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Tax 2011 Form

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Tax 2011 Form

Tax 2011 form 4. Tax 2011 form   Sales and Trades of Investment Property Table of Contents IntroductionNominees. Tax 2011 form Topics - This chapter discusses: Useful Items - You may want to see: What Is a Sale or Trade?Dividend versus sale or trade. Tax 2011 form Worthless Securities Constructive Sales of Appreciated Financial Positions Section 1256 Contracts Marked to Market Basis of Investment PropertyCost Basis Basis Other Than Cost Adjusted Basis Stocks and Bonds How To Figure Gain or LossFair market value. Tax 2011 form Debt paid off. Tax 2011 form Payment of cash. Tax 2011 form Special Rules for Mutual Funds Nontaxable TradesLike-Kind Exchanges Corporate Stocks Exchange of Shares In One Mutual Fund For Shares In Another Mutual Fund Insurance Policies and Annuities U. Tax 2011 form S. Tax 2011 form Treasury Notes or Bonds Transfers Between Spouses Related Party TransactionsGain on Sale or Trade of Depreciable Property Capital Gains and LossesCapital or Ordinary Gain or Loss Holding Period Nonbusiness Bad Debts Short Sales Wash Sales Options Straddles Sales of Stock to ESOPs or Certain Cooperatives Rollover of Gain From Publicly Traded Securities Gains on Qualified Small Business Stock Exclusion of Gain From DC Zone Assets Reporting Capital Gains and LossesException 1. Tax 2011 form Exception 2. Tax 2011 form Section 1256 contracts and straddles. Tax 2011 form Market discount bonds. Tax 2011 form File Form 1099-B or Form 1099-S with the IRS. Tax 2011 form Capital Losses Capital Gain Tax Rates Special Rules for Traders in SecuritiesHow To Report Introduction This chapter explains the tax treatment of sales and trades of investment property. Tax 2011 form Investment property. Tax 2011 form   This is property that produces investment income. Tax 2011 form Examples include stocks, bonds, and Treasury bills and notes. Tax 2011 form Property used in a trade or business is not investment property. Tax 2011 form Form 1099-B. Tax 2011 form   If you sold property such as stocks, bonds, mutual funds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. Tax 2011 form You should receive the statement by February 15 of the next year. Tax 2011 form It will show the gross proceeds from the sale. Tax 2011 form The IRS will also get a copy of Form 1099-B from the broker. Tax 2011 form   Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. Tax 2011 form If you sold a covered security in 2013, your broker will send you a Form 1099-B (or substitute statement) that shows your basis. Tax 2011 form This will help you complete Form 8949. Tax 2011 form Generally, a covered security is a security you acquired after 2010, with certain exceptions explained in the Instructions for Form 8949. Tax 2011 form    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in this chapter. Tax 2011 form Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Tax 2011 form Nominees. Tax 2011 form   If someone receives gross proceeds as a nominee for you, that person will give you a Form 1099-B, which will show gross proceeds received on your behalf. Tax 2011 form   If you receive a Form 1099-B that includes gross proceeds belonging to another person, see Nominees , later under Reporting Capital Gains and Losses for more information. Tax 2011 form Other property transactions. Tax 2011 form   Certain transfers of property are discussed in other IRS publications. Tax 2011 form These include: Sale of your main home, discussed in Publication 523, Selling Your Home; Installment sales, covered in Publication 537; Various types of transactions involving business property, discussed in Publication 544, Sales and Other Dispositions of Assets; Transfers of property at death, covered in Publication 559; and Disposition of an interest in a passive activity, discussed in Publication 925. Tax 2011 form Topics - This chapter discusses: What Is a Sale or Trade? , Basis of Investment Property , Adjusted Basis , How To Figure Gain or Loss , Nontaxable trades , Transfers Between Spouses , Related Party Transactions , Capital Gains and Losses , Reporting Capital Gains and Losses , and Special Rules for Traders in Securities . Tax 2011 form Useful Items - You may want to see: Publication 551 Basis of Assets Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 6781 Gains and Losses From Section 1256 Contracts and Straddles 8582 Passive Activity Loss Limitations 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Tax 2011 form What Is a Sale or Trade? This section explains what is a sale or trade. Tax 2011 form It also explains certain transactions and events that are treated as sales or trades. Tax 2011 form A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. Tax 2011 form A trade is a transfer of property for other property or services, and may be taxed in the same way as a sale. Tax 2011 form Sale and purchase. Tax 2011 form   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. Tax 2011 form The sale and purchase are two separate transactions. Tax 2011 form But see Like-Kind Exchanges under Nontaxable Trades, later. Tax 2011 form Redemption of stock. Tax 2011 form   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. Tax 2011 form Dividend versus sale or trade. Tax 2011 form   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. Tax 2011 form Both direct and indirect ownership of stock will be considered. Tax 2011 form The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend — see Dividends and Other Distributions in chapter 1, There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. Tax 2011 form Redemption or retirement of bonds. Tax 2011 form   A redemption or retirement of bonds or notes at their maturity generally is treated as a sale or trade. Tax 2011 form See Stocks, stock rights, and bonds and Discounted Debt Instruments under Capital or Ordinary Gain or Loss, later. Tax 2011 form   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. Tax 2011 form For details, see Regulations section 1. Tax 2011 form 1001-3. Tax 2011 form Surrender of stock. Tax 2011 form   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. Tax 2011 form The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. Tax 2011 form Trade of investment property for an annuity. Tax 2011 form   The transfer of investment property to a corporation, trust, fund, foundation, or other organization, in exchange for a fixed annuity contract that will make guaranteed annual payments to you for life, is a taxable trade. Tax 2011 form If the present value of the annuity is more than your basis in the property traded, you have a taxable gain in the year of the trade. Tax 2011 form Figure the present value of the annuity according to factors used by commercial insurance companies issuing annuities. Tax 2011 form Transfer by inheritance. Tax 2011 form   The transfer of property of a decedent to the executor or administrator of the estate, or to the heirs or beneficiaries, is not a sale or other disposition. Tax 2011 form No taxable gain or deductible loss results from the transfer. Tax 2011 form Termination of certain rights and obligations. Tax 2011 form   The cancellation, lapse, expiration, or other termination of a right or obligation (other than a securities futures contract) with respect to property that is a capital asset (or that would be a capital asset if you acquired it) is treated as a sale. Tax 2011 form Any gain or loss is treated as a capital gain or loss. Tax 2011 form   This rule does not apply to the retirement of a debt instrument. Tax 2011 form See Redemption or retirement of bonds , earlier. Tax 2011 form Worthless Securities Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. Tax 2011 form This affects whether your capital loss is long term or short term. Tax 2011 form See Holding Period , later. Tax 2011 form Worthless securities also include securities that you abandon after March 12, 2008. Tax 2011 form To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. Tax 2011 form All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. Tax 2011 form If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. Tax 2011 form Do not deduct them in the year the stock became worthless. Tax 2011 form How to report loss. Tax 2011 form   Report worthless securities in Form 8949, Part I or Part II, whichever applies. Tax 2011 form    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. Tax 2011 form See Form 8949 and the Instructions for Form 8949. Tax 2011 form Filing a claim for refund. Tax 2011 form   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. Tax 2011 form You must use Form 1040X, Amended U. Tax 2011 form S. Tax 2011 form Individual Income Tax Return, to amend your return for the year the security became worthless. Tax 2011 form You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. Tax 2011 form (Claims not due to worthless securities or bad debts generally must be filed within 3 years from the date a return is filed, or 2 years from the date the tax is paid, whichever is later. Tax 2011 form ) For more information about filing a claim, see Publication 556. Tax 2011 form Constructive Sales of Appreciated Financial Positions You are treated as having made a constructive sale when you enter into certain transactions involving an appreciated financial position (defined later) in stock, a partnership interest, or certain debt instruments. Tax 2011 form You must recognize gain as if the position were disposed of at its fair market value on the date of the constructive sale. Tax 2011 form This gives you a new holding period for the position that begins on the date of the constructive sale. Tax 2011 form Then, when you close the transaction, you reduce your gain (or increase your loss) by the gain recognized on the constructive sale. Tax 2011 form Constructive sale. Tax 2011 form   You are treated as having made a constructive sale of an appreciated financial position if you: Enter into a short sale of the same or substantially identical property, Enter into an offsetting notional principal contract relating to the same or substantially identical property, Enter into a futures or forward contract to deliver the same or substantially identical property (including a forward contract that provides for cash settlement), or Acquire the same or substantially identical property (if the appreciated financial position is a short sale, an offsetting notional principal contract, or a futures or forward contract). Tax 2011 form   You are also treated as having made a constructive sale of an appreciated financial position if a person related to you enters into a transaction described above with a view toward avoiding the constructive sale treatment. Tax 2011 form For this purpose, a related person is any related party described under Related Party Transactions , later in this chapter. Tax 2011 form Exception for nonmarketable securities. Tax 2011 form   You are not treated as having made a constructive sale solely because you entered into a contract for sale of any stock, debt instrument, or partnership interest that is not a marketable security if it settles within 1 year of the date you enter into it. Tax 2011 form Exception for certain closed transactions. Tax 2011 form   Do not treat a transaction as a constructive sale if all of the following are true. Tax 2011 form You closed the transaction on or before the 30th day after the end of your tax year. Tax 2011 form You held the appreciated financial position throughout the 60-day period beginning on the date you closed the transaction. Tax 2011 form Your risk of loss was not reduced at any time during that 60-day period by holding certain other positions. Tax 2011 form   If a closed transaction is reestablished in a substantially similar position during the 60-day period beginning on the date the first transaction was closed, this exception still applies if the reestablished position is closed before the 30th day after the end of your tax year in which the first transaction was closed and, after that closing, (2) and (3) above are true. Tax 2011 form   This exception also applies to successive short sales of an entire appreciated financial position. Tax 2011 form For more information, see Revenue Ruling 2003-1 in Internal Revenue Bulletin 2003-3. Tax 2011 form This bulletin is available at www. Tax 2011 form irs. Tax 2011 form gov/pub/irs-irbs/irb03-03. Tax 2011 form pdf. Tax 2011 form Appreciated financial position. Tax 2011 form   This is any interest in stock, a partnership interest, or a debt instrument (including a futures or forward contract, a short sale, or an option) if disposing of the interest would result in a gain. Tax 2011 form Exceptions. Tax 2011 form   An appreciated financial position does not include the following. Tax 2011 form Any position from which all of the appreciation is accounted for under marked-to-market rules, including section 1256 contracts (described later under Section 1256 Contracts Marked to Market ). Tax 2011 form Any position in a debt instrument if: The position unconditionally entitles the holder to receive a specified principal amount, The interest payments (or other similar amounts) with respect to the position are payable at a fixed rate or a variable rate described in Regulations section 1. Tax 2011 form 860G-1(a)(3), and The position is not convertible, either directly or indirectly, into stock of the issuer (or any related person). Tax 2011 form Any hedge with respect to a position described in (2). Tax 2011 form Certain trust instruments treated as stock. Tax 2011 form   For the constructive sale rules, an interest in an actively traded trust is treated as stock unless substantially all of the value of the property held by the trust is debt that qualifies for the exception to the definition of an appreciated financial position (explained in (2) above). Tax 2011 form Sale of appreciated financial position. Tax 2011 form   A transaction treated as a constructive sale of an appreciated financial position is not treated as a constructive sale of any other appreciated financial position, as long as you continue to hold the original position. Tax 2011 form However, if you hold another appreciated financial position and dispose of the original position before closing the transaction that resulted in the constructive sale, you are treated as if, at the same time, you constructively sold the other appreciated financial position. Tax 2011 form Section 1256 Contracts Marked to Market If you hold a section 1256 contract at the end of the tax year, you generally must treat it as sold at its fair market value on the last business day of the tax year. Tax 2011 form Section 1256 Contract A section 1256 contract is any: Regulated futures contract, Foreign currency contract, Nonequity option, Dealer equity option, or Dealer securities futures contract. Tax 2011 form Exceptions. Tax 2011 form   A section 1256 contract does not include: Interest rate swaps, Currency swaps, Basis swaps, Interest rate caps, Interest rate floors, Commodity swaps, Equity swaps, Equity index swaps, Credit default swaps, or Similar agreements. Tax 2011 form For more details, including definitions of these terms, see section 1256. Tax 2011 form Regulated futures contract. Tax 2011 form   This is a contract that: Provides that amounts which must be deposited to, or can be withdrawn from, your margin account depend on daily market conditions (a system of marking to market), and Is traded on, or subject to the rules of, a qualified board of exchange. Tax 2011 form A qualified board of exchange is a domestic board of trade designated as a contract market by the Commodity Futures Trading Commission, any board of trade or exchange approved by the Secretary of the Treasury, or a national securities exchange registered with the Securities and Exchange Commission. Tax 2011 form Foreign currency contract. Tax 2011 form   This is a contract that: Requires delivery of a foreign currency that has positions traded through regulated futures contracts (or settlement of which depends on the value of that type of foreign currency), Is traded in the interbank market, and Is entered into at arm's length at a price determined by reference to the price in the interbank market. Tax 2011 form   Bank forward contracts with maturity dates longer than the maturities ordinarily available for regulated futures contracts are considered to meet the definition of a foreign currency contract if the above three conditions are satisfied. Tax 2011 form   Special rules apply to certain foreign currency transactions. Tax 2011 form These transactions may result in ordinary gain or loss treatment. Tax 2011 form For details, see Internal Revenue Code section 988 and Regulations sections 1. Tax 2011 form 988-1(a)(7) and 1. Tax 2011 form 988-3. Tax 2011 form Nonequity option. Tax 2011 form   This is any listed option (defined later) that is not an equity option. Tax 2011 form Nonequity options include debt options, commodity futures options, currency options, and broad-based stock index options. Tax 2011 form A broad-based stock index is based on the value of a group of diversified stocks or securities (such as the Standard and Poor's 500 index). Tax 2011 form Warrants based on a stock index that are economically, substantially identical in all material respects to options based on a stock index are treated as options based on a stock index. Tax 2011 form Cash-settled options. Tax 2011 form   Cash-settled options based on a stock index and either traded on or subject to the rules of a qualified board of exchange are nonequity options if the Securities and Exchange Commission (SEC) determines that the stock index is broad based. Tax 2011 form   This rule does not apply to options established before the SEC determines that the stock index is broad based. Tax 2011 form Listed option. Tax 2011 form   This is any option traded on, or subject to the rules of, a qualified board or exchange (as discussed earlier under Regulated futures contract). Tax 2011 form A listed option, however, does not include an option that is a right to acquire stock from the issuer. Tax 2011 form Dealer equity option. Tax 2011 form   This is any listed option that, for an options dealer: Is an equity option, Is bought or granted by that dealer in the normal course of the dealer's business activity of dealing in options, and Is listed on the qualified board of exchange where that dealer is registered. Tax 2011 form   An “options dealer” is any person registered with an appropriate national securities exchange as a market maker or specialist in listed options. Tax 2011 form Equity option. Tax 2011 form   This is any option: To buy or sell stock, or That is valued directly or indirectly by reference to any stock or narrow-based security index. Tax 2011 form  Equity options include options on a group of stocks only if the group is a narrow-based stock index. Tax 2011 form Dealer securities futures contract. Tax 2011 form   For any dealer in securities futures contracts or options on those contracts, this is a securities futures contract (or option on such a contract) that: Is entered into by the dealer (or, in the case of an option, is purchased or granted by the dealer) in the normal course of the dealer's activity of dealing in this type of contract (or option), and Is traded on a qualified board or exchange (as defined under Regulated futures contract , earlier). Tax 2011 form A securities futures contract that is not a dealer securities futures contract is treated as described later under Securities Futures Contracts . Tax 2011 form Marked-to-Market Rules A section 1256 contract that you hold at the end of the tax year will generally be treated as sold at its fair market value on the last business day of the tax year, and you must recognize any gain or loss that results. Tax 2011 form That gain or loss is taken into account in figuring your gain or loss when you later dispose of the contract, as shown in the example under 60/40 rule, below. Tax 2011 form Hedging exception. Tax 2011 form   The marked-to-market rules do not apply to hedging transactions. Tax 2011 form See Hedging Transactions , later. Tax 2011 form 60/40 rule. Tax 2011 form   Under the marked-to-market system, 60% of your capital gain or loss will be treated as a long-term capital gain or loss, and 40% will be treated as a short-term capital gain or loss. Tax 2011 form This is true regardless of how long you actually held the property. Tax 2011 form Example. Tax 2011 form On June 22, 2012, you bought a regulated futures contract for $50,000. Tax 2011 form On December 31, 2012 (the last business day of your tax year), the fair market value of the contract was $57,000. Tax 2011 form You recognized a $7,000 gain on your 2012 tax return, treated as 60% long-term and 40% short-term capital gain. Tax 2011 form On February 1, 2013, you sold the contract for $56,000. Tax 2011 form Because you recognized a $7,000 gain on your 2012 return, you recognize a $1,000 loss ($57,000 − $56,000) on your 2013 tax return, treated as 60% long-term and 40% short-term capital loss. Tax 2011 form Limited partners or entrepreneurs. Tax 2011 form   The 60/40 rule does not apply to dealer equity options or dealer securities futures contracts that result in capital gain or loss allocable to limited partners or limited entrepreneurs (defined later under Hedging Transactions ). Tax 2011 form Instead, these gains or losses are treated as short term. Tax 2011 form Terminations and transfers. Tax 2011 form   The marked-to-market rules also apply if your obligation or rights under section 1256 contracts are terminated or transferred during the tax year. Tax 2011 form In this case, use the fair market value of each section 1256 contract at the time of termination or transfer to determine the gain or loss. Tax 2011 form Terminations or transfers may result from any offsetting, delivery, exercise, assignment, or lapse of your obligation or rights under section 1256 contracts. Tax 2011 form Loss carryback election. Tax 2011 form   An individual having a net section 1256 contracts loss (defined later), generally can elect to carry this loss back 3 years instead of carrying it over to the next year. Tax 2011 form See How To Report , later, for information about reporting this election on your return. Tax 2011 form   The loss carried back to any year under this election cannot be more than the net section 1256 contracts gain in that year. Tax 2011 form In addition, the amount of loss carried back to an earlier tax year cannot increase or produce a net operating loss for that year. Tax 2011 form   The loss is carried to the earliest carryback year first, and any unabsorbed loss amount can then be carried to each of the next 2 tax years. Tax 2011 form In each carryback year, treat 60% of the carryback amount as a long-term capital loss and 40% as a short-term capital loss from section 1256 contracts. Tax 2011 form   If only a portion of the net section 1256 contracts loss is absorbed by carrying the loss back, the unabsorbed portion can be carried forward, under the capital loss carryover rules, to the year following the loss. Tax 2011 form (See Capital Losses under Reporting Capital Gains and Losses, later. Tax 2011 form ) Figure your capital loss carryover as if, for the loss year, you had an additional short-term capital gain of 40% of the amount of net section 1256 contracts loss absorbed in the carryback years and an additional long-term capital gain of 60% of the absorbed loss. Tax 2011 form In the carryover year, treat any capital loss carryover from losses on section 1256 contracts as if it were a loss from section 1256 contracts for that year. Tax 2011 form Net section 1256 contracts loss. Tax 2011 form   This loss is the lesser of: The net capital loss for your tax year determined by taking into account only the gains and losses from section 1256 contracts, or The capital loss carryover to the next tax year determined without this election. Tax 2011 form Net section 1256 contracts gain. Tax 2011 form   This gain is the lesser of: The capital gain net income for the carryback year determined by taking into account only gains and losses from section 1256 contracts, or The capital gain net income for that year. Tax 2011 form  Figure your net section 1256 contracts gain for any carryback year without regard to the net section 1256 contracts loss for the loss year or any later tax year. Tax 2011 form Traders in section 1256 contracts. Tax 2011 form   Gain or loss from the trading of section 1256 contracts is capital gain or loss subject to the marked-to-market rules. Tax 2011 form However, this does not apply to contracts held for purposes of hedging property if any loss from the property would be an ordinary loss. Tax 2011 form Treatment of underlying property. Tax 2011 form   The determination of whether an individual's gain or loss from any property is ordinary or capital gain or loss is made without regard to the fact that the individual is actively engaged in dealing in or trading section 1256 contracts related to that property. Tax 2011 form How To Report If you disposed of regulated futures or foreign currency contracts in 2013 (or had unrealized profit or loss on these contracts that were open at the end of 2012 or 2013), you should receive Form 1099-B, or substitute statement, from your broker. Tax 2011 form Form 6781. Tax 2011 form   Use Part I of Form 6781 to report your gains and losses from all section 1256 contracts that are open at the end of the year or that were closed out during the year. Tax 2011 form This includes the amount shown in box 10 of Form 1099-B. Tax 2011 form Then enter the net amount of these gains and losses on Schedule D (Form 1040), line 4 or line 11, as appropriate. Tax 2011 form Include a copy of Form 6781 with your income tax return. Tax 2011 form   If the Form 1099-B you receive includes a straddle or hedging transaction, defined later, it may be necessary to show certain adjustments on Form 6781. Tax 2011 form Follow the Form 6781 instructions for completing Part I. Tax 2011 form Loss carryback election. Tax 2011 form   To carry back your loss under the election procedures described earlier, file Form 1040X or Form 1045, Application for Tentative Refund, for the year to which you are carrying the loss with an amended Form 6781 and an amended Schedule D (Form 1040) attached. Tax 2011 form Follow the instructions for completing Form 6781 for the loss year to make this election. Tax 2011 form Hedging Transactions The marked-to-market rules, described earlier, do not apply to hedging transactions. Tax 2011 form A transaction is a hedging transaction if both of the following conditions are met. Tax 2011 form You entered into the transaction in the normal course of your trade or business primarily to manage the risk of: Price changes or currency fluctuations on ordinary property you hold (or will hold), or Interest rate or price changes, or currency fluctuations, on your current or future borrowings or ordinary obligations. Tax 2011 form You clearly identified the transaction as being a hedging transaction before the close of the day on which you entered into it. Tax 2011 form This hedging transaction exception does not apply to transactions entered into by or for any syndicate. Tax 2011 form A syndicate is a partnership, S corporation, or other entity (other than a regular corporation) that allocates more than 35% of its losses to limited partners or limited entrepreneurs. Tax 2011 form A limited entrepreneur is a person who has an interest in an enterprise (but not as a limited partner) and who does not actively participate in its management. Tax 2011 form However, an interest is not considered held by a limited partner or entrepreneur if the interest holder actively participates (or did so for at least 5 full years) in the management of the entity, or is the spouse, child (including a legally adopted child), grandchild, or parent of an individual who actively participates in the management of the entity. Tax 2011 form Hedging loss limit. Tax 2011 form   If you are a limited partner or entrepreneur in a syndicate, the amount of a hedging loss you can claim is limited. Tax 2011 form A “hedging loss” is the amount by which the allowable deductions in a tax year that resulted from a hedging transaction (determined without regard to the limit) are more than the income received or accrued during the tax year from this transaction. Tax 2011 form   Any hedging loss allocated to you for the tax year is limited to your taxable income for that year from the trade or business in which the hedging transaction occurred. Tax 2011 form Ignore any hedging transaction items in determining this taxable income. Tax 2011 form If you have a hedging loss that is disallowed because of this limit, you can carry it over to the next tax year as a deduction resulting from a hedging transaction. Tax 2011 form   If the hedging transaction relates to property other than stock or securities, the limit on hedging losses applies if the limited partner or entrepreneur is an individual. Tax 2011 form   The limit on hedging losses does not apply to any hedging loss to the extent that it is more than all your unrecognized gains from hedging transactions at the end of the tax year that are from the trade or business in which the hedging transaction occurred. Tax 2011 form The term “unrecognized gain” has the same meaning as defined under Loss Deferral Rules in Straddles, later. Tax 2011 form Sale of property used in a hedge. Tax 2011 form   Once you identify personal property as being part of a hedging transaction, you must treat gain from its sale or exchange as ordinary income, not capital gain. Tax 2011 form Self-Employment Income Gains and losses derived in the ordinary course of a commodity or option dealer's trading in section 1256 contracts and property related to these contracts are included in net earnings from self-employment. Tax 2011 form See the Instructions for Schedule SE (Form 1040). Tax 2011 form In addition, the rules relating to contributions to self-employment retirement plans apply. Tax 2011 form For information on retirement plan contributions, see Publication 560 and Publication 590. Tax 2011 form Basis of Investment Property Basis is a way of measuring your investment in property for tax purposes. Tax 2011 form You must know the basis of your property to determine whether you have a gain or loss on its sale or other disposition. Tax 2011 form Investment property you buy normally has an original basis equal to its cost. Tax 2011 form If you get property in some way other than buying it, such as by gift or inheritance, its fair market value may be important in figuring the basis. Tax 2011 form Cost Basis The basis of property you buy is usually its cost. Tax 2011 form The cost is the amount you pay in cash, debt obligations, or other property or services. Tax 2011 form Unstated interest. Tax 2011 form   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, minus the amount considered to be unstated interest. Tax 2011 form You generally have unstated interest if your interest rate is less than the applicable federal rate. Tax 2011 form For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Tax 2011 form Basis Other Than Cost There are times when you must use a basis other than cost. Tax 2011 form In these cases, you may need to know the property's fair market value or the adjusted basis of the previous owner. Tax 2011 form Fair market value. Tax 2011 form   This is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. Tax 2011 form Sales of similar property, around the same date, may be helpful in figuring fair market value. Tax 2011 form Property Received for Services If you receive investment property for services, you must include the property's fair market value in income. Tax 2011 form The amount you include in income then becomes your basis in the property. Tax 2011 form If the services were performed for a price that was agreed to beforehand, this price will be accepted as the fair market value of the property if there is no evidence to the contrary. Tax 2011 form Restricted property. Tax 2011 form   If you receive, as payment for services, property that is subject to certain restrictions, your basis in the property generally is its fair market value when it becomes substantially vested. Tax 2011 form Property becomes substantially vested when it is transferable or is no longer subject to substantial risk of forfeiture, whichever happens first. Tax 2011 form See Restricted Property in Publication 525 for more information. Tax 2011 form Bargain purchases. Tax 2011 form   If you buy investment property at less than fair market value, as payment for services, you must include the difference in income. Tax 2011 form Your basis in the property is the price you pay plus the amount you include in income. Tax 2011 form Property Received in Taxable Trades If you received investment property in trade for other property, the basis of the new property is its fair market value at the time of the trade unless you received the property in a nontaxable trade. Tax 2011 form Example. Tax 2011 form You trade A Company stock for B Company stock having a fair market value of $1,200. Tax 2011 form If the adjusted basis of the A Company stock is less than $1,200, you have a taxable gain on the trade. Tax 2011 form If the adjusted basis of the A Company stock is more than $1,200, you have a deductible loss on the trade. Tax 2011 form The basis of your B Company stock is $1,200. Tax 2011 form If you later sell the B Company stock for $1,300, you will have a gain of $100. Tax 2011 form Property Received in Nontaxable Trades If you have a nontaxable trade, you do not recognize gain or loss until you dispose of the property you received in the trade. Tax 2011 form See Nontaxable Trades , later. Tax 2011 form The basis of property you received in a nontaxable or partly nontaxable trade is generally the same as the adjusted basis of the property you gave up. Tax 2011 form Increase this amount by any cash you paid, additional costs you had, and any gain recognized. Tax 2011 form Reduce this amount by any cash or unlike property you received, any loss recognized, and any liability of yours that was assumed or treated as assumed. Tax 2011 form Property Received From Your Spouse If property is transferred to you from your spouse (or former spouse, if the transfer is incident to your divorce), your basis is the same as your spouse's or former spouse's adjusted basis just before the transfer. Tax 2011 form See Transfers Between Spouses , later. Tax 2011 form Recordkeeping. Tax 2011 form The transferor must give you the records necessary to determine the adjusted basis and holding period of the property as of the date of the transfer. Tax 2011 form Property Received as a Gift To figure your basis in property that you received as a gift, you must know its adjusted basis to the donor just before it was given to you, its fair market value at the time it was given to you, the amount of any gift tax paid on it, and the date it was given to you. Tax 2011 form Fair market value less than donor's adjusted basis. Tax 2011 form   If the fair market value of the property at the time of the gift was less than the donor's adjusted basis just before the gift, your basis for gain on its sale or other disposition is the same as the donor's adjusted basis plus or minus any required adjustments to basis during the period you hold the property. Tax 2011 form Your basis for loss is its fair market value at the time of the gift plus or minus any required adjustments to basis during the period you hold the property. Tax 2011 form No gain or loss. Tax 2011 form   If you use the basis for figuring a gain and the result is a loss, and then use the basis for figuring a loss and the result is a gain, you will have neither a gain nor a loss. Tax 2011 form Example. Tax 2011 form You receive a gift of investment property having an adjusted basis of $10,000 at the time of the gift. Tax 2011 form The fair market value at the time of the gift is $9,000. Tax 2011 form You later sell the property for $9,500. Tax 2011 form You have neither gain nor loss. Tax 2011 form Your basis for figuring gain is $10,000, and $9,500 minus $10,000 results in a $500 loss. Tax 2011 form Your basis for figuring loss is $9,000, and $9,500 minus $9,000 results in a $500 gain. Tax 2011 form Fair market value equal to or more than donor's adjusted basis. Tax 2011 form   If the fair market value of the property at the time of the gift was equal to or more than the donor's adjusted basis just before the gift, your basis for gain or loss on its sale or other disposition is the donor's adjusted basis plus or minus any required adjustments to basis during the period you hold the property. Tax 2011 form Also, you may be allowed to add to the donor's adjusted basis all or part of any gift tax paid, depending on the date of the gift. Tax 2011 form Gift received before 1977. Tax 2011 form   If you received property as a gift before 1977, your basis in the property is the donor's adjusted basis increased by the total gift tax paid on the gift. Tax 2011 form However, your basis cannot be more than the fair market value of the gift at the time it was given to you. Tax 2011 form Example 1. Tax 2011 form You were given XYZ Company stock in 1976. Tax 2011 form At the time of the gift, the stock had a fair market value of $21,000. Tax 2011 form The donor's adjusted basis was $20,000. Tax 2011 form The donor paid a gift tax of $500 on the gift. Tax 2011 form Your basis for gain or loss is $20,500, the donor's adjusted basis plus the amount of gift tax paid. Tax 2011 form Example 2. Tax 2011 form The facts are the same as in Example 1 except that the gift tax paid was $1,500. Tax 2011 form Your basis is $21,000, the donor's adjusted basis plus the gift tax paid, but limited to the fair market value of the stock at the time of the gift. Tax 2011 form Gift received after 1976. Tax 2011 form   If you received property as a gift after 1976, your basis is the donor's adjusted basis increased by the part of the gift tax paid that was for the net increase in value of the gift. Tax 2011 form You figure this part by multiplying the gift tax paid on the gift by a fraction. Tax 2011 form The numerator (top part) is the net increase in value of the gift and the denominator (bottom part) is the amount of the gift. Tax 2011 form   The net increase in value of the gift is the fair market value of the gift minus the donor's adjusted basis. Tax 2011 form The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Tax 2011 form Example. Tax 2011 form In 2013, you received a gift of property from your mother. Tax 2011 form At the time of the gift, the property had a fair market value of $101,000 and an adjusted basis to her of $40,000. Tax 2011 form The amount of the gift for gift tax purposes was $87,000 ($101,000 minus the $14,000 annual exclusion), and your mother paid a gift tax of $21,000. Tax 2011 form You figure your basis in the following way: Fair market value $101,000 Minus: Adjusted basis 40,000 Net increase in value of gift $61,000 Gift tax paid $21,000 Multiplied by . Tax 2011 form 701 ($61,000 ÷ $87,000) . Tax 2011 form 701 Gift tax due to net increase in value $14,721 Plus: Adjusted basis of property to  your mother 40,000 Your basis in the property $54,721 Part sale, part gift. Tax 2011 form   If you get property in a transfer that is partly a sale and partly a gift, your basis is the larger of the amount you paid for the property or the transferor's adjusted basis in the property at the time of the transfer. Tax 2011 form Add to that amount the amount of any gift tax paid on the gift, as described in the preceding discussion. Tax 2011 form For figuring loss, your basis is limited to the property's fair market value at the time of the transfer. Tax 2011 form Gift tax information. Tax 2011 form   For information on gift tax, see Publication 950, Introduction to Estate and Gift Taxes. Tax 2011 form For information on figuring the amount of gift tax to add to your basis, see Property Received as a Gift in Publication 551. Tax 2011 form Property Received as Inheritance Before or after 2010. Tax 2011 form   If you inherited property from a decedent who died before or after 2010, or who died in 2010 and the executor of the decedent's estate elected not to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, your basis in that property generally is its fair market value (its appraised value on Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) on: The date of the decedent's death, or The later alternate valuation date if the estate qualifies for, and elects to use, alternate valuation. Tax 2011 form If no Form 706 was filed, use the appraised value on the date of death for state inheritance or transmission taxes. Tax 2011 form For stocks and bonds, if no Form 706 was filed and there are no state inheritance or transmission taxes, see the Form 706 instructions for figuring the fair market value of the stocks and bonds on the date of the decedent's death. Tax 2011 form Appreciated property you gave the decedent. Tax 2011 form   Your basis in certain appreciated property that you inherited is the decedent's adjusted basis in the property immediately before death rather than its fair market value. Tax 2011 form This applies to appreciated property that you or your spouse gave the decedent as a gift during the 1-year period ending on the date of death. Tax 2011 form Appreciated property is any property whose fair market value on the day you gave it to the decedent was more than its adjusted basis. Tax 2011 form More information. Tax 2011 form   See Publication 551 for more information on the basis of inherited property, including community property, property held by a surviving tenant in a joint tenancy or tenancy by the entirety, a qualified joint interest, and a farm or closely held business. Tax 2011 form Inherited in 2010 and executor elected to file Form 8939. Tax 2011 form   If you inherited property from a decedent who died in 2010 and the executor made the election to file Form 8939, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to figure your basis. Tax 2011 form Adjusted Basis Before you can figure any gain or loss on a sale, exchange, or other disposition of property or figure allowable depreciation, depletion, or amortization, you usually must make certain adjustments (increases and decreases) to the basis of the property. Tax 2011 form The result of these adjustments to the basis is the adjusted basis. Tax 2011 form Adjustments to the basis of stocks and bonds are explained in the following discussion. Tax 2011 form For information about other adjustments to basis, see Publication 551. Tax 2011 form Stocks and Bonds The basis of stocks or bonds you own generally is the purchase price plus the costs of purchase, such as commissions and recording or transfer fees. Tax 2011 form If you acquired stock or bonds other than by purchase, your basis is usually determined by fair market value or the previous owner's adjusted basis as discussed earlier under Basis Other Than Cost . Tax 2011 form The basis of stock must be adjusted for certain events that occur after purchase. Tax 2011 form For example, if you receive more stock from nontaxable stock dividends or stock splits, you must reduce the basis of your original stock. Tax 2011 form You must also reduce your basis when you receive nondividend distributions (discussed in chapter 1). Tax 2011 form These distributions, up to the amount of your basis, are a nontaxable return of capital. Tax 2011 form The IRS partners with companies that offer Form 8949 and Schedule D (Form 1040) software that can import trades from many brokerage firms and accounting software to help you keep track of your adjusted basis in securities. Tax 2011 form To find out more, go to www. Tax 2011 form irs. Tax 2011 form gov/Filing/Filing-Options. Tax 2011 form Identifying stock or bonds sold. Tax 2011 form   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. Tax 2011 form Adequate identification. Tax 2011 form   You will make an adequate identification if you show that certificates representing shares of stock from a lot that you bought on a certain date or for a certain price were delivered to your broker or other agent. Tax 2011 form Broker holds stock. Tax 2011 form   If you have left the stock certificates with your broker or other agent, you will make an adequate identification if you: Tell your broker or other agent the particular stock to be sold or transferred at the time of the sale or transfer, and Receive a written confirmation of this from your broker or other agent within a reasonable time. Tax 2011 form  Stock identified this way is the stock sold or transferred even if stock certificates from a different lot are delivered to the broker or other agent. Tax 2011 form Single stock certificate. Tax 2011 form   If you bought stock in different lots at different times and you hold a single stock certificate for this stock, you will make an adequate identification if you: Tell your broker or other agent the particular stock to be sold or transferred when you deliver the certificate to your broker or other agent, and Receive a written confirmation of this from your broker or other agent within a reasonable time. Tax 2011 form   If you sell part of the stock represented by a single certificate directly to the buyer instead of through a broker, you will make an adequate identification if you keep a written record of the particular stock that you intend to sell. Tax 2011 form Bonds. Tax 2011 form   These methods of identification also apply to bonds sold or transferred. Tax 2011 form Identification not possible. Tax 2011 form   If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Tax 2011 form Except for certain mutual fund shares, discussed later, you cannot use the average price per share to figure gain or loss on the sale of the shares. Tax 2011 form Example. Tax 2011 form You bought 100 shares of stock of XYZ Corporation in 1998 for $10 a share. Tax 2011 form In January 1999 you bought another 200 shares for $11 a share. Tax 2011 form In July 1999 you gave your son 50 shares. Tax 2011 form In December 2001 you bought 100 shares for $9 a share. Tax 2011 form In April 2013 you sold 130 shares. Tax 2011 form You cannot identify the shares you disposed of, so you must use the stock you acquired first to figure the basis. Tax 2011 form The shares of stock you gave your son had a basis of $500 (50 × $10). Tax 2011 form You figure the basis of the 130 shares of stock you sold in 2013 as follows: 50 shares (50 × $10) balance of stock bought in 1998 $ 500 80 shares (80 × $11) stock bought in January 1999 880 Total basis of stock sold in 2013 $1,380 Shares in a mutual fund or REIT. Tax 2011 form    The basis of shares in a mutual fund (or other regulated investment company) or a real estate investment trust (REIT) is generally figured in the same way as the basis of other stock and usually includes any commissions or load charges paid for the purchase. Tax 2011 form Example. Tax 2011 form You bought 100 shares of Fund A for $10 a share. Tax 2011 form You paid a $50 commission to the broker for the purchase. Tax 2011 form Your cost basis for each share is $10. Tax 2011 form 50 ($1,050 ÷ 100). Tax 2011 form Commissions and load charges. Tax 2011 form   The fees and charges you pay to acquire or redeem shares of a mutual fund are not deductible. Tax 2011 form You can usually add acquisition fees and charges to your cost of the shares and thereby increase your basis. Tax 2011 form A fee paid to redeem the shares is usually a reduction in the redemption price (sales price). Tax 2011 form   You cannot add your entire acquisition fee or load charge to the cost of the mutual fund shares acquired if all of the following conditions apply. Tax 2011 form You get a reinvestment right because of the purchase of the shares or the payment of the fee or charge. Tax 2011 form You dispose of the shares within 90 days of the purchase date. Tax 2011 form You acquire new shares in the same mutual fund or another mutual fund, for which the fee or charge is reduced or waived because of the reinvestment right you got when you acquired the original shares. Tax 2011 form   The amount of the original fee or charge in excess of the reduction in (3) is added to the cost of the original shares. Tax 2011 form The rest of the original fee or charge is added to the cost basis of the new shares (unless all three conditions above also apply to the purchase of the new shares). Tax 2011 form Choosing average basis for mutual fund shares. Tax 2011 form   You can choose to use the average basis of mutual fund shares if you acquired the identical shares at various times and prices, or you acquired the shares after 2010 in connection with a dividend reinvestment plan, and left them on deposit in an account kept by a custodian or agent. Tax 2011 form The methods you can use to figure average basis are explained later. Tax 2011 form Undistributed capital gains. Tax 2011 form   If you had to include in your income any undistributed capital gains of the mutual fund or REIT, increase your basis in the stock by the difference between the amount you included and the amount of tax paid for you by the fund or REIT. Tax 2011 form See Undistributed capital gains of mutual funds and REITs under Capital Gain Distributions in chapter 1. Tax 2011 form Reinvestment right. Tax 2011 form   This is the right to acquire mutual fund shares in the same or another mutual fund without paying a fee or load charge, or by paying a reduced fee or load charge. Tax 2011 form      The original cost basis of mutual fund shares you acquire by reinvesting your distributions is the amount of the distributions used to purchase each full or fractional share. Tax 2011 form This rule applies even if the distribution is an exempt-interest dividend that you do not report as income. Tax 2011 form Table 4-1. Tax 2011 form This is a worksheet you can use to keep track of the adjusted basis of your mutual fund shares. Tax 2011 form Enter the cost per share when you acquire new shares and any adjustments to their basis when the adjustment occurs. Tax 2011 form This worksheet will help you figure the adjusted basis when you sell or redeem shares. Tax 2011 form Table 4-1. Tax 2011 form Mutual Fund Record Mutual Fund Acquired1 Adjustment to Basis Per Share Adjusted2 Basis Per Share Sold or redeemed Date Number of Shares Cost Per Share Date Number of Shares                                                                                                                                                                                                                                                                         1 Include share received from reinvestment of distributions. Tax 2011 form 2 Cost plus or minus adjustments. Tax 2011 form Automatic investment service. Tax 2011 form   If you participate in an automatic investment service, your basis for each share of stock, including fractional shares, bought by the bank or other agent is the purchase price plus a share of the broker's commission. Tax 2011 form Dividend reinvestment plans. Tax 2011 form   If you participate in a dividend reinvestment plan and receive stock from the corporation at a discount, your basis is the full fair market value of the stock on the dividend payment date. Tax 2011 form You must include the amount of the discount in your income. Tax 2011 form Public utilities. Tax 2011 form   If, before 1986, you excluded from income the value of stock you had received under a qualified public utility reinvestment plan, your basis in that stock is zero. Tax 2011 form Stock dividends. Tax 2011 form   Stock dividends are distributions made by a corporation of its own stock. Tax 2011 form Generally, stock dividends are not taxable to you. Tax 2011 form However, see Distributions of Stock and Stock Rights under Dividends and Other Distributions in chapter 1 for some exceptions. Tax 2011 form If the stock dividends are not taxable, you must divide your basis for the old stock between the old and new stock. Tax 2011 form New and old stock identical. Tax 2011 form   If the new stock you received as a nontaxable dividend is identical to the old stock on which the dividend was declared, divide the adjusted basis of the old stock by the number of shares of old and new stock. Tax 2011 form The result is your basis for each share of stock. Tax 2011 form Example 1. Tax 2011 form You owned one share of common stock that you bought for $45. Tax 2011 form The corporation distributed two new shares of common stock for each share held. Tax 2011 form You then had three shares of common stock. Tax 2011 form Your basis in each share is $15 ($45 ÷ 3). Tax 2011 form Example 2. Tax 2011 form You owned two shares of common stock. Tax 2011 form You bought one for $30 and the other for $45. Tax 2011 form The corporation distributed two new shares of common stock for each share held. Tax 2011 form You had six shares after the distribution—three with a basis of $10 each ($30 ÷ 3) and three with a basis of $15 each ($45 ÷ 3). Tax 2011 form New and old stock not identical. Tax 2011 form   If the new stock you received as a nontaxable dividend is not identical to the old stock on which it was declared, the basis of the new stock is calculated differently. Tax 2011 form Divide the adjusted basis of the old stock between the old and the new stock in the ratio of the fair market value of each lot of stock to the total fair market value of both lots on the date of distribution of the new stock. Tax 2011 form Example. Tax 2011 form You bought a share of common stock for $100. Tax 2011 form Later, the corporation distributed a share of preferred stock for each share of common stock held. Tax 2011 form At the date of distribution, your common stock had a fair market value of $150 and the preferred stock had a fair market value of $50. Tax 2011 form You figure the basis of the old and new stock by dividing your $100 basis between them. Tax 2011 form The basis of your common stock is $75 (($150 ÷ $200) × $100), and the basis of the new preferred stock is $25 (($50 ÷ $200) × $100). Tax 2011 form Stock bought at various times. Tax 2011 form   Figure the basis of stock dividends received on stock you bought at various times and at different prices by allocating to each lot of stock the share of the stock dividends due to it. Tax 2011 form Taxable stock dividends. Tax 2011 form   If your stock dividend is taxable when you receive it, the basis of your new stock is its fair market value on the date of distribution. Tax 2011 form The basis of your old stock does not change. Tax 2011 form Stock splits. Tax 2011 form   Figure the basis of stock splits in the same way as stock dividends if identical stock is distributed on the stock held. Tax 2011 form Stock rights. Tax 2011 form   A stock right is a right to acquire a corporation's stock. Tax 2011 form It may be exercised, it may be sold if it has a market value, or it may expire. Tax 2011 form Stock rights are rarely taxable when you receive them. Tax 2011 form See Distributions of Stock and Stock Rights under Dividends and Other Distributions in chapter 1. Tax 2011 form Taxable stock rights. Tax 2011 form   If you receive stock rights that are taxable, the basis of the rights is their fair market value at the time of distribution. Tax 2011 form The basis of the old stock does not change. Tax 2011 form Nontaxable stock rights. Tax 2011 form   If you receive nontaxable stock rights and allow them to expire, they have no basis. Tax 2011 form   If you exercise or sell the nontaxable stock rights and if, at the time of distribution, the stock rights had a fair market value of 15% or more of the fair market value of the old stock, you must divide the adjusted basis of the old stock between the old stock and the stock rights. Tax 2011 form Use a ratio of the fair market value of each to the total fair market value of both at the time of distribution. Tax 2011 form   If the fair market value of the stock rights was less than 15%, their basis is zero. Tax 2011 form However, you can choose to divide the basis of the old stock between the old stock and the stock rights. Tax 2011 form To make the choice, attach a statement to your return for the year in which you received the rights, stating that you choose to divide the basis of the stock. Tax 2011 form Basis of new stock. Tax 2011 form   If you exercise the stock rights, the basis of the new stock is its cost plus the basis of the stock rights exercised. Tax 2011 form Example. Tax 2011 form You own 100 shares of ABC Company stock, which cost you $22 per share. Tax 2011 form The ABC Company gave you 10 nontaxable stock rights that would allow you to buy 10 more shares at $26 per share. Tax 2011 form At the time the stock rights were distributed, the stock had a market value of $30, not including the stock rights. Tax 2011 form Each stock right had a market value of $3. Tax 2011 form The market value of the stock rights was less than 15% of the market value of the stock, but you chose to divide the basis of your stock between the stock and the rights. Tax 2011 form You figure the basis of the rights and the basis of the old stock as follows: 100 shares × $22 = $2,200, basis of old stock   100 shares × $30 = $3,000, market value of old stock   10 rights × $3 = $30, market value of rights   ($3,000 ÷ $3,030) × $2,200 = $2,178. Tax 2011 form 22, new basis of old stock   ($30 ÷ $3,030) × $2,200 = $21. Tax 2011 form 78, basis of rights   If you sell the rights, the basis for figuring gain or loss is $2. Tax 2011 form 18 ($21. Tax 2011 form 78 ÷ 10) per right. Tax 2011 form If you exercise the rights, the basis of the stock you acquire is the price you pay ($26) plus the basis of the right exercised ($2. Tax 2011 form 18), or $28. Tax 2011 form 18 per share. Tax 2011 form The remaining basis of the old stock is $21. Tax 2011 form 78 per share. Tax 2011 form Investment property received in liquidation. Tax 2011 form   In general, if you receive investment property as a distribution in partial or complete liquidation of a corporation and if you recognize gain or loss when you acquire the property, your basis in the property is its fair market value at the time of the distribution. Tax 2011 form S corporation stock. Tax 2011 form   You must increase your basis in stock of an S corporation by your pro rata share of the following items. Tax 2011 form All income items of the S corporation, including tax-exempt income, that are separately stated and passed through to you as a shareholder. Tax 2011 form The nonseparately stated income of the S corporation. Tax 2011 form The amount of the deduction for depletion (other than oil and gas depletion) that is more than the basis of the property being depleted. Tax 2011 form   You must decrease your basis in stock of an S corporation by your pro rata share of the following items. Tax 2011 form Distributions by the S corporation that were not included in your income. Tax 2011 form All loss and deduction items of the S corporation that are separately stated and passed through to you. Tax 2011 form Any nonseparately stated loss of the S corporation. Tax 2011 form Any expense of the S corporation that is not deductible in figuring its taxable income and not properly chargeable to a capital account. Tax 2011 form The amount of your deduction for depletion of oil and gas wells to the extent the deduction is not more than your share of the adjusted basis of the wells. Tax 2011 form However, your basis in the stock cannot be reduced below zero. Tax 2011 form Specialized small business investment company stock or partnership interest. Tax 2011 form   If you bought this stock or interest as replacement property for publicly traded securities you sold at a gain, you must reduce the basis of the stock or interest by the amount of any postponed gain on that sale. Tax 2011 form See Rollover of Gain From Publicly Traded Securities , later. Tax 2011 form Qualified small business stock. Tax 2011 form   If you bought this stock as replacement property for other qualified small business stock you sold at a gain, you must reduce the basis of this replacement stock by the amount of any postponed gain on the earlier sale. Tax 2011 form See Gains on Qualified Small Business Stock , later. Tax 2011 form Short sales. Tax 2011 form   If you cannot deduct payments you make to a lender in lieu of dividends on stock used in a short sale, the amount you pay to the lender is a capital expense, and you must add it to the basis of the stock used to close the short sale. Tax 2011 form   See Payments in lieu of dividends , later, for information about deducting payments in lieu of dividends. Tax 2011 form Premiums on bonds. Tax 2011 form   If you buy a bond at a premium, the premium is treated as part of your basis in the bond. Tax 2011 form If you choose to amortize the premium paid on a taxable bond, you must reduce the basis of the bond by the amortized part of the premium each year over the life of the bond. Tax 2011 form   Although you cannot deduct the premium on a tax-exempt bond, you must amortize it to determine your adjusted basis in the bond. Tax 2011 form You must reduce the basis of the bond by the premium you amortized for the period you held the bond. Tax 2011 form   See Bond Premium Amortization in chapter 3 for more information. Tax 2011 form Market discount on bonds. Tax 2011 form   If you include market discount on a bond in income currently, increase the basis of your bond by the amount of market discount you include in your income. Tax 2011 form See Market Discount Bonds in chapter 1 for more information. Tax 2011 form Bonds purchased at par value. Tax 2011 form   A bond purchased at par value (face amount) has no premium or discount. Tax 2011 form When you sell or otherwise dispose of the bond, you figure the gain or loss by comparing the bond proceeds to the purchase price of the bond. Tax 2011 form Example. Tax 2011 form You purchased a bond several years ago for its par value of $10,000. Tax 2011 form You sold the bond this year for $10,100. Tax 2011 form You have a gain of $100. Tax 2011 form However, if you had sold the bond for $9,900, you would have a loss of $100. Tax 2011 form Acquisition discount on short-term obligations. Tax 2011 form   If you include acquisition discount on a short-term obligation in your income currently, increase the basis of the obligation by the amount of acquisition discount you include in your income. Tax 2011 form See Discount on Short-Term Obligations in chapter 1 for more information. Tax 2011 form Original issue discount (OID) on debt instruments. Tax 2011 form   Increase the basis of a debt instrument by the OID you include in your income. Tax 2011 form See Original Issue Discount (OID) in chapter 1. Tax 2011 form Discounted tax-exempt obligations. Tax 2011 form   OID on tax-exempt obligations is generally not taxable. Tax 2011 form However, when you dispose of a tax-exempt obligation issued after September 3, 1982, that you acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. Tax 2011 form The accrued OID is added to the basis of the obligation to determine your gain or loss. Tax 2011 form   For information on determining OID on a long-term obligation, see Debt Instruments Issued After July 1, 1982, and Before 1985 or Debt Instruments Issued After 1984, whichever applies, in Publication 1212 under Figuring OID on Long-Term Debt Instruments. Tax 2011 form   If the tax-exempt obligation has a maturity of 1 year or less, accrue OID under the rules for acquisition discount on short-term obligations. Tax 2011 form See Discount on Short-Term Obligations in chapter 1. Tax 2011 form Stripped tax-exempt obligation. Tax 2011 form   If you acquired a stripped tax-exempt bond or coupon after October 22, 1986, you must accrue OID on it to determine its adjusted basis when you dispose of it. Tax 2011 form For stripped tax-exempt bonds or coupons acquired after June 10, 1987, part of this OID may be taxable. Tax 2011 form You accrue the OID on these obligations in the manner described in chapter 1 under Stripped Bonds and Coupons . Tax 2011 form   Increase your basis in the stripped tax-exempt bond or coupon by the taxable and nontaxable accrued OID. Tax 2011 form Also increase your basis by the interest that accrued (but was not paid and was not previously reflected in your basis) before the date you sold the bond or coupon. Tax 2011 form In addition, for bonds acquired after June 10, 1987, add to your basis any accrued market discount not previously reflected in basis. Tax 2011 form How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. Tax 2011 form Gain. Tax 2011 form   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. Tax 2011 form Loss. Tax 2011 form   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. Tax 2011 form Amount realized. Tax 2011 form   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). Tax 2011 form Amount realized includes the money you receive plus the fair market value of any property or services you receive. Tax 2011 form   If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. Tax 2011 form For more information, see Publication 537. Tax 2011 form   If a buyer of property issues a debt instrument to the seller of the property, the amount realized is determined by reference to the issue price of the debt instrument, which may or may not be the fair market value of the debt instrument. Tax 2011 form See Regulations section 1. Tax 2011 form 1001-1(g). Tax 2011 form However, if the debt instrument was previously issued by a third party (one not part of the sale transaction), the fair market value of the debt instrument is used to determine the amount realized. Tax 2011 form Fair market value. Tax 2011 form   Fair market value is the price at which property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. Tax 2011 form Example. Tax 2011 form You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. Tax 2011 form Your gain is $3,000 ($10,000 – $7,000). Tax 2011 form If you also receive a note for $6,000 that has an issue price of $6,000, your gain is $9,000 ($10,000 + $6,000 – $7,000). Tax 2011 form Debt paid off. Tax 2011 form   A debt against the property, or against you, that is paid off as a part of the transaction or that is assumed by the buyer must be included in the amount realized. Tax 2011 form This is true even if neither you nor the buyer is personally liable for the debt. Tax 2011 form For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. Tax 2011 form Example. Tax 2011 form You sell stock that you had pledged as security for a bank loan of $8,000. Tax 2011 form Your basis in the stock is $6,000. Tax 2011 form The buyer pays off your bank loan and pays you $20,000 in cash. Tax 2011 form The amount realized is $28,000 ($20,000 + $8,000). Tax 2011 form Your gain is $22,000 ($28,000 – $6,000). Tax 2011 form Payment of cash. Tax 2011 form   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. Tax 2011 form Determine your gain or loss by subtracting the cash you pay and the adjusted basis of the property you trade in from the amount you realize. Tax 2011 form If the result is a positive number, it is a gain. Tax 2011 form If the result is a negative number, it is a loss. Tax 2011 form No gain or loss. Tax 2011 form   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. Tax 2011 form In this case, you may have neither a gain nor a loss. Tax 2011 form See No gain or loss in the discussion on the basis of property you received as a gift under Basis Other Than Cost, earlier. Tax 2011 form Special Rules for Mutual Funds To figure your gain or loss when you dispose of mutual fund shares, you need to determine which shares were sold and the basis of those shares. Tax 2011 form If your shares in a mutual fund were acquired all on the same day and for the same price, figuring their basis is not difficu
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SOI Tax Stats - Estate Tax Statistics

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Estate Tax Statistics OneSheet (PDF)
The OneSheet presents a project description, highlights of the data, and selected figures.

What is the Federal Estate Tax?

The Federal estate tax is a tax on the right to transfer property at death. The tax, reported on Form 706, United States Estate (and Generation Skipping Transfer) Tax Return, is applied to estates for which at-death gross assets, the "gross estate," exceed the filing threshold. Included in gross estate are real estate, cash, stocks, bonds, businesses, and decedent-owned life insurance policies. Deductions are allowed for administrative expenses, indebtedness, taxes, casualty loss, and charitable and marital transfers. The taxable estate is calculated as gross estate less allowable deductions.

For information about selected terms and concepts, a description of the data sources and limitations, and links to recent revisions of Form 706, please visit Estate Tax Study Metadata.

The IRS Estate Tax page provides further information concerning the estate tax.

Use the links below to find information about Estate Tax Statistics:

Data

Publications

Projections

     
Filing Year Data Tables SOI Bulletin Articles Estate Tax Projections
                         
Year-of-Death Data Tables Research Papers
                           

Linked Estate Tax-Form 1040 Data Tables
 

 

Presentations 
 

Compendium of Federal Estate Tax & Personal Wealth Studies: Volume 1  

Compendium of Federal Transfer Tax & Personal Wealth Studies: Volume 2

 

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Page Last Reviewed or Updated: 26-Dec-2013

The Tax 2011 Form

Tax 2011 form 16. Tax 2011 form   How To Get Tax Help Table of Contents Go online, use a smart phone, call or walk in to an office near you. Tax 2011 form Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. Tax 2011 form Free help with your tax return. Tax 2011 form   Free help in preparing your return is available nationwide from IRS-certified volunteers. Tax 2011 form The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. Tax 2011 form The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Tax 2011 form Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Tax 2011 form Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. Tax 2011 form To find the nearest VITA or TCE site, visit IRS. Tax 2011 form gov or call 1-800-906-9887. Tax 2011 form   As part of the TCE program, AARP offers the Tax-Aide counseling program. Tax 2011 form To find the nearest AARP Tax-Aide site, visit AARP's website at www. Tax 2011 form aarp. Tax 2011 form org/money/taxaide or call 1-888-227-7669. Tax 2011 form   For more information on these programs, go to IRS. Tax 2011 form gov and enter “VITA” in the search box. Tax 2011 form Internet. Tax 2011 form IRS. Tax 2011 form gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. Tax 2011 form Apply for an Employer Identification Number (EIN). Tax 2011 form Go to IRS. Tax 2011 form gov and enter Apply for an EIN in the search box. Tax 2011 form Request an Electronic Filing PIN by going to IRS. Tax 2011 form gov and entering Electronic Filing PIN in the search box. Tax 2011 form Check the status of your 2013 refund with Where's My Refund? Go to IRS. Tax 2011 form gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax 2011 form If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Tax 2011 form Checking the status of your amended return. Tax 2011 form Go to IRS. Tax 2011 form gov and enter Where's My Amended Return in the search box. Tax 2011 form Download forms, instructions, and publications, including some accessible versions. Tax 2011 form Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. Tax 2011 form gov or IRS2Go. Tax 2011 form Tax return and tax account transcripts are generally available for the current year and past three years. Tax 2011 form Figure your income tax withholding with the IRS Withholding Calculator on IRS. Tax 2011 form gov. Tax 2011 form Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Tax 2011 form Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Tax 2011 form gov. Tax 2011 form Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. Tax 2011 form gov or IRS2Go. Tax 2011 form Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. Tax 2011 form An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. Tax 2011 form Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. Tax 2011 form If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. Tax 2011 form Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Tax 2011 form Locate the nearest volunteer help site with the VITA Locator Tool on IRS. Tax 2011 form gov. Tax 2011 form Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Tax 2011 form The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Tax 2011 form Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. Tax 2011 form AARP offers the Tax-Aide counseling program as part of the TCE program. Tax 2011 form Visit AARP's website to find the nearest Tax-Aide location. Tax 2011 form Research your tax questions. Tax 2011 form Search publications and instructions by topic or keyword. Tax 2011 form Read the Internal Revenue Code, regulations, or other official guidance. Tax 2011 form Read Internal Revenue Bulletins. Tax 2011 form Sign up to receive local and national tax news by email. Tax 2011 form Phone. Tax 2011 form You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Tax 2011 form Download the free IRS2Go mobile app from the iTunes app store or from Google Play. Tax 2011 form Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Tax 2011 form Call to locate the nearest volunteer help site, 1-800-906-9887. Tax 2011 form Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Tax 2011 form The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. Tax 2011 form Most VITA and TCE sites offer free electronic filing. Tax 2011 form Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Tax 2011 form Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Tax 2011 form Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. Tax 2011 form The automated Where's My Refund? information is available 24 hours a day, 7 days a week. Tax 2011 form If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Tax 2011 form Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Tax 2011 form Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Tax 2011 form Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. Tax 2011 form Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Tax 2011 form Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). Tax 2011 form You should receive your order within 10 business days. Tax 2011 form Call to order transcripts of your tax returns or tax account, 1-800-908-9946. Tax 2011 form Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. Tax 2011 form Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. Tax 2011 form Call to ask tax questions, 1-800-829-1040. Tax 2011 form Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Tax 2011 form The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Tax 2011 form These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. Tax 2011 form gsa. Tax 2011 form gov/fedrelay. Tax 2011 form Walk-in. Tax 2011 form You can find a selection of forms, publications and services — in-person, face-to-face. Tax 2011 form Products. Tax 2011 form You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Tax 2011 form Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Tax 2011 form Services. Tax 2011 form You can walk in to your local TAC most business days for personal, face-to-face tax help. Tax 2011 form An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Tax 2011 form If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. Tax 2011 form No appointment is necessary—just walk in. Tax 2011 form Before visiting, check www. Tax 2011 form irs. Tax 2011 form gov/localcontacts for hours of operation and services provided. Tax 2011 form Mail. Tax 2011 form You can send your order for forms, instructions, and publications to the address below. Tax 2011 form You should receive a response within 10 business days after your request is received. Tax 2011 form  Internal Revenue Service 1201 N. Tax 2011 form Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. Tax 2011 form   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Tax 2011 form Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Tax 2011 form What can TAS do for you?   We can offer you free help with IRS problems that you can't resolve on your own. Tax 2011 form We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Tax 2011 form You face (or your business is facing) an immediate threat of adverse action. Tax 2011 form You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Tax 2011 form   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Tax 2011 form Here's why we can help: TAS is an independent organization within the IRS. Tax 2011 form Our advocates know how to work with the IRS. Tax 2011 form Our services are free and tailored to meet your needs. Tax 2011 form We have offices in every state, the District of Columbia, and Puerto Rico. Tax 2011 form How can you reach us?   If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. Tax 2011 form irs. Tax 2011 form gov/advocate, or call us toll-free at 1-877-777-4778. Tax 2011 form How else does TAS help taxpayers?   TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Tax 2011 form If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Tax 2011 form irs. Tax 2011 form gov/sams. Tax 2011 form Low Income Taxpayer Clinics. Tax 2011 form   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. Tax 2011 form Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Tax 2011 form Visit www. Tax 2011 form TaxpayerAdvocate. Tax 2011 form irs. Tax 2011 form gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. Tax 2011 form Prev  Up  Next   Home   More Online Publications