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Students Filing Taxes

Students filing taxes Publication 547(SP) - Introductory Material Table of Contents Qué Hay de Nuevo Recordatorios IntroductionCómo pedir formularios y publicaciones. Students filing taxes Preguntas sobre los impuestos. Students filing taxes Useful Items - You may want to see: Qué Hay de Nuevo Nueva Sección C en el Formulario 4684 para esquemas de inversión de tipo Ponzi (Ponzi-type schemes). Students filing taxes  La Sección C del Formulario 4684 (disponible en inglés) es nueva para el año 2013. Students filing taxes Usted debe completar la Seción C si está reclamando una deducción de pérdida por robo debido a un esquema de inversión de tipo Ponzi (Ponzi-type scheme) y estará usando el Procedimiento Tributario (Revenue Procedure) 2009-20, según modificado por el Procedimiento Tributario (Revenue Procedure) 2011-58. Students filing taxes La Sección C del Formulario 4864 reemplaza el Anexo A del Procedimiento Tributario (Revenue Procedure) 2009-20. Students filing taxes No necesita completar el Anexo A. Students filing taxes Para más información, vea Pérdidas provenientes de esquemas de inversión de tipo Ponzi (Ponzi-type schemes) , más adelante. Students filing taxes Recordatorios Acontecimientos futuros. Students filing taxes  Si desea obtener la información más reciente sobre los acontecimientos relacionados con la Publicación 547(SP), tal como legislación promulgada después que ésta fue impresa, acceda a www. Students filing taxes irs. Students filing taxes gov/Spanish/About-Publication-547(SP). Students filing taxes Fotografías de niños desaparecidos. Students filing taxes  El Servicio de Impuestos Internos (IRS, por sus siglas en inglés) se enorgullece en colaborar con el Centro Nacional de Niños Desaparecidos y Explotados (National Center for Missing and Exploited Children). Students filing taxes En esta publicación, pueden aparecer fotografías de niños desaparecidos que han sido seleccionadas por el Centro. Students filing taxes Estas fotografías aparecen en páginas que de otra manera estarían en blanco. Students filing taxes Usted puede ayudar a que estos niños regresen a sus hogares si identifica alguno de ellos y llama gratis al 1-800-THE-LOST (1-800-843-5678). Students filing taxes Introduction Esta publicación explica el trato tributario de casos de hechos fortuitos, robos y pérdidas de depósitos monetarios. Students filing taxes Un hecho fortuito ocurre cuando su propiedad resulta dañada por causa de algún desastre, como por ejemplo, una tormenta, un incendio, un accidente automovilístico u otro suceso de esta índole. Students filing taxes Un robo ocurre cuando alguien hurta sus bienes. Students filing taxes La pérdida de depósitos monetarios ocurre cuando su institución bancaria se declara insolvente o en quiebra (bancarrota). Students filing taxes Esta publicación aborda los siguientes temas: Definiciones de hecho fortuito, robo y pérdida de depósitos monetarios. Students filing taxes Cómo calcular el monto de su pérdida o ganancia. Students filing taxes Cómo se tratan tributariamente seguros y otros reembolsos que reciba. Students filing taxes Límites de la deducción. Students filing taxes Cómo y cuándo declarar un caso de hecho fortuito o robo. Students filing taxes Reglas especiales para pérdidas en zonas de desastre. Students filing taxes Formularios que tiene que presentar. Students filing taxes   Normalmente, si es víctima de un hecho fortuito o robo, tiene que presentar el Formulario 4684 (disponible sólo en inglés). Students filing taxes Asimismo, es posible que tenga que presentar uno o más de los siguientes formularios (todos en inglés): Anexo A (Formulario 1040). Students filing taxes Formulario 1040NR, Anexo A (para extranjeros no residentes). Students filing taxes Anexo D. Students filing taxes Formulario 4797. Students filing taxes Para información adicional sobre qué formulario utilizar, vea más adelante la sección sobre Cómo Declarar Pérdidas y Ganancias . Students filing taxes Expropiaciones forzosas. Students filing taxes   Para obtener información sobre expropiaciones forzosas de propiedades, vea el tema Involuntary Conversions (Conversiones involuntarias) en el capítulo 1 de la Publicación 544, Sales and Other Dispositions of Assets (Ventas y otras enajenaciones de activos), en inglés. Students filing taxes Registros para el cálculo de pérdidas por hecho fortuito y robo. Students filing taxes   La Publicación 584SP, Registro de Pérdidas por Hechos Fortuitos (Imprevistos), Desastres y Robos (Propiedad de uso Personal) está a su disposición para ayudarle a hacer una lista de artículos de sus bienes de uso personal que hayan sido robados o dañados y calcular su pérdida. Students filing taxes En dicha publicación se incluyen tablas para ayudarle a calcular el monto de las pérdidas de su vivienda, artículos de la misma y vehículos motorizados. Students filing taxes   La Publicación 584-B, Business Casualty, Disaster, and Theft Loss Workbook (Registro de pérdidas por hechos fortuitos, desastres y robos de propiedad de uso comercial), en inglés puede ayudarle a hacer una lista de artículos que hayan sido robados o dañados en su empresa o bienes de generación de ingresos, y calcular su pérdida. Students filing taxes Comentarios y sugerencias. Students filing taxes   Agradecemos sus comentarios y sugerencias sobre esta publicación para ediciones futuras. Students filing taxes   Puede escribirnos a la siguiente dirección: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Students filing taxes NW, IR-6526 Washington, DC 20224   Contestamos gran parte de correspondencia por teléfono. Students filing taxes Por lo tanto, nos sería útil si en su correspondencia incluye el número telefónico con su código de área donde podemos ubicarlo durante el día. Students filing taxes   Puede enviarnos comentarios a través de www. Students filing taxes irs. Students filing taxes gov/formspubs, pulsando sobre “ Comment on Tax Forms and Publications ” (Comentarios sobre formularios y publicaciones tributarios) bajo el título “ Information about ” (Información sobre), en inglés. Students filing taxes   Aunque no podemos contestar cada uno de los comentarios, agradecemos su opinión y tendremos en cuenta sus comentarios cuando revisemos nuestros productos. Students filing taxes Cómo pedir formularios y publicaciones. Students filing taxes   Visite el sitio web del IRS www. Students filing taxes irs. Students filing taxes gov/espanol y pulse sobre el enlace “Formularios y Publicaciones” para descargar formularios y publicaciones. Students filing taxes Llame al 1-800-829-3676 o escriba a la dirección que aparece a continuación y recibirá respuesta a los 10 días de que el IRS reciba su solicitud: Internal Revenue Service 1201 N. Students filing taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Preguntas sobre los impuestos. Students filing taxes   Si tiene alguna pregunta acerca de sus impuestos, consulte la información disponible en IRS. Students filing taxes gov/espanol o llame al número 1-800-829-1040. Students filing taxes No podemos contestar preguntas sobre impuestos enviadas a las direcciones anteriores. Students filing taxes Useful Items - You may want to see: Publicación 523 Selling Your Home (Venta de su vivienda), en inglés 525 Taxable and Nontaxable Income (Ingresos tributables y no tributables), en inglés 550 Investment Income and Expenses (Ingresos y gastos de inversiones), en inglés 551 Basis of Assets (Base de activos), en inglés 584SP Registro de Pérdidas por Hechos Fortuitos (Imprevistos), Desastres y Robos (Propiedad de Uso Personal) 584-B Business Casualty, Disaster, and Theft Loss Workbook (Registro de pérdidas por hechos fortuitos, desastres y robos comerciales), en inglés  Formulario (e Instrucciones) Anexo A (Formulario 1040) Itemized Deductions (Deducciones detalladas), en inglés Anexo A (Formulario 1040NR) Itemized Deductions (for nonresident aliens) (Deducciones detalladas (para extranjeros no residentes)), en inglés Anexo D (Formulario 1040) Capital Gains and Losses (Pérdidas y ganancias de capital), en inglés 4684 Casualties and Thefts (Hechos fortuitos y robos), en inglés 4797 Sales of Business Property (Ventas de bienes comerciales), en inglés  Para más información sobre cómo obtener publicaciones y formularios, vea la sección Cómo Obtener Ayuda con los Impuestos al final de esta publicación. 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The Students Filing Taxes

Students filing taxes Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. Students filing taxes Proc. Students filing taxes 2013-16 Table of Contents SECTION 1. Students filing taxes PURPOSE SECTION 2. Students filing taxes BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. Students filing taxes BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. Students filing taxes FEDERAL INCOME TAX TREATMENT SECTION 5. Students filing taxes INFORMATION-REPORTING OBLIGATIONS SECTION 6. Students filing taxes HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. Students filing taxes PENALTY RELIEF FOR 2012 SECTION 8. Students filing taxes SCOPE AND EFFECTIVE DATE SECTION 9. Students filing taxes DRAFTING INFORMATION SECTION 1. Students filing taxes PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). Students filing taxes Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). Students filing taxes In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. Students filing taxes Current plans call for HAMP to continue accepting new borrowers through the end of 2013. Students filing taxes The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. Students filing taxes SECTION 2. Students filing taxes BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . Students filing taxes 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Students filing taxes A description of the program can be found at www. Students filing taxes makinghomeaffordable. Students filing taxes gov. Students filing taxes . Students filing taxes 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. Students filing taxes These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. Students filing taxes . Students filing taxes 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. Students filing taxes The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. Students filing taxes However, as noted in section 2. Students filing taxes 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. Students filing taxes (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. Students filing taxes ”) . Students filing taxes 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. Students filing taxes . Students filing taxes 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. Students filing taxes The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. Students filing taxes (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. Students filing taxes ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). Students filing taxes Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. Students filing taxes Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. Students filing taxes . Students filing taxes 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. Students filing taxes (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. Students filing taxes ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. Students filing taxes . Students filing taxes 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). Students filing taxes If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. Students filing taxes These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. Students filing taxes The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. Students filing taxes The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. Students filing taxes For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. Students filing taxes ” . Students filing taxes 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). Students filing taxes . Students filing taxes 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. Students filing taxes 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. Students filing taxes . Students filing taxes 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. Students filing taxes SECTION 3. Students filing taxes BACKGROUND—APPLICABLE PROVISIONS OF LAW . Students filing taxes 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. Students filing taxes See § 61(a)(12). Students filing taxes . Students filing taxes 02 Under § 1. Students filing taxes 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. Students filing taxes In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. Students filing taxes However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. Students filing taxes See § 1. Students filing taxes 1001-3(c)(6). Students filing taxes . Students filing taxes 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. Students filing taxes 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. Students filing taxes If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. Students filing taxes See also § 1. Students filing taxes 61-12(c). Students filing taxes . Students filing taxes 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. Students filing taxes If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. Students filing taxes See, e. Students filing taxes g. Students filing taxes , §§ 1. Students filing taxes 1272-1(c)(5) and 1. Students filing taxes 1274-2(d). Students filing taxes . Students filing taxes 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. Students filing taxes Section 108(a)(1)(E) and 108(a)(1)(B). Students filing taxes (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. Students filing taxes ) . Students filing taxes 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. Students filing taxes . Students filing taxes 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. Students filing taxes See §§ 108(h) and 163(h)(3)(B)(i). Students filing taxes . Students filing taxes 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). Students filing taxes Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. Students filing taxes . Students filing taxes 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. Students filing taxes . Students filing taxes 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. Students filing taxes Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. Students filing taxes . Students filing taxes 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. Students filing taxes See § 108(h)(1). Students filing taxes If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). Students filing taxes See § 108(b). Students filing taxes For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Students filing taxes . Students filing taxes 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). Students filing taxes See Form 982 instructions and Publication 4681. Students filing taxes This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. Students filing taxes . Students filing taxes 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. Students filing taxes See Notice 2003-18, 2003-1 C. Students filing taxes B. Students filing taxes 699, and Rev. Students filing taxes Rul. Students filing taxes 79-356, 1979-2 C. Students filing taxes B. Students filing taxes 28. Students filing taxes However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). Students filing taxes See Rev. Students filing taxes Rul. Students filing taxes 2005-46, 2005-2 C. Students filing taxes B. Students filing taxes 120, and Rev. Students filing taxes Rul. Students filing taxes 75-246, 1975-1 C. Students filing taxes B. Students filing taxes 24. Students filing taxes . Students filing taxes 14 Under § 451 and § 1. Students filing taxes 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. Students filing taxes . Students filing taxes 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. Students filing taxes See § 6041(a) and (d) and § 1. Students filing taxes 6041-1(a)(1) and (b). Students filing taxes . Students filing taxes 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. Students filing taxes See § 6050P(a)-(c) and §§ 1. Students filing taxes 6050P-1(a) and 1. Students filing taxes 6050P-2(a) and (d). Students filing taxes . Students filing taxes 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. Students filing taxes These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. Students filing taxes Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. Students filing taxes ” . Students filing taxes 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. Students filing taxes These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. Students filing taxes Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. Students filing taxes SECTION 4. Students filing taxes FEDERAL INCOME TAX TREATMENT . Students filing taxes 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. Students filing taxes See § 1. Students filing taxes 1001-3. Students filing taxes At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. Students filing taxes See also § 61(a)(12) and § 1. Students filing taxes 61-12(c). Students filing taxes . Students filing taxes 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. Students filing taxes Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. Students filing taxes Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. Students filing taxes . Students filing taxes 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. Students filing taxes Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. Students filing taxes . Students filing taxes 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. Students filing taxes Therefore, for purposes of § 1. Students filing taxes 1001-3, the date of the modification is the date of the permanent modification. Students filing taxes . Students filing taxes 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. Students filing taxes 01 of this revenue procedure for the taxable year in which the permanent modification occurs. Students filing taxes Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. Students filing taxes The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. Students filing taxes . Students filing taxes 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. Students filing taxes . Students filing taxes 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. Students filing taxes This is consistent with Rev. Students filing taxes Rul. Students filing taxes 2009-19, 2009-28 I. Students filing taxes R. Students filing taxes B. Students filing taxes 111, which addressed the treatment of Pay-for-Performance Success Payments. Students filing taxes . Students filing taxes 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. Students filing taxes If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. Students filing taxes . Students filing taxes 09 As described in section 2. Students filing taxes 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. Students filing taxes To the extent that the HAMP-PRA borrower is described in section 4. Students filing taxes 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. Students filing taxes To the extent that the HAMP-PRA borrower is described in section 4. Students filing taxes 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. Students filing taxes SECTION 5. Students filing taxes INFORMATION-REPORTING OBLIGATIONS . Students filing taxes 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. Students filing taxes A copy of this form is required to be furnished to the borrower. Students filing taxes . Students filing taxes 02 As stated in sections 4. Students filing taxes 01 and 4. Students filing taxes 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. Students filing taxes . Students filing taxes 03 An investor is an applicable entity that is required under § 1. Students filing taxes 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. Students filing taxes Under § 1. Students filing taxes 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. Students filing taxes Identifiable events determine when Forms 1099-C have to be issued. Students filing taxes Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. Students filing taxes This rule under § 1. Students filing taxes 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. Students filing taxes . Students filing taxes 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. Students filing taxes That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). Students filing taxes . Students filing taxes 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Students filing taxes 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. Students filing taxes Under § 6041, these payments are not subject to information reporting. Students filing taxes See Notice 2011-14, 2011-11 I. Students filing taxes R. Students filing taxes B. Students filing taxes 544, 546. Students filing taxes . Students filing taxes 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Students filing taxes 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. Students filing taxes The payment is subject to the information reporting requirements of § 6041, as described in section 3. Students filing taxes 15 of this revenue procedure. Students filing taxes Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. Students filing taxes SECTION 6. Students filing taxes HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . Students filing taxes 01 In general. Students filing taxes The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). Students filing taxes As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. Students filing taxes Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. Students filing taxes A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. Students filing taxes 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. Students filing taxes Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. Students filing taxes 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. Students filing taxes . Students filing taxes 02 HAMP-PRA borrower options. Students filing taxes A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. Students filing taxes 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. Students filing taxes If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. Students filing taxes 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. Students filing taxes . Students filing taxes 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. Students filing taxes (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. Students filing taxes (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. Students filing taxes 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. Students filing taxes 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. Students filing taxes This section 6. Students filing taxes 03(2) applies only if the change to reporting the discharge using the method described in section 6. Students filing taxes 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. Students filing taxes To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. Students filing taxes (3) Example. Students filing taxes The following example illustrates the application of section 6. Students filing taxes 03(2) of this revenue procedure. Students filing taxes In 2010, B’s basis in B’s principal residence was $330,000. Students filing taxes In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. Students filing taxes B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). Students filing taxes The trial period plan effective date also fell in 2010. Students filing taxes B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. Students filing taxes 02(2) of this revenue procedure. Students filing taxes That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. Students filing taxes The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. Students filing taxes For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. Students filing taxes 02(1) of this revenue procedure. Students filing taxes Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. Students filing taxes 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). Students filing taxes (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. Students filing taxes 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. Students filing taxes 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. Students filing taxes Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. Students filing taxes 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. Students filing taxes Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. Students filing taxes (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. Students filing taxes 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. Students filing taxes The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. Students filing taxes (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. Students filing taxes The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). Students filing taxes The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. Students filing taxes . Students filing taxes 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. Students filing taxes (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. Students filing taxes Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. Students filing taxes Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. Students filing taxes If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. Students filing taxes (2) A HAMP-PRA borrower who has been using the method described in section 6. Students filing taxes 02(1) of this revenue procedure may change to the method described in section 6. Students filing taxes 02(2) but must comply with the consistency and open-year requirements described in section 6. Students filing taxes 01 of this revenue procedure. Students filing taxes SECTION 7. Students filing taxes PENALTY RELIEF FOR 2012 . Students filing taxes 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. Students filing taxes 03 through 5. Students filing taxes 04 and section 8. Students filing taxes 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. Students filing taxes 01 through 4. Students filing taxes 04 of this revenue procedure) that is required to be reported for 2012. Students filing taxes (2) Not later than March 28, 2013, a statement is sent to the Service. Students filing taxes It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. Students filing taxes 01(1) of this revenue procedure. Students filing taxes The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . Students filing taxes 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. Students filing taxes 06 and 8. Students filing taxes 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. Students filing taxes . Students filing taxes 03 Section 8. Students filing taxes 03 and 8. Students filing taxes 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. Students filing taxes SECTION 8. Students filing taxes SCOPE AND EFFECTIVE DATE . Students filing taxes 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. Students filing taxes . Students filing taxes 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. Students filing taxes . Students filing taxes 03 Because of the effective date in section 8. Students filing taxes 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. Students filing taxes 03 through 5. Students filing taxes 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. Students filing taxes 03 through 5. Students filing taxes 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. Students filing taxes . Students filing taxes 04 Because of the effective date in section 8. Students filing taxes 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. Students filing taxes 06 of this revenue procedure. Students filing taxes SECTION 9. Students filing taxes DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. Students filing taxes Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. Students filing taxes Pflanz and Sheldon A. Students filing taxes Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. Students filing taxes Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). Students filing taxes For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). Students filing taxes Prev  Up  Next   Home   More Internal Revenue Bulletins