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Free Online Amended Tax Return

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Free Online Amended Tax Return

Free online amended tax return Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. Free online amended tax return Proc. Free online amended tax return 2013-16 Table of Contents SECTION 1. Free online amended tax return PURPOSE SECTION 2. Free online amended tax return BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. Free online amended tax return BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. Free online amended tax return FEDERAL INCOME TAX TREATMENT SECTION 5. Free online amended tax return INFORMATION-REPORTING OBLIGATIONS SECTION 6. Free online amended tax return HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. Free online amended tax return PENALTY RELIEF FOR 2012 SECTION 8. Free online amended tax return SCOPE AND EFFECTIVE DATE SECTION 9. Free online amended tax return DRAFTING INFORMATION SECTION 1. Free online amended tax return PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). Free online amended tax return Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). Free online amended tax return In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. Free online amended tax return Current plans call for HAMP to continue accepting new borrowers through the end of 2013. Free online amended tax return The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. Free online amended tax return SECTION 2. Free online amended tax return BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . Free online amended tax return 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Free online amended tax return A description of the program can be found at www. Free online amended tax return makinghomeaffordable. Free online amended tax return gov. Free online amended tax return . Free online amended tax return 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. Free online amended tax return These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. Free online amended tax return . Free online amended tax return 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. Free online amended tax return The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. Free online amended tax return However, as noted in section 2. Free online amended tax return 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. Free online amended tax return (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. Free online amended tax return ”) . Free online amended tax return 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. Free online amended tax return . Free online amended tax return 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. Free online amended tax return The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. Free online amended tax return (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. Free online amended tax return ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). Free online amended tax return Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. Free online amended tax return Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. Free online amended tax return . Free online amended tax return 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. Free online amended tax return (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. Free online amended tax return ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. Free online amended tax return . Free online amended tax return 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). Free online amended tax return If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. Free online amended tax return These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. Free online amended tax return The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. Free online amended tax return The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. Free online amended tax return For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. Free online amended tax return ” . Free online amended tax return 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). Free online amended tax return . Free online amended tax return 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. Free online amended tax return 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. Free online amended tax return . Free online amended tax return 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. Free online amended tax return SECTION 3. Free online amended tax return BACKGROUND—APPLICABLE PROVISIONS OF LAW . Free online amended tax return 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. Free online amended tax return See § 61(a)(12). Free online amended tax return . Free online amended tax return 02 Under § 1. Free online amended tax return 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. Free online amended tax return In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. Free online amended tax return However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. Free online amended tax return See § 1. Free online amended tax return 1001-3(c)(6). Free online amended tax return . Free online amended tax return 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. Free online amended tax return 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. Free online amended tax return If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. Free online amended tax return See also § 1. Free online amended tax return 61-12(c). Free online amended tax return . Free online amended tax return 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. Free online amended tax return If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. Free online amended tax return See, e. Free online amended tax return g. Free online amended tax return , §§ 1. Free online amended tax return 1272-1(c)(5) and 1. Free online amended tax return 1274-2(d). Free online amended tax return . Free online amended tax return 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. Free online amended tax return Section 108(a)(1)(E) and 108(a)(1)(B). Free online amended tax return (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. Free online amended tax return ) . Free online amended tax return 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. Free online amended tax return . Free online amended tax return 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. Free online amended tax return See §§ 108(h) and 163(h)(3)(B)(i). Free online amended tax return . Free online amended tax return 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). Free online amended tax return Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. Free online amended tax return . Free online amended tax return 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. Free online amended tax return . Free online amended tax return 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. Free online amended tax return Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. Free online amended tax return . Free online amended tax return 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. Free online amended tax return See § 108(h)(1). Free online amended tax return If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). Free online amended tax return See § 108(b). Free online amended tax return For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Free online amended tax return . Free online amended tax return 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). Free online amended tax return See Form 982 instructions and Publication 4681. Free online amended tax return This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. Free online amended tax return . Free online amended tax return 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. Free online amended tax return See Notice 2003-18, 2003-1 C. Free online amended tax return B. Free online amended tax return 699, and Rev. Free online amended tax return Rul. Free online amended tax return 79-356, 1979-2 C. Free online amended tax return B. Free online amended tax return 28. Free online amended tax return However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). Free online amended tax return See Rev. Free online amended tax return Rul. Free online amended tax return 2005-46, 2005-2 C. Free online amended tax return B. Free online amended tax return 120, and Rev. Free online amended tax return Rul. Free online amended tax return 75-246, 1975-1 C. Free online amended tax return B. Free online amended tax return 24. Free online amended tax return . Free online amended tax return 14 Under § 451 and § 1. Free online amended tax return 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. Free online amended tax return . Free online amended tax return 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. Free online amended tax return See § 6041(a) and (d) and § 1. Free online amended tax return 6041-1(a)(1) and (b). Free online amended tax return . Free online amended tax return 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. Free online amended tax return See § 6050P(a)-(c) and §§ 1. Free online amended tax return 6050P-1(a) and 1. Free online amended tax return 6050P-2(a) and (d). Free online amended tax return . Free online amended tax return 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. Free online amended tax return These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. Free online amended tax return Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. Free online amended tax return ” . Free online amended tax return 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. Free online amended tax return These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. Free online amended tax return Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. Free online amended tax return SECTION 4. Free online amended tax return FEDERAL INCOME TAX TREATMENT . Free online amended tax return 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. Free online amended tax return See § 1. Free online amended tax return 1001-3. Free online amended tax return At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. Free online amended tax return See also § 61(a)(12) and § 1. Free online amended tax return 61-12(c). Free online amended tax return . Free online amended tax return 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. Free online amended tax return Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. Free online amended tax return Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. Free online amended tax return . Free online amended tax return 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. Free online amended tax return Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. Free online amended tax return . Free online amended tax return 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. Free online amended tax return Therefore, for purposes of § 1. Free online amended tax return 1001-3, the date of the modification is the date of the permanent modification. Free online amended tax return . Free online amended tax return 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. Free online amended tax return 01 of this revenue procedure for the taxable year in which the permanent modification occurs. Free online amended tax return Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. Free online amended tax return The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. Free online amended tax return . Free online amended tax return 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. Free online amended tax return . Free online amended tax return 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. Free online amended tax return This is consistent with Rev. Free online amended tax return Rul. Free online amended tax return 2009-19, 2009-28 I. Free online amended tax return R. Free online amended tax return B. Free online amended tax return 111, which addressed the treatment of Pay-for-Performance Success Payments. Free online amended tax return . Free online amended tax return 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. Free online amended tax return If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. Free online amended tax return . Free online amended tax return 09 As described in section 2. Free online amended tax return 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. Free online amended tax return To the extent that the HAMP-PRA borrower is described in section 4. Free online amended tax return 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. Free online amended tax return To the extent that the HAMP-PRA borrower is described in section 4. Free online amended tax return 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. Free online amended tax return SECTION 5. Free online amended tax return INFORMATION-REPORTING OBLIGATIONS . Free online amended tax return 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. Free online amended tax return A copy of this form is required to be furnished to the borrower. Free online amended tax return . Free online amended tax return 02 As stated in sections 4. Free online amended tax return 01 and 4. Free online amended tax return 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. Free online amended tax return . Free online amended tax return 03 An investor is an applicable entity that is required under § 1. Free online amended tax return 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. Free online amended tax return Under § 1. Free online amended tax return 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. Free online amended tax return Identifiable events determine when Forms 1099-C have to be issued. Free online amended tax return Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. Free online amended tax return This rule under § 1. Free online amended tax return 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. Free online amended tax return . Free online amended tax return 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. Free online amended tax return That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). Free online amended tax return . Free online amended tax return 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Free online amended tax return 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. Free online amended tax return Under § 6041, these payments are not subject to information reporting. Free online amended tax return See Notice 2011-14, 2011-11 I. Free online amended tax return R. Free online amended tax return B. Free online amended tax return 544, 546. Free online amended tax return . Free online amended tax return 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Free online amended tax return 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. Free online amended tax return The payment is subject to the information reporting requirements of § 6041, as described in section 3. Free online amended tax return 15 of this revenue procedure. Free online amended tax return Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. Free online amended tax return SECTION 6. Free online amended tax return HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . Free online amended tax return 01 In general. Free online amended tax return The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). Free online amended tax return As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. Free online amended tax return Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. Free online amended tax return A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. Free online amended tax return 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. Free online amended tax return Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. Free online amended tax return 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. Free online amended tax return . Free online amended tax return 02 HAMP-PRA borrower options. Free online amended tax return A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. Free online amended tax return 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. Free online amended tax return If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. Free online amended tax return 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. Free online amended tax return . Free online amended tax return 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. Free online amended tax return (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. Free online amended tax return (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. Free online amended tax return 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. Free online amended tax return 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. Free online amended tax return This section 6. Free online amended tax return 03(2) applies only if the change to reporting the discharge using the method described in section 6. Free online amended tax return 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. Free online amended tax return To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. Free online amended tax return (3) Example. Free online amended tax return The following example illustrates the application of section 6. Free online amended tax return 03(2) of this revenue procedure. Free online amended tax return In 2010, B’s basis in B’s principal residence was $330,000. Free online amended tax return In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. Free online amended tax return B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). Free online amended tax return The trial period plan effective date also fell in 2010. Free online amended tax return B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. Free online amended tax return 02(2) of this revenue procedure. Free online amended tax return That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. Free online amended tax return The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. Free online amended tax return For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. Free online amended tax return 02(1) of this revenue procedure. Free online amended tax return Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. Free online amended tax return 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). Free online amended tax return (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. Free online amended tax return 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. Free online amended tax return 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. Free online amended tax return Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. Free online amended tax return 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. Free online amended tax return Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. Free online amended tax return (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. Free online amended tax return 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. Free online amended tax return The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. Free online amended tax return (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. Free online amended tax return The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). Free online amended tax return The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. Free online amended tax return . Free online amended tax return 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. Free online amended tax return (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. Free online amended tax return Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. Free online amended tax return Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. Free online amended tax return If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. Free online amended tax return (2) A HAMP-PRA borrower who has been using the method described in section 6. Free online amended tax return 02(1) of this revenue procedure may change to the method described in section 6. Free online amended tax return 02(2) but must comply with the consistency and open-year requirements described in section 6. Free online amended tax return 01 of this revenue procedure. Free online amended tax return SECTION 7. Free online amended tax return PENALTY RELIEF FOR 2012 . Free online amended tax return 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. Free online amended tax return 03 through 5. Free online amended tax return 04 and section 8. Free online amended tax return 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. Free online amended tax return 01 through 4. Free online amended tax return 04 of this revenue procedure) that is required to be reported for 2012. Free online amended tax return (2) Not later than March 28, 2013, a statement is sent to the Service. Free online amended tax return It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. Free online amended tax return 01(1) of this revenue procedure. Free online amended tax return The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . Free online amended tax return 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. Free online amended tax return 06 and 8. Free online amended tax return 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. Free online amended tax return . Free online amended tax return 03 Section 8. Free online amended tax return 03 and 8. Free online amended tax return 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. Free online amended tax return SECTION 8. Free online amended tax return SCOPE AND EFFECTIVE DATE . Free online amended tax return 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. Free online amended tax return . Free online amended tax return 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. Free online amended tax return . Free online amended tax return 03 Because of the effective date in section 8. Free online amended tax return 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. Free online amended tax return 03 through 5. Free online amended tax return 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. Free online amended tax return 03 through 5. Free online amended tax return 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. Free online amended tax return . Free online amended tax return 04 Because of the effective date in section 8. Free online amended tax return 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. Free online amended tax return 06 of this revenue procedure. Free online amended tax return SECTION 9. Free online amended tax return DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. Free online amended tax return Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. Free online amended tax return Pflanz and Sheldon A. Free online amended tax return Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. Free online amended tax return Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). Free online amended tax return For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). Free online amended tax return Prev  Up  Next   Home   More Internal Revenue Bulletins
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Rural Housing Service

The Department of Agriculture's Rural Housing Service provides grants and loans for housing and community facilities in rural areas of the U.S.

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The Free Online Amended Tax Return

Free online amended tax return Publication 575 - Introductory Material Table of Contents What's New Reminders IntroductionThe General Rule. Free online amended tax return Individual retirement arrangements (IRAs). Free online amended tax return Civil service retirement benefits. Free online amended tax return Social security and equivalent tier 1 railroad retirement benefits. Free online amended tax return Tax-sheltered annuity plans (403(b) plans). Free online amended tax return Ordering forms and publications. Free online amended tax return Tax questions. Free online amended tax return Useful Items - You may want to see: What's New For purposes of the net investment income tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 408, 408A, or 457(b) plans). Free online amended tax return However, these distributions are taken into account when determining the modified adjusted gross income threshold. Free online amended tax return Distributions from a nonqualified retirement plan are included in net investment income. Free online amended tax return See Form 8960, Net Investment Income Tax - Individuals, Estates, and Trusts, and its instructions for more information. Free online amended tax return Reminders Future developments. Free online amended tax return  For the latest information about developments related to Publication 575, such as legislation enacted after it was published, go to www. Free online amended tax return irs. Free online amended tax return gov/pub575. Free online amended tax return In-plan Roth rollovers. Free online amended tax return   Starting in 2013, the American Taxpayer Relief Act of 2012 expanded the rules for in-plan Roth rollovers to include more taxpayers. Free online amended tax return For more information, see In-plan Roth rollovers under Rollovers, discussed later. Free online amended tax return Photographs of missing children. Free online amended tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free online amended tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free online amended tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free online amended tax return Introduction This publication discusses the tax treatment of distributions you receive from pension and annuity plans and also shows you how to report the income on your federal income tax return. Free online amended tax return How these distributions are taxed depends on whether they are periodic payments (amounts received as an annuity) that are paid at regular intervals over several years or nonperiodic payments (amounts not received as an annuity). Free online amended tax return What is covered in this publication?   This publication contains information that you need to understand the following topics. Free online amended tax return How to figure the tax-free part of periodic payments under a pension or annuity plan, including using a simple worksheet for payments under a qualified plan. Free online amended tax return How to figure the tax-free part of nonperiodic payments from qualified and nonqualified plans, and how to use the optional methods to figure the tax on lump-sum distributions from pension, stock bonus, and profit-sharing plans. Free online amended tax return How to roll over certain distributions from a retirement plan into another retirement plan or IRA. Free online amended tax return How to report disability payments, and how beneficiaries and survivors of employees and retirees must report benefits paid to them. Free online amended tax return How to report railroad retirement benefits. Free online amended tax return When additional taxes on certain distributions may apply (including the tax on early distributions and the tax on excess accumulation). Free online amended tax return For additional information on how to report pension or annuity payments on your federal income tax return, be sure to review the instructions on the back of Copies B, C, and 2 of the Form 1099-R that you received and the instructions for Form 1040, lines 16a and 16b (Form 1040A, lines 12a and 12b or Form 1040NR, lines 17a and 17b). Free online amended tax return A “corrected” Form 1099-R replaces the corresponding original Form 1099-R if the original Form 1099-R contained an error. Free online amended tax return Make sure you use the amounts shown on the corrected Form 1099-R when reporting information on your tax return. Free online amended tax return What is not covered in this publication?   The following topics are not discussed in this publication. Free online amended tax return The General Rule. Free online amended tax return   This is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). Free online amended tax return For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. Free online amended tax return Although this publication will help you determine whether you can use the General Rule, it will not help you use it to determine the tax treatment of your pension or annuity income. Free online amended tax return For that and other information on the General Rule, see Publication 939, General Rule for Pensions and Annuities. Free online amended tax return Individual retirement arrangements (IRAs). Free online amended tax return   Information on the tax treatment of amounts you receive from an IRA is in Publication 590, Individual Retirement Arrangements (IRAs). Free online amended tax return Civil service retirement benefits. Free online amended tax return   If you are retired from the federal government (regular, phased, or disability retirement) or are the survivor or beneficiary of a federal employee or retiree who died, get Publication 721, Tax Guide to U. Free online amended tax return S. Free online amended tax return Civil Service Retirement Benefits. Free online amended tax return Publication 721 covers the tax treatment of federal retirement benefits, primarily those paid under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). Free online amended tax return It also covers benefits paid from the Thrift Savings Plan (TSP). Free online amended tax return Social security and equivalent tier 1 railroad retirement benefits. Free online amended tax return   For information about the tax treatment of these benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Free online amended tax return However, this publication (575) covers the tax treatment of the non-social security equivalent benefit portion of tier 1 railroad retirement benefits, tier 2 benefits, vested dual benefits, and supplemental annuity benefits paid by the U. Free online amended tax return S. Free online amended tax return Railroad Retirement Board. Free online amended tax return Tax-sheltered annuity plans (403(b) plans). Free online amended tax return   If you work for a public school or certain tax-exempt organizations, you may be eligible to participate in a 403(b) retirement plan offered by your employer. Free online amended tax return Although this publication covers the treatment of benefits under 403(b) plans and discusses in-plan Roth rollovers from 403(b) plans to designated Roth accounts, it does not cover other tax provisions that apply to these plans. Free online amended tax return For that and other information on 403(b) plans, see Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations. Free online amended tax return Comments and suggestions. Free online amended tax return   We welcome your comments about this publication and your suggestions for future editions. Free online amended tax return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free online amended tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free online amended tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free online amended tax return   You can send your comments from www. Free online amended tax return irs. Free online amended tax return gov/formspubs/. Free online amended tax return Click on “More Information” and then on “Comment on Tax Forms and Publications. Free online amended tax return ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free online amended tax return Ordering forms and publications. Free online amended tax return   Visit www. Free online amended tax return irs. Free online amended tax return gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Free online amended tax return Internal Revenue Service 1201 N. Free online amended tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free online amended tax return   If you have a tax question, check the information available on IRS. Free online amended tax return gov or call 1-800-829-1040. Free online amended tax return We cannot answer tax questions sent to either of the above addresses. Free online amended tax return Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 525 Taxable and Nontaxable Income 560 Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) 571 Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations 590 Individual Retirement Arrangements (IRAs) 721 Tax Guide to U. Free online amended tax return S. Free online amended tax return Civil Service Retirement Benefits 915 Social Security and Equivalent Railroad Retirement Benefits 939 General Rule for Pensions and Annuities Form (and Instructions) W-4P Withholding Certificate for Pension or Annuity Payments 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free online amended tax return 4972 Tax on Lump-Sum Distributions 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts See How To Get Tax Help near the end of this publication for information about getting publications and forms. Free online amended tax return Prev  Up  Next   Home   More Online Publications