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Irs Forms 1040ez 2012

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Irs Forms 1040ez 2012

Irs forms 1040ez 2012 9. Irs forms 1040ez 2012   Dispositions of Property Used in Farming Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. Irs forms 1040ez 2012 Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sale Other Dispositions Other GainsExceptions. Irs forms 1040ez 2012 Amount to report as ordinary income. Irs forms 1040ez 2012 Applicable percentage. Irs forms 1040ez 2012 Amount to report as ordinary income. Irs forms 1040ez 2012 Applicable percentage. Irs forms 1040ez 2012 Introduction When you dispose of property used in your farm business, your taxable gain or loss is usually treated as ordinary income (which is taxed at the same rates as wages and interest income) or capital gain (which is generally taxed at lower rates) under the rules for section 1231 transactions. Irs forms 1040ez 2012 When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. Irs forms 1040ez 2012 Any gain remaining after applying the depreciation recapture rules is a section 1231 gain, which may be taxed as a capital gain. Irs forms 1040ez 2012 Gains and losses from property used in farming are reported on Form 4797, Sales of Business Property. Irs forms 1040ez 2012 Table 9-1 contains examples of items reported on Form 4797 and refers to the part of that form on which they first should be reported. Irs forms 1040ez 2012 Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Other gains Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Irs forms 1040ez 2012 Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (explained below). Irs forms 1040ez 2012 Their treatment as ordinary or capital gains depends on whether you have a net gain or a net loss from all of your section 1231 transactions in the tax year. Irs forms 1040ez 2012 Table 9-1. Irs forms 1040ez 2012 Where to First Report Certain Items on Form 4797 Type of property Held 1 year  or less Held more than  1 year 1 Depreciable trade or business property:       a Sold or exchanged at a gain Part II Part III (1245, 1250)   b Sold or exchanged at a loss Part II Part I 2 Farmland held less than 10 years for which soil, water, or land clearing expenses were deducted:       a Sold at a gain Part II Part III (1252)   b Sold at a loss Part II Part I 3 All other farmland Part II Part I 4 Disposition of cost-sharing payment property described in section 126 Part II Part III (1255) 5 Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 24 mos. Irs forms 1040ez 2012 Held 24 mos. Irs forms 1040ez 2012  or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised cattle and horses sold at a gain Part II Part I 6 Livestock other than cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 12 mos. Irs forms 1040ez 2012 Held 12 mos. Irs forms 1040ez 2012   or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised livestock sold at a gain Part II Part I If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). Irs forms 1040ez 2012 Do not take that gain into account as section 1231 gain. Irs forms 1040ez 2012 Section 1231 transactions. Irs forms 1040ez 2012   Gain or loss on the following transactions is subject to section 1231 treatment. Irs forms 1040ez 2012 Sale or exchange of cattle and horses. Irs forms 1040ez 2012 The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 24 months or longer. Irs forms 1040ez 2012 Sale or exchange of other livestock. Irs forms 1040ez 2012 This livestock must be held for draft, breeding, dairy, or sporting purposes and held for 12 months or longer. Irs forms 1040ez 2012 Other livestock includes hogs, mules, sheep, goats, donkeys, and other fur-bearing animals. Irs forms 1040ez 2012 Other livestock does not include poultry. Irs forms 1040ez 2012 Sale or exchange of depreciable personal property. Irs forms 1040ez 2012 This property must be used in your business and held longer than 1 year. Irs forms 1040ez 2012 Generally, property held for the production of rents or royalties is considered to be used in a trade or business. Irs forms 1040ez 2012 Examples of depreciable personal property include farm machinery and trucks. Irs forms 1040ez 2012 It also includes amortizable section 197 intangibles. Irs forms 1040ez 2012 Sale or exchange of real estate. Irs forms 1040ez 2012 This property must be used in your business and held longer than 1 year. Irs forms 1040ez 2012 Examples are your farm or ranch (including barns and sheds). Irs forms 1040ez 2012 Sale or exchange of unharvested crops. Irs forms 1040ez 2012 The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person, and the land must have been held longer than 1 year. Irs forms 1040ez 2012 You cannot keep any right or option to reacquire the land directly or indirectly (other than a right customarily incident to a mortgage or other security transaction). Irs forms 1040ez 2012 Growing crops sold with a leasehold on the land, even if sold to the same person in a single transaction, are not included. Irs forms 1040ez 2012 Distributive share of partnership gains and losses. Irs forms 1040ez 2012 Your distributive share must be from the sale or exchange of property listed above and held longer than 1 year (or for the required period for certain livestock). Irs forms 1040ez 2012 Cutting or disposal of timber. Irs forms 1040ez 2012 Special rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange, or you enter into a cutting contract, as described in chapter 8 under Timber . Irs forms 1040ez 2012 Condemnation. Irs forms 1040ez 2012 The condemned property (defined in chapter 11) must have been held longer than 1 year. Irs forms 1040ez 2012 It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. Irs forms 1040ez 2012 It cannot be property held for personal use. Irs forms 1040ez 2012 Casualty or theft. Irs forms 1040ez 2012 The casualty or theft must have affected business property, property held for the production of rents or royalties, or investment property (such as notes and bonds). Irs forms 1040ez 2012 You must have held the property longer than 1 year. Irs forms 1040ez 2012 However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. Irs forms 1040ez 2012 Section 1231 does not apply to personal casualty gains and losses. Irs forms 1040ez 2012 See chapter 11 for information on how to treat those gains and losses. Irs forms 1040ez 2012 If the property is not held for the required holding period, the transaction is not subject to section 1231 treatment, and any gain or loss is ordinary income reported in Part II of Form 4797. Irs forms 1040ez 2012 See Table 9-1. Irs forms 1040ez 2012 Property for sale to customers. Irs forms 1040ez 2012   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. Irs forms 1040ez 2012 If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. Irs forms 1040ez 2012 Treatment as ordinary or capital. Irs forms 1040ez 2012   To determine the treatment of section 1231 gains and losses, combine all of your section 1231 gains and losses for the year. Irs forms 1040ez 2012 If you have a net section 1231 loss, it is an ordinary loss. Irs forms 1040ez 2012 If you have a net section 1231 gain, it is ordinary income up to your nonrecaptured section 1231 losses from previous years, explained next. Irs forms 1040ez 2012 The rest, if any, is long-term capital gain. Irs forms 1040ez 2012 Nonrecaptured section 1231 losses. Irs forms 1040ez 2012   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain by treating the gain as ordinary income. Irs forms 1040ez 2012 These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. Irs forms 1040ez 2012 Example. Irs forms 1040ez 2012 In 2013, Ben has a $2,000 net section 1231 gain. Irs forms 1040ez 2012 To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. Irs forms 1040ez 2012 From 2008 through 2012 he had the following section 1231 gains and losses. Irs forms 1040ez 2012 Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800   Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. Irs forms 1040ez 2012 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 His remaining net section 1231 loss from 2010 is completely recaptured in 2013. Irs forms 1040ez 2012 Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if it is otherwise nontaxable) as ordinary income. Irs forms 1040ez 2012 To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. Irs forms 1040ez 2012 For more information, see chapter 3 of Publication 544. Irs forms 1040ez 2012 Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable. Irs forms 1040ez 2012 Any recognized gain that is more than the part that is ordinary income is a section 1231 gain. Irs forms 1040ez 2012 See Treatment as ordinary or capital under Section 1231 Gains and Losses , earlier. Irs forms 1040ez 2012 Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. Irs forms 1040ez 2012 Personal property (either tangible or intangible). Irs forms 1040ez 2012 Other tangible property (except buildings and their structural components) used as any of the following. Irs forms 1040ez 2012 See Buildings and structural components below. Irs forms 1040ez 2012 An integral part of manufacturing, production, or extraction, or of furnishing certain services. Irs forms 1040ez 2012 A research facility in any of the activities in (a). Irs forms 1040ez 2012 A facility in any of the activities in (a) above, for the bulk storage of fungible commodities (discussed later). Irs forms 1040ez 2012 That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. Irs forms 1040ez 2012 Amortization of certified pollution control facilities. Irs forms 1040ez 2012 The section 179 expense deduction. Irs forms 1040ez 2012 Deduction for clean-fuel vehicles and certain refueling property. Irs forms 1040ez 2012 Expenditures to remove architectural and transportation barriers to the handicapped and elderly. Irs forms 1040ez 2012 Certain reforestation expenditures (as described under Reforestation Costs in chapter 7. Irs forms 1040ez 2012 Single purpose agricultural (livestock) or horticultural structures. Irs forms 1040ez 2012 Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. Irs forms 1040ez 2012 Buildings and structural components. Irs forms 1040ez 2012   Section 1245 property does not include buildings and structural components. Irs forms 1040ez 2012 The term building includes a house, barn, warehouse, or garage. Irs forms 1040ez 2012 The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. Irs forms 1040ez 2012   Do not treat a structure that is essentially machinery or equipment as a building or structural component. Irs forms 1040ez 2012 Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. Irs forms 1040ez 2012   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. Irs forms 1040ez 2012 Structures such as oil and gas storage tanks, grain storage bins, and silos are not treated as buildings, but as section 1245 property. Irs forms 1040ez 2012 Facility for bulk storage of fungible commodities. Irs forms 1040ez 2012   This is a facility used mainly for the bulk storage of fungible commodities. Irs forms 1040ez 2012 Bulk storage means storage of a commodity in a large mass before it is used. Irs forms 1040ez 2012 For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. Irs forms 1040ez 2012 To be fungible, a commodity must be such that one part may be used in place of another. Irs forms 1040ez 2012 Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. Irs forms 1040ez 2012 The depreciation (which includes any section 179 deduction claimed) and amortization allowed or allowable on the property. Irs forms 1040ez 2012 The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). Irs forms 1040ez 2012 For any other disposition of section 1245 property, ordinary income is the lesser of (1) above or the amount by which its fair market value (FMV) is more than its adjusted basis. Irs forms 1040ez 2012 For details, see chapter 3 of Publication 544. Irs forms 1040ez 2012 Use Part III of Form 4797 to figure the ordinary income part of the gain. Irs forms 1040ez 2012 Depreciation claimed on other property or claimed by other taxpayers. Irs forms 1040ez 2012   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. Irs forms 1040ez 2012 Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. Irs forms 1040ez 2012 For details on exchanges of property that are not taxable, see Like-Kind Exchanges in chapter 8. Irs forms 1040ez 2012 Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift and part of the transfer is a sale or exchange). Irs forms 1040ez 2012 Example. Irs forms 1040ez 2012 Jeff Free paid $120,000 for a tractor in 2012. Irs forms 1040ez 2012 On February 23, 2013, he traded it for a chopper and paid an additional $30,000. Irs forms 1040ez 2012 To figure his depreciation deduction on the chopper for the current year, Jeff continues to use the basis of the tractor as he would have before the trade. Irs forms 1040ez 2012 Jeff can also depreciate the additional $30,000 for the chopper. Irs forms 1040ez 2012 Depreciation and amortization. Irs forms 1040ez 2012   Depreciation and amortization deductions that must be recaptured as ordinary income include (but are not limited to) the following items. Irs forms 1040ez 2012 See Depreciation Recapture in chapter 3 of Publication 544 for more details. Irs forms 1040ez 2012 Ordinary depreciation deductions. Irs forms 1040ez 2012 Section 179 deduction (see chapter 7). Irs forms 1040ez 2012 Any special depreciation allowance. Irs forms 1040ez 2012 Amortization deductions for all the following costs. Irs forms 1040ez 2012 Acquiring a lease. Irs forms 1040ez 2012 Lessee improvements. Irs forms 1040ez 2012 Pollution control facilities. Irs forms 1040ez 2012 Reforestation expenses. Irs forms 1040ez 2012 Section 197 intangibles. Irs forms 1040ez 2012 Qualified disaster expenses. Irs forms 1040ez 2012 Franchises, trademarks, and trade names acquired before August 11, 1993. Irs forms 1040ez 2012 Example. Irs forms 1040ez 2012 You file your returns on a calendar year basis. Irs forms 1040ez 2012 In February 2011, you bought and placed in service for 100% use in your farming business a light-duty truck (5-year property) that cost $10,000. Irs forms 1040ez 2012 You used the half-year convention and your MACRS deductions for the truck were $1,500 in 2011 and $2,550 in 2012. Irs forms 1040ez 2012 You did not claim the section 179 expense deduction for the truck. Irs forms 1040ez 2012 You sold it in May 2013 for $7,000. Irs forms 1040ez 2012 The MACRS deduction in 2013, the year of sale, is $893 (½ of $1,785). Irs forms 1040ez 2012 Figure the gain treated as ordinary income as follows. Irs forms 1040ez 2012 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $1,500 + $2,550 + $893) 4,943   4) Adjusted basis (subtract line 3 from line 2) $5,057 5) Gain realized (subtract line 4 from line 1) 1,943 6) Gain treated as ordinary income (lesser of line 3 or line 5) $1,943 Depreciation allowed or allowable. Irs forms 1040ez 2012   You generally use the greater of the depreciation allowed or allowable when figuring the part of gain to report as ordinary income. Irs forms 1040ez 2012 If, in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. Irs forms 1040ez 2012 If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. Irs forms 1040ez 2012 This treatment applies only when figuring what part of the gain is treated as ordinary income under the rules for section 1245 depreciation recapture. Irs forms 1040ez 2012 Disposition of plants and animals. Irs forms 1040ez 2012   If you elect not to use the uniform capitalization rules (see chapter 6), you must treat any plant you produce as section 1245 property. Irs forms 1040ez 2012 If you have a gain on the property's disposition, you must recapture the pre-productive expenses you would have capitalized if you had not made the election by treating the gain, up to the amount of these expenses, as ordinary income. Irs forms 1040ez 2012 For section 1231 transactions, show these expenses as depreciation on Form 4797, Part III, line 22. Irs forms 1040ez 2012 For plant sales that are reported on Schedule F (1040), Profit or Loss From Farming, this recapture rule does not change the reporting of income because the gain is already ordinary income. Irs forms 1040ez 2012 You can use the farm-price method or the unit-livestock-price method discussed in  chapter 2 to figure these expenses. Irs forms 1040ez 2012 Example. Irs forms 1040ez 2012 Janet Maple sold her apple orchard in 2013 for $80,000. Irs forms 1040ez 2012 Her adjusted basis at the time of sale was $60,000. Irs forms 1040ez 2012 She bought the orchard in 2006, but the trees did not produce a crop until 2009. Irs forms 1040ez 2012 Her pre-productive expenses were $6,000. Irs forms 1040ez 2012 She elected not to use the uniform capitalization rules. Irs forms 1040ez 2012 Janet must treat $6,000 of the gain as ordinary income. Irs forms 1040ez 2012 Section 1250 Property Section 1250 property includes all real property subject to an allowance for depreciation that is not and never has been section 1245 property. Irs forms 1040ez 2012 It includes buildings and structural components that are not section 1245 property (discussed earlier). Irs forms 1040ez 2012 It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. Irs forms 1040ez 2012 A fee simple interest in land is not section 1250 property because, like land, it is not depreciable. Irs forms 1040ez 2012 Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable. Irs forms 1040ez 2012 To determine the additional depreciation on section 1250 property, see Depreciation Recapture in chapter 3 of Publication 544. Irs forms 1040ez 2012 You will not have additional depreciation if any of the following apply to the property disposed of. Irs forms 1040ez 2012 You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method and you have held the property longer than 1 year. Irs forms 1040ez 2012 You chose the alternate ACRS (straight line) method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. Irs forms 1040ez 2012 The property was nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made) and you held it longer than 1 year. Irs forms 1040ez 2012 These properties are depreciated using the straight line method. Irs forms 1040ez 2012 Installment Sale If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. Irs forms 1040ez 2012 This applies even if no payments are received in that year. Irs forms 1040ez 2012 If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. Irs forms 1040ez 2012 For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. Irs forms 1040ez 2012 If you dispose of more than one asset in a single transaction, you must separately figure the gain on each asset so that it may be properly reported. Irs forms 1040ez 2012 To do this, allocate the selling price and the payments you receive in the year of sale to each asset. Irs forms 1040ez 2012 Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. Irs forms 1040ez 2012 For more information on installment sales, see chapter 10. Irs forms 1040ez 2012 Other Dispositions Chapter 3 of Publication 544 discusses the tax treatment of the following transfers of depreciable property. Irs forms 1040ez 2012 By gift. Irs forms 1040ez 2012 At death. Irs forms 1040ez 2012 In like-kind exchanges. Irs forms 1040ez 2012 In involuntary conversions. Irs forms 1040ez 2012 Publication 544 also explains how to handle a single transaction involving multiple properties. Irs forms 1040ez 2012 Other Gains This section discusses gain on the disposition of farmland for which you were allowed either of the following. Irs forms 1040ez 2012 Deductions for soil and water conservation expenditures (section 1252 property). Irs forms 1040ez 2012 Exclusions from income for certain cost sharing payments (section 1255 property). Irs forms 1040ez 2012 Section 1252 property. Irs forms 1040ez 2012   If you disposed of farmland you held more than 1 year and less than 10 years at a gain and you were allowed deductions for soil and water conservation expenses for the land, as discussed in chapter 5, you must treat part of the gain as ordinary income and treat the balance as section 1231 gain. Irs forms 1040ez 2012 Exceptions. Irs forms 1040ez 2012   Do not treat gain on the following transactions as gain on section 1252 property. Irs forms 1040ez 2012 Disposition of farmland by gift. Irs forms 1040ez 2012 Transfer of farm property at death (except for income in respect of a decedent). Irs forms 1040ez 2012 For more information, see Regulations section 1. Irs forms 1040ez 2012 1252-2. Irs forms 1040ez 2012 Amount to report as ordinary income. Irs forms 1040ez 2012   You report as ordinary income the lesser of the following amounts. Irs forms 1040ez 2012 Your gain (determined by subtracting the adjusted basis from the amount realized from a sale, exchange, or involuntary conversion, or the FMV for all other dispositions). Irs forms 1040ez 2012 The total deductions allowed for soil and water conservation expenses multiplied by the applicable percentage, discussed next. Irs forms 1040ez 2012 Applicable percentage. Irs forms 1040ez 2012   The applicable percentage is based on the length of time you held the land. Irs forms 1040ez 2012 If you dispose of your farmland within 5 years after the date you acquired it, the percentage is 100%. Irs forms 1040ez 2012 If you dispose of the land within the 6th through 9th year after you acquired it, the applicable percentage is reduced by 20% a year for each year or part of a year you hold the land after the 5th year. Irs forms 1040ez 2012 If you dispose of the land 10 or more years after you acquired it, the percentage is 0%, and the entire gain is a section 1231 gain. Irs forms 1040ez 2012 Example. Irs forms 1040ez 2012 You acquired farmland on January 19, 2005. Irs forms 1040ez 2012 On October 3, 2013, you sold the land at a $30,000 gain. Irs forms 1040ez 2012 Between January 1 and October 3, 2013, you incur soil and water conservation expenditures of $15,000 for the land that are fully deductible in 2013. Irs forms 1040ez 2012 The applicable percentage is 40% since you sold the land within the 8th year after you acquired it. Irs forms 1040ez 2012 You treat $6,000 (40% of $15,000) of the $30,000 gain as ordinary income and the $24,000 balance as a section 1231 gain. Irs forms 1040ez 2012 Section 1255 property. Irs forms 1040ez 2012   If you receive certain cost-sharing payments on property and you exclude those payments from income (as discussed in chapter 3), you may have to treat part of any gain as ordinary income and treat the balance as a section 1231 gain. Irs forms 1040ez 2012 If you chose not to exclude these payments, you will not have to recognize ordinary income under this provision. Irs forms 1040ez 2012 Amount to report as ordinary income. Irs forms 1040ez 2012   You report as ordinary income the lesser of the following amounts. Irs forms 1040ez 2012 The applicable percentage of the total excluded cost-sharing payments. Irs forms 1040ez 2012 The gain on the disposition of the property. Irs forms 1040ez 2012 You do not report ordinary income under this rule to the extent the gain is recognized as ordinary income under sections 1231 through 1254, 1256, and 1257. Irs forms 1040ez 2012 However, if applicable, gain reported under this rule must be reported regardless of any contrary provisions (including nonrecognition provisions) under any other section. Irs forms 1040ez 2012 Applicable percentage. Irs forms 1040ez 2012   The applicable percentage of the excluded cost-sharing payments to be reported as ordinary income is based on the length of time you hold the property after receiving the payments. Irs forms 1040ez 2012 If the property is held less than 10 years after you receive the payments, the percentage is 100%. Irs forms 1040ez 2012 After 10 years, the percentage is reduced by 10% a year, or part of a year, until the rate is 0%. Irs forms 1040ez 2012 Form 4797, Part III. Irs forms 1040ez 2012   Use Form 4797, Part III, to figure the ordinary income part of a gain from the sale, exchange, or involuntary conversion of section 1252 property and section 1255 property. Irs forms 1040ez 2012 Prev  Up  Next   Home   More Online Publications
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