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Free tax services online Publication 554 - Introductory Material Table of Contents What's New Reminders IntroductionVolunteer Income Tax Assistance and Tax Counseling for the Elderly. Free tax services online Ordering forms and publications. Free tax services online Tax questions. Free tax services online What's New Alternative minimum tax exemption increased. Free tax services online  The AMT exemption amount has increased to $51,900 ($80,800 if married filing jointly or qualifying widow(er); $40,400 if married filing separately). Free tax services online Earned income credit. Free tax services online  The maximum amount of income you can earn and still get the credit has increased. Free tax services online You may be able to take the credit if you earn less than: $14,340 ($19,680 if married filing jointly), do not have a qualifying child, and are at least 25 years old and under 65, $37,870 ($43,210 if married filing jointly), and you have one qualifying child, $43,038 ($48,378 if married filing jointly), and you have two qualifying children, or $46,227 ($51,567 if married filing jointly), and you have three or more qualifying children. Free tax services online For more information, see Earned Income Credit , later. Free tax services online Exemption phaseout. Free tax services online  You lose at least part of the benefit of your exemptions if your adjusted gross income is above a certain amount. Free tax services online For 2013, the phaseout begins at $150,000 for married individuals filing separate returns; $250,000 for single individuals; $275,000 for heads of household; and $300,000 for married individuals filing joint returns or qualifying widow(er)s. Free tax services online For more information, see Phaseout of Exemptions in Publication 501. Free tax services online Limit on itemized deductions. Free tax services online   Beginning January 1, 2013, itemized deductions for taxpayers with adjusted gross incomes above $150,000 may be reduced. Free tax services online See Overall limitation , later. Free tax services online Medical and dental expenses. Free tax services online   Beginning January 1, 2013, taxpayers 65 and older can deduct only the part of their medical and dental expenses that exceed 7. Free tax services online 5% of their adjusted gross income (10% for taxpayers under 65). Free tax services online Same-sex marriages. Free tax services online  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Free tax services online For more information, see Publication 501. Free tax services online Reminders Future developments. Free tax services online  For the latest information about developments related to Publication 554, such as legislation enacted after it was published, go to www. Free tax services online irs. Free tax services online gov/pub554. Free tax services online Tax return preparers. Free tax services online  Choose your preparer carefully. Free tax services online If you pay someone to prepare your return, the preparer is required, under the law, to sign the return and fill in the other blanks in the Paid Preparer's area of your return. Free tax services online Remember, however, that you are still responsible for the accuracy of every item entered on your return. Free tax services online If there is any underpayment, you are responsible for paying it, plus any interest and penalty that may be due. Free tax services online Sale of home by surviving spouse. Free tax services online  If you are an unmarried widow or widower, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Free tax services online For more information, see Sale of Home , later. Free tax services online Third party designee. Free tax services online  You can check the “Yes” box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, family member, or any other person you choose. Free tax services online This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. Free tax services online It also allows your designee to perform certain actions. Free tax services online See your income tax return instructions for details. Free tax services online Employment tax withholding. Free tax services online  Your wages are subject to withholding for income tax, social security tax, and Medicare tax even if you are receiving social security benefits. Free tax services online Photographs of missing children. Free tax services online  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free tax services online Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free tax services online 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 tax services online Introduction The purpose of this publication is to provide a general overview of selected topics that are of interest to older taxpayers. Free tax services online The publication will help you determine if you need to file a return and, if so, what items to report on your return. Free tax services online Each topic is discussed only briefly, so you will find references to other free IRS publications that provide more detail on these topics if you need it. Free tax services online Table I has a list of questions you may have about filing your federal tax return. Free tax services online To the right of each question is the location of the answer in this publication. Free tax services online Also, at the back of this publication there is an index to help you search for the topic you need. Free tax services online While most federal income tax laws apply equally to all taxpayers, regardless of age, there are some provisions that give special treatment to older taxpayers. Free tax services online The following are some examples. Free tax services online Higher gross income threshold for filing. Free tax services online You must be age 65 or older at the end of the year to get this benefit. Free tax services online You are considered age 65 on the day before your 65th birthday. Free tax services online Therefore, you are considered age 65 at the end of the year if your 65th birthday is on or before January 1 of the following year. Free tax services online Higher standard deduction. Free tax services online If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. Free tax services online You are considered age 65 at the end of the year if your 65th birthday is on or before January 1 of the following year. Free tax services online Credit for the elderly or the disabled. Free tax services online If you qualify, you may benefit from the credit for the elderly or the disabled. Free tax services online To determine if you qualify and how to figure this credit, see Credit for the Elderly or the Disabled , later. Free tax services online Return preparation assistance. Free tax services online   The IRS wants to make it easier for you to file your federal tax return. Free tax services online You may find it helpful to visit a Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), or American Association of Retired Persons (AARP) Tax-Aide site near you. Free tax services online Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Free tax services online   These programs provide free help for low-income taxpayers and taxpayers age 60 or older to fill in and file their returns. Free tax services online For the VITA/TCE site nearest you, contact your local IRS office. Free tax services online For more information, see Free help with your tax return under How To Get Tax Help. Free tax services online   For the location of an AARP Tax-Aide site in your community, call 1-888-227-7669. Free tax services online When asked, be ready to press in or speak your 5-digit ZIP code. Free tax services online Or, you can visit their website on the Internet at www. Free tax services online aarp. Free tax services online org/money/taxaide. Free tax services online Comments and suggestions. Free tax services online   We welcome your comments about this publication and your suggestions for future editions. Free tax services online   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free tax services online NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free tax services online Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free tax services online   You can send your comments from www. Free tax services online irs. Free tax services online gov/formspubs/. Free tax services online Click on “More Information” and then on “Comment on Tax Forms and Publications. Free tax services online ”   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 tax services online Ordering forms and publications. Free tax services online   Visit www. Free tax services online irs. Free tax services online 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 business days after your request is received. Free tax services online Internal Revenue Service 1201 N. Free tax services online Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free tax services online   If you have a tax question, check the information available on IRS. Free tax services online gov or call 1-800-829-1040. Free tax services online We cannot answer tax questions sent to either of the above addresses. Free tax services online Table I. Free tax services online What You Should Know About Federal Taxes Note. Free tax services online The following is a list of questions you may have about filling out your federal income tax return. Free tax services online  To the right of each question is the location of the answer in this publication. Free tax services online What I Should Know Where To Find the Answer Do I need to file a return? See chapter 1. Free tax services online Is my income taxable or nontaxable?  If it is nontaxable, must I still report it? See chapter 2. Free tax services online How do I report benefits I received from the Social Security Administration or the Railroad Retirement Board?  Are these benefits taxable? See Social Security and Equivalent Railroad Retirement Benefits in chapter 2. Free tax services online Must I report the sale of my home?  If I had a gain, is any part of it taxable? See Sale of Home in chapter 2. Free tax services online What are some of the items that I can deduct to reduce my income? See chapters 3 and 4. Free tax services online How do I report the amounts I set aside for my IRA? See Individual Retirement Arrangement (IRA) Contributions and Deductions in chapter 3. Free tax services online Would it be better for me to claim the standard deduction or itemize my deductions? See chapter 4. Free tax services online What are some of the credits I can claim to reduce my tax? See chapter 5 for discussions on the credit for the elderly or the disabled, the child and dependent care credit, and the earned income credit. Free tax services online Must I make estimated tax payments? See chapter 6. Free tax services online How do I contact the IRS or get more information? See chapter 7. Free tax services online Prev  Up  Next   Home   More Online Publications
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Free tax services online Internal Revenue Bulletin:  2009-36  September 8, 2009  Rev. Free tax services online Proc. Free tax services online 2009-37 Table of Contents SECTION 1. Free tax services online PURPOSE SECTION 2. Free tax services online BACKGROUND SECTION 3. Free tax services online SCOPE SECTION 4. Free tax services online ELECTION PROCEDURES SECTION 5. Free tax services online REQUIRED INFORMATION STATEMENT SECTION 6. Free tax services online EFFECTIVE DATE SECTION 7. Free tax services online TRANSITION RULE SECTION 8. Free tax services online PAPERWORK REDUCTION ACT DRAFTING INFORMATION SECTION 1. Free tax services online PURPOSE . Free tax services online 01 This revenue procedure provides the exclusive procedures for taxpayers to make an election to defer recognizing discharge of indebtedness income (“COD income”) under § 108(i) of the Internal Revenue Code. Free tax services online . Free tax services online 02 This revenue procedure also requires taxpayers making the § 108(i) election to provide additional information on returns beginning with the taxable year following the taxable year for which the taxpayer makes the election. Free tax services online This revenue procedure describes the time and manner of providing this additional information. Free tax services online . Free tax services online 03 The Internal Revenue Service and Treasury Department intend to issue additional guidance under § 108(i) that may include regulations addressing matters in this revenue procedure. Free tax services online Taxpayers should be aware that these regulations may be retroactive. Free tax services online See § 7805(b)(2). Free tax services online This revenue procedure may be modified to provide procedures consistent with additional guidance. Free tax services online SECTION 2. Free tax services online BACKGROUND . Free tax services online 01 Section 108(i), Generally. Free tax services online Section 108(i) was added to the Code by § 1231 of the American Recovery and Reinvestment Tax Act of 2009, Pub. Free tax services online L. Free tax services online No. Free tax services online 111-5, 123 Stat. Free tax services online 338. Free tax services online In general, § 108(i) provides that, at the election of a taxpayer, COD income realized in connection with a reacquisition after December 31, 2008, and before January 1, 2011, of an applicable debt instrument is includible in gross income ratably over a 5-taxable-year inclusion period, beginning with the taxpayer’s fourth or fifth taxable year following the taxable year of the reacquisition. Free tax services online Generally, if a taxpayer makes a § 108(i) election and reacquires (or is treated as reacquiring) the applicable debt instrument generating the COD income for a new debt instrument with original issue discount (“OID”), then interest deductions for this OID also are deferred, as provided in § 108(i)(2). Free tax services online The OID deferral rule, however, does not apply if the amount of OID is less than a de minimis amount, as determined under § 1273(a)(3) and § 1. Free tax services online 1273-1(d) of the Income Tax Regulations. Free tax services online The OID deferral rule in § 108(i)(2) applies at the entity level for a pass-through entity. Free tax services online For example, a partnership (and therefore its partners) may not deduct currently the OID described in § 108(i)(2)(A)(i). Free tax services online A taxpayer must take into account any item of income or deduction deferred under § 108(i), and not previously taken into account, in the taxable year in which certain events occur (such as the liquidation of the taxpayer and upon other events specified in administrative guidance). Free tax services online See § 108(i)(5)(D). Free tax services online The rule regarding acceleration of deferred COD income and OID deductions also applies in the case of certain dispositions by persons holding ownership interests in pass-through entities. Free tax services online Section 108(i)(5)(D)(ii). Free tax services online For purposes of § 108(i), regulated investment companies (as defined in § 851(a)) and real estate investment trusts (as defined in § 856(a)) are not pass-through entities. Free tax services online . Free tax services online 02 Applicable Debt Instrument. Free tax services online Section 108(i)(3)(A) defines the term “applicable debt instrument” to mean any debt instrument issued by a C corporation or by any other person in connection with the conduct of a trade or business by that person. Free tax services online The term “debt instrument” means any bond, debenture, note, certificate, or any other instrument or contractual arrangement constituting indebtedness within the meaning of § 1275(a)(1). Free tax services online Section 108(i)(3)(B). Free tax services online For purposes of § 108(i), in the case of an intercompany obligation (as defined in § 1. Free tax services online 1502-13(g)(2)(ii)), an applicable debt instrument includes only an instrument for which COD income is realized upon the instrument’s deemed satisfaction under § 1. Free tax services online 1502-13(g)(5). Free tax services online . Free tax services online 03 Reacquisition. Free tax services online Section 108(i)(4)(A) defines the term “reacquisition” to mean, with respect to any applicable debt instrument, any acquisition of the debt instrument by the debtor that issued (or is otherwise the obligor under) the debt instrument, or a person related to the debtor under § 108(e)(4). Free tax services online The term “acquisition” includes an acquisition of the debt instrument for cash or other property, the exchange of the debt instrument for another debt instrument (including an exchange resulting from a modification of the debt instrument), the exchange of the debt instrument for corporate stock or a partnership interest, the contribution of the debt instrument to capital, and the complete forgiveness of the indebtedness by the holder of the debt instrument. Free tax services online See § 108(i)(4)(B). Free tax services online The term “acquisition” also includes an indirect acquisition within the meaning of § 1. Free tax services online 108-2(c) if a direct acquisition of the debt instrument would qualify for an election under § 108(i). Free tax services online For example, if a corporation acquires debt of a partnership that the partnership issued in connection with its trade or business, and the partnership and corporation become related within six months of the corporation’s acquisition of the debt, the indirect acquisition is an acquisition for which an election under § 108(i) may be made. Free tax services online . Free tax services online 04 General Requirements for the Section 108(i) Election. Free tax services online Section 108(i)(5)(B) provides, in general, that a taxpayer makes the § 108(i) election by including a statement that clearly identifies the applicable debt instrument with the return of tax imposed for the taxable year in which the reacquisition of the instrument occurs. Free tax services online (For purposes of this revenue procedure, a return of tax or income tax return includes an information return, and a taxpayer includes a person that files an information return. Free tax services online ) The statement must include the amount of income to which § 108(i)(1) applies and other information the Service may prescribe. Free tax services online Once made, a § 108(i) election is irrevocable and, except as provided in section 7 of this revenue procedure, may not be modified. Free tax services online . Free tax services online 05 Section 108(i) Elections Made by Pass-through Entities. Free tax services online In the case of COD income realized by a pass-through entity from the reacquisition of an applicable debt instrument, the pass-through entity makes the § 108(i) election. Free tax services online Section 108(i)(5)(B)(iii). Free tax services online . Free tax services online 06 Additional Information on Subsequent Years’ Returns. Free tax services online Section 108(i)(7) authorizes the Service to issue guidance necessary or appropriate for applying § 108(i), including requiring reporting the election and other information on returns of tax for subsequent taxable years. Free tax services online . Free tax services online 07 Exclusivity. Free tax services online Section 108(i)(5)(C) provides that if a taxpayer elects to apply § 108(i) to an applicable debt instrument, § 108(a)(1)(A), (B), (C), and (D) do not apply to COD income deferred under § 108(i). Free tax services online . Free tax services online 08 Allocation of Deferred COD Income on Partnership Indebtedness. Free tax services online Section 4. Free tax services online 04(3) of this revenue procedure describes how a partnership may elect under § 108(i) to defer a portion of the COD income realized from the reacquisition of an applicable debt instrument. Free tax services online If a partnership elects to defer all or any portion of COD income realized from the reacquisition of an applicable debt instrument, all of the COD income with respect to that debt instrument, without regard to § 108(i), is allocated to the partners in the partnership immediately before the reacquisition in the manner in which the income would be included in the distributive shares of these partners under § 704 and the regulations thereunder, including § 1. Free tax services online 704-1(b)(2)(iii). Free tax services online Each partner’s share of this COD income is the partner’s COD income amount (“COD income amount”). Free tax services online The partner’s COD income amount that is deferred under § 108(i) is the partner’s deferred amount (“deferred amount”). Free tax services online The partner’s COD income amount that is not deferred and is included in the partner’s distributive share of partnership income for the taxable year of the partnership in which the reacquisition occurs is the partner’s included amount (“included amount”). Free tax services online . Free tax services online 09 Partner’s Deferred § 752 Amount. Free tax services online A decrease in a partner’s share of a partnership liability resulting from the reacquisition of an applicable debt instrument that is not treated as a current distribution of money to the partner under § 752 by reason of § 108(i)(6) is the partner’s deferred § 752 amount (“deferred § 752 amount”). Free tax services online A partner’s deferred § 752 amount may not exceed the lesser of (i) the partner’s deferred amount or (ii) gain that the partner would recognize in the year of reacquisition under § 731 as a result of the reacquisition absent § 108(i)(6). Free tax services online To determine the amount of gain the partner would recognize under clause (ii) of the preceding sentence, the amount of any deemed distribution of money under § 752(b) resulting from the decrease in the partner’s share of a reacquired applicable debt instrument that is treated as an advance or draw of money under § 1. Free tax services online 731-1(a)(1)(ii) is determined as if no COD income resulting from the reacquisition of the applicable debt instrument is deferred under § 108(i). Free tax services online See Rev. Free tax services online Rul. Free tax services online 92-97, 1992-2 C. Free tax services online B. Free tax services online 124, and Rev. Free tax services online Rul. Free tax services online 94-4, 1994-1 C. Free tax services online B. Free tax services online 195. Free tax services online A partner’s deferred § 752 amount is treated as a distribution of money to the partner under § 752 at the same time, and to the extent remaining in the same amount, as the partner recognizes the COD income deferred under § 108(i). Free tax services online . Free tax services online 10 Allocation of Deferred COD Income on S Corporation Indebtedness. Free tax services online For purposes of § 108(i), an S corporation’s COD income deferred under § 108(i) is shared pro rata only among those shareholders that are shareholders of the S corporation immediately before the reacquisition transaction. Free tax services online . Free tax services online 11 Deferred COD Income, Earnings and Profits, and Alternative Minimum Taxable Income. Free tax services online (1) In general. Free tax services online The Service and Treasury Department intend to issue regulations regarding the computation of a corporation’s earnings and profits with respect to COD income and OID deductions that are deferred under § 108(i). Free tax services online These regulations generally will provide that deferred COD income increases earnings and profits in the taxable year that it is realized and not in the taxable year or years that the deferred COD income is includible in gross income. Free tax services online OID deductions deferred under § 108(i) generally will decrease earnings and profits in the taxable year or years in which the deduction would be allowed without regard to § 108(i). Free tax services online COD income and OID deductions that are deferred increase or decrease adjusted current earnings under § 56(g)(4) in the taxable year or years that the income or deduction is includible or deductible in determining taxable income. Free tax services online See § 1. Free tax services online 56(g)-1(c)(1). Free tax services online (2) Exceptions for certain special status corporations. Free tax services online The Service and Treasury Department intend to issue regulations providing that in the case of regulated investment companies and real estate investment trusts, COD income deferred under § 108(i) generally increases earnings and profits in the taxable year or years in which the deferred COD income is includible in gross income and not in the year that the deferred COD income is realized. Free tax services online OID deductions deferred under § 108(i) generally decrease earnings and profits in the taxable year or years that the deferred OID deductions are deductible. Free tax services online . Free tax services online 12 Extension of Time to Make Election. Free tax services online Under § 301. Free tax services online 9100-1 of the Procedure and Administration Regulations, the Service may grant an extension of time to make a regulatory election. Free tax services online An election is a regulatory election if the due date is prescribed by regulation or other published guidance of general applicability. Free tax services online Section 301. Free tax services online 9100-2(a) provides an automatic 12-month extension from the due date for making certain regulatory elections. Free tax services online SECTION 3. Free tax services online SCOPE This revenue procedure applies to taxpayers that realize COD income from a reacquisition after December 31, 2008, and before January 1, 2011, of an applicable debt instrument, as provided in § 108(i). Free tax services online SECTION 4. Free tax services online ELECTION PROCEDURES . Free tax services online 01 In General. Free tax services online (1) A taxpayer within the scope of this revenue procedure makes the § 108(i) election by— (a) Attaching a statement meeting the requirements of section 4. Free tax services online 05 of this revenue procedure to the taxpayer’s timely filed (including extensions) original federal income tax return for the taxable year in which the reacquisition of the applicable debt instrument occurs, and (b) If applicable, satisfying the additional requirements of section 4. Free tax services online 07, 4. Free tax services online 08, 4. Free tax services online 09, or 4. Free tax services online 10 of this revenue procedure. Free tax services online (2) The Service grants an automatic extension of 12 months from the due date prescribed in section 4. Free tax services online 01(1)(a) of this revenue procedure for making the § 108(i) election. Free tax services online The rules that apply to an automatic extension under § 301. Free tax services online 9100-2(a) apply to this automatic extension. Free tax services online . Free tax services online 02 Section 108(i) Elections Made by Members of Consolidated Groups. Free tax services online The common parent of a consolidated group makes the § 108(i) election on behalf of all members of the group. Free tax services online See § 1. Free tax services online 1502-77(a). Free tax services online . Free tax services online 03 Aggregation Rule. Free tax services online A taxpayer within the scope of this revenue procedure may treat two or more applicable debt instruments that are part of the same issue and that are reacquired during the same taxable year as one applicable debt instrument for purposes of this revenue procedure. Free tax services online A pass-through entity may not treat two or more applicable debt instruments as one applicable debt instrument under this section 4. Free tax services online 03 if the owners and their ownership interests in the pass-through entity immediately prior to the reacquisition of each applicable debt instrument are not identical. Free tax services online . Free tax services online 04 Partial Elections. Free tax services online (1) A taxpayer within the scope of this revenue procedure may make an election for any portion of COD income realized from the reacquisition of any applicable debt instrument. Free tax services online Thus, for example, if a taxpayer realizes $100 of COD income from the reacquisition of an applicable debt instrument, the taxpayer may elect under § 108(i)(1) to defer only $40 of the $100 of COD income. Free tax services online The taxpayer may exclude from income the portion of COD income that the taxpayer does not elect to defer under § 108(i) ($60 in this example) under § 108(a)(1)(A), (B), (C), or (D), if applicable. Free tax services online (2) A taxpayer is not required to make an election for the same portion of COD income arising from each applicable debt instrument that it reacquires, but may make an election for different portions of COD income arising from different applicable debt instruments (whether or not part of the same issue). Free tax services online Thus, for example, if a taxpayer realizes $100 of COD income from the reacquisition of an applicable debt instrument (Instrument A) and $100 of COD income from the reacquisition of a different applicable debt instrument (Instrument B), the taxpayer may elect to defer all or a portion of the COD income associated with Instrument A and none or a different portion of the COD income associated with Instrument B. Free tax services online (3) A partnership that elects to defer less than all of the COD income realized from the reacquisition of an applicable debt instrument may determine, in any manner, the portion, if any, of a partner’s COD income amount that is the partner’s deferred amount and the portion, if any, of a partner’s COD income amount that is the partner’s included amount. Free tax services online Thus, for example, one partner’s deferred amount may be zero while another partner’s deferred amount may equal that partner’s COD income amount (or any portion thereof). Free tax services online A partner may exclude from income the partner’s included amount under § 108(a)(1)(A), (B), (C), or (D), if applicable. Free tax services online The provisions of this section 4. Free tax services online 04(3) apply for purposes of § 108(i) only and are not intended as an interpretation of or a change to existing law under § 704. Free tax services online . Free tax services online 05 Contents of Election Statement. Free tax services online A statement meets the requirements of this section 4. Free tax services online 05 if the statement— (1) Label. Free tax services online States “Section 108(i) Election” across the top. Free tax services online (2) Required information. Free tax services online Provides, for each applicable debt instrument the reacquisition of which generates COD income that the taxpayer is electing to defer under § 108(i)— (a) The name and taxpayer identification numbers, if any, of the issuer or issuers of the applicable debt instrument; (b) A general description of the applicable debt instrument (including the issue and maturity dates) and, in the case of any person other than a C corporation, a general description of the person’s trade or business to which the applicable debt instrument is connected; (c) A general description of the reacquisition transaction or transactions generating the COD income (including the date(s) of the transaction(s)); (d) The total amount of COD income for the applicable debt instrument that results from the reacquisition (in the case of a partnership, the aggregate of the partners’ COD income amounts) and a general description of the manner in which this amount is calculated; (e) The amount of COD income for the applicable debt instrument that the taxpayer is electing to defer under § 108(i); (f) In the case of a partnership, a list of partners that have a deferred amount, their identifying information and each partner’s deferred amount; and in the case of an S corporation, a list of shareholders with COD income deferred under § 108(i), their identifying information and each shareholder’s share of the S corporation’s deferred COD income; and (g) In cases in which a new debt instrument is issued or deemed issued in exchange for the applicable debt instrument (including exchanges under § 108(e)(4), § 108(i)(2)(B), and § 1. Free tax services online 1001-3), the issuer’s name, the issuer’s taxpayer identification number, if any, a general description of the new debt instrument and whether the new debt instrument has OID, and if the new debt instrument has OID, a schedule of the OID that the issuer expects to accrue each taxable year on the instrument and the amount of OID that the issuer expects to defer under § 108(i)(2) each taxable year. Free tax services online . Free tax services online 06 Supplemental information. Free tax services online The statement described in section 4. Free tax services online 05 of this revenue procedure may specify for each applicable debt instrument an amount greater than the amount identified in section 4. Free tax services online 05(2)(e) of this revenue procedure that the taxpayer elects to defer under § 108(i) in the event the Service subsequently concludes that the taxpayer understated the amount of COD income described in section 4. Free tax services online 05(2)(d) of this revenue procedure. Free tax services online This additional amount of COD income the taxpayer elects to defer may be described as the entire additional COD income, or as a percentage of any additional COD income. Free tax services online If the taxpayer is a partnership, the partnership must specify each partner’s share of the partnership’s additional COD income that would be deferred (the partner’s additional deferred amount), which the partnership may describe for each partner as the partner’s entire share of the partnership’s additional COD income or as a percentage of the partner’s share of the partnership’s additional COD income. Free tax services online If the taxpayer is an S corporation, the S corporation must specify each shareholder’s share of the S corporation’s additional COD income that would be deferred, which the S corporation may describe for each shareholder as the shareholder’s entire share of the S corporation’s additional COD income or as a percentage of the shareholder’s share of the S corporation’s additional COD income. Free tax services online In the case of partnerships and S corporations, the additional COD income and the portion of additional COD income that would be deferred are allocated or determined as provided in sections 2. Free tax services online 08, 2. Free tax services online 10 and, if applicable, 4. Free tax services online 04(3) of this revenue procedure, respectively, as if the additional COD income was realized. Free tax services online . Free tax services online 07 Additional Requirements for Certain Partnerships Making a § 108(i) Election. Free tax services online The rules of this section 4. Free tax services online 07 apply to partnerships other than partnerships described in section 4. Free tax services online 10 of this revenue procedure. Free tax services online (1) Information filing on Schedule K-1 (Form 1065 and Form 1065-B). Free tax services online For the taxable year in which the § 108(i) election is made, the partnership must report on the Schedule K-1 (Form 1065 or Form 1065-B), Partner’s Share of Income, Deductions, Credits, etc. Free tax services online , in the manner specified in the instructions to the forms, for each partner § 108(i) information on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made. Free tax services online Partnerships reporting § 108(i) information on the 2008 Schedule K-1 (Form 1065 or Form 1065-B) must report for each partner on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made: (a) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(1) or § 108(i)(5)(D)(i) or (ii), in box 11 (“other income”) using code F for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (b) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii) or § 108(i)(5)(D)(i) or (ii), in box 13 (“other deductions”) using code W for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (c) The partner’s deferred amount that has not been included in income in the current or prior taxable years, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (d) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); (e) The partner’s deferred § 752 amount that is treated as a distribution of money to the partner under § 752 in the current taxable year, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B); and (f) The partner’s deferred § 752 amount remaining as of the end of the current taxable year, in box 20 (“other information”) using code X for Schedule K-1 (Form 1065) or in box 9 (“other”) using code U for Schedule K-1 (Form 1065-B). Free tax services online (2) Election information statement provided to partners. Free tax services online The partnership must attach to the Schedule K-1 (Form 1065 or Form 1065-B) provided to each partner for the taxable year in which the § 108(i) election is made a statement satisfying the requirements of this section 4. Free tax services online 07(2). Free tax services online The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner must retain that partner’s statement, in their respective books and records. Free tax services online A statement meets the requirements of this section 4. Free tax services online 07(2) if the statement— (a) Label. Free tax services online States “Section 108(i) Election Information Statement for Partners” across the top. Free tax services online (b) Required information. Free tax services online Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies— (i) The partner’s COD income amount, the partner’s deferred amount, and the partner’s included amount; (ii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (iv) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); (v) The partner’s share of each liability of the partnership described in section 4. Free tax services online 05(2)(g) of this revenue procedure; (vi) The partner’s share of the decrease in the partnership liability that results from the reacquisition of the applicable debt instrument; (vii) The partner’s share of the decrease in the partnership liability that results from the reacquisition of the applicable debt instrument that is treated as a distribution of money to the partner under § 752 in the current taxable year; (viii) The partner’s deferred § 752 amount as described in section 2. Free tax services online 09 of this revenue procedure; (ix) The partner’s additional deferred amount as described in section 4. Free tax services online 06 of this revenue procedure; and (x) The date of the reacquisition transaction generating the COD income. Free tax services online (c) If a partner fails to provide the written statement required by section 4. Free tax services online 07(3) of this revenue procedure, the partnership must indicate that the amounts described in section 4. Free tax services online 07(2)(b)(vii) and (viii) of this revenue procedure cannot be calculated because the partner did not provide the information necessary to report these amounts. Free tax services online (3) Partner reporting requirements. Free tax services online The partnership must make reasonable efforts prior to making a § 108(i) election to secure from each partner with a deferred amount for which it does not have the information necessary to compute the partner’s basis in its partnership interest (and its deferred § 752 amount as described in section 2. Free tax services online 09 of this revenue procedure) a written statement signed under penalties of perjury that includes this information. Free tax services online Each partner with a deferred amount must provide this written statement to the partnership within 30 days of the date of request by the partnership. Free tax services online A partner’s failure to comply with this reporting requirement does not invalidate the partnership’s election under § 108(i) for an applicable debt instrument only if the partnership makes reasonable efforts before making the § 108(i) election to obtain the written statement from the partner and otherwise complies with the requirements of section 4 of this revenue procedure. Free tax services online If a partner provides its written statement under this section 4. Free tax services online 07(3) after the partnership has provided to the partner the Section 108(i) Election Information Statement for Partners, the partnership must provide to the partner a revised Section 108(i) Election Information Statement for Partners reporting the information required under section 4. Free tax services online 07(2)(b)(vii) and (viii) of this revenue procedure and report the partner’s deferred § 752 amount on the partner’s Schedule K-1 (Form 1065 or Form 1065-B) in subsequent taxable years. Free tax services online . Free tax services online 08 Additional Requirements for an S Corporation Making a § 108(i) Election. Free tax services online (1) Information filing on Schedule K-1 (Form 1120S). Free tax services online For the taxable year in which the § 108(i) election is made, the S corporation must report on the Schedule K-1 (Form 1120S), Shareholder’s Share of Income, Deductions, Credits, etc. Free tax services online , in the manner specified in the instructions to the forms, for each shareholder § 108(i) information on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made. Free tax services online S corporations reporting § 108(i) information on the 2008 Schedule K-1 (Form 1120S) must report for each shareholder, on an aggregate basis for all applicable debt instruments for which a § 108(i) election is made, the shareholder’s share of the S corporation’s: (a) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(1) or § 108(i)(5)(D)(i) or (ii), in box 10 (“other income”) using code E; (b) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii), or § 108(i)(5)(D)(i) or (ii), in box 12 (“other deductions”) using code S; (c) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years, in box 17 (“other information”) using code T; and (d) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years, in box 17 (“other information”) using code T. Free tax services online (2) Election information statement provided to shareholders. Free tax services online The S corporation must attach to the Schedule K-1 (Form 1120S) provided to each shareholder for the taxable year in which the § 108(i) election is made, a statement satisfying the requirements of this section 4. Free tax services online 08(2). Free tax services online The S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each shareholder must retain that shareholder’s statement, in their respective books and records. Free tax services online A statement meets the requirements of this section 4. Free tax services online 08(2) if the statement— (a) Label. Free tax services online States “Section 108(i) Election Information Statement for Shareholders” across the top. Free tax services online (b) Required information. Free tax services online Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies, the shareholder’s share of the S corporation’s— (i) COD income that the S corporation elects to defer under § 108(i); (ii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iii) OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (iv) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); and (v) Additional COD income that would be deferred as described in section 4. Free tax services online 06 of this revenue procedure. Free tax services online . Free tax services online 09 Section 108(i) Elections Made on Behalf of Certain Foreign Corporations. Free tax services online The controlling domestic shareholder(s) (or common parent of the controlling domestic shareholder(s), if applicable) of a controlled foreign corporation or a noncontrolled § 902 corporation not otherwise required to file a return of tax may make the § 108(i) election on behalf of the foreign corporation by satisfying the requirements of § 1. Free tax services online 964-1(c)(3). Free tax services online Each controlling domestic shareholder must attach a statement identifying the foreign corporation and satisfying the requirements of section 4. Free tax services online 05 of this revenue procedure and, if applicable, section 4. Free tax services online 06 of this revenue procedure, to its federal income tax return for the taxable year ending within or with the taxable year of the foreign corporation for which the § 108(i) election is made. Free tax services online . Free tax services online 10 Section 108(i) Elections Made By Certain Foreign Partnerships. Free tax services online The rules of this section 4. Free tax services online 10 apply to a foreign partnership making a § 108(i) election that is not otherwise required to file a federal partnership return (“nonfiling foreign partnership”). Free tax services online See § 1. Free tax services online 6031(a)-1(b). Free tax services online (1) A nonfiling foreign partnership making the election must attach a statement satisfying the requirements of section 4. Free tax services online 05 of this revenue procedure and, if applicable, section 4. Free tax services online 06 of this revenue procedure, to a partnership return satisfying the requirements of § 1. Free tax services online 6031(a)-1(b)(5) it files with the Service. Free tax services online In addition, a nonfiling foreign partnership must include in the information required in section 4. Free tax services online 05(2)(d) and (e) of this revenue procedure the aggregate amounts for all partners as well as the aggregate amounts for all U. Free tax services online S. Free tax services online persons (as defined in § 7701(a)(30)) and controlled foreign corporation(s) that are partners with deferred amounts in the nonfiling foreign partnership (“affected partners”). Free tax services online (2) The nonfiling foreign partnership must make the election, in accordance with § 1. Free tax services online 6031(a)-1(b)(5), by the date provided in section 4. Free tax services online 01(1)(a) of this revenue procedure, as if it had a filing obligation for the taxable year in which the reacquisition of the applicable debt instrument occurs. Free tax services online (3) For each affected partner, the partnership must file with the Service a Schedule K-1 (Form 1065) and report on the Schedule K-1 (Form 1065) for the affected partner as provided in section 4. Free tax services online 07(1) of this revenue procedure. Free tax services online Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K-1 (Form 1065). Free tax services online The partnership must provide a copy of the respective Schedule K-1 (Form 1065) to each affected partner and must also attach to the Schedule K-1 (Form 1065) provided to each affected partner a statement satisfying the requirements of section 4. Free tax services online 07(2) of this revenue procedure by the date provided in section 4. Free tax services online 01(1)(a) of this revenue procedure. Free tax services online The partnership should not attach any statement described in section 4. Free tax services online 07(2) of this revenue procedure to the Schedules K-1 that are filed with the Service. Free tax services online However, the partnership must retain the statements provided to the affected partners, and each affected partner must retain that partner’s statement, in their respective books and records. Free tax services online (4) The partnership and each affected partner must satisfy the requirements of section 4. Free tax services online 07(3) of this revenue procedure. Free tax services online . Free tax services online 11 Protective § 108(i) Election. Free tax services online (1) In general. Free tax services online A taxpayer may make a protective election under § 108(i) for an applicable debt instrument if the taxpayer concludes that a particular transaction does not result in the realization of COD income, reports the transaction on its federal income tax return in a manner consistent with the taxpayer’s conclusion, and would be within the scope of this revenue procedure if the taxpayer’s conclusion were incorrect. Free tax services online If the Service at any time determines the taxpayer’s conclusion that the particular transaction does not result in the realization of COD income is incorrect, the taxpayer’s protective election is treated as a valid, irrevocable election under § 108(i). Free tax services online Thus, if a taxpayer makes a protective election, the Service subsequently may require the taxpayer to report COD income deferred pursuant to the valid and irrevocable protective election even if the statute of limitations has expired for the year in which the COD income was realized and the protective election was made. Free tax services online A taxpayer makes a protective election by attaching a statement satisfying the requirements of this section 4. Free tax services online 11(1) to the taxpayer’s original federal income tax return within the period described in section 4. Free tax services online 01(1)(a) of this revenue procedure. Free tax services online The taxpayer also must attach the election to its federal income tax return in each of the 8 or 9 taxable years, as applicable, following the taxable year of the election. Free tax services online A statement meets the requirements of this section 4. Free tax services online 11(1) if the statement— (a) States “Section 108(i) Protective Election” across the top; (b) Provides the information required under section 4. Free tax services online 05(2)(a), (b), and (c) of this revenue procedure; (c) Provides that the amounts described in sections 4. Free tax services online 05(2)(d) and (e) of this revenue procedure are zero; and (d) Provides the information described in section 4. Free tax services online 06 of this revenue procedure. Free tax services online (2) Statements provided to shareholders and partners. Free tax services online (a) For each applicable debt instrument, a partnership or S corporation that makes a protective election must attach to the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) it provides each of its partners or shareholders, as the case may be, for the taxable year in which the protective election is made a statement containing the information described in section 4. Free tax services online 11(1)(b) of this revenue procedure (an S corporation need not provide its shareholders with the date(s) of the transaction(s) that would constitute the reacquisition transaction or transactions) and the partner’s or shareholder’s share of the additional COD income that would be deferred as described in section 4. Free tax services online 11(1)(d) of this revenue procedure. Free tax services online (b) The partnership or S corporation should not attach the statements described in this section 4. Free tax services online 11(2) to the Schedules K-1 that are filed with the Service but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. Free tax services online . Free tax services online 12 Election-Year Reporting by Tiered Pass-Through Entities. Free tax services online (1) A partnership required to file a U. Free tax services online S. Free tax services online partnership return other than under § 1. Free tax services online 6031(a)-1(b)(5), or an S corporation, that receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting its share of any items listed in section 4. Free tax services online 07(1) of this revenue procedure, must report on the Schedules K-1 (Form 1065, Form 1065-B, or Form 1120S) to its partners or shareholders, as the case may be, each partner’s or shareholder’s share of those items (an S corporation only reports to its shareholders the items described in section 4. Free tax services online 07(1)(a) through (d) of this revenue procedure). Free tax services online (2) If a partnership described in section 4. Free tax services online 12(1) of this revenue procedure receives a statement described in sections 4. Free tax services online 07(2) or 4. Free tax services online 10(3) of this revenue procedure or this section 4. Free tax services online 12(2), it must provide each of its partners a statement containing the partner’s share of each of the items listed on each statement received by the partnership, including the information described in section 4. Free tax services online 07(2)(b)(x) of this revenue procedure. Free tax services online If an S corporation receives a statement described in sections 4. Free tax services online 07(2) or 4. Free tax services online 10(3) of this revenue procedure or this section 4. Free tax services online 12(2), it must provide each of its shareholders a statement containing the shareholder’s share of each of the items listed on each statement received by the S corporation that are described in section 4. Free tax services online 07(2)(b)(i), (ii), (iii), (iv) and (ix) of this revenue procedure. Free tax services online The partnership or S corporation must attach this statement or statements to the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) that it provides to each of its partners or shareholders, as the case may be, for the taxable year of the partnership or S corporation. Free tax services online The partnership or S corporation should not attach these statements to the Schedules K-1 that are filed with the Service but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. Free tax services online (3) A partnership that receives a statement described in this section 4 identifying its COD income amount with respect to an applicable debt instrument must allocate its COD income amount, without regard to § 108(i), to the partners in the partnership immediately before the reacquisition transaction in the manner in which the income would be included in the distributive shares of these partners under § 704 and the regulations thereunder, including § 1. Free tax services online 704-1(b)(2)(iii). Free tax services online The partnership may determine in any manner the portion, if any, of a partner’s COD income amount that is the partner’s deferred amount and the portion, if any, of a partner’s COD income amount that is the partner’s included amount. Free tax services online No partner’s deferred amount with respect to an applicable debt instrument may exceed its COD income amount with respect to the applicable debt instrument, and the aggregate of deferred amounts of its partners with respect to an applicable debt instrument must equal the partnership’s deferred amount with respect to the applicable debt instrument. Free tax services online The partnership allocates amounts described in section 4. Free tax services online 06 of this revenue procedure under this section 4. Free tax services online 12(3) as if the additional COD income was realized. Free tax services online (4) The deferred § 752 amount for partners in a partnership making a § 108(i) election is calculated only for the partnership’s direct partners. Free tax services online No further adjustment to the deferred § 752 amount is made to reflect the basis or other attributes of partners that are indirect partners in the partnership. Free tax services online (5) If an S corporation receives a statement described in this section 4 identifying its COD income amount, deferred amount, included amount or additional COD income that would be deferred with respect to an applicable debt instrument, these amounts are shared pro rata only among those shareholders that are shareholders in the S corporation immediately before the reacquisition transaction. Free tax services online (6) This paragraph 4. Free tax services online 12(6) provides the rules for Category 1 and Category 2 filers of Form 8865, Return of U. Free tax services online S. Free tax services online Persons With Respect to Certain Foreign Partnerships, as defined in the instructions for Form 8865, if the foreign partnership, for which the Category 1 or Category 2 filer has a filing requirement, receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting the partnership’s share of any items listed in section 4. Free tax services online 07(1) of this revenue procedure, or a statement described in sections 4. Free tax services online 07(2) or 4. Free tax services online 10(3) of this revenue procedure (because the foreign partnership owns an interest directly or indirectly in another partnership in which an election was made under § 108(i) with respect to that foreign partnership’s distributive share from the other entity). Free tax services online (a) For each partner for whom the Category 1 filer is required to complete a Schedule K-1 (Form 8865) (which includes the Category 1 filer itself), the Category 1 filer must: (i) Include the information described in section 4. Free tax services online 07(1) of this revenue procedure in the Schedule K-1 (Form 8865) that the Category 1 filer files with the Service and completes for the partner; (ii) Produce a statement containing the partner’s share of the items listed on each statement received by the partnership; and (iii) Attach the statement described in section 4. Free tax services online 12(6)(a)(ii) of this revenue procedure to each Schedule K-1 (Form 8865) that it is required to provide to a partner of the foreign partnership. Free tax services online (b) A Category 2 filer must include its share of the information described in section 4. Free tax services online 07(1) on the Schedule K-1 (Form 8865) that it is required to complete. Free tax services online Category 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership. Free tax services online (c) The Category 1 and Category 2 filers should not attach the statements described in sections 4. Free tax services online 12(6)(a)(ii) and 4. Free tax services online 12(6)(b) of this revenue procedure, respectively, to the Schedules K-1 that are filed with the Service. Free tax services online However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records. Free tax services online (7) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 4. Free tax services online 12(1) of this revenue procedure or a shareholder of an S corporation described in section 4. Free tax services online 12(1) of this revenue procedure must recognize items deferred under § 108(i), the partnership or S corporation must report these items on the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) and statements provided to the partner or shareholder pursuant to section 4. Free tax services online 12(1) and (2) of this revenue procedure. Free tax services online Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4. Free tax services online 12(6) of this revenue procedure. Free tax services online (8) The provisions of section 4. Free tax services online 12(2), (3), (5) and (6) of this revenue procedure also apply to a statement received that is described in section 4. Free tax services online 11(2) of this revenue procedure, except that the information that must be provided are those items described in section 4. Free tax services online 11(1)(b) of this revenue procedure (an S corporation need not provide its shareholders with the date(s) of the transaction(s) that would constitute the reacquisition transaction or transactions) and the share of the partner or shareholder in the amounts described in section 4. Free tax services online 11(1)(d) of this revenue procedure. Free tax services online SECTION 5. Free tax services online REQUIRED INFORMATION STATEMENT . Free tax services online 01 Annual Information Statements. Free tax services online Pursuant to § 108(i)(7)(B), a taxpayer that makes an election under § 108(i) (except for a protective election under section 4. Free tax services online 11(1) of this revenue procedure) must attach a statement meeting the requirements of section 5. Free tax services online 02 of this revenue procedure to its federal income tax return for each taxable year beginning with the taxable year following the taxable year for which the taxpayer makes the election and ending with the first taxable year in which all items deferred under § 108(i) have been recognized. Free tax services online . Free tax services online 02 Contents of Statement. Free tax services online A statement meets the requirements of this section 5. Free tax services online 02 if the statement— (1) Label. Free tax services online States “Section 108(i) Information Statement” across the top; (2) Required information. Free tax services online Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies— (a) COD income deferred under § 108(i) that is included in income in the current taxable year under § 108(i)(1); (b) COD income deferred under § 108(i) that is included in income in the current taxable year under § 108(i)(5)(D), including a description and date of the acceleration event described in § 108(i)(5)(D); (c) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years (in the case of a partnership, the aggregate of the partners’ deferred amounts that have not been included in income in the current or prior taxable years, and in the case of an S corporation, the S corporation’s COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years); (d) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (e) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D); and (f) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years. Free tax services online (3) Election attached. Free tax services online Includes a copy of the election statement described in section 4. Free tax services online 05 of this revenue procedure. Free tax services online . Free tax services online 03 Additional Annual Reporting Requirements for Certain Partnerships. Free tax services online The rules of this section 5. Free tax services online 03 apply to partnerships other than partnerships described in section 5. Free tax services online 05 of this revenue procedure. Free tax services online (1) In general. Free tax services online A partnership that makes an election under § 108(i) (except for a protective election under section 4. Free tax services online 11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5. Free tax services online 01 of this revenue procedure. Free tax services online In addition, for each taxable year in which a statement is required under section 5. Free tax services online 01 of this revenue procedure, the partnership must report on the Schedule K-1 (Form 1065 or Form 1065-B) for each partner § 108(i) information in the manner described in section 4. Free tax services online 07(1) of this revenue procedure. Free tax services online (2) Annual information statements provided to partners. Free tax services online The partnership must attach to the Schedule K-1 (Form 1065) provided to each partner for each taxable year in which a statement is required under section 5. Free tax services online 01 of this revenue procedure, a statement meeting the requirements of this section 5. Free tax services online 03(2). Free tax services online The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner must retain that partner’s statement, in their respective books and records. Free tax services online A statement meets the requirements of this section 5. Free tax services online 03(2) if the statement— (a) Label. Free tax services online States “Section 108(i) Annual Information Statement for Partners” across the top of the statement. Free tax services online (b) Required information. Free tax services online Clearly identifies for each applicable debt instrument to which a § 108(i) election applies— (i) The partner’s deferred amount that has not been included in income as of the end of the prior taxable year; (ii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(1); (iii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iv) The partner’s deferred amount that has not been included in income in the current or prior taxable years; (v) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (vi) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (vii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); (viii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years; and (ix) The partner’s deferred § 752 amount that is treated as a distribution of money to the partner under § 752 in the current taxable year and any remaining deferred § 752 amount. Free tax services online If a partner fails to provide the written statement required by section 4. Free tax services online 07(3) of this revenue procedure, the partnership must indicate that the amounts described in this section 5. Free tax services online 03(2)(b)(ix) cannot be calculated because the partner did not provide the information necessary to report these amounts. Free tax services online . Free tax services online 04 Additional Annual Reporting Requirements for an S Corporation. Free tax services online (1) In general. Free tax services online An S corporation that makes an election under § 108(i) (except for a protective election under section 4. Free tax services online 11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5. Free tax services online 01 of this revenue procedure. Free tax services online In addition, for each taxable year in which a statement is required under section 5. Free tax services online 01 of this revenue procedure, the S corporation must report on the Schedule K-1 (Form 1120S) for each shareholder § 108(i) information in the manner described in section 4. Free tax services online 08(1) of this revenue procedure. Free tax services online (2) Annual information statements provided to shareholders. Free tax services online The S corporation must attach to the Schedule K-1 (Form 1120S) provided to each shareholder for each taxable year in which a statement is required under section 5. Free tax services online 01 of this revenue procedure a statement meeting the requirements of this section 5. Free tax services online 04(2). Free tax services online The S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each shareholder must retain that shareholder’s statement, in their respective books and records. Free tax services online A statement meets the requirements of this section 5. Free tax services online 04(2) if the statement— (a) Label. Free tax services online States “Section 108(i) Annual Information Statement for Shareholders” across the top; (b) Required information. Free tax services online Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies, the shareholder’s share of the S corporation’s— (i) COD income deferred under § 108(i) that has not been included in income as of the end of the prior taxable year; (ii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(1); (iii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii); (iv) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years; (v) OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year; (vi) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii); (vii) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); and (viii) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years. Free tax services online . Free tax services online 05 Additional Annual Reporting Requirements for Certain Foreign Partnerships. Free tax services online (1) The rules of this section 5. Free tax services online 05 apply to nonfiling foreign partnerships. Free tax services online (2) A nonfiling foreign partnership that makes an election under § 108(i) (except for a protective election under section 4. Free tax services online 11(1) of this revenue procedure) must file federal income tax returns with the Service containing the information under § 1. Free tax services online 6031(a)-1(b)(5) for each taxable year in which a statement is required by section 5. Free tax services online 01 of this revenue procedure. Free tax services online (3) The nonfiling foreign partnership must attach to its federal income tax returns the statements required under section 5. Free tax services online 01 of this revenue procedure, but only for that portion of the COD income allocated to affected partners. Free tax services online (4) For each taxable year in which a statement is required under section 5. Free tax services online 01 of this revenue procedure, the nonfiling foreign partnership must provide each affected partner a Schedule K-1 (Form 1065) reporting § 108(i) information in the manner described in section 4. Free tax services online 07(1) of this revenue procedure. Free tax services online Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K-1 (Form 1065). Free tax services online The partnership must provide each affected partner with a copy of the Schedule K-1 (Form 1065) by the date provided in § 1. Free tax services online 6031(b)-1T(b). Free tax services online The partnership must attach the Schedules K-1 (Form 1065) to the federal income tax returns filed with the Service pursuant to section 5. Free tax services online 05(2) of this revenue procedure. Free tax services online (5) For each taxable year for which a statement is required under section 5. Free tax services online 01 of this revenue procedure, the nonfiling foreign partnership must attach to each affected partner’s Schedule K-1 (Form 1065) a statement meeting the requirements of section 5. Free tax services online 03(2) of this revenue procedure. Free tax services online The partnership should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain the statements, and each partner must retain that partner’s statement, in their respective books and records. Free tax services online . Free tax services online 06 Information Statements Made on Behalf of Certain Foreign Corporations. Free tax services online Each controlling domestic shareholder must attach a statement identifying the foreign corporation and meeting the requirements of section 5. Free tax services online 02 of this revenue procedure to the shareholder’s federal income tax return for each taxable year for which a statement is required under section 5. Free tax services online 01 of this revenue procedure. Free tax services online . Free tax services online 07 Additional Annual Reporting Requirements for Tiered Pass-Through Entities. Free tax services online (1) A partnership required to file a U. Free tax services online S. Free tax services online partnership return other than under § 1. Free tax services online 6031(a)-1(b)(5), or an S corporation, that receives a Schedule K-1 (Form 1065 or Form 1065-B) described in the second sentence of section 5. Free tax services online 03(1) of this revenue procedure reflecting its share of any § 108(i) information must report on the Schedules K-1 (Form 1065, Form 1065-B, or Form 1120S) to its partners or shareholders, as the case may be, each partner’s or shareholder’s share of those items (an S corporation only reports to its shareholders the items described in section 4. Free tax services online 07(1)(a) through (d) of this revenue procedure). Free tax services online (2) If a partnership described in section 5. Free tax services online 07(1) of this revenue procedure receives a statement described in sections 5. Free tax services online 03(2) or 5. Free tax services online 05(5) of this revenue procedure or this section 5. Free tax services online 07(2), it must provide each of its partners a statement containing the partner’s share of each of the items listed on each statement received by the partnership. Free tax services online If an S corporation receives a statement described in sections 5. Free tax services online 03(2) or 5. Free tax services online 05(5) of this revenue procedure or this section 5. Free tax services online 07(2), it must provide each of its shareholders a statement containing the shareholder’s share of each of the items listed on each statement received by the S corporation that are described in section 5. Free tax services online 03(2)(b)(i) through (viii) of this revenue procedure. Free tax services online The partnership or S corporation must attach the statement or statements to the Schedule K-1 (Form 1065 or Form 1065-B) or Schedule K-1 (Form 1120S) that is provided to each of its partners or shareholders, as the case may be, for the taxable year of the partnership or S corporation. Free tax services online The partnership or S corporation should not attach these statements to the Schedules K-1 that are filed with the Service, but must retain these statements, and each partner and shareholder must retain that partner’s or shareholder’s statement, in their respective books and records. Free tax services online (3) This paragraph 5. Free tax services online 07(3) provides the rules for persons described in section 4. Free tax services online 12(6) of this revenue procedure if the foreign partnership, for which the Category 1 or 2 filer has a filing requirement, receives a Schedule K-1 (Form 1065 or Form 1065-B) reflecting the partnership’s share of any items described in the second sentence of section 5. Free tax services online 03(1) of this revenue procedure, or a statement described in sections 5. Free tax services online 03(2) or 5. Free tax services online 05(5) of this revenue procedure (because the foreign partnership owns an interest directly or indirectly in another partnership in which an election was made under § 108(i) with respect to that foreign partnership’s distributive share from the other entity). Free tax services online (a) For each partner for whom the Category 1 filer is required to complete a Schedule K-1 (Form 8865) (which includes the Category 1 filer itself), the Category 1 filer must: (i) Include the information described in section 4. Free tax services online 07(1) of this revenue procedure in the Schedule K-1 (Form 8865) that the Category 1 filer files with the Service and completes for the partner; (ii) Produce a statement containing the partner’s share of the items listed on each statement received by the partnership; and (iii) Attach the statement described in section 5. Free tax services online 07(3)(a)(ii) of this revenue procedure to each Schedule K-1 (Form 8865) that it is required to provide to a partner of the foreign partnership. Free tax services online (b) A Category 2 filer must include its share of the information described in section 4. Free tax services online 07(1) on the Schedule K-1 (Form 8865) that it is required to complete. Free tax services online Category 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership. Free tax services online (c) The Category 1 and Category 2 filers should not attach the statements described in sections 5. Free tax services online 07(3)(a)(ii) and 5. Free tax services online 07(3)(b) of this revenue procedure, respectively, to the Schedules K-1 that are filed with the Service. Free tax services online However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records. Free tax services online (4) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 5. Free tax services online 07(1) of this revenue procedure or a shareholder of an S corporation described in section 5. Free tax services online 07(1) of this revenue procedure must recognize items deferred under § 108(i), the partnership or S corporation must report these items on the Schedule K-1 (Form 1065, Form 1065-B, or Form 1120S) and statements provided to the partner or shareholder pursuant to section 5. Free tax services online 07(1) and (2) of this revenue procedure. Free tax services online Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4. Free tax services online 12(6) of this revenue procedure. Free tax services online SECTION 6. Free tax services online EFFECTIVE DATE This revenue procedure is effective for reacquisitions of applicable debt instruments in taxable years ending after December 31, 2008. Free tax services online SECTION 7. Free tax services online TRANSITION RULE . Free tax services online 01 Noncomplying Election. Free tax services online Except as otherwise provided in this section 7. Free tax services online 01, the Service will treat a § 108(i) election as effective if a taxpayer files an election with the taxpayer’s federal income tax return filed on or before September 16, 2009, using any reasonable procedure to make the election. Free tax services online However, an election that does not comply with section 4 of this revenue procedure will not be effective unless the taxpayer on or before November 16, 2009, files an amended return for the taxable year of the election and complies with the requirements of section 4 of this revenue procedure. Free tax services online . Free tax services online 02 Modification of Election. Free tax services online A taxpayer that files a § 108(i) election on or before September 16, 2009, may modify that election by filing an amended return on or before November 16, 2009 (for example, to modify the amount of COD income the taxpayer elects to defer). Free tax services online To be effective, a modification of an election described in the preceding sentence must satisfy the requirements for an election described in section 4 of this revenue procedure. Free tax services online . Free tax services online 03 Notations. Free tax services online A taxpayer that files the amended return on paper must write “Section 108(i) Election” on the top of the first page. Free tax services online A taxpayer that files the amended return electronically should indicate “Section 108(i) Election” on the return. Free tax services online See Publication 4163, Modernized e-File (MeF) Information for Authorized IRS e-file Providers for Business Returns Tax Year 2008 for more details. Free tax services online SECTION 8. Free tax services online PAPERWORK REDUCTION ACT The collection of information contained in this revenue procedure has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U. Free tax services online S. Free tax services online C. Free tax services online 3507) under control number 1545-2147. Free tax services online An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Free tax services online The collection of information in this revenue procedure is in sections 4, 5 and 7. Free tax services online This information is required to determine the amount of income and deductions a taxpayer elects to defer and to track those amounts until the taxpayer has reported all deferred income and deductions on the taxpayer’s tax return. Free tax services online This information will be used during examination to verify that a taxpayer has correctly deferred income and deductions. Free tax services online The collection of information is required to obtain a benefit. Free tax services online The likely respondents are C corporations, shareholders of S corporations, partners of partnerships, and other individuals engaged in a trade or business, that reacquire applicable debt instruments in 2009 or 2010. Free tax services online The estimated total annual reporting burden is 300,000 hours. Free tax services online The estimated annual burden per respondent varies from 1 to 8 hours, depending on individual circumstances, with an estimated average of 6 hours. Free tax services online The estimated number of respondents is 50,000. Free tax services online Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Free tax services online Generally, tax returns and return information are confidential, as required by § 6103. Free tax services online DRAFTING INFORMATION The principal authors of this revenue procedure are Megan A. Free tax services online Stoner of the Office of Associate Chief Counsel (Passthroughs & Special Industries) and Craig Wojay of the Office of Associate Chief Counsel (Income Tax & Accounting). Free tax services online For further information regarding this revenue procedure, contact Megan A. Free tax services online Stoner at (202) 622-3070 for questions involving partnerships and S corporations, William E. Free tax services online Blanchard at (202) 622-3950 for questions involving OID, Ronald M. Free tax services online Gootzeit at (202) 622-3860 for questions involving foreign entities, Robert Rhyne at (202) 622-7790 for questions involving earnings and profits and consolidated groups, and Craig Wojay at (202) 622-4920 for questions on § 108(i) generally (not toll-free calls). Free tax services online Prev  Up  Next   Home   More Internal Revenue Bulletins