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Tax Return Amendment

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Tax Return Amendment

Tax return amendment 3. Tax return amendment   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. Tax return amendment Traditional IRA mistakenly moved to SIMPLE IRA. Tax return amendment When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). Tax return amendment It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. Tax return amendment Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). Tax return amendment This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. Tax return amendment See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. Tax return amendment If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. Tax return amendment See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. Tax return amendment What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. Tax return amendment See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. Tax return amendment A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. Tax return amendment These contributions are called salary reduction contributions. Tax return amendment All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. Tax return amendment The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. Tax return amendment Contributions are made on behalf of eligible employees. Tax return amendment (See Eligible Employees below. Tax return amendment ) Contributions are also subject to various limits. Tax return amendment (See How Much Can Be Contributed on Your Behalf , later. Tax return amendment ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. Tax return amendment See How Are Contributions Made , later. Tax return amendment You may be able to claim a credit for contributions to your SIMPLE plan. Tax return amendment For more information, see chapter 4. Tax return amendment Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. Tax return amendment Self-employed individual. Tax return amendment   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. Tax return amendment Excludable employees. Tax return amendment   Your employer can exclude the following employees from participating in the SIMPLE plan. Tax return amendment Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). Tax return amendment Employees who are nonresident aliens and received no earned income from sources within the United States. Tax return amendment Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. Tax return amendment Compensation. Tax return amendment   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. Tax return amendment Wages, tips, and other pay from your employer that is subject to income tax withholding. Tax return amendment Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. Tax return amendment Self-employed individual compensation. Tax return amendment   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. Tax return amendment   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. Tax return amendment How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. Tax return amendment They are made on your behalf by your employer. Tax return amendment Your employer must also make either matching contributions or nonelective contributions. Tax return amendment Salary reduction contributions. Tax return amendment   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). Tax return amendment You can choose to cancel the election at any time during the year. Tax return amendment   Salary reduction contributions are also referred to as “elective deferrals. Tax return amendment ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. Tax return amendment Matching contributions. Tax return amendment   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. Tax return amendment See How Much Can Be Contributed on Your Behalf below. Tax return amendment These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. Tax return amendment These contributions are referred to as matching contributions. Tax return amendment   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. Tax return amendment Nonelective contributions. Tax return amendment   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. Tax return amendment These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. Tax return amendment   One of the requirements your employer must satisfy is notifying the employees that the election was made. Tax return amendment For other requirements that your employer must satisfy, see chapter 3 of Publication 560. Tax return amendment How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. Tax return amendment Salary reduction contributions limit. Tax return amendment   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. Tax return amendment The limitation remains at $12,000 for 2014. Tax return amendment If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. Tax return amendment You, not your employer, are responsible for monitoring compliance with these limits. Tax return amendment Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. Tax return amendment The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. Tax return amendment $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. Tax return amendment The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. Tax return amendment The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. Tax return amendment Matching employer contributions limit. Tax return amendment   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. Tax return amendment These matching contributions cannot be more than 3% of your compensation for the calendar year. Tax return amendment See Matching contributions less than 3% below. Tax return amendment Example 1. Tax return amendment In 2013, Joshua was a participant in his employer's SIMPLE plan. Tax return amendment His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). Tax return amendment Instead of taking it all in cash, Joshua elected to have 12. Tax return amendment 5% of his weekly pay ($100) contributed to his SIMPLE IRA. Tax return amendment For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. Tax return amendment Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. Tax return amendment Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). Tax return amendment Example 2. Tax return amendment Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. Tax return amendment 94% of his weekly pay contributed to his SIMPLE IRA. Tax return amendment In this example, Joshua's salary reduction contributions for the year (2. Tax return amendment 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). Tax return amendment Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. Tax return amendment In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. Tax return amendment Matching contributions less than 3%. Tax return amendment   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. Tax return amendment   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. Tax return amendment If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. Tax return amendment Nonelective employer contributions limit. Tax return amendment   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. Tax return amendment For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. Tax return amendment   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. Tax return amendment Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. Tax return amendment This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. Tax return amendment Example 3. Tax return amendment Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. Tax return amendment Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. Tax return amendment In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). Tax return amendment Traditional IRA mistakenly moved to SIMPLE IRA. Tax return amendment   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. Tax return amendment For more information, see Recharacterizations in chapter 1. Tax return amendment Recharacterizing employer contributions. Tax return amendment   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. Tax return amendment SEPs are discussed in chapter 2 of Publication 560. Tax return amendment SIMPLE plans are discussed in this chapter. Tax return amendment Converting from a SIMPLE IRA. Tax return amendment   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . Tax return amendment    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. Tax return amendment When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. Tax return amendment These rules are discussed in chapter 1. Tax return amendment Your employer cannot restrict you from taking distributions from a SIMPLE IRA. Tax return amendment Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. Tax return amendment If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. Tax return amendment See Additional Tax on Early Distributions, later. Tax return amendment Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. Tax return amendment Two-year rule. Tax return amendment   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. Tax return amendment The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. Tax return amendment   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). Tax return amendment Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. Tax return amendment If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. Tax return amendment If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. Tax return amendment Prev  Up  Next   Home   More Online Publications
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Sales Tax Deduction Calculator

If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. (You can’t claim both.) If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount.

If you didn’t save all your receipts, you can still choose to claim state and local sales taxes. You could fill out the worksheet and use the optional general sales tax tables in the Instructions for Schedule A (Form 1040) , but why not take the easy route and use the Sales Tax Deduction Calculator!

 

Using the Sales Tax Deduction Calculator
To figure the amount of optional general sales tax you are eligible to claim, just answer a few online questions and the system does the rest. First select the tax year for which you are preparing a return. Then, using your ZIP Code and just a few entries from your draft Form 1040, the Sales Tax Deduction Calculator will automatically figure the amount of state and local sales tax you can claim. You will see the results from your entries immediately on your computer screen. Even if your state and local sales tax rates changed during the year (e.g., because the rates changed or because you moved your personal residence), the Sales Tax Deduction Calculator can handle it.

Note:  If a city has more than one tax jurisdiction sharing the same ZIP Code and County but having different local tax rates, the calculator uses the average local tax rate for those jurisdictions.

Sales Tax Deduction Calculator updated with U.S. Military District ZIP Codes
The Sales Tax Deduction Calculator has been updated with overseas U.S. Military Zones and Districts where members of U.S. Military pay no sales tax. U.S. Military Personnel who are deployed overseas can use the calculator to determine the sales tax they paid while they were within the United States. The calculator provides the ability to choose military regions using Military Zone abbreviations and ZIP codes. Members of U.S. Military can choose from one of the following Military Zone abbreviations:

 

AA  - Military Personnel in the Americas, excluding Canada

APO - Military Post Office for U.S. Army & Air Force Personnel

AE - Military Personnel in Europe, Middle East, Africa and Canada

FPO - Military Post Office for U.S. Navy Personnel
AP - Military Personnel in Asia Pacific DPO - Post Office for U.S. Embassy, State Department and other Diplomatic Personnel

 

Your entries are anonymous and the information is collected solely to allow you to determine your total allowable deduction. All entries are erased when you exit or start over. See the “IRS Privacy Policy” below for more information.

Ready to start? Continue to the Sales Tax Deduction Calculator.

Additional Resources:

Sales Tax Deduction Calculator Frequently Asked Questions

Page Last Reviewed or Updated: 14-Jan-2014

The Tax Return Amendment

Tax return amendment 2. Tax return amendment   Foreclosures and Repossessions Table of Contents Amount realized and ordinary income on a recourse debt. Tax return amendment Amount realized on a nonrecourse debt. Tax return amendment If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Tax return amendment The foreclosure or repossession is treated as a sale from which you may realize gain or loss. Tax return amendment This is true even if you voluntarily return the property to the lender. Tax return amendment If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. Tax return amendment You must report this income on your return unless certain exceptions or exclusions apply. Tax return amendment See chapter 1 for more details. Tax return amendment Borrower's gain or loss. Tax return amendment    You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. Tax return amendment The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). Tax return amendment The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). Tax return amendment For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Publication 544. Tax return amendment You can use Table 1-1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession. Tax return amendment Amount realized and ordinary income on a recourse debt. Tax return amendment    If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The FMV of the transferred property. Tax return amendment The amount realized also includes any proceeds you received from the foreclosure sale. Tax return amendment If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. Tax return amendment You must report this income on your return unless certain exceptions or exclusions apply. Tax return amendment See chapter 1 for more details. Tax return amendment       Example 1. Tax return amendment Tara bought a new car for $15,000. Tax return amendment She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Tax return amendment Tara is personally liable for the loan (recourse debt) and the car is pledged as security for the loan. Tax return amendment On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Tax return amendment The balance due after taking into account the payments Tara made was $10,000. Tax return amendment The FMV of the car when it was repossessed was $9,000. Tax return amendment On November 15, 2013, the credit company forgave the remaining $1,000 balance on the loan due to insufficient assets. Tax return amendment In this case, the amount Tara realizes is $9,000. Tax return amendment This is the smaller of: The $10,000 outstanding debt immediately before the repossession reduced by the $1,000 for which she remains personally liable immediately after the repossession ($10,000 − $1,000 = $9,000), or The $9,000 FMV of the car. Tax return amendment Tara figures her gain or loss on the repossession by comparing the $9,000 amount realized with her $15,000 adjusted basis. Tax return amendment She has a $6,000 nondeductible loss. Tax return amendment After the cancellation of the remaining balance on the loan in November, Tara also has ordinary income from cancellation of debt in the amount of $1,000 (the remaining balance on the $10,000 loan after the $9,000 amount satisfied by the FMV of the repossessed car). Tax return amendment Tara must report this $1,000 on her return unless one of the exceptions or exclusions described in chapter 1 applies. Tax return amendment Example 2. Tax return amendment Lili paid $200,000 for her home. Tax return amendment She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Tax return amendment Lili is personally liable for the mortgage loan and the house secures the loan. Tax return amendment In 2013, the bank foreclosed on the mortgage because Lili stopped making payments. Tax return amendment When the bank foreclosed the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Tax return amendment At the time of the foreclosure, the bank forgave $2,000 of the $10,000 debt in excess of the FMV ($180,000 minus $170,000). Tax return amendment She remained personally liable for the $8,000 balance. Tax return amendment In this case, Lili has ordinary income from the cancellation of debt in the amount of $2,000. Tax return amendment The $2,000 income from the cancellation of debt is figured by subtracting the $170,000 FMV of the house from the $172,000 difference between her total outstanding debt immediately before the transfer of property and the amount for which she remains personally liable immediately after the transfer ($180,000 minus $8,000). Tax return amendment She is able to exclude the $2,000 of canceled debt from her income under the qualified principal residence indebtedness rules discussed earlier. Tax return amendment Lili must also determine her gain or loss from the foreclosure. Tax return amendment In this case, the amount that she realizes is $170,000. Tax return amendment This is the smaller of: (a) the $180,000 outstanding debt immediately before the transfer reduced by the $8,000 for which she remains personally liable immediately after the transfer ($180,000 − $8,000 = $172,000) or (b) the $170,000 FMV of the house. Tax return amendment Lili figures her gain or loss on the foreclosure by comparing the $170,000 amount realized with her $175,000 adjusted basis. Tax return amendment She has a $5,000 nondeductible loss. Tax return amendment Table 1-1. Tax return amendment Worksheet for Foreclosures and Repossessions Part 1. Tax return amendment Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Tax return amendment Otherwise, go to Part 2. Tax return amendment 1. Tax return amendment Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property   2. Tax return amendment Enter the fair market value of the transferred property   3. Tax return amendment Ordinary income from the cancellation of debt upon foreclosure or repossession. Tax return amendment * Subtract line 2 from line 1. Tax return amendment If less than zero, enter zero. Tax return amendment Next, go to Part 2   Part 2. Tax return amendment Gain or loss from foreclosure or repossession. Tax return amendment   4. Tax return amendment Enter the smaller of line 1 or line 2. Tax return amendment If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property   5. Tax return amendment Enter any proceeds you received from the foreclosure sale   6. Tax return amendment Add line 4 and line 5   7. Tax return amendment Enter the adjusted basis of the transferred property   8. Tax return amendment Gain or loss from foreclosure or repossession. Tax return amendment Subtract line 7 from line 6   * The income may not be taxable. Tax return amendment See chapter 1 for more details. Tax return amendment Amount realized on a nonrecourse debt. Tax return amendment    If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. Tax return amendment This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer. Tax return amendment Example 1. Tax return amendment Tara bought a new car for $15,000. Tax return amendment She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Tax return amendment Tara is not personally liable for the loan (nonrecourse), but pledged the new car as security for the loan. Tax return amendment On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Tax return amendment The balance due after taking into account the payments Tara made was $10,000. Tax return amendment The FMV of the car when it was repossessed was $9,000. Tax return amendment The amount Tara realized on the repossession is $10,000. Tax return amendment That is the outstanding amount of debt immediately before the repossession, even though the FMV of the car is less than $10,000. Tax return amendment Tara figures her gain or loss on the repossession by comparing the $10,000 amount realized with her $15,000 adjusted basis. Tax return amendment Tara has a $5,000 nondeductible loss. Tax return amendment Example 2. Tax return amendment Lili paid $200,000 for her home. Tax return amendment She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Tax return amendment She is not personally liable for the loan, but grants the bank a mortgage. Tax return amendment The bank foreclosed on the mortgage because Lili stopped making payments. Tax return amendment When the bank foreclosed on the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Tax return amendment The amount Lili realized on the foreclosure is $180,000, the outstanding debt immediately before the foreclosure. Tax return amendment She figures her gain or loss by comparing the $180,000 amount realized with her $175,000 adjusted basis. Tax return amendment Lili has a $5,000 realized gain. Tax return amendment See Publication 523 to figure and report any taxable amount. Tax return amendment Forms 1099-A and 1099-C. Tax return amendment    A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A, Acquisition or Abandonment of Secured Property, showing information you need to figure your gain or loss. Tax return amendment However, if the lender also cancels part of your debt and must file Form 1099-C, the lender can include the information about the foreclosure or repossession on that form instead of on Form 1099-A. Tax return amendment The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Tax return amendment For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Tax return amendment Prev  Up  Next   Home   More Online Publications