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W 2 Show State Income Tax Withheld

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W 2 Show State Income Tax Withheld

W 2 show state income tax withheld Publication 17 - Introductory Material Table of Contents What's New Reminders IntroductionIcons. W 2 show state income tax withheld Ordering forms and publications. W 2 show state income tax withheld Tax questions. W 2 show state income tax withheld All material in this publication may be reprinted freely. W 2 show state income tax withheld A citation to Your Federal Income Tax (2013) would be appropriate. W 2 show state income tax withheld The explanations and examples in this publication reflect the interpretation by the Internal Revenue Service (IRS) of: Tax laws enacted by Congress, Treasury regulations, and Court decisions. W 2 show state income tax withheld However, the information given does not cover every situation and is not intended to replace the law or change its meaning. W 2 show state income tax withheld This publication covers some subjects on which a court may have made a decision more favorable to taxpayers than the interpretation by the IRS. W 2 show state income tax withheld Until these differing interpretations are resolved by higher court decisions or in some other way, this publication will continue to present the interpretations by the IRS. W 2 show state income tax withheld All taxpayers have important rights when working with the IRS. W 2 show state income tax withheld These rights are described in Your Rights as a Taxpayer in the back of this publication. W 2 show state income tax withheld What's New This section summarizes important tax changes that took effect in 2013. W 2 show state income tax withheld Most of these changes are discussed in more detail throughout this publication. W 2 show state income tax withheld Future developments. W 2 show state income tax withheld  For the latest information about the tax law topics covered in this publication, including information about any tax legislation, go to www. W 2 show state income tax withheld irs. W 2 show state income tax withheld gov/pub17. W 2 show state income tax withheld Additional Medicare Tax. W 2 show state income tax withheld  Beginning in 2013, a 0. W 2 show state income tax withheld 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. W 2 show state income tax withheld See Form 8959 and its instructions. W 2 show state income tax withheld Net Investment Income Tax. W 2 show state income tax withheld  Beginning in 2013, you may be subject to Net Investment Income Tax (NIIT). W 2 show state income tax withheld The NIIT is 3. W 2 show state income tax withheld 8% of the smaller of (a) your net investment income or (b) the excess of your modified adjusted gross income over: $125,000 if married filing separately, $250,000 if married filing jointly or qualifying widow(er), or $200,000 if any other filing status. W 2 show state income tax withheld See Form 8960 and its instructions. W 2 show state income tax withheld Change in tax rates. W 2 show state income tax withheld  The highest tax rate is 39. W 2 show state income tax withheld 6%. W 2 show state income tax withheld For more information, see the 2013 Tax Computation Worksheet or the 2013 Tax Rate Schedules near the end of this publication. W 2 show state income tax withheld Tax rate on net capital gain and qualified dividends. W 2 show state income tax withheld  The maximum tax rate of 15% on net capital gain and qualified dividends has increased to 20% for some taxpayers. W 2 show state income tax withheld See chapter 16. W 2 show state income tax withheld Medical and dental expenses. W 2 show state income tax withheld  You can deduct only the part of your medical and dental expenses that is more than 10% of your adjusted gross income (7. W 2 show state income tax withheld 5% if either you or your spouse is age 65 or older). W 2 show state income tax withheld See chapter 21. W 2 show state income tax withheld Personal exemption amount increased for certain taxpayers. W 2 show state income tax withheld  Your personal exemption is increased to $3,900. W 2 show state income tax withheld But the amount is reduced if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if any other filing status. W 2 show state income tax withheld See chapter 3. W 2 show state income tax withheld Limit on itemized deductions. W 2 show state income tax withheld  You may not be able to deduct all of your itemized deductions if your adjusted gross income is more than: $150,000 if married filing separately, $250,000 if single, $275,000 if head of household, or $300,000 if any other filing status. W 2 show state income tax withheld See chapter 29. W 2 show state income tax withheld Same-sex marriages. W 2 show state income tax withheld  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. W 2 show state income tax withheld See chapter 2. W 2 show state income tax withheld If you meet certain requirements, you may be able to file amended returns to change your filing status for some earlier years. W 2 show state income tax withheld For details on filing amended returns, see chapter 1. W 2 show state income tax withheld Health flexible spending arrangements (FSAs). W 2 show state income tax withheld  You cannot have more than $2,500 in salary reduction contributions made to a health FSA for plan years beginning after 2012. W 2 show state income tax withheld See chapter 5. W 2 show state income tax withheld Expiring credits. W 2 show state income tax withheld  The plug-in electric vehicle credit and the refundable part of the credit for prior year minimum tax have expired. W 2 show state income tax withheld You cannot claim either one on your 2013 return. W 2 show state income tax withheld See chapter 37. W 2 show state income tax withheld Ponzi-type investment schemes. W 2 show state income tax withheld  There are new rules for how to claim a theft loss deduction on Form 4684 due to a Ponzi-type investment scheme. W 2 show state income tax withheld See chapter 25. W 2 show state income tax withheld Home office deduction simplified method. W 2 show state income tax withheld  If you can take a home office deduction, you may be able to use a simplified method to figure it. W 2 show state income tax withheld See Publication 587. W 2 show state income tax withheld Standard mileage rates. W 2 show state income tax withheld  The 2013 rate for business use of your car is increased to 56½ cents a mile. W 2 show state income tax withheld See chapter 26. W 2 show state income tax withheld The 2013 rate for use of your car to get medical care is increased to 24 cents a mile. W 2 show state income tax withheld See chapter 21. W 2 show state income tax withheld The 2013 rate for use of your car to move is increased to 24 cents a mile. W 2 show state income tax withheld See Publication 521, Moving Expenses. W 2 show state income tax withheld Reminders Listed below are important reminders and other items that may help you file your 2013 tax return. W 2 show state income tax withheld Many of these items are explained in more detail later in this publication. W 2 show state income tax withheld Enter your social security number (SSN). W 2 show state income tax withheld  Enter your SSN in the space provided on your tax form. W 2 show state income tax withheld If you filed a joint return for 2012 and are filing a joint return for 2013 with the same spouse, enter your names and SSNs in the same order as on your 2012 return. W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Secure your tax records from identity theft. W 2 show state income tax withheld  Identity theft occurs when someone uses your personal information, such as your name, SSN, or other identifying information, without your permission, to commit fraud or other crimes. W 2 show state income tax withheld An identity thief may use your SSN to get a job or may file a tax return using your SSN to receive a refund. W 2 show state income tax withheld For more information about identity theft and how to reduce your risk from it, see chapter 1. W 2 show state income tax withheld Taxpayer identification numbers. W 2 show state income tax withheld  You must provide the taxpayer identification number for each person for whom you claim certain tax benefits. W 2 show state income tax withheld This applies even if the person was born in 2013. W 2 show state income tax withheld Generally, this number is the person's social security number (SSN). W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Foreign source income. W 2 show state income tax withheld  If you are a U. W 2 show state income tax withheld S. W 2 show state income tax withheld citizen with income from sources outside the United States (foreign income), you must report all such income on your tax return unless it is exempt by U. W 2 show state income tax withheld S. W 2 show state income tax withheld law. W 2 show state income tax withheld This is true whether you live inside or outside the United States and whether or not you receive a Form W-2 or Form 1099 from the foreign payer. W 2 show state income tax withheld This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital gains, pensions, rents and royalties). W 2 show state income tax withheld If you live outside the United States, you may be able to exclude part or all of your foreign source earned income. W 2 show state income tax withheld For details, see Publication 54, Tax Guide for U. W 2 show state income tax withheld S. W 2 show state income tax withheld Citizens and Resident Aliens Abroad. W 2 show state income tax withheld Foreign financial assets. W 2 show state income tax withheld  If you had foreign financial assets in 2013, you may have to file Form 8938 with your return. W 2 show state income tax withheld Check www. W 2 show state income tax withheld IRS. W 2 show state income tax withheld gov/form8938 for details. W 2 show state income tax withheld Automatic 6-month extension to file tax return. W 2 show state income tax withheld  You can use Form 4868, Application for Automatic Extension of Time To File U. W 2 show state income tax withheld S. W 2 show state income tax withheld Individual Income Tax Return, to obtain an automatic 6-month extension of time to file your tax return. W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Include your phone number on your return. W 2 show state income tax withheld  To promptly resolve any questions we have in processing your tax return, we would like to be able to call you. W 2 show state income tax withheld Please enter your daytime telephone number on your tax form next to your signature and occupation. W 2 show state income tax withheld If you are filing a joint return, you can enter either your or your spouse's daytime phone number. W 2 show state income tax withheld Payment of taxes. W 2 show state income tax withheld   You can pay your taxes online, by phone, or by check or money order. W 2 show state income tax withheld You can make a direct transfer from your bank account or use a credit or debit card. W 2 show state income tax withheld If you e-file, you can schedule an electronic payment. W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Faster ways to file your return. W 2 show state income tax withheld  The IRS offers fast, accurate ways to file your tax return information without filing a paper tax return. W 2 show state income tax withheld You can use IRS e-file (electronic filing). W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Free electronic filing. W 2 show state income tax withheld  You may be able to file your 2013 taxes online for free. W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Change of address. W 2 show state income tax withheld  If you change your address, you should notify the IRS. W 2 show state income tax withheld See Change of Address in chapter 1. W 2 show state income tax withheld Refund on a late filed return. W 2 show state income tax withheld  If you were due a refund but you did not file a return, you generally must file your return within 3 years from the date the return was due (including extensions) to get that refund. W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Frivolous tax returns. W 2 show state income tax withheld  The IRS has published a list of positions that are identified as frivolous. W 2 show state income tax withheld The penalty for filing a frivolous tax return is $5,000. W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Filing erroneous claim for refund or credit. W 2 show state income tax withheld  You may have to pay a penalty if you file an erroneous claim for refund or credit. W 2 show state income tax withheld See chapter 1. W 2 show state income tax withheld Privacy Act and paperwork reduction information. W 2 show state income tax withheld   The IRS Restructuring and Reform Act of 1998, the Privacy Act of 1974, and the Paperwork Reduction Act of 1980 require that when we ask you for information we must first tell you what our legal right is to ask for the information, why we are asking for it, how it will be used, what could happen if we do not receive it, and whether your response is voluntary, required to obtain a benefit, or mandatory under the law. W 2 show state income tax withheld A complete statement on this subject can be found in your tax form instructions. W 2 show state income tax withheld Customer service for taxpayers. W 2 show state income tax withheld  You can set up a personal appointment at the most convenient Taxpayer Assistance Center, on the most convenient business day. W 2 show state income tax withheld See How To Get Tax Help in the back of this publication. W 2 show state income tax withheld Preparer e-file mandate. W 2 show state income tax withheld  Most paid preparers must e-file returns they prepare and file. W 2 show state income tax withheld Your preparer may make you aware of this requirement and the options available to you. W 2 show state income tax withheld Treasury Inspector General for Tax Administration. W 2 show state income tax withheld   If you want to confidentially report misconduct, waste, fraud, or abuse by an IRS employee, you can call 1-800-366-4484 (call 1-800-877-8339 if you are deaf, hard of hearing, or have a speech disability, and are using TTY/TDD equipment). W 2 show state income tax withheld You can remain anonymous. W 2 show state income tax withheld Photographs of missing children. W 2 show state income tax withheld  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. W 2 show state income tax withheld Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. W 2 show state income tax withheld You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. W 2 show state income tax withheld Introduction This publication covers the general rules for filing a federal income tax return. W 2 show state income tax withheld It supplements the information contained in your tax form instructions. W 2 show state income tax withheld It explains the tax law to make sure you pay only the tax you owe and no more. W 2 show state income tax withheld How this publication is arranged. W 2 show state income tax withheld   This publication closely follows Form 1040, U. W 2 show state income tax withheld S. W 2 show state income tax withheld Individual Income Tax Return. W 2 show state income tax withheld It is divided into six parts which cover different sections of Form 1040. W 2 show state income tax withheld Each part is further divided into chapters which generally discuss one line of the form. W 2 show state income tax withheld Do not worry if you file Form 1040A or Form 1040EZ. W 2 show state income tax withheld Anything included on a line of either of these forms is also included on Form 1040. W 2 show state income tax withheld   The table of contents inside the front cover and the index in the back of the publication are useful tools to help you find the information you need. W 2 show state income tax withheld What is in this publication. W 2 show state income tax withheld   The publication begins with the rules for filing a tax return. W 2 show state income tax withheld It explains: Who must file a return, Which tax form to use, When the return is due, How to e-file your return, and Other general information. W 2 show state income tax withheld It will help you identify which filing status you qualify for, whether you can claim any dependents, and whether the income you receive is taxable. W 2 show state income tax withheld The publication goes on to explain the standard deduction, the kinds of expenses you may be able to deduct, and the various kinds of credits you may be able to take to reduce your tax. W 2 show state income tax withheld   Throughout the publication are examples showing how the tax law applies in typical situations. W 2 show state income tax withheld Also throughout the publication are flowcharts and tables that present tax information in an easy-to-understand manner. W 2 show state income tax withheld   Many of the subjects discussed in this publication are discussed in greater detail in other IRS publications. W 2 show state income tax withheld References to those other publications are provided for your information. W 2 show state income tax withheld Icons. W 2 show state income tax withheld   Small graphic symbols, or icons, are used to draw your attention to special information. W 2 show state income tax withheld See Table 1 later for an explanation of each icon used in this publication. W 2 show state income tax withheld What is not covered in this publication. W 2 show state income tax withheld   Some material that you may find helpful is not included in this publication but can be found in your tax form instruction booklet. W 2 show state income tax withheld This includes lists of: Where to report certain items shown on information documents, and Recorded tax information topics (TeleTax). W 2 show state income tax withheld   If you operate your own business or have other self-employment income, such as from babysitting or selling crafts, see the following publications for more information. W 2 show state income tax withheld Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ). W 2 show state income tax withheld Publication 535, Business Expenses. W 2 show state income tax withheld Publication 587, Business Use of Your Home (Including Use by Daycare Providers). W 2 show state income tax withheld Help from the IRS. W 2 show state income tax withheld   There are many ways you can get help from the IRS. W 2 show state income tax withheld These are explained under How To Get Tax Help in the back of this publication. W 2 show state income tax withheld Comments and suggestions. W 2 show state income tax withheld   We welcome your comments about this publication and your suggestions for future editions. W 2 show state income tax withheld   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. W 2 show state income tax withheld NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. W 2 show state income tax withheld Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. W 2 show state income tax withheld   You can send your comments from www. W 2 show state income tax withheld irs. W 2 show state income tax withheld gov/formspubs/. W 2 show state income tax withheld Click on “More Information” and then on “Comment on Tax Forms and Publications”. W 2 show state income tax withheld   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. W 2 show state income tax withheld Ordering forms and publications. W 2 show state income tax withheld   Visit www. W 2 show state income tax withheld irs. W 2 show state income tax withheld gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. W 2 show state income tax withheld Internal Revenue Service 1201 N. W 2 show state income tax withheld Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. W 2 show state income tax withheld   If you have a tax question, check the information available on IRS. W 2 show state income tax withheld gov or call 1-800-829-1040. W 2 show state income tax withheld We cannot answer tax questions sent to either of the above addresses. W 2 show state income tax withheld IRS mission. W 2 show state income tax withheld   Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. W 2 show state income tax withheld Table 1. W 2 show state income tax withheld Legend of Icons Icon Explanation Items that may cause you particular problems, or an alert about pending legislation that may be enacted after this publication goes to print. W 2 show state income tax withheld An Internet site or an email address. W 2 show state income tax withheld An address you may need. W 2 show state income tax withheld Items you should keep in your personal records. W 2 show state income tax withheld Items you may need to figure or a worksheet you may need to complete and keep for your records. W 2 show state income tax withheld An important phone number. W 2 show state income tax withheld Helpful information you may need. W 2 show state income tax withheld Prev  Up  Next   Home   More Online Publications
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Closing a Business

There is more involved in closing your business than just locking the doors. This section provides procedures for getting out of business, including what forms to file and how to handle additional revenue received or expenses you may incur.

Page Last Reviewed or Updated: 04-Sep-2013

The W 2 Show State Income Tax Withheld

W 2 show state income tax withheld Publication 908 - Main Content Table of Contents Bankruptcy Code Tax Compliance RequirementsTax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Tax Returns Due After the Bankruptcy Filing Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11Debtor's Election To End Tax Year – Form 1040 Taxes and the Bankruptcy Estate Bankruptcy Estate – Income, Deductions, and Credits Tax Reporting – Chapter 11 Cases Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Tax Return Example – Form 1041 Partnerships and CorporationsFiling Requirements Partnerships Corporations Receiverships Determination of TaxPrompt Determination Requests Court Jurisdiction Over Tax MattersBankruptcy Court Tax Court Federal Tax ClaimsUnsecured Tax Claims Discharge of Unpaid Tax Debt CancellationExclusions Reduction of Tax Attributes Partnerships Corporations Tax Attribute Reduction Example How To Get Tax HelpTaxpayer Advocacy Panel (TAP). W 2 show state income tax withheld Low Income Taxpayer Clinics (LITCs). W 2 show state income tax withheld Bankruptcy Code Tax Compliance Requirements Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases The Bankruptcy Code requires chapter 13 debtors to file all required tax returns for tax periods ending within 4 years of the debtor's bankruptcy filing. W 2 show state income tax withheld All such federal tax returns must be filed with the IRS before the date first set for the first meeting of creditors. W 2 show state income tax withheld The debtor may request the trustee to hold the meeting open for an additional 120 days to enable the debtor to file the returns (or until the day the returns are due under an automatic IRS extension, if later). W 2 show state income tax withheld After notice and hearing, the bankruptcy court may extend the period for another 30 days. W 2 show state income tax withheld Failure to timely file the returns can prevent confirmation of a chapter 13 plan and result in either dismissal of the chapter 13 case or conversion to a chapter 7 case. W 2 show state income tax withheld Note. W 2 show state income tax withheld Individual debtors should use their home address when filing Form 1040 with the IRS. W 2 show state income tax withheld Returns should not be filed “in care of” the trustee's address. W 2 show state income tax withheld Ordering tax transcripts and copies of returns. W 2 show state income tax withheld   Trustees may require the debtor to submit copies or transcripts of the debtor's returns as proof of filing. W 2 show state income tax withheld The debtor can request free transcripts of the debtor's income tax returns by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS or by placing a request on the IRS's free Automated Delivery Service (ADS), available by calling 1-800-829-1040. W 2 show state income tax withheld If requested through ADS, the transcript will be mailed to the debtor's most current address according to the IRS's records. W 2 show state income tax withheld Transcripts requested using Form 4506-T may be mailed to any address, including to the attention of the trustee in the debtor's bankruptcy case. W 2 show state income tax withheld Transcripts are normally mailed within 10 to 15 days of receipt of the request by the IRS. W 2 show state income tax withheld A transcript contains most of the information on the debtor's filed return, but it is not a copy of the return. W 2 show state income tax withheld To request a copy of the debtor's filed return, file Form 4506, Request for Copy of Tax Return. W 2 show state income tax withheld It may take up to 60 days for the IRS to provide the copies after receipt of the debtor's request, and there is a fee of $57. W 2 show state income tax withheld 00 per tax return for copies of the returns. W 2 show state income tax withheld Tax Returns Due After the Bankruptcy Filing For debtors filing bankruptcy under all chapters (chapters 7, 11, 12, or 13), the Bankruptcy Code provides that if the debtor does not file a tax return that becomes due after the commencement of the bankruptcy case, or obtain an extension for filing the return before the due date, the taxing authority may request that the bankruptcy court either dismiss the case or convert the case to a case under another chapter of the Bankruptcy Code. W 2 show state income tax withheld If the debtor does not file the required return or obtain an extension within 90 days after the request is made, the bankruptcy court must dismiss or convert the case. W 2 show state income tax withheld Tax returns and payment of taxes in chapter 11 cases. W 2 show state income tax withheld   The Bankruptcy Code provides that a chapter 11 debtor's failure to timely file tax returns and pay taxes owed after the date of the “order for relief” (the bankruptcy petition date in voluntary cases) is cause for dismissal of the chapter 11 case, conversion to a chapter 7 case, or appointment of a chapter 11 trustee. W 2 show state income tax withheld Disclosure of debtor's return information to trustee. W 2 show state income tax withheld   In bankruptcy cases filed under chapter 7 or 11 by individuals, the debtor's income tax returns for the year the bankruptcy case begins and for earlier years are, upon written request, open to inspection by or disclosure to the trustee. W 2 show state income tax withheld If the bankruptcy case was not voluntary, disclosure cannot be made before the bankruptcy court has entered an order for relief, unless the court rules that the disclosure is needed for determining whether relief should be ordered. W 2 show state income tax withheld    In bankruptcy cases other than those of individuals filing under chapter 7 or 11, the debtor's income tax returns for the current and prior years are, upon written request, open to inspection by or disclosure to the trustee, but only if the IRS finds that the trustee has a material interest that will be affected by information on the return. W 2 show state income tax withheld Material interest is generally defined as a financial or monetary interest. W 2 show state income tax withheld Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. W 2 show state income tax withheld   However, the U. W 2 show state income tax withheld S. W 2 show state income tax withheld Trustee (an officer of the Department of Justice, responsible for maintaining and supervising a panel of private trustees for chapter 7 bankruptcy cases) and the standing chapter 13 trustee (the administrator of chapter 13 cases in a specific geographic region) generally do not have a material interest in the debtor’s return or return information. W 2 show state income tax withheld Disclosure of bankruptcy estate's return information to debtor. W 2 show state income tax withheld    The bankruptcy estate's tax return(s) are open, upon written request, to inspection by or disclosure to the individual debtor in a chapter 7 or 11 bankruptcy. W 2 show state income tax withheld Disclosure of the estate's return to the debtor may be necessary to enable the debtor to determine the amount and nature of the tax attributes, if any, that the debtor assumes when the bankruptcy estate terminates. W 2 show state income tax withheld Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. W 2 show state income tax withheld Chapter 13 relief is not available to corporations or partnerships. W 2 show state income tax withheld The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income) or 13 (Adjustment of Debts of an Individual with Regular Income) of the Bankruptcy Code. W 2 show state income tax withheld In these cases the individual continues to file the same federal income tax returns that were filed prior to the bankruptcy petition, Form 1040, U. W 2 show state income tax withheld S. W 2 show state income tax withheld Individual Income Tax Return. W 2 show state income tax withheld On the debtor's individual tax return, Form 1040, report all income received during the entire year and deduct all allowable expenses. W 2 show state income tax withheld Do not include in income the amount from any debt canceled due to the debtor's bankruptcy. W 2 show state income tax withheld To the extent the debtor has any losses, credits, or basis in property that were previously reduced as a result of canceled debt, these reductions must be included on the debtor's return. W 2 show state income tax withheld See Debt Cancellation, later. W 2 show state income tax withheld Interest on trust accounts in chapter 13 cases. W 2 show state income tax withheld   In chapter 13 proceedings, do not include interest earned on amounts held by the trustee in trust accounts as income on the debtor's return. W 2 show state income tax withheld This interest is not available to either the debtor or creditors, it is available only to the trustee for use by the U. W 2 show state income tax withheld S. W 2 show state income tax withheld Trustee system. W 2 show state income tax withheld The interest is also not taxable to the trustee as income. W 2 show state income tax withheld Individuals in Chapter 7 or 11 When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer. W 2 show state income tax withheld The bankruptcy estate in a chapter 7 case is represented by a trustee. W 2 show state income tax withheld The trustee is appointed to administer the estate and liquidate any nonexempt assets. W 2 show state income tax withheld In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. W 2 show state income tax withheld However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate. W 2 show state income tax withheld During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040. W 2 show state income tax withheld The bankruptcy trustee files a Form 1041 for the bankruptcy estate. W 2 show state income tax withheld However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements are met). W 2 show state income tax withheld Although a husband and wife may file a joint bankruptcy petition whose bankruptcy estates are jointly administered, the estates are be treated as two separate entities for tax purposes. W 2 show state income tax withheld Two separate bankruptcy estate income tax returns must be filed (if each spouse separately meets the filing requirements). W 2 show state income tax withheld For information about determining the tax due and paying tax for a chapter 7 or 11 bankruptcy estate, see Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. W 2 show state income tax withheld Debtor's Election To End Tax Year – Form 1040 Short tax years. W 2 show state income tax withheld   An individual debtor in a chapter 7 or 11 case may elect to close the debtor's tax year for the year in which the bankruptcy petition is filed, as of the day before the date on which the bankruptcy case commences. W 2 show state income tax withheld If the debtor makes this election, the debtor's tax year is divided into 2 short tax years of less than 12 months each. W 2 show state income tax withheld The first tax year ends on the day before the commencement date and the second tax year begins on the commencement date. W 2 show state income tax withheld   If the election is made, the debtor's federal income tax liability for the first short tax year becomes an allowable claim against the bankruptcy estate arising before the bankruptcy filing. W 2 show state income tax withheld Also, the tax liability for the first short tax year is not subject to discharge under the Bankruptcy Code. W 2 show state income tax withheld    If the debtor does not make an election to end the tax year, the commencement of the bankruptcy case does not affect the debtor's tax year. W 2 show state income tax withheld Also, no part of the debtor's income tax liability for the year in which the bankruptcy case commences can be collected from the bankruptcy estate. W 2 show state income tax withheld Note. W 2 show state income tax withheld The debtor cannot make a short tax year election if no assets, other than exempt property, are in the bankruptcy estate. W 2 show state income tax withheld Making the Election - Filing Requirements First short tax year. W 2 show state income tax withheld   The debtor can elect to end the debtor's tax year by filing a return on Form 1040 for the first short tax year. W 2 show state income tax withheld The return must be filed on or before the 15th day of the fourth full month after the end of that first tax year. W 2 show state income tax withheld Second short tax year. W 2 show state income tax withheld   If the debtor elects to end the tax year on the day before filing the bankruptcy case, the debtor must file the return for the first short tax year in the manner discussed above. W 2 show state income tax withheld   If the debtor makes this election, the debtor must also file a separate Form 1040 for the second short tax year by the regular due date. W 2 show state income tax withheld To avoid delays in processing the return, write “Second Short Year Return After Section 1398 Election” at the top of the return. W 2 show state income tax withheld Example. W 2 show state income tax withheld Jane Doe, an individual calendar year taxpayer, filed a bankruptcy petition under chapter 7 or 11 on May 8, 2012. W 2 show state income tax withheld If Jane elected to close her tax year at the commencement of her case, Jane's first short year for 2012 runs from January 1 through May 7, 2012. W 2 show state income tax withheld Jane's second short year runs from May 8, 2012, through December 31, 2012. W 2 show state income tax withheld To have a timely filed election for the first short year, Jane must file Form 1040 (or an extension of time to file) for the period January 1 through May 7 by September 15. W 2 show state income tax withheld To avoid delays in processing the return, write “Section 1398 Election” at the top of the return. W 2 show state income tax withheld The debtor may also make the election by attaching a statement to Form 4868, Automatic Extension of Time to File an U. W 2 show state income tax withheld S. W 2 show state income tax withheld Individual Tax Return. W 2 show state income tax withheld The statement must state that the debtor elects under IRC section 1398(d)(2) to close the debtor's tax year on the day before filing the bankruptcy case. W 2 show state income tax withheld The debtor must file Form 4868 by the due date of the return for the first short tax year. W 2 show state income tax withheld The debtor's spouse may also elect to close his or her tax year, see Election by debtor's spouse, below. W 2 show state income tax withheld Election by debtor's spouse. W 2 show state income tax withheld   If the debtor is married, the debtor's spouse may join in the election to end the tax year. W 2 show state income tax withheld If the debtor and spouse make a joint election, the debtor must file a joint return for the first short tax year. W 2 show state income tax withheld The debtor must elect by the due date for filing the return for the first short tax year. W 2 show state income tax withheld Once the election is made, it cannot be revoked for the first short tax year. W 2 show state income tax withheld However, the election does not prevent the debtor and the spouse from filing separate returns for the second short tax year. W 2 show state income tax withheld Later bankruptcy of spouse. W 2 show state income tax withheld    If the debtor's spouse files for bankruptcy later in the same year, he or she may also choose to end his or her tax year, regardless of whether he or she joined in the election to end the debtor's tax year. W 2 show state income tax withheld   As each spouse has a separate bankruptcy, one or both of them may have 3 short tax years in the same calendar year. W 2 show state income tax withheld If the debtor's spouse joined the debtor's election or if the debtor had not made the election to end the tax year, the debtor can join in the spouse's election. W 2 show state income tax withheld However, if the debtor made an election and the spouse did not join that election, the debtor cannot then join the spouse's later election. W 2 show state income tax withheld The debtor and the spouse are precluded from this election because they have different tax years. W 2 show state income tax withheld This results because the debtor does not have a tax year ending the day before the spouse's filing for bankruptcy, and the debtor cannot file a joint return for a year ending on the day before the spouse's filing of bankruptcy. W 2 show state income tax withheld Example 1. W 2 show state income tax withheld Paul and Mary Harris are calendar-year taxpayers. W 2 show state income tax withheld Paul's voluntary chapter 7 bankruptcy case begins on March 4. W 2 show state income tax withheld If Paul does not make an election, his tax year does not end on March 3. W 2 show state income tax withheld If he makes an election, Paul's first tax year is January 1–March 3, and his second tax year begins on March 4. W 2 show state income tax withheld Mary could join in Paul's election as long as they file a joint return for the tax year January 1–March 3. W 2 show state income tax withheld They must make the election by July 15, the due date for filing the joint return. W 2 show state income tax withheld Example 2. W 2 show state income tax withheld Fred and Ethel Barnes are calendar-year taxpayers. W 2 show state income tax withheld Fred's voluntary chapter 7 bankruptcy case begins on May 6, and Ethel's bankruptcy case begins on November 1 of the same year. W 2 show state income tax withheld Ethel could elect to end her tax year on October 31. W 2 show state income tax withheld If Fred did not elect to end his tax year on May 5, or if he elected to do so but Ethel had not joined in his election, Ethel would have 2 tax years in the same calendar year if she decided to close her tax year. W 2 show state income tax withheld Her first tax year is January 1–October 31, and her second year is November 1–December 31. W 2 show state income tax withheld If Fred did not end his tax year as of May 5, he could join in Ethel's election to close her tax year on October 31, but only if they file a joint return for the tax year January 1–October 31. W 2 show state income tax withheld If Fred elected to end his tax year on May 5, but Ethel did not join in Fred's election, Fred cannot join in Ethel's election to end her tax year on October 31. W 2 show state income tax withheld Fred and Ethel cannot file a joint return for that short tax year because their tax years preceding October 31 were not the same. W 2 show state income tax withheld Example 3. W 2 show state income tax withheld Jack and Karen Thomas are calendar-year taxpayers. W 2 show state income tax withheld Karen's voluntary chapter 7 bankruptcy case began on April 10, and Jack's voluntary chapter 7 bankruptcy case began on October 3 of the same year. W 2 show state income tax withheld Karen elected to close her tax year on April 9 and Jack joins in Karen's election. W 2 show state income tax withheld Under these facts, Jack would have 3 tax years for the same calendar year if he makes the election relating to his own bankruptcy case. W 2 show state income tax withheld The first tax year would be January 1–April 9; the second, April 10–October 2; and the third, October 3–December 31. W 2 show state income tax withheld Karen may join in Jack's election if they file a joint return for the second short tax year (April 10–October 2). W 2 show state income tax withheld If Karen does join in, she would have the same 3 short tax years as Jack. W 2 show state income tax withheld Also, if Karen joins in Jack's election, they may file a joint return for the third tax year (October 3–December 31), but they are not required to do so. W 2 show state income tax withheld Annualizing taxable income. W 2 show state income tax withheld   If the debtor elects to close the tax year, the debtor must annualize taxable income for each short tax year in the same manner a change in annual accounting period is calculated. W 2 show state income tax withheld See Short Tax Year in Publication 538, for information on how to annualize the debtor's income and to figure the tax for the short tax year. W 2 show state income tax withheld Dismissal of bankruptcy case. W 2 show state income tax withheld   If the bankruptcy court later dismisses an individual chapter 7 or 11 case, the bankruptcy estate is no longer treated as a separate taxable entity. W 2 show state income tax withheld It is as if no bankruptcy estate was created for tax purposes. W 2 show state income tax withheld In this situation, the debtor must file amended tax returns on Form 1040X, to replace all full or short year individual returns (Form 1040) and bankruptcy estate returns (Form 1041) filed as a result of the bankruptcy case. W 2 show state income tax withheld Income, deductions, and credits previously reported by the bankruptcy estate must be reported on the debtor's amended returns. W 2 show state income tax withheld Attach a statement to the amended returns explaining why the debtor is filing an amended return. W 2 show state income tax withheld Taxes and the Bankruptcy Estate Property of the bankruptcy estate. W 2 show state income tax withheld   At the commencement of a bankruptcy case a bankruptcy estate is created. W 2 show state income tax withheld Bankruptcy law determines which of the debtor's assets become part of a bankruptcy estate. W 2 show state income tax withheld This estate generally includes all of the debtor's legal and equitable interests in property as of the commencement date. W 2 show state income tax withheld However, there are exceptions and certain property is exempted or excluded from the bankruptcy estate. W 2 show state income tax withheld Note. W 2 show state income tax withheld Exempt property and abandoned property are initially part of the bankruptcy estate, but are subsequently removed from the estate. W 2 show state income tax withheld Excluded property is never included in the estate. W 2 show state income tax withheld Transfer of assets between debtor and bankruptcy estate. W 2 show state income tax withheld   The transfer (other than by sale or exchange) of an asset from the debtor to the bankruptcy estate is not treated as a disposition for income tax purposes. W 2 show state income tax withheld The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits. W 2 show state income tax withheld For example, the transfer of an installment obligation to the estate would not accelerate gain under the rules for reporting installment sales. W 2 show state income tax withheld The estate assumes the same basis, holding period, and character of the transferred assets. W 2 show state income tax withheld Also, the estate generally accounts for the transferred assets in the same manner as debtor. W 2 show state income tax withheld   When the bankruptcy estate is terminated or dissolved, any resulting transfer (other than by sale or exchange) of the estate's assets back to the debtor is also not treated as a disposition for tax purposes. W 2 show state income tax withheld The transfer does not result in gain or loss, acceleration of income or deductions, or recapture of deductions or credits to the estate. W 2 show state income tax withheld Abandoned property. W 2 show state income tax withheld    The abandonment of property by the estate to the debtor is a nontaxable disposition of property. W 2 show state income tax withheld If the debtor received abandoned property from the bankruptcy estate, the debtor assumes the same basis in the property that the bankruptcy estate had. W 2 show state income tax withheld Separate taxable entity. W 2 show state income tax withheld   When an individual files a bankruptcy petition under chapter 7 or 11, the bankruptcy estate is treated as a separate taxable entity from the debtor. W 2 show state income tax withheld The court appointed trustee or the debtor-in-possession is responsible for preparing and filing all of the bankruptcy estate's tax returns, including its income tax return on Form 1041, U. W 2 show state income tax withheld S. W 2 show state income tax withheld Income Tax Return for Estates and Trusts, and paying its taxes. W 2 show state income tax withheld The debtor remains responsible for filing his or her own returns on Form 1040, U. W 2 show state income tax withheld S. W 2 show state income tax withheld Individual Income Tax Return, and paying taxes on income that does not belong to the estate. W 2 show state income tax withheld Employer identification number. W 2 show state income tax withheld   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. W 2 show state income tax withheld The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. W 2 show state income tax withheld See Employer identification number, under Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due, later. W 2 show state income tax withheld    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. W 2 show state income tax withheld Income, deductions, and credits – Form 1040. W 2 show state income tax withheld   In an individual chapter 7 or 11 bankruptcy case, do not include the income, deductions, and credits that belong to the bankruptcy estate on the debtor's individual income tax return (Form 1040). W 2 show state income tax withheld Also, do not include as income on the debtor's return the amount of any debt canceled by reason of the bankruptcy discharge. W 2 show state income tax withheld The bankruptcy estate must reduce certain losses, credits, and the basis in property (to the extent of these items) by the amount of canceled debt. W 2 show state income tax withheld See Debt Cancellation, below. W 2 show state income tax withheld Note. W 2 show state income tax withheld The debtor may not be able to claim certain deductions available to the bankruptcy estate such as administrative expenses. W 2 show state income tax withheld Additionally, the bankruptcy exclusion cannot be used to exclude income from a cancelled debt if the discharge of indebtedness was not within the bankruptcy case, even though the debtor was under the bankruptcy court's protection at the time. W 2 show state income tax withheld However, other exclusions, such as the insolvency exclusion, may apply. W 2 show state income tax withheld Bankruptcy Estate – Income, Deductions, and Credits Bankruptcy Estate Income Income of the estate in individual chapter 7 cases. W 2 show state income tax withheld    The gross income of the bankruptcy estate includes gross income of the debtor to which the estate is entitled under the Bankruptcy Code. W 2 show state income tax withheld Gross income also includes income generated by the bankruptcy estate from property of the estate after the commencement of the case. W 2 show state income tax withheld   Gross income of the bankruptcy estate does not include amounts received or accrued by the debtor before the commencement of the case. W 2 show state income tax withheld Additionally, in chapter 7 cases, gross income of the bankruptcy estate does not include any income that the debtor earns after the date of the bankruptcy petition. W 2 show state income tax withheld Income of the estate in individual chapter 11 cases. W 2 show state income tax withheld    In chapter 11 cases, under IRC section 1398(e)(1), gross income of the bankruptcy estate includes income that the debtor earns for services performed after the bankruptcy petition date. W 2 show state income tax withheld Also, earnings from services performed by an individual debtor after the commencement of the chapter 11 case are property of the bankruptcy estate under section 1115 of the Bankruptcy Code (11 U. W 2 show state income tax withheld S. W 2 show state income tax withheld C. W 2 show state income tax withheld section 1115). W 2 show state income tax withheld Note. W 2 show state income tax withheld A debtor-in-possession may be compensated by the estate for managing or operating a trade or business that the debtor conducted before the commencement of the bankruptcy case. W 2 show state income tax withheld Such payments should be reported by the debtor as miscellaneous income on his or her individual income tax return (Form 1040). W 2 show state income tax withheld Amounts paid by the estate to the debtor-in-possession for managing or operating the trade or business may qualify as administrative expenses of the estate. W 2 show state income tax withheld See Administrative expenses, below. W 2 show state income tax withheld Conversion or dismissal of chapter 11 cases. W 2 show state income tax withheld   If a chapter 11 case is converted to a chapter 13 case, the chapter 13 estate is not a separate taxable entity and earnings from post-conversion services and income from property of the estate realized after the conversion to chapter 13 are taxed to the debtor. W 2 show state income tax withheld If the chapter 11 case is converted to a chapter 7 case, 11 U. W 2 show state income tax withheld S. W 2 show state income tax withheld C. W 2 show state income tax withheld section 1115 does not apply after conversion and: Earnings from post-conversion services will be taxed to the debtor, rather than the estate, and The property of the chapter 11 estate will become property of the chapter 7 estate. W 2 show state income tax withheld Any income on this property will be taxed to the estate even if the income is realized after the conversion to chapter 7. W 2 show state income tax withheld If a chapter 11 case is dismissed, the debtor is treated as if the bankruptcy case had never been filed and as if no bankruptcy estate had been created. W 2 show state income tax withheld Bankruptcy Estate Deductions and Credits A bankruptcy estate deducts expenses incurred in a trade, business, or activity, and uses credits in the same way the debtor would have deducted or credited them had he or she continued operations. W 2 show state income tax withheld Note. W 2 show state income tax withheld Expenses may be disallowed under other provisions of the IRC (such as the disallowance of certain capital expenditures or expenses relating to tax-exempt interest). W 2 show state income tax withheld Administrative expenses. W 2 show state income tax withheld   Allowable expenses include administrative expenses. W 2 show state income tax withheld    Administrative expenses can only be deducted by the estate, never by the debtor. W 2 show state income tax withheld   The bankruptcy estate is allowed deductions for bankruptcy administrative expenses and fees, including accounting fees, attorney fees, and court costs. W 2 show state income tax withheld These expenses are deductible on Form 1040, Schedule A as miscellaneous itemized deductions not subject to the 2% floor on miscellaneous itemized deductions, because they would not have been incurred if property had not been held by the bankruptcy estate. W 2 show state income tax withheld See IRC section 67(e). W 2 show state income tax withheld Administrative expenses of the bankruptcy estate attributable to conducting a trade or business for the production of estate rents or royalties are deductible in arriving at adjusted gross income on Form 1040, Schedules C, E, and F. W 2 show state income tax withheld Note. W 2 show state income tax withheld The bankruptcy estate uses Form 1041 as a transmittal for the tax return prepared using Form 1040 and its schedules. W 2 show state income tax withheld See Transmittal for Form 1040 under Tax Return Filing Requirements and Payment of Tax, later. W 2 show state income tax withheld Administrative expense loss. W 2 show state income tax withheld   If the administrative expenses of the bankruptcy estate are more than its gross income for a tax year, the excess amount may be carried back 3 years and forward 7 years. W 2 show state income tax withheld The amounts can only be carried to a tax year of the estate and never to a debtor's tax year. W 2 show state income tax withheld The excess amount to be carried back or forward is treated like a net operating loss (NOL) and must first be carried back to the earliest year possible. W 2 show state income tax withheld For a discussion of NOLs, see Publication 536. W 2 show state income tax withheld Attribute carryovers. W 2 show state income tax withheld   The bankruptcy estate may use its tax attributes the same way that the debtor would have used them. W 2 show state income tax withheld These items are determined as of the first day of the debtor's tax year in which the bankruptcy case begins. W 2 show state income tax withheld The bankruptcy estate assumes the following tax attributes from the debtor: NOL carryovers, Carryovers of excess charitable contributions, Recovery of tax benefit items, Credit carryovers, Capital loss carryovers, Basis, holding period, and character of assets, Method of accounting, Passive activity loss and credit carryovers, Unused at-risk deductions, and Other tax attributes provided in the regulations. W 2 show state income tax withheld   Certain tax attributes of the bankruptcy estate must be reduced by the amount of income that was previously excluded as a result of cancellation of debt during the bankruptcy proceeding. W 2 show state income tax withheld See Debt Cancellation, later. W 2 show state income tax withheld   When the bankruptcy estate is terminated (for example, when the case ends), the debtor assumes any remaining tax attributes previously taken over by the bankruptcy estate. W 2 show state income tax withheld The debtor also generally assumes any of the tax attributes, listed above, that arose during the administration of the bankruptcy estate. W 2 show state income tax withheld Note. W 2 show state income tax withheld The debtor does not assume the bankruptcy estate's administrative expense losses because they cannot be used by an individual taxpayer filing Form 1040. W 2 show state income tax withheld See Administrative expense loss, above. W 2 show state income tax withheld Passive and at-risk activities. W 2 show state income tax withheld   For bankruptcy cases beginning after November 8, 1992, passive activity carryover losses and credits and unused at-risk deductions are treated as tax attributes passing from the debtor to the bankruptcy estate, which the estate then passes back to the debtor when the bankruptcy estate terminates. W 2 show state income tax withheld Additionally, transfers to the debtor (other than by sale or exchange) of interests in passive or at-risk activities are treated as non-taxable exchanges. W 2 show state income tax withheld These transfers include the return of exempt property and abandonment of estate property to the debtor. W 2 show state income tax withheld Carrybacks from the debtor's activities. W 2 show state income tax withheld   The debtor cannot carry back any NOL or credit carryback from a tax year ending after the bankruptcy case has begun to any tax year ending before the case began. W 2 show state income tax withheld Carrybacks from the bankruptcy estate. W 2 show state income tax withheld   If the bankruptcy estate has an NOL that did not pass to the estate from the debtor under the attribute carryover rules, the estate can carry the loss back not only to its own earlier tax years but also to the debtor's tax years before the year the bankruptcy case began. W 2 show state income tax withheld The estate may also carry back excess credits, such as the general business credit, to the pre-bankruptcy tax years. W 2 show state income tax withheld Tax Reporting – Chapter 11 Cases Allocation of income and credits on information returns and required statement for returns for individual chapter 11 cases. W 2 show state income tax withheld    In chapter 11 cases, when an employer issues a Form W-2 reporting all of the debtor's wages, salary, or other compensation for a calendar year, and a portion of the earnings represent post-petition services includible in the estate's gross income, the Form W-2 amounts must be allocated between the estate and the debtor. W 2 show state income tax withheld The debtor-in-possession or trustee must allocate the income amount reported in box 1 and the income tax withheld reported in box 2 between the debtor and the estate. W 2 show state income tax withheld These allocations must reflect that the debtor's gross earnings from post-petition services and gross income from post-petition property are, generally, includible in the estate's gross income and not the debtor's gross income. W 2 show state income tax withheld The debtor and trustee may use a simple percentage method to allocate income and income tax withheld. W 2 show state income tax withheld The same method must be used to allocate the income and the withheld tax. W 2 show state income tax withheld Example. W 2 show state income tax withheld If 20% of the wages reported on Form W-2 for a calendar year were earned after the commencement of the case and are included in the estate's gross income, 20% of the withheld income tax reported on Form W-2 must also be claimed as a credit on the estate's income tax return. W 2 show state income tax withheld Likewise, 80% of wages must be reported by the debtor and 80% of the income tax withheld must be claimed as a credit on the debtor's income tax return. W 2 show state income tax withheld See IRC section 31(a). W 2 show state income tax withheld   If information returns are issued to the debtor for gross income, gross proceeds, or other reportable payments that should have been reported to the bankruptcy estate, the debtor-in-possession or trustee must allocate the improperly reported income in a reasonable manner between the debtor and the estate. W 2 show state income tax withheld In general, the allocation must ensure that any income and income tax withheld attributable to the post-petition period is reported on the estate's return, and any income and income tax withheld attributable to the pre-petition period is reported on the debtor's return. W 2 show state income tax withheld    IRS Notice 2006-83 requires the debtor to attach a statement to his or her individual income tax return (Form 1040) stating that the return is filed subject to a chapter 11 bankruptcy case. W 2 show state income tax withheld The statement must also: Show the allocations of income and income tax withheld, Describe the method used to allocate income and income tax withheld, and List the filing date of the bankruptcy case, the bankruptcy court in which the case is pending, the bankruptcy court case number, and the bankruptcy estate's EIN. W 2 show state income tax withheld Note. W 2 show state income tax withheld The debtor-in-possession or trustee must attach a similar statement to the bankruptcy estate's income tax return (Form 1041). W 2 show state income tax withheld   The model Notice 2006-83 Statement, shown above, may be used by debtors, debtors-in-possession, and trustees to satisfy the reporting requirement. W 2 show state income tax withheld Self-employment taxes in individual chapter 11 cases. W 2 show state income tax withheld   IRC section 1401 imposes a tax upon the self-employment income, that is, the net earnings from self-employment of an individual. W 2 show state income tax withheld Net earnings from self-employment are equal to the gross income derived by an individual from any trade or business carried on by such individual, less deductions attributable to the business. W 2 show state income tax withheld   Neither section 1115 of the Bankruptcy Code nor IRC section 1398 addresses the application of self-employment tax to the post-petition earnings of the individual debtor. W 2 show state income tax withheld Therefore, if the debtor continues to derive gross income from the performance of services as a self-employed individual after the commencement of the bankruptcy case, the debtor must continue to report the debtor's self-employment income on Schedule SE (Form 1040) of the debtor's income tax return. W 2 show state income tax withheld This schedule includes self-employment income earned post-petition and the attributable deductions. W 2 show state income tax withheld The debtor must pay any self-employment tax imposed by IRC section 1401. W 2 show state income tax withheld Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. W 2 show state income tax withheld   In chapter 11 cases, post-petition wages earned by a debtor are generally treated as gross income of the estate. W 2 show state income tax withheld However, section 1115 of the Bankruptcy Code (11 U. W 2 show state income tax withheld S. W 2 show state income tax withheld C. W 2 show state income tax withheld section 1115) does not affect the determination of what are deemed wages for Federal Insurance Contributions Act (FICA) tax, Federal Unemployment Tax Act (FUTA) tax, or Federal Income Tax Withholding purposes. W 2 show state income tax withheld See Notice 2006-83. W 2 show state income tax withheld   The reporting and withholding obligations of a debtor's employer also do not change. W 2 show state income tax withheld An employer should continue to report the wages and tax withholding on a Form W-2 issued under the debtor's name and social security number. W 2 show state income tax withheld Notice to persons required to file information returns (other than Form W-2, Wage and Tax Statement) in individual chapter 11 cases. W 2 show state income tax withheld   Within a reasonable time after the commencement of a chapter 11 bankruptcy case, the trustee or debtor-in-possession should provide notification of the bankruptcy estate's EIN to all persons (or entities) that are required to file information returns for the bankruptcy estate's gross income, gross proceeds, or other types of reportable payments. W 2 show state income tax withheld See IRC section 6109(a)(2). W 2 show state income tax withheld As these payments are the property of the estate under section 1115 of the Bankruptcy Code, the payors should report the gross income, gross proceeds, or other reportable payments on the appropriate information return using the estate's name and EIN as required under the IRC and regulations (see IRC sections 6041 through 6049). W 2 show state income tax withheld   The trustee or debtor-in-possession should not, however, provide the EIN to a person (or entity) filing Form W-2 reporting the debtor's wages or other compensation, as section 1115 of the Bankruptcy Code does not affect the determination of what constitutes wages for purposes of federal income tax withholding or FICA. W 2 show state income tax withheld See Notice 2006-83. W 2 show state income tax withheld An employer should continue to report all wage income and tax withholding, both pre-petition and post-petition, on a Form W-2 to the debtor under the debtor's social security number. W 2 show state income tax withheld   The debtor in a chapter 11 case is not required to file a new Form W-4 with an employer solely because the debtor filed a chapter 11 case and the post-petition wages are includible in the estate's income and not the debtor's income. W 2 show state income tax withheld However, a new Form W-4 may be necessary if the debtor is no longer entitled to claim the same number of allowances previously claimed because certain deductions or credits now belong to the estate. W 2 show state income tax withheld See Employment Tax Regulations section 31. W 2 show state income tax withheld 3402(f)(2)-1. W 2 show state income tax withheld Additionally, the debtor may wish to file a new Form W-4 to increase the income tax withheld from post-petition wages allocated to the estate to avoid having to make estimated tax payments for the estate. W 2 show state income tax withheld See IRC section 6654(a). W 2 show state income tax withheld Notice required in converted and dismissed cases. W 2 show state income tax withheld   When a chapter 11 bankruptcy case is closed, dismissed, or converted to a chapter 12 or 13 case, the bankruptcy estate ends as a separate taxable entity. W 2 show state income tax withheld The debtor should, within a reasonable time, send notice of such event to the persons (or entities) previously notified of the bankruptcy case. W 2 show state income tax withheld This helps to ensure that gross income, proceeds, and other reportable payments realized after the event are reported to the debtor under the correct TIN rather than to the estate. W 2 show state income tax withheld   When a chapter 11 case is converted to a chapter 7 case, the bankruptcy estate will continue to exist as a separate taxable entity. W 2 show state income tax withheld Gross income (other than post-conversion income from the debtor's services), gross proceeds, or other reportable payments should continue to be reported to the estate if they are property of the chapter 7 estate. W 2 show state income tax withheld However, income from services performed by the debtor after conversion of the case to chapter 7 is not property of the chapter 7 estate. W 2 show state income tax withheld After the conversion, the debtor should notify payors required to report the debtor's nonemployee compensation that compensation earned after the conversion should be reported using the debtor's name and TIN, not the estate's name and EIN. W 2 show state income tax withheld Employment taxes. W 2 show state income tax withheld   The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. W 2 show state income tax withheld See Publication 15, Circular E, Employer's Tax Guide, for details on employer tax responsibilities. W 2 show state income tax withheld   The trustee also has the duty to prepare and file Forms W-2 for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. W 2 show state income tax withheld For a further discussion of employment taxes, see Employment Taxes, later. W 2 show state income tax withheld Notice 2006-83 Statement Pending Bankruptcy Case The taxpayer, , filed a bankruptcy petition under chapter 11 of the Bankruptcy Code in the bankruptcy court for the District of . W 2 show state income tax withheld The bankruptcy court case number is . W 2 show state income tax withheld Gross income, and withheld federal income tax, reported on Form W-2, Forms 1099, Schedule K-1, and other information returns received under the taxpayer's name and social security number (or other taxpayer identification number) are allocated between the taxpayer's TIN and the bankruptcy estate's EIN as follows, using [describe allocation method]:. W 2 show state income tax withheld   Year Taxpayer   Estate 1. W 2 show state income tax withheld Form W-2, Payor: $   $     Withheld income tax shown on Form W-2 $   $   2. W 2 show state income tax withheld Form 1099-INT Payor: $   $     Withheld income tax (if any) shown on Form 1099-INT $   $   3. W 2 show state income tax withheld Form 1099-DIV Payor: $   $     Withheld income tax (if any) shown on Form 1099-DIV $   $   4. W 2 show state income tax withheld Form 1099-MISC Payor: $   $     Withheld income tax (if any) shown on Form 1099-MISC $   $   Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Filing Requirements Filing threshold. W 2 show state income tax withheld   If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. W 2 show state income tax withheld This amount is equal to the sum of the personal exemption amount plus the basic standard deduction for a married individual filing separately. W 2 show state income tax withheld   For 2012, the threshold filing amount for a bankruptcy estate is $9,750 (the sum of the $3,800 personal exemption plus the $5,950 standard deduction for married individuals filing separately). W 2 show state income tax withheld   These amounts are generally adjusted annually. W 2 show state income tax withheld See the present year Form 1041 Instructions at www. W 2 show state income tax withheld irs. W 2 show state income tax withheld gov/form1041 for the current dollar amounts. W 2 show state income tax withheld Accounting period. W 2 show state income tax withheld   A bankruptcy estate may have a fiscal year. W 2 show state income tax withheld However, this period cannot be longer than 12 months. W 2 show state income tax withheld Change of accounting period. W 2 show state income tax withheld   The bankruptcy estate may change its accounting period (tax year) once without IRS approval. W 2 show state income tax withheld This rule allows the bankruptcy trustee to close the estate's tax year early, before the expected termination of the bankruptcy estate. W 2 show state income tax withheld The trustee can then file a return for the first short tax year to get a quick determination of the estate's tax liability. W 2 show state income tax withheld Employer identification number. W 2 show state income tax withheld   The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. W 2 show state income tax withheld The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns. W 2 show state income tax withheld    The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate. W 2 show state income tax withheld   Obtain an EIN for a bankruptcy estate by applying: Online by clicking on the EIN link at www. W 2 show state income tax withheld irs. W 2 show state income tax withheld gov/businesses/small. W 2 show state income tax withheld The EIN is issued immediately once the application information is validated. W 2 show state income tax withheld By telephone at 1-800-829-4933 from 7:00 a. W 2 show state income tax withheld m. W 2 show state income tax withheld to 7:00 p. W 2 show state income tax withheld m. W 2 show state income tax withheld in the trustee's or debtor-in-possession's local time zone. W 2 show state income tax withheld Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone, or By mailing or faxing Form SS-4, Application for Employer Identification Number. W 2 show state income tax withheld   If the trustee or debtor-in-possession has not received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. W 2 show state income tax withheld For more details, see Pub. W 2 show state income tax withheld 583, Starting a Business and Keeping Records. W 2 show state income tax withheld   Trustees representing ten or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs. W 2 show state income tax withheld Figuring tax due. W 2 show state income tax withheld   The bankruptcy estate figures its taxable income the same way an individual figures taxable income. W 2 show state income tax withheld However, the estate uses the tax rates for a married individual filing separately to calculate the tax on its taxable income. W 2 show state income tax withheld The estate is entitled to one personal exemption and may either itemize deductions or take the basic standard deduction for a married individual filing a separate return. W 2 show state income tax withheld The estate cannot take the higher standard deduction allowed for married persons filing separately who are 65 or older or blind. W 2 show state income tax withheld Tax rate schedule. W 2 show state income tax withheld The tax on income for bankruptcy estates is calculated using the tax rate schedule for Married Individuals Filing Separately not the Estates and Trusts tax rate schedule. W 2 show state income tax withheld When to file. W 2 show state income tax withheld   Calendar year bankruptcy estates must file Form 1041 by April 15th. W 2 show state income tax withheld Fiscal year bankruptcy estates must file on or before the 15th day of the 4th month following the close of its tax year. W 2 show state income tax withheld For example, an estate that has a tax year that ends on June 30th must file Form 1041 by October 15th of the tax year. W 2 show state income tax withheld If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day. W 2 show state income tax withheld Note. W 2 show state income tax withheld The bankruptcy estate is allowed an automatic 6-month extension of time to file the bankruptcy estate tax return upon filing the required application, Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. W 2 show state income tax withheld Transmittal for Form 1040. W 2 show state income tax withheld   Form 1041 is used as a transmittal for Form 1040. W 2 show state income tax withheld If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11. W 2 show state income tax withheld   Prepare the bankruptcy estate's return by completing Form 1040. W 2 show state income tax withheld In the top margin of Form 1040, write “Attachment to Form 1041 —DO NOT DETACH. W 2 show state income tax withheld ” Then, attach Form 1040 to the Form 1041 transmittal. W 2 show state income tax withheld Enter the tax and payment amounts on lines 23 through 29 of Form 1041, then sign and date the return. W 2 show state income tax withheld An example of a bankruptcy estate's tax return is prepared below. W 2 show state income tax withheld Note. W 2 show state income tax withheld The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040. W 2 show state income tax withheld Payment of Tax Due Payment methods. W 2 show state income tax withheld   Payment of tax due may be made by check or money order or by credit or debit card. W 2 show state income tax withheld For information on how to make payments electronically by credit or debit card, go to irs. W 2 show state income tax withheld gov/e-pay. W 2 show state income tax withheld      Payments may also be made electronically using the Electronic Federal Tax Payment System (EFTPS), a free tax payment system that allows you to make payments online or by phone. W 2 show state income tax withheld To enroll in EFTPS, go to eftps. W 2 show state income tax withheld gov or call 1-800-555-4477. W 2 show state income tax withheld For more information see Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. W 2 show state income tax withheld Payment voucher – Form 1041-V. W 2 show state income tax withheld   Form 1041-V accompanies payments made by check or money order for Form 1041. W 2 show state income tax withheld The voucher includes information about the bankruptcy estate, including the name of the bankruptcy estate, trustee, EIN, and amount due. W 2 show state income tax withheld Using Form 1041-V assists the IRS in processing the payment more accurately and efficiently. W 2 show state income tax withheld We recommend the use of Form 1041-V; however, there is no penalty if the voucher is not used. W 2 show state income tax withheld Estimated tax – Form 1041-ES. W 2 show state income tax withheld   In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. W 2 show state income tax withheld See the Form 1041-ES Instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing. W 2 show state income tax withheld Employment Taxes The trustee or debtor-in-possession must withhold income and social security taxes and file employment tax returns for any wages paid by the trustee or debtor, including wage claims paid as administrative expenses. W 2 show state income tax withheld Until these employment taxes are deposited as required by the IRC, they should be set aside in a separate bank account to ensure that funds are available to satisfy the liability. W 2 show state income tax withheld If the employment taxes are not paid as required, the trustee may be held personally liable for payment of the taxes. W 2 show state income tax withheld   See Publication 15, (Circular E), Employer's Tax Guide, for details on employer tax responsibilities. W 2 show state income tax withheld Also see IRS Notice 931, Deposit Requirements for Employment Taxes, for details on the deposit rules, including the requirement that federal employment tax deposits be made by electronic funds transfer. W 2 show state income tax withheld The trustee also has a duty to prepare and file Forms W-2, Wage and Tax Statement, for wage claims paid by the trustee, regardless of whether the claims accrued before or during bankruptcy. W 2 show state income tax withheld If the debtor fails to prepare and file Forms W-2 for wages paid before bankruptcy, the trustee should instruct the employees to file a Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. W 2 show state income tax withheld , with their individual income tax returns. W 2 show state income tax withheld Tax Return Example – Form 1041 This publication is not revised annually. W 2 show state income tax withheld Future changes to the forms and their instructions may not be reflected in this example. W 2 show state income tax withheld Note. W 2 show state income tax withheld The following return was prepared for tax year 2011. W 2 show state income tax withheld In 2011, the threshold filing amount for a bankruptcy estate was $9,500 (the sum of the $3,700 personal exemption plus the $5,800 standard deduction for married individuals filing separately). W 2 show state income tax withheld Facts and circumstances. W 2 show state income tax withheld   On December 15, 2010, Thomas Smith filed a bankruptcy petition under chapter 7. W 2 show state income tax withheld Joan Black was appointed trustee to administer the bankruptcy estate and to distribute the assets. W 2 show state income tax withheld   The estate received the following assets from Mr. W 2 show state income tax withheld Smith: A $100,000 certificate of deposit, Commercial rental real estate with a fair market value (FMV) of $280,000, and His personal residence with an FMV of $200,000. W 2 show state income tax withheld   Also, the estate received a $251,500 capital loss carryover. W 2 show state income tax withheld   Mr. W 2 show state income tax withheld Smith's bankruptcy case was closed on December 31, 2011. W 2 show state income tax withheld During 2011, Mr. W 2 show state income tax withheld Smith was relieved of $70,000 of debt by the bankruptcy court. W 2 show state income tax withheld The estate chose a calendar year as its tax year. W 2 show state income tax withheld Joan, the trustee, reviews the estate's transactions and reports the taxable events on the estate's final return. W 2 show state income tax withheld Schedule B (Form 1040). W 2 show state income tax withheld    The certificate of deposit earned $5,500 of interest during 2011. W 2 show state income tax withheld Joan reports this interest on Schedule B. W 2 show state income tax withheld She completes this schedule and enters the result on Form 1040. W 2 show state income tax withheld Form 4562. W 2 show state income tax withheld   Joan enters the depreciation allowed on Form 4562. W 2 show state income tax withheld She completes the form and enters the result on Schedule E. W 2 show state income tax withheld Schedule E (Form 1040). W 2 show state income tax withheld   The commercial real estate was rented through the date of sale. W 2 show state income tax withheld Joan reports the income and expenses on Schedule E. W 2 show state income tax withheld She enters the net income on Form 1040. W 2 show state income tax withheld Form 4797. W 2 show state income tax withheld   The commercial real estate was sold on July 1, 2011, for $280,000. W 2 show state income tax withheld The property was purchased in 2001 at a cost of $250,000. W 2 show state income tax withheld The total depreciation allowable as of the date of sale was $120,000. W 2 show state income tax withheld Additionally, $25,000 of selling expenses were incurred. W 2 show state income tax withheld Joan reports the gain or loss from the sale on Form 4797. W 2 show state income tax withheld She completes the form and enters the gain on Schedule D (Form 1040). W 2 show state income tax withheld   Mr. W 2 show state income tax withheld Smith's former residence was sold on September 30, 2011. W 2 show state income tax withheld The sale price was $200,000, the selling expenses were $20,000, and his adjusted basis was $130,000. W 2 show state income tax withheld This sale is excluded from gross income under IRC section 121. W 2 show state income tax withheld Note. W 2 show state income tax withheld Gains from the sale of personal residences are excluded from gross income up to $250,000 under IRC section 121 ($500,000 for married couples filing a joint return). W 2 show state income tax withheld Bankruptcy estates succeed to this exclusion at the commencement of the case. W 2 show state income tax withheld See Regulation section 1. W 2 show state income tax withheld 1398-3. W 2 show state income tax withheld Schedule D (Form 1040). W 2 show state income tax withheld   Joan completes Schedule D, taking into account the $250,000 capital loss carryover from 2010 ($251,500 transferred to the estate minus $1,500 used on the estate's 2010 return). W 2 show state income tax withheld She enters the results on Form 1040. W 2 show state income tax withheld Form 1040, page 1. W 2 show state income tax withheld   Joan completes page 1 of the Form 1040 and enters the adjusted gross income on the first line of Form 1040, page 2. W 2 show state income tax withheld Schedule A (Form 1040). W 2 show state income tax withheld   During 2011, the estate paid mortgage interest and real property tax on Mr. W 2 show state income tax withheld Smith's former residence. W 2 show state income tax withheld It also paid income tax to the state. W 2 show state income tax withheld Joan enters the mortgage interest, real estate tax, and income tax on Schedule A. W 2 show state income tax withheld Also, she reports the bankruptcy estate's administrative expenses as a miscellaneous deduction not subject to the 2% floor on miscellaneous itemized deductions. W 2 show state income tax withheld She completes the Schedule A and enters the result on page 2 of Form 1040. W 2 show state income tax withheld Form 1040, page 2. W 2 show state income tax withheld   Joan determines the estate's taxable income and figures its tax using the tax rate schedule for married filing separately. W 2 show state income tax withheld She then enters the estate's estimated tax payments and figures the amount the estate still owes. W 2 show state income tax withheld Form 982. W 2 show state income tax withheld   Joan completes the Schedule D Tax Worksheet to figure the capital loss carryover. W 2 show state income tax withheld Because $70,000 of debt was canceled, Joan must reduce the tax attributes of the estate by the amount of the canceled debt. W 2 show state income tax withheld See Debt Cancellation, later. W 2 show state income tax withheld After the bankruptcy case ends, Mr. W 2 show state income tax withheld Smith will assume the estate's tax attributes. W 2 show state income tax withheld Mr. W 2 show state income tax withheld Smith will assume a capital loss carryover of $53,500 ($123,500 carryover minus the $70,000 attribute reduction) for use in preparation of his individual tax return (Form 1040). W 2 show state income tax withheld Note. W 2 show state income tax withheld If the bankruptcy estate had continued, the capital loss carryover would be available to the bankruptcy estate for the 2012 tax year. W 2 show state income tax withheld Form 1041. W 2 show state income tax withheld   Joan enters the total tax, estimated tax payments, and tax due from Form 1040 on Form 1041. W 2 show state income tax withheld She completes the identification area at the top of Form 1041, then signs and dates the return as the trustee on behalf of the bankruptcy estate. W 2 show state income tax withheld This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Form 1040 - page 1 This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Form 1040 - page 2 This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Schedule A This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Schedule B This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Schedule D This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Schedule E This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Form 4797 - page 1 This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Form 2119 This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Form 4797 - page 2 This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Form 4562 This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Capital Loss Carryover Worksheet This image is too large to be displayed in the current screen. W 2 show state income tax withheld Please click the link to view the image. W 2 show state income tax withheld Sample Form 982 Capital Loss Carryover Worksheet—Lines 6 and 14 Use this worksheet to figure your capital loss carryovers from 2010 to 2011 if your 2010 Schedule D, line 21, is a loss and (a) that loss is a smaller loss than the loss on your 2010 Schedule D, line 16, or (b) the amount on your 2010 Form 1040, line 41 (or your 2010 Form 1040NR, line 38, if applicable) is less than zero. W 2 show state income tax withheld Otherwise, you do not have any carryovers. W 2 show state income tax withheld 1. W 2 show state income tax withheld Enter the amount from your 2010 Form 1040, line 41, or Form 1040NR, line 38. W 2 show state income tax withheld If a loss, enclose the amount in parentheses 1. W 2 show state income tax withheld 19,880   2. W 2 show state income tax withheld Enter the loss from your 2010 Schedule D, line 21, as a positive amount 2. W 2 show state income tax withheld 1,500   3. W 2 show state income tax withheld Combine lines 1 and 2. W 2 show state income tax withheld If zero or less, enter -0- 3. W 2 show state income tax withheld 21,380   4. W 2 show state income tax withheld Enter the smaller of line 2 or line 3 4. W 2 show state income tax withheld 1,500     If line 7 of your 2010 Schedule D is a loss, go to line 5; otherwise, enter -0- on line 5 and go to line 9. W 2 show state income tax withheld       5. W 2 show state income tax withheld Enter the loss from your 2010 Schedule D, line 7, as a positive amount 5. W 2 show state income tax withheld 0   6. W 2 show state income tax withheld Enter any gain from your 2010 Schedule D, line 15. W 2 show state income tax withheld If a loss, enter -0- 6. W 2 show state income tax withheld         7. W 2 show state income tax withheld Add lines 4 and 6 7. W 2 show state income tax withheld 1,500   8. W 2 show state income tax withheld Short-term capital loss carryover for 2011. W 2 show state income tax withheld Subtract line 7 from line 5. W 2 show state income tax withheld If zero or less, enter -0-. W 2 show state income tax withheld If more than zero, also enter this amount on Schedule D, line 6 8. W 2 show state income tax withheld 0     If line 15 of your 2010 Schedule D is a loss, go to line 9; otherwise, skip lines 9 through 13. W 2 show state income tax withheld       9. W 2 show state income tax withheld Enter the loss from your 2010 Schedule D, line 15, as a positive amount 9. W 2 show state income tax withheld 251,500   10. W 2 show state income tax withheld Enter any gain from your 2010 Schedule D, line 7. W 2 show state income tax withheld If a loss, enter -0- 10. W 2 show state income tax withheld 0       11. W 2 show state income tax withheld Subtract line 5 from line 4. W 2 show state income tax withheld If zero or less, enter -0- 11. W 2 show state income tax withheld 1,500       12. W 2 show state income tax withheld Add lines 10 and 11 12. W 2 show state income tax withheld 1,500   13. W 2 show state income tax withheld Long-term capital loss carryover for 2011. W 2 show state income tax withheld Subtract line 12 from line 9. W 2 show state income tax withheld If zero or less, enter -0-. W 2 show state income tax withheld If more than zero, also enter this amount on Schedule D, line 14 13. W 2 show state income tax withheld 250,000                       Partnerships and Corporations Filing Requirements A separate taxable estate is not created when a partnership or corporation files a bankruptcy petition and their tax return filing requirements do not change. W 2 show state income tax withheld The debtor-in-possession, court appointed trustee, assignee, or receiver must file the entity's income tax returns on Form 1065, Form 1120 or, Form 1120S. W 2 show state income tax withheld In cases where a trustee or receiver is not appointed, the debtor-in-possession continues business operations and remains in possession of the business' property during the bankruptcy proceeding. W 2 show state income tax withheld The debtor-in-possession, rather than the general partner of a partnership or corporate officer of a corporation, assumes the fiduciary responsibility to file the business' tax returns. W 2 show state income tax withheld Partnerships The filing requirements for a partnership in a bankruptcy proceeding do not change. W 2 show state income tax withheld However, the responsibility to file the required returns becomes that of the court appointed trustee, receiver, or debtor-in-possession. W 2 show state income tax withheld A partnership's debt that is canceled as a result of the bankruptcy proceeding is not included in the partnership's income. W 2 show state income tax withheld However, It may or may not be included in the individual partners' income. W 2 show state income tax withheld See Partnerships, below under Debt Cancellation. W 2 show state income tax withheld Corporations The filing requirements for a corporation in a bankruptcy proceeding also do not change. W 2 show state income tax withheld A bankruptcy trustee, receiver, or debtor-in-possession, having possession of or holding title to substantially all of the property or business operations of the debtor corporation, must file the debtor's corporate income tax return for the tax year. W 2 show state income tax withheld The following discussion only highlights bankruptcy tax rules applying to corporations. W 2 show state income tax withheld The complex details of corporate bankruptcy reorganizations are beyond the scope of this publication. W 2 show state income tax withheld Therefore, you may wish to seek the help of a professional tax advisor. W 2 show state income tax withheld See Corporations under Debt Cancellation for information about a corporation's debt canceled in a bankruptcy proceeding. W 2 show state income tax withheld Tax-Free Reorganizations The tax-free reorganization provisions of the Internal Revenue Code allow a corporation to transfer all or part of its assets to another corporation in a bankruptcy under title 11 of the United States Code or in a similar case. W 2 show state income tax withheld However, under the reorganization plan, the stock or securities of the corporation to which the assets are transferred must be distributed in a transaction that qualifies under IRC section 354, 355, or 356. W 2 show state income tax withheld A “similar case” includes a receivership, foreclosure, or other similar proceeding in a federal or state court. W 2 show state income tax withheld In these cases, any party to the reorganization must be under the jurisdiction of the court and the transfer of assets under the plan of reorganization must be approved by the court. W 2 show state income tax withheld In a receivership, foreclosure, or similar proceeding before a federal or state agency involving certain financial institutions, the agency is treated as a court. W 2 show state income tax withheld Generally, IRC section 354 provides that no gain or loss is recognized if a corporation's stock is exchanged solely for stock or securities in a corporation that is a party to the reorganization under a qualifying reorganization plan. W 2 show state income tax withheld In this case, shareholders in the bankrupt corporation would recognize no gain or loss if they exchange their stock solely for stock or securities of the corporation acquiring the bankrupt corporation's assets. W 2 show state income tax withheld IRC section 355 generally provides that no gain or loss is recognized by a shareholder if a corporation distributes solely stock or securities of another corporation that the distributing corporation controls immediately before the distribution. W 2 show state income tax withheld IRC section 356 allows tax-free exchanges in situations that would qualify under IRC section 354 or 355, except that other property or money, in addition to the permitted stock or securities, is received by the shareholder. W 2 show state income tax withheld In this situation, gain is recognized by the shareholder, but only to the extent of the money and the FMV of the other property received. W 2 show state income tax withheld No loss is recognized in this situation. W 2 show state income tax withheld Exemption from tax return filing A trustee, receiver, or assignee of a corporation in bankruptcy, receivership, or in the process of dissolving, may apply to the IRS for relief from filing federal income tax returns for the corporation. W 2 show state income tax withheld To qualify, the corporation must have ceased business operations and have no assets nor income for the tax year. W 2 show state income tax withheld The exemption request must be submitted to the local IRS Insolvency Office handling the case. W 2 show state income tax withheld The request to the IRS must include the name, address, and EIN of the corporation and a statement of the facts (with any supporting documents) showing why the debtor needs relief from the filing requirements. W 2 show state income tax withheld The request must also include the following statement: “I hereby request relief from filing federal income tax returns for tax years ending _____ for the above-named corporation and declare under penalties of perjury that to the best of my knowledge and belief the information contained herein is correct. W 2 show state income tax withheld ” The statement must be signed by the trustee, receiver or assignee. W 2 show state income tax withheld The statement must also include notice of appointment to act on behalf of the corporation (this is not required for bankruptcy trustees or debtors-in-possession). W 2 show state income tax withheld The IRS will act on your request within 90 days. W 2 show state income tax withheld Disclosure of return information to trustee. W 2 show state income tax withheld   Upon written request, current and earlier returns of the debtor are open to inspection by or disclosure to the trustee or receiver. W 2 show state income tax withheld However, in bankruptcy cases other than those of individuals filing under chapter 7 or 11, such as a corporate bankruptcy, the IRS must find that the trustee has a material interest that will be affected by information on the return. W 2 show state income tax withheld Material interest is generally defined as a financial or monetary interest. W 2 show state income tax withheld Material interest is not limited to the trustee's responsibility to file a return on behalf of the bankruptcy estate. W 2 show state income tax withheld Receiverships Court-established receiverships sometimes arise in connection with bankruptcies. W 2 show state income tax withheld Certain court-established receiverships should be treated as qualified settlement funds ("QSFs") for purposes of IRC section 468B and the underlying Treasury Regulations. W 2 show state income tax withheld QSFs are required to file an annual income tax return, Form 1120-SF, U. W 2 show state income tax withheld S. W 2 show state income tax withheld Income Tax Return for Settlement Funds. W 2 show state income tax withheld More information about QSFs may be found in Treasury Regulation sections 1. W 2 show state income tax withheld 468B-1 through -5. W 2 show state income tax withheld Determination of Tax The determination of the proper amount of tax due for a tax year begins with the bankruptcy estate's filing of Form 1041, and the individual debtor's filing of Form 1040, or for bankrupt entities filing Forms 1065, 1120, or 1120S. W 2 show state income tax withheld After a return is filed, the IRS will either accept the return as filed or select the return for examination. W 2 show state income tax withheld Under examination the IRS may redetermine the tax liability shown on the return. W 2 show state income tax withheld If the bankruptcy estate or debtor disagrees with the redetermined tax due, the tax as redetermined by the IRS may be contested in the bankruptcy court, or Tax Court, as applicable. W 2 show state income tax withheld See Court Jurisdiction over Tax Matters, later. W 2 show state income tax withheld Prompt Determination Requests Pursuant to Rev. W 2 show state income tax withheld Proc. W 2 show state income tax withheld 2006-24, 2006-22 I. W 2 show state income tax withheld R. W 2 show state income tax withheld B. W 2 show state income tax withheld 943, www. W 2 show state income tax withheld irs. W 2 show state income tax withheld gov/irb/2006-22_IRB/ar12, as modified by Announcement 2011-77, www. W 2 show state income tax withheld irs. W 2 show state income tax withheld gov/irb/2011-51_IRB/ar13, the bankruptcy trustee may request a determination of any unpaid tax liability incurred by the bankruptcy estate during the administration of the case, by filing a tax return and a request for such determination with the IRS. W 2 show state income tax withheld Unless the return is fraudulent or contains a material misrepresentation, the estate, trustee, debtor, and any successor to the debtor are discharged from liability upon payment of the tax: As determined by the IRS, As determined by the bankruptcy court, after completion of the IRS examination, or As shown on the return, if the IRS does not: Notify the trustee within 60 days after the request for determination that the return has been selected for examination, or Complete the examination and notify the trustee of any tax due within 180 days after the request (or any additional time permitted by the bankruptcy court). W 2 show state income tax withheld Making the request for determination. W 2 show state income tax withheld   As detailed in Rev. W 2 show state income tax withheld Proc. W 2 show state income tax withheld 2006-24, as modified by Announcement 2011-77, to request a prompt determination of any unpaid tax liability of the estate, the trustee must file a signed written request, in duplicate, with the Internal Revenue Service, Centralized Insolvency Operation, P. W 2 show state income tax withheld O. W 2 show state income tax withheld Box 7346, Philadelphia, PA 19101–7346 (marked “Request for Prompt Determination”). W 2 show state income tax withheld   The request must be submitted in duplicate and must be executed under penalties of perjury. W 2 show state income tax withheld In addition, the trustee must submit along with the request an exact copy of the return(s) filed by the trustee with the IRS for each completed tax period. W 2 show state income tax withheld The request must contain the following information: A statement indicating that it is a Request for Prompt Determination of Tax Liability, specifying the type of return and tax period for each return being filed. W 2 show state income tax withheld The name and location of the office where the return was filed. W 2 show state income tax withheld The name of the debtor. W 2 show state income tax withheld Debtor's social security number, TIN, or EIN. W 2 show state income tax withheld Type of bankruptcy estate. W 2 show state income tax withheld Bankruptcy case number. W 2 show state income tax withheld Court where the bankruptcy case is pending. W 2 show state income tax withheld   The copy of the return(s) submitted with the request must be an exact copy of a valid return. W 2 show state income tax withheld A request for prompt determination will be considered incomplete and returned to the trustee if it is filed with a copy of a document that does not qualify as a valid return. W 2 show state income tax withheld    To qualify as valid, a return must meet certain criteria, including a signature under penalties of perjury. W 2 show state income tax withheld A document filed by the trustee with the jurat stricken, deleted, or modified will not qualify as a valid return. W 2 show state income tax withheld Examination of return. W 2 show state income tax withheld   The IRS will notify the trustee within 60 days from receipt of the request whether the return filed by the trustee has been selected for examination or has been accepted as filed. W 2 show state income tax withheld If the return is selected for examination, it will be examined as soon as possible. W 2 show state income tax withheld The IRS will notify the trustee of any tax due within 180 days from receipt of the application or within any additional time permitted by the bankruptcy court. W 2 show state income tax withheld   If a prompt determination request is incomplete, all the documents received by the IRS will be returned to the trustee by the assigned Field Insolvency Office with an explanation identifying the missing item(s) and instructions to re-file the request once corrected. W 2 show state income tax withheld   Once corrected, the request must be filed with the IRS at the Field Insolvency Office address specified in the correspondence accompanying the returned incomplete request. W 2 show state income tax withheld   In the case of an incomplete request submitted with a copy of an invalid return document, the trustee must file a valid original return with the appropriate IRS office and submit a copy of that return with the corrected request when the request is re-filed. W 2 show state income tax withheld Note. W 2 show state income tax withheld An incomplete request includes those submitted with a copy of a return form, the original of which does not qualify as a valid return. W 2 show state income tax withheld   The 60-day period to notify the trustee whether the return is accepted as filed or has been selected for examination does not begin to run until a complete request package is recei