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Amend Colorado Tax Return

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Amend Colorado Tax Return

Amend colorado tax return 4. Amend colorado tax return   Interest Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Allocation of InterestOrder of funds spent. Amend colorado tax return Payments from checking accounts. Amend colorado tax return Amounts paid within 30 days. Amend colorado tax return Optional method for determining date of reallocation. Amend colorado tax return Interest on a segregated account. Amend colorado tax return How to report. Amend colorado tax return Interest You Can DeductStatement. Amend colorado tax return Expenses paid to obtain a mortgage. Amend colorado tax return Prepayment penalty. Amend colorado tax return De minimis OID. Amend colorado tax return Constant-yield method. Amend colorado tax return Loan or mortgage ends. Amend colorado tax return Interest You Cannot DeductPenalties. Amend colorado tax return Who is a key person? Exceptions for pre-June 1997 contracts. Amend colorado tax return Interest allocated to unborrowed policy cash value. Amend colorado tax return Capitalization of Interest When To Deduct InterestPrepaid interest. Amend colorado tax return Discounted loan. Amend colorado tax return Refunds of interest. Amend colorado tax return Prepaid interest. Amend colorado tax return Discounted loan. Amend colorado tax return Tax deficiency. Amend colorado tax return Related person. Amend colorado tax return Below-Market LoansLimit on forgone interest for gift loans of $100,000 or less. Amend colorado tax return Introduction This chapter discusses the tax treatment of business interest expense. Amend colorado tax return Business interest expense is an amount charged for the use of money you borrowed for business activities. Amend colorado tax return Topics - This chapter discusses: Allocation of interest Interest you can deduct Interest you cannot deduct Capitalization of interest When to deduct interest Below-market loans Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 936 Home Mortgage Interest Deduction Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch E (Form 1040) Supplemental Income and Loss Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. Amend colorado tax return Sch K-1 (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. Amend colorado tax return 1098 Mortgage Interest Statement 3115 Application for Change in Accounting Method 4952 Investment Interest Expense Deduction 8582 Passive Activity Loss Limitations See chapter 12 for information about getting publications and forms. Amend colorado tax return Allocation of Interest The rules for deducting interest vary, depending on whether the loan proceeds are used for business, personal, or investment activities. Amend colorado tax return If you use the proceeds of a loan for more than one type of expense, you must allocate the interest based on the use of the loan's proceeds. Amend colorado tax return Allocate your interest expense to the following categories. Amend colorado tax return Nonpassive trade or business activity interest Passive trade or business activity interest Investment interest Portfolio interest Personal interest In general, you allocate interest on a loan the same way you allocate the loan proceeds. Amend colorado tax return You allocate loan proceeds by tracing disbursements to specific uses. Amend colorado tax return The easiest way to trace disbursements to specific uses is to keep the proceeds of a particular loan separate from any other funds. Amend colorado tax return Secured loan. Amend colorado tax return   The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan. Amend colorado tax return Example. Amend colorado tax return You secure a loan with property used in your business. Amend colorado tax return You use the loan proceeds to buy an automobile for personal use. Amend colorado tax return You must allocate interest expense on the loan to personal use (purchase of the automobile) even though the loan is secured by business property. Amend colorado tax return    If the property that secures the loan is your home, you generally do not allocate the loan proceeds or the related interest. Amend colorado tax return The interest is usually deductible as qualified home mortgage interest, regardless of how the loan proceeds are used. Amend colorado tax return For more information, see Publication 936. Amend colorado tax return Allocation period. Amend colorado tax return   The period for which a loan is allocated to a particular use begins on the date the proceeds are used and ends on the earlier of the following dates. Amend colorado tax return The date the loan is repaid. Amend colorado tax return The date the loan is reallocated to another use. Amend colorado tax return Proceeds not disbursed to borrower. Amend colorado tax return   Even if the lender disburses the loan proceeds to a third party, the allocation of the loan is still based on your use of the funds. Amend colorado tax return This applies whether you pay for property, services, or anything else by incurring a loan, or you take property subject to a debt. Amend colorado tax return Proceeds deposited in borrower's account. Amend colorado tax return   Treat loan proceeds deposited in an account as property held for investment. Amend colorado tax return It does not matter whether the account pays interest. Amend colorado tax return Any interest you pay on the loan is investment interest expense. Amend colorado tax return If you withdraw the proceeds of the loan, you must reallocate the loan based on the use of the funds. Amend colorado tax return Example. Amend colorado tax return Celina, a calendar-year taxpayer, borrows $100,000 on January 4 and immediately uses the proceeds to open a checking account. Amend colorado tax return No other amounts are deposited in the account during the year and no part of the loan principal is repaid during the year. Amend colorado tax return On April 2, Celina uses $20,000 from the checking account for a passive activity expenditure. Amend colorado tax return On September 4, Celina uses an additional $40,000 from the account for personal purposes. Amend colorado tax return Under the interest allocation rules, the entire $100,000 loan is treated as property held for investment for the period from January 4 through April 1. Amend colorado tax return From April 2 through September 3, Celina must treat $20,000 of the loan as used in the passive activity and $80,000 of the loan as property held for investment. Amend colorado tax return From September 4 through December 31, she must treat $40,000 of the loan as used for personal purposes, $20,000 as used in the passive activity, and $40,000 as property held for investment. Amend colorado tax return Order of funds spent. Amend colorado tax return   Generally, you treat loan proceeds deposited in an account as used (spent) before either of the following amounts. Amend colorado tax return Any unborrowed amounts held in the same account. Amend colorado tax return Any amounts deposited after these loan proceeds. Amend colorado tax return Example. Amend colorado tax return On January 9, Olena opened a checking account, depositing $500 of the proceeds of Loan A and $1,000 of unborrowed funds. Amend colorado tax return The following table shows the transactions in her account during the tax year. Amend colorado tax return Date Transaction January 9 $500 proceeds of Loan A and $1,000 unborrowed funds deposited January 14 $500 proceeds of Loan B  deposited February 19 $800 used for personal purposes February 27 $700 used for passive activity June 19 $1,000 proceeds of Loan C  deposited November 20 $800 used for an investment December 18 $600 used for personal purposes Olena treats the $800 used for personal purposes as made from the $500 proceeds of Loan A and $300 of the proceeds of Loan B. Amend colorado tax return She treats the $700 used for a passive activity as made from the remaining $200 proceeds of Loan B and $500 of unborrowed funds. Amend colorado tax return She treats the $800 used for an investment as made entirely from the proceeds of Loan C. Amend colorado tax return She treats the $600 used for personal purposes as made from the remaining $200 proceeds of Loan C and $400 of unborrowed funds. Amend colorado tax return For the periods during which loan proceeds are held in the account, Olena treats them as property held for investment. Amend colorado tax return Payments from checking accounts. Amend colorado tax return   Generally, you treat a payment from a checking or similar account as made at the time the check is written if you mail or deliver it to the payee within a reasonable period after you write it. Amend colorado tax return You can treat checks written on the same day as written in any order. Amend colorado tax return Amounts paid within 30 days. Amend colorado tax return   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. Amend colorado tax return This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. Amend colorado tax return   If the loan proceeds are deposited in an account, you can apply this rule even if the rules stated earlier under Order of funds spent would otherwise require you to treat the proceeds as used for other purposes. Amend colorado tax return If you apply this rule to any payments, disregard those payments (and the proceeds from which they are made) when applying the rules stated under Order of funds spent. Amend colorado tax return   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. Amend colorado tax return Example. Amend colorado tax return Giovanni gets a loan of $1,000 on August 4 and receives the proceeds in cash. Amend colorado tax return Giovanni deposits $1,500 in an account on August 18 and on August 28 writes a check on the account for a passive activity expense. Amend colorado tax return Also, Giovanni deposits his paycheck, deposits other loan proceeds, and pays his bills during the same period. Amend colorado tax return Regardless of these other transactions, Giovanni can treat $1,000 of the deposit he made on August 18 as being paid on August 4 from the loan proceeds. Amend colorado tax return In addition, Giovanni can treat the passive activity expense he paid on August 28 as made from the $1,000 loan proceeds treated as deposited in the account. Amend colorado tax return Optional method for determining date of reallocation. Amend colorado tax return   You can use the following method to determine the date loan proceeds are reallocated to another use. Amend colorado tax return You can treat all payments from loan proceeds in the account during any month as taking place on the later of the following dates. Amend colorado tax return The first day of that month. Amend colorado tax return The date the loan proceeds are deposited in the account. Amend colorado tax return However, you can use this optional method only if you treat all payments from the account during the same calendar month in the same way. Amend colorado tax return Interest on a segregated account. Amend colorado tax return   If you have an account that contains only loan proceeds and interest earned on the account, you can treat any payment from that account as being made first from the interest. Amend colorado tax return When the interest earned is used up, any remaining payments are from loan proceeds. Amend colorado tax return Example. Amend colorado tax return You borrowed $20,000 and used the proceeds of this loan to open a new savings account. Amend colorado tax return When the account had earned interest of $867, you withdrew $20,000 for personal purposes. Amend colorado tax return You can treat the withdrawal as coming first from the interest earned on the account, $867, and then from the loan proceeds, $19,133 ($20,000 − $867). Amend colorado tax return All the interest charged on the loan from the time it was deposited in the account until the time of the withdrawal is investment interest expense. Amend colorado tax return The interest charged on the part of the proceeds used for personal purposes ($19,133) from the time you withdrew it until you either repay it or reallocate it to another use is personal interest expense. Amend colorado tax return The interest charged on the loan proceeds you left in the account ($867) continues to be investment interest expense until you either repay it or reallocate it to another use. Amend colorado tax return Loan repayment. Amend colorado tax return   When you repay any part of a loan allocated to more than one use, treat it as being repaid in the following order. Amend colorado tax return Personal use. Amend colorado tax return Investments and passive activities (other than those included in (3)). Amend colorado tax return Passive activities in connection with a rental real estate activity in which you actively participate. Amend colorado tax return Former passive activities. Amend colorado tax return Trade or business use and expenses for certain low-income housing projects. Amend colorado tax return Line of credit (continuous borrowings). Amend colorado tax return   The following rules apply if you have a line of credit or similar arrangement. Amend colorado tax return Treat all borrowed funds on which interest accrues at the same fixed or variable rate as a single loan. Amend colorado tax return Treat borrowed funds or parts of borrowed funds on which interest accrues at different fixed or variable rates as different loans. Amend colorado tax return Treat these loans as repaid in the order shown on the loan agreement. Amend colorado tax return Loan refinancing. Amend colorado tax return   Allocate the replacement loan to the same uses to which the repaid loan was allocated. Amend colorado tax return Make the allocation only to the extent you use the proceeds of the new loan to repay any part of the original loan. Amend colorado tax return Debt-financed distribution. Amend colorado tax return   A debt-financed distribution occurs when a partnership or S corporation borrows funds and allocates those funds to distributions made to partners or shareholders. Amend colorado tax return The manner in which you report the interest expense associated with the distributed debt proceeds depends on your use of those proceeds. Amend colorado tax return How to report. Amend colorado tax return   If the proceeds were used in a nonpassive trade or business activity, report the interest on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership or S corporation in column (a) and the amount in column (h). Amend colorado tax return If the proceeds were used in a passive activity, follow the Instructions for Form 8582, Passive Activity Loss Limitations, to determine the amount of interest expense that can be reported on Schedule E (Form 1040), line 28; enter “interest expense” and the name of the partnership in column (a) and the amount in column (f). Amend colorado tax return If the proceeds were used in an investment activity, enter the interest on Form 4952. Amend colorado tax return If the proceeds are used for personal purposes, the interest is generally not deductible. Amend colorado tax return Interest You Can Deduct You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. Amend colorado tax return Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense. Amend colorado tax return It does not matter what type of property secures the loan. Amend colorado tax return You can deduct interest on a debt only if you meet all the following requirements. Amend colorado tax return You are legally liable for that debt. Amend colorado tax return Both you and the lender intend that the debt be repaid. Amend colorado tax return You and the lender have a true debtor-creditor relationship. Amend colorado tax return Partial liability. Amend colorado tax return   If you are liable for part of a business debt, you can deduct only your share of the total interest paid or accrued. Amend colorado tax return Example. Amend colorado tax return You and your brother borrow money. Amend colorado tax return You are liable for 50% of the note. Amend colorado tax return You use your half of the loan in your business, and you make one-half of the loan payments. Amend colorado tax return You can deduct your half of the total interest payments as a business deduction. Amend colorado tax return Mortgage. Amend colorado tax return   Generally, mortgage interest paid or accrued on real estate you own legally or equitably is deductible. Amend colorado tax return However, rather than deducting the interest currently, you may have to add it to the cost basis of the property as explained later under Capitalization of Interest. Amend colorado tax return Statement. Amend colorado tax return   If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage, you generally will receive a Form 1098 or a similar statement. Amend colorado tax return You will receive the statement if you pay interest to a person (including a financial institution or a cooperative housing corporation) in the course of that person's trade or business. Amend colorado tax return A governmental unit is a person for purposes of furnishing the statement. Amend colorado tax return   If you receive a refund of interest you overpaid in an earlier year, this amount will be reported in box 3 of Form 1098. Amend colorado tax return You cannot deduct this amount. Amend colorado tax return For information on how to report this refund, see Refunds of interest, later in this chapter. Amend colorado tax return Expenses paid to obtain a mortgage. Amend colorado tax return   Certain expenses you pay to obtain a mortgage cannot be deducted as interest. Amend colorado tax return These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses. Amend colorado tax return If the property mortgaged is business or income-producing property, you can amortize the costs over the life of the mortgage. Amend colorado tax return Prepayment penalty. Amend colorado tax return   If you pay off your mortgage early and pay the lender a penalty for doing this, you can deduct the penalty as interest. Amend colorado tax return Interest on employment tax deficiency. Amend colorado tax return   Interest charged on employment taxes assessed on your business is deductible. Amend colorado tax return Original issue discount (OID). Amend colorado tax return   OID is a form of interest. Amend colorado tax return A loan (mortgage or other debt) generally has OID when its proceeds are less than its principal amount. Amend colorado tax return The OID is the difference between the stated redemption price at maturity and the issue price of the loan. Amend colorado tax return   A loan's stated redemption price at maturity is the sum of all amounts (principal and interest) payable on it other than qualified stated interest. Amend colorado tax return Qualified stated interest is stated interest that is unconditionally payable in cash or property (other than another loan of the issuer) at least annually over the term of the loan at a single fixed rate. Amend colorado tax return You generally deduct OID over the term of the loan. Amend colorado tax return Figure the amount to deduct each year using the constant-yield method, unless the OID on the loan is de minimis. Amend colorado tax return De minimis OID. Amend colorado tax return   The OID is de minimis if it is less than one-fourth of 1% (. Amend colorado tax return 0025) of the stated redemption price of the loan at maturity multiplied by the number of full years from the date of original issue to maturity (the term of the loan). Amend colorado tax return   If the OID is de minimis, you can choose one of the following ways to figure the amount you can deduct each year. Amend colorado tax return On a constant-yield basis over the term of the loan. Amend colorado tax return On a straight-line basis over the term of the loan. Amend colorado tax return In proportion to stated interest payments. Amend colorado tax return In its entirety at maturity of the loan. Amend colorado tax return You make this choice by deducting the OID in a manner consistent with the method chosen on your timely filed tax return for the tax year in which the loan is issued. Amend colorado tax return Example. Amend colorado tax return On January 1, 2013, you took out a $100,000 discounted loan and received $98,500 in proceeds. Amend colorado tax return The loan will mature on January 1, 2023 (a 10-year term), and the $100,000 principal is payable on that date. Amend colorado tax return Interest of $10,000 is payable on January 1 of each year, beginning January 1, 2014. Amend colorado tax return The $1,500 OID on the loan is de minimis because it is less than $2,500 ($100,000 × . Amend colorado tax return 0025 × 10). Amend colorado tax return You choose to deduct the OID on a straight-line basis over the term of the loan. Amend colorado tax return Beginning in 2013, you can deduct $150 each year for 10 years. Amend colorado tax return Constant-yield method. Amend colorado tax return   If the OID is not de minimis, you must use the constant-yield method to figure how much you can deduct each year. Amend colorado tax return You figure your deduction for the first year using the following steps. Amend colorado tax return Determine the issue price of the loan. Amend colorado tax return Generally, this equals the proceeds of the loan. Amend colorado tax return If you paid points on the loan (as discussed later), the issue price generally is the difference between the proceeds and the points. Amend colorado tax return Multiply the result in (1) by the yield to maturity. Amend colorado tax return Subtract any qualified stated interest payments from the result in (2). Amend colorado tax return This is the OID you can deduct in the first year. Amend colorado tax return   To figure your deduction in any subsequent year, follow the above steps, except determine the adjusted issue price in step (1). Amend colorado tax return To get the adjusted issue price, add to the issue price any OID previously deducted. Amend colorado tax return Then follow steps (2) and (3) above. Amend colorado tax return   The yield to maturity is generally shown in the literature you receive from your lender. Amend colorado tax return If you do not have this information, consult your lender or tax advisor. Amend colorado tax return In general, the yield to maturity is the discount rate that, when used in computing the present value of all principal and interest payments, produces an amount equal to the principal amount of the loan. Amend colorado tax return Example. Amend colorado tax return The facts are the same as in the previous example, except that you deduct the OID on a constant yield basis over the term of the loan. Amend colorado tax return The yield to maturity on your loan is 10. Amend colorado tax return 2467%, compounded annually. Amend colorado tax return For 2013, you can deduct $93 [($98,500 × . Amend colorado tax return 102467) − $10,000]. Amend colorado tax return For 2014, you can deduct $103 [($98,593 × . Amend colorado tax return 102467) − $10,000]. Amend colorado tax return Loan or mortgage ends. Amend colorado tax return   If your loan or mortgage ends, you may be able to deduct any remaining OID in the tax year in which the loan or mortgage ends. Amend colorado tax return A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. Amend colorado tax return If you refinance with the original lender, you generally cannot deduct the remaining OID in the year in which the refinancing occurs, but you may be able to deduct it over the term of the new mortgage or loan. Amend colorado tax return See Interest paid with funds borrowed from original lender under Interest You Cannot Deduct, later. Amend colorado tax return Points. Amend colorado tax return   The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a loan or a mortgage. Amend colorado tax return These charges are also called loan origination fees, maximum loan charges, discount points, or premium charges. Amend colorado tax return If any of these charges (points) are solely for the use of money, they are interest. Amend colorado tax return   Because points are prepaid interest, you generally cannot deduct the full amount in the year paid. Amend colorado tax return However, you can choose to fully deduct points in the year paid if you meet certain tests. Amend colorado tax return For exceptions to the general rule, see Publication 936. Amend colorado tax return The points reduce the issue price of the loan and result in original issue discount (OID), deductible as explained in the preceding discussion. Amend colorado tax return Partial payments on a nontax debt. Amend colorado tax return   If you make partial payments on a debt (other than a debt owed the IRS), the payments are applied, in general, first to interest and any remainder to principal. Amend colorado tax return You can deduct only the interest. Amend colorado tax return This rule does not apply when it can be inferred that the borrower and lender understood that a different allocation of the payments would be made. Amend colorado tax return Installment purchase. Amend colorado tax return   If you make an installment purchase of business property, the contract between you and the seller generally provides for the payment of interest. Amend colorado tax return If no interest or a low rate of interest is charged under the contract, a portion of the stated principal amount payable under the contract may be recharacterized as interest (unstated interest). Amend colorado tax return The amount recharacterized as interest reduces your basis in the property and increases your interest expense. Amend colorado tax return For more information on installment sales and unstated interest, see Publication 537. Amend colorado tax return Interest You Cannot Deduct Certain interest payments cannot be deducted. Amend colorado tax return In addition, certain other expenses that may seem to be interest but are not, cannot be deducted as interest. Amend colorado tax return You cannot currently deduct interest that must be capitalized, and you generally cannot deduct personal interest. Amend colorado tax return Interest paid with funds borrowed from original lender. Amend colorado tax return   If you use the cash method of accounting, you cannot deduct interest you pay with funds borrowed from the original lender through a second loan, an advance, or any other arrangement similar to a loan. Amend colorado tax return You can deduct the interest expense once you start making payments on the new loan. Amend colorado tax return   When you make a payment on the new loan, you first apply the payment to interest and then to the principal. Amend colorado tax return All amounts you apply to the interest on the first loan are deductible, along with any interest you pay on the second loan, subject to any limits that apply. Amend colorado tax return Capitalized interest. Amend colorado tax return   You cannot currently deduct interest you are required to capitalize under the uniform capitalization rules. Amend colorado tax return See Capitalization of Interest, later. Amend colorado tax return In addition, if you buy property and pay interest owed by the seller (for example, by assuming the debt and any interest accrued on the property), you cannot deduct the interest. Amend colorado tax return Add this interest to the basis of the property. Amend colorado tax return Commitment fees or standby charges. Amend colorado tax return   Fees you incur to have business funds available on a standby basis, but not for the actual use of the funds, are not deductible as interest payments. Amend colorado tax return You may be able to deduct them as business expenses. Amend colorado tax return   If the funds are for inventory or certain property used in your business, the fees are indirect costs and you generally must capitalize them under the uniform capitalization rules. Amend colorado tax return See Capitalization of Interest, later. Amend colorado tax return Interest on income tax. Amend colorado tax return   Interest charged on income tax assessed on your individual income tax return is not a business deduction even though the tax due is related to income from your trade or business. Amend colorado tax return Treat this interest as a business deduction only in figuring a net operating loss deduction. Amend colorado tax return Penalties. Amend colorado tax return   Penalties on underpaid deficiencies and underpaid estimated tax are not interest. Amend colorado tax return You cannot deduct them. Amend colorado tax return Generally, you cannot deduct any fines or penalties. Amend colorado tax return Interest on loans with respect to life insurance policies. Amend colorado tax return   You generally cannot deduct interest on a debt incurred with respect to any life insurance, annuity, or endowment contract that covers any individual unless that individual is a key person. Amend colorado tax return   If the policy or contract covers a key person, you can deduct the interest on up to $50,000 of debt for that person. Amend colorado tax return However, the deduction for any month cannot be more than the interest figured using Moody's Composite Yield on Seasoned Corporate Bonds (formerly known as Moody's Corporate Bond Yield Average-Monthly Average Corporates) (Moody's rate) for that month. Amend colorado tax return Who is a key person?   A key person is an officer or 20% owner. Amend colorado tax return However, the number of individuals you can treat as key persons is limited to the greater of the following. Amend colorado tax return Five individuals. Amend colorado tax return The lesser of 5% of the total officers and employees of the company or 20 individuals. Amend colorado tax return Exceptions for pre-June 1997 contracts. Amend colorado tax return   You can generally deduct the interest if the contract was issued before June 9, 1997, and the covered individual is someone other than an employee, officer, or someone financially interested in your business. Amend colorado tax return If the contract was purchased before June 21, 1986, you can generally deduct the interest no matter who is covered by the contract. Amend colorado tax return Interest allocated to unborrowed policy cash value. Amend colorado tax return   Corporations and partnerships generally cannot deduct any interest expense allocable to unborrowed cash values of life insurance, annuity, or endowment contracts. Amend colorado tax return This rule applies to contracts issued after June 8, 1997, that cover someone other than an officer, director, employee, or 20% owner. Amend colorado tax return For more information, see section 264(f) of the Internal Revenue Code. Amend colorado tax return Capitalization of Interest Under the uniform capitalization rules, you generally must capitalize interest on debt equal to your expenditures to produce real property or certain tangible personal property. Amend colorado tax return The property must be produced by you for use in your trade or business or for sale to customers. Amend colorado tax return You cannot capitalize interest related to property that you acquire in any other manner. Amend colorado tax return Interest you paid or incurred during the production period must be capitalized if the property produced is designated property. Amend colorado tax return Designated property is any of the following. Amend colorado tax return Real property. Amend colorado tax return Tangible personal property with a class life of 20 years or more. Amend colorado tax return Tangible personal property with an estimated production period of more than 2 years. Amend colorado tax return Tangible personal property with an estimated production period of more than 1 year if the estimated cost of production is more than $1 million. Amend colorado tax return Property you produce. Amend colorado tax return   You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow it. Amend colorado tax return Treat property produced for you under a contract as produced by you up to the amount you pay or incur for the property. Amend colorado tax return Carrying charges. Amend colorado tax return   Carrying charges include taxes you pay to carry or develop real estate or to carry, transport, or install personal property. Amend colorado tax return You can choose to capitalize carrying charges not subject to the uniform capitalization rules if they are otherwise deductible. Amend colorado tax return For more information, see chapter 7. Amend colorado tax return Capitalized interest. Amend colorado tax return   Treat capitalized interest as a cost of the property produced. Amend colorado tax return You recover your interest when you sell or use the property. Amend colorado tax return If the property is inventory, recover capitalized interest through cost of goods sold. Amend colorado tax return If the property is used in your trade or business, recover capitalized interest through an adjustment to basis, depreciation, amortization, or other method. Amend colorado tax return Partnerships and S corporations. Amend colorado tax return   The interest capitalization rules are applied first at the partnership or S corporation level. Amend colorado tax return The rules are then applied at the partners' or shareholders' level to the extent the partnership or S corporation has insufficient debt to support the production or construction costs. Amend colorado tax return   If you are a partner or a shareholder, you may have to capitalize interest you incur during the tax year for the production costs of the partnership or S corporation. Amend colorado tax return You may also have to capitalize interest incurred by the partnership or S corporation for your own production costs. Amend colorado tax return To properly capitalize interest under these rules, you must be given the required information in an attachment to the Schedule K-1 you receive from the partnership or S corporation. Amend colorado tax return Additional information. Amend colorado tax return   The procedures for applying the uniform capitalization rules are beyond the scope of this publication. Amend colorado tax return For more information, see sections 1. Amend colorado tax return 263A-8 through 1. Amend colorado tax return 263A-15 of the regulations and Notice 88-99. Amend colorado tax return Notice 88-99 is in Cumulative Bulletin 1988-2. Amend colorado tax return When To Deduct Interest If the uniform capitalization rules, discussed under Capitalization of Interest, earlier, do not apply to you, deduct interest as follows. Amend colorado tax return Cash method. Amend colorado tax return   Under the cash method, you can generally deduct only the interest you actually paid during the tax year. Amend colorado tax return You cannot deduct a promissory note you gave as payment because it is a promise to pay and not an actual payment. Amend colorado tax return Prepaid interest. Amend colorado tax return   You generally cannot deduct any interest paid before the year it is due. Amend colorado tax return Interest paid in advance can be deducted only in the tax year in which it is due. Amend colorado tax return Discounted loan. Amend colorado tax return   If interest or a discount is subtracted from your loan proceeds, it is not a payment of interest and you cannot deduct it when you get the loan. Amend colorado tax return For more information, see Original issue discount (OID) under Interest You Can Deduct, earlier. Amend colorado tax return Refunds of interest. Amend colorado tax return   If you pay interest and then receive a refund in the same tax year of any part of the interest, reduce your interest deduction by the refund. Amend colorado tax return If you receive the refund in a later tax year, include the refund in your income to the extent the deduction for the interest reduced your tax. Amend colorado tax return Accrual method. Amend colorado tax return   Under an accrual method, you can deduct only interest that has accrued during the tax year. Amend colorado tax return Prepaid interest. Amend colorado tax return   See Prepaid interest, earlier. Amend colorado tax return Discounted loan. Amend colorado tax return   See Discounted loan, earlier. Amend colorado tax return Tax deficiency. Amend colorado tax return   If you contest a federal income tax deficiency, interest does not accrue until the tax year the final determination of liability is made. Amend colorado tax return If you do not contest the deficiency, then the interest accrues in the year the tax was asserted and agreed to by you. Amend colorado tax return   However, if you contest but pay the proposed tax deficiency and interest, and you do not designate the payment as a cash bond, then the interest is deductible in the year paid. Amend colorado tax return Related person. Amend colorado tax return   If you use an accrual method, you cannot deduct interest owed to a related person who uses the cash method until payment is made and the interest is includible in the gross income of that person. Amend colorado tax return The relationship is determined as of the end of the tax year for which the interest would otherwise be deductible. Amend colorado tax return See section 267 of the Internal Revenue Code for more information. Amend colorado tax return Below-Market Loans If you receive a below-market gift or demand loan and use the proceeds in your trade or business, you may be able to deduct the forgone interest. Amend colorado tax return See Treatment of gift and demand loans, later, in this discussion. Amend colorado tax return A below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Amend colorado tax return A gift or demand loan that is a below-market loan generally is considered an arm's-length transaction in which you, the borrower, are considered as having received both the following. Amend colorado tax return A loan in exchange for a note that requires the payment of interest at the applicable federal rate. Amend colorado tax return An additional payment in an amount equal to the forgone interest. Amend colorado tax return The additional payment is treated as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. Amend colorado tax return Forgone interest. Amend colorado tax return   For any period, forgone interest is The interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Amend colorado tax return Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Amend colorado tax return Internal Revenue Bulletins are available on the IRS web site at www. Amend colorado tax return irs. Amend colorado tax return gov/irb. Amend colorado tax return You can also contact an IRS office to get these rates. Amend colorado tax return Loans subject to the rules. Amend colorado tax return   The rules for below-market loans apply to the following. Amend colorado tax return Gift loans (below-market loans where the forgone interest is in the nature of a gift). Amend colorado tax return Compensation-related loans (below-market loans between an employer and an employee or between an independent contractor and a person for whom the contractor provides services). Amend colorado tax return Corporation-shareholder loans. Amend colorado tax return Tax avoidance loans (below-market loans where the avoidance of federal tax is one of the main purposes of the interest arrangement). Amend colorado tax return Loans to qualified continuing care facilities under a continuing care contract (made after October 11, 1985). Amend colorado tax return   Except as noted in (5) above, these rules apply to demand loans (loans payable in full at any time upon the lender's demand) outstanding after June 6, 1984, and to term loans (loans that are not demand loans) made after that date. Amend colorado tax return Treatment of gift and demand loans. Amend colorado tax return   If you receive a below-market gift loan or demand loan, you are treated as receiving an additional payment (as a gift, dividend, etc. Amend colorado tax return ) equal to the forgone interest on the loan. Amend colorado tax return You are then treated as transferring this amount back to the lender as interest. Amend colorado tax return These transfers are considered to occur annually, generally on December 31. Amend colorado tax return If you use the loan proceeds in your trade or business, you can deduct the forgone interest each year as a business interest expense. Amend colorado tax return The lender must report it as interest income. Amend colorado tax return Limit on forgone interest for gift loans of $100,000 or less. Amend colorado tax return   For gift loans between individuals, forgone interest treated as transferred back to the lender is limited to the borrower's net investment income for the year. Amend colorado tax return This limit applies if the outstanding loans between the lender and borrower total $100,000 or less. Amend colorado tax return If the borrower's net investment income is $1,000 or less, it is treated as zero. Amend colorado tax return This limit does not apply to a loan if the avoidance of any federal tax is one of the main purposes of the interest arrangement. Amend colorado tax return Treatment of term loans. Amend colorado tax return   If you receive a below-market term loan other than a gift or demand loan, you are treated as receiving an additional cash payment (as a dividend, etc. Amend colorado tax return ) on the date the loan is made. Amend colorado tax return This payment is equal to the loan amount minus the present value, at the applicable federal rate, of all payments due under the loan. Amend colorado tax return The same amount is treated as original issue discount on the loan. Amend colorado tax return See Original issue discount (OID) under Interest You Can Deduct, earlier. Amend colorado tax return Exceptions for loans of $10,000 or less. Amend colorado tax return   The rules for below-market loans do not apply to any day on which the total outstanding loans between the borrower and lender is $10,000 or less. Amend colorado tax return This exception applies only to the following. Amend colorado tax return Gift loans between individuals if the loan is not directly used to buy or carry income-producing assets. Amend colorado tax return Compensation-related loans or corporation-shareholder loans if the avoidance of any federal tax is not a principal purpose of the interest arrangement. Amend colorado tax return This exception does not apply to a term loan described in (2) above that was previously subject to the below-market loan rules. Amend colorado tax return Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Amend colorado tax return Exceptions for loans without significant tax effect. Amend colorado tax return   The following loans are specifically exempted from the rules for below-market loans because their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Amend colorado tax return Loans made available by lenders to the general public on the same terms and conditions that are consistent with the lender's customary business practices. Amend colorado tax return Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public. Amend colorado tax return Certain employee-relocation loans. Amend colorado tax return Certain loans to or from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Amend colorado tax return S. Amend colorado tax return trade or business and not exempt from U. Amend colorado tax return S. Amend colorado tax return tax under an income tax treaty. Amend colorado tax return Any other loan if the taxpayer can show that the interest arrangement has no significant effect on the federal tax liability of the lender or the borrower. Amend colorado tax return Whether an interest arrangement has a significant effect on the federal tax liability of the lender or the borrower will be determined by all the facts and circumstances. Amend colorado tax return Consider all the following factors. Amend colorado tax return Whether items of income and deduction generated by the loan offset each other. Amend colorado tax return The amount of the items. Amend colorado tax return The cost of complying with the below-market loan provisions if they were to apply. Amend colorado tax return Any reasons, other than taxes, for structuring the transaction as a below-market loan. Amend colorado tax return Exception for loans to qualified continuing care facilities. Amend colorado tax return   The below-market interest rules do not apply to a loan owed by a qualified continuing care facility under a continuing care contract if the lender or lender's spouse is age 62 or older by the end of the calendar year. Amend colorado tax return A qualified continuing care facility is one or more facilities (excluding nursing homes) meeting the requirements listed below. Amend colorado tax return Designed to provide services under continuing care contracts (defined below). Amend colorado tax return Includes an independent living unit, and either an assisted living or nursing facility, or both. Amend colorado tax return Substantially all of the independent living unit residents are covered by continuing care contracts. Amend colorado tax return A continuing care contract is a written contract between an individual and a qualified continuing care facility that includes all of the following conditions. Amend colorado tax return The individual or individual's spouse must be entitled to use the facility for the rest of their life or lives. Amend colorado tax return The individual or individual's spouse will be provided with housing, as appropriate for the health of the individual or individual's spouse in an: independent living unit (which has additional available facilities outside the unit for the provision of meals and other personal care), and assisted living or nursing facility available in the continuing care facility. Amend colorado tax return The individual or individual's spouse will be provided with assisted living or nursing care available in the continuing care facility, as required for the health of the individual or the individual's spouse. Amend colorado tax return For more information, see section 7872(h) of the Internal Revenue Code. Amend colorado tax return Sale or exchange of property. Amend colorado tax return   Different rules generally apply to a loan connected with the sale or exchange of property. Amend colorado tax return If the loan does not provide adequate stated interest, part of the principal payment may be considered interest. Amend colorado tax return However, there are exceptions that may require you to apply the below-market interest rate rules to these loans. Amend colorado tax return See Unstated Interest and Original Issue Discount (OID) in Publication 537. Amend colorado tax return More information. Amend colorado tax return   For more information on below-market loans, see section 7872 of the Internal Revenue Code and section 1. Amend colorado tax return 7872-5 of the regulations. Amend colorado tax return Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

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

State Consumer Protection Offices

Office of the Attorney General

Website: Office of the Attorney General

Address: Office of the Attorney General
Consumer Services Division
1400 Bremer Tower
445 Minnesota St.
St. Paul, MN 55101

Phone Number: 651-296-3353

Toll-free: 1-800-657-3787 (MN)

TTY: 651-297-7206 or 1-800-366-4812

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City Consumer Protection Offices

Minneapolis Department of Regulatory Services

Website: Minneapolis Department of Regulatory Services

Address: Minneapolis Department of Regulatory Services
Business Licenses & Consumer Services
City Hall, Room 1C
350 S. 5th St.
Minneapolis, MN 55415

Phone Number: 612-673-2080

TTY: 612-673-2157

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Banking Authorities

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

Department of Commerce

Website: Department of Commerce

Address: Department of Commerce
Financial Institutions Division
85 7th Pl. E, Suite 500
St. Paul, MN 55101

Phone Number: 651-296-2488

Toll-free: 1-800-657-3602

TTY: 651-296-2860

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Insurance Regulators

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

Department of Commerce

Website: Department of Commerce

Address: Department of Commerce
Insurance Division
85 7th Place E
Suite 500
St. Paul, MN 55101

Phone Number: 651-296-4026

Toll-free: 1-800-657-3602 (MN)

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Securities Administrators

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

Department of Commerce

Website: Department of Commerce

Address: Department of Commerce
Securities Unit
Consumer Protection and Education

85 7th Pl. E, Suite 500
St. Paul, MN 55101

Phone Number: 651-296-4973 (Securities) 651-296-2488 (Consumer Protection)

Toll-free: 1-800-657-3602 (MN)

TTY: 651-296-2860

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Utility Commissions

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

Public Utilities Commission

Website: Public Utilities Commission

Address: Public Utilities Commission
Consumer Affairs Office
121 7th Pl. E, Suite 350
St. Paul, MN 55101-2147

Phone Number: 651-296-0406

Toll-free: 1-800-657-3782

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The Amend Colorado Tax Return

Amend colorado tax return Internal Revenue Bulletin:  2013-7  February 11, 2013  Rev. Amend colorado tax return Proc. Amend colorado tax return 2013-16 Table of Contents SECTION 1. Amend colorado tax return PURPOSE SECTION 2. Amend colorado tax return BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE SECTION 3. Amend colorado tax return BACKGROUND—APPLICABLE PROVISIONS OF LAW SECTION 4. Amend colorado tax return FEDERAL INCOME TAX TREATMENT SECTION 5. Amend colorado tax return INFORMATION-REPORTING OBLIGATIONS SECTION 6. Amend colorado tax return HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA SECTION 7. Amend colorado tax return PENALTY RELIEF FOR 2012 SECTION 8. Amend colorado tax return SCOPE AND EFFECTIVE DATE SECTION 9. Amend colorado tax return DRAFTING INFORMATION SECTION 1. Amend colorado tax return PURPOSE This revenue procedure provides guidance to mortgage loan holders, loan servicers, and borrowers who are participating in the Department of the Treasury’s (Treasury) and Department of Housing and Urban Development’s (HUD) Home Affordable Modification Program® (HAMP®). Amend colorado tax return Under HAMP, a borrower may be eligible for principal reduction of the outstanding balance of a qualifying mortgage pursuant to the program’s Principal Reduction AlternativeSM (PRA). Amend colorado tax return In appropriate cases, HAMP has been offering the PRA as part of a HAMP loan modification since the last quarter of 2010. Amend colorado tax return Current plans call for HAMP to continue accepting new borrowers through the end of 2013. Amend colorado tax return The Internal Revenue Service (Service) is providing this guidance to address the tax consequences for borrowers (HAMP-PRA borrowers) who are participating in the PRA and the reporting obligations for participating mortgage loan holders and servicers. Amend colorado tax return SECTION 2. Amend colorado tax return BACKGROUND—HAMP AND THE HAMP PRINCIPAL REDUCTION ALTERNATIVE . Amend colorado tax return 01 To help distressed borrowers lower their monthly mortgage payments, Treasury and HUD established HAMP for mortgage loans that are not owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Amend colorado tax return A description of the program can be found at www. Amend colorado tax return makinghomeaffordable. Amend colorado tax return gov. Amend colorado tax return . Amend colorado tax return 02 Under HAMP, a participating loan servicer, acting on behalf of the mortgage loan holder, must consider a sequence of modification steps for each eligible borrower’s mortgage loan until the borrower’s monthly payment is reduced to a monthly payment amount determined under the HAMP guidelines. Amend colorado tax return These steps include a reduction in the mortgage loan’s interest rate, an extension of the mortgage loan’s term, and a reduction in the mortgage loan’s principal balance. Amend colorado tax return . Amend colorado tax return 03 In some cases, the unpaid principal balance of the modified mortgage loan is divided into (1) an amount that bears stated interest and that is used to calculate the borrower’s new monthly mortgage payment (the “Non-forbearance Portion”), and (2) a forbearance amount, which does not bear stated interest and on which periodic payments of stated principal are not required. Amend colorado tax return The stated principal of the forbearance amount is due upon the earliest of the borrower’s transfer of the property, payoff of the balance on the Non-forbearance Portion of the mortgage loan, or maturity of the mortgage loan. Amend colorado tax return However, as noted in section 2. Amend colorado tax return 06 of this revenue procedure, a HAMP-PRA borrower sometimes may not have to pay all or a portion of the forbearance amount. Amend colorado tax return (The forbearance amount associated with a HAMP-PRA principal reduction is called the “PRA Forbearance Amount. Amend colorado tax return ”) . Amend colorado tax return 04 If a mortgage loan is being considered for a HAMP modification and the amount owed on the mortgage loan is greater than 115 percent of the value of the property, then the servicer must consider whether principal reduction under PRA should be used as part of the HAMP modification. Amend colorado tax return . Amend colorado tax return 05 The first step toward a HAMP modification is a trial period plan, in which the borrower’s monthly mortgage payment is set at a monthly payment amount determined under the HAMP guidelines. Amend colorado tax return The trial period plan effective date is the due date for the first of the reduced payments that are to be made under the trial period plan. Amend colorado tax return (It is the first day of either the first or the second month after the servicer transmits the trial period notice to the borrower. Amend colorado tax return ) In general, the trial period is three months, and, during this period, the borrower must satisfy certain conditions before the changes to the terms of the mortgage loan become permanent (the “Trial Period Conditions”). Amend colorado tax return Specifically, depending on the borrower’s trial period payment history, the borrower’s compliance with HAMP and servicer guidelines, and his or her satisfaction of all other Trial Period Conditions, the borrower will be offered a permanent modification of the terms of the mortgage loan, including monthly mortgage payments that are lower than those under the old mortgage loan. Amend colorado tax return Until the effective date of a permanent modification, the terms of the existing mortgage loan continue to apply. Amend colorado tax return . Amend colorado tax return 06 After the mortgage loan is permanently modified under HAMP, if the modified mortgage loan is in good standing on the first, second, or third annual anniversary of the trial period plan effective date (the “Three-year Period”), the servicer must reduce the unpaid principal balance of the mortgage loan on the respective anniversary date by one-third of the initial PRA Forbearance Amount. Amend colorado tax return (The servicer allocates the entire reduction to the remaining PRA Forbearance Amount. Amend colorado tax return ) In general, if a HAMP-PRA borrower’s mortgage loan is in good standing and if the HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan prior to the reduction of the entire PRA Forbearance Amount, the servicer must reduce the remaining outstanding principal balance of the mortgage loan by the remaining PRA Forbearance Amount. Amend colorado tax return . Amend colorado tax return 07 In connection with every HAMP loan modification, the HAMP program administrator (acting on behalf of the federal government) provides incentives to the borrower, the servicer, and the investor (that is, the holder of the mortgage loan). Amend colorado tax return If a HAMP loan modification includes a PRA principal reduction, the HAMP program administrator makes additional incentive payments to the investor. Amend colorado tax return These additional incentives are called “PRA Investor Incentive Payments” and are generally spread over three years. Amend colorado tax return The size of the PRA Investor Incentive Payments depends on the amount of principal reduced, the loan-to-value ratio at the time of the HAMP modification, and the loan’s payment history before the modification. Amend colorado tax return The PRA Investor Incentive Payments range from 18 to 63 percent of the principal amounts reduced. Amend colorado tax return For purposes of this revenue procedure, the excess of the initial PRA Forbearance Amount of a mortgage loan over the aggregate PRA Investor Incentive Payments scheduled to be paid with respect to that loan is called the “PRA Adjusted Forbearance Amount. Amend colorado tax return ” . Amend colorado tax return 08 A PRA Investor Incentive Payment is earned by the investor on each date on which the servicer reduces the unpaid principal balance of the mortgage loan by a portion of the PRA Forbearance Amount (generally, on the first three annual anniversaries of the trial period plan effective date). Amend colorado tax return . Amend colorado tax return 09 If a HAMP-PRA borrower’s early payment in full of the Non-forbearance Portion of the mortgage loan accelerates the reduction of the remaining PRA Forbearance Amount (described above in section 2. Amend colorado tax return 06 of this revenue procedure), the remaining PRA Investor Incentive Payments from the HAMP program administrator are also accelerated. Amend colorado tax return . Amend colorado tax return 10 If, prior to completion of the Three-year Period, a mortgage loan ceases to be in good standing because of the HAMP-PRA borrower’s payment history, then the remaining PRA Forbearance Amount is not further reduced and is due when the HAMP-PRA borrower transfers the property, the HAMP-PRA borrower refinances, or otherwise pays off the Non-forbearance Portion of the mortgage loan, or the mortgage loan matures. Amend colorado tax return SECTION 3. Amend colorado tax return BACKGROUND—APPLICABLE PROVISIONS OF LAW . Amend colorado tax return 01 Under § 61 of the Internal Revenue Code, except as otherwise provided in subtitle A, gross income means all income from whatever source derived, including income from discharge of indebtedness. Amend colorado tax return See § 61(a)(12). Amend colorado tax return . Amend colorado tax return 02 Under § 1. Amend colorado tax return 1001-3 of the Income Tax Regulations, if a debt instrument undergoes a significant modification, then the modification results in an exchange of the original debt instrument for the modified debt instrument. Amend colorado tax return In general, an agreement to change a term of a debt instrument is a modification at the time the borrower and holder enter into the agreement, even if the change in term is not immediately effective. Amend colorado tax return However, if the change is conditioned on reasonable closing conditions, a modification occurs on the closing date of the agreement. Amend colorado tax return See § 1. Amend colorado tax return 1001-3(c)(6). Amend colorado tax return . Amend colorado tax return 03 Under § 108(e)(10), in the case of a debt-for-debt exchange (including a deemed exchange under § 1. Amend colorado tax return 1001-3), the borrower is treated as having satisfied the original debt instrument with an amount of money equal to the issue price of the new debt instrument. Amend colorado tax return If the amount of debt satisfied in this manner exceeds that issue price, the borrower realizes discharge of indebtedness income on the exchange. Amend colorado tax return See also § 1. Amend colorado tax return 61-12(c). Amend colorado tax return . Amend colorado tax return 04 The issue price of a non-publicly traded debt instrument issued for non-publicly traded property generally reflects the amount of principal that the borrower is required to pay to the holder of the instrument. Amend colorado tax return If a borrower has the ability to avoid paying certain amounts (including principal) without violating the terms of the instrument, the payment schedule for the instrument is generally determined based on an assumption that the borrower will avoid any requirement to make those payments. Amend colorado tax return See, e. Amend colorado tax return g. Amend colorado tax return , §§ 1. Amend colorado tax return 1272-1(c)(5) and 1. Amend colorado tax return 1274-2(d). Amend colorado tax return . Amend colorado tax return 05 Under § 108(a), gross income does not include any amount that but for § 108(a) would be includible in gross income by reason of the discharge (in whole or in part) of a taxpayer’s indebtedness if (1) the indebtedness discharged is qualified principal residence indebtedness that is discharged before January 1, 2014, or (2) the discharge occurs when the taxpayer is insolvent. Amend colorado tax return Section 108(a)(1)(E) and 108(a)(1)(B). Amend colorado tax return (Although § 108 contains other exclusions as well, this revenue procedure focuses on these two exclusions because they are the most likely to apply to the greatest number of HAMP-PRA borrowers. Amend colorado tax return ) . Amend colorado tax return 06 Under §§ 108(h) and 163(h)(3)(B), qualified principal residence indebtedness is any indebtedness that is incurred by a borrower to buy, build, or substantially improve the borrower’s principal residence and is secured by that residence. Amend colorado tax return . Amend colorado tax return 07 Qualified principal residence indebtedness also includes a loan secured by the borrower’s principal residence that refinances qualified principal residence indebtedness, but only to the extent of the amount of the refinanced indebtedness. Amend colorado tax return See §§ 108(h) and 163(h)(3)(B)(i). Amend colorado tax return . Amend colorado tax return 08 The maximum amount of discharged indebtedness that a borrower may exclude from gross income under the qualified principal residence indebtedness exclusion is $2,000,000 ($1,000,000 for a married individual filing a separate return). Amend colorado tax return Under § 108(h)(4), if only part of the discharged indebtedness is qualified principal residence indebtedness, then the exclusion applies only to the amount of the discharged indebtedness that exceeds the amount of the loan (determined immediately before the discharge) that is not qualified principal residence indebtedness. Amend colorado tax return . Amend colorado tax return 09 Under § 108(a)(3), the insolvency exclusion applies to the lesser of the amount of the debt discharged or the amount by which the taxpayer is insolvent immediately before the discharge. Amend colorado tax return . Amend colorado tax return 10 Section 108(d)(3) provides that, for purposes of the insolvency exclusion, a taxpayer is insolvent to the extent that the taxpayer’s total liabilities exceed the fair market value of all of the taxpayer’s assets immediately before the discharge of indebtedness. Amend colorado tax return Under § 108(a)(2)(C), the qualified principal residence indebtedness exclusion takes precedence over the insolvency exclusion when both exclusions apply to discharged indebtedness, unless the taxpayer elects to apply the insolvency exclusion. Amend colorado tax return . Amend colorado tax return 11 If an amount is excluded from gross income as a discharge of qualified principal residence indebtedness, the taxpayer must reduce the basis of the taxpayer’s principal residence. Amend colorado tax return See § 108(h)(1). Amend colorado tax return If a discharged amount is excluded from gross income because the taxpayer was insolvent when the discharge occurred, the taxpayer must reduce certain tax attributes (possibly including basis). Amend colorado tax return See § 108(b). Amend colorado tax return For further discussion of income from the discharge of indebtedness, the qualified principal residence indebtedness exclusion, the insolvency exclusion, and other exclusions from gross income that may apply, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). Amend colorado tax return . Amend colorado tax return 12 Taxpayers who exclude any discharged amounts from gross income report both the exclusion and the resulting reduction in basis or other tax attributes on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). Amend colorado tax return See Form 982 instructions and Publication 4681. Amend colorado tax return This form is to be filed with the tax return for the taxable year in which the amount is discharged but is excluded from gross income. Amend colorado tax return . Amend colorado tax return 13 Governmental payments made to or on behalf of individuals or other persons are included within the broad definition of gross income under § 61 unless an exception applies. Amend colorado tax return See Notice 2003-18, 2003-1 C. Amend colorado tax return B. Amend colorado tax return 699, and Rev. Amend colorado tax return Rul. Amend colorado tax return 79-356, 1979-2 C. Amend colorado tax return B. Amend colorado tax return 28. Amend colorado tax return However, if disbursements are made by a governmental unit to individuals in the interest of the general welfare (that is, are generally based on individual or family need) and the disbursements do not represent compensation for services, then the amounts disbursed are excluded from the income of the recipient (general welfare exclusion). Amend colorado tax return See Rev. Amend colorado tax return Rul. Amend colorado tax return 2005-46, 2005-2 C. Amend colorado tax return B. Amend colorado tax return 120, and Rev. Amend colorado tax return Rul. Amend colorado tax return 75-246, 1975-1 C. Amend colorado tax return B. Amend colorado tax return 24. Amend colorado tax return . Amend colorado tax return 14 Under § 451 and § 1. Amend colorado tax return 451-1(a), a taxpayer that uses the cash receipts and disbursements method of accounting includes income in gross income when the taxpayer actually or constructively receives the income. Amend colorado tax return . Amend colorado tax return 15 Section 6041 requires every person engaged in a trade or business (including the United States and its agencies) to (1) file an information return (Form 1099-MISC, Miscellaneous Income, is used for this purpose) for each calendar year in which the person makes, in the course of its trade or business, payments to another person of fixed or determinable income aggregating $600 or more, and (2) furnish a copy of the information return to that other person. Amend colorado tax return See § 6041(a) and (d) and § 1. Amend colorado tax return 6041-1(a)(1) and (b). Amend colorado tax return . Amend colorado tax return 16 Section 6050P requires applicable entities (including the United States and its agencies, financial entities, and any organization a significant trade or business of which is the lending of money) to (1) file an information return (Form 1099-C, Cancellation of Debt, is used for this purpose) for each calendar year in which it discharges indebtedness of another person of $600 or more, and (2) furnish a copy of the information return to that other person. Amend colorado tax return See § 6050P(a)-(c) and §§ 1. Amend colorado tax return 6050P-1(a) and 1. Amend colorado tax return 6050P-2(a) and (d). Amend colorado tax return . Amend colorado tax return 17 Section 6721 imposes penalties with respect to information returns required to be filed with the Service. Amend colorado tax return These penalties apply in the case of a failure to timely file an information return, a failure to include all required information on the return, or the inclusion of incorrect information on the return. Amend colorado tax return Section 6724(d)(1) includes Forms 1099-MISC and 1099-C in the term “information return. Amend colorado tax return ” . Amend colorado tax return 18 Section 6722 imposes penalties with respect to payee statements required to be furnished to payees. Amend colorado tax return These penalties apply in the case of a failure to timely furnish a payee statement, a failure to include all required information on the statement, or the inclusion of incorrect information on the payee statement. Amend colorado tax return Section 6724(d)(2) includes in the term “payee statement” copies of Forms 1099-MISC and 1099-C that are required to be furnished to taxpayers. Amend colorado tax return SECTION 4. Amend colorado tax return FEDERAL INCOME TAX TREATMENT . Amend colorado tax return 01 Because a HAMP modification with a PRA principal reduction is a significant modification, it results in a deemed debt-for-debt exchange in which the HAMP-PRA borrower satisfies the old mortgage loan by issuing a new one. Amend colorado tax return See § 1. Amend colorado tax return 1001-3. Amend colorado tax return At the time of the modification, therefore, under § 108 and this revenue procedure, the HAMP-PRA borrower realizes discharge of indebtedness income equal to any excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new (post-modification) mortgage loan. Amend colorado tax return See also § 61(a)(12) and § 1. Amend colorado tax return 61-12(c). Amend colorado tax return . Amend colorado tax return 02 A HAMP-PRA borrower has the ability to avoid payment of the PRA Adjusted Forbearance Amount. Amend colorado tax return Because the HAMP-PRA borrower has this ability, that amount should not be taken into account in determining the issue price of the new mortgage loan. Amend colorado tax return Because the issue price of the new mortgage loan does not include the PRA Adjusted Forbearance Amount, the PRA Adjusted Forbearance Amount contributes to the excess of the adjusted issue price of the old mortgage loan (which was satisfied in the deemed exchange) over the issue price of the new mortgage loan. Amend colorado tax return . Amend colorado tax return 03 On the other hand, the investor has not given up its right to receive the remainder of the PRA Forbearance Amount, because the HAMP program administrator is expected to make those payments on the HAMP-PRA borrower’s behalf by making the PRA Investor Incentive Payments. Amend colorado tax return Because the remainder of the PRA Forbearance Amount is payable in this manner, that remainder is included in the issue price of the new mortgage loan. Amend colorado tax return . Amend colorado tax return 04 The Trial Period Conditions are reasonable closing conditions that must be satisfied before the changes to the terms of the mortgage loan become permanent. Amend colorado tax return Therefore, for purposes of § 1. Amend colorado tax return 1001-3, the date of the modification is the date of the permanent modification. Amend colorado tax return . Amend colorado tax return 05 Unless an exclusion applies, the HAMP-PRA borrower includes in gross income the discharge of indebtedness income described in section 4. Amend colorado tax return 01 of this revenue procedure for the taxable year in which the permanent modification occurs. Amend colorado tax return Under certain conditions, however, section 6 of this revenue procedure permits a borrower to report the discharge of indebtedness under HAMP-PRA over the Three-year Period. Amend colorado tax return The qualified principal residence indebtedness exclusion under § 108(a)(1)(E) and the insolvency exclusion under § 108(a)(1)(B) are two exclusions that may apply to the discharge. Amend colorado tax return . Amend colorado tax return 06 The PRA Investor Incentive Payment is treated as a payment on the mortgage loan by the HAMP program administrator on behalf of the HAMP-PRA borrower. Amend colorado tax return . Amend colorado tax return 07 To the extent that the HAMP-PRA borrower uses the property as the HAMP-PRA borrower’s principal residence or the property is occupied by the HAMP-PRA borrower’s legal dependent, parent, or grandparent without rent being charged or collected, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the PRA Investor Incentive Payments that the HAMP program administrator makes to the investor in the mortgage loan. Amend colorado tax return This is consistent with Rev. Amend colorado tax return Rul. Amend colorado tax return 2009-19, 2009-28 I. Amend colorado tax return R. Amend colorado tax return B. Amend colorado tax return 111, which addressed the treatment of Pay-for-Performance Success Payments. Amend colorado tax return . Amend colorado tax return 08 To the extent that the HAMP-PRA borrower uses the property as a rental property or holds the property vacant and available for rent, the HAMP-PRA borrower includes PRA Investor Incentive Payments in gross income. Amend colorado tax return If the HAMP-PRA borrower uses the cash receipts and disbursements method of accounting, then the HAMP-PRA borrower includes a PRA Investor Incentive Payment in gross income in the taxable year in which it is applied as a payment on the HAMP-PRA borrower’s mortgage loan. Amend colorado tax return . Amend colorado tax return 09 As described in section 2. Amend colorado tax return 09 of this revenue procedure, if a HAMP-PRA borrower pays in full the Non-forbearance Portion of the mortgage loan while the loan is in good standing and prior to completion of the Three-year Period, that payment accelerates both the reduction in the remaining PRA Forbearance Amount and the PRA Investor Incentive Payments from the HAMP program administrator. Amend colorado tax return To the extent that the HAMP-PRA borrower is described in section 4. Amend colorado tax return 07 of this revenue procedure, the HAMP-PRA borrower excludes from his or her gross income under the general welfare exclusion the accelerated PRA Investor Incentive Payments. Amend colorado tax return To the extent that the HAMP-PRA borrower is described in section 4. Amend colorado tax return 08 of this revenue procedure, the HAMP-PRA borrower includes in income in the year of the acceleration the remaining amount of the PRA Investor Incentive Payment. Amend colorado tax return SECTION 5. Amend colorado tax return INFORMATION-REPORTING OBLIGATIONS . Amend colorado tax return 01 Under § 6050P, the investor is required to file a Form 1099-C with respect to a borrower who realizes discharge of indebtedness of $600 or more. Amend colorado tax return A copy of this form is required to be furnished to the borrower. Amend colorado tax return . Amend colorado tax return 02 As stated in sections 4. Amend colorado tax return 01 and 4. Amend colorado tax return 04 of this revenue procedure, the HAMP-PRA discharge of indebtedness is realized at the time of the permanent modification of the mortgage loan. Amend colorado tax return . Amend colorado tax return 03 An investor is an applicable entity that is required under § 1. Amend colorado tax return 6050P-1 and this revenue procedure to issue a Form 1099-C for discharge of indebtedness. Amend colorado tax return Under § 1. Amend colorado tax return 6050P-1(b)(2)(F), the permanent modification of a mortgage loan is an identifiable event. Amend colorado tax return Identifiable events determine when Forms 1099-C have to be issued. Amend colorado tax return Thus, the Form 1099-C is issued for the calendar year in which the permanent mortgage loan modification occurs. Amend colorado tax return This rule under § 1. Amend colorado tax return 6050P-1(b)(2)(F) applies even if, under section 6 of this revenue procedure, the HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the times when the unpaid principal balance of the new mortgage loan is reduced. Amend colorado tax return . Amend colorado tax return 04 The investor (or the loan servicer acting on behalf of the investor) reports the full amount of the discharge on the Form 1099-C regardless of whether some or all of the amount is excludible from income under the qualified principal residence indebtedness exclusion, the insolvency exclusion, or any other exclusion that may apply. Amend colorado tax return That discharged amount will generally be the PRA Adjusted Forbearance Amount (which does not include the amounts expected to be satisfied by PRA Investor Incentive Payments). Amend colorado tax return . Amend colorado tax return 05 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Amend colorado tax return 07 of this revenue procedure, the PRA Investor Incentive Payments are excluded from the gross income of the HAMP-PRA borrower, and thus they are not fixed or determinable income to the HAMP-PRA borrower. Amend colorado tax return Under § 6041, these payments are not subject to information reporting. Amend colorado tax return See Notice 2011-14, 2011-11 I. Amend colorado tax return R. Amend colorado tax return B. Amend colorado tax return 544, 546. Amend colorado tax return . Amend colorado tax return 06 To the extent that PRA Investor Incentive Payments are made on behalf of a HAMP-PRA borrower who is described in section 4. Amend colorado tax return 08 of this revenue procedure, the PRA Investor Incentive Payments are includible in gross income as fixed or determinable income in the taxable year required by the HAMP-PRA borrower’s method of accounting. Amend colorado tax return The payment is subject to the information reporting requirements of § 6041, as described in section 3. Amend colorado tax return 15 of this revenue procedure. Amend colorado tax return Accordingly, the HAMP program administrator is required to issue a Form 1099-MISC reporting the PRA Investor Incentive Payment. Amend colorado tax return SECTION 6. Amend colorado tax return HAMP-PRA BORROWERS’ REPORTING OF DISCHARGES OF INDEBTEDNESS UNDER HAMP-PRA . Amend colorado tax return 01 In general. Amend colorado tax return The HAMP-PRA program began in the last quarter of 2010, and since that time there has been uncertainty about whether the amount of the discharge of indebtedness should be reported in the year of the permanent modification or over the Three-year Period (when the unpaid principal balance on the new mortgage loan is reduced). Amend colorado tax return As a result, some HAMP-PRA borrowers have been reporting the discharge of indebtedness under HAMP-PRA over the Three-year Period. Amend colorado tax return Given the temporary nature of the program and the issuance of this guidance after participation in the program has begun, in the interests of equitable and sound tax administration, HAMP-PRA borrowers may report discharges of indebtedness under HAMP-PRA under the rules in this section 6. Amend colorado tax return A HAMP-PRA borrower may choose to report discharges of indebtedness under HAMP-PRA pursuant to the rules in this section 6 only if the borrower applies the same borrower option under section 6. Amend colorado tax return 02 of this revenue procedure consistently to the taxable year of the permanent modification and to all subsequent taxable years. Amend colorado tax return Thus, a HAMP-PRA borrower may not choose a borrower option under section 6. Amend colorado tax return 02 of this revenue procedure if a statute of limitations has expired for any of the taxable years that are necessary for consistent application of that option. Amend colorado tax return . Amend colorado tax return 02 HAMP-PRA borrower options. Amend colorado tax return A HAMP-PRA borrower may treat the HAMP-PRA discharge as being realized in either of the following ways— (1) One hundred percent of the PRA Adjusted Forbearance Amount at the time of the permanent modification; or (2) One third of the PRA Adjusted Forbearance Amount on each of the first three annual anniversaries of the trial period plan effective date (described in section 2. Amend colorado tax return 06 of this revenue procedure), when, as required by the terms of the new mortgage loan, the servicer reduces the unpaid principal balance of the new mortgage loan. Amend colorado tax return If some or all of the reduction in the unpaid principal balance is accelerated (as described in section 2. Amend colorado tax return 06 of this revenue procedure) because the HAMP-PRA borrower prepays the Non-forbearance Portion of the mortgage loan, then the HAMP-PRA discharge represented by the amount of the reduction that was accelerated is treated as being realized at the time of the accelerated reduction. Amend colorado tax return . Amend colorado tax return 03 HAMP-PRA borrowers who choose to realize the HAMP-PRA discharge at the time of the permanent modification. Amend colorado tax return (1) If a HAMP-PRA borrower chooses to treat the HAMP-PRA discharge as being realized at the time of the permanent modification, then for the taxable year in which the permanent modification occurs, the HAMP-PRA borrower reports on Form 982 the amount, if any, of the discharge that is excluded from gross income and includes in gross income any remaining discharge. Amend colorado tax return (2) If a HAMP-PRA borrower’s mortgage loan was permanently modified under HAMP in 2010 or 2011, and if the borrower was reporting the discharge of indebtedness using the method described in section 6. Amend colorado tax return 02(2) of this revenue procedure, then the borrower may change to reporting the discharge of indebtedness using the method described in section 6. Amend colorado tax return 02(1) of this revenue procedure by filing a 2012 Form 982 with the borrower’s timely filed (with extensions) 2012 income tax return. Amend colorado tax return This section 6. Amend colorado tax return 03(2) applies only if the change to reporting the discharge using the method described in section 6. Amend colorado tax return 02(1) of this revenue procedure does not change the borrower’s federal income tax liability (including any change in federal income tax liability due to a change in basis or tax attributes (under § 108(h)(1) or § 108(b))) for any taxable year prior to the borrower’s 2012 taxable year. Amend colorado tax return To make this change, the borrower must— (i) Compute the amount of discharge of indebtedness that would be included in income under § 61(a)(12) or excluded from gross income under § 108, basing the computation of the discharge on the facts as of the year of the permanent modification; and (ii) Report on a 2012 Form 982 the reduction in basis or tax attributes (under § 108(h)(1) or § 108(b)) due to the permanent modification that the borrower would have reported on the Form 982 for the taxable year of the permanent modification, minus any reductions due to the permanent modification that the borrower actually reported on Forms 982 for taxable years prior to 2012. Amend colorado tax return (3) Example. Amend colorado tax return The following example illustrates the application of section 6. Amend colorado tax return 03(2) of this revenue procedure. Amend colorado tax return In 2010, B’s basis in B’s principal residence was $330,000. Amend colorado tax return In 2010, B’s mortgage loan on the principal residence is permanently modified under HAMP-PRA. Amend colorado tax return B realized $30,000 of cancellation of indebtedness from the permanent modification, all of which qualifies for the exclusion from income for qualified principal residence indebtedness under § 108(a)(1)(E). Amend colorado tax return The trial period plan effective date also fell in 2010. Amend colorado tax return B’s federal income tax return for 2010 was consistent with B’s reporting this discharge of indebtedness using the method described in section 6. Amend colorado tax return 02(2) of this revenue procedure. Amend colorado tax return That is, B’s 2010 return did not include income from discharge of indebtedness under HAMP-PRA, nor did the return contain a Form 982 reporting exclusion of any such discharge of indebtedness. Amend colorado tax return The next year, B reported on line 10(b) of the 2011 Form 982 that B filed with B’s 2011 federal income tax return a $10,000 reduction in basis in the principal residence. Amend colorado tax return For 2012, B chooses to change to reporting the discharge of indebtedness using the method described in section 6. Amend colorado tax return 02(1) of this revenue procedure. Amend colorado tax return Thus, B files a 2012 Form 982 with B’s timely filed (including extensions) 2012 federal income tax return, and on line 10(b) of that form, B reports a $20,000 basis reduction in the principal residence ($30,000 basis reduction that B would have excluded from income in 2010 using the method described in section 6. Amend colorado tax return 02(1) of this revenue procedure, minus the $10,000 basis reduction that B reported on B’s 2011 Form 982). Amend colorado tax return (4) If a HAMP-PRA borrower reports the entire HAMP-PRA discharge using the method described in section 6. Amend colorado tax return 02(1) of this revenue procedure, and if that HAMP-PRA borrower’s mortgage loan ceases to be in good standing during the Three-year Period as described in section 2. Amend colorado tax return 10 of this revenue procedure, then some or all of the anticipated reductions in the PRA Adjusted Forbearance Amount will not take place. Amend colorado tax return Because the amount of these anticipated reductions was not included in determining the issue price of the new mortgage loan that, pursuant to § 1. Amend colorado tax return 1001-3, the HAMP-PRA borrower is deemed to issue in satisfaction of the old mortgage loan, the issue price of the new mortgage loan was understated. Amend colorado tax return Under these circumstances, the discharge of indebtedness income determined as of the date of the permanent modification will have been overstated. Amend colorado tax return (5) The Service will not challenge a HAMP-PRA borrower who is described in section 6. Amend colorado tax return 03(4) of this revenue procedure and who takes the following corrective measures: (i) If a HAMP-PRA borrower included any of the discharge of indebtedness in gross income, the HAMP-PRA borrower may file an amended return that does not include the amount of the discharge of indebtedness that was previously reported as gross income but that, because of the HAMP-PRA borrower’s failure to keep the new mortgage loan in good standing, was not ultimately discharged. Amend colorado tax return The amended return should be for the taxable year in which the income was included (that is, the year of the permanent modification), provided the applicable statute of limitations remains open for that taxable year. Amend colorado tax return (ii) If the HAMP-PRA borrower did not include any of the discharge of indebtedness in gross income (that is, if the HAMP-PRA borrower excluded all of it), the HAMP-PRA borrower may file a new Form 982 that the Service will treat as superseding the earlier Form 982. Amend colorado tax return The new Form 982 will reflect the revised reduction in basis or in tax attributes (under § 108(h)(1) or § 108(b)). Amend colorado tax return The new Form 982 should be the Form 982 for the year of the permanent modification and should be filed with the return for the taxable year in which the HAMP-PRA borrower’s mortgage loan ceased to be in good standing. Amend colorado tax return . Amend colorado tax return 04 HAMP-PRA borrowers who choose to treat the HAMP-PRA discharge as being realized on the dates on which the unpaid principal balance of the mortgage loan is reduced. Amend colorado tax return (1) If a HAMP-PRA borrower chooses to realize the HAMP-PRA discharge at the times that the unpaid principal balance on the new mortgage loan is reduced, instead of at the time of the permanent modification, then the HAMP-PRA borrower’s federal income tax returns for the taxable year that contains the permanent modification and for the subsequent taxable years must not treat any of the discharge as being realized at the time of the permanent modification and must treat the entire HAMP-PRA discharge as being realized in the amounts—and at the times—of the reductions in the unpaid principal balance. Amend colorado tax return Except as described in the last sentence of this paragraph, therefore, the income tax return for the year of the permanent modification must include no gross income from—nor report on Form 982 an exclusion of—any amount of the HAMP-PRA discharge. Amend colorado tax return Instead, the HAMP-PRA discharge is included in gross income (or is reported on Form 982 as excluded from gross income) in the subsequent years in which the unpaid principal balance is reduced. Amend colorado tax return If the first such reduction occurs in the year of the permanent modification, however, then the amount of any such reduction is reflected as an inclusion or exclusion on the federal income tax return for that year. Amend colorado tax return (2) A HAMP-PRA borrower who has been using the method described in section 6. Amend colorado tax return 02(1) of this revenue procedure may change to the method described in section 6. Amend colorado tax return 02(2) but must comply with the consistency and open-year requirements described in section 6. Amend colorado tax return 01 of this revenue procedure. Amend colorado tax return SECTION 7. Amend colorado tax return PENALTY RELIEF FOR 2012 . Amend colorado tax return 01 The Service will not assert penalties under § 6721 or § 6722 against an investor for failing to timely file and furnish a 2012 Form 1099-C as required by section 5. Amend colorado tax return 03 through 5. Amend colorado tax return 04 and section 8. Amend colorado tax return 02 of this revenue procedure with respect to discharge of indebtedness resulting from HAMP-PRA permanent modifications that take place during calendar year 2012 if the following requirements are satisfied: (1) Not later than February 28, 2013, a statement is sent to the HAMP-PRA borrower containing the following: (a) The HAMP-PRA borrower’s name, address, and taxpayer identification number; and (b) The date and amount of the discharge of indebtedness (as described in sections 4. Amend colorado tax return 01 through 4. Amend colorado tax return 04 of this revenue procedure) that is required to be reported for 2012. Amend colorado tax return (2) Not later than March 28, 2013, a statement is sent to the Service. Amend colorado tax return It must be in the form of a single statement that separately lists for each HAMP-PRA borrower the information specified in section 7. Amend colorado tax return 01(1) of this revenue procedure. Amend colorado tax return The statement should be sent to the Service at the following address: Internal Revenue Service Center Stop 6728AUSC Austin, TX 73301 . Amend colorado tax return 02 The Service will not assert penalties under § 6721 or § 6722 with respect to any Forms 1099-MISC for 2012 that sections 5. Amend colorado tax return 06 and 8. Amend colorado tax return 02 of this revenue procedure require to be filed with the Service and furnished to taxpayers. Amend colorado tax return . Amend colorado tax return 03 Section 8. Amend colorado tax return 03 and 8. Amend colorado tax return 04 of this revenue procedure, below, describes penalty relief regarding Forms 1099-C and 1099-MISC for 2010 and 2011. Amend colorado tax return SECTION 8. Amend colorado tax return SCOPE AND EFFECTIVE DATE . Amend colorado tax return 01 This revenue procedure applies to all borrowers, investors, and servicers who participate, or have participated, in the HAMP-PRA, regardless of when the permanent modification occurs. Amend colorado tax return . Amend colorado tax return 02 Section 5 of this revenue procedure is effective for Forms 1099-C and 1099-MISC due or filed after January 24, 2013. Amend colorado tax return . Amend colorado tax return 03 Because of the effective date in section 8. Amend colorado tax return 02 of this revenue procedure, an investor is not subject to penalties under § 6721 or § 6722 on the grounds that the investor failed to timely file and furnish a 2010 or 2011 Form 1099-C as described in section 5. Amend colorado tax return 03 through 5. Amend colorado tax return 04 of this revenue procedure (or on the grounds that the investor filed or furnished a 2010 or 2011 Form 1099-C that is inconsistent with section 5. Amend colorado tax return 03 through 5. Amend colorado tax return 04 of this revenue procedure), provided that the investor demonstrates a good faith attempt to comply with the requirements of § 6050P and that the failure was not due to willful neglect. Amend colorado tax return . Amend colorado tax return 04 Because of the effective date in section 8. Amend colorado tax return 02 of this revenue procedure, the Service will not assert penalties under § 6721 or § 6722 on the grounds of a failure to timely file and furnish a 2010 or 2011 Form 1099-MISC, as described in section 5. Amend colorado tax return 06 of this revenue procedure. Amend colorado tax return SECTION 9. Amend colorado tax return DRAFTING INFORMATION The principal authors of this revenue procedure are Ronald J. Amend colorado tax return Goldstein of the Office of Chief Counsel (Procedure and Administration); Shareen S. Amend colorado tax return Pflanz and Sheldon A. Amend colorado tax return Iskow of the Office of Chief Counsel (Income Tax and Accounting); and Andrea M. Amend colorado tax return Hoffenson of the Office of Chief Counsel (Financial Institutions and Products). Amend colorado tax return For further information regarding this revenue procedure, contact Procedure and Administration branch 1 at (202) 622-4910, Income Tax and Accounting branch 4 at (202) 622-4920, or Financial Institutions and Products branch 1 at (202) 622-3920 (not toll-free calls). Amend colorado tax return Prev  Up  Next   Home   More Internal Revenue Bulletins