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Irs Extension Form 2011

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Irs Extension Form 2011

Irs extension form 2011 13. Irs extension form 2011   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. Irs extension form 2011 It is divided into the following sections. Irs extension form 2011 Cost basis. Irs extension form 2011 Adjusted basis. Irs extension form 2011 Basis other than cost. Irs extension form 2011 Your basis is the amount of your investment in property for tax purposes. Irs extension form 2011 Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. Irs extension form 2011 Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. Irs extension form 2011 If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Irs extension form 2011 Only the basis allocated to the business or investment use of the property can be depreciated. Irs extension form 2011 Your original basis in property is adjusted (increased or decreased) by certain events. Irs extension form 2011 For example, if you make improvements to the property, increase your basis. Irs extension form 2011 If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. Irs extension form 2011 Keep accurate records of all items that affect the basis of your property. Irs extension form 2011 For more information on keeping records, see chapter 1. Irs extension form 2011 Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. Irs extension form 2011 The cost is the amount you pay in cash, debt obligations, other property, or services. Irs extension form 2011 Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). Irs extension form 2011 In addition, the basis of real estate and business assets may include other items. Irs extension form 2011 Loans with low or no interest. Irs extension form 2011    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. Irs extension form 2011 You generally have unstated interest if your interest rate is less than the applicable federal rate. Irs extension form 2011   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Irs extension form 2011 Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Irs extension form 2011 If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Irs extension form 2011 Lump sum purchase. Irs extension form 2011   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. Irs extension form 2011 Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. Irs extension form 2011 Figure the basis of each asset by multiplying the lump sum by a fraction. Irs extension form 2011 The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Irs extension form 2011    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. Irs extension form 2011 Fair market value (FMV). Irs extension form 2011   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Irs extension form 2011 Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. Irs extension form 2011 Assumption of mortgage. Irs extension form 2011   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Irs extension form 2011 Settlement costs. Irs extension form 2011   Your basis includes the settlement fees and closing costs you paid for buying the property. Irs extension form 2011 (A fee for buying property is a cost that must be paid even if you buy the property for cash. Irs extension form 2011 ) Do not include fees and costs for getting a loan on the property in your basis. Irs extension form 2011   The following are some of the settlement fees or closing costs you can include in the basis of your property. Irs extension form 2011 Abstract fees (abstract of title fees). Irs extension form 2011 Charges for installing utility services. Irs extension form 2011 Legal fees (including fees for the title search and preparation of the sales contract and deed). Irs extension form 2011 Recording fees. Irs extension form 2011 Survey fees. Irs extension form 2011 Transfer taxes. Irs extension form 2011 Owner's title insurance. Irs extension form 2011 Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Irs extension form 2011   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Irs extension form 2011   The following are some of the settlement fees and closing costs you cannot include in the basis of property. Irs extension form 2011 Casualty insurance premiums. Irs extension form 2011 Rent for occupancy of the property before closing. Irs extension form 2011 Charges for utilities or other services related to occupancy of the property before closing. Irs extension form 2011 Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. Irs extension form 2011 Fees for refinancing a mortgage. Irs extension form 2011 Real estate taxes. Irs extension form 2011   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Irs extension form 2011 You cannot deduct them as an expense. Irs extension form 2011    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Irs extension form 2011 Do not include that amount in the basis of your property. Irs extension form 2011 If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Irs extension form 2011 Points. Irs extension form 2011   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Irs extension form 2011 Generally, you deduct the points over the term of the loan. Irs extension form 2011 For more information on how to deduct points, see chapter 23. Irs extension form 2011 Points on home mortgage. Irs extension form 2011   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. Irs extension form 2011 If certain requirements are met, you can deduct the points in full for the year in which they are paid. Irs extension form 2011 Reduce the basis of your home by any seller-paid points. Irs extension form 2011 Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. Irs extension form 2011 The result is the adjusted basis. Irs extension form 2011 Increases to Basis Increase the basis of any property by all items properly added to a capital account. Irs extension form 2011 Examples of items that increase basis are shown in Table 13-1. Irs extension form 2011 These include the items discussed below. Irs extension form 2011 Improvements. Irs extension form 2011   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. Irs extension form 2011 For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. Irs extension form 2011 Assessments for local improvements. Irs extension form 2011   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. Irs extension form 2011 Do not deduct them as taxes. Irs extension form 2011 However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. Irs extension form 2011 Example. Irs extension form 2011 Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. Irs extension form 2011 Add the assessment to your property's basis. Irs extension form 2011 In this example, the assessment is a depreciable asset. Irs extension form 2011 Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. Irs extension form 2011 Examples of items that decrease basis are shown in Table 13-1. Irs extension form 2011 These include the items discussed below. Irs extension form 2011 Table 13-1. Irs extension form 2011 Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. Irs extension form 2011   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. Irs extension form 2011    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. Irs extension form 2011   For more information on casualty and theft losses, see chapter 25. Irs extension form 2011 Depreciation and section 179 deduction. Irs extension form 2011   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. Irs extension form 2011   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. Irs extension form 2011 Example. Irs extension form 2011 You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. Irs extension form 2011 You added an improvement to the duplex that cost $10,000. Irs extension form 2011 In February last year, the duplex was damaged by fire. Irs extension form 2011 Up to that time, you had been allowed depreciation of $23,000. Irs extension form 2011 You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. Irs extension form 2011 You deducted a casualty loss of $1,000 on your income tax return for last year. Irs extension form 2011 You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. Irs extension form 2011 You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. Irs extension form 2011 Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. Irs extension form 2011 Your basis in the land is its original cost of $5,000. Irs extension form 2011 Easements. Irs extension form 2011   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. Irs extension form 2011 It reduces the basis of the affected part of the property. Irs extension form 2011 If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Irs extension form 2011   If the gain is on a capital asset, see chapter 16 for information about how to report it. Irs extension form 2011 If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. Irs extension form 2011 Exclusion of subsidies for energy conservation measures. Irs extension form 2011   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Irs extension form 2011 Reduce the basis of the property for which you received the subsidy by the excluded amount. Irs extension form 2011 For more information about this subsidy, see chapter 12. Irs extension form 2011 Postponed gain from sale of home. Irs extension form 2011    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. Irs extension form 2011 For more information on the rules for the sale of a home, see chapter 15. Irs extension form 2011 Basis Other Than Cost There are many times when you cannot use cost as basis. Irs extension form 2011 In these cases, the fair market value or the adjusted basis of the property can be used. Irs extension form 2011 Fair market value (FMV) and adjusted basis were discussed earlier. Irs extension form 2011 Property Received for Services If you receive property for your services, include the FMV of the property in income. Irs extension form 2011 The amount you include in income becomes your basis. Irs extension form 2011 If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Irs extension form 2011 Restricted property. Irs extension form 2011   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. Irs extension form 2011 However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. Irs extension form 2011 Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). Irs extension form 2011 For more information, see Restricted Property in Publication 525. Irs extension form 2011 Bargain purchases. Irs extension form 2011   A bargain purchase is a purchase of an item for less than its FMV. Irs extension form 2011 If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Irs extension form 2011 Your basis in the property is its FMV (your purchase price plus the amount you include in income). Irs extension form 2011   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. Irs extension form 2011 However, your basis in the property is still its FMV. Irs extension form 2011 See Employee Discounts in Publication 15-B. Irs extension form 2011 Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Irs extension form 2011 A taxable gain or deductible loss also is known as a recognized gain or loss. Irs extension form 2011 If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Irs extension form 2011 Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. Irs extension form 2011 Similar or related property. Irs extension form 2011   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. Irs extension form 2011 Decrease the basis by the following. Irs extension form 2011 Any loss you recognize on the involuntary conversion. Irs extension form 2011 Any money you receive that you do not spend on similar property. Irs extension form 2011 Increase the basis by the following. Irs extension form 2011 Any gain you recognize on the involuntary conversion. Irs extension form 2011 Any cost of acquiring the replacement property. Irs extension form 2011 Money or property not similar or related. Irs extension form 2011    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. Irs extension form 2011 Example. Irs extension form 2011 The state condemned your property. Irs extension form 2011 The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. Irs extension form 2011 You realized a gain of $5,000 ($31,000 − $26,000). Irs extension form 2011 You bought replacement property similar in use to the converted property for $29,000. Irs extension form 2011 You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Irs extension form 2011 Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Irs extension form 2011 The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. Irs extension form 2011   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Irs extension form 2011 Basis for depreciation. Irs extension form 2011   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Irs extension form 2011 For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Irs extension form 2011 Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Irs extension form 2011 If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. Irs extension form 2011 See Nontaxable Trades in chapter 14. Irs extension form 2011 Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Irs extension form 2011 To qualify as a like-kind exchange, the property traded and the property received must be both of the following. Irs extension form 2011 Qualifying property. Irs extension form 2011 Like-kind property. Irs extension form 2011 The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. Irs extension form 2011 If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. Irs extension form 2011 Qualifying property. Irs extension form 2011   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. Irs extension form 2011 Like-kind property. Irs extension form 2011   There must be an exchange of like-kind property. Irs extension form 2011 Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Irs extension form 2011 The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. Irs extension form 2011 Example. Irs extension form 2011 You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. Irs extension form 2011 The dealer allows you $2,000 on the old truck, and you pay $4,800. Irs extension form 2011 This is a like-kind exchange. Irs extension form 2011 The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). Irs extension form 2011 If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). Irs extension form 2011 The basis of the new truck is the price you pay the dealer. Irs extension form 2011 Partially nontaxable exchanges. Irs extension form 2011   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Irs extension form 2011 The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. Irs extension form 2011 Decrease the basis by the following amounts. Irs extension form 2011 Any money you receive. Irs extension form 2011 Any loss you recognize on the exchange. Irs extension form 2011 Increase the basis by the following amounts. Irs extension form 2011 Any additional costs you incur. Irs extension form 2011 Any gain you recognize on the exchange. Irs extension form 2011 If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Irs extension form 2011 Allocation of basis. Irs extension form 2011   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Irs extension form 2011 The rest is the basis of the like-kind property. Irs extension form 2011 More information. Irs extension form 2011   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. Irs extension form 2011 Basis for depreciation. Irs extension form 2011   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. Irs extension form 2011 For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Irs extension form 2011 Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Irs extension form 2011 The same rule applies to a transfer by your former spouse that is incident to divorce. Irs extension form 2011 However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Irs extension form 2011 If the property transferred to you is a series E, series EE, or series I U. Irs extension form 2011 S. Irs extension form 2011 savings bond, the transferor must include in income the interest accrued to the date of transfer. Irs extension form 2011 Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Irs extension form 2011 For more information on these bonds, see chapter 7. Irs extension form 2011 At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Irs extension form 2011 For more information about the transfer of property from a spouse, see chapter 14. Irs extension form 2011 Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Irs extension form 2011 FMV less than donor's adjusted basis. Irs extension form 2011   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Irs extension form 2011 Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Irs extension form 2011 Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Irs extension form 2011 See Adjusted Basis , earlier. Irs extension form 2011 Example. Irs extension form 2011 You received an acre of land as a gift. Irs extension form 2011 At the time of the gift, the land had an FMV of $8,000. Irs extension form 2011 The donor's adjusted basis was $10,000. Irs extension form 2011 After you received the property, no events occurred to increase or decrease your basis. Irs extension form 2011 If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. Irs extension form 2011 If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. Irs extension form 2011 If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Irs extension form 2011 Business property. Irs extension form 2011   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Irs extension form 2011 FMV equal to or greater than donor's adjusted basis. Irs extension form 2011   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Irs extension form 2011 Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. Irs extension form 2011   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Irs extension form 2011 See Adjusted Basis , earlier. Irs extension form 2011   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Irs extension form 2011 Figure the increase by multiplying the gift tax paid by a fraction. Irs extension form 2011 The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Irs extension form 2011   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Irs extension form 2011 The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Irs extension form 2011 Example. Irs extension form 2011 In 2013, you received a gift of property from your mother that had an FMV of $50,000. Irs extension form 2011 Her adjusted basis was $20,000. Irs extension form 2011 The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Irs extension form 2011 She paid a gift tax of $7,320 on the property. Irs extension form 2011 Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Irs extension form 2011 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Irs extension form 2011 If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Irs extension form 2011 However, your basis cannot exceed the FMV of the gift at the time it was given to you. Irs extension form 2011 Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Irs extension form 2011 The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. Irs extension form 2011 The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. Irs extension form 2011 The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Irs extension form 2011 If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Irs extension form 2011 For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Irs extension form 2011 Property inherited from a decedent who died in 2010. Irs extension form 2011   If you inherited property from a decedent who died in 2010, special rules may apply. Irs extension form 2011 For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Irs extension form 2011 Community property. Irs extension form 2011   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Irs extension form 2011 When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Irs extension form 2011 For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Irs extension form 2011 Example. Irs extension form 2011 You and your spouse owned community property that had a basis of $80,000. Irs extension form 2011 When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Irs extension form 2011 The FMV of the community interest was $100,000. Irs extension form 2011 The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Irs extension form 2011 The basis of the other half to your spouse's heirs is also $50,000. Irs extension form 2011 For more information about community property, see Publication 555, Community Property. Irs extension form 2011 Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. Irs extension form 2011 To do so, you must figure its basis for depreciation at the time of the change. Irs extension form 2011 An example of changing property held for personal use to business or rental use would be renting out your former personal residence. Irs extension form 2011 Basis for depreciation. Irs extension form 2011   The basis for depreciation is the lesser of the following amounts. Irs extension form 2011 The FMV of the property on the date of the change. Irs extension form 2011 Your adjusted basis on the date of the change. Irs extension form 2011 Example. Irs extension form 2011 Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. Irs extension form 2011 You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Irs extension form 2011 Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Irs extension form 2011 Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Irs extension form 2011 On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Irs extension form 2011 The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). Irs extension form 2011 Sale of property. Irs extension form 2011   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. Irs extension form 2011 Gain. Irs extension form 2011   The basis for figuring a gain is your adjusted basis in the property when you sell the property. Irs extension form 2011 Example. Irs extension form 2011 Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Irs extension form 2011 Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Irs extension form 2011 Loss. Irs extension form 2011   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Irs extension form 2011 Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Irs extension form 2011 Example. Irs extension form 2011 Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Irs extension form 2011 In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. Irs extension form 2011 Reduce that amount ($180,000) by the depreciation deductions ($37,500). Irs extension form 2011 The basis for loss is $142,500 ($180,000 − $37,500). Irs extension form 2011 Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Irs extension form 2011 If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. Irs extension form 2011 You must adjust the basis of stocks for certain events that occur after purchase. Irs extension form 2011 For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. Irs extension form 2011 This rule applies only when the additional stock received is identical to the stock held. Irs extension form 2011 Also reduce your basis when you receive nontaxable distributions. Irs extension form 2011 They are a return of capital. Irs extension form 2011 Example. Irs extension form 2011 In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. Irs extension form 2011 In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. Irs extension form 2011 In 2013 XYZ declared a 2-for-1 stock split. Irs extension form 2011 You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. Irs extension form 2011 Other basis. Irs extension form 2011   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. Irs extension form 2011 For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Irs extension form 2011 Identifying stocks or bonds sold. Irs extension form 2011   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. Irs extension form 2011 If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Irs extension form 2011 For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Irs extension form 2011 Mutual fund shares. Irs extension form 2011   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. Irs extension form 2011 For more information, see Publication 550. Irs extension form 2011 Bond premium. Irs extension form 2011   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. Irs extension form 2011 See Bond Premium Amortization in chapter 3 of Publication 550 for more information. Irs extension form 2011 Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. Irs extension form 2011 Original issue discount (OID) on debt instruments. Irs extension form 2011   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. Irs extension form 2011 See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. Irs extension form 2011 Tax-exempt obligations. Irs extension form 2011    OID on tax-exempt obligations is generally not taxable. Irs extension form 2011 However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. Irs extension form 2011 The accrued OID is added to the basis of the obligation to determine your gain or loss. Irs extension form 2011 See chapter 4 of Publication 550. Irs extension form 2011 Prev  Up  Next   Home   More Online Publications
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Understanding Your CP292 Notice

We're revoking your Qualified Subchapter S Trust (QSST) election.


What you need to do

  • Timely file Form 1041

You may want to

  • Keep this notice in your permanent records.

Understanding your notice

Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP292, Page 1

 

Page Last Reviewed or Updated: 16-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Irs Extension Form 2011

Irs extension form 2011 18. Irs extension form 2011   Alimony Table of Contents IntroductionSpouse or former spouse. Irs extension form 2011 Divorce or separation instrument. Irs extension form 2011 Useful Items - You may want to see: General RulesMortgage payments. Irs extension form 2011 Taxes and insurance. Irs extension form 2011 Other payments to a third party. Irs extension form 2011 Instruments Executed After 1984Payments to a third party. Irs extension form 2011 Exception. Irs extension form 2011 Substitute payments. Irs extension form 2011 Specifically designated as child support. Irs extension form 2011 Contingency relating to your child. Irs extension form 2011 Clearly associated with a contingency. Irs extension form 2011 How To Deduct Alimony Paid How To Report Alimony Received Recapture Rule Introduction This chapter discusses the rules that apply if you pay or receive alimony. Irs extension form 2011 It covers the following topics. Irs extension form 2011 What payments are alimony. Irs extension form 2011 What payments are not alimony, such as child support. Irs extension form 2011 How to deduct alimony you paid. Irs extension form 2011 How to report alimony you received as income. Irs extension form 2011 Whether you must recapture the tax benefits of alimony. Irs extension form 2011 Recapture means adding back in your income all or part of a deduction you took in a prior year. Irs extension form 2011 Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. Irs extension form 2011 It does not include voluntary payments that are not made under a divorce or separation instrument. Irs extension form 2011 Alimony is deductible by the payer and must be included in the spouse's or former spouse's income. Irs extension form 2011 Although this chapter is generally written for the payer of the alimony, the recipient can use the information to determine whether an amount received is alimony. Irs extension form 2011 To be alimony, a payment must meet certain requirements. Irs extension form 2011 Different requirements generally apply to payments under instruments executed after 1984 and to payments under instruments executed before 1985. Irs extension form 2011 This chapter discusses the rules for payments under instruments executed after 1984. Irs extension form 2011 If you need the rules for payments under pre-1985 instruments, get and keep a copy of the 2004 version of Publication 504. Irs extension form 2011 That was the last year the information on pre-1985 instruments was included in Publication 504. Irs extension form 2011 Use Table 18-1 in this chapter as a guide to determine whether certain payments are considered alimony. Irs extension form 2011 Definitions. Irs extension form 2011   The following definitions apply throughout this chapter. Irs extension form 2011 Spouse or former spouse. Irs extension form 2011   Unless otherwise stated, the term “spouse” includes former spouse. Irs extension form 2011 Divorce or separation instrument. Irs extension form 2011   The term “divorce or separation instrument” means: A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. Irs extension form 2011 This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement). Irs extension form 2011 Useful Items - You may want to see: Publication 504 Divorced or Separated Individuals General Rules The following rules apply to alimony regardless of when the divorce or separation instrument was executed. Irs extension form 2011 Payments not alimony. Irs extension form 2011   Not all payments under a divorce or separation instrument are alimony. Irs extension form 2011 Alimony does not include: Child support, Noncash property settlements, Payments that are your spouse's part of community income, as explained under Community Property in Publication 504, Payments to keep up the payer's property, or Use of the payer's property. Irs extension form 2011 Payments to a third party. Irs extension form 2011   Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. Irs extension form 2011 These include payments for your spouse's medical expenses, housing costs (rent, utilities, etc. Irs extension form 2011 ), taxes, tuition, etc. Irs extension form 2011 The payments are treated as received by your spouse and then paid to the third party. Irs extension form 2011 Life insurance premiums. Irs extension form 2011   Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy. Irs extension form 2011 Payments for jointly-owned home. Irs extension form 2011   If your divorce or separation instrument states that you must pay expenses for a home owned by you and your spouse, some of your payments may be alimony. Irs extension form 2011 Mortgage payments. Irs extension form 2011   If you must pay all the mortgage payments (principal and interest) on a jointly-owned home, and they otherwise qualify as alimony, you can deduct one-half of the total payments as alimony. Irs extension form 2011 If you itemize deductions and the home is a qualified home, you can claim one-half of the interest in figuring your deductible interest. Irs extension form 2011 Your spouse must report one-half of the payments as alimony received. Irs extension form 2011 If your spouse itemizes deductions and the home is a qualified home, he or she can claim one-half of the interest on the mortgage in figuring deductible interest. Irs extension form 2011 Taxes and insurance. Irs extension form 2011   If you must pay all the real estate taxes or insurance on a home held as tenants in common, you can deduct one-half of these payments as alimony. Irs extension form 2011 Your spouse must report one-half of these payments as alimony received. Irs extension form 2011 If you and your spouse itemize deductions, you can each claim one-half of the real estate taxes and none of the home insurance. Irs extension form 2011    If your home is held as tenants by the entirety or joint tenants, none of your payments for taxes or insurance are alimony. Irs extension form 2011 But if you itemize deductions, you can claim all of the real estate taxes and none of the home insurance. Irs extension form 2011 Other payments to a third party. Irs extension form 2011   If you made other third-party payments, see Publication 504 to see whether any part of the payments qualifies as alimony. Irs extension form 2011 Instruments Executed After 1984 The following rules for alimony apply to payments under divorce or separation instruments executed after 1984. Irs extension form 2011 Exception for instruments executed before 1985. Irs extension form 2011   There are two situations where the rules for instruments executed after 1984 apply to instruments executed before 1985. Irs extension form 2011 A divorce or separation instrument executed before 1985 and then modified after 1984 to specify that the after-1984 rules will apply. Irs extension form 2011 A temporary divorce or separation instrument executed before 1985 and incorporated into, or adopted by, a final decree executed after 1984 that: Changes the amount or period of payment, or Adds or deletes any contingency or condition. Irs extension form 2011   For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, get the 2004 version of Publication 504 at www. Irs extension form 2011 irs. Irs extension form 2011 gov/pub504. Irs extension form 2011 Example 1. Irs extension form 2011 In November 1984, you and your former spouse executed a written separation agreement. Irs extension form 2011 In February 1985, a decree of divorce was substituted for the written separation agreement. Irs extension form 2011 The decree of divorce did not change the terms for the alimony you pay your former spouse. Irs extension form 2011 The decree of divorce is treated as executed before 1985. Irs extension form 2011 Alimony payments under this decree are not subject to the rules for payments under instruments executed after 1984. Irs extension form 2011 Example 2. Irs extension form 2011 Assume the same facts as in Example 1 except that the decree of divorce changed the amount of the alimony. Irs extension form 2011 In this example, the decree of divorce is not treated as executed before 1985. Irs extension form 2011 The alimony payments are subject to the rules for payments under instruments executed after 1984. Irs extension form 2011 Alimony requirements. Irs extension form 2011   A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met. Irs extension form 2011 The payment is in cash. Irs extension form 2011 The instrument does not designate the payment as not alimony. Irs extension form 2011 Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. Irs extension form 2011 There is no liability to make any payment (in cash or property) after the death of the recipient spouse. Irs extension form 2011 The payment is not treated as child support. Irs extension form 2011 Each of these requirements is discussed below. Irs extension form 2011 Cash payment requirement. Irs extension form 2011   Only cash payments, including checks and money orders, qualify as alimony. Irs extension form 2011 The following do not qualify as alimony. Irs extension form 2011 Transfers of services or property (including a debt instrument of a third party or an annuity contract). Irs extension form 2011 Execution of a debt instrument by the payer. Irs extension form 2011 The use of the payer's property. Irs extension form 2011 Payments to a third party. Irs extension form 2011   Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. Irs extension form 2011 See Payments to a third party under General Rules, earlier. Irs extension form 2011   Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met. Irs extension form 2011 The payments are in lieu of payments of alimony directly to your spouse. Irs extension form 2011 The written request states that both spouses intend the payments to be treated as alimony. Irs extension form 2011 You receive the written request from your spouse before you file your return for the year you made the payments. Irs extension form 2011 Payments designated as not alimony. Irs extension form 2011   You and your spouse can designate that otherwise qualifying payments are not alimony. Irs extension form 2011 You do this by including a provision in your divorce or separation instrument that states the payments are not deductible as alimony by you and are excludable from your spouse's income. Irs extension form 2011 For this purpose, any instrument (written statement) signed by both of you that makes this designation and that refers to a previous written separation agreement is treated as a written separation agreement (and therefore a divorce or separation instrument). Irs extension form 2011 If you are subject to temporary support orders, the designation must be made in the original or a later temporary support order. Irs extension form 2011   Your spouse can exclude the payments from income only if he or she attaches a copy of the instrument designating them as not alimony to his or her return. Irs extension form 2011 The copy must be attached each year the designation applies. Irs extension form 2011 Spouses cannot be members of the same household. Irs extension form 2011    Payments to your spouse while you are members of the same household are not alimony if you are legally separated under a decree of divorce or separate maintenance. Irs extension form 2011 A home you formerly shared is considered one household, even if you physically separate yourselves in the home. Irs extension form 2011   You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment. Irs extension form 2011 Exception. Irs extension form 2011   If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order may qualify as alimony even if you are members of the same household when the payment is made. Irs extension form 2011 Table 18-1. Irs extension form 2011 Alimony Requirements (Instruments Executed After 1984) Payments ARE alimony if all of the following are true: Payments are NOT alimony if any of the following are true: Payments are required by a divorce or separation instrument. Irs extension form 2011 Payments are not required by a divorce or separation instrument. Irs extension form 2011 Payer and recipient spouse do not file a joint return with each other. Irs extension form 2011 Payer and recipient spouse file a joint return with each other. Irs extension form 2011 Payment is in cash (including checks or money orders). Irs extension form 2011 Payment is: Not in cash, A noncash property settlement, Spouse's part of community income, or To keep up the payer's property. Irs extension form 2011 Payment is not designated in the instrument as not alimony. Irs extension form 2011 Payment is designated in the instrument as not alimony. Irs extension form 2011 Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. Irs extension form 2011 Spouses legally separated under a decree of divorce or separate maintenance are members of the same household. Irs extension form 2011 Payments are not required after death of the recipient spouse. Irs extension form 2011 Payments are required after death of the recipient spouse. Irs extension form 2011 Payment is not treated as child support. Irs extension form 2011 Payment is treated as child support. Irs extension form 2011 These payments are deductible by the payer and includible in income by the recipient. Irs extension form 2011 These payments are neither deductible by the payer nor includible in income by the recipient. Irs extension form 2011 Liability for payments after death of recipient spouse. Irs extension form 2011   If any part of payments you make must continue to be made for any period after your spouse's death, that part of your payments is not alimony, whether made before or after the death. Irs extension form 2011 If all of the payments would continue, then none of the payments made before or after the death are alimony. Irs extension form 2011   The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law. Irs extension form 2011 Example. Irs extension form 2011 You must pay your former spouse $10,000 in cash each year for 10 years. Irs extension form 2011 Your divorce decree states that the payments will end upon your former spouse's death. Irs extension form 2011 You must also pay your former spouse or your former spouse's estate $20,000 in cash each year for 10 years. Irs extension form 2011 The death of your spouse would not terminate these payments under state law. Irs extension form 2011 The $10,000 annual payments may qualify as alimony. Irs extension form 2011 The $20,000 annual payments that do not end upon your former spouse's death are not alimony. Irs extension form 2011 Substitute payments. Irs extension form 2011   If you must make any payments in cash or property after your spouse's death as a substitute for continuing otherwise qualifying payments before the death, the otherwise qualifying payments are not alimony. Irs extension form 2011 To the extent that your payments begin, accelerate, or increase because of the death of your spouse, otherwise qualifying payments you made may be treated as payments that were not alimony. Irs extension form 2011 Whether or not such payments will be treated as not alimony depends on all the facts and circumstances. Irs extension form 2011 Example 1. Irs extension form 2011 Under your divorce decree, you must pay your former spouse $30,000 annually. Irs extension form 2011 The payments will stop at the end of 6 years or upon your former spouse's death, if earlier. Irs extension form 2011 Your former spouse has custody of your minor children. Irs extension form 2011 The decree provides that if any child is still a minor at your spouse's death, you must pay $10,000 annually to a trust until the youngest child reaches the age of majority. Irs extension form 2011 The trust income and corpus (principal) are to be used for your children's benefit. Irs extension form 2011 These facts indicate that the payments to be made after your former spouse's death are a substitute for $10,000 of the $30,000 annual payments. Irs extension form 2011 Of each of the $30,000 annual payments, $10,000 is not alimony. Irs extension form 2011 Example 2. Irs extension form 2011 Under your divorce decree, you must pay your former spouse $30,000 annually. Irs extension form 2011 The payments will stop at the end of 15 years or upon your former spouse's death, if earlier. Irs extension form 2011 The decree provides that if your former spouse dies before the end of the 15-year period, you must pay the estate the difference between $450,000 ($30,000 × 15) and the total amount paid up to that time. Irs extension form 2011 For example, if your spouse dies at the end of the tenth year, you must pay the estate $150,000 ($450,000 − $300,000). Irs extension form 2011 These facts indicate that the lump-sum payment to be made after your former spouse's death is a substitute for the full amount of the $30,000 annual payments. Irs extension form 2011 None of the annual payments are alimony. Irs extension form 2011 The result would be the same if the payment required at death were to be discounted by an appropriate interest factor to account for the prepayment. Irs extension form 2011 Child support. Irs extension form 2011   A payment that is specifically designated as child support or treated as specifically designated as child support under your divorce or separation instrument is not alimony. Irs extension form 2011 The amount of child support may vary over time. Irs extension form 2011 Child support payments are not deductible by the payer and are not taxable to the recipient. Irs extension form 2011 Specifically designated as child support. Irs extension form 2011   A payment will be treated as specifically designated as child support to the extent that the payment is reduced either: On the happening of a contingency relating to your child, or At a time that can be clearly associated with the contingency. Irs extension form 2011 A payment may be treated as specifically designated as child support even if other separate payments are specifically designated as child support. Irs extension form 2011 Contingency relating to your child. Irs extension form 2011   A contingency relates to your child if it depends on any event relating to that child. Irs extension form 2011 It does not matter whether the event is certain or likely to occur. Irs extension form 2011 Events relating to your child include the child's: Becoming employed, Dying, Leaving the household, Leaving school, Marrying, or Reaching a specified age or income level. Irs extension form 2011 Clearly associated with a contingency. Irs extension form 2011   Payments that would otherwise qualify as alimony are presumed to be reduced at a time clearly associated with the happening of a contingency relating to your child only in the following situations. Irs extension form 2011 The payments are to be reduced not more than 6 months before or after the date the child will reach 18, 21, or local age of majority. Irs extension form 2011 The payments are to be reduced on two or more occasions that occur not more than 1 year before or after a different one of your children reaches a certain age from 18 to 24. Irs extension form 2011 This certain age must be the same for each child, but need not be a whole number of years. Irs extension form 2011 In all other situations, reductions in payments are not treated as clearly associated with the happening of a contingency relating to your child. Irs extension form 2011   Either you or the IRS can overcome the presumption in the two situations above. Irs extension form 2011 This is done by showing that the time at which the payments are to be reduced was determined independently of any contingencies relating to your children. Irs extension form 2011 For example, if you can show that the period of alimony payments is customary in the local jurisdiction, such as a period equal to one-half of the duration of the marriage, you can overcome the presumption and may be able to treat the amount as alimony. Irs extension form 2011 How To Deduct Alimony Paid You can deduct alimony you paid, whether or not you itemize deductions on your return. Irs extension form 2011 You must file Form 1040. Irs extension form 2011 You cannot use Form 1040A or Form 1040EZ. Irs extension form 2011 Enter the amount of alimony you paid on Form 1040, line 31a. Irs extension form 2011 In the space provided on line 31b, enter your spouse's social security number (SSN) or individual taxpayer identification number (ITIN). Irs extension form 2011 If you paid alimony to more than one person, enter the SSN or ITIN of one of the recipients. Irs extension form 2011 Show the SSN or ITIN and amount paid to each other recipient on an attached statement. Irs extension form 2011 Enter your total payments on line 31a. Irs extension form 2011 You must provide your spouse's SSN or ITIN. Irs extension form 2011 If you do not, you may have to pay a $50 penalty and your deduction may be disallowed. Irs extension form 2011 For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Irs extension form 2011 How To Report Alimony Received Report alimony you received as income on Form 1040, line 11. Irs extension form 2011 You cannot use Form 1040A or Form 1040EZ. Irs extension form 2011 You must give the person who paid the alimony your SSN or ITIN. Irs extension form 2011 If you do not, you may have to pay a $50 penalty. Irs extension form 2011 Recapture Rule If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. Irs extension form 2011 If you are subject to this rule, you have to include in income in the third year part of the alimony payments you previously deducted. Irs extension form 2011 Your spouse can deduct in the third year part of the alimony payments he or she previously included in income. Irs extension form 2011 The 3-year period starts with the first calendar year you make a payment qualifying as alimony under a decree of divorce or separate maintenance or a written separation agreement. Irs extension form 2011 Do not include any time in which payments were being made under temporary support orders. Irs extension form 2011 The second and third years are the next 2 calendar years, whether or not payments are made during those years. Irs extension form 2011 The reasons for a reduction or end of alimony payments that can require a recapture include: A change in your divorce or separation instrument, A failure to make timely payments, A reduction in your ability to provide support, or A reduction in your spouse's support needs. Irs extension form 2011 When to apply the recapture rule. Irs extension form 2011   You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year. Irs extension form 2011   When you figure a decrease in alimony, do not include the following amounts. Irs extension form 2011 Payments made under a temporary support order. Irs extension form 2011 Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income from a business or property, or from compensation for employment or self-employment. Irs extension form 2011 Payments that decrease because of the death of either spouse or the remarriage of the spouse receiving the payments before the end of the third year. Irs extension form 2011 Figuring the recapture. Irs extension form 2011   You can use Worksheet 1 in Publication 504 to figure recaptured alimony. Irs extension form 2011 Including the recapture in income. Irs extension form 2011   If you must include a recapture amount in income, show it on Form 1040, line 11 (“Alimony received”). Irs extension form 2011 Cross out “received” and enter “recapture. Irs extension form 2011 ” On the dotted line next to the amount, enter your spouse's last name and SSN or ITIN. Irs extension form 2011 Deducting the recapture. Irs extension form 2011   If you can deduct a recapture amount, show it on Form 1040, line 31a (“Alimony paid”). Irs extension form 2011 Cross out “paid” and enter “recapture. Irs extension form 2011 ” In the space provided, enter your spouse's SSN or ITIN. Irs extension form 2011 Prev  Up  Next   Home   More Online Publications