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Ez 1040 E-file

Ez 1040 e-file 14. Ez 1040 e-file   Sale of Property Table of Contents Reminder Introduction Useful Items - You may want to see: Sales and TradesWhat Is a Sale or Trade? How To Figure Gain or Loss Nontaxable Trades Transfers Between Spouses Related Party Transactions Capital Gains and LossesCapital or Ordinary Gain or Loss Capital Assets and Noncapital Assets Holding Period Nonbusiness Bad Debts Wash Sales Rollover of Gain From Publicly Traded Securities Reminder Foreign income. Ez 1040 e-file  If you are a U. Ez 1040 e-file S. Ez 1040 e-file citizen who sells property located outside the United States, you must report all gains and losses from the sale of that property on your tax return unless it is exempt by U. Ez 1040 e-file S. Ez 1040 e-file law. Ez 1040 e-file This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the payer. Ez 1040 e-file Introduction This chapter discusses the tax consequences of selling or trading investment property. Ez 1040 e-file It explains the following. Ez 1040 e-file What a sale or trade is. Ez 1040 e-file Figuring gain or loss. Ez 1040 e-file Nontaxable trades. Ez 1040 e-file Related party transactions. Ez 1040 e-file Capital gains or losses. Ez 1040 e-file Capital assets and noncapital assets. Ez 1040 e-file Holding period. Ez 1040 e-file Rollover of gain from publicly traded securities. Ez 1040 e-file Other property transactions. Ez 1040 e-file   Certain transfers of property are not discussed here. Ez 1040 e-file They are discussed in other IRS publications. Ez 1040 e-file These include the following. Ez 1040 e-file Sales of a main home, covered in chapter 15. Ez 1040 e-file Installment sales, covered in Publication 537, Installment Sales. Ez 1040 e-file Transactions involving business property, covered in Publication 544, Sales and Other Dispositions of Assets. Ez 1040 e-file Dispositions of an interest in a passive activity, covered in Publication 925, Passive Activity and At-Risk Rules. Ez 1040 e-file    Publication 550, Investment Income and Expenses (Including Capital Gains and Losses), provides a more detailed discussion about sales and trades of investment property. Ez 1040 e-file Publication 550 includes information about the rules covering nonbusiness bad debts, straddles, section 1256 contracts, puts and calls, commodity futures, short sales, and wash sales. Ez 1040 e-file It also discusses investment-related expenses. Ez 1040 e-file Useful Items - You may want to see: Publication 550 Investment Income and Expenses Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 8949 Sales and Other Dispositions of Capital Assets 8824 Like-Kind Exchanges Sales and Trades If you sold property such as stocks, bonds, or certain commodities through a broker during the year, you should receive, for each sale, a Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, or substitute statement, from the broker. Ez 1040 e-file Generally, you should receive the statement by February 15 of the next year. Ez 1040 e-file It will show the gross proceeds from the sale. Ez 1040 e-file If you sold a covered security in 2013, your 1099-B (or substitute statement) will show your basis. Ez 1040 e-file Generally, a covered security is a security you acquired after 2010, with certain exceptions. Ez 1040 e-file See the Instructions for Form 8949. Ez 1040 e-file The IRS will also get a copy of Form 1099-B from the broker. Ez 1040 e-file Use Form 1099-B (or substitute statement received from your broker) to complete Form 8949. Ez 1040 e-file What Is a Sale or Trade? This section explains what is a sale or trade. Ez 1040 e-file It also explains certain transactions and events that are treated as sales or trades. Ez 1040 e-file A sale is generally a transfer of property for money or a mortgage, note, or other promise to pay money. Ez 1040 e-file A trade is a transfer of property for other property or services and may be taxed in the same way as a sale. Ez 1040 e-file Sale and purchase. Ez 1040 e-file   Ordinarily, a transaction is not a trade when you voluntarily sell property for cash and immediately buy similar property to replace it. Ez 1040 e-file The sale and purchase are two separate transactions. Ez 1040 e-file But see Like-kind exchanges under Nontaxable Trades, later. Ez 1040 e-file Redemption of stock. Ez 1040 e-file   A redemption of stock is treated as a sale or trade and is subject to the capital gain or loss provisions unless the redemption is a dividend or other distribution on stock. Ez 1040 e-file Dividend versus sale or trade. Ez 1040 e-file   Whether a redemption is treated as a sale, trade, dividend, or other distribution depends on the circumstances in each case. Ez 1040 e-file Both direct and indirect ownership of stock will be considered. Ez 1040 e-file The redemption is treated as a sale or trade of stock if: The redemption is not essentially equivalent to a dividend (see chapter 8), There is a substantially disproportionate redemption of stock, There is a complete redemption of all the stock of the corporation owned by the shareholder, or The redemption is a distribution in partial liquidation of a corporation. Ez 1040 e-file Redemption or retirement of bonds. Ez 1040 e-file   A redemption or retirement of bonds or notes at their maturity is generally treated as a sale or trade. Ez 1040 e-file   In addition, a significant modification of a bond is treated as a trade of the original bond for a new bond. Ez 1040 e-file For details, see Regulations section 1. Ez 1040 e-file 1001-3. Ez 1040 e-file Surrender of stock. Ez 1040 e-file   A surrender of stock by a dominant shareholder who retains ownership of more than half of the corporation's voting shares is treated as a contribution to capital rather than as an immediate loss deductible from taxable income. Ez 1040 e-file The surrendering shareholder must reallocate his or her basis in the surrendered shares to the shares he or she retains. Ez 1040 e-file Worthless securities. Ez 1040 e-file    Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year. Ez 1040 e-file This affects whether your capital loss is long term or short term. Ez 1040 e-file See Holding Period , later. Ez 1040 e-file   Worthless securities also include securities that you abandon after March 12, 2008. Ez 1040 e-file To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. Ez 1040 e-file All the facts and circumstances determine whether the transaction is properly characterized as an abandonment or other type of transaction, such as an actual sale or exchange, contribution to capital, dividend, or gift. Ez 1040 e-file    If you are a cash basis taxpayer and make payments on a negotiable promissory note that you issued for stock that became worthless, you can deduct these payments as losses in the years you actually make the payments. Ez 1040 e-file Do not deduct them in the year the stock became worthless. Ez 1040 e-file How to report loss. Ez 1040 e-file    Report worthless securities in Part I or Part II, whichever applies, of Form 8949. Ez 1040 e-file In column (a), enter “Worthless. Ez 1040 e-file ”    Report your worthless securities transactions on Form 8949 with the correct box checked for these transactions. Ez 1040 e-file See Form 8949 and the Instructions for Form 8949. Ez 1040 e-file For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Ez 1040 e-file See also Schedule D (Form 1040), Form 8949, and their separate instructions. Ez 1040 e-file Filing a claim for refund. Ez 1040 e-file   If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. Ez 1040 e-file You must use Form 1040X, Amended U. Ez 1040 e-file S. Ez 1040 e-file Individual Income Tax Return, to amend your return for the year the security became worthless. Ez 1040 e-file You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. Ez 1040 e-file For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. Ez 1040 e-file How To Figure Gain or Loss You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. Ez 1040 e-file Gain. Ez 1040 e-file   If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. Ez 1040 e-file Loss. Ez 1040 e-file   If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. Ez 1040 e-file Adjusted basis. Ez 1040 e-file   The adjusted basis of property is your original cost or other original basis properly adjusted (increased or decreased) for certain items. Ez 1040 e-file See chapter 13 for more information about determining the adjusted basis of property. Ez 1040 e-file Amount realized. Ez 1040 e-file   The amount you realize from a sale or trade of property is everything you receive for the property minus your expenses of sale (such as redemption fees, sales commissions, sales charges, or exit fees). Ez 1040 e-file Amount realized includes the money you receive plus the fair market value of any property or services you receive. Ez 1040 e-file If you received a note or other debt instrument for the property, see How To Figure Gain or Loss in chapter 4 of Publication 550 to figure the amount realized. Ez 1040 e-file If you finance the buyer's purchase of your property and the debt instrument does not provide for adequate stated interest, the unstated interest that you must report as ordinary income will reduce the amount realized from the sale. Ez 1040 e-file For more information, see Publication 537. Ez 1040 e-file Fair market value. Ez 1040 e-file   Fair market value is the price at which the property would change hands between a buyer and a seller, neither being forced to buy or sell and both having reasonable knowledge of all the relevant facts. Ez 1040 e-file Example. Ez 1040 e-file You trade A Company stock with an adjusted basis of $7,000 for B Company stock with a fair market value of $10,000, which is your amount realized. Ez 1040 e-file Your gain is $3,000 ($10,000 − $7,000). Ez 1040 e-file Debt paid off. Ez 1040 e-file    A debt against the property, or against you, that is paid off as a part of the transaction, or that is assumed by the buyer, must be included in the amount realized. Ez 1040 e-file This is true even if neither you nor the buyer is personally liable for the debt. Ez 1040 e-file For example, if you sell or trade property that is subject to a nonrecourse loan, the amount you realize generally includes the full amount of the note assumed by the buyer even if the amount of the note is more than the fair market value of the property. Ez 1040 e-file Example. Ez 1040 e-file You sell stock that you had pledged as security for a bank loan of $8,000. Ez 1040 e-file Your basis in the stock is $6,000. Ez 1040 e-file The buyer pays off your bank loan and pays you $20,000 in cash. Ez 1040 e-file The amount realized is $28,000 ($20,000 + $8,000). Ez 1040 e-file Your gain is $22,000 ($28,000 − $6,000). Ez 1040 e-file Payment of cash. Ez 1040 e-file   If you trade property and cash for other property, the amount you realize is the fair market value of the property you receive. Ez 1040 e-file Determine your gain or loss by subtracting the cash you pay plus the adjusted basis of the property you trade in from the amount you realize. Ez 1040 e-file If the result is a positive number, it is a gain. Ez 1040 e-file If the result is a negative number, it is a loss. Ez 1040 e-file No gain or loss. Ez 1040 e-file   You may have to use a basis for figuring gain that is different from the basis used for figuring loss. Ez 1040 e-file In this case, you may have neither a gain nor a loss. Ez 1040 e-file See Basis Other Than Cost in chapter 13. Ez 1040 e-file Nontaxable Trades This section discusses trades that generally do not result in a taxable gain or deductible loss. Ez 1040 e-file For more information on nontaxable trades, see chapter 1 of Publication 544. Ez 1040 e-file Like-kind exchanges. Ez 1040 e-file   If you trade business or investment property for other business or investment property of a like kind, you do not pay tax on any gain or deduct any loss until you sell or dispose of the property you receive. Ez 1040 e-file To be nontaxable, a trade must meet all six of the following conditions. Ez 1040 e-file The property must be business or investment property. Ez 1040 e-file You must hold both the property you trade and the property you receive for productive use in your trade or business or for investment. Ez 1040 e-file Neither property may be property used for personal purposes, such as your home or family car. Ez 1040 e-file The property must not be held primarily for sale. Ez 1040 e-file The property you trade and the property you receive must not be property you sell to customers, such as merchandise. Ez 1040 e-file The property must not be stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest, including partnership interests. Ez 1040 e-file However, see Special rules for mutual ditch, reservoir, or irrigation company stock, in chapter 4 of Publication 550 for an exception. Ez 1040 e-file Also, you can have a nontaxable trade of corporate stocks under a different rule, as discussed later. Ez 1040 e-file There must be a trade of like property. Ez 1040 e-file The trade of real estate for real estate, or personal property for similar personal property, is a trade of like property. Ez 1040 e-file The trade of an apartment house for a store building, or a panel truck for a pickup truck, is a trade of like property. Ez 1040 e-file The trade of a piece of machinery for a store building is not a trade of like property. Ez 1040 e-file Real property located in the United States and real property located outside the United States are not like property. Ez 1040 e-file Also, personal property used predominantly within the United States and personal property used predominantly outside the United States are not like property. Ez 1040 e-file The property to be received must be identified in writing within 45 days after the date you transfer the property given up in the trade. Ez 1040 e-file The property to be received must be received by the earlier of: The 180th day after the date on which you transfer the property given up in the trade, or The due date, including extensions, for your tax return for the year in which the transfer of the property given up occurs. Ez 1040 e-file    If you trade property with a related party in a like-kind exchange, a special rule may apply. Ez 1040 e-file See Related Party Transactions , later in this chapter. Ez 1040 e-file Also, see chapter 1 of Publication 544 for more information on exchanges of business property and special rules for exchanges using qualified intermediaries or involving multiple properties. Ez 1040 e-file Partly nontaxable exchange. Ez 1040 e-file   If you receive money or unlike property in addition to like property, and the above six conditions are met, you have a partly nontaxable trade. Ez 1040 e-file You are taxed on any gain you realize, but only up to the amount of the money and the fair market value of the unlike property you receive. Ez 1040 e-file You cannot deduct a loss. Ez 1040 e-file Like property and unlike property transferred. Ez 1040 e-file   If you give up unlike property in addition to the like property, you must recognize gain or loss on the unlike property you give up. Ez 1040 e-file The gain or loss is the difference between the adjusted basis of the unlike property and its fair market value. Ez 1040 e-file Like property and money transferred. Ez 1040 e-file   If all of the above conditions (1) – (6) are met, you have a nontaxable trade even if you pay money in addition to the like property. Ez 1040 e-file Basis of property received. Ez 1040 e-file   To figure the basis of the property received, see Nontaxable Exchanges in chapter 13. Ez 1040 e-file How to report. Ez 1040 e-file   You must report the trade of like property on Form 8824. Ez 1040 e-file If you figure a recognized gain or loss on Form 8824, report it on Schedule D (Form 1040), or on Form 4797, Sales of Business Property, whichever applies. Ez 1040 e-file See the instructions for Line 22 in the Instructions for Form 8824. Ez 1040 e-file   For information on using Form 4797, see chapter 4 of Publication 544. Ez 1040 e-file Corporate stocks. Ez 1040 e-file   The following trades of corporate stocks generally do not result in a taxable gain or a deductible loss. Ez 1040 e-file Corporate reorganizations. Ez 1040 e-file   In some instances, a company will give you common stock for preferred stock, preferred stock for common stock, or stock in one corporation for stock in another corporation. Ez 1040 e-file If this is a result of a merger, recapitalization, transfer to a controlled corporation, bankruptcy, corporate division, corporate acquisition, or other corporate reorganization, you do not recognize gain or loss. Ez 1040 e-file Stock for stock of the same corporation. Ez 1040 e-file   You can exchange common stock for common stock or preferred stock for preferred stock in the same corporation without having a recognized gain or loss. Ez 1040 e-file This is true for a trade between two stockholders as well as a trade between a stockholder and the corporation. Ez 1040 e-file Convertible stocks and bonds. Ez 1040 e-file   You generally will not have a recognized gain or loss if you convert bonds into stock or preferred stock into common stock of the same corporation according to a conversion privilege in the terms of the bond or the preferred stock certificate. Ez 1040 e-file Property for stock of a controlled corporation. Ez 1040 e-file   If you transfer property to a corporation solely in exchange for stock in that corporation, and immediately after the trade you are in control of the corporation, you ordinarily will not recognize a gain or loss. Ez 1040 e-file This rule applies both to individuals and to groups who transfer property to a corporation. Ez 1040 e-file It does not apply if the corporation is an investment company. Ez 1040 e-file   For this purpose, to be in control of a corporation, you or your group of transferors must own, immediately after the exchange, at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the outstanding shares of each class of nonvoting stock of the corporation. Ez 1040 e-file   If this provision applies to you, you may have to attach to your return a complete statement of all facts pertinent to the exchange. Ez 1040 e-file For details, see Regulations section 1. Ez 1040 e-file 351-3. Ez 1040 e-file Additional information. Ez 1040 e-file   For more information on trades of stock, see Nontaxable Trades in chapter 4 of Publication 550. Ez 1040 e-file Insurance policies and annuities. Ez 1040 e-file   You will not have a recognized gain or loss if the insured or annuitant is the same under both contracts and you trade: A life insurance contract for another life insurance contract or for an endowment or annuity contract or for a qualified long-term care insurance contract, An endowment contract for another endowment contract that provides for regular payments beginning at a date no later than the beginning date under the old contract or for an annuity contract or for a qualified long-term insurance contract, An annuity contract for annuity contract or for a qualified long-term care insurance contract, or A qualified long-term care insurance contract for a qualified long-term care insurance contract. Ez 1040 e-file   You also may not have to recognize gain or loss on an exchange of a portion of an annuity contract for another annuity contract. Ez 1040 e-file For transfers completed before October 24, 2011, see Revenue Ruling 2003-76 in Internal Revenue Bulletin 2003-33 and Revenue Procedure 2008-24 in Internal Revenue Bulletin 2008-13. Ez 1040 e-file Revenue Ruling 2003-76 is available at www. Ez 1040 e-file irs. Ez 1040 e-file gov/irb/2003-33_IRB/ar11. Ez 1040 e-file html. Ez 1040 e-file Revenue Procedure 2008-24 is available at www. Ez 1040 e-file irs. Ez 1040 e-file gov/irb/2008-13_IRB/ar13. Ez 1040 e-file html. Ez 1040 e-file For transfers completed on or after October 24, 2011, see Revenue Ruling 2003-76, above, and Revenue Procedure 2011-38, in Internal Revenue Bulletin 2011-30. Ez 1040 e-file Revenue Procedure 2011-38 is available at www. Ez 1040 e-file irs. Ez 1040 e-file gov/irb/2011-30_IRB/ar09. Ez 1040 e-file html. Ez 1040 e-file   For tax years beginning after December 31, 2010, amounts received as an annuity for a period of 10 years or more, or for the lives of one or more individuals, under any portion of an annuity, endowment, or life insurance contract, are treated as a separate contract and are considered partial annuities. Ez 1040 e-file A portion of an annuity, endowment, or life insurance contract may be annuitized, provided that the annuitization period is for 10 years or more or for the lives of one or more individuals. Ez 1040 e-file The investment in the contract is allocated between the part of the contract from which amounts are received as an annuity and the part of the contract from which amounts are not received as an annuity. Ez 1040 e-file   Exchanges of contracts not included in this list, such as an annuity contract for an endowment contract, or an annuity or endowment contract for a life insurance contract, are taxable. Ez 1040 e-file Demutualization of life insurance companies. Ez 1040 e-file   If you received stock in exchange for your equity interest as a policyholder or an annuitant, you generally will not have a recognized gain or loss. Ez 1040 e-file See Demutualization of Life Insurance Companies in Publication 550. Ez 1040 e-file U. Ez 1040 e-file S. Ez 1040 e-file Treasury notes or bonds. Ez 1040 e-file   You can trade certain issues of U. Ez 1040 e-file S. Ez 1040 e-file Treasury obligations for other issues designated by the Secretary of the Treasury, with no gain or loss recognized on the trade. Ez 1040 e-file See Savings bonds traded in chapter 1 of Publication 550 for more information. Ez 1040 e-file Transfers Between Spouses Generally, no gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse, or if incident to a divorce, a former spouse. Ez 1040 e-file This nonrecognition rule does not apply in the following situations. Ez 1040 e-file The recipient spouse or former spouse is a nonresident alien. Ez 1040 e-file Property is transferred in trust and liability exceeds basis. Ez 1040 e-file Gain must be recognized to the extent the amount of the liabilities assumed by the trust, plus any liabilities on the property, exceed the adjusted basis of the property. Ez 1040 e-file For other situations, see Transfers Between Spouses in chapter 4 of Publication 550. Ez 1040 e-file Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. Ez 1040 e-file The recipient's basis in the property will be the same as the adjusted basis of the giver immediately before the transfer. Ez 1040 e-file This carryover basis rule applies whether the adjusted basis of the transferred property is less than, equal to, or greater than either its fair market value at the time of transfer or any consideration paid by the recipient. Ez 1040 e-file This rule applies for purposes of determining loss as well as gain. Ez 1040 e-file Any gain recognized on a transfer in trust increases the basis. Ez 1040 e-file A transfer of property is incident to a divorce if the transfer occurs within 1 year after the date on which the marriage ends, or if the transfer is related to the ending of the marriage. Ez 1040 e-file Related Party Transactions Special rules apply to the sale or trade of property between related parties. Ez 1040 e-file Gain on sale or trade of depreciable property. Ez 1040 e-file   Your gain from the sale or trade of property to a related party may be ordinary income, rather than capital gain, if the property can be depreciated by the party receiving it. Ez 1040 e-file See chapter 3 of Publication 544 for more information. Ez 1040 e-file Like-kind exchanges. Ez 1040 e-file   Generally, if you trade business or investment property for other business or investment property of a like kind, no gain or loss is recognized. Ez 1040 e-file See Like-kind exchanges , earlier, under Nontaxable Trades. Ez 1040 e-file   This rule also applies to trades of property between related parties, defined next under Losses on sales or trades of property. Ez 1040 e-file However, if either you or the related party disposes of the like property within 2 years after the trade, you both must report any gain or loss not recognized on the original trade on your return filed for the year in which the later disposition occurs. Ez 1040 e-file See Related Party Transactions in chapter 4 of Publication 550 for exceptions. Ez 1040 e-file Losses on sales or trades of property. Ez 1040 e-file   You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties. Ez 1040 e-file Members of your family. Ez 1040 e-file This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc. Ez 1040 e-file ), and lineal descendants (children, grandchildren, etc. Ez 1040 e-file ). Ez 1040 e-file A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest. Ez 1040 e-file A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock. Ez 1040 e-file (See Constructive ownership of stock , later. Ez 1040 e-file ) A tax-exempt charitable or educational organization directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable. Ez 1040 e-file   In addition, a loss on the sale or trade of property is not deductible if the transaction is directly or indirectly between the following related parties. Ez 1040 e-file A grantor and fiduciary, or the fiduciary and beneficiary, of any trust. Ez 1040 e-file Fiduciaries of two different trusts, or the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. Ez 1040 e-file A trust fiduciary and a corporation of which more than 50% in value of the outstanding stock is directly or indirectly owned by or for the trust, or by or for the grantor of the trust. Ez 1040 e-file A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital interest, or the profits interest, in the partnership. Ez 1040 e-file Two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. Ez 1040 e-file Two corporations, one of which is an S corporation, if the same persons own more than 50% in value of the outstanding stock of each corporation. Ez 1040 e-file An executor and a beneficiary of an estate (except in the case of a sale or trade to satisfy a pecuniary bequest). Ez 1040 e-file Two corporations that are members of the same controlled group. Ez 1040 e-file (Under certain conditions, however, these losses are not disallowed but must be deferred. Ez 1040 e-file ) Two partnerships if the same persons own, directly or indirectly, more than 50% of the capital interests or the profit interests in both partnerships. Ez 1040 e-file Multiple property sales or trades. Ez 1040 e-file   If you sell or trade to a related party a number of blocks of stock or pieces of property in a lump sum, you must figure the gain or loss separately for each block of stock or piece of property. Ez 1040 e-file The gain on each item may be taxable. Ez 1040 e-file However, you cannot deduct the loss on any item. Ez 1040 e-file Also, you cannot reduce gains from the sales of any of these items by losses on the sales of any of the other items. Ez 1040 e-file Indirect transactions. Ez 1040 e-file   You cannot deduct your loss on the sale of stock through your broker if, under a prearranged plan, a related party buys the same stock you had owned. Ez 1040 e-file This does not apply to a trade between related parties through an exchange that is purely coincidental and is not prearranged. Ez 1040 e-file Constructive ownership of stock. Ez 1040 e-file   In determining whether a person directly or indirectly owns any of the outstanding stock of a corporation, the following rules apply. Ez 1040 e-file Rule 1. Ez 1040 e-file   Stock directly or indirectly owned by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. Ez 1040 e-file Rule 2. Ez 1040 e-file   An individual is considered to own the stock directly or indirectly owned by or for his or her family. Ez 1040 e-file Family includes only brothers and sisters, half-brothers and half-sisters, spouse, ancestors, and lineal descendants. Ez 1040 e-file Rule 3. Ez 1040 e-file   An individual owning, other than by applying rule 2, any stock in a corporation is considered to own the stock directly or indirectly owned by or for his or her partner. Ez 1040 e-file Rule 4. Ez 1040 e-file   When applying rule 1, 2, or 3, stock constructively owned by a person under rule 1 is treated as actually owned by that person. Ez 1040 e-file But stock constructively owned by an individual under rule 2 or rule 3 is not treated as owned by that individual for again applying either rule 2 or rule 3 to make another person the constructive owner of the stock. Ez 1040 e-file Property received from a related party. Ez 1040 e-file    If you sell or trade at a gain property you acquired from a related party, you recognize the gain only to the extent it is more than the loss previously disallowed to the related party. Ez 1040 e-file This rule applies only if you are the original transferee and you acquired the property by purchase or exchange. Ez 1040 e-file This rule does not apply if the related party's loss was disallowed because of the wash sale rules described in chapter 4 of Publication 550 under Wash Sales. Ez 1040 e-file   If you sell or trade at a loss property you acquired from a related party, you cannot recognize the loss that was not allowed to the related party. Ez 1040 e-file Example 1. Ez 1040 e-file Your brother sells you stock for $7,600. Ez 1040 e-file His cost basis is $10,000. Ez 1040 e-file Your brother cannot deduct the loss of $2,400. Ez 1040 e-file Later, you sell the same stock to an unrelated party for $10,500, realizing a gain of $2,900. Ez 1040 e-file Your reportable gain is $500 (the $2,900 gain minus the $2,400 loss not allowed to your brother). Ez 1040 e-file Example 2. Ez 1040 e-file If, in Example 1, you sold the stock for $6,900 instead of $10,500, your recognized loss is only $700 (your $7,600 basis minus $6,900). Ez 1040 e-file You cannot deduct the loss that was not allowed to your brother. Ez 1040 e-file Capital Gains and Losses This section discusses the tax treatment of gains and losses from different types of investment transactions. Ez 1040 e-file Character of gain or loss. Ez 1040 e-file   You need to classify your gains and losses as either ordinary or capital gains or losses. Ez 1040 e-file You then need to classify your capital gains and losses as either short term or long term. Ez 1040 e-file If you have long-term gains and losses, you must identify your 28% rate gains and losses. Ez 1040 e-file If you have a net capital gain, you must also identify any unrecaptured section 1250 gain. Ez 1040 e-file   The correct classification and identification helps you figure the limit on capital losses and the correct tax on capital gains. Ez 1040 e-file Reporting capital gains and losses is explained in chapter 16. Ez 1040 e-file Capital or Ordinary Gain or Loss If you have a taxable gain or a deductible loss from a transaction, it may be either a capital gain or loss or an ordinary gain or loss, depending on the circumstances. Ez 1040 e-file Generally, a sale or trade of a capital asset (defined next) results in a capital gain or loss. Ez 1040 e-file A sale or trade of a noncapital asset generally results in ordinary gain or loss. Ez 1040 e-file Depending on the circumstances, a gain or loss on a sale or trade of property used in a trade or business may be treated as either capital or ordinary, as explained in Publication 544. Ez 1040 e-file In some situations, part of your gain or loss may be a capital gain or loss and part may be an ordinary gain or loss. Ez 1040 e-file Capital Assets and Noncapital Assets For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. Ez 1040 e-file Some examples are: Stocks or bonds held in your personal account, A house owned and used by you and your family, Household furnishings, A car used for pleasure or commuting, Coin or stamp collections, Gems and jewelry, and Gold, silver, or any other metal. Ez 1040 e-file Any property you own is a capital asset, except the following noncapital assets. Ez 1040 e-file Property held mainly for sale to customers or property that will physically become a part of the merchandise for sale to customers. Ez 1040 e-file For an exception, see Capital Asset Treatment for Self-Created Musical Works , later. Ez 1040 e-file Depreciable property used in your trade or business, even if fully depreciated. Ez 1040 e-file Real property used in your trade or business. Ez 1040 e-file A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property that is: Created by your personal efforts, Prepared or produced for you (in the case of a letter, memorandum, or similar property), or Acquired under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. Ez 1040 e-file For an exception to this rule, see Capital Asset Treatment for Self-Created Musical Works , later. Ez 1040 e-file Accounts or notes receivable acquired in the ordinary course of a trade or business for services rendered or from the sale of property described in (1). Ez 1040 e-file U. Ez 1040 e-file S. Ez 1040 e-file Government publications that you received from the government free or for less than the normal sales price, or that you acquired under circumstances entitling you to the basis of someone who received the publications free or for less than the normal sales price. Ez 1040 e-file Certain commodities derivative financial instruments held by commodities derivatives dealers. Ez 1040 e-file Hedging transactions, but only if the transaction is clearly identified as a hedging transaction before the close of the day on which it was acquired, originated, or entered into. Ez 1040 e-file Supplies of a type you regularly use or consume in the ordinary course of your trade or business. Ez 1040 e-file Investment Property Investment property is a capital asset. Ez 1040 e-file Any gain or loss from its sale or trade is generally a capital gain or loss. Ez 1040 e-file Gold, silver, stamps, coins, gems, etc. Ez 1040 e-file   These are capital assets except when they are held for sale by a dealer. Ez 1040 e-file Any gain or loss you have from their sale or trade generally is a capital gain or loss. Ez 1040 e-file Stocks, stock rights, and bonds. Ez 1040 e-file   All of these (including stock received as a dividend) are capital assets except when held for sale by a securities dealer. Ez 1040 e-file However, if you own small business stock, see Losses on Section 1244 (Small Business) Stock , later, and Losses on Small Business Investment Company Stock, in chapter 4 of Publication 550. Ez 1040 e-file Personal Use Property Property held for personal use only, rather than for investment, is a capital asset, and you must report a gain from its sale as a capital gain. Ez 1040 e-file However, you cannot deduct a loss from selling personal use property. Ez 1040 e-file Capital Asset Treatment for Self-Created Musical Works You can elect to treat musical compositions and copyrights in musical works as capital assets when you sell or exchange them if: Your personal efforts created the property, or You acquired the property under circumstances (for example, by gift) entitling you to the basis of the person who created the property or for whom it was prepared or produced. Ez 1040 e-file You must make a separate election for each musical composition (or copyright in a musical work) sold or exchanged during the tax year. Ez 1040 e-file You must make the election on or before the due date (including extensions) of the income tax return for the tax year of the sale or exchange. Ez 1040 e-file You must make the election on Form 8949 by treating the sale or exchange as the sale or exchange of a capital asset, according to Form 8949, Schedule D (Form 1040), and their separate instructions. Ez 1040 e-file For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Ez 1040 e-file See also Schedule D (Form 1040), Form 8949, and their separate instructions. Ez 1040 e-file You can revoke the election if you have IRS approval. Ez 1040 e-file To get IRS approval, you must submit a request for a letter ruling under the appropriate IRS revenue procedure. Ez 1040 e-file See, for example, Rev. Ez 1040 e-file Proc. Ez 1040 e-file 2013-1, corrected by Announcement 2013–9, and amplified and modified by Rev. Ez 1040 e-file Proc. Ez 1040 e-file 2013–32, available at www. Ez 1040 e-file irs. Ez 1040 e-file gov/irb/2013-01_IRB/ar06. Ez 1040 e-file html. Ez 1040 e-file Alternatively, you are granted an automatic 6-month extension from the due date of your income tax return (excluding extensions) to revoke the election, provided you timely file your income tax return, and within this 6-month extension period, you file Form 1040X that treats the sale or exchange as the sale or exchange of property that is not a capital asset. Ez 1040 e-file Discounted Debt Instruments Treat your gain or loss on the sale, redemption, or retirement of a bond or other debt instrument originally issued at a discount or bought at a discount as capital gain or loss, except as explained in the following discussions. Ez 1040 e-file Short-term government obligations. Ez 1040 e-file   Treat gains on short-term federal, state, or local government obligations (other than tax-exempt obligations) as ordinary income up to your ratable share of the acquisition discount. Ez 1040 e-file This treatment applies to obligations with a fixed maturity date not more than 1 year from the date of issue. Ez 1040 e-file Acquisition discount is the stated redemption price at maturity minus your basis in the obligation. Ez 1040 e-file   However, do not treat these gains as income to the extent you previously included the discount in income. Ez 1040 e-file See Discount on Short-Term Obligations in chapter 1 of Publication 550. Ez 1040 e-file Short-term nongovernment obligations. Ez 1040 e-file   Treat gains on short-term nongovernment obligations as ordinary income up to your ratable share of original issue discount (OID). Ez 1040 e-file This treatment applies to obligations with a fixed maturity date of not more than 1 year from the date of issue. Ez 1040 e-file   However, to the extent you previously included the discount in income, you do not have to include it in income again. Ez 1040 e-file See Discount on Short-Term Obligations in chapter 1 of Publication 550. Ez 1040 e-file Tax-exempt state and local government bonds. Ez 1040 e-file   If these bonds were originally issued at a discount before September 4, 1982, or you acquired them before March 2, 1984, treat your part of OID as tax-exempt interest. Ez 1040 e-file To figure your gain or loss on the sale or trade of these bonds, reduce the amount realized by your part of OID. Ez 1040 e-file   If the bonds were issued after September 3, 1982, and acquired after March 1, 1984, increase the adjusted basis by your part of OID to figure gain or loss. Ez 1040 e-file For more information on the basis of these bonds, see Discounted Debt Instruments in chapter 4 of Publication 550. Ez 1040 e-file   Any gain from market discount is usually taxable on disposition or redemption of tax-exempt bonds. Ez 1040 e-file If you bought the bonds before May 1, 1993, the gain from market discount is capital gain. Ez 1040 e-file If you bought the bonds after April 30, 1993, the gain is ordinary income. Ez 1040 e-file   You figure the market discount by subtracting the price you paid for the bond from the sum of the original issue price of the bond and the amount of accumulated OID from the date of issue that represented interest to any earlier holders. Ez 1040 e-file For more information, see Market Discount Bonds in chapter 1 of Publication 550. Ez 1040 e-file    A loss on the sale or other disposition of a tax-exempt state or local government bond is deductible as a capital loss. Ez 1040 e-file Redeemed before maturity. Ez 1040 e-file   If a state or local bond issued before June 9, 1980, is redeemed before it matures, the OID is not taxable to you. Ez 1040 e-file   If a state or local bond issued after June 8, 1980, is redeemed before it matures, the part of OID earned while you hold the bond is not taxable to you. Ez 1040 e-file However, you must report the unearned part of OID as a capital gain. Ez 1040 e-file Example. Ez 1040 e-file On July 2, 2002, the date of issue, you bought a 20-year, 6% municipal bond for $800. Ez 1040 e-file The face amount of the bond was $1,000. Ez 1040 e-file The $200 discount was OID. Ez 1040 e-file At the time the bond was issued, the issuer had no intention of redeeming it before it matured. Ez 1040 e-file The bond was callable at its face amount beginning 10 years after the issue date. Ez 1040 e-file The issuer redeemed the bond at the end of 11 years (July 2, 2013) for its face amount of $1,000 plus accrued annual interest of $60. Ez 1040 e-file The OID earned during the time you held the bond, $73, is not taxable. Ez 1040 e-file The $60 accrued annual interest also is not taxable. Ez 1040 e-file However, you must report the unearned part of OID ($127) as a capital gain. Ez 1040 e-file Long-term debt instruments issued after 1954 and before May 28, 1969 (or before July 2, 1982, if a government instrument). Ez 1040 e-file   If you sell, trade, or redeem for a gain one of these debt instruments, the part of your gain that is not more than your ratable share of the OID at the time of the sale or redemption is ordinary income. Ez 1040 e-file The rest of the gain is capital gain. Ez 1040 e-file If, however, there was an intention to call the debt instrument before maturity, all of your gain that is not more than the entire OID is treated as ordinary income at the time of the sale. Ez 1040 e-file This treatment of taxable gain also applies to corporate instruments issued after May 27, 1969, under a written commitment that was binding on May 27, 1969, and at all times thereafter. Ez 1040 e-file Long-term debt instruments issued after May 27, 1969 (or after July 1, 1982, if a government instrument). Ez 1040 e-file   If you hold one of these debt instruments, you must include a part of OID in your gross income each year you own the instrument. Ez 1040 e-file Your basis in that debt instrument is increased by the amount of OID that you have included in your gross income. Ez 1040 e-file See Original Issue Discount (OID) in chapter 7 for information about OID that you must report on your tax return. Ez 1040 e-file   If you sell or trade the debt instrument before maturity, your gain is a capital gain. Ez 1040 e-file However, if at the time the instrument was originally issued there was an intention to call it before its maturity, your gain generally is ordinary income to the extent of the entire OID reduced by any amounts of OID previously includible in your income. Ez 1040 e-file In this case, the rest of the gain is capital gain. Ez 1040 e-file Market discount bonds. Ez 1040 e-file   If the debt instrument has market discount and you chose to include the discount in income as it accrued, increase your basis in the debt instrument by the accrued discount to figure capital gain or loss on its disposition. Ez 1040 e-file If you did not choose to include the discount in income as it accrued, you must report gain as ordinary interest income up to the instrument's accrued market discount. Ez 1040 e-file The rest of the gain is capital gain. Ez 1040 e-file See Market Discount Bonds in chapter 1 of Publication 550. Ez 1040 e-file   A different rule applies to market discount bonds issued before July 19, 1984, and purchased by you before May 1, 1993. Ez 1040 e-file See Market discount bonds under Discounted Debt Instruments in chapter 4 of Publication 550. Ez 1040 e-file Retirement of debt instrument. Ez 1040 e-file   Any amount you receive on the retirement of a debt instrument is treated in the same way as if you had sold or traded that instrument. Ez 1040 e-file Notes of individuals. Ez 1040 e-file   If you hold an obligation of an individual issued with OID after March 1, 1984, you generally must include the OID in your income currently, and your gain or loss on its sale or retirement is generally capital gain or loss. Ez 1040 e-file An exception to this treatment applies if the obligation is a loan between individuals and all the following requirements are met. Ez 1040 e-file The lender is not in the business of lending money. Ez 1040 e-file The amount of the loan, plus the amount of any outstanding prior loans, is $10,000 or less. Ez 1040 e-file Avoiding federal tax is not one of the principal purposes of the loan. Ez 1040 e-file   If the exception applies, or the obligation was issued before March 2, 1984, you do not include the OID in your income currently. Ez 1040 e-file When you sell or redeem the obligation, the part of your gain that is not more than your accrued share of OID at that time is ordinary income. Ez 1040 e-file The rest of the gain, if any, is capital gain. Ez 1040 e-file Any loss on the sale or redemption is capital loss. Ez 1040 e-file Deposit in Insolvent or Bankrupt Financial Institution If you lose money you have on deposit in a bank, credit union, or other financial institution that becomes insolvent or bankrupt, you may be able to deduct your loss in one of three ways. Ez 1040 e-file Ordinary loss. Ez 1040 e-file Casualty loss. Ez 1040 e-file Nonbusiness bad debt (short-term capital loss). Ez 1040 e-file  For more information, see Deposit in Insolvent or Bankrupt Financial Institution, in chapter 4 of Publication 550. Ez 1040 e-file Sale of Annuity The part of any gain on the sale of an annuity contract before its maturity date that is based on interest accumulated on the contract is ordinary income. Ez 1040 e-file Losses on Section 1244 (Small Business) Stock You can deduct as an ordinary loss, rather than as a capital loss, your loss on the sale, trade, or worthlessness of section 1244 stock. Ez 1040 e-file Report the loss on Form 4797, line 10. Ez 1040 e-file Any gain on section 1244 stock is a capital gain if the stock is a capital asset in your hands. Ez 1040 e-file Report the gain on Form 8949. Ez 1040 e-file See Losses on Section 1244 (Small Business) Stock in chapter 4 of Publication 550. Ez 1040 e-file For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Ez 1040 e-file See also Schedule D (Form 1040), Form 8949, and their separate instructions. Ez 1040 e-file Holding Period If you sold or traded investment property, you must determine your holding period for the property. Ez 1040 e-file Your holding period determines whether any capital gain or loss was a short-term or long-term capital gain or loss. Ez 1040 e-file Long-term or short-term. Ez 1040 e-file   If you hold investment property more than 1 year, any capital gain or loss is a long-term capital gain or loss. Ez 1040 e-file If you hold the property 1 year or less, any capital gain or loss is a short-term capital gain or loss. Ez 1040 e-file   To determine how long you held the investment property, begin counting on the date after the day you acquired the property. Ez 1040 e-file The day you disposed of the property is part of your holding period. Ez 1040 e-file Example. Ez 1040 e-file If you bought investment property on February 6, 2012, and sold it on February 6, 2013, your holding period is not more than 1 year and you have a short-term capital gain or loss. Ez 1040 e-file If you sold it on February 7, 2013, your holding period is more than 1 year and you will have a long-term capital gain or loss. Ez 1040 e-file Securities traded on established market. Ez 1040 e-file   For securities traded on an established securities market, your holding period begins the day after the trade date you bought the securities, and ends on the trade date you sold them. Ez 1040 e-file    Do not confuse the trade date with the settlement date, which is the date by which the stock must be delivered and payment must be made. Ez 1040 e-file Example. Ez 1040 e-file You are a cash method, calendar year taxpayer. Ez 1040 e-file You sold stock at a gain on December 30, 2013. Ez 1040 e-file According to the rules of the stock exchange, the sale was closed by delivery of the stock 4 trading days after the sale, on January 6, 2014. Ez 1040 e-file You received payment of the sales price on that same day. Ez 1040 e-file Report your gain on your 2013 return, even though you received the payment in 2014. Ez 1040 e-file The gain is long term or short term depending on whether you held the stock more than 1 year. Ez 1040 e-file Your holding period ended on December 30. Ez 1040 e-file If you had sold the stock at a loss, you would also report it on your 2013 return. Ez 1040 e-file U. Ez 1040 e-file S. Ez 1040 e-file Treasury notes and bonds. Ez 1040 e-file   The holding period of U. Ez 1040 e-file S. Ez 1040 e-file Treasury notes and bonds sold at auction on the basis of yield starts the day after the Secretary of the Treasury, through news releases, gives notification of acceptance to successful bidders. Ez 1040 e-file The holding period of U. Ez 1040 e-file S. Ez 1040 e-file Treasury notes and bonds sold through an offering on a subscription basis at a specified yield starts the day after the subscription is submitted. Ez 1040 e-file Automatic investment service. Ez 1040 e-file   In determining your holding period for shares bought by the bank or other agent, full shares are considered bought first and any fractional shares are considered bought last. Ez 1040 e-file Your holding period starts on the day after the bank's purchase date. Ez 1040 e-file If a share was bought over more than one purchase date, your holding period for that share is a split holding period. Ez 1040 e-file A part of the share is considered to have been bought on each date that stock was bought by the bank with the proceeds of available funds. Ez 1040 e-file Nontaxable trades. Ez 1040 e-file   If you acquire investment property in a trade for other investment property and your basis for the new property is determined, in whole or in part, by your basis in the old property, your holding period for the new property begins on the day following the date you acquired the old property. Ez 1040 e-file Property received as a gift. Ez 1040 e-file   If you receive a gift of property and your basis is determined by the donor's adjusted basis, your holding period is considered to have started on the same day the donor's holding period started. Ez 1040 e-file   If your basis is determined by the fair market value of the property, your holding period starts on the day after the date of the gift. Ez 1040 e-file Inherited property. Ez 1040 e-file   Generally, if you inherited investment property, your capital gain or loss on any later disposition of that property is long-term capital gain or loss. Ez 1040 e-file This is true regardless of how long you actually held the property. Ez 1040 e-file However, if you inherited property from someone who died in 2010, see the information below. Ez 1040 e-file Inherited property from someone who died in 2010. Ez 1040 e-file   If you inherit investment property from a decedent who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010, to determine your holding period. Ez 1040 e-file Real property bought. Ez 1040 e-file   To figure how long you have held real property bought under an unconditional contract, begin counting on the day after you received title to it or on the day after you took possession of it and assumed the burdens and privileges of ownership, whichever happened first. Ez 1040 e-file However, taking delivery or possession of real property under an option agreement is not enough to start the holding period. Ez 1040 e-file The holding period cannot start until there is an actual contract of sale. Ez 1040 e-file The holding period of the seller cannot end before that time. Ez 1040 e-file Real property repossessed. Ez 1040 e-file   If you sell real property but keep a security interest in it, and then later repossess the property under the terms of the sales contract, your holding period for a later sale includes the period you held the property before the original sale and the period after the repossession. Ez 1040 e-file Your holding period does not include the time between the original sale and the repossession. Ez 1040 e-file That is, it does not include the period during which the first buyer held the property. Ez 1040 e-file Stock dividends. Ez 1040 e-file   The holding period for stock you received as a taxable stock dividend begins on the date of distribution. Ez 1040 e-file   The holding period for new stock you received as a nontaxable stock dividend begins on the same day as the holding period of the old stock. Ez 1040 e-file This rule also applies to stock acquired in a “spin-off,” which is a distribution of stock or securities in a controlled corporation. Ez 1040 e-file Nontaxable stock rights. Ez 1040 e-file   Your holding period for nontaxable stock rights begins on the same day as the holding period of the underlying stock. Ez 1040 e-file The holding period for stock acquired through the exercise of stock rights begins on the date the right was exercised. Ez 1040 e-file Nonbusiness Bad Debts If someone owes you money that you cannot collect, you have a bad debt. Ez 1040 e-file You may be able to deduct the amount owed to you when you figure your tax for the year the debt becomes worthless. Ez 1040 e-file Generally, nonbusiness bad debts are bad debts that did not come from operating your trade or business, and are deductible as short-term capital losses. Ez 1040 e-file To be deductible, nonbusiness bad debts must be totally worthless. Ez 1040 e-file You cannot deduct a partly worthless nonbusiness debt. Ez 1040 e-file Genuine debt required. Ez 1040 e-file   A debt must be genuine for you to deduct a loss. Ez 1040 e-file A debt is genuine if it arises from a debtor-creditor relationship based on a valid and enforceable obligation to repay a fixed or determinable sum of money. Ez 1040 e-file Basis in bad debt required. Ez 1040 e-file    To deduct a bad debt, you must have a basis in it—that is, you must have already included the amount in your income or loaned out your cash. Ez 1040 e-file For example, you cannot claim a bad debt deduction for court-ordered child support not paid to you by your former spouse. Ez 1040 e-file If you are a cash method taxpayer (as most individuals are), you generally cannot take a bad debt deduction for unpaid salaries, wages, rents, fees, interest, dividends, and similar items. Ez 1040 e-file When deductible. Ez 1040 e-file   You can take a bad debt deduction only in the year the debt becomes worthless. Ez 1040 e-file You do not have to wait until a debt is due to determine whether it is worthless. Ez 1040 e-file A debt becomes worthless when there is no longer any chance that the amount owed will be paid. Ez 1040 e-file   It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. Ez 1040 e-file You must only show that you have taken reasonable steps to collect the debt. Ez 1040 e-file Bankruptcy of your debtor is generally good evidence of the worthlessness of at least a part of an unsecured and unpreferred debt. Ez 1040 e-file How to report bad debts. Ez 1040 e-file    Deduct nonbusiness bad debts as short-term capital losses on Form 8949. Ez 1040 e-file    Make sure you report your bad debt(s) (and any other short-term transactions for which you did not receive a Form 1099-B) on Form 8949, Part I, with box C checked. Ez 1040 e-file    For more information on Form 8949 and Schedule D (Form 1040), see Reporting Capital Gains and Losses in chapter 16. Ez 1040 e-file See also Schedule D (Form 1040), Form 8949, and their separate instructions. Ez 1040 e-file   For each bad debt, attach a statement to your return that contains: A description of the debt, including the amount, and the date it became due, The name of the debtor, and any business or family relationship between you and the debtor, The efforts you made to collect the debt, and Why you decided the debt was worthless. Ez 1040 e-file For example, you could show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt. Ez 1040 e-file Filing a claim for refund. Ez 1040 e-file    If you do not deduct a bad debt on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the bad debt. Ez 1040 e-file To do this, use Form 1040X to amend your return for the year the debt became worthless. Ez 1040 e-file You must file it within 7 years from the date your original return for that year had to be filed, or 2 years from the date you paid the tax, whichever is later. Ez 1040 e-file For more information about filing a claim, see Amended Returns and Claims for Refund in chapter 1. Ez 1040 e-file Additional information. Ez 1040 e-file   For more information, see Nonbusiness Bad Debts in Publication 550. Ez 1040 e-file For information on business bad debts, see chapter 10 of Publication 535, Business Expenses. Ez 1040 e-file Wash Sales You cannot deduct losses from sales or trades of stock or securities in a wash sale. Ez 1040 e-file A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. Ez 1040 e-file If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). Ez 1040 e-file The result is your basis in the new stock or securities. Ez 1040 e-file This adjustment postpones the loss deduction until the disposition of the new stock or securities. Ez 1040 e-file Your holding period for the new stock or securities includes the holding period of the stock or securities sold. Ez 1040 e-file For more information, see Wash Sales, in chapter 4 of Publication 550. Ez 1040 e-file Rollover of Gain From Publicly Traded Securities You may qualify for a tax-free rollover of certain gains from the sale of publicly traded securities. Ez 1040 e-file This means that if you buy certain replacement property and make the choice described in this section, you postpone part or all of your gain. Ez 1040 e-file You postpone the gain by adjusting the basis of the replacement property as described in Basis of replacement property , later. Ez 1040 e-file This postpones your gain until the year you dispose of the replacement property. Ez 1040 e-file You qualify to make this choice if you meet all the following tests. Ez 1040 e-file You sell publicly traded securities at a gain. Ez 1040 e-file Publicly traded securities are securities traded on an established securities market. Ez 1040 e-file Your gain from the sale is a capital gain. Ez 1040 e-file During the 60-day period beginning on the date of the sale, you buy replacement property. Ez 1040 e-file This replacement property must be either common stock of, or a partnership interest in a specialized small business investment company (SSBIC). Ez 1040 e-file This is any partnership or corporation licensed by the Small Business Administration under section 301(d) of the Small Business Investment Act of 1958, as in effect on May 13, 1993. Ez 1040 e-file Amount of gain recognized. Ez 1040 e-file   If you make the choice described in this section, you must recognize gain only up to the following amount. Ez 1040 e-file The amount realized on the sale, minus The cost of any common stock or partnership interest in an SSBIC that you bought during the 60-day period beginning on the date of sale (and did not previously take into account on an earlier sale of publicly traded securities). Ez 1040 e-file  If this amount is less than the amount of your gain, you can postpone the rest of your gain, subject to the limit described next. Ez 1040 e-file If this amount is equal to or more than the amount of your gain, you must recognize the full amount of your gain. Ez 1040 e-file Limit on gain postponed. Ez 1040 e-file   The amount of gain you can postpone each year is limited to the smaller of: $50,000 ($25,000 if you are married and file a separate return), or $500,000 ($250,000 if you are married and file a separate return), minus the amount of gain you postponed for all earlier years. Ez 1040 e-file Basis of replacement property. Ez 1040 e-file   You must subtract the amount of postponed gain from the basis of your replacement property. Ez 1040 e-file How to report and postpone gain. Ez 1040 e-file    See How to report and postpone gain under Rollover of Gain From Publicly Traded Securities in chapter 4 of Publication 550 for details. 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Who Can I Claim as a Dependent?

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  • Marital status, relationship to the dependent and the amount of support provided
  • Basic income information such as your adjusted gross income
  • If no person supplied more than half of the potential dependent's support, the terms of any multiple support agreement you may have

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Page Last Reviewed or Updated: 14-Feb-2014

The Ez 1040 E-file

Ez 1040 e-file 2. Ez 1040 e-file   Fuel Tax Credits and Refunds Table of Contents Gasoline and Aviation Gasoline Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation)Sales by Registered Ultimate Vendors Diesel-Water Fuel Emulsion Kerosene for Use in AviationSales by Registered Ultimate Vendors Other Fuels (Including Alternative Fuels) Refunds of Second TaxOptional reporting. Ez 1040 e-file Providing information. Ez 1040 e-file Definitions of Nontaxable UsesCustom application of fertilizer and pesticide. Ez 1040 e-file Fuel used between airfield and farm. Ez 1040 e-file Fuel not used for farming. Ez 1040 e-file Vehicles not considered highway vehicles. Ez 1040 e-file Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture CreditHow to Claim the Credit Filing Claims Claiming A Refund Claiming a Credit on Form 4136 Including the Credit or Refund in Income Federal excise taxes are imposed on certain fuels as discussed in chapter 1. Ez 1040 e-file This chapter lists the nontaxable uses of each fuel and defines the nontaxable uses. Ez 1040 e-file Information on the refund of second tax is included. Ez 1040 e-file This chapter also explains credits and refunds for the biodiesel or renewable diesel mixture credits, and the alternative fuel mixture and alternative fuel credits. Ez 1040 e-file Information on how to make a claim for credit or refund is included in this chapter and in the instructions for: Form 720, Form 4136, and Form 8849. Ez 1040 e-file Exported taxable fuel. Ez 1040 e-file   The claim rates for exported taxable fuel are listed on Schedule C (Form 720), Schedule 1 (Form 8849), and Form 4136. Ez 1040 e-file Taxpayers making a claim for exported taxable fuel must include with their records proof of exportation. Ez 1040 e-file Proof of exportation includes: A copy of the export bill of lading issued by the delivering carrier, A certificate by the agent or representative of the export carrier showing actual exportation of the fuel, A certificate of lading signed by a customs officer of the foreign country to which the fuel is exported, or A statement of the foreign consignee showing receipt of the fuel. Ez 1040 e-file Gasoline and Aviation Gasoline Ultimate Purchasers. Ez 1040 e-file   The following are the uses of gasoline (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. Ez 1040 e-file On a farm for farming purposes (credit only). Ez 1040 e-file Off-highway business use. Ez 1040 e-file Export. Ez 1040 e-file In a boat engaged in commercial fishing. Ez 1040 e-file In certain intercity and local buses. Ez 1040 e-file In a school bus. Ez 1040 e-file Exclusive use by a qualified blood collector organization. Ez 1040 e-file In a highway vehicle owned by the United States that is not used on a highway. Ez 1040 e-file Exclusive use by a nonprofit educational organization (see Sales by registered ultimate vendors and Credit Card Purchases, later). Ez 1040 e-file Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit Card Purchases, later). Ez 1040 e-file In an aircraft or vehicle owned by an aircraft museum. Ez 1040 e-file   The following are the uses of aviation gasoline for which a credit or refund may be allowable to an ultimate purchaser. Ez 1040 e-file On a farm for farming purposes (credit only). Ez 1040 e-file Export. Ez 1040 e-file In foreign trade. Ez 1040 e-file Certain helicopter and fixed-wing air ambulance uses. Ez 1040 e-file In commercial aviation (other than foreign trade). Ez 1040 e-file Exclusive use by a qualified blood collector organization. Ez 1040 e-file Exclusive use by a nonprofit education organization (see Sales by registered ultimate vendors and Credit card purchases, later). Ez 1040 e-file Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by registered ultimate vendors and Credit and purchases, later). Ez 1040 e-file In an aircraft owned by an aircraft museum. Ez 1040 e-file In military aircraft. Ez 1040 e-file Claims by persons who paid the tax to the government. Ez 1040 e-file   Except for sales to nonprofit educational organizations and states and local governments, a credit or refund is allowable to the person that paid the tax to the government if the gasoline was sold to the ultimate purchaser (including an exporter) by either that person or by a retailer and the fuel was exported; used or sold for use as supplies for vessels or aircraft, including military aircraft, commercial fishing, and foreign trade; sold to a qualified blood collector organization; or used or sold for use in the production of Other Fuels. Ez 1040 e-file See Filing Claims, later. Ez 1040 e-file Sales by registered ultimate vendors. Ez 1040 e-file   This is an ultimate vendor that sells gasoline or aviation gasoline to any of the following and that is purchased without the use of a credit card. Ez 1040 e-file A state or local government for its exclusive use (including essential government use by an Indian tribal government). Ez 1040 e-file A nonprofit educational organization for its exclusive use. Ez 1040 e-file   The registered ultimate vendor may make the claim if the ultimate purchaser did not use a credit card and waives its right to the credit or refund by providing the registered ultimate vendor with a certificate. Ez 1040 e-file A sample certificate is included as Model Certificate M in the Appendix. Ez 1040 e-file The registered ultimate vendor must have the certificate at the time the credit or refund is claimed. Ez 1040 e-file   The ultimate vendor must be registered by the IRS. Ez 1040 e-file See Registration Requirements, earlier. Ez 1040 e-file Credit card purchases. Ez 1040 e-file   If gasoline and aviation gasoline are purchased with a credit card issued to a state or local government for its exclusive use (including essential government use by an Indian tribal government), or a nonprofit educational organization for its exclusive use, the person who extended credit to the ultimate purchaser (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the gasoline or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Ez 1040 e-file   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Ez 1040 e-file How to make the claim. Ez 1040 e-file   If the claim is made by the credit card issuer, see Schedule C  (Form 720) or Schedule 8 (Form 8849). Ez 1040 e-file Undyed Diesel Fuel and Undyed Kerosene (Other Than Kerosene Used in Aviation) For conditions to an allowance of a credit or refund on exported dyed diesel fuel and dyed kerosene, see Exported taxable fuel, earlier. Ez 1040 e-file Ultimate purchasers. Ez 1040 e-file   The following are nontaxable uses of diesel fuel and kerosene (defined earlier) for which a credit or refund may be allowable to an ultimate purchaser. Ez 1040 e-file On a farm for farming purposes. Ez 1040 e-file Off-highway business use. Ez 1040 e-file Export. Ez 1040 e-file In a qualified local bus. Ez 1040 e-file In a school bus. Ez 1040 e-file Other than as a fuel in a propulsion engine of a diesel-powered highway vehicle (such as home heating oil). Ez 1040 e-file Exclusive use by a qualified blood collector organization. Ez 1040 e-file In a highway vehicle owned by the United States that is not used on a highway. Ez 1040 e-file Exclusive use by a nonprofit educational organization (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). Ez 1040 e-file Exclusive use by a state, political subdivision of a state, or the District of Columbia (see Sales by Registered Ultimate Vendors and Credit Card Purchases, later). Ez 1040 e-file In a vehicle owned by an aircraft museum. Ez 1040 e-file As a fuel in a propulsion engine of a diesel-powered train. Ez 1040 e-file Sales by Registered Ultimate Vendors The following are the sales for which a credit or refund may be allowable to the registered ultimate vendor only. Ez 1040 e-file Undyed diesel fuel or undyed kerosene sold for the exclusive use by a state or local government (if credit card rules (defined later) do not apply), Undyed kerosene sold from a blocked pump (defined below), or Undyed diesel fuel or undyed kerosene used in certain intercity and local buses, only if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. Ez 1040 e-file Registered ultimate vendor (state use). Ez 1040 e-file   This is a person that sells undyed diesel fuel or undyed kerosene to a state or local government for its exclusive use (including essential government use by an Indian tribal government). Ez 1040 e-file The diesel fuel or kerosene must be purchased by the state without the use of a credit card, issued to the state by the credit card issuer, in order for the ultimate vendor to make the claim. Ez 1040 e-file The ultimate vendor must be registered by the IRS. Ez 1040 e-file See Registration Requirements, earlier. Ez 1040 e-file Registered ultimate vendor (blocked pump). Ez 1040 e-file   This is an ultimate vendor that sells undyed kerosene from a blocked pump. Ez 1040 e-file   A credit or refund may be allowable to a registered ultimate vendor (blocked pump) if the vendor sold to a buyer undyed kerosene from a blocked pump for use other than as a fuel in a diesel-powered highway vehicle and the vendor had no reason to believe the kerosene would not be used in that manner. Ez 1040 e-file Blocked pump. Ez 1040 e-file   A blocked pump is a fuel pump that meets all the following requirements. Ez 1040 e-file It is used to make retail sales of undyed kerosene for use by the buyer in any nontaxable use. Ez 1040 e-file It is at a fixed location. Ez 1040 e-file It is identified with a legible and conspicuous notice stating, “UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY. Ez 1040 e-file ” It meets either of the following conditions. Ez 1040 e-file It cannot reasonably be used to dispense fuel directly into the fuel supply tank of a diesel-powered highway vehicle or train. Ez 1040 e-file It is locked by the vendor after each sale and unlocked by the vendor only in response to a buyer's request for undyed kerosene for use other than as a fuel in a diesel-powered highway vehicle or train. Ez 1040 e-file Registered ultimate vendor (certain intercity and local buses). Ez 1040 e-file   This is an ultimate vendor that sells undyed diesel fuel or undyed kerosene to the ultimate purchaser for use in certain intercity and local buses. Ez 1040 e-file   The registered ultimate vendor may make the claim if the ultimate purchaser waives its right to the credit or refund by providing the registered ultimate vendor with a waiver. Ez 1040 e-file A sample waiver is included as Model Waiver N in the Appendix. Ez 1040 e-file The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. Ez 1040 e-file Credit Card Purchases. Ez 1040 e-file   If undyed diesel fuel or kerosene is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the diesel fuel or kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Ez 1040 e-file   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Ez 1040 e-file Diesel-Water Fuel Emulsion A claim for credit or refund may be made for the nontaxable use of a diesel-water fuel emulsion and for undyed diesel fuel used to produce a diesel-water fuel emulsion. Ez 1040 e-file The claim rate for nontaxable use of a diesel-water fuel emulsion taxed at $. Ez 1040 e-file 198 per gallon is $. Ez 1040 e-file 197 (if exported, the claim rate is $. Ez 1040 e-file 198). Ez 1040 e-file The following are the nontaxable uses for a diesel-water fuel emulsion for which a credit or refund may be allowable to an ultimate purchaser. Ez 1040 e-file On a farm for farming purposes. Ez 1040 e-file Off-highway business use. Ez 1040 e-file Export. Ez 1040 e-file In a qualified local bus. Ez 1040 e-file In a school bus. Ez 1040 e-file Other than as fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway use). Ez 1040 e-file Exclusive use by a qualified blood collector organization. Ez 1040 e-file In a highway vehicle owned by the United States that is not used on a highway. Ez 1040 e-file Exclusive use by a nonprofit educational organization. Ez 1040 e-file Exclusive use by a state, political subdivision of a state, or the District of Columbia. Ez 1040 e-file In an aircraft or vehicle owned by an aircraft museum. Ez 1040 e-file Blender claims. Ez 1040 e-file   The claim rate for undyed diesel fuel taxed at $. Ez 1040 e-file 244 and used to produce a diesel-water fuel emulsion is $. Ez 1040 e-file 046 per gallon of diesel fuel so used. Ez 1040 e-file The blender must be registered by the IRS in order to make the claim. Ez 1040 e-file The blender must attach a statement to the claim certifying that: The diesel-water fuel emulsion contains at least 14% water, The emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003, Undyed diesel fuel taxed at $. Ez 1040 e-file 244 was used to produce the diesel-water fuel emulsion, and The diesel-water fuel emulsion was used or sold for use in the blender's trade or business. Ez 1040 e-file Kerosene for Use in Aviation Ultimate purchasers. Ez 1040 e-file   Ultimate purchasers of kerosene used in certain aviation uses may make a claim if the rate of tax on their use is less than the rate of tax that was charged on the kerosene. Ez 1040 e-file   The ultimate purchaser of the kerosene used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) is eligible to make a claim if the ultimate purchaser certifies that the right to make the claim has not been waived. Ez 1040 e-file Generally, the ultimate purchaser is the aircraft operator. Ez 1040 e-file   The following are the nontaxable uses of kerosene used in noncommercial aviation for which a credit or refund may be allowable to the ultimate purchaser. Ez 1040 e-file On a farm for farming purposes. Ez 1040 e-file Certain helicopter and fixed-wing aircraft uses. Ez 1040 e-file Exclusive use by a qualified blood collector organization. Ez 1040 e-file Exclusive use by a nonprofit educational organization. Ez 1040 e-file In an aircraft owned by an aircraft museum. Ez 1040 e-file In military aircraft. Ez 1040 e-file Kerosene for use partly in commercial aviation and partly in nonexempt, noncommercial aviation. Ez 1040 e-file   If the fuel is used partly for use in commercial aviation and partly for use in nonexempt, noncommercial aviation, the operator may identify, either at the time of purchase or after the kerosene has been used, the amount that will be (or has been) used in commercial aviation. Ez 1040 e-file At the same time, the operator would either make the claim or waive the right to make the claim for credit or refund of the kerosene for use in commercial and nonexempt, noncommercial aviation. Ez 1040 e-file   If the operator does not identify the amount of kerosene that will be (or has been) used in commercial aviation, the operator may provide a certificate to the ultimate vendor similar to Model Certificate Q in the Appendix. Ez 1040 e-file For kerosene purchased with the certificate, used in commercial aviation, and taxed at $. Ez 1040 e-file 244 per gallon, use of the certificate will be treated as a waiver of the right to claim a credit or refund for the $. Ez 1040 e-file 025 per gallon part of the tax. Ez 1040 e-file The ultimate vendor may make this claim. Ez 1040 e-file The operator may make a claim for the $. Ez 1040 e-file 175 tax per gallon of the kerosene, but cannot waive the right to make the claim for the $. Ez 1040 e-file 175 tax per gallon. Ez 1040 e-file Sales by Registered Ultimate Vendors Kerosene for use in commercial aviation or noncommercial aviation. Ez 1040 e-file   The registered ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may make this claim if the ultimate purchaser waives its right to the credit or payment by providing the registered ultimate vendor with a waiver. Ez 1040 e-file A sample waiver is included as Model Waiver L in the Appendix. Ez 1040 e-file The registered ultimate vendor must have the waiver at the time the credit or payment is claimed. Ez 1040 e-file   Noncommercial aviation means any use of an aircraft not described as commercial aviation. Ez 1040 e-file For the definition of commercial aviation, see Commercial aviation on page 11. Ez 1040 e-file Kerosene for use in nonexempt, noncommercial aviation. Ez 1040 e-file   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in nonexempt, noncommercial aviation. Ez 1040 e-file The ultimate vendor must be registered by the IRS (activity letter UA) and have the required certificate from the ultimate purchaser. Ez 1040 e-file A sample certificate is included as Model Certificate Q in the Appendix. Ez 1040 e-file The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. Ez 1040 e-file Kerosene for use in aviation by a state or local government. Ez 1040 e-file   Only the registered ultimate vendor may claim a credit or payment for sales of kerosene for use in aviation to a state or local government for its exclusive use (including essential government use by an Indian tribal government). Ez 1040 e-file The kerosene for use in aviation must be purchased by the state without the use of a credit card in order for the ultimate vendor to make the claim. Ez 1040 e-file The ultimate vendor must be registered by the IRS (activity letter UV) and have the required certificate from the ultimate purchaser. Ez 1040 e-file A sample certificate is included as Model Certificate P in the Appendix. Ez 1040 e-file The registered ultimate vendor must have the certificate at the time the credit or payment is claimed. Ez 1040 e-file Credit card purchases. Ez 1040 e-file   If taxed kerosene for use in aviation is purchased with a credit card issued to a state, the person who extended credit to the state (the credit card issuer) is treated as the person that paid the tax and makes the claim if the credit card issuer: Is registered by the IRS, Has established that the amount of tax has not been collected from the person who purchased the kerosene, or has obtained written consent from the ultimate purchaser to the allowance of the credit or refund, and Has repaid or agreed to repay the amount of the tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to the allowance of the credit or refund, or has made arrangements that provide the ultimate vendor with reimbursement of the tax. Ez 1040 e-file   If the requirements above are not met by the credit card issuer, the credit card issuer must collect the tax from the ultimate purchaser and only the ultimate purchaser may make the claim. Ez 1040 e-file Other Fuels (Including Alternative Fuels) Credit or refund for nontaxable use of taxed Other Fuels may be allowable to an ultimate purchaser. Ez 1040 e-file While tax is generally imposed on delivery, Other Fuels are taxed prior to delivery in the case of certain bulk sales described in chapter 1. Ez 1040 e-file The following are the nontaxable uses of Other Fuels for which a credit or refund may be allowable to the ultimate purchaser. Ez 1040 e-file On a farm for farming purposes. Ez 1040 e-file Off-highway business use. Ez 1040 e-file In a boat engaged in commercial fishing. Ez 1040 e-file In certain intercity and local buses. Ez 1040 e-file In a school bus. Ez 1040 e-file In a qualified local bus. Ez 1040 e-file Exclusive use by a qualified blood collector organization. Ez 1040 e-file Exclusive use by a nonprofit educational organization. Ez 1040 e-file Exclusive use by a state, political subdivision of a state, or the District of Columbia. Ez 1040 e-file In an aircraft or vehicle owned by an aircraft museum. Ez 1040 e-file Use in any boat operated by the United States for its exclusive use or any vessel of war of any foreign nation. Ez 1040 e-file See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit, later. Ez 1040 e-file Refunds of Second Tax The tax on dyed diesel fuel for inland waterways fuel use applies at the rate listed on Form 720. Ez 1040 e-file This is in addition to all other taxes imposed on the sale or use of the fuel. Ez 1040 e-file The section 4081(e) refund (discussed below) cannot be claimed. Ez 1040 e-file If the tax is paid and reported to the government on more than one taxable event for a taxable fuel under section 4081, the person paying the “second tax” may claim a refund (without interest) of that tax if certain conditions and reporting requirements are met. Ez 1040 e-file No credit against any tax is allowed for this tax. Ez 1040 e-file For information about taxable events, see the discussions under Gasoline, Diesel Fuel and Kerosene and Kerosene for Use in Aviation in chapter 1. Ez 1040 e-file Conditions to allowance of refund. Ez 1040 e-file   A claim for refund of the tax is allowed only if all the following conditions are met. Ez 1040 e-file A tax on the fuel was paid to the government and not credited or refunded (the “first tax”). Ez 1040 e-file After the first tax was imposed, another tax was imposed on the same fuel and was paid to the government (the “second tax”). Ez 1040 e-file The person that paid the second tax filed a timely claim for refund containing the information required (see Refund claim, later). Ez 1040 e-file The person that paid the first tax has met the reporting requirements, discussed next. Ez 1040 e-file Reporting requirements. Ez 1040 e-file   Generally, the person that paid the first tax must file a “First Taxpayer's Report” with its Form 720 for the quarter to which the report relates. Ez 1040 e-file A model first taxpayer's report is shown in the Appendix as Model Certificate B. Ez 1040 e-file The report must contain all information needed to complete the model. Ez 1040 e-file   By the due date for filing the Form 720, you must also send a separate copy of the report to the following address. Ez 1040 e-file Department of the Treasury Internal Revenue Service  Cincinnati, OH 45999-0555 Write “EXCISE – FIRST TAXPAYER'S REPORT” across the top of that copy. Ez 1040 e-file Optional reporting. Ez 1040 e-file   A first taxpayer's report is not required for the tax imposed on: Removal at a terminal rack, Nonbulk entries into the United States, and Removals or sales by blenders. Ez 1040 e-file However, if the person liable for the tax expects that another tax will be imposed on that fuel, that person should (but is not required to) file a first taxpayer's report. Ez 1040 e-file Providing information. Ez 1040 e-file   The first taxpayer must give a copy of the report to the buyer of the fuel within the bulk transfer/terminal system or to the owner of the fuel immediately before the first tax was imposed, if the first taxpayer is not the owner at that time. Ez 1040 e-file If an optional report is filed, a copy should (but is not required to) be given to the buyer or owner. Ez 1040 e-file   A person that receives a copy of the first taxpayer's report and later sells the fuel within the bulk transfer/terminal system must give the copy and a “Statement of Subsequent Seller” to the buyer. Ez 1040 e-file If the later sale is outside the bulk transfer/terminal system and that person expects that another tax will be imposed, that person should (but is not required to) give the copy and the statement to the buyer. Ez 1040 e-file A model statement of subsequent seller is shown in the Appendix as Model Certificate A. Ez 1040 e-file The statement must contain all information necessary to complete the model. Ez 1040 e-file   If the first taxpayer's report relates to fuel sold to more than one buyer, copies of that report must be made when the fuel is divided. Ez 1040 e-file Each buyer must be given a copy of the report. Ez 1040 e-file Refund claim. Ez 1040 e-file   You must have filed Form 720 and paid the second tax before you file for a refund of that tax. Ez 1040 e-file You must make your claim for refund on Form 8849. Ez 1040 e-file Complete Schedule 5 (Form 8849) and attach it to your Form 8849. Ez 1040 e-file Do not include this claim with a claim under another tax provision. Ez 1040 e-file You must not have included the second tax in the price of the fuel and must not have collected it from the purchaser. Ez 1040 e-file You must submit the following information with your claim. Ez 1040 e-file A copy of the first taxpayer's report (discussed earlier). Ez 1040 e-file A copy of the statement of subsequent seller if the fuel was bought from someone other than the first taxpayer. Ez 1040 e-file Definitions of Nontaxable Uses This section provides definitions of the terms used in Table 2-1 for nontaxable uses. Ez 1040 e-file If applicable, the type of use number from Table 2-1 is indicated in each heading. Ez 1040 e-file Type of use table. Ez 1040 e-file   The first column of the table is the number you enter on Form 4136, Form 8849, or Schedule C (Form 720) for that type of use. Ez 1040 e-file For type of use 2, the mobile machinery parenthetical applies only to Form 8849 and Form 720. Ez 1040 e-file Table 2-1. Ez 1040 e-file Type of Use Table No. Ez 1040 e-file Type of Use 1 On a farm for farming purposes 2 Off-highway business use (for business use other than in a highway vehicle registered or required to be registered for highway use) (other than use in mobile machinery) 3 Export 4 In a boat engaged in commercial fishing 5 In certain intercity and local buses 6 In a qualified local bus 7 In a bus transporting students and employees of schools (school buses) 8 For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a train or diesel-powered highway vehicle (but not off-highway business use) 9 In foreign trade 10 Certain helicopter and fixed-wing aircraft uses 11 Exclusive use by a qualified blood collector organization 12 In a highway vehicle owned by the United States that is not used on a highway 13 Exclusive use by a nonprofit educational organization 14 Exclusive use by a state, political subdivision of a state, or the District of Columbia 15 In an aircraft or vehicle owned by an aircraft museum 16 In military aircraft On a farm for farming purposes (No. Ez 1040 e-file 1). Ez 1040 e-file   On a farm for farming purposes means fuel used in carrying on a trade or business of farming, on a farm in the United States, and for farming purposes. Ez 1040 e-file Farm. Ez 1040 e-file   A farm includes livestock, dairy, fish, poultry, fruit, fur-bearing animals, and truck farms; orchards; plantations; ranches; nurseries; ranges; and feed yards for fattening cattle. Ez 1040 e-file It also includes structures such as greenhouses used primarily for the raising of agricultural or horticultural commodities. Ez 1040 e-file A fish farm is an area where fish are grown or raised — not merely caught or harvested. Ez 1040 e-file Farming purposes. Ez 1040 e-file   As an owner, tenant, or operator, you use fuel on a farm for farming purposes if you use it in any of the following ways. Ez 1040 e-file To cultivate the soil or to raise or harvest any agricultural or horticultural commodity. Ez 1040 e-file To raise, shear, feed, care for, train, or manage livestock, bees, poultry, fur-bearing animals, or wildlife. Ez 1040 e-file To operate, manage, conserve, improve, or maintain your farm and its tools and equipment. Ez 1040 e-file To handle, dry, pack, grade, or store any raw agricultural or horticultural commodity. Ez 1040 e-file For this use to qualify, you must have produced more than half the commodity so treated during the tax year. Ez 1040 e-file Commodity means a single raw product. Ez 1040 e-file For example, apples and peaches are two separate commodities. Ez 1040 e-file To plant, cultivate, care for, or cut trees or to prepare (other than sawing logs into lumber, chipping, or other milling) trees for market, but only if the planting, etc. Ez 1040 e-file , is incidental to your farming operations. Ez 1040 e-file Your tree operations will be incidental only if they are minor in nature when compared to the total farming operations. Ez 1040 e-file   If any other person, such as a neighbor or custom operator, performs a service for you on your farm for any of the purposes listed in (1) or (2), you are considered to be the ultimate purchaser that used the fuel on a farm for farming purposes. Ez 1040 e-file However, see Custom application of fertilizer and pesticide, next. Ez 1040 e-file   If doubt exists whether the owner, the tenant, or the operator of the farm bought the fuel, determine who bore the cost of the fuel. Ez 1040 e-file For example, if the owner of a farm and the tenant equally share the cost of gasoline that is used on a farm for farming purposes, each can claim a credit for the tax on one-half the fuel used. Ez 1040 e-file Custom application of fertilizer and pesticide. Ez 1040 e-file   Fuel used on a farm for farming purposes includes fuel used in the application of fertilizer, pesticides, or other substances, including aerial applications. Ez 1040 e-file Generally, the applicator is treated as having used the fuel on a farm for farming purposes. Ez 1040 e-file For aviation gasoline, the aerial applicator makes the claim as the ultimate purchaser. Ez 1040 e-file For kerosene used in aviation, the ultimate purchaser may make the claim or waive their right to make the claim to the registered ultimate vendor. Ez 1040 e-file Fuel used between airfield and farm. Ez 1040 e-file   Fuel used by an aerial applicator for the direct flight between the airfield and one or more farms is treated as a farming purpose. Ez 1040 e-file Fuel not used for farming. Ez 1040 e-file   Fuel is not used on a farm for farming purposes if it is used in any of the following ways. Ez 1040 e-file Off the farm, such as on the highway or in noncommercial aviation, other than fuel used between the airfield and farm described above, even if the fuel is used in transporting livestock, feed, crops, or equipment. Ez 1040 e-file For personal use, such as mowing the lawn. Ez 1040 e-file In processing, packaging, freezing, or canning operations. Ez 1040 e-file In processing crude gum into gum spirits of turpentine or gum resin or in processing maple sap into maple syrup or maple sugar. Ez 1040 e-file Off-highway business use (No. Ez 1040 e-file 2). Ez 1040 e-file   Off-highway business use means fuel used in a trade or business or in an income-producing activity other than as a fuel in a highway vehicle registered or required to be registered for use on public highways. Ez 1040 e-file The terms “highway vehicle,” “public highway,” and “registered” are defined below. Ez 1040 e-file Do not consider any use in a boat as an off-highway business use. Ez 1040 e-file   Off-highway business use includes fuels used in any of the following ways. Ez 1040 e-file In stationary machines such as generators, compressors, power saws, and similar equipment. Ez 1040 e-file For cleaning purposes. Ez 1040 e-file In forklift trucks, bulldozers, and earthmovers. Ez 1040 e-file   Generally, this use does not include nonbusiness use of fuel, such as use by minibikes, snowmobiles, power lawn mowers, chain saws, and other yard equipment. Ez 1040 e-file Example. Ez 1040 e-file Caroline owns a landscaping business. Ez 1040 e-file She uses power lawn mowers and chain saws in her business. Ez 1040 e-file The gasoline used in the power lawn mowers and chain saws qualifies as fuel used in an off-highway business use. Ez 1040 e-file The gasoline used in her personal lawn mower at home does not qualify. Ez 1040 e-file Highway vehicle. Ez 1040 e-file   A highway vehicle is any self-propelled vehicle designed to carry a load over public highways, whether or not it is also designed to perform other functions. Ez 1040 e-file Examples of vehicles designed to carry a load over public highways are passenger automobiles, motorcycles, buses, and highway-type trucks and truck tractors. Ez 1040 e-file A vehicle is a highway vehicle even though the vehicle's design allows it to perform a highway transportation function for only one of the following. Ez 1040 e-file A particular type of load, such as passengers, furnishings, and personal effects (as in a house, office, or utility trailer). Ez 1040 e-file A special kind of cargo, goods, supplies, or materials. Ez 1040 e-file Some off-highway task unrelated to highway transportation, except as discussed next. Ez 1040 e-file Vehicles not considered highway vehicles. Ez 1040 e-file   Generally, the following kinds of vehicles are not considered highway vehicles for purposes of the credit or refund of fuel taxes. Ez 1040 e-file Specially designed mobile machinery for nontransportation functions. Ez 1040 e-file A self-propelled vehicle is not a highway vehicle if all the following apply. Ez 1040 e-file The chassis has permanently mounted to it machinery or equipment used to perform certain operations (construction, manufacturing, drilling, mining, timbering, processing, farming, or similar operations) if the operation of the machinery or equipment is unrelated to transportation on or off the public highways. Ez 1040 e-file The chassis has been specially designed to serve only as a mobile carriage and mount (and power source, if applicable) for the machinery or equipment, whether or not the machinery or equipment is in operation. Ez 1040 e-file The chassis could not, because of its special design and without substantial structural modification, be used as part of a vehicle designed to carry any other load. Ez 1040 e-file The vehicle must have traveled less than 7,500 miles on public highways during the taxable year. Ez 1040 e-file Vehicles specially designed for off-highway transportation. Ez 1040 e-file A vehicle is not treated as a highway vehicle if the vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design, the vehicle's capability to transport a load over a public highway is substantially limited or impaired. Ez 1040 e-file To make this determination, you can take into account the vehicle's size, whether the vehicle is subject to licensing, safety, or other requirements, and whether the vehicle can transport a load at a sustained speed of at least 25 miles per hour. Ez 1040 e-file It does not matter that the vehicle can carry heavier loads off highway than it is allowed to carry over the highway. Ez 1040 e-file Nontransportation trailers and semitrailers. Ez 1040 e-file A trailer or semi-trailer is not treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for carrying on a nontransportation function at an off-highway site. Ez 1040 e-file For example, a trailer that is capable only of functioning as an office for an off-highway construction operation is not a highway vehicle. Ez 1040 e-file Public highway. Ez 1040 e-file   A public highway includes any road in the United States that is not a private roadway. Ez 1040 e-file This includes federal, state, county, and city roads and streets. Ez 1040 e-file Registered. Ez 1040 e-file   A vehicle is considered registered when it is registered or required to be registered for highway use under the law of any state, the District of Columbia, or any foreign country in which it is operated or situated. Ez 1040 e-file Any highway vehicle operated under a dealer's tag, license, or permit is considered registered. Ez 1040 e-file A highway vehicle is not considered registered solely because a special permit allows the vehicle to be operated at particular times and under specified conditions. Ez 1040 e-file Dual use of propulsion motor. Ez 1040 e-file   Off-highway business use does not include any fuel used in the propulsion motor of a registered highway vehicle even though that motor also operates special equipment by means of a power take-off or power transfer. Ez 1040 e-file It does not matter if the special equipment is mounted on the vehicle. Ez 1040 e-file Example. Ez 1040 e-file The motor of a registered concrete-mixer truck operates both the engine and the mixing unit by means of a power take-off. Ez 1040 e-file The fuel used in the motor to run the mixer is not off-highway business use. Ez 1040 e-file Use in separate motor. Ez 1040 e-file   Off-highway business use includes fuel used in a separate motor to operate special equipment, such as a refrigeration unit, pump, generator, or mixing unit. Ez 1040 e-file If you draw fuel from the same tank that supplies fuel to the propulsion motor, you must figure the quantity used in the separate motor operating the special equipment. Ez 1040 e-file You may make a reasonable estimate based on your operating experience and supported by your records. Ez 1040 e-file   You can use devices that measure the miles the vehicle has traveled (such as hubometers) to figure the gallons of fuel used to propel the vehicle. Ez 1040 e-file Add to this amount the fuel consumed while idling or warming up the motor before propelling the vehicle. Ez 1040 e-file The difference between your total fuel used and the fuel used to propel the vehicle is the fuel used in the separate motor. Ez 1040 e-file Example. Ez 1040 e-file Hazel owns a refrigerated truck. Ez 1040 e-file It has a separate motor for the refrigeration unit. Ez 1040 e-file The same tank supplies both motors. Ez 1040 e-file Using the truck's hubometer, Hazel figures that 90% of the fuel was used to propel the truck. Ez 1040 e-file Therefore, 10% of the fuel is used in an off-highway business use. Ez 1040 e-file Fuel lost or destroyed. Ez 1040 e-file   You cannot treat fuel lost or destroyed through spillage, fire, or other casualty as fuel used in an off-highway business use. Ez 1040 e-file Export (No. Ez 1040 e-file 3). Ez 1040 e-file   Export means fuel transported from the United States with the intention that the fuel remain in a foreign country or possession of the United States. Ez 1040 e-file Fuel is not exported if it is in the fuel supply tank of a vehicle or aircraft. Ez 1040 e-file In a boat engaged in commercial fishing (No. Ez 1040 e-file 4). Ez 1040 e-file   In a boat engaged in commercial fishing means fuel used in taking, catching, processing, or transporting fish, shellfish, or other aquatic life for commercial purposes, such as selling or processing the catch, on a specific trip basis. Ez 1040 e-file They include boats used in both fresh and salt water fishing. Ez 1040 e-file They do not include boats used for both sport fishing and commercial fishing on the same trip. Ez 1040 e-file In certain intercity and local buses (No. Ez 1040 e-file 5). Ez 1040 e-file   In certain intercity and local buses means fuel used in a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Ez 1040 e-file The bus must be engaged in one of the following activities. Ez 1040 e-file Scheduled transportation along regular routes. Ez 1040 e-file Nonscheduled operations if the seating capacity of the bus is at least 20 adults, not including the driver. Ez 1040 e-file Vans and similar vehicles used for van-pooling or taxi service do not qualify. Ez 1040 e-file Available to the general public. Ez 1040 e-file   This means you offer service to more than a limited number of persons or organizations. Ez 1040 e-file If a bus operator normally provides charter operations through travel agencies but has buses available for chartering by the general public, this service is available to the general public. Ez 1040 e-file A bus does not qualify when its operator uses it to provide exclusive services to only one person, group, or organization. Ez 1040 e-file Also, intercity bus transportation does not include transporting students and employees of schools or intercity transportation in a qualified local bus. Ez 1040 e-file In a qualified local bus (No. Ez 1040 e-file 6). Ez 1040 e-file   In a qualified local bus means fuel used in a bus meeting all the following requirements. Ez 1040 e-file It is engaged in furnishing (for compensation) intracity passenger land transportation available to the general public. Ez 1040 e-file It operates along scheduled, regular routes. Ez 1040 e-file It has a seating capacity of at least 20 adults (excluding the driver). Ez 1040 e-file It is under contract with (or is receiving more than a nominal subsidy from) any state or local government to furnish the transportation. Ez 1040 e-file Intracity passenger land transportation. Ez 1040 e-file   This is the land transportation of passengers between points located within the same metropolitan area. Ez 1040 e-file It includes transportation along routes that cross state, city, or county boundaries if the routes remain within the metropolitan area. Ez 1040 e-file Under contract. Ez 1040 e-file   A bus is under contract with a state or local government only if the contract imposes a bona fide obligation on the bus operator to furnish the transportation. Ez 1040 e-file More than a nominal subsidy. Ez 1040 e-file   A subsidy is more than nominal if it is reasonably expected to exceed an amount equal to 3 cents multiplied by the number of gallons of fuel used in buses on subsidized routes. Ez 1040 e-file A company that operates its buses along subsidized and unsubsidized intracity routes may consider its buses qualified local buses only when the buses are used on the subsidized intracity routes. Ez 1040 e-file In a school bus (No. Ez 1040 e-file 7). Ez 1040 e-file   In a school bus means fuel used in a bus engaged in the transportation of students or employees of schools. Ez 1040 e-file A school is an educational organization with a regular faculty and curriculum and a regularly enrolled body of students who attend the place where the educational activities occur. Ez 1040 e-file For diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel (No. Ez 1040 e-file 8). Ez 1040 e-file   Diesel fuel and kerosene (other than kerosene used in aviation) used other than as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train (not including off-highway business use) means undyed diesel fuel and undyed kerosene used: For home heating, lighting, and cooking; In boats; In stationary machines, such as generators and compressors; For cleaning purposes; or In minibikes and snowmobiles. Ez 1040 e-file In foreign trade (No. Ez 1040 e-file 9). Ez 1040 e-file   In foreign trade means fuel used in civil aircraft employed in foreign trade or trade between the United States and any of its possessions. Ez 1040 e-file The term trade includes the transportation of persons or property for hire and the making of the necessary preparations for such transportation. Ez 1040 e-file In the case of aircraft registered in a foreign country, the country must allow reciprocal benefits for aircraft registered in the United States. Ez 1040 e-file Certain helicopter and fixed-wing aircraft uses (No. Ez 1040 e-file 10). Ez 1040 e-file   Includes: Certain helicopter uses. Ez 1040 e-file   Certain helicopter uses means fuel used by a helicopter for any of the following purposes. Ez 1040 e-file Transporting individuals, equipment, or supplies in the exploration for, or the development or removal of, hard minerals, oil, or gas. Ez 1040 e-file Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Ez 1040 e-file Providing emergency medical transportation. Ez 1040 e-file   During a use described in items (1) and (2), the helicopter must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Ez 1040 e-file For item (1), treat each flight segment as a separate flight. Ez 1040 e-file Fixed-wing aircraft uses. Ez 1040 e-file   Fixed-wing aircraft uses means fuel used by a fixed-wing aircraft for any of the following purposes. Ez 1040 e-file Planting, cultivating, cutting, transporting, or caring for trees (including logging operations). Ez 1040 e-file Providing emergency medical transportation. Ez 1040 e-file The aircraft must be equipped for and exclusively dedicated on that flight to acute care emergency medical services. Ez 1040 e-file During a use described in item (1), the aircraft must not take off from, or land at, a facility eligible for assistance under the Airport and Airway Development Act of 1970, or otherwise use services provided pursuant to section 44509 or 44913(b) or subchapter I of chapter 471 of title 49, United States Code. Ez 1040 e-file Exclusive use by a qualified blood collector organization (No. Ez 1040 e-file 11). Ez 1040 e-file   Exclusive use by a qualified blood collector organization means fuel used by the qualified blood collector organization for its exclusive use in the collection, storage, or transportation of blood. Ez 1040 e-file Qualified blood collector organization. Ez 1040 e-file   A qualified blood collector organization is one that is: Described in section 501(c)(3) and exempt from tax under section 501(a), Primarily engaged in the activity of collecting human blood, Registered by the IRS, and Registered by the Food and Drug Administration to collect blood. Ez 1040 e-file In a highway vehicle owned by the United States that is not used on a highway (No. Ez 1040 e-file 12). Ez 1040 e-file   In a highway vehicle owned by the United States that is not used on a highway means fuel used in a vehicle that was not used on public highways during the period covered by the claim. Ez 1040 e-file This use applies whether or not the vehicle is registered or required to be registered for highway use. Ez 1040 e-file Exclusive use by a nonprofit educational organization (No. Ez 1040 e-file 13). Ez 1040 e-file   Exclusive use by a nonprofit educational organization means fuel used by an organization exempt from income tax under section 501(a) that meets both of the following requirements. Ez 1040 e-file It has a regular faculty and curriculum. Ez 1040 e-file It has a regularly enrolled body of students who attend the place where the instruction normally occurs. Ez 1040 e-file   A nonprofit educational organization also includes a school operated by a church or other organization described in section 501(c)(3) if the school meets the above requirements. Ez 1040 e-file Exclusive use by a state, political subdivision of a state, or the District of Columbia (No. Ez 1040 e-file 14). Ez 1040 e-file   Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. Ez 1040 e-file A state or local government is any state, any political subdivision thereof, or the District of Columbia. Ez 1040 e-file An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. Ez 1040 e-file Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state. Ez 1040 e-file In an aircraft or vehicle owned by an aircraft museum (No. Ez 1040 e-file 15). Ez 1040 e-file   In an aircraft or vehicle owned by an aircraft museum means fuel used in an aircraft or vehicle that is owned by an organization that meets all the following requirements. Ez 1040 e-file It is exempt from income tax as an organization described in section 501(c)(3). Ez 1040 e-file It is operated as a museum under a state (or District of Columbia) charter. Ez 1040 e-file It is operated exclusively for acquiring, exhibiting, and caring for aircraft of the type used for combat or transport in  World War II. Ez 1040 e-file   The aircraft or vehicle (such as a ground servicing vehicle for aircraft) must be used exclusively for the purposes described in item (3). Ez 1040 e-file In military aircraft (No. Ez 1040 e-file 16). Ez 1040 e-file   In a military aircraft means fuel used in an aircraft owned by the United States or any foreign nation and constituting a part of its armed forces. Ez 1040 e-file In commercial aviation (other than foreign trade). Ez 1040 e-file   See Commercial aviation, earlier, for the definition. Ez 1040 e-file Use in a train. Ez 1040 e-file   Use in a train means fuel used in the propulsion engine of equipment or machinery that rides on rails. Ez 1040 e-file This includes use in a locomotive, work train, switching engine, and track maintenance machine. Ez 1040 e-file Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit, and Alternative Fuel Mixture Credit For alternative fuel mixtures produced after December 31, 2011, see How to Claim the Credit below. Ez 1040 e-file The section 6426 credit for biodiesel and alternative fuel consists of the biodiesel or renewable diesel mixture credit, alternative fuel credit, and alternative fuel mixture credit. Ez 1040 e-file Biodiesel or renewable diesel mixture credit claimant. Ez 1040 e-file   Claimant produced a biodiesel mixture by mixing biodiesel with diesel fuel. Ez 1040 e-file Claimant produced a renewable diesel mixture by mixing renewable diesel with liquid fuel (other than renewable diesel). Ez 1040 e-file   The person that produced and sold or used the mixture in their trade or business is the only person eligible to make this claim. Ez 1040 e-file The credit is based on the gallons of biodiesel or renewable diesel in the mixture. Ez 1040 e-file Renewable diesel does not include any fuel derived from coprocessing biomass (as defined in section 45K(c)(3)) with a feedstock that is not biomass. Ez 1040 e-file Claim requirements. Ez 1040 e-file   See the Instructions for Form 720 for the biodiesel or renewable diesel mixture claim requirements. Ez 1040 e-file Alternative fuel credit claimant. Ez 1040 e-file   For the alternative fuel credit, the registered alternative fueler who (1) sold an alternative fuel at retail delivered it into the fuel supply tank of a motor vehicle or motorboat, (2) sold an alternative fuel, delivered it in bulk taxable use in a motor vehicle or motorboat, and received required statement from the buyer, (3) used an alternative fuel (not sold at retail or in bulk as previously described) motor vehicle or motorboat, or (4) sold an alternative fuel used as a fuel in aviation is the only person eligible to make this claim. Ez 1040 e-file Carbon capture requirement. Ez 1040 e-file   A credit for Fischer-Tropsch process liquid fuel derived from coal (including peat) can be claimed only if the fuel is derived from coal produced at a gasification facility that separates and sequesters at least 75% of the facility's total carbon dioxide emissions. Ez 1040 e-file Alternative fuel credit. Ez 1040 e-file   The registered alternative fueler is the person eligible to make the claim. Ez 1040 e-file An alternative fueler is the person liable for tax on alternative fuel under the rules for taxable events for Other Fuels (discussed in chapter 1) or would be liable but for an exemption for nontaxable uses. Ez 1040 e-file An alternative fueler includes a person who sells for use or uses an alternative fuel in aviation. Ez 1040 e-file Alternative fuel mixture credit claimant. Ez 1040 e-file   For the alternative fuel mixture credit, the registered alternative fueler that produced and sold or used the mixture as a fuel in their trade or business is the only person eligible to make this claim. Ez 1040 e-file The credit is based on the gallons of alternative fuel in the mixture. Ez 1040 e-file An alternative fuel mixture is a mixture of alternative fuel and section 4081 taxable fuel (gasoline, diesel fuel, or kerosene). Ez 1040 e-file Registration. Ez 1040 e-file   You must be registered by the IRS to be eligible to claim the section 6426 fuel credit. Ez 1040 e-file See Registration Requirements in chapter 1. Ez 1040 e-file Credits for fuel provide incentive for United States production. Ez 1040 e-file   The section 6426 fuel credit may not be claimed for alternative fuel that is produced outside the United States for use as a fuel outside the United States. Ez 1040 e-file The United States includes any possession of the United States. Ez 1040 e-file Credit for fuels derived from paper or pulp production. Ez 1040 e-file   Credit for alternative fuels and alternative fuel mixtures for any fuel derived from the production of paper or pulp are not available for fuel sold or used on or after December 31, 2009. Ez 1040 e-file How to Claim the Credit Any biodiesel or renewable diesel mixture credit must first be claimed on Schedule C to reduce your taxable fuel liability reported on Form 720. Ez 1040 e-file Any excess credit may be claimed on Schedule C (Form 720), Schedule 3 (Form 8849), Form 4136, or Form 8864, Biodiesel and Renewable Diesel Fuels Credit. Ez 1040 e-file See Notice 2005-4 and the Instructions for Form 720 for more information. Ez 1040 e-file Also see Notice 2013-26 on page 984 of I. Ez 1040 e-file R. Ez 1040 e-file B. Ez 1040 e-file 2013-18 at www. Ez 1040 e-file irs. Ez 1040 e-file gov/pub/irs-irbs/irb13-18. Ez 1040 e-file pdf; and see chapter 2, later. Ez 1040 e-file Coordination with income tax credit. Ez 1040 e-file   Only one credit may be taken for any amount of biodiesel or renewable diesel. Ez 1040 e-file If any amount is claimed (or will be claimed) for any amount of biodiesel or renewable diesel on Form 720, Form 8849, or Form 4136, then a claim cannot be made on Form 8864 for that amount of biodiesel or renewable diesel. Ez 1040 e-file   Any alternative fuel credit must first be claimed on Schedule C (Form 720) to reduce your section 4041 taxable fuel liability for alternative fuel and CNG reported on Form 720. Ez 1040 e-file Any excess credit may claimed on Schedule C (Form 720), Schedule 3 (Form 8849), or Form 4136. Ez 1040 e-file   For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit can be claimed on Schedule C (Form 720), not on Form 4136 or Schedule 3 (Form 8849), and only to the extent of your section 4081 taxable fuel liability for gasoline, diesel fuel and kerosene reported on Form 720. Ez 1040 e-file   Calculate the limitation for alternative fuel mixtures separately and enter on Schedule C (Form 720), line 14, only the gallons of mixtures that do not exceed your section 4081 taxable fuel liability. Ez 1040 e-file Filing Claims This section tells you how to make a claim for a credit or refund of excise taxes on fuels. Ez 1040 e-file This section also covers recordkeeping requirements and when to include the credit or refund in your income. Ez 1040 e-file Generally, you will provide all the information needed to claim a credit or refund when you properly complete Form 8849, Form 4136, Schedule C (Form 720), Form 6478, or Form 8864. Ez 1040 e-file In some cases, you will have to attach additional information. Ez 1040 e-file You need to keep records that support your claim for a credit or refund. Ez 1040 e-file Keep at your principal place of business all records needed to enable the IRS to verify that you are the person entitled to claim a credit or refund and the amount you claimed. Ez 1040 e-file Ultimate purchaser. Ez 1040 e-file   Ultimate purchasers may make claims for the nontaxable use of fuels on Form 4136, Schedule 1 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. Ez 1040 e-file If you are an ultimate purchaser, you must keep the following records. Ez 1040 e-file The number of gallons purchased and used during the period covered by your claim. Ez 1040 e-file The dates of the purchases. Ez 1040 e-file The names and addresses of suppliers and amounts purchased from each in the period covered by your claim. Ez 1040 e-file The nontaxable use for which you used the fuel. Ez 1040 e-file The number of gallons used for each nontaxable use. Ez 1040 e-file It is important that your records show separately the number of gallons used for each nontaxable use that qualifies as a claim. Ez 1040 e-file If the fuel is exported, you must have proof of exportation. Ez 1040 e-file   For more information about keeping records, see Publication 583, Starting a Business and Keeping Records, or chapter 1 of Publication 17, Your Federal Income Tax for Individuals. Ez 1040 e-file Exceptions. Ez 1040 e-file    Generally, the ultimate purchaser may not claim a credit or refund for undyed diesel fuel, undyed kerosene, or kerosene for use in aviation sold for the exclusive use of a state or local government. Ez 1040 e-file However, see Claims by credit card issuers, later, for an exception. Ez 1040 e-file The ultimate purchaser may not claim a credit or refund as follows. Ez 1040 e-file The ultimate purchaser of gasoline or aviation gasoline used by a state or local government for its exclusive use or by a nonprofit educational organization for its exclusive use may waive its right to make a claim by providing a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate M. Ez 1040 e-file A new certificate is required each year or when any information in the current certificate expires. Ez 1040 e-file The ultimate purchaser of kerosene for use in commercial aviation or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia) may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver L. Ez 1040 e-file A new waiver is required each year or when any information in the current waiver expires. Ez 1040 e-file The ultimate purchaser of undyed diesel fuel or undyed kerosene used in certain intercity and local buses may waive its right to make a claim by providing a waiver that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Waiver N. Ez 1040 e-file A new waiver is required each year or when any information in the current waiver expires. Ez 1040 e-file The ultimate purchaser of kerosene for use in nonexempt, noncommercial aviation must provide a certificate that is signed under penalties of perjury by a person authorized to bind the ultimate purchaser and is in the same format as the Model Certificate Q. Ez 1040 e-file A new certificate is required each year or when any information in the current certificate expires. Ez 1040 e-file Registered ultimate vendor. Ez 1040 e-file   Registered ultimate vendors may make claims for certain sales of fuels on Form 4136, Schedule 2 (Form 8849), and Schedule C (Form 720) if reporting excise tax liability on that return. Ez 1040 e-file If you are a registered ultimate vendor, you must keep certain information pertaining to the sale of the fuel. Ez 1040 e-file   To make a claim, you must have sold the fuel at a tax-excluded price, repaid the tax to the buyer, or obtained the buyer's written consent to the allowance of the claim. Ez 1040 e-file You are required to have a valid certificate or waiver in your possession in order to make the claim. Ez 1040 e-file   In addition, you must have a registration number that has not been revoked or suspended. Ez 1040 e-file See Form 637. Ez 1040 e-file State use. Ez 1040 e-file   To make a claim as an ultimate vendor (state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained below. Ez 1040 e-file If you sell undyed diesel fuel, undyed kerosene, or kerosene for use in aviation for use by a state or local government, you must keep the following information. Ez 1040 e-file The name and taxpayer identification number of each person (government unit) that bought the fuel. Ez 1040 e-file The number of gallons sold to each person. Ez 1040 e-file An unexpired certificate from the buyer. Ez 1040 e-file See Model Certificate P in the Appendix. Ez 1040 e-file The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. Ez 1040 e-file Nonprofit educational organization and state use. Ez 1040 e-file   To make a claim as an ultimate vendor (nonprofit educational organization or state), you must have a UV registration number and the fuel cannot be purchased with a credit card as explained later. Ez 1040 e-file If you sell gasoline or aviation gasoline to a nonprofit educational organization for its exclusive use or to a state or local government for its exclusive use, you must keep the following information. Ez 1040 e-file The name and taxpayer identification number of each person (nonprofit educational organization or government unit) that bought the fuel. Ez 1040 e-file The number of gallons sold to each person. Ez 1040 e-file An unexpired certificate from the buyer. Ez 1040 e-file See Model Certificate M in the Appendix. Ez 1040 e-file  The certificate expires on the earlier of 1 year after the date of the certificate or the date a new certificate is given to the registered ultimate vendor. Ez 1040 e-file Blocked pump. Ez 1040 e-file   To make a claim as an ultimate vendor (blocked pump), you must have a UP registration number. Ez 1040 e-file If you sell undyed kerosene (other than kerosene for use in aviation) from a pump that qualifies as a blocked pump because it is locked by you after each sale and is unlocked by you at the request of the buyer, you must keep the following information for each sale of more than 5 gallons. Ez 1040 e-file The date of each sale. Ez 1040 e-file The name and address of the buyer. Ez 1040 e-file The number of gallons sold to that buyer. Ez 1040 e-file Certain intercity and local bus use. Ez 1040 e-file   To make a claim as an ultimate vendor of undyed diesel fuel or undyed kerosene used in certain intercity and local buses, you must have a UB registration number. Ez 1040 e-file You must keep the following information. Ez 1040 e-file The date of each sale. Ez 1040 e-file The name and address of the buyer. Ez 1040 e-file The number of gallons sold to the buyer. Ez 1040 e-file A copy of the waiver signed by the buyer at the time the credit or payment is claimed. Ez 1040 e-file See Model Waiver N in the Appendix. Ez 1040 e-file Kerosene for use in commercial aviation or noncommercial aviation. Ez 1040 e-file   To make a claim as an ultimate vendor of kerosene for use in commercial aviation (other than foreign trade) or noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia), you must have a UA registration number. Ez 1040 e-file See Kerosene for use in aviation, earlier, for a list of nontaxable uses. Ez 1040 e-file You must keep the following information. Ez 1040 e-file The date of each sale. Ez 1040 e-file The name and address of the buyer. Ez 1040 e-file The number of gallons sold to the buyer. Ez 1040 e-file A copy of the waiver signed by the buyer at the time the credit or payment is claimed. Ez 1040 e-file See Model Waiver L in the Appendix. Ez 1040 e-file Kerosene for use in nonexempt, noncommercial aviation. Ez 1040 e-file   To make a claim as an ultimate vendor of kerosene for use in nonexempt, noncommercial aviation, you must have a UA registration number. Ez 1040 e-file You must keep the following information. Ez 1040 e-file The date of each sale. Ez 1040 e-file The name and address of the buyer. Ez 1040 e-file The number of gallons sold to the buyer. Ez 1040 e-file A copy of the certificate signed by the buyer at the time the credit or payment is claimed. Ez 1040 e-file See Model Certificate Q in the Appendix. Ez 1040 e-file Claims by credit card issuers. Ez 1040 e-file   For sales of gasoline, aviation gasoline, diesel fuel, kerosene, or kerosene for use in aviation that are purchased by an exempt user with the use of a credit card, the registered credit card issuer is the only person who can make the claim. Ez 1040 e-file An exempt user for this purpose is: For gasoline or aviation gasoline, a state or local government (including essential government use by an Indian tribal government) or a nonprofit educational organization; or For diesel fuel, kerosene, or kerosene for use in aviation, a state or local government (including essential government use by an Indian tribal government). Ez 1040 e-file   If gasoline is purchased without the use of a credit card, then the registered ultimate vendor of the gasoline may make the claim for refund or credit. Ez 1040 e-file However, if the gasoline is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. Ez 1040 e-file   If diesel fuel, kerosene, or kerosene for use in aviation is purchased without the use of a credit card, the registered ultimate vendor may make the claim for refund or credit. Ez 1040 e-file A state is not allowed to make a claim for these fuels. Ez 1040 e-file However, if the diesel fuel or kerosene is purchased with a credit card issued to a state, but the credit card issuer is not registered by the IRS or does not meet the conditions described, the credit card issuer must collect the tax and the state may make the claim. Ez 1040 e-file   The claim from the credit card issuer must contain the following information as it applies to the fuel covered in the claim. Ez 1040 e-file The total number of gallons. Ez 1040 e-file Its registration number. Ez 1040 e-file A statement that it has not collected the amount of tax from the ultimate purchaser or has obtained the written consent of the ultimate purchaser to make the claim. Ez 1040 e-file A statement that it has repaid or agreed to repay the amount of tax to the ultimate vendor, has obtained the written consent of the ultimate vendor to make the claim, or has otherwise made arrangements which directly or indirectly provide the ultimate vendor with reimbursement of the tax. Ez 1040 e-file Has in its possession an unexpired certificate similar to Model Certificate R in the Appendix and has no reason to believe any of the information in the certificate is false. Ez 1040 e-file Taxpayer identification number. Ez 1040 e-file   To file a claim, you must have a taxpayer identification number. Ez 1040 e-file Your taxpayer identification number can be an: Employer identification number (EIN), Social security number (SSN), or Individual taxpayer identification number (ITIN), if you are an alien individual and do not have and are not eligible to get an SSN. Ez 1040 e-file   If you normally file only a U. Ez 1040 e-file S. Ez 1040 e-file individual income tax return (such as Form 1040 or 1040NR), use your SSN or ITIN. Ez 1040 e-file You get an SSN by filing Form SS-5, Application for a Social Security Card, with the Social Security Administration. Ez 1040 e-file To get an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number, with the IRS. Ez 1040 e-file   If you operate a business, use your EIN. Ez 1040 e-file If you do not have an EIN, you may apply for one online. Ez 1040 e-file Go to the IRS website at irs. Ez 1040 e-file gov/businesses/small and click on the “Employer ID Numbers (EINs)” link. Ez 1040 e-file You may also apply for an EIN by calling 1-800-829-4933, or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. Ez 1040 e-file Claiming A Refund Generally, you may claim a refund of excise taxes on Form 8849. Ez 1040 e-file Complete and attach to Form 8849 the appropriate Form 8849 schedules. Ez 1040 e-file The instructions for Form 8849 and the separate instructions for each schedule explain the requirements for making a claim for refund. Ez 1040 e-file If you file Form 720, you can use the Schedule C (Form 720) for your refund claims for the quarter. Ez 1040 e-file See the Instructions for Form 720. Ez 1040 e-file Do not claim a refund on Form 8849 for any amount for which you have filed or will file a claim on Schedule C (Form 720) or Form 4136. Ez 1040 e-file The alternative fuel mixture credit must be claimed on Schedule C (Form 720) against your section 4081 taxable fuel liability for gasoline, diesel, and kerosene and any excess is not allowed. Ez 1040 e-file The alternative fuel credit must first be claimed on Schedule C (Form 720) against your section 4041 taxable fuel liability for alternative fuel and CNG. Ez 1040 e-file To the extent the alternative fuel credit exceeds this taxable fuel liability, a payment is allowed and may be claimed as a credit on Schedule C (Form 720), or as an income tax credit on Forms 4136, 6478, or 8864, as applicable. Ez 1040 e-file Only one claim may be made for any particular amount of alternative fuel. Ez 1040 e-file Claiming a Credit on Form 4136 For alternative fuel mixtures produced after December 31, 2011, the alternative fuel mixture credit cannot be claimed on Form 4136. Ez 1040 e-file See Biodiesel or Renewable Diesel Mixture Credit, Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2, earlier. Ez 1040 e-file A credit may be claimed for certain uses and sales of fuels on Form 4136 when you file your income tax return at the end of the year. Ez 1040 e-file If you meet certain requirements (discussed earlier), you may be able to make a claim during the year. Ez 1040 e-file Credit only. Ez 1040 e-file   You can claim the following taxes only as a credit on Form 4136. Ez 1040 e-file Tax on fuels used for nontaxable uses if the total for your tax year is less than $750. Ez 1040 e-file Tax on fuel you did not include in any claim for refund previously filed for any quarter of your tax year. Ez 1040 e-file Tax on fuel you used in mobile machinery (off-highway business use) that traveled less than 7,500 miles on public highways. Ez 1040 e-file Do not claim a credit for any amount for which you have filed a refund claim on Form 8849 or credit on Schedule C (Form 720). Ez 1040 e-file When to file. Ez 1040 e-file   You can claim a fuel tax credit on your income tax return for the year you used the fuel (or sold the fuel in the case of a registered ultimate vendor claim). Ez 1040 e-file You may be able to make a fuel tax claim on an amended income tax return for the year you used the fuel. Ez 1040 e-file Generally, you must file an amended return by the later of 3 years from the date you filed your original return or within 2 years from the date you paid the income tax. Ez 1040 e-file How to claim a credit. Ez 1040 e-file   How you claim a credit depends on whether you are an individual, partnership, corporation, S corporation, or farmers' cooperative association. Ez 1040 e-file Individuals. Ez 1040 e-file   You claim the credit on the “Credits from” line of Form 1040. Ez 1040 e-file Also check box b on that line. Ez 1040 e-file If you would not otherwise have to file an income tax return, you must do so to get a fuel tax credit. Ez 1040 e-file Partnerships. Ez 1040 e-file   Partnerships (other than electing large partnerships) claim the credit by including a statement on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Ez 1040 e-file , showing each partner's share of the number of gallons of each fuel sold or used for a non