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Taxes On Unemployment

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Taxes On Unemployment

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

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

State Consumer Protection Offices

Arkansas Office of the Attorney General

Website: Arkansas Office of the Attorney General http://www.gotyourbackarkansas.org

Address: Arkansas Office of the Attorney General
Consumer Protection Division
323 Center St., Suite 200
Little Rock, AR 72201

Phone Number: 501-682-2341

Toll-free: 1-800-482-8982 (Consumer Hotline)

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Banking Authorities

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

State Bank Department

Website: State Bank Department

Address: State Bank Department
400 Hardin Rd., Suite 100
Little Rock, AR 72211

Phone Number: 501-324-9019

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Insurance Regulators

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

Insurance Department

Website: Insurance Department

Address: Insurance Department
Consumer Services Division
1200 W. Third St.
Little Rock, AR 72201-1904

Phone Number: 501-371-2640

Toll-free: 1-800-852-5494

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Securities Administrators

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

Securities Department

Website: Securities Department

Address: Securities Department
Heritage West Building, Suite 300
201 E. Markham St.
Little Rock, AR 72201-1692

Phone Number: 501-324-9260

Toll-free: 1-800-981-4429

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Utility Commissions

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

Public Service Commission

Website: Public Service Commission

Address: Public Service Commission
Consumer Services Division
PO Box 400
Little Rock, AR 72203-0400

Phone Number: 501-682-1718

Toll-free: 1-800-482-1164 (AR)

TTY: 1-800-682-2698

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The Taxes On Unemployment

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