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H R Bloc Amended Tax Return

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H R Bloc Amended Tax Return

H r bloc amended tax return Publication 537 - Main Content Table of Contents What Is an Installment Sale?Special rule. H r bloc amended tax return General RulesFiguring Installment Sale Income Reporting Installment Sale Income Other RulesElecting Out of the Installment Method Payments Received or Considered Received Escrow Account Depreciation Recapture Income Sale to a Related Person Like-Kind Exchange Contingent Payment Sale Single Sale of Several Assets Sale of a Business Unstated Interest and Original Issue Discount (OID) Disposition of an Installment Obligation Repossession Interest on Deferred Tax Reporting an Installment SaleRelated person. H r bloc amended tax return Several assets. H r bloc amended tax return Special situations. H r bloc amended tax return Schedule D (Form 1040). H r bloc amended tax return Form 4797. H r bloc amended tax return How To Get Tax Help What Is an Installment Sale? An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. H r bloc amended tax return The rules for installment sales do not apply if you elect not to use the installment method (see Electing Out of the Installment Method under Other Rules, later) or the transaction is one for which the installment method may not apply. H r bloc amended tax return The installment sales method cannot be used for the following. H r bloc amended tax return Sale of inventory. H r bloc amended tax return   The regular sale of inventory of personal property does not qualify as an installment sale even if you receive a payment after the year of sale. H r bloc amended tax return See Sale of a Business under Other Rules, later. H r bloc amended tax return Dealer sales. H r bloc amended tax return   Sales of personal property by a person who regularly sells or otherwise disposes of the same type of personal property on the installment plan are not installment sales. H r bloc amended tax return This rule also applies to real property held for sale to customers in the ordinary course of a trade or business. H r bloc amended tax return However, the rule does not apply to an installment sale of property used or produced in farming. H r bloc amended tax return Special rule. H r bloc amended tax return   Dealers of time-shares and residential lots can treat certain sales as installment sales and report them under the installment method if they elect to pay a special interest charge. H r bloc amended tax return For more information, see section 453(l). H r bloc amended tax return Stock or securities. H r bloc amended tax return   You cannot use the installment method to report gain from the sale of stock or securities traded on an established securities market. H r bloc amended tax return You must report the entire gain on the sale in the year in which the trade date falls. H r bloc amended tax return Installment obligation. H r bloc amended tax return   The buyer's obligation to make future payments to you can be in the form of a deed of trust, note, land contract, mortgage, or other evidence of the buyer's debt to you. H r bloc amended tax return General Rules If a sale qualifies as an installment sale, the gain must be reported under the installment method unless you elect out of using the installment method. H r bloc amended tax return See Electing Out of the Installment Method under Other Rules, later, for information on recognizing the entire gain in the year of sale. H r bloc amended tax return Sale at a loss. H r bloc amended tax return   If your sale results in a loss, you cannot use the installment method. H r bloc amended tax return If the loss is on an installment sale of business or investment property, you can deduct it only in the tax year of sale. H r bloc amended tax return Unstated interest. H r bloc amended tax return   If your sale calls for payments in a later year and the sales contract provides for little or no interest, you may have to figure unstated interest, even if you have a loss. H r bloc amended tax return See Unstated Interest and Original Issue Discount (OID) under Other Rules, later. H r bloc amended tax return Figuring Installment Sale Income You can use the following discussions or Form 6252 to help you determine gross profit, contract price, gross profit percentage, and installment sale income. H r bloc amended tax return Each payment on an installment sale usually consists of the following three parts. H r bloc amended tax return Interest income. H r bloc amended tax return Return of your adjusted basis in the property. H r bloc amended tax return Gain on the sale. H r bloc amended tax return In each year you receive a payment, you must include in income both the interest part and the part that is your gain on the sale. H r bloc amended tax return You do not include in income the part that is the return of your basis in the property. H r bloc amended tax return Basis is the amount of your investment in the property for installment sale purposes. H r bloc amended tax return Interest Income You must report interest as ordinary income. H r bloc amended tax return Interest is generally not included in a down payment. H r bloc amended tax return However, you may have to treat part of each later payment as interest, even if it is not called interest in your agreement with the buyer. H r bloc amended tax return Interest provided in the agreement is called stated interest. H r bloc amended tax return If the agreement does not provide for enough stated interest, there may be unstated interest or original issue discount. H r bloc amended tax return See Unstated Interest and Original Issue Discount (OID) under Other Rules, later. H r bloc amended tax return Adjusted Basis and Installment Sale Income (Gain on Sale) After you have determined how much of each payment to treat as interest, you treat the rest of each payment as if it were made up of two parts. H r bloc amended tax return A tax-free return of your adjusted basis in the property, and Your gain (referred to as installment sale income on Form 6252). H r bloc amended tax return Figuring adjusted basis for installment sale purposes. H r bloc amended tax return   You can use Worksheet A to figure your adjusted basis in the property for installment sale purposes. H r bloc amended tax return When you have completed the worksheet, you will also have determined the gross profit percentage necessary to figure your installment sale income (gain) for this year. H r bloc amended tax return Worksheet A. H r bloc amended tax return Figuring Adjusted Basis and Gross Profit Percentage 1. H r bloc amended tax return Enter the selling price for the property   2. H r bloc amended tax return Enter your adjusted basis for the property     3. H r bloc amended tax return Enter your selling expenses     4. H r bloc amended tax return Enter any depreciation recapture     5. H r bloc amended tax return Add lines 2, 3, and 4. H r bloc amended tax return  This is your adjusted basis for installment sale purposes   6. H r bloc amended tax return Subtract line 5 from line 1. H r bloc amended tax return If zero or less, enter -0-. H r bloc amended tax return  This is your gross profit     If the amount entered on line 6 is zero, stop here. H r bloc amended tax return You cannot use the installment method. H r bloc amended tax return   7. H r bloc amended tax return Enter the contract price for the property   8. H r bloc amended tax return Divide line 6 by line 7. H r bloc amended tax return This is your gross profit percentage   Selling price. H r bloc amended tax return   The selling price is the total cost of the property to the buyer and includes any of the following. H r bloc amended tax return Any money you are to receive. H r bloc amended tax return The fair market value (FMV) of any property you are to receive (FMV is discussed in Property Used As a Payment under Other Rules, later). H r bloc amended tax return Any existing mortgage or other debt the buyer pays, assumes, or takes (a note, mortgage, or any other liability, such as a lien, accrued interest, or taxes you owe on the property). H r bloc amended tax return Any of your selling expenses the buyer pays. H r bloc amended tax return   Do not include stated interest, unstated interest, any amount recomputed or recharacterized as interest, or original issue discount. H r bloc amended tax return Adjusted basis for installment sale purposes. H r bloc amended tax return   Your adjusted basis is the total of the following three items. H r bloc amended tax return Adjusted basis. H r bloc amended tax return Selling expenses. H r bloc amended tax return Depreciation recapture. H r bloc amended tax return Adjusted basis. H r bloc amended tax return   Basis is your investment in the property for installment sale purposes. H r bloc amended tax return The way you figure basis depends on how you acquire the property. H r bloc amended tax return The basis of property you buy is generally its cost. H r bloc amended tax return The basis of property you inherit, receive as a gift, build yourself, or receive in a tax-free exchange is figured differently. H r bloc amended tax return   While you own property, various events may change your original basis. H r bloc amended tax return Some events, such as adding rooms or making permanent improvements, increase basis. H r bloc amended tax return Others, such as deductible casualty losses or depreciation previously allowed or allowable, decrease basis. H r bloc amended tax return The result is adjusted basis. H r bloc amended tax return   For more information on how to figure basis and adjusted basis, see Publication 551. H r bloc amended tax return For more information regarding your basis in property you inherited from someone who died in 2010 and whose executor filed Form 8939, Allocation of Increase In Basis for Property Acquired From a Decedent, see Publication 4895. H r bloc amended tax return Selling expenses. H r bloc amended tax return   Selling expenses relate to the sale of the property. H r bloc amended tax return They include commissions, attorney fees, and any other expenses paid on the sale. H r bloc amended tax return Selling expenses are added to the basis of the sold property. H r bloc amended tax return Depreciation recapture. H r bloc amended tax return   If the property you sold was depreciable property, you may need to recapture part of the gain on the sale as ordinary income. H r bloc amended tax return See Depreciation Recapture Income under Other Rules, later. H r bloc amended tax return Gross profit. H r bloc amended tax return   Gross profit is the total gain you report on the installment method. H r bloc amended tax return   To figure your gross profit, subtract your adjusted basis for installment sale purposes from the selling price. H r bloc amended tax return If the property you sold was your home, subtract from the gross profit any gain you can exclude. H r bloc amended tax return See Sale of Your Home , later, under Reporting Installment Sale Income. H r bloc amended tax return Contract price. H r bloc amended tax return   Contract price equals: The selling price, minus The mortgages, debts, and other liabilities assumed or taken by the buyer, plus The amount by which the mortgages, debts, and other liabilities assumed or taken by the buyer exceed your adjusted basis for installment sale purposes. H r bloc amended tax return Gross profit percentage. H r bloc amended tax return   A certain percentage of each payment (after subtracting interest) is reported as installment sale income. H r bloc amended tax return This percentage is called the gross profit percentage and is figured by dividing your gross profit from the sale by the contract price. H r bloc amended tax return   The gross profit percentage generally remains the same for each payment you receive. H r bloc amended tax return However, see the Example under Selling Price Reduced, later, for a situation where the gross profit percentage changes. H r bloc amended tax return Example. H r bloc amended tax return You sell property at a contract price of $6,000 and your gross profit is $1,500. H r bloc amended tax return Your gross profit percentage is 25% ($1,500 ÷ $6,000). H r bloc amended tax return After subtracting interest, you report 25% of each payment, including the down payment, as installment sale income from the sale for the tax year you receive the payment. H r bloc amended tax return The remainder (balance) of each payment is the tax-free return of your adjusted basis. H r bloc amended tax return Amount to report as installment sale income. H r bloc amended tax return   Multiply the payments you receive each year (less interest) by the gross profit percentage. H r bloc amended tax return The result is your installment sale income for the tax year. H r bloc amended tax return In certain circumstances, you may be treated as having received a payment, even though you received nothing directly. H r bloc amended tax return A receipt of property or the assumption of a mortgage on the property sold may be treated as a payment. H r bloc amended tax return For a detailed discussion, see Payments Received or Considered Received under Other Rules, later. H r bloc amended tax return Selling Price Reduced If the selling price is reduced at a later date, the gross profit on the sale also will change. H r bloc amended tax return You then must refigure the gross profit percentage for the remaining payments. H r bloc amended tax return Refigure your gross profit using Worksheet B. H r bloc amended tax return You will spread any remaining gain over future installments. H r bloc amended tax return Worksheet B. H r bloc amended tax return New Gross Profit Percentage — Selling Price Reduced 1. H r bloc amended tax return Enter the reduced selling  price for the property   2. H r bloc amended tax return Enter your adjusted  basis for the  property     3. H r bloc amended tax return Enter your selling  expenses     4. H r bloc amended tax return Enter any depreciation  recapture     5. H r bloc amended tax return Add lines 2, 3, and 4. H r bloc amended tax return   6. H r bloc amended tax return Subtract line 5 from line 1. H r bloc amended tax return  This is your adjusted  gross profit   7. H r bloc amended tax return Enter any installment sale  income reported in  prior year(s)   8. H r bloc amended tax return Subtract line 7 from line 6   9. H r bloc amended tax return Future installments   10. H r bloc amended tax return Divide line 8 by line 9. H r bloc amended tax return  This is your new gross profit percentage*   * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. H r bloc amended tax return Example. H r bloc amended tax return In 2011, you sold land with a basis of $40,000 for $100,000. H r bloc amended tax return Your gross profit was $60,000. H r bloc amended tax return You received a $20,000 down payment and the buyer's note for $80,000. H r bloc amended tax return The note provides for four annual payments of $20,000 each, plus 8% interest, beginning in 2012. H r bloc amended tax return Your gross profit percentage is 60%. H r bloc amended tax return You reported a gain of $12,000 on each payment received in 2011 and 2012. H r bloc amended tax return In 2013, you and the buyer agreed to reduce the purchase price to $85,000 and payments during 2013, 2014, and 2015 are reduced to $15,000 for each year. H r bloc amended tax return The new gross profit percentage, 46. H r bloc amended tax return 67%, is figured on Example—Worksheet B. H r bloc amended tax return You will report a gain of $7,000 (46. H r bloc amended tax return 67% of $15,000) on each of the $15,000 installments due in 2013, 2014, and 2015. H r bloc amended tax return Example — Worksheet B. H r bloc amended tax return New Gross Profit Percentage — Selling Price Reduced 1. H r bloc amended tax return Enter the reduced selling  price for the property 85,000 2. H r bloc amended tax return Enter your adjusted  basis for the  property 40,000   3. H r bloc amended tax return Enter your selling  expenses -0-   4. H r bloc amended tax return Enter any depreciation  recapture -0-   5. H r bloc amended tax return Add lines 2, 3, and 4. H r bloc amended tax return 40,000 6. H r bloc amended tax return Subtract line 5 from line 1. H r bloc amended tax return  This is your adjusted  gross profit 45,000 7. H r bloc amended tax return Enter any installment sale  income reported in  prior year(s) 24,000 8. H r bloc amended tax return Subtract line 7 from line 6 21,000 9. H r bloc amended tax return Future installments 45,000 10. H r bloc amended tax return Divide line 8 by line 9. H r bloc amended tax return  This is your new gross profit percentage* 46. H r bloc amended tax return 67% * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. H r bloc amended tax return Reporting Installment Sale Income Generally, you will use Form 6252 to report installment sale income from casual sales of real or personal property during the tax year. H r bloc amended tax return You also will have to report the installment sale income on Schedule D (Form 1040), Capital Gains and Losses, or Form 4797, or both. H r bloc amended tax return See Schedule D (Form 1040) and Form 4797 , later. H r bloc amended tax return If the property was your main home, you may be able to exclude part or all of the gain. H r bloc amended tax return See Sale of Your Home , later. H r bloc amended tax return Form 6252 Use Form 6252 to report an installment sale in the year it takes place and to report payments received, or considered received because of related party resales, in later years. H r bloc amended tax return Attach it to your tax return for each year. H r bloc amended tax return Form 6252 will help you determine the gross profit, contract price, gross profit percentage, and installment sale income. H r bloc amended tax return Which parts to complete. H r bloc amended tax return   Which part to complete depends on whether you are filing the form for the year of sale or a later year. H r bloc amended tax return Year of sale. H r bloc amended tax return   Complete lines 1 through 4, Part I, and Part II. H r bloc amended tax return If you sold property to a related party during the year, also complete Part III. H r bloc amended tax return Later years. H r bloc amended tax return   Complete lines 1 through 4 and Part II for any year in which you receive a payment from an installment sale. H r bloc amended tax return   If you sold a marketable security to a related party after May 14, 1980, and before January 1, 1987, complete Form 6252 for each year of the installment agreement, even if you did not receive a payment. H r bloc amended tax return (After December 31, 1986, the installment method is not available for the sale of marketable securities. H r bloc amended tax return ) Complete lines 1 through 4 and Part II for any year in which you receive a payment from the sale. H r bloc amended tax return Complete Part III unless you received the final payment during the tax year. H r bloc amended tax return   If you sold property other than a marketable security to a related party after May 14, 1980, complete Form 6252 for the year of sale and for 2 years after the year of sale, even if you did not receive a payment. H r bloc amended tax return Complete lines 1 through 4 and Part II for any year during this 2-year period in which you receive a payment from the sale. H r bloc amended tax return Complete Part III for the 2 years after the year of sale unless you received the final payment during the tax year. H r bloc amended tax return Schedule D (Form 1040) Enter the gain figured on Form 6252 (line 26) for personal-use property (capital assets) on Schedule D (Form 1040), as a short-term gain (line 4) or long-term gain (line 11). H r bloc amended tax return If your gain from the installment sale qualifies for long-term capital gain treatment in the year of sale, it will continue to qualify in later tax years. H r bloc amended tax return Your gain is long-term if you owned the property for more than 1 year when you sold it. H r bloc amended tax return Form 4797 An installment sale of property used in your business or that earns rent or royalty income may result in a capital gain, an ordinary gain, or both. H r bloc amended tax return All or part of any gain from the disposition of the property may be ordinary gain from depreciation recapture. H r bloc amended tax return For trade or business property held for more than 1 year, enter the amount from line 26 of Form 6252 on Form 4797, line 4. H r bloc amended tax return If the property was held 1 year or less or you have an ordinary gain from the sale of a noncapital asset (even if the holding period is more than 1 year), enter this amount on Form 4797, line 10, and write “From Form 6252. H r bloc amended tax return ” Sale of Your Home If you sell your home, you may be able to exclude all or part of the gain on the sale. H r bloc amended tax return See Publication 523 for information about excluding the gain. H r bloc amended tax return If the sale is an installment sale, any gain you exclude is not included in gross profit when figuring your gross profit percentage. H r bloc amended tax return Seller-financed mortgage. H r bloc amended tax return   If you finance the sale of your home to an individual, both you and the buyer may have to follow special reporting procedures. H r bloc amended tax return   When you report interest income received from a buyer who uses the property as a personal residence, write the buyer's name, address, and social security number (SSN) on line 1 of Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. H r bloc amended tax return   When deducting the mortgage interest, the buyer must write your name, address, and SSN on line 11 of Schedule A (Form 1040), Itemized Deductions. H r bloc amended tax return   If either person fails to include the other person's SSN, a $50 penalty will be assessed. H r bloc amended tax return Other Rules The rules discussed in this part of the publication apply only in certain circumstances or to certain types of property. H r bloc amended tax return The following topics are discussed. H r bloc amended tax return Electing out of the installment method. H r bloc amended tax return Payments received or considered received. H r bloc amended tax return Escrow account. H r bloc amended tax return Depreciation recapture income. H r bloc amended tax return Sale to a related person. H r bloc amended tax return Like-kind exchange. H r bloc amended tax return Contingent payment sale. H r bloc amended tax return Single sale of several assets. H r bloc amended tax return Sale of a business. H r bloc amended tax return Unstated interest and original issue discount. H r bloc amended tax return Disposition of an installment obligation. H r bloc amended tax return Repossession. H r bloc amended tax return Interest on deferred tax. H r bloc amended tax return Electing Out of the Installment Method If you elect not to use the installment method, you generally report the entire gain in the year of sale, even though you do not receive all the sale proceeds in that year. H r bloc amended tax return To figure the amount of gain to report, use the fair market value (FMV) of the buyer's installment obligation that represents the buyer's debt to you. H r bloc amended tax return Notes, mortgages, and land contracts are examples of obligations that are included at FMV. H r bloc amended tax return You must figure the FMV of the buyer's installment obligation, whether or not you would actually be able to sell it. H r bloc amended tax return If you use the cash method of accounting, the FMV of the obligation will never be considered to be less than the FMV of the property sold (minus any other consideration received). H r bloc amended tax return Example. H r bloc amended tax return You sold a parcel of land for $50,000. H r bloc amended tax return You received a $10,000 down payment and will receive the balance over the next 10 years at $4,000 a year, plus 8% interest. H r bloc amended tax return The buyer gave you a note for $40,000. H r bloc amended tax return The note had an FMV of $40,000. H r bloc amended tax return You paid a commission of 6%, or $3,000, to a broker for negotiating the sale. H r bloc amended tax return The land cost $25,000, and you owned it for more than one year. H r bloc amended tax return You decide to elect out of the installment method and report the entire gain in the year of sale. H r bloc amended tax return Gain realized:     Selling price $50,000 Minus: Property's adj. H r bloc amended tax return basis $25,000     Commission 3,000 28,000 Gain realized $22,000 Gain recognized in year of sale:   Cash $10,000 Market value of note 40,000 Total realized in year of sale $50,000 Minus: Property's adj. H r bloc amended tax return basis $25,000     Commission 3,000 28,000 Gain recognized $22,000 The recognized gain of $22,000 is long-term capital gain. H r bloc amended tax return You include the entire gain in income in the year of sale, so you do not include in income any principal payments you receive in later tax years. H r bloc amended tax return The interest on the note is ordinary income and is reported as interest income each year. H r bloc amended tax return How to elect out. H r bloc amended tax return   To make this election, do not report your sale on Form 6252. H r bloc amended tax return Instead, report it on Form 8949, Sales and Other Dispositions of Capital Assets, Form 4797, or both. H r bloc amended tax return When to elect out. H r bloc amended tax return   Make this election by the due date, including extensions, for filing your tax return for the year the sale takes place. H r bloc amended tax return Automatic six-month extension. H r bloc amended tax return   If you timely file your tax return without making the election, you still can make the election by filing an amended return within 6 months of the due date of your return (excluding extensions). H r bloc amended tax return Write “Filed pursuant to section 301. H r bloc amended tax return 9100-2” at the top of the amended return and file it where the original return was filed. H r bloc amended tax return Revoking the election. H r bloc amended tax return   Once made, the election can be revoked only with IRS approval. H r bloc amended tax return A revocation is retroactive. H r bloc amended tax return You will not be allowed to revoke the election if either of the following applies. H r bloc amended tax return One of the purposes is to avoid federal income tax. H r bloc amended tax return The tax year in which any payment was received has closed. H r bloc amended tax return Payments Received or Considered Received You must figure your gain each year on the payments you receive, or are treated as receiving, from an installment sale. H r bloc amended tax return In certain situations, you are considered to have received a payment, even though the buyer does not pay you directly. H r bloc amended tax return These situations occur when the buyer assumes or pays any of your debts, such as a loan, or pays any of your expenses, such as a sales commission. H r bloc amended tax return However, as discussed later, the buyer's assumption of your debt is treated as a recovery of your basis rather than as a payment in many cases. H r bloc amended tax return Buyer Pays Seller's Expenses If the buyer pays any of your expenses related to the sale of your property, it is considered a payment to you in the year of sale. H r bloc amended tax return Include these expenses in the selling and contract prices when figuring the gross profit percentage. H r bloc amended tax return Buyer Assumes Mortgage If the buyer assumes or pays off your mortgage, or otherwise takes the property subject to the mortgage, the following rules apply. H r bloc amended tax return Mortgage not more than basis. H r bloc amended tax return   If the buyer assumes a mortgage that is not more than your installment sale basis in the property, it is not considered a payment to you. H r bloc amended tax return It is considered a recovery of your basis. H r bloc amended tax return The contract price is the selling price minus the mortgage. H r bloc amended tax return Example. H r bloc amended tax return You sell property with an adjusted basis of $19,000. H r bloc amended tax return You have selling expenses of $1,000. H r bloc amended tax return The buyer assumes your existing mortgage of $15,000 and agrees to pay you $10,000 (a cash down payment of $2,000 and $2,000 (plus 12% interest) in each of the next 4 years). H r bloc amended tax return The selling price is $25,000 ($15,000 + $10,000). H r bloc amended tax return Your gross profit is $5,000 ($25,000 − $20,000 installment sale basis). H r bloc amended tax return The contract price is $10,000 ($25,000 − $15,000 mortgage). H r bloc amended tax return Your gross profit percentage is 50% ($5,000 ÷ $10,000). H r bloc amended tax return You report half of each $2,000 payment received as gain from the sale. H r bloc amended tax return You also report all interest you receive as ordinary income. H r bloc amended tax return Mortgage more than basis. H r bloc amended tax return   If the buyer assumes a mortgage that is more than your installment sale basis in the property, you recover your entire basis. H r bloc amended tax return The part of the mortgage greater than your basis is treated as a payment received in the year of sale. H r bloc amended tax return   To figure the contract price, subtract the mortgage from the selling price. H r bloc amended tax return This is the total amount (other than interest) you will receive directly from the buyer. H r bloc amended tax return Add to this amount the payment you are considered to have received (the difference between the mortgage and your installment sale basis). H r bloc amended tax return The contract price is then the same as your gross profit from the sale. H r bloc amended tax return    If the mortgage the buyer assumes is equal to or more than your installment sale basis, the gross profit percentage always will be 100%. H r bloc amended tax return Example. H r bloc amended tax return The selling price for your property is $9,000. H r bloc amended tax return The buyer will pay you $1,000 annually (plus 8% interest) over the next 3 years and assume an existing mortgage of $6,000. H r bloc amended tax return Your adjusted basis in the property is $4,400. H r bloc amended tax return You have selling expenses of $600, for a total installment sale basis of $5,000. H r bloc amended tax return The part of the mortgage that is more than your installment sale basis is $1,000 ($6,000 − $5,000). H r bloc amended tax return This amount is included in the contract price and treated as a payment received in the year of sale. H r bloc amended tax return The contract price is $4,000: Selling price $9,000 Minus: Mortgage (6,000) Amount actually received $3,000 Add difference:   Mortgage $6,000   Minus: Installment sale basis 5,000 1,000 Contract price $4,000       Your gross profit on the sale is also $4,000: Selling price $9,000 Minus: Installment sale basis (5,000) Gross profit $4,000 Your gross profit percentage is 100%. H r bloc amended tax return Report 100% of each payment (less interest) as gain from the sale. H r bloc amended tax return Treat the $1,000 difference between the mortgage and your installment sale basis as a payment and report 100% of it as gain in the year of sale. H r bloc amended tax return Mortgage Canceled If the buyer of your property is the person who holds the mortgage on it, your debt is canceled, not assumed. H r bloc amended tax return You are considered to receive a payment equal to the outstanding canceled debt. H r bloc amended tax return Example. H r bloc amended tax return Mary Jones loaned you $45,000 in 2009 in exchange for a note and a mortgage in a tract of land you owned. H r bloc amended tax return On April 4, 2013, she bought the land for $70,000. H r bloc amended tax return At that time, $30,000 of her loan to you was outstanding. H r bloc amended tax return She agreed to forgive this $30,000 debt and to pay you $20,000 (plus interest) on August 1, 2013, and $20,000 on August 1, 2014. H r bloc amended tax return She did not assume an existing mortgage. H r bloc amended tax return She canceled the $30,000 debt you owed her. H r bloc amended tax return You are considered to have received a $30,000 payment at the time of the sale. H r bloc amended tax return Buyer Assumes Other Debts If the buyer assumes any other debts, such as a loan or back taxes, it may be considered a payment to you in the year of sale. H r bloc amended tax return If the buyer assumes the debt instead of paying it off, only part of it may have to be treated as a payment. H r bloc amended tax return Compare the debt to your installment sale basis in the property being sold. H r bloc amended tax return If the debt is less than your installment sale basis, none of it is treated as a payment. H r bloc amended tax return If it is more, only the difference is treated as a payment. H r bloc amended tax return If the buyer assumes more than one debt, any part of the total that is more than your installment sale basis is considered a payment. H r bloc amended tax return These rules are the same as the rules discussed earlier under Buyer Assumes Mortgage . H r bloc amended tax return However, they apply only to the following types of debt the buyer assumes. H r bloc amended tax return Those acquired from ownership of the property you are selling, such as a mortgage, lien, overdue interest, or back taxes. H r bloc amended tax return Those acquired in the ordinary course of your business, such as a balance due for inventory you purchased. H r bloc amended tax return If the buyer assumes any other type of debt, such as a personal loan or your legal fees relating to the sale, it is treated as if the buyer had paid off the debt at the time of the sale. H r bloc amended tax return The value of the assumed debt is then considered a payment to you in the year of sale. H r bloc amended tax return Property Used As a Payment If you receive property other than money from the buyer, it is still considered a payment in the year received. H r bloc amended tax return However, see Like-Kind Exchange , later. H r bloc amended tax return Generally, the amount of the payment is the property's FMV on the date you receive it. H r bloc amended tax return Exception. H r bloc amended tax return   If the property the buyer gives you is payable on demand or readily tradable, the amount you should consider as payment in the year received is: The FMV of the property on the date you receive it if you use the cash method of accounting, The face amount of the obligation on the date you receive it if you use the accrual method of accounting, or The stated redemption price at maturity less any original issue discount (OID) or, if there is no OID, the stated redemption price at maturity appropriately discounted to reflect total unstated interest. H r bloc amended tax return See Unstated Interest and Original Issue Discount (OID) , later. H r bloc amended tax return Debt not payable on demand. H r bloc amended tax return   Any evidence of debt you receive from the buyer not payable on demand is not considered a payment. H r bloc amended tax return This is true even if the debt is guaranteed by a third party, including a government agency. H r bloc amended tax return Fair market value (FMV). H r bloc amended tax return   This is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of all the necessary facts. H r bloc amended tax return Third-party note. H r bloc amended tax return   If the property the buyer gives you is a third-party note (or other obligation of a third party), you are considered to have received a payment equal to the note's FMV. H r bloc amended tax return Because the FMV of the note is itself a payment on your installment sale, any payments you later receive from the third party are not considered payments on the sale. H r bloc amended tax return The excess of the note's face value over its FMV is interest. H r bloc amended tax return Exclude this interest in determining the selling price of the property. H r bloc amended tax return However, see Exception under Property Used As a Payment, earlier. H r bloc amended tax return Example. H r bloc amended tax return You sold real estate in an installment sale. H r bloc amended tax return As part of the down payment, the buyer assigned to you a $50,000, 8% interest third-party note. H r bloc amended tax return The FMV of the third-party note at the time of the sale was $30,000. H r bloc amended tax return This amount, not $50,000, is a payment to you in the year of sale. H r bloc amended tax return The third-party note had an FMV equal to 60% of its face value ($30,000 ÷ $50,000), so 60% of each principal payment you receive on this note is a nontaxable return of capital. H r bloc amended tax return The remaining 40% is interest taxed as ordinary income. H r bloc amended tax return Bond. H r bloc amended tax return   A bond or other evidence of debt you receive from the buyer that is payable on demand or readily tradable in an established securities market is treated as a payment in the year you receive it. H r bloc amended tax return For more information on the amount you should treat as a payment, see Exception under Property Used As a Payment, earlier. H r bloc amended tax return    If you receive a government or corporate bond for a sale before October 22, 2004, and the bond has interest coupons attached or can be readily traded in an established securities market, you are considered to have received payment equal to the bond's FMV. H r bloc amended tax return However, see Exception under Property Used As a Payment, earlier. H r bloc amended tax return Buyer's note. H r bloc amended tax return   The buyer's note (unless payable on demand) is not considered payment on the sale. H r bloc amended tax return However, its full face value is included when figuring the selling price and the contract price. H r bloc amended tax return Payments you receive on the note are used to figure your gain in the year received. H r bloc amended tax return Installment Obligation Used as Security (Pledge Rule) If you use an installment obligation to secure any debt, the net proceeds from the debt may be treated as a payment on the installment obligation. H r bloc amended tax return This is known as the pledge rule, and it applies if the selling price of the property is over $150,000. H r bloc amended tax return It does not apply to the following dispositions. H r bloc amended tax return Sales of property used or produced in farming. H r bloc amended tax return Sales of personal-use property. H r bloc amended tax return Qualifying sales of time-shares and residential lots. H r bloc amended tax return The net debt proceeds are the gross debt minus the direct expenses of getting the debt. H r bloc amended tax return The amount treated as a payment is considered received on the later of the following dates. H r bloc amended tax return The date the debt becomes secured. H r bloc amended tax return The date you receive the debt proceeds. H r bloc amended tax return A debt is secured by an installment obligation to the extent that payment of principal or interest on the debt is directly secured (under the terms of the loan or any underlying arrangement) by any interest in the installment obligation. H r bloc amended tax return For sales after December 16, 1999, payment on a debt is treated as directly secured by an interest in an installment obligation to the extent an arrangement allows you to satisfy all or part of the debt with the installment obligation. H r bloc amended tax return Limit. H r bloc amended tax return   The net debt proceeds treated as a payment on the pledged installment obligation cannot be more than the excess of item (1) over item (2), below. H r bloc amended tax return The total contract price on the installment sale. H r bloc amended tax return Any payments received on the installment obligation before the date the net debt proceeds are treated as a payment. H r bloc amended tax return Installment payments. H r bloc amended tax return   The pledge rule accelerates the reporting of the installment obligation payments. H r bloc amended tax return Do not report payments received on the obligation after it has been pledged until the payments received exceed the amount reported under the pledge rule. H r bloc amended tax return Exception. H r bloc amended tax return   The pledge rule does not apply to pledges made after December 17, 1987, to refinance a debt under the following circumstances. H r bloc amended tax return The debt was outstanding on December 17, 1987. H r bloc amended tax return The debt was secured by that installment sale obligation on that date and at all times thereafter until the refinancing occurred. H r bloc amended tax return   A refinancing as a result of the creditor's calling of the debt is treated as a continuation of the original debt so long as a person other than the creditor or a person related to the creditor provides the refinancing. H r bloc amended tax return   This exception applies only to refinancing that does not exceed the principal of the original debt immediately before the refinancing. H r bloc amended tax return Any excess is treated as a payment on the installment obligation. H r bloc amended tax return Escrow Account In some cases, the sales agreement or a later agreement may call for the buyer to establish an irrevocable escrow account from which the remaining installment payments (including interest) are to be made. H r bloc amended tax return These sales cannot be reported on the installment method. H r bloc amended tax return The buyer's obligation is paid in full when the balance of the purchase price is deposited into the escrow account. H r bloc amended tax return When an escrow account is established, you no longer rely on the buyer for the rest of the payments, but on the escrow arrangement. H r bloc amended tax return Example. H r bloc amended tax return You sell property for $100,000. H r bloc amended tax return The sales agreement calls for a down payment of $10,000 and payment of $15,000 in each of the next 6 years to be made from an irrevocable escrow account containing the balance of the purchase price plus interest. H r bloc amended tax return You cannot report the sale on the installment method because the full purchase price is considered received in the year of sale. H r bloc amended tax return You report the entire gain in the year of sale. H r bloc amended tax return Escrow established in a later year. H r bloc amended tax return   If you make an installment sale and in a later year an irrevocable escrow account is established to pay the remaining installments plus interest, the amount placed in the escrow account represents payment of the balance of the installment obligation. H r bloc amended tax return Substantial restriction. H r bloc amended tax return   If an escrow arrangement imposes a substantial restriction on your right to receive the sale proceeds, the sale can be reported on the installment method, provided it otherwise qualifies. H r bloc amended tax return For an escrow arrangement to impose a substantial restriction, it must serve a bona fide purpose of the buyer, that is, a real and definite restriction placed on the seller or a specific economic benefit conferred on the buyer. H r bloc amended tax return Depreciation Recapture Income If you sell property for which you claimed or could have claimed a depreciation deduction, you must report any depreciation recapture income in the year of sale, whether or not an installment payment was received that year. H r bloc amended tax return Figure your depreciation recapture income (including the section 179 deduction and the section 179A deduction recapture) in Part III of Form 4797. H r bloc amended tax return Report the recapture income in Part II of Form 4797 as ordinary income in the year of sale. H r bloc amended tax return The recapture income is also included in Part I of Form 6252. H r bloc amended tax return However, the gain equal to the recapture income is reported in full in the year of the sale. H r bloc amended tax return Only the gain greater than the recapture income is reported on the installment method. H r bloc amended tax return For more information on depreciation recapture, see chapter 3 in Publication 544. H r bloc amended tax return The recapture income reported in the year of sale is included in your installment sale basis in determining your gross profit on the installment sale. H r bloc amended tax return Determining gross profit is discussed under General Rules , earlier. H r bloc amended tax return Sale to a Related Person If you sell depreciable property to a related person and the sale is an installment sale, you may not be able to report the sale using the installment method. H r bloc amended tax return If you sell property to a related person and the related person disposes of the property before you receive all payments with respect to the sale, you may have to treat the amount realized by the related person as received by you when the related person disposes of the property. H r bloc amended tax return These rules are explained under Sale of Depreciable Property and under Sale and Later Disposition , later. H r bloc amended tax return Sale of Depreciable Property If you sell depreciable property to certain related persons, you generally cannot report the sale using the installment method. H r bloc amended tax return Instead, all payments to be received are considered received in the year of sale. H r bloc amended tax return However, see Exception , below. H r bloc amended tax return Depreciable property for this rule is any property the purchaser can depreciate. H r bloc amended tax return Payments to be received include the total of all noncontingent payments and the FMV of any payments contingent as to amount. H r bloc amended tax return In the case of contingent payments for which the FMV cannot be reasonably determined, your basis in the property is recovered proportionately. H r bloc amended tax return The purchaser cannot increase the basis of the property acquired in the sale before the seller includes a like amount in income. H r bloc amended tax return Exception. H r bloc amended tax return   You can use the installment method to report a sale of depreciable property to a related person if no significant tax deferral benefit will be derived from the sale. H r bloc amended tax return You must show to the satisfaction of the IRS that avoidance of federal income tax was not one of the principal purposes of the sale. H r bloc amended tax return Related person. H r bloc amended tax return   Related persons include the following. H r bloc amended tax return A person and all controlled entities with respect to that person. H r bloc amended tax return A taxpayer and any trust in which such taxpayer (or his spouse) is a beneficiary, unless that beneficiary's interest in the trust is a remote contingent interest. H r bloc amended tax return Except in the case of a sale or exchange in satisfaction of a pecuniary bequest, an executor of an estate and a beneficiary of that estate. H r bloc amended tax return Two or more partnerships in which the same person owns, directly or indirectly, more than 50% of the capital interests or the profits interests. H r bloc amended tax return   For information about which entities are controlled entities, see section 1239(c). H r bloc amended tax return Sale and Later Disposition Generally, a special rule applies if you sell or exchange property to a related person on the installment method (first disposition) who then sells, exchanges, or gives away the property (second disposition) under the following circumstances. H r bloc amended tax return The related person makes the second disposition before making all payments on the first disposition. H r bloc amended tax return The related person disposes of the property within 2 years of the first disposition. H r bloc amended tax return This rule does not apply if the property involved is marketable securities. H r bloc amended tax return Under this rule, you treat part or all of the amount the related person realizes (or the FMV if the disposed property is not sold or exchanged) from the second disposition as if you received it at the time of the second disposition. H r bloc amended tax return See Exception , later. H r bloc amended tax return Related person. H r bloc amended tax return   Related persons include the following. H r bloc amended tax return Members of a family, including only brothers and sisters (either whole or half), husband and wife, ancestors, and lineal descendants. H r bloc amended tax return A partnership or estate and a partner or beneficiary. H r bloc amended tax return A trust (other than a section 401(a) employees trust) and a beneficiary. H r bloc amended tax return A trust and an owner of the trust. H r bloc amended tax return Two corporations that are members of the same controlled group as defined in section 267(f). H r bloc amended tax return The fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. H r bloc amended tax return A tax-exempt educational or charitable organization and a person (if an individual, including members of the individual's family) who directly or indirectly controls such an organization. H r bloc amended tax return An individual and a corporation when the individual owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. H r bloc amended tax return A fiduciary of a trust and a corporation when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation. H r bloc amended tax return The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. H r bloc amended tax return Any two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. H r bloc amended tax return An S corporation and a corporation that is not an S corporation if the same persons own more than 50% in value of the outstanding stock of each corporation. H r bloc amended tax return A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership. H r bloc amended tax return An executor and a beneficiary of an estate unless the sale is in satisfaction of a pecuniary bequest. H r bloc amended tax return Example 1. H r bloc amended tax return In 2012, Harvey Green sold farm land to his son Bob for $500,000, which was to be paid in five equal payments over 5 years, plus adequate stated interest on the balance due. H r bloc amended tax return His installment sale basis for the farm land was $250,000 and the property was not subject to any outstanding liens or mortgages. H r bloc amended tax return His gross profit percentage is 50% (gross profit of $250,000 ÷ contract price of $500,000). H r bloc amended tax return He received $100,000 in 2012 and included $50,000 in income for that year ($100,000 × 0. H r bloc amended tax return 50). H r bloc amended tax return Bob made no improvements to the property and sold it to Alfalfa Inc. H r bloc amended tax return , in 2013 for $600,000 after making the payment for that year. H r bloc amended tax return The amount realized from the second disposition is $600,000. H r bloc amended tax return Harvey figures his installment sale income for 2013 as follows: Lesser of: 1) Amount realized on second disposition, or 2) Contract price on first disposition $500,000 Subtract: Sum of payments from Bob in 2012 and 2013 - 200,000 Amount treated as received because of second disposition $300,000 Add: Payment from Bob in 2013 + 100,000 Total payments received and treated as received for 2013 $400,000 Multiply by gross profit % × . H r bloc amended tax return 50 Installment sale income for 2013 $200,000 Harvey will not include in his installment sale income any principal payments he receives on the installment obligation for 2014, 2015, and 2016 because he has already reported the total payments of $500,000 from the first disposition ($100,000 in 2012 and $400,000 in 2013). H r bloc amended tax return Example 2. H r bloc amended tax return Assume the facts are the same as Example 1 except that Bob sells the property for only $400,000. H r bloc amended tax return The gain for 2013 is figured as follows: Lesser of: 1) Amount realized on second disposition, or 2) Contract price on first disposition $400,000 Subtract: Sum of payments from Bob in 2012 and 2013 − 200,000 Amount treated as received because of second disposition $200,000 Add: Payment from Bob in 2013 + 100,000 Total payments received and treated as received for 2013 $300,000 Multiply by gross profit % × . H r bloc amended tax return 50 Installment sale income for 2013 $150,000     Harvey receives a $100,000 payment in 2014 and another in 2015. H r bloc amended tax return They are not taxed because he treated the $200,000 from the disposition in 2013 as a payment received and paid tax on the installment sale income. H r bloc amended tax return In 2016, he receives the final $100,000 payment. H r bloc amended tax return He figures the installment sale income he must recognize in 2016 as follows: Total payments from the first disposition received by the end of 2016 $500,000 Minus the sum of:     Payment from 2012 $100,000   Payment from 2013 100,000   Amount treated as received in 2013 200,000   Total on which gain was previously recognized  − 400,000 Payment on which gain is recognized for 2016  $100,000 Multiply by gross profit % × . H r bloc amended tax return 50 Installment sale income for 2016 $ 50,000 Exception. H r bloc amended tax return   This rule does not apply to a second disposition, and any later transfer, if you can show to the satisfaction of the IRS that neither the first disposition (to the related person) nor the second disposition had as one of its principal purposes the avoidance of federal income tax. H r bloc amended tax return Generally, an involuntary second disposition will qualify under the nontax avoidance exception, such as when a creditor of the related person forecloses on the property or the related person declares bankruptcy. H r bloc amended tax return   The nontax avoidance exception also applies to a second disposition that is also an installment sale if the terms of payment under the installment resale are substantially equal to or longer than those for the first installment sale. H r bloc amended tax return However, the exception does not apply if the resale terms permit significant deferral of recognition of gain from the first sale. H r bloc amended tax return   In addition, any sale or exchange of stock to the issuing corporation is not treated as a first disposition. H r bloc amended tax return An involuntary conversion is not treated as a second disposition if the first disposition occurred before the threat of conversion. H r bloc amended tax return A transfer after the death of the person making the first disposition or the related person's death, whichever is earlier, is not treated as a second disposition. H r bloc amended tax return Like-Kind Exchange If you trade business or investment property solely for the same kind of property to be held as business or investment property, you can postpone reporting the gain. H r bloc amended tax return These trades are known as like-kind exchanges. H r bloc amended tax return The property you receive in a like-kind exchange is treated as if it were a continuation of the property you gave up. H r bloc amended tax return You do not have to report any part of your gain if you receive only like-kind property. H r bloc amended tax return However, if you also receive money or other property (boot) in the exchange, you must report your gain to the extent of the money and the FMV of the other property received. H r bloc amended tax return For more information on like-kind exchanges, see Like-Kind Exchanges in chapter 1 of Publication 544. H r bloc amended tax return Installment payments. H r bloc amended tax return   If, in addition to like-kind property, you receive an installment obligation in the exchange, the following rules apply to determine the installment sale income each year. H r bloc amended tax return The contract price is reduced by the FMV of the like-kind property received in the trade. H r bloc amended tax return The gross profit is reduced by any gain on the trade that can be postponed. H r bloc amended tax return Like-kind property received in the trade is not considered payment on the installment obligation. H r bloc amended tax return Example. H r bloc amended tax return In 2013, George Brown trades personal property with an installment sale basis of $400,000 for like-kind property having an FMV of $200,000. H r bloc amended tax return He also receives an installment note for $800,000 in the trade. H r bloc amended tax return Under the terms of the note, he is to receive $100,000 (plus interest) in 2014 and the balance of $700,000 (plus interest) in 2015. H r bloc amended tax return George's selling price is $1,000,000 ($800,000 installment note + $200,000 FMV of like-kind property received). H r bloc amended tax return His gross profit is $600,000 ($1,000,000 − $400,000 installment sale basis). H r bloc amended tax return The contract price is $800,000 ($1,000,000 − $200,000). H r bloc amended tax return The gross profit percentage is 75% ($600,000 ÷ $800,000). H r bloc amended tax return He reports no gain in 2013 because the like-kind property he receives is not treated as a payment for figuring gain. H r bloc amended tax return He reports $75,000 gain for 2014 (75% of $100,000 payment received) and $525,000 gain for 2015 (75% of $700,000 payment received). H r bloc amended tax return Deferred exchanges. H r bloc amended tax return   A deferred exchange is one in which you transfer property you use in business or hold for investment and receive like-kind property later that you will use in business or hold for investment. H r bloc amended tax return Under this type of exchange, the person receiving your property may be required to place funds in an escrow account or trust. H r bloc amended tax return If certain rules are met, these funds will not be considered a payment until you have the right to receive the funds or, if earlier, the end of the exchange period. H r bloc amended tax return See Regulations section 1. H r bloc amended tax return 1031(k)-1(j)(2) for these rules. H r bloc amended tax return Contingent Payment Sale A contingent payment sale is one in which the total selling price cannot be determined by the end of the tax year of sale. H r bloc amended tax return This happens, for example, if you sell your business and the selling price includes a percentage of its profits in future years. H r bloc amended tax return If the selling price cannot be determined by the end of the tax year, you must use different rules to figure the contract price and the gross profit percentage than those you use for an installment sale with a fixed selling price. H r bloc amended tax return For rules on using the installment method for a contingent payment sale, see Regulations section 15a. H r bloc amended tax return 453-1(c). H r bloc amended tax return Single Sale of Several Assets If you sell different types of assets in a single sale, you must identify each asset to determine whether you can use the installment method to report the sale of that asset. H r bloc amended tax return You also have to allocate part of the selling price to each asset. H r bloc amended tax return If you sell assets that constitute a trade or business, see Sale of a Business , later. H r bloc amended tax return Unless an allocation of the selling price has been agreed to by both parties in an arm's-length transaction, you must allocate the selling price to an asset based on its FMV. H r bloc amended tax return If the buyer assumes a debt, or takes the property subject to a debt, you must reduce the FMV of the property by the debt. H r bloc amended tax return This becomes the net FMV. H r bloc amended tax return A sale of separate and unrelated assets of the same type under a single contract is reported as one transaction for the installment method. H r bloc amended tax return However, if an asset is sold at a loss, its disposition cannot be reported on the installment method. H r bloc amended tax return It must be reported separately. H r bloc amended tax return The remaining assets sold at a gain are reported together. H r bloc amended tax return Example. H r bloc amended tax return You sold three separate and unrelated parcels of real property (A, B, and C) under a single contract calling for a total selling price of $130,000. H r bloc amended tax return The total selling price consisted of a cash payment of $20,000, the buyer's assumption of a $30,000 mortgage on parcel B, and an installment obligation of $80,000 payable in eight annual installments, plus interest at 8% a year. H r bloc amended tax return Your installment sale basis for each parcel was $15,000. H r bloc amended tax return Your net gain was $85,000 ($130,000 − $45,000). H r bloc amended tax return You report the gain on the installment method. H r bloc amended tax return The sales contract did not allocate the selling price or the cash payment received in the year of sale among the individual parcels. H r bloc amended tax return The FMV of parcels A, B, and C were $60,000, $60,000, and $10,000, respectively. H r bloc amended tax return The installment sale basis for parcel C was more than its FMV, so it was sold at a loss and must be treated separately. H r bloc amended tax return You must allocate the total selling price and the amounts received in the year of sale between parcel C and the remaining parcels. H r bloc amended tax return Of the total $130,000 selling price, you must allocate $120,000 to parcels A and B together and $10,000 to parcel C. H r bloc amended tax return You should allocate the cash payment of $20,000 received in the year of sale and the note receivable on the basis of their proportionate net FMV. H r bloc amended tax return The allocation is figured as follows:   Parcels   A and B Parcel C FMV $120,000 $10,000 Minus: Mortgage assumed 30,000 -0- Net FMV $ 90,000 $10,000 Proportionate net FMV:     Percentage of total 90% 10% Payments in year of sale:     $20,000 × 90% $18,000   $20,000 × 10%   $2,000 Excess of parcel B mortgage over installment sale basis 15,000 -0- Allocation of payments  received (or considered  received) in year of sale $ 33,000 $ 2,000 You cannot report the sale of parcel C on the installment method because the sale results in a loss. H r bloc amended tax return You report this loss of $5,000 ($10,000 selling price − $15,000 installment sale basis) in the year of sale. H r bloc amended tax return However, if parcel C was held for personal use, the loss is not deductible. H r bloc amended tax return You allocate the installment obligation of $80,000 to the properties sold based on their proportionate net FMVs (90% to parcels A and B, 10% to parcel C). H r bloc amended tax return Sale of a Business The installment sale of an entire business for one overall price under a single contract is not the sale of a single asset. H r bloc amended tax return Allocation of Selling Price To determine whether any of the gain on the sale of the business can be reported on the installment method, you must allocate the total selling price and the payments received in the year of sale between each of the following classes of assets. H r bloc amended tax return Assets sold at a loss. H r bloc amended tax return Real and personal property eligible for the installment method. H r bloc amended tax return Real and personal property ineligible for the installment method, including: Inventory, Dealer property, and Stocks and securities. H r bloc amended tax return Inventory. H r bloc amended tax return   The sale of inventories of personal property cannot be reported on the installment method. H r bloc amended tax return All gain or loss on their sale must be reported in the year of sale, even if you receive payment in later years. H r bloc amended tax return   If inventory items are included in an installment sale, you may have an agreement stating which payments are for inventory and which are for the other assets being sold. H r bloc amended tax return If you do not, each payment must be allocated between the inventory and the other assets sold. H r bloc amended tax return   Report the amount you receive (or will receive) on the sale of inventory items as ordinary business income. H r bloc amended tax return Use your basis in the inventory to figure the cost of goods sold. H r bloc amended tax return Deduct the part of the selling expenses allocated to inventory as an ordinary business expense. H r bloc amended tax return Residual method. H r bloc amended tax return   Except for assets exchanged under the like-kind exchange rules, both the buyer and seller of a business must use the residual method to allocate the sale price to each business asset sold. H r bloc amended tax return This method determines gain or loss from the transfer of each asset and the buyer's basis in the assets. H r bloc amended tax return   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. H r bloc amended tax return This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b). H r bloc amended tax return   A group of assets constitutes a trade or business if goodwill or going concern value could, under any circumstances, attach to the assets or if the use of the assets would constitute an active trade or business under section 355. H r bloc amended tax return   The residual method provides for the consideration to be reduced first by cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). H r bloc amended tax return The consideration remaining after this reduction must be allocated among the various business assets in a certain order. H r bloc amended tax return   For asset acquisitions occurring after March 15, 2001, make the allocation among the following assets in proportion to (but not more than) their fair market value on the purchase date in the following order. H r bloc amended tax return Certificates of deposit, U. H r bloc amended tax return S. H r bloc amended tax return Government securities, foreign currency, and actively traded personal property, including stock and securities. H r bloc amended tax return Accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. H r bloc amended tax return However, see Regulations section 1. H r bloc amended tax return 338-6(b)(2)(iii) for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. H r bloc amended tax return Property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. H r bloc amended tax return All other assets except section 197 intangibles. H r bloc amended tax return Section 197 intangibles except goodwill and going concern value. H r bloc amended tax return Goodwill and going concern value (whether or not they qualify as section 197 intangibles). H r bloc amended tax return   If an asset described in (1) through (6) is includible in more than one category, include it in the lower number category. H r bloc amended tax return For example, if an asset is described in both (4) and (6), include it in (4). H r bloc amended tax return Agreement. H r bloc amended tax return   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. H r bloc amended tax return This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. H r bloc amended tax return Reporting requirement. H r bloc amended tax return   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. H r bloc amended tax return Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. H r bloc amended tax return The buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. H r bloc amended tax return Sale of Partnership Interest A partner who sells a partnership interest at a gain may be able to report the sale on the installment method. H r bloc amended tax return The sale of a partnership interest is treated as the sale of a single capital asset. H r bloc amended tax return The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary income. H r bloc amended tax return (The term “unrealized receivables” includes depreciation recapture income, discussed earlier. H r bloc amended tax return ) The gain allocated to the unrealized receivables and the inventory cannot be reported under the installment method. H r bloc amended tax return The gain allocated to the other assets can be reported under the installment method. H r bloc amended tax return For more information on the treatment of unrealized receivables and inventory, see Publication 541. H r bloc amended tax return Example — Sale of a Business On June 4, 2013, you sold the machine shop you had operated since 2005. H r bloc amended tax return You received a $100,000 down payment and the buyer's note for $120,000. H r bloc amended tax return The note payments are $15,000 each, plus 10% interest, due every July 1 and January 1, beginning in 2014. H r bloc amended tax return The total selling price is $220,000. H r bloc amended tax return Your selling expenses are $11,000. H r bloc amended tax return The selling expenses are divided among all the assets sold, including inventory. H r bloc amended tax return Your selling expense for each asset is 5% of the asset's selling price ($11,000 selling expense ÷ $220,000 total selling price). H r bloc amended tax return The FMV, adjusted basis, and depreciation claimed on each asset sold are as follows:     Depre- ciation Adj. H r bloc amended tax return Asset FMV Claimed Basis Inventory $ 10,000 -0- $ 8,000 Land 42,000 -0- 15,000 Building 48,000 $9,000 36,000 Machine A 71,000 27,200 63,800 Machine B 24,000 12,960 22,040 Truck 6,500 18,624 5,376   $201,500 $67,784 $150,216         Under the residual method, you allocate the selling price to each of the assets based on their FMV ($201,500). H r bloc amended tax return The remaining $18,500 ($220,000 - $201,500) is allocated to your section 197 intangible, goodwill. H r bloc amended tax return The assets included in the sale, their selling prices based on their FMVs, the selling expense allocated to each asset, the adjusted basis, and the gain for each asset are shown in the following chart. H r bloc amended tax return   Sale  Price Sale   Exp. H r bloc amended tax return Adj. H r bloc amended tax return   Basis Gain Inventory $ 10,000 $ 500 $ 8,000 $ 1,500 Land 42,000 2,100 15,000 24,900 Building 48,000 2,400 36,000 9,600 Mch. H r bloc amended tax return A 71,000 3,550 63,800 3,650 Mch. H r bloc amended tax return B 24,000 1,200 22,040 760 Truck 6,500 325 5,376 799 Goodwill 18,500 925 -0- 17,575   $220,000 $11,000 $150,216 $58,784 The building was acquired in 2005, the year the business began, and it is section 1250 property. H r bloc amended tax return There is no depreciation recapture income because the building was depreciated using the straight line method. H r bloc amended tax return All gain on the truck, machine A, and machine B is depreciation recapture income since it is the lesser of the depreciation claimed or the gain on the sale. H r bloc amended tax return Figure depreciation recapture in Part III of Form 4797. H r bloc amended tax return The total depreciation recapture income reported in Part II of Form 4797 is $5,209. H r bloc amended tax return This consists of $3,650 on machine A, $799 on the truck, and $760 on machine B (the gain on each item because it was less than the depreciation claimed). H r bloc amended tax return These gains are reported in full in the year of sale and are not included in the installment sale computation. H r bloc amended tax return Of the $220,000 total selling price, the $10,000 for inventory assets cannot be reported using the installment method. H r bloc amended tax return The selling prices of the truck and machines are also removed from the total selling price because gain on these items is reported in full in the year of sale. H r bloc amended tax return The selling price equals the contract price for the installment sale ($108,500). H r bloc amended tax return The assets included in the installment sale, their selling price, and their installment sale bases are shown in the following chart. H r bloc amended tax return   Selling  Price Install- ment  Sale  Basis Gross  Profit Land $ 42,000 $17,100 $24,900 Building 48,000 38,400 9,600 Goodwill 18,500 925 17,575 Total $108,500 $56,425 $52,075         The gross profit percentage (gross profit ÷ contract price) for the installment sale is 48% ($52,075 ÷ $108,500). H r bloc amended tax return The gross profit percentage for each asset is figured as follows: Percentage Land— $24,900 ÷ $108,500 22. H r bloc amended tax return 95 Building— $9,600 ÷ $108,500 8. H r bloc amended tax return 85 Goodwill— $17,575 ÷ $108,500 16. H r bloc amended tax return 20 Total 48. H r bloc amended tax return 00 The sale includes assets sold on the installment method and assets for which the gain is reported in full in the year of sale, so payments must be allocated between the installment part of the sale and the part reported in the year of sale. H r bloc amended tax return The selling price for the installment sale is $108,500. H r bloc amended tax return This is 49. H r bloc amended tax return 3% of the total selling price of $220,000 ($108,500 ÷ $220,000). H r bloc amended tax return The selling price of assets not reported on the installment method is $111,500. H r bloc amended tax return This is 50. H r bloc amended tax return 7% ($111,500 ÷ $220,000) of the total selling price. H r bloc amended tax return Multiply principal payments by 49. H r bloc amended tax return 3% to determine the part of the payment for the installment sale. H r bloc amended tax return The balance, 50. H r bloc amended tax return 7%, is for the part reported in the year of the sale. H r bloc amended tax return The gain on the sale of the inventory, machines, and truck is reported in full in the year of sale. H r bloc amended tax return When you receive principal payments in later years, no part of the payment for the sale of these assets is included in gross income. H r bloc amended tax return Only the part for the installment sale (49. H r bloc amended tax return 3%) is used in the installment sale computation. H r bloc amended tax return The only payment received in 2013 is the down payment of $100,000. H r bloc amended tax return The part of the payment for the installment sale is $49,300 ($100,000 × 49. H r bloc amended tax return 3%). H r bloc amended tax return This amount is used in the installment sale computation. H r bloc amended tax return Installment income for 2013. H r bloc amended tax return   Your installment income for each asset is the gross profit percentage for that asset times $49,300, the installment income received in 2013. H r bloc amended tax return Income Land—22. H r bloc amended tax return 95% of $49,300 $11,314 Building—8. H r bloc amended tax return 85% of $49,300 4,363 Goodwill—16. H r bloc amended tax return 2% of $49,300 7,987 Total installment income for 2013 $23,664 Installment income after 2013. H r bloc amended tax return   You figure installment income for years after 2013 by applying the same gross profit percentages to 49. H r bloc amended tax return 3% of the total payments you receive on the buyer's note during the year. H r bloc amended tax return Unstated Interest and Original Issue Discount (OID) An installment sale contract may provide that each deferred payment on the sale will include interest or that there will be an interest payment in addition to the principal payment. H r bloc amended tax return Interest provided in the contract is called stated interest. H r bloc amended tax return If an installment sale contract does not provide for adequate stated interest, part of the stated principal amount of the contract may be recharacterized as interest. H r bloc amended tax return If section 483 applies to the contract, this interest is called unstated interest. H r bloc amended tax return If section 1274 applies to the contract, this interest is called original issue discount (OID). H r bloc amended tax return An installment sale contract does not provide for adequate stated interest if the stated interest rate is lower than the test rate (defined later). H r bloc amended tax return Treatment of unstated interest and OID. H r bloc amended tax return   Generally, if a buyer gives a debt in consideration for personal use property, the unstated interest rules do not apply. H r bloc amended tax return As a result, the buyer cannot deduct the unstated interest. H r bloc amended tax return The seller must report the unstated interest as income. H r bloc amended tax return   Personal-use property is any property in which substantially all of its use by the buyer is not in connection with a trade or business or an investment activity. H r bloc amended tax return   If the debt is subject to the section 483 rules and is also subject to the below-market loan rules, such as a gift loan, compensation-related loan, or corporation-shareholder loan, then both parties are subject to the below-market loan rules rather than the unstated interest rules. H r bloc amended tax return Rules for the seller. H r bloc amended tax return   If either section 1274 or section 483 applies to the installment sale contract, you must treat part of the installment sale price as interest, even though interest is not called for in the sales agreement. H r bloc amended tax return If either section applies, you must reduce the stated selling price of the property and increase your interest income by this unstated interest. H r bloc amended tax return   Include the unstated interest in income based on your regular method of accounting. H r bloc amended tax return Include OID in income over the term of the contract. H r bloc amended tax return   The OID includible in income each year is based on the constant yield method described in section 1272. H r bloc amended tax return (In some cases, the OID on an installment sale contract also may include all or part of the stated interest, especially if the stated interest is not paid at least annually. H r bloc amended tax return )   If you do not use the installment method to report the sale, report the entire gain under your method of accounting in the year of sale. H r bloc amended tax return Reduce the selling price by any stated principal treated as interest to determine the gain. H r bloc amended tax return   Report unstated interest or OID on your tax return, in addition to stated interest. H r bloc amended tax return Rules for the buyer. H r bloc amended tax return   Any part of the stated selling price of an installment sale contract treated by the buyer as interest reduces the buyer's basis in the property and increases the buyer's interest expense. H r bloc amended tax return These rules do not apply to personal-use property (for example, property not used in a trade or business). H r bloc amended tax return Adequate stated interest. H r bloc amended tax return   An installment sale contract generally provides for adequate stated interest if the contract's stated principal amount is at least equal to the sum of the present values of all principal and interest payments called for under the contract. H r bloc amended tax return The present value of a payment is determined based on the test rate of interest, defined next. H r bloc amended tax return (If section 483 applies to the contract, payments due within six months after the sale are taken into account at face value. H r bloc amended tax return ) In general, an installment sale contract provides for adequate stated interest if the stated interest rate (based on an appropriate compounding period) is at least equal to the test rate of interest. H r bloc amended tax return Test rate of interest. H r bloc amended tax return   The test rate of interest for a contract is the 3-month rate. H r bloc amended tax return The 3-month rate is the lower of the following applicable federal rates (AFRs). H r bloc amended tax return The lowest AFR (based on the appropriate compounding period) in effect during the 3-month period ending with the first month in which there is a binding written contract that substantially provides the terms under which the sale or exchange is ultimately completed. H r bloc amended tax return The lowest AFR (based on the appropriate compounding period) in effect during the 3-month period ending with the month in which the sale or exchange occurs. H r bloc amended tax return Applicable federal rate (AFR). H r bloc amended tax return   The AFR depends on the month the binding
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Estimated Taxes

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Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

How to Pay Estimated Tax

If you are filing as a sole proprietor, partner, S corporation shareholder and/or a self-employed individual, you should use Form 1040-ES, Estimated Tax for Individuals (PDF), to figure and pay your estimated tax. For additional information on filing for a sole proprietor, partners, and/or S corporation shareholder, refer to Publication 505, Tax Withholding and Estimated Tax.

If you are filing as a corporation you should use Form 1120-W, Estimated Tax for Corporations (PDF), to figure the estimated tax. You must deposit the payments. For additional information on filing for a corporation, refer to Publication 542, Corporations.

Who Must Pay Estimated Tax

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.

If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return.

If you had a tax liability for the prior year, you may have to pay estimated tax for the current year. See the worksheet in Form 1040-ES (PDF) for more details on who must pay estimated tax.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings. To do this, file a new Form W-4 (PDF) with your employer. There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.

You do not have to pay estimated tax for the current year if you meet all three of the following conditions.

  • You had no tax liability for the prior year
  • You were a U.S. citizen or resident for the whole year
  • Your prior tax year covered a 12 month period

You had no tax liability for the prior year if your total tax was zero or you did not have to file an income tax return. For additional information on how to figure your estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, provides more information about these special estimated tax rules.

How To Figure Estimated Tax

To figure your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

When figuring your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for prior year as a starting point. Use your prior year's federal tax return as a guide. You can use the worksheet in Form 1040-ES (PDF) to figure your estimated tax. You will need to estimate the amount of income you expect to earn for the year. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated tax for the next quarter. You want to estimate your income as accurately as you can to avoid penalties.

You must make adjustments both for changes in your own situation and for recent changes in the tax law.

When To Pay Estimated Taxes

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return, see underpayment of tax below for more information.

Using the EFTPS system is the easiest way to pay your federal taxes for individuals as well as businesses. Make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement and estimated tax payments using Electronic Federal Tax Payment System (EFTPS). If it is easier to pay your estimated taxes weekly, bi-weekly, monthly, etc. you can, as long as you have paid enough in by the end of the quarter. Using EFTPS, you can access a history of your payments, so you know how much and when you made your estimated tax payments.

Underpayment of Estimated Tax

If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules for farmers and fishermen. Please refer to Publication 505 Tax Withholding and Estimated Tax, for additional information.

However, if your income is received unevenly during the year, you may be able to avoid or lower the penalty by annualizing your income and making unequal payments. Use Form 2210 (PDF), Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you owe a penalty for underpaying your estimated tax. Please refer to the Form 1040 Instructions (PDF) or the Form 1040A Instructions for where to report the estimated tax penalty on your return.

The penalty may also be waived if:

  1. The failure to make estimated payments was caused by a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or
  2. You retired (after reaching age 62) or became disabled during the tax year for which estimated payments were required to be made or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect.

You should also use Form 2210 (PDF) to request a waiver of the penalty for the reasons shown above.

Page Last Reviewed or Updated: 31-Oct-2013

The H R Bloc Amended Tax Return

H r bloc amended tax return 6. H r bloc amended tax return   How To Get Tax Help Table of Contents Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. H r bloc amended tax return Free help with your tax return. H r bloc amended tax return   You can get free help preparing your return nationwide from IRS-certified volunteers. H r bloc amended tax return The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. H r bloc amended tax return The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. H r bloc amended tax return Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. H r bloc amended tax return In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. H r bloc amended tax return To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. H r bloc amended tax return gov, download the IRS2Go app, or call 1-800-906-9887. H r bloc amended tax return   As part of the TCE program, AARP offers the Tax-Aide counseling program. H r bloc amended tax return To find the nearest AARP Tax-Aide site, visit AARP's website at www. H r bloc amended tax return aarp. H r bloc amended tax return org/money/taxaide or call 1-888-227-7669. H r bloc amended tax return For more information on these programs, go to IRS. H r bloc amended tax return gov and enter “VITA” in the search box. H r bloc amended tax return Internet. H r bloc amended tax return    IRS. H r bloc amended tax return gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. H r bloc amended tax return Download the free IRS2Go app from the iTunes app store or from Google Play. H r bloc amended tax return Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. H r bloc amended tax return Check the status of your 2013 refund with the Where's My Refund? application on IRS. H r bloc amended tax return gov or download the IRS2Go app and select the Refund Status option. H r bloc amended tax return The IRS issues more than 9 out of 10 refunds in less than 21 days. H r bloc amended tax return Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. H r bloc amended tax return You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. H r bloc amended tax return The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. H r bloc amended tax return Use the Interactive Tax Assistant (ITA) to research your tax questions. H r bloc amended tax return No need to wait on the phone or stand in line. H r bloc amended tax return The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. H r bloc amended tax return When you reach the response screen, you can print the entire interview and the final response for your records. H r bloc amended tax return New subject areas are added on a regular basis. H r bloc amended tax return  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. H r bloc amended tax return gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. H r bloc amended tax return You can use the IRS Tax Map, to search publications and instructions by topic or keyword. H r bloc amended tax return The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. H r bloc amended tax return When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. H r bloc amended tax return Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. H r bloc amended tax return You can also ask the IRS to mail a return or an account transcript to you. H r bloc amended tax return Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. H r bloc amended tax return gov or by calling 1-800-908-9946. H r bloc amended tax return Tax return and tax account transcripts are generally available for the current year and the past three years. H r bloc amended tax return Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. H r bloc amended tax return Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. H r bloc amended tax return If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. H r bloc amended tax return Check the status of your amended return using Where's My Amended Return? Go to IRS. H r bloc amended tax return gov and enter Where's My Amended Return? in the search box. H r bloc amended tax return You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. H r bloc amended tax return It can take up to 3 weeks from the date you mailed it to show up in our system. H r bloc amended tax return Make a payment using one of several safe and convenient electronic payment options available on IRS. H r bloc amended tax return gov. H r bloc amended tax return Select the Payment tab on the front page of IRS. H r bloc amended tax return gov for more information. H r bloc amended tax return Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. H r bloc amended tax return Figure your income tax withholding with the IRS Withholding Calculator on IRS. H r bloc amended tax return gov. H r bloc amended tax return Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. H r bloc amended tax return Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. H r bloc amended tax return gov. H r bloc amended tax return Request an Electronic Filing PIN by going to IRS. H r bloc amended tax return gov and entering Electronic Filing PIN in the search box. H r bloc amended tax return Download forms, instructions and publications, including accessible versions for people with disabilities. H r bloc amended tax return Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. H r bloc amended tax return gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. H r bloc amended tax return An employee can answer questions about your tax account or help you set up a payment plan. H r bloc amended tax return Before you visit, check the Office Locator on IRS. H r bloc amended tax return gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. H r bloc amended tax return If you have a special need, such as a disability, you can request an appointment. H r bloc amended tax return Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. H r bloc amended tax return Apply for an Employer Identification Number (EIN). H r bloc amended tax return Go to IRS. H r bloc amended tax return gov and enter Apply for an EIN in the search box. H r bloc amended tax return Read the Internal Revenue Code, regulations, or other official guidance. H r bloc amended tax return Read Internal Revenue Bulletins. H r bloc amended tax return Sign up to receive local and national tax news and more by email. H r bloc amended tax return Just click on “subscriptions” above the search box on IRS. H r bloc amended tax return gov and choose from a variety of options. H r bloc amended tax return Phone. H r bloc amended tax return    You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. H r bloc amended tax return Download the free IRS2Go app from the iTunes app store or from Google Play. H r bloc amended tax return Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. H r bloc amended tax return gov, or download the IRS2Go app. H r bloc amended tax return Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. H r bloc amended tax return The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. H r bloc amended tax return Most VITA and TCE sites offer free electronic filing. H r bloc amended tax return Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. H r bloc amended tax return Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. H r bloc amended tax return Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. H r bloc amended tax return If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. H r bloc amended tax return The IRS issues more than 9 out of 10 refunds in less than 21 days. H r bloc amended tax return Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. H r bloc amended tax return Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. H r bloc amended tax return The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. H r bloc amended tax return Note, the above information is for our automated hotline. H r bloc amended tax return Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. H r bloc amended tax return Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. H r bloc amended tax return You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. H r bloc amended tax return It can take up to 3 weeks from the date you mailed it to show up in our system. H r bloc amended tax return Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). H r bloc amended tax return You should receive your order within 10 business days. H r bloc amended tax return Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. H r bloc amended tax return If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. H r bloc amended tax return Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. H r bloc amended tax return The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. H r bloc amended tax return These individuals can also contact the IRS through relay services such as the Federal Relay Service. H r bloc amended tax return Walk-in. H r bloc amended tax return   You can find a selection of forms, publications and services — in-person. H r bloc amended tax return Products. H r bloc amended tax return You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. H r bloc amended tax return Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. H r bloc amended tax return Services. H r bloc amended tax return You can walk in to your local TAC for face-to-face tax help. H r bloc amended tax return An employee can answer questions about your tax account or help you set up a payment plan. H r bloc amended tax return Before visiting, use the Office Locator tool on IRS. H r bloc amended tax return gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. H r bloc amended tax return Mail. H r bloc amended tax return   You can send your order for forms, instructions, and publications to the address below. H r bloc amended tax return You should receive a response within 10 business days after your request is received. H r bloc amended tax return Internal Revenue Service 1201 N. H r bloc amended tax return Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. H r bloc amended tax return The Taxpayer Advocate Service (TAS) is your voice at the IRS. H r bloc amended tax return Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. H r bloc amended tax return   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. H r bloc amended tax return We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. H r bloc amended tax return You face (or your business is facing) an immediate threat of adverse action. H r bloc amended tax return You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. H r bloc amended tax return   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. H r bloc amended tax return Here's why we can help: TAS is an independent organization within the IRS. H r bloc amended tax return Our advocates know how to work with the IRS. H r bloc amended tax return Our services are free and tailored to meet your needs. H r bloc amended tax return We have offices in every state, the District of Columbia, and Puerto Rico. H r bloc amended tax return   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. H r bloc amended tax return   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. H r bloc amended tax return If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. H r bloc amended tax return Low Income Taxpayer Clinics (LITCs). H r bloc amended tax return   Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. H r bloc amended tax return Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. H r bloc amended tax return Visit www. H r bloc amended tax return TaxpayerAdvocate. H r bloc amended tax return irs. H r bloc amended tax return gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. H r bloc amended tax return Prev  Up  Next   Home   More Online Publications