File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Military Free Turbo Tax

Irs Form 2011How To Fill Out A 1040ez FormTurbotax 1040ez FreeEz Tax FormAmending 2009 Tax ReturnHow To File Unemployment On Tax Return1040 Tax FormsAarp Tax LocationsH & R Block ComFree Tax Preparation1040 Ez Tax ReturnIrs Tax AmendmentWww Irs Gov FreefileIncome Taxes FreeAmending My 2011 Tax ReturnFreefile ComFree State EfilingH&r Block Key Code Free State FilingFederal 1040x Instructions2014 1040ez FormFree Federal & State Tax FilingCalif State Taxes WebsiteIrs Form 1040x 2013Tax Breaks For The Unemployed2012 Tax Form 1040ezFiling State Taxes Free2012 Income Tax ReturnWww Freefile Irs Gov1040ez Instruction BookFree Efile Tax Return 2013Free 1040x Filing OnlineDo Military Pay TaxesFile 1040ez Electronically2010 TaxesE-file State Tax OnlyTaxact 2008 Free EfileWhere Can I Get 2011 Tax FormsFree E File And Free State Tax FilingTaxslayer Login PageFile Taxes For 2010

Military Free Turbo Tax

Military free turbo tax 10. Military free turbo tax   Installment Sales Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Installment Sale of a Farm Installment MethodWhen to elect out. Military free turbo tax Revoking the election. Military free turbo tax More information. Military free turbo tax Figuring Installment Sale Income Payments Received or Considered Received ExampleSection 1231 gains. Military free turbo tax Summary. Military free turbo tax Introduction An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. Military free turbo tax If you realize a gain on an installment sale, you may be able to report part of your gain when you receive each payment. Military free turbo tax This method of reporting gain is called the installment method. Military free turbo tax You cannot use the installment method to report a loss. Military free turbo tax You can choose to report all of your gain in the year of sale. Military free turbo tax Installment obligation. Military free turbo tax   The buyer's obligation to make future payments to you can be in the form of a deed of trust, note, land contract, mortgage, or other evidence of the buyer's debt to you. Military free turbo tax Topics - This chapter discusses: The general rules that apply to using the installment method Installment sale of a farm Useful Items - You may want to see: Publication 523 Selling Your Home 535 Business Expenses 537 Installment Sales 538 Accounting Periods and Methods 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property 6252 Installment Sale Income See chapter 16 for information about getting publications and forms. Military free turbo tax Installment Sale of a Farm The installment sale of a farm for one overall price under a single contract is not the sale of a single asset. Military free turbo tax It generally includes the sale of real property and personal property reportable on the installment method. Military free turbo tax It may also include the sale of property for which you must maintain an inventory, which cannot be reported on the installment method. Military free turbo tax See Inventory , later. Military free turbo tax The selling price must be allocated to determine the amount received for each class of asset. Military free turbo tax The tax treatment of the gain or loss on the sale of each class of assets is determined by its classification as a capital asset, as property used in the business, or as property held for sale and by the length of time the asset was held. Military free turbo tax (See chapter 8 for a discussion of capital assets and chapter 9 for a discussion of property used in the business. Military free turbo tax ) Separate computations must be made to figure the gain or loss for each class of asset sold. Military free turbo tax See Sale of a Farm in chapter 8. Military free turbo tax If you report the sale of property on the installment method, any depreciation recapture under section 1245 or 1250 of the Internal Revenue Code is generally taxable as ordinary income in the year of sale. Military free turbo tax See Depreciation recapture , later. Military free turbo tax This applies even if no payments are received in that year. Military free turbo tax Installment Method An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. Military free turbo tax A farmer who is not required to maintain an inventory can use the installment method to report gain from the sale of property used or produced in farming. Military free turbo tax See Inventory , later, for information on the sale of farm property where inventory items are included in the assets sold. Military free turbo tax If a sale qualifies as an installment sale, the gain must be reported under the installment method unless you elect out of using the installment method. Military free turbo tax Electing out of the installment method. Military free turbo tax   If you elect not to use the installment method, you generally report the entire gain in the year of sale, even though you do not receive all the sale proceeds in that year. Military free turbo tax   To make this election, do not report your sale on Form 6252. Military free turbo tax Instead, report it on Schedule D (Form 1040), Form 4797, or both. Military free turbo tax When to elect out. Military free turbo tax   Make this election by the due date, including extensions, for filing your tax return for the year the sale takes place. Military free turbo tax   However, if you timely file your tax return for the year the sale takes place without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Military free turbo tax Write “Filed pursuant to section 301. Military free turbo tax 9100-2” at the top of the amended return and file it where the original return was filed. Military free turbo tax Revoking the election. Military free turbo tax   Once made, the election can be revoked only with IRS approval. Military free turbo tax A revocation is retroactive. Military free turbo tax More information. Military free turbo tax   See Electing Out of the Installment Method in Publication 537 for more information. Military free turbo tax Inventory. Military free turbo tax   The sale of farm inventory items cannot be reported on the installment method. Military free turbo tax All gain or loss on their sale must be reported in the year of sale, even if you receive payment in later years. Military free turbo tax   If inventory items are included in an installment sale, you may have an agreement stating which payments are for inventory and which are for the other assets being sold. Military free turbo tax If you do not, each payment must be allocated between the inventory and the other assets sold. Military free turbo tax Sale at a loss. Military free turbo tax   If your sale results in a loss, you cannot use the installment method. Military free turbo tax If the loss is on an installment sale of business assets, you can deduct it only in the tax year of sale. Military free turbo tax Figuring Installment Sale Income Each payment on an installment sale usually consists of the following three parts. Military free turbo tax Interest income. Military free turbo tax Return of your adjusted basis in the property. Military free turbo tax Gain on the sale. Military free turbo tax In each year you receive a payment, you must include in income both the interest part and the part that is your gain on the sale. Military free turbo tax You do not include in income the part that is the return of your basis in the property. Military free turbo tax Basis is the amount of your investment in the property for installment sale purposes. Military free turbo tax Interest income. Military free turbo tax   You must report interest as ordinary income. Military free turbo tax Interest is generally not included in a down payment. Military free turbo tax However, you may have to treat part of each later payment as interest, even if it is not called interest in your agreement with the buyer. Military free turbo tax Interest provided in the agreement is called stated interest. Military free turbo tax If the agreement does not provide for enough stated interest, there may be unstated interest or original issue discount. Military free turbo tax See Unstated interest , later. Military free turbo tax    You must continue to report the interest income on payments you receive in subsequent years as interest income. Military free turbo tax Adjusted basis and installment sale income (gain on sale). Military free turbo tax   After you have determined how much of each payment to treat as interest, you treat the rest of each payment as if it were made up of two parts. Military free turbo tax A tax-free return of your adjusted basis in the property, and Your gain (referred to as “installment sale income” on Form 6252). Military free turbo tax Figuring adjusted basis for installment sale purposes. Military free turbo tax   You can use Worksheet 10-1 to figure your adjusted basis in the property for installment sale purposes. Military free turbo tax When you have completed the worksheet, you will also have determined the gross profit percentage necessary to figure your installment sale income (gain) for this year. Military free turbo tax    Worksheet 10-1. Military free turbo tax Figuring Adjusted Basis and Gross Profit Percentage 1. Military free turbo tax Enter the selling price for the property   2. Military free turbo tax Enter your adjusted basis for the property     3. Military free turbo tax Enter your selling expenses     4. Military free turbo tax Enter any depreciation recapture     5. Military free turbo tax Add lines 2, 3, and 4. Military free turbo tax  This is your adjusted basis  for installment sale purposes   6. Military free turbo tax Subtract line 5 from line 1. Military free turbo tax If zero or less, enter -0-. Military free turbo tax  This is your gross profit     If the amount entered on line 6 is zero, Stop here. Military free turbo tax You cannot use the installment method. Military free turbo tax   7. Military free turbo tax Enter the contract price for the property   8. Military free turbo tax Divide line 6 by line 7. Military free turbo tax This is your gross profit percentage   Selling price. Military free turbo tax   The selling price is the total cost of the property to the buyer and includes the following. Military free turbo tax Any money you are to receive. Military free turbo tax The fair market value (FMV) of any property you are to receive (FMV is discussed at Property used as a payment under Payments Received or Considered Received ). Military free turbo tax Any existing mortgage or other debt the buyer pays, assumes, or takes (a note, mortgage, or any other liability, such as a lien, accrued interest, or taxes you owe on the property). Military free turbo tax Any of your selling expenses the buyer pays. Military free turbo tax Do not include stated interest, unstated interest, any amount recomputed or recharacterized as interest, or original issue discount. Military free turbo tax Adjusted basis for installment sale purposes. Military free turbo tax   Your adjusted basis is the total of the following three items. Military free turbo tax Adjusted basis. Military free turbo tax Selling expenses. Military free turbo tax Depreciation recapture. Military free turbo tax Adjusted basis. Military free turbo tax   Basis is your investment in the property for installment sale purposes. Military free turbo tax The way you figure basis depends on how you acquire the property. Military free turbo tax The basis of property you buy is generally its cost. Military free turbo tax The basis of property you inherit, receive as a gift, build yourself, or receive in a tax-free exchange is figured differently. Military free turbo tax   While you own property, various events may change your original basis. Military free turbo tax Some events, such as adding rooms or making permanent improvements, increase basis. Military free turbo tax Others, such as deductible casualty losses or depreciation previously allowed or allowable, decrease basis. Military free turbo tax The result is adjusted basis. Military free turbo tax See chapter 6 and Publication 551, Basis of Assets, for more information. Military free turbo tax Selling expenses. Military free turbo tax   Selling expenses relate to the sale of the property. Military free turbo tax They include commissions, attorney fees, and any other expenses paid on the sale. Military free turbo tax Selling expenses are added to the basis of the sold property. Military free turbo tax Depreciation recapture. Military free turbo tax   If the property you sold was depreciable property, you may need to recapture part of the gain on the sale as ordinary income. Military free turbo tax See Depreciation Recapture in chapter 9 and Depreciation Recapture Income in Publication 537. Military free turbo tax Gross profit. Military free turbo tax   Gross profit is the total gain you report on the installment method. Military free turbo tax   To figure your gross profit, subtract your adjusted basis for installment sale purposes from the selling price. Military free turbo tax If the property you sold was your home, subtract from the gross profit any gain you can exclude. Military free turbo tax Contract price. Military free turbo tax   Contract price equals: The selling price, minus The mortgages, debts, and other liabilities assumed or taken by the buyer, plus The amount by which the mortgages, debts, and other liabilities assumed or taken by the buyer exceed your adjusted basis for installment sale purposes. Military free turbo tax Gross profit percentage. Military free turbo tax   A certain percentage of each payment (after subtracting interest) is reported as installment sale income. Military free turbo tax This percentage is called the gross profit percentage and is figured by dividing your gross profit from the sale by the contract price. Military free turbo tax   The gross profit percentage generally remains the same for each payment you receive. Military free turbo tax However, see the example under Selling price reduced , later, for a situation where the gross profit percentage changes. Military free turbo tax Amount to report as installment sale income. Military free turbo tax   Multiply the payments you receive each year (less interest) by the gross profit percentage. Military free turbo tax The result is your installment sales income for the tax year. Military free turbo tax In certain circumstances, you may be treated as having received a payment, even though you received nothing directly. Military free turbo tax A receipt of property or the assumption of a mortgage on the property sold may be treated as a payment. Military free turbo tax For a detailed discussion, see Payments Received or Considered Received , later. Military free turbo tax Selling price reduced. Military free turbo tax   If the selling price is reduced at a later date, the gross profit on the sale also will change. Military free turbo tax You then must refigure the gross profit percentage for the remaining payments. Military free turbo tax Refigure your gross profit using Worksheet 10-2. Military free turbo tax New Gross Profit Percentage — Selling Price Reduced. Military free turbo tax You will spread any remaining gain over future installments. Military free turbo tax    Worksheet 10-2. Military free turbo tax New Gross Profit Percentage — Selling Price Reduced 1. Military free turbo tax Enter the reduced selling  price for the property   2. Military free turbo tax Enter your adjusted  basis for the  property     3. Military free turbo tax Enter your selling  expenses     4. Military free turbo tax Enter any depreciation  recapture     5. Military free turbo tax Add lines 2, 3, and 4. Military free turbo tax   6. Military free turbo tax Subtract line 5 from line 1. Military free turbo tax  This is your adjusted  gross profit   7. Military free turbo tax Enter any installment sale  income reported in  prior year(s)   8. Military free turbo tax Subtract line 7 from line 6   9. Military free turbo tax Future installments     10. Military free turbo tax Divide line 8 by line 9. Military free turbo tax  This is your new  gross profit percentage*. Military free turbo tax   * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. Military free turbo tax Example. Military free turbo tax In 2011, you sold land with a basis of $40,000 for $100,000. Military free turbo tax Your gross profit was $60,000. Military free turbo tax You received a $20,000 down payment and the buyer's note for $80,000. Military free turbo tax The note provides for monthly payments of $1,953 each, figured at 8% interest, amortized over four years, beginning in January 2012. Military free turbo tax Your gross profit percentage was 60%. Military free turbo tax You received the down payment of $20,000 in 2011 and total payments of $23,436 in 2012, of which $17,675 was principal and $5,761 was interest according to the amortization schedule. Military free turbo tax You reported a gain of $12,000 on the down payment received in 2011 and $10,605 ($17,675 X 60% (. Military free turbo tax 60)) in 2012. Military free turbo tax In January 2013, you and the buyer agreed to reduce the purchase price to $85,000 and payments during 2013, 2014, and 2015 are reduced to $1,483 a month amortized over the remaining three years. Military free turbo tax The new gross profit percentage, 47. Military free turbo tax 32%, is figured in Example — Worksheet 10-2. Military free turbo tax Example — Worksheet 10-2. Military free turbo tax New Gross Profit Percentage — Selling Price Reduced 1. Military free turbo tax Enter the reduced selling  price for the property 85,000 2. Military free turbo tax Enter your adjusted  basis for the  property 40,000   3. Military free turbo tax Enter your selling  expenses -0-   4. Military free turbo tax Enter any depreciation  recapture -0-   5. Military free turbo tax Add lines 2, 3, and 4. Military free turbo tax 40,000 6. Military free turbo tax Subtract line 5 from line 1. Military free turbo tax  This is your adjusted  gross profit 45,000 7. Military free turbo tax Enter any installment sale  income reported in  prior year(s) 22,605 8. Military free turbo tax Subtract line 7 from line 6 22,395 9. Military free turbo tax Future installments   47,325 10. Military free turbo tax Divide line 8 by line 9. Military free turbo tax  This is your new  gross profit percentage*. Military free turbo tax 47. Military free turbo tax 32% * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. Military free turbo tax You will report installment sale income of $6,878 (47. Military free turbo tax 32% of $14,535) in 2013, $7,449 (47. Military free turbo tax 32% of $15,742) in 2014, and $8,067 (47. Military free turbo tax 32% of $17,048) in 2015. Military free turbo tax Form 6252. Military free turbo tax   Use Form 6252 to report an installment sale in the year it takes place and to report payments received, or considered received because of related party resales, in later years. Military free turbo tax Attach it to your tax return for each year. Military free turbo tax Disposition of Installment Obligation If you are using the installment method and you dispose of the installment obligation, generally you will have a gain or loss to report. Military free turbo tax It is considered gain or loss on the sale of the property for which you received the installment obligation. Military free turbo tax Cancellation. Military free turbo tax   If an installment obligation is canceled or otherwise becomes unenforceable, it is treated as a disposition other than a sale or exchange. Military free turbo tax Your gain or loss is the difference between your basis in the obligation and its fair market value (FMV) at the time you cancel it. Military free turbo tax If the parties are related, the FMV of the obligation is considered to be no less than its full face value. Military free turbo tax Transfer due to death. Military free turbo tax   The transfer of an installment obligation (other than to a buyer) as a result of the death of the seller is not a disposition. Military free turbo tax Any unreported gain from the installment obligation is not treated as gross income to the decedent. Military free turbo tax No income is reported on the decedent's return due to the transfer. Military free turbo tax Whoever receives the installment obligation as a result of the seller's death is taxed on the installment payments the same as the seller would have been had the seller lived to receive the payments. Military free turbo tax   However, if the installment obligation is canceled, becomes unenforceable, or is transferred to the buyer because of the death of the holder of the obligation, it is a disposition. Military free turbo tax The estate must figure its gain or loss on the disposition. Military free turbo tax If the holder and the buyer were related, the FMV of the installment obligation is considered to be no less than its full face value. Military free turbo tax More information. Military free turbo tax   For more information on the disposition of an installment obligation, see Publication 537. Military free turbo tax Sale of depreciable property. Military free turbo tax   You generally cannot report gain from the sale of depreciable property to a related person on the installment method. Military free turbo tax See Sale to a Related Person in Publication 537. Military free turbo tax   You cannot use the installment method to report any depreciation recapture income up to the gain on the sale. Military free turbo tax However, report any gain greater than the recapture income on the installment method. Military free turbo tax   The recapture income reported in the year of sale is included in your installment sale basis to determine your gross profit on the installment sale. Military free turbo tax   Figure your depreciation recapture income (including the section 179 deduction and the section 179A deduction recapture) in Part III of Form 4797. Military free turbo tax Report the depreciation recapture income in Part II of Form 4797 as ordinary income in the year of sale. Military free turbo tax    If you sell depreciable business property, prepare Form 4797 first in order to figure the amount to enter on line 12 of Part I, Form 6252. Military free turbo tax See the Form 6252 instructions for details. Military free turbo tax   For more information on the section 179 deduction, see Section 179 Expense Deduction in chapter 7. Military free turbo tax For more information on depreciation recapture, see Depreciation Recapture in  chapter 9. Military free turbo tax Payments Received or Considered Received You must figure your gain each year on the payments you receive, or are treated as receiving, from an installment sale. Military free turbo tax In certain situations, you are considered to have received a payment, even though the buyer does not pay you directly. Military free turbo tax These situations occur when the buyer assumes or pays any of your debts, such as a loan, or pays any of your expenses, such as a sales commission. Military free turbo tax However, as discussed later, the buyer's assumption of your debt is treated as a recovery of basis, rather than as a payment, in many cases. Military free turbo tax Buyer pays seller's expenses. Military free turbo tax   If the buyer pays any of your expenses related to the sale of your property, it is considered a payment to you in the year of sale. Military free turbo tax Include these expenses in the selling and contract prices when figuring the gross profit percentage. Military free turbo tax Buyer assumes mortgage. Military free turbo tax   If the buyer assumes or pays off your mortgage, or otherwise takes the property subject to the mortgage, the following rules apply. Military free turbo tax Mortgage less than basis. Military free turbo tax   If the buyer assumes a mortgage that is not more than your installment sale basis in the property, it is not considered a payment to you. Military free turbo tax It is considered a recovery of your basis. Military free turbo tax The contract price is the selling price minus the mortgage. Military free turbo tax Example. Military free turbo tax You sell property with an adjusted basis of $19,000. Military free turbo tax You have selling expenses of $1,000. Military free turbo tax The buyer assumes your existing mortgage of $15,000 and agrees to pay you $10,000 (a cash down payment of $2,000 and $2,000 (plus 8% interest) in each of the next 4 years). Military free turbo tax The selling price is $25,000 ($15,000 + $10,000). Military free turbo tax Your gross profit is $5,000 ($25,000 − $20,000 installment sale basis). Military free turbo tax The contract price is $10,000 ($25,000 − $15,000 mortgage). Military free turbo tax Your gross profit percentage is 50% ($5,000 ÷ $10,000). Military free turbo tax You report half of each $2,000 payment received as gain from the sale. Military free turbo tax You also report all interest you receive as ordinary income. Military free turbo tax Mortgage more than basis. Military free turbo tax   If the buyer assumes a mortgage that is more than your installment sale basis in the property, you recover your entire basis. Military free turbo tax The part of the mortgage greater than your basis is treated as a payment received in the year of sale. Military free turbo tax   To figure the contract price, subtract the mortgage from the selling price. Military free turbo tax This is the total amount (other than interest) you will receive directly from the buyer. Military free turbo tax Add to this amount the payment you are considered to have received (the difference between the mortgage and your installment sale basis). Military free turbo tax The contract price is then the same as your gross profit from the sale. Military free turbo tax    If the mortgage the buyer assumes is equal to or more than your installment sale basis, the gross profit percentage always will be 100%. Military free turbo tax Example. Military free turbo tax The selling price for your property is $9,000. Military free turbo tax The buyer will pay you $1,000 annually (plus 8% interest) over the next 3 years and assume an existing mortgage of $6,000. Military free turbo tax Your adjusted basis in the property is $4,400. Military free turbo tax You have selling expenses of $600, for a total installment sale basis of $5,000. Military free turbo tax The part of the mortgage that is more than your installment sale basis is $1,000 ($6,000 − $5,000). Military free turbo tax This amount is included in the contract price and treated as a payment received in the year of sale. Military free turbo tax The contract price is $4,000: Selling price $9,000 Minus: Mortgage (6,000) Amount actually received $3,000 Add difference:   Mortgage $6,000   Minus: Installment sale basis 5,000 1,000 Contract price $4,000   Your gross profit on the sale is also $4,000: Selling price $9,000 Minus: Installment sale basis (5,000) Gross profit $4,000   Your gross profit percentage is 100%. Military free turbo tax Report 100% of each payment (less interest) as gain from the sale. Military free turbo tax Treat the $1,000 difference between the mortgage and your installment sale basis as a payment and report 100% of it as gain in the year of sale. Military free turbo tax Buyer assumes other debts. Military free turbo tax   If the buyer assumes any other debts, such as a loan or back taxes, it may be considered a payment to you in the year of sale. Military free turbo tax   If the buyer assumes the debt instead of paying it off, only part of it may have to be treated as a payment. Military free turbo tax Compare the debt to your installment sale basis in the property being sold. Military free turbo tax If the debt is less than your installment sale basis, none of it is treated as a payment. Military free turbo tax If it is more, only the difference is treated as a payment. Military free turbo tax If the buyer assumes more than one debt, any part of the total that is more than your installment sale basis is considered a payment. Military free turbo tax These rules are the same as the rules discussed earlier under Buyer assumes mortgage . Military free turbo tax However, they apply only to the following types of debt the buyer assumes. Military free turbo tax Those acquired from ownership of the property you are selling, such as a mortgage, lien, overdue interest, or back taxes. Military free turbo tax Those acquired in the ordinary course of your business, such as a balance due for inventory you purchased. Military free turbo tax   If the buyer assumes any other type of debt, such as a personal loan or your legal fees relating to the sale, it is treated as if the buyer had paid off the debt at the time of the sale. Military free turbo tax The value of the assumed debt is then considered a payment to you in the year of sale. Military free turbo tax Property used as a payment. Military free turbo tax   If you receive property rather than money from the buyer, it is still considered a payment in the year received. Military free turbo tax However, see Trading property for like-kind property , later. Military free turbo tax Generally, the amount of the payment is the property's FMV on the date you receive it. Military free turbo tax Exception. Military free turbo tax   If the property the buyer gives you is payable on demand or readily tradable (see examples later), the amount you should consider as payment in the year received is: The FMV of the property on the date you receive it if you use the cash method of accounting, The face amount of the obligation on the date you receive it if you use an accrual method of accounting, or The stated redemption price at maturity less any original issue discount (OID) or, if there is no OID, the stated redemption price at maturity appropriately discounted to reflect total unstated interest. Military free turbo tax See Unstated interest , later. Military free turbo tax Examples. Military free turbo tax If you receive a note from the buyer as payment, and the note stipulates that you can demand payment from the buyer at any time, the note is payable on demand. Military free turbo tax If you receive marketable securities from the buyer as payment, and you can sell the securities on an established securities market (such as the New York Stock Exchange) at any time, the securities are readily tradable. Military free turbo tax In these examples, use the above rules to determine the amount you should consider as payment in the year received. Military free turbo tax Debt not payable on demand. Military free turbo tax   Any evidence of debt you receive from the buyer that is not payable on demand is not considered a payment. Military free turbo tax This is true even if the debt is guaranteed by a third party, including a government agency. Military free turbo tax Fair market value (FMV). Military free turbo tax   This is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of all the necessary facts. Military free turbo tax Third-party note. Military free turbo tax   If the property the buyer gives you is a third-party note (or other obligation of a third party), you are considered to have received a payment equal to the note's FMV. Military free turbo tax Because the FMV of the note is itself a payment on your installment sale, any payments you later receive from the third party are not considered payments on the sale. Military free turbo tax The excess of the note's face value over its FMV is interest. Military free turbo tax Exclude this interest in determining the selling price of the property. Military free turbo tax However, see Exception under Property used as a payment , earlier. Military free turbo tax Example. Military free turbo tax You sold real estate in an installment sale. Military free turbo tax As part of the down payment, the buyer assigned to you a $50,000, 8% third-party note. Military free turbo tax The FMV of the third-party note at the time of the sale was $30,000. Military free turbo tax This amount, not $50,000, is a payment to you in the year of sale. Military free turbo tax The third-party note had an FMV equal to 60% of its face value ($30,000 ÷ $50,000), so 60% of each principal payment you receive on this note is a nontaxable return of capital. Military free turbo tax The remaining 40% is interest taxed as ordinary income. Military free turbo tax Bond. Military free turbo tax   A bond or other evidence of debt you receive from the buyer that is payable on demand or readily tradable in an established securities market is treated as a payment in the year you receive it. Military free turbo tax For more information on the amount you should treat as a payment, see Exception under Property used as a payment , earlier. Military free turbo tax   If you receive a government or corporate bond for a sale before October 22, 2004, and the bond has interest coupons attached or can be readily traded in an established securities market, you are considered to have received payment equal to the bond's FMV. Military free turbo tax However, see Exception under Property used as a payment , earlier. Military free turbo tax Buyer's note. Military free turbo tax   The buyer's note (unless payable on demand) is not considered payment on the sale. Military free turbo tax However, its full face value is included when figuring the selling price and the contract price. Military free turbo tax Payments you receive on the note are used to figure your gain in the year received. Military free turbo tax Sale to a related person. Military free turbo tax   If you sell depreciable property to a related person and the sale is an installment sale, you may not be able to report the sale using the installment method. Military free turbo tax For information on these rules, see the Instructions for Form 6252 and Sale to a Related Person in Publication 537. Military free turbo tax Trading property for like-kind property. Military free turbo tax   If you trade business or investment property solely for the same kind of property to be held as business or investment property, you can postpone reporting the gain. Military free turbo tax See Like-Kind Exchanges in chapter 8 for a discussion of like-kind property. Military free turbo tax   If, in addition to like-kind property, you receive an installment obligation in the exchange, the following rules apply to determine installment sale income each year. Military free turbo tax The contract price is reduced by the FMV of the like-kind property received in the trade. Military free turbo tax The gross profit is reduced by any gain on the trade that can be postponed. Military free turbo tax Like-kind property received in the trade is not considered payment on the installment obligation. Military free turbo tax Unstated interest. Military free turbo tax   An installment sale contract may provide that each deferred payment on the sale will include interest or that there will be an interest payment in addition to the principal payment. Military free turbo tax Interest provided in the contract is called stated interest. Military free turbo tax   If an installment sale contract does not provide for adequate stated interest, part of the stated principal amount of the contract may be recharacterized as interest. Military free turbo tax If Internal Revenue Code section 483 applies to the contract, this interest is called unstated interest. Military free turbo tax   If Internal Revenue Code section 1274 applies to the contract, this interest is called original issue discount (OID). Military free turbo tax   Generally, if a buyer gives a debt in consideration for personal use property, the unstated interest rules do not apply. Military free turbo tax Therefore, the buyer cannot deduct the unstated interest. Military free turbo tax The seller must report the unstated interest as income. Military free turbo tax Personal-use property is any property in which substantially all of its use by the buyer is not in connection with a trade or business or an investment activity. Military free turbo tax   If the debt is subject to the Internal Revenue Code section 483 rules and is also subject to the below-market loan rules, such as a gift loan, compensation-related loan or corporation-shareholder loan, then both parties are subject to the below-market loan rules rather than the unstated interest rules. Military free turbo tax   Unstated interest reduces the stated selling price of the property and the buyer's basis in the property. Military free turbo tax It increases the seller's interest income and the buyer's interest expense. Military free turbo tax   In general, an installment sale contract provides for adequate stated interest if the stated interest rate (based on an appropriate compounding period) is at least equal to the applicable federal rate (AFR). Military free turbo tax    The AFRs are published monthly in the Internal Revenue Bulletin (IRB). Military free turbo tax You can get this information by contacting an IRS office. Military free turbo tax IRBs are also available at IRS. Military free turbo tax gov. Military free turbo tax More information. Military free turbo tax   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Military free turbo tax Example. Military free turbo tax You sell property at a contract price of $6,000 and your gross profit is $1,500. Military free turbo tax Your gross profit percentage is 25% ($1,500 ÷ $6,000). Military free turbo tax After subtracting interest, you report 25% of each payment, including the down payment, as installment sale income from the sale for the tax year you receive the payment. Military free turbo tax The remainder (balance) of each payment is the tax-free return of your adjusted basis. Military free turbo tax Example On January 3, 2013, you sold your farm, including the home, farm land and buildings. Military free turbo tax You received $50,000 down and the buyer's note for $200,000. Military free turbo tax In addition, the buyer assumed an outstanding $50,000 mortgage on the farm land. Military free turbo tax The total selling price was $300,000. Military free turbo tax The note payments of $25,000 each, plus adequate interest, are due every July 1 and January 1, beginning in July 2013. Military free turbo tax Your selling expenses were $15,000. Military free turbo tax Adjusted basis and depreciation. Military free turbo tax   The adjusted basis and depreciation claimed on each asset sold are as follows:   Depreciation Adjusted Asset Claimed Basis Home* -0- $33,743 Farm land -0- 73,610 Buildings $31,500 35,130 * Owned and used as main home for at least 2 of the 5 years prior to the sale Gain on each asset. Military free turbo tax   The following schedule shows the assets included in the sale, each asset's selling price based on its respective value, the selling expense allocated to each asset, the adjusted basis of each asset, and the gain on each asset. Military free turbo tax The selling expense for each asset is 5% of the selling price ($15,000 selling expense ÷ $300,000 selling price). Military free turbo tax   Selling Selling Adjusted     Price Expense Basis Gain Home* $60,000 $3,000 $33,743 $23,257 Farm land  165,000  8,250  73,610  83,140 Buildings 75,000 3,750 35,130 36,120   $300,000 $15,000 $142,483 $142,517 * Owned and used as main home for at least 2 of the 5 years prior to the sale Depreciation recapture. Military free turbo tax   The buildings are section 1250 property. Military free turbo tax There is no depreciation recapture income for them because they were depreciated using the straight line method. Military free turbo tax See chapter 9 for more information on depreciation recapture. Military free turbo tax   Special rules may apply when you sell section 1250 assets depreciated under the straight line method. Military free turbo tax See the Unrecaptured Section 1250 Gain Worksheet in the Instructions for Schedule D (Form 1040). Military free turbo tax See chapter 3 of Publication 544, Sales and Other Dispositions of Assets, for more information on section 1250 assets. Military free turbo tax Installment sale basis and gross profit. Military free turbo tax   The following table shows each asset reported on the installment method, its selling price, installment sale basis, and gross profit. Military free turbo tax     Installment     Selling Sale Gross   Price Basis Profit Farm land $165,000 $73,610 $83,140 Buildings 75,000 35,130 36,120   $240,000 $108,740 $119,260 Section 1231 gains. Military free turbo tax   The gain on the farm land and buildings is reported as section 1231 gains. Military free turbo tax See Section 1231 Gains and Losses in chapter 9. Military free turbo tax Contract price and gross profit percentage. Military free turbo tax   The contract price is $250,000 for the part of the sale reported on the installment method. Military free turbo tax This is the selling price ($300,000) minus the mortgage assumed ($50,000). Military free turbo tax   Gross profit percentage for the sale is 47. Military free turbo tax 70% ($119,260 gross profit ÷ $250,000 contract price). Military free turbo tax The gross profit percentage for each asset is figured as follows:   Percent Farm land ($83,140 ÷ $250,000) 33. Military free turbo tax 256 Buildings ($36,120 ÷ $250,000) 14. Military free turbo tax 448 Total 47. Military free turbo tax 70 Figuring the gain to report on the installment method. Military free turbo tax   One hundred percent (100%) of each payment is reported on the installment method. Military free turbo tax The total amount received on the sale in 2013 is $75,000 ($50,000 down payment + $25,000 payment on July 1). Military free turbo tax The installment sale part of the total payments received in 2013 is also $75,000. Military free turbo tax Figure the gain to report for each asset by multiplying its gross profit percentage times $75,000. Military free turbo tax   Income Farm land—33. Military free turbo tax 256% × $75,000 $24,942 Buildings—14. Military free turbo tax 448% × $75,000 10,836 Total installment income for 2013 $35,778 Reporting the sale. Military free turbo tax   Report the installment sale on Form 6252. Military free turbo tax Then report the amounts from Form 6252 on Form 4797 and Schedule D (Form 1040). Military free turbo tax Attach a separate page to Form 6252 that shows the computations in the example. Military free turbo tax If you sell depreciable business property, prepare Form 4797 first in order to figure the amount to enter on line 12 of Part I, Form 6252. Military free turbo tax Section 1231 gains. Military free turbo tax   The gains on the farm land and buildings are section 1231 gains. Military free turbo tax They may be reported as either capital or ordinary gain depending on the net balance when combined with other section 1231 losses. Military free turbo tax A net 1231 gain is capital gain and a net 1231 loss is an ordinary loss. Military free turbo tax Installment income for years after 2013. Military free turbo tax   You figure installment income for the years after 2013 by applying the same gross profit percentages to the payments you receive each year. Military free turbo tax If you receive $50,000 during the year, the entire $50,000 is considered received on the installment sale (100% × $50,000). Military free turbo tax You realize income as follows:   Income Farm land—33. Military free turbo tax 256% × $50,000 $16,628 Buildings—14. Military free turbo tax 448% × $50,000 7,224 Total installment income $23,852   In this example, no gain ever is recognized from the sale of your home. Military free turbo tax You will combine your section 1231 gains from this sale with section 1231 gains and losses from other sales in each of the later years to determine whether to report them as ordinary or capital gains. Military free turbo tax The interest received with each payment will be included in full as ordinary income. Military free turbo tax Summary. Military free turbo tax   The installment income (rounded to the nearest dollar) from the sale of the farm is reported as follows: Selling price $190,000 Minus: Installment basis (108,740) Gross profit $81,260     Gain reported in 2012 (year of sale) $35,778 Gain reported in 2013:   $50,000 × 47. Military free turbo tax 70% 23,850 Gain reported in 2014:   $50,000 × 47. Military free turbo tax 70% 23,850 Gain reported in 2015:   $50,000 × 47. Military free turbo tax 70% 23,850 Gain reported in 2016:   $25,000 × 47. Military free turbo tax 70% 11,925 Total gain reported $119,253 Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Contact My Local Office in Utah

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available.  Services are limited and not all services are available at every TAC office.  Services may vary from site to site. You can get these services on a walk-in, non-advance appointment basis.

City  Street Address  Days/Hours of Service  Telephone* 
Ogden  324 25th St.
Ogden, UT 84401 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(801) 626-0753 
Provo  173 E. 100 North
Provo, UT 84606 

Monday-Friday - 9:00 a.m.-3:30 p.m.
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(801) 377-6971 
Salt Lake City  50 S. 200 East
Salt Lake City, UT 84111 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

Services Provided

(801) 799-6963 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service:  Call (801) 799-6958 in Salt Lake City or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS. 

For further information, see Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
50 South 200 East, MS 6610SLC
Salt Lake City, UT 84111

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Military Free Turbo Tax

Military free turbo tax 8. Military free turbo tax   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. Military free turbo tax Reporting tax withheld. Military free turbo tax Nominees. Military free turbo tax Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. Military free turbo tax Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. Military free turbo tax Alternative minimum tax treatment. Military free turbo tax How To Report Dividend IncomeInvestment interest deducted. Military free turbo tax Reminder Foreign-source income. Military free turbo tax  If you are a U. Military free turbo tax S. Military free turbo tax citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. Military free turbo tax S. Military free turbo tax law. Military free turbo tax This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. Military free turbo tax Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. Military free turbo tax This chapter also explains how to report dividend income on your tax return. Military free turbo tax Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. Military free turbo tax You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. Military free turbo tax However, some amounts you receive that are called dividends are actually interest income. Military free turbo tax (See Dividends that are actually interest under Taxable Interest in chapter 7. Military free turbo tax ) Most distributions are paid in cash (or check). Military free turbo tax However, distributions can consist of more stock, stock rights, other property, or services. Military free turbo tax Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. Military free turbo tax Tax on unearned income of certain children. Military free turbo tax   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Military free turbo tax If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Military free turbo tax If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Military free turbo tax    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Military free turbo tax Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Military free turbo tax   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Military free turbo tax Beneficiary of an estate or trust. Military free turbo tax    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. Military free turbo tax You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Military free turbo tax , from the fiduciary. Military free turbo tax Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Military free turbo tax Social security number (SSN) or individual taxpayer identification number (ITIN). Military free turbo tax    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. Military free turbo tax This includes payers of dividends. Military free turbo tax If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. Military free turbo tax For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Military free turbo tax Backup withholding. Military free turbo tax   Your dividend income is generally not subject to regular withholding. Military free turbo tax However, it may be subject to backup withholding to ensure that income tax is collected on the income. Military free turbo tax Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Military free turbo tax   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Military free turbo tax For more information, see Backup Withholding in chapter 4. Military free turbo tax Stock certificate in two or more names. Military free turbo tax   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. Military free turbo tax Form 1099-DIV. Military free turbo tax   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. Military free turbo tax Keep this form with your records. Military free turbo tax You do not have to attach it to your tax return. Military free turbo tax Dividends not reported on Form 1099-DIV. Military free turbo tax   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. Military free turbo tax For example, you may receive distributive shares of dividends from partnerships or S corporations. Military free turbo tax These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Military free turbo tax , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Military free turbo tax Reporting tax withheld. Military free turbo tax   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. Military free turbo tax Nominees. Military free turbo tax   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. Military free turbo tax Form 1099-MISC. Military free turbo tax   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. Military free turbo tax See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. Military free turbo tax Incorrect amount shown on a Form 1099. Military free turbo tax   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Military free turbo tax The new Form 1099 you receive will be marked “Corrected. Military free turbo tax ” Dividends on stock sold. Military free turbo tax   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. Military free turbo tax Dividends received in January. Military free turbo tax   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. Military free turbo tax You report the dividend in the year it was declared. Military free turbo tax Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. Military free turbo tax They are paid out of earnings and profits and are ordinary income to you. Military free turbo tax This means they are not capital gains. Military free turbo tax You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. Military free turbo tax Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Military free turbo tax Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. Military free turbo tax They should be shown in box 1b of the Form 1099-DIV you receive. Military free turbo tax The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. Military free turbo tax 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. Military free turbo tax 6%. Military free turbo tax 20% on any amount that otherwise would be taxed at a 39. Military free turbo tax 6% rate. Military free turbo tax To qualify for the maximum rate, all of the following requirements must be met. Military free turbo tax The dividends must have been paid by a U. Military free turbo tax S. Military free turbo tax corporation or a qualified foreign corporation. Military free turbo tax (See Qualified foreign corporation , later. Military free turbo tax ) The dividends are not of the type listed later under Dividends that are not qualified dividends . Military free turbo tax You meet the holding period (discussed next). Military free turbo tax Holding period. Military free turbo tax   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Military free turbo tax The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. Military free turbo tax Instead, the seller will get the dividend. Military free turbo tax   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. Military free turbo tax See the examples later. Military free turbo tax Exception for preferred stock. Military free turbo tax   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. Military free turbo tax If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. Military free turbo tax Example 1. Military free turbo tax You bought 5,000 shares of XYZ Corp. Military free turbo tax common stock on July 9, 2013. Military free turbo tax XYZ Corp. Military free turbo tax paid a cash dividend of 10 cents per share. Military free turbo tax The ex-dividend date was July 16, 2013. Military free turbo tax Your Form 1099-DIV from XYZ Corp. Military free turbo tax shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). Military free turbo tax However, you sold the 5,000 shares on August 12, 2013. Military free turbo tax You held your shares of XYZ Corp. Military free turbo tax for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). Military free turbo tax The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. Military free turbo tax You have no qualified dividends from XYZ Corp. Military free turbo tax because you held the XYZ stock for less than 61 days. Military free turbo tax Example 2. Military free turbo tax Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. Military free turbo tax You held the stock for 63 days (from July 16, 2013, through September 16, 2013). Military free turbo tax The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). Military free turbo tax Example 3. Military free turbo tax You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. Military free turbo tax ABC Mutual Fund paid a cash dividend of 10 cents a share. Military free turbo tax The ex-dividend date was July 16, 2013. Military free turbo tax The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Military free turbo tax Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. Military free turbo tax However, you sold the 10,000 shares on August 12, 2013. Military free turbo tax You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. Military free turbo tax Holding period reduced where risk of loss is diminished. Military free turbo tax   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. Military free turbo tax You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. Military free turbo tax You were grantor (writer) of an option to buy substantially identical stock or securities. Military free turbo tax Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. Military free turbo tax   For information about how to apply condition (3), see Regulations section 1. Military free turbo tax 246-5. Military free turbo tax Qualified foreign corporation. Military free turbo tax   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. Military free turbo tax The corporation is incorporated in a U. Military free turbo tax S. Military free turbo tax possession. Military free turbo tax The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. Military free turbo tax For a list of those treaties, see Table 8-1. Military free turbo tax The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. Military free turbo tax See Readily tradable stock , later. Military free turbo tax Exception. Military free turbo tax   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. Military free turbo tax Readily tradable stock. Military free turbo tax   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. Military free turbo tax For a list of the exchanges that meet these requirements, see www. Military free turbo tax sec. Military free turbo tax gov/divisions/marketreg/mrexchanges. Military free turbo tax shtml. Military free turbo tax Dividends that are not qualified dividends. Military free turbo tax   The following dividends are not qualified dividends. Military free turbo tax They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. Military free turbo tax Capital gain distributions. Military free turbo tax Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. Military free turbo tax S. Military free turbo tax building and loan associations, U. Military free turbo tax S. Military free turbo tax savings and loan associations, federal savings and loan associations, and similar financial institutions. Military free turbo tax (Report these amounts as interest income. Military free turbo tax ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. Military free turbo tax Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. Military free turbo tax Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. Military free turbo tax Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Military free turbo tax Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. Military free turbo tax Table 8-1. Military free turbo tax Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. Military free turbo tax Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. Military free turbo tax This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. Military free turbo tax Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. Military free turbo tax If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. Military free turbo tax If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. Military free turbo tax You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. Military free turbo tax But you may be able to deduct the service charge. Military free turbo tax See chapter 28 for more information about deducting expenses of producing income. Military free turbo tax In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. Military free turbo tax If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. Military free turbo tax When figuring this amount, use the fair market value of the stock on the dividend payment date. Military free turbo tax Money Market Funds Report amounts you receive from money market funds as dividend income. Military free turbo tax Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. Military free turbo tax Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). Military free turbo tax They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. Military free turbo tax Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. Military free turbo tax Undistributed capital gains of mutual funds and REITs. Military free turbo tax    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. Military free turbo tax You must treat your share of these gains as distributions, even though you did not actually receive them. Military free turbo tax However, they are not included on Form 1099-DIV. Military free turbo tax Instead, they are reported to you in box 1a of Form 2439. Military free turbo tax   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. Military free turbo tax   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. Military free turbo tax You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. Military free turbo tax Attach Copy B of Form 2439 to your return, and keep Copy C for your records. Military free turbo tax Basis adjustment. Military free turbo tax   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. Military free turbo tax Additional information. Military free turbo tax   For more information on the treatment of distributions from mutual funds, see Publication 550. Military free turbo tax Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. Military free turbo tax You should receive a Form 1099-DIV or other statement showing the nondividend distribution. Military free turbo tax On Form 1099-DIV, a nondividend distribution will be shown in box 3. Military free turbo tax If you do not receive such a statement, you report the distribution as an ordinary dividend. Military free turbo tax Basis adjustment. Military free turbo tax   A nondividend distribution reduces the basis of your stock. Military free turbo tax It is not taxed until your basis in the stock is fully recovered. Military free turbo tax This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. Military free turbo tax If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. Military free turbo tax   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. Military free turbo tax Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. Military free turbo tax See Holding Period in chapter 14. Military free turbo tax Example. Military free turbo tax You bought stock in 2000 for $100. Military free turbo tax In 2003, you received a nondividend distribution of $80. Military free turbo tax You did not include this amount in your income, but you reduced the basis of your stock to $20. Military free turbo tax You received a nondividend distribution of $30 in 2013. Military free turbo tax The first $20 of this amount reduced your basis to zero. Military free turbo tax You report the other $10 as a long-term capital gain for 2013. Military free turbo tax You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. Military free turbo tax Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. Military free turbo tax These distributions are, at least in part, one form of a return of capital. Military free turbo tax They may be paid in one or more installments. Military free turbo tax You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. Military free turbo tax For more information on liquidating distributions, see chapter 1 of Publication 550. Military free turbo tax Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. Military free turbo tax Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. Military free turbo tax Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. Military free turbo tax Taxable stock dividends and stock rights. Military free turbo tax   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. Military free turbo tax You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. Military free turbo tax The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. Military free turbo tax The distribution is in convertible preferred stock and has the same result as in (2). Military free turbo tax The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. Military free turbo tax The distribution is on preferred stock. Military free turbo tax (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. Military free turbo tax )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. Military free turbo tax If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. Military free turbo tax Preferred stock redeemable at a premium. Military free turbo tax   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. Military free turbo tax For more information, see chapter 1 of Publication 550. Military free turbo tax Basis. Military free turbo tax   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. Military free turbo tax If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. Military free turbo tax Fractional shares. Military free turbo tax    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. Military free turbo tax However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. Military free turbo tax Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. Military free turbo tax Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. Military free turbo tax Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. Military free turbo tax    Report these transactions on Form 8949 with the correct box checked. Military free turbo tax   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. Military free turbo tax Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Military free turbo tax Example. Military free turbo tax You own one share of common stock that you bought on January 3, 2004, for $100. Military free turbo tax The corporation declared a common stock dividend of 5% on June 29, 2013. Military free turbo tax The fair market value of the stock at the time the stock dividend was declared was $200. Military free turbo tax You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. Military free turbo tax You figure your gain or loss as follows: Fair market value of old stock $200. Military free turbo tax 00 Fair market value of stock dividend (cash received) +10. Military free turbo tax 00 Fair market value of old stock and stock dividend $210. Military free turbo tax 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. Military free turbo tax 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. Military free turbo tax 76 Total $100. Military free turbo tax 00 Cash received $10. Military free turbo tax 00 Basis (cost) of stock dividend − 4. Military free turbo tax 76 Gain $5. Military free turbo tax 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. Military free turbo tax Scrip dividends. Military free turbo tax   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. Military free turbo tax The certificate is generally nontaxable when you receive it. Military free turbo tax If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. Military free turbo tax   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. Military free turbo tax You must include its fair market value in income on the date you receive it. Military free turbo tax Other Distributions You may receive any of the following distributions during the year. Military free turbo tax Exempt-interest dividends. Military free turbo tax   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Military free turbo tax Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Military free turbo tax Information reporting requirement. Military free turbo tax   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. Military free turbo tax This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. Military free turbo tax Alternative minimum tax treatment. Military free turbo tax   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Military free turbo tax See Alternative Minimum Tax (AMT) in chapter 30 for more information. Military free turbo tax Dividends on insurance policies. Military free turbo tax    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. Military free turbo tax However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. Military free turbo tax    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. Military free turbo tax Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. Military free turbo tax Report any taxable distributions on insurance policies on Form 1040, line 21. Military free turbo tax Dividends on veterans' insurance. Military free turbo tax   Dividends you receive on veterans' insurance policies are not taxable. Military free turbo tax In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. Military free turbo tax Patronage dividends. Military free turbo tax   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. Military free turbo tax   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. Military free turbo tax But you must reduce the basis (cost) of the items bought. Military free turbo tax If the dividend is more than the adjusted basis of the assets, you must report the excess as income. Military free turbo tax   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. Military free turbo tax Alaska Permanent Fund dividends. Military free turbo tax    Do not report these amounts as dividends. Military free turbo tax Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. Military free turbo tax How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. Military free turbo tax Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. Military free turbo tax Report qualified dividends on line 9b of Form 1040 or Form 1040A. Military free turbo tax If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. Military free turbo tax See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. Military free turbo tax If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. Military free turbo tax You cannot use Form 1040EZ if you receive any dividend income. Military free turbo tax Form 1099-DIV. Military free turbo tax   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. Military free turbo tax Even if you do not receive Form 1099-DIV, you must report all your dividend income. Military free turbo tax   See Form 1099-DIV for more information on how to report dividend income. Military free turbo tax Form 1040A or 1040. Military free turbo tax    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. Military free turbo tax If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. Military free turbo tax   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. Military free turbo tax If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. Military free turbo tax If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. Military free turbo tax   Enter on line 6 the total of the amounts listed on line 5. Military free turbo tax Also enter this total on line 9a of Form 1040A or 1040. Military free turbo tax Qualified dividends. Military free turbo tax   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. Military free turbo tax The amount in box 1b is already included in box 1a. Military free turbo tax Do not add the amount in box 1b to, or substract it from, the amount in box 1a. Military free turbo tax   Do not include any of the following on line 9b. Military free turbo tax Qualified dividends you received as a nominee. Military free turbo tax See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. Military free turbo tax Dividends on stock for which you did not meet the holding period. Military free turbo tax See Holding period , earlier under Qualified Dividends. Military free turbo tax Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. Military free turbo tax Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Military free turbo tax Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. Military free turbo tax   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. Military free turbo tax Enter qualified dividends on line 2 of the worksheet. Military free turbo tax Investment interest deducted. Military free turbo tax   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. Military free turbo tax Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. Military free turbo tax This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. Military free turbo tax For more information about the limit on investment interest, see Investment expenses in chapter 23. Military free turbo tax Expenses related to dividend income. Military free turbo tax   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). Military free turbo tax See chapter 28 for general information about deducting expenses of producing income. Military free turbo tax More information. Military free turbo tax    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. Military free turbo tax Prev  Up  Next   Home   More Online Publications