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Online filing Internal Revenue Bulletin:  2012-14  April 2, 2012  Rev. Online filing Proc. Online filing 2012-23 Table of Contents SECTION 1. Online filing PURPOSE SECTION 2. Online filing BACKGROUND SECTION 3. Online filing SCOPE SECTION 4. Online filing APPLICATION. Online filing 01 Limitations on Depreciation Deductions for Certain Automobiles. Online filing . Online filing 02 Inclusions in Income of Lessees of Passenger Automobiles. Online filing SECTION 5. Online filing EFFECTIVE DATE SECTION 6. Online filing DRAFTING INFORMATION SECTION 1. Online filing PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2012, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2012, including a separate table of inclusion amounts for lessees of trucks and vans. Online filing The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Online filing SECTION 2. Online filing BACKGROUND . Online filing 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Online filing For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Online filing The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Online filing This change reflects the higher rate of price inflation for trucks and vans since 1988. Online filing . Online filing 02 Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Online filing L. Online filing No. Online filing 111-312, 124 Stat. Online filing 3296 (Dec. Online filing 17, 2010) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Online filing Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Online filing . Online filing 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Online filing Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Online filing Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv)). Online filing Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Online filing This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2012 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Online filing . Online filing 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Online filing The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Online filing Under § 1. Online filing 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Online filing One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Online filing Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Online filing SECTION 3. Online filing SCOPE . Online filing 01 The limitations on depreciation deductions in section 4. Online filing 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2012, and continue to apply for each taxable year that the passenger automobile remains in service. Online filing . Online filing 02 The tables in section 4. Online filing 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2012. Online filing Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Online filing See Rev. Online filing Proc. Online filing 2007-30, 2007-1 C. Online filing B. Online filing 1104, for passenger automobiles first leased during calendar year 2007; Rev. Online filing Proc. Online filing 2008-22, 2008-1 C. Online filing B. Online filing 658, for passenger automobiles first leased during calendar year 2008; Rev. Online filing Proc. Online filing 2009-24, 2009-17 I. Online filing R. Online filing B. Online filing 885, for passenger automobiles first leased during calendar year 2009; Rev. Online filing Proc. Online filing 2010-18, 2010-9 I. Online filing R. Online filing B. Online filing 427, as amplified and modified by section 4. Online filing 03 of Rev. Online filing Proc. Online filing 2011-21, 2011-12 I. Online filing R. Online filing B. Online filing 560, for passenger automobiles first leased during calendar year 2010; and Rev. Online filing Proc. Online filing 2011-21, for passenger automobiles first leased during calendar year 2011. Online filing SECTION 4. Online filing APPLICATION . Online filing 01 Limitations on Depreciation Deductions for Certain Automobiles. Online filing (1) Amount of the inflation adjustment. Online filing (a) Passenger automobiles (other than trucks or vans). Online filing Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Online filing Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Online filing The new car component of the CPI was 115. Online filing 2 for October 1987 and 143. Online filing 419 for October 2011. Online filing The October 2011 index exceeded the October 1987 index by 28. Online filing 219. Online filing Therefore, the automobile price inflation adjustment for 2012 for passenger automobiles (other than trucks and vans) is 24. Online filing 5 percent (28. Online filing 219/115. Online filing 2 x 100%). Online filing The dollar limitations in § 280F(a) are multiplied by a factor of 0. Online filing 245, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2012. Online filing This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2012. Online filing (b) Trucks and vans. Online filing To determine the dollar limitations for trucks and vans first placed in service during calendar year 2012, the Service uses the new truck component of the CPI instead of the new car component. Online filing The new truck component of the CPI was 112. Online filing 4 for October 1987 and 146. Online filing 607 for October 2011. Online filing The October 2011 index exceeded the October 1987 index by 34. Online filing 207. Online filing Therefore, the automobile price inflation adjustment for 2012 for trucks and vans is 30. Online filing 43 percent (34. Online filing 207/112. Online filing 4 x 100%). Online filing The dollar limitations in § 280F(a) are multiplied by a factor of 0. Online filing 3043, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Online filing This adjustment applies to all trucks and vans that are first placed in service in calendar year 2012. Online filing (2) Amount of the limitation. Online filing Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2012. Online filing Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2012 for which the § 168(k) additional first year depreciation deduction applies. Online filing Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2012 for which the § 168(k) additional first year depreciation deduction does not apply. Online filing REV. Online filing PROC. Online filing 2012-23 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Online filing PROC. Online filing 2012-23 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Online filing PROC. Online filing 2012-23 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Online filing PROC. Online filing 2012-23 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Online filing 02 Inclusions in Income of Lessees of Passenger Automobiles. Online filing A taxpayer must follow the procedures in § 1. Online filing 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2012. Online filing In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Online filing REV. Online filing PROC. Online filing 2012-23 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 2 4 5 6 8 19,000 19,500 2 4 7 7 9 19,500 20,000 2 5 8 8 10 20,000 20,500 3 5 9 10 11 20,500 21,000 3 6 9 12 12 21,000 21,500 3 7 10 12 14 21,500 22,000 3 8 11 13 16 22,000 23,000 4 8 13 15 17 23,000 24,000 4 10 15 17 20 24,000 25,000 5 11 17 19 23 25,000 26,000 6 12 19 21 26 26,000 27,000 6 14 20 24 28 27,000 28,000 7 15 22 26 31 28,000 29,000 7 16 25 28 33 29,000 30,000 8 18 25 32 35 30,000 31,000 9 19 27 34 38 31,000 32,000 9 20 30 36 41 32,000 33,000 10 21 32 38 43 33,000 34,000 10 23 33 41 46 34,000 35,000 11 24 35 43 49 35,000 36,000 12 25 37 45 52 36,000 37,000 12 27 39 47 54 37,000 38,000 13 28 41 49 57 38,000 39,000 13 29 43 52 59 39,000 40,000 14 30 45 54 62 40,000 41,000 14 32 47 56 65 41,000 42,000 15 33 49 58 68 42,000 43,000 16 34 51 61 70 43,000 44,000 16 36 52 63 73 44,000 45,000 17 37 54 66 75 45,000 46,000 17 38 57 67 78 46,000 47,000 18 39 59 70 80 47,000 48,000 19 40 61 72 83 48,000 49,000 19 42 62 75 86 49,000 50,000 20 43 64 77 89 50,000 51,000 20 45 66 79 91 51,000 52,000 21 46 68 81 94 52,000 53,000 21 47 70 84 96 53,000 54,000 22 48 72 86 99 54,000 55,000 23 49 74 88 102 55,000 56,000 23 51 76 90 104 56,000 57,000 24 52 78 92 107 57,000 58,000 24 54 79 95 110 58,000 59,000 25 55 81 97 113 59,000 60,000 26 56 83 100 115 60,000 62,000 26 58 86 103 119 62,000 64,000 28 60 90 108 124 64,000 66,000 29 63 94 112 129 66,000 68,000 30 66 97 117 135 68,000 70,000 31 68 102 121 140 70,000 72,000 32 71 105 126 145 72,000 74,000 33 74 109 130 151 74,000 76,000 35 76 113 135 156 76,000 78,000 36 78 117 140 161 78,000 80,000 37 81 120 145 166 80,000 85,000 39 86 127 152 176 85,000 90,000 42 92 137 163 189 90,000 95,000 45 98 147 175 202 95,000 100,000 48 105 155 187 215 100,000 110,000 52 115 170 203 235 110,000 120,000 58 127 189 227 262 120,000 130,000 64 140 208 250 288 130,000 140,000 70 153 227 272 315 140,000 150,000 75 166 246 296 340 150,000 160,000 81 179 265 318 368 160,000 170,000 87 192 284 341 394 170,000 180,000 93 204 304 364 420 180,000 190,000 99 217 323 387 446 190,000 200,000 105 230 342 409 473 200,000 210,000 111 243 361 432 499 210,000 220,000 116 256 380 455 526 220,000 230,000 122 269 399 478 552 230,000 240,000 128 282 418 501 578 240,000 and up 134 294 437 524 605 REV. Online filing PROC. Online filing 2012-23 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $19,000 $19,500 1 4 5 6 7 19,500 20,000 2 4 6 7 9 20,000 20,500 2 5 7 8 10 20,500 21,000 2 5 8 10 11 21,000 21,500 3 6 9 10 13 21,500 22,000 3 6 10 12 14 22,000 23,000 3 8 11 14 15 23,000 24,000 4 9 13 16 18 24,000 25,000 4 10 15 19 21 25,000 26,000 5 11 17 21 24 26,000 27,000 6 12 19 23 26 27,000 28,000 6 14 21 25 29 28,000 29,000 7 15 23 27 32 29,000 30,000 7 17 24 30 34 30,000 31,000 8 18 26 32 37 31,000 32,000 9 19 28 34 40 32,000 33,000 9 20 31 36 42 33,000 34,000 10 21 33 39 44 34,000 35,000 10 23 34 41 48 35,000 36,000 11 24 36 44 50 36,000 37,000 12 25 38 46 53 37,000 38,000 12 27 40 48 55 38,000 39,000 13 28 42 50 58 39,000 40,000 13 29 44 53 60 40,000 41,000 14 31 45 55 63 41,000 42,000 14 32 48 57 66 42,000 43,000 15 33 50 59 69 43,000 44,000 16 34 52 61 72 44,000 45,000 16 36 53 64 74 45,000 46,000 17 37 55 66 77 46,000 47,000 17 38 58 68 79 47,000 48,000 18 40 59 70 82 48,000 49,000 19 41 61 73 84 49,000 50,000 19 42 63 75 87 50,000 51,000 20 43 65 78 89 51,000 52,000 20 45 66 80 93 52,000 53,000 21 46 68 83 95 53,000 54,000 21 48 70 84 98 54,000 55,000 22 49 72 87 100 55,000 56,000 23 50 74 89 103 56,000 57,000 23 51 76 92 105 57,000 58,000 24 52 78 94 108 58,000 59,000 24 54 80 96 111 59,000 60,000 25 55 82 98 114 60,000 62,000 26 57 85 101 118 62,000 64,000 27 60 88 106 123 64,000 66,000 28 62 93 110 128 66,000 68,000 29 65 96 115 134 68,000 70,000 30 67 100 120 139 70,000 72,000 32 70 103 125 144 72,000 74,000 33 72 108 129 149 74,000 76,000 34 75 111 134 155 76,000 78,000 35 78 115 138 160 78,000 80,000 36 80 119 143 165 80,000 85,000 38 85 125 151 175 85,000 90,000 41 91 135 163 187 90,000 95,000 44 98 144 174 201 95,000 100,000 47 104 154 185 214 100,000 110,000 52 113 169 202 234 110,000 120,000 57 127 187 225 261 120,000 130,000 63 139 207 248 287 130,000 140,000 69 152 226 271 313 140,000 150,000 75 165 245 294 339 150,000 160,000 81 178 264 316 366 160,000 170,000 87 190 283 340 392 170,000 180,000 92 204 302 362 419 180,000 190,000 98 216 322 385 445 190,000 200,000 104 229 340 409 471 200,000 210,000 110 242 359 431 498 210,000 220,000 116 255 378 454 524 220,000 230,000 122 267 398 477 551 230,000 240,000 127 281 416 500 577 240,000 and up 133 294 435 523 603 SECTION 5. Online filing EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2012. Online filing SECTION 6. Online filing DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Online filing Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Online filing For further information regarding this revenue procedure, contact Mr. Online filing Harvey at (202) 622-4930 (not a toll-free call). Online filing Prev  Up  Next   Home   More Internal Revenue Bulletins

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Tax Fraud Alerts
"If it sounds too good to be true, it probably is!" Seek expert advice before you subscribe to any scheme that offers instant wealth or exemption from your obligation as a United States Citizen to pay taxes. Buying into a tax evasion scheme can be very costly. To arrive at the 'Tax Fraud Alerts' page quickly, use the Keyword 'Fraud' from www.irs.gov

Criminal Investigation (CI) At-a-Glance
Criminal Investigation (CI) serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.

What Criminal Investigation Does
Some people bend the tax law -- others break it. Criminal Investigation's job is to pursue the lawbreakers.

Criminal Investigation Statistical Data
Enforcement statistics show trends in areas of fraud. This data assists Criminal Investigation in determining where to focus our resources.

IRS Criminal Investigation Press Releases - Calendar Year 2014
Here you will find links to IRS Criminal Investigation press releases issued by the IRS Special Agents in Charge

How to Make an Offshore Voluntary Disclosure
Taxpayers wanting to report undisclosed income or assets should come in through the IRS Voluntary Disclosure Program.

Criminal Investigation Special Agent Careers
A Career In Action! As an IRS Criminal Investigation (CI) Special Agent, you will pull together your accounting and law enforcement skills. CI special agents are duly sworn law enforcement officers who investigate complex financial crimes associated with tax evasion, money laundering, narcotics, public corruption, and much more. Are You Ready For The Challenge?

Information for Retired IRS Criminal Investigation Special Agents
Information for retired IRS Criminal Investigation special agents to apply to "Retired Law Special Agent" credentials under the Law Enforcement Officers Safety Act of 2004.

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The Online Filing

Online filing 1. Online filing   Canceled Debts Table of Contents General RulesForm 1099-C Discounts and loan modifications Sales or other dispositions (such as foreclosures and repossessions) Abandonments Stockholder debt This chapter discusses the tax treatment of canceled debts. Online filing General Rules Generally, if a debt for which you are personally liable is forgiven or discharged for less than the full amount owed, the debt is considered canceled in whatever amount it remained unpaid. Online filing There are exceptions to this rule, discussed under Exceptions , later. Online filing Generally, you must include the canceled debt in your income. Online filing However, you may be able to exclude the canceled debt. Online filing See Exclusions , later. Online filing Example. Online filing John owed $1,000 to Mary. Online filing Mary agreed to accept and John paid $400 in satisfaction of the entire debt. Online filing John has canceled debt of $600. Online filing Example. Online filing Margaret owed $1,000 to Henry. Online filing Henry and Margaret agreed that Margaret would provide Henry with services (instead of money) in full satisfaction of the debt. Online filing Margaret does not have canceled debt. Online filing Instead, she has income from services. Online filing A debt includes any indebtedness: For which you are liable, or Subject to which you hold property. Online filing Debt for which you are personally liable is recourse debt. Online filing All other debt is nonrecourse debt. Online filing If you are not personally liable for the debt, you do not have ordinary income from the cancellation of debt unless you retain the collateral and either: The lender offers a discount for the early payment of the debt, or The lender agrees to a loan modification that results in the reduction of the principal balance of the debt. Online filing See Discounts and loan modifications , later. Online filing However, upon the disposition of the property securing a nonrecourse debt, the amount realized includes the entire unpaid amount of the debt, not just the FMV of the property. Online filing As a result, you may realize a gain or loss if the outstanding debt immediately before the disposition is more or less than your adjusted basis in the property. Online filing For more details on figuring your gain or loss, see chapter 2 of this publication or see Publication 544. Online filing There are several exceptions and exclusions that may result in part or all of a canceled debt being nontaxable. Online filing See Exceptions and Exclusions, later. Online filing You must report any taxable canceled debt as ordinary income on: Form 1040 or Form 1040NR, line 21, if the debt is a nonbusiness debt; Schedule C (Form 1040), line 6 (or Schedule C-EZ (Form 1040), line 1), if the debt is related to a nonfarm sole proprietorship; Schedule E (Form 1040), line 3, if the debt is related to nonfarm rental of real property; Form 4835, line 6, if the debt is related to a farm rental activity for which you use Form 4835 to report farm rental income based on crops or livestock produced by a tenant; or Schedule F (Form 1040), line 8, if the debt is farm debt and you are a farmer. Online filing Form 1099-C If you receive a Form 1099-C, that means an applicable entity has reported an identifiable event to the IRS regarding a debt you owe. Online filing The identifiable event may be an actual cancellation of the debt or it may be an event the applicable entity is required, solely for purposes of reporting to the IRS, to treat as a cancellation of debt. Online filing For information on the reasons an applicable entity files Form 1099-C, see Identifiable event codes, later. Online filing Unless you meet one of the exceptions or exclusions discussed later, this canceled debt is ordinary income and must be reported on the appropriate form discussed above. Online filing An applicable entity includes: A federal government agency, A financial institution, A credit union, and Any organization a significant trade or business of which is lending money. Online filing Identifiable event codes. Online filing    Box 6 of Form 1099-C should indicate the reason the creditor filed this form. Online filing The codes shown in box 6 are explained below. Online filing Also see the chart after the explanation for a quick reference guide for the codes used in Box 6. Online filing Note. Online filing Codes A through G and I identify specific occurrences resulting from an actual discharge of indebtedness. Online filing However, Code H, Expiration of nonpayment testing period, does not necessarily identify an actual discharge of indebtedness. Online filing Code A — Bankruptcy. Online filing Code A is used to identify cancellation of debt as a result of a title 11 bankruptcy case. Online filing See Bankruptcy , later. Online filing Code B — Other judicial debt relief. Online filing Code B is used to identify cancellation of debt as a result of a receivership, foreclosure, or similar federal or state court proceeding other than bankruptcy. Online filing Code C — Statute of limitations or expiration of deficiency period. Online filing Code C is used to identify cancellation of debt either when the statute of limitations for collecting the debt expires or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. Online filing In the case of the expiration of a statute of limitations, an identifiable event occurs only if and when your affirmative defense of the statute of limitations is upheld in a final judgment or decision in a judicial proceeding, and the period for appealing the judgment or decision has expired. Online filing Code D — Foreclosure election. Online filing Code D is used to identify cancellation of debt when the creditor elects foreclosure remedies that statutorily end or bar the creditor's right to pursue collection of the debt. Online filing This event applies to a mortgage lender or holder who is barred from pursuing debt collection after a power of sale in the mortgage or deed of trust is exercised. Online filing Code E — Debt relief from probate or similar proceeding. Online filing Code E is used to identify cancellation of debt as a result of a probate court or similar legal proceeding. Online filing Code F — By agreement. Online filing Code F is used to identify cancellation of debt as a result of an agreement between the creditor and the debtor to cancel the debt at less than full consideration. Online filing Code G — Decision or policy to discontinue collection. Online filing Code G is used to identify cancellation of debt as a result of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. Online filing For purposes of this identifiable event, a defined policy includes both a written policy and the creditor's established business practice. Online filing Code H — Expiration of nonpayment testing period. Online filing Code H is used to indicate that the creditor has not received a payment on the debt during a testing period ending on December 31, 2013. Online filing The testing period is a 36-month period increased by the number of months the creditor was prevented from engaging in collection activity by a stay in bankruptcy or similar bar under state or local law. Online filing This identifiable event applies only for a creditor that is a financial institution or credit union (and certain of their subsidiaries), the Federal Deposit Insurance Corporation (FDIC), Resolution Trust Corporation (RTC), National Credit Union Administration (NCUA), and other Federal executive agencies. Online filing Expiration of the nonpayment testing period does not necessarily result from an actual discharge of indebtedness. Online filing Code I — Other actual discharge before identifiable event. Online filing Code I is used to identify an actual cancellation of debt that occurs before any of the identifiable events described in codes A through H. Online filing Form 1099-C Reference Guide for Box 6 Identifiable Event Codes A Bankruptcy B Other judicial debt relief C Statute of limitations or expiration of deficiency period D Foreclosure election E Debt relief from probate or similar proceeding F By agreement G Decision or policy to discontinue collection H Expiration of nonpayment testing period I Other actual discharge before identifiable event Even if you did not receive a Form 1099-C, you must report canceled debt as gross income on your tax return unless one of the exceptions or exclusions described later applies. Online filing Amount of canceled debt. Online filing    The amount in box 2 of Form 1099-C may represent some or all of the debt that has been canceled or treated as canceled. Online filing The amount in box 2 will include principal and may include interest and other nonprincipal amounts (such as fees or penalties). Online filing Unless you meet one of the exceptions or exclusions discussed later, the amount of the debt that has been canceled is ordinary income and must be reported on the appropriate form as discussed earlier. Online filing Interest included in canceled debt. Online filing    If any interest is included in the amount of canceled debt in box 2, it will be shown in box 3. Online filing Whether the interest portion of the canceled debt must be included in your income depends on whether the interest would be deductible if you paid it. Online filing See Deductible Debt under Exceptions, later. Online filing Persons who each receive a Form 1099-C showing the full amount of debt. Online filing    If you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. Online filing However, you may not have to report that entire amount as income. Online filing The amount, if any, you must report depends on all the facts and circumstances, including: State law, The amount of debt proceeds each person received, How much of any interest deduction from the debt was claimed by each person, How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner, and Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication. Online filing See Example 3 under Insolvency, later. Online filing Discounts and loan modifications If a lender discounts (reduces) the principal balance of a loan because you pay it off early, or agrees to a loan modification (a “workout”) that includes a reduction in the principal balance of a loan, the amount of the discount or the amount of principal reduction is canceled debt. Online filing However, if the debt is nonrecourse and you did not retain the collateral, you do not have cancellation of the debt income. Online filing The amount of the canceled debt must be included in income unless one of the exceptions or exclusions described later applies. Online filing For more details, see Exceptions and Exclusions, later. Online filing Sales or other dispositions (such as foreclosures and repossessions) Recourse debt. Online filing   If you owned property that was subject to a recourse debt in excess of the FMV of the property, the lender's foreclosure or repossession of the property is treated as a sale or disposition of the property by you and may result in your realization of gain or loss. Online filing The gain or loss on the disposition of the property is measured by the difference between the FMV of the property at the time of the disposition and your adjusted basis (usually your cost) in the property. Online filing The character of the gain or loss (such as ordinary or capital) is determined by the character of the property. Online filing If the lender forgives all or part of the amount of the debt in excess of the FMV of the property, the cancellation of the excess debt may result in ordinary income. Online filing The ordinary income from the cancellation of debt (the excess of the canceled debt over the FMV of the property) must be included in your gross income reported on your tax return unless one of the exceptions or exclusions described later applies. Online filing For more details, see Exceptions and Exclusions, later. Online filing Nonrecourse debt. Online filing   If you owned property that was subject to a nonrecourse debt in excess of the FMV of the property, the lender's foreclosure on the property does not result in ordinary income from the cancellation of debt. Online filing The entire amount of the nonrecourse debt is treated as an amount realized on the disposition of the property. Online filing The gain or loss on the disposition of the property is measured by the difference between the total amount realized (the entire amount of the nonrecourse debt plus the amount of cash and the FMV of any property received) and your adjusted basis in the property. Online filing The character of the gain or loss is determined by the character of the property. Online filing More information. Online filing    See Publications 523, 544, and 551, and chapter 2 of this publication for more details. Online filing Abandonments Recourse debt. Online filing   If you abandon property that secures a debt for which you are personally liable (recourse debt) and the debt is canceled, you will realize ordinary income equal to the canceled debt. Online filing You must report this income on your tax return unless one of the exceptions or exclusions described later applies. Online filing For more details, see Exceptions and Exclusions, later. Online filing This income is separate from any amount realized from the abandonment of the property. Online filing For more details, see chapter 3. Online filing Nonrecourse debt. Online filing   If you abandon property that secures a debt for which you are not personally liable (nonrecourse debt), you may realize gain or loss but will not have cancellation of indebtedness income. Online filing Stockholder debt If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution. Online filing For more information, see Publication 542, Corporations. Online filing Prev  Up  Next   Home   More Online Publications