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Filing Military Taxes

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Filing Military Taxes

Filing military taxes 3. Filing military taxes   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. Filing military taxes Traditional IRA mistakenly moved to SIMPLE IRA. Filing military taxes When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). Filing military taxes It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. Filing military taxes Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). Filing military taxes This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. Filing military taxes See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. Filing military taxes If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. Filing military taxes See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. Filing military taxes What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. Filing military taxes See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. Filing military taxes A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. Filing military taxes These contributions are called salary reduction contributions. Filing military taxes All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. Filing military taxes The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. Filing military taxes Contributions are made on behalf of eligible employees. Filing military taxes (See Eligible Employees below. Filing military taxes ) Contributions are also subject to various limits. Filing military taxes (See How Much Can Be Contributed on Your Behalf , later. Filing military taxes ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. Filing military taxes See How Are Contributions Made , later. Filing military taxes You may be able to claim a credit for contributions to your SIMPLE plan. Filing military taxes For more information, see chapter 4. Filing military taxes Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. Filing military taxes Self-employed individual. Filing military taxes   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. Filing military taxes Excludable employees. Filing military taxes   Your employer can exclude the following employees from participating in the SIMPLE plan. Filing military taxes Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). Filing military taxes Employees who are nonresident aliens and received no earned income from sources within the United States. Filing military taxes Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. Filing military taxes Compensation. Filing military taxes   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. Filing military taxes Wages, tips, and other pay from your employer that is subject to income tax withholding. Filing military taxes Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. Filing military taxes Self-employed individual compensation. Filing military taxes   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. Filing military taxes   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. Filing military taxes How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. Filing military taxes They are made on your behalf by your employer. Filing military taxes Your employer must also make either matching contributions or nonelective contributions. Filing military taxes Salary reduction contributions. Filing military taxes   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). Filing military taxes You can choose to cancel the election at any time during the year. Filing military taxes   Salary reduction contributions are also referred to as “elective deferrals. Filing military taxes ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. Filing military taxes Matching contributions. Filing military taxes   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. Filing military taxes See How Much Can Be Contributed on Your Behalf below. Filing military taxes These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. Filing military taxes These contributions are referred to as matching contributions. Filing military taxes   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. Filing military taxes Nonelective contributions. Filing military taxes   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. Filing military taxes These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. Filing military taxes   One of the requirements your employer must satisfy is notifying the employees that the election was made. Filing military taxes For other requirements that your employer must satisfy, see chapter 3 of Publication 560. Filing military taxes How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. Filing military taxes Salary reduction contributions limit. Filing military taxes   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. Filing military taxes The limitation remains at $12,000 for 2014. Filing military taxes If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. Filing military taxes You, not your employer, are responsible for monitoring compliance with these limits. Filing military taxes Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. Filing military taxes The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. Filing military taxes $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. Filing military taxes The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. Filing military taxes The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. Filing military taxes Matching employer contributions limit. Filing military taxes   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. Filing military taxes These matching contributions cannot be more than 3% of your compensation for the calendar year. Filing military taxes See Matching contributions less than 3% below. Filing military taxes Example 1. Filing military taxes In 2013, Joshua was a participant in his employer's SIMPLE plan. Filing military taxes His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). Filing military taxes Instead of taking it all in cash, Joshua elected to have 12. Filing military taxes 5% of his weekly pay ($100) contributed to his SIMPLE IRA. Filing military taxes For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. Filing military taxes Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. Filing military taxes Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). Filing military taxes Example 2. Filing military taxes Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. Filing military taxes 94% of his weekly pay contributed to his SIMPLE IRA. Filing military taxes In this example, Joshua's salary reduction contributions for the year (2. Filing military taxes 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). Filing military taxes Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. Filing military taxes In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. Filing military taxes Matching contributions less than 3%. Filing military taxes   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. Filing military taxes   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. Filing military taxes If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. Filing military taxes Nonelective employer contributions limit. Filing military taxes   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. Filing military taxes For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. Filing military taxes   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. Filing military taxes Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. Filing military taxes This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. Filing military taxes Example 3. Filing military taxes Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. Filing military taxes Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. Filing military taxes In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). Filing military taxes Traditional IRA mistakenly moved to SIMPLE IRA. Filing military taxes   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. Filing military taxes For more information, see Recharacterizations in chapter 1. Filing military taxes Recharacterizing employer contributions. Filing military taxes   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. Filing military taxes SEPs are discussed in chapter 2 of Publication 560. Filing military taxes SIMPLE plans are discussed in this chapter. Filing military taxes Converting from a SIMPLE IRA. Filing military taxes   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . Filing military taxes    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. Filing military taxes When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. Filing military taxes These rules are discussed in chapter 1. Filing military taxes Your employer cannot restrict you from taking distributions from a SIMPLE IRA. Filing military taxes Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. Filing military taxes If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. Filing military taxes See Additional Tax on Early Distributions, later. Filing military taxes Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. Filing military taxes Two-year rule. Filing military taxes   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. Filing military taxes The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. Filing military taxes   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). Filing military taxes Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. Filing military taxes If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. Filing military taxes If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. Filing military taxes Prev  Up  Next   Home   More Online Publications
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Page Last Reviewed or Updated: 19-Mar-2014

The Filing Military Taxes

Filing military taxes 8. Filing military taxes   Gains and Losses Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Sales and ExchangesDetermining Gain or Loss Like-Kind Exchanges Transfer to Spouse Ordinary or Capital Gain or LossCapital Assets Noncapital Assets Hedging (Commodity Futures) Livestock Converted Wetland and Highly Erodible Cropland Timber Sale of a Farm Foreclosure or Repossession Abandonment Introduction This chapter explains how to figure, and report on your tax return, your gain or loss on the disposition of your property or debt and whether such gain or loss is ordinary or capital. Filing military taxes Ordinary gain is taxed at the same rates as wages and interest income while capital gain is generally taxed at lower rates. Filing military taxes Dispositions discussed in this chapter include sales, exchanges, foreclosures, repossessions, canceled debts, hedging transactions, and elections to treat cutting of timber as a sale or exchange. Filing military taxes Topics - This chapter discusses: Sales and exchanges Ordinary or capital gain or loss Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 523 Selling Your Home 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 908 Bankruptcy Tax Guide Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 1099-A Acquisition or Abandonment of Secured Property 1099-C Cancellation of Debt 4797 Sales of Business Property 8949 Sales and Other Dispositions of Capital Assets See chapter 16 for information about getting publications and forms. Filing military taxes Sales and Exchanges If you sell, exchange, or otherwise dispose of your property, you usually have a gain or a loss. Filing military taxes This section explains certain rules for determining whether any gain you have is taxable, and whether any loss you have is deductible. Filing military taxes A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. Filing military taxes An exchange is a transfer of property for other property or services. Filing military taxes Determining Gain or Loss You usually realize a gain or loss when you sell or exchange property. Filing military taxes If the amount you realize from a sale or exchange of property is more than its adjusted basis, you will have a gain. Filing military taxes If the adjusted basis of the property is more than the amount you realize, you will have a loss. Filing military taxes Basis and adjusted basis. Filing military taxes   The basis of property you buy is usually its cost. Filing military taxes The adjusted basis of property is basis plus certain additions and minus certain deductions. Filing military taxes See chapter 6 for more information about basis and adjusted basis. Filing military taxes Amount realized. Filing military taxes   The amount you realize from a sale or exchange is the total of all money you receive plus the fair market value (FMV) (defined in chapter 6) of all property or services you receive. Filing military taxes The amount you realize also includes any of your liabilities assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage. Filing military taxes   If the liabilities relate to an exchange of multiple properties, see Multiple Property Exchanges in chapter 1 of Publication 544. Filing military taxes Amount recognized. Filing military taxes   Your gain or loss realized from a sale or exchange of certain property is usually a recognized gain or loss for tax purposes. Filing military taxes A recognized gain is a gain you must include in gross income and report on your income tax return. Filing military taxes A recognized loss is a loss you deduct from gross income. Filing military taxes However, your gain or loss realized from the exchange of certain property may not be recognized for tax purposes. Filing military taxes See Like-Kind Exchanges next. Filing military taxes Also, a loss from the disposition of property held for personal use is not deductible. Filing military taxes Like-Kind Exchanges Certain exchanges of property are not taxable. Filing military taxes This means any gain from the exchange is not recognized, and any loss cannot be deducted. Filing military taxes Your gain or loss will not be recognized until you sell or otherwise dispose of the property you receive. Filing military taxes The exchange of property for the same kind of property is the most common type of nontaxable exchange. Filing military taxes To qualify for treatment as a like-kind exchange, the property traded and the property received must be both of the following. Filing military taxes Qualifying property. Filing military taxes Like-kind property. Filing military taxes These two requirements are discussed later. Filing military taxes Multiple-party transactions. Filing military taxes   The like-kind exchange rules also apply to property exchanges that involve three and four-party transactions. Filing military taxes Any part of these multiple-party transactions can qualify as a like-kind exchange if it meets all the requirements described in this section. Filing military taxes Receipt of title from third party. Filing military taxes   If you receive property in a like-kind exchange and the other party who transfers the property to you does not give you the title, but a third party does, you can still treat this transaction as a like-kind exchange if it meets all the requirements. Filing military taxes Basis of property received. Filing military taxes   If you receive property in a like-kind exchange, the basis of the property will be the same as the basis of the property you gave up. Filing military taxes See chapter 6 for more information. Filing military taxes Money paid. Filing military taxes   If, in addition to giving up like-kind property, you pay money in a like-kind exchange, you still have no recognized gain or loss. Filing military taxes The basis of the property received is the basis of the property given up, increased by the money paid. Filing military taxes Example. Filing military taxes You traded an old tractor with an adjusted basis of $15,000 for a new one. Filing military taxes The new tractor costs $300,000. Filing military taxes You were allowed $80,000 for the old tractor and paid $220,000 cash. Filing military taxes You have no recognized gain or loss on the transaction regardless of the adjusted basis of your old tractor and the basis of the new tractor is $235,000, the adjusted basis of the old tractor plus the cash paid ($15,000 + $220,000). Filing military taxes If you had sold the old tractor to a third party for $80,000 and bought a new one, you would have a recognized gain or loss on the sale of your old tractor equal to the difference between the amount realized and the adjusted basis of the old tractor. Filing military taxes In this case, the taxable gain would be $65,000 ($80,000 − $15,000) and the basis of the new tractor would be $300,000. Filing military taxes Reporting the exchange. Filing military taxes   Report the exchange of like-kind property, even though no gain or loss is recognized, on Form 8824, Like-Kind Exchanges. Filing military taxes The Instructions for Form 8824 explain how to report the details of the exchange. Filing military taxes   If you have any recognized gain because you received money or unlike property, report it on Schedule D (Form 1040) or Form 4797, whichever applies. Filing military taxes You may also have to report the recognized gain as ordinary income because of depreciation recapture on Form 4797. Filing military taxes See chapter 9 for more information. Filing military taxes Qualifying property. Filing military taxes   In a like-kind exchange, both the property you give up and the property you receive must be held by you for investment or for productive use in your trade or business. Filing military taxes Machinery, buildings, land, trucks, breeding livestock, rental houses, and certain mutual ditch, reservoir, or irrigation company stock are examples of property that may qualify. Filing military taxes Nonqualifying property. Filing military taxes   The rules for like-kind exchanges do not apply to exchanges of the following property. Filing military taxes Property you use for personal purposes, such as your home and family car. Filing military taxes Stock in trade or other property held primarily for sale, such as crops and produce. Filing military taxes Stocks, bonds, or notes. Filing military taxes However, see Qualifying property above. Filing military taxes Other securities or evidences of indebtedness, such as accounts receivable. Filing military taxes Partnership interests. Filing military taxes However, you may have a nontaxable exchange under other rules. Filing military taxes See Other Nontaxable Exchanges in chapter 1 of Publication 544. Filing military taxes Like-kind property. Filing military taxes   To qualify as a nontaxable exchange, the properties exchanged must be of like kind. Filing military taxes Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Filing military taxes Generally, real property exchanged for real property qualifies as an exchange of like-kind property. Filing military taxes For example, an exchange of city property for farm property or improved property for unimproved property is a like-kind exchange. Filing military taxes   An exchange of a tractor for a new tractor is an exchange of like-kind property, and so is an exchange of timber land for crop acreage. Filing military taxes An exchange of a tractor for acreage, however, is not an exchange of like-kind property. Filing military taxes The exchange of livestock of one sex for livestock of the other sex is not a like-kind exchange. Filing military taxes For example, the exchange of a bull for a cow is not a like-kind exchange. Filing military taxes An exchange of the assets of a business for the assets of a similar business cannot be treated as an exchange of one property for another property. Filing military taxes    Note. Filing military taxes Whether you engaged in a like-kind exchange depends on an analysis of each asset involved in the exchange. Filing military taxes Personal property. Filing military taxes   Depreciable tangible personal property can be either like kind or like class to qualify for nontaxable exchange treatment. Filing military taxes Like-class properties are depreciable tangible personal properties within the same General Asset Class or Product Class. Filing military taxes Property classified in any General Asset Class may not be classified within a Product Class. Filing military taxes Assets that are not in the same class will qualify as like-kind property if they are of the same nature or character. Filing military taxes General Asset Classes. Filing military taxes   General Asset Classes describe the types of property frequently used in many businesses. Filing military taxes They include, but are not limited to, the following property. Filing military taxes Office furniture, fixtures, and equipment (asset class 00. Filing military taxes 11). Filing military taxes Information systems, such as computers and peripheral equipment (asset class 00. Filing military taxes 12). Filing military taxes Data handling equipment except computers (asset class 00. Filing military taxes 13). Filing military taxes Automobiles and taxis (asset class 00. Filing military taxes 22). Filing military taxes Light general purpose trucks (asset class 00. Filing military taxes 241). Filing military taxes Heavy general purpose trucks (asset class 00. Filing military taxes 242). Filing military taxes Tractor units for use over-the-road (asset class 00. Filing military taxes 26). Filing military taxes Trailers and trailer-mounted containers (asset class 00. Filing military taxes 27). Filing military taxes Industrial steam and electric generation and/or distribution systems (asset class 00. Filing military taxes 4). Filing military taxes Product Classes. Filing military taxes   Product Classes include property listed in a 6-digit product class in sectors 31 through 33 of the North American Industry Classification System (NAICS) of the Executive Office of the President, Office of Management and Budget, United States, (NAICS Manual). Filing military taxes The latest version of the manual can be accessed at www. Filing military taxes census. Filing military taxes gov/eos/www/naics/. Filing military taxes Copies of the printed manual may be purchased from the National Technical Information Service (NTIS) at  www. Filing military taxes ntis. Filing military taxes gov/products/naics. Filing military taxes aspx or by calling 1-800-553-NTIS (1-800-553-6847) or (703) 605-6000. Filing military taxes A CD-ROM version with search and retrieval software is also available from NTIS. Filing military taxes    NAICS class 333111, Farm Machinery and Equipment Manufacturing, includes most machinery and equipment used in a farming business. Filing military taxes Partially nontaxable exchange. Filing military taxes   If, in addition to like-kind property, you receive money or unlike property in an exchange on which you realize gain, you have a partially nontaxable exchange. Filing military taxes You are taxed on the gain you realize, but only to the extent of the money and the FMV of the unlike property you receive. Filing military taxes A loss is not deductible. Filing military taxes Example 1. Filing military taxes You trade farmland that cost $30,000 for $10,000 cash and other land to be used in farming with a FMV of $50,000. Filing military taxes You have a realized gain of $30,000 ($50,000 FMV of new land + $10,000 cash − $30,000 basis of old farmland = $30,000 realized gain). Filing military taxes However, only $10,000, the cash received, is recognized (included in income). Filing military taxes Example 2. Filing military taxes Assume the same facts as in Example 1, except that, instead of money, you received a tractor with a FMV of $10,000. Filing military taxes Your recognized gain is still limited to $10,000, the value of the tractor (the unlike property). Filing military taxes Example 3. Filing military taxes Assume in Example 1 that the FMV of the land you received was only $15,000. Filing military taxes Your $5,000 loss is not recognized. Filing military taxes Unlike property given up. Filing military taxes   If, in addition to like-kind property, you give up unlike property, you must recognize gain or loss on the unlike property you give up. Filing military taxes The gain or loss is the difference between the FMV of the unlike property and the adjusted basis of the unlike property. Filing military taxes Like-kind exchanges between related persons. Filing military taxes   Special rules apply to like-kind exchanges between related persons. Filing military taxes These rules affect both direct and indirect exchanges. Filing military taxes Under these rules, if either person disposes of the property within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. Filing military taxes The gain or loss on the original exchange must be recognized as of the date of the later disposition. Filing military taxes The 2-year holding period begins on the date of the last transfer of property that was part of the like-kind exchange. Filing military taxes Related persons. Filing military taxes   Under these rules, related persons include, for example, you and a member of your family (spouse, brother, sister, parent, child, etc. Filing military taxes ), you and a corporation in which you have more than 50% ownership, you and a partnership in which you directly or indirectly own more than a 50% interest of the capital or profits, and two partnerships in which you directly or indirectly own more than 50% of the capital interests or profits. Filing military taxes   For the complete list of related persons, see Related persons in chapter 2 of Publication 544. Filing military taxes Example. Filing military taxes You used a grey pickup truck in your farming business. Filing military taxes Your sister used a red pickup truck in her landscaping business. Filing military taxes In December 2012, you exchanged your grey pickup truck, plus $200, for your sister's red pickup truck. Filing military taxes At that time, the FMV of the grey pickup truck was $7,000 and its adjusted basis was $6,000. Filing military taxes The FMV of the red pickup truck was $7,200 and its adjusted basis was $1,000. Filing military taxes You realized a gain of $1,000 (the $7,200 FMV of the red pickup truck, minus the grey pickup truck's $6,000 adjusted basis, minus the $200 you paid). Filing military taxes Your sister realized a gain of $6,200 (the $7,000 FMV of the grey pickup truck plus the $200 you paid, minus the $1,000 adjusted basis of the red pickup truck). Filing military taxes However, because this was a like-kind exchange, you recognized no gain. Filing military taxes Your basis in the red pickup truck was $6,200 (the $6,000 adjusted basis of the grey pickup truck plus the $200 you paid). Filing military taxes She recognized gain only to the extent of the money she received, $200. Filing military taxes Her basis in the grey pickup truck was $1,000 (the $1,000 adjusted basis of the red pickup truck minus the $200 received, plus the $200 gain recognized). Filing military taxes In 2013, you sold the red pickup truck to a third party for $7,000. Filing military taxes Because you sold it within 2 years after the exchange, the exchange is disqualified from nonrecognition treatment. Filing military taxes On your tax return for 2013, you must report your $1,000 gain on the 2012 exchange. Filing military taxes You also report a loss on the sale as $200 (the adjusted basis of the red pickup truck, $7,200 (its $6,200 basis plus the $1,000 gain recognized), minus the $7,000 realized from the sale). Filing military taxes In addition, your sister must report on her tax return for 2013 the $6,000 balance of her gain on the 2012 exchange. Filing military taxes Her adjusted basis in the grey pickup truck is increased to $7,000 (its $1,000 basis plus the $6,000 gain recognized). Filing military taxes Exceptions to the rules for related persons. Filing military taxes   The following property dispositions are excluded from these rules. Filing military taxes Dispositions due to the death of either related person. Filing military taxes Involuntary conversions. Filing military taxes Dispositions where it is established to the satisfaction of the IRS that neither the exchange nor the disposition has, as a main purpose, the avoidance of federal income tax. Filing military taxes Multiple property exchanges. Filing military taxes   Under the like-kind exchange rules, you must generally make a property-by-property comparison to figure your recognized gain and the basis of the property you receive in the exchange. Filing military taxes However, for exchanges of multiple properties, you do not make a property-by-property comparison if you do either of the following. Filing military taxes Transfer and receive properties in two or more exchange groups. Filing military taxes Transfer or receive more than one property within a single exchange group. Filing military taxes   For more information, see Multiple Property Exchanges in chapter 1 of Publication 544. Filing military taxes Deferred exchange. Filing military taxes   A deferred exchange for like-kind property may qualify for nonrecognition of gain or loss. Filing military taxes A deferred exchange is an exchange in which you transfer property you use in business or hold for investment and later receive like-kind property you will use in business or hold for investment. Filing military taxes The property you receive is replacement property. Filing military taxes The transaction must be an exchange of property for property rather than a transfer of property for money used to buy replacement property. Filing military taxes In addition, the replacement property will not be treated as like-kind property unless certain identification and receipt requirements are met. Filing military taxes   For more information see Deferred Exchanges in chapter 1 of Publication 544. Filing military taxes Transfer to Spouse No gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or a former spouse if incident to divorce. Filing military taxes This rule does not apply if the recipient is a nonresident alien. Filing military taxes Nor does this rule apply to a transfer in trust to the extent the liabilities assumed and the liabilities on the property are more than the property's adjusted basis. Filing military taxes Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is not considered a sale or exchange. Filing military taxes The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. Filing military taxes This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its FMV at the time of transfer or any consideration paid by the recipient. Filing military taxes This rule applies for determining loss as well as gain. Filing military taxes Any gain recognized on a transfer in trust increases the basis. Filing military taxes For more information on transfers of property incident to divorce, see Property Settlements in Publication 504, Divorced or Separated Individuals. Filing military taxes Ordinary or Capital Gain or Loss Generally, you will have a capital gain or loss if you sell or exchange a capital asset (defined below). Filing military taxes You may also have a capital gain if your section 1231 transactions result in a net gain. Filing military taxes See Section 1231 Gains and Losses in  chapter 9. Filing military taxes To figure your net capital gain or loss, you must classify your gains and losses as either ordinary or capital (and your capital gains or losses as either short-term or long-term). Filing military taxes Your net capital gains may be taxed at a lower tax rate than ordinary income. Filing military taxes See Capital Gains Tax Rates , later. Filing military taxes Your deduction for a net capital loss may be limited. Filing military taxes See Treatment of Capital Losses , later. Filing military taxes Capital Assets Almost everything you own and use for personal purposes or investment is a capital asset. Filing military taxes The following items are examples of capital assets. Filing military taxes A home owned and occupied by you and your family. Filing military taxes Household furnishings. Filing military taxes A car used for pleasure. Filing military taxes If your car is used both for pleasure and for farm business, it is partly a capital asset and partly a noncapital asset, defined later. Filing military taxes Stocks and bonds. Filing military taxes However, there are special rules for gains on qualified small business stock. Filing military taxes For more information on this subject, see Gains on Qualified Small Business Stock and Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. Filing military taxes Personal-use property. Filing military taxes   Gain from a sale or exchange of personal-use property is a capital gain and is taxable. Filing military taxes Loss from the sale or exchange of personal-use property is not deductible. Filing military taxes You can deduct a loss relating to personal-use property only if it results from a casualty or theft. Filing military taxes For information on casualties and thefts, see chapter 11. Filing military taxes Long and Short Term Where you report a capital gain or loss depends on how long you own the asset before you sell or exchange it. Filing military taxes The time you own an asset before disposing of it is the holding period. Filing military taxes If you hold a capital asset 1 year or less, the gain or loss resulting from its disposition is short term. Filing military taxes Report it in Part I of Schedule D (Form 1040). Filing military taxes If you hold a capital asset longer than 1 year, the gain or loss resulting from its disposition is long term. Filing military taxes Report it in Part II of Schedule D (Form 1040). Filing military taxes Holding period. Filing military taxes   To figure if you held property longer than 1 year, start counting on the day after the day you acquired the property. Filing military taxes The day you disposed of the property is part of your holding period. Filing military taxes Example. Filing military taxes If you bought an asset on June 19, 2012, you should start counting on June 20, 2012. Filing military taxes If you sold the asset on June 19, 2013, your holding period is not longer than 1 year, but if you sold it on June 20, 2013, your holding period is longer than 1 year. Filing military taxes Inherited property. Filing military taxes   If you inherit property, you are considered to have held the property longer than 1 year, regardless of how long you actually held it. Filing military taxes This rule does not apply to livestock used in a farm business. Filing military taxes See Holding period under Livestock , later. Filing military taxes Nonbusiness bad debt. Filing military taxes   A nonbusiness bad debt is a short-term capital loss, deductible in the year the debt becomes worthless. Filing military taxes See chapter 4 of Publication 550. Filing military taxes Nontaxable exchange. Filing military taxes   If you acquire an asset in exchange for another asset and your basis for the new asset is figured, in whole or in part, by using your basis in the old property, the holding period of the new property includes the holding period of the old property. Filing military taxes That is, it begins on the same day as your holding period for the old property. Filing military taxes Gift. Filing military taxes   If you receive a gift of property and your basis in it is figured using the donor's basis, your holding period includes the donor's holding period. Filing military taxes Real property. Filing military taxes   To figure how long you held real property, start counting on the day after you received title to it or, if earlier, on the day after you took possession of it and assumed the burdens and privileges of ownership. Filing military taxes   However, taking possession of real property under an option agreement is not enough to start the holding period. Filing military taxes The holding period cannot start until there is an actual contract of sale. Filing military taxes The holding period of the seller cannot end before that time. Filing military taxes Figuring Net Gain or Loss The totals for short-term capital gains and losses and the totals for long-term capital gains and losses must be figured separately. Filing military taxes Net short-term capital gain or loss. Filing military taxes   Combine your short-term capital gains and losses. Filing military taxes Do this by adding all of your short-term capital gains. Filing military taxes Then add all of your short-term capital losses. Filing military taxes Subtract the lesser total from the greater. Filing military taxes The difference is your net short-term capital gain or loss. Filing military taxes Net long-term capital gain or loss. Filing military taxes   Follow the same steps to combine your long-term capital gains and losses. Filing military taxes The result is your net long-term capital gain or loss. Filing military taxes Net gain. Filing military taxes   If the total of your capital gains is more than the total of your capital losses, the difference is taxable. Filing military taxes However, part of your gain (but not more than your net capital gain) may be taxed at a lower rate than the rate of tax on your ordinary income. Filing military taxes See Capital Gains Tax Rates , later. Filing military taxes Net loss. Filing military taxes   If the total of your capital losses is more than the total of your capital gains, the difference is deductible. Filing military taxes But there are limits on how much loss you can deduct and when you can deduct it. Filing military taxes See Treatment of Capital Losses next. Filing military taxes Treatment of Capital Losses If your capital losses are more than your capital gains, you must claim the difference even if you do not have ordinary income to offset it. Filing military taxes For taxpayers other than corporations, the yearly limit on the capital loss you can deduct is $3,000 ($1,500 if you are married and file a separate return). Filing military taxes If your other income is low, you may not be able to use the full $3,000. Filing military taxes The part of the $3,000 you cannot use becomes part of your capital loss carryover (discussed next). Filing military taxes Capital loss carryover. Filing military taxes   Generally, you have a capital loss carryover if either of the following situations applies to you. Filing military taxes Your net loss on Schedule D (Form 1040), is more than the yearly limit. Filing military taxes Your taxable income without your deduction for exemptions is less than zero. Filing military taxes If either of these situations applies to you for 2013, see Capital Losses under Reporting Capital Gains and Losses in chapter 4 of Publication 550 to figure the amount you can carry over to 2014. Filing military taxes    To figure your capital loss carryover from 2013 to 2014, you will need a copy of your 2013 Form 1040 and Schedule D (Form 1040). Filing military taxes Capital Gains Tax Rates The tax rates that apply to a net capital gain are generally lower than the tax rates that apply to other income. Filing military taxes These lower rates are called the maximum capital gains rates. Filing military taxes The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss. Filing military taxes See Schedule D (Form 1040) and the Instructions for Schedule D (Form 1040). Filing military taxes Also see Publication 550. Filing military taxes Noncapital Assets Noncapital assets include property such as inventory and depreciable property used in a trade or business. Filing military taxes A list of properties that are not capital assets is provided in the Instructions for Schedule D (Form 1040). Filing military taxes Property held for sale in the ordinary course of your farm business. Filing military taxes   Property you hold mainly for sale to customers, such as livestock, poultry, livestock products, and crops, is a noncapital asset. Filing military taxes Gain or loss from sales or other dispositions of this property is reported on Schedule F (Form 1040) (not on Schedule D (Form 1040) or Form 4797). Filing military taxes The treatment of this property is discussed in chapter 3. Filing military taxes Land and depreciable properties. Filing military taxes   Land and depreciable property you use in farming are not capital assets. Filing military taxes Noncapital assets also include livestock held for draft, breeding, dairy, or sporting purposes. Filing military taxes However, your gains and losses from sales and exchanges of your farmland and depreciable properties must be considered together with certain other transactions to determine whether the gains and losses are treated as capital or ordinary gains and losses. Filing military taxes The sales of these business assets are reported on Form 4797. Filing military taxes See chapter 9 for more information. Filing military taxes Hedging (Commodity Futures) Hedging transactions are transactions that you enter into in the normal course of business primarily to manage the risk of interest rate or price changes, or currency fluctuations, with respect to borrowings, ordinary property, or ordinary obligations. Filing military taxes Ordinary property or obligations are those that cannot produce capital gain or loss if sold or exchanged. Filing military taxes A commodity futures contract is a standardized, exchange-traded contract for the sale or purchase of a fixed amount of a commodity at a future date for a fixed price. Filing military taxes The holder of an option on a futures contract has the right (but not the obligation) for a specified period of time to enter into a futures contract to buy or sell at a particular price. Filing military taxes A forward contract is generally similar to a futures contract except that the terms are not standardized and the contract is not exchange traded. Filing military taxes Businesses may enter into commodity futures contracts or forward contracts and may acquire options on commodity futures contracts as either of the following. Filing military taxes Hedging transactions. Filing military taxes Transactions that are not hedging transactions. Filing military taxes Futures transactions with exchange-traded commodity futures contracts that are not hedging transactions, generally, result in capital gain or loss and are subject to the mark-to-market rules discussed in Publication 550. Filing military taxes There is a limit on the amount of capital losses you can deduct each year. Filing military taxes Hedging transactions are not subject to the mark-to-market rules. Filing military taxes If, as a farmer-producer, to protect yourself from the risk of unfavorable price fluctuations, you enter into commodity forward contracts, futures contracts, or options on futures contracts and the contracts cover an amount of the commodity within your range of production, the transactions are generally considered hedging transactions. Filing military taxes They can take place at any time you have the commodity under production, have it on hand for sale, or reasonably expect to have it on hand. Filing military taxes The gain or loss on the termination of these hedges is generally ordinary gain or loss. Filing military taxes Farmers who file their income tax returns on the cash method report any profit or loss on the hedging transaction on Schedule F, line 8. Filing military taxes Gains or losses from hedging transactions that hedge supplies of a type regularly used or consumed in the ordinary course of your trade or business may be ordinary gains or losses. Filing military taxes Examples include fuel and feed. Filing military taxes If you have numerous transactions in the commodity futures market during the year, you must be able to show which transactions are hedging transactions. Filing military taxes Clearly identify a hedging transaction on your books and records before the end of the day you entered into the transaction. Filing military taxes It may be helpful to have separate brokerage accounts for your hedging and speculation transactions. Filing military taxes Retain the identification of each hedging transaction with your books and records. Filing military taxes Also, identify the item(s) or aggregate risk that is being hedged in your records. Filing military taxes Although the identification of the hedging transaction must be made before the end of the day it was entered into, you have 35 days after entering into the transaction to identify the hedged item(s) or risk. Filing military taxes For more information on the tax treatment of futures and options contracts, see Commodity Futures and Section 1256 Contracts Marked to Market in Publication 550. Filing military taxes Accounting methods for hedging transactions. Filing military taxes   The accounting method you use for a hedging transaction must clearly reflect income. Filing military taxes This means that your accounting method must reasonably match the timing of income, deduction, gain, or loss from a hedging transaction with the timing of income, deduction, gain, or loss from the item or items being hedged. Filing military taxes There are requirements and limits on the method you can use for certain hedging transactions. Filing military taxes See Regulations section 1. Filing military taxes 446-4(e) for those requirements and limits. Filing military taxes   Hedging transactions must be accounted for under the rules stated above unless the transaction is subject to mark-to-market accounting under section 475 or you use an accounting method other than the following methods. Filing military taxes Cash method. Filing military taxes Farm-price method. Filing military taxes Unit-livestock-price method. Filing military taxes   Once you adopt a method, you must apply it consistently and must have IRS approval before changing it. Filing military taxes   Your books and records must describe the accounting method used for each type of hedging transaction. Filing military taxes They must also contain any additional identification necessary to verify the application of the accounting method you used for the transaction. Filing military taxes You must make the additional identification no more than 35 days after entering into the hedging transaction. Filing military taxes Example of a hedging transaction. Filing military taxes   You file your income tax returns on the cash method. Filing military taxes On July 2 you anticipate a yield of 50,000 bushels of corn this year. Filing military taxes The December futures price is $5. Filing military taxes 75 a bushel, but there are indications that by harvest time the price will drop. Filing military taxes To protect yourself against a drop in the price, you enter into the following hedging transaction. Filing military taxes You sell ten December futures contracts of 5,000 bushels each for a total of 50,000 bushels of corn at $5. Filing military taxes 75 a bushel. Filing military taxes   The price did not drop as anticipated but rose to $6 a bushel. Filing military taxes In November, you sell your crop at a local elevator for $6 a bushel. Filing military taxes You also close out your futures position by buying ten December contracts for $6 a bushel. Filing military taxes You paid a broker's commission of $1,400 ($70 per contract) for the complete in and out position in the futures market. Filing military taxes   The result is that the price of corn rose 25 cents a bushel and the actual selling price is $6 a bushel. Filing military taxes Your loss on the hedge is 25 cents a bushel. Filing military taxes In effect, the net selling price of your corn is $5. Filing military taxes 75 a bushel. Filing military taxes   Report the results of your futures transactions and your sale of corn separately on Schedule F. Filing military taxes See the instructions for the 2013 Schedule F (Form 1040). Filing military taxes   The loss on your futures transactions is $13,900, figured as follows. Filing military taxes July 2 - Sold December corn futures (50,000 bu. Filing military taxes @$5. Filing military taxes 75) $287,500 November 6 - Bought December corn futures (50,000 bu. Filing military taxes @$6 plus $1,400 broker's commission) 301,400 Futures loss ($13,900) This loss is reported as a negative figure on Schedule F, Part I, line 8, as other income. Filing military taxes   The proceeds from your corn sale at the local elevator are $300,000 (50,000 bu. Filing military taxes × $6). Filing military taxes Report it on Schedule F, Part I, line 2, as income from sales of products you raised. Filing military taxes   Assume you were right and the price went down 25 cents a bushel. Filing military taxes In effect, you would still net $5. Filing military taxes 75 a bushel, figured as follows. Filing military taxes Sold cash corn, per bushel $5. Filing military taxes 50 Gain on hedge, per bushel . Filing military taxes 25 Net price, per bushel $5. Filing military taxes 75       The gain on your futures transactions would have been $11,100, figured as follows. Filing military taxes July 2 - Sold December corn futures (50,000 bu. Filing military taxes @$5. Filing military taxes 75) $287,500 November 6 - Bought December corn futures (50,000 bu. Filing military taxes @$5. Filing military taxes 50 plus $1,400 broker's commission) 276,400 Futures gain $11,100 The $11,100 is reported on Schedule F, Part I, line 8, as other income. Filing military taxes   The proceeds from the sale of your corn at the local elevator, $275,000, are reported on Schedule F, Part I, line 2, as income from sales of products you raised. Filing military taxes Livestock This part discusses the sale or exchange of livestock used in your farm business. Filing military taxes Gain or loss from the sale or exchange of this livestock may qualify as a section 1231 gain or loss. Filing military taxes However, any part of the gain that is ordinary income from the recapture of depreciation is not included as section 1231 gain. Filing military taxes See chapter 9 for more information on section 1231 gains and losses and the recapture of depreciation under section 1245. Filing military taxes The rules discussed here do not apply to the sale of livestock held primarily for sale to customers. Filing military taxes The sale of this livestock is reported on Schedule F. Filing military taxes See chapter 3. Filing military taxes Also, special rules apply to sales or exchanges caused by weather-related conditions. Filing military taxes See chapter 3. Filing military taxes Holding period. Filing military taxes   The sale or exchange of livestock used in your farm business (defined below) qualifies as a section 1231 transaction if you held the livestock for 12 months or more (24 months or more for horses and cattle). Filing military taxes Livestock. Filing military taxes   For section 1231 transactions, livestock includes cattle, hogs, horses, mules, donkeys, sheep, goats, fur-bearing animals, and other mammals. Filing military taxes Also, for section 1231 transactions, livestock does not include chickens, turkeys, pigeons, geese, emus, ostriches, rheas, or other birds, fish, frogs, reptiles, etc. Filing military taxes Livestock used in farm business. Filing military taxes   If livestock is held primarily for draft, breeding, dairy, or sporting purposes, it is used in your farm business. Filing military taxes The purpose for which an animal is held ordinarily is determined by a farmer's actual use of the animal. Filing military taxes An animal is not held for draft, breeding, dairy, or sporting purposes merely because it is suitable for that purpose, or because it is held for sale to other persons for use by them for that purpose. Filing military taxes However, a draft, breeding, or sporting purpose may be present if an animal is disposed of within a reasonable time after it is prevented from its intended use or made undesirable as a result of an accident, disease, drought, or unfitness of the animal. Filing military taxes Example 1. Filing military taxes You discover an animal that you intend to use for breeding purposes is sterile. Filing military taxes You dispose of it within a reasonable time. Filing military taxes This animal was held for breeding purposes. Filing military taxes Example 2. Filing military taxes You retire and sell your entire herd, including young animals that you would have used for breeding or dairy purposes had you remained in business. Filing military taxes These young animals were held for breeding or dairy purposes. Filing military taxes Also, if you sell young animals to reduce your breeding or dairy herd because of drought, these animals are treated as having been held for breeding or dairy purposes. Filing military taxes See Sales Caused by Weather-Related Conditions in chapter 3. Filing military taxes Example 3. Filing military taxes You are in the business of raising hogs for slaughter. Filing military taxes Customarily, before selling your sows, you obtain a single litter of pigs that you will raise for sale. Filing military taxes You sell the brood sows after obtaining the litter. Filing military taxes Even though you hold these brood sows for ultimate sale to customers in the ordinary course of your business, they are considered to be held for breeding purposes. Filing military taxes Example 4. Filing military taxes You are in the business of raising registered cattle for sale to others for use as breeding cattle. Filing military taxes The business practice is to breed the cattle before sale to establish their fitness as registered breeding cattle. Filing military taxes Your use of the young cattle for breeding purposes is ordinary and necessary for selling them as registered breeding cattle. Filing military taxes Such use does not demonstrate that you are holding the cattle for breeding purposes. Filing military taxes However, those cattle you held as additions or replacements to your own breeding herd to produce calves are considered to be held for breeding purposes, even though they may not actually have produced calves. Filing military taxes The same applies to hog and sheep breeders. Filing military taxes Example 5. Filing military taxes You breed, raise, and train horses for racing purposes. Filing military taxes Every year you cull horses from your racing stable. Filing military taxes In 2013, you decided that to prevent your racing stable from getting too large to be effectively operated, you must cull six horses that had been raced at public tracks in 2012. Filing military taxes These horses are all considered held for sporting purposes. Filing military taxes Figuring gain or loss on the cash method. Filing military taxes   Farmers or ranchers who use the cash method of accounting figure their gain or loss on the sale of livestock used in their farming business as follows. Filing military taxes Raised livestock. Filing military taxes   Gain on the sale of raised livestock is generally the gross sales price reduced by any expenses of the sale. Filing military taxes Expenses of sale include sales commissions, freight or hauling from farm to commission company, and other similar expenses. Filing military taxes The basis of the animal sold is zero if the costs of raising it were deducted during the years the animal was being raised. Filing military taxes However, see Uniform Capitalization Rules in chapter 6. Filing military taxes Purchased livestock. Filing military taxes   The gross sales price minus your adjusted basis and any expenses of sale is the gain or loss. Filing military taxes Example. Filing military taxes A farmer sold a breeding cow on January 8, 2013, for $1,250. Filing military taxes Expenses of the sale were $125. Filing military taxes The cow was bought July 2, 2009, for $1,300. Filing military taxes Depreciation (not less than the amount allowable) was $867. Filing military taxes Gross sales price $1,250 Cost (basis) $1,300   Minus: Depreciation deduction 867   Unrecovered cost (adjusted basis) $ 433   Expense of sale 125 558 Gain realized $ 692 Converted Wetland and Highly Erodible Cropland Special rules apply to dispositions of land converted to farming use after March 1, 1986. Filing military taxes Any gain realized on the disposition of converted wetland or highly erodible cropland is treated as ordinary income. Filing military taxes Any loss on the disposition of such property is treated as a long-term capital loss. Filing military taxes Converted wetland. Filing military taxes   This is generally land that was drained or filled to make the production of agricultural commodities possible. Filing military taxes It includes converted wetland held by the person who originally converted it or held by any other person who used the converted wetland at any time after conversion for farming. Filing military taxes   A wetland (before conversion) is land that meets all the following conditions. Filing military taxes It is mostly soil that, in its undrained condition, is saturated, flooded, or ponded long enough during a growing season to develop an oxygen-deficient state that supports the growth and regeneration of plants growing in water. Filing military taxes It is saturated by surface or groundwater at a frequency and duration sufficient to support mostly plants that are adapted for life in saturated soil. Filing military taxes It supports, under normal circumstances, mostly plants that grow in saturated soil. Filing military taxes Highly erodible cropland. Filing military taxes   This is cropland subject to erosion that you used at any time for farming purposes other than grazing animals. Filing military taxes Generally, highly erodible cropland is land currently classified by the Department of Agriculture as Class IV, VI, VII, or VIII under its classification system. Filing military taxes Highly erodible cropland also includes land that would have an excessive average annual erosion rate in relation to the soil loss tolerance level, as determined by the Department of Agriculture. Filing military taxes Successor. Filing military taxes   Converted wetland or highly erodible cropland is also land held by any person whose basis in the land is figured by reference to the adjusted basis of a person in whose hands the property was converted wetland or highly erodible cropland. Filing military taxes Timber Standing timber you held as investment property is a capital asset. Filing military taxes Gain or loss from its sale is capital gain or loss reported on Form 8949 and Schedule D (Form 1040), as applicable. Filing military taxes If you held the timber primarily for sale to customers, it is not a capital asset. Filing military taxes Gain or loss on its sale is ordinary business income or loss. Filing military taxes It is reported on Schedule F, line 1 (purchased timber) or line 2 (raised timber). Filing military taxes See the Instructions for Schedule F (Form 1040). Filing military taxes Farmers who cut timber on their land and sell it as logs, firewood, or pulpwood usually have no cost or other basis for that timber. Filing military taxes Amounts realized from these sales, and the expenses incurred in cutting, hauling, etc. Filing military taxes , are ordinary farm income and expenses reported on Schedule F. Filing military taxes Different rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange or you enter into a cutting contract, discussed below. Filing military taxes Timber considered cut. Filing military taxes   Timber is considered cut on the date when, in the ordinary course of business, the quantity of felled timber is first definitely determined. Filing military taxes This is true whether the timber is cut under contract or whether you cut it yourself. Filing military taxes Christmas trees. Filing military taxes   Evergreen trees, such as Christmas trees, that are more than 6 years old when severed from their roots and sold for ornamental purposes are included in the term timber. Filing military taxes They qualify for both rules discussed below. Filing military taxes Election to treat cutting as a sale or exchange. Filing military taxes   Under the general rule, the cutting of timber results in no gain or loss. Filing military taxes It is not until a sale or exchange occurs that gain or loss is realized. Filing military taxes But if you owned or had a contractual right to cut timber, you can elect to treat the cutting of timber as a section 1231 transaction in the year it is cut. Filing military taxes Even though the cut timber is not actually sold or exchanged, you report your gain or loss on the cutting for the year the timber is cut. Filing military taxes Any later sale results in ordinary business income or loss. Filing military taxes See the example below. Filing military taxes   To elect this treatment, you must: Own or hold a contractual right to cut the timber for a period of more than 1 year before it is cut, and Cut the timber for sale or use in your trade or business. Filing military taxes Making the election. Filing military taxes   You make the election on your return for the year the cutting takes place by including in income the gain or loss on the cutting and including a computation of your gain or loss. Filing military taxes You do not have to make the election in the first year you cut the timber. Filing military taxes You can make it in any year to which the election would apply. Filing military taxes If the timber is partnership property, the election is made on the partnership return. Filing military taxes This election cannot be made on an amended return. Filing military taxes   Once you have made the election, it remains in effect for all later years unless you revoke it. Filing military taxes Election under section 631(a) may be revoked. Filing military taxes   If you previously elected for any tax year ending before October 23, 2004, to treat the cutting of timber as a sale or exchange under section 631(a), you may revoke this election without the consent of the IRS for any tax year ending after October 22, 2004. Filing military taxes The prior election (and revocation) is disregarded for purposes of making a subsequent election. Filing military taxes See Form T (Timber), Forest Activities Schedule, for more information. Filing military taxes Gain or loss. Filing military taxes   Your gain or loss on the cutting of standing timber is the difference between its adjusted basis for depletion and its FMV on the first day of your tax year in which it is cut. Filing military taxes   Your adjusted basis for depletion of cut timber is based on the number of units (board feet, log scale, or other units) of timber cut during the tax year and considered to be sold or exchanged. Filing military taxes Your adjusted basis for depletion is also based on the depletion unit of timber in the account used for the cut timber, and should be figured in the same manner as shown in section 611 and Regulations section 1. Filing military taxes 611-3. Filing military taxes   Depletion of timber is discussed in chapter 7. Filing military taxes Example. Filing military taxes   In April 2013, you owned 4,000 MBF (1,000 board feet) of standing timber longer than 1 year. Filing military taxes It had an adjusted basis for depletion of $40 per MBF. Filing military taxes You are a calendar year taxpayer. Filing military taxes On January 1, 2013, the timber had a FMV of $350 per MBF. Filing military taxes It was cut in April for sale. Filing military taxes On your 2013 tax return, you elect to treat the cutting of the timber as a sale or exchange. Filing military taxes You report the difference between the FMV and your adjusted basis for depletion as a gain. Filing military taxes This amount is reported on Form 4797 along with your other section 1231 gains and losses to figure whether it is treated as a capital gain or as ordinary gain. Filing military taxes You figure your gain as follows. Filing military taxes FMV of timber January 1, 2013 $1,400,000 Minus: Adjusted basis for depletion 160,000 Section 1231 gain $1,240,000   The FMV becomes your basis in the cut timber, and a later sale of the cut timber, including any by-product or tree tops, will result in ordinary business income or loss. Filing military taxes Outright sales of timber. Filing military taxes   Outright sales of timber by landowners qualify for capital gains treatment using rules similar to the rules for certain disposal of timber under a contract with retained economic interest (defined later). Filing military taxes However, for outright sales, the date of disposal is not deemed to be the date the timber is cut because the landowner can elect to treat the payment date as the date of disposal (see Date of disposal below). Filing military taxes Cutting contract. Filing military taxes   You must treat the disposal of standing timber under a cutting contract as a section 1231 transaction if all the following apply to you. Filing military taxes You are the owner of the timber. Filing military taxes You held the timber longer than 1 year before its disposal. Filing military taxes You kept an economic interest in the timber. Filing military taxes   You have kept an economic interest in standing timber if, under the cutting contract, the expected return on your investment is conditioned on the cutting of the timber. Filing military taxes   The difference between the amount realized from the disposal of the timber and its adjusted basis for depletion is treated as gain or loss on its sale. Filing military taxes Include this amount on Form 4797 along with your other section 1231 gains or losses. Filing military taxes Date of disposal. Filing military taxes   The date of disposal is the date the timber is cut. Filing military taxes However, for outright sales by landowners or if you receive payment under the contract before the timber is cut, you can elect to treat the date of payment as the date of disposal. Filing military taxes   This election applies only to figure the holding period of the timber. Filing military taxes It has no effect on the time for reporting gain or loss (generally when the timber is sold or exchanged). Filing military taxes   To make this election, attach a statement to the tax return filed by the due date (including extensions) for the year payment is received. Filing military taxes The statement must identify the advance payments subject to the election and the contract under which they were made. Filing military taxes   If you timely filed your return for the year you received payment without making the election, you can still make the election by filing an amended return within 6 months after the due date for that year's return (excluding extensions). Filing military taxes Attach the statement to the amended return and write “Filed pursuant to section 301. Filing military taxes 9100-2” at the top of the statement. Filing military taxes File the amended return at the same address the original return was filed. Filing military taxes Owner. Filing military taxes   An owner is any person who owns an interest in the timber, including a sublessor and the holder of a contract to cut the timber. Filing military taxes You own an interest in timber if you have the right to cut it for sale on your own account or for use in your business. Filing military taxes Tree stumps. Filing military taxes   Tree stumps are a capital asset if they are on land held by an investor who is not in the timber or stump business as a buyer, seller, or processor. Filing military taxes Gain from the sale of stumps sold in one lot by such a holder is taxed as a capital gain. Filing military taxes However, tree stumps held by timber operators after the saleable standing timber was cut and removed from the land are considered by-products. Filing military taxes Gain from the sale of stumps in lots or tonnage by such operators is taxed as ordinary income. Filing military taxes   See Form T (Timber) and its separate instructions for more information about dispositions of timber. Filing military taxes Sale of a Farm The sale of your farm will usually involve the sale of both nonbusiness property (your home) and business property (the land and buildings used in the farm operation and perhaps machinery and livestock). Filing military taxes If you have a gain from the sale, you may be allowed to exclude the gain on your home. Filing military taxes For more information, see Publication 523, Selling Your Home. Filing military taxes The gain on the sale of your business property is taxable. Filing military taxes A loss on the sale of your business property to an unrelated person is deducted as an ordinary loss. Filing military taxes Your taxable gain or loss on the sale of property used in your farm business is taxed under the rules for section 1231 transactions. Filing military taxes See chapter 9. Filing military taxes Losses from personal-use property, other than casualty or theft losses, are not deductible. Filing military taxes If you receive payments for your farm in installments, your gain is taxed over the period of years the payments are received, unless you elect not to use the installment method of reporting the gain. Filing military taxes See chapter 10 for information about installment sales. Filing military taxes When you sell your farm, the gain or loss on each asset is figured separately. Filing military taxes The tax treatment of gain or loss on the sale of each asset is determined by the classification of the asset. Filing military taxes Each of the assets sold must be classified as one of the following. Filing military taxes Capital asset held 1 year or less. Filing military taxes Capital asset held longer than 1 year. Filing military taxes Property (including real estate) used in your business and held 1 year or less (including draft, breeding, dairy, and sporting animals held less than the holding periods discussed earlier under Livestock ). Filing military taxes Property (including real estate) used in your business and held longer than 1 year (including only draft, breeding, dairy, and sporting animals held for the holding periods discussed earlier). Filing military taxes Property held primarily for sale or which is of the kind that would be included in inventory if on hand at the end of your tax year. Filing military taxes Allocation of consideration paid for a farm. Filing military taxes   The sale of a farm for a lump sum is considered a sale of each individual asset rather than a single asset. Filing military taxes The residual method is required only if the group of assets sold constitutes a trade or business. Filing military taxes This method determines gain or loss from the transfer of each asset. Filing military taxes It also determines the buyer's basis in the business assets. Filing military taxes For more information, see Sale of a Business in chapter 2 of Publication 544. Filing military taxes Property used in farm operation. Filing military taxes   The rules for excluding the gain on the sale of your home, described later under Sale of your home , do not apply to the property used for your farming business. Filing military taxes Recognized gains and losses on business property must be reported on your return for the year of the sale. Filing military taxes If the property was held longer than 1 year, it may qualify for section 1231 treatment (see chapter 9). Filing military taxes Example. Filing military taxes You sell your farm, including your main home, which you have owned since December 2001. Filing military taxes You realize gain on the sale as follows. Filing military taxes   Farm   Farm   With Home Without   Home Only Home Selling price $382,000 $158,000 $224,000 Cost (or other basis) 240,000 110,000 130,000 Gain $142,000 $48,000 $94,000 You must report the $94,000 gain from the sale of the property used in your farm business. Filing military taxes All or a part of that gain may have to be reported as ordinary income from the recapture of depreciation or soil and water conservation expenses. Filing military taxes Treat the balance as section 1231 gain. Filing military taxes The $48,000 gain from the sale of your home is not taxable as long as you meet the requirements explained later under Sale of your home . Filing military taxes Partial sale. Filing military taxes   If you sell only part of your farm, you must report any recognized gain or loss on the sale of that part on your tax return for the year of the sale. Filing military taxes You cannot wait until you have sold enough of the farm to recover its entire cost before reporting gain or loss. Filing military taxes For a detailed discussion on installment sales, see Publication 544. Filing military taxes Adjusted basis of the part sold. Filing military taxes   This is the properly allocated part of your original cost or other basis of the entire farm plus or minus necessary adjustments for improvements, depreciation, etc. Filing military taxes , on the part sold. Filing military taxes If your home is on the farm, you must properly adjust the basis to exclude those costs from your farm asset costs, as discussed below under Sale of your home . Filing military taxes Example. Filing military taxes You bought a 600-acre farm for $700,000. Filing military taxes The farm included land and buildings. Filing military taxes The purchase contract designated $600,000 of the purchase price to the land. Filing military taxes You later sold 60 acres of land on which you had installed a fence. Filing military taxes Your adjusted basis for the part of your farm sold is $60,000 (1/10 of $600,000), plus any unrecovered cost (cost not depreciated) of the fence on the 60 acres at the time of sale. Filing military taxes Use this amount to determine your gain or loss on the sale of the 60 acres. Filing military taxes Assessed values for local property taxes. Filing military taxes   If you paid a flat sum for the entire farm and no other facts are available for properly allocating your original cost or other basis between the land and the buildings, you can use the assessed values for local property taxes for the year of purchase to allocate the costs. Filing military taxes Example. Filing military taxes Assume that in the preceding example there was no breakdown of the $700,000 purchase price between land and buildings. Filing military taxes However, in the year of purchase, local taxes on the entire property were based on assessed valuations of $420,000 for land and $140,000 for improvements, or a total of $560,000. Filing military taxes The assessed valuation of the land is 3/4 (75%) of the total assessed valuation. Filing military taxes Multiply the $700,000 total purchase price by 75% to figure basis of $525,000 for the 600 acres of land. Filing military taxes The unadjusted basis of the 60 acres you sold would then be $52,500 (1/10 of $525,000). Filing military taxes Sale of your home. Filing military taxes   Your home is a capital asset and not property used in the trade or business of farming. Filing military taxes If you sell a farm that includes a house you and your family occupy, you must determine the part of the selling price and the part of the cost or other basis allocable to your home. Filing military taxes Your home includes the immediate surroundings and outbuildings relating to it that are not used for business purposes. Filing military taxes   If you use part of your home for business, you must make an appropriate adjustment to the basis for depreciation allowed or allowable. Filing military taxes For more information on basis, see chapter 6. Filing military taxes More information. Filing military taxes   For more information on selling your home, see Publication 523. Filing military taxes Gain from condemnation. Filing military taxes   If you have a gain from a condemnation or sale under threat of condemnation, you may use the preceding rules for excluding the gain, rather than the rules discussed under Postponing Gain in chapter 11. Filing military taxes However, any gain that cannot be excluded (because it is more than the limit) may be postponed under the rules discussed under Postponing Gain in chapter 11. Filing military taxes Foreclosure or Repossession If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Filing military taxes The foreclosure or repossession is treated as a sale or exchange from which you may realize gain or loss. Filing military taxes This is true even if you voluntarily return the property to the lender. Filing military taxes You may also realize ordinary income from cancellation of debt if the loan balance is more than the FMV of the property. Filing military taxes Buyer's (borrower's) gain or loss. Filing military taxes   You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale or exchange. Filing military taxes The gain or loss is the difference between your adjusted basis in the transferred property and the amount realized. Filing military taxes See Determining Gain or Loss , earlier. Filing military taxes Worksheet 8-1. Filing military taxes Worksheet for Foreclosures andRepossessions Part 1. Filing military taxes Use Part 1 to figure your ordinary income from the cancellation of debt upon foreclosure or repossession. Filing military taxes Complete this part only if you were personally liable for the debt. Filing military taxes Otherwise, go to Part 2. Filing military taxes   1. Filing military taxes Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable after the transfer of property   2. Filing military taxes Enter the Fair Market Value of the transferred property   3. Filing military taxes Ordinary income from cancellation of debt upon foreclosure or repossession. Filing military taxes * Subtract line 2 from line 1. Filing military taxes If zero or less, enter -0-   Part 2. Filing military taxes Figure your gain or loss from foreclosure or repossession. Filing military taxes   4. Filing military taxes If you completed Part 1, enter the smaller of line 1 or line 2. Filing military taxes If you did not complete Part 1, enter the outstanding debt immediately before the transfer of property   5. Filing military taxes Enter any proceeds you received from the foreclosure sale   6. Filing military taxes Add lines 4 and 5   7. Filing military taxes Enter the adjusted basis of the transferred property   8. Filing military taxes Gain or loss from foreclosure or repossession. Filing military taxes Subtract line 7  from line 6   * The income may not be taxable. Filing military taxes See Cancellation of debt . Filing military taxes    You can use Worksheet 8-1 to figure your gain or loss from a foreclosure or repossession. Filing military taxes Amount realized on a nonrecourse debt. Filing military taxes   If you are not personally liable for repaying the debt (nonrecourse debt) secured by the transferred property, the amount you realize includes the full amount of the debt canceled by the transfer. Filing military taxes The full canceled debt is included in the amount realized even if the fair market value of the property is less than the canceled debt. Filing military taxes Example 1. Filing military taxes Ann paid $200,000 for land used in her farming business. Filing military taxes She paid $15,000 down and borrowed the remaining $185,000 from a bank. Filing military taxes Ann is not personally liable for the loan (nonrecourse debt), but pledges the land as security. Filing military taxes The bank foreclosed on the loan 2 years after Ann stopped making payments. Filing military taxes When the bank foreclosed, the balance due on the loan was $180,000 and the FMV of the land was $170,000. Filing military taxes The amount Ann realized on the foreclosure was $180,000, the debt canceled by the foreclosure. Filing military taxes She figures her gain or loss on Form 4797, Part I, by comparing the amount realized ($180,000) with her adjusted basis ($200,000). Filing military taxes She has a $20,000 deductible loss. Filing military taxes Example 2. Filing military taxes Assume the same facts as in Example 1 except the FMV of the land was $210,000. Filing military taxes The result is the same. Filing military taxes The amount Ann realized on the foreclosure is $180,000, the debt canceled by the foreclosure. Filing military taxes Because her adjusted basis is $200,000, she has a deductible loss of $20,000, which she reports on Form 4797, Part I. Filing military taxes Amount realized on a recourse debt. Filing military taxes   If you are personally liable for the debt (recourse debt), the amount realized on the foreclosure or repossession includes the lesser of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The fair market value of the transferred property. Filing military taxes   You are treated as receiving ordinary income from the canceled debt for the part of the debt that is more than the fair market value. Filing military taxes The amount realized does not include the canceled debt that is your income from cancellation of debt. Filing military taxes See Cancellation of debt , later. Filing military taxes Example 3. Filing military taxes Assume the same facts as in Example 1 above except Ann is personally liable for the loan (recourse debt). Filing military taxes In this case, the amount she realizes is $170,000. Filing military taxes This is the canceled debt ($180,000) up to the FMV of the land ($170,000). Filing military taxes Ann figures her gain or loss on the foreclosure by comparing the amount realized ($170,000) with her adjusted basis ($200,000). Filing military taxes She has a $30,000 deductible loss, which she figures on Form 4797, Part I. Filing military taxes She is also treated as receiving ordinary income from cancellation of debt. Filing military taxes That income is $10,000 ($180,000 − $170,000). Filing military taxes This is the part of the canceled debt not included in the amount realized. Filing military taxes She reports this as other income on Schedule F, line 8. Filing military taxes Seller's (lender's) gain or loss on repossession. Filing military taxes   If you finance a buyer's purchase of property and later acquire an interest in it through foreclosure or repossession, you may have a gain or loss on the acquisition. Filing military taxes For more information, see Repossession in Publication 537, Installment Sales. Filing military taxes Cancellation of debt. Filing military taxes   If property that is repossessed or foreclosed upon secures a debt for which you are personally liable (recourse debt), you generally must report as ordinary income the amount by which the canceled debt is more than the FMV of the property. Filing military taxes This income is separate from any gain or loss realized from the foreclosure or repossession. Filing military taxes Report the income from cancellation of a business debt on Schedule F, line 8. Filing military taxes Report the income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. Filing military taxes    You can use Worksheet 8-1 to figure your income from cancellation of debt. Filing military taxes   However, income from cancellation of debt is not taxed if any of the following apply. Filing military taxes The cancellation is intended as a gift. Filing military taxes The debt is qualified farm debt (see chapter 3). Filing military taxes The debt is qualified real property business debt (see chapter 5 of Publication 334). Filing military taxes You are insolvent or bankrupt (see  chapter 3). Filing military taxes The debt is qualified principal residence indebtedness (see chapter 3). Filing military taxes   Use Form 982 to report the income exclusion. Filing military taxes Abandonment The abandonment of property is a disposition of property. Filing military taxes You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership, but without passing it on to anyone else. Filing military taxes Business or investment property. Filing military taxes   Loss from abandonment of business or investment property is deductible as a loss. Filing military taxes Loss from abandonment of business or investment property that is not treated as a sale or exchange generally is an ordinary loss. Filing military taxes If your adjusted basis is more than the amount you realize (if any), then you have a loss. Filing military taxes If the amount you realize (if any) is more than your adjusted basis, then you have a gain. Filing military taxes This rule also applies to leasehold improvements the lessor made for the lessee. Filing military taxes However, if the property is foreclosed on or repossessed in lieu of abandonment, gain or loss is figured as discussed earlier under Foreclosure or Repossession . Filing military taxes   If the abandoned property is secured by debt, special rules apply. Filing military taxes The tax consequences of abandonment of property that secures a debt depend on whether you are personally liable for the debt (recourse debt) or were not personally liable for the debt (nonrecourse debt). Filing military taxes For more information, see chapter 3 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Filing military taxes The abandonment loss is deducted in the tax year in which the loss is sustained. Filing military taxes Report the loss on Form 4797, Part II, line 10. Filing military taxes Personal-use property. Filing military taxes   You cannot deduct any loss from abandonment of your home or other property held for personal use. Filing military taxes Canceled debt. Filing military taxes   If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you will realize ordinary income equal to the canceled debt. Filing military taxes This income is separate from any loss realized from abandonment of the property. Filing military taxes Report income from cancellation of a debt related to a business or rental activity as business or rental income. Filing military taxes Report income from cancellation of a nonbusiness debt as miscellaneous income on Form 1040. Filing military taxes   However, income from cancellation of debt is not taxed in certain circumstances. Filing military taxes See Cancellation of debt earlier under Foreclosure or Repossession . Filing military taxes Forms 1099-A and 1099-C. Filing military taxes   A lender who acquires an interest in your property in a foreclosure, repossession, or abandonment should send you Form 1099-A showing the information you need to figure your loss from the foreclosure, repossession, or abandonment. Filing military taxes However, if the lender cancels part of your debt and the lender must file Form 1099-C, the lender may include the information about the foreclosure, repossession, or abandonment on that form instead of Form 1099-A. Filing military taxes The lender must file Form 1099-C and send you a copy if the canceled debt is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Filing military taxes For foreclosures, repossessions, abandonments of property, and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. Filing military taxes Prev  Up  Next   Home   More Online Publications