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Irs Vita

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Irs Vita

Irs vita Index Symbols 529 program (see Qualified tuition program (QTP)) A Academic period American opportunity credit, Academic period. Irs vita Lifetime learning credit, Academic period. Irs vita Student loan interest deduction, Academic period. Irs vita Tuition and fees deduction, Academic period. Irs vita Accountable plans, Accountable Plans, Allocating your reimbursements for meals. Irs vita Additional tax Coverdell ESA On excess contributions, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Irs vita On taxable distributions, Additional Tax on Taxable Distributions IRA distributions, education exception, Education Exception to Additional Tax on Early IRA Distributions Qualified tuition program (QTP), on taxable distributions, Additional Tax on Taxable Distributions Adjusted qualified education expenses (see Qualified education expenses) American opportunity credit Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Claiming dependent's expenses, Who Can Claim a Dependent's Expenses, Tuition reduction. Irs vita Tuition reduction, Tuition reduction. Irs vita Claiming the credit, Can You Claim the Credit, Who Cannot Claim the Credit, Claiming the Credit Qualifying to claim (Figure 2-1), Coordination with Coverdell ESA distributions, Figuring the Taxable Portion of a Distribution Coordination with qualified tuition program (QTP) distributions, Coordination With American Opportunity and Lifetime Learning Credits Eligible educational institution, Eligible educational institution. Irs vita Eligible student, Who Is an Eligible Student Requirements (Figure 2-2), Expenses qualifying for, What Expenses Qualify, Adjustments to Qualified Education Expenses Figuring the credit, Figuring the Credit Income level, effect on amount of credit, Effect of the Amount of Your Income on the Amount of Your Credit, Phaseout. Irs vita Income limits, Effect of the Amount of Your Income on the Amount of Your Credit, Phaseout. Irs vita Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Irs vita Worksheet 2-1, Claiming the Credit Overview of American opportunity credit (Table 2-1), Introduction Phaseout, Phaseout. Irs vita Qualified education expenses, Qualified Education Expenses Tax benefit of, What is the tax benefit of the American opportunity credit. Irs vita Armed Forces Health Professions Scholarship and Financial Assistance Program, Exceptions. Irs vita Assistance (see Tax help) Athletic scholarships, Athletic Scholarships B Bar review course, Bar or CPA Review Course Bonds, education savings (see Education savings bond program) Business deduction for work-related education, Business Deduction for Work-Related Education, Illustrated Example Accountable plans, Accountable Plans, Allocating your reimbursements for meals. Irs vita Adjustments to qualifying work-related education expenses, Adjustments to Qualifying Work-Related Education Expenses Allocating meal reimbursements, Allocating your reimbursements for meals. Irs vita Deductible education expenses, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Deducting business expenses, Deducting Business Expenses, Impairment-Related Work Expenses Double benefit not allowed, No Double Benefit Allowed Education required by employer or by law, Education Required by Employer or by Law Education to maintain or improve skills, Education To Maintain or Improve Skills Education to meet minimum requirements, Education To Meet Minimum Requirements, Certification in a new state. Irs vita Education to qualify for new trade or business, Education That Qualifies You for a New Trade or Business, Teaching and Related Duties Excess expenses, accountable plan, Excess expenses. Irs vita , Allocating your reimbursements for meals. Irs vita Indefinite absence, Education during indefinite absence. Irs vita Maintaining skills vs. Irs vita qualifying for new job, Maintaining skills vs. Irs vita qualifying for new job. Irs vita Nonaccountable plans, Nonaccountable Plans Nondeductible expenses, Nondeductible expenses. Irs vita Qualified education expenses, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Recordkeeping requirements, Recordkeeping, Examples of records to keep. Irs vita Reimbursements, treatment of, How To Treat Reimbursements, Reimbursements for nondeductible expenses. Irs vita Tax benefit of, What is the tax benefit of taking a business deduction for work-related education. Irs vita Tax-free educational assistance, Tax-free educational assistance. Irs vita Teachers, Requirements for Teachers, Teaching and Related Duties Temporary absence to acquire education, Education during temporary absence. Irs vita Transportation expenses, Transportation Expenses, Using your car. Irs vita Travel expenses, Travel Expenses C Cancellation of student loan (see Student loan cancellation) Candidate for a degree Scholarships and fellowships, Candidate for a degree. Irs vita Change of designated beneficiary Coverdell ESA, Changing the Designated Beneficiary Qualified tuition program, Changing the Designated Beneficiary Collapsed loans, Interest on refinanced student loans. Irs vita Comprehensive or bundled fees American opportunity credit, Comprehensive or bundled fees. Irs vita Lifetime learning credit, Comprehensive or bundled fees. Irs vita Tuition and fees deduction, Comprehensive or bundled fees. Irs vita Consolidated loans used to refinance student loans, Interest on refinanced student loans. Irs vita Conventions outside U. Irs vita S. Irs vita , Cruises and conventions. Irs vita Coverdell education savings account (ESA), Coverdell Education Savings Account (ESA), Figuring the Taxable Portion of a Distribution, Coordination With American Opportunity and Lifetime Learning Credits, Worksheet 7-3. Irs vita Coverdell ESA—Taxable Distributions and Basis Additional tax On excess contributions, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Irs vita On taxable distributions, Additional Tax on Taxable Distributions Assets to be distributed at age 30 or death of beneficiary, When Assets Must Be Distributed Contribution limits, Contribution Limits, Figuring the limit. Irs vita Figuring the limit (Worksheet 6-2), Figuring the limit. Irs vita Contributions to, Contributions, Figuring and reporting the additional tax. Irs vita Table 7-2, Contributions Coordination with American opportunity and lifetime learning credits, Coordination With American Opportunity and Lifetime Learning Credits Coordination with qualified tuition program (QTP), Coordination With Qualified Tuition Program (QTP) Distributions Defined, What Is a Coverdell ESA Distributions, Distributions, How To Figure the Taxable Earnings Overview (Table 7-3), Distributions Divorce, transfer due to, Transfer Because of Divorce Eligible educational institution, Eligible Educational Institution Figuring taxable portion of distribution, Figuring the Taxable Portion of a Distribution Worksheet 7-3, Worksheet 7-3. Irs vita Coverdell ESA—Taxable Distributions and Basis Figuring the taxable earnings in required distribution, How To Figure the Taxable Earnings Losses, Losses on Coverdell ESA Investments Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Irs vita , MAGI when using Form 1040NR-EZ. Irs vita Worksheet 6-1, Worksheet 7-1. Irs vita MAGI for a Coverdell ESA Overview (Table 6-1), Coverdell Education Savings Account (ESA) Qualified education expenses, Qualified Education Expenses, Qualified Elementary and Secondary Education Expenses Rollovers, Rollovers Tax benefit of, What is the tax benefit of the Coverdell ESA. Irs vita Tax-free distributions, Tax-Free Distributions Taxable distributions, Taxable Distributions, Figuring the additional tax. Irs vita Worksheet 7-3 to figure, Worksheet 7-3. Irs vita Coverdell ESA—Taxable Distributions and Basis Transfers, Rollovers CPA review course, Bar or CPA Review Course Credits American opportunity (see American opportunity credit) Lifetime learning (see Lifetime learning credit) Cruises, educational, Cruises and conventions. Irs vita D Deductions (see Business deduction for work-related education) Designated beneficiary Coverdell ESA, What Is a Coverdell ESA, Changing the Designated Beneficiary Qualified tuition program (QTP), Designated beneficiary. Irs vita , Changing the Designated Beneficiary Disabilities, persons with Impairment-related work expenses, Impairment-Related Work Expenses Distributions (see specific benefit ) Divorce Coverdell ESA transfer due to, Transfer Because of Divorce Expenses paid under decree American opportunity credit, Expenses paid by dependent. Irs vita Lifetime learning credit, Expenses paid by dependent. Irs vita Tuition and fees deduction, Expenses paid under divorce decree. Irs vita Double benefit not allowed American opportunity credit, No Double Benefit Allowed Lifetime learning credit, No Double Benefit Allowed Student loan interest deduction, No Double Benefit Allowed Tuition and fees deduction, No Double Benefit Allowed Work-related education, No Double Benefit Allowed E Early distributions from IRAs, Education Exception to Additional Tax on Early IRA Distributions, Reporting Early Distributions Eligible educational institution, Eligible educational institution. Irs vita Figuring amount not subject to 10% tax, Figuring the Amount Not Subject to the 10% Tax Qualified education expenses, Qualified education expenses. Irs vita Reporting, Reporting Early Distributions Education IRA (see Coverdell education savings account (ESA)) Education loans (see Student loan interest deduction) Education savings account (see Coverdell education savings account (ESA)) Education savings bond program Cashing in bonds tax free, Who Can Cash In Bonds Tax Free, MAGI when using Form 1040. Irs vita Claiming dependent's exemption, Dependent for whom you claim an exemption. Irs vita Claiming exclusion, Claiming the Exclusion Eligible educational institution, Eligible educational institution. Irs vita Figuring tax-free amount, Figuring the Tax-Free Amount Income level, effect on amount of exclusion, Effect of the Amount of Your Income on the Amount of Your Exclusion Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Irs vita , MAGI when using Form 1040. Irs vita Phaseout, Effect of the Amount of Your Income on the Amount of Your Exclusion Qualified education expenses, Qualified education expenses. Irs vita Educational assistance, employer-provided (see Employer-provided educational assistance) Eligible educational institution American opportunity credit, Eligible educational institution. Irs vita Cancellation of student loan, Eligible educational institution. Irs vita Coverdell ESA, Eligible Educational Institution Early distributions from IRAs, Eligible educational institution. Irs vita Education savings bond program, Eligible educational institution. Irs vita Lifetime learning credit, Eligible educational institution. Irs vita Qualified tuition program (QTP), Eligible educational institution. Irs vita Qualified tuition reduction, Qualified Tuition Reduction Scholarships and fellowships, Eligible educational institution. Irs vita , Eligible educational institution. Irs vita Student loan cancellation, Eligible educational institution. Irs vita Student loan interest deduction, Eligible educational institution. Irs vita Tuition and fees deduction, Eligible educational institution. Irs vita Eligible elementary or secondary school Coverdell ESA, Eligible elementary or secondary school. Irs vita Eligible student American opportunity credit, Who Is an Eligible Student Lifetime learning credit, Who Is an Eligible Student Student loan interest deduction, Eligible student. Irs vita Tuition and fees deduction, Who Is an Eligible Student Employees Deducting work-related education expenses, Employees Employer-provided educational assistance, Employer-Provided Educational Assistance, Working condition fringe benefit. Irs vita ESAs (see Coverdell education savings account (ESA)) Estimated tax, Reminders Excess contributions Coverdell ESA, Additional Tax on Excess Contributions, Figuring and reporting the additional tax. Irs vita Excess expenses, accountable plan, Excess expenses. Irs vita , Allocating your reimbursements for meals. Irs vita Expenses (see specific benefit ) F Family members, beneficiary Coverdell ESA, Members of the beneficiary's family. Irs vita Qualified tuition program (QTP), Members of the beneficiary's family. Irs vita Fee-basis officials, work-related education deduction, Performing Artists and Fee-Basis Officials Fellowships (see Scholarships and fellowships) Figures (see Tables and figures) Financial aid (see Scholarships and fellowships) Form 1098-E Student loan interest deduction, Loan origination fee. Irs vita , Form 1098-E. Irs vita Form 1098-T, Reminders American opportunity credit, Form 1098-T. Irs vita Lifetime learning credit, Form 1098-T. Irs vita Tuition and fees deduction, Form 1098-T. Irs vita Form 1099-Q Coverdell ESA, Exceptions. Irs vita , Earnings and basis. Irs vita Qualified tuition program (QTP), Earnings and return of investment. Irs vita Form 1099-R Early distributions from IRAs, Reporting Early Distributions Form 2106, 50% limit on meals. Irs vita , Form 2106 or 2106-EZ. Irs vita Form 2106-EZ, 50% limit on meals. Irs vita , Form 2106 or 2106-EZ. Irs vita , Using Form 2106-EZ. Irs vita Filled-in example, Form 5329 Coverdell ESA, Figuring the additional tax. Irs vita Early distributions from IRAs, Reporting Early Distributions Qualified tuition program (QTP), Figuring the additional tax. Irs vita Form 8815, MAGI when using Form 1040. Irs vita , Claiming the Exclusion Form 8863 Filled-in examples, Form 8917 Filled-in examples, Form W-9S, Form 1098-T. Irs vita , Form 1098-T. Irs vita , Form 1098-E. Irs vita , Form 1098-T. Irs vita Free tax services, Free help with your tax return. Irs vita Fulbright grants, Fulbright Grants G Glossary, Glossary. Irs vita , Glossary, Transfer: Graduate education tuition reduction, Graduate Education Grants Fulbright, Fulbright Grants Pell, Pell Grants and Other Title IV Need-Based Education Grants Title IV need-based education, Pell Grants and Other Title IV Need-Based Education Grants H Half-time student American opportunity credit, Enrolled at least half-time. Irs vita Coverdell ESA, Half-time student. Irs vita Early distributions from IRAs, Half-time student. Irs vita Student loan interest deduction, Enrolled at least half-time. Irs vita Help (see Tax help) I Illustrated example of education credits (Appendix A), Appendix A. Irs vita Illustrated Example of Education Credits, Impairment-related work expenses Work-related education deduction, Impairment-Related Work Expenses Individual retirement arrangements (IRAs), Coverdell Education Savings Account (ESA) Early distributions (see Early distributions from IRAs) L Lifetime learning credit, Differences between the American opportunity and lifetime learning credits. Irs vita Academic period, Academic period. Irs vita Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Claiming dependent's expenses, Who Can Claim a Dependent's Expenses Tuition reduction, Tuition reduction. Irs vita Claiming the credit, Can You Claim the Credit, Who Cannot Claim the Credit, Claiming the Credit Qualifying to claim (Figure 3-1), Coordination with Coverdell ESA distributions, Figuring the Taxable Portion of a Distribution, Coordination With American Opportunity and Lifetime Learning Credits Coordination with qualified tuition program (QTP) distributions, Coordination With American Opportunity and Lifetime Learning Credits Eligible educational institution, Eligible educational institution. Irs vita Eligible student, Who Is an Eligible Student Expenses qualifying for, What Expenses Qualify, Amounts that do not reduce qualified education expenses. Irs vita Figuring the credit, Figuring the Credit, Claiming the Credit Income level, effect on amount of credit, Effect of the Amount of Your Income on the Amount of Your Credit Income limits, Effect of the Amount of Your Income on the Amount of Your Credit Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Irs vita Worksheet 3-1, MAGI when using Form 1040. Irs vita Overview (Table 3-1), Table 3-1. Irs vita Overview of the Lifetime Learning Credit Phaseout, Phaseout. Irs vita Qualified education expenses, Qualified Education Expenses, Amounts that do not reduce qualified education expenses. Irs vita Qualifying to claim (Figure 3-1), Tax benefit of, What is the tax benefit of the lifetime learning credit. Irs vita Loans Cancellation (see Student loan cancellation) Capitalized interest on student loan, Capitalized interest. Irs vita Origination fees on student loan, Loan origination fee. Irs vita Qualified education expenses paid with American opportunity credit, Academic period. Irs vita Lifetime learning credit, Paid with borrowed funds. Irs vita Student loan repayment assistance, Student Loan Repayment Assistance Losses, deducting Coverdell ESA, Losses on Coverdell ESA Investments Qualified tuition program (QTP), Losses on QTP Investments Luxury water transportation, Cruises and conventions. Irs vita M Mileage deduction for work-related education, What's New, Using your car. Irs vita Military academy cadets, Payment to Service Academy Cadets Missing children, photographs of, Reminders Modified adjusted gross income (MAGI) American opportunity credit Worksheet 2-1, Claiming the Credit Coverdell ESA, Modified adjusted gross income (MAGI). Irs vita , MAGI when using Form 1040NR-EZ. Irs vita Worksheet 6-1, Worksheet 7-1. Irs vita MAGI for a Coverdell ESA Education savings bond program, Modified adjusted gross income (MAGI). Irs vita , MAGI when using Form 1040. Irs vita Lifetime learning credit, Modified adjusted gross income (MAGI). Irs vita Worksheet 3-1, MAGI when using Form 1040. Irs vita Student loan interest deduction, Modified adjusted gross income (MAGI). Irs vita Table 4-2, Table 4-2. Irs vita Effect of MAGI on Student Loan Interest Deduction Tuition and fees deduction, Modified adjusted gross income (MAGI). Irs vita Table 6-2, Table 6-2. Irs vita Effect of MAGI on Maximum Tuition and Fees Deduction Worksheet 6-1, Worksheet 6-1. Irs vita MAGI for the Tuition and Fees Deduction N National Health Service Corps Scholarship Program, Exceptions. Irs vita , Exceptions. Irs vita Nonaccountable plans Work-related education, Nonaccountable Plans P Pell grants, Pell Grants and Other Title IV Need-Based Education Grants, Coordination with Pell grants and other scholarships. Irs vita , Coordination with Pell grants and other scholarships. Irs vita Performing artists, work-related education deduction, Performing Artists and Fee-Basis Officials Phaseout American opportunity credit, Phaseout. Irs vita Education savings bond program, Effect of the Amount of Your Income on the Amount of Your Exclusion Lifetime learning credit, Phaseout. Irs vita Student loan interest deduction, Phaseout. Irs vita , Effect of the Amount of Your Income on the Amount of Your Deduction Publications (see Tax help) Q Qualified education expenses Adjustments to American opportunity credit, Adjustments to Qualified Education Expenses Coverdell ESA, Adjusted qualified education expenses. Irs vita Education savings bond program, Adjusted qualified education expenses. Irs vita Lifetime learning credit, Adjustments to Qualified Education Expenses Qualified tuition program (QTP), Adjusted qualified education expenses. Irs vita Student loan interest deduction, Adjustments to Qualified Education Expenses Tuition and fees deduction, Adjustments to Qualified Education Expenses Work-related education, Adjustments to Qualifying Work-Related Education Expenses American opportunity credit, Qualified Education Expenses, Adjustments to Qualified Education Expenses Coverdell ESA, Qualified Education Expenses, Qualified Elementary and Secondary Education Expenses Early distributions from IRAs, Qualified education expenses. Irs vita Education savings bond program, Qualified education expenses. Irs vita Expenses not qualified American opportunity credit, Expenses That Do Not Qualify, Comprehensive or bundled fees. Irs vita Lifetime learning credit, Expenses That Do Not Qualify Tuition and fees deduction, Expenses That Do Not Qualify Lifetime learning credit, Qualified Education Expenses, Amounts that do not reduce qualified education expenses. Irs vita Qualified tuition program (QTP), Qualified education expenses. Irs vita Scholarships and fellowships, Qualified education expenses. Irs vita Student loan interest deduction, Qualified Education Expenses Tuition and fees deduction, What Expenses Qualify, Adjustments to Qualified Education Expenses Work-related education, What Expenses Can Be Deducted, Adjustments to Qualifying Work-Related Education Expenses Qualified elementary and secondary education expenses Coverdell ESAs, Qualified Elementary and Secondary Education Expenses Qualified employer plans Student loan interest deduction not allowed, Qualified employer plan. Irs vita Qualified student loans, Qualified Student Loan, Qualified employer plan. Irs vita Qualified tuition program (QTP), Qualified Tuition Program (QTP), Changing the Designated Beneficiary Additional tax on taxable distributions, Additional Tax on Taxable Distributions Change of designated beneficiary, Changing the Designated Beneficiary Contributions to, How Much Can You Contribute Coordination with American opportunity and lifetime learning credits, Coordination With American Opportunity and Lifetime Learning Credits Coordination with Coverdell ESA distributions, Coordination With Coverdell ESA Distributions Defined, What Is a Qualified Tuition Program Eligible educational institution, Eligible educational institution. Irs vita Figuring taxable portion of distribution, Figuring the Taxable Portion of a Distribution, Losses on QTP Investments Losses, Losses on QTP Investments Qualified education expenses, Qualified education expenses. Irs vita Rollovers, Rollovers and Other Transfers, Changing the Designated Beneficiary Tax benefit of, What is the tax benefit of a QTP. Irs vita Taxability of distributions, Are Distributions Taxable, Figuring the additional tax. Irs vita Taxable earnings, Taxable earnings. Irs vita Transfers, Rollovers and Other Transfers, Changing the Designated Beneficiary Qualified tuition reduction, Qualified Tuition Reduction, How To Report Qualified U. Irs vita S. Irs vita savings bonds, Qualified U. Irs vita S. Irs vita savings bonds. Irs vita Qualifying work-related education, Qualifying Work-Related Education, Teaching and Related Duties Determining if qualified (Figure 11-1), R Recapture American opportunity credit, Credit recapture. Irs vita Lifetime learning credit, Credit recapture. Irs vita Tuition and fees deduction, Credit recapture. Irs vita Recordkeeping requirements Work-related education, Recordkeeping, Examples of records to keep. Irs vita Refinanced student loans, Interest on refinanced student loans. Irs vita , Refinanced Loan Reimbursements Nondeductible expenses, Reimbursements for nondeductible expenses. Irs vita Work-related education, How To Treat Reimbursements, Reimbursements for nondeductible expenses. Irs vita Related persons Coverdell ESA, Members of the beneficiary's family. Irs vita Qualified tuition program (QTP), Members of the beneficiary's family. Irs vita Student loan interest deduction, Related person. Irs vita Repayment programs (see Student loan repayment assistance) Reporting American opportunity credit, Claiming the Credit Coverdell ESA, Exceptions. Irs vita , Figuring and reporting the additional tax. Irs vita , Figuring the Taxable Portion of a Distribution, Figuring the additional tax. Irs vita Early distributions from IRAs, Reporting Early Distributions Education savings bond program, Claiming the Exclusion Lifetime learning credit, Claiming the Credit Qualified tuition program (QTP), Taxable earnings. Irs vita , Losses on QTP Investments, Rollovers Scholarships and fellowships, taxable, Reporting Scholarships and Fellowships Student loan interest deduction, Claiming the Deduction Tuition and fees deduction, Claiming the Deduction Tuition reduction, taxable, How To Report Work-related education expenses, Deducting Business Expenses, Impairment-Related Work Expenses Revolving lines of credit, interest on, Interest on revolving lines of credit. Irs vita Rollovers Coverdell ESA, Rollovers Qualified tuition program (QTP), Rollovers and Other Transfers, Changing the Designated Beneficiary S Scholarships and fellowships, Scholarships and Fellowships, Form 1040NR-EZ. Irs vita , Coordination with Pell grants and other scholarships. Irs vita , Coordination with Pell grants and other scholarships. Irs vita Athletic scholarships, Athletic Scholarships Eligible educational institution, Eligible educational institution. Irs vita , Eligible educational institution. Irs vita Figuring tax-free and taxable parts (Worksheet 1-1), Worksheet 1-1. Irs vita Qualified education expenses, Qualified education expenses. Irs vita Reporting, Reporting Scholarships and Fellowships Scholarship, defined, Scholarships and Fellowships Tax treatment of (Table 1-1), Tax-Free Scholarships and Fellowships Tax-free, Tax-Free Scholarships and Fellowships, Athletic Scholarships Taxable, Taxable Scholarships and Fellowships Section 501(c)(3) organizations (see Student loan cancellation) Section 529 program (see Qualified tuition program (QTP)) Self-employed persons Deducting work-related education expenses, Self-Employed Persons Service academy cadets, Payment to Service Academy Cadets Sports, games, hobbies, and noncredit courses American opportunity credit, Sports, games, hobbies, and noncredit courses. Irs vita Education savings bond program, Qualified education expenses. Irs vita Lifetime learning credit, Sports, games, hobbies, and noncredit courses. Irs vita Tuition and fees deduction, Sports, games, hobbies, and noncredit courses. Irs vita Standard mileage rate Work-related education, What's New, Using your car. Irs vita State prepaid education accounts (see Qualified tuition program (QTP)) Student loan cancellation, Student Loan Cancellation Eligible educational institution, Eligible educational institution. Irs vita Section 501(c)(3) organizations, Section 501(c)(3) organization. Irs vita Student loan interest deduction Academic period, Academic period. Irs vita Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Allocation between interest and principal, Allocating Payments Between Interest and Principal Claiming the deduction, Claiming the Deduction Eligible educational institution, Eligible educational institution. Irs vita Eligible student, Eligible student. Irs vita Figuring the deduction, Figuring the Deduction, Which Worksheet To Use Include as interest, Include As Interest Income level, effect on amount of deduction, Effect of the Amount of Your Income on the Amount of Your Deduction Loan repayment assistance, Do Not Include As Interest Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Irs vita , Which Worksheet To Use Table 4-2, Table 4-2. Irs vita Effect of MAGI on Student Loan Interest Deduction Not included as interest, Do Not Include As Interest Phaseout, Phaseout. Irs vita , Effect of the Amount of Your Income on the Amount of Your Deduction Qualified education expenses, Qualified Education Expenses Qualified employer plans, Qualified employer plan. Irs vita Qualified student loans, Qualified Student Loan, Qualified employer plan. Irs vita Reasonable period of time, Reasonable period of time. Irs vita Related persons, Related person. Irs vita Student loan interest, defined, Student Loan Interest Defined, When Must Interest Be Paid Third party interest payments, Interest paid by others. Irs vita When interest must be paid, When Must Interest Be Paid Worksheet 4-1, Worksheet 4-1. Irs vita Student Loan Interest Deduction Worksheet Student loan repayment assistance, Student Loan Repayment Assistance Surviving spouse Coverdell ESA transfer to, Exception for Transfer to Surviving Spouse or Family Member T Tables and figures American opportunity credit Eligible student requirements (Figure 2-2), Overview (Table 2-1), Introduction Qualifying to claim (Figure 2-1), Comparison of education tax benefits (Appendix B), Coverdell ESAs Contributions to (Table 7-2), Contribution Limits Distributions (Table 7-3), Distributions Overview (Table 6-1), Coverdell Education Savings Account (ESA) Education credits Overview of American opportunity credit (Table 2-1), Introduction Overview of lifetime learning credit (Table 3-1), Table 3-1. Irs vita Overview of the Lifetime Learning Credit Lifetime learning credit Overview (Table 3-1), Table 3-1. Irs vita Overview of the Lifetime Learning Credit Qualifying to claim (Figure 3-1), Scholarships and fellowships, taxability of (Table 1-1), Tax-Free Scholarships and Fellowships Student loan interest deduction MAGI, effect of (Table 4-2), Table 4-2. Irs vita Effect of MAGI on Student Loan Interest Deduction Overview (Table 4-1), Table 4-1. Irs vita Student Loan Interest Deduction at a Glance Summary chart of differences between education tax benefits (Appendix B), Tuition and fees deduction MAGI, effect of (Table 6-2), Table 6-2. Irs vita Effect of MAGI on Maximum Tuition and Fees Deduction Overview (Table 6-1), Table 6-1. Irs vita Tuition and Fees Deduction at a Glance Work-related education, qualifying (Figure 112-1), Tax help, How To Get Tax Help Tax-free educational assistance American opportunity credit, Tax-free educational assistance. Irs vita Coverdell ESA, Adjusted qualified education expenses. Irs vita Early distributions from IRAs, Figuring the Amount Not Subject to the 10% Tax Education savings bond program, Adjusted qualified education expenses. Irs vita Lifetime learning credit, Tax-free educational assistance. Irs vita Qualified tuition program (QTP), Adjusted qualified education expenses. Irs vita Tuition and fees deduction, Tax-free educational assistance. Irs vita Work-related education, Tax-free educational assistance. Irs vita Taxable scholarships and fellowships, Taxable Scholarships and Fellowships Teachers, Requirements for Teachers, Teaching and Related Duties Temporary-basis student, transportation expenses of, Temporary basis. Irs vita Title IV need-based education grants, Pell Grants and Other Title IV Need-Based Education Grants Transfers Coverdell ESA, Rollovers Qualified tuition program (QTP), Rollovers and Other Transfers, Changing the Designated Beneficiary Transportation expenses Work-related education, Transportation Expenses, Using your car. Irs vita Travel expenses 50% limit on meals, 50% limit on meals. Irs vita Not deductible as form of education, Travel as Education Work-related education, Travel Expenses TTY/TDD information, How To Get Tax Help Tuition and fees deduction, Tuition and Fees Deduction, Illustrated Example Academic period, Academic period. Irs vita Adjustments to qualified education expenses, Adjustments to Qualified Education Expenses Can you claim the deduction, Can You Claim the Deduction Claiming dependent's expenses, Who Can Claim a Dependent's Expenses Claiming the deduction, Claiming the Deduction Double benefit not allowed, No Double Benefit Allowed Eligible educational institution, Eligible educational institution. Irs vita Eligible student, Who Is an Eligible Student Expenses not qualifying for, Expenses That Do Not Qualify Expenses qualifying for, What Expenses Qualify, Adjustments to Qualified Education Expenses Figuring the deduction, Figuring the Deduction, MAGI when using Form 1040. Irs vita Income level, effect on amount of deduction, Effect of the Amount of Your Income on the Amount of Your Deduction Loan used to pay tuition and fees, Paid with borrowed funds. Irs vita Modified adjusted gross income (MAGI), Modified adjusted gross income (MAGI). Irs vita Table 6-2, Table 6-2. Irs vita Effect of MAGI on Maximum Tuition and Fees Deduction Worksheet 6-1, Worksheet 6-1. Irs vita MAGI for the Tuition and Fees Deduction Overview (Table 4-1), Table 4-1. Irs vita Student Loan Interest Deduction at a Glance Overview (Table 6-1), Table 6-1. Irs vita Tuition and Fees Deduction at a Glance Qualified education expenses, What Expenses Qualify, Adjustments to Qualified Education Expenses Qualifying for deduction, Can You Claim the Deduction Tax benefit of, What is the tax benefit of the tuition and fees deduction. Irs vita Tax-free educational assistance, Tax-free educational assistance. Irs vita Tuition reduction American opportunity credit, Tuition reduction. Irs vita Lifetime learning credit, Tuition reduction. Irs vita Qualified, Qualified Tuition Reduction, How To Report Tuition and fees deduction, Tuition reduction. Irs vita U U. Irs vita S. Irs vita savings bonds, Qualified U. Irs vita S. Irs vita savings bonds. Irs vita Unclaimed reimbursement Work-related education, Unclaimed reimbursement. Irs vita V Veterans' benefits, Veterans' Benefits Voluntary interest payments, Voluntary interest payments. Irs vita W Withholding, Analyzing your tax withholding. Irs vita Work-related education (see Business deduction for work-related education) Working condition fringe benefit, Working condition fringe benefit. Irs vita Worksheets Coverdell ESA Contribution limit (Worksheet 6-2), Figuring the limit. Irs vita MAGI, calculation of (Worksheet 6-1), Worksheet 7-1. Irs vita MAGI for a Coverdell ESA Taxable distributions and basis (Worksheet 6-3), Worksheet 7-3. Irs vita Coverdell ESA—Taxable Distributions and Basis Taxable distributions and basis (Worksheet 7-3), Worksheet 7-3. Irs vita Coverdell ESA—Taxable Distributions and Basis Lifetime learning credit MAGI calculation (Worksheet 3-1), MAGI when using Form 1040. Irs vita Scholarships and fellowships, taxable income (Worksheet 1-1), Worksheet 1-1. Irs vita Student loan interest deduction (Worksheet 4-1), Worksheet 4-1. Irs vita Student Loan Interest Deduction Worksheet Tuition and fees deduction, MAGI calculation (Worksheet 6-1), Worksheet 6-1. Irs vita MAGI for the Tuition and Fees Deduction Prev  Up     Home   More Online Publications
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The Irs Vita

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