Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Students Taxes

1040 Ez 2010 PdfEz Tax ReturnHow To Amend A Tax ReturnWww Freefile Irs Gov1040a Or 1040ezE File 2010 Taxes For FreeH&r Block Ez FormMilitary Tax Returns1040ez Instructions 2012Tax Software 2012Where To File 2011 TaxesTax Form 1040Tax Cut Free FileH&r Block Amended Return 2012Amend 2012 Tax Return FreeAmended 1040ezIrse FileFiling Taxes 2010 OnlineFree 2012 State Tax Filing1040nr Online Filing FreeDo State Taxes FreeIrs Tax 1040ezFree TaxesFile Taxes For Free2011 Irs 1040ezInstructions For 1040x 2012Filing An Amended Tax ReturnFree 2011 TaxFiling For Tax ExtensionFree 1040ez Tax FilingIrs FormsH&r Block LoginTax Forms 2011 FederalH&r Block Free Federal1040ez Form 2012Federal Form 1040x1040 Ez Free FileAarp Tax Help LocationsFiling Taxes MilitaryFile Taxes 2006

Students Taxes

Students taxes Index Symbols 1231 property sale, Sale of property interest. Students taxes 401(k) plans, Elective Deferrals Excess contributions, Excess Contributions 403(b) plans, Elective Deferrals Limit for, Limit for tax-sheltered annuities. Students taxes 457 plans, Elective Deferrals Limit for deferrals under, Limit for deferrals under section 457 plans. Students taxes 501(c)(18)(D) plans, Elective Deferrals Contributions, Section 501(c)(18)(D) contributions. Students taxes 501(c)(3) organizations, Student loans. Students taxes 529 program, Qualified tuition program (QTP). Students taxes 83(b) election, How to make the choice. Students taxes A Academic health centers Meals and lodging when teaching and research organization, Academic health center. Students taxes Accelerated death benefits, Accelerated Death Benefits Accident insurance, Accident or Health Plan Accidental death benefits, Accidental death benefits. Students taxes Accrual method taxpayers, Prepaid income. Students taxes Accrued leave payment At time of retirement or resignation, Accrued leave payment. Students taxes Disability retirement, Accrued leave payment. Students taxes Activity not for profit, Activity not for profit. Students taxes Adoption Employer assistance, Adoption Assistance Advance commissions, Miscellaneous Compensation Aircraft, Flights on employer-provided aircraft. Students taxes Airlines No-additional-cost services, No-Additional-Cost Services Valuation of flights on employer-provided aircraft, Flights on employer-provided aircraft. Students taxes Alaska Permanent Fund dividend, Alaska Permanent Fund dividend. Students taxes Alien status, waiver of, Waiver of alien status. Students taxes Aliens Nonresident, Nonresident aliens. Students taxes Alimony, Alimony. Students taxes Alternative minimum tax (AMT) Recoveries, refiguring of, Subject to alternative minimum tax. Students taxes Stock options, Alternative minimum tax (AMT). Students taxes Annuities Charitable gift, Charitable gift annuities. Students taxes Railroad retirement, Railroad retirement annuities. Students taxes Tax-sheltered, Limit for tax-sheltered annuities. Students taxes Archer MSAs, Archer MSA contributions. Students taxes , Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Students taxes Armed forces, Military Combat zone bonus, Veterans' benefits. Students taxes Disability, Disability. Students taxes Disability pensions, Military and Government Disability Pensions Health professions scholarship, Tuition Reduction Military action as cause of disability injuries, Terrorist attack or military action. Students taxes Qualified reservist distribution, Qualified reservist distribution (QRD). Students taxes Rehabilitative program payments, Veterans' benefits. Students taxes Retirement pay, Military retirement pay. Students taxes Veterans benefits, Veterans' benefits. Students taxes Assistance (see Tax help) Athletic facilities, employer-provided, Athletic Facilities Automobile (see Vehicle, employer-provided) Awards (see Damages from lawsuits) B Babysitting, Babysitting. Students taxes Back pay, award for, Back pay awards. Students taxes Backup withholding Barter exchange transactions, Backup withholding. Students taxes Bankruptcy Canceled debt not deemed to be income, Excluded debt. Students taxes Barter income, Bartering Below-market loans, Below-market loans. Students taxes Bequest for services, Bequest for services. Students taxes Bicycle, Transportation Fringe benefit, Qualified bicycle commuting. Students taxes Black lung benefit payments, Black lung benefit payments. Students taxes Bonuses, Bonuses and awards. Students taxes , Employee awards or bonuses. Students taxes Breach of contract Damages as income, Court awards and damages. Students taxes Bribes, Bribes. Students taxes Business expenses Reimbursements, Allowances and reimbursements. Students taxes Business income, Business and Investment Income, More information. Students taxes C Cafeteria plans, Cafeteria plans. Students taxes Campaign contributions, Campaign contributions. Students taxes Campus lodging, Qualified campus lodging. Students taxes , Moving Expense Reimbursements Cancellation of debt, Canceled Debts Cancellation of sales contracts, Canceled sales contract. Students taxes Capital gains Recoveries, Capital gains. Students taxes , Capital gains. Students taxes Capital gains or losses Employee stock option plans (ESOPs), Option granted at a discount. Students taxes Incentive stock options (ISOs), Incentive stock options (ISOs). Students taxes Sale of personal property, Sale of personal items. Students taxes Car (see Vehicle, employer-provided) Car pools, Car pools. Students taxes Cash or deferred arrangements (CODAs), Elective Deferrals Cash rebates, Cash rebates. Students taxes Casualty insurance Reimbursements from, Casualty insurance and other reimbursements. Students taxes Catch-up contributions, Catch-up contributions. Students taxes , Catch-up contributions. Students taxes Charitable gift annuities, Charitable gift annuities. Students taxes Child and Adult Care Food Program Payments to daycare providers, Food program payments to daycare providers. Students taxes Child support payments, Child support payments. Students taxes Childcare providers, Childcare providers. Students taxes , Food program payments to daycare providers. Students taxes Chronic illness, Chronically ill individual. Students taxes Accelerated death benefits paid to, Exclusion for chronic illness. Students taxes Citizens outside U. Students taxes S. Students taxes Exclusion of foreign income, Reminders Civil Rights Act of 1964, Title VII Back pay and damages for emotional distress under, Court awards and damages. Students taxes Clergy, Clergy Coal, Coal and iron ore. Students taxes Colleges and universities Faculty lodging, Faculty lodging. Students taxes Scholarships and fellowships, Scholarships and fellowships. Students taxes Commissions Advance, Miscellaneous Compensation Commuter highway vehicles, Transportation Compensation Employee, Employee Compensation Miscellaneous, Miscellaneous Compensation Unemployment, Unemployment compensation. Students taxes Workers', Workers' Compensation Compensatory damages, Other compensation. Students taxes , Court awards and damages. Students taxes Constructive receipt of income, Constructively received income. Students taxes Copyrights Infringement damages, Court awards and damages. Students taxes Royalties, Copyrights and patents. Students taxes Corporate directors, Corporate director. Students taxes Cost-of-living allowances, Government cost-of-living allowances. Students taxes Court awards, Court awards and damages. Students taxes (see also Damages from lawsuits) Credit card Insurance, Credit card insurance. Students taxes Credits Recoveries, refiguring of unused credits, Unused tax credits. Students taxes , Unused tax credits. Students taxes Currency transactions, foreign, Foreign currency transactions. Students taxes D Damages from lawsuits, Court awards and damages. Students taxes Back pay awards, Back pay awards. Students taxes Breach of contract, Court awards and damages. Students taxes Compensatory damages, Other compensation. Students taxes , Court awards and damages. Students taxes Emotional distress under Title VII, Civil Rights Act of 1964, Court awards and damages. Students taxes Punitive damages, Court awards and damages. Students taxes Daycare providers, Childcare providers. Students taxes (see also Childcare providers) Food program payments to, Food program payments to daycare providers. Students taxes De minimis benefits, De Minimis (Minimal) Benefits, Meals and Lodging Death benefits, Proceeds not received in installments. Students taxes (see also Life insurance) Accelerated, Accelerated Death Benefits Debts Canceled, Canceled Debts Excluded debt, Excluded debt. Students taxes Nonrecourse debts, Mortgage relief upon sale or other disposition. Students taxes Recourse, Mortgage relief upon sale or other disposition. Students taxes Stockholder's, Stockholder debt. Students taxes Deduction Costs of discrimination suits, Deduction for costs involved in unlawful discrimination suits. Students taxes Deferred compensation Nonqualified plans, Nonqualified deferred compensation plans. Students taxes , Nonqualified deferred compensation plans of nonqualified entities. Students taxes Dependent care benefits, Dependent Care Benefits Depletion allowance, Depletion. Students taxes Differential wage payments, Differential wage payments. Students taxes Armed forces, Differential wage payments. Students taxes Directors' fees, Corporate director. Students taxes Disability Military, Disability. Students taxes Pensions, Disability Pensions Workers' compensation, Disability pension. Students taxes Person with, Persons with disabilities. Students taxes Unemployment compensation, paid as substitute for, Types of unemployment compensation. Students taxes Disaster relief Disaster mitigation payments, Disaster mitigation payments. Students taxes Disaster Relief and Emergency Assistance Act Grants, Disaster relief grants. Students taxes Unemployment benefits, Unemployment Benefits Mitigation payments, Reminders Payments, Disaster relief payments. Students taxes Discounts Employee discounts, Employee Discounts Employee stock purchase plans, Option granted at a discount. Students taxes Mortgage loan for early payment, Discounted mortgage loan. Students taxes Dividends Restricted stock, Dividends received on restricted stock. Students taxes Divorced taxpayers Stock options exercised incident to divorce, Tax form. Students taxes Down payment assistance, Down payment assistance. Students taxes E Educational assistance Employer-provided, Educational Assistance Scholarships and fellowships, Scholarships and fellowships. Students taxes Educational institutions Faculty lodging, Faculty lodging. Students taxes Elderly persons Nutrition Program for the Elderly, Nutrition Program for the Elderly. Students taxes Tax Counseling for the Elderly, Volunteer tax counseling. Students taxes Election precinct officials, Election precinct official. Students taxes Elective deferrals, Elective Deferrals Catch-up contributions, Catch-up contributions. Students taxes , Catch-up contributions. Students taxes Excess annual additions, Excess Annual Additions Excess contributions, Excess Contributions Excess deferrals, Excess deferrals. Students taxes Increased limit for last 3 years prior to retirement age, Increased limit. Students taxes Limit on, Elective Deferrals Reporting by employer, Reporting by employer. Students taxes Emergency Homeowners' Loan Program, Hardest Hit Fund and Emergency Homeowners' Loan Program. Students taxes Emotional distress damages, Emotional distress. Students taxes Employee achievement awards, Employee achievement award. Students taxes Employee awards or bonuses, Employee awards or bonuses. Students taxes Employee compensation, Employee Compensation, Inherited property not substantially vested. Students taxes Fringe benefits, Fringe Benefits, Special valuation rules. Students taxes Restricted property, Restricted Property, Inherited property not substantially vested. Students taxes Retirement plan contributions, Retirement Plan Contributions Stock options, Stock Options, Statutory Stock Options Employee discounts, Employee Discounts Employee stock purchase plans, Statutory Stock Options, Employee stock purchase plan. Students taxes Employer, foreign, Foreign Employer Employer-owned life insurance, Employer-owned life insurance contract. Students taxes Employer-provided Educational assistance, Educational Assistance Vehicles, Employer-provided vehicles. Students taxes Employment Abroad, Employment abroad. Students taxes Agency fees, Employment agency fees. Students taxes Contracts Severance pay for cancellation of, Severance pay. Students taxes Endowment proceeds, Endowment Contract Proceeds Energy Assistance, Payments to reduce cost of winter energy. Students taxes Conservation Subsidies, Energy conservation subsidies. Students taxes Utility rebates, Utility rebates. Students taxes Estate income, Estate and trust income. Students taxes Estimated tax Unemployment compensation, Tax withholding. Students taxes Excess Annual additions, Excess Annual Additions Contributions, Excess Contributions Deferrals, Excess deferrals. Students taxes Expected inheritance, Expected inheritance. Students taxes Expenses paid by another, Expenses paid by another. Students taxes Exxon Valdez settlement, Exxon Valdez settlement income. Students taxes Eligible retirement plan, Contributions to eligible retirement plan. Students taxes Income averaging, Income averaging. Students taxes Legal expenses, Legal expenses. Students taxes Reporting requirement-statement, Statement. Students taxes F Faculty lodging, Faculty lodging. Students taxes Fair market value (FMV), Fair market value. Students taxes Stock options, Grant of option. Students taxes Farming Qualified farm debt, cancellation of, Excluded debt. Students taxes Federal employees Accrued leave payment, Accrued leave payment. Students taxes Cost-of-living allowances, Government cost-of-living allowances. Students taxes Disability pensions, Military and Government Disability Pensions Thrift Savings Plan for, Elective Deferrals Federal Employees Compensation Act (FECA) payments, Federal Employees' Compensation Act (FECA). Students taxes Federal income tax Refunds, Federal income tax refund. Students taxes Fees for services, Fees for services. Students taxes Financial counseling fees, Financial Counseling Fees Fellowships, Scholarships and fellowships. Students taxes FICA withholding Foreign employers, U. Students taxes S. Students taxes citizens working for in U. Students taxes S. Students taxes , Social security and Medicare taxes. Students taxes Paid by employer, Social security and Medicare taxes paid by employer. Students taxes Fiduciaries Fees for services, Fees for services. Students taxes , Personal representatives. Students taxes Financial counseling fees, Financial Counseling Fees (see also Retirement planning services) Fitness programs Employer-provided, Athletic Facilities Flights Employer-provided aircraft, Flights on employer-provided aircraft. Students taxes No-additional-cost services, No-Additional-Cost Services Food benefits Daycare providers, food program payments to, Food program payments to daycare providers. Students taxes Nutrition Program for the Elderly, Nutrition Program for the Elderly. Students taxes Foreign Currency transactions, Foreign currency transactions. Students taxes Employment, Foreign Employer Governments, employees of, Employees of international organizations or foreign governments. Students taxes Income, Reminders Service, Service-connected disability. Students taxes Form 1040 Excess contributions to elective deferrals, Excess Contributions Recoveries, Where to report. Students taxes Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1040 or 1040A, Schedule B Restricted stock dividends, Stock you chose to include in your income. Students taxes Form 1040, Schedule A Outplacement services, deduction for, Outplacement services. Students taxes Repayment of commissions paid in advance, Advance commissions and other earnings. Students taxes Form 1040, Schedule C Bartering, Bartering Childcare providers to use, Childcare providers. Students taxes Personal property rental, reporting income from, Reporting business income and expenses. Students taxes Royalties, Royalties Form 1040, Schedule C-EZ Bartering, Bartering Childcare Providers to use, Childcare providers. Students taxes Personal property rental, reporting income from, Reporting business income and expenses. Students taxes Royalties, Royalties Form 1040, Schedule D Stock options, Sale of the stock. Students taxes Stock options reported on, Statutory Stock Options Form 1040, Schedule E Partner's return, Partner's return. Students taxes Royalties, Royalties Form 1040A Recoveries, Where to report. Students taxes Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1040EZ Recoveries, Where to report. Students taxes Unemployment compensation, Unemployment Benefits Wages from Form W-2, Employee Compensation Form 1041 Estates and trusts, Estate and trust income. Students taxes Form 1041, Schedule K-1 Beneficiary's share of income, deductions, credits, etc. Students taxes , Estate and trust income. Students taxes Form 1065 Partnership return, Partnership return. Students taxes Form 1065, Schedule K-1 Partner's share of income, Schedule K-1 (Form 1065). Students taxes , Partnership Income Form 1098 Mortgage interest statement, Mortgage interest refund. Students taxes Form 1099-B Barter exchange transactions, Form 1099-B from barter exchange. Students taxes , Backup withholding. Students taxes Form 1099-C Cancellation of debt, Form 1099-C. Students taxes Form 1099-DIV Restricted stock dividends, Stock you chose to include in your income. Students taxes Form 1099-G State tax refunds, State tax refund. Students taxes Unemployment compensation, Unemployment Benefits Form 1099-MISC Services totaling $600 or more, Fees for services. Students taxes Stock options exercised incident to divorce, Tax form. Students taxes Form 1099-R Charitable gift annuities, Charitable gift annuities. Students taxes Excess annual additions, Excess Annual Additions Excess deferral amounts, Excess distributed to you. Students taxes Surrender of life insurance policy for cash, Surrender of policy for cash. Students taxes Form 1120-POL Political organizations, Campaign contributions. Students taxes Form 1120S S corporation return, S corporation return. Students taxes Form 1120S, Schedule K-1 Shareholder's share of income, credits, deductions, etc. Students taxes , Schedule K-1 (Form 1120S). Students taxes Form 2441 Child and dependent care expenses, Dependent Care Benefits Form 4255 Recapture of investment credit, Amounts Recovered for Credits Form 6251 Alternative minimum tax, Alternative minimum tax (AMT). Students taxes Form 8839 Adoption assistance, Adoption Assistance Form 8853 Accelerated death benefits, Form 8853. Students taxes Archer MSAs and long-term care insurance contracts, Archer MSA contributions. Students taxes Form 8919 Uncollected social security and Medicare tax on wages, Employee Compensation Form RRB-1099 Railroad retirement board payments, Form RRB-1099. Students taxes Form SSA-1099 Social security benefit statement, Form SSA-1099. Students taxes Form W-2 501(c)(18)(D) contributions, Section 501(c)(18)(D) contributions. Students taxes Accrued leave payment at time of retirement or resignation, Accrued leave payment. Students taxes Back pay awards, Back pay awards. Students taxes Bonuses or awards, Bonuses and awards. Students taxes Elective deferrals, reporting by employer, Reporting by employer. Students taxes Failure to receive from employer, Employee Compensation Fringe benefits reported on, Form W-2. Students taxes Stock options from employers, Tax form. Students taxes Wage and tax statement, Employee Compensation Form W-2G Gambling winnings, Form W-2G. Students taxes Form W-4V Unemployment compensation, voluntary withholding request, Tax withholding. Students taxes Form W-9 Request for taxpayer identification number, Backup withholding. Students taxes Foster care, Foster care providers. Students taxes Foster Grandparent Program, National Senior Service Corps programs. Students taxes Found property, Found property. Students taxes Free tax services, Free help with your tax return. Students taxes Fringe benefits, Fringe Benefits, Special valuation rules. Students taxes Accident and health insurance, Accident or Health Plan Adoption, employer assistance, Adoption Assistance Athletic facilities, Athletic Facilities Commuter highway vehicles, Transportation De minimis benefits, De Minimis (Minimal) Benefits, Meals and Lodging Dependent care benefits, Dependent Care Benefits Educational assistance, Educational Assistance Employee discounts, Employee Discounts Faculty lodging, Faculty lodging. Students taxes Financial counseling fees, Financial Counseling Fees Holiday gifts, Holiday gifts. Students taxes Meals and lodging, Meals and Lodging Moving expenses (see Moving expenses) No-additional-cost services, No-Additional-Cost Services Parking, Transportation Retirement planning (see Retirement planning services) Transit pass, Transportation, Transit pass. Students taxes Tuition reduction, Tuition Reduction Valuation of, Valuation of Fringe Benefits, Special valuation rules. Students taxes Vehicle, Employer-provided vehicles. Students taxes Working condition benefits, Working Condition Benefits Frozen deposits Interest on, Interest on frozen deposits. Students taxes G Gambling winnings and losses, Gambling winnings. Students taxes Gas Royalties from, Oil, gas, and minerals. Students taxes Gifts, Gifts and inheritances. Students taxes Holiday gifts from employer, Holiday gifts. Students taxes Government employees (see Federal employees; State employees) Grantor trusts, Grantor trust. Students taxes Group-term life insurance Worksheets, Figuring the taxable cost. Students taxes , Worksheet 1. Students taxes Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated Gulf oil spill, Reminders, Gulf oil spill. Students taxes H HAMP Home affordable modification program Pay-for-performance success payments, Home Affordable Modification Program (HAMP). Students taxes Hardest Hit Fund Program, Hardest Hit Fund and Emergency Homeowners' Loan Program. Students taxes Health Flexible spending arrangement, Health flexible spending arrangement (health FSA). Students taxes Insurance, Accident or Health Plan Reimbursement arrangement, Health reimbursement arrangement (HRA). Students taxes Savings account, Health savings accounts (HSA). Students taxes Help (see Tax help) Highly compensated employees Excess contributions to elective deferrals, Excess Contributions Historic preservation grants, Historic preservation grants. Students taxes Hobby losses, Hobby losses. Students taxes Holding period requirement, Holding period requirement. Students taxes Holiday gifts, Holiday gifts. Students taxes Holocaust victims restitution, Holocaust victims restitution. Students taxes Home, sale of, Sale of home. Students taxes Host or hostess, Host or Hostess Hotels No-additional-cost services, No-Additional-Cost Services Housing (see Lodging) I Illegal activities, Illegal activities. Students taxes Incentive stock options (ISOs), Statutory Stock Options, Incentive stock options (ISOs). Students taxes Income Assigned, Assignment of income. Students taxes Business and investment, Business and Investment Income, More information. Students taxes Constructive receipt of, Constructively received income. Students taxes Estate and trust, Estate and trust income. Students taxes Foreign employers, Foreign Employer Illegal, Illegal activities. Students taxes Miscellaneous, Miscellaneous Income Other, Other Income Partnership, Partnership Income Prepaid, Prepaid income. Students taxes S corporation, S Corporation Income Indian fishing rights, Indian fishing rights. Students taxes Indian money account, Indian money account litigation settlement. Students taxes Individual retirement arrangements (IRAs) Deduction, Benefits may affect your IRA deduction. Students taxes Inherited IRA, Inherited pension or IRA. Students taxes Inheritance, Gifts and inheritances. Students taxes IRA, Inherited pension or IRA. Students taxes Property not substantially vested, Inherited property not substantially vested. Students taxes Injury benefits, Sickness and Injury Benefits, Reimbursement for medical care. Students taxes Insurance Credit card, Credit card insurance. Students taxes Health, Accident or Health Plan Life (see Life insurance) Long-term care (see Long-term care insurance) Interest Canceled debt including, Interest included in canceled debt. Students taxes Frozen deposits, Interest on frozen deposits. Students taxes Mortgage refunds, Mortgage interest refund. Students taxes Option on insurance, Interest option on insurance. Students taxes Recovery amounts, Interest on recovery. Students taxes Savings bond, Interest on qualified savings bonds. Students taxes State and local government obligations, Interest on state and local government obligations. Students taxes Interference with business operations Damages as income, Court awards and damages. Students taxes International organizations, employees of, Foreign Employer Interview expenses, Job interview expenses. Students taxes Investment counseling fees, Financial Counseling Fees (see also Retirement planning services) Investment income, Business and Investment Income, More information. Students taxes IRAs (see Individual retirement arrangements (IRAs)) Iron ore, Coal and iron ore. Students taxes Itemized deductions Limited, Itemized deductions limited. Students taxes Recoveries, Recoveries, Itemized Deduction Recoveries J Job interview expenses, Job interview expenses. Students taxes Joint returns Social security benefits or railroad retirement payments, Joint return. Students taxes Joint state/local tax return Recoveries, Joint state or local income tax return. Students taxes Jury duty pay, Jury duty. Students taxes K Kickbacks, Kickbacks. Students taxes L Labor unions Convention expenses, reimbursed, Reimbursed union convention expenses. Students taxes Dues, Union benefits and dues. Students taxes Strike and lockout benefits, Strike and lockout benefits. Students taxes Unemployment benefits paid from, Payments by a union. Students taxes Last day of tax year, income received on, Constructively received income. Students taxes Leave (see Accrued leave payment) Length-of-service awards, Employee achievement award. Students taxes Life insurance Employer-owned, Employer-owned life insurance contract. Students taxes Proceeds, Life Insurance Proceeds Surrender of policy for cash, Surrender of policy for cash. Students taxes Loans, Discounted mortgage loan. Students taxes (see also Mortgage) Below-market, Below-market loans. Students taxes Student, Student loans. Students taxes Lockout benefits, Strike and lockout benefits. Students taxes Lodging Campus lodging, Qualified campus lodging. Students taxes , Moving Expense Reimbursements Clergy, Housing Employer-paid or reimbursed, Meals and Lodging Faculty lodging, Faculty lodging. Students taxes Replacement housing payments, Replacement housing payments. Students taxes Long-term care insurance, Long-term care coverage. Students taxes , Long-Term Care Insurance Contracts Lotteries and raffles, Lotteries and raffles. Students taxes Lump-sum distributions Survivor benefits, Lump-sum payments. Students taxes M Manufacturer incentive payments, Manufacturer incentive payments. Students taxes Meals Employer-paid or reimbursed, Meals and Lodging Nutrition Program for the Elderly, Nutrition Program for the Elderly. Students taxes Medical Care reimbursements, Reimbursement for medical care. Students taxes Savings accounts, Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Students taxes Medicare Advantage MSAs, Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Students taxes Benefits, Medicare. Students taxes Tax paid by employer, Social security and Medicare taxes paid by employer. Students taxes Medicare tax (see Social security and Medicare taxes) Military (see Armed forces) Minerals Royalties from, Oil, gas, and minerals. Students taxes Miscellaneous Compensation, Miscellaneous Compensation Income, Miscellaneous Income Missing children, photographs of, Reminders Mortgage Assistance payment (under sec. Students taxes 235 of National Housing Act), Mortgage assistance payments under section 235 of the National Housing Act. Students taxes Discounted loan, Discounted mortgage loan. Students taxes Interest refund, Mortgage interest refund. Students taxes Qualified principal residence indebtedness, Qualified principal residence indebtedness (QPRI). Students taxes Relief, Mortgage relief upon sale or other disposition. Students taxes Motor vehicle, employer-provided, Employer-provided vehicles. Students taxes Moving expenses Reimbursements, Allowances and reimbursements. Students taxes , Moving expense reimbursements. Students taxes MSAs (Medical savings accounts), Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Students taxes N National Health Service Corps Scholarship Program, Tuition Reduction National Oceanic and Atmospheric Administration, Service-connected disability. Students taxes National Senior Service Corps, National Senior Service Corps programs. Students taxes No-additional-cost services, No-Additional-Cost Services No-fault car insurance Disability benefits under, Other compensation. Students taxes Nobel prize, Pulitzer, Nobel, and similar prizes. Students taxes Nonrecourse debt, Mortgage relief upon sale or other disposition. Students taxes Nonstatutory stock options, Nonstatutory Stock Options Nontaxable income, Introduction Not-for-profit activities, Activity not for profit. Students taxes Notary fees, Notary public. Students taxes Notes received for services, Note received for services. Students taxes Nutrition Program for the Elderly, Nutrition Program for the Elderly. Students taxes O Oil Royalties from, Oil, gas, and minerals. Students taxes Old-age, survivors, and disability insurance benefits (OASDI), Old-age, survivors, and disability insurance benefits (OASDI). Students taxes Options, stock, Stock Options, Statutory Stock Options Outplacement services, Outplacement services. Students taxes Overseas work, Reminders P Parking fees Employer-paid or reimbursed, Transportation, Qualified parking. Students taxes Partner and partnership income, Partnership Income Patents Infringement damages, Court awards and damages. Students taxes Royalties, Copyrights and patents. Students taxes Peace Corps, Peace Corps. Students taxes Pensions Clergy, Pension. Students taxes Disability pensions, Disability Pensions Inherited pensions, Inherited pension or IRA. Students taxes Military, Military retirement pay. Students taxes Personal property Rental income and expense, Rents From Personal Property Sale of, Sale of personal items. Students taxes Personal representatives (see Fiduciaries) Prepaid income, Prepaid income. Students taxes Price reduced after purchase, Price reduced after purchase. Students taxes Prizes and awards, Bonuses and awards. Students taxes , Prizes and awards. Students taxes Achievement awards, Employee achievement award. Students taxes Employee awards or bonuses, Employee awards or bonuses. Students taxes Length-of-service awards, Employee achievement award. Students taxes Pulitzer, Nobel, and similar prizes, Pulitzer, Nobel, and similar prizes. Students taxes Safety achievement, Employee achievement award. Students taxes Scholarship prizes, Prizes. Students taxes Profit-sharing plan, Retirement and profit-sharing plans. Students taxes Public assistance benefits, Welfare and Other Public Assistance Benefits Public Health Service, Service-connected disability. Students taxes Public safety officers killed in line of duty, Public safety officer killed in the line of duty. Students taxes Public transportation passes, employer-provided, Transportation, Transit pass. Students taxes Publications (see Tax help) Pulitzer prize, Pulitzer, Nobel, and similar prizes. Students taxes Punitive damages, Court awards and damages. Students taxes Q Qualified joint venture, Reminders Qualified tuition program (QTP), Qualified tuition program (QTP). Students taxes R Raffles, Lotteries and raffles. Students taxes Railroad Retirement annuities, Railroad retirement annuities. Students taxes Retirement benefits, Social security and equivalent railroad retirement benefits. Students taxes Sick pay, Railroad sick pay. Students taxes Unemployment compensation benefits, Types of unemployment compensation. Students taxes Real estate Qualified real property business debt, cancellation of, Excluded debt. Students taxes Rebates Cash, Cash rebates. Students taxes Utility, Utility rebates. Students taxes Recovery of amounts previously deducted, Recoveries, Standard deduction for earlier years. Students taxes Itemized deductions, Recoveries, Itemized Deduction Recoveries Non-itemized deductions, Non-Itemized Deduction Recoveries Unused tax credits, refiguring of, Unused tax credits. Students taxes , Unused tax credits. Students taxes Refunds Federal income tax, Federal income tax refund. Students taxes Mortgage interest, Mortgage interest refund. Students taxes State tax, State tax refund. Students taxes Rehabilitative program payments, Veterans' benefits. Students taxes Reimbursements Business expenses, Allowances and reimbursements. Students taxes Casualty losses, Casualty insurance and other reimbursements. Students taxes Meals and lodging, Meals and Lodging Medical expenses, Reimbursement for medical care. Students taxes Moving expenses, Allowances and reimbursements. Students taxes , Moving expense reimbursements. Students taxes Related party transactions Stock option transfer, Transfer in non-arm's-length transaction. Students taxes Religious order members, Members of Religious Orders Rental income and expenses Personal property rental, Rents From Personal Property Reporting of, Reporting business income and expenses. Students taxes Repayments, Repayments, Year of deduction (or credit). Students taxes Repossession, Canceled sales contract. Students taxes Restricted property, Restricted Property, Inherited property not substantially vested. Students taxes Retired Senior Volunteer Program (RSVP), National Senior Service Corps programs. Students taxes Retirement Settlement, Reminders Retirement planning services, Financial Counseling Fees, Retirement Planning Services Retirement plans, Military retirement pay. Students taxes (see also Pensions) Automatic contribution arrangements, Qualified automatic contribution arrangements. Students taxes Contributions, Retirement Plan Contributions, Excess Annual Additions, Statutory Stock Options Elective deferrals (see Elective deferrals) Rewards, Rewards. Students taxes Roth contributions, Designated Roth contributions. Students taxes Royalties, Royalties S S corporations, S Corporation Income Safety achievement awards, Employee achievement award. Students taxes Salary reduction simplified employee pension plans (see SARSEPs) Sale of home, Sale of home. Students taxes Sales contracts Cancellation of, Canceled sales contract. Students taxes SARSEPs, Elective Deferrals Excess contributions, Excess Contributions Savings bonds, Interest on qualified savings bonds. Students taxes Savings incentive match plans for employees (see SIMPLE plans) Scholarships and fellowships, Scholarships and fellowships. Students taxes Self-employed persons U. Students taxes S. Students taxes citizens working for foreign employers in U. Students taxes S. Students taxes treated as, Social security and Medicare taxes. Students taxes Senior Companion Program, National Senior Service Corps programs. Students taxes Service Corps of Retired Executives (SCORE), Service Corps of Retired Executives (SCORE). Students taxes Severance pay, Severance pay. Students taxes Outplacement services, Outplacement services. Students taxes Sick pay, Sick pay. Students taxes Sickness and injury benefits, Sickness and Injury Benefits, Reimbursement for medical care. Students taxes SIMPLE plans, Elective Deferrals Limit for deferrals under, Limit for deferrals under SIMPLE plans. Students taxes Smallpox vaccine injuries, Smallpox vaccine injuries. Students taxes Social security and Medicare taxes Foreign employers, U. Students taxes S. Students taxes citizens working for in U. Students taxes S. Students taxes , Social security and Medicare taxes. Students taxes Paid by employer, Social security and Medicare taxes paid by employer. Students taxes Social security benefits, Social security and equivalent railroad retirement benefits. Students taxes Standard deduction Recoveries, Standard deduction limit. Students taxes , Standard deduction for earlier years. Students taxes State employees Unemployment benefits paid to, State employees. Students taxes State or local governments Interest on obligations of, Interest on state and local government obligations. Students taxes State or local taxes Refunds, State tax refund. Students taxes Statutory stock option holding period, Sale of the stock. Students taxes Stock appreciation rights, Stock appreciation rights. Students taxes Stock options, Stock Options, Statutory Stock Options Stock options, nonstatutory Exercise or transfer, Exercise or transfer of option. Students taxes Grant, Grant of option. Students taxes Sale, Sale of the stock. Students taxes Stock options, statutory Exercise, Exercise of option. Students taxes Grant, Grant of option. Students taxes Sale, Sale of the stock. Students taxes Stockholder debts, Stockholder debt. Students taxes Stolen property, Stolen property. Students taxes Strike benefits, Strike and lockout benefits. Students taxes Student loans Cancellation of debt, Student loans. Students taxes Substantial risk of forfeiture, Substantial risk of forfeiture. Students taxes Substantially vested property, Substantially vested. Students taxes Supplemental security income (SSI) payments, Social security and equivalent railroad retirement benefits. Students taxes Supplemental unemployment benefits, Supplemental unemployment benefits. Students taxes Surviving spouse Life insurance proceeds paid to, Surviving spouse. Students taxes Survivor benefits, Survivor Benefits T Tables and figures Group-term life insurance (Table 1), Group-Term Life Insurance Tax benefit rule, Tax benefit rule. Students taxes Tax Counseling for the Elderly, Volunteer tax counseling. Students taxes Tax help, How To Get Tax Help Tax-sheltered annuity plans (403(b) plans), Elective Deferrals Limit for, Limit for tax-sheltered annuities. Students taxes Terminal illness, Exclusion for terminal illness. Students taxes Terrorist attacks Disability payments for injuries from, Terrorist attack or military action. Students taxes Victims of, tax relief, Reminders Thrift Savings Plan, Elective Deferrals Title VII, Civil Rights Act of 1964 Back pay and damages for emotional distress under, Court awards and damages. Students taxes Tour guides, free tours for, Free tour. Students taxes Trade Act of 1974 Trade readjustment allowances under, Types of unemployment compensation. Students taxes , Repayment of benefits. Students taxes Transferable property, Transferable property. Students taxes Transit passes, Transportation, Transit pass. Students taxes Travel agencies Free tour to organizer of group of tourists, Free tour. Students taxes Travel and transportation expenses Free tours from travel agencies, Free tour. Students taxes Fringe benefits, Transportation Reimbursements, Allowances and reimbursements. Students taxes School children, transporting of, Transporting school children. Students taxes Trusts Grantor trusts, Grantor trust. Students taxes Income, Estate and trust income. Students taxes Tuition program, qualified (QTP), Qualified tuition program (QTP). Students taxes Tuition reduction, Tuition Reduction U Unemployment compensation, Unemployment Benefits Unions (see Labor unions) Unlawful discrimination suits Deduction for costs, Deduction for costs involved in unlawful discrimination suits. Students taxes V VA payments, VA payments. Students taxes Valuation Fringe benefits, Valuation of Fringe Benefits, Special valuation rules. Students taxes Stock options, Nonstatutory Stock Options Vehicle Commuter highway, Commuter highway vehicle. Students taxes Employer-provided, Employer-provided vehicles. Students taxes Veterans benefits, Veterans' benefits. Students taxes Disability compensation, Retroactive VA determination. Students taxes Retroactive VA determination, Retroactive VA determination. Students taxes Special statute of limitations. Students taxes , Special statute of limitations. Students taxes Viatical settlements, Viatical settlement. Students taxes Volunteer work, Volunteers Tax counseling (Volunteer Income Tax Assistance Program), Volunteer tax counseling. Students taxes Volunteers in Service to America (VISTA), Volunteers in Service to America (VISTA). Students taxes W W-2 form (see Form W-2) Welfare benefits, Welfare and Other Public Assistance Benefits Whistleblower, Whistleblower's award. Students taxes Winter energy payments, Payments to reduce cost of winter energy. Students taxes Withholding Barter exchange transactions, Backup withholding. Students taxes Unemployment compensation, Tax withholding. Students taxes Work-training programs, Work-training program. Students taxes Workers' compensation, Workers' Compensation Working condition benefits, Working Condition Benefits Worksheets Group-term life insurance (Worksheet 1), Figuring the taxable cost. Students taxes , Worksheet 1. Students taxes Figuring the Cost of Group-Term Life Insurance To Include in Income—Illustrated Prev  Up     Home   More Online Publications
Print - Click this link to Print this page

Contact Your Local Taxpayer Advocate

The Taxpayer Advocate Service is your voice at the IRS. Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Remember, the worst thing you can do is nothing at all.

TAS can help if you can’t resolve your problem with the IRS and:

  • Your problem is causing financial difficulties for you, your family, or your business.
  • You face (or your business is facing) an immediate threat of adverse action.
  • You’ve tried repeatedly to contact the IRS but no one has responded to you, or the IRS hasn’t responded by the date promised.

If you qualify for our help, we’ll do everything we can to get your problem resolved. You'll be assigned to one advocate who will be with you at every turn. Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved.

As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Our tax toolkit can help you understand these rights.
 


Here’s how to reach your local Taxpayer Advocate Service office:

There’s also a list of offices in Publication 1546 ( English, Spanish), Taxpayer Advocate Service–Your Voice at the IRS
 

Virtual Tax Help

Need help but don’t have a Taxpayer Advocate Service office near you?  We have a new option!  TAS now offers help through video conferencing.  

How does this work?

You can go to a location in one of the cities listed below and use high-definition two-way video conferencing to get face-to-face help from a taxpayer advocate in another city.  Similar to talking to a case advocate in person, this allows you to discuss your tax matters in a private setting.

Available cities:

Toll-Free Assistance
You can also call this toll-free number to find out if TAS can help you: 1-877-777-4778 or TTY/TTD: 1-800-829-4059. 

You can file Form 911, Request for Taxpayer Advocate Service Assistance, with the Taxpayer Advocate Service, or ask an IRS employee to complete the form on your behalf. Fax or mail the form to your Local Taxpayer Advocate.

 

 

Page Last Reviewed or Updated: 14-Mar-2014

The Students Taxes

Students taxes Publication 541 - Main Content Table of Contents Forming a PartnershipOrganizations Classified as Partnerships Family Partnership Partnership Agreement Terminating a PartnershipIRS e-file (Electronic Filing) Exclusion From Partnership Rules Partnership Return (Form 1065) Partnership DistributionsSubstantially appreciated inventory items. Students taxes Partner's Gain or Loss Partner's Basis for Distributed Property Transactions Between Partnership and PartnersGuaranteed Payments Sale or Exchange of Property Contribution of Property Contribution of Services Basis of Partner's InterestAdjusted Basis Effect of Partnership Liabilities Disposition of Partner's InterestSale, Exchange, or Other Transfer Payments for Unrealized Receivables and Inventory Items Liquidation at Partner's Retirement or Death Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)Partnership Item. Students taxes Small Partnerships and the Small Partnership Exception Small Partnership TEFRA Election Role of Tax Matters Partner (TMP) in TEFRA Proceedings Statute of Limitations and TEFRA Amended Returns and Administrative Adjustment Requests (AARs) How To Get Tax Help Forming a Partnership The following sections contain general information about partnerships. Students taxes Organizations Classified as Partnerships An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if its members carry on a trade, business, financial operation, or venture and divide its profits. Students taxes However, a joint undertaking merely to share expenses is not a partnership. Students taxes For example, co-ownership of property maintained and rented or leased is not a partnership unless the co-owners provide services to the tenants. Students taxes The rules you must use to determine whether an organization is classified as a partnership changed for organizations formed after 1996. Students taxes Organizations formed after 1996. Students taxes   An organization formed after 1996 is classified as a partnership for federal tax purposes if it has two or more members and it is none of the following. Students taxes An organization formed under a federal or state law that refers to it as incorporated or as a corporation, body corporate, or body politic. Students taxes An organization formed under a state law that refers to it as a joint-stock company or joint-stock association. Students taxes An insurance company. Students taxes Certain banks. Students taxes An organization wholly owned by a state, local, or foreign government. Students taxes An organization specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships). Students taxes Certain foreign organizations identified in section 301. Students taxes 7701-2(b)(8) of the regulations. Students taxes A tax-exempt organization. Students taxes A real estate investment trust. Students taxes An organization classified as a trust under section 301. Students taxes 7701-4 of the regulations or otherwise subject to special treatment under the Internal Revenue Code. Students taxes Any other organization that elects to be classified as a corporation by filing Form 8832. Students taxes For more information, see the instructions for Form 8832. Students taxes Limited liability company. Students taxes   A limited liability company (LLC) is an entity formed under state law by filing articles of organization as an LLC. Students taxes Unlike a partnership, none of the members of an LLC are personally liable for its debts. Students taxes An LLC may be classified for federal income tax purposes as either a partnership, a corporation, or an entity disregarded as an entity separate from its owner by applying the rules in Regulations section 301. Students taxes 7701-3. Students taxes See Form 8832 and section 301. Students taxes 7701-3 of the regulations for more details. Students taxes A domestic LLC with at least two members that does not file Form 8832 is classified as a partnership for federal income tax purposes. Students taxes Organizations formed before 1997. Students taxes   An organization formed before 1997 and classified as a partnership under the old rules will generally continue to be classified as a partnership as long as the organization has at least two members and does not elect to be classified as a corporation by filing Form 8832. Students taxes Community property. Students taxes    Spouses who own a qualified entity (defined later) can choose to classify the entity as a partnership for federal tax purposes by filing the appropriate partnership tax returns. Students taxes They can choose to classify the entity as a sole proprietorship by filing a Schedule C (Form 1040) listing one spouse as the sole proprietor. Students taxes A change in reporting position will be treated for federal tax purposes as a conversion of the entity. Students taxes   A qualified entity is a business entity that meets all the following requirements. Students taxes The business entity is wholly owned by spouses as community property under the laws of a state, a foreign country, or a possession of the United States. Students taxes No person other than one or both spouses would be considered an owner for federal tax purposes. Students taxes The business entity is not treated as a corporation. Students taxes   For more information about community property, see Publication 555, Community Property. Students taxes Publication 555 discusses the community property laws of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Students taxes Family Partnership Members of a family can be partners. Students taxes However, family members (or any other person) will be recognized as partners only if one of the following requirements is met. Students taxes If capital is a material income-producing factor, they acquired their capital interest in a bona fide transaction (even if by gift or purchase from another family member), actually own the partnership interest, and actually control the interest. Students taxes If capital is not a material income-producing factor, they joined together in good faith to conduct a business. Students taxes They agreed that contributions of each entitle them to a share in the profits, and some capital or service has been (or is) provided by each partner. Students taxes Capital is material. Students taxes   Capital is a material income-producing factor if a substantial part of the gross income of the business comes from the use of capital. Students taxes Capital is ordinarily an income-producing factor if the operation of the business requires substantial inventories or investments in plants, machinery, or equipment. Students taxes Capital is not material. Students taxes   In general, capital is not a material income-producing factor if the income of the business consists principally of fees, commissions, or other compensation for personal services performed by members or employees of the partnership. Students taxes Capital interest. Students taxes   A capital interest in a partnership is an interest in its assets that is distributable to the owner of the interest in either of the following situations. Students taxes The owner withdraws from the partnership. Students taxes The partnership liquidates. Students taxes   The mere right to share in earnings and profits is not a capital interest in the partnership. Students taxes Gift of capital interest. Students taxes   If a family member (or any other person) receives a gift of a capital interest in a partnership in which capital is a material income-producing factor, the donee's distributive share of partnership income is subject to both of the following restrictions. Students taxes It must be figured by reducing the partnership income by reasonable compensation for services the donor renders to the partnership. Students taxes The donee's distributive share of partnership income attributable to donated capital must not be proportionately greater than the donor's distributive share attributable to the donor's capital. Students taxes Purchase. Students taxes   For purposes of determining a partner's distributive share, an interest purchased by one family member from another family member is considered a gift from the seller. Students taxes The fair market value of the purchased interest is considered donated capital. Students taxes For this purpose, members of a family include only spouses, ancestors, and lineal descendants (or a trust for the primary benefit of those persons). Students taxes Example. Students taxes A father sold 50% of his business to his son. Students taxes The resulting partnership had a profit of $60,000. Students taxes Capital is a material income-producing factor. Students taxes The father performed services worth $24,000, which is reasonable compensation, and the son performed no services. Students taxes The $24,000 must be allocated to the father as compensation. Students taxes Of the remaining $36,000 of profit due to capital, at least 50%, or $18,000, must be allocated to the father since he owns a 50% capital interest. Students taxes The son's share of partnership profit cannot be more than $18,000. Students taxes Business owned and operated by spouses. Students taxes   If spouses carry on a business together and share in the profits and losses, they may be partners whether or not they have a formal partnership agreement. Students taxes If so, they should report income or loss from the business on Form 1065. Students taxes They should not report the income on a Schedule C (Form 1040) in the name of one spouse as a sole proprietor. Students taxes However, the spouses can elect not to treat the joint venture as a partnership by making a Qualified Joint Venture Election. Students taxes Qualified Joint Venture Election. Students taxes   A "qualified joint venture," whose only members are spouses filing a joint return, can elect not to be treated as a partnership for federal tax purposes. Students taxes A qualified joint venture conducts a trade or business where: the only members of the joint venture are spouses filing jointly; both spouses elect not to be treated as a partnership; both spouses materially participate in the trade or business (see Passive Activity Limitations in the Instructions for Form 1065 for a definition of material participation); and the business is co-owned by both spouses and is not held in the name of a state law entity such as a partnership or LLC. Students taxes   Under this election, a qualified joint venture conducted by spouses who file a joint return is not treated as a partnership for federal tax purposes and therefore does not have a Form 1065 filing requirement. Students taxes All items of income, gain, deduction, loss, and credit are divided between the spouses based on their respective interests in the venture. Students taxes Each spouse takes into account his or her respective share of these items as a sole proprietor. Students taxes Each spouse would account for his or her respective share on the appropriate form, such as Schedule C (Form 1040). Students taxes For purposes of determining net earnings from self-employment, each spouse's share of income or loss from a qualified joint venture is taken into account just as it is for federal income tax purposes (i. Students taxes e. Students taxes , based on their respective interests in the venture). Students taxes   If the spouses do not make the election to treat their respective interests in the joint venture as sole proprietorships, each spouse should carry his or her share of the partnership income or loss from Schedule K-1 (Form 1065) to their joint or separate Form(s) 1040. Students taxes Each spouse should include his or her respective share of self-employment income on a separate Schedule SE (Form 1040), Self-Employment Tax. Students taxes   This generally does not increase the total tax on the return, but it does give each spouse credit for social security earnings on which retirement benefits are based. Students taxes However, this may not be true if either spouse exceeds the social security tax limitation. Students taxes   For more information on qualified joint ventures, go to IRS. Students taxes gov, enter “Election for Qualified Joint Ventures” in the search box and select the link reading “Election for Husband and Wife Unincorporated Businesses. Students taxes ” Partnership Agreement The partnership agreement includes the original agreement and any modifications. Students taxes The modifications must be agreed to by all partners or adopted in any other manner provided by the partnership agreement. Students taxes The agreement or modifications can be oral or written. Students taxes Partners can modify the partnership agreement for a particular tax year after the close of the year but not later than the date for filing the partnership return for that year. Students taxes This filing date does not include any extension of time. Students taxes If the partnership agreement or any modification is silent on any matter, the provisions of local law are treated as part of the agreement. Students taxes Terminating a Partnership A partnership terminates when one of the following events takes place. Students taxes All its operations are discontinued and no part of any business, financial operation, or venture is continued by any of its partners in a partnership. Students taxes At least 50% of the total interest in partnership capital and profits is sold or exchanged within a 12-month period, including a sale or exchange to another partner. Students taxes Unlike other partnerships, an electing large partnership does not terminate on the sale or exchange of 50% or more of the partnership interests within a 12-month period. Students taxes See section 1. Students taxes 708-1(b) of the regulations for more information on the termination of a partnership. Students taxes For special rules that apply to a merger, consolidation, or division of a partnership, see sections 1. Students taxes 708-1(c) and 1. Students taxes 708-1(d) of the regulations. Students taxes Date of termination. Students taxes   The partnership's tax year ends on the date of termination. Students taxes For the event described in (1), above, the date of termination is the date the partnership completes the winding up of its affairs. Students taxes For the event described in (2), above, the date of termination is the date of the sale or exchange of a partnership interest that, by itself or together with other sales or exchanges in the preceding 12 months, transfers an interest of 50% or more in both capital and profits. Students taxes Short period return. Students taxes   If a partnership is terminated before the end of what would otherwise be its tax year, Form 1065 must be filed for the short period, which is the period from the beginning of the tax year through the date of termination. Students taxes The return is due the 15th day of the fourth month following the date of termination. Students taxes See Partnership Return (Form 1065), later, for information about filing Form 1065. Students taxes Conversion of partnership into limited liability company (LLC). Students taxes   The conversion of a partnership into an LLC classified as a partnership for federal tax purposes does not terminate the partnership. Students taxes The conversion is not a sale, exchange, or liquidation of any partnership interest; the partnership's tax year does not close; and the LLC can continue to use the partnership's taxpayer identification number. Students taxes   However, the conversion may change some of the partners' bases in their partnership interests if the partnership has recourse liabilities that become nonrecourse liabilities. Students taxes Because the partners share recourse and nonrecourse liabilities differently, their bases must be adjusted to reflect the new sharing ratios. Students taxes If a decrease in a partner's share of liabilities exceeds the partner's basis, he or she must recognize gain on the excess. Students taxes For more information, see Effect of Partnership Liabilities under Basis of Partner's Interest, later. Students taxes   The same rules apply if an LLC classified as a partnership is converted into a partnership. Students taxes IRS e-file (Electronic Filing) Please click here for the text description of the image. Students taxes e-file Certain partnerships with more than 100 partners are required to file Form 1065, Schedules K-1, and related forms and schedules electronically (e-file). Students taxes Other partnerships generally have the option to file electronically. Students taxes For details about IRS e-file, see the Form 1065 instructions. Students taxes Exclusion From Partnership Rules Certain partnerships that do not actively conduct a business can choose to be completely or partially excluded from being treated as partnerships for federal income tax purposes. Students taxes All the partners must agree to make the choice, and the partners must be able to compute their own taxable income without computing the partnership's income. Students taxes However, the partners are not exempt from the rule that limits a partner's distributive share of partnership loss to the adjusted basis of the partner's partnership interest. Students taxes Nor are they exempt from the requirement of a business purpose for adopting a tax year for the partnership that differs from its required tax year. Students taxes Investing partnership. Students taxes   An investing partnership can be excluded if the participants in the joint purchase, retention, sale, or exchange of investment property meet all the following requirements. Students taxes They own the property as co-owners. Students taxes They reserve the right separately to take or dispose of their shares of any property acquired or retained. Students taxes They do not actively conduct business or irrevocably authorize some person acting in a representative capacity to purchase, sell, or exchange the investment property. Students taxes Each separate participant can delegate authority to purchase, sell, or exchange his or her share of the investment property for the time being for his or her account, but not for a period of more than a year. Students taxes Operating agreement partnership. Students taxes   An operating agreement partnership group can be excluded if the participants in the joint production, extraction, or use of property meet all the following requirements. Students taxes They own the property as co-owners, either in fee or under lease or other form of contract granting exclusive operating rights. Students taxes They reserve the right separately to take in kind or dispose of their shares of any property produced, extracted, or used. Students taxes They do not jointly sell services or the property produced or extracted. Students taxes Each separate participant can delegate authority to sell his or her share of the property produced or extracted for the time being for his or her account, but not for a period of time in excess of the minimum needs of the industry, and in no event for more than one year. Students taxes However, this exclusion does not apply to an unincorporated organization one of whose principal purposes is cycling, manufacturing, or processing for persons who are not members of the organization. Students taxes Electing the exclusion. Students taxes   An eligible organization that wishes to be excluded from the partnership rules must make the election not later than the time for filing the partnership return for the first tax year for which exclusion is desired. Students taxes This filing date includes any extension of time. Students taxes See Regulations section 1. Students taxes 761-2(b) for the procedures to follow. Students taxes Partnership Return (Form 1065) Every partnership that engages in a trade or business or has gross income must file an information return on Form 1065 showing its income, deductions, and other required information. Students taxes The partnership return must show the names and addresses of each partner and each partner's distributive share of taxable income. Students taxes The return must be signed by a general partner. Students taxes If a limited liability company is treated as a partnership, it must file Form 1065 and one of its members must sign the return. Students taxes A partnership is not considered to engage in a trade or business, and is not required to file a Form 1065, for any tax year in which it neither receives income nor pays or incurs any expenses treated as deductions or credits for federal income tax purposes. Students taxes See the Instructions for Form 1065 for more information about who must file Form 1065. Students taxes Partnership Distributions Partnership distributions include the following. Students taxes A withdrawal by a partner in anticipation of the current year's earnings. Students taxes A distribution of the current year's or prior years' earnings not needed for working capital. Students taxes A complete or partial liquidation of a partner's interest. Students taxes A distribution to all partners in a complete liquidation of the partnership. Students taxes A partnership distribution is not taken into account in determining the partner's distributive share of partnership income or loss. Students taxes If any gain or loss from the distribution is recognized by the partner, it must be reported on his or her return for the tax year in which the distribution is received. Students taxes Money or property withdrawn by a partner in anticipation of the current year's earnings is treated as a distribution received on the last day of the partnership's tax year. Students taxes Effect on partner's basis. Students taxes   A partner's adjusted basis in his or her partnership interest is decreased (but not below zero) by the money and adjusted basis of property distributed to the partner. Students taxes See Adjusted Basis under Basis of Partner's Interest, later. Students taxes Effect on partnership. Students taxes   A partnership generally does not recognize any gain or loss because of distributions it makes to partners. Students taxes The partnership may be able to elect to adjust the basis of its undistributed property. Students taxes Certain distributions treated as a sale or exchange. Students taxes   When a partnership distributes the following items, the distribution may be treated as a sale or exchange of property rather than a distribution. Students taxes Unrealized receivables or substantially appreciated inventory items distributed in exchange for any part of the partner's interest in other partnership property, including money. Students taxes Other property (including money) distributed in exchange for any part of a partner's interest in unrealized receivables or substantially appreciated inventory items. Students taxes   See Payments for Unrealized Receivables and Inventory Items under Disposition of Partner's Interest, later. Students taxes   This treatment does not apply to the following distributions. Students taxes A distribution of property to the partner who contributed the property to the partnership. Students taxes Payments made to a retiring partner or successor in interest of a deceased partner that are the partner's distributive share of partnership income or guaranteed payments. Students taxes Substantially appreciated inventory items. Students taxes   Inventory items of the partnership are considered to have appreciated substantially in value if, at the time of the distribution, their total fair market value is more than 120% of the partnership's adjusted basis for the property. Students taxes However, if a principal purpose for acquiring inventory property is to avoid ordinary income treatment by reducing the appreciation to less than 120%, that property is excluded. Students taxes Partner's Gain or Loss A partner generally recognizes gain on a partnership distribution only to the extent any money (and marketable securities treated as money) included in the distribution exceeds the adjusted basis of the partner's interest in the partnership. Students taxes Any gain recognized is generally treated as capital gain from the sale of the partnership interest on the date of the distribution. Students taxes If partnership property (other than marketable securities treated as money) is distributed to a partner, he or she generally does not recognize any gain until the sale or other disposition of the property. Students taxes For exceptions to these rules, see Distribution of partner's debt and Net precontribution gain, later. Students taxes Also, see Payments for Unrealized Receivables and Inventory Items under Disposition of Partner's Interest, later. Students taxes Example. Students taxes The adjusted basis of Jo's partnership interest is $14,000. Students taxes She receives a distribution of $8,000 cash and land that has an adjusted basis of $2,000 and a fair market value of $3,000. Students taxes Because the cash received does not exceed the basis of her partnership interest, Jo does not recognize any gain on the distribution. Students taxes Any gain on the land will be recognized when she sells or otherwise disposes of it. Students taxes The distribution decreases the adjusted basis of Jo's partnership interest to $4,000 [$14,000 − ($8,000 + $2,000)]. Students taxes Marketable securities treated as money. Students taxes   Generally, a marketable security distributed to a partner is treated as money in determining whether gain is recognized on the distribution. Students taxes This treatment, however, does not generally apply if that partner contributed the security to the partnership or an investment partnership made the distribution to an eligible partner. Students taxes   The amount treated as money is the security's fair market value when distributed, reduced (but not below zero) by the excess (if any) of: The partner's distributive share of the gain that would be recognized had the partnership sold all its marketable securities at their fair market value immediately before the transaction resulting in the distribution, over The partner's distributive share of the gain that would be recognized had the partnership sold all such securities it still held after the distribution at the fair market value in (1). Students taxes   For more information, including the definition of marketable securities, see section 731(c) of the Internal Revenue Code. Students taxes Loss on distribution. Students taxes   A partner does not recognize loss on a partnership distribution unless all the following requirements are met. Students taxes The adjusted basis of the partner's interest in the partnership exceeds the distribution. Students taxes The partner's entire interest in the partnership is liquidated. Students taxes The distribution is in money, unrealized receivables, or inventory items. Students taxes   There are exceptions to these general rules. Students taxes See the following discussions. Students taxes Also, see Liquidation at Partner's Retirement or Death under Disposition of Partner's Interest, later. Students taxes Distribution of partner's debt. Students taxes   If a partnership acquires a partner's debt and extinguishes the debt by distributing it to the partner, the partner will recognize capital gain or loss to the extent the fair market value of the debt differs from the basis of the debt (determined under the rules discussed in Partner's Basis for Distributed Property, later). Students taxes   The partner is treated as having satisfied the debt for its fair market value. Students taxes If the issue price (adjusted for any premium or discount) of the debt exceeds its fair market value when distributed, the partner may have to include the excess amount in income as canceled debt. Students taxes   Similarly, a deduction may be available to a corporate partner if the fair market value of the debt at the time of distribution exceeds its adjusted issue price. Students taxes Net precontribution gain. Students taxes   A partner generally must recognize gain on the distribution of property (other than money) if the partner contributed appreciated property to the partnership during the 7-year period before the distribution. Students taxes   The gain recognized is the lesser of the following amounts. Students taxes The excess of: The fair market value of the property received in the distribution, over The adjusted basis of the partner's interest in the partnership immediately before the distribution, reduced (but not below zero) by any money received in the distribution. Students taxes The “net precontribution gain” of the partner. Students taxes This is the net gain the partner would recognize if all the property contributed by the partner within 7 years of the distribution, and held by the partnership immediately before the distribution, were distributed to another partner, other than a partner who owns more than 50% of the partnership. Students taxes For information about the distribution of contributed property to another partner, see Contribution of Property , under Transactions Between Partnership and Partners, later. Students taxes   The character of the gain is determined by reference to the character of the net precontribution gain. Students taxes This gain is in addition to any gain the partner must recognize if the money distributed is more than his or her basis in the partnership. Students taxes For these rules, the term “money” includes marketable securities treated as money, as discussed earlier. Students taxes Effect on basis. Students taxes   The adjusted basis of the partner's interest in the partnership is increased by any net precontribution gain recognized by the partner. Students taxes Other than for purposes of determining the gain, the increase is treated as occurring immediately before the distribution. Students taxes See Basis of Partner's Interest , later. Students taxes   The partnership must adjust its basis in any property the partner contributed within 7 years of the distribution to reflect any gain that partner recognizes under this rule. Students taxes Exceptions. Students taxes   Any part of a distribution that is property the partner previously contributed to the partnership is not taken into account in determining the amount of the excess distribution or the partner's net precontribution gain. Students taxes For this purpose, the partner's previously contributed property does not include a contributed interest in an entity to the extent its value is due to property contributed to the entity after the interest was contributed to the partnership. Students taxes   Recognition of gain under this rule also does not apply to a distribution of unrealized receivables or substantially appreciated inventory items if the distribution is treated as a sale or exchange, as discussed earlier. Students taxes Partner's Basis for Distributed Property Unless there is a complete liquidation of a partner's interest, the basis of property (other than money) distributed to the partner by a partnership is its adjusted basis to the partnership immediately before the distribution. Students taxes 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. Students taxes Example 1. Students taxes The adjusted basis of Emily's partnership interest is $30,000. Students taxes She receives a distribution of property that has an adjusted basis of $20,000 to the partnership and $4,000 in cash. Students taxes Her basis for the property is $20,000. Students taxes Example 2. Students taxes The adjusted basis of Steve's partnership interest is $10,000. Students taxes He receives a distribution of $4,000 cash and property that has an adjusted basis to the partnership of $8,000. Students taxes His basis for the distributed property is limited to $6,000 ($10,000 − $4,000, the cash he receives). Students taxes Complete liquidation of partner's interest. Students taxes   The basis of property received in complete liquidation of a partner's interest is the adjusted basis of the partner's interest in the partnership reduced by any money distributed to the partner in the same transaction. Students taxes Partner's holding period. Students taxes   A partner's holding period for property distributed to the partner includes the period the property was held by the partnership. Students taxes If the property was contributed to the partnership by a partner, then the period it was held by that partner is also included. Students taxes Basis divided among properties. Students taxes   If the basis of property received is the adjusted basis of the partner's interest in the partnership (reduced by money received in the same transaction), it must be divided among the properties distributed to the partner. Students taxes For property distributed after August 5, 1997, allocate the basis using the following rules. Students taxes Allocate the basis first to unrealized receivables and inventory items included in the distribution by assigning a basis to each item equal to the partnership's adjusted basis in the item immediately before the distribution. Students taxes If the total of these assigned bases exceeds the allocable basis, decrease the assigned bases by the amount of the excess. Students taxes Allocate any remaining basis to properties other than unrealized receivables and inventory items by assigning a basis to each property equal to the partnership's adjusted basis in the property immediately before the distribution. Students taxes If the allocable basis exceeds the total of these assigned bases, increase the assigned bases by the amount of the excess. Students taxes If the total of these assigned bases exceeds the allocable basis, decrease the assigned bases by the amount of the excess. Students taxes Allocating a basis increase. Students taxes   Allocate any basis increase required in rule (2), above, first to properties with unrealized appreciation to the extent of the unrealized appreciation. Students taxes If the basis increase is less than the total unrealized appreciation, allocate it among those properties in proportion to their respective amounts of unrealized appreciation. Students taxes Allocate any remaining basis increase among all the properties in proportion to their respective fair market values. Students taxes Example. Students taxes Eun's basis in her partnership interest is $55,000. Students taxes In a distribution in liquidation of her entire interest, she receives properties A and B, neither of which is inventory or unrealized receivables. Students taxes Property A has an adjusted basis to the partnership of $5,000 and a fair market value of $40,000. Students taxes Property B has an adjusted basis to the partnership of $10,000 and a fair market value of $10,000. Students taxes To figure her basis in each property, Eun first assigns bases of $5,000 to property A and $10,000 to property B (their adjusted bases to the partnership). Students taxes This leaves a $40,000 basis increase (the $55,000 allocable basis minus the $15,000 total of the assigned bases). Students taxes She first allocates $35,000 to property A (its unrealized appreciation). Students taxes The remaining $5,000 is allocated between the properties based on their fair market values. Students taxes $4,000 ($40,000/$50,000) is allocated to property A and $1,000 ($10,000/$50,000) is allocated to property B. Students taxes Eun's basis in property A is $44,000 ($5,000 + $35,000 + $4,000) and her basis in property B is $11,000 ($10,000 + $1,000). Students taxes Allocating a basis decrease. Students taxes   Use the following rules to allocate any basis decrease required in rule (1) or rule (2), earlier. Students taxes Allocate the basis decrease first to items with unrealized depreciation to the extent of the unrealized depreciation. Students taxes If the basis decrease is less than the total unrealized depreciation, allocate it among those items in proportion to their respective amounts of unrealized depreciation. Students taxes Allocate any remaining basis decrease among all the items in proportion to their respective assigned basis amounts (as decreased in (1)). Students taxes Example. Students taxes Armando's basis in his partnership interest is $20,000. Students taxes In a distribution in liquidation of his entire interest, he receives properties C and D, neither of which is inventory or unrealized receivables. Students taxes Property C has an adjusted basis to the partnership of $15,000 and a fair market value of $15,000. Students taxes Property D has an adjusted basis to the partnership of $15,000 and a fair market value of $5,000. Students taxes To figure his basis in each property, Armando first assigns bases of $15,000 to property C and $15,000 to property D (their adjusted bases to the partnership). Students taxes This leaves a $10,000 basis decrease (the $30,000 total of the assigned bases minus the $20,000 allocable basis). Students taxes He allocates the entire $10,000 to property D (its unrealized depreciation). Students taxes Armando's basis in property C is $15,000 and his basis in property D is $5,000 ($15,000 − $10,000). Students taxes Distributions before August 6, 1997. Students taxes   For property distributed before August 6, 1997, allocate the basis using the following rules. Students taxes Allocate the basis first to unrealized receivables and inventory items included in the distribution to the extent of the partnership's adjusted basis in those items. Students taxes If the partnership's adjusted basis in those items exceeded the allocable basis, allocate the basis among the items in proportion to their adjusted bases to the partnership. Students taxes Allocate any remaining basis to other distributed properties in proportion to their adjusted bases to the partnership. Students taxes Partner's interest more than partnership basis. Students taxes   If the basis of a partner's interest to be divided in a complete liquidation of the partner's interest is more than the partnership's adjusted basis for the unrealized receivables and inventory items distributed, and if no other property is distributed to which the partner can apply the remaining basis, the partner has a capital loss to the extent of the remaining basis of the partnership interest. Students taxes Special adjustment to basis. Students taxes   A partner who acquired any part of his or her partnership interest in a sale or exchange or upon the death of another partner may be able to choose a special basis adjustment for property distributed by the partnership. Students taxes To choose the special adjustment, the partner must have received the distribution within 2 years after acquiring the partnership interest. Students taxes Also, the partnership must not have chosen the optional adjustment to basis when the partner acquired the partnership interest. Students taxes   If a partner chooses this special basis adjustment, the partner's basis for the property distributed is the same as it would have been if the partnership had chosen the optional adjustment to basis. Students taxes However, this assigned basis is not reduced by any depletion or depreciation that would have been allowed or allowable if the partnership had previously chosen the optional adjustment. Students taxes   The choice must be made with the partner's tax return for the year of the distribution if the distribution includes any property subject to depreciation, depletion, or amortization. Students taxes If the choice does not have to be made for the distribution year, it must be made with the return for the first year in which the basis of the distributed property is pertinent in determining the partner's income tax. Students taxes   A partner choosing this special basis adjustment must attach a statement to his or her tax return that the partner chooses under section 732(d) of the Internal Revenue Code to adjust the basis of property received in a distribution. Students taxes The statement must show the computation of the special basis adjustment for the property distributed and list the properties to which the adjustment has been allocated. Students taxes Example. Students taxes Chin Ho purchased a 25% interest in X partnership for $17,000 cash. Students taxes At the time of the purchase, the partnership owned inventory having a basis to the partnership of $14,000 and a fair market value of $16,000. Students taxes Thus, $4,000 of the $17,000 he paid was attributable to his share of inventory with a basis to the partnership of $3,500. Students taxes Within 2 years after acquiring his interest, Chin Ho withdrew from the partnership and for his entire interest received cash of $1,500, inventory with a basis to the partnership of $3,500, and other property with a basis of $6,000. Students taxes The value of the inventory received was 25% of the value of all partnership inventory. Students taxes (It is immaterial whether the inventory he received was on hand when he acquired his interest. Students taxes ) Since the partnership from which Chin Ho withdrew did not make the optional adjustment to basis, he chose to adjust the basis of the inventory received. Students taxes His share of the partnership's basis for the inventory is increased by $500 (25% of the $2,000 difference between the $16,000 fair market value of the inventory and its $14,000 basis to the partnership at the time he acquired his interest). Students taxes The adjustment applies only for purposes of determining his new basis in the inventory, and not for purposes of partnership gain or loss on disposition. Students taxes The total to be allocated among the properties Chin Ho received in the distribution is $15,500 ($17,000 basis of his interest − $1,500 cash received). Students taxes His basis in the inventory items is $4,000 ($3,500 partnership basis + $500 special adjustment). Students taxes The remaining $11,500 is allocated to his new basis for the other property he received. Students taxes Mandatory adjustment. Students taxes   A partner does not always have a choice of making this special adjustment to basis. Students taxes The special adjustment to basis must be made for a distribution of property (whether or not within 2 years after the partnership interest was acquired) if all the following conditions existed when the partner received the partnership interest. Students taxes The fair market value of all partnership property (other than money) was more than 110% of its adjusted basis to the partnership. Students taxes If there had been a liquidation of the partner's interest immediately after it was acquired, an allocation of the basis of that interest under the general rules (discussed earlier under Basis divided among properties) would have decreased the basis of property that could not be depreciated, depleted, or amortized and increased the basis of property that could be. Students taxes The optional basis adjustment, if it had been chosen by the partnership, would have changed the partner's basis for the property actually distributed. Students taxes Required statement. Students taxes   Generally, if a partner chooses a special basis adjustment and notifies the partnership, or if the partnership makes a distribution for which the special basis adjustment is mandatory, the partnership must provide a statement to the partner. Students taxes The statement must provide information necessary for the partner to compute the special basis adjustment. Students taxes Marketable securities. Students taxes   A partner's basis in marketable securities received in a partnership distribution, as determined in the preceding discussions, is increased by any gain recognized by treating the securities as money. Students taxes See Marketable securities treated as money under Partner's Gain or Loss, earlier. Students taxes The basis increase is allocated among the securities in proportion to their respective amounts of unrealized appreciation before the basis increase. Students taxes Transactions Between Partnership and Partners For certain transactions between a partner and his or her partnership, the partner is treated as not being a member of the partnership. Students taxes These transactions include the following. Students taxes Performing services for, or transferring property to, a partnership if: There is a related allocation and distribution to a partner, and The entire transaction, when viewed together, is properly characterized as occurring between the partnership and a partner not acting in the capacity of a partner. Students taxes Transferring money or other property to a partnership if: There is a related transfer of money or other property by the partnership to the contributing partner or another partner, and The transfers together are properly characterized as a sale or exchange of property. Students taxes Payments by accrual basis partnership to cash basis partner. Students taxes   A partnership that uses an accrual method of accounting cannot deduct any business expense owed to a cash basis partner until the amount is paid. Students taxes However, this rule does not apply to guaranteed payments made to a partner, which are generally deductible when accrued. Students taxes Guaranteed Payments Guaranteed payments are those made by a partnership to a partner that are determined without regard to the partnership's income. Students taxes A partnership treats guaranteed payments for services, or for the use of capital, as if they were made to a person who is not a partner. Students taxes This treatment is for purposes of determining gross income and deductible business expenses only. Students taxes For other tax purposes, guaranteed payments are treated as a partner's distributive share of ordinary income. Students taxes Guaranteed payments are not subject to income tax withholding. Students taxes The partnership generally deducts guaranteed payments on line 10 of Form 1065 as a business expense. Students taxes They are also listed on Schedules K and K-1 of the partnership return. Students taxes The individual partner reports guaranteed payments on Schedule E (Form 1040) as ordinary income, along with his or her distributive share of the partnership's other ordinary income. Students taxes Guaranteed payments made to partners for organizing the partnership or syndicating interests in the partnership are capital expenses. Students taxes Generally, organizational and syndication expenses are not deductible by the partnership. Students taxes However, a partnership can elect to deduct a portion of its organizational expenses and amortize the remaining expenses (see Business start-up and organizational costs in the Instructions for Form 1065). Students taxes Organizational expenses (if the election is not made) and syndication expenses paid to partners must be reported on the partners' Schedule K-1 as guaranteed payments. Students taxes Minimum payment. Students taxes   If a partner is to receive a minimum payment from the partnership, the guaranteed payment is the amount by which the minimum payment is more than the partner's distributive share of the partnership income before taking into account the guaranteed payment. Students taxes Example. Students taxes Under a partnership agreement, Divya is to receive 30% of the partnership income, but not less than $8,000. Students taxes The partnership has net income of $20,000. Students taxes Divya's share, without regard to the minimum guarantee, is $6,000 (30% × $20,000). Students taxes The guaranteed payment that can be deducted by the partnership is $2,000 ($8,000 − $6,000). Students taxes Divya's income from the partnership is $8,000, and the remaining $12,000 of partnership income will be reported by the other partners in proportion to their shares under the partnership agreement. Students taxes If the partnership net income had been $30,000, there would have been no guaranteed payment since her share, without regard to the guarantee, would have been greater than the guarantee. Students taxes Self-employed health insurance premiums. Students taxes   Premiums for health insurance paid by a partnership on behalf of a partner, for services as a partner, are treated as guaranteed payments. Students taxes The partnership can deduct the payments as a business expense, and the partner must include them in gross income. Students taxes However, if the partnership accounts for insurance paid for a partner as a reduction in distributions to the partner, the partnership cannot deduct the premiums. Students taxes   A partner who qualifies can deduct 100% of the health insurance premiums paid by the partnership on his or her behalf as an adjustment to income. Students taxes The partner cannot deduct the premiums for any calendar month, or part of a month, in which the partner is eligible to participate in any subsidized health plan maintained by any employer of the partner, the partner's spouse, the partner's dependents, or any children under age 27 who are not dependents. Students taxes For more information on the self-employed health insurance deduction, see chapter 6 in Publication 535. Students taxes Including payments in partner's income. Students taxes   Guaranteed payments are included in income in the partner's tax year in which the partnership's tax year ends. Students taxes Example 1. Students taxes Under the terms of a partnership agreement, Erica is entitled to a fixed annual payment of $10,000 without regard to the income of the partnership. Students taxes Her distributive share of the partnership income is 10%. Students taxes The partnership has $50,000 of ordinary income after deducting the guaranteed payment. Students taxes She must include ordinary income of $15,000 ($10,000 guaranteed payment + $5,000 ($50,000 × 10%) distributive share) on her individual income tax return for her tax year in which the partnership's tax year ends. Students taxes Example 2. Students taxes Lamont is a calendar year taxpayer who is a partner in a partnership. Students taxes The partnership uses a fiscal year that ended January 31, 2013. Students taxes Lamont received guaranteed payments from the partnership from February 1, 2012, until December 31, 2012. Students taxes He must include these guaranteed payments in income for 2013 and report them on his 2013 income tax return. Students taxes Payments resulting in loss. Students taxes   If guaranteed payments to a partner result in a partnership loss in which the partner shares, the partner must report the full amount of the guaranteed payments as ordinary income. Students taxes The partner separately takes into account his or her distributive share of the partnership loss, to the extent of the adjusted basis of the partner's partnership interest. Students taxes Sale or Exchange of Property Special rules apply to a sale or exchange of property between a partnership and certain persons. Students taxes Losses. Students taxes   Losses will not be allowed from a sale or exchange of property (other than an interest in the partnership) directly or indirectly between a partnership and a person whose direct or indirect interest in the capital or profits of the partnership is more than 50%. Students taxes   If the sale or exchange is between two partnerships in which the same persons directly or indirectly own more than 50% of the capital or profits interests in each partnership, no deduction of a loss is allowed. Students taxes   The basis of each partner's interest in the partnership is decreased (but not below zero) by the partner's share of the disallowed loss. Students taxes   If the purchaser later sells the property, only the gain realized that is greater than the loss not allowed will be taxable. Students taxes If any gain from the sale of the property is not recognized because of this rule, the basis of each partner's interest in the partnership is increased by the partner's share of that gain. Students taxes Gains. Students taxes   Gains are treated as ordinary income in a sale or exchange of property directly or indirectly between a person and a partnership, or between two partnerships, if both of the following tests are met. Students taxes More than 50% of the capital or profits interest in the partnership(s) is directly or indirectly owned by the same person(s). Students taxes The property in the hands of the transferee immediately after the transfer is not a capital asset. Students taxes Property that is not a capital asset includes accounts receivable, inventory, stock-in-trade, and depreciable or real property used in a trade or business. Students taxes More than 50% ownership. Students taxes   To determine if there is more than 50% ownership in partnership capital or profits, the following rules apply. Students taxes An interest directly or indirectly owned by, or for, a corporation, partnership, estate, or trust is considered to be owned proportionately by, or for, its shareholders, partners, or beneficiaries. Students taxes An individual is considered to own the interest directly or indirectly owned by, or for, the individual's family. Students taxes For this rule, “family” includes only brothers, sisters, half-brothers, half-sisters, spouses, ancestors, and lineal descendants. Students taxes If a person is considered to own an interest using rule (1), that person (the “constructive owner”) is treated as if actually owning that interest when rules (1) and (2) are applied. Students taxes However, if a person is considered to own an interest using rule (2), that person is not treated as actually owning that interest in reapplying rule (2) to make another person the constructive owner. Students taxes Example. Students taxes Individuals A and B and Trust T are equal partners in Partnership ABT. Students taxes A's husband, AH, is the sole beneficiary of Trust T. Students taxes Trust T's partnership interest will be attributed to AH only for the purpose of further attributing the interest to A. Students taxes As a result, A is a more-than-50% partner. Students taxes This means that any deduction for losses on transactions between her and ABT will not be allowed, and gain from property that in the hands of the transferee is not a capital asset is treated as ordinary, rather than capital, gain. Students taxes More information. Students taxes   For more information on these special rules, see Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Students taxes Contribution of Property Usually, neither the partner nor the partnership recognizes a gain or loss when property is contributed to the partnership in exchange for a partnership interest. Students taxes This applies whether a partnership is being formed or is already operating. Students taxes The partnership's holding period for the property includes the partner's holding period. Students taxes The contribution of limited partnership interests in one partnership for limited partnership interests in another partnership qualifies as a tax-free contribution of property to the second partnership if the transaction is made for business purposes. Students taxes The exchange is not subject to the rules explained later under Disposition of Partner's Interest. Students taxes Disguised sales. Students taxes   A contribution of money or other property to the partnership followed by a distribution of different property from the partnership to the partner is treated not as a contribution and distribution, but as a sale of property, if both of the following tests are met. Students taxes The distribution would not have been made but for the contribution. Students taxes The partner's right to the distribution does not depend on the success of partnership operations. Students taxes   All facts and circumstances are considered in determining if the contribution and distribution are more properly characterized as a sale. Students taxes However, if the contribution and distribution occur within 2 years of each other, the transfers are presumed to be a sale unless the facts clearly indicate that the transfers are not a sale. Students taxes If the contribution and distribution occur more than 2 years apart, the transfers are presumed not to be a sale unless the facts clearly indicate that the transfers are a sale. Students taxes Form 8275 required. Students taxes   A partner must attach Form 8275, Disclosure Statement, (or other statement) to his or her return if the partner contributes property to a partnership and, within 2 years (before or after the contribution), the partnership transfers money or other consideration to the partner. Students taxes For exceptions to this requirement, see section 1. Students taxes 707-3(c)(2) of the regulations. Students taxes   A partnership must attach Form 8275 (or other statement) to its return if it distributes property to a partner, and, within 2 years (before or after the distribution), the partner transfers money or other consideration to the partnership. Students taxes   Form 8275 must include the following information. Students taxes A caption identifying the statement as a disclosure under section 707 of the Internal Revenue Code. Students taxes A description of the transferred property or money, including its value. Students taxes A description of any relevant facts in determining if the transfers are properly viewed as a disguised sale. Students taxes See section 1. Students taxes 707-3(b)(2) of the regulations for a description of the facts and circumstances considered in determining if the transfers are a disguised sale. Students taxes Contribution to partnership treated as investment company. Students taxes   Gain is recognized when property is contributed (in exchange for an interest in the partnership) to a partnership that would be treated as an investment company if it were incorporated. Students taxes   A partnership is generally treated as an investment company if over 80% of the value of its assets is held for investment and consists of certain readily marketable items. Students taxes These items include money, stocks and other equity interests in a corporation, and interests in regulated investment companies and real estate investment trusts. Students taxes For more information, see section 351(e)(1) of the Internal Revenue Code and the related regulations. Students taxes Whether a partnership is treated as an investment company under this test is ordinarily determined immediately after the transfer of property. Students taxes   This rule applies to limited partnerships and general partnerships, regardless of whether they are privately formed or publicly syndicated. Students taxes Contribution to foreign partnership. Students taxes   A domestic partnership that contributed property after August 5, 1997, to a foreign partnership in exchange for a partnership interest may have to file Form 8865 if either of the following apply. Students taxes Immediately after the contribution, the partnership owned, directly or indirectly, at least a 10% interest in the foreign partnership. Students taxes The fair market value of the property contributed to the foreign partnership, when added to other contributions of property made to the partnership during the preceding 12-month period, is greater than $100,000. Students taxes   The partnership may also have to file Form 8865, even if no contributions are made during the tax year, if it owns a 10% or more interest in a foreign partnership at any time during the year. Students taxes See the form instructions for more information. Students taxes Basis of contributed property. Students taxes   If a partner contributes property to a partnership, the partnership's basis for determining depreciation, depletion, gain, or loss for the property is the same as the partner's adjusted basis for the property when it was contributed, increased by any gain recognized by the partner at the time of contribution. Students taxes Allocations to account for built-in gain or loss. Students taxes   The fair market value of property at the time it is contributed may be different from the partner's adjusted basis. Students taxes The partnership must allocate among the partners any income, deduction, gain, or loss on the property in a manner that will account for the difference. Students taxes This rule also applies to contributions of accounts payable and other accrued but unpaid items of a cash basis partner. Students taxes   The partnership can use different allocation methods for different items of contributed property. Students taxes A single reasonable method must be consistently applied to each item, and the overall method or combination of methods must be reasonable. Students taxes See section 1. Students taxes 704-3 of the regulations for allocation methods generally considered reasonable. Students taxes   If the partnership sells contributed property and recognizes gain or loss, built-in gain or loss is allocated to the contributing partner. Students taxes If contributed property is subject to depreciation or other cost recovery, the allocation of deductions for these items takes into account built-in gain or loss on the property. Students taxes However, the total depreciation, depletion, gain, or loss allocated to partners cannot be more than the depreciation or depletion allowable to the partnership or the gain or loss realized by the partnership. Students taxes Example. Students taxes Areta and Sofia formed an equal partnership. Students taxes Areta contributed $10,000 in cash to the partnership and Sofia contributed depreciable property with a fair market value of $10,000 and an adjusted basis of $4,000. Students taxes The partnership's basis for depreciation is limited to the adjusted basis of the property in Sofia's hands, $4,000. Students taxes In effect, Areta purchased an undivided one-half interest in the depreciable property with her contribution of $10,000. Students taxes Assuming that the depreciation rate is 10% a year under the General Depreciation System (GDS), she would have been entitled to a depreciation deduction of $500 per year, based on her interest in the partnership, if the adjusted basis of the property equaled its fair market value when contributed. Students taxes To simplify this example, the depreciation deductions are determined without regard to any first-year depreciation conventions. Students taxes However, since the partnership is allowed only $400 per year of depreciation (10% of $4,000), no more than $400 can be allocated between the partners. Students taxes The entire $400 must be allocated to Areta. Students taxes Distribution of contributed property to another partner. Students taxes   If a partner contributes property to a partnership and the partnership distributes the property to another partner within 7 years of the contribution, the contributing partner must recognize gain or loss on the distribution. Students taxes   The recognized gain or loss is the amount the contributing partner would have recognized if the property had been sold for its fair market value when it was distributed. Students taxes This amount is the difference between the property's basis and its fair market value at the time of contribution. Students taxes The character of the gain or loss will be the same as the character of the gain or loss that would have resulted if the partnership had sold the property to the distributee partner. Students taxes Appropriate adjustments must be made to the adjusted basis of the contributing partner's partnership interest and to the adjusted basis of the property distributed to reflect the recognized gain or loss. Students taxes Disposition of certain contributed property. Students taxes   The following rules determine the character of the partnership's gain or loss on a disposition of certain types of contributed property. Students taxes Unrealized receivables. Students taxes If the property was an unrealized receivable in the hands of the contributing partner, any gain or loss on its disposition by the partnership is ordinary income or loss. Students taxes Unrealized receivables are defined later under Payments for Unrealized Receivables and Inventory Items. Students taxes When reading the definition, substitute “partner” for “partnership. Students taxes ” Inventory items. Students taxes If the property was an inventory item in the hands of the contributing partner, any gain or loss on its disposition by the partnership within 5 years after the contribution is ordinary income or loss. Students taxes Inventory items are defined later in Payments for Unrealized Receivables and Inventory Items. Students taxes Capital loss property. Students taxes If the property was a capital asset in the contributing partner's hands, any loss on its disposition by the partnership within 5 years after the contribution is a capital loss. Students taxes The capital loss is limited to the amount by which the partner's adjusted basis for the property exceeded the property's fair market value immediately before the contribution. Students taxes Substituted basis property. Students taxes If the disposition of any of the property listed in (1), (2), or (3) is a nonrecognition transaction, these rules apply when the recipient of the property disposes of any substituted basis property (other than certain corporate stock) resulting from the transaction. Students taxes Contribution of Services A partner can acquire an interest in partnership capital or profits as compensation for services performed or to be performed. Students taxes Capital interest. Students taxes   A capital interest is an interest that would give the holder a share of the proceeds if the partnership's assets were sold at fair market value and the proceeds were distributed in a complete liquidation of the partnership. Students taxes This determination generally is made at the time of receipt of the partnership interest. Students taxes The fair market value of such an interest received by a partner as compensation for services must generally be included in the partner's gross income in the first tax year in which the partner can transfer the interest or the interest is not subject to a substantial risk of forfeiture. Students taxes The capital interest transferred as compensation for services is subject to the rules for restricted property discussed in Publication 525 under Employee Compensation. Students taxes   The fair market value of an interest in partnership capital transferred to a partner as payment for services to the partnership is a guaranteed payment, discussed earlier. Students taxes Profits interest. Students taxes   A profits interest is a partnership interest other than a capital interest. Students taxes If a person receives a profits interest for providing services to, or for the benefit of, a partnership in a partner capacity or in anticipation of being a partner, the receipt of such an interest is not a taxable event for the partner or the partnership. Students taxes However, this does not apply in the following situations. Students taxes The profits interest relates to a substantially certain and predictable stream of income from partnership assets, such as income from high-quality debt securities or a high-quality net lease. Students taxes Within 2 years of receipt, the partner disposes of the profits interest. Students taxes The profits interest is a limited partnership interest in a publicly traded partnership. Students taxes   A profits interest transferred as compensation for services is not subject to the rules for restricted property that apply to capital interests. Students taxes Basis of Partner's Interest The basis of a partnership interest is the money plus the adjusted basis of any property the partner contributed. Students taxes If the partner must recognize gain as a result of the contribution, this gain is included in the basis of his or her interest. Students taxes Any increase in a partner's individual liabilities because of an assumption of partnership liabilities is considered a contribution of money to the partnership by the partner. Students taxes Interest acquired by gift, etc. Students taxes   If a partner acquires an interest in a partnership by gift, inheritance, or under any circumstance other than by a contribution of money or property to the partnership, the partner's basis must be determined using the basis rules described in Publication 551. Students taxes Adjusted Basis There is a worksheet for adjusting the basis of a partner's interest in the partnership in the Partner's Instructions for Schedule K-1 (Form 1065). Students taxes The basis of an interest in a partnership is increased or decreased by certain items. Students taxes Increases. Students taxes   A partner's basis is increased by the following items. Students taxes The partner's additional contributions to the partnership, including an increased share of, or assumption of, partnership liabilities. Students taxes The partner's distributive share of taxable and nontaxable partnership income. Students taxes The partner's distributive share of the excess of the deductions for depletion over the basis of the depletable property, unless the property is oil or gas wells whose basis has been allocated to partners. Students taxes Decreases. Students taxes   The partner's basis is decreased (but never below zero) by the following items. Students taxes The money (including a decreased share of partnership liabilities or an assumption of the partner's individual liabilities by the partnership) and adjusted basis of property distributed to the partner by the partnership. Students taxes The partner's distributive share of the partnership losses (including capital losses). Students taxes The partner's distributive share of nondeductible partnership expenses that are not capital expenditures. Students taxes This includes the partner's share of any section 179 expenses, even if the partner cannot deduct the entire amount on his or her individual income tax return. Students taxes The partner's deduction for depletion for any partnership oil and gas wells, up to the proportionate share of the adjusted basis of the wells allocated to the partner. Students taxes Partner's liabilities assumed by partnership. Students taxes   If contributed property is subject to a debt or if a partner's liabilities are assumed by the partnership, the basis of that partner's interest is reduced (but not below zero) by the liability assumed by the other partners. Students taxes This partner must reduce his or her basis because the assumption of the liability is treated as a distribution of money to that partner. Students taxes The other partners' assumption of the liability is treated as a contribution by them of money to the partnership. Students taxes See Effect of Partnership Liabilities , later. Students taxes Example 1. Students taxes Ivan acquired a 20% interest in a partnership by contributing property that had an adjusted basis to him of $8,000 and a $4,000 mortgage. Students taxes The partnership assumed payment of the mortgage. Students taxes The basis of Ivan's interest is: Adjusted basis of contributed property $8,000 Minus: Part of mortgage assumed by other partners (80% × $4,000) 3,200 Basis of Ivan's partnership interest $4,800 Example 2. Students taxes If, in Example 1, the contributed property had a $12,000 mortgage, the basis of Ivan's partnership interest would be zero. Students taxes The $1,600 difference between the mortgage assumed by the other partners, $9,600 (80% × $12,000), and his basis of $8,000 would be treated as capital gain from the sale or exchange of a partnership interest. Students taxes However, this gain would not increase the basis of his partnership interest. Students taxes Book value of partner's interest. Students taxes   The adjusted basis of a partner's interest is determined without considering any amount shown in the partnership books as a capital, equity, or similar account. Students taxes Example. Students taxes Enzo contributes to his partnership property that has an adjusted basis of $400 and a fair market value of $1,000. Students taxes His partner contributes $1,000 cash. Students taxes While each partner has increased his capital account by $1,000, which will be re