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1040x online free Part Six -   Cómo Calcular los Impuestos y Créditos Los ocho capítulos de esta sección explican cómo calcular sus impuestos y cómo calcular los impuestos de determinados hijos con ingresos no derivados del trabajo de $2,000 o más. 1040x online free Explican también créditos tributarios que, a diferencia de las deducciones, se restan directamente de los impuestos y los disminuyen, dólar por dólar. 1040x online free El capítulo 36 trata sobre el crédito por ingreso del trabajo y el capítulo 37 abarca una amplia gama de otros créditos, como por ejemplo, el crédito por adopción. 1040x online free Table of Contents 30. 1040x online free   Cómo Calcular los ImpuestosIntroduction Cómo Calcular los Impuestos Impuesto Mínimo Alternativo (AMT) Impuestos Calculados por el IRS Cómo Presentar la Declaración 31. 1040x online free   Impuesto sobre Ingresos No Derivados del Trabajo de Determinados Hijos¿Que Hay de Nuevo? Introduction Useful Items - You may want to see: Cómo Saber si se Tiene que Utilizar la Declaración del Padre o de la MadrePadres que no Presentan la Declaración Conjunta Elección de los Padres de Declarar los Intereses y Dividendos del HijoConsecuencias de Incluir los Ingresos del Hijo Cómo Calcular los Ingresos del Hijo Cómo Calcular el Impuesto Adicional Impuesto para Determinados Hijos con Ingresos No Derivados del TrabajoCómo Facilitar Información sobre los Padres (líneas A-C del Formulario 8615) Paso 1. 1040x online free Cómo Calcular los Ingresos Netos No Derivados del Trabajo del Hijo (Parte I del Formulario 8615) Paso 2. 1040x online free Cómo Calcular el Impuesto Provisional a la Tasa Impositiva de los Padres (Parte II del Formulario 8615) Paso 3. 1040x online free Cómo Calcular el Impuesto del Hijo (Parte III del Formulario 8615) 32. 1040x online free   Crédito por Gastos del Cuidado de Menores y DependientesRecordatorios Introduction Useful Items - You may want to see: Requisitos Para Reclamar el CréditoRequisitos de la Persona Calificada Requisito del Ingreso del Trabajo Requisito de Gastos Relacionados con el Trabajo Requisito de la Declaración Conjunta Requisito de Identificación del Proveedor de Cuidados Cómo Calcular el CréditoCómo Calcular el Total de los Gastos Relacionados con el Trabajo Límite del Ingreso del Trabajo Límite de Dinero Cantidad de Crédito Cómo Reclamar el CréditoCrédito tributario no reembolsable. 1040x online free Impuestos sobre la Nómina para Empleadores de Empleados Domésticos 33. 1040x online free   Crédito para Ancianos o Personas IncapacitadasIntroduction Useful Items - You may want to see: ¿Reúne los Requisitos del Crédito?Persona que Reúne los Requisitos Límites sobre los Ingresos Cómo Reclamar el CréditoEl Crédito Calculado por el IRS El Crédito Calculado por Usted Mismo 34. 1040x online free   Crédito Tributario por HijosIntroduction Useful Items - You may want to see: Hijo Calificado Cantidad de CréditoLímites del Crédito Cómo Reclamar el Crédito Crédito Tributario Adicional por Hijos Cómo Completar el Anexo 8812 (Formulario 1040A o Formulario 1040)Parte I Partes II a IV 35. 1040x online free   Créditos Tributarios por EstudiosIntroduction Useful Items - You may want to see: ¿Quién Puede Reclamar un Crédito Tributario por Estudios? Gastos de Estudios CalificadosNo se Permite Beneficio Doble Ajustes a los Gastos de Estudios Calificados 36. 1040x online free   Crédito por Ingreso del Trabajo (EIC) Qué Hay de Nuevo Recordatorios Introduction Useful Items - You may want to see: ¿Reúne los Requisitos para el Crédito?Si se Hizo una Solicitud Indebida del Crédito en un Año Anterior Parte A. 1040x online free Requisitos para TodosRequisito 1. 1040x online free Tiene que Tener Ingresos Brutos Ajustados Inferiores a: Requisito 2. 1040x online free Tiene que tener un número de Seguro Social válido Requisito 3. 1040x online free Su Estado Civil para Efectos de la Declaración no Puede Ser Casado que Presenta la Declaración por Separado Requisito 4. 1040x online free Tiene que Ser Ciudadano o Extranjero Residente de los Estados Unidos Durante Todo el Año Requisito 5. 1040x online free No Puede Presentar el Formulario 2555 ni el Formulario 2555-EZ Requisito 6. 1040x online free Tiene que Tener Ingresos de Inversiones de $3,300 o Menos Requisito 7. 1040x online free Tiene que Haber Recibido Ingresos del Trabajo Parte B. 1040x online free Requisitos si Tiene un Hijo CalificadoRequisito 8. 1040x online free Su Hijo Tiene que Cumplir los Requisitos de Parentesco, Edad, Residencia y de la Declaración Conjunta Requisito 9. 1040x online free Para Reclamar el Crédito por Ingreso del Trabajo, Sólo una Persona Puede Basarse en el Hijo Calificado de Usted Requisito 10. 1040x online free Otro Contribuyente no Puede Reclamarlo a Usted como Hijo Calificado Parte C. 1040x online free Requisitos si no Tiene un Hijo CalificadoRequisito 11. 1040x online free Tiene que Tener por lo Menos 25 Años pero Menos de 65 Años Requisito 12. 1040x online free No Puede Ser el Dependiente de Otra Persona Requisito 13. 1040x online free Otro Contribuyente no Puede Reclamarlo a Usted como Hijo Calificado Requisito 14. 1040x online free Tiene que Haber Vivido en los Estados Unidos durante más de la Mitad del Año Parte D. 1040x online free Cómo Calcular y Reclamar el Crédito por Ingreso del TrabajoRequisito 15. 1040x online free Su Ingreso del Trabajo Tiene que Ser Menos de: El IRS Puede Calcularle el Crédito por Ingreso del Trabajo Cómo Calcular Usted Mismo el Crédito por Ingreso del Trabajo EjemplosEjemplo 1. 1040x online free Juan y Julia Martínez (Formulario 1040A) Ejemplo 2. 1040x online free Carla Robles (Formulario 1040EZ) 37. 1040x online free   Otros CréditosQué Hay de Nuevo Introduction Useful Items - You may want to see: Créditos no ReembolsablesCrédito por Adopción Crédito por Vehículo Motorizado Alternativo Crédito por Bienes de Reabastecimiento de Vehículos con Combustible Alternativo Crédito para Titulares de Bonos de Crédito Tributario Crédito por Impuestos Extranjeros Crédito por Intereses Hipotecarios Crédito no Reembolsable del Impuesto Mínimo de Años Anteriores Crédito por Vehículos Enchufables con Motor de Dirección Eléctrica Créditos por Energía de la Propiedad Residencial Crédito por Aportaciones a Cuentas de Ahorro para la Jubilación (Crédito del Ahorrador) Créditos ReembolsablesCrédito por el Impuesto sobre Ganancias de Capital no Distribuidas Crédito Tributario por Cobertura del Seguro Médico Crédito por Retención en Exceso del Impuesto del Seguro Social o del Impuesto de la Jubilación Ferroviaria Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Gift Tax Statistics

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What is the Federal Gift Tax?


 

The Federal gift tax is a tax on the right to transfer property from a living person to other persons or trusts. Reported on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, data are collected on the donor and recipient of gifts that exceed the annual exclusion. The name of the recipient, recipient's relationship to the donor, type of property, and value of gift are reported, as are the total value of a donor's lifetime gifts and tax computation items.

For information about selected terms and concepts and a description of the data sources and limitations, please visit Gift Tax Study Metadata.

 


 

Statistical Tables

Total Gifts of Donor, Total Gifts, Deductions, Credits, and Net Gift Tax

 

 


SOI Bulletin Articles

These articles are in .PDF format.  Adobe Acrobat® reader

 

2009 Gifts
This article presents data on gifts made during 2009. Donors filed a total of 223,093 returns for 2009, reporting a total of $$37.9 billion in assets transferred to 867,507 donees, primarily children and grandchildren.

2008 Gifts
This article presents data on gifts made during 2008. Donors filed a total of 234,714 returns for 2008, reporting a total of $40.2 billion in assets transferred to 927,554 donees, primarily children and grandchildren.

2007 Gifts
This article describes gifts made during calendar year 2007.  There were a total of 257,485 gift tax returns filed in 2008.  247,932 returns, or 96.3 percent, were nontaxable.  The remaining 9,553 (3.7 percent) were taxable.

Wealth Transfers, 2005 Gifts

This article describes gifts made during calendar year 2005.  A total of $38.5 billion in assets was transferred from donors to donees, or gift recipients.  Only 2.9 percent of returns were taxable, with $1.7 billion in gift tax liability reported.

 

Inter Vivos Wealth Transfers, 1997 Gifts
This article describes gifts made during calendar year 1997.  Like transfers of wealth at death, wealth transfers during life—called inter vivos wealth transfers—are subject to Federal taxation.  Only individual gifts in excess of $10,000 were potentially taxable for Gift Year 1997.

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1040x online free 2. 1040x online free   Ordinary or Capital Gain or Loss Table of Contents IntroductionSection 1231 transactions. 1040x online free Topics - This chapter discusses: Useful Items - You may want to see: Capital Assets Noncapital AssetsCommodities derivative dealer. 1040x online free Sales and Exchanges Between Related PersonsGain Is Ordinary Income Nondeductible Loss Other DispositionsSale of a Business Dispositions of Intangible Property Subdivision of Land Timber Precious Metals and Stones, Stamps, and Coins Coal and Iron Ore Conversion Transactions Introduction You must classify your gains and losses as either ordinary or capital (and your capital gains or losses as either short-term or long-term). 1040x online free You must do this to figure your net capital gain or loss. 1040x online free For individuals, a net capital gain may be taxed at a different tax rate than ordinary income. 1040x online free See Capital Gains Tax Rates in chapter 4. 1040x online free Your deduction for a net capital loss may be limited. 1040x online free See Treatment of Capital Losses in chapter 4. 1040x online free Capital gain or loss. 1040x online free   Generally, you will have a capital gain or loss if you sell or exchange a capital asset. 1040x online free You also may have a capital gain if your section 1231 transactions result in a net gain. 1040x online free Section 1231 transactions. 1040x online free   Section 1231 transactions are sales and exchanges of property held longer than 1 year and either used in a trade or business or held for the production of rents or royalties. 1040x online free They also include certain involuntary conversions of business or investment property, including capital assets. 1040x online free See Section 1231 Gains and Losses in chapter 3 for more information. 1040x online free Topics - This chapter discusses: Capital assets Noncapital assets Sales and exchanges between  related persons Other dispositions Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 4797 Sales of Business Property 8594 Asset Acquisition Statement Under Section 1060 8949 Sales and Other Dispositions of Capital Assets See chapter 5 for information about getting publications and forms. 1040x online free Capital Assets Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. 1040x online free For exceptions, see Noncapital Assets, later. 1040x online free The following items are examples of capital assets. 1040x online free Stocks and bonds. 1040x online free A home owned and occupied by you and your family. 1040x online free Timber grown on your home property or investment property, even if you make casual sales of the timber. 1040x online free Household furnishings. 1040x online free A car used for pleasure or commuting. 1040x online free Coin or stamp collections. 1040x online free Gems and jewelry. 1040x online free Gold, silver, and other metals. 1040x online free Personal-use property. 1040x online free   Generally, property held for personal use is a capital asset. 1040x online free Gain from a sale or exchange of that property is a capital gain. 1040x online free Loss from the sale or exchange of that property is not deductible. 1040x online free You can deduct a loss relating to personal-use property only if it results from a casualty or theft. 1040x online free Investment property. 1040x online free   Investment property (such as stocks and bonds) is a capital asset, and a gain or loss from its sale or exchange is a capital gain or loss. 1040x online free This treatment does not apply to property used to produce rental income. 1040x online free See Business assets, later, under Noncapital Assets. 1040x online free Release of restriction on land. 1040x online free   Amounts you receive for the release of a restrictive covenant in a deed to land are treated as proceeds from the sale of a capital asset. 1040x online free Noncapital Assets A noncapital asset is property that is not a capital asset. 1040x online free The following kinds of property are not capital assets. 1040x online free Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business. 1040x online free Inventories are discussed in Publication 538, Accounting Periods and Methods. 1040x online free But, see the Tip below. 1040x online free Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of any properties described in (1), above. 1040x online free Depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later), even if the property is fully depreciated (or amortized). 1040x online free Sales of this type of property are discussed in chapter 3. 1040x online free Real property used in your trade or business or as rental property, even if the property is fully depreciated. 1040x online free A copyright; a literary, musical, or artistic composition; a letter; a memorandum; or similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs): Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Received from a person who created the property or for whom the property was prepared under circumstances (for example, by gift) entitling you to the basis of the person who created the property, or for whom it was prepared or produced. 1040x online free But, see the Tip below. 1040x online free U. 1040x online free S. 1040x online free Government publications you got from the government for free or for less than the normal sales price or that you acquired under circumstances entitling you to the basis of someone who got the publications for free or for less than the normal sales price. 1040x online free Any commodities derivative financial instrument (discussed later) held by a commodities derivatives dealer unless it meets both of the following requirements. 1040x online free It is established to the satisfaction of the IRS that the instrument has no connection to the activities of the dealer as a dealer. 1040x online free The instrument is clearly identified in the dealer's records as meeting (a) by the end of the day on which it was acquired, originated, or entered into. 1040x online free Any hedging transaction (defined later) that is clearly identified as a hedging transaction by the end of the day on which it was acquired, originated, or entered into. 1040x online free Supplies of a type you regularly use or consume in the ordinary course of your trade or business. 1040x online free You can elect to treat as capital assets certain self-created musical compositions or copyrights you sold or exchanged. 1040x online free See chapter 4 of Publication 550 for details. 1040x online free Property held mainly for sale to customers. 1040x online free   Stock in trade, inventory, and other property you hold mainly for sale to customers in your trade or business are not capital assets. 1040x online free Inventories are discussed in Publication 538. 1040x online free Business assets. 1040x online free   Real property and depreciable property used in your trade or business or as rental property (including section 197 intangibles defined later under Dispositions of Intangible Property) are not capital assets. 1040x online free The sale or disposition of business property is discussed in chapter 3. 1040x online free Letters and memoranda. 1040x online free   Letters, memoranda, and similar property (such as drafts of speeches, recordings, transcripts, manuscripts, drawings, or photographs) are not treated as capital assets (as discussed earlier) if your personal efforts created them or if they were prepared or produced for you. 1040x online free Nor is this property a capital asset if your basis in it is determined by reference to the person who created it or the person for whom it was prepared. 1040x online free For this purpose, letters and memoranda addressed to you are considered prepared for you. 1040x online free If letters or memoranda are prepared by persons under your administrative control, they are considered prepared for you whether or not you review them. 1040x online free Commodities derivative financial instrument. 1040x online free   A commodities derivative financial instrument is a commodities contract or other financial instrument for commodities (other than a share of corporate stock, a beneficial interest in a partnership or trust, a note, bond, debenture, or other evidence of indebtedness, or a section 1256 contract) the value or settlement price of which is calculated or determined by reference to a specified index (as defined in section 1221(b) of the Internal Revenue Code). 1040x online free Commodities derivative dealer. 1040x online free   A commodities derivative dealer is a person who regularly offers to enter into, assume, offset, assign, or terminate positions in commodities derivative financial instruments with customers in the ordinary course of a trade or business. 1040x online free Hedging transaction. 1040x online free   A hedging transaction is any transaction you enter into in the normal course of your trade or business primarily to manage any of the following. 1040x online free Risk of price changes or currency fluctuations involving ordinary property you hold or will hold. 1040x online free Risk of interest rate or price changes or currency fluctuations for borrowings you make or will make, or ordinary obligations you incur or will incur. 1040x online free Sales and Exchanges Between Related Persons This section discusses the rules that may apply to the sale or exchange of property between related persons. 1040x online free If these rules apply, gains may be treated as ordinary income and losses may not be deductible. 1040x online free See Transfers to Spouse in chapter 1 for rules that apply to spouses. 1040x online free Gain Is Ordinary Income If a gain is recognized on the sale or exchange of property to a related person, the gain may be ordinary income even if the property is a capital asset. 1040x online free It is ordinary income if the sale or exchange is a depreciable property transaction or a controlled partnership transaction. 1040x online free Depreciable property transaction. 1040x online free   Gain on the sale or exchange of property, including a leasehold or a patent application, that is depreciable property in the hands of the person who receives it is ordinary income if the transaction is either directly or indirectly between any of the following pairs of entities. 1040x online free A person and the person's controlled entity or entities. 1040x online free A taxpayer and any trust in which the taxpayer (or his or her spouse) is a beneficiary unless the beneficiary's interest in the trust is a remote contingent interest; that is, the value of the interest computed actuarially is 5% or less of the value of the trust property. 1040x online free An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest (a bequest for a sum of money). 1040x online free An employer (or any person related to the employer under rules (1), (2), or (3)) and a welfare benefit fund (within the meaning of section 419(e) of the Internal Revenue Code) that is controlled directly or indirectly by the employer (or any person related to the employer). 1040x online free Controlled entity. 1040x online free   A person's controlled entity is either of the following. 1040x online free A corporation in which more than 50% of the value of all outstanding stock, or a partnership in which more than 50% of the capital interest or profits interest, is directly or indirectly owned by or for that person. 1040x online free An entity whose relationship with that person is one of the following. 1040x online free A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest or profits interest in the partnership. 1040x online free Two corporations that are members of the same controlled group as defined in section 1563(a) of the Internal Revenue Code, except that “more than 50%” is substituted for “at least 80%” in that definition. 1040x online free Two S corporations, if the same persons own more than 50% in value of the outstanding stock of each corporation. 1040x online free Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. 1040x online free Controlled partnership transaction. 1040x online free   A gain recognized in a controlled partnership transaction may be ordinary income. 1040x online free The gain is ordinary income if it results from the sale or exchange of property that, in the hands of the party who receives it, is a noncapital asset such as trade accounts receivable, inventory, stock in trade, or depreciable or real property used in a trade or business. 1040x online free   A controlled partnership transaction is a transaction directly or indirectly between either of the following pairs of entities. 1040x online free A partnership and a person who directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. 1040x online free Two partnerships, if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. 1040x online free Determining ownership. 1040x online free   In the transactions under Depreciable property transaction and Controlled partnership transaction, earlier, use the following rules to determine the ownership of stock or a partnership interest. 1040x online free Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. 1040x online free (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. 1040x online free ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. 1040x online free Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. 1040x online free For purposes of applying (1) or (2), above, stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. 1040x online free But stock or a partnership interest constructively owned by an individual under (2) is not treated as owned by the individual for reapplying (2) to make another person the constructive owner of that stock or partnership interest. 1040x online free Nondeductible Loss A loss on the sale or exchange of property between related persons is not deductible. 1040x online free This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. 1040x online free For the list of related persons, see Related persons next. 1040x online free If a sale or exchange is between any of these related persons and involves the lump-sum sale of a number of blocks of stock or pieces of property, the gain or loss must be figured separately for each block of stock or piece of property. 1040x online free The gain on each item is taxable. 1040x online free The loss on any item is nondeductible. 1040x online free Gains from the sales of any of these items may not be offset by losses on the sales of any of the other items. 1040x online free Related persons. 1040x online free   The following is a list of related persons. 1040x online free Members of a family, including only brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. 1040x online free ), and lineal descendants (children, grandchildren, etc. 1040x online free ). 1040x online free An individual and a corporation if the individual directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. 1040x online free Two corporations that are members of the same controlled group as defined in section 267(f) of the Internal Revenue Code. 1040x online free A trust fiduciary and a corporation if the trust or the grantor of the trust directly or indirectly owns more than 50% in value of the outstanding stock of the corporation. 1040x online free A grantor and fiduciary, and the fiduciary and beneficiary, of any trust. 1040x online free Fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. 1040x online free A tax-exempt educational or charitable organization and a person who directly or indirectly controls the organization, or a member of that person's family. 1040x online free A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest or profits interest in the partnership. 1040x online free Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. 1040x online free Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. 1040x online free An executor and a beneficiary of an estate unless the sale or exchange is in satisfaction of a pecuniary bequest. 1040x online free Two partnerships if the same persons directly or indirectly own more than 50% of the capital interests or profits interests in both partnerships. 1040x online free A person and a partnership if the person directly or indirectly owns more than 50% of the capital interest or profits interest in the partnership. 1040x online free Partnership interests. 1040x online free   The nondeductible loss rule does not apply to a sale or exchange of an interest in the partnership between the related persons described in (12) or (13) above. 1040x online free Controlled groups. 1040x online free   Losses on transactions between members of the same controlled group described in (3) earlier are deferred rather than denied. 1040x online free   For more information, see section 267(f) of the Internal Revenue Code. 1040x online free Ownership of stock or partnership interests. 1040x online free   In determining whether an individual directly or indirectly owns any of the outstanding stock of a corporation or an interest in a partnership for a loss on a sale or exchange, the following rules apply. 1040x online free Stock or a partnership interest directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. 1040x online free (However, for a partnership interest owned by or for a C corporation, this applies only to shareholders who directly or indirectly own 5% or more in value of the stock of the corporation. 1040x online free ) An individual is considered as owning the stock or partnership interest directly or indirectly owned by or for his or her family. 1040x online free Family includes only brothers, sisters, half-brothers, half-sisters, spouse, ancestors, and lineal descendants. 1040x online free An individual owning (other than by applying (2)) any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. 1040x online free For purposes of applying (1), (2), or (3), stock or a partnership interest constructively owned by a person under (1) is treated as actually owned by that person. 1040x online free But stock or a partnership interest constructively owned by an individual under (2) or (3) is not treated as owned by the individual for reapplying either (2) or (3) to make another person the constructive owner of that stock or partnership interest. 1040x online free Indirect transactions. 1040x online free   You cannot deduct your loss on the sale of stock through your broker if under a prearranged plan a related person or entity buys the same stock you had owned. 1040x online free This does not apply to a cross-trade between related parties through an exchange that is purely coincidental and is not prearranged. 1040x online free Property received from a related person. 1040x online free   If, in a purchase or exchange, you received property from a related person who had a loss that was not allowable and you later sell or exchange the property at a gain, you recognize the gain only to the extent it is more than the loss previously disallowed to the related person. 1040x online free This rule applies only to the original transferee. 1040x online free Example 1. 1040x online free Your brother sold stock to you for $7,600. 1040x online free His cost basis was $10,000. 1040x online free His loss of $2,400 was not deductible. 1040x online free You later sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900 ($10,500 − $7,600). 1040x online free Your recognized gain is only $500, the gain that is more than the $2,400 loss not allowed to your brother. 1040x online free Example 2. 1040x online free Assume the same facts as in Example 1, except that you sell the stock for $6,900 instead of $10,500. 1040x online free Your recognized loss is only $700 ($7,600 − $6,900). 1040x online free You cannot deduct the loss not allowed to your brother. 1040x online free Other Dispositions This section discusses rules for determining the treatment of gain or loss from various dispositions of property. 1040x online free Sale of a Business The sale of a business usually is not a sale of one asset. 1040x online free Instead, all the assets of the business are sold. 1040x online free Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss. 1040x online free A business usually has many assets. 1040x online free When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade. 1040x online free The gain or loss on each asset is figured separately. 1040x online free The sale of capital assets results in capital gain or loss. 1040x online free The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction (discussed in chapter 3). 1040x online free The sale of inventory results in ordinary income or loss. 1040x online free Partnership interests. 1040x online free   An interest in a partnership or joint venture is treated as a capital asset when sold. 1040x online free The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary gain or loss. 1040x online free For more information, see Disposition of Partner's Interest in Publication 541. 1040x online free Corporation interests. 1040x online free   Your interest in a corporation is represented by stock certificates. 1040x online free When you sell these certificates, you usually realize capital gain or loss. 1040x online free For information on the sale of stock, see chapter 4 in Publication 550. 1040x online free Corporate liquidations. 1040x online free   Corporate liquidations of property generally are treated as a sale or exchange. 1040x online free Gain or loss generally is recognized by the corporation on a liquidating sale of its assets. 1040x online free Gain or loss generally is recognized also on a liquidating distribution of assets as if the corporation sold the assets to the distributee at fair market value. 1040x online free   In certain cases in which the distributee is a corporation in control of the distributing corporation, the distribution may not be taxable. 1040x online free For more information, see section 332 of the Internal Revenue Code and the related regulations. 1040x online free Allocation of consideration paid for a business. 1040x online free   The sale of a trade or business for a lump sum is considered a sale of each individual asset rather than of a single asset. 1040x online free Except for assets exchanged under any nontaxable exchange rules, both the buyer and seller of a business must use the residual method (explained later) to allocate the consideration to each business asset transferred. 1040x online free This method determines gain or loss from the transfer of each asset and how much of the consideration is for goodwill and certain other intangible property. 1040x online free It also determines the buyer's basis in the business assets. 1040x online free Consideration. 1040x online free   The buyer's consideration is the cost of the assets acquired. 1040x online free The seller's consideration is the amount realized (money plus the fair market value of property received) from the sale of assets. 1040x online free Residual method. 1040x online free   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. 1040x online free This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b) of the Internal Revenue Code. 1040x online free Section 743(b) applies if a partnership has an election in effect under section 754 of the Internal Revenue Code. 1040x online free   A group of assets constitutes a trade or business if either of the following applies. 1040x online free Goodwill or going concern value could, under any circumstances, attach to them. 1040x online free The use of the assets would constitute an active trade or business under section 355 of the Internal Revenue Code. 1040x online free   The residual method provides for the consideration to be reduced first by the amount of Class I assets (defined below). 1040x online free The consideration remaining after this reduction must be allocated among the various business assets in a certain order. 1040x online free See Classes of assets next for the complete order. 1040x online free Classes of assets. 1040x online free   The following definitions are the classifications for deemed or actual asset acquisitions. 1040x online free Allocate the consideration among the assets in the following order. 1040x online free The amount allocated to an asset, other than a Class VII asset, cannot exceed its fair market value on the purchase date. 1040x online free The amount you can allocate to an asset also is subject to any applicable limits under the Internal Revenue Code or general principles of tax law. 1040x online free Class I assets are cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). 1040x online free Class II assets are certificates of deposit, U. 1040x online free S. 1040x online free Government securities, foreign currency, and actively traded personal property, including stock and securities. 1040x online free Class III assets are accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. 1040x online free However, see section 1. 1040x online free 338-6(b)(2)(iii) of the regulations for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. 1040x online free Class IV assets are property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. 1040x online free Class V assets are all assets other than Class I, II, III, IV, VI, and VII assets. 1040x online free    Note. 1040x online free Furniture and fixtures, buildings, land, vehicles, and equipment, which constitute all or part of a trade or business are generally Class V assets. 1040x online free Class VI assets are section 197 intangibles (other than goodwill and going concern value). 1040x online free Class VII assets are goodwill and going concern value (whether the goodwill or going concern value qualifies as a section 197 intangible). 1040x online free   If an asset described in one of the classifications described above can be included in more than one class, include it in the lower numbered class. 1040x online free For example, if an asset is described in both Class II and Class IV, choose Class II. 1040x online free Example. 1040x online free The total paid in the sale of the assets of Company SKB is $21,000. 1040x online free No cash or deposit accounts or similar accounts were sold. 1040x online free The company's U. 1040x online free S. 1040x online free Government securities sold had a fair market value of $3,200. 1040x online free The only other asset transferred (other than goodwill and going concern value) was inventory with a fair market value of $15,000. 1040x online free Of the $21,000 paid for the assets of Company SKB, $3,200 is allocated to U. 1040x online free S. 1040x online free Government securities, $15,000 to inventory assets, and the remaining $2,800 to goodwill and going concern value. 1040x online free Agreement. 1040x online free   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. 1040x online free This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. 1040x online free Reporting requirement. 1040x online free   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. 1040x online free Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. 1040x online free Generally, the buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. 1040x online free See the Instructions for Form 8594. 1040x online free Dispositions of Intangible Property Intangible property is any personal property that has value but cannot be seen or touched. 1040x online free It includes such items as patents, copyrights, and the goodwill value of a business. 1040x online free Gain or loss on the sale or exchange of amortizable or depreciable intangible property held longer than 1 year (other than an amount recaptured as ordinary income) is a section 1231 gain or loss. 1040x online free The treatment of section 1231 gain or loss and the recapture of amortization and depreciation as ordinary income are explained in chapter 3. 1040x online free See chapter 8 of Publication 535, Business Expenses, for information on amortizable intangible property and chapter 1 of Publication 946, How To Depreciate Property, for information on intangible property that can and cannot be depreciated. 1040x online free Gain or loss on dispositions of other intangible property is ordinary or capital depending on whether the property is a capital asset or a noncapital asset. 1040x online free The following discussions explain special rules that apply to certain dispositions of intangible property. 1040x online free Section 197 Intangibles Section 197 intangibles are certain intangible assets acquired after August 10, 1993 (after July 25, 1991, if chosen), and held in connection with the conduct of a trade or business or an activity entered into for profit whose costs are amortized over 15 years. 1040x online free They include the following assets. 1040x online free Goodwill. 1040x online free Going concern value. 1040x online free Workforce in place. 1040x online free Business books and records, operating systems, and other information bases. 1040x online free Patents, copyrights, formulas, processes, designs, patterns, know how, formats, and similar items. 1040x online free Customer-based intangibles. 1040x online free Supplier-based intangibles. 1040x online free Licenses, permits, and other rights granted by a governmental unit. 1040x online free Covenants not to compete entered into in connection with the acquisition of a business. 1040x online free Franchises, trademarks, and trade names. 1040x online free See chapter 8 of Publication 535 for a description of each intangible. 1040x online free Dispositions. 1040x online free   You cannot deduct a loss from the disposition or worthlessness of a section 197 intangible you acquired in the same transaction (or series of related transactions) as another section 197 intangible you still hold. 1040x online free Instead, you must increase the adjusted basis of your retained section 197 intangible by the nondeductible loss. 1040x online free If you retain more than one section 197 intangible, increase each intangible's adjusted basis. 1040x online free Figure the increase by multiplying the nondeductible loss by a fraction, the numerator (top number) of which is the retained intangible's adjusted basis on the date of the loss and the denominator (bottom number) of which is the total adjusted basis of all retained intangibles on the date of the loss. 1040x online free   In applying this rule, members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity. 1040x online free For example, a corporation cannot deduct a loss on the sale of a section 197 intangible if, after the sale, a member of the same controlled group retains other section 197 intangibles acquired in the same transaction as the intangible sold. 1040x online free Covenant not to compete. 1040x online free   A covenant not to compete (or similar arrangement) that is a section 197 intangible cannot be treated as disposed of or worthless before you have disposed of your entire interest in the trade or business for which the covenant was entered into. 1040x online free Members of the same controlled group of corporations and commonly controlled businesses are treated as a single entity in determining whether a member has disposed of its entire interest in a trade or business. 1040x online free Anti-churning rules. 1040x online free   Anti-churning rules prevent a taxpayer from converting section 197 intangibles that do not qualify for amortization into property that would qualify for amortization. 1040x online free However, these rules do not apply to part of the basis of property acquired by certain related persons if the transferor elects to do both the following. 1040x online free Recognize gain on the transfer of the property. 1040x online free Pay income tax on the gain at the highest tax rate. 1040x online free   If the transferor is a partnership or S corporation, the partnership or S corporation (not the partners or shareholders) can make the election. 1040x online free But each partner or shareholder must pay the tax on his or her share of gain. 1040x online free   To make the election, you, as the transferor, must attach a statement containing certain information to your income tax return for the year of the transfer. 1040x online free You must file the tax return by the due date (including extensions). 1040x online free You must also notify the transferee of the election in writing by the due date of the return. 1040x online free   If you timely filed your return without making the election, you can make the election by filing an amended return within 6 months after the due date of the return (excluding extensions). 1040x online free Attach the statement to the amended return and write “Filed pursuant to section 301. 1040x online free 9100-2” at the top of the statement. 1040x online free File the amended return at the same address the original return was filed. 1040x online free For more information about making the election, see Regulations section 1. 1040x online free 197-2(h)(9). 1040x online free For information about reporting the tax on your income tax return, see the Instructions for Form 4797. 1040x online free Patents The transfer of a patent by an individual is treated as a sale or exchange of a capital asset held longer than 1 year. 1040x online free This applies even if the payments for the patent are made periodically during the transferee's use or are contingent on the productivity, use, or disposition of the patent. 1040x online free For information on the treatment of gain or loss on the transfer of capital assets, see chapter 4. 1040x online free This treatment applies to your transfer of a patent if you meet all the following conditions. 1040x online free You are the holder of the patent. 1040x online free You transfer the patent other than by gift, inheritance, or devise. 1040x online free You transfer all substantial rights to the patent or an undivided interest in all such rights. 1040x online free You do not transfer the patent to a related person. 1040x online free Holder. 1040x online free   You are the holder of a patent if you are either of the following. 1040x online free The individual whose effort created the patent property and who qualifies as the original and first inventor. 1040x online free The individual who bought an interest in the patent from the inventor before the invention was tested and operated successfully under operating conditions and who is neither related to, nor the employer of, the inventor. 1040x online free All substantial rights. 1040x online free   All substantial rights to patent property are all rights that have value when they are transferred. 1040x online free A security interest (such as a lien), or a reservation calling for forfeiture for nonperformance, is not treated as a substantial right for these rules and may be kept by you as the holder of the patent. 1040x online free   All substantial rights to a patent are not transferred if any of the following apply to the transfer. 1040x online free The rights are limited geographically within a country. 1040x online free The rights are limited to a period less than the remaining life of the patent. 1040x online free The rights are limited to fields of use within trades or industries and are less than all the rights that exist and have value at the time of the transfer. 1040x online free The rights are less than all the claims or inventions covered by the patent that exist and have value at the time of the transfer. 1040x online free Related persons. 1040x online free   This tax treatment does not apply if the transfer is directly or indirectly between you and a related person as defined earlier in the list under Nondeductible Loss, with the following changes. 1040x online free Members of your family include your spouse, ancestors, and lineal descendants, but not your brothers, sisters, half-brothers, or half-sisters. 1040x online free Substitute “25% or more” ownership for “more than 50%. 1040x online free ”   If you fit within the definition of a related person independent of family status, the brother-sister exception in (1), earlier, does not apply. 1040x online free For example, a transfer between a brother and a sister as beneficiary and fiduciary of the same trust is a transfer between related persons. 1040x online free The brother-sister exception does not apply because the trust relationship is independent of family status. 1040x online free Franchise, Trademark, or Trade Name If you transfer or renew a franchise, trademark, or trade name for a price contingent on its productivity, use, or disposition, the amount you receive generally is treated as an amount realized from the sale of a noncapital asset. 1040x online free A franchise includes an agreement that gives one of the parties the right to distribute, sell, or provide goods, services, or facilities within a specified area. 1040x online free Significant power, right, or continuing interest. 1040x online free   If you keep any significant power, right, or continuing interest in the subject matter of a franchise, trademark, or trade name that you transfer or renew, the amount you receive is ordinary royalty income rather than an amount realized from a sale or exchange. 1040x online free   A significant power, right, or continuing interest in a franchise, trademark, or trade name includes, but is not limited to, the following rights in the transferred interest. 1040x online free A right to disapprove any assignment of the interest, or any part of it. 1040x online free A right to end the agreement at will. 1040x online free A right to set standards of quality for products used or sold, or for services provided, and for the equipment and facilities used to promote such products or services. 1040x online free A right to make the recipient sell or advertise only your products or services. 1040x online free A right to make the recipient buy most supplies and equipment from you. 1040x online free A right to receive payments based on the productivity, use, or disposition of the transferred item of interest if those payments are a substantial part of the transfer agreement. 1040x online free Subdivision of Land If you own a tract of land and, to sell or exchange it, you subdivide it into individual lots or parcels, the gain normally is ordinary income. 1040x online free However, you may receive capital gain treatment on at least part of the proceeds provided you meet certain requirements. 1040x online free See section 1237 of the Internal Revenue Code. 1040x online free Timber Standing timber held as investment property is a capital asset. 1040x online free Gain or loss from its sale is reported as a capital gain or loss on Form 8949, and Schedule D (Form 1040), as applicable. 1040x online free If you held the timber primarily for sale to customers, it is not a capital asset. 1040x online free Gain or loss on its sale is ordinary business income or loss. 1040x online free It is reported in the gross receipts or sales and cost of goods sold items of your return. 1040x online free Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. 1040x online free These sales constitute a very minor part of their farm businesses. 1040x online free In these cases, amounts realized from such sales, and the expenses of cutting, hauling, etc. 1040x online free , are ordinary farm income and expenses reported on Schedule F (Form 1040), Profit or Loss From Farming. 1040x online free Different rules apply if you owned the timber longer than 1 year and elect to either: Treat timber cutting as a sale or exchange, or Enter into a cutting contract. 1040x online free Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. 1040x online free This is true whether the timber is cut under contract or whether you cut it yourself. 1040x online free Under the rules discussed below, disposition of the timber is treated as a section 1231 transaction. 1040x online free See chapter 3. 1040x online free Gain or loss is reported on Form 4797. 1040x online free Christmas trees. 1040x online free   Evergreen trees, such as Christmas trees, that are more than 6 years old when severed from their roots and sold for ornamental purposes are included in the term timber. 1040x online free They qualify for both rules discussed below. 1040x online free Election to treat cutting as a sale or exchange. 1040x online free   Under the general rule, the cutting of timber results in no gain or loss. 1040x online free It is not until a sale or exchange occurs that gain or loss is realized. 1040x online free But if you owned or had a contractual right to cut timber, you can elect to treat the cutting of timber as a section 1231 transaction in the year the timber is cut. 1040x online free Even though the cut timber is not actually sold or exchanged, you report your gain or loss on the cutting for the year the timber is cut. 1040x online free Any later sale results in ordinary business income or loss. 1040x online free See Example, later. 1040x online free   To elect this treatment, you must: Own or hold a contractual right to cut the timber for a period of more than 1 year before it is cut, and Cut the timber for sale or for use in your trade or business. 1040x online free Making the election. 1040x online free   You make the election on your return for the year the cutting takes place by including in income the gain or loss on the cutting and including a computation of the gain or loss. 1040x online free You do not have to make the election in the first year you cut timber. 1040x online free You can make it in any year to which the election would apply. 1040x online free If the timber is partnership property, the election is made on the partnership return. 1040x online free This election cannot be made on an amended return. 1040x online free   Once you have made the election, it remains in effect for all later years unless you cancel it. 1040x online free   If you previously elected to treat the cutting of timber as a sale or exchange, you may revoke this election without the consent of the IRS. 1040x online free The prior election (and revocation) is disregarded for purposes of making a subsequent election. 1040x online free See Form T (Timber), Forest Activities Schedule, for more information. 1040x online free Gain or loss. 1040x online free   Your gain or loss on the cutting of standing timber is the difference between its adjusted basis for depletion and its fair market value on the first day of your tax year in which it is cut. 1040x online free   Your adjusted basis for depletion of cut timber is based on the number of units (feet board measure, log scale, or other units) of timber cut during the tax year and considered to be sold or exchanged. 1040x online free Your adjusted basis for depletion is also based on the depletion unit of timber in the account used for the cut timber, and should be figured in the same manner as shown in section 611 of the Internal Revenue Code and the related regulations. 1040x online free   Timber depletion is discussed in chapter 9 of Publication 535. 1040x online free Example. 1040x online free In April 2013, you had owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. 1040x online free It had an adjusted basis for depletion of $40 per MBF. 1040x online free You are a calendar year taxpayer. 1040x online free On January 1, 2013, the timber had a fair market value (FMV) of $350 per MBF. 1040x online free It was cut in April for sale. 1040x online free On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. 1040x online free You report the difference between the fair market value and your adjusted basis for depletion as a gain. 1040x online free This amount is reported on Form 4797 along with your other section 1231 gains and losses to figure whether it is treated as capital gain or as ordinary gain. 1040x online free You figure your gain as follows. 1040x online free FMV of timber January 1, 2013 $1,400,000 Minus: Adjusted basis for depletion 160,000 Section 1231 gain $1,240,000 The fair market value becomes your basis in the cut timber and a later sale of the cut timber including any by-product or tree tops will result in ordinary business income or loss. 1040x online free Outright sales of timber. 1040x online free   Outright sales of timber by landowners qualify for capital gains treatment using rules similar to the rules for certain disposal of timber under a contract with retained economic interest (defined below). 1040x online free However, for outright sales, the date of disposal is not deemed to be the date the timber is cut because the landowner can elect to treat the payment date as the date of disposal (see below). 1040x online free Cutting contract. 1040x online free   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. 1040x online free You are the owner of the timber. 1040x online free You held the timber longer than 1 year before its disposal. 1040x online free You kept an economic interest in the timber. 1040x online free   You have kept an economic interest in standing timber if, under the cutting contract, the expected return on your investment is conditioned on the cutting of the timber. 1040x online free   The difference between the amount realized from the disposal of the timber and its adjusted basis for depletion is treated as gain or loss on its sale. 1040x online free Include this amount on Form 4797 along with your other section 1231 gains or losses to figure whether it is treated as capital or ordinary gain or loss. 1040x online free Date of disposal. 1040x online free   The date of disposal is the date the timber is cut. 1040x online free However, for outright sales by landowners or if you receive payment under the contract before the timber is cut, you can elect to treat the date of payment as the date of disposal. 1040x online free   This election applies only to figure the holding period of the timber. 1040x online free It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). 1040x online free   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. 1040x online free The statement must identify the advance payments subject to the election and the contract under which they were made. 1040x online free   If you timely filed your return for the year you received payment without making the election, you still can make the election by filing an amended return within 6 months after the due date for that year's return (excluding extensions). 1040x online free Attach the statement to the amended return and write “Filed pursuant to section 301. 1040x online free 9100-2” at the top of the statement. 1040x online free File the amended return at the same address the original return was filed. 1040x online free Owner. 1040x online free   The owner of timber is any person who owns an interest in it, including a sublessor and the holder of a contract to cut the timber. 1040x online free You own an interest in timber if you have the right to cut it for sale on your own account or for use in your business. 1040x online free Tree stumps. 1040x online free   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. 1040x online free Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. 1040x online free However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. 1040x online free Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. 1040x online free   See Form T (Timber) and its separate instructions for more information about dispositions of timber. 1040x online free Precious Metals and Stones, Stamps, and Coins Gold, silver, gems, stamps, coins, etc. 1040x online free , are capital assets except when they are held for sale by a dealer. 1040x online free Any gain or loss from their sale or exchange generally is a capital gain or loss. 1040x online free If you are a dealer, the amount received from the sale is ordinary business income. 1040x online free Coal and Iron Ore You must treat the disposal of coal (including lignite) or iron ore mined in the United States as a section 1231 transaction if both the following apply to you. 1040x online free You owned the coal or iron ore longer than 1 year before its disposal. 1040x online free You kept an economic interest in the coal or iron ore. 1040x online free For this rule, the date the coal or iron ore is mined is considered the date of its disposal. 1040x online free Your gain or loss is the difference between the amount realized from disposal of the coal or iron ore and the adjusted basis you use to figure cost depletion (increased by certain expenses not allowed as deductions for the tax year). 1040x online free This amount is included on Form 4797 along with your other section 1231 gains and losses. 1040x online free You are considered an owner if you own or sublet an economic interest in the coal or iron ore in place. 1040x online free If you own only an option to buy the coal in place, you do not qualify as an owner. 1040x online free In addition, this gain or loss treatment does not apply to income realized by an owner who is a co-adventurer, partner, or principal in the mining of coal or iron ore. 1040x online free The expenses of making and administering the contract under which the coal or iron ore was disposed of and the expenses of preserving the economic interest kept under the contract are not allowed as deductions in figuring taxable income. 1040x online free Rather, their total, along with the adjusted depletion basis, is deducted from the amount received to determine gain. 1040x online free If the total of these expenses plus the adjusted depletion basis is more than the amount received, the result is a loss. 1040x online free Special rule. 1040x online free   The above treatment does not apply if you directly or indirectly dispose of the iron ore or coal to any of the following persons. 1040x online free A related person whose relationship to you would result in the disallowance of a loss (see Nondeductible Loss under Sales and Exchanges Between Related Persons, earlier). 1040x online free An individual, trust, estate, partnership, association, company, or corporation owned or controlled directly or indirectly by the same interests that own or control your business. 1040x online free Conversion Transactions Recognized gain on the disposition or termination of any position held as part of certain conversion transactions is treated as ordinary income. 1040x online free This applies if substantially all your expected return is attributable to the time value of your net investment (like interest on a loan) and the transaction is any of the following. 1040x online free An applicable straddle (generally, any set of offsetting positions with respect to personal property, including stock). 1040x online free A transaction in which you acquire property and, at or about the same time, you contract to sell the same or substantially identical property at a specified price. 1040x online free Any other transaction that is marketed and sold as producing capital gain from a transaction in which substantially all of your expected return is due to the time value of your net investment. 1040x online free For more information, see chapter 4 of Publication 550. 1040x online free Prev  Up  Next   Home   More Online Publications