table of Contents Qué Hay de Nuevo Introduction Useful Items - You may want to see: Cómo Declarar Ganancias y Pérdidas de CapitalExcepción 1. Irs amended return form Excepción 2. Irs amended return form Presente el Formulario 1099-B o el Formulario 1099-S al IRS. Irs amended return form Pérdidas de Capital Tasas Impositivas sobre Ganancias de Capital Qué Hay de Nuevo Tasas máximas de ganancias de capital. Irs amended return form  Para el año 2013, las tasas máximas de ganancias de capital son del 0%, 15%, 20%, 25% y 28%. Irs amended return form Introduction En este capítulo se explica cómo declarar ganancias y pérdidas de capital provenientes de ventas, intercambios y otras enajenaciones de bienes de inversión en el Formulario 8949 y el Anexo D (Formulario 1040). Irs amended return form Esta explicación abarca los siguientes temas: Cómo declarar ganancias y pérdidas a corto plazo. Irs amended return form Cómo declarar ganancias y pérdidas a largo plazo. Irs amended return form Cómo calcular pérdidas de capital que se van a trasladar al año siguiente. Irs amended return form Cómo calcular los impuestos sobre una ganancia neta de capital. Irs amended return form Si vende o de otro modo enajena bienes utilizados en una ocupación o negocio o en la producción de ingresos, vea la Publicación 544, Sales and Other Dispositions of Assets (Ventas y otras enajenaciones de activos), en inglés, antes de completar el Anexo D (Formulario 1040). Irs amended return form Useful Items - You may want to see: Publicación 537 Installment Sales (Ventas a plazos), en inglés 544 Sales and Other Dispositions of Assets (Ventas y otras enajenaciones de activos), en inglés 550 Investment Income and Expenses (Ingresos y gastos de inversión), en inglés Formulario (e Instrucciones) 4797 Sales of Business Property (Ventas de bienes comerciales), en inglés 6252 Installment Sale Income (Ingresos de ventas a plazos), en inglés 8582 Passive Activity Loss Limitations (Limitaciones de pérdidas en actividades pasivas), en inglés 8949 Sales and Other Dispositions of Capital Assets (Ventas y otras enajenaciones de activos de capital, en inglés) Anexo D (Formulario 1040) Capital Gains and Losses (Ganancias y pérdidas de capital), en inglés Cómo Declarar Ganancias y Pérdidas de Capital Declare sus ganancias y pérdidas de capital en el Formulario 8949. Irs amended return form Complete el Formulario 8949 antes de completar las líneas 1b, 2, 3, 8b, 9 ó 10 del Anexo D (Formulario 1040). Irs amended return form Use el Formulario 8949 para declarar: La venta o intercambio de un activo de capital, la cual no se declaró en ningún otro formulario o anexo, Ganancias por canjes involuntarios (aparte de cuando se deba a un hecho fortuito o un robo) de activos de capital que no sirven para propósitos de negocio o lucro y Deudas incobrables que no provienen del negocio. Irs amended return form Use el Anexo D (Formulario 1040): Para calcular la ganancia o pérdida total de las transacciones declaradas en el Formulario 8949; Para declarar una ganancia proveniente del Formulario 6252 o de la Parte I del Formulario 4797; Para declarar una ganancia o pérdida proveniente del Formulario 4684, 6781 u 8824; Para declarar distribuciones de ganancias de capital no declaradas directamente en el Formulario 1040 o en el Formulario 1040A; Para declarar una pérdida de capital trasladada del año tributario anterior al año tributario actual; Para declarar su parte de una ganancia (o pérdida) de una sociedad colectiva, sociedad anónima de tipo S, caudal hereditario o fideicomiso; Para declarar las transacciones informadas a usted en el Formulario 1099-B (o documento sustitutivo), el cual muestra las bases informadas al IRS y al cual no corresponde ninguno de los ajustes o códigos del Formulario 8949; y Para declarar ganancias de capital a largo plazo no distribuidas provenientes del Formulario 2439. Irs amended return form Anote en el Formulario 8949 todas las ventas e intercambios de activos de capital (incluyendo acciones, bonos, etc. Irs amended return form ) y de bienes raíces (si no se declararon en el Formulario 4684, 4797, 6252, 6781 u 8824 o la línea 1a u 8a del Anexo D). Irs amended return form Declare estas transacciones aun si usted no recibió un Formulario 1099-B o 1099-S (u otra declaración sustitutiva) para la transacción. Irs amended return form Declare las ganancias o pérdidas a corto plazo en la Parte I. Irs amended return form Declare ganancias y pérdidas a largo plazo en la Parte II. Irs amended return form Use cuantos Formularios 8949 sean necesarios. Irs amended return form Excepciones a la presentación del Formulario 8949 y el Anexo D (Formulario 1040). Irs amended return form   Hay ciertas circunstancias bajo las cuales usted tal vez no tenga que presentar el Formulario 8949 ni el Anexo D (Formulario 1040). Irs amended return form Excepción 1. Irs amended return form   Usted no tiene que presentar el Formulario 8949 ni el Anexo D (Formulario 1040) si no tiene pérdidas de capital y sus únicas ganancias de capital son distribuciones de ganancia de capital correspondientes al (los) recuadro(s) 2a del (de los) Formulario(s) 1099-DIV (o declaraciones sustitutivas). Irs amended return form (Si alguno de los Formularios 1099-DIV (o declaraciones sustitutivas) que usted recibe indica una cifra en el recuadro 2b (ganancias no recuperadas conforme a la sección 1250), el recuadro 2c (ganancias conforme a la sección 1202) o el recuadro 2d (ganancias (tasas de 28%) por la venta de objetos coleccionables, usted no reúne los requisitos para esta excepción). Irs amended return form Si reúne los requisitos para esta excepción, declare sus distribuciones de ganancia de capital directamente en la línea 13 del Formulario 1040 y marque el recuadro en la línea 13. Irs amended return form También debe utillizar la Qualified Dividends and Capital Gain Tax Worksheet (Hoja de trabajo para impuestos sobre dividendos y ganancias de capital), que encontrará en las Instrucciones del Formulario 1040, para calcular su impuesto. Irs amended return form Usted pede declarar sus distribuciones de ganancias de capital en la línea 10 del Formulario 1040A, en vez del Formulario 1040, si ninguno de los Formularios 1099-DIV (o declaraciones sustitutivas) que usted recibió indica una cifra en los recuadros 2b, 2c o 2d y usted no tiene que presentar el Formulario 1040. Irs amended return form Excepción 2. Irs amended return form   Usted tiene que presentar el Anexo D (Formulario 1040), pero por lo general no tiene que presentar el Formulario 8949 si la Excepción 1 no le corresponde y sus únicas ganancias y pérdidas de capital son: Distribuciones de ganancias de capital; Una pérdida de capital trasladada de un año anterior; Una ganancia correspondiente al Formulario 2439 ó 6252, o de la Parte I del Formulario 4797; Una ganancia o pérdida correspondiente al Formulario 4684, 6781 u 8824; Una ganancia o pérdida de una sociedad colectiva, sociedad anónima de tipo S, un caudal hereditario o fideicomiso; Ganancias y pérdidas de transacciones por las cuales usted recibió el Formulario 1099-B (o un documento sustitutivo), el cual muestra las bases informadas al IRS y por lo cual no necesita hacer ningún ajuste en la columna (g) del Formulario 8949 ni anotar ningún código en la columna (f) del Formulario 8949. Irs amended return form Ventas a plazos. Irs amended return form   No puede utilizar el método de pago a plazos para declarar una ganancia proveniente de la venta de acciones o valores bursátiles cotizados en un mercado de valores bursátiles establecido. Irs amended return form Tiene que declarar la totalidad de la ganancia en el año de la venta (el año en el que ocurra la fecha de canje). Irs amended return form Ganancias y pérdidas provenientes de una actividad pasiva. Irs amended return form    Si tiene pérdidas o ganancias provenientes de una actividad pasiva, es posible que tenga que declararlas también en el Formulario 8582. Irs amended return form En ciertos casos, la pérdida puede ser limitada conforme a las reglas de actividad pasiva. Irs amended return form Consulte el Formulario 8582 y sus instrucciones correspondientes por separado para obtener información adicional sobre la declaración de ganancias y pérdidas de capital producto de una actividad pasiva. Irs amended return form Transacciones que se declaran en el Formulario 1099-B. Irs amended return form   Si vendió bienes, como acciones, bonos o ciertos productos de consumo bursátiles, a través de un agente corredor bursátil, éste debe entregarle un Formulario 1099-B o documento sustitutivo. Irs amended return form Utilice el Formulario 1099-B o el documento sustitutivo para completar el Formulario 8949. Irs amended return form Si usted vendió un valor bursátil garantizado en 2013, su agente corredor bursátil le mandará un Formulario 1099-B (o declaración sustitutiva) que le indica la base. Irs amended return form Esto le ayudará a completar el Formulario 8949. Irs amended return form Por lo general, los valores bursátiles garantizados son aquéllos que usted adquirió después del año 2010. Irs amended return form   Declare las ganancias brutas que aparezcan en el recuadro 2a del Formulario 1099-B como el precio de venta en la columna (d) de la Parte I o la Parte II del Formulario 8949, según le corresponda a su caso. Irs amended return form No obstante, si el agente corredor bursátil indica, en el recuadro 2a del Formulario 1099-B, haber declarado al IRS las ganancias brutas (precio de venta) menos comisiones y primas de opciones, anote el precio neto de venta resultante en la columna (d) de la Parte I o de la Parte II del Formulario 8949, según le corresponda a su caso. Irs amended return form   Incluya en la columna (g) todo gasto de venta, tal como honorarios de agente corredor bursátil, comisiones, impuestos de traspaso locales y estatales y primas de opciones, a menos que usted haya declarado el precio neto de venta en la columna (d). Irs amended return form Si incluye un gasto de venta en la columna (g), anote “E” en la columna (f). Irs amended return form Transacciones que se declaran en el Formulario 1099-CAP. Irs amended return form   Si es dueño de acciones de una sociedad anónima en cuyo control o estructura de capital haya habido cambios importantes, dicha sociedad debe enviarle el Formulario 1099-CAP o documento sustitutivo. Irs amended return form Utilice el Formulario 1099-CAP o documento sustitutivo para completar el Formulario 8949. Irs amended return form Si sus cálculos indican que, debido al cambio, usted tendría una pérdida, no anote ninguna cantidad en el Formulario 8949 ni en el Anexo D (Formulario 1040). Irs amended return form Esta transacción no le da la posibilidad de declarar una pérdida en el Anexo D (Formulario 1040). Irs amended return form   Declare el total de la cantidad recibida indicado en el recuadro 2 del Formulario 1099-CAP como el precio de venta en la columna (d) de la Parte I o de la Parte II del Formulario 8949, según le corresponda a su caso. Irs amended return form Transacciones que se declaran en el Formulario 1099-S. Irs amended return form   Si vendió o canjeó bienes raíces que han de declararse, normalmente la persona encargada de comunicar transacciones de bienes raíces debe entregarle un Formulario 1099-S en el que se indiquen las ganancias brutas. Irs amended return form    “Bienes raíces que han de declararse” son toda participación en una propiedad actual o futura en cualesquiera de los siguientes casos: Terrenos con o sin mejoras, incluido el espacio aéreo; Estructuras intrínsecamente permanentes, incluido todo edificio residencial, comercial o industrial; Una unidad de condominio y sus instalaciones accesorias y elementos comunes, incluido el terreno; y Acciones de cooperativa de viviendas en sociedad anónima (como se define en la sección 216 del Código de Impuestos Internos). Irs amended return form   Una “persona encargada de comunicar transacciones de bienes raíces” puede ser el abogado del comprador, el abogado de usted, una compañía de escrituras de propiedad o de cuentas en depósito, un prestamista hipotecario, el agente corredor bursátil de usted, el agente corredor bursátil del comprador o la persona que adquiera la mayor participación en la propiedad. Irs amended return form   El Formulario 1099-S indicará las ganancias brutas de la venta o el intercambio en el recuadro 2. Irs amended return form Consulte las Instrucciones para el Formulario 8949 y las Instrucciones para el Anexo D (Formulario 1040) para saber cómo se declaran estas transacciones e incluirlas en la Parte I o Parte II del Formulario 8949, tal como le corresponda a su caso. Irs amended return form No obstante, declare los intercambios por bienes del mismo tipo en el Formulario 8824. Irs amended return form   Es ilegal que una persona encargada de comunicar transacciones de bienes raíces le cobre un cargo por separado por cumplir con el requisito de presentación del Formulario 1099-S. Irs amended return form Nominatarios. Irs amended return form   Si recibe ganancias brutas como nominatario (es decir, las ganancias brutas están a nombre suyo pero en realidad pertenecen a otra persona), vea las Instrucciones para el Formulario 8949, para saber cómo declarar estas cantidades en el Formulario 8949. Irs amended return form Presente el Formulario 1099-B o el Formulario 1099-S al IRS. Irs amended return form   Si recibió ganancias brutas en calidad de nominatario en 2013, tiene que presentar al IRS el Formulario 1099-B o el Formulario 1099-S correspondiente a dichas ganancias. Irs amended return form Envíe el Formulario 1099-B o el Formulario 1099-S junto con el Formulario 1096, Annual Summary and Transmittal of U. Irs amended return form S. Irs amended return form Information Returns (Resumen e informe anual de declaraciones informativas de los Estados Unidos), en inglés, al Centro de Servicio del Servicio de Impuestos Internos que le corresponda a más tardar el 28 de febrero de 2014 (31 de marzo de 2014, si presenta el Formulario 1099-B o el Formulario 1099-S por vía electrónica). Irs amended return form Entregue la Copia B del Formulario 1099-B o del Formulario 1099-S al verdadero dueño de dichas ganancias a más tardar el 18 de febrero de 2014. Irs amended return form En el Formulario 1099-B, usted debe constar como “Payer” (Pagador). Irs amended return form El otro dueño debe constar como “Recipient” (Destinatario). Irs amended return form En el Formulario 1099-S, usted debe constar como “Filer” (Declarante). Irs amended return form El otro dueño debe constar como “Transferor” (Cesionista). Irs amended return form No obstante, usted no tiene que presentar el Formulario 1099-B ni el Formulario 1099-S para mostrar las ganancias de su cónyuge. Irs amended return form Para más información acerca de los requisitos de presentación de ciertas declaraciones informativas y las multas por no presentar (o facilitar) dichas declaraciones, vea las General Instructions for Certain Information Returns (Instrucciones generales para determinadas declaraciones informativas), en inglés. Irs amended return form Si presenta la declaración electrónicamente, vea la Publicación 1220, en inglés. Irs amended return form Venta de bienes comprados en diferentes ocasiones. Irs amended return form   Si vende un paquete de acciones u otros bienes que haya comprado en diferentes ocasiones, declare la pérdida o ganancia a corto plazo procedente de la venta en una fila de la Parte I del Formulario 8949 y anote la pérdida o ganancia a largo plazo en una fila de la Parte II del Formulario 8949. Irs amended return form Escriba “Various” (Varios) en la columna (b) para la “Date acquired” (Fecha de adquisición). Irs amended return form Gastos de venta. Irs amended return form    En la columna (g) del Formulario 8949, incluya todo gasto de venta, como honorarios de agentes corredores bursátiles, comisiones, impuestos estatales y locales sobre traspasos y primas de opciones, a menos que usted haya declarado el precio neto de ventas en la columna (d). Irs amended return form Si usted incluyó un gasto de venta en la columna (g), anote “E” en la columna (f). Irs amended return form   Para más información sobre los ajustes a la base, vea el capítulo 13. Irs amended return form Ganancias y pérdidas a corto plazo. Irs amended return form   Las ganancias o pérdidas de capital sobre la venta o canje de bienes de inversión que haya tenido por 1 año o menos se consideran pérdidas o ganancias de capital a corto plazo. Irs amended return form Declárelas en la Parte I del Formulario 8949. Irs amended return form   Sume su parte de pérdidas o ganancias de capital a corto plazo provenientes de sociedades colectivas, sociedades anónimas de tipo S, caudales hereditarios y fideicomisos, además de toda pérdida de capital a corto plazo que se haya trasladado de un año anterior, con las demás ganancias y pérdidas de capital a corto plazo para calcular la pérdida o ganancia de capital neta a corto plazo en la línea 7 del Anexo D (Formulario 1040). Irs amended return form Ganancias y pérdidas a largo plazo. Irs amended return form    Una ganancia o pérdida de capital sobre la venta o canje de bienes de inversión que haya tenido durante más de 1 año se considera ganancia o pérdida de capital a largo plazo. Irs amended return form Declárela en la Parte II del Formulario 8949. Irs amended return form   Usted debe declarar lo siguiente en la Parte II del Anexo D (Formulario 1040): Ganancias de capital a largo plazo de un fondo mutuo (u otra sociedad inversionista reglamentada) o de una sociedad de inversión inmobiliaria (REIT, por sus siglas en inglés) que no hayan sido distribuidas; Su participación de las ganancias y pérdidas de capital a largo plazo de sociedades colectivas, sociedades anónimas de tipo S, caudales hereditarios y fideicomisos; Toda distribución de ganancia de capital proveniente de fondos mutuos y sociedades de inversión inmobiliaria (REIT) que no se haya declarado directamente en la línea 10 del Formulario 1040A o la línea 13 del Formulario 1040; y Pérdidas de capital a largo plazo trasladadas de un año anterior. Irs amended return form    El resultado que se dé después de sumar dichas cantidades con las demás ganancias de capital a largo plazo y restar las pérdidas de capital a largo plazo es la ganancia o pérdida de capital neta a largo plazo (línea 15 del Anexo D (Formulario 1040)). Irs amended return form Total de la ganancia o pérdida neta. Irs amended return form   Para calcular el total de la ganancia o pérdida neta, sume la ganancia o pérdida de capital neta a corto plazo (línea 7 del Anexo D (Formulario 1040)) con la pérdida o ganancia de capital neta a largo plazo (línea 15 del Anexo D (Formulario 1040)). Irs amended return form Anote el resultado en la línea 16 de la Parte III del Anexo D (Formulario 1040). Irs amended return form Si tiene pérdidas que sobrepasen las ganancias, vea Pérdidas de Capital , que se encuentra a continuación. Irs amended return form Si las líneas 15 y 16 del Anexo D (Formulario 1040) son ganancias y el ingreso sujeto a impuestos en su Formulario 1040 es mayor de cero, vea Tasas Impositivas sobre Ganancias de Capital , más adelante. Irs amended return form Pérdidas de Capital Si las pérdidas de capital son mayores que las ganancias de capital, se puede declarar una deducción por pérdida de capital. Irs amended return form Declare la cantidad de la deducción en la línea 13 del Formulario 1040, anotándola entre paréntesis. Irs amended return form Límite sobre la deducción. Irs amended return form   La deducción por ganancia de capital permisible, calculada en el Anexo D (Formulario 1040), es la cantidad que sea menor de las siguientes: $3,000 ($1,500 si es casado y presenta una declaración por separado) o El total de la pérdida neta tal como aparece en la línea 16 del Anexo D (Formulario 1040). Irs amended return form   Puede usar el total de la pérdida neta para reducir sus ingresos en una cantidad equivalente, hasta el límite de $3,000. Irs amended return form Traslado de pérdida de capital. Irs amended return form   Si el total de la pérdida neta en la línea 16 del Anexo D (Formulario 1040) sobrepasa el límite anual de las deducciones de pérdida de capital, puede trasladar al año siguiente la parte sobrante y tratarla como si hubiera incurrido en la misma durante ese próximo año. Irs amended return form Si una parte de la pérdida sigue sin usarse, puede trasladarla a años posteriores hasta que se agote. Irs amended return form   Cuando calcule una cantidad de pérdida de capital que se trasladará al año siguiente, tiene que tener en cuenta la deducción permisible del año en curso, la haya reclamado o no, e independientemente de si presentó o no una declaración correspondiente al año en curso. Irs amended return form   Cuando traslade una pérdida a un año posterior, ésta sigue siendo una pérdida a largo plazo o corto plazo. Irs amended return form Una pérdida de capital a largo plazo que usted traslade al año tributario siguiente reducirá las ganancias de capital a largo plazo de dicho año antes de reducir las ganancias de capital a corto plazo de dicho año. Irs amended return form Cálculo de la cantidad trasladada al año siguiente. Irs amended return form   La cantidad de la pérdida de capital a trasladarse al año siguiente es la cantidad de pérdida neta total que sea mayor que la cantidad menor entre: La deducción por pérdida de capital permisible durante el año o Sus ingresos sujetos a impuestos aumentados por la deducción por pérdida de capital permisible durante el año y la deducción por exenciones personales. Irs amended return form   Si las deducciones son mayores que sus ingresos brutos del año tributario, utilice los ingresos negativos sujetos a impuestos al calcular la cantidad en el punto (2). Irs amended return form    Complete la Capital Loss Carryover Worksheet (Hoja de trabajo para calcular la pérdida de capital a trasladarse a años posteriores) en las Instrucciones del Anexo D o la Publicación 550, en inglés, para calcular la parte de la pérdida de capital que se pueda trasladar. Irs amended return form Ejemplo. Irs amended return form Roberto y Gloria vendieron valores bursátiles en 2013. Irs amended return form Las ventas dieron por resultado una pérdida de capital de $7,000. Irs amended return form No hicieron otras transacciones de capital. Irs amended return form Sus ingresos sujetos a impuestos fueron $26,000. Irs amended return form En la declaración conjunta de 2013, pueden deducir $3,000. Irs amended return form La parte de la pérdida que no usaron, $4,000 ($7,000 − $3,000), se puede trasladar a 2014. Irs amended return form Si la pérdida de capital hubiera sido $2,000, la deducción por pérdida de capital también habría sido $2,000. Irs amended return form No tendrían cantidad alguna a trasladar al año siguiente. Irs amended return form Utilice primero las pérdidas a corto plazo. Irs amended return form   Cuando calcule la cantidad a trasladarse al año siguiente, utilice primero las pérdidas de capital a corto plazo, aunque haya incurrido en las mismas después de una pérdida de capital a largo plazo. Irs amended return form Si no ha alcanzado el límite de la deducción por pérdidas de capital después de haber utilizado las pérdidas de capital a corto plazo, utilice las pérdidas de capital a largo plazo hasta alcanzar el límite. Irs amended return form Pérdida de capital de un difunto. Irs amended return form    Una pérdida de capital sufrida por una persona en su último año tributario antes de fallecer (o que se haya traspasado de un año anterior a dicho año) se puede deducir sólo en la última declaración del impuesto sobre el ingreso personal que se presente a nombre del difunto. Irs amended return form Los límites de pérdida de capital explicados anteriormente aún corresponden en este caso. Irs amended return form El caudal hereditario (patrimonio) del difunto no puede deducir ninguna parte de la pérdida ni trasladarla a años posteriores. Irs amended return form Declaraciones conjuntas y separadas. Irs amended return form   Si antes usted y su cónyuge presentaban declaraciones por separado y ahora presentan una declaración conjunta, sume las cantidades de pérdida de capital que cada uno de ustedes haya trasladado a un año siguiente. Irs amended return form No obstante, si antes usted y su cónyuge presentaban una declaración conjunta y ahora presentan declaraciones por separado, toda pérdida de capital que se haya trasladado a un año siguiente se puede deducir sólo en la declaración del cónyuge que de hecho sufrió la pérdida. Irs amended return form Tasas Impositivas sobre Ganancias de Capital Las tasas impositivas correspondientes a una ganancia neta de capital suelen ser más bajas que las que corresponden a otros ingresos. Irs amended return form Estas tasas reducidas se conocen como las “tasas máximas de ganancias de capital”. Irs amended return form El término “ganancia neta de capital” designa la cantidad por la que la ganancia neta de capital a largo plazo del año supera la pérdida de capital neta a corto plazo. Irs amended return form Para el año 2013, las tasas máximas correspondientes a ganancias de capital son 0%, 15%, 20%, 25% y 28%. Irs amended return form Vea la Tabla 16-1, para obtener información detallada. Irs amended return form Si para calcular el impuesto utiliza las tasas máximas correspondientes a ganancias de capital y el cálculo normal de impuestos le resulta en unos impuestos más bajos, el cálculo normal de impuestos es el que le corresponde. Irs amended return form Ejemplo. Irs amended return form Su ganancia neta de capital proviene en su totalidad de la venta de artículos coleccionables, por lo tanto, la tasa correspondiente a la ganancia de capital es 28%. Irs amended return form Si de otro modo está sujeto a una tasa menor del 28%, la tasa del 28% no corresponde. Irs amended return form Deducción de los intereses de inversiones. Irs amended return form   Si declara una deducción de intereses de inversiones, tal vez tenga que reducir la cantidad de su ganancia neta de capital que reúna los requisitos para las tasas impositivas sobre ganancias de capital. Irs amended return form Réstele la cantidad de la ganancia neta de capital que opte por incluir en los ingresos de inversiones al calcular el límite de la deducción de los mismos. Irs amended return form Para hacer esto, se utiliza la Schedule D Tax Worksheet (Hoja de trabajo para los impuestos del Anexo D) en las Instrucciones para el Anexo D (Formulario 1040), en inglés, o la Qualified Dividends and Capital Gain Tax Worksheet (Hoja de trabajo para los impuestos sobre dividendos calificados y ganancias de capital), que se encuentra en las instrucciones por separado correspondientes a los Formularios 1040 y 1040A, en inglés. Irs amended return form Para más información acerca del límite de los intereses procedentes de inversiones, vea Interest Expenses (Gastos de intereses) en el capítulo 3 de la Publicación 550, en inglés. Irs amended return form Tabla 16-1. Irs amended return form ¿Cuál es la Tasa Máxima de Ganancias de Capital que le Corresponde? SI la ganancia neta de capital se deriva de . Irs amended return form . Irs amended return form . Irs amended return form ENTONCES la  tasa máxima de  ganancia de capital es . Irs amended return form . Irs amended return form . Irs amended return form una ganancia producto de artículos coleccionables 28% una ganancia, la cual reúne los requisitos, sobre acciones de pequeños negocios calificados menos la exclusión conforme a la sección 1202 28% una ganancia conforme a la sección 1250 no recuperada 25% otra ganancia1 y la tasa impositiva normal correspondiente es 39. Irs amended return form 6% 20% otra ganancia1 y la tasa impositiva normal correspondiente es 25%, 28%, 33% o 35% 15% otra ganancia1 y la tasa impositiva normal correspondiente es 10% o 15% 0% 1 El término “otra ganancia” significa toda ganancia que no sea una ganancia procedente de artículos coleccionables, ganancia sobre acciones de pequeños negocios calificados o una ganancia conforme a la sección 1250 no recuperada. Irs amended return form     Ganancia o pérdida procedente de artículos coleccionables. Irs amended return form   Ésta es una ganancia o pérdida que se deriva de la venta o canje de una obra de arte, alfombra, antigüedad, metal (como oro, plata y platino en barras), piedra preciosa, estampilla o sello, moneda o bebida alcohólica que haya tenido más de 1 año. Irs amended return form   Se considera que una ganancia procedente de artículos coleccionables abarca las ganancias resultantes de la venta de una participación en una sociedad colectiva, sociedad anónima de tipo S o fideicomiso, generadas por una plusvalía no realizada de dichos artículos coleccionables. Irs amended return form Ganancia sobre acciones de pequeños negocios calificados. Irs amended return form    Si obtuvo una ganancia de acciones de pequeños negocios calificados y fue dueño de dichas acciones durante más de 5 años, normalmente puede excluir de los ingresos una parte o la totalidad de su ganancia bajo la sección 1202. Irs amended return form La ganancia que cumple los requisitos, menos la exclusión conforme a la sección 1202, es una ganancia con una tasa de 28%. Irs amended return form Vea Gains on Qualified Small Business Stock (Ganancias de acciones de pequeños negocios calificados) en el capítulo 4 de la Publicación 550, en inglés. Irs amended return form Ganancia conforme a la sección 1250 no recuperada. Irs amended return form    Por lo general, ésta es toda parte de la ganancia de capital que se haya originado por la venta de bienes conforme a la sección 1250 (bienes raíces) debido a depreciación (pero no más que la ganancia neta conforme a la sección 1231) menos toda pérdida neta en el grupo del 28%. Irs amended return form Use la Unrecaptured Section 1250 Gain Worksheet (Hoja de trabajo de ganancias no recuperadas conforme a la sección 1250) de las Instrucciones del Anexo D (Formulario 1040), en inglés, para calcular la ganancia no recuperada conforme a la sección 1250. Irs amended return form Para más información sobre bienes conforme a la sección 1250 y ganancias conforme a la sección 1231, vea el capítulo 3 de la Publicación 544, en inglés. Irs amended return form Cálculo de los impuestos a base de las tasas máximas de ganancias de capital. Irs amended return form   Utilice la Qualified Dividends and Capital Gain Tax Worksheet (Hoja de trabajo para los impuestos sobre dividendos calificados y ganancias de capital) o la Schedule D Tax Worksheet (Hoja de trabajo para los impuestos del Anexo D), la que corresponda, para calcular su impuesto si ha recibido dividendos calificados o ganancia neta de capital. Irs amended return form Tiene ganancia neta de capital si las cantidades de las líneas 15 y 16 del Anexo D ambas son ganancias. Irs amended return form Hoja de trabajo para los impuestos del Anexo D. Irs amended return form   Utilice la Schedule D Tax Worksheet (Hoja de trabajo para los impuestos del Anexo D) que se encuentra en las Instrucciones del Anexo D (Formulario 1040) para calcular el impuesto si se dan las siguientes condiciones: Tiene que presentar el Anexo D (Formulario 1040) y La cantidad de la línea 18 (ganancia a una tasa de 28%) o la línea 19 (ganancia no recuperada conforme a la sección 1250) del Anexo D (Formulario 1040) es mayor de cero. Irs amended return form Hoja de trabajo para el impuesto sobre dividendos calificados y ganancias de capital. Irs amended return form   Utilice la Qualified Dividends and Capital Gain Tax Worksheet (Hoja de trabajo para el impuesto sobre los dividendos calificados y ganancias de capital) de las instrucciones del Formulario 1040 o Formulario 1040A (el que presente) para calcular el impuesto si no tiene que utilizar la Hoja de trabajo para los impuestos del Anexo D (como se explica anteriormente) y corresponde cualquiera de los siguientes puntos: Recibió dividendos calificados. Irs amended return form (Vea Dividendos Calificados en el capítulo 8). Irs amended return form No tiene que presentar el Anexo D (Formulario 1040) y recibió distribuciones de ganancias de capital. Irs amended return form (Vea Excepciones a la presentación del Formulario 8949 y el Anexo D (Formulario 1040) , anteriormente). Irs amended return form Las cantidades de las líneas 15 y 16 del Anexo D (Formulario 1040) son mayores de cero. Irs amended return form Impuesto mínimo alternativo. Irs amended return form   Estas tasas de ganancias de capital se utilizan también para calcular el impuesto mínimo alternativo. Irs amended return form Prev  Up  Next   Home   More Online Publications
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The Irs Amended Return Form

Irs amended return form 4. Irs amended return form   Unrelated Business Taxable Income Table of Contents IncomeExclusions Dues of Agricultural Organizations and Business Leagues DeductionsDirectly Connected Exploitation of Exempt Activity—Advertising Sales Modifications Partnership Income or Loss S Corporation Income or Loss Special Rules for Foreign Organizations Special Rules for Social Clubs, VEBAs, SUBs, and GLSOsIncome that is set aside. Irs amended return form Special Rules for Veterans' Organizations Income From Controlled OrganizationsAddition to tax for valuation misstatements. Irs amended return form Net unrelated income. Irs amended return form Net unrelated loss. Irs amended return form Control. Irs amended return form Income from property financed with qualified 501(c)(3) bonds. Irs amended return form Disposition of property received from taxable subsidiary and used in unrelated business. Irs amended return form Income From Debt-Financed Property Debt-Financed PropertyAcquisition Indebtedness Computation of Debt-Financed Income Deductions for Debt-Financed Property Allocation Rules How to Get Tax Help The term “unrelated business taxable income” generally means the gross income derived from any unrelated trade or business regularly conducted by the exempt organization, less the deductions directly connected with carrying on the trade or business. Irs amended return form If an organization regularly carries on two or more unrelated business activities, its unrelated business taxable income is the total of gross income from all such activities less the total allowable deductions attributable to all the activities. Irs amended return form In computing unrelated business taxable income, gross income and deductions are subject to the modifications and special rules explained in this chapter. Irs amended return form Whether a particular item of income or expense falls within any of these modifications or special rules must be determined by all the facts and circumstances in each specific case. Irs amended return form For example, if the organization received a payment termed rent that is in fact a return of profits by a person operating the property for the benefit of the organization, or that is a share of the profits retained by the organization as a partner or joint venturer, the payment is not within the income exclusion for rents, discussed later under Exclusions. Irs amended return form Income Generally, unrelated business income is taxable, but there are exclusions and special rules that must be considered when figuring the income. Irs amended return form Exclusions The following types of income (and deductions directly connected with the income) are generally excluded when figuring unrelated business taxable income. Irs amended return form Dividends, interest, annuities and other investment income. Irs amended return form   All dividends, interest, annuities, payments with respect to securities loans, income from notional principal contracts, and other income from an exempt organization's ordinary and routine investments that the IRS determines are substantially similar to these types of income are excluded in computing unrelated business taxable income. Irs amended return form Exception for insurance activity income of a controlled foreign corporation. Irs amended return form   This exclusion does not apply to income from certain insurance activities of an exempt organization's controlled foreign corporation. Irs amended return form The income is not excludable dividend income, but instead is unrelated business taxable income to the extent it would be so treated if the exempt organization had earned it directly. Irs amended return form Certain exceptions to this rule apply. Irs amended return form For more information, see section 512(b)(17). Irs amended return form Other exceptions. Irs amended return form   This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later), to interest or annuities received from a controlled corporation (discussed under Income From Controlled Organizations, later). Irs amended return form Income from lending securities. Irs amended return form   Payments received with respect to a security loan are excluded in computing unrelated business taxable income only if the loan is made under an agreement that:    Provides for the return to the exempt organization of securities identical to the securities loaned, Requires payments to the organization of amounts equivalent to all interest, dividends, and other distributions that the owner of the securities is entitled to receive during the period of the loan, Does not reduce the organization's risk of loss or opportunity for gain on the securities, Contains reasonable procedures to implement the obligation of the borrower to furnish collateral to the organization with a fair market value each business day during the period of the loan in an amount not less than the fair market value of the securities at the close of the preceding business day, and Permits the organization to terminate the loan upon notice of not more than 5 business days. Irs amended return form   Payments with respect to securities loans include: Amounts in respect of dividends, interest, and other distributions, Fees based on the period of time the loan is in effect and the fair market value of the security during that period, Income from collateral security for the loan, and Income from the investment of collateral security. Irs amended return form The payments are considered to be from the securities loaned and not from collateral security or the investment of collateral security from the loans. Irs amended return form Any deductions that are directly connected with collateral security for the loan, or with the investment of collateral security, are considered deductions that are directly connected with the securities loaned. Irs amended return form Royalties. Irs amended return form   Royalties, including overriding royalties, are excluded in computing unrelated business taxable income. Irs amended return form   To be considered a royalty, a payment must relate to the use of a valuable right. Irs amended return form Payments for trademarks, trade names, or copyrights are ordinarily considered royalties. Irs amended return form Similarly, payments for the use of a professional athlete's name, photograph, likeness, or facsimile signature are ordinarily considered royalties. Irs amended return form However, royalties do not include payments for personal services. Irs amended return form Therefore, payments for personal appearances and interviews are not excluded as royalties and must be included in figuring unrelated business taxable income. Irs amended return form   Unrelated business taxable income does not include royalty income received from licensees by an exempt organization that is the legal and beneficial owner of patents assigned to it by inventors for specified percentages of future royalties. Irs amended return form   Mineral royalties are excluded whether measured by production or by gross or taxable income from the mineral property. Irs amended return form However, the exclusion does not apply to royalties that stem from an arrangement whereby the organization owns a working interest in a mineral property and is liable for its share of the development and operating costs under the terms of its agreement with the operator of the property. Irs amended return form To the extent they are not treated as loans under section 636 (relating to income tax treatment of mineral production payments), payments for mineral production are treated in the same manner as royalty payments for the purpose of computing unrelated business taxable income. Irs amended return form To the extent they are treated as loans, any payments for production that are the equivalent of interest are treated as interest and are excluded. Irs amended return form Exceptions. Irs amended return form   This exclusion does not apply to debt-financed income (discussed under Income From Debt-Financed Property, later) or to royalties received from a controlled corporation (discussed under Income From Controlled Organizations, later). Irs amended return form Rents. Irs amended return form   Rents from real property, including elevators and escalators, are excluded in computing unrelated business taxable income. Irs amended return form Rents from personal property are not excluded. Irs amended return form However, special rules apply to “mixed leases” of both real and personal property. Irs amended return form Mixed leases. Irs amended return form   In a mixed lease, all of the rents are excluded if the rents attributable to the personal property are not more than 10% of the total rents under the lease, as determined when the personal property is first placed in service by the lessee. Irs amended return form If the rents attributable to personal property are more than 10% but not more than 50% of the total rents, only the rents attributable to the real property are excluded. Irs amended return form If the rents attributable to the personal property are more than 50% of the total rents, none of the rents are excludable. Irs amended return form   Property is placed in service when the lessee first may use it under the terms of a lease. Irs amended return form For example, property subject to a lease entered into on November 1, for a term starting on January 1 of the next year, is considered placed in service on January 1, regardless of when the lessee first actually uses it. Irs amended return form   If separate leases are entered into for real and personal property and the properties have an integrated use (for example, one or more leases for real property and another lease or leases for personal property to be used on the real property), all the leases will be considered as one lease. Irs amended return form   The rent attributable to the personal property must be recomputed, and the treatment of the rents must be redetermined, if: The rent attributable to all the leased personal property increases by 100% or more because additional or substitute personal property is placed in service, or The lease is modified to change the rent charged (whether or not the amount of rented personal property changes). Irs amended return form Any change in the treatment of rents resulting from the recomputation is effective only for the period beginning with the event that caused the recomputation. Irs amended return form Exception for rents based on net profit. Irs amended return form   The exclusion for rents does not apply if the amount of the rent depends on the income or profits derived by any person from the leased property, other than an amount based on a fixed percentage of the gross receipts or sales. Irs amended return form Exception for income from personal services. Irs amended return form   Payment for occupying space when personal services are also rendered to the occupant does not constitute rent from real property. Irs amended return form Therefore, the exclusion does not apply to transactions such as renting hotel rooms, rooms in boarding houses or tourist homes, and space in parking lots or warehouses. Irs amended return form Other exceptions. Irs amended return form   This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later), or to interest, annuities, royalties and rents received from a controlled corporation (discussed under Income From Controlled Organizations, later), investment income (dividends, interest, rents, etc. Irs amended return form ) received by organizations described in sections 501(c)(7), 501(c)(9), 501(c)(17), and 501(c)(20). Irs amended return form See Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs, discussed later for more information. Irs amended return form Income from research. Irs amended return form   A tax-exempt organization may exclude income from research grants or contracts from unrelated business taxable income. Irs amended return form However, the extent of the exclusion depends on the nature of the organization and the type of research. Irs amended return form   Income from research for the United States, any of its agencies or instrumentalities, or a state or any of its political subdivisions is excluded when computing unrelated business taxable income. Irs amended return form   For a college, university, or hospital, all income from research, whether fundamental or applied, is excluded in computing unrelated business taxable income. Irs amended return form   When an organization is operated primarily to conduct fundamental research (as distinguished from applied research) and the results are freely available to the general public, all income from research performed for any person is excluded in computing unrelated business taxable income. Irs amended return form   The term research, for this purpose, does not include activities of a type normally conducted as an incident to commercial or industrial operations, such as testing or inspecting materials or products, or designing or constructing equipment, buildings, etc. Irs amended return form In addition, the term fundamental research does not include research conducted for the primary purpose of commercial or industrial application. Irs amended return form Gains and losses from disposition of property. Irs amended return form   Also excluded from unrelated business taxable income are gains or losses from the sale, exchange, or other disposition of property other than: Stock in trade or other property of a kind that would properly be includable in inventory if on hand at the close of the tax year, Property held primarily for sale to customers in the ordinary course of a trade or business, or Cutting of timber that an organization has elected to consider as a sale or exchange of the timber. Irs amended return form   It should be noted that the last exception relates only to cut timber. Irs amended return form The sale, exchange, or other disposition of standing timber is excluded from the computation of unrelated business income, unless it constitutes property held for sale to customers in the ordinary course of business. Irs amended return form Lapse or termination of options. Irs amended return form   Any gain from the lapse or termination of options to buy or sell securities is excluded from unrelated business taxable income. Irs amended return form The exclusion applies only if the option is written in connection with the exempt organization's investment activities. Irs amended return form Therefore, this exclusion is not available if the organization is engaged in the trade or business of writing options or the options are held by the organization as inventory or for sale to customers in the ordinary course of a trade or business. Irs amended return form Exception. Irs amended return form   This exclusion does not apply to unrelated debt-financed income, discussed later under Income From Debt-Financed Property. Irs amended return form Gain or loss on disposition of certain brownfield property. Irs amended return form   Gain or loss from the qualifying sale, exchange, or other disposition of a qualifying brownfield property (as defined in section 512(b)(19)(C)), which was acquired by the organization after December 31, 2005 and before January 1, 2011, is excluded from unrelated business taxable income and is excepted from the debt-financed rules for such property. Irs amended return form See sections 512(b)(19) and 514(b)(1)(E). Irs amended return form Income from services provided under federal license. Irs amended return form   There is a further exclusion from unrelated business taxable income of income from a trade or business conducted by a religious order or by an educational organization maintained by the order. Irs amended return form   This exclusion applies only if the following requirements are met. Irs amended return form The trade or business must have been operated by the order or by the institution before May 27, 1959. Irs amended return form The trade or business must provide services under a license issued by a federal regulatory agency. Irs amended return form More than 90% of the net income from the business for the tax year must be devoted to religious, charitable, or educational purposes that constitute the basis for the religious order's exemption. Irs amended return form The rates or other charges for these services must be fully competitive with the rates or other charges of similar taxable businesses. Irs amended return form Rates or other charges for these services will be considered as fully competitive if they are neither materially higher nor materially lower than the rates charged by similar businesses operating in the same general area. Irs amended return form Exception. Irs amended return form    This exclusion does not apply to unrelated debt-financed income (discussed under Income From Debt-Financed Property, later). Irs amended return form Member income of mutual or cooperative electric companies. Irs amended return form   Income of a mutual or cooperative electric company described in section 501(c)(12) which is treated as member income under subparagraph (H) of that section is excluded from unrelated business taxable income. Irs amended return form Dues of Agricultural Organizations and Business Leagues Dues received from associate members by organizations exempt under section 501(c)(5) or section 501(c)(6) may be treated as gross income from an unrelated trade or business if the associate member category exists for the principal purpose of producing unrelated business income. Irs amended return form For example, if an organization creates an associate member category solely to allow associate members to purchase insurance through the organization, the associate member dues may be unrelated business income. Irs amended return form Exception. Irs amended return form   Associate member dues received by an agricultural or horticultural organization are not treated as gross income from an unrelated trade or business, regardless of their purpose, if they are not more than the annual limit. Irs amended return form The limit on dues paid by an associate member is $148 for 2011. Irs amended return form   If the required annual dues are more than the limit, the entire amount is treated as income from an unrelated business unless the associate member category was formed or availed of for the principal purpose of furthering the organization's exempt purposes. Irs amended return form Deductions To qualify as allowable deductions in computing unrelated business taxable income, the expenses, depreciation, and similar items generally must be allowable income tax deductions that are directly connected with carrying on an unrelated trade or business. Irs amended return form They cannot be directly connected with excluded income. Irs amended return form For an exception to the “directly connected” requirement, see Charitable contributions deduction, under Modifications, later. Irs amended return form Directly Connected To be directly connected with the conduct of an unrelated business, deductions must have a proximate and primary relationship to carrying on that business. Irs amended return form For an exception, see Expenses attributable to exploitation of exempt activities, later. Irs amended return form Expenses attributable solely to unrelated business. Irs amended return form   Expenses, depreciation, and similar items attributable solely to the conduct of an unrelated business are proximately and primarily related to that business and qualify for deduction to the extent that they are otherwise allowable income tax deductions. Irs amended return form   For example, salaries of personnel employed full-time to conduct the unrelated business and depreciation of a building used entirely in the conduct of that business are deductible to the extent otherwise allowable. Irs amended return form Expenses attributable to dual use of facilities or personnel. Irs amended return form   When facilities or personnel are used both to conduct exempt functions and to conduct an unrelated trade or business, expenses, depreciation, and similar items attributable to the facilities or personnel must be allocated between the two uses on a reasonable basis. Irs amended return form The part of an item allocated to the unrelated trade or business is proximately and primarily related to that business and is allowable as a deduction in computing unrelated business taxable income if the expense is otherwise an allowable income tax deduction. Irs amended return form Example 1. Irs amended return form A school recognized as a tax-exempt organization contracts with an individual to conduct a summer tennis camp. Irs amended return form The school provides the tennis courts, housing, and dining facilities. Irs amended return form The contracted individual hires the instructors, recruits campers, and provides supervision. Irs amended return form The income the school receives from this activity is from a dual use of the facilities and personnel. Irs amended return form The school, in computing its unrelated business taxable income, may deduct an allocable part of the expenses attributable to the facilities and personnel. Irs amended return form Example 2. Irs amended return form An exempt organization with gross income from an unrelated trade or business pays its president $90,000 a year. Irs amended return form The president devotes approximately 10% of his time to the unrelated business. Irs amended return form To figure the organization's unrelated business taxable income, a deduction of $9,000 ($90,000 × 10%) is allowed for the salary paid to its president. Irs amended return form Expenses attributable to exploitation of exempt activities. Irs amended return form   Generally, expenses, depreciation, and similar items attributable to the conduct of an exempt activity are not deductible in computing unrelated business taxable income from an unrelated trade or business that exploits the exempt activity. Irs amended return form (See Exploitation of exempt functions under Not substantially related in chapter 3. Irs amended return form ) This is because they do not have a proximate and primary relationship to the unrelated trade or business, and therefore, they do not qualify as directly connected with that business. Irs amended return form Exception. Irs amended return form   Expenses, depreciation, and similar items may be treated as directly connected with the conduct of the unrelated business if all the following statements are true. Irs amended return form The unrelated business exploits the exempt activity. Irs amended return form The unrelated business is a type normally conducted for profit by taxable organizations. Irs amended return form The exempt activity is a type normally conducted by taxable organizations in carrying on that type of business. Irs amended return form The amount treated as directly connected is the smaller of: The excess of these expenses, depreciation, and similar items over the income from, or attributable to, the exempt activity; or The gross unrelated business income reduced by all other expenses, depreciation, and other items that are actually directly connected. Irs amended return form   The application of these rules to an advertising activity that exploits an exempt publishing activity is explained next. Irs amended return form Exploitation of Exempt Activity—Advertising Sales The sale of advertising in a periodical of an exempt organization that contains editorial material related to the accomplishment of the organization's exempt purpose is an unrelated business that exploits an exempt activity, the circulation and readership of the periodical. Irs amended return form Therefore, in addition to direct advertising costs, exempt activity costs (expenses, depreciation, and similar expenses attributable to the production and distribution of the editorial or readership content) can be treated as directly connected with the conduct of the advertising activity. Irs amended return form (See Expenses attributable to exploitation of exempt activities under Directly Connected, earlier. Irs amended return form ) Figuring unrelated business taxable income (UBTI). Irs amended return form   The UBTI of an advertising activity is the amount shown in the following chart. Irs amended return form IF gross advertising income is . Irs amended return form . Irs amended return form . Irs amended return form THEN UBTI is . Irs amended return form . Irs amended return form . Irs amended return form More than direct advertising costs The excess advertising income, reduced (but not below zero) by the excess, if any, of readership costs over circulation income. Irs amended return form Equal to or less than direct advertising costs Zero. Irs amended return form   • Circulation income and readership costs are not taken into account. Irs amended return form   • Any excess advertising costs reduce (but not below zero) UBTI from any other unrelated business activity. Irs amended return form   The terms used in the chart are explained in the following discussions. Irs amended return form Periodical Income Gross advertising income. Irs amended return form   This is all the income from the unrelated advertising activities of an exempt organization periodical. Irs amended return form Circulation income. Irs amended return form   This is all the income from the production, distribution, or circulation of an exempt organization's periodical (other than gross advertising income). Irs amended return form It includes all amounts from the sale or distribution of the readership content of the periodical, such as income from subscriptions. Irs amended return form It also includes allocable membership receipts if the right to receive the periodical is associated with a membership or similar status in the organization. Irs amended return form Allocable membership receipts. Irs amended return form   This is the part of membership receipts (dues, fees, or other charges associated with membership) equal to the amount that would have been charged and paid for the periodical if: The periodical was published by a taxable organization, The periodical was published for profit, and The member was an unrelated party dealing with the taxable organization at arm's length. Irs amended return form   The amount used to allocate membership receipts is the amount shown in the following chart. Irs amended return form   For this purpose, the total periodical costs are the sum of the direct advertising costs and the readership costs, explained under Periodical Costs, later. Irs amended return form The cost of other exempt activities means the total expenses incurred by the organization in connection with its other exempt activities, not offset by any income earned by the organization from those activities. Irs amended return form IF . Irs amended return form . Irs amended return form . Irs amended return form THEN the amount used to allocate membership receipts is . Irs amended return form . Irs amended return form . Irs amended return form 20% or more of the total circulation consists of sales to nonmembers The subscription price charged nonmembers. Irs amended return form The above condition does not apply, and 20% or more of the members pay reduced dues because they do not receive the periodical The reduction in dues for a member not receiving the periodical. Irs amended return form Neither of the above conditions applies The membership receipts multiplied by this fraction:   Total periodical costs Total periodical costs Plus Cost of other exempt activities Example 1. Irs amended return form U is an exempt scientific organization with 10,000 members who pay annual dues of $15. Irs amended return form One of U's activities is publishing a monthly periodical distributed to all of its members. Irs amended return form U also distributes 5,000 additional copies of its periodical to nonmembers, who subscribe for $10 a year. Irs amended return form Since the nonmember circulation of U's periodical represents one-third (more than 20%) of its total circulation, the subscription price charged to nonmembers is used to determine the part of U's membership receipts allocable to the periodical. Irs amended return form Thus, U's allocable membership receipts are $100,000 ($10 times 10,000 members), and U's total circulation income for the periodical is $150,000 ($100,000 from members plus $50,000 from sales to nonmembers). Irs amended return form Example 2. Irs amended return form Assume the same facts except that U sells only 500 copies of its periodical to nonmembers, at a price of $10 a year. Irs amended return form Assume also that U's members may elect not to receive the periodical, in which case their dues are reduced from $15 a year to $6 a year, and that only 3,000 members elect to receive the periodical and pay the full dues of $15 a year. Irs amended return form U's stated subscription price of $9 to members consistently results in an excess of total income (including gross advertising income) attributable to the periodical over total costs of the periodical. Irs amended return form Since the 500 copies of the periodical distributed to nonmembers represent only 14% of the 3,500 copies distributed, the $10 subscription price charged to nonmembers is not used to determine the part of membership receipts allocable to the periodical. Irs amended return form Instead, since 70% of the members elect not to receive the periodical and pay $9 less per year in dues, the $9 price is used to determine the subscription price charged to members. Irs amended return form Thus, the allocable membership receipts will be $9 a member, or $27,000 ($9 times 3,000 copies). Irs amended return form U's total circulation income is $32,000 ($27,000 plus the $5,000 from nonmember subscriptions). Irs amended return form Periodical Costs Direct advertising costs. Irs amended return form   These are expenses, depreciation, and similar items of deduction directly connected with selling and publishing advertising in the periodical. Irs amended return form   Examples of allowable deductions under this classification include agency commissions and other direct selling costs, such as transportation and travel expenses, office salaries, promotion and research expenses, and office overhead directly connected with the sale of advertising lineage in the periodical. Irs amended return form Also included are other deductions commonly classified as advertising costs under standard account classifications, such as artwork and copy preparation, telephone, telegraph, postage, and similar costs directly connected with advertising. Irs amended return form   In addition, direct advertising costs include the part of mechanical and distribution costs attributable to advertising lineage. Irs amended return form For this purpose, the general account classifications of items includable in mechanical and distribution costs ordinarily employed in business-paper and consumer-publication accounting provide a guide for the computation. Irs amended return form Accordingly, the mechanical and distribution costs include the part of the costs and other expenses of composition, press work, binding, mailing (including paper and wrappers used for mailing), and bulk postage attributable to the advertising lineage of the publication. Irs amended return form   In the absence of specific and detailed records, the part of mechanical and distribution costs attributable to the periodical's advertising lineage can be based on the ratio of advertising lineage to total lineage in the periodical, if this allocation is reasonable. Irs amended return form Readership costs. Irs amended return form   These are all expenses, depreciation, and similar items that are directly connected with the production and distribution of the readership content of the periodical. Irs amended return form Costs partly attributable to other activities. Irs amended return form   Deductions properly attributable to exempt activities other than publishing the periodical may not be allocated to the periodical. Irs amended return form When expenses are attributable both to the periodical and to the organization's other activities, an allocation must be made on a reasonable basis. Irs amended return form The method of allocation will vary with the nature of the item, but once adopted, should be used consistently. Irs amended return form Allocations based on dollar receipts from various exempt activities generally are not reasonable since receipts usually do not accurately reflect the costs associated with specific activities that an exempt organization conducts. Irs amended return form Consolidated Periodicals If an exempt organization publishes more than one periodical to produce income, it may treat all of them (but not less than all) as one in determining unrelated business taxable income from selling advertising. Irs amended return form It treats the gross income from all the periodicals, and the deductions directly connected with them, on a consolidated basis. Irs amended return form Consolidated treatment, once adopted, must be followed consistently and is binding. Irs amended return form This treatment can be changed only with the consent of the Internal Revenue Service. Irs amended return form An exempt organization's periodical is published to produce income if: The periodical generates gross advertising income to the organization equal to at least 25% of its readership costs, and Publishing the periodical is an activity engaged in for profit. Irs amended return form Whether the publication of a periodical is an activity engaged in for profit can be determined only by all the facts and circumstances in each case. Irs amended return form The facts and circumstances must show that the organization carries on the activity for economic profit, although there may not be a profit in a particular year. Irs amended return form For example, if an organization begins publishing a new periodical whose total costs exceed total income in the start-up years because of lack of advertising sales, that does not mean that the organization did not have as its objective an economic profit. Irs amended return form The organization may establish that it had this objective by showing it can reasonably expect advertising sales to increase, so that total income will exceed costs within a reasonable time. Irs amended return form Example. Irs amended return form Y, an exempt trade association, publishes three periodicals that it distributes to its members: a weekly newsletter, a monthly magazine, and a quarterly journal. Irs amended return form Both the monthly magazine and the quarterly journal contain advertising that accounts for gross advertising income equal to more than 25% of their respective readership costs. Irs amended return form Similarly, the total income attributable to each periodical has exceeded the total deductions attributable to each periodical for substantially all the years they have been published. Irs amended return form The newsletter carries no advertising and its annual subscription price is not intended to cover the cost of publication. Irs amended return form The newsletter is a service that Y distributes to all of its members in an effort to keep them informed of changes occurring in the business world. Irs amended return form It is not engaged in for profit. Irs amended return form Under these circumstances, Y may consolidate the income and deductions from the monthly and quarterly journals in computing its unrelated business taxable income. Irs amended return form It may not consolidate the income and deductions from the newsletter with the income and deductions of its other periodicals, since the newsletter is not published for the production of income. Irs amended return form Modifications Net operating loss deduction. Irs amended return form   The net operating loss (NOL) deduction (as provided in section 172) is allowed in computing unrelated business taxable income. Irs amended return form However, the NOL for any tax year, the carrybacks and carryovers of NOLs, and the NOL deduction are determined without taking into account any amount of income or deduction that has been specifically excluded in computing unrelated business taxable income. Irs amended return form For example, a loss from an unrelated trade or business is not diminished because dividend income was received. Irs amended return form   If this were not done, organizations would, in effect, be taxed on their exempt income, since unrelated business losses then would be offset by dividends, interest, and other excluded income. Irs amended return form This would reduce the loss that could be applied against unrelated business income of prior or future tax years. Irs amended return form Therefore, to preserve the immunity of exempt income, all NOL computations are limited to those items of income and deductions that affect the unrelated business taxable income. Irs amended return form   In line with this concept, an NOL carryback or carryover is allowed only from a tax year for which the organization is subject to tax on unrelated business income. Irs amended return form   For example, if an organization just became subject to the tax last year, its NOL for that year is not a carryback to a prior year when it had no unrelated business taxable income, nor is its NOL carryover to succeeding years reduced by the related income of those prior years. Irs amended return form   However, in determining the span of years for which an NOL may be carried back or forward, the tax years for which the organization is not subject to the tax on unrelated business income are counted. Irs amended return form For example, if an organization was subject to the tax for 2009 and had an NOL for that year, the last tax year to which any part of that loss may be carried over is 2029, regardless of whether the organization was subject to the unrelated business income tax in any of the intervening years. Irs amended return form   For more details on the NOL deduction, including property eligible for an extended carryback period, see sections 172 and 1400N, Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, and Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Irs amended return form Charitable contributions deduction. Irs amended return form   An exempt organization is allowed to deduct its charitable contributions in computing its unrelated business taxable income whether or not the contributions are directly connected with the unrelated business. Irs amended return form   To be deductible, the contribution must be paid to another qualified organization. Irs amended return form For example, an exempt university that operates an unrelated business may deduct a contribution made to another university for educational work, but may not claim a deduction for contributions of amounts spent for carrying out its own educational program. Irs amended return form   For purposes of the deduction, a distribution by a trust made under the trust instrument to a beneficiary, which itself is a qualified organization, is treated the same as a contribution. Irs amended return form Deduction limits. Irs amended return form   An exempt organization that is subject to the unrelated business income tax at corporate rates is allowed a deduction for charitable contributions up to 10% of its unrelated business taxable income computed without regard to the deduction for contributions. Irs amended return form See the Instructions for Form 990-T for more information. Irs amended return form    An exempt trust that is subject to the unrelated business income tax at trust rates generally is allowed a deduction for charitable contributions in the same amounts as allowed for individuals. Irs amended return form However, the limit on the deduction is determined in relation to the trust's unrelated business taxable income computed without regard to the deduction, rather than in relation to adjusted gross income. Irs amended return form   Contributions in excess of the limits just described may be carried over to the next 5 tax years. Irs amended return form A contribution carryover is not allowed, however, to the extent that it increases an NOL carryover. Irs amended return form Suspension of deduction limits for farmers and ranchers. Irs amended return form   The limitations discussed above are temporarily suspended for certain qualified conservation contributions of property used in agriculture or livestock production. Irs amended return form See the Instructions for Form 990-T for details. Irs amended return form Specific deduction. Irs amended return form   In computing unrelated business taxable income, a specific deduction of $1,000 is allowed. Irs amended return form However, the specific deduction is not allowed in computing an NOL or the NOL deduction. Irs amended return form   Generally, the deduction is limited to $1,000 regardless of the number of unrelated businesses in which the organization is engaged. Irs amended return form Exception. Irs amended return form   An exception is provided in the case of a diocese, province of a religious order, or a convention or association of churches that may claim a specific deduction for each parish, individual church, district, or other local unit. Irs amended return form In these cases, the specific deduction for each local unit is limited to the lower of: $1,000, or Gross income derived from an unrelated trade or business regularly conducted by the local unit. Irs amended return form   This exception applies only to parishes, districts, or other local units that are not separate legal entities, but are components of a larger entity (diocese, province, convention, or association) filing Form 990-T. Irs amended return form The parent organization must file a return reporting the unrelated business gross income and related deductions of all units that are not separate legal entities. Irs amended return form The local units cannot file separate returns. Irs amended return form However, each local unit that is separately incorporated must file its own return and cannot include, or be included with, any other entity. Irs amended return form See Title-holding corporations in chapter 1 for a discussion of the only situation in which more than one legal entity may be included on the same Form 990-T. Irs amended return form Example. Irs amended return form X is an association of churches and is divided into local units A, B, C, and D. Irs amended return form Last year, A, B, C, and D derived gross income of, respectively, $1,200, $800, $1,500, and $700 from unrelated businesses that they regularly conduct. Irs amended return form X may claim a specific deduction of $1,000 with respect to A, $800 with respect to B, $1,000 with respect to C, and $700 with respect to D. Irs amended return form Partnership Income or Loss An organization may have unrelated business income or loss as a member of a partnership, rather than through direct business dealings with the public. Irs amended return form If so, it must treat its share of the partnership income or loss as if it had conducted the business activity in its own capacity as a corporation or trust. Irs amended return form No distinction is made between limited and general partners. Irs amended return form The organization is required to notify the partnership of its tax-exempt status. Irs amended return form Thus, if an organization is a member of a partnership regularly engaged in a trade or business that is an unrelated trade or business with respect to the organization, the organization must include in its unrelated business taxable income its share of the partnership's gross income from the unrelated trade or business (whether or not distributed), and the deductions attributable to it. Irs amended return form The partnership income and deductions to be included in the organization's unrelated business taxable income are figured the same way as any income and deductions from an unrelated trade or business conducted directly by the organization. Irs amended return form The partnership is required to provide the organization this information on Schedule K-1. Irs amended return form Example. Irs amended return form An exempt educational organization is a partner in a partnership that operates a factory. Irs amended return form The partnership also holds stock in a corporation. Irs amended return form The exempt organization must include its share of the gross income from operating the factory in its unrelated business taxable income but may exclude its share of any dividends the partnership received from the corporation. Irs amended return form Different tax years. Irs amended return form   If the exempt organization and the partnership of which it is a member have different tax years, the partnership items that enter into the computation of the organization's unrelated business taxable income must be based on the income and deductions of the partnership for the partnership's tax year that ends within or with the organization's tax year. Irs amended return form S Corporation Income or Loss An organization that owns S corporation stock must take into account its share of the S corporation's income, deductions, or losses in figuring unrelated business taxable income, regardless of the actual source or nature of the income, deductions, and losses. Irs amended return form For example, the organization's share of the S corporation's interest and dividend income will be taxable, even though interest and dividends are normally excluded from unrelated business taxable income. Irs amended return form The organization must also take into account its gain or loss on the sale or other disposition of the S corporation stock in figuring unrelated business taxable income. Irs amended return form Special Rules for Foreign Organizations The unrelated business taxable income of a foreign organization exempt from tax under section 501(a) consists of the organization's: Unrelated business taxable income derived from sources within the United States but not effectively connected with the conduct of a trade or business within the United States, and Unrelated business taxable income effectively connected with the conduct of a trade or business within the United States, whether or not this income is derived from sources within the United States. Irs amended return form To determine whether income realized by a foreign organization is derived from sources within the United States or is effectively connected with the conduct of a trade or business within the United States, see sections 861 through 865 and the related regulations. Irs amended return form Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs The following discussion applies to: Social clubs described in section 501(c)(7), Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9), Supplemental unemployment compensation benefit trusts (SUBs) described in section 501(c)(17), and Group legal services organizations (GLSOs) described in section 501(c)(20). Irs amended return form These organizations must figure unrelated business taxable income under special rules. Irs amended return form Unlike other exempt organizations, they cannot exclude their investment income (dividends, interest, rents, etc. Irs amended return form ). Irs amended return form (See Exclusions under Income, earlier. Irs amended return form ) Therefore, they are generally subject to unrelated business income tax on this income. Irs amended return form The unrelated business taxable income of these organizations includes all gross income, less deductions directly connected with the production of that income, except that gross income for this purpose does not include exempt function income. Irs amended return form The dividends received by a corporation are not allowed in computing unrelated business taxable income because it is not an expense incurred in the production of income. Irs amended return form Losses from nonexempt activities. Irs amended return form   Losses from nonexempt activities of these organizations cannot be used to offset investment income unless the activities were undertaken with the intent to make a profit. Irs amended return form Example. Irs amended return form A private golf and country club that is a qualified tax-exempt social club has nonexempt function income from interest and from the sale of food and beverages to nonmembers. Irs amended return form The club sells food and beverages as a service to members and their guests rather than for the purpose of making a profit. Irs amended return form Therefore, any loss resulting from sales to nonmembers cannot be used to offset the club's interest income. Irs amended return form Modifications. Irs amended return form   The unrelated business taxable income is modified by any NOL or charitable contributions deduction and by the specific deduction (described earlier under Deductions). Irs amended return form Exempt function income. Irs amended return form   This is gross income from dues, fees, charges or similar items paid by members for goods, facilities, or services to the members or their dependents or guests, to further the organization's exempt purposes. Irs amended return form Exempt function income also includes income set aside for qualified purposes. Irs amended return form Income that is set aside. Irs amended return form   This is income set aside to be used for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals. Irs amended return form In addition, for a VEBA, SUB, or GLSO, it is income set aside to provide for the payment of life, sick, accident, or other benefits. Irs amended return form   However, any amounts set aside by a VEBA or SUB that exceed the organization's qualified asset account limit (determined under section 419A) are unrelated business income. Irs amended return form Special rules apply to the treatment of existing reserves for post-retirement medical or life insurance benefits. Irs amended return form These rules are explained in section 512(a)(3)(E)(ii). Irs amended return form   Income derived from an unrelated trade or business may not be set aside and therefore cannot be exempt function income. Irs amended return form In addition, any income set aside and later spent for other purposes must be included in unrelated business taxable income. Irs amended return form   Set-aside income is generally excluded from gross income only if it is set aside in the tax year in which it is otherwise includible in gross income. Irs amended return form However, income set aside on or before the date for filing Form 990-T, including extensions of time, may, at the election of the organization, be treated as having been set aside in the tax year for which the return was filed. Irs amended return form The income set aside must have been includible in gross income for that earlier year. Irs amended return form Nonrecognition of gain. Irs amended return form   If the organization sells property used directly in performing an exempt function and purchases other property used directly in performing an exempt function, any gain on the sale is recognized only to the extent that the sales price of the old property exceeds the cost of the new property. Irs amended return form The purchase of the new property must be made within 1 year before the date of sale of the old property or within 3 years after the date of sale. Irs amended return form   This rule also applies to gain from an involuntary conversion of the property resulting from its destruction in whole or in part, theft, seizure, requisition, or condemnation. Irs amended return form Special Rules for Veterans' Organizations Unrelated business taxable income of a veterans' organization that is exempt under section 501(c)(19) does not include the net income from insurance business that is properly set aside. Irs amended return form The organization may set aside income from payments received for life, sick, accident, or health insurance for the organization's members or their dependents for the payment of insurance benefits or reasonable costs of insurance administration, or for use exclusively for religious, charitable, scientific, literary, or educational purposes, or the prevention of cruelty to children or animals. Irs amended return form For details, see section 512(a)(4) and the regulations under that section. Irs amended return form Income From Controlled Organizations The exclusions for interest, annuities, royalties, and rents, explained earlier in this chapter under Income, may not apply to a payment of these items received by a controlling organization from its controlled organization. Irs amended return form The payment is included in the controlling organization's unrelated business taxable income to the extent it reduced the net unrelated income (or increased the net unrelated loss) of the controlled organization. Irs amended return form All deductions of the controlling organization directly connected with the amount included in its unrelated business taxable income are allowed. Irs amended return form Excess qualifying specified payments. Irs amended return form   Excess qualifying specified payments received or accrued from a controlled entity are included in a controlling exempt organization's unrelated business taxable income only on the amount that exceeds that which would have been paid or accrued if the payments had been determined under section 482. Irs amended return form Qualifying specified payments means any payments of interest, annuities, royalties, or rents received or accrued from the controlled organization pursuant to a binding written contract in effect on August 17, 2006, or to a contract which is a renewal, under substantially similar terms of a binding written contract in effect on August 17, 2006, and the payments are received or accrued before January 1, 2012. Irs amended return form   If a controlled participant is not required to file a U. Irs amended return form S. Irs amended return form income tax return, the participant must ensure that the copy or copies of the Regulations section 1. Irs amended return form 482-7 Cost Sharing Arrangement Statement and any updates are attached to Schedule M of any Form 5471, Information Return of U. Irs amended return form S. Irs amended return form Persons With Respect To Certain Foreign Corporations, any Form 5472, Information Return of a 25% Foreign-Owned U. Irs amended return form S. Irs amended return form Corporation or a Foreign Corporation Engaged in a U. Irs amended return form S. Irs amended return form Trade or Business, or any Form 8865, Return of U. Irs amended return form S. Irs amended return form Persons With Respect to Certain Foreign Partnerships, filed for that participant. Irs amended return form Addition to tax for valuation misstatements. Irs amended return form   Under section 512(b)(13)(E)(ii), the tax imposed on a controlling organization will be increased by 20 percent of the excess qualifying specified payments that are determined with or without any amendments or supplements, whichever is larger. Irs amended return form See section 512(b)(13)(E)(ii) for more information. Irs amended return form Net unrelated income. Irs amended return form   This is: For an exempt organization, its unrelated business taxable income, or For a nonexempt organization, the part of its taxable income that would be unrelated business taxable income if it were exempt and had the same exempt purposes as the controlling organization. Irs amended return form Net unrelated loss. Irs amended return form   This is: For an exempt organization, its NOL, or For a nonexempt organization, the part of its NOL that would be its NOL if it were exempt and had the same exempt purposes as the controlling organization. Irs amended return form Control. Irs amended return form   An organization is controlled if: For a corporation, the controlling organization owns (by vote or value) more than 50% of the stock, For a partnership, the controlling organization owns more than 50% of the profits or capital interests, or For any other organization, the controlling organization owns more than 50% of the beneficial interest. Irs amended return form For this purpose, constructive ownership of stock (determined under section 318) or other interests is taken into account. Irs amended return form   As a result, an exempt parent organization is treated as controlling any subsidiary in which it holds more than 50% of the voting power or value, whether directly (as in the case of a first-tier subsidiary) or indirectly (as in the case of a second-tier subsidiary). Irs amended return form Income from property financed with qualified 501(c)(3) bonds. Irs amended return form If any part of a 501(c)(3) organization's property financed with qualified 501(c)(3) bonds is used in a trade or business of any person other than a section 501(c)(3) organization or a governmental unit, and such use is not consistent with the requirements for qualified 501(c)(3) bonds under section 145, the section 501(c)(3) organization is considered to have received unrelated business income in the amount of the greater of the actual rental income or the fair rental value of the property for the period it is used. Irs amended return form No deduction is allowed for interest on the private activity bond. Irs amended return form See sections 150(b)(3) and (c) for more information. Irs amended return form Disposition of property received from taxable subsidiary and used in unrelated business. Irs amended return form A taxable 80%-owned subsidiary corporation of one or more tax-exempt entities is generally subject to tax on a distribution in liquidation of its assets to its exempt parent (or parents). Irs amended return form The assets are treated as if sold at fair market value. Irs amended return form Tax-exempt entities include organizations described in sections 501(a), 529, and 115, charitable remainder trusts, U. Irs amended return form S. Irs amended return form and foreign governments, Indian tribal governments, international organizations, and similar non-taxable organizations. Irs amended return form A taxable corporation that transfers substantially all of its assets to a tax-exempt entity in a transaction that otherwise qualifies for nonrecognition treatment must recognize gain on the transaction as if it sold the assets at fair market value. Irs amended return form However, such a transfer is not taxable if it qualifies as a like-kind exchange under section 1031 or an involuntary conversion under section 1033. Irs amended return form In such a case the built-in appreciation is preserved in the replacement property received in the transaction. Irs amended return form A corporation that changes status from taxable to tax-exempt is treated generally as if it transferred all of its assets to a tax-exempt entity immediately before the change in status (thus subjecting it to the tax on a deemed sale for fair market value). Irs amended return form This rule does not apply where the taxable corporation becomes exempt within 3 years of formation, or had previously been exempt and within several years (generally a period of 3 years) regains exemption, unless the principal purpose of the transactions is to avoid the tax on the change in status. Irs amended return form In the transactions described above, the taxable event is deferred for property that the tax-exempt entity immediately uses in an unrelated business. Irs amended return form If the parent later disposes of the property, then any gain (not in excess of the amount not recognized) is included in the parent's unrelated business taxable income. Irs amended return form If there is partial use of the assets in unrelated business, then there is partial recognition of gain or loss. Irs amended return form Property is treated as disposed if the tax-exempt entity no longer uses it in an unrelated business. Irs amended return form Losses on the transfer of assets to a tax-exempt entity are disallowed if part of a plan with a principal purpose of recognizing losses. Irs amended return form Income From Debt-Financed Property Investment income that would otherwise be excluded from an exempt organization's unrelated business taxable income (see Exclusions under Income earlier) must be included to the extent it is derived from debt-financed property. Irs amended return form The amount of income included is proportionate to the debt on the property. Irs amended return form Debt-Financed Property In general, the term “debt-financed property” means any property held to produce income (including gain from its disposition) for which there is an acquisition indebtedness at any time during the tax year (or during the 12-month period before the date of the property's disposal, if it was disposed of during the tax year). Irs amended return form It includes rental real estate, tangible personal property, and corporate stock. Irs amended return form Acquisition Indebtedness For any debt-financed property, acquisition indebtedness is the unpaid amount of debt incurred by an organization: When acquiring or improving the property, Before acquiring or improving the property if the debt would not have been incurred except for the acquisition or improvement, and After acquiring or improving the property if: The debt would not have been incurred except for the acquisition or improvement, and Incurring the debt was reasonably foreseeable when the property was acquired or improved. Irs amended return form The facts and circumstances of each situation determine whether incurring a debt was reasonably foreseeable. Irs amended return form That an organization may not have foreseen the need to incur a debt before acquiring or improving the property does not necessarily mean that incurring the debt later was not reasonably foreseeable. Irs amended return form Example 1. Irs amended return form Y, an exempt scientific organization, mortgages its laboratory to replace working capital used in remodeling an office building that Y rents to an insurance company for nonexempt purposes. Irs amended return form The debt is acquisition indebtedness since the debt, though incurred after the improvement of the office building, would not have been incurred without the improvement, and the debt was reasonably foreseeable when, to make the improvement, Y reduced its working capital below the amount necessary to continue current operations. Irs amended return form Example 2. Irs amended return form X, an exempt organization, forms a partnership with A and B. Irs amended return form The partnership agreement provides that all three partners will share equally in the profits of the partnership, each will invest $3 million, and X will be a limited partner. Irs amended return form X invests $1 million of its own funds in the partnership and $2 million of borrowed funds. Irs amended return form The partnership buys as its sole asset an office building that it leases to the public for nonexempt purposes. Irs amended return form The office building costs the partnership $24 million, of which $15 million is borrowed from Y bank. Irs amended return form The loan is secured by a mortgage on the entire office building. Irs amended return form By agreement with Y bank, X is not personally liable for payment of the mortgage. Irs amended return form X has acquisition indebtedness of $7 million. Irs amended return form This amount is the $2 million debt X incurred in acquiring the partnership interest, plus the $5 million that is X's allocable part of the partnership's debt incurred to buy the office building (one-third of $15 million). Irs amended return form Example 3. Irs amended return form A labor union advanced funds, from existing resources and without any borrowing, to its tax-exempt subsidiary title-holding company. Irs amended return form The subsidiary used the funds to pay a debt owed to a third party that was previously incurred in acquiring two income-producing office buildings. Irs amended return form Neither the union nor the subsidiary has incurred any further debt in acquiring or improving the property. Irs amended return form The union has no outstanding debt on the property. Irs amended return form The subsidiary's debt to the union is represented by a demand note on which the subsidiary makes payments whenever it has the available cash. Irs amended return form The books of the union and the subsidiary list the outstanding debt as interorganizational indebtedness. Irs amended return form Although the subsidiary's books show a debt to the union, it is not the type subject to the debt-financed property rules. Irs amended return form In this situation, the very nature of the title-holding company and the parent-subsidiary relationship shows this debt to be merely a matter of accounting between the two organizations. Irs amended return form Accordingly, the debt is not acquisition indebtedness. Irs amended return form Change in use of property. Irs amended return form   If an organization converts property that is not debt-financed property to a use that results in its treatment as debt-financed property, the outstanding principal debt on the property is thereafter treated as acquisition indebtedness. Irs amended return form Example. Irs amended return form Four years ago a university borrowed funds to acquire an apartment building as housing for married students. Irs amended return form Last year, the university rented the apartment building to the public for nonexempt purposes. Irs amended return form The outstanding principal debt becomes acquisition indebtedness as of the time the building was first rented to the public. Irs amended return form Continued debt. Irs amended return form   If an organization sells property and, without paying off debt that would be acquisition indebtedness if the property were debt-financed property, buys property that is otherwise debt-financed property, the unpaid debt is acquisition indebtedness for the new property. Irs amended return form This is true even if the original property was not debt-financed property. Irs amended return form Example. Irs amended return form To house its administration offices, an exempt organization bought a building using $600,000 of its own funds and $400,000 of borrowed funds secured by a pledge of its securities. Irs amended return form The office building was not debt-financed property. Irs amended return form The organization later sold the building for $1 million without repaying the $400,000 loan. Irs amended return form It used the sale proceeds to buy an apartment building it rents to the general public. Irs amended return form The unpaid debt of $400,000 is acquisition indebtedness with respect to the apartment building. Irs amended return form Property acquired subject to mortgage or lien. Irs amended return form   If property (other than certain gifts, bequests, and devises) is acquired subject to a mortgage, the outstanding principal debt secured by that mortgage is treated as acquisition indebtedness even if the organization did not assume or agree to pay the debt. Irs amended return form Example. Irs amended return form An exempt organization paid $50,000 for real property valued at $150,000 and subject to a $100,000 mortgage. Irs amended return form The $100,000 of outstanding principal debt is acquisition indebtedness, as though the organization had borrowed $100,000 to buy the property. Irs amended return form Liens similar to a mortgage. Irs amended return form   In determining acquisition indebtedness, a lien similar to a mortgage is treated as a mortgage. Irs amended return form A lien is similar to a mortgage if title to property is encumbered by the lien for a creditor's benefit. Irs amended return form However, when state law provides that a lien for taxes or assessments attaches to property before the taxes or assessments become due and payable, the lien is not treated as a mortgage until after the taxes or assessments have become due and payable and the organization has had an opportunity to pay the lien in accordance with state law. Irs amended return form Liens similar to mortgages include (but are not limited to): Deeds of trust, Conditional sales contracts, Chattel mortgages, Security interests under the Uniform Commercial Code, Pledges, Agreements to hold title in escrow, and Liens for taxes or assessments (other than those discussed earlier in this paragraph). Irs amended return form Exception for property acquired by gift, bequest, or devise. Irs amended return form   If property subject to a mortgage is acquired by gift, bequest, or devise, the outstanding principal debt secured by the mortgage is not treated as acquisition indebtedness during the 10-year period following the date the organization receives the property. Irs amended return form However, this applies to a gift of property only if:    The mortgage was placed on the property more than 5 years before the date the organization received it, and The donor held the property for more than 5 years before the date the organization received it. Irs amended return form   This exception does not apply if an organization assumes and agrees to pay all or part of the debt secured by the mortgage or makes any payment for the equity in the property owned by the donor or decedent (other than a payment under an annuity obligation excluded from the definition of acquisition indebtedness, discussed under Debt That Is Not Acquisition Indebtedness, later). Irs amended return form   Whether an organization has assumed and agreed to pay all or part of a debt in order to acquire the property is determined by the facts and circumstances of each situation. Irs amended return form Modifying existing debt. Irs amended return form   Extending, renewing, or refinancing an existing debt is considered a continuation of that debt to the extent its outstanding principal does not increase. Irs amended return form When the principal of the modified debt is more than the outstanding principal of the old debt, the excess is treated as a separate debt. Irs amended return form Extension or renewal. Irs amended return form   In general, any modification or substitution of the terms of a debt by an organization is considered an extension or renewal of the original debt, rather than the start of a new one, to the extent that the outstanding principal of the debt does not increase. Irs amended return form   The following are examples of acts resulting in the extension or renewal of a debt: Substituting liens to secure the debt, Substituting obligees whether or not with the organization's consent, Renewing, extending, or accelerating the payment terms of the debt, and Adding, deleting, or substituting sureties or other primary or secondary obligors. Irs amended return form Debt increase. Irs amended return form   If the outstanding principal of a modified debt is more than that of the unmodified debt, and only part of the refinanced debt is acquisition indebtedness, the payments on the refinanced debt must be allocated between the old debt and the excess. Irs amended return form Example. Irs amended return form An organization has an outstanding principal debt of $500,000 that is treated as acquisition indebtedness. Irs amended return form The organization borrows another $100,000, which is not acquisition indebtedness, from the same lender, resulting in a $600,000 note for the total obligation. Irs amended return form A payment of $60,000 on the total obligation would reduce the acquisition indebtedness by $50,000 ($60,000 x $500,000/$600,000) and the excess debt by $10,000. Irs amended return form Debt That Is Not Acquisition Indebtedness Certain debt and obligations are not acquisition indebtedness. Irs amended return form These include the following. Irs amended return form Debts incurred in performing an exempt purpose. Irs amended return form Annuity obligations. Irs amended return form Securities loans. Irs amended return form Real property debts of qualified organizations. Irs amended return form Certain Federal financing. Irs amended return form Debt incurred in performing exempt purpose. Irs amended return form   A debt incurred in performing an exempt purpose is not acquisition indebtedness. Irs amended return form For example, acquisition indebtedness does not include the debt an exempt credit union incurs in accepting deposits from its members or the debt an exempt organization incurs in accepting payments from its members to provide them with insurance, retirement, or other benefits. Irs amended return form Annuity obligation. Irs amended return form   The organization's obligation to pay an annuity is not acquisition indebtedness if the annuity meets all the following requirements. Irs amended return form It must be the sole consideration (other than a mortgage on property acquired by gift, bequest, or devise that meets the exception discussed under Property acquired subject to mortgage or lien, earlier in this chapter) issued in exchange for the property received. Irs amended return form Its present value, at the time of exchange, must be less than 90% of the value of the prior owner's equity in the property received. Irs amended return form It must be payable over the lives of either one or two individuals living when issued. Irs amended return form It must be payable under a contract that: Does not guarantee a minimum nor specify a maximum number of payments, and Does not provide for any adjustment of the amount of the annuity payments based on the income received from the transferred property or any other property. Irs amended return form Example. Irs amended return form X, an exempt organization, receives property valued at $100,000 from donor A, a male age 60. Irs amended return form In return X promises to pay A $6,000 a year for the rest of A's life, with neither a minimum nor maximum number of payments specified. Irs amended return form The amounts paid under the annuity are not dependent on the income derived from the property transferred to X. Irs amended return form The present value of this annuity is $81,156, determined from IRS valuation tables. Irs amended return form Since the value of the annuity is less than 90 percent of A's $100,000 equity in the property transferred and the annuity meets all the other requirements just discussed, the obligation to make annuity payments is not acquisition indebtedness. Irs amended return form Securities loans. Irs amended return form   Acquisition indebtedness does not include an obligation of the exempt organization to return collateral security provided by the borrower of the exempt organization's securities under a securities loan agreement (discussed under Exclusions earlier in this chapter). Irs amended return form This transaction is not treated as the borrowing by the exempt organization of the collateral furnished by the borrower (usually a broker) of the securities. Irs amended return form   However, if the exempt organization incurred debt to buy the loaned securities, any income from the securities (including income from