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Federal Income Tax Extension

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Federal Income Tax Extension

Federal income tax extension Part One -   The Income Tax Return The four chapters in this part provide basic information on the tax system. Federal income tax extension They take you through the first steps of filling out a tax return—such as deciding what your filing status is, how many exemptions you can take, and what form to file. Federal income tax extension They also discuss recordkeeping requirements, IRS e-file (electronic filing), certain penalties, and the two methods used to pay tax during the year: withholding and estimated tax. Federal income tax extension Table of Contents 1. Federal income tax extension   Filing InformationWhat's New Reminders Introduction Do I Have To File a Return?Individuals—In General Dependents Certain Children Under Age 19 or Full-Time Students Self-Employed Persons Aliens Who Should File Which Form Should I Use?Form 1040EZ Form 1040A Form 1040 Does My Return Have To Be on Paper?IRS e-file When Do I Have To File?Private delivery services. Federal income tax extension Extensions of Time To File How Do I Prepare My Return?When Do I Report My Income and Expenses? Social Security Number (SSN) Presidential Election Campaign Fund Computations Attachments Third Party Designee Signatures Paid Preparer Refunds Amount You Owe Gift To Reduce Debt Held by the Public Name and Address Where Do I File? What Happens After I File?What Records Should I Keep? Why Keep Records? Kinds of Records to Keep Basic Records How Long to Keep Records Refund Information Interest on Refunds Change of Address What If I Made a Mistake?Amended Returns and Claims for Refund Penalties Identity Theft 2. Federal income tax extension   Filing StatusWhat's New Introduction Useful Items - You may want to see: Marital StatusDivorced persons. Federal income tax extension Divorce and remarriage. Federal income tax extension Annulled marriages. Federal income tax extension Head of household or qualifying widow(er) with dependent child. Federal income tax extension Considered married. Federal income tax extension Same-sex marriage. Federal income tax extension Spouse died during the year. Federal income tax extension Married persons living apart. Federal income tax extension Single Married Filing JointlyFiling a Joint Return Married Filing SeparatelySpecial Rules Head of HouseholdConsidered Unmarried Keeping Up a Home Qualifying Person Qualifying Widow(er) With Dependent Child 3. Federal income tax extension   Personal Exemptions and DependentsWhat's New Introduction Useful Items - You may want to see: ExemptionsPersonal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. Federal income tax extension Taxpayer identification numbers for aliens. Federal income tax extension Taxpayer identification numbers for adoptees. Federal income tax extension 4. Federal income tax extension   Tax Withholding and Estimated TaxWhat's New for 2014 Reminders Introduction Useful Items - You may want to see: Tax Withholding for 2014Salaries and Wages Tips Taxable Fringe Benefits Sick Pay Pensions and Annuities Gambling Winnings Unemployment Compensation Federal Payments Backup Withholding Estimated Tax for 2014Who Does Not Have To Pay Estimated Tax Who Must Pay Estimated Tax How To Figure Estimated Tax When To Pay Estimated Tax How To Figure Each Payment How To Pay Estimated Tax Credit for Withholding and Estimated Tax for 2013Withholding Estimated Tax Underpayment Penalty for 2013 Prev  Up  Next   Home   More Online Publications
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IRS Encourages Small Employers to Check Out Small Business Health Care Tax Credit; Helpful Resources, Tax Tips Available on IRS.gov

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IR-2014-27, March 10, 2014

WASHINGTON — With business tax-filing deadlines fast approaching, the Internal Revenue Service today encouraged small employers that provide health insurance coverage to their employees to check out the small business health care tax credit and then claim it if they qualify.

The Small Business Health Care Tax Credit page on IRS.gov is packed with information and resources designed to help small employers see if they qualify for the credit and then figure it correctly. These include a 2013 tax credit estimator, examples of typical tax savings under various scenarios and answers to frequently-asked questions.

Additionally, the IRS has Health Care Tax Tips, designed to provide useful information to employers, families and individuals. These tips include a new Small Business Health Care Tax Credit tip as well as tips covering other Affordable Care Act topics.

The small business health care tax credit was included in the Affordable Care Act enacted in 2010. Under the ACA, eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014. For 2010 through 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. In 2014, the maximum credit rate rises to 50 percent for small businesses and 35 percent for tax-exempt organizations.

Small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for this credit. The credit is specifically targeted to help small businesses and tax-exempt organizations provide health insurance for their employees.

Depending upon how they are structured, eligible small employers are likely subject to one of the following three tax-filing deadlines, which fall in coming weeks:

  • March 17: Corporations and S Corporations that file on a calendar year basis can figure the credit on Form 8941 attached to the income tax return.
  • April 15: Partnerships and individuals have until April 15 to complete and file their income tax returns (partnerships on Form 1065 and individuals on Form 1040). Sole proprietors can figure the credit on Form 8941 attached to the individual income tax return. Individuals who have business income and credits reported to them on Schedules K-1—partners in partnerships, S corporation shareholders and beneficiaries of estates and trusts—will report the credit amount directly on Form 3800– no Form 8941 required. The resulting credit is entered on Form 1040, Line 53.
  • May 15: Tax-exempt organizations that file on a calendar year basis can use Form 8941 and then claim the credit on Form 990-T, Line 44f.

Taxpayers needing more time to determine eligibility should consider obtaining an automatic tax-filing extension, usually for six months. See Form 4868 for individuals, Form 7004 for businesses and Form 8868 for tax-exempt organizations.

Businesses that have already filed and later find that they qualified in 2013 or an earlier year can still claim the credit by filing an amended return for the affected years. Corporations use Form 1120X, individuals use Form 1040X and tax-exempt organizations use Form 990-T. A three-year statute of limitations normally applies to these refund claims. See the instructions to these forms for details.

Some businesses and tax-exempt organizations that already locked into health insurance plan structures and contributions may not have had the opportunity to make any needed adjustments to qualify for the credit for 2013 or earlier years. These employers can still make changes so they qualify to claim the credit on future returns.

To learn more about the Small Business Health Care Tax Credit and view tips about other ACA topics, visit the Health Care Tax Tip page on IRS.gov/aca. Newly added tips include:

  • Small Business Health Care Tax Credit ─ Employers can find out if they qualify and how much they can get.
  • What You Need to Know about the Amount of Health Insurance Reported on Form W-2 - Learn about the amount of health insurance reported on Form W-2. 
  • What do I need to know about the Health Care Law for my 2013 Tax Return? – Provides tips that help with filing the 2013 income tax return, including information about filing requirements and Form W-2.

To receive copies of IRS tax tips via email, subscribe at www.irs.gov/uac/Subscribe-to-IRS-Tax-Tips.

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Page Last Reviewed or Updated: 13-Mar-2014

The Federal Income Tax Extension

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