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1040ez

1040ez 4. 1040ez   Limit on Elective Deferrals Table of Contents Excess elective deferrals. 1040ez General Limit 15-Year RuleYears of Service Figuring the Limit on Elective DeferralsExample The second and final component of MAC is the limit on elective deferrals. 1040ez This is a limit on the amount of contributions that can be made to your account through a salary reduction agreement. 1040ez A salary reduction agreement is an agreement between you and your employer that allows for a portion of your compensation to be directly invested in a 403(b) account on your behalf. 1040ez You can enter into more than one salary reduction agreement during a year. 1040ez More than one 403(b) account. 1040ez If, for any year, elective deferrals are contributed to more than one 403(b) account for you (whether or not with the same employer), you must combine all the elective deferrals to determine whether the total is more than the limit for that year. 1040ez 403(b) plan and another retirement plan. 1040ez If, during the year, contributions in the form of elective deferrals are made to other retirement plans on your behalf, you must combine all of the elective deferrals to determine if they are more than your limit on elective deferrals. 1040ez The limit on elective deferrals applies to amounts contributed to: 401(k) plans, to the extent excluded from income, Roth contribution programs, Section 501(c)(18) plans, to the extent excluded from income, Savings incentive match plan for employees (SIMPLE plans), Simplified employee pension (SEP) plans, and All 403(b) plans. 1040ez Roth contribution program. 1040ez   Your 403(b) plan may allow you to designate all or a portion of your elective deferrals as Roth contributions. 1040ez Elective deferrals designated as Roth contributions must be maintained in a separate Roth account and are not excludable from your gross income. 1040ez   The maximum amount of contributions allowed under a Roth contribution program is your limit on elective deferrals, less your elective deferrals not designated as Roth contributions. 1040ez For more information on the Roth contribution program, see Publication 560, Retirement Plans for Small Business. 1040ez Excess elective deferrals. 1040ez   If the amount contributed is more than the allowable limit, you must include the excess that is not a Roth contribution in your gross income for the year contributed. 1040ez General Limit Under the general limit on elective deferrals, the most that can be contributed to your 403(b) account through a salary reduction agreement is $17,500 for 2013 and 2014. 1040ez This limit applies without regard to community property laws. 1040ez 15-Year Rule If you have at least 15 years of service with an educational organization (such as a public or private school), hospital, home health service agency, health and welfare service agency, church, or convention or association of churches (or associated organization), the limit on elective deferrals to your 403(b) account is increased by the least of: $3,000, $15,000, reduced by the sum of: The additional pre-tax elective deferrals made in prior years because of this rule, plus The aggregate amount of designated Roth contributions permitted for prior years because of this rule, or $5,000 times the number of your years of service for the organization, minus the total elective deferrals made by your employer on your behalf for earlier years. 1040ez If you qualify for the 15-year rule, your elective deferrals under this limit can be as high as $20,500 for 2013 and 2014. 1040ez To determine whether you have 15 years of service with your employer, see Years of Service , next. 1040ez Years of Service To determine if you are eligible for the increased limit on elective deferrals, you will first need to figure your years of service. 1040ez How you figure your years of service depends on whether you were a full-time or a part-time employee, whether you worked for the full year or only part of the year, and whether you have worked for your employer for an entire year. 1040ez You must figure years of service for each year during which you worked for the employer who is maintaining your 403(b) account. 1040ez If more than one employer maintains a 403(b) account for you in the same year, you must figure years of service separately for each employer. 1040ez Definition Your years of service are the total number of years you have worked as a full time employee for the employer maintaining your 403(b) account as of the end of the year. 1040ez Figuring Your Years of Service Take the following rules into account when figuring your years of service. 1040ez Status of employer. 1040ez   Your years of service include only periods during which your employer was a qualified employer. 1040ez Your plan administrator can tell you whether or not your employer was qualified during all your periods of service. 1040ez Service with one employer. 1040ez   Generally, you cannot count service for any employer other than the one who maintains your 403(b) account. 1040ez Church employee. 1040ez   If you are a church employee, treat all of your years of service with related church organizations as years of service with the same employer. 1040ez For more information about church employees, see chapter 5. 1040ez Self-employed ministers. 1040ez   If you are a self-employed minister, your years of service include full and part years in which you have been treated as employed by a tax-exempt organization that is a qualified employer. 1040ez Total years of service. 1040ez   When figuring prior years of service, figure each year individually and then add the individual years of service to determine your total years of service. 1040ez Example. 1040ez The annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. 1040ez Marsha began working with ABC schools in September 2009. 1040ez She has always worked full-time for each annual work period. 1040ez At the end of 2013, Marsha had 4. 1040ez 5 years of service with ABC Public Schools, as shown in Table 4-1. 1040ez Table 4-1. 1040ez Marsha's Years of Service Note. 1040ez This table shows how Marsha figures her years of service, as explained in the previous example. 1040ez Year Period Worked Portion of Work Period Years of Service 2009 Sept. 1040ez –Dec. 1040ez . 1040ez 5 year . 1040ez 5 year 2010 Feb. 1040ez –May . 1040ez 5 year 1 year Sept. 1040ez –Dec. 1040ez . 1040ez 5 year 2011 Feb. 1040ez –May . 1040ez 5 year 1 year Sept. 1040ez –Dec. 1040ez . 1040ez 5 year 2012 Feb. 1040ez –May . 1040ez 5 year 1 year Sept. 1040ez –Dec. 1040ez . 1040ez 5 year 2013 Feb. 1040ez –May . 1040ez 5 year 1 year Sept. 1040ez –Dec. 1040ez . 1040ez 5 year Total years of service 4. 1040ez 5 years Full-time or part-time. 1040ez   To figure your years of service, you must analyze each year individually and determine whether you worked full-time for the full year or something other than full-time. 1040ez When determining whether you worked full-time or something other than full-time, use your employer's annual work period as the standard. 1040ez Employer's annual work period. 1040ez   Your employer's annual work period is the usual amount of time an individual working full-time in a specific position is required to work. 1040ez Generally, this period of time is expressed in days, weeks, months, or semesters, and can span 2 calendar years. 1040ez Note. 1040ez You cannot accumulate more than 1 year of service in a 12-month period. 1040ez Example. 1040ez All full-time teachers at ABC Public Schools are required to work both the September through December semester and the February through May semester. 1040ez Therefore, the annual work period for full-time teachers employed by ABC Public Schools is September through December and February through May. 1040ez Teachers at ABC Public Schools who work both semesters in the same calendar year are considered working a full year of service in that calendar year. 1040ez Full-Time Employee for the Full Year Count each full year during which you were employed full-time as 1 year of service. 1040ez In determining whether you were employed full-time, compare the amount of work you were required to perform with the amount of work normally required of others who held the same position with the same employer and who generally received most of their pay from the position. 1040ez How to compare. 1040ez   You can use any method that reasonably and accurately reflects the amount of work required. 1040ez For example, if you are a teacher, you can use the number of hours of classroom instruction as a measure of the amount of work required. 1040ez   In determining whether positions with the same employer are the same, consider all of the facts and circumstances concerning the positions, including the work performed, the methods by which pay is determined, and the descriptions (or titles) of the positions. 1040ez Example. 1040ez An assistant professor employed in the English department of a university will be considered a full-time employee if the amount of work that he or she is required to perform is the same as the amount of work normally required of assistant professors of English at that university who get most of their pay from that position. 1040ez   If no one else works for your employer in the same position, compare your work with the work normally required of others who held the same position with similar employers or similar positions with your employer. 1040ez Full year of service. 1040ez   A full year of service for a particular position means the usual annual work period of anyone employed full-time in that general type of work at that place of employment. 1040ez Example. 1040ez If a doctor works for a hospital 12 months of a year except for a 1-month vacation, the doctor will be considered as employed for a full year if the other doctors at that hospital also work 11 months of the year with a 1-month vacation. 1040ez Similarly, if the usual annual work period at a university consists of the fall and spring semesters, an instructor at that university who teaches these semesters will be considered as working a full year. 1040ez Other Than Full-Time for the Full Year If, during any year, you were employed full-time for only part of your employer's annual work period, part-time for the entire annual work period, or part-time for only part of the work period, your year of service for that year is a fraction of your employer's annual work period. 1040ez Full-time for part of the year. 1040ez   If, during a year, you were employed full-time for only part of your employer's annual work period, figure the fraction for that year as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. 1040ez The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. 1040ez Example. 1040ez Jason was employed as a full-time instructor by a local college for the 4 months of the 2013 spring semester (February 2013 through May 2013). 1040ez The annual work period for the college is 8 months (February through May and July through October). 1040ez Given these facts, Jason was employed full-time for part of the annual work period and provided ½ of a year of service. 1040ez Jason's years of service computation for 2013 is as follows: Number of months Jason worked = 4 = 1 Number of months in annual work period 8 2 Part-time for the full year. 1040ez   If, during a year, you were employed part-time for the employer's entire annual work period, you figure the fraction for that year as follows: The numerator (top number) is the number of hours or days you worked. 1040ez The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. 1040ez Example. 1040ez Vance teaches one course at a local medical school. 1040ez He teaches 3 hours per week for two semesters. 1040ez Other faculty members at the same school teach 9 hours per week for two semesters. 1040ez The annual work period of the medical school is two semesters. 1040ez An instructor teaching 9 hours a week for two semesters is considered a full-time employee. 1040ez Given these facts, Vance has worked part-time for a full annual work period. 1040ez Vance has completed 1/3 of a year of service, figured as shown below. 1040ez Number of hours per week Vance worked = 3 = 1 Number of hours per week considered full-time 9 3 Part-time for part of the year. 1040ez   If, during any year, you were employed part-time for only part of your employer's annual work period, you figure your fraction for that year by multiplying two fractions. 1040ez   Figure the first fraction as though you had worked full-time for part of the annual work period. 1040ez The fraction is as follows: The numerator (top number) is the number of weeks, months, or semesters you were a full-time employee. 1040ez The denominator (bottom number) is the number of weeks, months, or semesters considered the normal annual work period for the position. 1040ez   Figure the second fraction as though you had worked part-time for the entire annual work period. 1040ez The fraction is as follows: The numerator (top number) is the number of hours or days you worked. 1040ez The denominator (bottom number) is the number of hours or days normally required of someone holding the same position who works full-time. 1040ez   Once you have figured these two fractions, multiply them together to determine the fraction representing your partial year of service for the year. 1040ez Example. 1040ez Maria, an attorney, teaches a course for one semester at a law school. 1040ez She teaches 3 hours per week. 1040ez The annual work period for teachers at the school is two semesters. 1040ez All full-time instructors at the school are required to teach 12 hours per week. 1040ez Based on these facts, Maria is employed part-time for part of the annual work period. 1040ez Her year of service for this year is determined by multiplying two fractions. 1040ez Her computation is as follows: Maria's first fraction Number of semesters Maria worked = 1 Number of semesters in annual work period 2 Maria's second fraction Number of hours Maria worked per week = 3 = 1 Number of hours per week considered full-time 12 4 Maria would multiply these fractions to obtain the fractional year of service: 1 x 1 = 1         2 4 8         Figuring the Limit on Elective Deferrals You can use Part II of Worksheet 1 in chapter 9 to figure the limit on elective deferrals. 1040ez Example Floyd has figured his limit on annual additions. 1040ez The only other component needed before he can determine his MAC for 2014 is his limit on elective deferrals. 1040ez Figuring Floyd's limit on elective deferrals. 1040ez   Floyd has been employed with his current employer for less than 15 years. 1040ez He is not eligible for the special 15-year increase. 1040ez Therefore, his limit on elective deferrals for 2014 is $17,500 as shown in Table 4-2. 1040ez Floyd's employer will not make any nonelective contributions to his 403(b) account and Floyd will not make any after-tax contributions. 1040ez Additionally, Floyd's employer does not offer a Roth contribution program. 1040ez Figuring Floyd's MAC Floyd has determined that his limit on annual additions for 2014 is $52,000 and his limit on elective deferrals is $17,500. 1040ez Because elective deferrals are the only contributions made to Floyd's account, the maximum amount that can be contributed to a 403(b) account on Floyd's behalf in 2014 is $17,500, the lesser of both limits. 1040ez Table 4-2. 1040ez Worksheet 1. 1040ez Maximum Amount Contributable (MAC) Note. 1040ez Use this worksheet to figure your MAC. 1040ez Part I. 1040ez Limit on Annual Additions     1. 1040ez Enter your includible compensation for your most recent year of service 1. 1040ez $70,475 2. 1040ez Maximum: For 2013 enter $51,000 For 2014 enter $52,000 2. 1040ez 52,000 3. 1040ez Enter the lesser of line 1 or line 2. 1040ez This is your limit on annual additions 3. 1040ez 52,000   Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. 1040ez     Part II. 1040ez Limit on Elective Deferrals     4. 1040ez Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. 1040ez 17,500   Note. 1040ez If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. 1040ez If not, enter zero (-0-) on line 16 and go to line 17. 1040ez     5. 1040ez Amount per year of service 5. 1040ez 5,000 6. 1040ez Enter your years of service 6. 1040ez   7. 1040ez Multiply line 5 by line 6 7. 1040ez   8. 1040ez Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. 1040ez   9. 1040ez Subtract line 8 from line 7. 1040ez If zero or less, enter zero (-0-) 9. 1040ez   10. 1040ez Maximum increase in limit for long service 10. 1040ez 15,000 11. 1040ez Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. 1040ez   12. 1040ez Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. 1040ez   13. 1040ez Add lines 11 and 12 13. 1040ez   14. 1040ez Subtract line 13 from line 10 14. 1040ez   15. 1040ez Maximum additional contributions 15. 1040ez 3,000 16. 1040ez Enter the least of lines 9, 14, or 15. 1040ez This is your increase in the limit for long service 16. 1040ez -0- 17. 1040ez Add lines 4 and 16. 1040ez This is your limit on elective deferrals 17. 1040ez 17,500   Part III. 1040ez Maximum Amount Contributable     18. 1040ez If you had only nonelective contributions, enter the amount from line 3. 1040ez This is your MAC. 1040ez    If you had only elective deferrals, enter the lesser of lines 3 or 17. 1040ez This is your MAC. 1040ez    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. 1040ez This is your MAC. 1040ez (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. 1040ez ) 18. 1040ez $17,500 Prev  Up  Next   Home   More Online Publications
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A-Z Index for Business
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Struggling with Paying Your Taxes? Let IRS Help You Get a Fresh Start.
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Page Last Reviewed or Updated: 06-Dec-2013

The 1040ez

1040ez Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). 1040ez Low Income Taxpayer Clinics (LITCs). 1040ez Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. 1040ez All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. 1040ez The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). 1040ez After notice and hearing, the bankruptcy court may extend the period for another 30 days. 1040ez Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. 1040ez Note. 1040ez Individual debtors should use their home address when filing Form 1040 with the IRS. 1040ez Returns should not be filed “in care of” the trustee's address. 1040ez Ordering tax transcripts and copies of returns. 1040ez   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. 1040ez The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. 1040ez If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. 1040ez Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. 1040ez Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. 1040ez A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. 1040ez To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. 1040ez It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. 1040ez 00 per tax return for copies of the returns. 1040ez Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. 1040ez If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. 1040ez Tax returns and payment of taxes in chapter 11 cases. 1040ez   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. 1040ez Disclosure of debtor's return information to trustee. 1040ez   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. 1040ez If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. 1040ez    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. 1040ez Material interest is generally defined as a financial or monetary interest. 1040ez Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. 1040ez   However, the U. 1040ez S. 1040ez Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. 1040ez Disclosure of bankruptcy estate's return information to debtor. 1040ez    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. 1040ez Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. 1040ez Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. 1040ez Chapter 13 relief is not available to corporations or partnerships. 1040ez The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. 1040ez In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. 1040ez S. 1040ez Individual Income Tax Return. 1040ez On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. 1040ez Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. 1040ez To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. 1040ez See Debt Cancellation, later. 1040ez Interest on trust accounts in chapter 13 cases. 1040ez   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. 1040ez This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. 1040ez S. 1040ez Trustee system. 1040ez The interest is also not taxable to the trustee as income. 1040ez Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. 1040ez The bankruptcy estate in a chapter 7 case is represented by a trustee. 1040ez The trustee is appointed to administer the estate and liquidate any nonexempt assets. 1040ez In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. 1040ez However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. 1040ez During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. 1040ez The bankruptcy trustee files a Form 1041 for the bankruptcy estate. 1040ez However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). 1040ez Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. 1040ez Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). 1040ez For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. 1040ez Debtor's Election To End Tax Year – Form 1040 Short tax years. 1040ez   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. 1040ez If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. 1040ez The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. 1040ez   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. 1040ez Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. 1040ez    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. 1040ez Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. 1040ez Note. 1040ez The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. 1040ez Making the Election - Filing Requirements First short tax year. 1040ez   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. 1040ez The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. 1040ez Second short tax year. 1040ez   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. 1040ez   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. 1040ez To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. 1040ez Example. 1040ez Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. 1040ez If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. 1040ez Jane's second short year runs from May 8, 2012, through December 31, 2012. 1040ez To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. 1040ez To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. 1040ez The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. 1040ez S. 1040ez Individual Tax Return. 1040ez The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. 1040ez The debtor must file Form 4868 by the due date of the return for the first short tax year. 1040ez The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. 1040ez Election by debtor's spouse. 1040ez   If the debtor is married, the debtor's spouse may join in the election to end the tax year. 1040ez If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. 1040ez The debtor must elect by the due date for filing the return for the first short tax year. 1040ez Once the election is made, it cannot be revoked for the first short tax year. 1040ez However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. 1040ez Later bankruptcy of spouse. 1040ez    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. 1040ez   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. 1040ez If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. 1040ez However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. 1040ez The debtor and the spouse are precluded from this election because they have different tax years. 1040ez This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. 1040ez Example 1. 1040ez Paul and Mary Harris are calendar-year taxpayers. 1040ez Paul's voluntary chapter 7 bankruptcy case begins on March 4. 1040ez If Paul does not make an election, his tax year does not end on March 3. 1040ez If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. 1040ez Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. 1040ez They must make the election by July 15, the due date for filing the joint return. 1040ez Example 2. 1040ez Fred and Ethel Barnes are calendar-year taxpayers. 1040ez Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. 1040ez Ethel could elect to end her tax year on October 31. 1040ez If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. 1040ez Her first tax year is January 1–October 31, and her second year is November 1–December 31. 1040ez If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. 1040ez If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. 1040ez Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. 1040ez Example 3. 1040ez Jack and Karen Thomas are calendar-year taxpayers. 1040ez Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. 1040ez Karen elected to close her tax year on April 9 and Jack joins in Karen's election. 1040ez Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. 1040ez The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. 1040ez Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). 1040ez If Karen does join in, she would have the same 3 short tax years as Jack. 1040ez Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. 1040ez Annualizing taxable income. 1040ez   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. 1040ez See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. 1040ez Dismissal of bankruptcy case. 1040ez   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. 1040ez It is as if no bankruptcy estate was created for tax purposes. 1040ez In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. 1040ez Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. 1040ez Attach a statement to the amended returns explaining why the debtor is filing an amended return. 1040ez Taxes and the Bankruptcy Estate Property of the bankruptcy estate. 1040ez   At the commencement of a bankruptcy case a bankruptcy estate is created. 1040ez Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. 1040ez This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. 1040ez However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. 1040ez Note. 1040ez Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. 1040ez Excluded property is never included in the estate. 1040ez Transfer of assets between debtor and bankruptcy estate. 1040ez   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. 1040ez The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. 1040ez For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. 1040ez The estate assumes the same basis, holding period, and character of the transferred assets. 1040ez Also, the estate generally accounts for the transferred assets in the same manner as debtor. 1040ez   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. 1040ez The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. 1040ez Abandoned property. 1040ez    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. 1040ez If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. 1040ez Separate taxable entity. 1040ez   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. 1040ez The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. 1040ez S. 1040ez Income Tax Return for Estates and Trusts, and paying its taxes. 1040ez The debtor remains responsible for filing his or her own returns on Form 1040, U. 1040ez S. 1040ez Individual Income Tax Return, and paying taxes on income that does not belong to the estate. 1040ez Employer identification number. 1040ez   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. 1040ez The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. 1040ez See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. 1040ez    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. 1040ez Income, deductions, and credits – Form 1040. 1040ez   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). 1040ez Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. 1040ez The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. 1040ez See Debt Cancellation, below. 1040ez Note. 1040ez The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. 1040ez Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. 1040ez However, other exclusions, such as the insolvency exclusion, may apply. 1040ez Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. 1040ez    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. 1040ez Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. 1040ez   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. 1040ez Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. 1040ez Income of the estate in individual chapter 11 cases. 1040ez    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. 1040ez Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. 1040ez S. 1040ez C. 1040ez section 1115). 1040ez Note. 1040ez A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. 1040ez Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). 1040ez Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. 1040ez See Administrative expenses, below. 1040ez Conversion or dismissal of chapter 11 cases. 1040ez   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. 1040ez If the chapter 11 case is converted to a chapter 7 case, 11 U. 1040ez S. 1040ez C. 1040ez section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. 1040ez Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. 1040ez If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. 1040ez Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. 1040ez Note. 1040ez Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). 1040ez Administrative expenses. 1040ez   Allowable expenses include administrative expenses. 1040ez    Administrative expenses can only be deducted by the estate, never by the debtor. 1040ez   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. 1040ez These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. 1040ez See IRC section 67(e). 1040ez Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. 1040ez Note. 1040ez The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. 1040ez See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. 1040ez Administrative expense loss. 1040ez   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. 1040ez The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. 1040ez The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. 1040ez For a discussion of NOLs, see Publication 536. 1040ez Attribute carryovers. 1040ez   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. 1040ez These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. 1040ez The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. 1040ez   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. 1040ez See Debt Cancellation, later. 1040ez   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. 1040ez The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. 1040ez Note. 1040ez The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. 1040ez See Administrative expense loss, above. 1040ez Passive and at-risk activities. 1040ez   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. 1040ez Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. 1040ez These transfers include the return of exempt property and abandonment of estate property to the debtor. 1040ez Carrybacks from the debtor's activities. 1040ez   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. 1040ez Carrybacks from the bankruptcy estate. 1040ez   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. 1040ez The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. 1040ez Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. 1040ez    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. 1040ez The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. 1040ez These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. 1040ez The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. 1040ez The same method must be used to allocate the income and the withheld tax. 1040ez Example. 1040ez If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. 1040ez Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. 1040ez See IRC section 31(a). 1040ez   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. 1040ez In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. 1040ez    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. 1040ez The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. 1040ez Note. 1040ez The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). 1040ez   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. 1040ez Self-employment taxes in individual chapter 11 cases. 1040ez   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. 1040ez Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. 1040ez   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. 1040ez Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. 1040ez This schedule includes self-employment income earned post-petition and the attributable deductions. 1040ez The debtor must pay any self-employment tax imposed by IRC section 1401. 1040ez Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. 1040ez   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. 1040ez However, section 1115 of the Bankruptcy Code (11 U. 1040ez S. 1040ez C. 1040ez section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. 1040ez See Notice 2006-83. 1040ez   The reporting and withholding obligations of a debtor's employer also do not change. 1040ez An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. 1040ez Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. 1040ez   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. 1040ez See IRC section 6109(a)(2). 1040ez As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). 1040ez   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. 1040ez See Notice 2006-83. 1040ez An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. 1040ez   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. 1040ez However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. 1040ez See Employment Tax Regulations section 31. 1040ez 3402(f)(2)-1. 1040ez Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. 1040ez See IRC section 6654(a). 1040ez Notice required in converted and dismissed cases. 1040ez   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. 1040ez The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. 1040ez This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. 1040ez   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. 1040ez Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. 1040ez However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. 1040ez After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. 1040ez Employment taxes. 1040ez   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. 1040ez See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. 1040ez   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. 1040ez For a further discussion of employment taxes, see Employment Taxes, later. 1040ez Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . 1040ez The bankruptcy court case number is . 1040ez Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. 1040ez   Year Taxpayer   Estate 1. 1040ez Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. 1040ez Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. 1040ez Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. 1040ez Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. 1040ez   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. 1040ez This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. 1040ez   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). 1040ez   These amounts are generally adjusted annually. 1040ez See the present year Form 1041 Instructions at www. 1040ez irs. 1040ez gov/form1041 for the current dollar amounts. 1040ez Accounting period. 1040ez   A bankruptcy estate may have a fiscal year. 1040ez However, this period cannot be longer than 12 months. 1040ez Change of accounting period. 1040ez   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. 1040ez This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. 1040ez The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. 1040ez Employer identification number. 1040ez   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. 1040ez The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. 1040ez    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. 1040ez   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. 1040ez irs. 1040ez gov/businesses/small. 1040ez The EIN is issued immediately once the application information is validated. 1040ez By telephone at 1-800-829-4933 from 7:00 a. 1040ez m. 1040ez to 7:00 p. 1040ez m. 1040ez in the trustee's or debtor-in-possession's local time zone. 1040ez Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. 1040ez   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. 1040ez For more details, see Pub. 1040ez 583, Starting a Business and Keeping Records. 1040ez   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. 1040ez Figuring tax due. 1040ez   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. 1040ez However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. 1040ez The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. 1040ez The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. 1040ez Tax rate schedule. 1040ez The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. 1040ez When to file. 1040ez   Calendar year bankruptcy estates must file Form 1041 by April 15th. 1040ez Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. 1040ez For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. 1040ez If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. 1040ez Note. 1040ez The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. 1040ez Transmittal for Form 1040. 1040ez   Form 1041 is used as a transmittal for Form 1040. 1040ez If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. 1040ez   Prepare the bankruptcy estate's return by completing Form 1040. 1040ez In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. 1040ez ” Then, attach Form 1040 to the Form 1041 transmittal. 1040ez Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. 1040ez An example of a bankruptcy estate's tax return is prepared below. 1040ez Note. 1040ez The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. 1040ez Payment of Tax Due Payment methods. 1040ez   Payment of tax due may be made by check or money order or by credit or debit card. 1040ez For information on how to make payments electronically by credit or debit card, go to irs. 1040ez gov/e-pay. 1040ez      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. 1040ez To enroll in EFTPS, go to eftps. 1040ez gov or call 1-800-555-4477. 1040ez For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. 1040ez Payment voucher – Form 1041-V. 1040ez   Form 1041-V accompanies payments made by check or money order for Form 1041. 1040ez The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. 1040ez Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. 1040ez We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. 1040ez Estimated tax – Form 1041-ES. 1040ez   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. 1040ez See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. 1040ez Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. 1040ez Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. 1040ez If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. 1040ez   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. 1040ez Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. 1040ez The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. 1040ez If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1040ez , with their individual income tax returns. 1040ez Tax Return Example – Form 1041 This publication is not revised annually. 1040ez Future changes to the forms and their instructions may not be reflected in this example. 1040ez Note. 1040ez The following return was prepared for tax year 2011. 1040ez In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). 1040ez Facts and circumstances. 1040ez   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. 1040ez Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. 1040ez   The estate received the following assets from Mr. 1040ez Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. 1040ez   Also, the estate received a $251,500 capital loss carryover. 1040ez   Mr. 1040ez Smith's bankruptcy case was closed on December 31, 2011. 1040ez During 2011, Mr. 1040ez Smith was relieved of $70,000 of debt by the bankruptcy court. 1040ez The estate chose a calendar year as its tax year. 1040ez Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. 1040ez Schedule B (Form 1040). 1040ez    The certificate of deposit earned $5,500 of interest during 2011. 1040ez Joan reports this interest on Schedule B. 1040ez She completes this schedule and enters the result on Form 1040. 1040ez Form 4562. 1040ez   Joan enters the depreciation allowed on Form 4562. 1040ez She completes the form and enters the result on Schedule E. 1040ez Schedule E (Form 1040). 1040ez   The commercial real estate was rented through the date of sale. 1040ez Joan reports the income and expenses on Schedule E. 1040ez She enters the net income on Form 1040. 1040ez Form 4797. 1040ez   The commercial real estate was sold on July 1, 2011, for $280,000. 1040ez The property was purchased in 2001 at a cost of $250,000. 1040ez The total depreciation allowable as of the date of sale was $120,000. 1040ez Additionally, $25,000 of selling expenses were incurred. 1040ez Joan reports the gain or loss from the sale on Form 4797. 1040ez She completes the form and enters the gain on Schedule D (Form 1040). 1040ez   Mr. 1040ez Smith's former residence was sold on September 30, 2011. 1040ez The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. 1040ez This sale is excluded from gross income under IRC section 121. 1040ez Note. 1040ez Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). 1040ez Bankruptcy estates succeed to this exclusion at the commencement of the case. 1040ez See Regulation section 1. 1040ez 1398-3. 1040ez Schedule D (Form 1040). 1040ez   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). 1040ez She enters the results on Form 1040. 1040ez Form 1040, page 1. 1040ez   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. 1040ez Schedule A (Form 1040). 1040ez   During 2011, the estate paid mortgage interest and real property tax on Mr. 1040ez Smith's former residence. 1040ez It also paid income tax to the state. 1040ez Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. 1040ez Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. 1040ez She completes the Schedule A and enters the result on page 2 of Form 1040. 1040ez Form 1040, page 2. 1040ez   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. 1040ez She then enters the estate's estimated tax payments and figures the amount the estate still owes. 1040ez Form 982. 1040ez   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. 1040ez Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. 1040ez See Debt Cancellation, later. 1040ez After the bankruptcy case ends, Mr. 1040ez Smith will assume the estate's tax attributes. 1040ez Mr. 1040ez Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). 1040ez Note. 1040ez If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. 1040ez Form 1041. 1040ez   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. 1040ez She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. 1040ez This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Schedule A This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Schedule B This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Schedule D This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Schedule E This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Form 2119 This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Form 4562 This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. 1040ez Please click the link to view the image. 1040ez Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. 1040ez Otherwise, you do not have any carryovers. 1040ez 1. 1040ez Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. 1040ez If a loss, enclose the amount in parentheses 1. 1040ez 19,880   2. 1040ez Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. 1040ez 1,500   3. 1040ez Combine lines 1 and 2. 1040ez If zero or less, enter -0- 3. 1040ez 21,380   4. 1040ez Enter the smaller of line 2 or line 3 4. 1040ez 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. 1040ez       5. 1040ez Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. 1040ez 0   6. 1040ez Enter any gain from your 2010 Schedule D, line 15. 1040ez If a loss, enter -0- 6. 1040ez         7. 1040ez Add lines 4 and 6 7. 1040ez 1,500   8. 1040ez Short-term capital loss carryover for 2011. 1040ez Subtract line 7 from line 5. 1040ez If zero or less, enter -0-. 1040ez If more than zero, also enter this amount on Schedule D, line 6 8. 1040ez 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. 1040ez       9. 1040ez Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. 1040ez 251,500   10. 1040ez Enter any gain from your 2010 Schedule D, line 7. 1040ez If a loss, enter -0- 10. 1040ez 0       11. 1040ez Subtract line 5 from line 4. 1040ez If zero or less, enter -0- 11. 1040ez 1,500       12. 1040ez Add lines 10 and 11 12. 1040ez 1,500   13. 1040ez Long-term capital loss carryover for 2011. 1040ez Subtract line 12 from line 9. 1040ez If zero or less, enter -0-. 1040ez If more than zero, also enter this amount on Schedule D, line 14 13. 1040ez 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. 1040ez The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. 1040ez In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. 1040ez The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. 1040ez Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. 1040ez However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. 1040ez A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. 1040ez However, It may or may not be included in the individual partners' income. 1040ez See Partnerships, below under Debt Cancellation. 1040ez Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. 1040ez A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. 1040ez The following discussion only highlights bankruptcy tax rules applying to corporations. 1040ez The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. 1040ez Therefore, you may wish to seek the help of a professional tax advisor. 1040ez See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. 1040ez Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. 1040ez However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. 1040ez A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. 1040ez In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. 1040ez In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. 1040ez Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. 1040ez In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. 1040ez IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. 1040ez IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. 1040ez In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. 1040ez No loss is recognized in this situation. 1040ez Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. 1040ez To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. 1040ez The exemption request must be submitted to the local IRS Insolvency Office handling the case. 1040ez The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. 1040ez The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. 1040ez ” The statement must be signed by the trustee, receiver or assignee. 1040ez The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). 1040ez The IRS will act on your request within 90 days. 1040ez Disclosure of return information to trustee. 1040ez   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. 1040ez However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. 1040ez Material interest is generally defined as a financial or monetary interest. 1040ez Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. 1040ez Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. 1040ez Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. 1040ez QSFs are required to file an annual income tax return, Form 1120-SF, U. 1040ez S. 1040ez Income Tax Return for Settlement Funds. 1040ez More information about QSFs may be found in Treasury Regulation sections 1. 1040ez 468B-1 through -5. 1040ez Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. 1040ez After a return is filed, the IRS will either accept the return as filed or select the return for examination. 1040ez Under examination the IRS may redetermine the tax liability shown on the return. 1040ez If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. 1040ez See Court Jurisdiction over Tax Matters, later. 1040ez Prompt Determination Requests Pursuant to Rev. 1040ez Proc. 1040ez 2006-24, 2006-22 I. 1040ez R. 1040ez B. 1040ez 943, www. 1040ez irs. 1040ez gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. 1040ez irs. 1040ez gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. 1040ez Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). 1040ez Making the request for determination. 1040ez   As detailed in Rev. 1040ez Proc. 1040ez 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. 1040ez O. 1040ez Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). 1040ez   The request must be submitted in duplicate and must be executed under penalties of perjury. 1040ez In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. 1040ez The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. 1040ez The name and location of the office where the return was filed. 1040ez The name of the debtor. 1040ez Debtor's social security number, TIN, or EIN. 1040ez Type of bankruptcy estate. 1040ez Bankruptcy case number. 1040ez Court where the bankruptcy case is pending. 1040ez   The copy of the return(s) submitted with the request must be an exact copy of a valid return. 1040ez A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. 1040ez    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. 1040ez A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. 1040ez Examination of return. 1040ez   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. 1040ez If the return is selected for examination, it will be examined as soon as possible. 1040ez The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. 1040ez   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. 1040ez   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. 1040ez   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. 1040ez Note. 1040ez An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. 1040ez   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei