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Taxes Supplemental Security Income Ssi

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Taxes Supplemental Security Income Ssi

Taxes supplemental security income ssi 11. Taxes supplemental security income ssi   Departing Aliens and the Sailing or Departure Permit Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Aliens Not Required To Obtain Sailing or Departure Permits Aliens Required To Obtain Sailing or Departure PermitsGetting a Sailing or Departure Permit Forms To File Paying Taxes and Obtaining Refunds Bond To Ensure Payment Filing Annual U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi Income Tax Returns Introduction Before leaving the United States, all aliens (except those listed under Aliens Not Required To Obtain Sailing or Departure Permits must obtain a certificate of compliance. Taxes supplemental security income ssi This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Taxes supplemental security income ssi You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Taxes supplemental security income ssi These forms are discussed in this chapter. Taxes supplemental security income ssi To find out if you need a sailing or departure permit, first read Aliens Not Required To Obtain Sailing or Departure Permits . Taxes supplemental security income ssi If you do not fall into one of the categories in that discussion, you must obtain a sailing or departure permit. Taxes supplemental security income ssi Read Aliens Required To Obtain Sailing or Departure Permits . Taxes supplemental security income ssi Topics - This chapter discusses: Who needs a sailing permit, How to get a sailing permit, and Forms you file to get a sailing permit. Taxes supplemental security income ssi Useful Items - You may want to see: Form (and Instructions) 1040-C U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi Departing Alien Income Tax Return 2063 U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi Departing Alien Income Tax Statement See chapter 12 for information about getting these forms. Taxes supplemental security income ssi Aliens Not Required To Obtain Sailing or Departure Permits If you are included in one of the following categories, you do not have to get a sailing or departure permit before leaving the United States. Taxes supplemental security income ssi If you are in one of these categories and do not have to get a sailing or departure permit, you must be able to support your claim for exemption with proper identification or give the authority for the exemption. Taxes supplemental security income ssi Category 1. Taxes supplemental security income ssi   Representatives of foreign governments with diplomatic passports, whether accredited to the United States or other countries, members of their households, and servants accompanying them. Taxes supplemental security income ssi Servants who are leaving, but not with a person with a diplomatic passport, must get a sailing or departure permit. Taxes supplemental security income ssi However, they can get a sailing or departure permit on Form 2063 without examination of their income tax liability by presenting a letter from the chief of their diplomatic mission certifying that: Their name appears on the “White List” (a list of employees of diplomatic missions), and They do not owe to the United States any income tax, and will not owe any tax up to and including the intended date of departure. Taxes supplemental security income ssi   The statement must be presented to an IRS office. Taxes supplemental security income ssi Category 2. Taxes supplemental security income ssi    Employees of international organizations and foreign governments (other than diplomatic representatives exempt under category 1) and members of their households: Whose compensation for official services is exempt from U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi tax under U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi tax laws (described in chapter 10), and Who receive no other income from U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi sources. Taxes supplemental security income ssi If you are an alien in category (1) or (2), above, who filed the waiver under section 247(b) of the Immigration and Nationality Act, you must get a sailing or departure permit. Taxes supplemental security income ssi This is true even if your income is exempt from U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi tax because of an income tax treaty, consular agreement, or international agreement. Taxes supplemental security income ssi Category 3. Taxes supplemental security income ssi   Alien students, industrial trainees, and exchange visitors, including their spouses and children, who enter on an “F-1,” “F-2,” “H-3,” “H-4,” “J-1,” “J-2,” or “Q” visa only and who receive no income from U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi sources while in the United States under those visas other than: Allowances to cover expenses incident to study or training in the United States, such as expenses for travel, maintenance, and tuition, The value of any services or food and lodging connected with this study or training, Income from employment authorized by the U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi Citizenship and Immigration Services (USCIS), or Interest income on deposits that is not effectively connected with a U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi trade or business. Taxes supplemental security income ssi (See Interest Income in chapter 3. Taxes supplemental security income ssi ) Category 4. Taxes supplemental security income ssi   Alien students, including their spouses and children, who enter on an “M-1” or “M-2” visa only and who receive no income from U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi sources while in the United States under those visas, other than: Income from employment authorized by the U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi Citizenship and Immigration Services (USCIS) or Interest income on deposits that is not effectively connected with a U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi trade or business. Taxes supplemental security income ssi (See Interest Income in chapter 3. Taxes supplemental security income ssi ) Category 5. Taxes supplemental security income ssi   Certain other aliens temporarily in the United States who have received no taxable income during the tax year up to and including the date of departure or during the preceding tax year. Taxes supplemental security income ssi If the IRS has reason to believe that an alien has received income subject to tax and that the collection of income tax is jeopardized by departure, it may then require the alien to obtain a sailing or departure permit. Taxes supplemental security income ssi Aliens in this category are: Alien military trainees who enter the United States for training under the sponsorship of the Department of Defense and who leave the United States on official military travel orders, Alien visitors for business on a “B-1” visa, or on both a “B-1” visa and a “B-2” visa, who do not remain in the United States or a U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi possession for more than 90 days during the tax year, Alien visitors for pleasure on a “B-2” visa, Aliens in transit through the United States or any of its possessions on a “C-1” visa, or under a contract, such as a bond agreement, between a transportation line and the Attorney General, and Aliens who enter the United States on a border-crossing identification card or for whom passports, visas, and border-crossing identification cards are not required, if they are: Visitors for pleasure, Visitors for business who do not remain in the United States or a U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi possession for more than 90 days during the tax year, or In transit through the United States or any of its possessions. Taxes supplemental security income ssi Category 6. Taxes supplemental security income ssi   Alien residents of Canada or Mexico who frequently commute between that country and the United States for employment, and whose wages are subject to the withholding of U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi tax. Taxes supplemental security income ssi Aliens Required To Obtain Sailing or Departure Permits If you do not fall into one of the categories listed under Aliens Not Required To Obtain Sailing or Departure Permits, you must obtain a sailing or departure permit. Taxes supplemental security income ssi To obtain a permit, file Form 1040-C or Form 2063 (whichever applies) with your local IRS office before you leave the United States. Taxes supplemental security income ssi See Forms To File , later. Taxes supplemental security income ssi You must also pay all the tax shown as due on Form 1040-C and any taxes due for past years. Taxes supplemental security income ssi See Paying Taxes and Obtaining Refunds , later. Taxes supplemental security income ssi Getting a Sailing or Departure Permit The following discussion covers when and where to get your sailing permit. Taxes supplemental security income ssi Where to get a sailing or departure permit. Taxes supplemental security income ssi   If you have been working in the United States, you should get the permit from an IRS office in the area of your employment, or you may obtain one from an IRS office in the area of your departure. Taxes supplemental security income ssi When to get a sailing or departure permit. Taxes supplemental security income ssi   You should get your sailing or departure permit at least 2 weeks before you plan to leave. Taxes supplemental security income ssi You cannot apply earlier than 30 days before your planned departure date. Taxes supplemental security income ssi Do not wait until the last minute in case there are unexpected problems. Taxes supplemental security income ssi Papers to submit. Taxes supplemental security income ssi   Getting your sailing or departure permit will go faster if you bring to the IRS office papers and documents related to your income and your stay in the United States. Taxes supplemental security income ssi Bring the following records with you if they apply. Taxes supplemental security income ssi Your passport and alien registration card or visa. Taxes supplemental security income ssi Copies of your U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi income tax returns filed for the past 2 years. Taxes supplemental security income ssi If you were in the United States for less than 2 years, bring the income tax returns you filed for that period. Taxes supplemental security income ssi Receipts for income taxes paid on these returns. Taxes supplemental security income ssi Receipts, bank records, canceled checks, and other documents that prove your deductions, business expenses, and dependents claimed on your returns. Taxes supplemental security income ssi A statement from each employer showing wages paid and tax withheld from January 1 of the current year to the date of departure if you were an employee. Taxes supplemental security income ssi If you were self-employed, you must bring a statement of income and expenses up to the date you plan to leave. Taxes supplemental security income ssi Proof of estimated tax payments for the past year and this year. Taxes supplemental security income ssi Documents showing any gain or loss from the sale of personal property and/or real property, including capital assets and merchandise. Taxes supplemental security income ssi Documents relating to scholarship or fellowship grants including: Verification of the grantor, source, and purpose of the grant. Taxes supplemental security income ssi Copies of the application for, and approval of, the grant. Taxes supplemental security income ssi A statement of the amount paid, and your duties and obligations under the grant. Taxes supplemental security income ssi A list of any previous grants. Taxes supplemental security income ssi Documents indicating you qualify for any special tax treaty benefits claimed. Taxes supplemental security income ssi Document verifying your date of departure from the United States, such as an airline ticket. Taxes supplemental security income ssi Document verifying your U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi taxpayer identification number, such as a social security card or an IRS issued Notice CP 565 showing your individual taxpayer identification number (ITIN). Taxes supplemental security income ssi Note. Taxes supplemental security income ssi   If you are married and reside in a community property state, also bring the above-listed documents for your spouse. Taxes supplemental security income ssi This applies whether or not your spouse requires a permit. Taxes supplemental security income ssi Forms To File If you must get a sailing or departure permit, you must file Form 2063 or Form 1040-C. Taxes supplemental security income ssi Employees in the IRS office can assist in filing these forms. Taxes supplemental security income ssi Both forms have a “certificate of compliance” section. Taxes supplemental security income ssi When the certificate of compliance is signed by an agent of the Field Assistance Area Director, it certifies that your U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi tax obligations have been satisfied according to available information. Taxes supplemental security income ssi Your Form 1040-C copy of the signed certificate, or the one detached from Form 2063, is your sailing or departure permit. Taxes supplemental security income ssi Form 2063 This is a short form that asks for certain information but does not include a tax computation. Taxes supplemental security income ssi The following departing aliens can get their sailing or departure permits by filing Form 2063. Taxes supplemental security income ssi Aliens, whether resident or nonresident, who have had no taxable income for the tax year up to and including the date of departure and for the preceding year, if the period for filing the income tax return for that year has not expired. Taxes supplemental security income ssi Resident aliens who have received taxable income during the tax year or preceding year and whose departure will not hinder the collection of any tax. Taxes supplemental security income ssi However, if the IRS has information indicating that the aliens are leaving to avoid paying their income tax, they must file a Form 1040-C. Taxes supplemental security income ssi Aliens in either of these categories who have not filed an income tax return or paid income tax for any tax year must file the return and pay the income tax before they can be issued a sailing or departure permit on Form 2063. Taxes supplemental security income ssi The sailing or departure permit detached from Form 2063 can be used for all departures during the current year. Taxes supplemental security income ssi However, the IRS may cancel the sailing or departure permit for any later departure if it believes the collection of income tax is jeopardized by that later departure. Taxes supplemental security income ssi Form 1040-C If you must get a sailing or departure permit and you do not qualify to file Form 2063, you must file Form 1040-C. Taxes supplemental security income ssi Ordinarily, all income received or reasonably expected to be received during the tax year up to and including the date of departure must be reported on Form 1040-C and the tax on it must be paid. Taxes supplemental security income ssi When you pay any tax shown as due on the Form 1040-C, and you file all returns and pay all tax due for previous years, you will receive a sailing or departure permit. Taxes supplemental security income ssi However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years. Taxes supplemental security income ssi See Bond To Ensure Payment , discussed later. Taxes supplemental security income ssi The sailing or departure permit issued under the conditions in this paragraph is only for the specific departure for which it is issued. Taxes supplemental security income ssi Returning to the United States. Taxes supplemental security income ssi   If you furnish the IRS with information showing, to the satisfaction of the IRS, that you intend to return to the United States and that your departure does not jeopardize the collection of income tax, you can get a sailing or departure permit by filing Form 1040-C without having to pay the tax shown on it. Taxes supplemental security income ssi You must, however, file all income tax returns that have not yet been filed as required, and pay all income tax that is due on these returns. Taxes supplemental security income ssi   Your Form 1040-C must include all income received and reasonably expected to be received during the entire year of departure. Taxes supplemental security income ssi The sailing or departure permit issued with this Form 1040-C can be used for all departures during the current year. Taxes supplemental security income ssi However, the Service may cancel the sailing or departure permit for any later departure if the payment of income tax appears to be in jeopardy. Taxes supplemental security income ssi Joint return on Form 1040-C. Taxes supplemental security income ssi   Departing husbands and wives who are nonresident aliens cannot file joint returns. Taxes supplemental security income ssi However, if both spouses are resident aliens, they can file a joint return on Form 1040-C if: Both spouses can reasonably be expected to qualify to file a joint return at the normal close of their tax year, and The tax years of the spouses end at the same time. Taxes supplemental security income ssi Paying Taxes and Obtaining Refunds You must pay all tax shown as due on the Form 1040-C at the time of filing it, except when a bond is furnished, or the IRS is satisfied that your departure does not jeopardize the collection of income tax. Taxes supplemental security income ssi You must also pay any taxes due for past years. Taxes supplemental security income ssi If the tax computation on Form 1040-C results in an overpayment, there is no tax to pay at the time you file that return. Taxes supplemental security income ssi However, the IRS cannot provide a refund at the time of departure. Taxes supplemental security income ssi If you are due a refund, you must file either Form 1040NR or Form 1040NR-EZ at the end of the tax year. Taxes supplemental security income ssi Bond To Ensure Payment Usually, you must pay the tax shown as due on Form 1040-C when you file it. Taxes supplemental security income ssi However, if you pay all taxes due that you owe for prior years, you can furnish a bond guaranteeing payment instead of paying the income taxes shown as due on the Form 1040-C or the tax return for the preceding year if the period for filing that return has not expired. Taxes supplemental security income ssi The bond must equal the tax due plus interest to the date of payment as figured by the IRS. Taxes supplemental security income ssi Information about the form of bond and security on it can be obtained from your IRS office. Taxes supplemental security income ssi Filing Annual U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi Income Tax Returns Form 1040-C is not an annual U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi income tax return. Taxes supplemental security income ssi If an income tax return is required by law, that return must be filed even though a Form 1040-C has already been filed. Taxes supplemental security income ssi Chapters 5 and 7 discuss filing an annual U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi income tax return. Taxes supplemental security income ssi The tax paid with Form 1040-C should be taken as a credit against the tax liability for the entire tax year on your annual U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi income tax return. Taxes supplemental security income ssi Prev  Up  Next   Home   More Online Publications
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The Taxes Supplemental Security Income Ssi

Taxes supplemental security income ssi 13. Taxes supplemental security income ssi   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. Taxes supplemental security income ssi It is divided into the following sections. Taxes supplemental security income ssi Cost basis. Taxes supplemental security income ssi Adjusted basis. Taxes supplemental security income ssi Basis other than cost. Taxes supplemental security income ssi Your basis is the amount of your investment in property for tax purposes. Taxes supplemental security income ssi Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. Taxes supplemental security income ssi Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. Taxes supplemental security income ssi If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Taxes supplemental security income ssi Only the basis allocated to the business or investment use of the property can be depreciated. Taxes supplemental security income ssi Your original basis in property is adjusted (increased or decreased) by certain events. Taxes supplemental security income ssi For example, if you make improvements to the property, increase your basis. Taxes supplemental security income ssi If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. Taxes supplemental security income ssi Keep accurate records of all items that affect the basis of your property. Taxes supplemental security income ssi For more information on keeping records, see chapter 1. Taxes supplemental security income ssi Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. Taxes supplemental security income ssi The cost is the amount you pay in cash, debt obligations, other property, or services. Taxes supplemental security income ssi Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). Taxes supplemental security income ssi In addition, the basis of real estate and business assets may include other items. Taxes supplemental security income ssi Loans with low or no interest. Taxes supplemental security income ssi    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. Taxes supplemental security income ssi You generally have unstated interest if your interest rate is less than the applicable federal rate. Taxes supplemental security income ssi   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Taxes supplemental security income ssi Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Taxes supplemental security income ssi If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Taxes supplemental security income ssi Lump sum purchase. Taxes supplemental security income ssi   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. Taxes supplemental security income ssi Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. Taxes supplemental security income ssi Figure the basis of each asset by multiplying the lump sum by a fraction. Taxes supplemental security income ssi The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Taxes supplemental security income ssi    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. Taxes supplemental security income ssi Fair market value (FMV). Taxes supplemental security income ssi   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Taxes supplemental security income ssi Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. Taxes supplemental security income ssi Assumption of mortgage. Taxes supplemental security income ssi   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Taxes supplemental security income ssi Settlement costs. Taxes supplemental security income ssi   Your basis includes the settlement fees and closing costs you paid for buying the property. Taxes supplemental security income ssi (A fee for buying property is a cost that must be paid even if you buy the property for cash. Taxes supplemental security income ssi ) Do not include fees and costs for getting a loan on the property in your basis. Taxes supplemental security income ssi   The following are some of the settlement fees or closing costs you can include in the basis of your property. Taxes supplemental security income ssi Abstract fees (abstract of title fees). Taxes supplemental security income ssi Charges for installing utility services. Taxes supplemental security income ssi Legal fees (including fees for the title search and preparation of the sales contract and deed). Taxes supplemental security income ssi Recording fees. Taxes supplemental security income ssi Survey fees. Taxes supplemental security income ssi Transfer taxes. Taxes supplemental security income ssi Owner's title insurance. Taxes supplemental security income ssi Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Taxes supplemental security income ssi   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Taxes supplemental security income ssi   The following are some of the settlement fees and closing costs you cannot include in the basis of property. Taxes supplemental security income ssi Casualty insurance premiums. Taxes supplemental security income ssi Rent for occupancy of the property before closing. Taxes supplemental security income ssi Charges for utilities or other services related to occupancy of the property before closing. Taxes supplemental security income ssi Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. Taxes supplemental security income ssi Fees for refinancing a mortgage. Taxes supplemental security income ssi Real estate taxes. Taxes supplemental security income ssi   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Taxes supplemental security income ssi You cannot deduct them as an expense. Taxes supplemental security income ssi    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Taxes supplemental security income ssi Do not include that amount in the basis of your property. Taxes supplemental security income ssi If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Taxes supplemental security income ssi Points. Taxes supplemental security income ssi   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Taxes supplemental security income ssi Generally, you deduct the points over the term of the loan. Taxes supplemental security income ssi For more information on how to deduct points, see chapter 23. Taxes supplemental security income ssi Points on home mortgage. Taxes supplemental security income ssi   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. Taxes supplemental security income ssi If certain requirements are met, you can deduct the points in full for the year in which they are paid. Taxes supplemental security income ssi Reduce the basis of your home by any seller-paid points. Taxes supplemental security income ssi Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. Taxes supplemental security income ssi The result is the adjusted basis. Taxes supplemental security income ssi Increases to Basis Increase the basis of any property by all items properly added to a capital account. Taxes supplemental security income ssi Examples of items that increase basis are shown in Table 13-1. Taxes supplemental security income ssi These include the items discussed below. Taxes supplemental security income ssi Improvements. Taxes supplemental security income ssi   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. Taxes supplemental security income ssi For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. Taxes supplemental security income ssi Assessments for local improvements. Taxes supplemental security income ssi   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. Taxes supplemental security income ssi Do not deduct them as taxes. Taxes supplemental security income ssi However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. Taxes supplemental security income ssi Add the assessment to your property's basis. Taxes supplemental security income ssi In this example, the assessment is a depreciable asset. Taxes supplemental security income ssi Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. Taxes supplemental security income ssi Examples of items that decrease basis are shown in Table 13-1. Taxes supplemental security income ssi These include the items discussed below. Taxes supplemental security income ssi Table 13-1. Taxes supplemental security income ssi Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. Taxes supplemental security income ssi   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. Taxes supplemental security income ssi    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. Taxes supplemental security income ssi   For more information on casualty and theft losses, see chapter 25. Taxes supplemental security income ssi Depreciation and section 179 deduction. Taxes supplemental security income ssi   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. Taxes supplemental security income ssi   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. Taxes supplemental security income ssi You added an improvement to the duplex that cost $10,000. Taxes supplemental security income ssi In February last year, the duplex was damaged by fire. Taxes supplemental security income ssi Up to that time, you had been allowed depreciation of $23,000. Taxes supplemental security income ssi You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. Taxes supplemental security income ssi You deducted a casualty loss of $1,000 on your income tax return for last year. Taxes supplemental security income ssi You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. Taxes supplemental security income ssi You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. Taxes supplemental security income ssi Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. Taxes supplemental security income ssi Your basis in the land is its original cost of $5,000. Taxes supplemental security income ssi Easements. Taxes supplemental security income ssi   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. Taxes supplemental security income ssi It reduces the basis of the affected part of the property. Taxes supplemental security income ssi If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Taxes supplemental security income ssi   If the gain is on a capital asset, see chapter 16 for information about how to report it. Taxes supplemental security income ssi If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. Taxes supplemental security income ssi Exclusion of subsidies for energy conservation measures. Taxes supplemental security income ssi   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Taxes supplemental security income ssi Reduce the basis of the property for which you received the subsidy by the excluded amount. Taxes supplemental security income ssi For more information about this subsidy, see chapter 12. Taxes supplemental security income ssi Postponed gain from sale of home. Taxes supplemental security income ssi    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. Taxes supplemental security income ssi For more information on the rules for the sale of a home, see chapter 15. Taxes supplemental security income ssi Basis Other Than Cost There are many times when you cannot use cost as basis. Taxes supplemental security income ssi In these cases, the fair market value or the adjusted basis of the property can be used. Taxes supplemental security income ssi Fair market value (FMV) and adjusted basis were discussed earlier. Taxes supplemental security income ssi Property Received for Services If you receive property for your services, include the FMV of the property in income. Taxes supplemental security income ssi The amount you include in income becomes your basis. Taxes supplemental security income ssi If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Taxes supplemental security income ssi Restricted property. Taxes supplemental security income ssi   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. Taxes supplemental security income ssi However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. Taxes supplemental security income ssi Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). Taxes supplemental security income ssi For more information, see Restricted Property in Publication 525. Taxes supplemental security income ssi Bargain purchases. Taxes supplemental security income ssi   A bargain purchase is a purchase of an item for less than its FMV. Taxes supplemental security income ssi If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Taxes supplemental security income ssi Your basis in the property is its FMV (your purchase price plus the amount you include in income). Taxes supplemental security income ssi   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. Taxes supplemental security income ssi However, your basis in the property is still its FMV. Taxes supplemental security income ssi See Employee Discounts in Publication 15-B. Taxes supplemental security income ssi Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Taxes supplemental security income ssi A taxable gain or deductible loss also is known as a recognized gain or loss. Taxes supplemental security income ssi If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Taxes supplemental security income ssi Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. Taxes supplemental security income ssi Similar or related property. Taxes supplemental security income ssi   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. Taxes supplemental security income ssi Decrease the basis by the following. Taxes supplemental security income ssi Any loss you recognize on the involuntary conversion. Taxes supplemental security income ssi Any money you receive that you do not spend on similar property. Taxes supplemental security income ssi Increase the basis by the following. Taxes supplemental security income ssi Any gain you recognize on the involuntary conversion. Taxes supplemental security income ssi Any cost of acquiring the replacement property. Taxes supplemental security income ssi Money or property not similar or related. Taxes supplemental security income ssi    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi The state condemned your property. Taxes supplemental security income ssi The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. Taxes supplemental security income ssi You realized a gain of $5,000 ($31,000 − $26,000). Taxes supplemental security income ssi You bought replacement property similar in use to the converted property for $29,000. Taxes supplemental security income ssi You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Taxes supplemental security income ssi Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Taxes supplemental security income ssi The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. Taxes supplemental security income ssi   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Taxes supplemental security income ssi Basis for depreciation. Taxes supplemental security income ssi   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Taxes supplemental security income ssi For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Taxes supplemental security income ssi Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Taxes supplemental security income ssi If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. Taxes supplemental security income ssi See Nontaxable Trades in chapter 14. Taxes supplemental security income ssi Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Taxes supplemental security income ssi To qualify as a like-kind exchange, the property traded and the property received must be both of the following. Taxes supplemental security income ssi Qualifying property. Taxes supplemental security income ssi Like-kind property. Taxes supplemental security income ssi The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. Taxes supplemental security income ssi If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. Taxes supplemental security income ssi Qualifying property. Taxes supplemental security income ssi   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. Taxes supplemental security income ssi Like-kind property. Taxes supplemental security income ssi   There must be an exchange of like-kind property. Taxes supplemental security income ssi Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Taxes supplemental security income ssi The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. Taxes supplemental security income ssi The dealer allows you $2,000 on the old truck, and you pay $4,800. Taxes supplemental security income ssi This is a like-kind exchange. Taxes supplemental security income ssi The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). Taxes supplemental security income ssi If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). Taxes supplemental security income ssi The basis of the new truck is the price you pay the dealer. Taxes supplemental security income ssi Partially nontaxable exchanges. Taxes supplemental security income ssi   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Taxes supplemental security income ssi The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. Taxes supplemental security income ssi Decrease the basis by the following amounts. Taxes supplemental security income ssi Any money you receive. Taxes supplemental security income ssi Any loss you recognize on the exchange. Taxes supplemental security income ssi Increase the basis by the following amounts. Taxes supplemental security income ssi Any additional costs you incur. Taxes supplemental security income ssi Any gain you recognize on the exchange. Taxes supplemental security income ssi If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Taxes supplemental security income ssi Allocation of basis. Taxes supplemental security income ssi   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Taxes supplemental security income ssi The rest is the basis of the like-kind property. Taxes supplemental security income ssi More information. Taxes supplemental security income ssi   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. Taxes supplemental security income ssi Basis for depreciation. Taxes supplemental security income ssi   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. Taxes supplemental security income ssi For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Taxes supplemental security income ssi Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Taxes supplemental security income ssi The same rule applies to a transfer by your former spouse that is incident to divorce. Taxes supplemental security income ssi However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Taxes supplemental security income ssi If the property transferred to you is a series E, series EE, or series I U. Taxes supplemental security income ssi S. Taxes supplemental security income ssi savings bond, the transferor must include in income the interest accrued to the date of transfer. Taxes supplemental security income ssi Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Taxes supplemental security income ssi For more information on these bonds, see chapter 7. Taxes supplemental security income ssi At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Taxes supplemental security income ssi For more information about the transfer of property from a spouse, see chapter 14. Taxes supplemental security income ssi Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Taxes supplemental security income ssi FMV less than donor's adjusted basis. Taxes supplemental security income ssi   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Taxes supplemental security income ssi Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Taxes supplemental security income ssi Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Taxes supplemental security income ssi See Adjusted Basis , earlier. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi You received an acre of land as a gift. Taxes supplemental security income ssi At the time of the gift, the land had an FMV of $8,000. Taxes supplemental security income ssi The donor's adjusted basis was $10,000. Taxes supplemental security income ssi After you received the property, no events occurred to increase or decrease your basis. Taxes supplemental security income ssi If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. Taxes supplemental security income ssi If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. Taxes supplemental security income ssi If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Taxes supplemental security income ssi Business property. Taxes supplemental security income ssi   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Taxes supplemental security income ssi FMV equal to or greater than donor's adjusted basis. Taxes supplemental security income ssi   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Taxes supplemental security income ssi Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. Taxes supplemental security income ssi   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Taxes supplemental security income ssi See Adjusted Basis , earlier. Taxes supplemental security income ssi   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Taxes supplemental security income ssi Figure the increase by multiplying the gift tax paid by a fraction. Taxes supplemental security income ssi The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Taxes supplemental security income ssi   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Taxes supplemental security income ssi The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi In 2013, you received a gift of property from your mother that had an FMV of $50,000. Taxes supplemental security income ssi Her adjusted basis was $20,000. Taxes supplemental security income ssi The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Taxes supplemental security income ssi She paid a gift tax of $7,320 on the property. Taxes supplemental security income ssi Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Taxes supplemental security income ssi 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Taxes supplemental security income ssi If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Taxes supplemental security income ssi However, your basis cannot exceed the FMV of the gift at the time it was given to you. Taxes supplemental security income ssi Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Taxes supplemental security income ssi The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. Taxes supplemental security income ssi The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. Taxes supplemental security income ssi The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Taxes supplemental security income ssi If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Taxes supplemental security income ssi For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Taxes supplemental security income ssi Property inherited from a decedent who died in 2010. Taxes supplemental security income ssi   If you inherited property from a decedent who died in 2010, special rules may apply. Taxes supplemental security income ssi For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Taxes supplemental security income ssi Community property. Taxes supplemental security income ssi   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Taxes supplemental security income ssi When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Taxes supplemental security income ssi For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi You and your spouse owned community property that had a basis of $80,000. Taxes supplemental security income ssi When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Taxes supplemental security income ssi The FMV of the community interest was $100,000. Taxes supplemental security income ssi The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Taxes supplemental security income ssi The basis of the other half to your spouse's heirs is also $50,000. Taxes supplemental security income ssi For more information about community property, see Publication 555, Community Property. Taxes supplemental security income ssi Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. Taxes supplemental security income ssi To do so, you must figure its basis for depreciation at the time of the change. Taxes supplemental security income ssi An example of changing property held for personal use to business or rental use would be renting out your former personal residence. Taxes supplemental security income ssi Basis for depreciation. Taxes supplemental security income ssi   The basis for depreciation is the lesser of the following amounts. Taxes supplemental security income ssi The FMV of the property on the date of the change. Taxes supplemental security income ssi Your adjusted basis on the date of the change. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. Taxes supplemental security income ssi You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Taxes supplemental security income ssi Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Taxes supplemental security income ssi Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Taxes supplemental security income ssi On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Taxes supplemental security income ssi The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). Taxes supplemental security income ssi Sale of property. Taxes supplemental security income ssi   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. Taxes supplemental security income ssi Gain. Taxes supplemental security income ssi   The basis for figuring a gain is your adjusted basis in the property when you sell the property. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Taxes supplemental security income ssi Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Taxes supplemental security income ssi Loss. Taxes supplemental security income ssi   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Taxes supplemental security income ssi Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Taxes supplemental security income ssi Example. Taxes supplemental security income ssi Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Taxes supplemental security income ssi In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. Taxes supplemental security income ssi Reduce that amount ($180,000) by the depreciation deductions ($37,500). Taxes supplemental security income ssi The basis for loss is $142,500 ($180,000 − $37,500). Taxes supplemental security income ssi Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Taxes supplemental security income ssi If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. Taxes supplemental security income ssi You must adjust the basis of stocks for certain events that occur after purchase. Taxes supplemental security income ssi For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. Taxes supplemental security income ssi This rule applies only when the additional stock received is identical to the stock held. Taxes supplemental security income ssi Also reduce your basis when you receive nontaxable distributions. Taxes supplemental security income ssi They are a return of capital. Taxes supplemental security income ssi Example. Taxes supplemental security income ssi In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. Taxes supplemental security income ssi In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. Taxes supplemental security income ssi In 2013 XYZ declared a 2-for-1 stock split. Taxes supplemental security income ssi You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. Taxes supplemental security income ssi Other basis. Taxes supplemental security income ssi   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. Taxes supplemental security income ssi For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Taxes supplemental security income ssi Identifying stocks or bonds sold. Taxes supplemental security income ssi   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. Taxes supplemental security income ssi If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Taxes supplemental security income ssi For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Taxes supplemental security income ssi Mutual fund shares. Taxes supplemental security income ssi   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. Taxes supplemental security income ssi For more information, see Publication 550. Taxes supplemental security income ssi Bond premium. Taxes supplemental security income ssi   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. Taxes supplemental security income ssi See Bond Premium Amortization in chapter 3 of Publication 550 for more information. Taxes supplemental security income ssi Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. Taxes supplemental security income ssi Original issue discount (OID) on debt instruments. Taxes supplemental security income ssi   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. Taxes supplemental security income ssi See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. Taxes supplemental security income ssi Tax-exempt obligations. Taxes supplemental security income ssi    OID on tax-exempt obligations is generally not taxable. Taxes supplemental security income ssi However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. Taxes supplemental security income ssi The accrued OID is added to the basis of the obligation to determine your gain or loss. Taxes supplemental security income ssi See chapter 4 of Publication 550. Taxes supplemental security income ssi Prev  Up  Next   Home   More Online Publications