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2012 Tax Forms Irs

2012 tax forms irs 1. 2012 tax forms irs   Filing and Paying Business Taxes Table of Contents Introduction Useful Items - You may want to see: Identification NumbersNew EIN. 2012 tax forms irs Employee. 2012 tax forms irs Other payee. 2012 tax forms irs Income TaxDo I Have To File an Income Tax Return? How Do I File? IRS e-file (Electronic Filing) When Is My Tax Return Due? How Do I Pay Income Tax? Self-Employment (SE) TaxHow to become insured under social security. 2012 tax forms irs Earning credits in 2013 and 2014. 2012 tax forms irs Employment Taxes Excise Taxes Information ReturnsWaiver of penalties. 2012 tax forms irs Penalties. 2012 tax forms irs Introduction This chapter explains the business taxes you may have to pay and the forms you may have to file. 2012 tax forms irs It also discusses taxpayer identification numbers. 2012 tax forms irs Table 1-1 lists the benefits of filing electronically. 2012 tax forms irs Table 1-2 lists the federal taxes you may have to pay, their due dates, and the forms you use to report them. 2012 tax forms irs Table 1-3 provides checklists that highlight the typical forms and schedules you may need to file if you ever go out of business. 2012 tax forms irs You may want to get Publication 509, Tax Calendars. 2012 tax forms irs It has tax calendars that tell you when to file returns and make tax payments. 2012 tax forms irs Useful Items - You may want to see: Publication 505 Tax Withholding and Estimated Tax Form (and Instructions) 1040 U. 2012 tax forms irs S. 2012 tax forms irs Individual Income Tax Return 1040-ES Estimated Tax for Individuals Sch C (Form 1040) Profit or Loss From Business Sch C-EZ (Form 1040) Net Profit From Business Sch SE (Form 1040) Self-Employment Tax See chapter 12 for information about getting publications and forms. 2012 tax forms irs Identification Numbers This section explains three types of taxpayer identification numbers, who needs them, when to use them, and how to get them. 2012 tax forms irs Social security number (SSN). 2012 tax forms irs   Generally, use your SSN as your taxpayer identification number. 2012 tax forms irs You must put this number on each of your individual income tax forms, such as Form 1040 and its schedules. 2012 tax forms irs   To apply for an SSN, use Form SS-5, Application for a Social Security Card. 2012 tax forms irs This form is available at Social Security Administration (SSA) offices or by calling 1-800-772-1213. 2012 tax forms irs It is also available from the SSA website at www. 2012 tax forms irs socialsecurity. 2012 tax forms irs gov. 2012 tax forms irs Individual taxpayer identification number (ITIN). 2012 tax forms irs   The IRS will issue an ITIN if you are a nonresident or resident alien and you do not have and are not eligible to get an SSN. 2012 tax forms irs In general, if you need to obtain an ITIN, you must attach Form W-7, Application for IRS Individual Taxpayer Identification Number, with your signed, original, completed tax return and any other required documentation and mail them to the following address. 2012 tax forms irs  Internal Revenue Service ITIN Operation P. 2012 tax forms irs O. 2012 tax forms irs Box 149342 Austin, TX 78714-9342 The exceptions are covered in detail in the instructions for Form W-7. 2012 tax forms irs If you must include another person's SSN on your return and that person does not have and cannot get an SSN, enter that person's ITIN. 2012 tax forms irs The application is also available in Spanish. 2012 tax forms irs The form is available at IRS. 2012 tax forms irs gov or you can call 1-800-829-3676 to order the form. 2012 tax forms irs    An ITIN is for tax use only. 2012 tax forms irs It does not entitle the holder to social security benefits or change the holder's employment or immigration status. 2012 tax forms irs Employer identification number (EIN). 2012 tax forms irs   You must also have an EIN to use as a taxpayer identification number if you do either of the following. 2012 tax forms irs Pay wages to one or more employees. 2012 tax forms irs File pension or excise tax returns. 2012 tax forms irs   If you must have an EIN, include it along with your SSN on your Schedule C or C-EZ. 2012 tax forms irs   You can apply for an EIN: Online by clicking on the Employer ID Numbers (EINs) link at www. 2012 tax forms irs irs. 2012 tax forms irs gov/businesses/small. 2012 tax forms irs The EIN is issued immediately once the application information is validated. 2012 tax forms irs By telephone at 1-800-829-4933. 2012 tax forms irs By mailing or faxing Form SS-4, Application for Employer Identification Number. 2012 tax forms irs New EIN. 2012 tax forms irs   You may need to get a new EIN if either the form or the ownership of your business changes. 2012 tax forms irs For more information, see Publication 1635, Understanding Your EIN. 2012 tax forms irs When you need identification numbers of other persons. 2012 tax forms irs   In operating your business, you will probably make certain payments you must report on information returns. 2012 tax forms irs These payments are discussed under Information Returns, later in this chapter. 2012 tax forms irs You must give the recipient of these payments (the payee) a statement showing the total amount paid during the year. 2012 tax forms irs You must include the payee's identification number and your identification number on the returns and statements. 2012 tax forms irs Employee. 2012 tax forms irs   If you have employees, you must get an SSN from each of them. 2012 tax forms irs Record the name and SSN of each employee exactly as they are shown on the employee's social security card. 2012 tax forms irs If the employee's name is not correct as shown on the card, the employee should request a new card from the SSA. 2012 tax forms irs This may occur if the employee's name was changed due to marriage or divorce. 2012 tax forms irs   Form W-4, Employee's Withholding Allowance Certificate, is completed by each employee so the correct federal income tax can be withheld from their pay. 2012 tax forms irs   If your employee does not have an SSN, he or she should file Form SS-5 with the SSA. 2012 tax forms irs Other payee. 2012 tax forms irs   If you make payments to someone who is not your employee and you must report the payments on an information return, get that person's SSN. 2012 tax forms irs If you must report payments to an organization, such as a corporation or partnership, you must get its EIN. 2012 tax forms irs   To get the payee's SSN or EIN, use Form W-9, Request for Taxpayer Identification Number and Certification. 2012 tax forms irs   A payee who does not provide you with an identification number may be subject to backup withholding. 2012 tax forms irs For information on backup withholding, see the Form W-9 instructions and the General Instructions for Certain Information Returns. 2012 tax forms irs Income Tax This part explains whether you have to file an income tax return and when you file it. 2012 tax forms irs It also explains how you pay the tax. 2012 tax forms irs Do I Have To File an Income Tax Return? You have to file an income tax return for 2013 if your net earnings from self-employment were $400 or more. 2012 tax forms irs If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions. 2012 tax forms irs How Do I File? File your income tax return on Form 1040 and attach Schedule C or Schedule C-EZ. 2012 tax forms irs Enter the net profit or loss from Schedule C or Schedule C-EZ on page 1 of Form 1040. 2012 tax forms irs Use Schedule C to figure your net profit or loss from your business. 2012 tax forms irs If you operated more than one business as a sole proprietorship, you must attach a separate Schedule C for each business. 2012 tax forms irs You can use the simpler Schedule C-EZ if you operated only one business as a sole proprietorship, you did not have a net loss, and you meet the other requirements listed in Part I of the schedule. 2012 tax forms irs IRS e-file (Electronic Filing) Please click here for the text description of the image. 2012 tax forms irs E-file logo You may be able to file your tax returns electronically using an IRS e-file option. 2012 tax forms irs Table 1-1 lists the benefits of IRS e-file. 2012 tax forms irs IRS e-file uses automation to replace most of the manual steps needed to process paper returns. 2012 tax forms irs As a result, the processing of e-file returns is faster and more accurate than the processing of paper returns. 2012 tax forms irs As with a paper return, you are responsible for making sure your return contains accurate information and is filed on time. 2012 tax forms irs Using e-file does not affect your chances of an IRS examination of your return. 2012 tax forms irs You can file most commonly used business forms using IRS e-file. 2012 tax forms irs For more information, visit IRS. 2012 tax forms irs gov. 2012 tax forms irs Electronic signatures. 2012 tax forms irs   Paperless filing is easier than you think and it's available to most taxpayers who file electronically—including those first-time filers who were 16 or older at the end of 2013. 2012 tax forms irs If you file electronically using tax preparation software or a tax professional, you will participate in the Self-Select PIN (personal identification number) program. 2012 tax forms irs If you are married filing jointly, you and your spouse will each need to create a PIN and enter these PINs as your electronic signatures. 2012 tax forms irs    To create a PIN, you must know your adjusted gross income (AGI) from your originally filed 2012 income tax return (not from an amended return, Form 1040X, or any math error notice from the IRS). 2012 tax forms irs You will also need to provide your date of birth (DOB). 2012 tax forms irs Make sure your DOB is accurate and matches the information on record with the Social Security Administration before you e-file. 2012 tax forms irs To do this, check your annual Social Security Statement. 2012 tax forms irs   With a Self-Select PIN, there is nothing to sign and nothing to mail—not even your Forms W-2. 2012 tax forms irs For more details on the Self-Select PIN program, visit IRS. 2012 tax forms irs gov. 2012 tax forms irs State returns. 2012 tax forms irs   In most states, you can file an electronic state return simultaneously with your federal return. 2012 tax forms irs For more information, check with your local IRS office, state tax agency, tax professional, or IRS. 2012 tax forms irs gov. 2012 tax forms irs Refunds. 2012 tax forms irs   You can have your refund check mailed to you, or you can have your refund deposited directly to your checking or savings account. 2012 tax forms irs   With e-file, your refund will be issued in half the time as when filing on paper. 2012 tax forms irs Most refunds are issued within 3 weeks. 2012 tax forms irs If you choose Direct Deposit, you can receive your refund in as few as 10 days. 2012 tax forms irs Offset against debts. 2012 tax forms irs   As with a paper return, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. 2012 tax forms irs You will be notified if the refund you claimed has been offset against your debts. 2012 tax forms irs Refund inquiries. 2012 tax forms irs   You can check the status of your refund if it has been at least 24 hours (4 weeks if you mailed a paper return) from the date you filed your return. 2012 tax forms irs Be sure to have a copy of your tax return available because you will need to know the filing status, the first social security number shown on the return, and the exact whole-dollar amount of the refund. 2012 tax forms irs To check on your refund, do one of the following. 2012 tax forms irs Go to IRS. 2012 tax forms irs gov and click on Where's My Refund. 2012 tax forms irs Call 1-800-829-4477 for automated refund information, and follow the recorded instructions. 2012 tax forms irs Call 1-800-829-1954 during the hours shown in your form instructions. 2012 tax forms irs Balance due. 2012 tax forms irs   If you owe tax, you must pay it by April 15, 2014, to avoid late-payment penalties and interest. 2012 tax forms irs You can make your payment electronically by scheduling an electronic funds withdrawal from your checking or savings account or by credit card. 2012 tax forms irs Using an Authorized IRS e-file Provider Many tax professionals can electronically file paperless returns for their clients. 2012 tax forms irs You have two options. 2012 tax forms irs You can prepare your return, take it to an authorized IRS e-file provider, and have the provider transmit it electronically to the IRS. 2012 tax forms irs You can have an authorized IRS e-file provider prepare your return and transmit it for you electronically. 2012 tax forms irs You will be asked to complete Form 8879, IRS e-file Signature Authorization, to authorize the provider to enter your self-selected PIN on your return. 2012 tax forms irs Depending on the provider and the specific services requested, a fee may be charged. 2012 tax forms irs To find an authorized IRS e-file provider near you, go to IRS. 2012 tax forms irs gov or look for an “Authorized IRS e-file Provider” sign. 2012 tax forms irs Using Your Personal Computer A computer with Internet access is all you need to file your tax return using IRS e-file. 2012 tax forms irs When you use your personal computer, you can e-file your return from your home any time of the day or night. 2012 tax forms irs Sign your return electronically using a self-selected PIN to complete the process. 2012 tax forms irs There is no signature form to submit or Forms W-2 to send in. 2012 tax forms irs Free Internet filing options. 2012 tax forms irs   More taxpayers can now prepare and e-file their individual income tax returns free using commercial tax preparation software accessible through IRS. 2012 tax forms irs gov or www. 2012 tax forms irs usa. 2012 tax forms irs gov. 2012 tax forms irs The IRS is partnering with the tax software industry to offer free preparation and filing services to a significant number of taxpayers. 2012 tax forms irs Security and privacy certificate programs will assure tax data is safe and secure. 2012 tax forms irs To see if you qualify for these services, visit the Return Preparation and Filing Options page at IRS. 2012 tax forms irs gov. 2012 tax forms irs   If you cannot use the free services, you can buy tax preparation software at various electronics stores or computer and office supply stores. 2012 tax forms irs You can also download software from the Internet or prepare and file your return completely online by using tax preparation software available on the Internet. 2012 tax forms irs Filing Through Employers and Financial Institutions Some businesses offer free e-file to their employees, members, or customers. 2012 tax forms irs Others offer it for a fee. 2012 tax forms irs Ask your employer or financial institution if they offer IRS e-file as an employee, member, or customer benefit. 2012 tax forms irs Free Help With Your Return Free help in preparing your return is available nationwide from IRS-trained volunteers. 2012 tax forms irs The Volunteer Income Tax Assistance (VITA) program is designed to help low-income taxpayers, and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 or older with their tax returns. 2012 tax forms irs Some locations offer free electronic filing. 2012 tax forms irs Table 1-1. 2012 tax forms irs Benefits of IRS e-file Accuracy • Your chance of getting an error notice from the IRS is significantly reduced. 2012 tax forms irs Security • Your privacy and security are assured. 2012 tax forms irs Electronic signatures • Create your own personal identification number (PIN) and file a completely paperless return through your tax preparation software or tax professional. 2012 tax forms irs There is nothing to mail. 2012 tax forms irs Proof of acceptance • You receive an electronic acknowledgment within 48 hours that the IRS has accepted your return for processing. 2012 tax forms irs Fast refunds • You get your refund faster with Direct Deposit—in as few as 10 days. 2012 tax forms irs Free Internet filing options • Use IRS. 2012 tax forms irs gov to access commercial tax preparation and e-file services available at no cost to eligible taxpayers. 2012 tax forms irs Electronic payment options • Convenient, safe, and secure electronic payment options are available. 2012 tax forms irs E-file and pay your taxes in a single step. 2012 tax forms irs Schedule an electronic funds withdrawal from your checking or savings account (up to and including April 15, 2014) or pay by credit card. 2012 tax forms irs Federal/State filing • Prepare and file your federal and state tax returns together and double the benefits you get from e-file. 2012 tax forms irs When Is My Tax Return Due? Form 1040 for calendar year 2013 is due by April 15, 2014. 2012 tax forms irs If you use a fiscal year (explained in chapter 2), your return is due by the 15th day of the 4th month after the end of your fiscal year. 2012 tax forms irs If you file late, you may have to pay penalties and interest. 2012 tax forms irs If you cannot file your return on time, use Form 4868, Application for Automatic Extension of Time To File U. 2012 tax forms irs S. 2012 tax forms irs Individual Income Tax Return, to request an automatic 6-month extension. 2012 tax forms irs For calendar year taxpayers, this will extend the tax filing due date until October 15. 2012 tax forms irs Filing an extension does not extend the time to pay your taxes, only the time to file the tax return. 2012 tax forms irs How Do I Pay Income Tax? Federal income tax is a pay-as-you-go tax. 2012 tax forms irs You must pay it as you earn or receive income during the year. 2012 tax forms irs An employee usually has income tax withheld from his or her pay. 2012 tax forms irs If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax. 2012 tax forms irs You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax (discussed later), of $1,000 or more when you file your return. 2012 tax forms irs Use Form 1040-ES to figure and pay the tax. 2012 tax forms irs If you do not have to make estimated tax payments, you can pay any tax due when you file your return. 2012 tax forms irs For more information on estimated tax, see Publication 505, Tax Withholding and Estimated Tax. 2012 tax forms irs What are my payment options?   You can pay your estimated tax electronically using various options. 2012 tax forms irs If you pay electronically, there is no need to mail in Form 1040-ES payment vouchers. 2012 tax forms irs These options include: Paying electronically through the Electronic Federal Tax Payment System (EFTPS). 2012 tax forms irs Paying by authorizing an electronic funds withdrawal when you file Form 1040 electronically. 2012 tax forms irs Paying by credit or debit card over the phone or by Internet. 2012 tax forms irs Other options include crediting an overpayment from your 2013 return to your 2014 estimated tax, or mailing a check or money order with a Form 1040-ES payment voucher. 2012 tax forms irs EFTPS    To enroll in EFTPS, go to www. 2012 tax forms irs eftps. 2012 tax forms irs gov or call 1-800-555-4477. 2012 tax forms irs When you request a new EIN and you will have a tax obligation, you are automatically enrolled in EFTPS. 2012 tax forms irs Benefits of EFTPS: The chance of an error in making your payments is reduced. 2012 tax forms irs You receive immediate confirmation of every transaction. 2012 tax forms irs Penalty for underpayment of tax. 2012 tax forms irs   If you did not pay enough income tax and self-employment tax for 2013 by withholding or by making estimated tax payments, you may have to pay a penalty on the amount not paid. 2012 tax forms irs The IRS will figure the penalty for you and send you a bill. 2012 tax forms irs Or you can use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you have to pay a penalty and to figure the penalty amount. 2012 tax forms irs For more information, see Publication 505. 2012 tax forms irs Self-Employment (SE) Tax Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. 2012 tax forms irs It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. 2012 tax forms irs If you earned income as a statutory employee, you do not pay SE tax on that income. 2012 tax forms irs Social security coverage. 2012 tax forms irs   Social security benefits are available to self-employed persons just as they are to wage earners. 2012 tax forms irs Your payments of SE tax contribute to your coverage under the social security system. 2012 tax forms irs Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. 2012 tax forms irs By not reporting all of your self-employment income, you could cause your social security benefits to be lower when you retire. 2012 tax forms irs How to become insured under social security. 2012 tax forms irs   You must be insured under the social security system before you begin receiving social security benefits. 2012 tax forms irs You are insured if you have the required number of credits (also called quarters of coverage), discussed next. 2012 tax forms irs Earning credits in 2013 and 2014. 2012 tax forms irs   For 2013, you received one credit, up to a maximum of four credits, for each $1,160 ($1,200 for 2014) of income subject to social security taxes. 2012 tax forms irs Therefore, for 2013, if you had income (self-employment and wages) of $4,640 that was subject to social security taxes, you receive four credits ($4,640 ÷ $1,160). 2012 tax forms irs   For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office. 2012 tax forms irs    Making false statements to get or to increase social security benefits may subject you to penalties. 2012 tax forms irs The Social Security Administration (SSA) time limit for posting self-employment income. 2012 tax forms irs   Generally, the SSA will give you credit only for self-employment income reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. 2012 tax forms irs If you file your tax return or report a change in your self-employment income after this time limit, the SSA may change its records, but only to remove or reduce the amount. 2012 tax forms irs The SSA will not change its records to increase your self-employment income. 2012 tax forms irs Who must pay self-employment tax. 2012 tax forms irs   You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. 2012 tax forms irs Your net earnings from self-employment (excluding church employee income) were $400 or more. 2012 tax forms irs You had church employee income of $108. 2012 tax forms irs 28 or more. 2012 tax forms irs The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. 2012 tax forms irs SE tax rate. 2012 tax forms irs   For 2013, the SE tax rate on net earnings is 15. 2012 tax forms irs 3% (12. 2012 tax forms irs 4% social security tax plus 2. 2012 tax forms irs 9% Medicare tax). 2012 tax forms irs Maximum earnings subject to SE tax. 2012 tax forms irs   Only the first $113,700 of your combined wages, tips, and net earnings in 2013 is subject to any combination of the 12. 2012 tax forms irs 4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax. 2012 tax forms irs   All your combined wages, tips, and net earnings in 2013 are subject to any combination of the 2. 2012 tax forms irs 9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax. 2012 tax forms irs   If wages and tips you receive as an employee are subject to either social security or railroad retirement (tier 1) tax, or both, and total at least $113,700, do not pay the 12. 2012 tax forms irs 4% social security part of the SE tax on any of your net earnings. 2012 tax forms irs However, you must pay the 2. 2012 tax forms irs 9% Medicare part of the SE tax on all your net earnings. 2012 tax forms irs Deduct one-half of your SE tax as an adjustment to income on line 27 of Form 1040. 2012 tax forms irs   More information. 2012 tax forms irs   For information on methods of calculating SE tax, see Chapter 10, Self-Employment Tax. 2012 tax forms irs Table 1-2. 2012 tax forms irs Which Forms Must I File? IF you are liable for: THEN use Form: DUE by:1 Income tax 1040 and Schedule C or C-EZ2 15th day of 4th month after end of  tax year. 2012 tax forms irs Self-employment tax Schedule SE File with Form 1040. 2012 tax forms irs Estimated tax 1040-ES 15th day of 4th, 6th, and 9th months of tax year, and 15th day of 1st month after the end of tax year. 2012 tax forms irs Social security and Medicare taxes and income tax withholding 941 or 944 April 30, July 31, October 31, and January 313. 2012 tax forms irs     See Publication 15. 2012 tax forms irs Providing information on social security and Medicare taxes and income tax withholding W-2 (to employee)  W-2 and W-3 (to the Social Security Administration) January 313. 2012 tax forms irs   Last day of February (March 31 if filing electronically)3. 2012 tax forms irs Federal unemployment (FUTA) tax 940 January 313. 2012 tax forms irs     April 30, July 31, October 31, and January 31, but only if the liability for unpaid tax is more than $500. 2012 tax forms irs Filing information returns for payments to nonemployees and transactions with other persons See Information Returns Forms 1099 – to the recipient by January 31 and to the IRS by February 28 (March 31 if filing electronically). 2012 tax forms irs     Other forms – see the General Instructions for Certain Information Returns. 2012 tax forms irs Excise tax See Excise Taxes See the instructions to the forms. 2012 tax forms irs 1 If a due date falls on a Saturday, Sunday, or legal holiday, file by the next day that is not a Saturday, Sunday, or legal holiday. 2012 tax forms irs For more information, see Publication 509, Tax Calendars. 2012 tax forms irs 2 File a separate schedule for each business. 2012 tax forms irs 3 See the form instructions if you go out of business, change the form of your business, or stop paying wages. 2012 tax forms irs     Employment Taxes If you have employees, you will need to file forms to report employment taxes. 2012 tax forms irs Employment taxes include the following items. 2012 tax forms irs Social security and Medicare taxes. 2012 tax forms irs Federal income tax withholding. 2012 tax forms irs Federal unemployment (FUTA) tax. 2012 tax forms irs For more information, see Publication 15 (Circular E), Employer's Tax Guide. 2012 tax forms irs That publication explains your tax responsibilities as an employer. 2012 tax forms irs To help you determine whether the people working for you are your employees, see Publication 15-A, Employer's Supplemental Tax Guide. 2012 tax forms irs That publication has information to help you determine whether an individual is an independent contractor or an employee. 2012 tax forms irs If you incorrectly classify an employee as an independent contractor, you may be held liable for employment taxes for that worker plus a penalty. 2012 tax forms irs An independent contractor is someone who is self-employed. 2012 tax forms irs You do not generally have to withhold or pay any taxes on payments made to an independent contractor. 2012 tax forms irs Excise Taxes This section identifies some of the excise taxes you may have to pay and the forms you have to file if you do any of the following. 2012 tax forms irs Manufacture or sell certain products. 2012 tax forms irs Operate certain kinds of businesses. 2012 tax forms irs Use various kinds of equipment, facilities, or products. 2012 tax forms irs Receive payment for certain services. 2012 tax forms irs For more information on excise taxes, see Publication 510, Excise Taxes. 2012 tax forms irs Form 720. 2012 tax forms irs   The federal excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, consist of several broad categories of taxes, including the following. 2012 tax forms irs Environmental taxes on the sale or use of ozone-depleting chemicals and imported products containing or manufactured with these chemicals. 2012 tax forms irs Communications and air transportation taxes. 2012 tax forms irs Fuel taxes. 2012 tax forms irs Tax on the first retail sale of heavy trucks, trailers, and tractors. 2012 tax forms irs Manufacturers taxes on the sale or use of a variety of different articles. 2012 tax forms irs Tax on indoor tanning services. 2012 tax forms irs Form 2290. 2012 tax forms irs   There is a federal excise tax on the use of certain trucks, truck tractors, and buses on public highways. 2012 tax forms irs The tax applies to vehicles having a taxable gross weight of 55,000 pounds or more. 2012 tax forms irs Report the tax on Form 2290, Heavy Highway Vehicle Use Tax Return. 2012 tax forms irs For more information, see the Instructions for Form 2290. 2012 tax forms irs Depositing excise taxes. 2012 tax forms irs   If you have to file a quarterly excise tax return on Form 720, you may have to deposit your excise taxes before the return is due. 2012 tax forms irs For details on depositing excise taxes, see the Instructions for Form 720. 2012 tax forms irs Information Returns If you make or receive payments in your business, you may have to report them to the IRS on information returns. 2012 tax forms irs The IRS compares the payments shown on the information returns with each person's income tax return to see if the payments were included in income. 2012 tax forms irs You must give a copy of each information return you are required to file to the recipient or payer. 2012 tax forms irs In addition to the forms described below, you may have to use other returns to report certain kinds of payments or transactions. 2012 tax forms irs For more details on information returns and when you have to file them, see the General Instructions for Certain Information Returns. 2012 tax forms irs Form 1099-MISC. 2012 tax forms irs   Use Form 1099-MISC, Miscellaneous Income, to report certain payments you make in your business. 2012 tax forms irs These payments include the following items. 2012 tax forms irs Payments of $600 or more for services performed for your business by people not treated as your employees, such as fees to subcontractors, attorneys, accountants, or directors. 2012 tax forms irs Rent payments of $600 or more, other than rents paid to real estate agents. 2012 tax forms irs Prizes and awards of $600 or more that are not for services, such as winnings on TV or radio shows. 2012 tax forms irs Royalty payments of $10 or more. 2012 tax forms irs Payments to certain crew members by operators of fishing boats. 2012 tax forms irs You also use Form 1099-MISC to report your sales of $5,000 or more of consumer goods to a person for resale anywhere other than in a permanent retail establishment. 2012 tax forms irs Form W-2. 2012 tax forms irs   You must file Form W-2, Wage and Tax Statement, to report payments to your employees, such as wages, tips, and other compensation, withheld income, social security, and Medicare taxes. 2012 tax forms irs You can file Form W-2 online. 2012 tax forms irs For more information about Form W-2, see the General Instructions for Forms W-2 and W-3. 2012 tax forms irs Penalties. 2012 tax forms irs   The law provides for the following penalties if you do not file Form 1099-MISC or Form W-2 or do not correctly report the information. 2012 tax forms irs For more information, see the General Instructions for Certain Information Returns. 2012 tax forms irs Failure to file information returns. 2012 tax forms irs This penalty applies if you do not file information returns by the due date, do not include all required information, or report incorrect information. 2012 tax forms irs Failure to furnish correct payee statements. 2012 tax forms irs This penalty applies if you do not furnish a required statement to a payee by the required date, do not include all required information, or report incorrect information. 2012 tax forms irs Waiver of penalties. 2012 tax forms irs   These penalties will not apply if you can show that the failure was due to reasonable cause and not willful neglect. 2012 tax forms irs   In addition, there is no penalty for failure to include all required information, or for including incorrect information, on a de minimis (small) number of information returns if you correct the errors by August 1 of the year the returns are due. 2012 tax forms irs (A de minimis number of returns is the greater of 10 or ½ of 1% of the total number of returns you are required to file for the year. 2012 tax forms irs ) Form 8300. 2012 tax forms irs   You must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if you receive more than $10,000 in cash in one transaction, or two or more related business transactions. 2012 tax forms irs Cash includes U. 2012 tax forms irs S. 2012 tax forms irs and foreign coin and currency. 2012 tax forms irs It also includes certain monetary instruments such as cashier's and traveler's checks and money orders. 2012 tax forms irs Cash does not include a check drawn on an individual's personal account (personal check). 2012 tax forms irs For more information, see Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). 2012 tax forms irs Penalties. 2012 tax forms irs   There are civil and criminal penalties, including up to 5 years in prison, for not filing Form 8300, filing (or causing the filing of) a false or fraudulent Form 8300, or structuring a transaction to evade reporting requirements. 2012 tax forms irs Table 1-3. 2012 tax forms irs Going Out of Business Checklists (Note. 2012 tax forms irs The following checklists highlight the typical final forms and schedules you may need to file if you ever go out of business. 2012 tax forms irs For more information, see the instructions for the listed forms. 2012 tax forms irs ) IF you are liable for:   THEN you may need to: Income tax □ File Schedule C or C-EZ with your Form 1040 for the year in which you go out of business. 2012 tax forms irs   □ File Form 4797 with your Form 1040 for each year in which you sell or exchange property used in your business or in which the business use of certain section 179 or listed property drops to 50% or less. 2012 tax forms irs   □ File Form 8594 with your Form 1040 if you sold your business. 2012 tax forms irs Self-employment tax □ File Schedule SE with your Form 1040 for the year in which you go out of business. 2012 tax forms irs Employment taxes □ File Form 941 (or Form 944) for the calendar quarter in which you make final wage payments. 2012 tax forms irs Note. 2012 tax forms irs Do not forget to check the box and enter the date final wages were paid on line 15 of Form 941 or line 14 of Form 944. 2012 tax forms irs   □ File Form 940 for the calendar year in which final wages were paid. 2012 tax forms irs Note. 2012 tax forms irs Do not forget to check box d, Final: Business closed or stopped paying wages, under Type of Return. 2012 tax forms irs Information returns □ Provide Forms W-2 to your employees for the calendar year in which you make final wage payments. 2012 tax forms irs Note. 2012 tax forms irs These forms are generally due by the due date of your final Form 941 or Form 944. 2012 tax forms irs   □ File Form W-3 to file Forms W-2. 2012 tax forms irs Note. 2012 tax forms irs These forms are generally due within 1 month after the due date of your final Form 941 or Form 944. 2012 tax forms irs   □ Provide Forms 1099-MISC to each person to whom you have paid at least $600 for services (including parts and materials) during the calendar year in which you go out of business. 2012 tax forms irs   □ File Form 1096 to file Forms 1099-MISC. 2012 tax forms irs Prev  Up  Next   Home   More Online Publications
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The 2012 Tax Forms Irs

2012 tax forms irs 4. 2012 tax forms irs   Sales and Trades of Investment Property Table of Contents IntroductionNominees. 2012 tax forms irs Topics - This chapter discusses: Useful Items - You may want to see: What Is a Sale or Trade?Dividend versus sale or trade. 2012 tax forms irs Worthless Securities Constructive Sales of Appreciated Financial Positions Section 1256 Contracts Marked to Market Basis of Investment PropertyCost Basis Basis Other Than Cost Adjusted Basis Stocks and Bonds How To Figure Gain or LossFair market value. 2012 tax forms irs Debt paid off. 2012 tax forms irs Payment of cash. 2012 tax forms irs Special Rules for Mutual Funds Nontaxable TradesLike-Kind Exchanges Corporate Stocks Exchange of Shares In One Mutual Fund For Shares In Another Mutual Fund Insurance Policies and Annuities U. 2012 tax forms irs S. 2012 tax forms irs Treasury Notes or Bonds Transfers Between Spouses Related Party TransactionsGain on Sale or Trade of Depreciable Property Capital Gains and LossesCapital or Ordinary Gain or Loss Holding Period Nonbusiness Bad Debts Short Sales Wash Sales Options Straddles Sales of Stock to ESOPs or Certain Cooperatives Rollover of Gain From Publicly Traded Securities Gains on Qualified Small Business Stock Exclusion of Gain From DC Zone Assets Reporting Capital Gains and LossesException 1. 2012 tax forms irs Exception 2. 2012 tax forms irs Section 1256 contracts and straddles. 2012 tax forms irs Market discount bonds. 2012 tax forms irs File Form 1099-B or Form 1099-S with the IRS. 2012 tax forms irs Capital Losses Capital Gain Tax Rates Special Rules for Traders in SecuritiesHow To Report Introduction This chapter explains the tax treatment of sales and trades of investment property. 2012 tax forms irs Investment property. 2012 tax forms irs   This is property that produces investment income. 2012 tax forms irs Examples include stocks, bonds, and Treasury bills and notes. 2012 tax forms irs Property used in a trade or business is not investment property. 2012 tax forms irs Form 1099-B. 2012 tax forms irs   If you sold property such as stocks, bonds, mutual funds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. 2012 tax forms irs You should receive the statement by February 15 of the next year. 2012 tax forms irs It will show the gross proceeds from the sale. 2012 tax forms irs The IRS will also get a copy of Form 1099-B from the broker. 2012 tax forms irs   Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. 2012 tax forms irs If you sold a covered security in 2013, your broker will send you a Form 1099-B (or substitute statement) that shows your basis. 2012 tax forms irs This will help you complete Form 8949. 2012 tax forms irs Generally, a covered security is a security you acquired after 2010, with certain exceptions explained in the Instructions for Form 8949. 2012 tax forms irs    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in this chapter. 2012 tax forms irs Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). 2012 tax forms irs Nominees. 2012 tax forms irs   If someone receives gross proceeds as a nominee for you, that person will give you a Form 1099-B, which will show gross proceeds received on your behalf. 2012 tax forms irs   If you receive a Form 1099-B that includes gross proceeds belonging to another person, see Nominees , later under Reporting Capital Gains and Losses for more information. 2012 tax forms irs Other property transactions. 2012 tax forms irs   Certain transfers of property are discussed in other IRS publications. 2012 tax forms irs These include: Sale of your main home, discussed in Publication 523, Selling Your Home; Installment sales, covered in Publication 537; Various types of transactions involving business property, discussed in Publication 544, Sales and Other Dispositions of Assets; Transfers of property at death, covered in Publication 559; and Disposition of an interest in a passive activity, discussed in Publication 925. 2012 tax forms irs Topics - This chapter discusses: What Is a Sale or Trade? , Basis of Investment Property , Adjusted Basis , How To Figure Gain or Loss , Nontaxable trades , Transfers Between Spouses , Related Party Transactions , Capital Gains and Losses , Reporting Capital Gains and Losses , and Special Rules for Traders in Securities . 2012 tax forms irs Useful Items - You may want to see: Publication 551 Basis of Assets Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 6781 Gains and Losses From Section 1256 Contracts and Straddles 8582 Passive Activity Loss Limitations 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets See chapter 5, How To Get Tax Help , for information about getting these publications and forms. 2012 tax forms irs What Is a Sale or Trade? This section explains what is a sale or trade. 2012 tax forms irs It also explains certain transactions and events that are treated as sales or trades. 2012 tax forms irs A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. 2012 tax forms irs A trade is a transfer of property for other property or services, and may be taxed in the same way as a sale. 2012 tax forms irs Sale and purchase. 2012 tax forms irs   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. 2012 tax forms irs The sale and purchase are two separate transactions. 2012 tax forms irs But see Like-Kind Exchanges under Nontaxable Trades, later. 2012 tax forms irs Redemption of stock. 2012 tax forms irs   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. 2012 tax forms irs Dividend versus sale or trade. 2012 tax forms irs   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. 2012 tax forms irs Both direct and indirect ownership of stock will be considered. 2012 tax forms irs The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend — see Dividends and Other Distributions in chapter 1, There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. 2012 tax forms irs Redemption or retirement of bonds. 2012 tax forms irs   A redemption or retirement of bonds or notes at their maturity generally is treated as a sale or trade. 2012 tax forms irs See Stocks, stock rights, and bonds and Discounted Debt Instruments under Capital or Ordinary Gain or Loss, later. 2012 tax forms irs   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. 2012 tax forms irs For details, see Regulations section 1. 2012 tax forms irs 1001-3. 2012 tax forms irs Surrender of stock. 2012 tax forms irs   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. 2012 tax forms irs The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. 2012 tax forms irs Trade of investment property for an annuity. 2012 tax forms irs   The transfer of investment property to a corporation, trust, fund, foundation, or other organization, in exchange for a fixed annuity contract that will make guaranteed annual payments to you for life, is a taxable trade. 2012 tax forms irs If the present value of the annuity is more than your basis in the property traded, you have a taxable gain in the year of the trade. 2012 tax forms irs Figure the present value of the annuity according to factors used by commercial insurance companies issuing annuities. 2012 tax forms irs Transfer by inheritance. 2012 tax forms irs   The transfer of property of a decedent to the executor or administrator of the estate, or to the heirs or beneficiaries, is not a sale or other disposition. 2012 tax forms irs No taxable gain or deductible loss results from the transfer. 2012 tax forms irs Termination of certain rights and obligations. 2012 tax forms irs   The cancellation, lapse, expiration, or other termination of a right or obligation (other than a securities futures contract) with respect to property that is a capital asset (or that would be a capital asset if you acquired it) is treated as a sale. 2012 tax forms irs Any gain or loss is treated as a capital gain or loss. 2012 tax forms irs   This rule does not apply to the retirement of a debt instrument. 2012 tax forms irs See Redemption or retirement of bonds , earlier. 2012 tax forms irs Worthless Securities Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. 2012 tax forms irs This affects whether your capital loss is long term or short term. 2012 tax forms irs See Holding Period , later. 2012 tax forms irs Worthless securities also include securities that you abandon after March 12, 2008. 2012 tax forms irs To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. 2012 tax forms irs All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. 2012 tax forms irs If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. 2012 tax forms irs Do not deduct them in the year the stock became worthless. 2012 tax forms irs How to report loss. 2012 tax forms irs   Report worthless securities in Form 8949, Part I or Part II, whichever applies. 2012 tax forms irs    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. 2012 tax forms irs See Form 8949 and the Instructions for Form 8949. 2012 tax forms irs Filing a claim for refund. 2012 tax forms irs   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. 2012 tax forms irs You must use Form 1040X, Amended U. 2012 tax forms irs S. 2012 tax forms irs Individual Income Tax Return, to amend your return for the year the security became worthless. 2012 tax forms irs You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. 2012 tax forms irs (Claims not due to worthless securities or bad debts generally must be filed within 3 years from the date a return is filed, or 2 years from the date the tax is paid, whichever is later. 2012 tax forms irs ) For more information about filing a claim, see Publication 556. 2012 tax forms irs Constructive Sales of Appreciated Financial Positions You are treated as having made a constructive sale when you enter into certain transactions involving an appreciated financial position (defined later) in stock, a partnership interest, or certain debt instruments. 2012 tax forms irs You must recognize gain as if the position were disposed of at its fair market value on the date of the constructive sale. 2012 tax forms irs This gives you a new holding period for the position that begins on the date of the constructive sale. 2012 tax forms irs Then, when you close the transaction, you reduce your gain (or increase your loss) by the gain recognized on the constructive sale. 2012 tax forms irs Constructive sale. 2012 tax forms irs   You are treated as having made a constructive sale of an appreciated financial position if you: Enter into a short sale of the same or substantially identical property, Enter into an offsetting notional principal contract relating to the same or substantially identical property, Enter into a futures or forward contract to deliver the same or substantially identical property (including a forward contract that provides for cash settlement), or Acquire the same or substantially identical property (if the appreciated financial position is a short sale, an offsetting notional principal contract, or a futures or forward contract). 2012 tax forms irs   You are also treated as having made a constructive sale of an appreciated financial position if a person related to you enters into a transaction described above with a view toward avoiding the constructive sale treatment. 2012 tax forms irs For this purpose, a related person is any related party described under Related Party Transactions , later in this chapter. 2012 tax forms irs Exception for nonmarketable securities. 2012 tax forms irs   You are not treated as having made a constructive sale solely because you entered into a contract for sale of any stock, debt instrument, or partnership interest that is not a marketable security if it settles within 1 year of the date you enter into it. 2012 tax forms irs Exception for certain closed transactions. 2012 tax forms irs   Do not treat a transaction as a constructive sale if all of the following are true. 2012 tax forms irs You closed the transaction on or before the 30th day after the end of your tax year. 2012 tax forms irs You held the appreciated financial position throughout the 60-day period beginning on the date you closed the transaction. 2012 tax forms irs Your risk of loss was not reduced at any time during that 60-day period by holding certain other positions. 2012 tax forms irs   If a closed transaction is reestablished in a substantially similar position during the 60-day period beginning on the date the first transaction was closed, this exception still applies if the reestablished position is closed before the 30th day after the end of your tax year in which the first transaction was closed and, after that closing, (2) and (3) above are true. 2012 tax forms irs   This exception also applies to successive short sales of an entire appreciated financial position. 2012 tax forms irs For more information, see Revenue Ruling 2003-1 in Internal Revenue Bulletin 2003-3. 2012 tax forms irs This bulletin is available at www. 2012 tax forms irs irs. 2012 tax forms irs gov/pub/irs-irbs/irb03-03. 2012 tax forms irs pdf. 2012 tax forms irs Appreciated financial position. 2012 tax forms irs   This is any interest in stock, a partnership interest, or a debt instrument (including a futures or forward contract, a short sale, or an option) if disposing of the interest would result in a gain. 2012 tax forms irs Exceptions. 2012 tax forms irs   An appreciated financial position does not include the following. 2012 tax forms irs Any position from which all of the appreciation is accounted for under marked-to-market rules, including section 1256 contracts (described later under Section 1256 Contracts Marked to Market ). 2012 tax forms irs Any position in a debt instrument if: The position unconditionally entitles the holder to receive a specified principal amount, The interest payments (or other similar amounts) with respect to the position are payable at a fixed rate or a variable rate described in Regulations section 1. 2012 tax forms irs 860G-1(a)(3), and The position is not convertible, either directly or indirectly, into stock of the issuer (or any related person). 2012 tax forms irs Any hedge with respect to a position described in (2). 2012 tax forms irs Certain trust instruments treated as stock. 2012 tax forms irs   For the constructive sale rules, an interest in an actively traded trust is treated as stock unless substantially all of the value of the property held by the trust is debt that qualifies for the exception to the definition of an appreciated financial position (explained in (2) above). 2012 tax forms irs Sale of appreciated financial position. 2012 tax forms irs   A transaction treated as a constructive sale of an appreciated financial position is not treated as a constructive sale of any other appreciated financial position, as long as you continue to hold the original position. 2012 tax forms irs However, if you hold another appreciated financial position and dispose of the original position before closing the transaction that resulted in the constructive sale, you are treated as if, at the same time, you constructively sold the other appreciated financial position. 2012 tax forms irs Section 1256 Contracts Marked to Market If you hold a section 1256 contract at the end of the tax year, you generally must treat it as sold at its fair market value on the last business day of the tax year. 2012 tax forms irs Section 1256 Contract A section 1256 contract is any: Regulated futures contract, Foreign currency contract, Nonequity option, Dealer equity option, or Dealer securities futures contract. 2012 tax forms irs Exceptions. 2012 tax forms irs   A section 1256 contract does not include: Interest rate swaps, Currency swaps, Basis swaps, Interest rate caps, Interest rate floors, Commodity swaps, Equity swaps, Equity index swaps, Credit default swaps, or Similar agreements. 2012 tax forms irs For more details, including definitions of these terms, see section 1256. 2012 tax forms irs Regulated futures contract. 2012 tax forms irs   This is a contract that: Provides that amounts which must be deposited to, or can be withdrawn from, your margin account depend on daily market conditions (a system of marking to market), and Is traded on, or subject to the rules of, a qualified board of exchange. 2012 tax forms irs A qualified board of exchange is a domestic board of trade designated as a contract market by the Commodity Futures Trading Commission, any board of trade or exchange approved by the Secretary of the Treasury, or a national securities exchange registered with the Securities and Exchange Commission. 2012 tax forms irs Foreign currency contract. 2012 tax forms irs   This is a contract that: Requires delivery of a foreign currency that has positions traded through regulated futures contracts (or settlement of which depends on the value of that type of foreign currency), Is traded in the interbank market, and Is entered into at arm's length at a price determined by reference to the price in the interbank market. 2012 tax forms irs   Bank forward contracts with maturity dates longer than the maturities ordinarily available for regulated futures contracts are considered to meet the definition of a foreign currency contract if the above three conditions are satisfied. 2012 tax forms irs   Special rules apply to certain foreign currency transactions. 2012 tax forms irs These transactions may result in ordinary gain or loss treatment. 2012 tax forms irs For details, see Internal Revenue Code section 988 and Regulations sections 1. 2012 tax forms irs 988-1(a)(7) and 1. 2012 tax forms irs 988-3. 2012 tax forms irs Nonequity option. 2012 tax forms irs   This is any listed option (defined later) that is not an equity option. 2012 tax forms irs Nonequity options include debt options, commodity futures options, currency options, and broad-based stock index options. 2012 tax forms irs A broad-based stock index is based on the value of a group of diversified stocks or securities (such as the Standard and Poor's 500 index). 2012 tax forms irs Warrants based on a stock index that are economically, substantially identical in all material respects to options based on a stock index are treated as options based on a stock index. 2012 tax forms irs Cash-settled options. 2012 tax forms irs   Cash-settled options based on a stock index and either traded on or subject to the rules of a qualified board of exchange are nonequity options if the Securities and Exchange Commission (SEC) determines that the stock index is broad based. 2012 tax forms irs   This rule does not apply to options established before the SEC determines that the stock index is broad based. 2012 tax forms irs Listed option. 2012 tax forms irs   This is any option traded on, or subject to the rules of, a qualified board or exchange (as discussed earlier under Regulated futures contract). 2012 tax forms irs A listed option, however, does not include an option that is a right to acquire stock from the issuer. 2012 tax forms irs Dealer equity option. 2012 tax forms irs   This is any listed option that, for an options dealer: Is an equity option, Is bought or granted by that dealer in the normal course of the dealer's business activity of dealing in options, and Is listed on the qualified board of exchange where that dealer is registered. 2012 tax forms irs   An “options dealer” is any person registered with an appropriate national securities exchange as a market maker or specialist in listed options. 2012 tax forms irs Equity option. 2012 tax forms irs   This is any option: To buy or sell stock, or That is valued directly or indirectly by reference to any stock or narrow-based security index. 2012 tax forms irs  Equity options include options on a group of stocks only if the group is a narrow-based stock index. 2012 tax forms irs Dealer securities futures contract. 2012 tax forms irs   For any dealer in securities futures contracts or options on those contracts, this is a securities futures contract (or option on such a contract) that: Is entered into by the dealer (or, in the case of an option, is purchased or granted by the dealer) in the normal course of the dealer's activity of dealing in this type of contract (or option), and Is traded on a qualified board or exchange (as defined under Regulated futures contract , earlier). 2012 tax forms irs A securities futures contract that is not a dealer securities futures contract is treated as described later under Securities Futures Contracts . 2012 tax forms irs Marked-to-Market Rules A section 1256 contract that you hold at the end of the tax year will generally be treated as sold at its fair market value on the last business day of the tax year, and you must recognize any gain or loss that results. 2012 tax forms irs That gain or loss is taken into account in figuring your gain or loss when you later dispose of the contract, as shown in the example under 60/40 rule, below. 2012 tax forms irs Hedging exception. 2012 tax forms irs   The marked-to-market rules do not apply to hedging transactions. 2012 tax forms irs See Hedging Transactions , later. 2012 tax forms irs 60/40 rule. 2012 tax forms irs   Under the marked-to-market system, 60% of your capital gain or loss will be treated as a long-term capital gain or loss, and 40% will be treated as a short-term capital gain or loss. 2012 tax forms irs This is true regardless of how long you actually held the property. 2012 tax forms irs Example. 2012 tax forms irs On June 22, 2012, you bought a regulated futures contract for $50,000. 2012 tax forms irs On December 31, 2012 (the last business day of your tax year), the fair market value of the contract was $57,000. 2012 tax forms irs You recognized a $7,000 gain on your 2012 tax return, treated as 60% long-term and 40% short-term capital gain. 2012 tax forms irs On February 1, 2013, you sold the contract for $56,000. 2012 tax forms irs Because you recognized a $7,000 gain on your 2012 return, you recognize a $1,000 loss ($57,000 − $56,000) on your 2013 tax return, treated as 60% long-term and 40% short-term capital loss. 2012 tax forms irs Limited partners or entrepreneurs. 2012 tax forms irs   The 60/40 rule does not apply to dealer equity options or dealer securities futures contracts that result in capital gain or loss allocable to limited partners or limited entrepreneurs (defined later under Hedging Transactions ). 2012 tax forms irs Instead, these gains or losses are treated as short term. 2012 tax forms irs Terminations and transfers. 2012 tax forms irs   The marked-to-market rules also apply if your obligation or rights under section 1256 contracts are terminated or transferred during the tax year. 2012 tax forms irs In this case, use the fair market value of each section 1256 contract at the time of termination or transfer to determine the gain or loss. 2012 tax forms irs Terminations or transfers may result from any offsetting, delivery, exercise, assignment, or lapse of your obligation or rights under section 1256 contracts. 2012 tax forms irs Loss carryback election. 2012 tax forms irs   An individual having a net section 1256 contracts loss (defined later), generally can elect to carry this loss back 3 years instead of carrying it over to the next year. 2012 tax forms irs See How To Report , later, for information about reporting this election on your return. 2012 tax forms irs   The loss carried back to any year under this election cannot be more than the net section 1256 contracts gain in that year. 2012 tax forms irs In addition, the amount of loss carried back to an earlier tax year cannot increase or produce a net operating loss for that year. 2012 tax forms irs   The loss is carried to the earliest carryback year first, and any unabsorbed loss amount can then be carried to each of the next 2 tax years. 2012 tax forms irs In each carryback year, treat 60% of the carryback amount as a long-term capital loss and 40% as a short-term capital loss from section 1256 contracts. 2012 tax forms irs   If only a portion of the net section 1256 contracts loss is absorbed by carrying the loss back, the unabsorbed portion can be carried forward, under the capital loss carryover rules, to the year following the loss. 2012 tax forms irs (See Capital Losses under Reporting Capital Gains and Losses, later. 2012 tax forms irs ) Figure your capital loss carryover as if, for the loss year, you had an additional short-term capital gain of 40% of the amount of net section 1256 contracts loss absorbed in the carryback years and an additional long-term capital gain of 60% of the absorbed loss. 2012 tax forms irs In the carryover year, treat any capital loss carryover from losses on section 1256 contracts as if it were a loss from section 1256 contracts for that year. 2012 tax forms irs Net section 1256 contracts loss. 2012 tax forms irs   This loss is the lesser of: The net capital loss for your tax year determined by taking into account only the gains and losses from section 1256 contracts, or The capital loss carryover to the next tax year determined without this election. 2012 tax forms irs Net section 1256 contracts gain. 2012 tax forms irs   This gain is the lesser of: The capital gain net income for the carryback year determined by taking into account only gains and losses from section 1256 contracts, or The capital gain net income for that year. 2012 tax forms irs  Figure your net section 1256 contracts gain for any carryback year without regard to the net section 1256 contracts loss for the loss year or any later tax year. 2012 tax forms irs Traders in section 1256 contracts. 2012 tax forms irs   Gain or loss from the trading of section 1256 contracts is capital gain or loss subject to the marked-to-market rules. 2012 tax forms irs However, this does not apply to contracts held for purposes of hedging property if any loss from the property would be an ordinary loss. 2012 tax forms irs Treatment of underlying property. 2012 tax forms irs   The determination of whether an individual's gain or loss from any property is ordinary or capital gain or loss is made without regard to the fact that the individual is actively engaged in dealing in or trading section 1256 contracts related to that property. 2012 tax forms irs How To Report If you disposed of regulated futures or foreign currency contracts in 2013 (or had unrealized profit or loss on these contracts that were open at the end of 2012 or 2013), you should receive Form 1099-B, or substitute statement, from your broker. 2012 tax forms irs Form 6781. 2012 tax forms irs   Use Part I of Form 6781 to report your gains and losses from all section 1256 contracts that are open at the end of the year or that were closed out during the year. 2012 tax forms irs This includes the amount shown in box 10 of Form 1099-B. 2012 tax forms irs Then enter the net amount of these gains and losses on Schedule D (Form 1040), line 4 or line 11, as appropriate. 2012 tax forms irs Include a copy of Form 6781 with your income tax return. 2012 tax forms irs   If the Form 1099-B you receive includes a straddle or hedging transaction, defined later, it may be necessary to show certain adjustments on Form 6781. 2012 tax forms irs Follow the Form 6781 instructions for completing Part I. 2012 tax forms irs Loss carryback election. 2012 tax forms irs   To carry back your loss under the election procedures described earlier, file Form 1040X or Form 1045, Application for Tentative Refund, for the year to which you are carrying the loss with an amended Form 6781 and an amended Schedule D (Form 1040) attached. 2012 tax forms irs Follow the instructions for completing Form 6781 for the loss year to make this election. 2012 tax forms irs Hedging Transactions The marked-to-market rules, described earlier, do not apply to hedging transactions. 2012 tax forms irs A transaction is a hedging transaction if both of the following conditions are met. 2012 tax forms irs You entered into the transaction in the normal course of your trade or business primarily to manage the risk of: Price changes or currency fluctuations on ordinary property you hold (or will hold), or Interest rate or price changes, or currency fluctuations, on your current or future borrowings or ordinary obligations. 2012 tax forms irs You clearly identified the transaction as being a hedging transaction before the close of the day on which you entered into it. 2012 tax forms irs This hedging transaction exception does not apply to transactions entered into by or for any syndicate. 2012 tax forms irs A syndicate is a partnership, S corporation, or other entity (other than a regular corporation) that allocates more than 35% of its losses to limited partners or limited entrepreneurs. 2012 tax forms irs A limited entrepreneur is a person who has an interest in an enterprise (but not as a limited partner) and who does not actively participate in its management. 2012 tax forms irs However, an interest is not considered held by a limited partner or entrepreneur if the interest holder actively participates (or did so for at least 5 full years) in the management of the entity, or is the spouse, child (including a legally adopted child), grandchild, or parent of an individual who actively participates in the management of the entity. 2012 tax forms irs Hedging loss limit. 2012 tax forms irs   If you are a limited partner or entrepreneur in a syndicate, the amount of a hedging loss you can claim is limited. 2012 tax forms irs A “hedging loss” is the amount by which the allowable deductions in a tax year that resulted from a hedging transaction (determined without regard to the limit) are more than the income received or accrued during the tax year from this transaction. 2012 tax forms irs   Any hedging loss allocated to you for the tax year is limited to your taxable income for that year from the trade or business in which the hedging transaction occurred. 2012 tax forms irs Ignore any hedging transaction items in determining this taxable income. 2012 tax forms irs If you have a hedging loss that is disallowed because of this limit, you can carry it over to the next tax year as a deduction resulting from a hedging transaction. 2012 tax forms irs   If the hedging transaction relates to property other than stock or securities, the limit on hedging losses applies if the limited partner or entrepreneur is an individual. 2012 tax forms irs   The limit on hedging losses does not apply to any hedging loss to the extent that it is more than all your unrecognized gains from hedging transactions at the end of the tax year that are from the trade or business in which the hedging transaction occurred. 2012 tax forms irs The term “unrecognized gain” has the same meaning as defined under Loss Deferral Rules in Straddles, later. 2012 tax forms irs Sale of property used in a hedge. 2012 tax forms irs   Once you identify personal property as being part of a hedging transaction, you must treat gain from its sale or exchange as ordinary income, not capital gain. 2012 tax forms irs Self-Employment Income Gains and losses derived in the ordinary course of a commodity or option dealer's trading in section 1256 contracts and property related to these contracts are included in net earnings from self-employment. 2012 tax forms irs See the Instructions for Schedule SE (Form 1040). 2012 tax forms irs In addition, the rules relating to contributions to self-employment retirement plans apply. 2012 tax forms irs For information on retirement plan contributions, see Publication 560 and Publication 590. 2012 tax forms irs Basis of Investment Property Basis is a way of measuring your investment in property for tax purposes. 2012 tax forms irs You must know the basis of your property to determine whether you have a gain or loss on its sale or other disposition. 2012 tax forms irs Investment property you buy normally has an original basis equal to its cost. 2012 tax forms irs If you get property in some way other than buying it, such as by gift or inheritance, its fair market value may be important in figuring the basis. 2012 tax forms irs Cost Basis The basis of property you buy is usually its cost. 2012 tax forms irs The cost is the amount you pay in cash, debt obligations, or other property or services. 2012 tax forms irs Unstated interest. 2012 tax forms irs   If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, minus the amount considered to be unstated interest. 2012 tax forms irs You generally have unstated interest if your interest rate is less than the applicable federal rate. 2012 tax forms irs For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. 2012 tax forms irs Basis Other Than Cost There are times when you must use a basis other than cost. 2012 tax forms irs In these cases, you may need to know the property's fair market value or the adjusted basis of the previous owner. 2012 tax forms irs Fair market value. 2012 tax forms irs   This is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. 2012 tax forms irs Sales of similar property, around the same date, may be helpful in figuring fair market value. 2012 tax forms irs Property Received for Services If you receive investment property for services, you must include the property's fair market value in income. 2012 tax forms irs The amount you include in income then becomes your basis in the property. 2012 tax forms irs If the services were performed for a price that was agreed to beforehand, this price will be accepted as the fair market value of the property if there is no evidence to the contrary. 2012 tax forms irs Restricted property. 2012 tax forms irs   If you receive, as payment for services, property that is subject to certain restrictions, your basis in the property generally is its fair market value when it becomes substantially vested. 2012 tax forms irs Property becomes substantially vested when it is transferable or is no longer subject to substantial risk of forfeiture, whichever happens first. 2012 tax forms irs See Restricted Property in Publication 525 for more information. 2012 tax forms irs Bargain purchases. 2012 tax forms irs   If you buy investment property at less than fair market value, as payment for services, you must include the difference in income. 2012 tax forms irs Your basis in the property is the price you pay plus the amount you include in income. 2012 tax forms irs Property Received in Taxable Trades If you received investment property in trade for other property, the basis of the new property is its fair market value at the time of the trade unless you received the property in a nontaxable trade. 2012 tax forms irs Example. 2012 tax forms irs You trade A Company stock for B Company stock having a fair market value of $1,200. 2012 tax forms irs If the adjusted basis of the A Company stock is less than $1,200, you have a taxable gain on the trade. 2012 tax forms irs If the adjusted basis of the A Company stock is more than $1,200, you have a deductible loss on the trade. 2012 tax forms irs The basis of your B Company stock is $1,200. 2012 tax forms irs If you later sell the B Company stock for $1,300, you will have a gain of $100. 2012 tax forms irs Property Received in Nontaxable Trades If you have a nontaxable trade, you do not recognize gain or loss until you dispose of the property you received in the trade. 2012 tax forms irs See Nontaxable Trades , later. 2012 tax forms irs The basis of property you received in a nontaxable or partly nontaxable trade is generally the same as the adjusted basis of the property you gave up. 2012 tax forms irs Increase this amount by any cash you paid, additional costs you had, and any gain recognized. 2012 tax forms irs Reduce this amount by any cash or unlike property you received, any loss recognized, and any liability of yours that was assumed or treated as assumed. 2012 tax forms irs Property Received From Your Spouse If property is transferred to you from your spouse (or former spouse, if the transfer is incident to your divorce), your basis is the same as your spouse's or former spouse's adjusted basis just before the transfer. 2012 tax forms irs See Transfers Between Spouses , later. 2012 tax forms irs Recordkeeping. 2012 tax forms irs The transferor must give you the records necessary to determine the adjusted basis and holding period of the property as of the date of the transfer. 2012 tax forms irs Property Received as a Gift To figure your basis in property that you received as a gift, you must know its adjusted basis to the donor just before it was given to you, its fair market value at the time it was given to you, the amount of any gift tax paid on it, and the date it was given to you. 2012 tax forms irs Fair market value less than donor's adjusted basis. 2012 tax forms irs   If the fair market value of the property at the time of the gift was less than the donor's adjusted basis just before the gift, your basis for gain on its sale or other disposition is the same as the donor's adjusted basis plus or minus any required adjustments to basis during the period you hold the property. 2012 tax forms irs Your basis for loss is its fair market value at the time of the gift plus or minus any required adjustments to basis during the period you hold the property. 2012 tax forms irs No gain or loss. 2012 tax forms irs   If you use the basis for figuring a gain and the result is a loss, and then use the basis for figuring a loss and the result is a gain, you will have neither a gain nor a loss. 2012 tax forms irs Example. 2012 tax forms irs You receive a gift of investment property having an adjusted basis of $10,000 at the time of the gift. 2012 tax forms irs The fair market value at the time of the gift is $9,000. 2012 tax forms irs You later sell the property for $9,500. 2012 tax forms irs You have neither gain nor loss. 2012 tax forms irs Your basis for figuring gain is $10,000, and $9,500 minus $10,000 results in a $500 loss. 2012 tax forms irs Your basis for figuring loss is $9,000, and $9,500 minus $9,000 results in a $500 gain. 2012 tax forms irs Fair market value equal to or more than donor's adjusted basis. 2012 tax forms irs   If the fair market value of the property at the time of the gift was equal to or more than the donor's adjusted basis just before the gift, your basis for gain or loss on its sale or other disposition is the donor's adjusted basis plus or minus any required adjustments to basis during the period you hold the property. 2012 tax forms irs Also, you may be allowed to add to the donor's adjusted basis all or part of any gift tax paid, depending on the date of the gift. 2012 tax forms irs Gift received before 1977. 2012 tax forms irs   If you received property as a gift before 1977, your basis in the property is the donor's adjusted basis increased by the total gift tax paid on the gift. 2012 tax forms irs However, your basis cannot be more than the fair market value of the gift at the time it was given to you. 2012 tax forms irs Example 1. 2012 tax forms irs You were given XYZ Company stock in 1976. 2012 tax forms irs At the time of the gift, the stock had a fair market value of $21,000. 2012 tax forms irs The donor's adjusted basis was $20,000. 2012 tax forms irs The donor paid a gift tax of $500 on the gift. 2012 tax forms irs Your basis for gain or loss is $20,500, the donor's adjusted basis plus the amount of gift tax paid. 2012 tax forms irs Example 2. 2012 tax forms irs The facts are the same as in Example 1 except that the gift tax paid was $1,500. 2012 tax forms irs Your basis is $21,000, the donor's adjusted basis plus the gift tax paid, but limited to the fair market value of the stock at the time of the gift. 2012 tax forms irs Gift received after 1976. 2012 tax forms irs   If you received property as a gift after 1976, your basis is the donor's adjusted basis increased by the part of the gift tax paid that was for the net increase in value of the gift. 2012 tax forms irs You figure this part by multiplying the gift tax paid on the gift by a fraction. 2012 tax forms irs The numerator (top part) is the net increase in value of the gift and the denominator (bottom part) is the amount of the gift. 2012 tax forms irs   The net increase in value of the gift is the fair market value of the gift minus the donor's adjusted basis. 2012 tax forms irs The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. 2012 tax forms irs Example. 2012 tax forms irs In 2013, you received a gift of property from your mother. 2012 tax forms irs At the time of the gift, the property had a fair market value of $101,000 and an adjusted basis to her of $40,000. 2012 tax forms irs The amount of the gift for gift tax purposes was $87,000 ($101,000 minus the $14,000 annual exclusion), and your mother paid a gift tax of $21,000. 2012 tax forms irs You figure your basis in the following way: Fair market value $101,000 Minus: Adjusted basis 40,000 Net increase in value of gift $61,000 Gift tax paid $21,000 Multiplied by . 2012 tax forms irs 701 ($61,000 ÷ $87,000) . 2012 tax forms irs 701 Gift tax due to net increase in value $14,721 Plus: Adjusted basis of property to  your mother 40,000 Your basis in the property $54,721 Part sale, part gift. 2012 tax forms irs   If you get property in a transfer that is partly a sale and partly a gift, your basis is the larger of the amount you paid for the property or the transferor's adjusted basis in the property at the time of the transfer. 2012 tax forms irs Add to that amount the amount of any gift tax paid on the gift, as described in the preceding discussion. 2012 tax forms irs For figuring loss, your basis is limited to the property's fair market value at the time of the transfer. 2012 tax forms irs Gift tax information. 2012 tax forms irs   For information on gift tax, see Publication 950, Introduction to Estate and Gift Taxes. 2012 tax forms irs For information on figuring the amount of gift tax to add to your basis, see Property Received as a Gift in Publication 551. 2012 tax forms irs Property Received as Inheritance Before or after 2010. 2012 tax forms irs   If you inherited property from a decedent who died before or after 2010, or who died in 2010 and the executor of the decedent's estate elected not to file Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent, your basis in that property generally is its fair market value (its appraised value on Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) on: The date of the decedent's death, or The later alternate valuation date if the estate qualifies for, and elects to use, alternate valuation. 2012 tax forms irs If no Form 706 was filed, use the appraised value on the date of death for state inheritance or transmission taxes. 2012 tax forms irs For stocks and bonds, if no Form 706 was filed and there are no state inheritance or transmission taxes, see the Form 706 instructions for figuring the fair market value of the stocks and bonds on the date of the decedent's death. 2012 tax forms irs Appreciated property you gave the decedent. 2012 tax forms irs   Your basis in certain appreciated property that you inherited is the decedent's adjusted basis in the property immediately before death rather than its fair market value. 2012 tax forms irs This applies to appreciated property that you or your spouse gave the decedent as a gift during the 1-year period ending on the date of death. 2012 tax forms irs Appreciated property is any property whose fair market value on the day you gave it to the decedent was more than its adjusted basis. 2012 tax forms irs More information. 2012 tax forms irs   See Publication 551 for more information on the basis of inherited property, including community property, property held by a surviving tenant in a joint tenancy or tenancy by the entirety, a qualified joint interest, and a farm or closely held business. 2012 tax forms irs Inherited in 2010 and executor elected to file Form 8939. 2012 tax forms irs   If you inherited property from a decedent who died in 2010 and the executor made the election to file Form 8939, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to figure your basis. 2012 tax forms irs Adjusted Basis Before you can figure any gain or loss on a sale, exchange, or other disposition of property or figure allowable depreciation, depletion, or amortization, you usually must make certain adjustments (increases and decreases) to the basis of the property. 2012 tax forms irs The result of these adjustments to the basis is the adjusted basis. 2012 tax forms irs Adjustments to the basis of stocks and bonds are explained in the following discussion. 2012 tax forms irs For information about other adjustments to basis, see Publication 551. 2012 tax forms irs Stocks and Bonds The basis of stocks or bonds you own generally is the purchase price plus the costs of purchase, such as commissions and recording or transfer fees. 2012 tax forms irs If you acquired stock or bonds other than by purchase, your basis is usually determined by fair market value or the previous owner's adjusted basis as discussed earlier under Basis Other Than Cost . 2012 tax forms irs The basis of stock must be adjusted for certain events that occur after purchase. 2012 tax forms irs For example, if you receive more stock from nontaxable stock dividends or stock splits, you must reduce the basis of your original stock. 2012 tax forms irs You must also reduce your basis when you receive nondividend distributions (discussed in chapter 1). 2012 tax forms irs These distributions, up to the amount of your basis, are a nontaxable return of capital. 2012 tax forms irs The IRS partners with companies that offer Form 8949 and Schedule D (Form 1040) software that can import trades from many brokerage firms and accounting software to help you keep track of your adjusted basis in securities. 2012 tax forms irs To find out more, go to www. 2012 tax forms irs irs. 2012 tax forms irs gov/Filing/Filing-Options. 2012 tax forms irs Identifying stock or bonds sold. 2012 tax forms irs   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. 2012 tax forms irs Adequate identification. 2012 tax forms irs   You will make an adequate identification if you show that certificates representing shares of stock from a lot that you bought on a certain date or for a certain price were delivered to your broker or other agent. 2012 tax forms irs Broker holds stock. 2012 tax forms irs   If you have left the stock certificates with your broker or other agent, you will make an adequate identification if you: Tell your broker or other agent the particular stock to be sold or transferred at the time of the sale or transfer, and Receive a written confirmation of this from your broker or other agent within a reasonable time. 2012 tax forms irs  Stock identified this way is the stock sold or transferred even if stock certificates from a different lot are delivered to the broker or other agent. 2012 tax forms irs Single stock certificate. 2012 tax forms irs   If you bought stock in different lots at different times and you hold a single stock certificate for this stock, you will make an adequate identification if you: Tell your broker or other agent the particular stock to be sold or transferred when you deliver the certificate to your broker or other agent, and Receive a written confirmation of this from your broker or other agent within a reasonable time. 2012 tax forms irs   If you sell part of the stock represented by a single certificate directly to the buyer instead of through a broker, you will make an adequate identification if you keep a written record of the particular stock that you intend to sell. 2012 tax forms irs Bonds. 2012 tax forms irs   These methods of identification also apply to bonds sold or transferred. 2012 tax forms irs Identification not possible. 2012 tax forms irs   If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. 2012 tax forms irs Except for certain mutual fund shares, discussed later, you cannot use the average price per share to figure gain or loss on the sale of the shares. 2012 tax forms irs Example. 2012 tax forms irs You bought 100 shares of stock of XYZ Corporation in 1998 for $10 a share. 2012 tax forms irs In January 1999 you bought another 200 shares for $11 a share. 2012 tax forms irs In July 1999 you gave your son 50 shares. 2012 tax forms irs In December 2001 you bought 100 shares for $9 a share. 2012 tax forms irs In April 2013 you sold 130 shares. 2012 tax forms irs You cannot identify the shares you disposed of, so you must use the stock you acquired first to figure the basis. 2012 tax forms irs The shares of stock you gave your son had a basis of $500 (50 × $10). 2012 tax forms irs You figure the basis of the 130 shares of stock you sold in 2013 as follows: 50 shares (50 × $10) balance of stock bought in 1998 $ 500 80 shares (80 × $11) stock bought in January 1999 880 Total basis of stock sold in 2013 $1,380 Shares in a mutual fund or REIT. 2012 tax forms irs    The basis of shares in a mutual fund (or other regulated investment company) or a real estate investment trust (REIT) is generally figured in the same way as the basis of other stock and usually includes any commissions or load charges paid for the purchase. 2012 tax forms irs Example. 2012 tax forms irs You bought 100 shares of Fund A for $10 a share. 2012 tax forms irs You paid a $50 commission to the broker for the purchase. 2012 tax forms irs Your cost basis for each share is $10. 2012 tax forms irs 50 ($1,050 ÷ 100). 2012 tax forms irs Commissions and load charges. 2012 tax forms irs   The fees and charges you pay to acquire or redeem shares of a mutual fund are not deductible. 2012 tax forms irs You can usually add acquisition fees and charges to your cost of the shares and thereby increase your basis. 2012 tax forms irs A fee paid to redeem the shares is usually a reduction in the redemption price (sales price). 2012 tax forms irs   You cannot add your entire acquisition fee or load charge to the cost of the mutual fund shares acquired if all of the following conditions apply. 2012 tax forms irs You get a reinvestment right because of the purchase of the shares or the payment of the fee or charge. 2012 tax forms irs You dispose of the shares within 90 days of the purchase date. 2012 tax forms irs You acquire new shares in the same mutual fund or another mutual fund, for which the fee or charge is reduced or waived because of the reinvestment right you got when you acquired the original shares. 2012 tax forms irs   The amount of the original fee or charge in excess of the reduction in (3) is added to the cost of the original shares. 2012 tax forms irs The rest of the original fee or charge is added to the cost basis of the new shares (unless all three conditions above also apply to the purchase of the new shares). 2012 tax forms irs Choosing average basis for mutual fund shares. 2012 tax forms irs   You can choose to use the average basis of mutual fund shares if you acquired the identical shares at various times and prices, or you acquired the shares after 2010 in connection with a dividend reinvestment plan, and left them on deposit in an account kept by a custodian or agent. 2012 tax forms irs The methods you can use to figure average basis are explained later. 2012 tax forms irs Undistributed capital gains. 2012 tax forms irs   If you had to include in your income any undistributed capital gains of the mutual fund or REIT, increase your basis in the stock by the difference between the amount you included and the amount of tax paid for you by the fund or REIT. 2012 tax forms irs See Undistributed capital gains of mutual funds and REITs under Capital Gain Distributions in chapter 1. 2012 tax forms irs Reinvestment right. 2012 tax forms irs   This is the right to acquire mutual fund shares in the same or another mutual fund without paying a fee or load charge, or by paying a reduced fee or load charge. 2012 tax forms irs      The original cost basis of mutual fund shares you acquire by reinvesting your distributions is the amount of the distributions used to purchase each full or fractional share. 2012 tax forms irs This rule applies even if the distribution is an exempt-interest dividend that you do not report as income. 2012 tax forms irs Table 4-1. 2012 tax forms irs This is a worksheet you can use to keep track of the adjusted basis of your mutual fund shares. 2012 tax forms irs Enter the cost per share when you acquire new shares and any adjustments to their basis when the adjustment occurs. 2012 tax forms irs This worksheet will help you figure the adjusted basis when you sell or redeem shares. 2012 tax forms irs Table 4-1. 2012 tax forms irs Mutual Fund Record Mutual Fund Acquired1 Adjustment to Basis Per Share Adjusted2 Basis Per Share Sold or redeemed Date Number of Shares Cost Per Share Date Number of Shares                                                                                                                                                                                                                                                                         1 Include share received from reinvestment of distributions. 2012 tax forms irs 2 Cost plus or minus adjustments. 2012 tax forms irs Automatic investment service. 2012 tax forms irs   If you participate in an automatic investment service, your basis for each share of stock, including fractional shares, bought by the bank or other agent is the purchase price plus a share of the broker's commission. 2012 tax forms irs Dividend reinvestment plans. 2012 tax forms irs   If you participate in a dividend reinvestment plan and receive stock from the corporation at a discount, your basis is the full fair market value of the stock on the dividend payment date. 2012 tax forms irs You must include the amount of the discount in your income. 2012 tax forms irs Public utilities. 2012 tax forms irs   If, before 1986, you excluded from income the value of stock you had received under a qualified public utility reinvestment plan, your basis in that stock is zero. 2012 tax forms irs Stock dividends. 2012 tax forms irs   Stock dividends are distributions made by a corporation of its own stock. 2012 tax forms irs Generally, stock dividends are not taxable to you. 2012 tax forms irs However, see Distributions of Stock and Stock Rights under Dividends and Other Distributions in chapter 1 for some exceptions. 2012 tax forms irs If the stock dividends are not taxable, you must divide your basis for the old stock between the old and new stock. 2012 tax forms irs New and old stock identical. 2012 tax forms irs   If the new stock you received as a nontaxable dividend is identical to the old stock on which the dividend was declared, divide the adjusted basis of the old stock by the number of shares of old and new stock. 2012 tax forms irs The result is your basis for each share of stock. 2012 tax forms irs Example 1. 2012 tax forms irs You owned one share of common stock that you bought for $45. 2012 tax forms irs The corporation distributed two new shares of common stock for each share held. 2012 tax forms irs You then had three shares of common stock. 2012 tax forms irs Your basis in each share is $15 ($45 ÷ 3). 2012 tax forms irs Example 2. 2012 tax forms irs You owned two shares of common stock. 2012 tax forms irs You bought one for $30 and the other for $45. 2012 tax forms irs The corporation distributed two new shares of common stock for each share held. 2012 tax forms irs You had six shares after the distribution—three with a basis of $10 each ($30 ÷ 3) and three with a basis of $15 each ($45 ÷ 3). 2012 tax forms irs New and old stock not identical. 2012 tax forms irs   If the new stock you received as a nontaxable dividend is not identical to the old stock on which it was declared, the basis of the new stock is calculated differently. 2012 tax forms irs Divide the adjusted basis of the old stock between the old and the new stock in the ratio of the fair market value of each lot of stock to the total fair market value of both lots on the date of distribution of the new stock. 2012 tax forms irs Example. 2012 tax forms irs You bought a share of common stock for $100. 2012 tax forms irs Later, the corporation distributed a share of preferred stock for each share of common stock held. 2012 tax forms irs At the date of distribution, your common stock had a fair market value of $150 and the preferred stock had a fair market value of $50. 2012 tax forms irs You figure the basis of the old and new stock by dividing your $100 basis between them. 2012 tax forms irs The basis of your common stock is $75 (($150 ÷ $200) × $100), and the basis of the new preferred stock is $25 (($50 ÷ $200) × $100). 2012 tax forms irs Stock bought at various times. 2012 tax forms irs   Figure the basis of stock dividends received on stock you bought at various times and at different prices by allocating to each lot of stock the share of the stock dividends due to it. 2012 tax forms irs Taxable stock dividends. 2012 tax forms irs   If your stock dividend is taxable when you receive it, the basis of your new stock is its fair market value on the date of distribution. 2012 tax forms irs The basis of your old stock does not change. 2012 tax forms irs Stock splits. 2012 tax forms irs   Figure the basis of stock splits in the same way as stock dividends if identical stock is distributed on the stock held. 2012 tax forms irs Stock rights. 2012 tax forms irs   A stock right is a right to acquire a corporation's stock. 2012 tax forms irs It may be exercised, it may be sold if it has a market value, or it may expire. 2012 tax forms irs Stock rights are rarely taxable when you receive them. 2012 tax forms irs See Distributions of Stock and Stock Rights under Dividends and Other Distributions in chapter 1. 2012 tax forms irs Taxable stock rights. 2012 tax forms irs   If you receive stock rights that are taxable, the basis of the rights is their fair market value at the time of distribution. 2012 tax forms irs The basis of the old stock does not change. 2012 tax forms irs Nontaxable stock rights. 2012 tax forms irs   If you receive nontaxable stock rights and allow them to expire, they have no basis. 2012 tax forms irs   If you exercise or sell the nontaxable stock rights and if, at the time of distribution, the stock rights had a fair market value of 15% or more of the fair market value of the old stock, you must divide the adjusted basis of the old stock between the old stock and the stock rights. 2012 tax forms irs Use a ratio of the fair market value of each to the total fair market value of both at the time of distribution. 2012 tax forms irs   If the fair market value of the stock rights was less than 15%, their basis is zero. 2012 tax forms irs However, you can choose to divide the basis of the old stock between the old stock and the stock rights. 2012 tax forms irs To make the choice, attach a statement to your return for the year in which you received the rights, stating that you choose to divide the basis of the stock. 2012 tax forms irs Basis of new stock. 2012 tax forms irs   If you exercise the stock rights, the basis of the new stock is its cost plus the basis of the stock rights exercised. 2012 tax forms irs Example. 2012 tax forms irs You own 100 shares of ABC Company stock, which cost you $22 per share. 2012 tax forms irs The ABC Company gave you 10 nontaxable stock rights that would allow you to buy 10 more shares at $26 per share. 2012 tax forms irs At the time the stock rights were distributed, the stock had a market value of $30, not including the stock rights. 2012 tax forms irs Each stock right had a market value of $3. 2012 tax forms irs The market value of the stock rights was less than 15% of the market value of the stock, but you chose to divide the basis of your stock between the stock and the rights. 2012 tax forms irs You figure the basis of the rights and the basis of the old stock as follows: 100 shares × $22 = $2,200, basis of old stock   100 shares × $30 = $3,000, market value of old stock   10 rights × $3 = $30, market value of rights   ($3,000 ÷ $3,030) × $2,200 = $2,178. 2012 tax forms irs 22, new basis of old stock   ($30 ÷ $3,030) × $2,200 = $21. 2012 tax forms irs 78, basis of rights   If you sell the rights, the basis for figuring gain or loss is $2. 2012 tax forms irs 18 ($21. 2012 tax forms irs 78 ÷ 10) per right. 2012 tax forms irs If you exercise the rights, the basis of the stock you acquire is the price you pay ($26) plus the basis of the right exercised ($2. 2012 tax forms irs 18), or $28. 2012 tax forms irs 18 per share. 2012 tax forms irs The remaining basis of the old stock is $21. 2012 tax forms irs 78 per share. 2012 tax forms irs Investment property received in liquidation. 2012 tax forms irs   In general, if you receive investment property as a distribution in partial or complete liquidation of a corporation and if you recognize gain or loss when you acquire the property, your basis in the property is its fair market value at the time of the distribution. 2012 tax forms irs S corporation stock. 2012 tax forms irs   You must increase your basis in stock of an S corporation by your pro rata share of the following items. 2012 tax forms irs All income items of the S corporation, including tax-exempt income, that are separately stated and passed through to you as a shareholder. 2012 tax forms irs The nonseparately stated income of the S corporation. 2012 tax forms irs The amount of the deduction for depletion (other than oil and gas depletion) that is more than the basis of the property being depleted. 2012 tax forms irs   You must decrease your basis in stock of an S corporation by your pro rata share of the following items. 2012 tax forms irs Distributions by the S corporation that were not included in your income. 2012 tax forms irs All loss and deduction items of the S corporation that are separately stated and passed through to you. 2012 tax forms irs Any nonseparately stated loss of the S corporation. 2012 tax forms irs Any expense of the S corporation that is not deductible in figuring its taxable income and not properly chargeable to a capital account. 2012 tax forms irs The amount of your deduction for depletion of oil and gas wells to the extent the deduction is not more than your share of the adjusted basis of the wells. 2012 tax forms irs However, your basis in the stock cannot be reduced below zero. 2012 tax forms irs Specialized small business investment company stock or partnership interest. 2012 tax forms irs   If you bought this stock or interest as replacement property for publicly traded securities you sold at a gain, you must reduce the basis of the stock or interest by the amount of any postponed gain on that sale. 2012 tax forms irs See Rollover of Gain From Publicly Traded Securities , later. 2012 tax forms irs Qualified small business stock. 2012 tax forms irs   If you bought this stock as replacement property for other qualified small business stock you sold at a gain, you must reduce the basis of this replacement stock by the amount of any postponed gain on the earlier sale. 2012 tax forms irs See Gains on Qualified Small Business Stock , later. 2012 tax forms irs Short sales. 2012 tax forms irs   If you cannot deduct payments you make to a lender in lieu of dividends on stock used in a short sale, the amount you pay to the lender is a capital expense, and you must add it to the basis of the stock used to close the short sale. 2012 tax forms irs   See Payments in lieu of dividends , later, for information about deducting payments in lieu of dividends. 2012 tax forms irs Premiums on bonds. 2012 tax forms irs   If you buy a bond at a premium, the premium is treated as part of your basis in the bond. 2012 tax forms irs If you choose to amortize the premium paid on a taxable bond, you must reduce the basis of the bond by the amortized part of the premium each year over the life of the bond. 2012 tax forms irs   Although you cannot deduct the premium on a tax-exempt bond, you must amortize it to determine your adjusted basis in the bond. 2012 tax forms irs You must reduce the basis of the bond by the premium you amortized for the period you held the bond. 2012 tax forms irs   See Bond Premium Amortization in chapter 3 for more information. 2012 tax forms irs Market discount on bonds. 2012 tax forms irs   If you include market discount on a bond in income currently, increase the basis of your bond by the amount of market discount you include in your income. 2012 tax forms irs See Market Discount Bonds in chapter 1 for more information. 2012 tax forms irs Bonds purchased at par value. 2012 tax forms irs   A bond purchased at par value (face amount) has no premium or discount. 2012 tax forms irs When you sell or otherwise dispose of the bond, you figure the gain or loss by comparing the bond proceeds to the purchase price of the bond. 2012 tax forms irs Example. 2012 tax forms irs You purchased a bond several years ago for its par value of $10,000. 2012 tax forms irs You sold the bond this year for $10,100. 2012 tax forms irs You have a gain of $100. 2012 tax forms irs However, if you had sold the bond for $9,900, you would have a loss of $100. 2012 tax forms irs Acquisition discount on short-term obligations. 2012 tax forms irs   If you include acquisition discount on a short-term obligation in your income currently, increase the basis of the obligation by the amount of acquisition discount you include in your income. 2012 tax forms irs See Discount on Short-Term Obligations in chapter 1 for more information. 2012 tax forms irs Original issue discount (OID) on debt instruments. 2012 tax forms irs   Increase the basis of a debt instrument by the OID you include in your income. 2012 tax forms irs See Original Issue Discount (OID) in chapter 1. 2012 tax forms irs Discounted tax-exempt obligations. 2012 tax forms irs   OID on tax-exempt obligations is generally not taxable. 2012 tax forms irs However, when you dispose of a tax-exempt obligation issued after September 3, 1982, that you acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. 2012 tax forms irs The accrued OID is added to the basis of the obligation to determine your gain or loss. 2012 tax forms irs   For information on determining OID on a long-term obligation, see Debt Instruments Issued After July 1, 1982, and Before 1985 or Debt Instruments Issued After 1984, whichever applies, in Publication 1212 under Figuring OID on Long-Term Debt Instruments. 2012 tax forms irs   If the tax-exempt obligation has a maturity of 1 year or less, accrue OID under the rules for acquisition discount on short-term obligations. 2012 tax forms irs See Discount on Short-Term Obligations in chapter 1. 2012 tax forms irs Stripped tax-exempt obligation. 2012 tax forms irs   If you acquired a stripped tax-exempt bond or coupon after October 22, 1986, you must accrue OID on it to determine its adjusted basis when you dispose of it. 2012 tax forms irs For stripped tax-exempt bonds or coupons acquired after June 10, 1987, part of this OID may be taxable. 2012 tax forms irs You accrue the OID on these obligations in the manner described in chapter 1 under Stripped Bonds and Coupons . 2012 tax forms irs   Increase your basis in the stripped tax-exempt bond or coupon by the taxable and nontaxable accrued OID. 2012 tax forms irs Also increase your basis by the interest that accrued (but was not paid and was not previously reflected in your basis) before the date you sold the bond or coupon. 2012 tax forms irs In addition, for bonds acquired after June 10, 1987, add to your basis any accrued market discount not previously reflected in basis. 2012 tax forms irs How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. 2012 tax forms irs Gain. 2012 tax forms irs   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. 2012 tax forms irs Loss. 2012 tax forms irs   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. 2012 tax forms irs Amount realized. 2012 tax forms irs   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). 2012 tax forms irs Amount realized includes the money you receive plus the fair market value of any property or services you receive. 2012 tax forms irs   If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. 2012 tax forms irs For more information, see Publication 537. 2012 tax forms irs   If a buyer of property issues a debt instrument to the seller of the property, the amount realized is determined by reference to the issue price of the debt instrument, which may or may not be the fair market value of the debt instrument. 2012 tax forms irs See Regulations section 1. 2012 tax forms irs 1001-1(g). 2012 tax forms irs However, if the debt instrument was previously issued by a third party (one not part of the sale transaction), the fair market value of the debt instrument is used to determine the amount realized. 2012 tax forms irs Fair market value. 2012 tax forms irs   Fair market value is the price at which property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. 2012 tax forms irs Example. 2012 tax forms irs You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. 2012 tax forms irs Your gain is $3,000 ($10,000 – $7,000). 2012 tax forms irs If you also receive a note for $6,000 that has an issue price of $6,000, your gain is $9,000 ($10,000 + $6,000 – $7,000). 2012 tax forms irs Debt paid off. 2012 tax forms irs   A debt against the property, or against you, that is paid off as a part of the transaction or that is assumed by the buyer must be included in the amount realized. 2012 tax forms irs This is true even if neither you nor the buyer is personally liable for the debt. 2012 tax forms irs For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. 2012 tax forms irs Example. 2012 tax forms irs You sell stock that you had pledged as security for a bank loan of $8,000. 2012 tax forms irs Your basis in the stock is $6,000. 2012 tax forms irs The buyer pays off your bank loan and pays you $20,000 in cash. 2012 tax forms irs The amount realized is $28,000 ($20,000 + $8,000). 2012 tax forms irs Your gain is $22,000 ($28,000 – $6,000). 2012 tax forms irs Payment of cash. 2012 tax forms irs   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. 2012 tax forms irs Determine your gain or loss by subtracting the cash you pay and the adjusted basis of the property you trade in from the amount you realize. 2012 tax forms irs If the result is a positive number, it is a gain. 2012 tax forms irs If the result is a negative number, it is a loss. 2012 tax forms irs No gain or loss. 2012 tax forms irs   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. 2012 tax forms irs In this case, you may have neither a gain nor a loss. 2012 tax forms irs See No gain or loss in the discussion on the basis of property you received as a gift under Basis Other Than Cost, earlier. 2012 tax forms irs Special Rules for Mutual Funds To figure your gain or loss when you dispose of mutual fund shares, you need to determine which shares were sold and the basis of those shares. 2012 tax forms irs If your shares in a mutual fund were acquired all on the same day and for the same price, figuring their basis is not difficu