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Free Income Tax Return

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Free Income Tax Return

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

Free income tax return Internal Revenue Bulletin:  2010-9  March 1, 2010  Rev. Free income tax return Proc. Free income tax return 2010-18 Table of Contents SECTION 1. Free income tax return PURPOSE SECTION 2. Free income tax return BACKGROUND SECTION 3. Free income tax return SCOPE SECTION 4. Free income tax return APPLICATION SECTION 5. Free income tax return EFFECTIVE DATE SECTION 6. Free income tax return DRAFTING INFORMATION SECTION 1. Free income tax return PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2010, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2010, including a separate table of inclusion amounts for lessees of trucks and vans. Free income tax return The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Free income tax return SECTION 2. Free income tax return BACKGROUND . Free income tax return 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Free income tax return Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. Free income tax return The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Free income tax return This change reflects the higher rate of price inflation for trucks and vans since 1988. Free income tax return . Free income tax return 02 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Free income tax return The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Free income tax return Under § 1. Free income tax return 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. Free income tax return One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Free income tax return Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Free income tax return SECTION 3. Free income tax return SCOPE . Free income tax return 01 The limitations on depreciation deductions in section 4. Free income tax return 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2010, and continue to apply for each taxable year that the passenger automobile remains in service. Free income tax return . Free income tax return 02 The tables in section 4. Free income tax return 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2010. Free income tax return Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Free income tax return See Rev. Free income tax return Proc. Free income tax return 2005-13, 2005-1 C. Free income tax return B. Free income tax return 759, for passenger automobiles first leased before calendar year 2006; Rev. Free income tax return Proc. Free income tax return 2006-18, 2006-1 C. Free income tax return B. Free income tax return 645, for passenger automobiles first leased during calendar year 2006; Rev. Free income tax return Proc. Free income tax return 2007-30, 2007-1 C. Free income tax return B. Free income tax return 1104, for passenger automobiles first leased during calendar year 2007; Rev. Free income tax return Proc. Free income tax return 2008-22, 2008-12 I. Free income tax return R. Free income tax return B. Free income tax return 658, for passenger automobiles first leased during calendar year 2008; and Rev. Free income tax return Proc. Free income tax return 2009-24, 2009-17 I. Free income tax return R. Free income tax return B. Free income tax return 885, for passenger automobiles first leased during calendar year 2009. Free income tax return SECTION 4. Free income tax return APPLICATION . Free income tax return 01 Limitations on Depreciation Deductions for Certain Automobiles. Free income tax return (1) Amount of the inflation adjustment. Free income tax return (a) Passenger automobiles (other than trucks or vans). Free income tax return Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Free income tax return The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Free income tax return The new car component of the CPI was 115. Free income tax return 2 for October 1987 and 137. Free income tax return 851 for October 2009. Free income tax return The October 2009 index exceeded the October 1987 index by 22. Free income tax return 651. Free income tax return Therefore, the automobile price inflation adjustment for 2010 for passenger automobiles (other than trucks and vans) is 19. Free income tax return 66 percent (22. Free income tax return 651/115. Free income tax return 2 x 100%). Free income tax return The dollar limitations in § 280F(a) are multiplied by a factor of 0. Free income tax return 1966, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2010. Free income tax return This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2010. Free income tax return (b) Trucks and vans. Free income tax return To determine the dollar limitations for trucks and vans first placed in service during calendar year 2010, the new truck component of the CPI is used instead of the new car component. Free income tax return The new truck component of the CPI was 112. Free income tax return 4 for October 1987 and 140. Free income tax return 897 for October 2009. Free income tax return The October 2009 index exceeded the October 1987 index by 28. Free income tax return 497. Free income tax return Therefore, the automobile price inflation adjustment for 2010 for trucks and vans is 25. Free income tax return 35 percent (28. Free income tax return 497/112. Free income tax return 4 x 100%). Free income tax return The dollar limitations in § 280F(a) are multiplied by a factor of 0. Free income tax return 2535, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Free income tax return This adjustment applies to all trucks and vans that are first placed in service in calendar year 2010. Free income tax return (2) Amount of the limitation. Free income tax return Tables 1 and 2 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2010. Free income tax return Use Table 1 for a passenger automobile (other than a truck or van) and Table 2 for a truck or van placed in service in calendar year 2010. Free income tax return REV. Free income tax return PROC. Free income tax return 2010-18 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Free income tax return PROC. Free income tax return 2010-18 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 . Free income tax return 02 Inclusions in Income of Lessees of Passenger Automobiles. Free income tax return A taxpayer must follow the procedures in § 1. Free income tax return 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2010. Free income tax return In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 3 of this revenue procedure, while lessees of trucks and vans should use Table 4 of this revenue procedure. Free income tax return REV. Free income tax return PROC. Free income tax return 2010-18 TABLE 3 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $16,700 $17,000 3 7 10 11 14 17,000 17,500 4 8 13 15 16 17,500 18,000 5 10 16 19 21 18,000 18,500 6 13 18 23 26 18,500 19,000 7 15 22 26 31 19,000 19,500 8 17 25 30 35 19,500 20,000 9 19 29 34 39 20,000 20,500 10 21 32 38 44 20,500 21,000 11 23 35 42 48 21,000 21,500 12 26 38 45 53 21,500 22,000 13 28 41 50 57 22,000 23,000 14 31 46 56 63 23,000 24,000 16 36 52 63 73 24,000 25,000 18 40 59 71 81 25,000 26,000 20 44 66 78 90 26,000 27,000 22 49 71 86 100 27,000 28,000 24 53 78 94 108 28,000 29,000 26 57 85 101 118 29,000 30,000 28 61 92 109 126 30,000 31,000 30 66 97 117 135 31,000 32,000 32 70 104 125 144 32,000 33,000 34 74 111 132 153 33,000 34,000 36 79 117 140 161 34,000 35,000 38 83 123 148 171 35,000 36,000 40 87 130 156 179 36,000 37,000 42 92 136 163 188 37,000 38,000 44 96 143 170 198 38,000 39,000 46 100 149 179 206 39,000 40,000 48 105 155 186 215 40,000 41,000 50 109 162 194 224 41,000 42,000 52 113 169 201 233 42,000 43,000 54 118 174 210 241 43,000 44,000 56 122 181 217 251 44,000 45,000 58 126 188 225 259 45,000 46,000 60 131 194 232 269 46,000 47,000 61 135 201 240 277 47,000 48,000 63 140 207 248 286 48,000 49,000 65 144 213 256 295 49,000 50,000 67 148 220 263 304 50,000 51,000 69 153 226 271 313 51,000 52,000 71 157 232 279 322 52,000 53,000 73 161 239 287 331 53,000 54,000 75 166 245 294 340 54,000 55,000 77 170 252 302 348 55,000 56,000 79 174 258 310 358 56,000 57,000 81 178 265 318 366 57,000 58,000 83 183 271 325 375 58,000 59,000 85 187 278 333 384 59,000 60,000 87 191 284 341 393 60,000 62,000 90 198 294 352 406 62,000 64,000 94 207 306 368 424 64,000 66,000 98 215 320 382 443 66,000 68,000 102 224 332 398 460 68,000 70,000 106 232 346 413 478 70,000 72,000 110 241 358 429 496 72,000 74,000 114 250 371 444 513 74,000 76,000 118 258 384 460 531 76,000 78,000 122 267 396 476 549 78,000 80,000 126 276 409 491 566 80,000 85,000 132 291 432 518 598 85,000 90,000 142 313 464 556 643 90,000 95,000 152 334 497 594 687 95,000 100,000 162 356 528 634 731 100,000 110,000 177 388 577 691 798 110,000 120,000 196 432 641 768 887 120,000 130,000 216 475 705 846 976 130,000 140,000 236 518 770 922 1,065 140,000 150,000 256 561 834 1,000 1,154 150,000 160,000 275 605 898 1,077 1,243 160,000 170,000 295 648 963 1,153 1,333 170,000 180,000 315 691 1,027 1,231 1,421 180,000 190,000 334 735 1,091 1,308 1,510 190,000 200,000 354 778 1,155 1,386 1,599 200,000 210,000 374 821 1,220 1,462 1,688 210,000 220,000 393 865 1,284 1,539 1,777 220,000 230,000 413 908 1,348 1,617 1,866 230,000 240,000 433 951 1,413 1,693 1,956 240,000 and up 453 995 1,476 1,771 2,044 REV. Free income tax return PROC. Free income tax return 2010-18 TABLE 4 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later 17,000 17,500 3 6 9 10 11 17,500 18,000 4 8 12 14 16 18,000 18,500 5 10 15 18 21 18,500 19,000 6 12 19 22 24 19,000 19,500 7 15 21 26 29 19,500 20,000 8 17 25 29 34 20,000 20,500 9 19 28 33 38 20,500 21,000 10 21 31 37 43 21,000 21,500 11 23 35 41 47 21,500 22,000 12 25 38 45 51 22,000 23,000 13 29 42 51 58 23,000 24,000 15 33 49 58 67 24,000 25,000 17 37 56 66 76 25,000 26,000 19 42 62 73 85 26,000 27,000 21 46 68 82 93 27,000 28,000 23 50 75 89 103 28,000 29,000 25 55 81 97 111 29,000 30,000 27 59 88 104 121 30,000 31,000 29 63 94 113 129 31,000 32,000 31 68 100 120 138 32,000 33,000 33 72 107 127 148 33,000 34,000 35 76 114 135 156 34,000 35,000 37 81 119 143 165 35,000 36,000 39 85 126 151 174 36,000 37,000 41 89 133 158 183 37,000 38,000 43 94 139 166 191 38,000 39,000 45 98 145 174 201 39,000 40,000 47 102 152 182 209 40,000 41,000 49 106 159 189 218 41,000 42,000 51 111 164 198 227 42,000 43,000 53 115 171 205 236 43,000 44,000 55 119 178 213 245 44,000 45,000 57 124 184 220 254 45,000 46,000 59 128 190 228 263 46,000 47,000 60 133 197 235 272 47,000 48,000 62 137 203 244 280 48,000 49,000 64 142 209 251 290 49,000 50,000 66 146 216 259 298 50,000 51,000 68 150 223 266 308 51,000 52,000 70 154 229 275 316 52,000 53,000 72 159 235 282 325 53,000 54,000 74 163 242 290 334 54,000 55,000 76 167 249 297 343 55,000 56,000 78 172 254 305 352 56,000 57,000 80 176 261 313 361 57,000 58,000 82 180 268 320 370 58,000 59,000 84 185 274 328 378 59,000 60,000 86 189 280 336 388 60,000 62,000 89 195 291 347 401 62,000 64,000 93 204 303 363 418 64,000 66,000 97 213 315 379 436 66,000 68,000 101 221 329 394 454 68,000 70,000 105 230 341 410 472 70,000 72,000 109 239 354 424 490 72,000 74,000 113 247 367 440 508 74,000 76,000 117 256 380 455 526 76,000 78,000 121 264 393 471 543 78,000 80,000 125 273 406 486 561 80,000 85,000 131 289 428 513 592 85,000 90,000 141 310 461 552 636 90,000 95,000 151 332 492 591 681 95,000 100,000 161 353 525 629 726 100,000 110,000 176 386 573 686 793 110,000 120,000 195 430 637 763 882 120,000 130,000 215 473 701 841 971 130,000 140,000 235 516 766 918 1,059 140,000 150,000 255 559 830 995 1,149 150,000 160,000 274 603 894 1,072 1,238 160,000 170,000 294 646 958 1,150 1,326 170,000 180,000 314 689 1,023 1,226 1,416 180,000 190,000 333 733 1,087 1,303 1,505 190,000 200,000 353 776 1,151 1,381 1,594 200,000 210,000 373 819 1,216 1,457 1,683 210,000 220,000 392 863 1,280 1,534 1,772 220,000 230,000 412 906 1,344 1,612 1,861 230,000 240,000 432 949 1,409 1,689 1,949 240,000 and up 452 992 1,473 1,766 2,039 SECTION 5. Free income tax return EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. Free income tax return SECTION 6. Free income tax return DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Free income tax return Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Free income tax return For further information regarding this revenue procedure, contact Mr. Free income tax return Harvey at (202) 622-4930 (not a toll-free call). Free income tax return Prev  Up  Next   Home   More Internal Revenue Bulletins