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Free Downloadable Irs Tax Forms

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Free downloadable irs tax forms Publication 557 - Introductory Material Table of Contents What's New Reminders Introduction What's New Proposed regulations on “good faith determinations”. Free downloadable irs tax forms  Proposed regulations modify standards for making a good faith determination that a foreign organization is a charitable organization, grants to which may be qualifying distributions and not taxable expenditures. Free downloadable irs tax forms The proposed regulations identify a broader class of tax practitioners upon whose written advice a private foundation may base a “good faith determination. Free downloadable irs tax forms ” See, Proposed Regulations: Reliance Standards for Making Good Faith Determinations, REG-134974-12, 2012-47 I. Free downloadable irs tax forms R. Free downloadable irs tax forms B. Free downloadable irs tax forms 553. Free downloadable irs tax forms Prop. Free downloadable irs tax forms Regs. Free downloadable irs tax forms on Good Faith Determinations. Free downloadable irs tax forms New Requirements for section 501(c)(3) Hospitals Under the Affordable Care Act. Free downloadable irs tax forms  The Affordable Care Act (ACA), enacted March 23, 2010, added new requirements that hospital organizations must satisfy in order to be described in section 501(c)(3), as well as new reporting requirements and excise taxes. Free downloadable irs tax forms On June 22, 2012, the Service issued a notice of proposed rulemaking that addresses the new requirements enacted by the ACA applicable to section 501(c)(3) hospital organizations. Free downloadable irs tax forms See, Proposed Regulations: Additional Requirements for Charitable Hospitals, REG-13026-11, 77 Fed. Free downloadable irs tax forms Reg. Free downloadable irs tax forms 38148. Free downloadable irs tax forms On April 3, 2013, the Service issued proposed regulations on the ACA's community health needs assessment (CHNA) requirements. Free downloadable irs tax forms The proposed regulations also discuss the related reporting and excise tax requirements for charitable hospitals and the consequences for failure to satisfy the section 501(r) requirements. Free downloadable irs tax forms See, Proposed Regulations: Community Health Needs Assessments for Charitable Hospitals, REG-106499-12, 78 Fed. Free downloadable irs tax forms Reg. Free downloadable irs tax forms 20,523. Free downloadable irs tax forms Timing of when an Organization is exempt for Federal Tax Purposes. Free downloadable irs tax forms  As noted in section 2. Free downloadable irs tax forms 03(4) of Revenue Procedure 2013-9, 2013-2 I. Free downloadable irs tax forms R. Free downloadable irs tax forms B. Free downloadable irs tax forms 267, the provisions in section 11. Free downloadable irs tax forms 01 regarding the effect of determination letters or rulings recognizing exempt status of organizations described in section 501(c), other than sections 501(c)(3), (9), (17), and (29), have been revised. Free downloadable irs tax forms Prior to this year, and back to 1962, when such organizations applied for recognition, the IRS would usually recognize the organizations as tax exempt from the date of formation, no matter how long the interval between the date of formation and the date of application. Free downloadable irs tax forms In addition to the practical difficulties of ascertaining an organization's purposes and activities for this period, such recognition is now potentially inconsistent with the provisions of section 6033(j), which automatically revokes the exempt status of an organization that fails to file required Form 990 series returns or notices for three consecutive years. Free downloadable irs tax forms The new procedure adopts a practice similar to the rule for section 501(c)(3) organizations for these organizations, generally permitting recognition from the date of formation if the organization has: always met the requirements for exemption, has applied within 27 months from the end of the month in which it was organized, and has not failed to file required Form 990 series returns or notices for three consecutive years. Free downloadable irs tax forms Section 11. Free downloadable irs tax forms 01(3) notes: an organization that otherwise meets the requirements for tax-exempt status and the issuance of a determination letter or ruling that does not meet the requirements for recognition from date of formation will generally be recognized from the postmark date of its application. Free downloadable irs tax forms Exempt Organizations Select Check. Free downloadable irs tax forms  The IRS has developed an on-line search tool, Exempt Organizations Select Check, that allows users to select an exempt organization and check certain information about its federal tax status and filings. Free downloadable irs tax forms It consolidates three former search sites into one, providing expanded search capability and a more efficient way to search for organizations that: Are eligible to receive tax-deductible charitable contributions (Publication 78 data). Free downloadable irs tax forms Users may rely on this list in determining deductibility of contributions, just as they did when Publication 78 was a separate electronic publication rather than part of Select Check. Free downloadable irs tax forms Have had their tax-exempt status automatically revoked under the law because they have not filed Form 990 series returns or notices annually as required for three consecutive years (Auto-Revocation List). Free downloadable irs tax forms Have filed a Form 990-N (e-Postcard) annual electronic notice. Free downloadable irs tax forms  In addition to searching for a particular organization, users may download a complete list of each of the three types of organizations through Exempt Organizations Select Check. Free downloadable irs tax forms See also Revenue Procedure 2011-33, 2011-25 I. Free downloadable irs tax forms R. Free downloadable irs tax forms B. Free downloadable irs tax forms 887. Free downloadable irs tax forms Future developments. Free downloadable irs tax forms . Free downloadable irs tax forms  The IRS has created a page on IRS. Free downloadable irs tax forms gov for information about Publication 557, at www. Free downloadable irs tax forms irs. Free downloadable irs tax forms gov/pub557. Free downloadable irs tax forms Information about any future developments affecting Publication 557 (such as legislation enacted after we release it) will be posted on that page. Free downloadable irs tax forms Reminders The Patient Protection and Affordable Care Act (ACA). Free downloadable irs tax forms   The ACA added several new laws. Free downloadable irs tax forms This includes a new excise tax on indoor tanning services, a small business health care tax credit, additional requirements for tax-exempt hospitals, and the section 501(c)(29) CO-OP program. Free downloadable irs tax forms For more information, go to IRS. Free downloadable irs tax forms gov and select Affordable Care Act Tax Provisions. Free downloadable irs tax forms Electronic filing requirement for large organizations. Free downloadable irs tax forms  For tax years ending on or after December 31, 2006, only organizations that file 250 returns during the calendar year and that have total assets of $10 million or more are required to file Form 990 electronically. Free downloadable irs tax forms For more information, go to e-file for Charities and Non-Profits. Free downloadable irs tax forms Section 501(c)(15) gross receipts. Free downloadable irs tax forms   The definition of gross receipts for purposes of determining whether small insurance companies qualify as tax-exempt under section 501(c)(15) has changed. Free downloadable irs tax forms See Notice 2006-42, 2006-19 I. Free downloadable irs tax forms R. Free downloadable irs tax forms B. Free downloadable irs tax forms 878, Notice 2006-42. Free downloadable irs tax forms Prohibited tax shelter transactions. Free downloadable irs tax forms  New excise taxes are imposed under section 4965 on certain tax-exempt organizations entering into prohibited tax shelter transactions. Free downloadable irs tax forms See T. Free downloadable irs tax forms D. Free downloadable irs tax forms 9492, Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirements, 2010-33 I. Free downloadable irs tax forms R. Free downloadable irs tax forms B. Free downloadable irs tax forms 242. Free downloadable irs tax forms See IRS Issues Final Regulations Regarding Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirement. Free downloadable irs tax forms Pension Protection Act of 2006 tax changes. Free downloadable irs tax forms  The Pension Protection Act of 2006 made numerous changes to the tax law provisions affecting tax-exempt organizations. Free downloadable irs tax forms Unless otherwise noted, most of the changes became effective on August 17, 2006. Free downloadable irs tax forms For key provisions, go to The Pension Protection Act of 2006. Free downloadable irs tax forms Section 501(c)(3) organizations must make their Form 990-T, Exempt Organization Business Tax Return (and proxy tax under section 6033(e)), open for public inspection for a period of 3 years from the date the Form 990-T is required to be filed (determined with regard to any extension of time for filing) or is actually filed, whichever is later. Free downloadable irs tax forms There is an increase in excise taxes relating to public charities, social welfare organizations, and private foundations. Free downloadable irs tax forms There are additional standards for credit counseling organizations. Free downloadable irs tax forms The definition of convention or association of churches has been modified. Free downloadable irs tax forms Entities that are not required to file Form 990 or 990-EZ must file new Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ. Free downloadable irs tax forms The requirements of disclosure to state officials relating to exempt organizations has been modified. Free downloadable irs tax forms There are excise taxes imposed on excess benefit transactions involving donor advised funds and sponsoring organizations. Free downloadable irs tax forms There are new excise taxes on prohibited tax shelter transactions. Free downloadable irs tax forms There is a modification of recordkeeping requirements for certain charitable contributions. Free downloadable irs tax forms Introduction This publication discusses the rules and procedures for organizations that seek recognition of exemption from federal income tax under section 501(a) of the Internal Revenue Code (the Code). Free downloadable irs tax forms It explains the procedures you must follow to obtain an appropriate ruling or determination letter recognizing your organization's exemption, as well as certain other information that applies generally to all exempt organizations. Free downloadable irs tax forms To qualify for exemption under the Code, your organization must be organized for one or more of the purposes specifically designated in the Code. Free downloadable irs tax forms Organizations that are exempt under section 501(a) include those organizations described in section 501(c). Free downloadable irs tax forms Section 501(c) organizations are covered in this publication. Free downloadable irs tax forms Chapter 1, Application, Approval, and Appeal Procedures, provides general information about the procedures for obtaining recognition of tax-exempt status. Free downloadable irs tax forms Chapter 2, Filing Requirements and Required Disclosures, contains information about annual filing requirements and other matters that may affect your organization's tax-exempt status. Free downloadable irs tax forms Chapter 3, Section 501(c)(3) Organizations, contains detailed information on various matters affecting section 501(c)(3) organizations, including a section on the determination of private foundation status. Free downloadable irs tax forms Chapter 4, Other Section 501(c) Organizations, includes separate sections for specific types of organizations described in section 501(c). Free downloadable irs tax forms Chapter 5, Excise Taxes, provides information on when excise taxes may be imposed. Free downloadable irs tax forms Organizations not discussed in this publication. Free downloadable irs tax forms   Certain organizations that may qualify for exemption are not discussed in this publication, although they are included in the Organization Reference Chart. Free downloadable irs tax forms These organizations (and the Code sections that apply to them) are as follows. Free downloadable irs tax forms Corporations organized under Acts of Congress 501(c)(1) Teachers' retirement fund associations 501(c)(11) Mutual insurance companies 501(c)(15) Corporations organized to finance crop operations 501(c)(16) Employee funded pension trusts (created before June 25, 1959) 501(c)(18) Withdrawal liability payment fund 501(c)(22) Veterans' organizations (created before 1880) 501(c)(23) National Railroad Retirement Investment Trust 501(c)(28) Religious and apostolic associations 501(d) Cooperative hospital service organizations 501(e) Cooperative service organizations of operating educational organizations 501(f)   Section 501(c)(24) organizations (section 4049 ERISA trusts) are neither discussed in the text nor listed in the Organization Reference Chart. Free downloadable irs tax forms   Similarly, farmers' cooperative associations that qualify for exemption under section 521, qualified state tuition programs described in section 529, and pension, profit-sharing, and stock bonus plans described in section 401(a) are not discussed in this publication. Free downloadable irs tax forms If you think your organization falls within one of these categories, contact the IRS for any additional information you need. Free downloadable irs tax forms For telephone assistance, call 1-877-829-5500. Free downloadable irs tax forms   Check the Table of Contents at the beginning of this publication to determine whether your organization is described in this publication. Free downloadable irs tax forms If it is, read the chapter (or section) that applies to your type of organization for the specific information you must give when applying for recognition of exemption. Free downloadable irs tax forms Organization Reference Chart. Free downloadable irs tax forms   The Organization Reference Chart enables you to locate at a glance the section of the Code under which your organization might qualify for exemption. Free downloadable irs tax forms It also shows the required application form and, if your organization meets the exemption requirements, the annual return to be filed (if any), and whether or not a contribution to your organization will be deductible by a donor. Free downloadable irs tax forms It also describes each type of qualifying organization and the general nature of its activities. Free downloadable irs tax forms   You may use the Organization Reference Chart to determine the Code section that you think applies to your organization. Free downloadable irs tax forms Any correspondence with the IRS (in requesting forms or otherwise) will be expedited if you indicate in your correspondence the appropriate Code section. Free downloadable irs tax forms Check the IRS website, IRS. Free downloadable irs tax forms gov, for the latest updates, Tax Information for Charities & Other Non-Profits, www. Free downloadable irs tax forms irs. Free downloadable irs tax forms gov/charities/index. Free downloadable irs tax forms html. Free downloadable irs tax forms Comments and suggestions. Free downloadable irs tax forms   We welcome your comments about this publication and your suggestions for future editions. Free downloadable irs tax forms   You can e-mail us while visiting our website at IRS. Free downloadable irs tax forms gov. Free downloadable irs tax forms   You can send your comments to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free downloadable irs tax forms NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free downloadable irs tax forms Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free downloadable irs tax forms   If you wish telephone assistance, please call 1-877-829-5500. Free downloadable irs tax forms This toll-free telephone service is available Monday through Friday. Free downloadable irs tax forms Prev  Up  Next   Home   More Online Publications

.gov Reform Effort: Improving Federal Websites

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Digital Government Strategy

The White House released its Digital Government Strategy, entitled Digital Government: Building a 21st Century Platform to Better Serve the American People, on May 23, 2012. You can also download the Digital Government Strategy as a PDF.

The strategy is a plan for delivering better online service to the American people, with three main objectives:

  • Enable citizens and an increasingly mobile workforce to access high-quality digital government information and services anywhere, anytime, on any device.
  • Ensure that as the government adjusts to this new digital world, we seize the opportunity to procure and manage devices, applications, and data in smart, secure and affordable ways.
  • Unlock the power of government data to spur innovation across our Nation and improve the quality of services for the American people.

The Digital Government Strategy was created from a broad range of input across government: the Mobility Strategy and Web Reform Task Forces, the Office of Management and Budget, the General Services Administration, Federal CIOs, new media directors, and web managers. The Strategy also draws on research from the State of the Federal Web Report (PDF) and public input from the National Dialogue for Improving Federal Websites and the National Dialogue on the Federal Mobility Strategy.

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What is the .gov reform effort?

The .gov reform effort began in 2011 as part of President Obama's Campaign to Cut Waste, identifying unnecessary websites that can be consolidated into other websites to reduce costs and improve the quality of service to the American public.

The reform effort led to the development of a federal web strategy, which was merged with the federal mobility strategy to create the Digital Government Strategy. This broader initiative focuses not only on website consolidation, but also on innovating with less and delivering better quality content and information to the public across multiple platforms and devices.

What is the federal government doing to improve federal websites?

In the June 13, 2011, OMB Memorandum M-11-24, Implementing Executive Order 13571 on Streamlining Service Delivery and Improving Customer Service (PDF), agencies are directed to improve online services and eliminate wasteful spending. They must work to manage web resources more efficiently and assure that valuable content is readily accessible and available online. To date, the reform effort has:

  • Instituted a freeze on the approval of new .gov domain names and developed stronger criteria for getting a new domain.
  • Set up the .gov Reform Task Force to recommend updates to federal web guidelines and policies.
  • Posted and updated a list of all registered .gov domain names on Data.gov.
  • Asked agencies to identify sites that can be eliminated, consolidated, and/or streamlined.
  • Conducted an inventory of federal domains and sites, a survey of federal web governance policies and a national dialogue on improving federal web sites, and used the data to create the State of the Federal Web report.
  • Required agencies to develop Web Improvement Plans (included in the State of the Federal Web Report).
  • Worked with others across government to develop the Digital Government Strategy.

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Who's responsible for managing this effort?

The Office of Management and Budget (OMB), the General Services Administration (GSA), the Office of Science and Technology Policy (OSTP), the Chief Information Officers Council, and the Federal Web Managers Council are working with agencies to manage this effort. The .gov Task Force, whose members are listed below, is leading this effort.

Where can I see a list of federal websites?

The list of federal executive branch .gov domains was published July 12, 2011 on Data.gov. It does not include .gov domains/URLs in the federal legislative or judicial branches or from state, local, or tribal governments. It also does not include sub-domains that are below the root domain, such as ers.usda.gov or niaid.nih.gov.

Since each domain can have an unlimited number of potential websites and URLs under them, the total number of websites in the entire federal government is much larger than the number of domains listed on Data.gov. The inventory will allow us to more closely identify the total number of federal websites over time.

The list of domains will be regularly updated and published on Data.gov. Putting the list on Data.gov will have several benefits:

  • Provide increased access to, and transparency of, government data.
  • Foster accountability in how we manage our federal websites and encourage input from public and private sector experts, customers, developers, and other members of the public.
  • Make it easier for agencies to see the websites they own, that are owned by other agencies, and to increase opportunities for collaboration across government.

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Who is on the .gov Task Force and how were they selected?

The Federal Chief Information Officer selected the members of the .gov Task Force, representing a broad range of agencies and a mix of perspectives and skills.

Task force members:

  • Les Benito, Director, Public Web at Defense Media Activity
  • Gray Brooks, Associate CIO, Federal Communications Commission
  • Sheila Campbell, Director, Center for Excellence in Digital Government, Office of Citizen Services, General Services Administration
  • Sarah Crane, Director, USA.gov, Office of Citizen Services, General Services Administration
  • Cammie Croft, Senior Advisor, Director of New Media and Citizen Engagement, Department of Energy
  • Linda Cureton, Chief Information Officer, NASA
  • Terry Davis, IT Specialist, Department of Defense
  • Nick Fraser, Office of Information and Regulatory Affairs, Office of Management and Budget, Executive Office of the President
  • Miguel Gomez, Director, AIDS.gov, Health and Human Services
  • Jeffrey Levy, Director of Web Communications, Environmental Protection Agency, and Co-Chair, Federal Web Managers Council
  • Dan Munz, IT Specialist, Consumer Financial Protection Bureau
  • Adam Neufeld, Office of Management and Budget, Executive Office of the President
  • Todd Park, U.S. Chief Technology Officer
  • Macon Phillips, Director of Digital Strategy, The White House
  • Stacy Riggs, Office of Government-wide Policy, General Services Administration
  • Rand Ruggieri, EGov Program Manager, Department of Commerce
  • Janet Stevens, Chief Information Officer, Food Safety and Inspection Service, Department of Agriculture
  • Kodiak Starr, Creative Director of New Media, Executive Office of the President
  • Haley Van Dyck, Office of E-Gov and Information Technology, Office of Management and Budget, Executive Office of the President
  • Chris Vein, Deputy U.S. Chief Technology Officer for Government Innovation, Office of Science and Technology Policy, Executive Office of the President
  • Jim Wilson, Senior Editor, NASA.gov

We plan to consult with additional subject matter experts, customers, and others as needed, to provide expertise on such areas as user-centered design, search, information management policy, privacy and security issues, and overall Internet trends such as the growth of mobile and social media.

How was the public involved in improving federal websites?

During this initiative we've invited you to join the conversation about improving federal websites. Releasing the .gov dataset on Data.gov was the first step. We enabled commenting on the dataset, and considered your ideas and comments as we developed the domain inventory.

As we've seen in other efforts, making government data transparent can spark the creativity of many bright minds across the country. We hope the public will continue to explore, discuss, and remix this data, and maybe even use it to map the .gov domain in ways we haven't seen before.

From September 19–30, 2011, we hosted a "national dialogue"–an online conversation that brought together experts, innovators, and ordinary citizens who rely on federal information every day. We discussed how federal agencies can learn from, and contribute to, the best practices of the modern web. It was a discussion filled with ideas and energy.

If you have questions about the .gov Task Force, contact Alycia Piazza at alycia.piazza@gsa.gov.

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Content Lead: Natalie Davidson and Andrea Sigritz
Page Reviewed/Updated: October 22, 2013

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The Free Downloadable Irs Tax Forms

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