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Amend 2010 Tax Return Online

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Amend 2010 Tax Return Online

Amend 2010 tax return online 37. Amend 2010 tax return online   Other Credits Table of Contents What's New Introduction Useful Items - You may want to see: Nonrefundable CreditsAdoption Credit Alternative Motor Vehicle Credit Alternative Fuel Vehicle Refueling Property Credit Credit to Holders of Tax Credit Bonds Foreign Tax Credit Mortgage Interest Credit Nonrefundable Credit for Prior Year Minimum Tax Plug-in Electric Drive Motor Vehicle Credit Residential Energy Credits Retirement Savings Contributions Credit (Saver's Credit) Refundable CreditsCredit for Tax on Undistributed Capital Gain Health Coverage Tax Credit Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld What's New Adoption credit. Amend 2010 tax return online  The maximum adoption credit is $12,970 for 2013. Amend 2010 tax return online See Adoption Credit . Amend 2010 tax return online Plug-in electric vehicle credit. Amend 2010 tax return online  This credit has expired. Amend 2010 tax return online Credit for prior year minimum tax. Amend 2010 tax return online  The refundable portion of the credit for prior year minimum tax has expired. Amend 2010 tax return online Excess withholding of social security and railroad retirement tax. Amend 2010 tax return online  Social security tax and tier 1 railroad retirement (RRTA) tax were both withheld during 2013 at a rate of 6. Amend 2010 tax return online 2% of wages up to $113,700. Amend 2010 tax return online If you worked for more than one employer and had too much social security or RRTA tax withheld during 2013, you may be entitled to a credit for the excess withholding. Amend 2010 tax return online See Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld . Amend 2010 tax return online Introduction This chapter discusses the following nonrefundable credits. Amend 2010 tax return online Adoption credit. Amend 2010 tax return online Alternative motor vehicle credit. Amend 2010 tax return online Alternative fuel vehicle refueling property credit. Amend 2010 tax return online Credit to holders of tax credit bonds. Amend 2010 tax return online Foreign tax credit. Amend 2010 tax return online Mortgage interest credit. Amend 2010 tax return online Nonrefundable credit for prior year minimum tax. Amend 2010 tax return online Plug-in electric drive motor vehicle credit. Amend 2010 tax return online Residential energy credits. Amend 2010 tax return online Retirement savings contributions credit. Amend 2010 tax return online This chapter also discusses the following refundable credits. Amend 2010 tax return online Credit for tax on undistributed capital gain. Amend 2010 tax return online Health coverage tax credit. Amend 2010 tax return online Credit for excess social security tax or railroad retirement tax withheld. Amend 2010 tax return online Several other credits are discussed in other chapters in this publication. Amend 2010 tax return online Child and dependent care credit (chapter 32). Amend 2010 tax return online Credit for the elderly or the disabled (chapter 33). Amend 2010 tax return online Child tax credit (chapter 34). Amend 2010 tax return online Education credits (chapter 35). Amend 2010 tax return online Earned income credit (chapter 36). Amend 2010 tax return online Nonrefundable credits. Amend 2010 tax return online   The first part of this chapter, Nonrefundable Credits , covers ten credits that you subtract from your tax. Amend 2010 tax return online These credits may reduce your tax to zero. Amend 2010 tax return online If these credits are more than your tax, the excess is not refunded to you. Amend 2010 tax return online Refundable credits. Amend 2010 tax return online   The second part of this chapter, Refundable Credits , covers three credits that are treated as payments and are refundable to you. Amend 2010 tax return online These credits are added to the federal income tax withheld and any estimated tax payments you made. Amend 2010 tax return online If this total is more than your total tax, the excess will be refunded to you. Amend 2010 tax return online Useful Items - You may want to see: Publication 502 Medical and Dental Expenses 514 Foreign Tax Credit for  Individuals 530 Tax Information for Homeowners 590 Individual Retirement Arrangements (IRAs) Form (and Instructions) 1116 Foreign Tax Credit 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 5695 Residential Energy Credits 8396 Mortgage Interest Credit 8801 Credit For Prior Year Minimum Tax — Individuals, Estates, and Trusts 8828 Recapture of Federal Mortgage Subsidy 8839 Qualified Adoption Expenses 8880 Credit for Qualified Retirement Savings Contributions 8885 Health Coverage Tax Credit 8910 Alternative Motor Vehicle Credit 8911 Alternative Fuel Vehicle Refueling Property Credit 8912 Credit to Holders of Tax Credit Bonds 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit Nonrefundable Credits The credits discussed in this part of the chapter can reduce your tax. Amend 2010 tax return online However, if the total of these credits is more than your tax, the excess is not refunded to you. Amend 2010 tax return online Adoption Credit You may be able to take a tax credit of up to $12,970 for qualified expenses paid to adopt an eligible child. Amend 2010 tax return online The credit may be allowed for the adoption of a child with special needs even if you do not have any qualified expenses. Amend 2010 tax return online If your modified adjusted gross income (AGI) is more than $194,580, your credit is reduced. Amend 2010 tax return online If your modified AGI is $234,580 or more, you cannot take the credit. Amend 2010 tax return online Qualified adoption expenses. Amend 2010 tax return online   Qualified adoption expenses are reasonable and necessary expenses directly related to, and whose principal purpose is for, the legal adoption of an eligible child. Amend 2010 tax return online These expenses include: Adoption fees, Court costs, Attorney fees, Travel expenses (including amounts spent for meals and lodging) while away from home, and Re-adoption expenses to adopt a foreign child. Amend 2010 tax return online Nonqualified expenses. Amend 2010 tax return online   Qualified adoption expenses do not include expenses: That violate state or federal law, For carrying out any surrogate parenting arrangement, For the adoption of your spouse's child, For which you received funds under any federal, state, or local program, Allowed as a credit or deduction under any other federal income tax rule, or Paid or reimbursed by your employer or any other person or organization. Amend 2010 tax return online Eligible child. Amend 2010 tax return online   The term “eligible child” means any individual: Under 18 years old, or Physically or mentally incapable of caring for himself or herself. Amend 2010 tax return online Child with special needs. Amend 2010 tax return online   An eligible child is a child with special needs if all three of the following apply. Amend 2010 tax return online The child was a citizen or resident of the United States (including U. Amend 2010 tax return online S. Amend 2010 tax return online possessions) at the time the adoption process began. Amend 2010 tax return online A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents' home. Amend 2010 tax return online The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. Amend 2010 tax return online Factors used by states to make this determination include: The child's ethnic background, The child's age, Whether the child is a member of a minority or sibling group, and Whether the child has a medical condition or a physical, mental, or emotional handicap. Amend 2010 tax return online When to take the credit. Amend 2010 tax return online   Generally, until the adoption becomes final, you take the credit in the year after your qualified expenses were paid or incurred. Amend 2010 tax return online If the adoption becomes final, you take the credit in the year your expenses were paid or incurred. Amend 2010 tax return online See the Instructions for Form 8839 for more specific information on when to take the credit. Amend 2010 tax return online Foreign child. Amend 2010 tax return online   If the child is not a U. Amend 2010 tax return online S. Amend 2010 tax return online citizen or resident at the time the adoption process began, you cannot take the credit unless the adoption becomes final. Amend 2010 tax return online You treat all adoption expenses paid or incurred in years before the adoption becomes final as paid or incurred in the year it becomes final. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   Figure your 2013 nonrefundable credit and any carryforward to 2014 on Form 8839 and attach it to your Form 1040. Amend 2010 tax return online Include the credit in your total for Form 1040, line 53. Amend 2010 tax return online Check box c and enter “8839” on the line next to that box. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information, see the Instructions for Form 8839. Amend 2010 tax return online Alternative Motor Vehicle Credit You may be able to take this credit if you place a qualified fuel cell vehicle in service in 2013. Amend 2010 tax return online Amount of credit. Amend 2010 tax return online   Generally, you can rely on the manufacturer's certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and the amount of the credit for which it qualifies. Amend 2010 tax return online In the case of a foreign manufacturer, you generally can rely on its domestic distributor's certification to the IRS. Amend 2010 tax return online   Ordinarily the amount of the credit is 100% of the manufacturer's (or domestic distributor's) certification to the IRS of the maximum credit allowable. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   To take the credit, you must complete Form 8910 and attach it to your Form 1040. Amend 2010 tax return online Include the credit in your total for Form 1040, line 53. Amend 2010 tax return online Check box c and enter “8910” on the line next to that box. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the credit, see the Instructions for Form 8910. Amend 2010 tax return online Alternative Fuel Vehicle Refueling Property Credit You may be able to take a credit if you place qualified alternative fuel vehicle refueling property in service in 2013. Amend 2010 tax return online Qualified alternative fuel vehicle refueling property. Amend 2010 tax return online   Qualified alternative fuel vehicle refueling property is any property (other than a building or its structural components) used for either of the following. Amend 2010 tax return online To store or dispense alternative fuel into the fuel tank of a motor vehicle propelled by the fuel, but only if the storage or dispensing is at the point where the fuel is delivered into that tank. Amend 2010 tax return online To recharge an electric vehicle, but only if the recharging property is located at the point where the vehicle is recharged. Amend 2010 tax return online   The following are alternative fuels. Amend 2010 tax return online Any fuel at least 85% of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen. Amend 2010 tax return online Any mixture which consists of two or more of the following: biodiesel, diesel fuel, or kerosene, and at least 20% of the volume of which consists of biodiesel determined without regard to any kerosene. Amend 2010 tax return online Electricity. Amend 2010 tax return online Amount of the credit. Amend 2010 tax return online   For personal use property, the credit is generally the smaller of 30% of the property's cost or $1,000. Amend 2010 tax return online For business use property, the credit is generally the smaller of 30% of the property's cost or $30,000. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   To take the credit, you must complete Form 8911 and attach it to your Form 1040. Amend 2010 tax return online Include the credit in your total for Form 1040, line 53. Amend 2010 tax return online Check box c and enter “8911” on the line next to that box. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the credit, see the Form 8911 instructions. Amend 2010 tax return online Credit to Holders of Tax Credit Bonds Tax credit bonds are bonds in which the holder receives a tax credit in lieu of some or all of the interest on the bond. Amend 2010 tax return online You may be able to take a credit if you are a holder of one of the following bonds. Amend 2010 tax return online Clean renewable energy bonds (issued before 2010). Amend 2010 tax return online New clean renewable energy bonds. Amend 2010 tax return online Qualified energy conservation bonds. Amend 2010 tax return online Qualified school construction bonds. Amend 2010 tax return online Qualified zone academy bonds. Amend 2010 tax return online Build America bonds. Amend 2010 tax return online In some instances, an issuer may elect to receive a credit for interest paid on the bond. Amend 2010 tax return online If the issuer makes this election, you cannot also claim a credit. Amend 2010 tax return online Interest income. Amend 2010 tax return online   The amount of any tax credit allowed (figured before applying tax liability limits) must be included as interest income on your tax return. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   Complete Form 8912 and attach it to your Form 1040. Amend 2010 tax return online Include the credit in your total for Form 1040, line 53. Amend 2010 tax return online Check box c and enter “8912” on the line next to that box. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information, see the Instructions for Form 8912. Amend 2010 tax return online Foreign Tax Credit You generally can choose to take income taxes you paid or accrued during the year to a foreign country or U. Amend 2010 tax return online S. Amend 2010 tax return online possession as a credit against your U. Amend 2010 tax return online S. Amend 2010 tax return online income tax. Amend 2010 tax return online Or, you can deduct them as an itemized deduction (see chapter 22). Amend 2010 tax return online You cannot take a credit (or deduction) for foreign income taxes paid on income that you exclude from U. Amend 2010 tax return online S. Amend 2010 tax return online tax under any of the following. Amend 2010 tax return online Foreign earned income exclusion. Amend 2010 tax return online Foreign housing exclusion. Amend 2010 tax return online Income from Puerto Rico exempt from U. Amend 2010 tax return online S. Amend 2010 tax return online tax. Amend 2010 tax return online Possession exclusion. Amend 2010 tax return online Limit on the credit. Amend 2010 tax return online   Unless you can elect not to file Form 1116 (see Exception , later), your foreign tax credit cannot be more than your U. Amend 2010 tax return online S. Amend 2010 tax return online tax liability (Form 1040, line 44), multiplied by a fraction. Amend 2010 tax return online The numerator of the fraction is your taxable income from sources outside the United States. Amend 2010 tax return online The denominator is your total taxable income from U. Amend 2010 tax return online S. Amend 2010 tax return online and foreign sources. Amend 2010 tax return online See Publication 514 for more information. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   Complete Form 1116 and attach it to your Form 1040. Amend 2010 tax return online Enter the credit on Form 1040, line 47. Amend 2010 tax return online Exception. Amend 2010 tax return online   You do not have to complete Form 1116 to take the credit if all of the following apply. Amend 2010 tax return online All of your gross foreign source income was from interest and dividends and all of that income and the foreign tax paid on it were reported to you on Form 1099-INT, Form 1099-DIV, or Schedule K-1 (or substitute statement). Amend 2010 tax return online If you had dividend income from shares of stock, you held those shares for at least 16 days. Amend 2010 tax return online You are not filing Form 4563 or excluding income from sources within Puerto Rico. Amend 2010 tax return online The total of your foreign taxes was not more than $300 (not more than $600 if married filing jointly). Amend 2010 tax return online All of your foreign taxes were: Legally owed and not eligible for a refund, and Paid to countries that are recognized by the United States and do not support terrorism. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the credit and these requirements, see the Instructions for Form 1116. Amend 2010 tax return online Mortgage Interest Credit The mortgage interest credit is intended to help lower-income individuals own a home. Amend 2010 tax return online If you qualify, you can take the credit each year for part of the home mortgage interest you pay. Amend 2010 tax return online Who qualifies. Amend 2010 tax return online   You may be eligible for the credit if you were issued a qualified mortgage credit certificate (MCC) from your state or local government. Amend 2010 tax return online Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home. Amend 2010 tax return online Amount of credit. Amend 2010 tax return online   Figure your credit on Form 8396. Amend 2010 tax return online If your mortgage loan amount is equal to (or smaller than) the certified indebtedness (loan) amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year. Amend 2010 tax return online   If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. Amend 2010 tax return online To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction. Amend 2010 tax return online      Certified indebtedness amount on your MCC     Original amount of your mortgage   Limit based on credit rate. Amend 2010 tax return online   If the certificate credit rate is more than 20%, the credit you are allowed cannot be more than $2,000. Amend 2010 tax return online If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, this $2,000 limit must be divided based on the interest held by each person. Amend 2010 tax return online See Publication 530 for more information. Amend 2010 tax return online Carryforward. Amend 2010 tax return online   Your credit (after applying the limit based on the credit rate) is also subject to a limit based on your tax that is figured using Form 8396. Amend 2010 tax return online If your allowable credit is reduced because of this tax liability limit, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first. Amend 2010 tax return online   If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit). Amend 2010 tax return online How to take the credit. Amend 2010 tax return online    Figure your 2013 credit and any carryforward to 2014 on Form 8396, and attach it to your Form 1040. Amend 2010 tax return online Be sure to include any credit carryforward from 2010, 2011, and 2012. Amend 2010 tax return online   Include the credit in your total for Form 1040, line 53. Amend 2010 tax return online Check box c and enter “8396” on the line next to that box. Amend 2010 tax return online Reduced home mortgage interest deduction. Amend 2010 tax return online   If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. Amend 2010 tax return online You must do this even if part of that amount is to be carried forward to 2014. Amend 2010 tax return online For more information about the home mortgage interest deduction, see chapter 23. Amend 2010 tax return online Recapture of federal mortgage subsidy. Amend 2010 tax return online   If you received an MCC with your mortgage loan, you may have to recapture (pay back) all or part of the benefit you received from that program. Amend 2010 tax return online The recapture may be required if you sell or dispose of your home at a gain during the first 9 years after the date you closed your mortgage loan. Amend 2010 tax return online See the Instructions for Form 8828 and chapter 15 for more information. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the credit, see the Form 8396 instructions. Amend 2010 tax return online Nonrefundable Credit for Prior Year Minimum Tax The tax laws give special treatment to some kinds of income and allow special deductions and credits for some kinds of expenses. Amend 2010 tax return online If you benefit from these laws, you may have to pay at least a minimum amount of tax in addition to any other tax on these items. Amend 2010 tax return online This is called the alternative minimum tax. Amend 2010 tax return online The special treatment of some items of income and expenses only allows you to postpone paying tax until a later year. Amend 2010 tax return online If in prior years you paid alternative minimum tax because of these tax postponement items, you may be able to take a credit for prior year minimum tax against your current year's regular tax. Amend 2010 tax return online You may be able to take a credit against your regular tax if for 2012 you had: An alternative minimum tax liability and adjustments or preferences other than exclusion items, A minimum tax credit that you are carrying forward to 2013, or An unallowed qualified electric vehicle credit. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online    Figure your 2013 nonrefundable credit (if any), and any carryforward to 2014 on Form 8801, and attach it to your Form 1040. Amend 2010 tax return online Include the credit in your total for Form 1040, line 53, and check box b. Amend 2010 tax return online You can carry forward any unused credit for prior year minimum tax to later years until it is completely used. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the credit, see the Instructions for Form 8801. Amend 2010 tax return online Plug-in Electric Drive Motor Vehicle Credit You may be able to take this credit if you placed in service for business or personal use a qualified plug-in electric drive motor vehicle or a qualified two- or three-wheeled plug-in electric vehicle in 2013 and you meet some other requirements. Amend 2010 tax return online Qualified plug-in electric drive motor vehicle. Amend 2010 tax return online   This is a new vehicle with at least four wheels that: Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 4 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. Amend 2010 tax return online Qualified two- or three-wheeled plug-in electric vehicle. Amend 2010 tax return online   This is a new vehicle with two or three wheels that: Is capable of achieving a speed of 45 miles per hour or greater, Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 2. Amend 2010 tax return online 5 kilowatt hours and is capable of being recharged from an external source of electricity, and Has a gross vehicle weight of less than 14,000 pounds. Amend 2010 tax return online Certification and other requirements. Amend 2010 tax return online   Generally, you can rely on the manufacturer's (or, in the case of a foreign manufacturer, its domestic distributor's) certification to the IRS that a specific make, model, and model year vehicle qualifies for the credit and, if applicable, the amount of the credit for which it qualifies. Amend 2010 tax return online However, if the IRS publishes an announcement that the certification for any specific make, model, and model year vehicle has been withdrawn, you cannot rely on the certification for such a vehicle purchased after the date of publication of the withdrawal announcement. Amend 2010 tax return online   The following requirements must also be met to qualify for the credit. Amend 2010 tax return online You are the owner of the vehicle. Amend 2010 tax return online If the vehicle is leased, only the lessor, and not the lessee, is entitled to the credit. Amend 2010 tax return online You placed the vehicle in service during 2013. Amend 2010 tax return online The vehicle is manufactured primarily for use on public streets, roads, and highways. Amend 2010 tax return online The original use of the vehicle began with you. Amend 2010 tax return online You acquired the vehicle for your use or to lease to others, and not for resale. Amend 2010 tax return online In the case of the qualified two- or three-wheeled plug-in electric vehicle, the vehicle is acquired after 2011 and before 2014. Amend 2010 tax return online You use the vehicle primarily in the United States. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   To take the credit, you must complete Form 8936 and attach it to your Form 1040. Amend 2010 tax return online Include the credit in your total for Form 1040, line 53. Amend 2010 tax return online Check box c and enter “8936” on the line next to that box. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the credit, see the Form 8936 instructions. Amend 2010 tax return online Residential Energy Credits You may be able to take one or both of the following credits if you made energy saving improvements to your home located in the United States in 2013. Amend 2010 tax return online Nonbusiness energy property credit. Amend 2010 tax return online Residential energy efficient property credit. Amend 2010 tax return online If you are a member of a condominium management association for a condominium you own or a tenant-stockholder in a cooperative housing corporation, you are treated as having paid your proportionate share of any costs of the association or corporation for purposes of these credits. Amend 2010 tax return online Nonbusiness energy property credit. Amend 2010 tax return online   You may be able to take a credit equal to the sum of: 10% of the amount paid or incurred for qualified energy efficiency improvements installed during 2013, and Any residential energy property costs paid or incurred in 2013. Amend 2010 tax return online   There is a lifetime limit of $500 for all years after 2005, of which only $200 can be for windows; $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property. Amend 2010 tax return online    If the total of nonbusiness energy property credits you have taken in previous years (after 2005) is more than $500, you cannot take this credit in 2013. Amend 2010 tax return online   Qualified energy efficiency improvements are the following improvements that are new, can be expected to remain in use at least 5 years, and meet certain requirements for energy efficiency. Amend 2010 tax return online Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home. Amend 2010 tax return online Exterior window (including skylights). Amend 2010 tax return online Exterior doors. Amend 2010 tax return online Any metal or asphalt roof that has appropriate pigmented coatings or cooling granules specifically and primarily designed to reduce heat gain of the home. Amend 2010 tax return online   Residential energy property is any of the following. Amend 2010 tax return online Certain electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane, or oil water heater; and stoves that use biomass fuel. Amend 2010 tax return online Qualified natural gas, propane, or oil furnaces; and qualified natural gas, propane, or oil hot water boilers. Amend 2010 tax return online Certain advanced main air circulating fans used in natural gas, propane, or oil furnaces. Amend 2010 tax return online Residential energy efficient property credit. Amend 2010 tax return online   You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, fuel cell property, small wind energy property, and geothermal heat pump property. Amend 2010 tax return online The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property. Amend 2010 tax return online Basis reduction. Amend 2010 tax return online   You must reduce the basis of your home by the amount of any credit allowed. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   Complete Form 5695 and attach it to your Form 1040. Amend 2010 tax return online Enter the credit on Form 1040, line 52. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on these credits, see the Form 5695 instructions. Amend 2010 tax return online Retirement Savings Contributions Credit (Saver's Credit) You may be able to take this credit if you, or your spouse if filing jointly, made: Contributions (other than rollover contributions) to a traditional or Roth IRA, Elective deferrals to a 401(k) or 403(b) plan (including designated Roth contributions) or to a governmental 457, SEP, or SIMPLE plan, Voluntary employee contributions to a qualified retirement plan (including the federal Thrift Savings Plan), or Contributions to a 501(c)(18)(D) plan. Amend 2010 tax return online However, you cannot take the credit if either of the following applies. Amend 2010 tax return online The amount on Form 1040, line 38, or Form 1040A, line 22, is more than $29,500 ($44,250 if head of household; $59,000 if married filing jointly). Amend 2010 tax return online The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1996, (b) is claimed as a dependent on someone else's 2013 tax return, or (c) was a student (defined next). Amend 2010 tax return online Student. Amend 2010 tax return online   You were a student if during any part of 5 calendar months of 2013 you: Were enrolled as a full-time student at a school, or Took a full-time, on-farm training course given by a school or a state, county, or local government agency. Amend 2010 tax return online School. Amend 2010 tax return online   A school includes a technical, trade, or mechanical school. Amend 2010 tax return online It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   Figure the credit on Form 8880. Amend 2010 tax return online Enter the credit on your Form 1040, line 50, or your Form 1040A, line 32, and attach Form 8880 to your return. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the credit, see the Form 8880 instructions. Amend 2010 tax return online Refundable Credits The credits discussed in this part of the chapter are treated as payments of tax. Amend 2010 tax return online If the total of these credits, withheld federal income tax, and estimated tax payments is more than your total tax, the excess can be refunded to you. Amend 2010 tax return online Credit for Tax on Undistributed Capital Gain You must include in your income any amounts that regulated investment companies (commonly called mutual funds) or real estate investment trusts (REITs) allocated to you as capital gain distributions, even if you did not actually receive them. Amend 2010 tax return online If the mutual fund or REIT paid a tax on the capital gain, you are allowed a credit for the tax since it is considered paid by you. Amend 2010 tax return online The mutual fund or REIT will send you Form 2439 showing your share of the undistributed capital gains and the tax paid, if any. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   To take the credit, attach Copy B of Form 2439 to your Form 1040. Amend 2010 tax return online Include the amount from box 2 of your Form 2439 in the total for Form 1040, line 71, and check box a. Amend 2010 tax return online More information. Amend 2010 tax return online   See Capital Gain Distributions in chapter 8 for more information on undistributed capital gains. Amend 2010 tax return online Health Coverage Tax Credit You may be able to take this credit for any month in which all the following statements were true on the first day of the month. Amend 2010 tax return online You were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient (defined later); or you were a qualified family member of one of these individuals when the individual died or you finalized a divorce with one of these individuals. Amend 2010 tax return online You and/or your family members were covered by a qualified health insurance plan for which you paid the entire premiums, or your portion of the premiums, directly to your health plan or to “U. Amend 2010 tax return online S. Amend 2010 tax return online Treasury–HCTC. Amend 2010 tax return online ” You were not enrolled in Medicare Part A, B, or C, or you were enrolled in Medicare but your family member(s) qualified for the HCTC. Amend 2010 tax return online You were not enrolled in Medicaid or the Children's Health Insurance Program (CHIP). Amend 2010 tax return online You were not enrolled in the Federal Employees Health Benefits program (FEHBP) or eligible to receive benefits under the U. Amend 2010 tax return online S. Amend 2010 tax return online military health system (TRICARE). Amend 2010 tax return online You were not imprisoned under federal, state, or local authority. Amend 2010 tax return online Your employer did not pay 50% or more of the cost of coverage. Amend 2010 tax return online You did not receive a 65% COBRA premium reduction from your former employer or COBRA administrator. Amend 2010 tax return online But, you cannot take the credit if you can be claimed as a dependent on someone else's 2013 tax return. Amend 2010 tax return online If you meet all of these conditions, you may be able to take a credit of up to 72. Amend 2010 tax return online 5% of the amount you paid directly to a qualified health plan for you and any qualifying family members. Amend 2010 tax return online You cannot take the credit for insurance premiums on coverage that was actually paid for with a National Emergency Grant. Amend 2010 tax return online The amount you paid for qualified health insurance coverage must be reduced by any Archer MSA and health savings account distributions used to pay for the coverage. Amend 2010 tax return online You can take this credit on your tax return or have it paid on your behalf in advance to your insurance company. Amend 2010 tax return online If the credit is paid on your behalf in advance, that amount will reduce the amount of the credit you can take on your tax return. Amend 2010 tax return online TAA recipient. Amend 2010 tax return online   You were an eligible TAA recipient on the first day of the month if, for any day in that month or the prior month, you: Received a trade readjustment allowance, or Would have been entitled to receive such an allowance except that you had not exhausted all rights to any unemployment insurance (except additional compensation that is funded by a state and is not reimbursed from any federal funds) to which you were entitled (or would be entitled if you applied). Amend 2010 tax return online Example. Amend 2010 tax return online You received a trade adjustment allowance for January 2013. Amend 2010 tax return online You were an eligible TAA recipient on the first day of January and February. Amend 2010 tax return online Alternative TAA recipient. Amend 2010 tax return online   You were an eligible alternative TAA recipient on the first day of the month if, for that month or the prior month, you received benefits under an alternative trade adjustment assistance program for older workers established by the Department of Labor. Amend 2010 tax return online Example. Amend 2010 tax return online You received benefits under an alternative trade adjustment assistance program for older workers for October 2013. Amend 2010 tax return online The program was established by the Department of Labor. Amend 2010 tax return online You were an eligible alternative TAA recipient on the first day of October and November. Amend 2010 tax return online RTAA recipient. Amend 2010 tax return online   You were an eligible RTAA recipient on the first day of the month if, for that month or the prior month, you received benefits under a reemployment trade adjustment assistance program for older workers established by the Department of Labor. Amend 2010 tax return online PBGC pension recipient. Amend 2010 tax return online   You were an eligible PBGC pension recipient on the first day of the month, if both of the following apply. Amend 2010 tax return online You were age 55 or older on the first day of the month. Amend 2010 tax return online You received a benefit for that month paid by the PBGC under title IV of the Employee Retirement Income Security Act of 1974 (ERISA). Amend 2010 tax return online If you received a lump-sum payment from the PBGC after August 5, 2002, you meet item (2) above for any month that you would have received a PBGC benefit if you had not received the lump-sum payment. Amend 2010 tax return online How to take the credit. Amend 2010 tax return online   To take the credit, complete Form 8885 and attach it to your Form 1040. Amend 2010 tax return online Include your credit in the total for Form 1040, line 71, and check box c. Amend 2010 tax return online   You must attach health insurance bills (or COBRA payment coupons) and proof of payment for any amounts you include on Form 8885, line 2. Amend 2010 tax return online For details, see Publication 502 or Form 8885. Amend 2010 tax return online More information. Amend 2010 tax return online   For definitions and special rules, including those relating to qualified health insurance plans, qualifying family members, the effect of certain life events, and employer-sponsored health insurance plans, see Publication 502 and the Form 8885 instructions. Amend 2010 tax return online Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld Most employers must withhold social security tax from your wages. Amend 2010 tax return online If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax. Amend 2010 tax return online If you worked for two or more employers in 2013, you may have had too much social security tax withheld from your pay. Amend 2010 tax return online If one or more of those employers was a railroad employer, too much tier 1 RRTA tax may also have been withheld at the 6. Amend 2010 tax return online 2% rate. Amend 2010 tax return online You can claim the excess social security or tier 1 RRTA tax as a credit against your income tax when you file your return. Amend 2010 tax return online For the tier 1 RRTA tax, only use the portion of the tier 1 RRTA tax that was taxed at the 6. Amend 2010 tax return online 2% rate when figuring if excess tier 1 RRTA tax was withheld; do not include any portion of the tier 1 RRTA tax that was withheld at the Medicare tax rate (1. Amend 2010 tax return online 45%) or the Additional Medicare Tax rate (. Amend 2010 tax return online 9%). Amend 2010 tax return online The following table shows the maximum amount of wages subject to tax and the maximum amount of tax that should have been withheld for 2013. Amend 2010 tax return online Type of tax Maximum  wages subject to tax Maximum tax that should have been withheld Social security or RRTA tier 1 $113,700 $7,049. Amend 2010 tax return online 40 RRTA tier 2 $84,300 $3,709. Amend 2010 tax return online 20 All wages are subject to Medicare tax withholding. Amend 2010 tax return online   Use Form 843, Claim for Refund and Request for Abatement, to claim a refund of excess tier 2 RRTA tax. Amend 2010 tax return online Be sure to attach a copy of all of your W-2 forms. Amend 2010 tax return online Use Worksheet 3-3 in Publication 505, Tax Withholding and Estimated Tax, to help you figure the excess amount. Amend 2010 tax return online Employer's error. Amend 2010 tax return online   If any one employer withheld too much social security or tier 1 RRTA tax, you cannot take the excess as a credit against your income tax. Amend 2010 tax return online The employer should adjust the tax for you. Amend 2010 tax return online If the employer does not adjust the overcollection, you can file a claim for refund using Form 843. Amend 2010 tax return online Joint return. Amend 2010 tax return online   If you are filing a joint return, you cannot add the social security or tier 1 RRTA tax withheld from your spouse's wages to the amount withheld from your wages. Amend 2010 tax return online Figure the withholding separately for you and your spouse to determine if either of you has excess withholding. Amend 2010 tax return online How to figure the credit if you did not work for a railroad. Amend 2010 tax return online   If you did not work for a railroad during 2013, figure the credit as follows: 1. Amend 2010 tax return online Add all social security tax withheld (but not more than $7,049. Amend 2010 tax return online 40 for each employer). Amend 2010 tax return online Enter the total here   2. Amend 2010 tax return online Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. Amend 2010 tax return online Add lines 1 and 2. Amend 2010 tax return online If $7,049. Amend 2010 tax return online 40 or less, stop here. Amend 2010 tax return online You cannot take  the credit   4. Amend 2010 tax return online Social security tax limit 7,049. Amend 2010 tax return online 40 5. Amend 2010 tax return online Credit. Amend 2010 tax return online Subtract line 4 from line 3. Amend 2010 tax return online Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ Example. Amend 2010 tax return online You are married and file a joint return with your spouse who had no gross income in 2013. Amend 2010 tax return online During 2013, you worked for the Brown Technology Company and earned $60,000 in wages. Amend 2010 tax return online Social security tax of $3,720 was withheld. Amend 2010 tax return online You also worked for another employer in 2013 and earned $55,000 in wages. Amend 2010 tax return online $3,410 of social security tax was withheld from these wages. Amend 2010 tax return online Because you worked for more than one employer and your total wages were more than $113,700, you can take a credit of $80. Amend 2010 tax return online 60 for the excess social security tax withheld. Amend 2010 tax return online 1. Amend 2010 tax return online Add all social security tax withheld (but not more than $7,049. Amend 2010 tax return online 40 for each employer). Amend 2010 tax return online Enter the total here $7,130. Amend 2010 tax return online 00 2. Amend 2010 tax return online Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT” -0- 3. Amend 2010 tax return online Add lines 1 and 2. Amend 2010 tax return online If $7,049. Amend 2010 tax return online 40 or less, stop here. Amend 2010 tax return online You cannot take the credit 7,130. Amend 2010 tax return online 00 4. Amend 2010 tax return online Social security tax limit 7,049. Amend 2010 tax return online 40 5. Amend 2010 tax return online Credit. Amend 2010 tax return online Subtract line 4 from line 3. Amend 2010 tax return online Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $80. Amend 2010 tax return online 60 How to figure the credit if you worked for a railroad. Amend 2010 tax return online   If you were a railroad employee at any time during 2013, figure the credit as follows: 1. Amend 2010 tax return online Add all social security and tier 1 RRTA tax withheld at the 6. Amend 2010 tax return online 2% rate (but not more than $7,049. Amend 2010 tax return online 40 for each employer). Amend 2010 tax return online Enter the total here   2. Amend 2010 tax return online Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance included in the total on Form 1040, line 60, identified by “UT”   3. Amend 2010 tax return online Add lines 1 and 2. Amend 2010 tax return online If $7,049. Amend 2010 tax return online 40 or less, stop here. Amend 2010 tax return online You cannot take  the credit   4. Amend 2010 tax return online Social security and tier 1 RRTA  tax limit 7,049. Amend 2010 tax return online 40 5. Amend 2010 tax return online Credit. Amend 2010 tax return online Subtract line 4 from line 3. Amend 2010 tax return online Enter the result here and on Form 1040, line 69 (or Form 1040A, line 41) $ How to take the credit. Amend 2010 tax return online   Enter the credit on Form 1040, line 69, or include it in the total for Form 1040A, line 41. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the credit, see Publication 505. Amend 2010 tax return online Prev  Up  Next   Home   More Online Publications
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Understanding Your CP232C Notice

We denied your request to extend the time to file Form 5330 because your Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, wasn't signed or was signed by someone who wasn’t authorized.


What you need to do

  • File Form 5330 or a correct Form 5558 by the due date of the Form 5330. If Form 5330 is filed after the due date of the return (including any extension), the return will be considered late and subject to late filing penalties.

You may want to


Answers to Common Questions

Q. Where can I go for more information about Employee Benefit Plans?

A. For more information on Employee Benefit Plans, see Retirement Plans Community.

Q. Can I get help over the phone?

A. If you have questions and/or need help, please call 1-877-829-5500. Personal assistance is available Monday through Friday, 7:00 a.m. to 7:00 p.m. CT.

 


Tips for next year

  • Be sure to sign and mail your Form 5558 on or before the due date of your return.
  • Review the Form 5558 resources at Form 5500 Corner.

 

Page Last Reviewed or Updated: 27-Jan-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Amend 2010 Tax Return Online

Amend 2010 tax return online 6. Amend 2010 tax return online   Basis of Assets Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Cost BasisReal Property Allocating the Basis Uniform Capitalization Rules Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostTaxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Received as a Gift Property Transferred From a Spouse Inherited Property Property Distributed From a Partnership or Corporation Introduction Your basis is the amount of your investment in property for tax purposes. Amend 2010 tax return online Use basis to figure the gain or loss on the sale, exchange, or other disposition of property. Amend 2010 tax return online Also use basis to figure depreciation, amortization, depletion, and casualty losses. Amend 2010 tax return online If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Amend 2010 tax return online Only the basis allocated to the business or investment use of the property can be depreciated. Amend 2010 tax return online Your original basis in property is adjusted (increased or decreased) by certain events. Amend 2010 tax return online For example, if you make improvements to the property, increase your basis. Amend 2010 tax return online If you take deductions for depreciation, or casualty losses, or claim certain credits, reduce your basis. Amend 2010 tax return online Keep accurate records of all items that affect the basis of your assets. Amend 2010 tax return online For information on keeping records, see chapter 1. Amend 2010 tax return online Topics - This chapter discusses: Cost basis Adjusted basis Basis other than cost Useful Items - You may want to see: Publication 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property See chapter 16 for information about getting publications and forms. Amend 2010 tax return online Cost Basis The basis of property you buy is usually its cost. Amend 2010 tax return online Cost is the amount you pay in cash, debt obligations, other property, or services. Amend 2010 tax return online Your cost includes amounts you pay for sales tax, freight, installation, and testing. Amend 2010 tax return online The basis of real estate and business assets will include other items, discussed later. Amend 2010 tax return online Basis generally does not include interest payments. Amend 2010 tax return online However, see Carrying charges and Capitalized interest in chapter 4 of Publication 535. Amend 2010 tax return online You also may have to capitalize (add to basis) certain other costs related to buying or producing property. Amend 2010 tax return online Under the uniform capitalization rules, discussed later, you may have to capitalize direct costs and certain indirect costs of producing property. Amend 2010 tax return online Loans with low or no interest. Amend 2010 tax return online   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. Amend 2010 tax return online You generally have unstated interest if your interest rate is less than the applicable federal rate. Amend 2010 tax return online See the discussion of unstated interest in Publication 537, Installment Sales. Amend 2010 tax return online Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Amend 2010 tax return online If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Amend 2010 tax return online Some of these expenses are discussed next. Amend 2010 tax return online Lump sum purchase. Amend 2010 tax return online   If you buy improvements, such as buildings, and the land on which they stand for a lump sum, allocate your cost basis between the land and improvements. Amend 2010 tax return online Allocate the cost basis according to the respective fair market values (FMVs) of the land and improvements at the time of purchase. Amend 2010 tax return online Figure the basis of each asset by multiplying the lump sum by a fraction. Amend 2010 tax return online The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Amend 2010 tax return online Fair market value (FMV). Amend 2010 tax return online   FMV is the price at which 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 necessary facts. Amend 2010 tax return online Sales of similar property on or about the same date may help in figuring the FMV of the property. Amend 2010 tax return online If you are not certain of the FMV of the land and improvements, you can allocate the basis according to their assessed values for real estate tax purposes. Amend 2010 tax return online Real estate taxes. Amend 2010 tax return online   If you pay the real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Amend 2010 tax return online   If you reimburse the seller for taxes the seller paid for you, you generally can deduct that amount as a tax expense. Amend 2010 tax return online Whether or not you reimburse the seller, do not include that amount in the basis of your property. Amend 2010 tax return online Settlement costs. Amend 2010 tax return online   Your basis includes the settlement fees and closing costs for buying the property. Amend 2010 tax return online See Publication 551 for a detailed list of items you can and cannot include in basis. Amend 2010 tax return online   Do not include fees and costs for getting a loan on the property. Amend 2010 tax return online Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Amend 2010 tax return online Points. Amend 2010 tax return online   If you pay points to get a loan (including a mortgage, second mortgage, or line-of-credit), do not add the points to the basis of the related property. Amend 2010 tax return online You may be able to deduct the points currently or over the term of the loan. Amend 2010 tax return online For more information about deducting points, see Points in chapter 4 of Publication 535. Amend 2010 tax return online Assumption of a mortgage. Amend 2010 tax return online   If you buy property and assume (or buy the property subject to) an existing mortgage, your basis includes the amount you pay for the property plus the amount you owe on the mortgage. Amend 2010 tax return online Example. Amend 2010 tax return online If you buy a farm for $100,000 cash and assume a mortgage of $400,000, your basis is $500,000. Amend 2010 tax return online Constructing assets. Amend 2010 tax return online   If you build property or have assets built for you, your expenses for this construction are part of your basis. Amend 2010 tax return online Some of these expenses include the following costs: Land, Labor and materials, Architect's fees, Building permit charges, Payments to contractors, Payments for rental equipment, and Inspection fees. Amend 2010 tax return online   In addition, if you use your own employees, farm materials, and equipment to build an asset, do not deduct the following expenses. Amend 2010 tax return online You must capitalize them (include them in the asset's basis). Amend 2010 tax return online Employee wages paid for the construction work, reduced by any employment credits allowed. Amend 2010 tax return online Depreciation on equipment you own while it is used in the construction. Amend 2010 tax return online Operating and maintenance costs for equipment used in the construction. Amend 2010 tax return online The cost of business supplies and materials used in the construction. Amend 2010 tax return online    Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you construct. Amend 2010 tax return online Allocating the Basis In some instances, the rules for determining basis apply to a group of assets acquired in the same transaction or to property that consists of separate items. Amend 2010 tax return online To determine the basis of these assets or separate items, there must be an allocation of basis. Amend 2010 tax return online Group of assets acquired. Amend 2010 tax return online   If you buy multiple assets for a lump sum, allocate the amount you pay among the assets. Amend 2010 tax return online Use this allocation to figure your basis for depreciation and gain or loss on a later disposition of any of these assets. Amend 2010 tax return online You and the seller may agree in the sales contract to a specific allocation of the purchase price among the assets. Amend 2010 tax return online If this allocation is based on the value of each asset and you and the seller have adverse tax interests, the allocation generally will be accepted. Amend 2010 tax return online Farming business acquired. Amend 2010 tax return online   If you buy a group of assets that makes up a farming business, there are special rules you must use to allocate the purchase price among the assets. Amend 2010 tax return online Generally, reduce the purchase price by any cash received. Amend 2010 tax return online Allocate the remaining purchase price to the other business assets received in proportion to (but not more than) their FMV and in a certain order. Amend 2010 tax return online See Trade or Business Acquired under Allocating the Basis in Publication 551 for more information. Amend 2010 tax return online Transplanted embryo. Amend 2010 tax return online   If you buy a cow that is pregnant with a transplanted embryo, allocate to the basis of the cow the part of the purchase price equal to the FMV of the cow without the implant. Amend 2010 tax return online Allocate the rest of the purchase price to the basis of the calf. Amend 2010 tax return online Neither the cost allocated to the cow nor the cost allocated to the calf is deductible as a current business expense. Amend 2010 tax return online Uniform Capitalization Rules Under the uniform capitalization rules, you must include certain direct and indirect costs in the basis of property you produce or in your inventory costs, rather than claim them as a current deduction. Amend 2010 tax return online You recover these costs through depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property. Amend 2010 tax return online Generally, you are subject to the uniform capitalization rules if you do any of the following: Produce real or tangible personal property, or Acquire property for resale. Amend 2010 tax return online However, this rule does not apply to personal property if your average annual gross receipts for the 3-tax-year period ending with the year preceding the current tax year are $10 million or less. Amend 2010 tax return online You produce property if you construct, build, install, manufacture, develop, improve, or create the property. Amend 2010 tax return online You are not subject to the uniform capitalization rules if the property is produced for personal use. Amend 2010 tax return online In a farming business, you produce property if you raise or grow any agricultural or horticultural commodity, including plants and animals. Amend 2010 tax return online Plants. Amend 2010 tax return online   A plant produced in a farming business includes the following items: A fruit, nut, or other crop-bearing tree; An ornamental tree; A vine; A bush; Sod; and The crop or yield of a plant that will have more than one crop or yield. Amend 2010 tax return online Animals. Amend 2010 tax return online   An animal produced in a farming business includes any stock, poultry or other bird, and fish or other sea life. Amend 2010 tax return online The direct and indirect costs of producing plants or animals include preparatory costs and preproductive period costs. Amend 2010 tax return online Preparatory costs include the acquisition costs of the seed, seedling, plant, or animal. Amend 2010 tax return online For plants, preproductive period costs include the costs of items such as irrigation, pruning, frost protection, spraying, and harvesting. Amend 2010 tax return online For animals, preproductive period costs include the costs of items such as feed, maintaining pasture or pen areas, breeding, veterinary services, and bedding. Amend 2010 tax return online Exceptions. Amend 2010 tax return online   In a farming business, the uniform capitalization rules do not apply to: Any animal, Any plant with a preproductive period of 2 years or less, or Any costs of replanting certain plants lost or damaged due to casualty. Amend 2010 tax return online   Exceptions (1) and (2) do not apply to a corporation, partnership, or tax shelter required to use an accrual method of accounting. Amend 2010 tax return online See Accrual Method Required under Accounting Methods in chapter 2. Amend 2010 tax return online   In addition, you can elect not to use the uniform capitalization rules for plants with a preproductive period of more than 2 years. Amend 2010 tax return online If you make this election, special rules apply. Amend 2010 tax return online This election cannot be made by a corporation, partnership, or tax shelter required to use an accrual method of accounting. Amend 2010 tax return online This election also does not apply to any costs incurred for the planting, cultivation, maintenance, or development of any citrus or almond grove (or any part thereof) within the first 4 years the trees were planted. Amend 2010 tax return online    If you elect not to use the uniform capitalization rules, you must use the alternative depreciation system for all property used in any of your farming businesses and placed in service in any tax year during which the election is in effect. Amend 2010 tax return online See chapter 7, for additional information on depreciation. Amend 2010 tax return online Example. Amend 2010 tax return online You grow trees that have a preproductive period of more than 2 years. Amend 2010 tax return online The trees produce an annual crop. Amend 2010 tax return online You are an individual and the uniform capitalization rules apply to your farming business. Amend 2010 tax return online You must capitalize the direct costs and an allocable part of indirect costs incurred due to the production of the trees. Amend 2010 tax return online You are not required to capitalize the costs of producing the annual crop because its preproductive period is 2 years or less. Amend 2010 tax return online Preproductive period of more than 2 years. Amend 2010 tax return online   The preproductive period of plants grown in commercial quantities in the United States is based on their nationwide weighted average preproductive period. Amend 2010 tax return online Plants producing the crops or yields shown in Table 6-1 have a nationwide weighted average preproductive period of more than 2 years. Amend 2010 tax return online Other plants (not shown in Table 6-1) may also have a nationwide weighted average preproductive period of more than 2 years. Amend 2010 tax return online More information. Amend 2010 tax return online   For more information on the uniform capitalization rules that apply to property produced in a farming business, see Regulations section 1. Amend 2010 tax return online 263A-4. Amend 2010 tax return online Table 6-1. Amend 2010 tax return online Plants With a Preproductive Period of More Than 2 Years Plants producing the following crops or yields have a nationwide weighted average preproductive period of more than 2 years. Amend 2010 tax return online Almonds Apples Apricots Avocados Blueberries Cherries Chestnuts Coffee beans Currants Dates Figs Grapefruit Grapes Guavas Kiwifruit Kumquats Lemons Limes Macadamia nuts Mangoes Nectarines Olives Oranges Peaches Pears Pecans Persimmons Pistachio nuts Plums Pomegranates Prunes Tangelos Tangerines Tangors Walnuts Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments to the cost basis or basis other than cost (discussed later) of the property. Amend 2010 tax return online The adjustments to the original basis are increases or decreases to the cost basis or other basis which result in the adjusted basis of the property. Amend 2010 tax return online Increases to Basis Increase the basis of any property by all items properly added to a capital account. Amend 2010 tax return online These include the cost of any improvements having a useful life of more than 1 year. Amend 2010 tax return online The following costs increase the basis of property. Amend 2010 tax return online The cost of extending utility service lines to property. Amend 2010 tax return online Legal fees, such as the cost of defending and perfecting title. Amend 2010 tax return online Legal fees for seeking a decrease in an assessment levied against property to pay for local improvements. Amend 2010 tax return online Assessments for items such as paving roads and building ditches that increase the value of the property assessed. Amend 2010 tax return online Do not deduct these expenses as taxes. Amend 2010 tax return online However, you can deduct as taxes amounts assessed for maintenance or repairs, or for meeting interest charges related to the improvements. Amend 2010 tax return online If you make additions or improvements to business property, depreciate the basis of each addition or improvement as separate depreciable property using the rules that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Amend 2010 tax return online See chapter 7. Amend 2010 tax return online Deducting vs. Amend 2010 tax return online capitalizing costs. Amend 2010 tax return online   Do not add to your basis costs you can deduct as current expenses. Amend 2010 tax return online For example, amounts paid for incidental repairs or maintenance are deductible as business expenses and are not added to basis. Amend 2010 tax return online However, you can elect either to deduct or to capitalize certain other costs. Amend 2010 tax return online See chapter 7 in Publication 535. Amend 2010 tax return online Decreases to Basis The following are some items that reduce the basis of property. Amend 2010 tax return online Section 179 deduction. Amend 2010 tax return online Deductions previously allowed or allowable for amortization, depreciation, and depletion. Amend 2010 tax return online Alternative motor vehicle credit. Amend 2010 tax return online See Form 8910. Amend 2010 tax return online Alternative fuel vehicle refueling property credit. Amend 2010 tax return online See Form 8911. Amend 2010 tax return online Residential energy efficient property credits. Amend 2010 tax return online See Form 5695. Amend 2010 tax return online Investment credit (part or all) taken. Amend 2010 tax return online Casualty and theft losses and insurance reimbursements. Amend 2010 tax return online Payments you receive for granting an easement. Amend 2010 tax return online Exclusion from income of subsidies for energy conservation measures. Amend 2010 tax return online Certain canceled debt excluded from income. Amend 2010 tax return online Rebates from a manufacturer or seller. Amend 2010 tax return online Patronage dividends received from a cooperative association as a result of a purchase of property. Amend 2010 tax return online See Patronage Dividends in chapter 3. Amend 2010 tax return online Gas-guzzler tax. Amend 2010 tax return online See Form 6197. Amend 2010 tax return online Some of these items are discussed next. Amend 2010 tax return online For a more detailed list of items that decrease basis, see section 1016 of the Internal Revenue Code and Publication 551. Amend 2010 tax return online Depreciation and section 179 deduction. Amend 2010 tax return online   The adjustments you must make to the basis of the property if you take the section 179 deduction or depreciate the property are explained next. Amend 2010 tax return online For more information on these deductions, see chapter 7. Amend 2010 tax return online Section 179 deduction. Amend 2010 tax return online   If you take the section 179 expense deduction for all or part of the cost of qualifying business property, decrease the basis of the property by the deduction. Amend 2010 tax return online Depreciation. Amend 2010 tax return online   Decrease the basis of property by the depreciation you deducted or could have deducted on your tax returns under the method of depreciation you chose. Amend 2010 tax return online If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could have taken under that method. Amend 2010 tax return online If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have taken. Amend 2010 tax return online   If you deducted more depreciation than you should have, decrease your basis by the amount you should have deducted plus the part of the excess depreciation you deducted that actually reduced your tax liability for any year. Amend 2010 tax return online   See chapter 7 for information on figuring the depreciation you should have claimed. Amend 2010 tax return online   In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any depreciation you must capitalize under the uniform capitalization rules. Amend 2010 tax return online Casualty and theft losses. Amend 2010 tax return online   If you have a casualty or theft loss, decrease the basis of the property by any insurance or other reimbursement. Amend 2010 tax return online Also, decrease it by any deductible loss not covered by insurance. Amend 2010 tax return online See chapter 11 for information about figuring your casualty or theft loss. Amend 2010 tax return online   You must increase your basis in the property by the amount you spend on clean-up costs (such as debris removal) and repairs that restore the property to its pre-casualty condition. Amend 2010 tax return online To make this determination, compare the repaired property to the property before the casualty. Amend 2010 tax return online Easements. Amend 2010 tax return online   The amount you receive for granting an easement is usually considered to be proceeds from the sale of an interest in the real property. Amend 2010 tax return online It reduces the basis of the affected part of the property. Amend 2010 tax return online If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Amend 2010 tax return online See Easements and rights-of-way in chapter 3. Amend 2010 tax return online Exclusion from income of subsidies for energy conservation measures. Amend 2010 tax return online   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Amend 2010 tax return online Reduce the basis of the property by the excluded amount. Amend 2010 tax return online Canceled debt excluded from income. Amend 2010 tax return online   If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount in your gross income for tax purposes. Amend 2010 tax return online A debt includes any indebtedness for which you are liable or which attaches to property you hold. Amend 2010 tax return online   You can exclude your canceled debt from income if the debt is any of the following. Amend 2010 tax return online Debt canceled in a bankruptcy case or when you are insolvent. Amend 2010 tax return online Qualified farm debt. Amend 2010 tax return online Qualified real property business debt (provided you are not a C corporation). Amend 2010 tax return online Qualified principal residence indebtedness. Amend 2010 tax return online Discharge of certain indebtedness of a qualified individual because of Midwestern disasters. Amend 2010 tax return online If you exclude canceled debt described in (1) or (2), you may have to reduce the basis of your depreciable and nondepreciable property. Amend 2010 tax return online If you exclude canceled debt described in (3), you must only reduce the basis of your depreciable property by the excluded amount. Amend 2010 tax return online   For more information about canceled debt in a bankruptcy case, see Publication 908, Bankruptcy Tax Guide. Amend 2010 tax return online For more information about insolvency and canceled debt that is qualified farm debt or qualified principal residence indebtedness, see chapter 3. Amend 2010 tax return online For more information about qualified real property business debt, see Publication 334, Tax Guide for Small Business. Amend 2010 tax return online For more information about canceled debt in Midwestern disaster areas, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. Amend 2010 tax return online Basis Other Than Cost There are times when you cannot use cost as basis. Amend 2010 tax return online In these situations, the fair market value or the adjusted basis of property may be used. Amend 2010 tax return online Examples are discussed next. Amend 2010 tax return online Property changed from personal to business or rental use. Amend 2010 tax return online   When you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis for depreciation. Amend 2010 tax return online An example of changing property from personal to business use would be changing the use of your pickup truck that you originally purchased for your personal use to use in your farming business. Amend 2010 tax return online   The basis for depreciation is the lesser of: The FMV of the property on the date of the change, or Your adjusted basis on the date of the change. Amend 2010 tax return online   If you later sell or dispose of this property, the basis you use will depend on whether you are figuring a gain or loss. Amend 2010 tax return online The basis for figuring a gain is your adjusted basis in the property when you sell the property. Amend 2010 tax return online Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Amend 2010 tax return online Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Amend 2010 tax return online Property received for services. Amend 2010 tax return online   If you receive property for services, include the property's FMV in income. Amend 2010 tax return online The amount you include in income becomes your basis. Amend 2010 tax return online If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Amend 2010 tax return online Example. Amend 2010 tax return online George Smith is an accountant and also operates a farming business. Amend 2010 tax return online George agreed to do some accounting work for his neighbor in exchange for a dairy cow. Amend 2010 tax return online The accounting work and the cow are each worth $1,500. Amend 2010 tax return online George must include $1,500 in income for his accounting services. Amend 2010 tax return online George's basis in the cow is $1,500. Amend 2010 tax return online Taxable Exchanges A taxable exchange is one in which the gain is taxable, or the loss is deductible. Amend 2010 tax return online A taxable gain or deductible loss also is known as a recognized gain or loss. Amend 2010 tax return online A taxable exchange occurs when you receive cash or get property that is not similar or related in use to the property exchanged. Amend 2010 tax return online If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Amend 2010 tax return online Example. Amend 2010 tax return online You trade a tract of farmland with an adjusted basis of $2,000 for a tractor that has an FMV of $6,000. Amend 2010 tax return online You must report a taxable gain of $4,000 for the land. Amend 2010 tax return online The tractor has a basis of $6,000. Amend 2010 tax return online Involuntary Conversions If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property you receive using the basis of the converted property. Amend 2010 tax return online Similar or related property. Amend 2010 tax return online   If the replacement property is similar or related in service or use to the converted property, the replacement property's basis is the same as the old property's basis on the date of the conversion. Amend 2010 tax return online However, make the following adjustments. Amend 2010 tax return online Decrease the basis by the following amounts. Amend 2010 tax return online Any loss you recognize on the involuntary conversion. Amend 2010 tax return online Any money you receive that you do not spend on similar property. Amend 2010 tax return online Increase the basis by the following amounts. Amend 2010 tax return online Any gain you recognize on the involuntary conversion. Amend 2010 tax return online Any cost of acquiring the replacement property. Amend 2010 tax return online Money or property not similar or related. Amend 2010 tax return online   If you receive money or property not similar or related in service or use to the converted property and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the involuntary conversion. Amend 2010 tax return online Allocating the basis. Amend 2010 tax return online   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Amend 2010 tax return online Basis for depreciation. Amend 2010 tax return online   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Amend 2010 tax return online For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. Amend 2010 tax return online For more information about involuntary conversions, see chapter 11. Amend 2010 tax return online Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Amend 2010 tax return online A nontaxable gain or loss also is known as an unrecognized gain or loss. Amend 2010 tax return online If you receive property in a nontaxable exchange, its basis is usually the same as the basis of the property you transferred. Amend 2010 tax return online Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Amend 2010 tax return online For an exchange to qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the property you receive. Amend 2010 tax return online There must also be an exchange of like-kind property. Amend 2010 tax return online For more information, see Like-Kind Exchanges in  chapter 8. Amend 2010 tax return online The basis of the property you receive generally is the same as the adjusted basis of the property you gave up. Amend 2010 tax return online Example 1. Amend 2010 tax return online You traded a truck you used in your farming business for a new smaller truck to use in farming. Amend 2010 tax return online The adjusted basis of the old truck was $10,000. Amend 2010 tax return online The FMV of the new truck is $30,000. Amend 2010 tax return online Because this is a nontaxable exchange, you do not recognize any gain, and your basis in the new truck is $10,000, the same as the adjusted basis of the truck you traded. Amend 2010 tax return online Example 2. Amend 2010 tax return online You trade a field cultivator (adjusted basis of $8,000) for a planter (FMV of $9,000). Amend 2010 tax return online You use both the field cultivator and the planter in your farming business. Amend 2010 tax return online The basis of the planter you receive is $8,000, the same as the field cultivator traded Exchange expenses. Amend 2010 tax return online   Exchange expenses generally are the closing costs that you pay. Amend 2010 tax return online They include such items as brokerage commissions, attorney fees, and deed preparation fees. Amend 2010 tax return online Add them to the basis of the like-kind property you receive. Amend 2010 tax return online Property plus cash. Amend 2010 tax return online   If you trade property in a like-kind exchange and also pay money, the basis of the property you receive is the adjusted basis of the property you gave up plus the money you paid. Amend 2010 tax return online Example. Amend 2010 tax return online You trade in a truck (adjusted basis of $3,000) for another truck (FMV of $7,500) and pay $4,000. Amend 2010 tax return online Your basis in the new truck is $7,000 (the $3,000 adjusted basis of the old truck plus the $4,000 cash). Amend 2010 tax return online Special rules for related persons. Amend 2010 tax return online   If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the property within 2 years after the exchange, the exchange no longer qualifies for like-kind exchange treatment. Amend 2010 tax return online Each person must report any gain or loss not recognized on the original exchange unless the loss is not deductible under the related party rules. Amend 2010 tax return online Each person reports it on the tax return filed for the year in which the later disposition occurred. Amend 2010 tax return online If this rule applies, the basis of the property received in the original exchange will be its FMV. Amend 2010 tax return online For more information, see chapter 8. Amend 2010 tax return online Exchange of business property. Amend 2010 tax return online   Exchanging the property of one business for the property of another business generally is a multiple property exchange. Amend 2010 tax return online For information on figuring basis, see Multiple Property Exchanges in chapter 1 of Publication 544. Amend 2010 tax return online Basis for depreciation. Amend 2010 tax return online   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind transaction. Amend 2010 tax return online For information, see Figuring the Deduction for Property Acquired in a Nontaxable Exchange under Figuring Depreciation Under MACRS in chapter 7. Amend 2010 tax return online Partially Nontaxable Exchanges A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Amend 2010 tax return online The basis of the property you receive is the same as the adjusted basis of the property you gave up with the following adjustments. Amend 2010 tax return online Decrease the basis by the following amounts. Amend 2010 tax return online Any money you receive. Amend 2010 tax return online Any loss you recognize on the exchange. Amend 2010 tax return online Increase the basis by the following amounts. Amend 2010 tax return online Any additional costs you incur. Amend 2010 tax return online Any gain you recognize on the exchange. Amend 2010 tax return online If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Amend 2010 tax return online Example 1. Amend 2010 tax return online You trade farmland (basis of $100,000) for another tract of farmland (FMV of $110,000) and $30,000 cash. Amend 2010 tax return online You realize a gain of $40,000. Amend 2010 tax return online This is the FMV of the land received plus the cash minus the basis of the land you traded ($110,000 + $30,000 − $100,000). Amend 2010 tax return online Include your gain in income (recognize gain) only to the extent of the cash received. Amend 2010 tax return online Your basis in the land you received is figured as follows. Amend 2010 tax return online Basis of land traded $100,000 Minus: Cash received (adjustment 1(a)) − 30,000   $70,000 Plus: Gain recognized (adjustment 2(b)) + 30,000 Basis of land received $100,000 Example 2. Amend 2010 tax return online You trade a truck (adjusted basis of $22,750) for another truck (FMV of $20,000) and $10,000 cash. Amend 2010 tax return online You realize a gain of $7,250. Amend 2010 tax return online This is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($20,000 + $10,000 − $22,750). Amend 2010 tax return online You include all the gain in your income (recognize gain) because the gain is less than the cash you received. Amend 2010 tax return online Your basis in the truck you received is figured as follows. Amend 2010 tax return online Adjusted basis of truck traded $22,750 Minus: Cash received (adjustment 1(a)) −10,000   $12,750 Plus: Gain recognized (adjustment 2(b)) + 7,250 Basis of truck received $20,000 Allocation of basis. Amend 2010 tax return online   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Amend 2010 tax return online The rest is the basis of the like-kind property. Amend 2010 tax return online Example. Amend 2010 tax return online You traded a tractor with an adjusted basis of $15,000 for another tractor that had an FMV of $12,500. Amend 2010 tax return online You also received $1,000 cash and a truck that had an FMV of $3,000. Amend 2010 tax return online The truck is unlike property. Amend 2010 tax return online You realized a gain of $1,500. Amend 2010 tax return online This is the FMV of the tractor received plus the FMV of the truck received plus the cash minus the adjusted basis of the tractor you traded ($12,500 + $3,000 + $1,000 − $15,000). Amend 2010 tax return online You include in income (recognize) all $1,500 of the gain because it is less than the FMV of the unlike property plus the cash received. Amend 2010 tax return online Your basis in the properties you received is figured as follows. Amend 2010 tax return online Adjusted basis of old tractor $15,000 Minus: Cash received (adjustment 1(a)) − 1,000   $14,000 Plus: Gain recognized (adjustment 2(b)) + 1,500 Total basis of properties received $15,500 Allocate the total basis of $15,500 first to the unlike property—the truck ($3,000). Amend 2010 tax return online This is the truck's FMV. Amend 2010 tax return online The rest ($12,500) is the basis of the tractor. Amend 2010 tax return online Sale and Purchase If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase as a single nontaxable exchange. Amend 2010 tax return online Example. Amend 2010 tax return online You used a tractor on your farm for 3 years. Amend 2010 tax return online Its adjusted basis is $22,000 and its FMV is $40,000. Amend 2010 tax return online You are interested in a new tractor, which sells for $60,000. Amend 2010 tax return online Ordinarily, you would trade your old tractor for the new one and pay the dealer $20,000. Amend 2010 tax return online Your basis for depreciating the new tractor would then be $42,000 ($20,000 + $22,000, the adjusted basis of your old tractor). Amend 2010 tax return online However, you want a higher basis for depreciating the new tractor, so you agree to pay the dealer $60,000 for the new tractor if he will pay you $40,000 for your old tractor. Amend 2010 tax return online Because the two transactions are dependent on each other, you are treated as having exchanged your old tractor for the new one and paid $20,000 ($60,000 − $40,000). Amend 2010 tax return online Your basis for depreciating the new tractor is $42,000, the same as if you traded the old tractor. Amend 2010 tax return online Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you. Amend 2010 tax return online You also must know its FMV at the time it was given to you and any gift tax paid on it. Amend 2010 tax return online FMV equal to or greater than donor's adjusted basis. Amend 2010 tax return online   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis when you received the gift. Amend 2010 tax return online Increase your basis by all or part of any gift tax paid, depending on the date of the gift. Amend 2010 tax return online   Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Amend 2010 tax return online See Adjusted Basis , earlier. Amend 2010 tax return online   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Amend 2010 tax return online Figure the increase by multiplying the gift tax paid by the following fraction. Amend 2010 tax return online Net increase in value of the gift Amount of the gift   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Amend 2010 tax return online 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. Amend 2010 tax return online Example. Amend 2010 tax return online In 2013, you received a gift of property from your mother that had an FMV of $50,000. Amend 2010 tax return online Her adjusted basis was $20,000. Amend 2010 tax return online The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Amend 2010 tax return online She paid a gift tax of $7,320. Amend 2010 tax return online Your basis, $26,076, is figured as follows. Amend 2010 tax return online Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000 Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Amend 2010 tax return online 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Amend 2010 tax return online If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Amend 2010 tax return online However, your basis cannot exceed the FMV of the gift when it was given to you. Amend 2010 tax return online FMV less than donor's adjusted basis. Amend 2010 tax return online   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Amend 2010 tax return online Your basis for figuring gain is the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Amend 2010 tax return online Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Amend 2010 tax return online (See Adjusted Basis , earlier. Amend 2010 tax return online )   If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither gain nor loss on the sale or other disposition of the property. Amend 2010 tax return online Example. Amend 2010 tax return online You received farmland as a gift from your parents when they retired from farming. Amend 2010 tax return online At the time of the gift, the land had an FMV of $80,000. Amend 2010 tax return online Your parents' adjusted basis was $100,000. Amend 2010 tax return online After you received the land, no events occurred that would increase or decrease your basis. Amend 2010 tax return online If you sell the land for $120,000, you will have a $20,000 gain because you must use the donor's adjusted basis at the time of the gift ($100,000) as your basis to figure a gain. Amend 2010 tax return online If you sell the land for $70,000, you will have a $10,000 loss because you must use the FMV at the time of the gift ($80,000) as your basis to figure a loss. Amend 2010 tax return online If the sales price is between $80,000 and $100,000, you have neither gain nor loss. Amend 2010 tax return online For instance, if the sales price was $90,000 and you tried to figure a gain using the donor's adjusted basis ($100,000), you would get a $10,000 loss. Amend 2010 tax return online If you then tried to figure a loss using the FMV ($80,000), you would get a $10,000 gain. Amend 2010 tax return online Business property. Amend 2010 tax return online   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Amend 2010 tax return online Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Amend 2010 tax return online The same rule applies to a transfer by your former spouse if the transfer is incident to divorce. Amend 2010 tax return online However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed plus the liabilities to which the property is subject are more than the adjusted basis of the property transferred. Amend 2010 tax return online The transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Amend 2010 tax return online For more information, see Property Settlements in Publication 504, Divorced or Separated Individuals. Amend 2010 tax return online Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Amend 2010 tax return online If a federal estate return is filed, you can use its appraised value. Amend 2010 tax return online The FMV on the alternate valuation date, if the personal representative for the estate elects to use alternate valuation. Amend 2010 tax return online For information on the alternate valuation, see the Instructions for Form 706. Amend 2010 tax return online The decedent's adjusted basis in land to the extent of the value that is excluded from the decedent's taxable estate as a qualified conservation easement. Amend 2010 tax return online If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Amend 2010 tax return online Special-use valuation method. Amend 2010 tax return online   Under certain conditions, when a person dies, the executor or personal representative of that person's estate may elect to value qualified real property at other than its FMV. Amend 2010 tax return online If so, the executor or personal representative values the qualified real property based on its use as a farm or other closely held business. Amend 2010 tax return online If the executor or personal representative elects this method of valuation for estate tax purposes, this value is the basis of the property for the qualified heirs. Amend 2010 tax return online The qualified heirs should be able to get the necessary value from the executor or personal representative of the estate. Amend 2010 tax return online   If you are a qualified heir who received special-use valuation property, increase your basis by any gain recognized by the estate or trust because of post-death appreciation. Amend 2010 tax return online Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the individual's death or on the alternate valuation date. Amend 2010 tax return online Figure all FMVs without regard to the special-use valuation. Amend 2010 tax return online   You may be liable for an additional estate tax if, within 10 years after the death of the decedent, you transfer the property or the property stops being used as a farm. Amend 2010 tax return online This tax does not apply if you dispose of the property in a like-kind exchange or in an involuntary conversion in which all of the proceeds are reinvested in qualified replacement property. Amend 2010 tax return online The tax also does not apply if you transfer the property to a member of your family and certain requirements are met. Amend 2010 tax return online   You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate tax. Amend 2010 tax return online To increase your basis, you must make an irrevocable election and pay interest on the additional estate tax figured from the date 9 months after the decedent's death until the date of payment of the additional estate tax. Amend 2010 tax return online If you meet these requirements, increase your basis in the property to its FMV on the date of the decedent's death or the alternate valuation date. Amend 2010 tax return online The increase in your basis is considered to have occurred immediately before the event that resulted in the additional estate tax. Amend 2010 tax return online   You make the election by filing, with Form 706-A, United States Additional Estate Tax Return, a statement that: Contains your (and the estate's) name, address, and taxpayer identification number; Identifies the election as an election under section 1016(c) of the Internal Revenue Code; Specifies the property for which you are making the election; and Provides any additional information required by the Form 706-A instructions. Amend 2010 tax return online   For more information, see Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, Form 706-A, and the related instructions. Amend 2010 tax return online Property inherited from a decedent who died in 2010. Amend 2010 tax return online   If you inherited property from a decedent who died in 2010, different rules may apply. Amend 2010 tax return online See Publication 4895, Tax Treatment of Property Acquired From a Decendent Dying in 2010, for details. Amend 2010 tax return online Property Distributed From a Partnership or Corporation The following rules apply to determine a partner's basis and a shareholder's basis in property distributed respectively from a partnership to the partner with respect to the partner's interest in the partnership and from a corporation to the shareholder with respect to the shareholder's ownership of stock in the corporation. Amend 2010 tax return online Partner's basis. Amend 2010 tax return online   Unless there is a complete liquidation of a partner's interest, the basis of property (other than money) distributed by a partnership to the partner is its adjusted basis to the partnership immediately before the distribution. Amend 2010 tax return online However, the basis of the property to the partner cannot be more than the adjusted basis of his or her interest in the partnership reduced by any money received in the same transaction. Amend 2010 tax return online For more information, see Partner's Basis for Distributed Property in Publication 541, Partnerships. Amend 2010 tax return online Shareholder's basis. Amend 2010 tax return online   The basis of property distributed by a corporation to a shareholder is its fair market value. Amend 2010 tax return online For more information about corporate distributions, see Distributions to Shareholders in Publication 542, Corporations. 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