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Irs Form 1040 Ez Instructions

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Irs Form 1040 Ez Instructions

Irs form 1040 ez instructions Publication 1212 - Main Content Table of Contents Definitions Debt Instruments on the OID List Debt Instruments Not on the OID List Information for Brokers and Other MiddlemenShort-Term Obligations Redeemed at Maturity Long-Term Debt Instruments Certificates of Deposit Bearer Bonds and Coupons Backup Withholding Information for Owners of OID Debt InstrumentsExceptions. Irs form 1040 ez instructions Adjustment for premium. Irs form 1040 ez instructions Adjustment for acquisition premium. Irs form 1040 ez instructions Adjustment for market discount. Irs form 1040 ez instructions Form 1099-OID How To Report OID Figuring OID on Long-Term Debt Instruments Figuring OID on Stripped Bonds and Coupons How To Get Tax HelpLow Income Taxpayer Clinics Definitions The following terms are used throughout this publication. Irs form 1040 ez instructions “Original issue discount” is defined first. Irs form 1040 ez instructions The other terms are listed alphabetically. Irs form 1040 ez instructions Original issue discount (OID). Irs form 1040 ez instructions   OID is a form of interest. Irs form 1040 ez instructions It is the excess of a debt instrument's stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon). Irs form 1040 ez instructions Zero coupon bonds and debt instruments that pay no stated interest until maturity are examples of debt instruments that have OID. Irs form 1040 ez instructions Accrual period. Irs form 1040 ez instructions   An accrual period is an interval of time used to measure OID. Irs form 1040 ez instructions The length of an accrual period can be 6 months, a year, or some other period, depending on when the debt instrument was issued. Irs form 1040 ez instructions Acquisition premium. Irs form 1040 ez instructions   Acquisition premium is the excess of a debt instrument's adjusted basis immediately after purchase, including purchase at original issue, over the debt instrument's adjusted issue price at that time. Irs form 1040 ez instructions A debt instrument does not have acquisition premium, however, if the debt instrument was purchased at a premium. Irs form 1040 ez instructions See Premium, later. Irs form 1040 ez instructions Adjusted issue price. Irs form 1040 ez instructions   The adjusted issue price of a debt instrument at the beginning of an accrual period is used to figure the OID allocable to that period. Irs form 1040 ez instructions In general, the adjusted issue price at the beginning of the debt instrument's first accrual period is its issue price. Irs form 1040 ez instructions The adjusted issue price at the beginning of any subsequent accrual period is the sum of the issue price and all the OID includible in income before that accrual period minus any payment previously made on the debt instrument, other than a payment of qualified stated interest. Irs form 1040 ez instructions Debt instrument. Irs form 1040 ez instructions   The term “debt instrument” means any instrument or contractual arrangement that constitutes indebtedness under general principles of federal income tax law (including, for example, a bond, debenture, note, certificate, or other evidence of indebtedness). Irs form 1040 ez instructions It generally does not include an annuity contract. Irs form 1040 ez instructions Issue price. Irs form 1040 ez instructions   For debt instruments listed in Section I-A and Section I-B, the issue price generally is the initial offering price to the public (excluding bond houses and brokers) at which a substantial amount of these instruments was sold. Irs form 1040 ez instructions Market discount. Irs form 1040 ez instructions   Market discount arises when a debt instrument purchased in the secondary market has decreased in value since its issue date, generally because of an increase in interest rates. Irs form 1040 ez instructions An OID debt instrument has market discount if your adjusted basis in the debt instrument immediately after you acquired it (usually its purchase price) was less than the debt instrument's issue price plus the total OID that accrued before you acquired it. Irs form 1040 ez instructions The market discount is the difference between the issue price plus accrued OID and your adjusted basis. Irs form 1040 ez instructions Premium. Irs form 1040 ez instructions   A debt instrument is purchased at a premium if its adjusted basis immediately after purchase is greater than the total of all amounts payable on the debt instrument after the purchase date, other than qualified stated interest. Irs form 1040 ez instructions The premium is the excess of the adjusted basis over the payable amounts. Irs form 1040 ez instructions See Publication 550 for information on the tax treatment of bond premium. Irs form 1040 ez instructions Qualified stated interest. Irs form 1040 ez instructions   In general, qualified stated interest is stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually over the term of the debt instrument at a single fixed rate. Irs form 1040 ez instructions Stated redemption price at maturity. Irs form 1040 ez instructions   A debt instrument's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on the debt instrument other than qualified stated interest. Irs form 1040 ez instructions Yield to maturity (YTM). Irs form 1040 ez instructions   In general, the YTM is the discount rate that, when used in figuring the present value of all principal and interest payments, produces an amount equal to the issue price of the debt instrument. Irs form 1040 ez instructions The YTM is generally shown on the face of the debt instrument or in the literature you receive from your broker. Irs form 1040 ez instructions If you do not have this information, consult your broker, tax advisor, or the issuer. Irs form 1040 ez instructions Debt Instruments on the OID List The OID list on the IRS website can be used by brokers and other middlemen to prepare information returns. Irs form 1040 ez instructions If you own a listed debt instrument, you generally should not rely on the information in the OID list to determine (or compare) the OID to be reported on your tax return. Irs form 1040 ez instructions The OID amounts listed are figured without reference to the price or date at which you acquired the debt instrument. Irs form 1040 ez instructions For information about determining the OID to be reported on your tax return, see the instructions for figuring OID under Information for Owners of OID Debt Instruments, later. Irs form 1040 ez instructions The following discussions explain what information is contained in each section of the list. Irs form 1040 ez instructions Section I. Irs form 1040 ez instructions   This section contains publicly offered, long-term debt instruments. Irs form 1040 ez instructions Section I-A: Corporate Debt Instruments Issued Before 1985. Irs form 1040 ez instructions Section I-B: Corporate Debt Instruments Issued After 1984. Irs form 1040 ez instructions Section I-C: Inflation-Indexed Debt Instruments. Irs form 1040 ez instructions For each publicly offered debt instrument in Section I, the list contains the following information. Irs form 1040 ez instructions The name of the issuer. Irs form 1040 ez instructions The Committee on Uniform Security Identification Procedures (CUSIP) number. Irs form 1040 ez instructions The issue date. Irs form 1040 ez instructions The maturity date. Irs form 1040 ez instructions The issue price expressed as a percent of principal or of stated redemption price at maturity. Irs form 1040 ez instructions The annual stated or coupon interest rate. Irs form 1040 ez instructions (This rate is shown as 0. Irs form 1040 ez instructions 00 if no annual interest payments are provided. Irs form 1040 ez instructions ) The yield to maturity will be added to Section I-B for bonds issued after December 31, 2006. Irs form 1040 ez instructions The total OID accrued up to January 1 of a calendar year. Irs form 1040 ez instructions (This information is not available for every instrument. Irs form 1040 ez instructions ) For long-term debt instruments issued after July 1, 1982, the daily OID for the accrual periods falling in a calendar year and a subsequent year. Irs form 1040 ez instructions The total OID per $1,000 of principal or maturity value for a calendar year and a subsequent year. Irs form 1040 ez instructions Section II. Irs form 1040 ez instructions   This section contains stripped coupons and principal components of U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions Treasury and Government-Sponsored Enterprise debt instruments. Irs form 1040 ez instructions These stripped components are available through the Department of the Treasury's Separate Trading of Registered Interest and Principal of Securities (STRIPS) program and government-sponsored enterprises such as the Resolution Funding Corporation. Irs form 1040 ez instructions This section also includes debt instruments backed by U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions Treasury securities that represent ownership interests in those securities. Irs form 1040 ez instructions   The obligations listed in Section II are arranged by maturity date. Irs form 1040 ez instructions The amounts listed are the total OID for a calendar year per $1,000 of redemption price. Irs form 1040 ez instructions Section III. Irs form 1040 ez instructions   This section contains short-term discount obligations. Irs form 1040 ez instructions Section III-A: Short-Term U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions Treasury Bills. Irs form 1040 ez instructions Section III-B: Federal Home Loan Banks. Irs form 1040 ez instructions Section III-C: Federal National Mortgage Association. Irs form 1040 ez instructions Section III-D: Federal Farm Credit Banks. Irs form 1040 ez instructions Section III-E: Federal Home Loan Mortgage Corporation. Irs form 1040 ez instructions Section III-F: Federal Agricultural Mortgage Corporation. Irs form 1040 ez instructions    Information that supplements Section III-A is available on the Internet at http://www. Irs form 1040 ez instructions treasurydirect. Irs form 1040 ez instructions gov/tdhome. Irs form 1040 ez instructions htm. Irs form 1040 ez instructions   The short-term obligations listed in this section are arranged by maturity date. Irs form 1040 ez instructions For each obligation, the list contains the CUSIP number, maturity date, issue date, issue price (expressed as a percent of principal), and discount to be reported as interest for a calendar year per $1,000 of redemption price. Irs form 1040 ez instructions Brokers and other middlemen should rely on the issue price information in Section III only if they are unable to determine the price actually paid by the owner. Irs form 1040 ez instructions Debt Instruments Not on the OID List The list of debt instruments discussed earlier does not contain the following items. Irs form 1040 ez instructions U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions savings bonds. Irs form 1040 ez instructions Certificates of deposit and other face-amount certificates issued at a discount, including syndicated certificates of deposit. Irs form 1040 ez instructions Obligations issued by tax-exempt organizations. Irs form 1040 ez instructions OID debt instruments that matured or were entirely called by the issuer before the tables were posted on the IRS website. Irs form 1040 ez instructions Mortgage-backed securities and mortgage participation certificates. Irs form 1040 ez instructions Long-term OID debt instruments issued before May 28, 1969. Irs form 1040 ez instructions Short-term obligations, other than the obligations listed in Section III. Irs form 1040 ez instructions Debt instruments issued at a discount by states or their political subdivisions. Irs form 1040 ez instructions REMIC regular interests and CDOs. Irs form 1040 ez instructions Commercial paper and banker's acceptances issued at a discount. Irs form 1040 ez instructions Obligations issued at a discount by individuals. Irs form 1040 ez instructions Foreign obligations not traded in the United States and obligations not issued in the United States. Irs form 1040 ez instructions Information for Brokers and Other Middlemen The following discussions contain specific instructions for brokers and middlemen who hold or redeem a debt instrument for the owner. Irs form 1040 ez instructions In general, you must file a Form 1099 for the debt instrument if the interest or OID to be included in the owner's income for a calendar year totals $10 or more. Irs form 1040 ez instructions You also must file a Form 1099 if you were required to deduct and withhold tax, even if the interest or OID is less than $10. Irs form 1040 ez instructions See Backup Withholding, later. Irs form 1040 ez instructions If you must file a Form 1099, furnish a copy to the owner of the debt instrument by January 31 in the year it is due. Irs form 1040 ez instructions File all your Forms 1099 with the IRS, accompanied by Form 1096, by February 28 in the year it is due (March 31 if you file electronically). Irs form 1040 ez instructions Electronic payee statements. Irs form 1040 ez instructions   You can issue Form 1099-OID electronically with the consent of the recipient. Irs form 1040 ez instructions More information. Irs form 1040 ez instructions   For more information, including penalties for failure to file (or furnish) required information returns or statements, see the General Instructions for Certain Information Returns (Forms 1098, 1099, 3921, 3922, 5498, and W-2G) for the appropriate calendar year. Irs form 1040 ez instructions Short-Term Obligations Redeemed at Maturity If you redeem a short-term discount obligation for the owner at maturity, you must report the discount as interest on Form 1099-INT. Irs form 1040 ez instructions To figure the discount, use the purchase price shown on the owner's copy of the purchase confirmation receipt or similar record, or the price shown in your transaction records. Irs form 1040 ez instructions If you sell the obligation for the owner before maturity, you must file Form 1099-B to reflect the gross proceeds to the seller. Irs form 1040 ez instructions Do not report the accrued discount to the date of sale on either Form 1099-INT or Form 1099-OID. Irs form 1040 ez instructions If the owner's purchase price cannot be determined, figure the discount as if the owner had purchased the obligation at its original issue price. Irs form 1040 ez instructions A special rule is used to determine the original issue price for information reporting on U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions Treasury bills (T-bills) listed in Section III-A. Irs form 1040 ez instructions Under this rule, you treat as the original issue price of the T-bill the noncompetitive (weighted average of accepted auction bids) discount price for the longest-maturity T-bill maturing on the same date as the T-bill being redeemed. Irs form 1040 ez instructions This noncompetitive discount price is the issue price (expressed as a percent of principal) shown in Section III-A. Irs form 1040 ez instructions A similar rule is used to figure the discount on short-term discount obligations issued by the organizations listed in Section III-B through Section III-F. Irs form 1040 ez instructions Example 1. Irs form 1040 ez instructions There are 13-week and 26-week T-bills maturing on the same date as the T-bill being redeemed. Irs form 1040 ez instructions The price actually paid by the owner cannot be established by owner or middleman records. Irs form 1040 ez instructions You treat as the issue price of the T-bill the noncompetitive discount price (expressed as a percent of principal) shown in Section III-A for a 26-week bill maturing on the same date as the T-bill redeemed. Irs form 1040 ez instructions The interest you report on Form 1099-INT is the OID (per $1,000 of principal) shown in Section III-A for that obligation. Irs form 1040 ez instructions Long-Term Debt Instruments If you hold a long-term OID debt instrument as a nominee for the true owner, you generally must file Form 1099-OID. Irs form 1040 ez instructions For this purpose, you can rely on Section I of the OID list to determine the following information. Irs form 1040 ez instructions Whether a debt instrument has OID. Irs form 1040 ez instructions The OID to be reported on the Form 1099-OID. Irs form 1040 ez instructions In general, you must report OID on publicly offered, long-term debt instruments listed in Section I. Irs form 1040 ez instructions You also can report OID on other long-term debt instruments. Irs form 1040 ez instructions Form 1099-OID. Irs form 1040 ez instructions   On Form 1099-OID for a calendar year show the following information. Irs form 1040 ez instructions Box 1. Irs form 1040 ez instructions The OID for the actual dates the owner held the debt instruments during a calendar year. Irs form 1040 ez instructions To determine this amount, see Figuring OID, next. Irs form 1040 ez instructions Box 2. Irs form 1040 ez instructions The qualified stated interest paid or credited during the calendar year. Irs form 1040 ez instructions Interest reported here is not reported on Form 1099-INT. Irs form 1040 ez instructions The qualified stated interest on Treasury inflation-protected securities may be reported on Form 1099-INT in box 3 instead. Irs form 1040 ez instructions Box 3. Irs form 1040 ez instructions Any interest or principal forfeited because of an early withdrawal that the owner can deduct from gross income. Irs form 1040 ez instructions Do not reduce the amounts in boxes 1 and 2 by the forfeiture. Irs form 1040 ez instructions Box 4. Irs form 1040 ez instructions Any backup withholding for this debt instrument. Irs form 1040 ez instructions Box 7. Irs form 1040 ez instructions The CUSIP number, if any. Irs form 1040 ez instructions If there is no CUSIP number, give a description of the debt instrument, including the abbreviation for the stock exchange, the abbreviation used by the stock exchange for the issuer, the coupon rate, and the year of maturity (for example, NYSE XYZ 12. Irs form 1040 ez instructions 50 2006). Irs form 1040 ez instructions If the issuer of the debt instrument is other than the payer, show the name of the issuer in this box. Irs form 1040 ez instructions Box 8. Irs form 1040 ez instructions The OID on a U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions Treasury obligation for the part of the year the owner held the debt instrument. Irs form 1040 ez instructions Box 9. Irs form 1040 ez instructions Investment expenses passed on to holders of a single-class REMIC. Irs form 1040 ez instructions Boxes 10-12. Irs form 1040 ez instructions Use to report any state income tax withheld for this debt instrument. Irs form 1040 ez instructions Figuring OID. Irs form 1040 ez instructions   You can determine the OID on a long-term debt instrument by using either of the following. Irs form 1040 ez instructions Section I of the OID list. Irs form 1040 ez instructions The income tax regulations. Irs form 1040 ez instructions Using Section I. Irs form 1040 ez instructions   If the owner held the debt instrument for the entire calendar year, report the OID shown in Section I for the calendar year. Irs form 1040 ez instructions Because OID is listed for each $1,000 of stated redemption price at maturity, you must adjust the listed amount to reflect the debt instrument's actual stated redemption price at maturity. Irs form 1040 ez instructions For example, if the debt instrument's stated redemption price at maturity is $500, report one-half the listed OID. Irs form 1040 ez instructions   If the owner held the debt instrument for less than the entire calendar year, figure the OID to report as follows. Irs form 1040 ez instructions Look up the daily OID for the first accrual period in the calendar year during which the owner held the debt instrument. Irs form 1040 ez instructions Multiply the daily OID by the number of days the owner held the debt instrument during that accrual period. Irs form 1040 ez instructions Repeat steps (1) and (2) for any remaining accrual periods for the year during which the owner held the debt instrument. Irs form 1040 ez instructions Add the results in steps (2) and (3) to determine the owner's OID per $1,000 of stated redemption price at maturity. Irs form 1040 ez instructions If necessary, adjust the OID in (4) to reflect the debt instrument's stated redemption price at maturity. Irs form 1040 ez instructions Report the result on Form 1099-OID in box 1. Irs form 1040 ez instructions Using the income tax regulations. Irs form 1040 ez instructions   Instead of using Section I to figure OID, you can use the regulations under sections 1272 through 1275 of the Internal Revenue Code. Irs form 1040 ez instructions For example, under the regulations, you can use monthly accrual periods in figuring OID for a debt instrument issued after April 3, 1994, that provides for monthly payments. Irs form 1040 ez instructions (If you use Section I-B, the OID is figured using 6-month accrual periods. Irs form 1040 ez instructions )   For a general explanation of the rules for figuring OID under the regulations, see Figuring OID on Long-Term Debt Instruments under Information for Owners of OID Debt Instruments, later. Irs form 1040 ez instructions Certificates of Deposit If you hold a bank certificate of deposit (CD) as a nominee, you must determine whether the CD has OID and any OID includible in the income of the owner. Irs form 1040 ez instructions You must file an information return showing the reportable interest and OID, if any, on the CD. Irs form 1040 ez instructions These rules apply whether or not you sold the CD to the owner. Irs form 1040 ez instructions Report OID on a CD in the same way as OID on other debt instruments. Irs form 1040 ez instructions See Short-Term Obligations Redeemed at Maturity and Long-Term Debt Instruments, earlier. Irs form 1040 ez instructions Bearer Bonds and Coupons If a coupon from a bearer bond is presented to you for collection before the bond matures, you generally must report the interest on Form 1099-INT. Irs form 1040 ez instructions However, do not report the interest if either of the following apply. Irs form 1040 ez instructions You hold the bond as a nominee for the true owner. Irs form 1040 ez instructions The payee is a foreign person. Irs form 1040 ez instructions See Payments to foreign person under Backup Withholding, later. Irs form 1040 ez instructions Because you cannot assume the presenter of the coupon also owns the bond, you should not report OID on the bond on Form 1099-OID. Irs form 1040 ez instructions The coupon may have been “stripped” (separated) from the bond and separately purchased. Irs form 1040 ez instructions However, if a long-term bearer bond on the OID list is presented to you for redemption upon call or maturity, you should prepare a Form 1099-OID showing the OID for that calendar year, as well as any coupon interest payments collected at the time of redemption. Irs form 1040 ez instructions Backup Withholding If you report OID on Form 1099-OID or interest on Form 1099-INT for a calendar year, you may be required to apply backup withholding to the reportable payment at a rate of 28%. Irs form 1040 ez instructions The backup withholding is deducted at the time a cash payment is made. Irs form 1040 ez instructions See Pub. Irs form 1040 ez instructions 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), for more information. Irs form 1040 ez instructions Backup withholding generally applies in the following situations. Irs form 1040 ez instructions The payee does not give you a taxpayer identification number (TIN). Irs form 1040 ez instructions The IRS notifies you that the payee gave an incorrect TIN. Irs form 1040 ez instructions The IRS notifies you that the payee is subject to backup withholding due to payee underreporting. Irs form 1040 ez instructions For debt instruments acquired after 1983: The payee does not certify, under penalties of perjury, that he or she is not subject to backup withholding under (3), or The payee does not certify, under penalties of perjury, that the TIN given is correct. Irs form 1040 ez instructions However, for short-term discount obligations (other than government obligations), bearer bonds and coupons, and U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions savings bonds, backup withholding applies only if the payee does not give you a TIN or gives you an obviously incorrect number for a TIN. Irs form 1040 ez instructions Short-term obligations. Irs form 1040 ez instructions   Backup withholding applies to OID on a short-term obligation only when the OID is paid at maturity. Irs form 1040 ez instructions However, backup withholding applies to any interest payable before maturity when the interest is paid or credited. Irs form 1040 ez instructions   If the owner of a short-term obligation at maturity is not the original owner and can establish the purchase price of the obligation, the amount subject to backup withholding must be determined by treating the purchase price as the issue price. Irs form 1040 ez instructions However, you can choose to disregard that price if it would require significant manual intervention in the computer or recordkeeping system used for the obligation. Irs form 1040 ez instructions If the purchase price of a listed obligation is not established or is disregarded, you must use the issue price shown in Section III. Irs form 1040 ez instructions Long-term obligations. Irs form 1040 ez instructions   If no cash payments are made on a long-term obligation before maturity, backup withholding applies only at maturity. Irs form 1040 ez instructions The amount subject to backup withholding is the OID includible in the owner's gross income for the calendar year when the obligation matures. Irs form 1040 ez instructions The amount to be withheld is limited to the cash paid. Irs form 1040 ez instructions Registered long-term obligations with cash payments. Irs form 1040 ez instructions   If a registered long-term obligation has cash payments before maturity, backup withholding applies when a cash payment is made. Irs form 1040 ez instructions The amount subject to backup withholding is the total of the qualified stated interest (defined earlier under Definitions) and OID includible in the owner's gross income for the calendar year when the payment is made. Irs form 1040 ez instructions If more than one cash payment is made during the year, the OID subject to withholding for the year must be allocated among the expected cash payments in the ratio that each bears to the total of the expected cash payments. Irs form 1040 ez instructions For any payment, the required withholding is limited to the cash paid. Irs form 1040 ez instructions Payee not the original owner. Irs form 1040 ez instructions   If the payee is not the original owner of the obligation, the OID subject to backup withholding is the OID includible in the gross income of all owners during the calendar year (without regard to any amount paid by the new owner at the time of transfer). Irs form 1040 ez instructions The amount subject to backup withholding at maturity of a listed obligation must be determined using the issue price shown in Section I. Irs form 1040 ez instructions Bearer long-term obligations with cash payments. Irs form 1040 ez instructions   If a bearer long-term obligation has cash payments before maturity, backup withholding applies when the cash payments are made. Irs form 1040 ez instructions For payments before maturity, the amount subject to withholding is the qualified stated interest (defined earlier under Definitions) includible in the owner's gross income for the calendar year. Irs form 1040 ez instructions For a payment at maturity, the amount subject to withholding is only the total of any qualified stated interest paid at maturity and the OID includible in the owner's gross income for the calendar year when the obligation matures. Irs form 1040 ez instructions The required withholding at maturity is limited to the cash paid. Irs form 1040 ez instructions Sales and redemptions. Irs form 1040 ez instructions   If you report the gross proceeds from a sale, exchange, or redemption of a debt instrument on Form 1099-B for a calendar year, you may be required to withhold 28% of the amount reported. Irs form 1040 ez instructions Backup withholding applies in the following situations. Irs form 1040 ez instructions The payee does not give you a TIN. Irs form 1040 ez instructions The IRS notifies you that the payee gave an incorrect TIN. Irs form 1040 ez instructions For debt instruments held in an account opened after 1983, the payee does not certify, under penalties of perjury, that the TIN given is correct. Irs form 1040 ez instructions Payments outside the United States to U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions person. Irs form 1040 ez instructions   The requirements for backup withholding and information reporting apply to payments of OID and interest made outside the United States to a U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions person, a controlled foreign corporation, or a foreign person at least 50% of whose income for the preceding 3-year period is effectively connected with the conduct of a U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions trade or business. Irs form 1040 ez instructions Payments to foreign person. Irs form 1040 ez instructions   The following discussions explain the rules for backup withholding and information reporting on payments to foreign persons. Irs form 1040 ez instructions U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions -source amount. Irs form 1040 ez instructions   Backup withholding and information reporting are not required for payments of U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions -source OID, interest, or proceeds from a sale or redemption of an OID instrument if the payee has given you proof (generally the appropriate Form W-8 or an acceptable substitute) that the payee is a foreign person. Irs form 1040 ez instructions A U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions resident is not a foreign person. Irs form 1040 ez instructions For proof of the payee's foreign status, you can rely on the appropriate Form W-8 or on documentary evidence for payments made outside the United States to an offshore account or, in case of broker proceeds, a sale effected outside the United States. Irs form 1040 ez instructions Receipt of the appropriate Form W-8 does not relieve you from information reporting and backup withholding if you actually know the payee is a U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions person. Irs form 1040 ez instructions   For information about the 28% withholding tax that may apply to payments of U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions -source OID or interest to foreign persons, see Publication 515. Irs form 1040 ez instructions Foreign-source amount. Irs form 1040 ez instructions   Backup withholding and information reporting are not required for payments of foreign-source OID and interest made outside the United States. Irs form 1040 ez instructions However, if the payments are made inside the United States, the requirements for backup withholding and information reporting will apply unless the payee has given you the appropriate Form W-8 or acceptable substitute as proof that the payee is a foreign person. Irs form 1040 ez instructions More information. Irs form 1040 ez instructions   For more information about backup withholding and information reporting on foreign-source amounts or payments to foreign persons, see Regulations section 1. Irs form 1040 ez instructions 6049-5. Irs form 1040 ez instructions Information for Owners of OID Debt Instruments This section is for persons who prepare their own tax returns. Irs form 1040 ez instructions It discusses the income tax rules for figuring and reporting OID on long-term debt instruments. Irs form 1040 ez instructions It also includes a similar discussion for stripped bonds and coupons, such as zero coupon bonds available through the Department of the Treasury's STRIPS program and government-sponsored enterprises such as the Resolution Funding Corporation. Irs form 1040 ez instructions However, the information provided does not cover every situation. Irs form 1040 ez instructions More information can be found in the regulations under sections 1271 through 1275 of the Internal Revenue Code. Irs form 1040 ez instructions Including OID in income. Irs form 1040 ez instructions   Generally, you include OID in income as it accrues each year, whether or not you receive any payments from the debt instrument issuer. Irs form 1040 ez instructions Exceptions. Irs form 1040 ez instructions   The rules for including OID in income as it accrues generally do not apply to the following debt instruments. Irs form 1040 ez instructions U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions savings bonds. Irs form 1040 ez instructions Tax-exempt obligations. Irs form 1040 ez instructions (However, see Tax-Exempt Bonds and Coupons, later. Irs form 1040 ez instructions ) Obligations issued by individuals before March 2, 1984. Irs form 1040 ez instructions Loans of $10,000 or less between individuals who are not in the business of lending money. Irs form 1040 ez instructions (The dollar limit includes outstanding prior loans by the lender to the borrower. Irs form 1040 ez instructions ) This exception does not apply if a principal purpose of the loan is to avoid any federal tax. Irs form 1040 ez instructions   See chapter 1 of Publication 550 for information about the rules for these and other types of discounted debt instruments, such as short-term and market discount obligations. Irs form 1040 ez instructions Publication 550 also discusses rules for holders of REMIC interests and CDOs. Irs form 1040 ez instructions De minimis rule. Irs form 1040 ez instructions   You can treat OID as zero if the total OID on a debt instrument is less than one-fourth of 1% (. Irs form 1040 ez instructions 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. Irs form 1040 ez instructions Debt instruments with de minimis OID are not listed in this publication. Irs form 1040 ez instructions There are special rules to determine the de minimis amount in the case of debt instruments that provide for more than one payment of principal. Irs form 1040 ez instructions Also, the de minimis rules generally do not apply to tax-exempt obligations. Irs form 1040 ez instructions Example 2. Irs form 1040 ez instructions You bought at issuance a 10-year debt instrument with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. Irs form 1040 ez instructions One-fourth of 1% of $1,000 (the stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. Irs form 1040 ez instructions Under the de minimis rule, you can treat the OID as zero because the $20 discount is less than $25. Irs form 1040 ez instructions Example 3. Irs form 1040 ez instructions Assume the same facts as Example 2, except the debt instrument was issued at $950. Irs form 1040 ez instructions You must report part of the $50 OID each year because it is more than $25. Irs form 1040 ez instructions Choice to report all interest as OID. Irs form 1040 ez instructions   Generally, you can choose to treat all interest on a debt instrument acquired after April 3, 1994, as OID and include it in gross income by using the constant yield method. Irs form 1040 ez instructions See Constant yield method under Debt Instruments Issued After 1984, later, for more information. Irs form 1040 ez instructions   For this choice, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. Irs form 1040 ez instructions For more information, see Regulations section 1. Irs form 1040 ez instructions 1272-3. Irs form 1040 ez instructions Purchase after date of original issue. Irs form 1040 ez instructions   A debt instrument you purchased after the date of original issue may have premium, acquisition premium, or market discount. Irs form 1040 ez instructions If so, the OID reported to you on Form 1099-OID may have to be adjusted. Irs form 1040 ez instructions For more information, see Showing an OID adjustment under How To Report OID, later. Irs form 1040 ez instructions The following rules generally do not apply to contingent payment debt instruments. Irs form 1040 ez instructions Adjustment for premium. Irs form 1040 ez instructions   If your debt instrument (other than an inflation-indexed debt instrument) has premium, do not report any OID as ordinary income. Irs form 1040 ez instructions Your adjustment is the total OID shown on your Form 1099-OID. Irs form 1040 ez instructions Adjustment for acquisition premium. Irs form 1040 ez instructions   If your debt instrument has acquisition premium, reduce the OID you report. Irs form 1040 ez instructions Your adjustment is the difference between the OID shown on your Form 1099-OID and the reduced OID amount figured using the rules explained later under Figuring OID on Long-Term Debt Instruments. Irs form 1040 ez instructions Adjustment for market discount. Irs form 1040 ez instructions   If your debt instrument has market discount that you choose to include in income currently, increase the OID you report. Irs form 1040 ez instructions Your adjustment is the accrued market discount for the year. Irs form 1040 ez instructions See Market Discount Bonds in chapter 1 of Publication 550 for information on how to figure accrued market discount and include it in your income currently and for other information about market discount bonds. Irs form 1040 ez instructions If you choose to use the constant yield method to figure accrued market discount, also see Figuring OID on Long-Term Debt Instruments, later. Irs form 1040 ez instructions The constant yield method of figuring accrued OID, explained in those discussions under Constant yield method, is also used to figure accrued market discount. Irs form 1040 ez instructions For more information concerning premium or market discount on an inflation-indexed debt instrument, see Regulations section 1. Irs form 1040 ez instructions 1275-7. Irs form 1040 ez instructions Sale, exchange, or redemption. Irs form 1040 ez instructions   Generally, you treat your gain or loss from the sale, exchange, or redemption of a discounted debt instrument as a capital gain or loss if you held the debt instrument as a capital asset. Irs form 1040 ez instructions If you sold the debt instrument through a broker, you should receive Form 1099-B or an equivalent statement from the broker. Irs form 1040 ez instructions Use the Form 1099-B or other statement and your brokerage statements to complete Form 8949, and Schedule D (Form 1040). Irs form 1040 ez instructions   Your gain or loss is the difference between the amount you realized on the sale, exchange, or redemption and your basis in the debt instrument. Irs form 1040 ez instructions Your basis, generally, is your cost increased by the OID you have included in income each year you held it. Irs form 1040 ez instructions In general, to determine your gain or loss on a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. Irs form 1040 ez instructions   See chapter 4 of Publication 550 for more information about the tax treatment of the sale or redemption of discounted debt instruments. Irs form 1040 ez instructions Example 4. Irs form 1040 ez instructions Larry, a calendar year taxpayer, bought a corporate debt instrument at original issue for $86,235. Irs form 1040 ez instructions 00 on November 1 of Year 1. Irs form 1040 ez instructions The 15-year debt instrument matures on October 31 of Year 16 at a stated redemption price of $100,000. Irs form 1040 ez instructions The debt instrument provides for semiannual payments of interest at 10%. Irs form 1040 ez instructions Assume the debt instrument is a capital asset in Larry's hands. Irs form 1040 ez instructions The debt instrument has $13,765. Irs form 1040 ez instructions 00 of OID ($100,000 stated redemption price at maturity minus $86,235. Irs form 1040 ez instructions 00 issue price). Irs form 1040 ez instructions Larry sold the debt instrument for $90,000 on November 1 of Year 4. Irs form 1040 ez instructions Including the OID he will report for the period he held the debt instrument in Year 4, Larry has included $4,556. Irs form 1040 ez instructions 00 of OID in income and has increased his basis by that amount to $90,791. Irs form 1040 ez instructions 00. Irs form 1040 ez instructions Larry has realized a loss of $791. Irs form 1040 ez instructions 00. Irs form 1040 ez instructions All of Larry's loss is capital loss. Irs form 1040 ez instructions Form 1099-OID The issuer of the debt instrument (or your broker, if you purchased or held the debt instrument through a broker) should give you a copy of Form 1099-OID or a similar statement if the accrued OID for the calendar year is $10 or more and the term of the debt instrument is more than 1 year. Irs form 1040 ez instructions Form 1099-OID shows all OID income in box 1 except OID on a U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions Treasury obligation, which is shown in box 8. Irs form 1040 ez instructions It also shows, in box 2, any qualified stated interest you must include in income. Irs form 1040 ez instructions (However, any qualified stated interest on Treasury inflation-protected securities can be reported on Form 1099-INT in box 3. Irs form 1040 ez instructions ) A copy of Form 1099-OID will be sent to the IRS. Irs form 1040 ez instructions Do not attach your copy to your tax return. Irs form 1040 ez instructions Keep it for your records. Irs form 1040 ez instructions If you are required to file a tax return and you receive Form 1099-OID showing taxable amounts, you must report these amounts on your return. Irs form 1040 ez instructions A 20% accuracy-related penalty may be charged for underpayment of tax due to either negligence or disregard of rules and regulations or substantial understatement of tax. Irs form 1040 ez instructions Form 1099-OID not received. Irs form 1040 ez instructions   If you held an OID debt instrument for a calendar year but did not receive a Form 1099-OID, refer to the discussions under Figuring OID on Long-Term Debt Instruments, later, for information on the OID you must report. Irs form 1040 ez instructions Refiguring OID. Irs form 1040 ez instructions   You must refigure the OID shown on Form 1099-OID, in box 1 or box 8, to determine the proper amount to include in income if one of the following applies. Irs form 1040 ez instructions You bought the debt instrument at a premium or at an acquisition premium. Irs form 1040 ez instructions The debt instrument is a stripped bond or coupon (including zero coupon bonds backed by U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions Treasury securities). Irs form 1040 ez instructions The debt instrument is a contingent payment or inflation-indexed debt instrument. Irs form 1040 ez instructions See the discussions under Figuring OID on Long-Term Debt Instruments or Figuring OID on Stripped Bonds and Coupons, later, for the specific computations. Irs form 1040 ez instructions Refiguring interest. Irs form 1040 ez instructions   If you disposed of a debt instrument or acquired it from another holder between interest dates, see the discussion under Bonds Sold Between Interest Dates in chapter 1 of Publication 550 for information about refiguring the interest shown on Form 1099-OID in box 2. Irs form 1040 ez instructions Nominee. Irs form 1040 ez instructions   If you are the holder of an OID debt instrument and you receive a Form 1099-OID that shows your taxpayer identification number and includes amounts belonging to another person, you are considered a “nominee. Irs form 1040 ez instructions ” You must file another Form 1099-OID for each actual owner, showing the OID for the owner. Irs form 1040 ez instructions Show the owner of the debt instrument as the “recipient” and you as the “payer. Irs form 1040 ez instructions ”   Complete Form 1099-OID and Form 1096 and file the forms with the Internal Revenue Service Center for your area. Irs form 1040 ez instructions You must also give a copy of the Form 1099-OID to the actual owner. Irs form 1040 ez instructions However, you are not required to file a nominee return to show amounts belonging to your spouse. Irs form 1040 ez instructions See the Form 1099 instructions for more information. Irs form 1040 ez instructions   When preparing your tax return, follow the instructions under Showing an OID adjustment in the next discussion. Irs form 1040 ez instructions How To Report OID Generally, you report your taxable interest and OID income on the interest line of Form 1040EZ, Form 1040A, or Form 1040. Irs form 1040 ez instructions Form 1040 or Form 1040A required. Irs form 1040 ez instructions   You must use Form 1040 or Form 1040A (you cannot use Form 1040EZ) under either of the following conditions. Irs form 1040 ez instructions You received a Form 1099-OID as a nominee for the actual owner. Irs form 1040 ez instructions Your total interest and OID income for the year was more than $1,500. Irs form 1040 ez instructions Form 1040 required. Irs form 1040 ez instructions   You must use Form 1040 (you cannot use Form 1040A or Form 1040EZ) if you are reporting more or less OID than the amount shown on Form 1099-OID, other than because you are a nominee. Irs form 1040 ez instructions For example, if you paid a premium or an acquisition premium when you purchased the debt instrument, you must use Form 1040 because you will report less OID than shown on Form 1099-OID. Irs form 1040 ez instructions Also, you must use Form 1040 if you were charged an early withdrawal penalty. Irs form 1040 ez instructions Where to report. Irs form 1040 ez instructions   List each payer's name (if a brokerage firm gave you a Form 1099, list the brokerage firm as the payer) and the amount received from each payer on Form 1040A, Schedule B, Part I, line 1, or Form 1040, Schedule B, line 1. Irs form 1040 ez instructions Include all OID and periodic interest shown on any Form 1099-OID, boxes 1, 2, and 8, you received for the tax year. Irs form 1040 ez instructions Also include any other OID and interest income for which you did not receive a Form 1099. Irs form 1040 ez instructions Showing an OID adjustment. Irs form 1040 ez instructions   If you use Form 1040 to report more or less OID than shown on Form 1099-OID, list the full OID on Schedule B, Part I, line 1, and follow the instructions under 1 or 2, next. Irs form 1040 ez instructions   If you use Form 1040A to report the OID shown on a Form 1099-OID you received as a nominee for the actual owner, list the full OID on Schedule B, Part I, line 1 and follow the instructions under 1. Irs form 1040 ez instructions If the OID, as adjusted, is less than the amount shown on Form 1099-OID, show the adjustment as follows. Irs form 1040 ez instructions Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Irs form 1040 ez instructions Below the subtotal, write “Nominee Distribution” or “OID Adjustment” and show the OID you are not required to report. Irs form 1040 ez instructions Subtract that OID from the subtotal and enter the result on line 2. Irs form 1040 ez instructions If the OID, as adjusted, is more than the amount shown on Form 1099-OID, show the adjustment as follows. Irs form 1040 ez instructions Under your last entry on line 1, subtotal all interest and OID income listed on line 1. Irs form 1040 ez instructions Below the subtotal, write “OID Adjustment” and show the additional OID. Irs form 1040 ez instructions Add that OID to the subtotal and enter the result on line 2. Irs form 1040 ez instructions Figuring OID on Long-Term Debt Instruments How you figure the OID on a long-term debt instrument depends on the date it was issued. Irs form 1040 ez instructions It also may depend on the type of the debt instrument. Irs form 1040 ez instructions There are different rules for each of the following debt instruments. Irs form 1040 ez instructions Corporate debt instruments issued after 1954 and before May 28, 1969, and government debt instruments issued after 1954 and before July 2, 1982. Irs form 1040 ez instructions Corporate debt instruments issued after May 27, 1969, and before July 2, 1982. Irs form 1040 ez instructions Debt instruments issued after July 1, 1982, and before 1985. Irs form 1040 ez instructions Debt instruments issued after 1984 (other than debt instruments described in (5) and (6)). Irs form 1040 ez instructions Contingent payment debt instruments issued after August 12, 1996. Irs form 1040 ez instructions Inflation-indexed debt instruments (including Treasury inflation-protected securities) issued after January 5, 1997. Irs form 1040 ez instructions Zero coupon bonds. Irs form 1040 ez instructions   The rules for figuring OID on zero coupon bonds backed by U. Irs form 1040 ez instructions S. Irs form 1040 ez instructions Treasury securities are discussed under Figuring OID on Stripped Bonds and Coupons, later. Irs form 1040 ez instructions Corporate Debt Instruments Issued After 1954 and Before May 28, 1969, and Government Debt Instruments Issued After 1954 and Before July 2, 1982 If you hold these debt instruments as capital assets, you include OID in income only in the year the debt instrument is sold, exchanged, or redeemed, and only if you have a gain. Irs form 1040 ez instructions The OID, which is taxed as ordinary income, generally equals the following amount. Irs form 1040 ez instructions   number of full months you held the debt instrument  number of full months from date of original issue to date of maturity X original issue discount The balance of the gain is capital gain. Irs form 1040 ez instructions If there is a loss on the sale of the debt instrument, the entire loss is a capital loss and no OID is reported. Irs form 1040 ez instructions Corporate Debt Instruments Issued After May 27, 1969, and Before July 2, 1982 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments. Irs form 1040 ez instructions For information about showing the correct OID on your tax return, see the discussion under How To Report OID, earlier. Irs form 1040 ez instructions Your basis in the debt instrument is increased by the OID you include in income. Irs form 1040 ez instructions Form 1099-OID. Irs form 1040 ez instructions   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Irs form 1040 ez instructions However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Irs form 1040 ez instructions See Reduction for acquisition premium, later. Irs form 1040 ez instructions If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. Irs form 1040 ez instructions irs. Irs form 1040 ez instructions gov/pub1212 by clicking the link under Recent Developments. Irs form 1040 ez instructions Form 1099-OID not received. Irs form 1040 ez instructions    The OID listed is for each $1,000 of redemption price. Irs form 1040 ez instructions You must adjust the listed amount if your debt instrument has a different principal amount. Irs form 1040 ez instructions For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Irs form 1040 ez instructions   If you held the debt instrument the entire year, use the OID shown in Section I-A for a calendar year. Irs form 1040 ez instructions (If your debt instrument is not listed in Section I-A, consult the issuer for information about the issue price and the OID that accrued for that year. Irs form 1040 ez instructions ) If you did not hold the debt instrument the entire year, figure your OID using the following method. Irs form 1040 ez instructions Divide the OID shown by 12. Irs form 1040 ez instructions Multiply the result in (1) by the number of complete and partial months (for example, 6½ months) you held the debt instrument during a calendar year. Irs form 1040 ez instructions This is the OID to include in income unless you paid an acquisition premium. Irs form 1040 ez instructions The reduction for acquisition premium is discussed next. Irs form 1040 ez instructions Reduction for acquisition premium. Irs form 1040 ez instructions   If you bought the debt instrument at an acquisition premium, figure the OID to include in income as follows. Irs form 1040 ez instructions Divide the total OID on the debt instrument by the number of complete months, and any part of a month, from the date of original issue to the maturity date. Irs form 1040 ez instructions This is the monthly OID. Irs form 1040 ez instructions Subtract from your cost the issue price and the accumulated OID from the date of issue to the date of purchase. Irs form 1040 ez instructions (If the result is zero or less, stop here. Irs form 1040 ez instructions You did not pay an acquisition premium. Irs form 1040 ez instructions ) Divide the amount figured in (2) by the number of complete months, and any part of a month, from the date of your purchase to the maturity date. Irs form 1040 ez instructions Subtract the amount figured in (3) from the amount figured in (1). Irs form 1040 ez instructions This is the OID to include in income for each month you hold the debt instrument during the year. Irs form 1040 ez instructions Transfers during the month. Irs form 1040 ez instructions   If you buy or sell a debt instrument on any day other than the same day of the month as the date of original issue, the ratable monthly portion of OID for the month of sale is divided between the seller and the buyer according to the number of days each held the debt instrument. Irs form 1040 ez instructions Your holding period for this purpose begins the day you acquire the debt instrument and ends the day before you dispose of it. Irs form 1040 ez instructions Debt Instruments Issued After July 1, 1982, and Before 1985 If you hold these debt instruments as capital assets, you must include part of the OID in income each year you own the debt instruments and increase your basis by the amount included. Irs form 1040 ez instructions For information about showing the correct OID on your tax return, see How To Report OID, earlier. Irs form 1040 ez instructions Form 1099-OID. Irs form 1040 ez instructions   You should receive a Form 1099-OID showing OID for the part of the year you held the debt instrument. Irs form 1040 ez instructions However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Irs form 1040 ez instructions See Constant yield method and the discussions on acquisition premium that follow, later. Irs form 1040 ez instructions If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-A available at www. Irs form 1040 ez instructions irs. Irs form 1040 ez instructions gov/pub1212 by clicking the link under Recent Developments. Irs form 1040 ez instructions Form 1099-OID not received. Irs form 1040 ez instructions    The OID listed is for each $1,000 of redemption price. Irs form 1040 ez instructions You must adjust the listed amount if your debt instrument has a different principal amount. Irs form 1040 ez instructions For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Irs form 1040 ez instructions   If you held the debt instrument the entire year, use the OID shown in Section I-A. Irs form 1040 ez instructions (If your instrument is not listed in Section I-A, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. Irs form 1040 ez instructions ) If you did not hold the debt instrument the entire year, figure your OID using either of the following methods. Irs form 1040 ez instructions Method 1. Irs form 1040 ez instructions    Divide the total OID for a calendar year by 365 (366 for leap years). Irs form 1040 ez instructions Multiply the result in (1) by the number of days you held the debt instrument during that particular year. Irs form 1040 ez instructions  This computation is an approximation and may result in a slightly higher OID than Method 2. Irs form 1040 ez instructions Method 2. Irs form 1040 ez instructions    Look up the daily OID for the first accrual period you held the debt instrument during a calendar year. Irs form 1040 ez instructions (See Accrual period under Constant yield method, next. Irs form 1040 ez instructions ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Irs form 1040 ez instructions If you held the debt instrument for part of both accrual periods, repeat (1) and (2) for the second accrual period. Irs form 1040 ez instructions Add the results of (2) and (3). Irs form 1040 ez instructions This is the OID to include in income, unless you paid an acquisition premium. Irs form 1040 ez instructions (The reduction for acquisition premium is discussed later. Irs form 1040 ez instructions ) Constant yield method. Irs form 1040 ez instructions   This discussion shows how to figure OID on debt instruments issued after July 1, 1982, and before 1985, using a constant yield method. Irs form 1040 ez instructions OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Irs form 1040 ez instructions   Figure the OID allocable to any accrual period as follows. Irs form 1040 ez instructions Multiply the adjusted issue price at the beginning of the accrual period by the debt instrument's yield to maturity. Irs form 1040 ez instructions Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Irs form 1040 ez instructions Accrual period. Irs form 1040 ez instructions   An accrual period for any OID debt instrument issued after July 1, 1982, and before 1985 is each 1-year period beginning on the date of the issue of the obligation and each anniversary thereafter, or the shorter period to maturity for the last accrual period. Irs form 1040 ez instructions Your tax year will usually include parts of two accrual periods. Irs form 1040 ez instructions Daily OID. Irs form 1040 ez instructions   The OID for any accrual period is allocated equally to each day in the accrual period. Irs form 1040 ez instructions You must include in income the sum of the OID amounts for each day you hold the debt instrument during the year. Irs form 1040 ez instructions If your tax year includes parts of two or more accrual periods, you must include the proper daily OID amounts for each accrual period. Irs form 1040 ez instructions Figuring daily OID. Irs form 1040 ez instructions   The daily OID for the initial accrual period is figured using the following formula. Irs form 1040 ez instructions   (ip × ytm) − qsi     p   ip = issue price ytm = yield to maturity qsi = qualified stated interest p = number of days in accrual period         The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. Irs form 1040 ez instructions Reduction for acquisition premium on debt instruments purchased before July 19, 1984. Irs form 1040 ez instructions   If you bought the debt instrument at an acquisition premium before July 19, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Irs form 1040 ez instructions Figure the daily acquisition premium by dividing the total acquisition premium by the number of days in the period beginning on your purchase date and ending on the day before the date of maturity. Irs form 1040 ez instructions Reduction for acquisition premium on debt instruments purchased after July 18, 1984. Irs form 1040 ez instructions   If you bought the debt instrument at an acquisition premium after July 18, 1984, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Irs form 1040 ez instructions However, the method of figuring the daily acquisition premium is different from the method described in the preceding discussion. Irs form 1040 ez instructions To figure the daily acquisition premium under this method, multiply the daily OID by the following fraction. Irs form 1040 ez instructions The numerator is the acquisition premium. Irs form 1040 ez instructions The denominator is the total OID remaining for the debt instrument after your purchase date. Irs form 1040 ez instructions Section I-A is available at www. Irs form 1040 ez instructions irs. Irs form 1040 ez instructions gov/pub1212 and clicking the link under Recent Developments. Irs form 1040 ez instructions Using Section I-A to figure accumulated OID. Irs form 1040 ez instructions   If you bought your corporate debt instrument in a calendar year or the subsequent year, you can figure the accumulated OID to the date of purchase by adding the following amounts. Irs form 1040 ez instructions The amount from the “Total OID to January 1, YYYY” column for your debt instrument. Irs form 1040 ez instructions The OID from January 1 of a calendar year to the date of purchase, figured as follows. Irs form 1040 ez instructions Multiply the daily OID for the first accrual period in the calendar year by the number of days from January 1 to the date of purchase, or the end of the accrual period if the debt instrument was purchased in the second or third accrual period. Irs form 1040 ez instructions Multiply the daily OID for each subsequent accrual period by the number of days in the period to the date of purchase or the end of the accrual period, whichever applies. Irs form 1040 ez instructions Add the amounts figured in (2a) and (2b). Irs form 1040 ez instructions Debt Instruments Issued After 1984 If you hold debt instruments issued after 1984, you must report part of the OID in gross income each year that you own the debt instruments. Irs form 1040 ez instructions You must include the OID in gross income whether or not you hold the debt instrument as a capital asset. Irs form 1040 ez instructions Your basis in the debt instrument is increased by the OID you include in income. Irs form 1040 ez instructions For information about showing the correct OID on your tax return, see How To Report OID, earlier. Irs form 1040 ez instructions Form 1099-OID. Irs form 1040 ez instructions   You should receive a Form 1099-OID showing OID for the part of a calendar year you held the debt instrument. Irs form 1040 ez instructions However, if you paid an acquisition premium, you may need to refigure the OID to report on your tax return. Irs form 1040 ez instructions See Constant yield method and Reduction for acquisition premium, later. Irs form 1040 ez instructions   You may also need to refigure the OID for a contingent payment or inflation-indexed debt instrument on which the amount reported on Form 1099-OID is inaccurate. Irs form 1040 ez instructions See Contingent Payment Debt Instruments or Inflation-Indexed Debt Instruments, later. Irs form 1040 ez instructions If you held an OID debt instrument in a calendar year but did not receive a Form 1099-OID, see Form 1099-OID not received, immediately below, and refer to Section I-B available at www. Irs form 1040 ez instructions irs. Irs form 1040 ez instructions gov/pub1212 by clicking the link under Recent Developments. Irs form 1040 ez instructions Form 1099-OID not received. Irs form 1040 ez instructions   The OID listed is for each $1,000 of redemption price. Irs form 1040 ez instructions You must adjust the listed amount if your debt instrument has a different principal amount. Irs form 1040 ez instructions For example, if you have a debt instrument with a $500 principal amount, use one-half the listed amount to figure your OID. Irs form 1040 ez instructions   Use the OID shown in Section I-B for a calendar year if you held the debt instrument the entire year. Irs form 1040 ez instructions (If your debt instrument is not listed in Section I-B, consult the issuer for information about the issue price, the yield to maturity, and the OID that accrued for that year. Irs form 1040 ez instructions ) If you did not hold the debt instrument the entire year, figure your OID as follows. Irs form 1040 ez instructions Look up the daily OID for the first accrual period in which you held the debt instrument during a calendar year. Irs form 1040 ez instructions (See Accrual period under Constant yield method, later. Irs form 1040 ez instructions ) Multiply the daily OID by the number of days you held the debt instrument during that accrual period. Irs form 1040 ez instructions Repeat (1) and (2) for any remaining accrual periods in which you held the debt instrument. Irs form 1040 ez instructions Add the results of (2) and (3). Irs form 1040 ez instructions This is the OID to include in income for that year, unless you paid an acquisition premium. Irs form 1040 ez instructions (The reduction for acquisition premium is discussed later. Irs form 1040 ez instructions ) Tax-exempt bond. Irs form 1040 ez instructions   If you own a tax-exempt bond, figure your basis in the bond by adding to your cost the OID you would have included in income if the bond had been taxable. Irs form 1040 ez instructions You need to make this adjustment to determine if you have a gain or loss on a later disposition of the bond. Irs form 1040 ez instructions In general, use the rules that follow to determine your OID. Irs form 1040 ez instructions Constant yield method. Irs form 1040 ez instructions   This discussion shows how to figure OID on debt instruments issued after 1984 using a constant yield method. Irs form 1040 ez instructions (The special rules that apply to contingent payment debt instruments and inflation-indexed debt instruments are explained later. Irs form 1040 ez instructions ) OID is allocated over the life of the debt instrument through adjustments to the issue price for each accrual period. Irs form 1040 ez instructions   Figure the OID allocable to any accrual period as follows. Irs form 1040 ez instructions Multiply the adjusted issue price at the beginning of the accrual period by a fraction. Irs form 1040 ez instructions The numerator of the fraction is the debt instrument's yield to maturity and the denominator is the number of accrual periods per year. Irs form 1040 ez instructions The yield must be stated appropriately taking into account the length of the particular accrual period. Irs form 1040 ez instructions Subtract from the result in (1) any qualified stated interest allocable to the accrual period. Irs form 1040 ez instructions Accrual period. Irs form 1040 ez instructions   For debt instruments issued after 1984 and before April 4, 1994, an accrual period is each 6-month period that ends on the day that corresponds to the stated maturity date of the debt instrument or the date 6 months before that date. Irs form 1040 ez instructions For example, a debt instrument maturing on March 31 has accrual periods that end on September 30 and March 31 of each calendar year. Irs form 1040 ez instructions Any short period is included as the first accrual period. Irs form 1040 ez instructions   For debt instruments issued after April 3, 1994, accrual periods may be of any length and may vary in length over the term of the debt instrument, as long as each accrual period is no longer than 1 year and all payments are made on the first or last day of an accrual period. Irs form 1040 ez instructions However, the OID listed for these debt instruments in Section I-B has been figured using 6-month accrual periods. Irs form 1040 ez instructions Daily OID. Irs form 1040 ez instructions   The OID for any accrual period is allocated equally to each day in the accrual period. Irs form 1040 ez instructions Figure the amount to include in income by adding the OID for each day you hold the debt instrument during the year. Irs form 1040 ez instructions Since your tax year will usually include parts of two or more accrual periods, you must include the proper daily OID for each accrual period. Irs form 1040 ez instructions If your debt instrument has 6-month accrual periods, your tax year will usually include one full 6-month accrual period and parts of two other 6-month periods. Irs form 1040 ez instructions Figuring daily OID. Irs form 1040 ez instructions   The daily OID for the initial accrual period is figured using the following formula. Irs form 1040 ez instructions   (ip × ytm/n) − qsi     p   ip = issue price ytm = yield to maturity n = number of accrual periods in 1 year qsi = qualified stated interest p = number of days in accrual period       The daily OID for subsequent accrual periods is figured the same way except the adjusted issue price at the beginning of each period is used in the formula instead of the issue price. Irs form 1040 ez instructions Example 5. Irs form 1040 ez instructions On January 1 of Year 1, you bought a 15-year, 10% debt instrument of A Corporation at original issue for $86,235. Irs form 1040 ez instructions 17. Irs form 1040 ez instructions According to the prospectus, the debt instrument matures on December 31 of Year 15 at a stated redemption price of $100,000. Irs form 1040 ez instructions The yield to maturity is 12%, compounded semiannually. Irs form 1040 ez instructions The debt instrument provides for qualified stated interest payments of $5,000 on June 30 and December 31 of each calendar year. Irs form 1040 ez instructions The accrual periods are the 6-month periods ending on each of these dates. Irs form 1040 ez instructions The number of days for the first accrual period (January 1 through June 30) is 181 days (182 for leap years). Irs form 1040 ez instructions The daily OID for the first accrual period is figured as follows. Irs form 1040 ez instructions   ($86,235. Irs form 1040 ez instructions 17 x . Irs form 1040 ez instructions 12/2) – $5,000     181 days     = $174. Irs form 1040 ez instructions 11020 = $. Irs form 1040 ez instructions 96193   181           The adjusted issue price at the beginning of the second accrual period is the issue price plus the OID previously includible in income ($86,235. Irs form 1040 ez instructions 17 + $174. Irs form 1040 ez instructions 11), or $86,409. Irs form 1040 ez instructions 28. Irs form 1040 ez instructions The number of days for the second accrual period (July 1 through December 31) is 184 days. Irs form 1040 ez instructions The daily OID for the second accrual period is figured as follows. Irs form 1040 ez instructions   ($86,409. Irs form 1040 ez instructions 28 x . Irs form 1040 ez instructions 12/2) – $5,000     184 days     = $184. Irs form 1040 ez instructions 55681 = $1. Irs form 1040 ez instructions 00303   184 Since the first and second accrual periods coincide exactly with your tax year, you include in income for Year 1 the OID allocable to the first two accrual periods, $174. Irs form 1040 ez instructions 11 ($. Irs form 1040 ez instructions 95665 × 182 days) plus $184. Irs form 1040 ez instructions 56 ($1. Irs form 1040 ez instructions 00303 × 184 days), or $358. Irs form 1040 ez instructions 67. Irs form 1040 ez instructions Add the OID to the $10,000 interest you report on your income tax return for Year 1. Irs form 1040 ez instructions Example 6. Irs form 1040 ez instructions Assume the same facts as in Example 5, except that you bought the debt instrument at original issue on May 1 of Year 1, with a maturity date of April 30, Year 16. Irs form 1040 ez instructions Also, the interest payment dates are October 31 and April 30 of each calendar year. Irs form 1040 ez instructions The accrual periods are the 6-month periods ending on each of these dates. Irs form 1040 ez instructions The number of days for the first accrual period (May 1 through October 31) is 184 days. Irs form 1040 ez instructions The daily OID for the first accrual period is figured as follows. Irs form 1040 ez instructions   ($86,235. Irs form 1040 ez instructions 17 x . Irs form 1040 ez instructions 12/2) – $5,000     184 days     = $174. Irs form 1040 ez instructions 11020 = $. Irs form 1040 ez instructions 94625   184           The number of days for the second accrual period (November 1 through April 30) is 181 days (182 for leap years). Irs form 1040 ez instructions The daily OID for the second accrual period is figured as follows. Irs form 1040 ez instructions   ($86,409. Irs form 1040 ez instructions 28 x . Irs form 1040 ez instructions 12/2) – $5,000     181 days     = $184. Irs form 1040 ez instructions 55681 = $1. Irs form 1040 ez instructions 01965   181 If you hold the debt instrument through the end of Year 1, you must include $236. Irs form 1040 ez instructions 31 of OID in income. Irs form 1040 ez instructions This is $174. Irs form 1040 ez instructions 11 ($. Irs form 1040 ez instructions 94625 × 184 days) for the period May 1 through October 31 plus $62. Irs form 1040 ez instructions 20 ($1. Irs form 1040 ez instructions 01965 × 61 days) for the period November 1 through December 31. Irs form 1040 ez instructions The OID is added to the $5,000 interest income paid on October 31 of Year 1. Irs form 1040 ez instructions Your basis in the debt instrument is increased by the OID you include in income. Irs form 1040 ez instructions On January 1 of Year 2, your basis in the A Corporation debt instrument is $86,471. Irs form 1040 ez instructions 48 ($86,235. Irs form 1040 ez instructions 17 + $236. Irs form 1040 ez instructions 31). Irs form 1040 ez instructions Short first accrual period. Irs form 1040 ez instructions   You may have to make adjustments if a debt instrument has a short first accrual period. Irs form 1040 ez instructions For example, a debt instrument with 6-month accrual periods that is issued on February 15 and matures on October 31 has a short first accrual period that ends April 30. Irs form 1040 ez instructions (The remaining accrual periods begin on May 1 and November 1. Irs form 1040 ez instructions ) For this short period, figure the daily OID as described earlier, but adjust the yield for the length of the short accrual period. Irs form 1040 ez instructions You may use any reasonable compounding method in determining OID for a short period. Irs form 1040 ez instructions Examples of reasonable compounding methods include continuous compounding and monthly compounding (that is, simple interest within a month). Irs form 1040 ez instructions Consult your tax advisor for more information about making this computation. Irs form 1040 ez instructions   The OID for the final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. Irs form 1040 ez instructions Reduction for acquisition premium. Irs form 1040 ez instructions   If you bought the debt instrument at an acquisition premium, figure the OID includible in income by reducing the daily OID by the daily acquisition premium. Irs form 1040 ez instructions To figure the daily acquisition premium, multiply the daily OID by the following fraction. Irs form 1040 ez instructions The numerator is the acquisition premium. Irs form 1040 ez instructions The denominator is the total OID remaining for the debt instrument after your purchase date. Irs form 1040 ez instructions Example 7. Irs form 1040 ez instructions Assume the same facts as in Example 6, except that you bought the debt instrument on November 1 of Year 1 for $87,000, after its original issue on May 1 of Year 1. Irs form 1040 ez instructions The adjusted issue price on November 1 of Year 1 is $86,409. Irs form 1040 ez instructions 28 ($86,235. Irs form 1040 ez instructions 17 + $174. Irs form 1040 ez instructions 11). Irs form 1040 ez instructions In this case, you paid an acquisition premium of $590. Irs form 1040 ez instructions 72 ($87,000 − $86,409. Irs form 1040 ez instructions 28). Irs form 1040 ez instructions The daily OID for the accrual period November 1 through April 30, reduced for the acquisition premium, is figured as follows. Irs form 1040 ez instructions 1) Daily OID on date of purchase (2nd accrual period) $1. Irs form 1040 ez instructions 01965*  2)  Acquisition premium $590. Irs form 1040 ez instructions 72    3)  Total OID remaining after purchase date ($13,764. Irs form 1040 ez instructions 83 − $174. Irs form 1040 ez instructions 11) 13,590. Irs form 1040 ez instructions 72   4) Line 2 ÷ line 3 . Irs form 1040 ez instructions 04346  5)  Line 1 × line 4 . Irs form 1040 ez instructions 04432  6)  Daily OID reduced for the acquisition premium. Irs form 1040 ez instructions Line 1 − line 5 $0. Irs form 1040 ez instructions 97533  * As shown in Example 6. Irs form 1040 ez instructions The total OID to include in income for Year 1 is $59. Irs form 1040 ez instructions 50 ($. Irs form 1040 ez instructions 97533 × 61 days). Irs form 1040 ez instructions Contingent Payment Debt Instruments This discussion shows how to figure OID on a contingent payment debt instrument issued after August 12, 1996, that was issued for cash or publicly traded property. Irs form 1040 ez instructions In general, a contingent payment debt instrument provides for one or more payments that are contingent as to timing or amount. Irs form 1040 ez instructions If you hold a contingent payment bond, you must report OID as it accrues each year. Irs form 1040 ez instructions Because the actual payments on a contingent payment debt instrument cannot be known in advance, issuers and holders cannot use the constant yield method (discussed earlier under Debt Instruments Issued After 1984) without making certain assumptions about the payments on the debt instrument. Irs form 1040 ez instructions To figure OID accruals on contingent payment debt instruments, holders and issuers must use the noncontingent bond method. Irs form 1040 ez instructions Noncontingent bond method. Irs form 1040 ez instructions    Under this method, the issuer must compute a comparable yield for the debt instrument and, based on this yield, construct a projected payment schedule for the instrument, which includes a projected fixed amount for each contingent payment. Irs form 1040 ez instructions In general, holders and issuers accrue OID on this projected payment schedule using the constant yield method that applies to fixed payment debt instruments. Irs form 1040 ez instructions When a contingent payment differs from the projected fixed amount, the holders and issuers make adjustments to their OID accruals. Irs form 1040 ez instructions If the actual contingent payment is larger than expected, both the issuer and the holder increase their OID accruals. Irs form 1040 ez instructions If the actual contingent payment is smaller than expected, holders and issuers generally decrease their OID accruals. Irs form 1040 ez instructions Form 1099-OID. Irs form 1040 ez instructions   The amount shown on Form 1099-OID in box 1 you receive for a contingent payment debt instrument may not be the correct amount to include in income. Irs form 1040 ez instructions For example, the amount may not be correct if the contingent payment was different from the projected amount. Irs form 1040 ez instructions If the amount in box 1 is not correct, you must figure the OID to report on your return under the following rules. Irs form 1040 ez instructions For information on showing an OID adjustment on your tax return, see How To Report OID, earlier. Irs form 1040 ez instructions Figuring OID. Irs form 1040 ez instructions   To figure OID on a contingent payment debt instrument, you need to know the “comparable yield” and “projected payment schedule” of the debt instrument. Irs form 1040 ez instructions The issuer must make these available to you. Irs form 1040 ez instructions Comparable yield. Irs form 1040 ez instructions   The comparable yield generally is the yield at which the issuer would issue a fixed rate debt instrument with terms and conditions similar to those of the contingent payment debt instrument. Irs form 1040 ez instructions The comparable yield is determined as of the debt instrument's issue date. Irs form 1040 ez instructions Projected payment schedule. Irs form 1040 ez instructions   The projected payment schedule for a contingent payment debt instrument includes all fixed payments due under the instrument and a projected fixed amount for each contingent payment. Irs form 1040 ez instructions The projected payment schedule is created by the issuer as of the debt instrument's issue date. Irs form 1040 ez instructions It is used to determine the issuer's and holder's interest accruals and adjustments. Irs form 1040 ez instructions Steps for figuring OID. Irs form 1040 ez instructions   Figure the OID on a contingent payment debt instrument in two steps. Irs form 1040 ez instructions Figure the OID using the constant yield method (discussed earlier under Debt Instruments Issued After 1984 ) that applies to fixed payment debt instruments. Irs form 1040 ez instructions Use the comparable yield as the yield to maturity. Irs form 1040 ez instructions In general, use the projected payment schedule to determine the instrument's adjusted issue price at the beginning of each accrual period (other than the initial period). Irs form 1040 ez instructions Do not treat any amount payable as qualified stated interest. Irs form 1040 ez instructions Adjust the OID in (1) to account for actual contingent payments. Irs form 1040 ez instructions If the contingent payment is greater than the projected fixed amount, you have a positive adjustment. Irs form 1040 ez instructions If the contingent payment is less than the projected fixed amount, you have a negative adjustment. Irs form 1040 ez instructions Net positive adjustment. Irs form 1040 ez instructions   A net positive adjustment exists for a tax year when the total of any positive adjustments described in (2) above for the tax year is more than the total of any negative adjustments for the tax year. Irs form 1040 ez instructions Treat a net positive adjustment as additional OID for the tax year. Irs form 1040 ez instructions Net negative adjustment. Irs form 1040 ez instructions   A net negative adjustment exists for a tax year when the total of any negative adjustments described in (2) above for the tax year is more than the total of any positive adjustments for the tax year. Irs form 1040 ez instructions Use a net negative adjustment to offset OID on the debt instrument for the tax year. Irs form 1040 ez instructions If the net negative adjustment is more than the OID on the debt instrument for the tax year, you can claim the difference as an ordinary loss. Irs form 1040 ez instructions However, the amount you can claim as an ordinary loss is limited to the OID on the debt instrument you included in income in prior tax years. Irs form 1040 ez instructions You must carry forward any net negative adjustment that is more than the total OID for the tax year and prior tax years and treat it as a negative adjustment in the next tax year. Irs form 1040 ez instructions Basis adjustments. Irs form 1040 ez instructions   In general, increase your basis in a contingent payment debt instrument by the OID included in income. Irs form 1040 ez instructions Your basis, however, is not affected by any negative or positive adjustments. Irs form 1040 ez instructions Decrease your basis by any noncontingent payment received and the projected contingent payment scheduled to be received. Irs form 1040 ez instructions Treatment of gain or loss on sale or exchange. Irs form 1040 ez instructions   If you sell a contingent payment debt instrument at a gain, your gain is ordinary income (interest income), even if you hold the debt instrument as a capital asset. Irs form 1040 ez instructions If you sell a contingent payment debt instrument at a loss, your loss is an ordinary loss to the extent of your prior OID accruals on the debt instrument. Irs form 1040 ez instructions If the debt instrument is a capital asset, treat any loss that is more than your prior OID accruals as a capital loss. Irs form 1040 ez instructions See Regulations section 1. Irs form 1040 ez instructions 1275-4 for exceptions to these rules. Irs form 1040 ez instructions Premium, acquisition premium, and market discount. Irs form 1040 ez instructions   The rules for accruing premium, acquisition premium, and market discount do not apply to a contingent payment debt instrument. Irs form 1040 ez instructions See Regulations section 1. Irs form 1040 ez instructions 1275-4 to determine how to account for these items. Irs form 1040 ez instructions Inflation-Indexed Debt Instruments This discussion shows how you figure OID on certain inflation-indexed debt instruments issued after January 5, 1997. Irs form 1040 ez instructions An inflation-indexed debt instrument is generally a debt instrument on which the payments are adjusted for inflation and d
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Page Last Reviewed or Updated: 10-Mar-2014

The Irs Form 1040 Ez Instructions

Irs form 1040 ez instructions Publication 584 - Additional Material Table of Contents This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Entrance Hall This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Living Room This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Dining Room This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Kitchen This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Den This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Bedrooms This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Bathrooms This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Recreation Room This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Laundry and Basement This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Garage This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Sporting Equipment This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Men's Clothing This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Women's Clothing This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Children's Clothing This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Jewelry This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Electrical Appliances This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Linens This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Miscellaneous This image is too large to be displayed in the current screen. Irs form 1040 ez instructions Please click the link to view the image. Irs form 1040 ez instructions Motor Vehicles Schedule 20. Irs form 1040 ez instructions Home (Excluding Contents) Note. Irs form 1040 ez instructions If you used the entire property as your home, fill out only column (a). Irs form 1040 ez instructions If you used part of the property as your home and part of it for business or to produce rental income, you must allocate the entries on lines 2-9 between the personal part (column (a)) and the business/rental part (column (b)). Irs form 1040 ez instructions 1. Irs form 1040 ez instructions Description of property (Show location and date acquired. Irs form 1040 ez instructions )     (a)  Personal Part (b)  Business/Rental Part 2. Irs form 1040 ez instructions Cost or other (adjusted) basis of property (from Worksheet A)     3. Irs form 1040 ez instructions Insurance or other reimbursement Note. Irs form 1040 ez instructions If line 2 is more than line 3, skip line 4. Irs form 1040 ez instructions If line 3 is more than line 2, you exclude gain, and the gain is more than you can exclude, see the instructions for line 3 in the Instructions for Form 4684 for the amount to enter. Irs form 1040 ez instructions     4. Irs form 1040 ez instructions Gain from casualty. Irs form 1040 ez instructions If line 3 is more than line 2, enter the difference here and skip lines 5 through 9. Irs form 1040 ez instructions But see Next below line 9. Irs form 1040 ez instructions     5. Irs form 1040 ez instructions Fair market value before casualty     6. Irs form 1040 ez instructions Fair market value after casualty     7. Irs form 1040 ez instructions Decrease in fair market value. Irs form 1040 ez instructions Subtract line 6 from line 5. Irs form 1040 ez instructions     8. Irs form 1040 ez instructions Enter the smaller of line 2 or line 7 Note for business/rental part. Irs form 1040 ez instructions If the property was totally destroyed by casualty, enter on line 8, column (b) the amount from line 2, column (b). Irs form 1040 ez instructions     9. Irs form 1040 ez instructions Subtract line 3 from line 8. Irs form 1040 ez instructions If zero or less, enter -0-. Irs form 1040 ez instructions     Next: Transfer the entries from line 1 and lines 2-9, column (a), above to the corresponding lines on Form 4684, Section A. Irs form 1040 ez instructions Transfer the entries from line 1 and lines 2-9, column (b), to the corresponding lines on Form 4684, Section B. Irs form 1040 ez instructions Worksheet A. Irs form 1040 ez instructions Cost or Other (Adjusted) Basis Caution. Irs form 1040 ez instructions See the Worksheet A Instructions before you use this worksheet. Irs form 1040 ez instructions         (a) Personal Part (b) Business/Rental Part 1. Irs form 1040 ez instructions   Enter the purchase price of the home damaged or destroyed. Irs form 1040 ez instructions (If you filed Form 2119 when you originally acquired that home to postpone gain on the sale of a previous home before May 7, 1997, enter the adjusted basis of the new home from that Form 2119. Irs form 1040 ez instructions ) 1. Irs form 1040 ez instructions     2. Irs form 1040 ez instructions   Seller paid points for home bought after 1990. Irs form 1040 ez instructions Do not include any seller-paid points you already subtracted to arrive at the amount entered on line 1 2. Irs form 1040 ez instructions     3. Irs form 1040 ez instructions   Subtract line 2 from line 1 3. Irs form 1040 ez instructions     4. Irs form 1040 ez instructions   Settlement fees or closing costs. Irs form 1040 ez instructions (See Settlement costs in Publication 551. Irs form 1040 ez instructions ) If line 1 includes the adjusted basis of the new home from Form 2119, skip lines 4a-4g and 5; go to line 6. Irs form 1040 ez instructions         a. Irs form 1040 ez instructions Abstract and recording fees 4a. Irs form 1040 ez instructions       b. Irs form 1040 ez instructions Legal fees (including fees for title search and preparing documents) 4b. Irs form 1040 ez instructions       c. Irs form 1040 ez instructions Survey fees 4c. Irs form 1040 ez instructions       d. Irs form 1040 ez instructions Title insurance 4d. Irs form 1040 ez instructions       e. Irs form 1040 ez instructions Transfer or stamp taxes 4e. Irs form 1040 ez instructions       f. Irs form 1040 ez instructions Amounts that the seller owed that you agreed to pay (back taxes or interest, recording or mortgage fees, and sales commissions) 4f. Irs form 1040 ez instructions       g. Irs form 1040 ez instructions Other 4g. Irs form 1040 ez instructions     5. Irs form 1040 ez instructions   Add lines 4a through 4g 5. Irs form 1040 ez instructions     6. Irs form 1040 ez instructions   Cost of additions and improvements. Irs form 1040 ez instructions (See Increases to Basis in Publication 551. Irs form 1040 ez instructions ) Do not include any additions and improvements included on line 1 6. Irs form 1040 ez instructions     7. Irs form 1040 ez instructions   Special tax assessments paid for local improvements, such as streets and sidewalks 7. Irs form 1040 ez instructions     8. Irs form 1040 ez instructions   Other increases to basis 8. Irs form 1040 ez instructions     9. Irs form 1040 ez instructions   Add lines 3, 5, 6, 7, and 8 9. Irs form 1040 ez instructions     10. Irs form 1040 ez instructions   Depreciation allowed or allowable, related to the business use or rental of the home 10. Irs form 1040 ez instructions 0   11. Irs form 1040 ez instructions   Other decreases to basis (See Decreases to Basis in Publication 551. Irs form 1040 ez instructions ) 11. Irs form 1040 ez instructions     12. Irs form 1040 ez instructions   Add lines 10 and 11 12. Irs form 1040 ez instructions     13. Irs form 1040 ez instructions   Cost or other (adjusted) basis of home damaged or destroyed. Irs form 1040 ez instructions Subtract line 12 from line 9. Irs form 1040 ez instructions Enter here and on Schedule 20, line 2 13. Irs form 1040 ez instructions     Worksheet A Instructions. Irs form 1040 ez instructions If you use Worksheet A to figure the cost or other (adjusted) basis of your home, follow these instructions. Irs form 1040 ez instructions DO NOT use this worksheet to determine your basis if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939. Irs form 1040 ez instructions IF. Irs form 1040 ez instructions . Irs form 1040 ez instructions . Irs form 1040 ez instructions   THEN. Irs form 1040 ez instructions . Irs form 1040 ez instructions . Irs form 1040 ez instructions you inherited your home from a decedent who died either before or after 2010 or from a decedent who died in 2010 and whose executor did not file Form 8939. Irs form 1040 ez instructions 1 skip lines 1–4 of the worksheet. Irs form 1040 ez instructions 2 find your basis using the rules under Inherited Property in Publication 551. Irs form 1040 ez instructions Enter this amount on line 5 of the worksheet. Irs form 1040 ez instructions 3 fill out lines 6–13 of the worksheet. Irs form 1040 ez instructions you received your home as a gift 1 read Property Received as a Gift in Publication 551 and enter on lines 1 and 3 of the worksheet either the donor's adjusted basis or the home's fair market value at the time of the gift, whichever is appropriate. Irs form 1040 ez instructions 2 if you can add any federal gift tax to your basis, enter that amount on line 5 of the worksheet. Irs form 1040 ez instructions 3 fill out the rest of the worksheet. Irs form 1040 ez instructions you received your home as a trade for other property 1 enter on line 1 of the worksheet the fair market value of the other property at the time of the trade. Irs form 1040 ez instructions (But if you received your home as a trade for your previous home before May 7, 1997, and had a gain on the trade that you postponed using Form 2119, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Irs form 1040 ez instructions ) 2 fill out the rest of the worksheet. Irs form 1040 ez instructions you built your home 1 add the purchase price of the land and the cost of building the home. Irs form 1040 ez instructions Enter that total on line 1 of the worksheet. Irs form 1040 ez instructions (However, if you filed a Form 2119 to postpone gain on the sale of a previous home before May 7, 1997, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Irs form 1040 ez instructions ) 2 fill out the rest of the worksheet. Irs form 1040 ez instructions you received your home from your spouse after July 18, 1984 1 skip lines 1–4 of the worksheet. Irs form 1040 ez instructions 2 enter on line 5 of the worksheet your spouse's cost or other (adjusted) basis in the home just before you received it. Irs form 1040 ez instructions 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Irs form 1040 ez instructions you owned a home jointly with your spouse, who transferred his or her interest in the home to you after July 18, 1984     fill out one worksheet, making adjustments to basis for events both before and after the transfer. Irs form 1040 ez instructions   you received your home from your spouse before July 19, 1984 1 skip lines 1–4 of the worksheet. Irs form 1040 ez instructions 2 enter on line 5 of the worksheet the home's fair market value at the time you received it. Irs form 1040 ez instructions 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Irs form 1040 ez instructions you owned a home jointly with your spouse, and your spouse transferred his or her interest in the home to you before July 19, 1984 1 fill out a worksheet, lines 1–13, making adjustments to basis only for events before the transfer. Irs form 1040 ez instructions 2 multiply the amount on line 13 of that worksheet by 50% (0. Irs form 1040 ez instructions 50) to get the adjusted basis of your half-interest at the time of the transfer. Irs form 1040 ez instructions 3 multiply the fair market value of the home at the time of the transfer by 50% (0. Irs form 1040 ez instructions 50). Irs form 1040 ez instructions Generally, this is the basis of the half-interest that your spouse owned. Irs form 1040 ez instructions 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Irs form 1040 ez instructions 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after the transfer. Irs form 1040 ez instructions you owned your home jointly with a nonspouse 1 fill out lines 1–13 of the worksheet. Irs form 1040 ez instructions 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest. Irs form 1040 ez instructions Worksheet A Instructions. Irs form 1040 ez instructions (Continued) IF. Irs form 1040 ez instructions . Irs form 1040 ez instructions . Irs form 1040 ez instructions   THEN. Irs form 1040 ez instructions . Irs form 1040 ez instructions . Irs form 1040 ez instructions you owned your home jointly with your spouse who died before 2010 and before the casualty 1 fill out a worksheet, lines 1–13, including adjustments to basis only for events before your spouse's death. Irs form 1040 ez instructions 2 multiply the amount on line 13 of that worksheet by 50% (0. Irs form 1040 ez instructions 50) to get the adjusted basis of your half-interest on the date of death. Irs form 1040 ez instructions 3 figure the basis for the half-interest owned by your spouse. Irs form 1040 ez instructions This is one-half of the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax). Irs form 1040 ez instructions (The basis in your half will remain one-half of the adjusted basis determined in step 2. Irs form 1040 ez instructions ) 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Irs form 1040 ez instructions 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after your spouse's death. Irs form 1040 ez instructions you owned your home jointly with your spouse who died before 2010 and before the casualty, and your permanent legal home is in a community property state 1 skip lines 1–4 of the worksheet. Irs form 1040 ez instructions 2 enter the amount of your basis on line 5 of the worksheet. Irs form 1040 ez instructions Generally, this is the fair market value of the home at the time of death. Irs form 1040 ez instructions (But see Community Property in Publication 551 for special rules. Irs form 1040 ez instructions ) 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after your spouse's death. Irs form 1040 ez instructions you owned your home jointly with a nonspouse who died before 2010 and before the casualty 1 fill out lines 1–13 of the worksheet, including adjustments to basis only for events before the co-owner's death. Irs form 1040 ez instructions 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest on the date of death. Irs form 1040 ez instructions 3 multiply the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax) by the co-owner's percentage of ownership. Irs form 1040 ez instructions This is the basis for the co-owner's part-interest. Irs form 1040 ez instructions 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Irs form 1040 ez instructions 5 complete lines 6–13 of the second worksheet, including adjustments to basis only for events after the co-owner's death. Irs form 1040 ez instructions your home was ever damaged as a result of a prior casualty 1 on line 8 of the worksheet, enter any amounts you spent to restore the home to its condition before the prior casualty. Irs form 1040 ez instructions 2 on line 11 enter: any insurance reimbursements you received (or expect to receive) for the prior loss,  and any deductible casualty losses from prior years not covered by insurance. Irs form 1040 ez instructions the person who sold you your home paid points on your loan and you bought your home after 1990 but before April 4, 1994. Irs form 1040 ez instructions   on line 2 enter the seller-paid points only if you deducted them as home mortgage interest in the year paid (unless you used the seller-paid points to reduce the amount on line 1). Irs form 1040 ez instructions the person who sold you your home paid points on your loan and you bought your home after April 3, 1994   on line 2 enter the seller-paid points even if you did not deduct them (unless you used the seller-paid points to reduce the amount on line 1). Irs form 1040 ez instructions you used part of the property as your home and part of it for business or to produce rental income   you must allocate the entries on Worksheet A between the personal part (column (a)) and the business/rental part (column (b)). Irs form 1040 ez instructions none of these items apply   fill out the entire worksheet. Irs form 1040 ez instructions Prev  Up  Next   Home   More Online Publications