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Tax Form 2011

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Tax Form 2011

Tax form 2011 11. Tax form 2011   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Tax form 2011 Nondeductible losses. Tax form 2011 Family pet. Tax form 2011 Progressive deterioration. Tax form 2011 Decline in market value of stock. Tax form 2011 Mislaid or lost property. Tax form 2011 Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. Tax form 2011 Related persons. Tax form 2011 Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Tax form 2011 Covered disaster area. Tax form 2011 Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Tax form 2011 A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Tax form 2011 A theft occurs when property is stolen. Tax form 2011 A condemnation occurs when private property is legally taken for public use without the owner's consent. Tax form 2011 A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Tax form 2011 You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. Tax form 2011 An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. Tax form 2011 If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. Tax form 2011 For more information, see Postponing Gain , later. Tax form 2011 Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Tax form 2011 Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Tax form 2011 If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. Tax form 2011 Casualty. Tax form 2011   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Tax form 2011 A sudden event is one that is swift, not gradual or progressive. Tax form 2011 An unexpected event is one that is ordinarily unanticipated and unintended. Tax form 2011 An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged. Tax form 2011 Deductible losses. Tax form 2011   Deductible casualty losses can result from a number of different causes, including the following. Tax form 2011 Airplane crashes. Tax form 2011 Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Tax form 2011 Earthquakes. Tax form 2011 Fires (but see Nondeductible losses next for exceptions). Tax form 2011 Floods. Tax form 2011 Freezing. Tax form 2011 Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses, in Publication 547. Tax form 2011 Lightning. Tax form 2011 Storms, including hurricanes and tornadoes. Tax form 2011 Terrorist attacks. Tax form 2011 Vandalism. Tax form 2011 Volcanic eruptions. Tax form 2011 Nondeductible losses. Tax form 2011   A casualty loss is not deductible if the damage or destruction is caused by the following. Tax form 2011 Accidentally breaking articles such as glassware or china under normal conditions. Tax form 2011 A family pet (explained below). Tax form 2011 A fire if you willfully set it, or pay someone else to set it. Tax form 2011 A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Tax form 2011 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Tax form 2011 Progressive deterioration (explained below). Tax form 2011 Family pet. Tax form 2011   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. Tax form 2011 Example. Tax form 2011 You keep your horse in your yard. Tax form 2011 The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Tax form 2011 Some of the trees were completely girdled and died. Tax form 2011 Because the damage was not unexpected or unusual, the loss is not deductible. Tax form 2011 Progressive deterioration. Tax form 2011   Loss of property due to progressive deterioration is not deductible as a casualty loss. Tax form 2011 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Tax form 2011 Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Tax form 2011 However, weather-related conditions or disease may cause another type of involuntary conversion. Tax form 2011 See Other Involuntary Conversions , later. Tax form 2011 Theft. Tax form 2011   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Tax form 2011 The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Tax form 2011 You do not need to show a conviction for theft. Tax form 2011   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Tax form 2011 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Tax form 2011 Decline in market value of stock. Tax form 2011   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. Tax form 2011 However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. Tax form 2011 You report a capital loss on Schedule D (Form 1040). Tax form 2011 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Tax form 2011 Mislaid or lost property. Tax form 2011   The simple disappearance of money or property is not a theft. Tax form 2011 However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Tax form 2011 Example. Tax form 2011 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Tax form 2011 The diamond falls from the ring and is never found. Tax form 2011 The loss of the diamond is a casualty. Tax form 2011 Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Tax form 2011 The following is a discussion of some losses you can deduct and some you cannot deduct. Tax form 2011 Livestock or produce bought for resale. Tax form 2011   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Tax form 2011 If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. Tax form 2011 You cannot take a separate deduction. Tax form 2011 Livestock, plants, produce, and crops raised for sale. Tax form 2011   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Tax form 2011 You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Tax form 2011   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. Tax form 2011 You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Tax form 2011 The uniform capitalization rules are discussed in chapter 6. Tax form 2011   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. Tax form 2011 You get the deduction by omitting the item from your inventory at the close of your tax year. Tax form 2011 You cannot take a separate casualty or theft deduction. Tax form 2011 Income loss. Tax form 2011   A loss of future income is not deductible. Tax form 2011 Example. Tax form 2011 A severe flood destroyed your crops. Tax form 2011 Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . Tax form 2011 You estimate that the crop loss will reduce your farm income by $25,000. Tax form 2011 This loss of future income is also not deductible. Tax form 2011 Loss of timber. Tax form 2011   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Tax form 2011 If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Tax form 2011 See Postponing Gain , later. Tax form 2011 Property used in farming. Tax form 2011   Casualty and theft losses of property used in your farm business usually result in deductible losses. Tax form 2011 If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. Tax form 2011 See How To Figure a Loss , later. Tax form 2011 Raised draft, breeding, dairy, or sporting animals. Tax form 2011   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. Tax form 2011 However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. Tax form 2011 You use inventories to determine your income and you included the animals in your inventory. Tax form 2011 You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. Tax form 2011 When you include livestock in inventory, its last inventory value is its basis. Tax form 2011 When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. Tax form 2011 You cannot take a separate deduction. Tax form 2011 How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. Tax form 2011 Farm property. Tax form 2011   Farm property is the property you use in your farming business. Tax form 2011 If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. Tax form 2011   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Tax form 2011 However, the deduction limits, discussed later, do not apply to farm property. Tax form 2011 Personal-use property. Tax form 2011   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. Tax form 2011 The following items are examples of personal-use property: Your main home. Tax form 2011 Furniture and electronics used in your main home and not used in a home office or for business purposes. Tax form 2011 Clothing and jewelry. Tax form 2011 An automobile used for nonbusiness purposes. Tax form 2011 You figure the casualty or theft loss on this property by taking the following steps. Tax form 2011 Determine your adjusted basis in the property before the casualty or theft. Tax form 2011 Determine the decrease in fair market value of the property as a result of the casualty or theft. Tax form 2011 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Tax form 2011 You must apply the deduction limits, discussed later, to determine your deductible loss. Tax form 2011    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Tax form 2011 It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Tax form 2011 Adjusted basis. Tax form 2011   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Tax form 2011 For more information about adjusted basis, see chapter 6. Tax form 2011 Decrease in fair market value (FMV). Tax form 2011   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Tax form 2011 FMV is defined in chapter 10 under Payments Received or Considered Received . Tax form 2011 Appraisal. Tax form 2011   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Tax form 2011 But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Tax form 2011   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. Tax form 2011 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Tax form 2011 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Tax form 2011 Cost of cleaning up or making repairs. Tax form 2011   The cost of cleaning up after a casualty is not part of a casualty loss. Tax form 2011 Neither is the cost of repairing damaged property after a casualty. Tax form 2011 But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Tax form 2011 The repairs are actually made. Tax form 2011 The repairs are necessary to bring the property back to its condition before the casualty. Tax form 2011 The amount spent for repairs is not excessive. Tax form 2011 The repairs fix the damage only. Tax form 2011 The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Tax form 2011 Related expenses. Tax form 2011   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. Tax form 2011 However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Tax form 2011 Separate computations for more than one item of property. Tax form 2011   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. Tax form 2011 Then combine the losses to determine your total loss. Tax form 2011    There is an exception to this rule for personal-use real property. Tax form 2011 See Exception for personal-use real property, later. Tax form 2011 Example. Tax form 2011 A fire on your farm damaged a tractor and the barn in which it was stored. Tax form 2011 The tractor had an adjusted basis of $3,300. Tax form 2011 Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Tax form 2011 The barn had an adjusted basis of $28,000. Tax form 2011 Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Tax form 2011 You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Tax form 2011 Figure your deductible casualty loss separately for the two items of property. Tax form 2011     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. Tax form 2011   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Tax form 2011 Figure the loss using the smaller of the following. Tax form 2011 The decrease in FMV of the entire property. Tax form 2011 The adjusted basis of the entire property. Tax form 2011 Example. Tax form 2011 You bought a farm in 1990 for $160,000. Tax form 2011 The adjusted basis of the residential part is now $128,000. Tax form 2011 In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Tax form 2011 The adjusted basis of the residential part includes the $7,500. Tax form 2011 The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Tax form 2011 The trees were not covered by insurance. Tax form 2011 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. Tax form 2011   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Tax form 2011 You do not have a casualty or theft loss to the extent you are reimbursed. Tax form 2011   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Tax form 2011 You must reduce your loss even if you do not receive payment until a later tax year. Tax form 2011    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. Tax form 2011 You may have to include a portion of these payments in your income. Tax form 2011 See Insurance payments for living expenses in Publication 547 for details. Tax form 2011 Disaster relief. Tax form 2011   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss, unless they are replacements for lost or destroyed property. Tax form 2011 Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Tax form 2011   Generally, disaster relief grants received under the Robert T. Tax form 2011 Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Tax form 2011 See Federal disaster relief grants , later, under Disaster Area Losses . Tax form 2011   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Tax form 2011 See Qualified disaster relief payments , later, under Disaster Area Losses . Tax form 2011 Reimbursement received after deducting loss. Tax form 2011   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Tax form 2011 Actual reimbursement less than expected. Tax form 2011   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. Tax form 2011 Actual reimbursement more than expected. Tax form 2011   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Tax form 2011 However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Tax form 2011 Do not refigure your tax for the year you claimed the deduction. Tax form 2011 See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Tax form 2011 If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. Tax form 2011 See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. Tax form 2011 Actual reimbursement same as expected. Tax form 2011   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. Tax form 2011 Lump-sum reimbursement. Tax form 2011   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. Tax form 2011 Figure the gain or loss separately for each asset that has a separate basis. Tax form 2011 Adjustments to basis. Tax form 2011   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any deductible loss. Tax form 2011 The result is your adjusted basis in the property. Tax form 2011 Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Tax form 2011 See Adjusted Basis in chapter 6 for more information. Tax form 2011 Example. Tax form 2011 You built a new silo for $25,000. Tax form 2011 This is the basis in your silo because that is the total cost you incurred to build it. Tax form 2011 During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Tax form 2011 In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. Tax form 2011 Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Tax form 2011 Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). Tax form 2011 There are two limits on the deduction for casualty or theft loss of personal-use property. Tax form 2011 You figure these limits on Form 4684. Tax form 2011 $100 rule. Tax form 2011   You must reduce each casualty or theft loss on personal-use property by $100. Tax form 2011 This rule applies after you have subtracted any reimbursement. Tax form 2011 10% rule. Tax form 2011   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Tax form 2011 Apply this rule after you reduce each loss by $100. Tax form 2011 Adjusted gross income is on line 38 of Form 1040. Tax form 2011 Example. Tax form 2011 In June, you discovered that your house had been burglarized. Tax form 2011 Your loss after insurance reimbursement was $2,000. Tax form 2011 Your adjusted gross income for the year you discovered the burglary is $57,000. Tax form 2011 Figure your theft loss deduction as follows: 1. Tax form 2011 Loss after insurance $2,000 2. Tax form 2011 Subtract $100 100 3. Tax form 2011 Loss after $100 rule $1,900 4. Tax form 2011 Subtract 10% (. Tax form 2011 10) × $57,000 AGI $5,700 5. Tax form 2011 Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). Tax form 2011    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. Tax form 2011 See 10% Rule in Publication 547. Tax form 2011 When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Tax form 2011 You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Tax form 2011 However, losses in federally declared disaster areas are subject to different rules. Tax form 2011 See Disaster Area Losses , later, for an exception. Tax form 2011 If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. Tax form 2011 Leased property. Tax form 2011   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. Tax form 2011 This is true even if the loss occurred or the liability was paid in a different year. Tax form 2011 You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Tax form 2011 Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Tax form 2011 Example. Tax form 2011 Robert leased a tractor from First Implement, Inc. Tax form 2011 , for use in his farm business. Tax form 2011 The tractor was destroyed by a tornado in June 2012. Tax form 2011 The loss was not insured. Tax form 2011 First Implement billed Robert for the fair market value of the tractor on the date of the loss. Tax form 2011 Robert disagreed with the bill and refused to pay it. Tax form 2011 First Implement later filed suit in court against Robert. Tax form 2011 In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. Tax form 2011 Robert paid $20,000 in June 2013. Tax form 2011 He can claim the $20,000 as a loss on his 2013 tax return. Tax form 2011 Net operating loss (NOL). Tax form 2011   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Tax form 2011 An NOL can be carried back or carried forward and deducted from income in other years. Tax form 2011 See Publication 536 for more information on NOLs. Tax form 2011 Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Tax form 2011 You must have records to support the amount you claim for the loss. Tax form 2011 Casualty loss proof. Tax form 2011   For a casualty loss, your records should show all the following information. Tax form 2011 The type of casualty (car accident, fire, storm, etc. Tax form 2011 ) and when it occurred. Tax form 2011 That the loss was a direct result of the casualty. Tax form 2011 That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. Tax form 2011 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Tax form 2011 Theft loss proof. Tax form 2011   For a theft loss, your records should show all the following information. Tax form 2011 When you discovered your property was missing. Tax form 2011 That your property was stolen. Tax form 2011 That you were the owner of the property. Tax form 2011 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Tax form 2011 Figuring a Gain A casualty or theft may result in a taxable gain. Tax form 2011 If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Tax form 2011 You generally report your gain as income in the year you receive the reimbursement. Tax form 2011 However, depending on the type of property you receive, you may not have to report your gain. Tax form 2011 See Postponing Gain , later. Tax form 2011 Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. Tax form 2011 Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. Tax form 2011 Amount you receive. Tax form 2011   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Tax form 2011 It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Tax form 2011 Example. Tax form 2011 A tornado severely damaged your barn. Tax form 2011 The adjusted basis of the barn was $25,000. Tax form 2011 Your insurance company reimbursed you $40,000 for the damaged barn. Tax form 2011 However, you had legal expenses of $2,000 to collect that insurance. Tax form 2011 Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Tax form 2011 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. Tax form 2011 Some of these are discussed in the following paragraphs. Tax form 2011 Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Tax form 2011 You report the gain or deduct the loss on your tax return for the year you realize it. Tax form 2011 However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Tax form 2011 See Postponing Gain , later. Tax form 2011 Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Tax form 2011 The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. Tax form 2011 The owner receives a condemnation award (money or property) in exchange for the property taken. Tax form 2011 A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Tax form 2011 Threat of condemnation. Tax form 2011   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. Tax form 2011 Main home condemned. Tax form 2011   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. Tax form 2011 For information on this exclusion, see Publication 523. Tax form 2011 If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. Tax form 2011 See Postponing Gain , later. Tax form 2011 (You cannot deduct a loss from the condemnation of your main home. Tax form 2011 ) More information. Tax form 2011   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Tax form 2011 Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Tax form 2011 Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. Tax form 2011 Livestock Losses Diseased livestock. Tax form 2011   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. Tax form 2011 If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Tax form 2011 Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Tax form 2011 If you replace the livestock, you may be able to postpone reporting the gain. Tax form 2011 See Postponing Gain below. Tax form 2011 Reporting dispositions of diseased livestock. Tax form 2011   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. Tax form 2011 You must also include other information on this statement. Tax form 2011 See How To Postpone Gain , later, under Postponing Gain . Tax form 2011 Weather-related sales of livestock. Tax form 2011   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. Tax form 2011 Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. Tax form 2011 Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Tax form 2011 If you replace the livestock, you may be able to postpone reporting the gain. Tax form 2011 See Postponing Gain below. Tax form 2011 Example. Tax form 2011 It is your usual business practice to sell five of your dairy animals during the year. Tax form 2011 This year you sold 20 dairy animals because of drought. Tax form 2011 The sale of 15 animals is treated as an involuntary conversion. Tax form 2011    If you do not replace the livestock, you may be able to report the gain in the following year's income. Tax form 2011 This rule also applies to other livestock (including poultry). Tax form 2011 See Sales Caused by Weather-Related Conditions in chapter 3. Tax form 2011 Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. Tax form 2011 Treat the loss as a loss from an involuntary conversion. Tax form 2011 The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Tax form 2011 You deduct the loss on the return for the year the seedlings died. Tax form 2011 Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. Tax form 2011 Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Tax form 2011 You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Tax form 2011 However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. Tax form 2011 If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Tax form 2011 To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Tax form 2011 If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. Tax form 2011 Example 1. Tax form 2011 In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Tax form 2011 In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Tax form 2011 In May of this year, the property was worth $100,000. Tax form 2011 In June the barn and silo were destroyed by a tornado. Tax form 2011 At the time of the tornado, you had an adjusted basis of $0 in the property. Tax form 2011 You received $85,000 from the insurance company. Tax form 2011 You had a gain of $85,000 ($85,000 – $0). Tax form 2011 You spent $80,000 to rebuild the barn and silo. Tax form 2011 Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Tax form 2011 Example 2. Tax form 2011 In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Tax form 2011 You made no further improvements or additions to it. Tax form 2011 When a storm destroyed the cabin this January, the cabin was worth $250,000. Tax form 2011 You received $146,000 from the insurance company in March. Tax form 2011 You had a gain of $128,000 ($146,000 − $18,000). Tax form 2011 You spent $144,000 to rebuild the cabin. Tax form 2011 Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Tax form 2011 Buying replacement property from a related person. Tax form 2011   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). Tax form 2011 This rule applies to the following taxpayers. Tax form 2011 C corporations. Tax form 2011 Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Tax form 2011 Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. Tax form 2011 For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Tax form 2011 If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Tax form 2011 If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Tax form 2011 Exception. Tax form 2011   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. Tax form 2011 Related persons. Tax form 2011   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. Tax form 2011 For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Tax form 2011 Death of a taxpayer. Tax form 2011   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. Tax form 2011 The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. Tax form 2011 Replacement Property You must buy replacement property for the specific purpose of replacing your property. Tax form 2011 Your replacement property must be similar or related in service or use to the property it replaces. Tax form 2011 You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Tax form 2011 If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. Tax form 2011 Property you acquire by gift or inheritance does not qualify as replacement property. Tax form 2011 Owner-user. Tax form 2011   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. Tax form 2011 Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. Tax form 2011 A grinding mill that replaces a tractor does not qualify. Tax form 2011 Neither does a breeding or draft animal that replaces a dairy cow. Tax form 2011 Soil or other environmental contamination. Tax form 2011   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. Tax form 2011 Weather-related conditions. Tax form 2011   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. Tax form 2011 Example. Tax form 2011 Each year you normally sell 25 cows from your beef herd. Tax form 2011 However, this year you had to sell 50 cows. Tax form 2011 This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. Tax form 2011 Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. Tax form 2011 Standing crop destroyed by casualty. Tax form 2011   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. Tax form 2011 The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). Tax form 2011 In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. Tax form 2011 Timber loss. Tax form 2011   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. Tax form 2011 If you bought the standing timber within the replacement period, you can postpone reporting the gain. Tax form 2011 Business or income-producing property located in a federally declared disaster area. Tax form 2011   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. Tax form 2011 For more information, see Disaster Area Losses in Publication 547. Tax form 2011 Substituting replacement property. Tax form 2011   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. Tax form 2011 This is true even if you acquire the other property within the replacement period. Tax form 2011 However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. Tax form 2011 Basis of replacement property. Tax form 2011   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Tax form 2011 In this way, tax on the gain is postponed until you dispose of the replacement property. Tax form 2011 Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Tax form 2011 This is the replacement period. Tax form 2011 The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Tax form 2011 The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Tax form 2011 Example. Tax form 2011 You are a calendar year taxpayer. Tax form 2011 While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Tax form 2011 You discovered the theft when you returned to your farm on November 11, 2012. Tax form 2011 Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Tax form 2011 You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Tax form 2011 Main home in disaster area. Tax form 2011   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Tax form 2011 See Disaster Area Losses , later. Tax form 2011 Property in the Midwestern disaster areas. Tax form 2011   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Tax form 2011 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Tax form 2011 Property in the Kansas disaster area. Tax form 2011   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Tax form 2011 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Tax form 2011 Property in the Hurricane Katrina disaster area. Tax form 2011   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Tax form 2011 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Tax form 2011 Weather-related sales of livestock in an area eligible for federal assistance. Tax form 2011   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. Tax form 2011 The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Tax form 2011   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Tax form 2011 R. Tax form 2011 B. Tax form 2011 529, available at  www. Tax form 2011 irs. Tax form 2011 gov/irb/2006-39_IRB/ar11. Tax form 2011 html. Tax form 2011 For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. Tax form 2011 gov. Tax form 2011 Condemnation. Tax form 2011   The replacement period for a condemnation begins on the earlier of the following dates. Tax form 2011 The date on which you disposed of the condemned property. Tax form 2011 The date on which the threat of condemnation began. Tax form 2011 The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Tax form 2011 But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. Tax form 2011 Business or investment real property. Tax form 2011   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Tax form 2011 Extension. Tax form 2011   You can apply for an extension of the replacement period. Tax form 2011 Send your written application to the Internal Revenue Service Center where you file your tax return. Tax form 2011 See your tax return instructions for the address. Tax form 2011 Include all the details about your need for an extension. Tax form 2011 Make your application before the end of the replacement period. Tax form 2011 However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. Tax form 2011 You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Tax form 2011 How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Tax form 2011 You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Tax form 2011 Required statement. Tax form 2011   You should attach a statement to your return for the year you have the gain. Tax form 2011 This statement should include all the following information. Tax form 2011 The date and details of the casualty, theft, or other involuntary conversion. Tax form 2011 The insurance or other reimbursement you received. Tax form 2011 How you figured the gain. Tax form 2011 Replacement property acquired before return filed. Tax form 2011   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. Tax form 2011 The replacement property. Tax form 2011 The postponed gain. Tax form 2011 The basis adjustment that reflects the postponed gain. Tax form 2011 Any gain you are reporting as income. Tax form 2011 Replacement property acquired after return filed. Tax form 2011   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. Tax form 2011   You should then attach another statement to your return for the year in which you buy the replacement property. Tax form 2011 This statement should contain detailed information on the replacement property. Tax form 2011 If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. Tax form 2011 Include in the statement detailed information on the replacement property bought in that year. Tax form 2011 Reporting weather-related sales of livestock. Tax form 2011   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. Tax form 2011 Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Tax form 2011 The gain realized on the sale or exchange. Tax form 2011 The number and kind of livestock sold or exchanged. Tax form 2011 The number of livestock of each kind you would have sold or exchanged under your usual business practice. Tax form 2011   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Tax form 2011 The dates you bought the replacement property. Tax form 2011 The cost of the replacement property. Tax form 2011 Description of the replacement property (for example, the number and kind of the replacement livestock). Tax form 2011 Amended return. Tax form 2011   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Tax form 2011 You do not acquire replacement property within the replacement period, plus extensions. Tax form 2011 On this amended return, you must report the gain and pay any additional tax due. Tax form 2011 You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. Tax form 2011 On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Tax form 2011 Disaster Area Losses Special rules apply to federally declared disaster area losses. Tax form 2011 A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. Tax form 2011 Stafford Disaster Relief and Emergency Assistance Act. Tax form 2011 It includes a major disaster or emergency declaration under the act. Tax form 2011 A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. Tax form 2011 fema. Tax form 2011 gov. Tax form 2011 This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Tax form 2011 For other special rules, see Disaster Area Losses in Publication 547. Tax form 2011 When to deduct the loss. Tax form 2011   You generally must deduct a casualty loss in the year it occurred. Tax form 2011 However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. Tax form 2011 If you make this choice, the loss is treated as having occurred in the preceding year. Tax form 2011    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. Tax form 2011   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Tax form 2011 The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Tax form 2011 The due date (with extensions) for the return for the preceding tax year. Tax form 2011 Federal disaster relief grants. Tax form 2011   Do not include post-disaster relief grants received under the Robert T. Tax form 2011 Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Tax form 2011 Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Tax form 2011 If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. Tax form 2011 Unemployment assistance payments under the Act are taxable unemployment compensation. Tax form 2011 Qualified disaster relief payments. Tax form 2011   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. Tax form 2011 These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Tax form 2011 No withholding applies to these payments. Tax form 2011   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Tax form 2011 Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Tax form 2011 Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Tax form 2011 (A personal residence can be a rented residence or one you own. Tax form 2011 ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Tax form 2011   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. Tax form 2011    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Tax form 2011 Qualified disaster mitigation payments. Tax form 2011   Qualified disaster mitigation payments made under the Robert T. Tax form 2011 Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. Tax form 2011 These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Tax form 2011 You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Tax form 2011 Sale of property under hazard mitigation program. Tax form 2011   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. Tax form 2011 You report the gain or deduct the loss on your tax return for the year you realize it. Tax form 2011 (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Tax form 2011 ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. Tax form 2011 See Postponing Gain , earlier, for the rules that apply. Tax form 2011 Other federal assistance programs. Tax form 2011    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Tax form 2011 Postponed tax deadlines. Tax form 2011   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Tax form 2011 The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. Tax form 2011   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Tax form 2011 Go to http://www. Tax form 2011 irs. Tax form 2011 gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Tax form 2011 Who is eligible. Tax form 2011   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Tax form 2011 Any individual whose main home is located in a covered disaster area (defined next). Tax form 2011 Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Tax form 2011 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Tax form 2011 Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Tax form 2011 The main home or principal place of business does not have to be located in the covered disaster area. Tax form 2011 Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Tax form 2011 The spouse on a joint return with a taxpayer who is eligible for postponements. Tax form 2011 Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. Tax form 2011 Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Tax form 2011 Any other person determined by the IRS to be affected by a federally declared disaster. Tax form 2011 Covered disaster area. Tax form 2011   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. Tax form 2011 Abatement of interest and penalties. Tax form 2011   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Tax form 2011 Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. Tax form 2011 Form 4684. Tax form 2011   Use this form to report your gains and losses from casualties and thefts. Tax form 2011 Form 4797. Tax form 2011   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Tax form 2011 Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. Tax form 2011 Form 8949. Tax form 2011   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Tax form 2011 Schedule A (Form 1040). Tax form 2011   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. Tax form 2011 Schedule D (Form 1040). Tax form 2011   Use this form to carry over the following gains. Tax form 2011 Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Tax form 2011 Net gain shown on Form 4684 from the casualty or theft of personal-use property. Tax form 2011    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Tax form 2011 Schedule F (Form 1040). Tax form 2011   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. Tax form 2011 Prev  Up  Next   Home   More Online Publications
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Understanding Your 4883C Letter

This letter tells you that the IRS needs more information to verify your identity in order to process your tax return accurately. The contact information below is only for taxpayers who received Letter 4883C.
 


Why are we contacting you?

We received your federal income tax return; however, we need more information to verify your identity in order to process it. The letter you received provides a toll-free IRS Identity Verification telephone number to call.


This contact information is only for taxpayers who received Letter 4883C. The toll-free number is for identity verification only. No other tax-related information, including refund status, is available.


What should you do?

Please call the toll-free IRS Identity Verification telephone number provided in your letter. You will need to have a copy of your prior year tax return and your most recently filed tax return. The toll-free IRS Identity Verification telephone number is available for you to call even if you haven't filed a tax return for this year.
 


 

Page Last Reviewed or Updated: 21-Mar-2014

The Tax Form 2011

Tax form 2011 Publication 590 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. Tax form 2011 Tax questions. Tax form 2011 Useful Items - You may want to see: Note. Tax form 2011 After 2013, Publication 590 will be split into two separate publications as follows. Tax form 2011 Publication 590-A, will focus on contributions to traditional IRAs as well as Roth IRAs. Tax form 2011 This publication will include the rules for rollover and conversion contributions. Tax form 2011 Publication 590-B, will focus on distributions from traditional IRAs as well as Roth IRAs. Tax form 2011 This publication will include the rules for required minimum distributions and IRA beneficiaries. Tax form 2011 What's New for 2013 Traditional IRA contribution and deduction limit. Tax form 2011  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. Tax form 2011 If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. Tax form 2011 For more information, see How Much Can Be Contributed? in chapter 1. Tax form 2011 Roth IRA contribution limit. Tax form 2011  If contributions on your behalf are made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $5,500, or Your taxable compensation for the year. Tax form 2011 If you were age 50 or older before 2014 and contributions on your behalf were made only to Roth IRAs, your contribution limit for 2013 will generally be the lesser of: $6,500, or Your taxable compensation for the year. Tax form 2011 However, if your modified adjusted gross income (AGI) is above a certain amount, your contribution limit may be reduced. Tax form 2011 For more information, see How Much Can Be Contributed? under Can You Contribute to a Roth IRA? in chapter 2. Tax form 2011 Modified AGI limit for traditional IRA contributions increased. Tax form 2011  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Tax form 2011 If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. Tax form 2011 If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Tax form 2011 See How Much Can You Deduct? in chapter 1. Tax form 2011 Modified AGI limit for Roth IRA contributions increased. Tax form 2011  For 2013, your Roth IRA contribution limit is reduced (phased out) in the following situations. Tax form 2011 Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $178,000. Tax form 2011 You cannot make a Roth IRA contribution if your modified AGI is $188,000 or more. Tax form 2011 Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2013 and your modified AGI is at least $112,000. Tax form 2011 You cannot make a Roth IRA contribution if your modified AGI is $127,000 or more. Tax form 2011 Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Tax form 2011 You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Tax form 2011 See Can You Contribute to a Roth IRA? in chapter 2. Tax form 2011 Net Investment Income Tax. Tax form 2011  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). Tax form 2011 However, these distributions are taken into account when determining the modified adjusted gross income threshold. Tax form 2011 Distributions from a nonqualified retirement plan are included in net investment income. Tax form 2011 See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Tax form 2011 Kay Bailey Hutchison Spousal IRA. Tax form 2011 . Tax form 2011  In 2013, spousal IRAs were renamed to Kay Bailey Hutchison Spousal IRAs. Tax form 2011 There are no changes to the rules regarding these IRAs. Tax form 2011 See Kay Bailey Hutchison Spousal IRA Limit in chapter 1 for more information. Tax form 2011 What's New for 2014 Modified AGI limit for traditional IRA contributions increased. Tax form 2011  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Tax form 2011 If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. Tax form 2011 If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. Tax form 2011 Modified AGI limit for Roth IRA contributions increased. Tax form 2011  For 2014, your Roth IRA contribution limit is reduced (phased out) in the following situations. Tax form 2011 Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $181,000. Tax form 2011 You cannot make a Roth IRA contribution if your modified AGI is $191,000 or more. Tax form 2011 Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2014 and your modified AGI is at least $114,000. Tax form 2011 You cannot make a Roth IRA contribution if your modified AGI is $129,000 or more. Tax form 2011 Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. Tax form 2011 You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more. Tax form 2011 Reminders Future developments. Tax form 2011  For the latest information about developments related to Publication 590, such as legislation enacted after it was published, go to www. Tax form 2011 irs. Tax form 2011 gov/pub590. Tax form 2011 Simplified employee pension (SEP). Tax form 2011  SEP IRAs are not covered in this publication. Tax form 2011 They are covered in Publication 560, Retirement Plans for Small Business. Tax form 2011 Deemed IRAs. Tax form 2011  A qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions. Tax form 2011 If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules. Tax form 2011 An employee's account can be treated as a traditional IRA or a Roth IRA. Tax form 2011 For this purpose, a “qualified employer plan” includes: A qualified pension, profit-sharing, or stock bonus plan (section 401(a) plan), A qualified employee annuity plan (section 403(a) plan), A tax-sheltered annuity plan (section 403(b) plan), and A deferred compensation plan (section 457 plan) maintained by a state, a political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state. Tax form 2011 Contributions to both traditional and Roth IRAs. Tax form 2011  For information on your combined contribution limit if you contribute to both traditional and Roth IRAs, see Roth IRAs and traditional IRAs under How Much Can Be Contributed? in chapter 2. Tax form 2011 Statement of required minimum distribution (RMD). Tax form 2011  If an RMD is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the RMD to you, or offer to calculate it for you. Tax form 2011 The report or offer must include the date by which the amount must be distributed. Tax form 2011 The report is due January 31 of the year in which the minimum distribution is required. Tax form 2011 It can be provided with the year-end fair market value statement that you normally get each year. Tax form 2011 No report is required for section 403(b) contracts (generally tax-sheltered annuities) or for IRAs of owners who have died. Tax form 2011 IRA interest. Tax form 2011  Although interest earned from your IRA is generally not taxed in the year earned, it is not tax-exempt interest. Tax form 2011 Tax on your traditional IRA is generally deferred until you take a distribution. Tax form 2011 Do not report this interest on your return as tax-exempt interest. Tax form 2011 For more information on tax-exempt interest, see the instructions for your tax return. Tax form 2011 Photographs of missing children. Tax form 2011  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax form 2011 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax form 2011 You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Tax form 2011 Introduction This publication discusses individual retirement arrangements (IRAs). Tax form 2011 An IRA is a personal savings plan that gives you tax advantages for setting aside money for retirement. Tax form 2011 What are some tax advantages of an IRA?   Two tax advantages of an IRA are that: Contributions you make to an IRA may be fully or partially deductible, depending on which type of IRA you have and on your circumstances, and Generally, amounts in your IRA (including earnings and gains) are not taxed until distributed. Tax form 2011 In some cases, amounts are not taxed at all if distributed according to the rules. Tax form 2011 What's in this publication?   This publication discusses traditional, Roth, and SIMPLE IRAs. Tax form 2011 It explains the rules for: Setting up an IRA, Contributing to an IRA, Transferring money or property to and from an IRA, Handling an inherited IRA, Receiving distributions (making withdrawals) from an IRA, and Taking a credit for contributions to an IRA. Tax form 2011   It also explains the penalties and additional taxes that apply when the rules are not followed. Tax form 2011 To assist you in complying with the tax rules for IRAs, this publication contains worksheets, sample forms, and tables, which can be found throughout the publication and in the appendices at the back of the publication. Tax form 2011 How to use this publication. Tax form 2011   The rules that you must follow depend on which type of IRA you have. Tax form 2011 Use Table I-1 to help you determine which parts of this publication to read. Tax form 2011 Also use Table I-1 if you were referred to this publication from instructions to a form. Tax form 2011 Comments and suggestions. Tax form 2011   We welcome your comments about this publication and your suggestions for future editions. Tax form 2011   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Tax form 2011 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Tax form 2011 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax form 2011   You can send your comments from www. Tax form 2011 irs. Tax form 2011 gov/formspubs/. Tax form 2011 Click on “More Information” and then on “Comment on Tax Forms and Publications”. Tax form 2011   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Tax form 2011 Ordering forms and publications. Tax form 2011   Visit www. Tax form 2011 irs. Tax form 2011 gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Tax form 2011 Internal Revenue Service 1201 N. Tax form 2011 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax form 2011   If you have a tax question, check the information available on IRS. Tax form 2011 gov or call 1-800-829-1040. Tax form 2011 We cannot answer tax questions sent to either of the above addresses. Tax form 2011 Useful Items - You may want to see: Publications 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 571 Tax-Sheltered Annuity Plans (403(b) Plans) 575 Pension and Annuity Income 939 General Rule for Pensions and Annuities Forms (and instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Tax form 2011 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-S SIMPLE Individual Retirement Trust Account 5305-SA SIMPLE Individual Retirement Custodial Account 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 5498 IRA Contribution Information 8606 Nondeductible IRAs 8815 Exclusion of Interest From Series EE and I U. Tax form 2011 S. Tax form 2011 Savings Bonds Issued After 1989 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions See chapter 5 for information about getting these publications and forms. Tax form 2011 Table I-1. Tax form 2011 Using This Publication IF you need information on . Tax form 2011 . Tax form 2011 . Tax form 2011 THEN see . Tax form 2011 . Tax form 2011 . Tax form 2011 traditional IRAs chapter 1. Tax form 2011 Roth IRAs chapter 2, and parts of  chapter 1. Tax form 2011 SIMPLE IRAs chapter 3. Tax form 2011 the credit for qualified retirement savings contributions (the saver's credit) chapter 4. Tax form 2011 how to keep a record of your contributions to, and distributions from, your traditional IRA(s) appendix A. Tax form 2011 SEP IRAs and 401(k) plans Publication 560. Tax form 2011 Coverdell education savings accounts (formerly called education IRAs) Publication 970. Tax form 2011 IF for 2013, you received social security benefits, had taxable compensation, contributed to a traditional IRA, and you or your spouse was covered by an employer retirement plan, and you want to. Tax form 2011 . Tax form 2011 . Tax form 2011 THEN see . Tax form 2011 . Tax form 2011 . Tax form 2011 first figure your modified adjusted gross income (AGI) appendix B, worksheet 1. Tax form 2011 then figure how much of your traditional IRA contribution you can deduct appendix B, worksheet 2. Tax form 2011 and finally figure how much of your social security is taxable appendix B, worksheet 3. Tax form 2011 Table I-2. Tax form 2011 How Are a Traditional IRA and a Roth IRA Different? This table shows the differences between traditional and Roth IRAs. Tax form 2011 Answers in the middle column apply to traditional IRAs. Tax form 2011 Answers in the right column apply to Roth IRAs. Tax form 2011 Question Answer   Traditional IRA? Roth IRA? Is there an age limit on when I can open and contribute to a Yes. Tax form 2011 You must not have reached age  70½ by the end of the year. Tax form 2011 See Who Can Open a Traditional IRA? in chapter 1. Tax form 2011 No. Tax form 2011 You can be any age. Tax form 2011 See Can You Contribute to a Roth IRA? in chapter 2. Tax form 2011 If I earned more than $5,500 in 2013 ($6,500 if I was 50 or older by the end of 2013), is there a limit on how much I can contribute to a Yes. Tax form 2011 For 2013, you can contribute to a traditional IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013. Tax form 2011  There is no upper limit on how much you can earn and still contribute. Tax form 2011 See How Much Can Be Contributed? in chapter 1. Tax form 2011 Yes. Tax form 2011 For 2013, you may be able to contribute to a Roth IRA up to: $5,500, or $6,500 if you were age 50 or older by the end of 2013,  but the amount you can contribute may be less than that depending on your income, filing status, and if you contribute to another IRA. Tax form 2011 See How Much Can Be Contributed? and Table 2-1 in chapter 2. Tax form 2011 Can I deduct contributions to a Yes. Tax form 2011 You may be able to deduct your contributions to a traditional IRA depending on your income, filing status, whether you are covered by a retirement plan at work, and whether you receive social security benefits. Tax form 2011 See How Much Can You Deduct? in chapter 1. Tax form 2011 No. Tax form 2011 You can never deduct contributions to a Roth IRA. Tax form 2011 See What Is a Roth IRA? in chapter 2. Tax form 2011 Do I have to file a form just because I contribute to a Not unless you make nondeductible contributions to your traditional IRA. Tax form 2011 In that case, you must file Form 8606. Tax form 2011 See Nondeductible Contributions in chapter 1. Tax form 2011 No. Tax form 2011 You do not have to file a form if you contribute to a Roth IRA. Tax form 2011 See Contributions not reported in chapter 2. Tax form 2011 Do I have to start taking distributions when I reach a certain age from a Yes. Tax form 2011 You must begin receiving required minimum distributions by April 1 of the year following the year you reach age 70½. Tax form 2011 See When Must You Withdraw Assets? (Required Minimum Distributions) in chapter 1. Tax form 2011 No. Tax form 2011 If you are the original owner of a Roth IRA, you do not have to take distributions regardless of your age. Tax form 2011 See Are Distributions Taxable? in chapter 2. Tax form 2011 However, if you are the beneficiary of a Roth IRA, you may have to take distributions. Tax form 2011 See Distributions After Owner's Death in chapter 2. Tax form 2011 How are distributions taxed from a Distributions from a traditional IRA are taxed as ordinary income, but if you made nondeductible contributions, not all of the distribution is taxable. Tax form 2011 See Are Distributions Taxable? in chapter 1. Tax form 2011 Distributions from a Roth IRA are not taxed as long as you meet certain criteria. Tax form 2011 See Are Distributions Taxable? in chapter 2. Tax form 2011 Do I have to file a form just because I receive distributions from a Not unless you have ever made a nondeductible contribution to a traditional IRA. Tax form 2011 If you have, file Form 8606. Tax form 2011 See Nondeductible Contributions in chapter 1. Tax form 2011 Yes. Tax form 2011 File Form 8606 if you received distributions from a Roth IRA (other than a rollover, qualified charitable distribution, one-time distribution to fund an HSA, recharacterization, certain qualified distributions, or a return of certain contributions). 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