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

Free income tax forms 7. Free income tax forms   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. Free income tax forms Costs not included. Free income tax forms Intangible Drilling Costs Exploration CostsPartnerships and S corporations. Free income tax forms Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. Free income tax forms Film and Television Production Costs What's New Film and television productions costs. Free income tax forms  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. Free income tax forms See Film and Television Production Costs , later. Free income tax forms Introduction This chapter discusses costs you can elect to deduct or capitalize. Free income tax forms You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. Free income tax forms If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. Free income tax forms When you capitalize a cost, you add it to the basis of property to which it relates. Free income tax forms A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. Free income tax forms Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. Free income tax forms You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. Free income tax forms For more information on the alternative minimum tax, see the instructions for the following forms. Free income tax forms Form 6251, Alternative Minimum Tax—Individuals. Free income tax forms Form 4626, Alternative Minimum Tax—Corporations. Free income tax forms Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. Free income tax forms Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. Free income tax forms Certain carrying charges must be capitalized under the uniform capitalization rules. Free income tax forms (For information on capitalization of interest, see chapter 4 . Free income tax forms ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. Free income tax forms You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. Free income tax forms For unimproved and unproductive real property, your election is good for only 1 year. Free income tax forms You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. Free income tax forms For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. Free income tax forms For personal property, your election is effective until the date you install or first use it, whichever is later. Free income tax forms How to make the election. Free income tax forms   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. Free income tax forms However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free income tax forms Attach the statement to the amended return and write “Filed pursuant to section 301. Free income tax forms 9100-2” on the statement. Free income tax forms File the amended return at the same address you filed the original return. Free income tax forms Research and Experimental Costs The costs of research and experimentation are generally capital expenses. Free income tax forms However, you can elect to deduct these costs as a current business expense. Free income tax forms Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. Free income tax forms If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Free income tax forms For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. Free income tax forms Research and experimental costs defined. Free income tax forms   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. Free income tax forms Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. Free income tax forms Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. Free income tax forms      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. Free income tax forms However, costs paid or incurred to obtain another's patent are not research and experimental costs. Free income tax forms Product. Free income tax forms   The term “product” includes any of the following items. Free income tax forms Formula. Free income tax forms Invention. Free income tax forms Patent. Free income tax forms Pilot model. Free income tax forms Process. Free income tax forms Technique. Free income tax forms Property similar to the items listed above. Free income tax forms It also includes products used by you in your trade or business or held for sale, lease, or license. Free income tax forms Costs not included. Free income tax forms   Research and experimental costs do not include expenses for any of the following activities. Free income tax forms Advertising or promotions. Free income tax forms Consumer surveys. Free income tax forms Efficiency surveys. Free income tax forms Management studies. Free income tax forms Quality control testing. Free income tax forms Research in connection with literary, historical, or similar projects. Free income tax forms The acquisition of another's patent, model, production, or process. Free income tax forms When and how to elect. Free income tax forms   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. Free income tax forms If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. Free income tax forms Deducting or Amortizing Research and Experimentation Costs IF you . Free income tax forms . Free income tax forms . Free income tax forms THEN . Free income tax forms . Free income tax forms . Free income tax forms Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Free income tax forms Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. Free income tax forms See Research and Experimental Costs in chapter 8. Free income tax forms Research credit. Free income tax forms   If you pay or incur qualified research expenses, you may be able to take the research credit. Free income tax forms For more information see Form 6765, Credit for Increasing Research Activities and its instructions. Free income tax forms Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. Free income tax forms You can usually recover them through depreciation or depletion. Free income tax forms However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. Free income tax forms These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. Free income tax forms You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. Free income tax forms You can elect to deduct only the costs of items with no salvage value. Free income tax forms These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. Free income tax forms Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. Free income tax forms However, see Amounts paid to contractor that must be capitalized , later. Free income tax forms You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. Free income tax forms It does not matter whether there is any intent to produce hydrocarbons. Free income tax forms If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. Free income tax forms Amounts paid to contractor that must be capitalized. Free income tax forms   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. Free income tax forms How to make the election. Free income tax forms   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. Free income tax forms No formal statement is required. Free income tax forms If you file Schedule C (Form 1040), enter these costs under “Other expenses. Free income tax forms ”   For oil and gas wells, your election is binding for the year it is made and for all later years. Free income tax forms For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. Free income tax forms You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. Free income tax forms Energy credit for costs of geothermal wells. Free income tax forms   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. Free income tax forms See the Instructions for Form 3468 for more information. Free income tax forms Nonproductive well. Free income tax forms   If you capitalize your IDCs, you have another option if the well is nonproductive. Free income tax forms You can deduct the IDCs of the nonproductive well as an ordinary loss. Free income tax forms You must indicate and clearly state your election on your tax return for the year the well is completed. Free income tax forms Once made, the election for oil and gas wells is binding for all later years. Free income tax forms You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. Free income tax forms Costs incurred outside the United States. Free income tax forms   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. Free income tax forms However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. Free income tax forms If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. Free income tax forms These rules do not apply to a nonproductive well. Free income tax forms Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. Free income tax forms You recover these costs through depletion as the mineral is removed from the ground. Free income tax forms However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). Free income tax forms How to make the election. Free income tax forms   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. Free income tax forms Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. Free income tax forms The election applies to the tax year you make this election and all later tax years. Free income tax forms Partnerships and S corporations. Free income tax forms   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. Free income tax forms Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. Free income tax forms Reduced corporate deductions for exploration costs. Free income tax forms   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. Free income tax forms It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. Free income tax forms A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. Free income tax forms For more information on this method of amortization, see Internal Revenue Code section 59(e). Free income tax forms   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. Free income tax forms However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. Free income tax forms See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Free income tax forms   These rules also apply to the deduction of development costs by corporations. Free income tax forms See Development Costs , later. Free income tax forms Recapture of exploration expenses. Free income tax forms   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. Free income tax forms Use either of the following methods. Free income tax forms Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. Free income tax forms Your election must be clearly indicated on the return. Free income tax forms Increase your adjusted basis in the mine by the amount included in income. Free income tax forms Generally, you must elect this recapture method by the due date (including extensions) of your return. Free income tax forms However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free income tax forms Make the election on your amended return and write “Filed pursuant to section 301. Free income tax forms 9100-2” on the form where you are including the income. Free income tax forms File the amended return at the same address you filed the original return. Free income tax forms Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Free income tax forms   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. Free income tax forms Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Free income tax forms   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. Free income tax forms Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. Free income tax forms If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. Free income tax forms Foreign exploration costs. Free income tax forms   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. Free income tax forms You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. Free income tax forms (Cost depletion is discussed in chapter 9 . Free income tax forms ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. Free income tax forms These rules also apply to foreign development costs. Free income tax forms Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. Free income tax forms These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. Free income tax forms Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. Free income tax forms Development costs do not include the costs for the acquisition or improvement of depreciable property. Free income tax forms Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. Free income tax forms This election applies each tax year to expenses paid or incurred in that year. Free income tax forms Once made, the election is binding for the year and cannot be revoked for any reason. Free income tax forms How to make the election. Free income tax forms   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. Free income tax forms Generally, you must make the election by the due date of the return (including extensions). Free income tax forms However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free income tax forms Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free income tax forms 9100-2. Free income tax forms ” File the amended return at the same address you filed the original return. Free income tax forms Foreign development costs. Free income tax forms   The rules discussed earlier for foreign exploration costs apply to foreign development costs. Free income tax forms Reduced corporate deductions for development costs. Free income tax forms   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. Free income tax forms Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. Free income tax forms For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Free income tax forms Circulation costs are deductible even if they normally would be capitalized. Free income tax forms This rule does not apply to the following costs that must be capitalized. Free income tax forms The purchase of land or depreciable property. Free income tax forms The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. Free income tax forms Other treatment of circulation costs. Free income tax forms   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. Free income tax forms Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). Free income tax forms Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. Free income tax forms How to make the election. Free income tax forms   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. Free income tax forms Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. Free income tax forms Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. Free income tax forms However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. Free income tax forms The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Free income tax forms Any remaining costs must be amortized. Free income tax forms For information about amortizing start-up and organizational costs, see chapter 8 . Free income tax forms Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Free income tax forms Organizational costs include the costs of creating a corporation. Free income tax forms For more information on start-up and organizational costs, see chapter 8 . Free income tax forms How to make the election. Free income tax forms   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. Free income tax forms However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free income tax forms Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free income tax forms 9100-2. Free income tax forms ” File the amended return at the same address you filed the original return. Free income tax forms The election applies when computing taxable income for the current tax year and all subsequent years. Free income tax forms Reforestation Costs Reforestation costs are generally capital expenditures. Free income tax forms However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Free income tax forms The remaining costs can be amortized over an 84-month period. Free income tax forms For information about amortizing reforestation costs, see chapter 8 . Free income tax forms Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Free income tax forms Qualified timber property is property that contains trees in significant commercial quantities. Free income tax forms See chapter 8 for more information on qualifying reforestation costs and qualified timber property. Free income tax forms If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. Free income tax forms Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. Free income tax forms How to make the election. Free income tax forms   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. Free income tax forms If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. Free income tax forms If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. Free income tax forms The unique stand identification numbers. Free income tax forms The total number of acres reforested during the tax year. Free income tax forms The nature of the reforestation treatments. Free income tax forms The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. Free income tax forms   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free income tax forms Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free income tax forms 9100-2. Free income tax forms ” File the amended return at the same address you filed the original return. Free income tax forms The election applies when computing taxable income for the current tax year and all subsequent years. Free income tax forms   For additional information on reforestation costs, see chapter 8 . Free income tax forms Recapture. Free income tax forms   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. Free income tax forms For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. Free income tax forms Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. Free income tax forms However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. Free income tax forms Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. Free income tax forms However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. Free income tax forms You must own or lease the facility or vehicle for use in connection with your trade or business. Free income tax forms A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. Free income tax forms A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). Free income tax forms You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. Free income tax forms Deduction limit. Free income tax forms   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. Free income tax forms However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. Free income tax forms Partners and partnerships. Free income tax forms   The $15,000 limit applies to a partnership and also to each partner in the partnership. Free income tax forms A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. Free income tax forms If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. Free income tax forms   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). Free income tax forms If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. Free income tax forms Example. Free income tax forms Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. Free income tax forms Emilio had $12,000 of similar expenses in his sole proprietorship. Free income tax forms He elected to deduct $7,000 of them. Free income tax forms Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. Free income tax forms Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. Free income tax forms Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. Free income tax forms Qualification standards. Free income tax forms   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. Free income tax forms You can view the Americans with Disabilities Act at www. Free income tax forms ada. Free income tax forms gov/pubs/ada. Free income tax forms htm. Free income tax forms   The following is a list of some architectural barrier removal costs that can be deducted. Free income tax forms Ground and floor surfaces. Free income tax forms Walks. Free income tax forms Parking lots. Free income tax forms Ramps. Free income tax forms Entrances. Free income tax forms Doors and doorways. Free income tax forms Stairs. Free income tax forms Floors. Free income tax forms Toilet rooms. Free income tax forms Water fountains. Free income tax forms Public telephones. Free income tax forms Elevators. Free income tax forms Controls. Free income tax forms Signage. Free income tax forms Alarms. Free income tax forms Protruding objects. Free income tax forms Symbols of accessibility. Free income tax forms You can find the ADA guidelines and requirements for architectural barrier removal at www. Free income tax forms usdoj. Free income tax forms gov/crt/ada/reg3a. Free income tax forms html. Free income tax forms   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. Free income tax forms You can find the guidelines and requirements for transportation barrier removal at www. Free income tax forms fta. Free income tax forms dot. Free income tax forms gov. Free income tax forms   Also, you can access the ADA website at www. Free income tax forms ada. Free income tax forms gov for additional information. Free income tax forms Other barrier removals. Free income tax forms   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. Free income tax forms The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. Free income tax forms The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). Free income tax forms The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. Free income tax forms How to make the election. Free income tax forms   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. Free income tax forms Identify the deduction as a separate item. Free income tax forms The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. Free income tax forms If you make this election, you must maintain adequate records to support your deduction. Free income tax forms   For your election to be valid, you generally must file your return by its due date, including extensions. Free income tax forms However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Free income tax forms Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Free income tax forms 9100-2. Free income tax forms ” File the amended return at the same address you filed the original return. Free income tax forms Your election is irrevocable after the due date, including extensions, of your return. Free income tax forms Disabled access credit. Free income tax forms   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. Free income tax forms If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Free income tax forms   For more information, see Form 8826, Disabled Access Credit. Free income tax forms Film and Television Production Costs Film and television production costs are generally capital expenses. Free income tax forms However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. Free income tax forms For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. Free income tax forms Prev  Up  Next   Home   More Online Publications