File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

2014 1040 Ez Tax Form

Https Www Freefilefillableforms ComFree Filing For 2012 TaxesUnemployed And Taxes1040 EsTax Software 20111040 Short FormTaxes For StudentsAmendment Tax Return 2012Tax Forms2013 Tax Booklet 1040ezFile 1040ez By PhoneTurbo Tax Free FileTax 2012How Do I File An Amended Federal Tax ReturnTax Act 2012 Free DownloadH&r Block Key Code For Free State FilingFederal Tax Forms For 20121040 Ez 2010Form 1040ez 2013Free Federal Tax Filing 2011Filing State Taxes Online For FreeFile My 2011 Taxes FreeHow To File Back Taxes OnlineFederal Tax Forms 1040ez1040ez Free Online FilingFile 2012 Taxes Online For Free1040ez OnlineFederal Tax Form 1040 EzWhere Do I File My 2012 Federal Tax ReturnAmended FormsE File 1040ezFile Taxes Online Free H&r BlockAmend State Tax ReturnFile Your State Taxes Online For Free990 Ez FormTax Planning Us 1040xAmended Utah State Tax ReturnHow Can I File My 2010 Taxes For FreeE File State Taxes Only FreeFree Tax Return

2014 1040 Ez Tax Form

2014 1040 ez tax form 4. 2014 1040 ez tax form   Special Situations Table of Contents Condominiums CooperativesDepreciation Property Changed to Rental UseBasis of Property Changed to Rental Use Figuring the Depreciation Deduction Renting Part of Property Not Rented for ProfitPostponing decision. 2014 1040 ez tax form Example—Property Changed to Rental Use This chapter discusses some rental real estate activities that are subject to additional rules. 2014 1040 ez tax form Condominiums A condominium is most often a dwelling unit in a multi-unit building, but can also take other forms, such as a townhouse or garden apartment. 2014 1040 ez tax form If you own a condominium, you also own a share of the common elements, such as land, lobbies, elevators, and service areas. 2014 1040 ez tax form You and the other condominium owners may pay dues or assessments to a special corporation that is organized to take care of the common elements. 2014 1040 ez tax form Special rules apply if you rent your condominium to others. 2014 1040 ez tax form You can deduct as rental expenses all the expenses discussed in chapters 1 and 2. 2014 1040 ez tax form In addition, you can deduct any dues or assessments paid for maintenance of the common elements. 2014 1040 ez tax form You cannot deduct special assessments you pay to a condominium management corporation for improvements. 2014 1040 ez tax form However, you may be able to recover your share of the cost of any improvement by taking depreciation. 2014 1040 ez tax form Cooperatives If you live in a cooperative, you do not own your apartment. 2014 1040 ez tax form Instead, a corporation owns the apartments and you are a tenant-stockholder in the cooperative housing corporation. 2014 1040 ez tax form If you rent your apartment to others, you usually can deduct, as a rental expense, all the maintenance fees you pay to the cooperative housing corporation. 2014 1040 ez tax form In addition to the maintenance fees paid to the cooperative housing corporation, you can deduct your direct payments for repairs, upkeep, and other rental expenses, including interest paid on a loan used to buy your stock in the corporation. 2014 1040 ez tax form Depreciation You will be depreciating your stock in the corporation rather than the apartment itself. 2014 1040 ez tax form Figure your depreciation deduction as follows. 2014 1040 ez tax form Figure the depreciation for all the depreciable real property owned by the corporation. 2014 1040 ez tax form (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. 2014 1040 ez tax form ) If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. 2014 1040 ez tax form Multiply your cost per share by the total number of outstanding shares. 2014 1040 ez tax form Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. 2014 1040 ez tax form Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land. 2014 1040 ez tax form Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be rented but cannot be lived in by tenant-stockholders. 2014 1040 ez tax form Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. 2014 1040 ez tax form Multiply the result of (2) by the percentage you figured in (3). 2014 1040 ez tax form This is your depreciation on the stock. 2014 1040 ez tax form Your depreciation deduction for the year cannot be more than the part of your adjusted basis (defined in chapter 2) in the stock of the corporation that is allocable to your rental property. 2014 1040 ez tax form Payments added to capital account. 2014 1040 ez tax form   Payments earmarked for a capital asset or improvement, or otherwise charged to the corporation's capital account are added to the basis of your stock in the corporation. 2014 1040 ez tax form For example, you cannot deduct a payment used to pave a community parking lot, install a new roof, or pay the principal of the corporation's mortgage. 2014 1040 ez tax form   Treat as a capital cost the amount you were assessed for capital items. 2014 1040 ez tax form This cannot be more than the amount by which your payments to the corporation exceeded your share of the corporation's mortgage interest and real estate taxes. 2014 1040 ez tax form   Your share of interest and taxes is the amount the corporation elected to allocate to you, if it reasonably reflects those expenses for your apartment. 2014 1040 ez tax form Otherwise, figure your share in the following manner. 2014 1040 ez tax form Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. 2014 1040 ez tax form Multiply the corporation's deductible interest by the number you figured in (1). 2014 1040 ez tax form This is your share of the interest. 2014 1040 ez tax form Multiply the corporation's deductible taxes by the number you figured in (1). 2014 1040 ez tax form This is your share of the taxes. 2014 1040 ez tax form Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. 2014 1040 ez tax form You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. 2014 1040 ez tax form You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. 2014 1040 ez tax form However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). 2014 1040 ez tax form Example. 2014 1040 ez tax form Your tax year is the calendar year. 2014 1040 ez tax form You moved from your home in May and started renting it out on June 1. 2014 1040 ez tax form You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. 2014 1040 ez tax form Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. 2014 1040 ez tax form When figuring depreciation, treat the property as placed in service on June 1. 2014 1040 ez tax form Basis of Property Changed to Rental Use When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of fair market value or adjusted basis on the date of conversion. 2014 1040 ez tax form Fair market value. 2014 1040 ez tax form   This is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. 2014 1040 ez tax form Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property. 2014 1040 ez tax form Figuring the basis. 2014 1040 ez tax form   The basis for depreciation is the lesser of: The fair market value of the property on the date you changed it to rental use, or Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis. 2014 1040 ez tax form For other increases and decreases to basis, see Adjusted Basis in chapter 2. 2014 1040 ez tax form Example. 2014 1040 ez tax form Several years ago you built your home for $140,000 on a lot that cost you $14,000. 2014 1040 ez tax form Before changing the property to rental use this year, you added $28,000 of permanent improvements to the house and claimed a $3,500 casualty loss deduction for damage to the house. 2014 1040 ez tax form Part of the improvements qualified for a $500 residential energy credit, which you claimed on your 2010 tax return. 2014 1040 ez tax form Because land is not depreciable, you can only include the cost of the house when figuring the basis for depreciation. 2014 1040 ez tax form The adjusted basis of the house at the time of the change in its use was $164,000 ($140,000 + $28,000 − $3,500 − $500). 2014 1040 ez tax form On the date of the change in use, your property had a fair market value of $168,000, of which $21,000 was for the land and $147,000 was for the house. 2014 1040 ez tax form The basis for depreciation on the house is the fair market value on the date of the change ($147,000), because it is less than your adjusted basis ($164,000). 2014 1040 ez tax form Cooperatives If you change your cooperative apartment to rental use, figure your allowable depreciation as explained earlier. 2014 1040 ez tax form (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. 2014 1040 ez tax form ) The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. 2014 1040 ez tax form The fair market value of the property on the date you change your apartment to rental use. 2014 1040 ez tax form This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. 2014 1040 ez tax form The corporation's adjusted basis in the property on that date. 2014 1040 ez tax form Do not subtract depreciation when figuring the corporation's adjusted basis. 2014 1040 ez tax form If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1) under Depreciation (under Cooperatives, near the beginning of this chapter). 2014 1040 ez tax form The fair market value of the property is considered to be the same as the corporation's adjusted basis figured in this way minus straight line depreciation, unless the value is unrealistic. 2014 1040 ez tax form Figuring the Depreciation Deduction To figure the deduction, use the depreciation system in effect when you convert your residence to rental use. 2014 1040 ez tax form Generally, that will be MACRS for any conversion after 1986. 2014 1040 ez tax form Treat the property as placed in service on the conversion date. 2014 1040 ez tax form Example. 2014 1040 ez tax form Your converted residence (see previous example under Figuring the basis) was available for rent on August 1. 2014 1040 ez tax form Using Table 2-2d (see chapter 2), the percentage for Year 1 beginning in August is 1. 2014 1040 ez tax form 364% and the depreciation deduction for Year 1 is $2,005 ($147,000 × . 2014 1040 ez tax form 01364). 2014 1040 ez tax form Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. 2014 1040 ez tax form You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). 2014 1040 ez tax form You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity, or painting the outside of the house. 2014 1040 ez tax form There is no change in the types of expenses deductible for the personal-use part of your property. 2014 1040 ez tax form Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). 2014 1040 ez tax form You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. 2014 1040 ez tax form You do not have to divide the expenses that belong only to the rental part of your property. 2014 1040 ez tax form For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. 2014 1040 ez tax form If you install a second phone line strictly for your tenant's use, all of the cost of the second line is deductible as a rental expense. 2014 1040 ez tax form You can deduct depreciation on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. 2014 1040 ez tax form How to divide expenses. 2014 1040 ez tax form   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use. 2014 1040 ez tax form You can use any reasonable method for dividing the expense. 2014 1040 ez tax form It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. 2014 1040 ez tax form The two most common methods for dividing an expense are (1) the number of rooms in your home, and (2) the square footage of your home. 2014 1040 ez tax form Example. 2014 1040 ez tax form You rent a room in your house. 2014 1040 ez tax form The room is 12 × 15 feet, or 180 square feet. 2014 1040 ez tax form Your entire house has 1,800 square feet of floor space. 2014 1040 ez tax form You can deduct as a rental expense 10% of any expense that must be divided between rental use and personal use. 2014 1040 ez tax form If your heating bill for the year for the entire house was $600, $60 ($600 × . 2014 1040 ez tax form 10) is a rental expense. 2014 1040 ez tax form The balance, $540, is a personal expense that you cannot deduct. 2014 1040 ez tax form Duplex. 2014 1040 ez tax form   A common situation is the duplex where you live in one unit and rent out the other. 2014 1040 ez tax form Certain expenses apply to the entire property, such as mortgage interest and real estate taxes, and must be split to determine rental and personal expenses. 2014 1040 ez tax form Example. 2014 1040 ez tax form You own a duplex and live in one half, renting the other half. 2014 1040 ez tax form Both units are approximately the same size. 2014 1040 ez tax form Last year, you paid a total of $10,000 mortgage interest and $2,000 real estate taxes for the entire property. 2014 1040 ez tax form You can deduct $5,000 mortgage interest and $1,000 real estate taxes on Schedule E (Form 1040), and if you itemize your deductions, you can deduct the other $5,000 mortgage interest and $1,000 real estate taxes on Schedule A (Form 1040). 2014 1040 ez tax form Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. 2014 1040 ez tax form You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. 2014 1040 ez tax form Where to report. 2014 1040 ez tax form   Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. 2014 1040 ez tax form For example, if you are filing Form 1040, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. 2014 1040 ez tax form   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. 2014 1040 ez tax form You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. 2014 1040 ez tax form Presumption of profit. 2014 1040 ez tax form   If your rental income is more than your rental expenses for at least 3 years out of a period of 5 consecutive years, you are presumed to be renting your property to make a profit. 2014 1040 ez tax form Postponing decision. 2014 1040 ez tax form   If you are starting your rental activity and do not have 3 years showing a profit, you can elect to have the presumption made after you have the 5 years of experience required by the test. 2014 1040 ez tax form You may choose to postpone the decision of whether the rental is for profit by filing Form 5213. 2014 1040 ez tax form You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. 2014 1040 ez tax form More information. 2014 1040 ez tax form   For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. 2014 1040 ez tax form Example—Property Changed to Rental Use In January, Eileen Johnson bought a condominium apartment to live in. 2014 1040 ez tax form Instead of selling the house she had been living in, she decided to change it to rental property. 2014 1040 ez tax form Eileen selected a tenant and started renting the house on February 1. 2014 1040 ez tax form Eileen charges $750 a month for rent and collects it herself. 2014 1040 ez tax form Eileen also received a $750 security deposit from her tenant. 2014 1040 ez tax form Because she plans to return it to her tenant at the end of the lease, she does not include it in her income. 2014 1040 ez tax form Her rental expenses for the year are as follows. 2014 1040 ez tax form   Mortgage interest $1,800     Fire insurance (1-year policy) 100     Miscellaneous repairs (after renting) 297     Real estate taxes imposed and paid 1,200   Eileen must divide the real estate taxes, mortgage interest, and fire insurance between the personal use of the property and the rental use of the property. 2014 1040 ez tax form She can deduct eleven-twelfths of these expenses as rental expenses. 2014 1040 ez tax form She can include the balance of the allowable taxes and mortgage interest on Schedule A (Form 1040) if she itemizes. 2014 1040 ez tax form She cannot deduct the balance of the fire insurance because it is a personal expense. 2014 1040 ez tax form Eileen bought this house in 1984 for $35,000. 2014 1040 ez tax form Her property tax was based on assessed values of $10,000 for the land and $25,000 for the house. 2014 1040 ez tax form Before changing it to rental property, Eileen added several improvements to the house. 2014 1040 ez tax form She figures her adjusted basis as follows:   Improvements Cost     House $25,000     Remodeled kitchen 4,200     Recreation room 5,800     New roof 1,600     Patio and deck 2,400     Adjusted basis $39,000   On February 1, when Eileen changed her house to rental property, the property had a fair market value of $152,000. 2014 1040 ez tax form Of this amount, $35,000 was for the land and $117,000 was for the house. 2014 1040 ez tax form Because Eileen's adjusted basis is less than the fair market value on the date of the change, Eileen uses $39,000 as her basis for depreciation. 2014 1040 ez tax form As specified for residential rental property, Eileen must use the straight line method of depreciation over the GDS or ADS recovery period. 2014 1040 ez tax form She chooses the GDS recovery period of 27. 2014 1040 ez tax form 5 years. 2014 1040 ez tax form She uses Table 2-2d to find her depreciation percentage. 2014 1040 ez tax form Since she placed the property in service in February, the percentage is 3. 2014 1040 ez tax form 182%. 2014 1040 ez tax form On April 1, Eileen bought a new dishwasher for the rental property at a cost of $425. 2014 1040 ez tax form The dishwasher is personal property used in a rental real estate activity, which has a 5-year recovery period. 2014 1040 ez tax form She uses Table 2-2a to find the percentage for Year 1 under “Half-year convention” (20%) to figure her depreciation deduction. 2014 1040 ez tax form On May 1, Eileen paid $4,000 to have a furnace installed in the house. 2014 1040 ez tax form The furnace is residential rental property. 2014 1040 ez tax form Because she placed the property in service in May, the percentage from Table 2-2d is 2. 2014 1040 ez tax form 273%. 2014 1040 ez tax form Eileen figures her net rental income or loss for the house as follows: Total rental income received  ($750 × 11) $8,250 Minus: Expenses     Mortgage interest ($1,800 × 11/12) $1,650   Fire insurance ($100 × 11/12) 92   Miscellaneous repairs 297   Real estate taxes ($1,200 × 11/12) 1,100   Total expenses 3,139 Balance $5,111 Minus: Depreciation     House ($39,000 × . 2014 1040 ez tax form 03182) $1,241   Dishwasher ($425 × . 2014 1040 ez tax form 20) 85   Furnace ($4,000 × . 2014 1040 ez tax form 02273) 91   Total depreciation 1,417 Net rental income for house   $3,694       Eileen uses Schedule E, Part I, to report her rental income and expenses. 2014 1040 ez tax form She enters her income, expenses, and depreciation for the house in the column for Property A. 2014 1040 ez tax form Since all property was placed in service this year, Eileen must use Form 4562 to figure the depreciation. 2014 1040 ez tax form See the Instructions for Form 4562 for more information on preparing the form. 2014 1040 ez tax form Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Section 7216 Information Center

Final Treasury Regulations on rules and consent requirements relating to the disclosure or use of tax return information by tax return preparers became effective Dec. 28, 2012. For additional information about how these apply to services and education related to the Affordable Care Act, please see our questions and answers.

 For further information, see Rev Proc 2013-14 and Rev Proc 2013-19

On December 30, 2009, the IRS issued proposed and temporary regulations (effective January 4, 2010) and related revenue rulings addressing the use or disclosure of tax return information by tax return preparers. The regulations and related revenue rulings under section 7216 enable tax return preparers to more effectively provide a range of services that taxpayers would ordinarily expect from tax return preparers.

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations Amendments to the Section 7216 Regulations—Disclosure or Use of Information by Preparers of Returns

Revision to Section 301.7216-2 Guidance

Description of the Guidance:
These final and temporary regulations provide updated guidance regarding the disclosure and use of tax return information by tax return preparers without taxpayer consent. These regulations expand the information tax return preparers may compile, maintain, and use in lists for solicitation of tax return business under section 301.7216-2(n) to include taxpayer entity classification or type and tax return form number. These regulations clarify that the section 301.7216-2(n) lists may not be used to solicit non-tax return preparation services.  These regulations also clarify the phrase “tax information” in section 301.7216-2(n) by replacing that phrase with “tax information and general business or economic analysis for educational purposes.  These regulations further clarify that due diligence performed in contemplation of a sale or other disposition of a tax return preparation business is “in connection with” the sale or other disposition of the section 301.7216-2(n) list compiler’s tax return business” and that tax return information made available for due diligence purposes is a disclosure of that information, not a transfer of that information.  These regulations adopt the guidance provided in Notice 2009-13 related to section 301.7216-2(p) allowing certain expanded disclosures and uses of statistical compilations, subject to specific prohibitions, provided that the statistical compilations are anonymous as to taxpayer identity and contain data from at least 10 tax returns. Finally, these regulations allow the disclosure of tax return information to the extent necessary to accomplish required legal or ethical conflict reviews to avoid client conflicts of interest.  These regulations also include specific restrictions and prohibitions applicable to the expanded uses and disclosures that are designed to appropriately balance taxpayer rights provided by section 7216 and its regulations without compromising those rights.

Revenue Ruling 2010-4

(Provides guidance on whether a tax return preparer is liable for criminal and civil penalties under Internal Revenue Code sections 7216 and 6713 when the tax return preparer uses tax return information to contact taxpayers to inform them of changes in tax law that could affect the taxpayers’ income tax liability reported in tax returns previously prepared or processed by the tax return preparer; uses tax return information to determine which taxpayers’ future income tax return filing obligations may be affected by a prospective change in tax rule or regulation and to contact such taxpayers to notify them of the changed rule or regulation, explain how the change may affect them, and advise them with regard to actions they may take in response to the change; or discloses tax return information contained in the list permitted to be maintained by the tax return preparer under section 301.7216-2(n) to a third-party service provider that creates, publishes, or distributes, by mail or e-mail, tax information and general business and economic information or analysis for educational purposes or for purposes of soliciting additional tax return preparation services for the tax return preparer, for the purpose of obtaining the ‘newsletter’ creation, publication, and or distribution services offered by the third-party service provider.)

Revenue Ruling 2010-5

(Provides guidance on whether a tax return preparer is liable for criminal and civil penalties under Internal Revenue Code sections 7216 and 6713 when the tax return preparer discloses (1) to a professional liability insurance carrier tax return information required by the insurance carrier to obtain or maintain professional liability insurance coverage; (2) to a professional liability insurance carrier tax return information required by the insurance carrier to promptly and accurately report a claim or a potential claim against the tax return preparer, or to aid in the investigation of a claim or potential claim against the tax return preparer; (3) to a professional liability insurance carrier tax return information to the preparer’s professional liability insurance carrier in order to obtain legal representation under the terms of the insurance policy; or (4) tax return information to an unrelated attorney for the purpose of evaluating a claim or potential claim against the tax return preparer.)

News Releases:

IRS Issues Proposed Regulations Adjusting Use of Some Taxpayer Information (Released December 30, 2009)

How Do I?

Section 7216 Frequently Asked Questions

Aids to Preparing Section 7216 Consent Forms

Archived Information:

Section 7216 Updated Rules for Tax Preparers (Updated 12/18/2008)

Page Last Reviewed or Updated: 27-Feb-2014

The 2014 1040 Ez Tax Form

2014 1040 ez tax form 9. 2014 1040 ez tax form   Dispositions of Property Used in Farming Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. 2014 1040 ez tax form Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sale Other Dispositions Other GainsExceptions. 2014 1040 ez tax form Amount to report as ordinary income. 2014 1040 ez tax form Applicable percentage. 2014 1040 ez tax form Amount to report as ordinary income. 2014 1040 ez tax form Applicable percentage. 2014 1040 ez tax form Introduction When you dispose of property used in your farm business, your taxable gain or loss is usually treated as ordinary income (which is taxed at the same rates as wages and interest income) or capital gain (which is generally taxed at lower rates) under the rules for section 1231 transactions. 2014 1040 ez tax form When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. 2014 1040 ez tax form Any gain remaining after applying the depreciation recapture rules is a section 1231 gain, which may be taxed as a capital gain. 2014 1040 ez tax form Gains and losses from property used in farming are reported on Form 4797, Sales of Business Property. 2014 1040 ez tax form Table 9-1 contains examples of items reported on Form 4797 and refers to the part of that form on which they first should be reported. 2014 1040 ez tax form Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Other gains Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. 2014 1040 ez tax form Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (explained below). 2014 1040 ez tax form Their treatment as ordinary or capital gains depends on whether you have a net gain or a net loss from all of your section 1231 transactions in the tax year. 2014 1040 ez tax form Table 9-1. 2014 1040 ez tax form Where to First Report Certain Items on Form 4797 Type of property Held 1 year  or less Held more than  1 year 1 Depreciable trade or business property:       a Sold or exchanged at a gain Part II Part III (1245, 1250)   b Sold or exchanged at a loss Part II Part I 2 Farmland held less than 10 years for which soil, water, or land clearing expenses were deducted:       a Sold at a gain Part II Part III (1252)   b Sold at a loss Part II Part I 3 All other farmland Part II Part I 4 Disposition of cost-sharing payment property described in section 126 Part II Part III (1255) 5 Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 24 mos. 2014 1040 ez tax form Held 24 mos. 2014 1040 ez tax form  or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised cattle and horses sold at a gain Part II Part I 6 Livestock other than cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 12 mos. 2014 1040 ez tax form Held 12 mos. 2014 1040 ez tax form   or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised livestock sold at a gain Part II Part I If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). 2014 1040 ez tax form Do not take that gain into account as section 1231 gain. 2014 1040 ez tax form Section 1231 transactions. 2014 1040 ez tax form   Gain or loss on the following transactions is subject to section 1231 treatment. 2014 1040 ez tax form Sale or exchange of cattle and horses. 2014 1040 ez tax form The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 24 months or longer. 2014 1040 ez tax form Sale or exchange of other livestock. 2014 1040 ez tax form This livestock must be held for draft, breeding, dairy, or sporting purposes and held for 12 months or longer. 2014 1040 ez tax form Other livestock includes hogs, mules, sheep, goats, donkeys, and other fur-bearing animals. 2014 1040 ez tax form Other livestock does not include poultry. 2014 1040 ez tax form Sale or exchange of depreciable personal property. 2014 1040 ez tax form This property must be used in your business and held longer than 1 year. 2014 1040 ez tax form Generally, property held for the production of rents or royalties is considered to be used in a trade or business. 2014 1040 ez tax form Examples of depreciable personal property include farm machinery and trucks. 2014 1040 ez tax form It also includes amortizable section 197 intangibles. 2014 1040 ez tax form Sale or exchange of real estate. 2014 1040 ez tax form This property must be used in your business and held longer than 1 year. 2014 1040 ez tax form Examples are your farm or ranch (including barns and sheds). 2014 1040 ez tax form Sale or exchange of unharvested crops. 2014 1040 ez tax form The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person, and the land must have been held longer than 1 year. 2014 1040 ez tax form You cannot keep any right or option to reacquire the land directly or indirectly (other than a right customarily incident to a mortgage or other security transaction). 2014 1040 ez tax form Growing crops sold with a leasehold on the land, even if sold to the same person in a single transaction, are not included. 2014 1040 ez tax form Distributive share of partnership gains and losses. 2014 1040 ez tax form Your distributive share must be from the sale or exchange of property listed above and held longer than 1 year (or for the required period for certain livestock). 2014 1040 ez tax form Cutting or disposal of timber. 2014 1040 ez tax form Special rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange, or you enter into a cutting contract, as described in chapter 8 under Timber . 2014 1040 ez tax form Condemnation. 2014 1040 ez tax form The condemned property (defined in chapter 11) must have been held longer than 1 year. 2014 1040 ez tax form It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. 2014 1040 ez tax form It cannot be property held for personal use. 2014 1040 ez tax form Casualty or theft. 2014 1040 ez tax form The casualty or theft must have affected business property, property held for the production of rents or royalties, or investment property (such as notes and bonds). 2014 1040 ez tax form You must have held the property longer than 1 year. 2014 1040 ez tax form However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. 2014 1040 ez tax form Section 1231 does not apply to personal casualty gains and losses. 2014 1040 ez tax form See chapter 11 for information on how to treat those gains and losses. 2014 1040 ez tax form If the property is not held for the required holding period, the transaction is not subject to section 1231 treatment, and any gain or loss is ordinary income reported in Part II of Form 4797. 2014 1040 ez tax form See Table 9-1. 2014 1040 ez tax form Property for sale to customers. 2014 1040 ez tax form   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. 2014 1040 ez tax form If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. 2014 1040 ez tax form Treatment as ordinary or capital. 2014 1040 ez tax form   To determine the treatment of section 1231 gains and losses, combine all of your section 1231 gains and losses for the year. 2014 1040 ez tax form If you have a net section 1231 loss, it is an ordinary loss. 2014 1040 ez tax form If you have a net section 1231 gain, it is ordinary income up to your nonrecaptured section 1231 losses from previous years, explained next. 2014 1040 ez tax form The rest, if any, is long-term capital gain. 2014 1040 ez tax form Nonrecaptured section 1231 losses. 2014 1040 ez tax form   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain by treating the gain as ordinary income. 2014 1040 ez tax form These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. 2014 1040 ez tax form Example. 2014 1040 ez tax form In 2013, Ben has a $2,000 net section 1231 gain. 2014 1040 ez tax form To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. 2014 1040 ez tax form From 2008 through 2012 he had the following section 1231 gains and losses. 2014 1040 ez tax form Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800   Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. 2014 1040 ez tax form 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 His remaining net section 1231 loss from 2010 is completely recaptured in 2013. 2014 1040 ez tax form Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if it is otherwise nontaxable) as ordinary income. 2014 1040 ez tax form To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. 2014 1040 ez tax form For more information, see chapter 3 of Publication 544. 2014 1040 ez tax form Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable. 2014 1040 ez tax form Any recognized gain that is more than the part that is ordinary income is a section 1231 gain. 2014 1040 ez tax form See Treatment as ordinary or capital under Section 1231 Gains and Losses , earlier. 2014 1040 ez tax form Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. 2014 1040 ez tax form Personal property (either tangible or intangible). 2014 1040 ez tax form Other tangible property (except buildings and their structural components) used as any of the following. 2014 1040 ez tax form See Buildings and structural components below. 2014 1040 ez tax form An integral part of manufacturing, production, or extraction, or of furnishing certain services. 2014 1040 ez tax form A research facility in any of the activities in (a). 2014 1040 ez tax form A facility in any of the activities in (a) above, for the bulk storage of fungible commodities (discussed later). 2014 1040 ez tax form That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. 2014 1040 ez tax form Amortization of certified pollution control facilities. 2014 1040 ez tax form The section 179 expense deduction. 2014 1040 ez tax form Deduction for clean-fuel vehicles and certain refueling property. 2014 1040 ez tax form Expenditures to remove architectural and transportation barriers to the handicapped and elderly. 2014 1040 ez tax form Certain reforestation expenditures (as described under Reforestation Costs in chapter 7. 2014 1040 ez tax form Single purpose agricultural (livestock) or horticultural structures. 2014 1040 ez tax form Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. 2014 1040 ez tax form Buildings and structural components. 2014 1040 ez tax form   Section 1245 property does not include buildings and structural components. 2014 1040 ez tax form The term building includes a house, barn, warehouse, or garage. 2014 1040 ez tax form The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. 2014 1040 ez tax form   Do not treat a structure that is essentially machinery or equipment as a building or structural component. 2014 1040 ez tax form Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. 2014 1040 ez tax form   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. 2014 1040 ez tax form Structures such as oil and gas storage tanks, grain storage bins, and silos are not treated as buildings, but as section 1245 property. 2014 1040 ez tax form Facility for bulk storage of fungible commodities. 2014 1040 ez tax form   This is a facility used mainly for the bulk storage of fungible commodities. 2014 1040 ez tax form Bulk storage means storage of a commodity in a large mass before it is used. 2014 1040 ez tax form For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. 2014 1040 ez tax form To be fungible, a commodity must be such that one part may be used in place of another. 2014 1040 ez tax form Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. 2014 1040 ez tax form The depreciation (which includes any section 179 deduction claimed) and amortization allowed or allowable on the property. 2014 1040 ez tax form The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). 2014 1040 ez tax form For any other disposition of section 1245 property, ordinary income is the lesser of (1) above or the amount by which its fair market value (FMV) is more than its adjusted basis. 2014 1040 ez tax form For details, see chapter 3 of Publication 544. 2014 1040 ez tax form Use Part III of Form 4797 to figure the ordinary income part of the gain. 2014 1040 ez tax form Depreciation claimed on other property or claimed by other taxpayers. 2014 1040 ez tax form   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. 2014 1040 ez tax form Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. 2014 1040 ez tax form For details on exchanges of property that are not taxable, see Like-Kind Exchanges in chapter 8. 2014 1040 ez tax form Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift and part of the transfer is a sale or exchange). 2014 1040 ez tax form Example. 2014 1040 ez tax form Jeff Free paid $120,000 for a tractor in 2012. 2014 1040 ez tax form On February 23, 2013, he traded it for a chopper and paid an additional $30,000. 2014 1040 ez tax form To figure his depreciation deduction on the chopper for the current year, Jeff continues to use the basis of the tractor as he would have before the trade. 2014 1040 ez tax form Jeff can also depreciate the additional $30,000 for the chopper. 2014 1040 ez tax form Depreciation and amortization. 2014 1040 ez tax form   Depreciation and amortization deductions that must be recaptured as ordinary income include (but are not limited to) the following items. 2014 1040 ez tax form See Depreciation Recapture in chapter 3 of Publication 544 for more details. 2014 1040 ez tax form Ordinary depreciation deductions. 2014 1040 ez tax form Section 179 deduction (see chapter 7). 2014 1040 ez tax form Any special depreciation allowance. 2014 1040 ez tax form Amortization deductions for all the following costs. 2014 1040 ez tax form Acquiring a lease. 2014 1040 ez tax form Lessee improvements. 2014 1040 ez tax form Pollution control facilities. 2014 1040 ez tax form Reforestation expenses. 2014 1040 ez tax form Section 197 intangibles. 2014 1040 ez tax form Qualified disaster expenses. 2014 1040 ez tax form Franchises, trademarks, and trade names acquired before August 11, 1993. 2014 1040 ez tax form Example. 2014 1040 ez tax form You file your returns on a calendar year basis. 2014 1040 ez tax form In February 2011, you bought and placed in service for 100% use in your farming business a light-duty truck (5-year property) that cost $10,000. 2014 1040 ez tax form You used the half-year convention and your MACRS deductions for the truck were $1,500 in 2011 and $2,550 in 2012. 2014 1040 ez tax form You did not claim the section 179 expense deduction for the truck. 2014 1040 ez tax form You sold it in May 2013 for $7,000. 2014 1040 ez tax form The MACRS deduction in 2013, the year of sale, is $893 (½ of $1,785). 2014 1040 ez tax form Figure the gain treated as ordinary income as follows. 2014 1040 ez tax form 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $1,500 + $2,550 + $893) 4,943   4) Adjusted basis (subtract line 3 from line 2) $5,057 5) Gain realized (subtract line 4 from line 1) 1,943 6) Gain treated as ordinary income (lesser of line 3 or line 5) $1,943 Depreciation allowed or allowable. 2014 1040 ez tax form   You generally use the greater of the depreciation allowed or allowable when figuring the part of gain to report as ordinary income. 2014 1040 ez tax form If, in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. 2014 1040 ez tax form If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. 2014 1040 ez tax form This treatment applies only when figuring what part of the gain is treated as ordinary income under the rules for section 1245 depreciation recapture. 2014 1040 ez tax form Disposition of plants and animals. 2014 1040 ez tax form   If you elect not to use the uniform capitalization rules (see chapter 6), you must treat any plant you produce as section 1245 property. 2014 1040 ez tax form If you have a gain on the property's disposition, you must recapture the pre-productive expenses you would have capitalized if you had not made the election by treating the gain, up to the amount of these expenses, as ordinary income. 2014 1040 ez tax form For section 1231 transactions, show these expenses as depreciation on Form 4797, Part III, line 22. 2014 1040 ez tax form For plant sales that are reported on Schedule F (1040), Profit or Loss From Farming, this recapture rule does not change the reporting of income because the gain is already ordinary income. 2014 1040 ez tax form You can use the farm-price method or the unit-livestock-price method discussed in  chapter 2 to figure these expenses. 2014 1040 ez tax form Example. 2014 1040 ez tax form Janet Maple sold her apple orchard in 2013 for $80,000. 2014 1040 ez tax form Her adjusted basis at the time of sale was $60,000. 2014 1040 ez tax form She bought the orchard in 2006, but the trees did not produce a crop until 2009. 2014 1040 ez tax form Her pre-productive expenses were $6,000. 2014 1040 ez tax form She elected not to use the uniform capitalization rules. 2014 1040 ez tax form Janet must treat $6,000 of the gain as ordinary income. 2014 1040 ez tax form Section 1250 Property Section 1250 property includes all real property subject to an allowance for depreciation that is not and never has been section 1245 property. 2014 1040 ez tax form It includes buildings and structural components that are not section 1245 property (discussed earlier). 2014 1040 ez tax form It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. 2014 1040 ez tax form A fee simple interest in land is not section 1250 property because, like land, it is not depreciable. 2014 1040 ez tax form Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable. 2014 1040 ez tax form To determine the additional depreciation on section 1250 property, see Depreciation Recapture in chapter 3 of Publication 544. 2014 1040 ez tax form You will not have additional depreciation if any of the following apply to the property disposed of. 2014 1040 ez tax form You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method and you have held the property longer than 1 year. 2014 1040 ez tax form You chose the alternate ACRS (straight line) method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. 2014 1040 ez tax form The property was nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made) and you held it longer than 1 year. 2014 1040 ez tax form These properties are depreciated using the straight line method. 2014 1040 ez tax form Installment Sale If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. 2014 1040 ez tax form This applies even if no payments are received in that year. 2014 1040 ez tax form If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. 2014 1040 ez tax form For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. 2014 1040 ez tax form If you dispose of more than one asset in a single transaction, you must separately figure the gain on each asset so that it may be properly reported. 2014 1040 ez tax form To do this, allocate the selling price and the payments you receive in the year of sale to each asset. 2014 1040 ez tax form Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. 2014 1040 ez tax form For more information on installment sales, see chapter 10. 2014 1040 ez tax form Other Dispositions Chapter 3 of Publication 544 discusses the tax treatment of the following transfers of depreciable property. 2014 1040 ez tax form By gift. 2014 1040 ez tax form At death. 2014 1040 ez tax form In like-kind exchanges. 2014 1040 ez tax form In involuntary conversions. 2014 1040 ez tax form Publication 544 also explains how to handle a single transaction involving multiple properties. 2014 1040 ez tax form Other Gains This section discusses gain on the disposition of farmland for which you were allowed either of the following. 2014 1040 ez tax form Deductions for soil and water conservation expenditures (section 1252 property). 2014 1040 ez tax form Exclusions from income for certain cost sharing payments (section 1255 property). 2014 1040 ez tax form Section 1252 property. 2014 1040 ez tax form   If you disposed of farmland you held more than 1 year and less than 10 years at a gain and you were allowed deductions for soil and water conservation expenses for the land, as discussed in chapter 5, you must treat part of the gain as ordinary income and treat the balance as section 1231 gain. 2014 1040 ez tax form Exceptions. 2014 1040 ez tax form   Do not treat gain on the following transactions as gain on section 1252 property. 2014 1040 ez tax form Disposition of farmland by gift. 2014 1040 ez tax form Transfer of farm property at death (except for income in respect of a decedent). 2014 1040 ez tax form For more information, see Regulations section 1. 2014 1040 ez tax form 1252-2. 2014 1040 ez tax form Amount to report as ordinary income. 2014 1040 ez tax form   You report as ordinary income the lesser of the following amounts. 2014 1040 ez tax form Your gain (determined by subtracting the adjusted basis from the amount realized from a sale, exchange, or involuntary conversion, or the FMV for all other dispositions). 2014 1040 ez tax form The total deductions allowed for soil and water conservation expenses multiplied by the applicable percentage, discussed next. 2014 1040 ez tax form Applicable percentage. 2014 1040 ez tax form   The applicable percentage is based on the length of time you held the land. 2014 1040 ez tax form If you dispose of your farmland within 5 years after the date you acquired it, the percentage is 100%. 2014 1040 ez tax form If you dispose of the land within the 6th through 9th year after you acquired it, the applicable percentage is reduced by 20% a year for each year or part of a year you hold the land after the 5th year. 2014 1040 ez tax form If you dispose of the land 10 or more years after you acquired it, the percentage is 0%, and the entire gain is a section 1231 gain. 2014 1040 ez tax form Example. 2014 1040 ez tax form You acquired farmland on January 19, 2005. 2014 1040 ez tax form On October 3, 2013, you sold the land at a $30,000 gain. 2014 1040 ez tax form Between January 1 and October 3, 2013, you incur soil and water conservation expenditures of $15,000 for the land that are fully deductible in 2013. 2014 1040 ez tax form The applicable percentage is 40% since you sold the land within the 8th year after you acquired it. 2014 1040 ez tax form You treat $6,000 (40% of $15,000) of the $30,000 gain as ordinary income and the $24,000 balance as a section 1231 gain. 2014 1040 ez tax form Section 1255 property. 2014 1040 ez tax form   If you receive certain cost-sharing payments on property and you exclude those payments from income (as discussed in chapter 3), you may have to treat part of any gain as ordinary income and treat the balance as a section 1231 gain. 2014 1040 ez tax form If you chose not to exclude these payments, you will not have to recognize ordinary income under this provision. 2014 1040 ez tax form Amount to report as ordinary income. 2014 1040 ez tax form   You report as ordinary income the lesser of the following amounts. 2014 1040 ez tax form The applicable percentage of the total excluded cost-sharing payments. 2014 1040 ez tax form The gain on the disposition of the property. 2014 1040 ez tax form You do not report ordinary income under this rule to the extent the gain is recognized as ordinary income under sections 1231 through 1254, 1256, and 1257. 2014 1040 ez tax form However, if applicable, gain reported under this rule must be reported regardless of any contrary provisions (including nonrecognition provisions) under any other section. 2014 1040 ez tax form Applicable percentage. 2014 1040 ez tax form   The applicable percentage of the excluded cost-sharing payments to be reported as ordinary income is based on the length of time you hold the property after receiving the payments. 2014 1040 ez tax form If the property is held less than 10 years after you receive the payments, the percentage is 100%. 2014 1040 ez tax form After 10 years, the percentage is reduced by 10% a year, or part of a year, until the rate is 0%. 2014 1040 ez tax form Form 4797, Part III. 2014 1040 ez tax form   Use Form 4797, Part III, to figure the ordinary income part of a gain from the sale, exchange, or involuntary conversion of section 1252 property and section 1255 property. 2014 1040 ez tax form Prev  Up  Next   Home   More Online Publications