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

TurboTax Federal Free Edition - File Taxes Online

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

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


© 2012 - 2018 All rights reserved.

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

File Income Tax Online Free

File 2007 Tax Return Online FreeState Income Tax Forms 2011File An Amended ReturnFree Ez FormTax 2012H And R Block Active DutyFree Turbo Tax Filing 2012H & R Block OnlineFiling Taxes Online 1040ezAmended Tax FormDoes Active Duty Military Pay State TaxesCan I Still File My 2010 TaxesIrs Amendment2011 Tax ReturnWww.myfreetax.comI Need To File My 2012 Taxes For FreeFederal Income Tax Form 1040ezI Didn T File My 2012 TaxesHelp Back Taxes1040 Ez Form Online1040ez Illinois State Income Tax FormIrs 2011 Amended Tax ReturnTaxes 2012Form 1040ezI Need To File My 2012 Tax ReturnWhere To File My 2011 Tax Return2011 Federal Tax Forms 1040 EzDownload Irs Form 1040 2010Can You Amend A Tax ReturnFederal Tax Form 1040 Ez 2011Amend 2009 Tax ReturnFree File State Federal Taxes1040z1040 Ez 2012Tax Forms 2009Free 2011 Tax FormsMilitary Onesource Hr BlockFiling An Extension For TaxesH&r Block Printable CouponH R Block Taxes

File Income Tax Online Free

File income tax online free 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). File income tax online free Low Income Taxpayer Clinics (LITCs). File income tax online free 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. File income tax online free All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. File income tax online free 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). File income tax online free After notice and hearing, the bankruptcy court may extend the period for another 30 days. File income tax online free 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. File income tax online free Note. File income tax online free Individual debtors should use their home address when filing Form 1040 with the IRS. File income tax online free Returns should not be filed “in care of” the trustee's address. File income tax online free Ordering tax transcripts and copies of returns. File income tax online free   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. File income tax online free 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. File income tax online free If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. File income tax online free 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. File income tax online free Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. File income tax online free A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. File income tax online free To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. File income tax online free 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. File income tax online free 00 per tax return for copies of the returns. File income tax online free 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. File income tax online free 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. File income tax online free Tax returns and payment of taxes in chapter 11 cases. File income tax online free   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. File income tax online free Disclosure of debtor's return information to trustee. File income tax online free   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. File income tax online free 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. File income tax online free    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. File income tax online free Material interest is generally defined as a financial or monetary interest. File income tax online free Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. File income tax online free   However, the U. File income tax online free S. File income tax online free 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. File income tax online free Disclosure of bankruptcy estate's return information to debtor. File income tax online free    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. File income tax online free 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. File income tax online free Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. File income tax online free Chapter 13 relief is not available to corporations or partnerships. File income tax online free 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. File income tax online free 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. File income tax online free S. File income tax online free Individual Income Tax Return. File income tax online free On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. File income tax online free Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. File income tax online free 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. File income tax online free See Debt Cancellation, later. File income tax online free Interest on trust accounts in chapter 13 cases. File income tax online free   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. File income tax online free This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. File income tax online free S. File income tax online free Trustee system. File income tax online free The interest is also not taxable to the trustee as income. File income tax online free 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. File income tax online free The bankruptcy estate in a chapter 7 case is represented by a trustee. File income tax online free The trustee is appointed to administer the estate and liquidate any nonexempt assets. File income tax online free In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. File income tax online free However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. File income tax online free During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. File income tax online free The bankruptcy trustee files a Form 1041 for the bankruptcy estate. File income tax online free 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). File income tax online free 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. File income tax online free Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). File income tax online free 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. File income tax online free Debtor's Election To End Tax Year – Form 1040 Short tax years. File income tax online free   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. File income tax online free If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. File income tax online free The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. File income tax online free   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. File income tax online free Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. File income tax online free    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. File income tax online free 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. File income tax online free Note. File income tax online free The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. File income tax online free Making the Election - Filing Requirements First short tax year. File income tax online free   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. File income tax online free The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. File income tax online free Second short tax year. File income tax online free   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. File income tax online free   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. File income tax online free To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. File income tax online free Example. File income tax online free Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. File income tax online free 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. File income tax online free Jane's second short year runs from May 8, 2012, through December 31, 2012. File income tax online free 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. File income tax online free To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. File income tax online free The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. File income tax online free S. File income tax online free Individual Tax Return. File income tax online free 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. File income tax online free The debtor must file Form 4868 by the due date of the return for the first short tax year. File income tax online free The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. File income tax online free Election by debtor's spouse. File income tax online free   If the debtor is married, the debtor's spouse may join in the election to end the tax year. File income tax online free If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. File income tax online free The debtor must elect by the due date for filing the return for the first short tax year. File income tax online free Once the election is made, it cannot be revoked for the first short tax year. File income tax online free However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. File income tax online free Later bankruptcy of spouse. File income tax online free    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. File income tax online free   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. File income tax online free 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. File income tax online free 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. File income tax online free The debtor and the spouse are precluded from this election because they have different tax years. File income tax online free 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. File income tax online free Example 1. File income tax online free Paul and Mary Harris are calendar-year taxpayers. File income tax online free Paul's voluntary chapter 7 bankruptcy case begins on March 4. File income tax online free If Paul does not make an election, his tax year does not end on March 3. File income tax online free If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. File income tax online free Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. File income tax online free They must make the election by July 15, the due date for filing the joint return. File income tax online free Example 2. File income tax online free Fred and Ethel Barnes are calendar-year taxpayers. File income tax online free Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. File income tax online free Ethel could elect to end her tax year on October 31. File income tax online free 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. File income tax online free Her first tax year is January 1–October 31, and her second year is November 1–December 31. File income tax online free 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. File income tax online free 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. File income tax online free Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. File income tax online free Example 3. File income tax online free Jack and Karen Thomas are calendar-year taxpayers. File income tax online free 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. File income tax online free Karen elected to close her tax year on April 9 and Jack joins in Karen's election. File income tax online free 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. File income tax online free The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. File income tax online free Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). File income tax online free If Karen does join in, she would have the same 3 short tax years as Jack. File income tax online free 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. File income tax online free Annualizing taxable income. File income tax online free   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. File income tax online free 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. File income tax online free Dismissal of bankruptcy case. File income tax online free   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. File income tax online free It is as if no bankruptcy estate was created for tax purposes. File income tax online free 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. File income tax online free Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. File income tax online free Attach a statement to the amended returns explaining why the debtor is filing an amended return. File income tax online free Taxes and the Bankruptcy Estate Property of the bankruptcy estate. File income tax online free   At the commencement of a bankruptcy case a bankruptcy estate is created. File income tax online free Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. File income tax online free This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. File income tax online free However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. File income tax online free Note. File income tax online free Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. File income tax online free Excluded property is never included in the estate. File income tax online free Transfer of assets between debtor and bankruptcy estate. File income tax online free   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. File income tax online free The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. File income tax online free For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. File income tax online free The estate assumes the same basis, holding period, and character of the transferred assets. File income tax online free Also, the estate generally accounts for the transferred assets in the same manner as debtor. File income tax online free   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. File income tax online free The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. File income tax online free Abandoned property. File income tax online free    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. File income tax online free If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. File income tax online free Separate taxable entity. File income tax online free   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. File income tax online free 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. File income tax online free S. File income tax online free Income Tax Return for Estates and Trusts, and paying its taxes. File income tax online free The debtor remains responsible for filing his or her own returns on Form 1040, U. File income tax online free S. File income tax online free Individual Income Tax Return, and paying taxes on income that does not belong to the estate. File income tax online free Employer identification number. File income tax online free   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. File income tax online free 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. File income tax online free See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. File income tax online free    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. File income tax online free Income, deductions, and credits – Form 1040. File income tax online free   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). File income tax online free Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. File income tax online free 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. File income tax online free See Debt Cancellation, below. File income tax online free Note. File income tax online free The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. File income tax online free 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. File income tax online free However, other exclusions, such as the insolvency exclusion, may apply. File income tax online free Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. File income tax online free    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. File income tax online free Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. File income tax online free   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. File income tax online free 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. File income tax online free Income of the estate in individual chapter 11 cases. File income tax online free    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. File income tax online free 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. File income tax online free S. File income tax online free C. File income tax online free section 1115). File income tax online free Note. File income tax online free 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. File income tax online free Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). File income tax online free 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. File income tax online free See Administrative expenses, below. File income tax online free Conversion or dismissal of chapter 11 cases. File income tax online free   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. File income tax online free If the chapter 11 case is converted to a chapter 7 case, 11 U. File income tax online free S. File income tax online free C. File income tax online free 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. File income tax online free Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. File income tax online free 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. File income tax online free 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. File income tax online free Note. File income tax online free 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). File income tax online free Administrative expenses. File income tax online free   Allowable expenses include administrative expenses. File income tax online free    Administrative expenses can only be deducted by the estate, never by the debtor. File income tax online free   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. File income tax online free 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. File income tax online free See IRC section 67(e). File income tax online free 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. File income tax online free Note. File income tax online free The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. File income tax online free See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. File income tax online free Administrative expense loss. File income tax online free   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. File income tax online free The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. File income tax online free 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. File income tax online free For a discussion of NOLs, see Publication 536. File income tax online free Attribute carryovers. File income tax online free   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. File income tax online free These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. File income tax online free 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. File income tax online free   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. File income tax online free See Debt Cancellation, later. File income tax online free   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. File income tax online free The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. File income tax online free Note. File income tax online free The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. File income tax online free See Administrative expense loss, above. File income tax online free Passive and at-risk activities. File income tax online free   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. File income tax online free 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. File income tax online free These transfers include the return of exempt property and abandonment of estate property to the debtor. File income tax online free Carrybacks from the debtor's activities. File income tax online free   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. File income tax online free Carrybacks from the bankruptcy estate. File income tax online free   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. File income tax online free The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. File income tax online free Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. File income tax online free    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. File income tax online free 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. File income tax online free 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. File income tax online free The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. File income tax online free The same method must be used to allocate the income and the withheld tax. File income tax online free Example. File income tax online free 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. File income tax online free 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. File income tax online free See IRC section 31(a). File income tax online free   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. File income tax online free 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. File income tax online free    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. File income tax online free 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. File income tax online free Note. File income tax online free The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). File income tax online free   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. File income tax online free Self-employment taxes in individual chapter 11 cases. File income tax online free   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. File income tax online free 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. File income tax online free   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. File income tax online free 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. File income tax online free This schedule includes self-employment income earned post-petition and the attributable deductions. File income tax online free The debtor must pay any self-employment tax imposed by IRC section 1401. File income tax online free Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. File income tax online free   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. File income tax online free However, section 1115 of the Bankruptcy Code (11 U. File income tax online free S. File income tax online free C. File income tax online free 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. File income tax online free See Notice 2006-83. File income tax online free   The reporting and withholding obligations of a debtor's employer also do not change. File income tax online free 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. File income tax online free Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. File income tax online free   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. File income tax online free See IRC section 6109(a)(2). File income tax online free 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). File income tax online free   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. File income tax online free See Notice 2006-83. File income tax online free 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. File income tax online free   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. File income tax online free 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. File income tax online free See Employment Tax Regulations section 31. File income tax online free 3402(f)(2)-1. File income tax online free 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. File income tax online free See IRC section 6654(a). File income tax online free Notice required in converted and dismissed cases. File income tax online free   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. File income tax online free The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. File income tax online free 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. File income tax online free   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. File income tax online free 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. File income tax online free However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. File income tax online free 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. File income tax online free Employment taxes. File income tax online free   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. File income tax online free See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. File income tax online free   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. File income tax online free For a further discussion of employment taxes, see Employment Taxes, later. File income tax online free 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 . File income tax online free The bankruptcy court case number is . File income tax online free 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]:. File income tax online free   Year Taxpayer   Estate 1. File income tax online free Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. File income tax online free Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. File income tax online free Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. File income tax online free 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. File income tax online free   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. File income tax online free This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. File income tax online free   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). File income tax online free   These amounts are generally adjusted annually. File income tax online free See the present year Form 1041 Instructions at www. File income tax online free irs. File income tax online free gov/form1041 for the current dollar amounts. File income tax online free Accounting period. File income tax online free   A bankruptcy estate may have a fiscal year. File income tax online free However, this period cannot be longer than 12 months. File income tax online free Change of accounting period. File income tax online free   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. File income tax online free This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. File income tax online free The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. File income tax online free Employer identification number. File income tax online free   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. File income tax online free 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. File income tax online free    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. File income tax online free   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. File income tax online free irs. File income tax online free gov/businesses/small. File income tax online free The EIN is issued immediately once the application information is validated. File income tax online free By telephone at 1-800-829-4933 from 7:00 a. File income tax online free m. File income tax online free to 7:00 p. File income tax online free m. File income tax online free in the trustee's or debtor-in-possession's local time zone. File income tax online free 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. File income tax online free   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. File income tax online free For more details, see Pub. File income tax online free 583, Starting a Business and Keeping Records. File income tax online free   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. File income tax online free Figuring tax due. File income tax online free   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. File income tax online free However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. File income tax online free 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. File income tax online free The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. File income tax online free Tax rate schedule. File income tax online free 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. File income tax online free When to file. File income tax online free   Calendar year bankruptcy estates must file Form 1041 by April 15th. File income tax online free Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. File income tax online free 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. File income tax online free If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. File income tax online free Note. File income tax online free 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. File income tax online free Transmittal for Form 1040. File income tax online free   Form 1041 is used as a transmittal for Form 1040. File income tax online free 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. File income tax online free   Prepare the bankruptcy estate's return by completing Form 1040. File income tax online free In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. File income tax online free ” Then, attach Form 1040 to the Form 1041 transmittal. File income tax online free Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. File income tax online free An example of a bankruptcy estate's tax return is prepared below. File income tax online free Note. File income tax online free 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. File income tax online free Payment of Tax Due Payment methods. File income tax online free   Payment of tax due may be made by check or money order or by credit or debit card. File income tax online free For information on how to make payments electronically by credit or debit card, go to irs. File income tax online free gov/e-pay. File income tax online free      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. File income tax online free To enroll in EFTPS, go to eftps. File income tax online free gov or call 1-800-555-4477. File income tax online free For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. File income tax online free Payment voucher – Form 1041-V. File income tax online free   Form 1041-V accompanies payments made by check or money order for Form 1041. File income tax online free The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. File income tax online free Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. File income tax online free We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. File income tax online free Estimated tax – Form 1041-ES. File income tax online free   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. File income tax online free 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. File income tax online free 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. File income tax online free 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. File income tax online free If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. File income tax online free   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. File income tax online free 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. File income tax online free 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. File income tax online free 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. File income tax online free , with their individual income tax returns. File income tax online free Tax Return Example – Form 1041 This publication is not revised annually. File income tax online free Future changes to the forms and their instructions may not be reflected in this example. File income tax online free Note. File income tax online free The following return was prepared for tax year 2011. File income tax online free 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). File income tax online free Facts and circumstances. File income tax online free   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. File income tax online free Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. File income tax online free   The estate received the following assets from Mr. File income tax online free 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. File income tax online free   Also, the estate received a $251,500 capital loss carryover. File income tax online free   Mr. File income tax online free Smith's bankruptcy case was closed on December 31, 2011. File income tax online free During 2011, Mr. File income tax online free Smith was relieved of $70,000 of debt by the bankruptcy court. File income tax online free The estate chose a calendar year as its tax year. File income tax online free Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. File income tax online free Schedule B (Form 1040). File income tax online free    The certificate of deposit earned $5,500 of interest during 2011. File income tax online free Joan reports this interest on Schedule B. File income tax online free She completes this schedule and enters the result on Form 1040. File income tax online free Form 4562. File income tax online free   Joan enters the depreciation allowed on Form 4562. File income tax online free She completes the form and enters the result on Schedule E. File income tax online free Schedule E (Form 1040). File income tax online free   The commercial real estate was rented through the date of sale. File income tax online free Joan reports the income and expenses on Schedule E. File income tax online free She enters the net income on Form 1040. File income tax online free Form 4797. File income tax online free   The commercial real estate was sold on July 1, 2011, for $280,000. File income tax online free The property was purchased in 2001 at a cost of $250,000. File income tax online free The total depreciation allowable as of the date of sale was $120,000. File income tax online free Additionally, $25,000 of selling expenses were incurred. File income tax online free Joan reports the gain or loss from the sale on Form 4797. File income tax online free She completes the form and enters the gain on Schedule D (Form 1040). File income tax online free   Mr. File income tax online free Smith's former residence was sold on September 30, 2011. File income tax online free The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. File income tax online free This sale is excluded from gross income under IRC section 121. File income tax online free Note. File income tax online free 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). File income tax online free Bankruptcy estates succeed to this exclusion at the commencement of the case. File income tax online free See Regulation section 1. File income tax online free 1398-3. File income tax online free Schedule D (Form 1040). File income tax online free   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). File income tax online free She enters the results on Form 1040. File income tax online free Form 1040, page 1. File income tax online free   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. File income tax online free Schedule A (Form 1040). File income tax online free   During 2011, the estate paid mortgage interest and real property tax on Mr. File income tax online free Smith's former residence. File income tax online free It also paid income tax to the state. File income tax online free Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. File income tax online free Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. File income tax online free She completes the Schedule A and enters the result on page 2 of Form 1040. File income tax online free Form 1040, page 2. File income tax online free   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. File income tax online free She then enters the estate's estimated tax payments and figures the amount the estate still owes. File income tax online free Form 982. File income tax online free   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. File income tax online free Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. File income tax online free See Debt Cancellation, later. File income tax online free After the bankruptcy case ends, Mr. File income tax online free Smith will assume the estate's tax attributes. File income tax online free Mr. File income tax online free 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). File income tax online free Note. File income tax online free If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. File income tax online free Form 1041. File income tax online free   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. File income tax online free 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. File income tax online free This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Schedule A This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Schedule B This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Schedule D This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Schedule E This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Form 2119 This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Form 4562 This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. File income tax online free Please click the link to view the image. File income tax online free 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. File income tax online free Otherwise, you do not have any carryovers. File income tax online free 1. File income tax online free Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. File income tax online free If a loss, enclose the amount in parentheses 1. File income tax online free 19,880   2. File income tax online free Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. File income tax online free 1,500   3. File income tax online free Combine lines 1 and 2. File income tax online free If zero or less, enter -0- 3. File income tax online free 21,380   4. File income tax online free Enter the smaller of line 2 or line 3 4. File income tax online free 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. File income tax online free       5. File income tax online free Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. File income tax online free 0   6. File income tax online free Enter any gain from your 2010 Schedule D, line 15. File income tax online free If a loss, enter -0- 6. File income tax online free         7. File income tax online free Add lines 4 and 6 7. File income tax online free 1,500   8. File income tax online free Short-term capital loss carryover for 2011. File income tax online free Subtract line 7 from line 5. File income tax online free If zero or less, enter -0-. File income tax online free If more than zero, also enter this amount on Schedule D, line 6 8. File income tax online free 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. File income tax online free       9. File income tax online free Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. File income tax online free 251,500   10. File income tax online free Enter any gain from your 2010 Schedule D, line 7. File income tax online free If a loss, enter -0- 10. File income tax online free 0       11. File income tax online free Subtract line 5 from line 4. File income tax online free If zero or less, enter -0- 11. File income tax online free 1,500       12. File income tax online free Add lines 10 and 11 12. File income tax online free 1,500   13. File income tax online free Long-term capital loss carryover for 2011. File income tax online free Subtract line 12 from line 9. File income tax online free If zero or less, enter -0-. File income tax online free If more than zero, also enter this amount on Schedule D, line 14 13. File income tax online free 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. File income tax online free 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. File income tax online free 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. File income tax online free 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. File income tax online free Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. File income tax online free However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. File income tax online free A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. File income tax online free However, It may or may not be included in the individual partners' income. File income tax online free See Partnerships, below under Debt Cancellation. File income tax online free Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. File income tax online free 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. File income tax online free The following discussion only highlights bankruptcy tax rules applying to corporations. File income tax online free The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. File income tax online free Therefore, you may wish to seek the help of a professional tax advisor. File income tax online free See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. File income tax online free 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. File income tax online free 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. File income tax online free A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. File income tax online free 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. File income tax online free In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. File income tax online free 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. File income tax online free 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. File income tax online free 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. File income tax online free 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. File income tax online free 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. File income tax online free No loss is recognized in this situation. File income tax online free 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. File income tax online free To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. File income tax online free The exemption request must be submitted to the local IRS Insolvency Office handling the case. File income tax online free 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. File income tax online free 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. File income tax online free ” The statement must be signed by the trustee, receiver or assignee. File income tax online free 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). File income tax online free The IRS will act on your request within 90 days. File income tax online free Disclosure of return information to trustee. File income tax online free   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. File income tax online free 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. File income tax online free Material interest is generally defined as a financial or monetary interest. File income tax online free Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. File income tax online free Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. File income tax online free Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. File income tax online free QSFs are required to file an annual income tax return, Form 1120-SF, U. File income tax online free S. File income tax online free Income Tax Return for Settlement Funds. File income tax online free More information about QSFs may be found in Treasury Regulation sections 1. File income tax online free 468B-1 through -5. File income tax online free 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. File income tax online free After a return is filed, the IRS will either accept the return as filed or select the return for examination. File income tax online free Under examination the IRS may redetermine the tax liability shown on the return. File income tax online free 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. File income tax online free See Court Jurisdiction over Tax Matters, later. File income tax online free Prompt Determination Requests Pursuant to Rev. File income tax online free Proc. File income tax online free 2006-24, 2006-22 I. File income tax online free R. File income tax online free B. File income tax online free 943, www. File income tax online free irs. File income tax online free gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. File income tax online free irs. File income tax online free 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. File income tax online free 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). File income tax online free Making the request for determination. File income tax online free   As detailed in Rev. File income tax online free Proc. File income tax online free 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. File income tax online free O. File income tax online free Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). File income tax online free   The request must be submitted in duplicate and must be executed under penalties of perjury. File income tax online free 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. File income tax online free 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. File income tax online free The name and location of the office where the return was filed. File income tax online free The name of the debtor. File income tax online free Debtor's social security number, TIN, or EIN. File income tax online free Type of bankruptcy estate. File income tax online free Bankruptcy case number. File income tax online free Court where the bankruptcy case is pending. File income tax online free   The copy of the return(s) submitted with the request must be an exact copy of a valid return. File income tax online free 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. File income tax online free    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. File income tax online free A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. File income tax online free Examination of return. File income tax online free   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. File income tax online free If the return is selected for examination, it will be examined as soon as possible. File income tax online free 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. File income tax online free   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. File income tax online free   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. File income tax online free   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. File income tax online free Note. File income tax online free An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. File income tax online free   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
Print - Click this link to Print this page

Can I Deduct My Medical and Dental Expenses?

Information You Will Need:

  • Filing status
  • Type and amount of expenses paid
  • The year in which the expenses were paid
  • Your adjusted gross income
  • If you were reimbursed or if expenses were paid out of a Health Savings Account or an Archer Medical Savings Account

Estimated Completion Time: 15 minutes.  However: 5 minutes of inactivity will end the interview and you will be forced to start over.

Begin

Page Last Reviewed or Updated: 14-Feb-2014

The File Income Tax Online Free

File income tax online free Publication 1212 - Main Content Table of Contents Definitions Debt Instruments on the OID List Debt Instruments Not on the OID List Information for Brokers and Other MiddlemenShort-Term Obligations Redeemed at Maturity Long-Term Debt Instruments Certificates of Deposit Bearer Bonds and Coupons Backup Withholding Information for Owners of OID Debt InstrumentsExceptions. File income tax online free Adjustment for premium. File income tax online free Adjustment for acquisition premium. File income tax online free Adjustment for market discount. File income tax online free Form 1099-OID How To Report OID Figuring OID on Long-Term Debt Instruments Figuring OID on Stripped Bonds and Coupons How To Get Tax HelpLow Income Taxpayer Clinics Definitions The following terms are used throughout this publication. File income tax online free “Original issue discount” is defined first. File income tax online free The other terms are listed alphabetically. File income tax online free Original issue discount (OID). File income tax online free   OID is a form of interest. File income tax online free It is the excess of a debt instrument's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). File income tax online free Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. File income tax online free Accrual period. File income tax online free   An accrual period is an interval of time used to measure OID. File income tax online free The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. File income tax online free Acquisition premium. File income tax online free   Acquisition premium is the excess of a debt instrument's adjusted basis immediately after purchase, including purchase at original issue, over the debt instrument's adjusted issue price at that time. File income tax online free A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. File income tax online free See Premium, later. File income tax online free Adjusted issue price. File income tax online free   The adjusted issue price of a debt instrument at the beginning of an accrual period is used to figure the OID allocable to that period. File income tax online free In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. File income tax online free The adjusted issue price at the beginning of any subsequent accrual period is the sum of the issue price and all the OID includible in income before that accrual period minus any payment previously made on the debt instrument, other than a payment of qualified stated interest. File income tax online free Debt instrument. File income tax online free   The term “debt instrument” means any instrument or contractual arrangement that constitutes indebtedness under general principles of federal income tax law (including, for example, a bond, debenture, note, certificate, or other evidence of indebtedness). File income tax online free It generally does not include an annuity contract. File income tax online free Issue price. File income tax online free   For debt instruments listed in Section I-A and Section I-B, the issue price generally is the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of these instruments was sold. File income tax online free Market discount. File income tax online free   Market discount arises when a debt instrument purchased in the secondary market has decreased in value since its issue date, generally because of an increase in interest rates. File income tax online free An OID debt instrument has market discount if your adjusted basis in the debt instrument immediately after you acquired it (usually its purchase price) was less than the debt instrument's issue price plus the total OID that accrued before you acquired it. File income tax online free The market discount is the difference between the issue price plus accrued OID and your adjusted basis. File income tax online free Premium. File income tax online free   A debt instrument is purchased at a premium if its adjusted basis immediately after purchase is greater than the total of all amounts payable on the debt instrument after the purchase date, other than qualified stated interest. File income tax online free The premium is the excess of the adjusted basis over the payable amounts. File income tax online free See Publication 550 for information on the tax treatment of bond premium. File income tax online free Qualified stated interest. File income tax online free   In general, qualified stated interest is stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually over the term of the debt instrument at a single fixed rate. File income tax online free Stated redemption price at maturity. File income tax online free   A debt instrument's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on the debt instrument other than qualified stated interest. File income tax online free Yield to maturity (YTM). File income tax online free   In general, the YTM is the discount rate that, when used in figuring the present value of all principal and interest payments, produces an amount equal to the issue price of the debt instrument. File income tax online free The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. File income tax online free If you do not have this information, consult your broker, tax advisor, or the issuer. File income tax online free Debt Instruments on the OID List The OID list on the IRS website can be used by brokers and other middlemen to prepare information returns. File income tax online free If you own a listed debt instrument, you generally should not rely on the information in the OID list to determine (or compare) the OID to be reported on your tax return. File income tax online free The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. File income tax online free For information about determining the OID to be reported on your tax return, see the instructions for figuring OID under Information for Owners of OID Debt Instruments, later. File income tax online free The following discussions explain what information is contained in each section of the list. File income tax online free Section I. File income tax online free   This section contains publicly offered, long-term debt instruments. File income tax online free Section I-A: Corporate Debt Instruments Issued Before 1985. File income tax online free Section I-B: Corporate Debt Instruments Issued After 1984. File income tax online free Section I-C: Inflation-Indexed Debt Instruments. File income tax online free For each publicly offered debt instrument in Section I, the list contains the following information. File income tax online free The name of the issuer. File income tax online free The Committee on Uniform Security Identification Procedures (CUSIP) number. File income tax online free The issue date. File income tax online free The maturity date. File income tax online free The issue price expressed as a percent of principal or of stated redemption price at maturity. File income tax online free The annual stated or coupon interest rate. File income tax online free (This rate is shown as 0. File income tax online free 00 if no annual interest payments are provided. File income tax online free ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. File income tax online free The total OID accrued up to January 1 of a calendar year. File income tax online free (This information is not available for every instrument. File income tax online free ) For long-term debt instruments issued after July 1, 1982, the daily OID for the accrual periods falling in a calendar year and a subsequent year. File income tax online free The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. File income tax online free Section II. File income tax online free   This section contains stripped coupons and principal components of U. File income tax online free S. File income tax online free Treasury and Government-Sponsored Enterprise debt instruments. File income tax online free These stripped components are available through the Department of the Treasury's Separate Trading of Registered Interest and Principal of Securities (STRIPS) program and government-sponsored enterprises such as the Resolution Funding Corporation. File income tax online free This section also includes debt instruments backed by U. File income tax online free S. File income tax online free Treasury securities that represent ownership interests in those securities. File income tax online free   The obligations listed in Section II are arranged by maturity date. File income tax online free The amounts listed are the total OID for a calendar year per $1,000 of redemption price. File income tax online free Section III. File income tax online free   This section contains short-term discount obligations. File income tax online free Section III-A: Short-Term U. File income tax online free S. File income tax online free Treasury Bills. File income tax online free Section III-B: Federal Home Loan Banks. File income tax online free Section III-C: Federal National Mortgage Association. File income tax online free Section III-D: Federal Farm Credit Banks. File income tax online free Section III-E: Federal Home Loan Mortgage Corporation. File income tax online free Section III-F: Federal Agricultural Mortgage Corporation. File income tax online free    Information that supplements Section III-A is available on the Internet at http://www. File income tax online free treasurydirect. File income tax online free gov/tdhome. File income tax online free htm. File income tax online free   The short-term obligations listed in this section are arranged by maturity date. File income tax online free For each obligation, the list contains the CUSIP number, maturity date, issue date, issue price (expressed as a percent of principal), and discount to be reported as interest for a calendar year per $1,000 of redemption price. File income tax online free Brokers and other middlemen should rely on the issue price information in Section III only if they are unable to determine the price actually paid by the owner. File income tax online free Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. File income tax online free U. File income tax online free S. File income tax online free savings bonds. File income tax online free Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. File income tax online free Obligations issued by tax-exempt organizations. File income tax online free OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. File income tax online free Mortgage-backed securities and mortgage participation certificates. File income tax online free Long-term OID debt instruments issued before May 28, 1969. File income tax online free Short-term obligations, other than the obligations listed in Section III. File income tax online free Debt instruments issued at a discount by states or their political subdivisions. File income tax online free REMIC regular interests and CDOs. File income tax online free Commercial paper and banker's acceptances issued at a discount. File income tax online free Obligations issued at a discount by individuals. File income tax online free Foreign obligations not traded in the United States and obligations not issued in the United States. File income tax online free Information for Brokers and Other Middlemen The following discussions contain specific instructions for brokers and middlemen who hold or redeem a debt instrument for the owner. File income tax online free In general, you must file a Form 1099 for the debt instrument if the interest or OID to be included in the owner's income for a calendar year totals $10 or more. File income tax online free You also must file a Form 1099 if you were required to deduct and withhold tax, even if the interest or OID is less than $10. File income tax online free See Backup Withholding, later. File income tax online free If you must file a Form 1099, furnish a copy to the owner of the debt instrument by January 31 in the year it is due. File income tax online free File all your Forms 1099 with the IRS, accompanied by Form 1096, by February 28 in the year it is due (March 31 if you file electronically). File income tax online free Electronic payee statements. File income tax online free   You can issue Form 1099-OID electronically with the consent of the recipient. File income tax online free More information. File income tax online free   For more information, including penalties for failure to file (or furnish) required information returns or statements, see the General Instructions for Certain Information Returns (Forms 1098, 1099, 3921, 3922, 5498, and W-2G) for the appropriate calendar year. File income tax online free Short-Term Obligations Redeemed at Maturity If you redeem a short-term discount obligation for the owner at maturity, you must report the discount as interest on Form 1099-INT. File income tax online free To figure the discount, use the purchase price shown on the owner's copy of the purchase confirmation receipt or similar record, or the price shown in your transaction records. File income tax online free If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. File income tax online free Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. File income tax online free If the owner's purchase price cannot be determined, figure the discount as if the owner had purchased the obligation at its original issue price. File income tax online free A special rule is used to determine the original issue price for information reporting on U. File income tax online free S. File income tax online free Treasury bills (T-bills) listed in Section III-A. File income tax online free Under this rule, you treat as the original issue price of the T-bill the noncompetitive (weighted average of accepted auction bids) discount price for the longest-maturity T-bill maturing on the same date as the T-bill being redeemed. File income tax online free This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. File income tax online free A similar rule is used to figure the discount on short-term discount obligations issued by the organizations listed in Section III-B through Section III-F. File income tax online free Example 1. File income tax online free There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. File income tax online free The price actually paid by the owner cannot be established by owner or middleman records. File income tax online free You treat as the issue price of the T-bill the noncompetitive discount price (expressed as a percent of principal) shown in Section III-A for a 26-week bill maturing on the same date as the T-bill redeemed. File income tax online free The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. File income tax online free Long-Term Debt Instruments If you hold a long-term OID debt instrument as a nominee for the true owner, you generally must file Form 1099-OID. File income tax online free For this purpose, you can rely on Section I of the OID list to determine the following information. File income tax online free Whether a debt instrument has OID. File income tax online free The OID to be reported on the Form 1099-OID. File income tax online free In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. File income tax online free You also can report OID on other long-term debt instruments. File income tax online free Form 1099-OID. File income tax online free   On Form 1099-OID for a calendar year show the following information. File income tax online free Box 1. File income tax online free The OID for the actual dates the owner held the debt instruments during a calendar year. File income tax online free To determine this amount, see Figuring OID, next. File income tax online free Box 2. File income tax online free The qualified stated interest paid or credited during the calendar year. File income tax online free Interest reported here is not reported on Form 1099-INT. File income tax online free The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. File income tax online free Box 3. File income tax online free Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. File income tax online free Do not reduce the amounts in boxes 1 and 2 by the forfeiture. File income tax online free Box 4. File income tax online free Any backup withholding for this debt instrument. File income tax online free Box 7. File income tax online free The CUSIP number, if any. File income tax online free If there is no CUSIP number, give a description of the debt instrument, including the abbreviation for the stock exchange, the abbreviation used by the stock exchange for the issuer, the coupon rate, and the year of maturity (for example, NYSE XYZ 12. File income tax online free 50 2006). File income tax online free If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. File income tax online free Box 8. File income tax online free The OID on a U. File income tax online free S. File income tax online free Treasury obligation for the part of the year the owner held the debt instrument. File income tax online free Box 9. File income tax online free Investment expenses passed on to holders of a single-class REMIC. File income tax online free Boxes 10-12. File income tax online free Use to report any state income tax withheld for this debt instrument. File income tax online free Figuring OID. File income tax online free   You can determine the OID on a long-term debt instrument by using either of the following. File income tax online free Section I of the OID list. File income tax online free The income tax regulations. File income tax online free Using Section I. File income tax online free   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. File income tax online free Because OID is listed for each $1,000 of stated redemption price at maturity, you must adjust the listed amount to reflect the debt instrument's actual stated redemption price at maturity. File income tax online free For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. File income tax online free   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. File income tax online free Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. File income tax online free Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. File income tax online free Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. File income tax online free Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. File income tax online free If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. File income tax online free Report the result on Form 1099-OID in box 1. File income tax online free Using the income tax regulations. File income tax online free   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. File income tax online free For example, under the regulations, you can use monthly accrual periods in figuring OID for a debt instrument issued after April 3, 1994, that provides for monthly payments. File income tax online free (If you use Section I-B, the OID is figured using 6-month accrual periods. File income tax online free )   For a general explanation of the rules for figuring OID under the regulations, see Figuring OID on Long-Term Debt Instruments under Information for Owners of OID Debt Instruments, later. File income tax online free Certificates of Deposit If you hold a bank certificate of deposit (CD) as a nominee, you must determine whether the CD has OID and any OID includible in the income of the owner. File income tax online free You must file an information return showing the reportable interest and OID, if any, on the CD. File income tax online free These rules apply whether or not you sold the CD to the owner. File income tax online free Report OID on a CD in the same way as OID on other debt instruments. File income tax online free See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. File income tax online free Bearer Bonds and Coupons If a coupon from a bearer bond is presented to you for collection before the bond matures, you generally must report the interest on Form 1099-INT. File income tax online free However, do not report the interest if either of the following apply. File income tax online free You hold the bond as a nominee for the true owner. File income tax online free The payee is a foreign person. File income tax online free See Payments to foreign person under Backup Withholding, later. File income tax online free Because you cannot assume the presenter of the coupon also owns the bond, you should not report OID on the bond on Form 1099-OID. File income tax online free The coupon may have been “stripped” (separated) from the bond and separately purchased. File income tax online free However, if a long-term bearer bond on the OID list is presented to you for redemption upon call or maturity, you should prepare a Form 1099-OID showing the OID for that calendar year, as well as any coupon interest payments collected at the time of redemption. File income tax online free Backup Withholding If you report OID on Form 1099-OID or interest on Form 1099-INT for a calendar year, you may be required to apply backup withholding to the reportable payment at a rate of 28%. File income tax online free The backup withholding is deducted at the time a cash payment is made. File income tax online free See Pub. File income tax online free 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. File income tax online free Backup withholding generally applies in the following situations. File income tax online free The payee does not give you a taxpayer identification number (TIN). File income tax online free The IRS notifies you that the payee gave an incorrect TIN. File income tax online free The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. File income tax online free For debt instruments acquired after 1983: The payee does not certify, under penalties of perjury, that he or she is not subject to backup withholding under (3), or The payee does not certify, under penalties of perjury, that the TIN given is correct. File income tax online free However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. File income tax online free S. File income tax online free savings bonds, backup withholding applies only if the payee does not give you a TIN or gives you an obviously incorrect number for a TIN. File income tax online free Short-term obligations. File income tax online free   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. File income tax online free However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. File income tax online free   If the owner of a short-term obligation at maturity is not the original owner and can establish the purchase price of the obligation, the amount subject to backup withholding must be determined by treating the purchase price as the issue price. File income tax online free However, you can choose to disregard that price if it would require significant manual intervention in the computer or recordkeeping system used for the obligation. File income tax online free If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. File income tax online free Long-term obligations. File income tax online free   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. File income tax online free The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. File income tax online free The amount to be withheld is limited to the cash paid. File income tax online free Registered long-term obligations with cash payments. File income tax online free   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. File income tax online free The amount subject to backup withholding is the total of the qualified stated interest (defined earlier under Definitions) and OID includible in the owner's gross income for the calendar year when the payment is made. File income tax online free If more than one cash payment is made during the year, the OID subject to withholding for the year must be allocated among the expected cash payments in the ratio that each bears to the total of the expected cash payments. File income tax online free For any payment, the required withholding is limited to the cash paid. File income tax online free Payee not the original owner. File income tax online free   If the payee is not the original owner of the obligation, the OID subject to backup withholding is the OID includible in the gross income of all owners during the calendar year (without regard to any amount paid by the new owner at the time of transfer). File income tax online free The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. File income tax online free Bearer long-term obligations with cash payments. File income tax online free   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. File income tax online free For payments before maturity, the amount subject to withholding is the qualified stated interest (defined earlier under Definitions) includible in the owner's gross income for the calendar year. File income tax online free For a payment at maturity, the amount subject to withholding is only the total of any qualified stated interest paid at maturity and the OID includible in the owner's gross income for the calendar year when the obligation matures. File income tax online free The required withholding at maturity is limited to the cash paid. File income tax online free Sales and redemptions. File income tax online free   If you report the gross proceeds from a sale, exchange, or redemption of a debt instrument on Form 1099-B for a calendar year, you may be required to withhold 28% of the amount reported. File income tax online free Backup withholding applies in the following situations. File income tax online free The payee does not give you a TIN. File income tax online free The IRS notifies you that the payee gave an incorrect TIN. File income tax online free For debt instruments held in an account opened after 1983, the payee does not certify, under penalties of perjury, that the TIN given is correct. File income tax online free Payments outside the United States to U. File income tax online free S. File income tax online free person. File income tax online free   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. File income tax online free S. File income tax online free person, a controlled foreign corporation, or a foreign person at least 50% of whose income for the preceding 3-year period is effectively connected with the conduct of a U. File income tax online free S. File income tax online free trade or business. File income tax online free Payments to foreign person. File income tax online free   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. File income tax online free U. File income tax online free S. File income tax online free -source amount. File income tax online free   Backup withholding and information reporting are not required for payments of U. File income tax online free S. File income tax online free -source OID, interest, or proceeds from a sale or redemption of an OID instrument if the payee has given you proof (generally the appropriate Form W-8 or an acceptable substitute) that the payee is a foreign person. File income tax online free A U. File income tax online free S. File income tax online free resident is not a foreign person. File income tax online free For proof of the payee's foreign status, you can rely on the appropriate Form W-8 or on documentary evidence for payments made outside the United States to an offshore account or, in case of broker proceeds, a sale effected outside the United States. File income tax online free Receipt of the appropriate Form W-8 does not relieve you from information reporting and backup withholding if you actually know the payee is a U. File income tax online free S. File income tax online free person. File income tax online free   For information about the 28% withholding tax that may apply to payments of U. File income tax online free S. File income tax online free -source OID or interest to foreign persons, see Publication 515. File income tax online free Foreign-source amount. File income tax online free   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. File income tax online free However, if the payments are made inside the United States, the requirements for backup withholding and information reporting will apply unless the payee has given you the appropriate Form W-8 or acceptable substitute as proof that the payee is a foreign person. File income tax online free More information. File income tax online free   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. File income tax online free 6049-5. File income tax online free Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. File income tax online free It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. File income tax online free It also includes a similar discussion for stripped bonds and coupons, such as zero coupon bonds available through the Department of the Treasury's STRIPS program and government-sponsored enterprises such as the Resolution Funding Corporation. File income tax online free However, the information provided does not cover every situation. File income tax online free More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. File income tax online free Including OID in income. File income tax online free   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. File income tax online free Exceptions. File income tax online free   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. File income tax online free U. File income tax online free S. File income tax online free savings bonds. File income tax online free Tax-exempt obligations. File income tax online free (However, see Tax-Exempt Bonds and Coupons, later. File income tax online free ) Obligations issued by individuals before March 2, 1984. File income tax online free Loans of $10,000 or less between individuals who are not in the business of lending money. File income tax online free (The dollar limit includes outstanding prior loans by the lender to the borrower. File income tax online free ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. File income tax online free   See chapter 1 of Publication 550 for information about the rules for these and other types of discounted debt instruments, such as short-term and market discount obligations. File income tax online free Publication 550 also discusses rules for holders of REMIC interests and CDOs. File income tax online free De minimis rule. File income tax online free   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. File income tax online free 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. File income tax online free Debt instruments with de minimis OID are not listed in this publication. File income tax online free There are special rules to determine the de minimis amount in the case of debt instruments that provide for more than one payment of principal. File income tax online free Also, the de minimis rules generally do not apply to tax-exempt obligations. File income tax online free Example 2. File income tax online free You bought at issuance a 10-year debt instrument with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. File income tax online free One-fourth of 1% of $1,000 (the stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. File income tax online free Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. File income tax online free Example 3. File income tax online free Assume the same facts as Example 2, except the debt instrument was issued at $950. File income tax online free You must report part of the $50 OID each year because it is more than $25. File income tax online free Choice to report all interest as OID. File income tax online free   Generally, you can choose to treat all interest on a debt instrument acquired after April 3, 1994, as OID and include it in gross income by using the constant yield method. File income tax online free See Constant yield method under Debt Instruments Issued After 1984, later, for more information. File income tax online free   For this choice, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. File income tax online free For more information, see Regulations section 1. File income tax online free 1272-3. File income tax online free Purchase after date of original issue. File income tax online free   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. File income tax online free If so, the OID reported to you on Form 1099-OID may have to be adjusted. File income tax online free For more information, see Showing an OID adjustment under How To Report OID, later. File income tax online free The following rules generally do not apply to contingent payment debt instruments. File income tax online free Adjustment for premium. File income tax online free   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. File income tax online free Your adjustment is the total OID shown on your Form 1099-OID. File income tax online free Adjustment for acquisition premium. File income tax online free   If your debt instrument has acquisition premium, reduce the OID you report. File income tax online free Your adjustment is the difference between the OID shown on your Form 1099-OID and the reduced OID amount figured using the rules explained later under Figuring OID on Long-Term Debt Instruments. File income tax online free Adjustment for market discount. File income tax online free   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. File income tax online free Your adjustment is the accrued market discount for the year. File income tax online free See Market Discount Bonds in chapter 1 of Publication 550 for information on how to figure accrued market discount and include it in your income currently and for other information about market discount bonds. File income tax online free If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. File income tax online free The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. File income tax online free For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. File income tax online free 1275-7. File income tax online free Sale, exchange, or redemption. File income tax online free   Generally, you treat your gain or loss from the sale, exchange, or redemption of a discounted debt instrument as a capital gain or loss if you held the debt instrument as a capital asset. File income tax online free If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. File income tax online free Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). File income tax online free   Your gain or loss is the difference between the amount you realized on the sale, exchange, or redemption and your basis in the debt instrument. File income tax online free Your basis, generally, is your cost increased by the OID you have included in income each year you held it. File income tax online free In general, to determine your gain or loss on a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. File income tax online free   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. File income tax online free Example 4. File income tax online free Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. File income tax online free 00 on November 1 of Year 1. File income tax online free The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. File income tax online free The debt instrument provides for semiannual payments of interest at 10%. File income tax online free Assume the debt instrument is a capital asset in Larry's hands. File income tax online free The debt instrument has $13,765. File income tax online free 00 of OID ($100,000 stated redemption price at maturity minus $86,235. File income tax online free 00 issue price). File income tax online free Larry sold the debt instrument for $90,000 on November 1 of Year 4. File income tax online free Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. File income tax online free 00 of OID in income and has increased his basis by that amount to $90,791. File income tax online free 00. File income tax online free Larry has realized a loss of $791. File income tax online free 00. File income tax online free All of Larry's loss is capital loss. File income tax online free Form 1099-OID The issuer of the debt instrument (or your broker, if you purchased or held the debt instrument through a broker) should give you a copy of Form 1099-OID or a similar statement if the accrued OID for the calendar year is $10 or more and the term of the debt instrument is more than 1 year. File income tax online free Form 1099-OID shows all OID income in box 1 except OID on a U. File income tax online free S. File income tax online free Treasury obligation, which is shown in box 8. File income tax online free It also shows, in box 2, any qualified stated interest you must include in income. File income tax online free (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. File income tax online free ) A copy of Form 1099-OID will be sent to the IRS. File income tax online free Do not attach your copy to your tax return. File income tax online free Keep it for your records. File income tax online free If you are required to file a tax return and you receive Form 1099-OID showing taxable amounts, you must report these amounts on your return. File income tax online free A 20% accuracy-related penalty may be charged for underpayment of tax due to either negligence or disregard of rules and regulations or substantial understatement of tax. File income tax online free Form 1099-OID not received. File income tax online free   If you held an OID debt instrument for a calendar year but did not receive a Form 1099-OID, refer to the discussions under Figuring OID on Long-Term Debt Instruments, later, for information on the OID you must report. File income tax online free Refiguring OID. File income tax online free   You must refigure the OID shown on Form 1099-OID, in box 1 or box 8, to determine the proper amount to include in income if one of the following applies. File income tax online free You bought the debt instrument at a premium or at an acquisition premium. File income tax online free The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. File income tax online free S. File income tax online free Treasury securities). File income tax online free The debt instrument is a contingent payment or inflation-indexed debt instrument. File income tax online free See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. File income tax online free Refiguring interest. File income tax online free   If you disposed of a debt instrument or acquired it from another holder between interest dates, see the discussion under Bonds Sold Between Interest Dates in chapter 1 of Publication 550 for information about refiguring the interest shown on Form 1099-OID in box 2. File income tax online free Nominee. File income tax online free   If you are the holder of an OID debt instrument and you receive a Form 1099-OID that shows your taxpayer identification number and includes amounts belonging to another person, you are considered a “nominee. File income tax online free ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. File income tax online free Show the owner of the debt instrument as the “recipient” and you as the “payer. File income tax online free ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. File income tax online free You must also give a copy of the Form 1099-OID to the actual owner. File income tax online free However, you are not required to file a nominee return to show amounts belonging to your spouse. File income tax online free See the Form 1099 instructions for more information. File income tax online free   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. File income tax online free How To Report OID Generally, you report your taxable interest and OID income on the interest line of Form 1040EZ, Form 1040A, or Form 1040. File income tax online free Form 1040 or Form 1040A required. File income tax online free   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. File income tax online free You received a Form 1099-OID as a nominee for the actual owner. File income tax online free Your total interest and OID income for the year was more than $1,500. File income tax online free Form 1040 required. File income tax online free   You must use Form 1040 (you cannot use Form 1040A or Form 1040EZ) if you are reporting more or less OID than the amount shown on Form 1099-OID, other than because you are a nominee. File income tax online free For example, if you paid a premium or an acquisition premium when you purchased the debt instrument, you must use Form 1040 because you will report less OID than shown on Form 1099-OID. File income tax online free Also, you must use Form 1040 if you were charged an early withdrawal penalty. File income tax online free Where to report. File income tax online free   List each payer's name (if a brokerage firm gave you a Form 1099, list the brokerage firm as the payer) and the amount received from each payer on Form 1040A, Schedule B, Part I, line 1, or Form 1040, Schedule B, line 1. File income tax online free Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. File income tax online free Also include any other OID and interest income for which you did not receive a Form 1099. File income tax online free Showing an OID adjustment. File income tax online free   If you use Form 1040 to report more or less OID than shown on Form 1099-OID, list the full OID on Schedule B, Part I, line 1, and follow the instructions under 1 or 2, next. File income tax online free   If you use Form 1040A to report the OID shown on a Form 1099-OID you received as a nominee for the actual owner, list the full OID on Schedule B, Part I, line 1 and follow the instructions under 1. File income tax online free If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. File income tax online free Under your last entry on line 1, subtotal all interest and OID income listed on line 1. File income tax online free Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. File income tax online free Subtract that OID from the subtotal and enter the result on line 2. File income tax online free If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. File income tax online free Under your last entry on line 1, subtotal all interest and OID income listed on line 1. File income tax online free Below the subtotal, write “OID Adjustment” and show the additional OID. File income tax online free Add that OID to the subtotal and enter the result on line 2. File income tax online free Figuring OID on Long-Term Debt Instruments How you figure the OID on a long-term debt instrument depends on the date it was issued. File income tax online free It also may depend on the type of the debt instrument. File income tax online free There are different rules for each of the following debt instruments. File income tax online free Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. File income tax online free Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. File income tax online free Debt instruments issued after July 1, 1982, and before 1985. File income tax online free Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). File income tax online free Contingent payment debt instruments issued after August 12, 1996. File income tax online free Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. File income tax online free Zero coupon bonds. File income tax online free   The rules for figuring OID on zero coupon bonds backed by U. File income tax online free S. File income tax online free Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. File income tax online free Corporate Debt Instruments Issued After 1954 and Before May 28, 1969, and Government Debt Instruments Issued After 1954 and Before July 2, 1982 If you hold these debt instruments as capital assets, you include OID in income only in the year the debt instrument is sold, exchanged, or redeemed, and only if you have a gain. File income tax online free The OID, which is taxed as ordinary income, generally equals the following amount. File income tax online free   number of full months you held the debt instrument  number of full months from date of original issue to date of maturity X original issue discount The balance of the gain is capital gain. File income tax online free If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. File income tax online free Corporate Debt Instruments Issued After May 27, 1969, and Before July 2, 1982 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments. File income tax online free For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. File income tax online free Your basis in the debt instrument is increased by the OID you include in income. File income tax online free Form 1099-OID. File income tax online free   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. File income tax online free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. File income tax online free See Reduction for acquisition premium, later. File income tax online free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. File income tax online free irs. File income tax online free gov/pub1212 by clicking the link under Recent Developments. File income tax online free Form 1099-OID not received. File income tax online free    The OID listed is for each $1,000 of redemption price. File income tax online free You must adjust the listed amount if your debt instrument has a different principal amount. File income tax online free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. File income tax online free   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. File income tax online free (If your debt instrument is not listed in Section I-A, consult the issuer for information about the issue price and the OID that accrued for that year. File income tax online free ) If you did not hold the debt instrument the entire year, figure your OID using the following method. File income tax online free Divide the OID shown by 12. File income tax online free Multiply the result in (1) by the number of complete and partial months (for example, 6½ months) you held the debt instrument during a calendar year. File income tax online free This is the OID to include in income unless you paid an acquisition premium. File income tax online free The reduction for acquisition premium is discussed next. File income tax online free Reduction for acquisition premium. File income tax online free   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. File income tax online free Divide the total OID on the debt instrument by the number of complete months, and any part of a month, from the date of original issue to the maturity date. File income tax online free This is the monthly OID. File income tax online free Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. File income tax online free (If the result is zero or less, stop here. File income tax online free You did not pay an acquisition premium. File income tax online free ) Divide the amount figured in (2) by the number of complete months, and any part of a month, from the date of your purchase to the maturity date. File income tax online free Subtract the amount figured in (3) from the amount figured in (1). File income tax online free This is the OID to include in income for each month you hold the debt instrument during the year. File income tax online free Transfers during the month. File income tax online free   If you buy or sell a debt instrument on any day other than the same day of the month as the date of original issue, the ratable monthly portion of OID for the month of sale is divided between the seller and the buyer according to the number of days each held the debt instrument. File income tax online free Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. File income tax online free Debt Instruments Issued After July 1, 1982, and Before 1985 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments and increase your basis by the amount included. File income tax online free For information about showing the correct OID on your tax return, see How To Report OID, earlier. File income tax online free Form 1099-OID. File income tax online free   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. File income tax online free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. File income tax online free See Constant yield method and the discussions on acquisition premium that follow, later. File income tax online free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. File income tax online free irs. File income tax online free gov/pub1212 by clicking the link under Recent Developments. File income tax online free Form 1099-OID not received. File income tax online free    The OID listed is for each $1,000 of redemption price. File income tax online free You must adjust the listed amount if your debt instrument has a different principal amount. File income tax online free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. File income tax online free   If you held the debt instrument the entire year, use the OID shown in Section I-A. File income tax online free (If your instrument is not listed in Section I-A, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. File income tax online free ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. File income tax online free Method 1. File income tax online free    Divide the total OID for a calendar year by 365 (366 for leap years). File income tax online free Multiply the result in (1) by the number of days you held the debt instrument during that particular year. File income tax online free  This computation is an approximation and may result in a slightly higher OID than Method 2. File income tax online free Method 2. File income tax online free    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. File income tax online free (See Accrual period under Constant yield method, next. File income tax online free ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. File income tax online free If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. File income tax online free Add the results of (2) and (3). File income tax online free This is the OID to include in income, unless you paid an acquisition premium. File income tax online free (The reduction for acquisition premium is discussed later. File income tax online free ) Constant yield method. File income tax online free   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. File income tax online free OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. File income tax online free   Figure the OID allocable to any accrual period as follows. File income tax online free Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. File income tax online free Subtract from the result in (1) any qualified stated interest allocable to the accrual period. File income tax online free Accrual period. File income tax online free   An accrual period for any OID debt instrument issued after July 1, 1982, and before 1985 is each 1-year period beginning on the date of the issue of the obligation and each anniversary thereafter, or the shorter period to maturity for the last accrual period. File income tax online free Your tax year will usually include parts of two accrual periods. File income tax online free Daily OID. File income tax online free   The OID for any accrual period is allocated equally to each day in the accrual period. File income tax online free You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. File income tax online free If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. File income tax online free Figuring daily OID. File income tax online free   The daily OID for the initial accrual period is figured using the following formula. File income tax online free   (ip × ytm) − qsi     p   ip = issue price ytm = yield to maturity qsi = qualified stated interest p = number of days in accrual period         The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. File income tax online free Reduction for acquisition premium on debt instruments purchased before July 19, 1984. File income tax online free   If you bought the debt instrument at an acquisition premium before July 19, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. File income tax online free Figure the daily acquisition premium by dividing the total acquisition premium by the number of days in the period beginning on your purchase date and ending on the day before the date of maturity. File income tax online free Reduction for acquisition premium on debt instruments purchased after July 18, 1984. File income tax online free   If you bought the debt instrument at an acquisition premium after July 18, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. File income tax online free However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. File income tax online free To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. File income tax online free The numerator is the acquisition premium. File income tax online free The denominator is the total OID remaining for the debt instrument after your purchase date. File income tax online free Section I-A is available at www. File income tax online free irs. File income tax online free gov/pub1212 and clicking the link under Recent Developments. File income tax online free Using Section I-A to figure accumulated OID. File income tax online free   If you bought your corporate debt instrument in a calendar year or the subsequent year, you can figure the accumulated OID to the date of purchase by adding the following amounts. File income tax online free The amount from the “Total OID to January 1, YYYY” column for your debt instrument. File income tax online free The OID from January 1 of a calendar year to the date of purchase, figured as follows. File income tax online free Multiply the daily OID for the first accrual period in the calendar year by the number of days from January 1 to the date of purchase, or the end of the accrual period if the debt instrument was purchased in the second or third accrual period. File income tax online free Multiply the daily OID for each subsequent accrual period by the number of days in the period to the date of purchase or the end of the accrual period, whichever applies. File income tax online free Add the amounts figured in (2a) and (2b). File income tax online free Debt Instruments Issued After 1984 If you hold debt instruments issued after 1984, you must report part of the OID in gross income each year that you own the debt instruments. File income tax online free You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. File income tax online free Your basis in the debt instrument is increased by the OID you include in income. File income tax online free For information about showing the correct OID on your tax return, see How To Report OID, earlier. File income tax online free Form 1099-OID. File income tax online free   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. File income tax online free However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. File income tax online free See Constant yield method and Reduction for acquisition premium, later. File income tax online free   You may also need to refigure the OID for a contingent payment or inflation-indexed debt instrument on which the amount reported on Form 1099-OID is inaccurate. File income tax online free See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. File income tax online free If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-B available at www. File income tax online free irs. File income tax online free gov/pub1212 by clicking the link under Recent Developments. File income tax online free Form 1099-OID not received. File income tax online free   The OID listed is for each $1,000 of redemption price. File income tax online free You must adjust the listed amount if your debt instrument has a different principal amount. File income tax online free For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. File income tax online free   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. File income tax online free (If your debt instrument is not listed in Section I-B, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. File income tax online free ) If you did not hold the debt instrument the entire year, figure your OID as follows. File income tax online free Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. File income tax online free (See Accrual period under Constant yield method, later. File income tax online free ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. File income tax online free Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. File income tax online free Add the results of (2) and (3). File income tax online free This is the OID to include in income for that year, unless you paid an acquisition premium. File income tax online free (The reduction for acquisition premium is discussed later. File income tax online free ) Tax-exempt bond. File income tax online free   If you own a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. File income tax online free You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. File income tax online free In general, use the rules that follow to determine your OID. File income tax online free Constant yield method. File income tax online free   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. File income tax online free (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. File income tax online free ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. File income tax online free   Figure the OID allocable to any accrual period as follows. File income tax online free Multiply the adjusted issue price at the beginning of the accrual period by a fraction. File income tax online free The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. File income tax online free The yield must be stated appropriately taking into account the length of the particular accrual period. File income tax online free Subtract from the result in (1) any qualified stated interest allocable to the accrual period. File income tax online free Accrual period. File income tax online free   For debt instruments issued after 1984 and before April 4, 1994, an accrual period is each 6-month period that ends on the day that corresponds to the stated maturity date of the debt instrument or the date 6 months before that date. File income tax online free For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. File income tax online free Any short period is included as the first accrual period. File income tax online free   For debt instruments issued after April 3, 1994, accrual periods may be of any length and may vary in length over the term of the debt instrument, as long as each accrual period is no longer than 1 year and all payments are made on the first or last day of an accrual period. File income tax online free However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. File income tax online free Daily OID. File income tax online free   The OID for any accrual period is allocated equally to each day in the accrual period. File income tax online free Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. File income tax online free Since your tax year will usually include parts of two or more accrual periods, you must include the proper daily OID for each accrual period. File income tax online free If your debt instrument has 6-month accrual periods, your tax year will usually include one full 6-month accrual period and parts of two other 6-month periods. File income tax online free Figuring daily OID. File income tax online free   The daily OID for the initial accrual period is figured using the following formula. File income tax online free   (ip × ytm/n) − qsi     p   ip = issue price ytm = yield to maturity n = number of accrual periods in 1 year qsi = qualified stated interest p = number of days in accrual period       The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. File income tax online free Example 5. File income tax online free On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. File income tax online free 17. File income tax online free According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. File income tax online free The yield to maturity is 12%, compounded semiannually. File income tax online free The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. File income tax online free The accrual periods are the 6-month periods ending on each of these dates. File income tax online free The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). File income tax online free The daily OID for the first accrual period is figured as follows. File income tax online free   ($86,235. File income tax online free 17 x . File income tax online free 12/2) – $5,000     181 days     = $174. File income tax online free 11020 = $. File income tax online free 96193   181           The adjusted issue price at the beginning of the second accrual period is the issue price plus the OID previously includible in income ($86,235. File income tax online free 17 + $174. File income tax online free 11), or $86,409. File income tax online free 28. File income tax online free The number of days for the second accrual period (July 1 through December 31) is 184 days. File income tax online free The daily OID for the second accrual period is figured as follows. File income tax online free   ($86,409. File income tax online free 28 x . File income tax online free 12/2) – $5,000     184 days     = $184. File income tax online free 55681 = $1. File income tax online free 00303   184 Since the first and second accrual periods coincide exactly with your tax year, you include in income for Year 1 the OID allocable to the first two accrual periods, $174. File income tax online free 11 ($. File income tax online free 95665 × 182 days) plus $184. File income tax online free 56 ($1. File income tax online free 00303 × 184 days), or $358. File income tax online free 67. File income tax online free Add the OID to the $10,000 interest you report on your income tax return for Year 1. File income tax online free Example 6. File income tax online free Assume the same facts as in Example 5, except that you bought the debt instrument at original issue on May 1 of Year 1, with a maturity date of April 30, Year 16. File income tax online free Also, the interest payment dates are October 31 and April 30 of each calendar year. File income tax online free The accrual periods are the 6-month periods ending on each of these dates. File income tax online free The number of days for the first accrual period (May 1 through October 31) is 184 days. File income tax online free The daily OID for the first accrual period is figured as follows. File income tax online free   ($86,235. File income tax online free 17 x . File income tax online free 12/2) – $5,000     184 days     = $174. File income tax online free 11020 = $. File income tax online free 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). File income tax online free The daily OID for the second accrual period is figured as follows. File income tax online free   ($86,409. File income tax online free 28 x . File income tax online free 12/2) – $5,000     181 days     = $184. File income tax online free 55681 = $1. File income tax online free 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. File income tax online free 31 of OID in income. File income tax online free This is $174. File income tax online free 11 ($. File income tax online free 94625 × 184 days) for the period May 1 through October 31 plus $62. File income tax online free 20 ($1. File income tax online free 01965 × 61 days) for the period November 1 through December 31. File income tax online free The OID is added to the $5,000 interest income paid on October 31 of Year 1. File income tax online free Your basis in the debt instrument is increased by the OID you include in income. File income tax online free On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. File income tax online free 48 ($86,235. File income tax online free 17 + $236. File income tax online free 31). File income tax online free Short first accrual period. File income tax online free   You may have to make adjustments if a debt instrument has a short first accrual period. File income tax online free For example, a debt instrument with 6-month accrual periods that is issued on February 15 and matures on October 31 has a short first accrual period that ends April 30. File income tax online free (The remaining accrual periods begin on May 1 and November 1. File income tax online free ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. File income tax online free You may use any reasonable compounding method in determining OID for a short period. File income tax online free Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). File income tax online free Consult your tax advisor for more information about making this computation. File income tax online free   The OID for the final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. File income tax online free Reduction for acquisition premium. File income tax online free   If you bought the debt instrument at an acquisition premium, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. File income tax online free To figure the daily acquisition premium, multiply the daily OID by the following fraction. File income tax online free The numerator is the acquisition premium. File income tax online free The denominator is the total OID remaining for the debt instrument after your purchase date. File income tax online free Example 7. File income tax online free Assume the same facts as in Example 6, except that you bought the debt instrument on November 1 of Year 1 for $87,000, after its original issue on May 1 of Year 1. File income tax online free The adjusted issue price on November 1 of Year 1 is $86,409. File income tax online free 28 ($86,235. File income tax online free 17 + $174. File income tax online free 11). File income tax online free In this case, you paid an acquisition premium of $590. File income tax online free 72 ($87,000 − $86,409. File income tax online free 28). File income tax online free The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. File income tax online free 1) Daily OID on date of purchase (2nd accrual period) $1. File income tax online free 01965*  2)  Acquisition premium $590. File income tax online free 72    3)  Total OID remaining after purchase date ($13,764. File income tax online free 83 − $174. File income tax online free 11) 13,590. File income tax online free 72   4) Line 2 ÷ line 3 . File income tax online free 04346  5)  Line 1 × line 4 . File income tax online free 04432  6)  Daily OID reduced for the acquisition premium. File income tax online free Line 1 − line 5 $0. File income tax online free 97533  * As shown in Example 6. File income tax online free The total OID to include in income for Year 1 is $59. File income tax online free 50 ($. File income tax online free 97533 × 61 days). File income tax online free Contingent Payment Debt Instruments This discussion shows how to figure OID on a contingent payment debt instrument issued after August 12, 1996, that was issued for cash or publicly traded property. File income tax online free In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. File income tax online free If you hold a contingent payment bond, you must report OID as it accrues each year. File income tax online free Because the actual payments on a contingent payment debt instrument cannot be known in advance, issuers and holders cannot use the constant yield method (discussed earlier under Debt Instruments Issued After 1984) without making certain assumptions about the payments on the debt instrument. File income tax online free To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. File income tax online free Noncontingent bond method. File income tax online free    Under this method, the issuer must compute a comparable yield for the debt instrument and, based on this yield, construct a projected payment schedule for the instrument, which includes a projected fixed amount for each contingent payment. File income tax online free In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. File income tax online free When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. File income tax online free If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. File income tax online free If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. File income tax online free Form 1099-OID. File income tax online free   The amount shown on Form 1099-OID in box 1 you receive for a contingent payment debt instrument may not be the correct amount to include in income. File income tax online free For example, the amount may not be correct if the contingent payment was different from the projected amount. File income tax online free If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. File income tax online free For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. File income tax online free Figuring OID. File income tax online free   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. File income tax online free The issuer must make these available to you. File income tax online free Comparable yield. File income tax online free   The comparable yield generally is the yield at which the issuer would issue a fixed rate debt instrument with terms and conditions similar to those of the contingent payment debt instrument. File income tax online free The comparable yield is determined as of the debt instrument's issue date. File income tax online free Projected payment schedule. File income tax online free   The projected payment schedule for a contingent payment debt instrument includes all fixed payments due under the instrument and a projected fixed amount for each contingent payment. File income tax online free The projected payment schedule is created by the issuer as of the debt instrument's issue date. File income tax online free It is used to determine the issuer's and holder's interest accruals and adjustments. File income tax online free Steps for figuring OID. File income tax online free   Figure the OID on a contingent payment debt instrument in two steps. File income tax online free Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. File income tax online free Use the comparable yield as the yield to maturity. File income tax online free In general, use the projected payment schedule to determine the instrument's adjusted issue price at the beginning of each accrual period (other than the initial period). File income tax online free Do not treat any amount payable as qualified stated interest. File income tax online free Adjust the OID in (1) to account for actual contingent payments. File income tax online free If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. File income tax online free If the contingent payment is less than the projected fixed amount, you have a negative adjustment. File income tax online free Net positive adjustment. File income tax online free   A net positive adjustment exists for a tax year when the total of any positive adjustments described in (2) above for the tax year is more than the total of any negative adjustments for the tax year. File income tax online free Treat a net positive adjustment as additional OID for the tax year. File income tax online free Net negative adjustment. File income tax online free   A net negative adjustment exists for a tax year when the total of any negative adjustments described in (2) above for the tax year is more than the total of any positive adjustments for the tax year. File income tax online free Use a net negative adjustment to offset OID on the debt instrument for the tax year. File income tax online free If the net negative adjustment is more than the OID on the debt instrument for the tax year, you can claim the difference as an ordinary loss. File income tax online free However, the amount you can claim as an ordinary loss is limited to the OID on the debt instrument you included in income in prior tax years. File income tax online free You must carry forward any net negative adjustment that is more than the total OID for the tax year and prior tax years and treat it as a negative adjustment in the next tax year. File income tax online free Basis adjustments. File income tax online free   In general, increase your basis in a contingent payment debt instrument by the OID included in income. File income tax online free Your basis, however, is not affected by any negative or positive adjustments. File income tax online free Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. File income tax online free Treatment of gain or loss on sale or exchange. File income tax online free   If you sell a contingent payment debt instrument at a gain, your gain is ordinary income (interest income), even if you hold the debt instrument as a capital asset. File income tax online free If you sell a contingent payment debt instrument at a loss, your loss is an ordinary loss to the extent of your prior OID accruals on the debt instrument. File income tax online free If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. File income tax online free See Regulations section 1. File income tax online free 1275-4 for exceptions to these rules. File income tax online free Premium, acquisition premium, and market discount. File income tax online free   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. File income tax online free See Regulations section 1. File income tax online free 1275-4 to determine how to account for these items. File income tax online free Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. File income tax online free An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d