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How Do I File My 2011 Taxes

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How Do I File My 2011 Taxes

How do i file my 2011 taxes 35. How do i file my 2011 taxes   Education Credits Table of Contents Introduction Useful Items - You may want to see: Who Can Claim an Education Credit Qualified Education ExpensesNo Double Benefit Allowed Adjustments to Qualified Education Expenses Introduction For 2013, there are two tax credits available to persons who pay expenses for higher (postsecondary) education. How do i file my 2011 taxes They are: The American opportunity credit, and The lifetime learning credit. How do i file my 2011 taxes The chapter will present an overview of these education credits. How do i file my 2011 taxes To get the detailed information you will need to claim either of the credits, and for examples illustrating that information, see chapters 2 and 3 of Publication 970. How do i file my 2011 taxes Can you claim more than one education credit this year?   For each student, you can choose for any year only one of the credits. How do i file my 2011 taxes For example, if you choose to take the American opportunity credit for a child on your 2013 tax return, you cannot, for that same child, also claim the lifetime learning credit for 2013. How do i file my 2011 taxes   If you are eligible to claim the American opportunity credit and you are also eligible to claim the lifetime learning credit for the same student in the same year, you can choose to claim either credit, but not both. How do i file my 2011 taxes   If you pay qualified education expenses for more than one student in the same year, you can choose to take the American opportunity and the lifetime learning credits on a per-student, per-year basis. How do i file my 2011 taxes This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year. How do i file my 2011 taxes Table 35-1. How do i file my 2011 taxes Comparison of Education Credits Caution. How do i file my 2011 taxes You can claim both the American opportunity credit and the lifetime learning credit on the same return—but not for the same student. How do i file my 2011 taxes   American Opportunity Credit Lifetime Learning Credit Maximum credit Up to $2,500 credit per eligible student Up to $2,000 credit per return Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly;  $90,000 if single, head of household, or qualifying widow(er) $127,000 if married filing jointly;  $63,000 if single, head of household, or qualifying widow(er) Refundable or nonrefundable 40% of credit may be refundable Credit limited to the amount of tax you must pay on your taxable income Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Available for all years of postsecondary education and for courses to acquire or improve job skills Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) the Hope credit was claimed) Available for an unlimited number of years Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Student does not need to be pursuing a program leading to a degree or other recognized education credential Number of courses Student must be enrolled at least half time for at least one academic period beginning during the tax year Available for one or more courses Felony drug conviction At the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Felony drug convictions do not make the student ineligible Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment) Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014 Differences between the American opportunity and lifetime learning credits. How do i file my 2011 taxes   There are several differences between these two credits. How do i file my 2011 taxes These differences are summarized in Table 35-1, later. How do i file my 2011 taxes Useful Items - You may want to see: Publication 970 Tax Benefits for Education Form (and Instructions) 8863 Education Credits (American Opportunity and Lifetime Learning Credits) Who Can Claim an Education Credit You may be able to claim an education credit if you, your spouse, or a dependent you claim on your tax return was a student enrolled at or attending an eligible educational institution. How do i file my 2011 taxes The credits are based on the amount of qualified education expenses paid for the student in 2013 for academic periods beginning in 2013 and in the first 3 months of 2014. How do i file my 2011 taxes For example, if you paid $1,500 in December 2013 for qualified tuition for the spring 2014 semester beginning in January 2014, you may be able to use that $1,500 in figuring your 2013 education credit(s). How do i file my 2011 taxes Academic period. How do i file my 2011 taxes   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. How do i file my 2011 taxes In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. How do i file my 2011 taxes Eligible educational institution. How do i file my 2011 taxes   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. How do i file my 2011 taxes S. How do i file my 2011 taxes Department of Education. How do i file my 2011 taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. How do i file my 2011 taxes The educational institution should be able to tell you if it is an eligible educational institution. How do i file my 2011 taxes   Certain educational institutions located outside the United States also participate in the U. How do i file my 2011 taxes S. How do i file my 2011 taxes Department of Education's Federal Student Aid (FSA) programs. How do i file my 2011 taxes Who can claim a dependent's expenses. How do i file my 2011 taxes   If an exemption is allowed as a deduction for any person who claims the student as a dependent, all qualified education expenses of the student are treated as having been paid by that person. How do i file my 2011 taxes Therefore, only that person can claim an education credit for the student. How do i file my 2011 taxes If a student is not claimed as a dependent on another person's tax return, only the student can claim a credit. How do i file my 2011 taxes Expenses paid by a third party. How do i file my 2011 taxes   Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. How do i file my 2011 taxes However, qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. How do i file my 2011 taxes Therefore, you are treated as having paid expenses that were paid by the third party. How do i file my 2011 taxes For more information and an example see Who Can Claim a Dependent's Expenses in Pub. How do i file my 2011 taxes 970, chapter 2 or 3. How do i file my 2011 taxes Who cannot claim a credit. How do i file my 2011 taxes   You cannot take an education credit if any of the following apply. How do i file my 2011 taxes You are claimed as a dependent on another person's tax return, such as your parent's return. How do i file my 2011 taxes Your filing status is married filing separately. How do i file my 2011 taxes You (or your spouse) were a nonresident alien for any part of 2013 and did not elect to be treated as a resident alien for tax purposes. How do i file my 2011 taxes Your MAGI is one of the following. How do i file my 2011 taxes American opportunity credit: $180,000 or more if married filing jointly, or $90,000 or more if single, head of household, or qualifying widow(er). How do i file my 2011 taxes Lifetime learning credit: $127,000 or more if married filing jointly, or $63,000 or more if single, head of household, or qualifying widow(er) . How do i file my 2011 taxes   Generally, your MAGI is the amount on your Form 1040, line 38, or Form 1040A, line 22. How do i file my 2011 taxes However, if you are filing Form 2555, Form 2555–EZ, or Form 4563, or are excluding income from Puerto RIco, add to the amount on your Form 1040, line 38, or Form 1040A, line 22, the amount of income you excluded. How do i file my 2011 taxes For details, see Pub. How do i file my 2011 taxes 970. How do i file my 2011 taxes    Figure 35-A may be helpful in determining if you can claim an education credit on your tax return. How do i file my 2011 taxes The American opportunity credit will always be greater than or equal to the lifetime learning credit for any student who is eligible for both credits. How do i file my 2011 taxes However, if any of the conditions for the American opportunity credit, listed in Table 35-1 earlier, are not met for any student, you cannot take the American opportunity credit for that student. How do i file my 2011 taxes You may be able to take the lifetime learning credit for part or all of that student's qualified education expenses instead. How do i file my 2011 taxes See Pub. How do i file my 2011 taxes 970 for information on other education benefits. How do i file my 2011 taxes Qualified Education Expenses Generally, qualified education expenses are amounts paid in 2013 for tuition and fees required for the student's enrollment or attendance at an eligible educational institution. How do i file my 2011 taxes It does not matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds. How do i file my 2011 taxes For course-related books, supplies, and equipment, only certain expenses qualify. How do i file my 2011 taxes American opportunity credit: Qualified education expenses include amounts spent on books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance. How do i file my 2011 taxes Lifetime learning credit: Qualified education expenses include amounts for books, supplies, and equipment only if required to be paid to the institution as a condition of enrollment or attendance. How do i file my 2011 taxes Qualified education expenses include nonacademic fees, such as student activity fees, athletic fees, or other expenses unrelated to the academic course of instruction, only if the fee must be paid to the institution as a condition of enrollment or attendance. How do i file my 2011 taxes However, fees for personal expenses (described below) are never qualified education expenses. How do i file my 2011 taxes Qualified education expenses for either credit do not include amounts paid for: Personal expenses. How do i file my 2011 taxes This means room and board, insurance, medical expenses (including student health fees), transportation, and other similar personal, living, or family expenses. How do i file my 2011 taxes Any course or other education involving sports, games, or hobbies, or any noncredit course, unless such course or other education is part of the student's degree program or (for the lifetime learning credit only) helps the student acquire or improve job skills. How do i file my 2011 taxes You should receive Form 1098–T, Tuition Statement, from the institution reporting either payments received in 2013 (box 1) or amounts billed in 2013 (box 2). How do i file my 2011 taxes However, the amount in box 1 or 2 of Form 1098–T may be different from the amount you paid (or are treated as having paid). How do i file my 2011 taxes In completing Form 8863, use only the amounts you actually paid (plus any amounts you are treated as having paid) in 2013, reduced as necessary, as described in Adjustments to Qualified Education Expenses , later. How do i file my 2011 taxes Qualified education expenses paid on behalf of the student by someone other than the student (such as a relative) are treated as paid by the student. How do i file my 2011 taxes Qualified education expenses paid (or treated as paid) by a student who is claimed as a dependent on your tax return are treated as paid by you. How do i file my 2011 taxes If you or the student takes a deduction for higher education expenses, such as on Schedule A or C (Form 1040), you cannot use those expenses in your qualified education expenses when figuring your education credits. How do i file my 2011 taxes Qualified education expenses for any academic period must be reduced by any tax-free educational assistance allocable to that academic period. How do i file my 2011 taxes See Adjustments to Qualified Education Expenses, later. How do i file my 2011 taxes Prepaid Expenses. How do i file my 2011 taxes   Qualified education expenses paid in 2013 for an academic period that begins in the first 3 months of 2014 can be used in figuring an education credit for 2013 only. How do i file my 2011 taxes See Academic period , earlier. How do i file my 2011 taxes For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring an education credit for 2013 only (if you meet all the other requirements). How do i file my 2011 taxes    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 education credit(s). How do i file my 2011 taxes Paid with borrowed funds. How do i file my 2011 taxes   You can claim an education credit for qualified education expenses paid with the proceeds of a loan. How do i file my 2011 taxes Use the expenses to figure the credit for the year in which the expenses are paid, not the year in which the loan is repaid. How do i file my 2011 taxes Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. How do i file my 2011 taxes Student withdraws from class(es). How do i file my 2011 taxes   You can claim an education credit for qualified education expenses not refunded when a student withdraws. How do i file my 2011 taxes No Double Benefit Allowed You cannot do any of the following. How do i file my 2011 taxes Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim an education credit based on those same expenses. How do i file my 2011 taxes Claim more than one education credit based on the same qualified education expenses. How do i file my 2011 taxes Claim an education credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). How do i file my 2011 taxes Claim an education credit based on qualified education expenses paid with educational assistance, such as a tax-free scholarship, grant, or employer-provided educational assistance. How do i file my 2011 taxes See Adjustments to Qualified Education Expenses, next. How do i file my 2011 taxes Adjustments to Qualified Education Expenses For each student, reduce the qualified education expenses paid in 2013 by or on behalf of that student under the following rules. How do i file my 2011 taxes The result is the amount of adjusted qualified education expenses for each student. How do i file my 2011 taxes Tax-free educational assistance. How do i file my 2011 taxes   For tax-free educational assistance received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period. How do i file my 2011 taxes See Academic period , earlier. How do i file my 2011 taxes      Tax-free educational assistance includes:    Tax-free parts of scholarships and fellowships (see chapter 12 of this publication and chapter 1 of Pub. How do i file my 2011 taxes 970), The tax-free part of Pell grants (see chapter 1 of Pub. How do i file my 2011 taxes 970), The tax-free part of employer-provided educational assistance (see Pub. How do i file my 2011 taxes 970), Veterans' educational assistance (see chapter 1 of Pub. How do i file my 2011 taxes 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. How do i file my 2011 taxes Generally, any scholarship or fellowship is treated as tax-free educational assistance. How do i file my 2011 taxes However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent the student includes it in gross income (if the student is required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. How do i file my 2011 taxes 970, chapter 1; or The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. How do i file my 2011 taxes 970, chapter 1. How do i file my 2011 taxes You may be able to increase the combined value of an education credit and certain educational assistance if the student includes some or all of the educational assistance in income in the year received. How do i file my 2011 taxes For details, see Adjustments of Qualified Education Expenses, in chapters 2 and 3 of Pub. How do i file my 2011 taxes 970. How do i file my 2011 taxes Some tax-free educational assistance received after 2013 may be treated as a refund of qualified education expenses paid in 2013. How do i file my 2011 taxes This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). How do i file my 2011 taxes If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. How do i file my 2011 taxes If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. How do i file my 2011 taxes Refunds. How do i file my 2011 taxes   A refund of qualified education expenses may reduce qualified education expenses for the tax year or may require you to repay (recapture) the credit that you claimed in an earlier year. How do i file my 2011 taxes Some tax-free educational assistance received after 2013 may be treated as a refund. How do i file my 2011 taxes See Tax-free educational assistance, earlier. How do i file my 2011 taxes Refunds received in 2013. How do i file my 2011 taxes   For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. How do i file my 2011 taxes Refunds received after 2013 but before your income tax return is filed. How do i file my 2011 taxes   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. How do i file my 2011 taxes Refunds received after 2013 and after your income tax return is filed. How do i file my 2011 taxes   If anyone receives a refund after 2013 of qualified education expenses paid on behalf of a student in 2013 and the refund is received after you file your 2013 income tax return, you may need to repay some or all of the credit that you claimed. How do i file my 2011 taxes See Credit recapture, next. How do i file my 2011 taxes Credit recapture. How do i file my 2011 taxes    If any tax-free educational assistance for the qualified education expenses paid in 2013, or any refund of your qualified education expenses paid in 2013, is received after you file your 2013 income tax return, you must recapture (repay) any excess credit. How do i file my 2011 taxes You do this by refiguring the amount of your adjusted qualified education expenses for 2013 by reducing the expenses by the amount of the refund or tax-free educational assistance. How do i file my 2011 taxes You then refigure your education credit(s) for 2013 and figure the amount by which your 2013 tax liability would have increased if you had claimed the refigured credit(s). How do i file my 2011 taxes Include that amount as an additional tax for the year the refund or tax-free assistance was received. How do i file my 2011 taxes Example. How do i file my 2011 taxes    You paid $8,000 tuition and fees in December 2013 for your child's Spring semester beginning in January 2014. How do i file my 2011 taxes You filed your 2013 tax return on February 3, 2014, and claimed a lifetime learning credit of $1,600 ($8,000 qualified education expense paid x . How do i file my 2011 taxes 20). How do i file my 2011 taxes You claimed no other tax credits. How do i file my 2011 taxes After you filed your return, your child withdrew from two courses and you received a refund of $1,400. How do i file my 2011 taxes You must refigure your 2013 lifetime learning credit using $6,600 ($8,000 qualified education expenses − $1,400 refund). How do i file my 2011 taxes The refigured credit is $1,320 and your tax liability increased by $280. How do i file my 2011 taxes You must include the difference of $280 ($1,600 credit originally claimed − $1,320 refigured credit) as additional tax on your 2014 income tax return. How do i file my 2011 taxes See the instructions for your 2014 income tax return to determine where to include this tax. How do i file my 2011 taxes If you also pay qualified education expenses in 2014 for an academic period that begins in the first 3 months of 2014 and you receive tax-free educational assistance, or a refund, as described above, you may choose to reduce your qualified education expenses for 2014 instead of reducing your expenses for 2013. How do i file my 2011 taxes Amounts that do not reduce qualified education expenses. How do i file my 2011 taxes   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. How do i file my 2011 taxes   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. How do i file my 2011 taxes The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses, as defined in Chapter 1 of Pub. How do i file my 2011 taxes 970. How do i file my 2011 taxes The use of the money is not restricted. How do i file my 2011 taxes   For examples, see chapter 2 in Pub. How do i file my 2011 taxes 970. How do i file my 2011 taxes Figure 35-A. How do i file my 2011 taxes Can You Claim an Education Credit for 2013? This image is too large to be displayed in the current screen. How do i file my 2011 taxes Please click the link to view the image. How do i file my 2011 taxes Figure 35-A. How do i file my 2011 taxes Can You Claim an Education Credit for 2013? Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

Departmento de Asuntos Del Consumidor

Website: Departmento de Asuntos Del Consumidor

Address: Departmento de Asuntos Del Consumidor
Apartado 41059
Minillas Station
Santurce, PR 00940

Phone Number: 787-722-7555

Toll-free: 1-866-520-3226 (PR)

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The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Oficina del Comisionado de Instituciones Financieras

Website: Oficina del Comisionado de Instituciones Financieras

Address: Oficina del Comisionado de Instituciones Financieras
PO Box 11855
San Juan, PR 00910-3855

Phone Number: 787-723-3131

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

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Address: Office of the Commissioner of Insurance
B5 Calle Tabonuco, Suite 216 PMB 356
Guaynabo, PR 00968-3029

Phone Number: 787-304-8686

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Office of the Commissioner of Financial Institutions

Website: Office of the Commissioner of Financial Institutions

Address: Office of the Commissioner of Financial Institutions
Securities Division
PO Box 11855
San Juan, PR 00910-3855

Phone Number: 787-723-3131

TTY: 1-800-981-7711 (Consumers)

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Service Commission

Website: Public Service Commission

Address: Public Service Commission
PO Box 190870
San Juan, PR 00918

Phone Number: 787-756-1919

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The How Do I File My 2011 Taxes

How do i file my 2011 taxes 3. How do i file my 2011 taxes   Farm Income Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Schedule F (Form 1040) Sales of Farm ProductsSchedule F. How do i file my 2011 taxes Form 4797. How do i file my 2011 taxes Sales Caused by Weather-Related Conditions Rents (Including Crop Shares)Crop Shares Agricultural Program PaymentsCommodity Credit Corporation (CCC) Loans Conservation Reserve Program (CRP) Crop Insurance and Crop Disaster Payments Feed Assistance and Payments Cost-Sharing Exclusion (Improvements) Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 Tobacco Quota Buyout Program Payments Other Payments Payment to More Than One Person Income From CooperativesPatronage Dividends Per-Unit Retain Certificates Cancellation of DebtGeneral Rule Exceptions Exclusions Income From Other SourcesSod. How do i file my 2011 taxes Granting the right to remove deposits. How do i file my 2011 taxes Income Averaging for FarmersElected Farm Income (EFI) How To Figure the Tax Effect on Other Tax Determinations Tax for Certain Children Who Have Unearned Income Alternative Minimum Tax (AMT) Schedule J Introduction You may receive income from many sources. How do i file my 2011 taxes You must report the income from all the different sources on your tax return, unless it is excluded by law. How do i file my 2011 taxes Where you report the income on your tax return depends on its source. How do i file my 2011 taxes This chapter discusses farm income you report on Schedule F (Form 1040), Profit or Loss From Farming. How do i file my 2011 taxes For information on where to report other income, see the Instructions for Form 1040, U. How do i file my 2011 taxes S. How do i file my 2011 taxes Individual Income Tax Return. How do i file my 2011 taxes Accounting method. How do i file my 2011 taxes   The rules discussed in this chapter assume you use the cash method of accounting. How do i file my 2011 taxes Under the cash method, you generally include an item of income in gross income in the year you receive it. How do i file my 2011 taxes See Cash Method in chapter 2. How do i file my 2011 taxes   If you use an accrual method of accounting, different rules may apply to your situation. How do i file my 2011 taxes See Accrual Method in chapter 2. How do i file my 2011 taxes Topics - This chapter discusses: Schedule F Sales of farm products Rents (including crop shares) Agricultural program payments Income from cooperatives Cancellation of debt Income from other sources Income averaging for farmers Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 550 Investment Income and Expenses 908 Bankruptcy Tax Guide 925 Passive Activity and At-Risk Rules 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) 982 Reduction of Tax Attributes Due to Discharge of Indebtedness Sch E (Form 1040) Supplemental Income and Loss Sch J (Form 1040) Income Averaging for Farmers and Fishermen 1099-G Certain Government Payments 1099-PATR Taxable Distributions Received From Cooperatives 4797 Sales of Business Property 4835 Farm Rental Income and Expenses See chapter 16 for information about getting publications and forms. How do i file my 2011 taxes Schedule F (Form 1040) Individuals, trusts, and partnerships report farm income on Schedule F (Form 1040), Profit or Loss From Farming. How do i file my 2011 taxes Use this schedule to figure the net profit or loss from regular farming operations. How do i file my 2011 taxes Income from farming reported on Schedule F includes amounts you receive from cultivating, operating, or managing a farm for gain or profit, either as owner or tenant. How do i file my 2011 taxes This includes income from operating a stock, dairy, poultry, fish, fruit, or truck farm and income from operating a plantation, ranch, range, or orchard. How do i file my 2011 taxes It also includes income from the sale of crop shares if you materially participate in producing the crop. How do i file my 2011 taxes See Rents (Including Crop Shares) , later. How do i file my 2011 taxes Income received from operating a nursery, which specializes in growing ornamental plants, is considered to be income from farming. How do i file my 2011 taxes Income reported on Schedule F does not include gains or losses from sales or other dispositions of the following farm assets. How do i file my 2011 taxes Land. How do i file my 2011 taxes Depreciable farm equipment. How do i file my 2011 taxes Buildings and structures. How do i file my 2011 taxes Livestock held for draft, breeding, sport, or dairy purposes. How do i file my 2011 taxes Gains and losses from most dispositions of farm assets are discussed in chapters 8 and 9. How do i file my 2011 taxes Gains and losses from casualties, thefts, and condemnations are discussed in chapter 11. How do i file my 2011 taxes Sales of Farm Products Where to report. How do i file my 2011 taxes    Table 3-1 shows where to report the sale of farm products on your tax return. How do i file my 2011 taxes Schedule F. How do i file my 2011 taxes   Amounts received from the sales of products you raised on your farm for sale (or bought for resale), such as livestock, produce, or grains, are reported on Schedule F. How do i file my 2011 taxes This includes money and the fair market value of any property or services you receive. How do i file my 2011 taxes When you sell farm products bought for resale, your profit or loss is the difference between your selling price (money plus the fair market value of any property) and your basis in the item (usually the cost). How do i file my 2011 taxes See chapter 6 for information on the basis of assets. How do i file my 2011 taxes You generally report these amounts on Schedule F for the year you receive payment. How do i file my 2011 taxes Example. How do i file my 2011 taxes In 2012, you bought 20 feeder calves for $11,000 for resale. How do i file my 2011 taxes You sold them in 2013 for $21,000. How do i file my 2011 taxes You report the $21,000 sales price on Schedule F, line 1b, subtract your $11,000 basis on line 1d, and report the resulting $10,000 profit on line 1e. How do i file my 2011 taxes Form 4797. How do i file my 2011 taxes   Sales of livestock held for draft, breeding, sport, or dairy purposes may result in ordinary or capital gains or losses, depending on the circumstances. How do i file my 2011 taxes In either case, you should always report these sales on Form 4797 instead of Schedule F. How do i file my 2011 taxes See Livestock under Ordinary or Capital Gain or Loss in chapter 8. How do i file my 2011 taxes Animals you do not hold primarily for sale are considered business assets of your farm. How do i file my 2011 taxes Table 3-1. How do i file my 2011 taxes Where To Report Sales of Farm Products Item Sold Schedule F Form 4797 Farm products raised for sale X   Farm products bought for resale X   Farm assets not held primarily for sale, such as livestock held for draft, breeding, sport, or dairy purposes (bought or raised)   X Sale by agent. How do i file my 2011 taxes   If your agent sells your farm products, you have constructive receipt of the income when your agent receives payment and you must include the net proceeds from the sale in gross income for the year the agent receives payment. How do i file my 2011 taxes This applies even if your agent pays you in a later year. How do i file my 2011 taxes For a discussion on constructive receipt of income, see Cash Method under Accounting Methods in chapter 2. How do i file my 2011 taxes Sales Caused by Weather-Related Conditions If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. How do i file my 2011 taxes You must meet all the following conditions to qualify. How do i file my 2011 taxes Your principal trade or business is farming. How do i file my 2011 taxes You use the cash method of accounting. How do i file my 2011 taxes You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition. How do i file my 2011 taxes The weather-related condition caused an area to be designated as eligible for assistance by the federal government. How do i file my 2011 taxes Sales or exchanges made before an area became eligible for federal assistance qualify if the weather-related condition that caused the sale or exchange also caused the area to be designated as eligible for federal assistance. How do i file my 2011 taxes The designation can be made by the President, the Department of Agriculture (or any of its agencies), or by other federal departments or agencies. How do i file my 2011 taxes A weather-related sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes may be an involuntary conversion. How do i file my 2011 taxes See Other Involuntary Conversions in chapter 11. How do i file my 2011 taxes Usual business practice. How do i file my 2011 taxes   You must determine the number of animals you would have sold had you followed your usual business practice in the absence of the weather-related condition. How do i file my 2011 taxes Do this by considering all the facts and circumstances, but do not take into account your sales in any earlier year for which you postponed the gain. How do i file my 2011 taxes If you have not yet established a usual business practice, rely on the usual business practices of similarly situated farmers in your general region. How do i file my 2011 taxes Connection with affected area. How do i file my 2011 taxes   The livestock does not have to be raised or sold in an area affected by a weather-related condition for the postponement to apply. How do i file my 2011 taxes However, the sale must occur solely because of a weather-related condition that affected the water, grazing, or other requirements of the livestock. How do i file my 2011 taxes This requirement generally will not be met if the costs of feed, water, or other requirements of the livestock affected by the weather-related condition are not substantial in relation to the total costs of holding the livestock. How do i file my 2011 taxes Classes of livestock. How do i file my 2011 taxes   You must figure the amount to be postponed separately for each generic class of animals—for example, hogs, sheep, and cattle. How do i file my 2011 taxes Do not separate animals into classes based on age, sex, or breed. How do i file my 2011 taxes Amount to be postponed. How do i file my 2011 taxes   Follow these steps to figure the amount of gain to be postponed for each class of animals. How do i file my 2011 taxes Divide the total income realized from the sale of all livestock in the class during the tax year by the total number of such livestock sold. How do i file my 2011 taxes For this purpose, do not treat any postponed gain from the previous year as income received from the sale of livestock. How do i file my 2011 taxes Multiply the result in (1) by the excess number of such livestock sold solely because of weather-related conditions. How do i file my 2011 taxes Example. How do i file my 2011 taxes You are a calendar year taxpayer and you normally sell 100 head of beef cattle a year. How do i file my 2011 taxes As a result of drought, you sold 135 head during 2012. How do i file my 2011 taxes You realized $70,200 from the sale. How do i file my 2011 taxes On August 9, 2012, as a result of drought, the affected area was declared a disaster area eligible for federal assistance. How do i file my 2011 taxes The income you can postpone until 2013 is $18,200 [($70,200 ÷ 135) × 35]. How do i file my 2011 taxes How to postpone gain. How do i file my 2011 taxes   To postpone gain, attach a statement to your tax return for the year of the sale. How do i file my 2011 taxes The statement must include your name and address and give the following information for each class of livestock for which you are postponing gain. How do i file my 2011 taxes A statement that you are postponing gain under Internal Revenue Code (IRC) section 451(e). How do i file my 2011 taxes Evidence of the weather-related conditions that forced the early sale or exchange of the livestock and the date, if known, on which an area was designated as eligible for assistance by the federal government because of weather-related conditions. How do i file my 2011 taxes A statement explaining the relationship of the area affected by the weather-related condition to your early sale or exchange of the livestock. How do i file my 2011 taxes The number of animals sold in each of the 3 preceding years. How do i file my 2011 taxes The number of animals you would have sold in the tax year had you followed your normal business practice in the absence of weather-related conditions. How do i file my 2011 taxes The total number of animals sold and the number sold because of weather-related conditions during the tax year. How do i file my 2011 taxes A computation, as described above, of the income to be postponed for each class of livestock. How do i file my 2011 taxes   Generally, you must file the statement and the return by the due date of the return, including extensions. How do i file my 2011 taxes However, for sales or exchanges treated as an involuntary conversion from weather-related sales of livestock in an area eligible for federal assistance (discussed in chapter 11), you can file this statement at any time during the replacement period. How do i file my 2011 taxes For other sales or exchanges, if you timely filed your return for the year without postponing gain, you can still postpone gain by filing an amended return within 6 months of the due date of the return (excluding extensions). How do i file my 2011 taxes Attach the statement to the amended return and write “Filed pursuant to section 301. How do i file my 2011 taxes 9100-2” at the top of the amended return. How do i file my 2011 taxes File the amended return at the same address you filed the original return. How do i file my 2011 taxes Once you have filed the statement, you can cancel your postponement of gain only with the approval of the IRS. How do i file my 2011 taxes Rents (Including Crop Shares) The rent you receive for the use of your farmland is generally rental income, not farm income. How do i file my 2011 taxes However, if you materially participate in farming operations on the land, the rent is farm income. How do i file my 2011 taxes See Landlord Participation in Farming in chapter 12. How do i file my 2011 taxes Pasture income and rental. How do i file my 2011 taxes   If you pasture someone else's livestock and take care of them for a fee, the income is from your farming business. How do i file my 2011 taxes You must enter it as Other income on Schedule F. How do i file my 2011 taxes If you simply rent your pasture for a flat cash amount without providing services, report the income as rent on Part I of Schedule E (Form 1040), Supplemental Income and Loss. How do i file my 2011 taxes Crop Shares You must include rent you receive in the form of crop shares in income in the year you convert the shares to money or the equivalent of money. How do i file my 2011 taxes It does not matter whether you use the cash method of accounting or an accrual method of accounting. How do i file my 2011 taxes If you materially participate in operating a farm from which you receive rent in the form of crop shares or livestock, the rental income is included in self-employment income. How do i file my 2011 taxes See Landlord Participation in Farming in chapter 12. How do i file my 2011 taxes Report the rental income on Schedule F. How do i file my 2011 taxes If you do not materially participate in operating the farm, report this income on Form 4835 and carry the net income or loss to Schedule E (Form 1040). How do i file my 2011 taxes The income is not included in self-employment income. How do i file my 2011 taxes Crop shares you use to feed livestock. How do i file my 2011 taxes   Crop shares you receive as a landlord and feed to your livestock are considered converted to money when fed to the livestock. How do i file my 2011 taxes You must include the fair market value of the crop shares in income at that time. How do i file my 2011 taxes You are entitled to a business expense deduction for the livestock feed in the same amount and at the same time you include the fair market value of the crop share as rental income. How do i file my 2011 taxes Although these two transactions cancel each other for figuring adjusted gross income on Form 1040, they may be necessary to figure your self-employment tax. How do i file my 2011 taxes See  chapter 12. How do i file my 2011 taxes Crop shares you give to others (gift). How do i file my 2011 taxes   Crop shares you receive as a landlord and give to others are considered converted to money when you make the gift. How do i file my 2011 taxes You must report the fair market value of the crop share as income, even though someone else receives payment for the crop share. How do i file my 2011 taxes Example. How do i file my 2011 taxes A tenant farmed part of your land under a crop-share arrangement. How do i file my 2011 taxes The tenant harvested and delivered the crop in your name to an elevator company. How do i file my 2011 taxes Before selling any of the crop, you instructed the elevator company to cancel your warehouse receipt and make out new warehouse receipts in equal amounts of the crop in the names of your children. How do i file my 2011 taxes They sell their crop shares in the following year and the elevator company makes payments directly to your children. How do i file my 2011 taxes In this situation, you are considered to have received rental income and then made a gift of that income. How do i file my 2011 taxes You must include the fair market value of the crop shares in your income for the tax year you gave the crop shares to your children. How do i file my 2011 taxes Crop share loss. How do i file my 2011 taxes   If you are involved in a rental or crop-share lease arrangement, any loss from these activities may be subject to the limits under the passive loss rules. How do i file my 2011 taxes See Publication 925 for information on these rules. How do i file my 2011 taxes Agricultural Program Payments You must include in income most government payments, such as those for approved conservation practices, direct payments, and counter-cyclical payments, whether you receive them in cash, materials, services, or commodity certificates. How do i file my 2011 taxes However, you can exclude from income some payments you receive under certain cost-sharing conservation programs. How do i file my 2011 taxes See Cost-Sharing Exclusion (Improvements) , later. How do i file my 2011 taxes Report the agricultural program payment on the appropriate line of Schedule F, Part I. How do i file my 2011 taxes Report the full amount even if you return a government check for cancellation, refund any of the payment you receive, or the government collects all or part of the payment from you by reducing the amount of some other payment or Commodity Credit Corporation (CCC) loan. How do i file my 2011 taxes However, you can deduct the amount you refund or return or that reduces some other payment or loan to you. How do i file my 2011 taxes Claim the deduction on Schedule F for the year of repayment or reduction. How do i file my 2011 taxes Commodity Credit Corporation (CCC) Loans Generally, you do not report loans you receive as income. How do i file my 2011 taxes However, if you pledge part or all of your production to secure a CCC loan, you can treat the loan as if it were a sale of the crop and report the loan proceeds as income in the year you receive them. How do i file my 2011 taxes You do not need approval from the IRS to adopt this method of reporting CCC loans. How do i file my 2011 taxes Once you report a CCC loan as income for the year received, you generally must report all CCC loans in that year and later years in the same way. How do i file my 2011 taxes However, you can obtain for your tax year an automatic consent to change your method of accounting for loans received from the CCC, from including the loan amount in gross income for the tax year in which the loan is received to treating the loan amount as a loan. How do i file my 2011 taxes For more information, see Part I of the Instructions for Form 3115 and Revenue Procedure 2008-52. How do i file my 2011 taxes Revenue Procedure 2008-52, 2008-36 I. How do i file my 2011 taxes R. How do i file my 2011 taxes B. How do i file my 2011 taxes 587, is available at  www. How do i file my 2011 taxes irs. How do i file my 2011 taxes gov/irb/2008-36_IRB/ar09. How do i file my 2011 taxes html. How do i file my 2011 taxes You can request income tax withholding from CCC loan payments you receive. How do i file my 2011 taxes Use Form W-4V, Voluntary Withholding Request. How do i file my 2011 taxes See chapter 16 for information about ordering the form. How do i file my 2011 taxes To elect to report a CCC loan as income, include the loan proceeds as income on Schedule F, line 7a, for the year you receive it. How do i file my 2011 taxes Attach a statement to your return showing the details of the loan. How do i file my 2011 taxes You must file the statement and the return by the due date of the return, including extensions. How do i file my 2011 taxes If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). How do i file my 2011 taxes Attach the statement to the amended return and write “Filed pursuant to section 301. How do i file my 2011 taxes 9100-2” at the top of the return. How do i file my 2011 taxes File the amended return at the same address you filed the original return. How do i file my 2011 taxes When you make this election, the amount you report as income becomes your basis in the commodity. How do i file my 2011 taxes See chapter 6 for information on the basis of assets. How do i file my 2011 taxes If you later repay the loan, redeem the pledged commodity, and sell it, you report as income at the time of sale the sale proceeds minus your basis in the commodity. How do i file my 2011 taxes If the sale proceeds are less than your basis in the commodity, you can report the difference as a loss on Schedule F. How do i file my 2011 taxes If you forfeit the pledged crops to the CCC in full payment of the loan, the forfeiture is treated for tax purposes as a sale of the crops. How do i file my 2011 taxes If you did not report the loan proceeds as income for the year you received them, you must include them in your income for the year of the forfeiture. How do i file my 2011 taxes Form 1099-A. How do i file my 2011 taxes   If you forfeit pledged crops to the CCC in full payment of a loan, you may receive a Form 1099-A, Acquisition or Abandonment of Secured Property. How do i file my 2011 taxes “CCC” should be shown in box 6. How do i file my 2011 taxes The amount of any CCC loan outstanding when you forfeited your commodity should also be indicated on the form. How do i file my 2011 taxes Market Gain Under the CCC nonrecourse marketing assistance loan program, your repayment amount for a loan secured by your pledge of an eligible commodity is generally based on the lower of the loan rate or the prevailing world market price for the commodity on the date of repayment. How do i file my 2011 taxes If you repay the loan when the world price is lower, the difference between that repayment amount and the original loan amount is market gain. How do i file my 2011 taxes Whether you use cash or CCC certificates to repay the loan, you will receive a Form 1099-G showing the market gain you realized. How do i file my 2011 taxes Market gain should be reported as follows. How do i file my 2011 taxes If you elected to include the CCC loan in income in the year you received it, do not include the market gain in income. How do i file my 2011 taxes However, adjust the basis of the commodity for the amount of the market gain. How do i file my 2011 taxes If you did not include the CCC loan in income in the year received, include the market gain in your income. How do i file my 2011 taxes The following examples show how to report market gain. How do i file my 2011 taxes Example 1. How do i file my 2011 taxes Mike Green is a cotton farmer. How do i file my 2011 taxes He uses the cash method of accounting and files his tax return on a calendar year basis. How do i file my 2011 taxes He has deducted all expenses incurred in producing the cotton and has a zero basis in the commodity. How do i file my 2011 taxes In 2012, Mike pledged 1,000 pounds of cotton as collateral for a CCC loan of $2,000 (a loan rate of $2. How do i file my 2011 taxes 00 per pound). How do i file my 2011 taxes In 2013, he repaid the loan and redeemed the cotton for $1,500 when the world price was $1. How do i file my 2011 taxes 50 per pound (lower than the loan amount). How do i file my 2011 taxes Later in 2013, he sold the cotton for $2,500. How do i file my 2011 taxes The market gain on the redemption was $. How do i file my 2011 taxes 50 ($2. How do i file my 2011 taxes 00 – $1. How do i file my 2011 taxes 50) per pound. How do i file my 2011 taxes Mike realized total market gain of $500 ($. How do i file my 2011 taxes 50 x 1,000 pounds). How do i file my 2011 taxes How he reports this market gain and figures his gain or loss from the sale of the cotton depends on whether he included CCC loans in income in 2012. How do i file my 2011 taxes Included CCC loan. How do i file my 2011 taxes   Mike reported the $2,000 CCC loan as income for 2012 on Schedule F, line 1b, so he is treated as if he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when he redeemed it. How do i file my 2011 taxes The $500 market gain is not recognized on the redemption. How do i file my 2011 taxes He reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. How do i file my 2011 taxes   Mike's basis in the cotton after he redeemed it was $1,500, which is the redemption (repurchase) price paid for the cotton. How do i file my 2011 taxes His gain from the sale is $1,000 ($2,500 – $1,500). How do i file my 2011 taxes He reports the $1,000 gain as income for 2013 on Schedule F, line 1b. How do i file my 2011 taxes Excluded CCC loan. How do i file my 2011 taxes   Mike has income of $500 from market gain in 2013. How do i file my 2011 taxes He reports it on Schedule F, lines 4a and 4b. How do i file my 2011 taxes His basis in the cotton is zero, so his gain from its sale is $2,500. How do i file my 2011 taxes He reports the $2,500 gain as income for 2013 on Schedule F, line 1b. How do i file my 2011 taxes Example 2. How do i file my 2011 taxes The facts are the same as in Example 1 except that, instead of selling the cotton for $2,500 after redeeming it, Mike entered into an option-to-purchase contract with a cotton buyer before redeeming the cotton. How do i file my 2011 taxes Under that contract, Mike authorized the cotton buyer to pay the CCC loan on Mike's behalf. How do i file my 2011 taxes In 2013, the cotton buyer repaid the loan for $1,500 and immediately exercised his option, buying the cotton for $1,500. How do i file my 2011 taxes How Mike reports the $500 market gain on the redemption of the cotton and figures his gain or loss from its sale depends on whether he included CCC loans in income in 2012. How do i file my 2011 taxes Included CCC loan. How do i file my 2011 taxes   As in Example 1, Mike is treated as though he sold the cotton for $2,000 when he pledged it and repurchased the cotton for $1,500 when the cotton buyer redeemed it for him. How do i file my 2011 taxes The $500 market gain is not recognized on the redemption. How do i file my 2011 taxes Mike reports it for 2013 as an agricultural program payment on Schedule F, line 4a, but does not include it as a taxable amount on line 4b. How do i file my 2011 taxes   Also, as in Example 1, Mike's basis in the cotton when the cotton buyer redeemed it for him was $1,500. How do i file my 2011 taxes Mike has no gain or loss on its sale to the cotton buyer for that amount. How do i file my 2011 taxes Excluded CCC loan. How do i file my 2011 taxes   As in Example 1, Mike has income of $500 from market gain in 2013. How do i file my 2011 taxes He reports it on Schedule F, lines 4a and 4b. How do i file my 2011 taxes His basis in the cotton is zero, so his gain from its sale is $1,500. How do i file my 2011 taxes He reports the $1,500 gain as income for 2013 on Schedule F, line 1b. How do i file my 2011 taxes Conservation Reserve Program (CRP) Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long-term contract with the USDA, agreeing to convert to a less intensive use of that cropland. How do i file my 2011 taxes You must include the annual rental payments and any one-time incentive payment you receive under the program on Schedule F, lines 4a and 4b. How do i file my 2011 taxes Cost-share payments you receive may qualify for the cost-sharing exclusion. How do i file my 2011 taxes See Cost-Sharing Exclusion (Improvements) , later. How do i file my 2011 taxes CRP payments are reported to you on Form 1099-G. How do i file my 2011 taxes Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. How do i file my 2011 taxes See the instructions for Schedule SE (Form 1040). How do i file my 2011 taxes Crop Insurance and Crop Disaster Payments You must include in income any crop insurance proceeds you receive as the result of physical crop damage or reduction of crop revenue, or both. How do i file my 2011 taxes You generally include them in the year you receive them. How do i file my 2011 taxes Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops, because of drought, flood, or any other natural disaster. How do i file my 2011 taxes You can request income tax withholding from crop disaster payments you receive from the federal government. How do i file my 2011 taxes Use Form W-4V, Voluntary Withholding Request. How do i file my 2011 taxes See chapter 16 for information about ordering the form. How do i file my 2011 taxes Election to postpone reporting until the following year. How do i file my 2011 taxes   You can postpone reporting some or all crop insurance proceeds as income until the year following the year the physical damage occurred if you meet all the following conditions. How do i file my 2011 taxes You use the cash method of accounting. How do i file my 2011 taxes You receive the crop insurance proceeds in the same tax year the crops are damaged. How do i file my 2011 taxes You can show that under your normal business practice you would have included income from the damaged crops in any tax year following the year the damage occurred. How do i file my 2011 taxes   Deferral is not permitted for proceeds received from revenue insurance policies. How do i file my 2011 taxes   To postpone reporting some or all crop insurance proceeds received in 2013, report the amount you received on Schedule F, line 6a, but do not include it as a taxable amount on line 6b. How do i file my 2011 taxes Check the box on line 8c and attach a statement to your tax return. How do i file my 2011 taxes The statement must include your name and address and contain the following information. How do i file my 2011 taxes A statement that you are making an election under IRC section 451(d) and Regulations section 1. How do i file my 2011 taxes 451-6. How do i file my 2011 taxes The specific crop or crops physically destroyed or damaged. How do i file my 2011 taxes A statement that under your normal business practice you would have included income from some or all of the destroyed or damaged crops in gross income for a tax year following the year the crops were destroyed or damaged. How do i file my 2011 taxes The cause of the physical destruction or damage and the date or dates it occurred. How do i file my 2011 taxes The total payments you received from insurance carriers, itemized for each specific crop, and the date you received each payment. How do i file my 2011 taxes The name of each insurance carrier from whom you received payments. How do i file my 2011 taxes   One election covers all crops representing a single trade or business. How do i file my 2011 taxes If you have more than one farming business, make a separate election for each one. How do i file my 2011 taxes For example, if you operate two separate farms on which you grow different crops and you keep separate books for each farm, you should make two separate elections to postpone reporting insurance proceeds you receive for crops grown on each of your farms. How do i file my 2011 taxes   An election is binding for the year unless the IRS approves your request to change it. How do i file my 2011 taxes To request IRS approval to change your election, write to the IRS at the following address giving your name, address, identification number, the year you made the election, and your reasons for wanting to change it. How do i file my 2011 taxes Ogden Submission Processing Center P. How do i file my 2011 taxes O. How do i file my 2011 taxes Box 9941 Ogden, UT 84409 Feed Assistance and Payments The Disaster Assistance Act of 1988 authorizes programs to provide feed assistance, reimbursement payments, and other benefits to qualifying livestock producers if the Secretary of Agriculture determines that, because of a natural disaster, a livestock emergency exists. How do i file my 2011 taxes These programs include partial reimbursement for the cost of purchased feed and for certain transportation expenses. How do i file my 2011 taxes They also include the donation or sale at a below-market price of feed owned by the Commodity Credit Corporation. How do i file my 2011 taxes Include in income: The market value of donated feed, The difference between the market value and the price you paid for feed you buy at below-market prices, and Any cost reimbursement you receive. How do i file my 2011 taxes You must include these benefits in income in the year you receive them. How do i file my 2011 taxes You cannot postpone reporting them under the rules explained earlier for weather-related sales of livestock or crop insurance proceeds. How do i file my 2011 taxes Report the benefits on Schedule F, Part I, as agricultural program payments. How do i file my 2011 taxes You can usually take a current deduction for the same amount as a feed expense. How do i file my 2011 taxes Cost-Sharing Exclusion (Improvements) You can exclude from your income part or all of a payment you receive under certain federal or state cost-sharing conservation, reclamation, and restoration programs. How do i file my 2011 taxes A payment is any economic benefit you get as a result of an improvement. How do i file my 2011 taxes However, this exclusion applies only to that part of a payment that meets all three of the following tests. How do i file my 2011 taxes It was for a capital expense. How do i file my 2011 taxes You cannot exclude any part of a payment for an expense you can deduct in the year you pay or incur it. How do i file my 2011 taxes You must include the payment for a deductible expense in income, and you can take any offsetting deduction. How do i file my 2011 taxes See chapter 5 for information on deducting soil and water conservation expenses. How do i file my 2011 taxes It does not substantially increase your annual income from the property for which it is made. How do i file my 2011 taxes An increase in annual income is substantial if it is more than the greater of the following amounts. How do i file my 2011 taxes 10% of the average annual income derived from the affected property before receiving the improvement. How do i file my 2011 taxes $2. How do i file my 2011 taxes 50 times the number of affected acres. How do i file my 2011 taxes The Secretary of Agriculture certified that the payment was primarily made for conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. How do i file my 2011 taxes Qualifying programs. How do i file my 2011 taxes   If the three tests listed above are met, you can exclude part or all of the payments from the following programs. How do i file my 2011 taxes The rural clean water program authorized by the Federal Water Pollution Control Act. How do i file my 2011 taxes The rural abandoned mine program authorized by the Surface Mining Control and Reclamation Act of 1977. How do i file my 2011 taxes The water bank program authorized by the Water Bank Act. How do i file my 2011 taxes The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978. How do i file my 2011 taxes The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act. How do i file my 2011 taxes The great plains conservation program authorized by the Soil Conservation and Domestic Policy Act. How do i file my 2011 taxes The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act. How do i file my 2011 taxes Certain small watershed programs, listed later. How do i file my 2011 taxes Any program of a state, possession of the United States, a political subdivision of any of these, or of the District of Columbia under which payments are made to individuals primarily for conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife. How do i file my 2011 taxes Several state programs have been approved. How do i file my 2011 taxes For information about the status of those programs, contact the state offices of the Farm Service Agency (FSA) and the Natural Resources and Conservation Service (NRCS). How do i file my 2011 taxes Small watershed programs. How do i file my 2011 taxes   If the three tests listed earlier are met, you can exclude part or all of the payments you receive under the following programs for improvements made in connection with a watershed. How do i file my 2011 taxes The programs under the Watershed Protection and Flood Prevention Act. How do i file my 2011 taxes The flood prevention projects under the Flood Control Act of 1944. How do i file my 2011 taxes The Emergency Watershed Protection Program under the Flood Control Act of 1950. How do i file my 2011 taxes Certain programs under the Colorado River Basin Salinity Control Act. How do i file my 2011 taxes The Wetlands Reserve Program authorized by the Food Security Act of 1985, the Federal Agriculture Improvement and Reform Act of 1996 and the Farm Security and Rural Investment Act of 2002. How do i file my 2011 taxes The Environmental Quality Incentives Program (EQIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. How do i file my 2011 taxes The Wildlife Habitat Incentives Program (WHIP) authorized by the Federal Agriculture Improvement and Reform Act of 1996. How do i file my 2011 taxes The Soil and Water Conservation Assistance Program authorized by the Agricultural Risk Protection Act of 2000. How do i file my 2011 taxes The Agricultural Management Assistance Program authorized by the Agricultural Risk Protection Act of 2000. How do i file my 2011 taxes The Conservation Reserve Program authorized by the Food Security Act of 1985 and the Federal Agriculture Improvement and Reform Act of 1996. How do i file my 2011 taxes The Forest Land Enhancement Program authorized under the Farm Security and Rural Investment Act of 2002. How do i file my 2011 taxes The Conservation Security Program authorized by the Food Security Act of 1985. How do i file my 2011 taxes The Forest Health Protection Program (FHPP) authorized by the Cooperative Forestry Assistance Act of 1978. How do i file my 2011 taxes Income realized. How do i file my 2011 taxes   The gross income you realize upon getting an improvement under these cost-sharing programs is the value of the improvement reduced by the sum of the excludable portion and your share of the cost of the improvement (if any). How do i file my 2011 taxes Value of the improvement. How do i file my 2011 taxes   You determine the value of the improvement by multiplying its fair market value (defined in chapter 6) by a fraction. How do i file my 2011 taxes The numerator of the fraction is the total cost of the improvement (all amounts paid either by you or by the government for the improvement) reduced by the sum of the following items. How do i file my 2011 taxes Any government payments under a program not listed earlier. How do i file my 2011 taxes Any part of a government payment under a program listed earlier that the Secretary of Agriculture has not certified as primarily for conservation. How do i file my 2011 taxes Any government payment to you for rent or for your services. How do i file my 2011 taxes The denominator of the fraction is the total cost of the improvement. How do i file my 2011 taxes Excludable portion. How do i file my 2011 taxes   The excludable portion is the present fair market value of the right to receive annual income from the affected acreage of the greater of the following amounts. How do i file my 2011 taxes 10% of the prior average annual income from the affected acreage. How do i file my 2011 taxes The prior average annual income is the average of the gross receipts from the affected acreage for the last 3 tax years before the tax year in which you started to install the improvement. How do i file my 2011 taxes $2. How do i file my 2011 taxes 50 times the number of affected acres. How do i file my 2011 taxes The calculation of present fair market value of the right to receive annual income is too complex to discuss in this publication. How do i file my 2011 taxes You may need to consult your tax advisor for assistance. How do i file my 2011 taxes Example. How do i file my 2011 taxes One hundred acres of your land was reclaimed under a rural abandoned mine program contract with the Natural Resources Conservation Service of the USDA. How do i file my 2011 taxes The total cost of the improvement was $500,000. How do i file my 2011 taxes The USDA paid $490,000. How do i file my 2011 taxes You paid $10,000. How do i file my 2011 taxes The value of the cost-sharing improvement is $15,000. How do i file my 2011 taxes The present fair market value of the right to receive the annual income described in (1) above is $1,380, and the present fair market value of the right to receive the annual income described in (2) is $1,550. How do i file my 2011 taxes The excludable portion is the greater amount, $1,550. How do i file my 2011 taxes You figure the amount to include in gross income as follows: Value of cost-sharing improvement $15,000 Minus: Your share $10,000     Excludable portion 1,550 11,550 Amount included in income $ 3,450 Effects of the exclusion. How do i file my 2011 taxes   When you figure the basis of property you acquire or improve using cost-sharing payments excluded from income, subtract the excluded payments from your capital costs. How do i file my 2011 taxes Any payment excluded from income is not part of your basis. How do i file my 2011 taxes In the example above, the increase in basis is $500,000 – $490,000 + $3,450 = $13,450. How do i file my 2011 taxes   In addition, you cannot take depreciation, amortization, or depletion deductions for the part of the cost of the property for which you receive cost-sharing payments you exclude from income. How do i file my 2011 taxes How to report the exclusion. How do i file my 2011 taxes   Attach a statement to your tax return (or amended return) for the tax year you receive the last government payment for the improvement. How do i file my 2011 taxes The statement must include the following information. How do i file my 2011 taxes The dollar amount of the cost funded by the government payment. How do i file my 2011 taxes The value of the improvement. How do i file my 2011 taxes The amount you are excluding. How do i file my 2011 taxes   Report the total cost-sharing payments you receive on Schedule F, line 4a, and the taxable amount on line 4b. How do i file my 2011 taxes Recapture. How do i file my 2011 taxes   If you dispose of the property within 20 years after you received the excluded payments, you must treat as ordinary income part or all of the cost-sharing payments you excluded. How do i file my 2011 taxes In the above example, if the 100 acres were sold within 20 years of the exclusion for a gain of $2,000, $1,550 of that amount would be included in ordinary income. How do i file my 2011 taxes You must report the recapture on Form 4797. How do i file my 2011 taxes See Section 1255 property under Other Gains in chapter 9. How do i file my 2011 taxes Electing not to exclude payments. How do i file my 2011 taxes   You can elect not to exclude all or part of any payments you receive under these programs. How do i file my 2011 taxes If you make this election for all of these payments, none of the above restrictions and rules apply. How do i file my 2011 taxes You must make this election by the due date, including extensions, for filing your return. How do i file my 2011 taxes In the example above, an election not to exclude payments results in $5,000 included in income and a $15,000 increase in basis. How do i file my 2011 taxes If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). How do i file my 2011 taxes Write “Filed pursuant to section 301. How do i file my 2011 taxes 9100-2” at the top of the amended return and file it at the same address you filed the original return. How do i file my 2011 taxes Payments Under the Farm Security and Rural Investment Act of 2002 and Under the Food, Conservation, and Energy Act of 2008 The Farm Security and Rural Investment Act of 2002 created two new types of payments—direct and counter-cyclical payments. How do i file my 2011 taxes You must include these payments on Schedule F, lines 4a and 4b. How do i file my 2011 taxes The Food, Conservation, and Energy Act of 2008 provides for direct and counter-cyclical payments (DCP) as well as Average Crop Revenue Election (ACRE) payments. How do i file my 2011 taxes You must include these payments on Schedule F, lines 6a and 6b. How do i file my 2011 taxes The American Taxpayer Relief Act of 2012, enacted on January 2, 2013, amends the Food, Conservation, and Energy Act of 2008 and provided a one-year extension for these payments. How do i file my 2011 taxes Tobacco Quota Buyout Program Payments The Fair and Equitable Tobacco Reform Act of 2004, title VI of the American Jobs Creation Act of 2004, terminated the tobacco marketing quota program and the tobacco price support program. How do i file my 2011 taxes As a result, the USDA offered to enter into contracts with eligible tobacco quota holders and growers to provide compensation for the lost value of the quotas and related price support. How do i file my 2011 taxes If you are an eligible tobacco quota holder, your contract entitles you to receive total payments of $7 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. How do i file my 2011 taxes If you are an eligible tobacco grower, your contract entitles you to receive total payments of up to $3 per pound of quota in 10 equal annual payments in fiscal years 2005 through 2014. How do i file my 2011 taxes Tobacco Quota Holders Contract payments you receive are considered proceeds from a sale of your tobacco quota as of the date on which you and the USDA enter into the contract. How do i file my 2011 taxes Your taxable gain or loss is the total amount received for your quota reduced by any amount treated as interest (discussed below), over your adjusted basis. How do i file my 2011 taxes The gain or loss is capital or ordinary depending on how you used the quota. How do i file my 2011 taxes See Capital or ordinary gain or loss , later. How do i file my 2011 taxes Report the entire gain on your income tax return for the tax year that includes the date you entered into the contract if you elect not to use the installment method. How do i file my 2011 taxes Adjusted basis. How do i file my 2011 taxes   The adjusted basis of your quota is determined differently depending on how you obtained the quota. How do i file my 2011 taxes The basis of a quota derived from an original grant by the federal government is zero. How do i file my 2011 taxes The basis of a purchased quota is the purchase price. How do i file my 2011 taxes The basis of a quota received as a gift is generally the same as the donor's basis. How do i file my 2011 taxes However, under certain circumstances, the basis is increased by the amount of gift taxes paid. How do i file my 2011 taxes If the basis is greater than the fair market value of the quota at the time of the gift, the basis for determining loss is the fair market value. How do i file my 2011 taxes The basis of an inherited quota is generally the fair market value of the quota at the time of the decedent's death. How do i file my 2011 taxes Reduction of basis. How do i file my 2011 taxes   You are required to reduce the basis of your tobacco quota by the following amounts. How do i file my 2011 taxes Deductions you took for amortization, depletion, or depreciation. How do i file my 2011 taxes Amounts you previously deducted as a loss because of a reduction in the number of pounds of tobacco allowable under the quota. How do i file my 2011 taxes The entire cost of a purchased quota you deducted in an earlier year (which reduces your basis to zero). How do i file my 2011 taxes Amount treated as interest. How do i file my 2011 taxes   You must reduce your tobacco quota buyout program payment by the amount treated as interest. How do i file my 2011 taxes The interest is reportable as ordinary income. How do i file my 2011 taxes If payments total $3,000 or less, your total quota buyout program payment does not include any amount treated as interest and you are not required to reduce the total payment you receive. How do i file my 2011 taxes   In all other cases, a portion of each payment may be treated as interest for federal tax purposes. How do i file my 2011 taxes You may be required to reduce your total quota buyout program payment before you calculate your gain or loss. How do i file my 2011 taxes For more information, see Notice 2005-57, 2005-32 I. How do i file my 2011 taxes R. How do i file my 2011 taxes B. How do i file my 2011 taxes 267, available at www. How do i file my 2011 taxes irs. How do i file my 2011 taxes gov/irb/2005-32_IRB/ar13. How do i file my 2011 taxes html. How do i file my 2011 taxes Installment method. How do i file my 2011 taxes   You may use the installment method to report a gain if you receive at least one payment after the close of your tax year. How do i file my 2011 taxes Under the installment method, a portion of the gain is taken into account in each year in which a payment is received. How do i file my 2011 taxes See chapter 10 for more information. How do i file my 2011 taxes Capital or ordinary gain or loss. How do i file my 2011 taxes   Whether your gain or loss is ordinary or capital depends on how you used the quota. How do i file my 2011 taxes Quota used in the trade or business of farming. How do i file my 2011 taxes   If you used the quota in the trade or business of farming and you held it for more than one year, you report the transaction as a section 1231 transaction on Form 4797. How do i file my 2011 taxes See Section 1231 transactions in the Instructions for Form 4797 for detailed information on reporting section 1231 transactions. How do i file my 2011 taxes Quota held for investment. How do i file my 2011 taxes   If you held the quota for investment purposes, any gain or loss is capital gain or loss. How do i file my 2011 taxes The same result also applies if you held the quota for the production of income, though not connected with a trade or business. How do i file my 2011 taxes Gain treated as ordinary income. How do i file my 2011 taxes   If you previously deducted any of the following items, some or all of the capital gain must be recharacterized and reported as ordinary income. How do i file my 2011 taxes Any resulting capital gain is taxed as ordinary income up to the amount previously deducted. How do i file my 2011 taxes The cost of acquiring a quota. How do i file my 2011 taxes Amounts for amortization, depletion, or depreciation. How do i file my 2011 taxes Amounts to reflect a reduction in the quota pounds. How do i file my 2011 taxes   You should include the ordinary income on your return for the tax year even if you use the installment method to report the remainder of the gain. How do i file my 2011 taxes Self-employment income. How do i file my 2011 taxes   The tobacco quota buyout payments are not self-employment income. How do i file my 2011 taxes Income averaging for farmers. How do i file my 2011 taxes   The gain or loss resulting from the quota payments does not qualify for income averaging. How do i file my 2011 taxes A tobacco quota is considered an interest in land. How do i file my 2011 taxes Income averaging is not available for gain or loss arising from the sale or other disposition of land. How do i file my 2011 taxes Involuntary conversion. How do i file my 2011 taxes   The buyout of the tobacco quota is not an involuntary conversion. How do i file my 2011 taxes Form 1099-S. How do i file my 2011 taxes   A tobacco quota is considered an interest in land, so the USDA will generally report the total amount you receive under a contract on Form 1099-S, Proceeds From Real Estate Transactions, if the amount is $600 or more. How do i file my 2011 taxes The USDA will generally report any portion of a payment treated as interest of $600 or more to you on Form 1099-INT, Interest Income, for the year in which the payment is made. How do i file my 2011 taxes Like-kind exchange of quota. How do i file my 2011 taxes   You may postpone reporting the gain or loss from tobacco quota buyout payments by entering into a like-kind exchange if you comply with the requirements of section 1031 and the regulations thereunder. How do i file my 2011 taxes See Notice 2005-57 for more information. How do i file my 2011 taxes Tobacco Growers Contract payments you receive are determined by reference to the amount of quota under which you produced (or planted) quota tobacco during the 2002, 2003, and 2004 tobacco marketing years and are prorated based on the number of years that you produced (or planted) quota tobacco during those years. How do i file my 2011 taxes Taxation of payments to tobacco growers. How do i file my 2011 taxes   Payments to growers replace ordinary income that would have been earned had the tobacco marketing quota and price support programs continued. How do i file my 2011 taxes Individuals will generally report the payments as an Agricultural program payment on Schedule F. How do i file my 2011 taxes If you are a landowner who does not materially participate in the operation or management of the farm and are receiving the grower payment because your farm rental income is based on the tobacco grown by a tenant, the grower payment should be reported on Form 4835. How do i file my 2011 taxes Self-employment income. How do i file my 2011 taxes   Payments to growers generally represent self-employment income. How do i file my 2011 taxes If the grower is an individual carrying on a trade or business and deriving income (other than farm rental income properly reported on Form 4835) from that trade or business, the payments are net earnings from self-employment. How do i file my 2011 taxes Income averaging for farmers. How do i file my 2011 taxes   Payments to growers who are individuals qualify for farm income averaging. How do i file my 2011 taxes Form 1099-G. How do i file my 2011 taxes   If the amount received in a taxable year is $600 or more, the amount will generally be reported by the USDA on a Form 1099-G. How do i file my 2011 taxes Other Payments You must include most other government program payments in income. How do i file my 2011 taxes Fertilizer and Lime Include in income the value of fertilizer or lime you receive under a government program. How do i file my 2011 taxes How to claim the offsetting deduction is explained under Fertilizer and Lime in chapter 4. How do i file my 2011 taxes Improvements If government payments are based on improvements, such as a pollution control facility, you must include them in income. How do i file my 2011 taxes You must also capitalize the full cost of the improvement. How do i file my 2011 taxes Since you have included the payments in income, they do not reduce your basis. How do i file my 2011 taxes However, see Cost-Sharing Exclusion (Improvements) , earlier, for additional information. How do i file my 2011 taxes National Tobacco Growers' Settlement Trust Fund Payments If you are a producer, landowner, or tobacco quota owner who receives money from the National Tobacco Growers' Settlement Trust Fund, you must report those payments as income. How do i file my 2011 taxes You should receive a Form 1099-MISC, Miscellaneous Income, that shows the payment amount. How do i file my 2011 taxes If you produce a tobacco crop, report the payments as income from farming on your Schedule F. How do i file my 2011 taxes If you are a landowner or tobacco quota owner who leases tobacco-related property but you do not produce the crop, report the payments as farm rental income on Form 4835. How do i file my 2011 taxes Payment to More Than One Person The USDA reports program payments to the IRS. How do i file my 2011 taxes It reports a program payment intended for more than one person as having been paid to the person whose identification number is on record for that payment (payee of record). How do i file my 2011 taxes If you, as the payee of record, receive a program payment belonging to someone else, such as your landlord, the amount belonging to the other person is a nominee distribution. How do i file my 2011 taxes You should file Form 1099-G to report the identity of the actual recipient to the IRS. How do i file my 2011 taxes You should also give this information to the recipient. How do i file my 2011 taxes You can avoid the inconvenience of unnecessary inquiries about the identity of the recipient if you file this form. How do i file my 2011 taxes Report the total amount reported to you as the payee of record on Schedule F, line 4a or 6a. How do i file my 2011 taxes However, do not report as a taxable amount on line 4b or 6b any amount belonging to someone else. How do i file my 2011 taxes See chapter 16 for information about ordering Form 1099-G. How do i file my 2011 taxes Income From Cooperatives If you buy farm supplies through a cooperative, you may receive income from the cooperative in the form of patronage dividends (refunds). How do i file my 2011 taxes If you sell your farm products through a cooperative, you may receive either patronage dividends or a per-unit retain certificate, explained later, from the cooperative. How do i file my 2011 taxes Form 1099-PATR. How do i file my 2011 taxes   The cooperative will report the income to you on Form 1099-PATR or a similar form and send a copy to the IRS. How do i file my 2011 taxes Form 1099-PATR may also show an alternative minimum tax adjustment that you must include on Form 6251, Alternative Minimum Tax—Individuals, if you are required to file the form. How do i file my 2011 taxes For information on the alternative minimum tax, see the Instructions for Form 6251. How do i file my 2011 taxes Patronage Dividends You generally report patronage dividends as income on Schedule F, lines 3a and 3b, for the tax year you receive them. How do i file my 2011 taxes They include the following items. How do i file my 2011 taxes Money paid as a patronage dividend, including cash advances received (for example, from a marketing cooperative). How do i file my 2011 taxes The stated dollar value of qualified written notices of allocation. How do i file my 2011 taxes The fair market value of other property. How do i file my 2011 taxes Do not report as income on line 3b any patronage dividends you receive from expenditures that were not deductible, such as buying personal or family items, capital assets, or depreciable property. How do i file my 2011 taxes You must reduce the cost or other basis of these items by the amount of such patronage dividends received. How do i file my 2011 taxes Personal items include fuel purchased for personal use, basic local telephone service, and personal long distance calls. How do i file my 2011 taxes If you cannot determine what the dividend is for, report it as income on lines 3a and 3b. How do i file my 2011 taxes Qualified written notice of allocation. How do i file my 2011 taxes   If you receive a qualified written notice of allocation as part of a patronage dividend, you must generally include its stated dollar value in your income on Schedule F, lines 3a and 3b, in the year you receive it. How do i file my 2011 taxes A written notice of allocation is qualified if at least 20% of the patronage dividend is paid in money or by qualified check and either of the following conditions is met. How do i file my 2011 taxes The notice must be redeemable in cash for at least 90 days after it is issued, and you must have received a written notice of your right of redemption at the same time as the written notice of allocation. How do i file my 2011 taxes You must have agreed to include the stated dollar value in income in the year you receive the notice by doing one of the following. How do i file my 2011 taxes Signing and giving a written agreement to the cooperative. How do i file my 2011 taxes Getting or keeping membership in the cooperative after it adopted a bylaw providing that membership constitutes agreement. How do i file my 2011 taxes The cooperative must notify you in writing of this bylaw and give you a copy. How do i file my 2011 taxes Endorsing and cashing a qualified check paid as part of the same patronage dividend. How do i file my 2011 taxes You must cash the check by the 90th day after the close of the payment period for the cooperative's tax year for which the patronage dividend was paid. How do i file my 2011 taxes Qualified check. How do i file my 2011 taxes   A qualified check is any instrument that is redeemable in money and meets both of the following requirements. How do i file my 2011 taxes It is part of a patronage dividend that also includes a qualified written notice of allocation for which you met condition 2(c), above. How do i file my 2011 taxes It is imprinted with a statement that endorsing and cashing it constitutes the payee's consent to include in income the stated dollar value of any written notices of allocation paid as part of the same patronage dividend. How do i file my 2011 taxes Loss on redemption. How do i file my 2011 taxes   You can deduct on Schedule F, Part II, any loss incurred on the redemption of a qualified written notice of allocation you received in the ordinary course of your farming business. How do i file my 2011 taxes The loss is the difference between the stated dollar amount of the qualified written notice you included in income and the amount you received when you redeemed it. How do i file my 2011 taxes Nonqualified notice of allocation. How do i file my 2011 taxes   Do not include the stated dollar value of any nonqualified notice of allocation in income when you receive it. How do i file my 2011 taxes Your basis in the notice is zero. How do i file my 2011 taxes You must include in income for the tax year of disposition any amount you receive from its sale, redemption, or other disposition. How do i file my 2011 taxes Report that amount, up to the stated dollar value of the notice, on Schedule F, lines 3a and 3b. How do i file my 2011 taxes However, do not include that amount in your income if the notice resulted from buying or selling capital assets or depreciable property or from buying personal items, as explained in the following discussions. How do i file my 2011 taxes   If the amount you receive is more than the stated dollar value of the notice, report the excess as the type of income it represents. How do i file my 2011 taxes For example, if it represents interest income, report it on your return as interest. How do i file my 2011 taxes Buying or selling capital assets or depreciable property. How do i file my 2011 taxes   Do not include in income patronage dividends from buying capital assets or depreciable property used in your business. How do i file my 2011 taxes You must, however, reduce the basis of these assets by the dividends. How do i file my 2011 taxes This reduction is taken into account as of the first day of the tax year in which the dividends are received. How do i file my 2011 taxes If the dividends are more than your unrecovered basis, reduce the unrecovered basis to zero and include the difference on Schedule F, line 3a, for the tax year you receive them. How do i file my 2011 taxes   This rule and the exceptions explained below also apply to amounts you receive from the sale, redemption, or other disposition of a nonqualified notice of allocation that resulted from buying or selling capital assets or depreciable property. How do i file my 2011 taxes Example. How do i file my 2011 taxes On July 1, 2012, Mr. How do i file my 2011 taxes Brown, a patron of a cooperative association, bought a machine for his dairy farm business from the association for $2,900. How do i file my 2011 taxes The machine has a life of 7 years under MACRS (as provided in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946, Depreciation and Amortization). How do i file my 2011 taxes Mr. How do i file my 2011 taxes Brown files his return on a calendar year basis. How do i file my 2011 taxes For 2012, he claimed a depreciation deduction of $311, using the 10. How do i file my 2011 taxes 71% depreciation rate from the 150% declining balance, half-year convention table (shown in Table A-14 in Appendix A of Publication 946). How do i file my 2011 taxes On July 2, 2013, the cooperative association paid Mr. How do i file my 2011 taxes Brown a $300 cash patronage dividend for buying the machine. How do i file my 2011 taxes Mr. How do i file my 2011 taxes Brown adjusts the basis of the machine and figures his depreciation deduction for 2013 (and later years) as follows. How do i file my 2011 taxes Cost of machine on July 1, 2012 $2,900 Minus: 2012 depreciation $311     2013 cash dividend 300 611 Adjusted basis for  depreciation for 2013: $2,289 Depreciation rate: 1 ÷ 6½ (remaining recovery period as of 1/1/2012) = 15. How do i file my 2011 taxes 38% × 1. How do i file my 2011 taxes 5 = 23. How do i file my 2011 taxes 07% Depreciation deduction for 2013 ($2,289 × 23. How do i file my 2011 taxes 07%) $528 Exceptions. How do i file my 2011 taxes   If the dividends are for buying or selling capital assets or depreciable property you did not own at any time during the year you received the dividends, you must include them on Schedule F, lines 3a and 3b, unless one of the following rules applies. How do i file my 2011 taxes If the dividends relate to a capital asset you held for more than 1 year for which a loss was or would have been deductible, treat them as gain from the sale or exchange of a capital asset held for more than 1 year. How do i file my 2011 taxes If the dividends relate to a capital asset for which a loss was not or would not have been deductible, do not report them as income (ordinary or capital gain). How do i file my 2011 taxes   If the dividends are for selling capital assets or depreciable property during the year you received the dividends, treat them as an additional amount received on the sale. How do i file my 2011 taxes Personal purchases. How do i file my 2011 taxes   Because you cannot deduct the cost of personal, living, or family items, such as supplies, equipment, or services not related to the production of farm income, you can omit from the taxable amount of patronage dividends on Schedule F, line 3b, any dividends from buying those items (and you must reduce the cost or other basis of those items by the amount of the dividends). How do i file my 2011 taxes This rule also applies to amounts you receive from the sale, redemption, or other disposition of a nonqualified written notice of allocation resulting from these purchases. How do i file my 2011 taxes Per-Unit Retain Certificates A per-unit retain certificate is any written notice that shows the stated dollar amount of a per-unit retain allocation made to you by the cooperative. How do i file my 2011 taxes A per-unit retain allocation is an amount paid to patrons for products sold for them that is fixed without regard to the net earnings of the cooperative. How do i file my 2011 taxes These allocations can be paid in money, other property, or qualified certificates. How do i file my 2011 taxes Per-unit retain certificates issued by a cooperative generally receive the same tax treatment as patronage dividends, discussed earlier. How do i file my 2011 taxes Qualified certificates. How do i file my 2011 taxes   Qualified per-unit retain certificates are those issued to patrons who have agreed to include the stated dollar amount of these certificates in income in the year of receipt. How do i file my 2011 taxes The agreement may be made in writing or by getting or keeping membership in a cooperative whose bylaws or charter states that membership constitutes agreement. How do i file my 2011 taxes If you receive qualified per-unit retain certificates, include the stated dollar amount of the certificates in income on Schedule F, lines 3a and 3b, for the tax year you receive them. How do i file my 2011 taxes Nonqualified certificates. How do i file my 2011 taxes   Do not include the stated dollar value of a nonqualified per-unit retain certificate in income when you receive it. How do i file my 2011 taxes Your basis in the certificate is zero. How do i file my 2011 taxes You must include in income any amount you receive from its sale, redemption, or other disposition. How do i file my 2011 taxes Report the amount you receive from the disposition as ordinary income on Schedule F, lines 3a and 3b, for the tax year of disposition. How do i file my 2011 taxes Cancellation of Debt This section explains the general rule for including canceled debt in income and the exceptions to the general rule. How do i file my 2011 taxes For more information on canceled debt, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. How do i file my 2011 taxes General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in gross income for tax purposes. How do i file my 2011 taxes Discharge of qualified farm indebtedness (defined below) is one of the exceptions to the general rule. How do i file my 2011 taxes It is excluded from taxable income (see Exclusions , later). How do i file my 2011 taxes Report the canceled amount on Schedule F, line 8, if you incurred the debt in your farming business. How do i file my 2011 taxes If the debt is a nonbusiness debt, report the canceled amount as other income on Form 1040, line 21. How do i file my 2011 taxes Election to defer income from discharge of indebtedness. How do i file my 2011 taxes   You can elect to defer income from a discharge of business indebtedness that occurred after 2008 and before 2011. How do i file my 2011 taxes Generally, if the election is made, the deferred income is included in gross income ratably over a 5-year period beginning in 2014 (for calendar year taxpayers) and the exclusions listed below do not apply. How do i file my 2011 taxes See IRC section 108(i) and Publication 4681 for details. How do i file my 2011 taxes Form 1099-C. How do i file my 2011 taxes   If a federal agency, financial institution, credit union, finance company, or credit card company cancels or forgives your debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. How do i file my 2011 taxes The amount of debt canceled is shown in box 2. How do i file my 2011 taxes Exceptions The following discussion covers some exceptions to the general rule for canceled debt. How do i file my 2011 taxes These exceptions apply before the exclusions discussed below. How do i file my 2011 taxes Price reduced after purchase. How do i file my 2011 taxes   If your purchase of property was financed by the seller and the seller reduces the amount of the debt at a time when you are not insolvent and the reduction does not occur in a chapter 11 bankruptcy case, the amount of the debt reduction will be treated as a reduction in the purchase price of the property. How do i file my 2011 taxes Reduce your basis in the property by the amount of the reduction in the debt. How do i file my 2011 taxes The rules that apply to bankruptcy and insolvency are explained below under Exclusions . How do i file my 2011 taxes Deductible debt. How do i file my 2011 taxes   You do not realize income from a canceled debt to the extent the payment of the debt would have been a deductible expense. How do i file my 2011 taxes This exception applies before the price reduction exception discussed above and the bankruptcy and insolvency exclusions discussed next. How do i file my 2011 taxes Example. How do i file my 2011 taxes You get accounting services for your farm on credit. How do i file my 2011 taxes Later, you have trouble paying your farm debts, but you are not bankrupt or insolvent. How do i file my 2011 taxes Your accountant forgives part of the amount you owe for the accounting services. How do i file my 2011 taxes How you treat the canceled debt depends on your method of accounting. How do i file my 2011 taxes Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. How do i file my 2011 taxes Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. How do i file my 2011 taxes Exclusions Do not include canceled debt in income in the following situations. How do i file my 2011 taxes The cancellation takes place in a bankruptcy case under title 11 of the U. How do i file my 2011 taxes S. How do i file my 2011 taxes Code. How do i file my 2011 taxes The cancellation takes place when you are insolvent. How do i file my 2011 taxes The canceled debt is a qualified farm debt. How do i file my 2011 taxes The canceled debt is a qualified real property business debt (in the case of a taxpayer other than a C corporation). How do i file my 2011 taxes See Publication 334, Tax Guide for Small Business, chapter 5. How do i file my 2011 taxes The canceled debt is qualified principal residence indebtedness which is discharged after 2006 and before 2014. How do i file my 2011 taxes The exclusions do not apply in the following situations: If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations (2), (3), (4), and (5) do not apply. How do i file my 2011 taxes If a canceled debt is excluded from income because it takes place when you are insolvent, the exclusions in situations (3) and (4) do not apply to the extent you are insolvent. How do i file my 2011 taxes If a canceled debt is excluded from income because it is qualified principal residence indebtedness, the exclusion in situation (2) does not apply unless you elect to apply situation (2) instead of the exclusion for qualified principal residence indebtedness. How do i file my 2011 taxes See Form 982 , later, for information on how to claim an exclusion for a canceled debt. How do i file my 2011 taxes Debt. How do i file my 2011 taxes   For this discussion, debt includes any debt for which you are liable or that attaches to property you hold. How do i file my 2011 taxes Bankruptcy and Insolvency You can exclude a canceled debt from income if you are bankrupt or to the extent you are insolvent. How do i file my 2011 taxes Bankruptcy. How do i file my 2011 taxes   A bankruptcy case is a case under title 11 of the U. How do i file my 2011 taxes S. How do i file my 2011 taxes Code if you are under the jurisdiction of the court and the cancellation of the debt is granted by the court or is the result of a plan approved by the court. How do i file my 2011 taxes   Do not include debt canceled in a bankruptcy case in your income in the year it is canceled. How do i file my 2011 taxes Instead, you must use the amount canceled to reduce your tax attributes, explained below under Reduction of tax attributes . How do i file my 2011 taxes Insolvency. How do i file my 2011 taxes   You are insolvent to the extent your liabilities are more than the fair market value of your assets immediately before the cancellation of debt. How do i file my 2011 taxes   You can exclude canceled debt from gross income up to the amount by which you are insolvent. How do i file my 2011 taxes If the canceled debt is more than this amount and the debt qualifies, you can apply the rules for qualified farm debt or qualified real property business debt to the difference. How do i file my 2011 taxes Otherwise, you include the difference in gross income. How do i file my 2011 taxes Use the amount excluded because of insolvency to reduce any tax attributes, as explained below under Reduction of tax attributes . How do i file my 2011 taxes You must reduce the tax attributes under the insolvency rules before applying the rules for qualified farm debt or for qualified real property business debt. How do i file my 2011 taxes Example. How do i file my 2011 taxes You had a $15,000 debt that was not qualified principal residence debt canceled outside of bankruptcy. How do i file my 2011 taxes Immediately before the cancellation, your liabilities totaled $80,000 and your assets totaled $75,000. How do i file my 2011 taxes Since your liabilities were more than your assets, you were insolvent to the extent of $5,000 ($80,000 − $75,000). How do i file my 2011 taxes You can exclude this amount from income. How do i file my 2011 taxes The remaining canceled debt ($10,000) may be subject to the qualified farm debt or qualified real property business debt rules. How do i file my 2011 taxes If not, you must include it in income. How do i file my 2011 taxes Reduction of tax attributes. How do i file my 2011 taxes   If you exclude canceled debt from income in a bankruptcy case or during insolvency, you must use the excluded debt to reduce certain tax attributes. How do i file my 2011 taxes Order of reduction. How do i file my 2011 taxes   You must use the excluded canceled debt to reduce the following tax attributes in the order listed unless you elect to reduce the basis of depreciable property first, as explained later. How do i file my 2011 taxes Net operating loss (NOL). How do i file my 2011 taxes Reduce any NOL for the tax year of the debt cancellation, and then any NOL carryover to that year. How do i file my 2011 taxes Reduce the NOL or NOL carryover one dollar for each dollar of excluded canceled debt. How do i file my 2011 taxes General business credit carryover. How do i file my 2011 taxes Reduce the credit carryover to or from the tax year of the debt cancellation. How do i file my 2011 taxes Reduce the carryover 331/3 cents for each dollar of excluded canceled debt. How do i file my 2011 taxes Minimum tax credit. How do i file my 2011 taxes Reduce the minimum tax credit available at the beginning of the tax year following the tax year of the debt cancellation. How do i file my 2011 taxes Reduce the credit 331/3 cents for each dollar of excluded canceled debt. How do i file my 2011 taxes Capital loss. How do i file my 2011 taxes Reduce any net capital loss for the tax year of the debt cancellation, and then any capital loss carryover to that year. How do i file my 2011 taxes Reduce the capital loss or loss carryover one dollar for each dollar of excluded canceled debt. How do i file my 2011 taxes Basis. How do i file my 2011 taxes Reduce the basis of the property you hold at the beginning of the tax year following the tax year of the debt cancellation in the following order. How do i file my 2011 taxes Real property (except inventory) used in your trade or business or held for investment that secured the canceled debt. How do i file my 2011 taxes Personal property (except inventory and accounts and notes receivable) used in your trade or business or held for investment that secured the canceled debt. How do i file my 2011 taxes Other property (except inventory and accounts and notes receivable) used in your trade or business or held for investment. How do i file my 2011 taxes Inventory and accounts and notes receivable. How do i file my 2011 taxes Other property. How do i file my 2011 taxes Reduce the basis one dollar for each dollar of excluded canceled debt. How do i file my 2011 taxes However, the reduction cannot be more than the total basis of property and the amount of money you hold immediately after the debt cancellation minus your total liabilities immediately after the cancellation. How do i file my 2011 taxes For allocation rules that apply to basis reductions for multiple canceled debts, see Regulations section 1. How do i file my 2011 taxes 1017-1(b)(2). How do i file my 2011 taxes Also see Electing to reduce the basis of depreciable property