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Tax Forms 1040ez 2011

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Tax Forms 1040ez 2011

Tax forms 1040ez 2011 5. Tax forms 1040ez 2011   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. Tax forms 1040ez 2011 Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. Tax forms 1040ez 2011 When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. Tax forms 1040ez 2011 Otherwise, these are capital expenses that must be added to the basis of the land. Tax forms 1040ez 2011 (See chapter 6 for information on determining basis. Tax forms 1040ez 2011 ) Conservation expenses for land in a foreign country do not qualify for this special treatment. Tax forms 1040ez 2011 The deduction for conservation expenses cannot be more than 25% of your gross income from farming. Tax forms 1040ez 2011 See 25% Limit on Deduction , later. Tax forms 1040ez 2011 Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. Tax forms 1040ez 2011 These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. Tax forms 1040ez 2011 You must include in income most government payments for approved conservation practices. Tax forms 1040ez 2011 However, you can exclude some payments you receive under certain cost-sharing conservation programs. Tax forms 1040ez 2011 For more information, see Agricultural Program Payments in chapter 3. Tax forms 1040ez 2011 To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. Tax forms 1040ez 2011 Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. Tax forms 1040ez 2011 You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. Tax forms 1040ez 2011 You are not farming if you are engaged only in forestry or the growing of timber. Tax forms 1040ez 2011 Farm defined. Tax forms 1040ez 2011   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. Tax forms 1040ez 2011 It also includes plantations, ranches, ranges, and orchards. Tax forms 1040ez 2011 A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. Tax forms 1040ez 2011 It does not include an area where they are merely caught or harvested. Tax forms 1040ez 2011 A plant nursery is a farm for purposes of deducting soil and water conservation expenses. Tax forms 1040ez 2011 Farm rental. Tax forms 1040ez 2011   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. Tax forms 1040ez 2011 If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. Tax forms 1040ez 2011   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 You own a farm in Iowa and live in California. Tax forms 1040ez 2011 You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. Tax forms 1040ez 2011 You cannot deduct your soil conservation expenses for this farm. Tax forms 1040ez 2011 You must capitalize the expenses and add them to the basis of the land. Tax forms 1040ez 2011     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. Tax forms 1040ez 2011 Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. Tax forms 1040ez 2011 If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. Tax forms 1040ez 2011 Keep a copy of the plan with your books and records to support your deductions. Tax forms 1040ez 2011 Conservation plan. Tax forms 1040ez 2011   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. Tax forms 1040ez 2011 There are three types of approved plans. Tax forms 1040ez 2011 NRCS individual site plans. Tax forms 1040ez 2011 These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. Tax forms 1040ez 2011 NRCS county plans. Tax forms 1040ez 2011 These plans include a listing of farm conservation practices approved for the county where the farmland is located. Tax forms 1040ez 2011 You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. Tax forms 1040ez 2011 Comparable state agency plans. Tax forms 1040ez 2011 These plans are approved by state agencies and can be approved individual site plans or county plans. Tax forms 1040ez 2011   A list of NRCS conservation programs is available at www. Tax forms 1040ez 2011 nrcs. Tax forms 1040ez 2011 usda. Tax forms 1040ez 2011 gov/programs. Tax forms 1040ez 2011 Individual site plans can be obtained from NRCS offices and the comparable state agencies. Tax forms 1040ez 2011 Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. Tax forms 1040ez 2011 These expenses include, but are not limited to, the following. Tax forms 1040ez 2011 The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. Tax forms 1040ez 2011 The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. Tax forms 1040ez 2011 The eradication of brush. Tax forms 1040ez 2011 The planting of windbreaks. Tax forms 1040ez 2011 You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. Tax forms 1040ez 2011 These expenses are added to the basis of the land. Tax forms 1040ez 2011 If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. Tax forms 1040ez 2011 See chapter 3 for information about payments eligible for the cost-sharing exclusion. Tax forms 1040ez 2011 New farm or farmland. Tax forms 1040ez 2011   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. Tax forms 1040ez 2011 You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. Tax forms 1040ez 2011 The new farming activity does not have to be the same as the old farming activity. Tax forms 1040ez 2011 For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. Tax forms 1040ez 2011 Land not used for farming. Tax forms 1040ez 2011   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. Tax forms 1040ez 2011 For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. Tax forms 1040ez 2011 You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. Tax forms 1040ez 2011 Depreciable conservation assets. Tax forms 1040ez 2011   You generally cannot deduct your expenses for depreciable conservation assets. Tax forms 1040ez 2011 However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. Tax forms 1040ez 2011 See Assessment for Depreciable Property , later. Tax forms 1040ez 2011   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. Tax forms 1040ez 2011 These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. Tax forms 1040ez 2011 You recover your capital investment through annual allowances for depreciation. Tax forms 1040ez 2011   You can deduct soil and water conservation expenses for nondepreciable earthen items. Tax forms 1040ez 2011 Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. Tax forms 1040ez 2011 Water well. Tax forms 1040ez 2011   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. Tax forms 1040ez 2011 It is a capital expense. Tax forms 1040ez 2011 You recover your cost through depreciation. Tax forms 1040ez 2011 You also must capitalize your cost for drilling a test hole. Tax forms 1040ez 2011 If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. Tax forms 1040ez 2011 You can recover the total cost through depreciation deductions. Tax forms 1040ez 2011   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. Tax forms 1040ez 2011 Abandonment means that all economic benefits from the well are terminated. Tax forms 1040ez 2011 For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. Tax forms 1040ez 2011 Endangered species recovery expenses. Tax forms 1040ez 2011   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. Tax forms 1040ez 2011 Otherwise, these are capital expenses that must be added to the basis of the land. Tax forms 1040ez 2011   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. Tax forms 1040ez 2011 See Internal Revenue Code section 175 for more information. Tax forms 1040ez 2011 Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. Tax forms 1040ez 2011 You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. Tax forms 1040ez 2011 Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. Tax forms 1040ez 2011 This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. Tax forms 1040ez 2011 The depreciable property must be used in the district's soil and water conservation activities. Tax forms 1040ez 2011 However, the following limits apply to these assessments. Tax forms 1040ez 2011 The total assessment limit. Tax forms 1040ez 2011 The yearly assessment limit. Tax forms 1040ez 2011 After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. Tax forms 1040ez 2011 The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. Tax forms 1040ez 2011 See Table 5-1 for a brief summary of these limits. Tax forms 1040ez 2011 Table 5-1. Tax forms 1040ez 2011 Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. Tax forms 1040ez 2011 Your deductible share of the cost to the district for the property. Tax forms 1040ez 2011 Your gross income from farming. Tax forms 1040ez 2011 No one taxpayer can deduct more than 10% of the total assessment. Tax forms 1040ez 2011 Any amount over 10% is a capital expense and is added to the basis of your land. Tax forms 1040ez 2011 If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Tax forms 1040ez 2011 If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. Tax forms 1040ez 2011 You can deduct the remainder in equal amounts over the next 9 tax years. Tax forms 1040ez 2011 Limit for all conservation expenses, including assessments for depreciable property. Tax forms 1040ez 2011 Amounts greater than 25% can be carried to the following year and added to that year's expenses. Tax forms 1040ez 2011 The total is then subject to the 25% of gross income from farming limit in that year. Tax forms 1040ez 2011 To ensure your deduction is within the deduction limits, keep records to show the following. Tax forms 1040ez 2011 The total assessment against all members of the district for the depreciable property. Tax forms 1040ez 2011 Your deductible share of the cost to the district for the depreciable property. Tax forms 1040ez 2011 Your gross income from farming. Tax forms 1040ez 2011 Total assessment limit. Tax forms 1040ez 2011   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. Tax forms 1040ez 2011 This applies whether you pay the assessment in one payment or in installments. Tax forms 1040ez 2011 If your assessment is more than 10% of the total amount assessed, both the following rules apply. Tax forms 1040ez 2011 The amount over 10% is a capital expense and is added to the basis of your land. Tax forms 1040ez 2011 If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Tax forms 1040ez 2011 Yearly assessment limit. Tax forms 1040ez 2011   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. Tax forms 1040ez 2011 If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. Tax forms 1040ez 2011 If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. Tax forms 1040ez 2011 You can deduct the remainder in equal amounts over the next 9 tax years. Tax forms 1040ez 2011 Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. Tax forms 1040ez 2011 Example 1. Tax forms 1040ez 2011 This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. Tax forms 1040ez 2011 Of the assessment, $1,500 is for digging drainage ditches. Tax forms 1040ez 2011 You can deduct this part as a soil or conservation expense as if you had paid it directly. Tax forms 1040ez 2011 The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. Tax forms 1040ez 2011 The total amount assessed by the district against all its members for the depreciable equipment is $7,000. Tax forms 1040ez 2011 The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. Tax forms 1040ez 2011 The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. Tax forms 1040ez 2011 To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. Tax forms 1040ez 2011 Add $500 to the result for a total of $570. Tax forms 1040ez 2011 Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). Tax forms 1040ez 2011 You can deduct the balance at the rate of $70 a year over the next 9 years. Tax forms 1040ez 2011 You add $70 to the $1,500 portion of the assessment for drainage ditches. Tax forms 1040ez 2011 You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. Tax forms 1040ez 2011 Example 2. Tax forms 1040ez 2011 Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. Tax forms 1040ez 2011 The total amount assessed by the district against all its members for depreciable equipment is $5,500. Tax forms 1040ez 2011 The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. Tax forms 1040ez 2011 The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). Tax forms 1040ez 2011 Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. Tax forms 1040ez 2011 You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. Tax forms 1040ez 2011 Sale or other disposal of land during 9-year period. Tax forms 1040ez 2011   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. Tax forms 1040ez 2011 Death of farmer during 9-year period. Tax forms 1040ez 2011   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. Tax forms 1040ez 2011 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. Tax forms 1040ez 2011 Gross income from farming. Tax forms 1040ez 2011   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. Tax forms 1040ez 2011 Gains from sales of draft, breeding, or dairy livestock are included. Tax forms 1040ez 2011 Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. Tax forms 1040ez 2011 Carryover of deduction. Tax forms 1040ez 2011   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. Tax forms 1040ez 2011 However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 In 2012, you have gross income of $32,000 from two farms. Tax forms 1040ez 2011 During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. Tax forms 1040ez 2011 However, your deduction is limited to 25% of $32,000, or $8,000. Tax forms 1040ez 2011 The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. Tax forms 1040ez 2011 The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. Tax forms 1040ez 2011 Any expenses over the limit in that year are carried to 2014 and later years. Tax forms 1040ez 2011 Net operating loss. Tax forms 1040ez 2011   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. Tax forms 1040ez 2011 If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. Tax forms 1040ez 2011 When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. Tax forms 1040ez 2011 If you do not choose to deduct the expenses, you must capitalize them. Tax forms 1040ez 2011 Change of method. Tax forms 1040ez 2011   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. Tax forms 1040ez 2011 To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. Tax forms 1040ez 2011 You or your authorized representative must sign the request. Tax forms 1040ez 2011   The request must include the following information. Tax forms 1040ez 2011 Your name and address. Tax forms 1040ez 2011 The first tax year the method or change of method is to apply. Tax forms 1040ez 2011 Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. Tax forms 1040ez 2011 If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. Tax forms 1040ez 2011 The total expenses you paid or incurred in the first tax year the method or change of method is to apply. Tax forms 1040ez 2011 A statement that you will account separately in your books for the expenses to which this method or change of method relates. Tax forms 1040ez 2011 Send your request to the following  address. Tax forms 1040ez 2011  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. Tax forms 1040ez 2011 Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). Tax forms 1040ez 2011 However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. Tax forms 1040ez 2011 Gain on sale of farmland. Tax forms 1040ez 2011   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. Tax forms 1040ez 2011 If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. Tax forms 1040ez 2011 See Section 1252 property under Other Gains in chapter 9. 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Understanding Your CP113 Notice

We made changes to your railroad retirement tax return because we believe there was a miscalculation. As a result of these changes, you have an overpayment on your account.


What you need to do

  • Read the notice carefully.
  • Compare the figures on the notice with your railroad retirement tax return.
  • Contact us within 10 days of the date of your notice if you disagree with the changes we made.
  • Correct the copy of your railroad retirement tax return that you kept for your records if you agree with our changes.
  • You should receive a refund of the amount you overpaid as long as you don’t owe any other amounts we are required to collect. You don’t need to do anything.

You may want to

  • Download copies of the following materials (if they weren’t included with your notice).
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Answers to Common Questions

Q. How can I find out what caused my tax return to change?

A. You can contact us at the number listed on your notice for specific information about your tax return.

Q. What should I do if I disagree with the changes you made?

A. If you disagree, contact us at the toll-free number listed on the top right corner of your notice or respond in writing within 10 days of the date of the notice. If your response provides additional information that justifies a reversal of the change, we’ll reverse the change we made to your account. If you agree with the change, update your records. No further action is required.

Q. Will I receive a refund of the amount overpaid?

A. Yes, as long as you don’t owe any other outstanding liabilities we are required to collect and the amount of your refund is $1 or more.

 


Tips for next year

Review your return for accuracy before mailing it to us.

Page Last Reviewed or Updated: 23-Jan-2014

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  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Tax Forms 1040ez 2011

Tax forms 1040ez 2011 11. Tax forms 1040ez 2011   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Tax forms 1040ez 2011 Nondeductible losses. Tax forms 1040ez 2011 Family pet. Tax forms 1040ez 2011 Progressive deterioration. Tax forms 1040ez 2011 Decline in market value of stock. Tax forms 1040ez 2011 Mislaid or lost property. Tax forms 1040ez 2011 Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. Tax forms 1040ez 2011 Related persons. Tax forms 1040ez 2011 Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Tax forms 1040ez 2011 Covered disaster area. Tax forms 1040ez 2011 Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Tax forms 1040ez 2011 A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Tax forms 1040ez 2011 A theft occurs when property is stolen. Tax forms 1040ez 2011 A condemnation occurs when private property is legally taken for public use without the owner's consent. Tax forms 1040ez 2011 A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Tax forms 1040ez 2011 You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. Tax forms 1040ez 2011 An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. Tax forms 1040ez 2011 If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. Tax forms 1040ez 2011 For more information, see Postponing Gain , later. Tax forms 1040ez 2011 Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Tax forms 1040ez 2011 Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Tax forms 1040ez 2011 If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. Tax forms 1040ez 2011 Casualty. Tax forms 1040ez 2011   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Tax forms 1040ez 2011 A sudden event is one that is swift, not gradual or progressive. Tax forms 1040ez 2011 An unexpected event is one that is ordinarily unanticipated and unintended. Tax forms 1040ez 2011 An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged. Tax forms 1040ez 2011 Deductible losses. Tax forms 1040ez 2011   Deductible casualty losses can result from a number of different causes, including the following. Tax forms 1040ez 2011 Airplane crashes. Tax forms 1040ez 2011 Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Tax forms 1040ez 2011 Earthquakes. Tax forms 1040ez 2011 Fires (but see Nondeductible losses next for exceptions). Tax forms 1040ez 2011 Floods. Tax forms 1040ez 2011 Freezing. Tax forms 1040ez 2011 Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses, in Publication 547. Tax forms 1040ez 2011 Lightning. Tax forms 1040ez 2011 Storms, including hurricanes and tornadoes. Tax forms 1040ez 2011 Terrorist attacks. Tax forms 1040ez 2011 Vandalism. Tax forms 1040ez 2011 Volcanic eruptions. Tax forms 1040ez 2011 Nondeductible losses. Tax forms 1040ez 2011   A casualty loss is not deductible if the damage or destruction is caused by the following. Tax forms 1040ez 2011 Accidentally breaking articles such as glassware or china under normal conditions. Tax forms 1040ez 2011 A family pet (explained below). Tax forms 1040ez 2011 A fire if you willfully set it, or pay someone else to set it. Tax forms 1040ez 2011 A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Tax forms 1040ez 2011 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Tax forms 1040ez 2011 Progressive deterioration (explained below). Tax forms 1040ez 2011 Family pet. Tax forms 1040ez 2011   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 You keep your horse in your yard. Tax forms 1040ez 2011 The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Tax forms 1040ez 2011 Some of the trees were completely girdled and died. Tax forms 1040ez 2011 Because the damage was not unexpected or unusual, the loss is not deductible. Tax forms 1040ez 2011 Progressive deterioration. Tax forms 1040ez 2011   Loss of property due to progressive deterioration is not deductible as a casualty loss. Tax forms 1040ez 2011 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Tax forms 1040ez 2011 Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Tax forms 1040ez 2011 However, weather-related conditions or disease may cause another type of involuntary conversion. Tax forms 1040ez 2011 See Other Involuntary Conversions , later. Tax forms 1040ez 2011 Theft. Tax forms 1040ez 2011   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Tax forms 1040ez 2011 The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Tax forms 1040ez 2011 You do not need to show a conviction for theft. Tax forms 1040ez 2011   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Tax forms 1040ez 2011 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Tax forms 1040ez 2011 Decline in market value of stock. Tax forms 1040ez 2011   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. Tax forms 1040ez 2011 However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. Tax forms 1040ez 2011 You report a capital loss on Schedule D (Form 1040). Tax forms 1040ez 2011 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Tax forms 1040ez 2011 Mislaid or lost property. Tax forms 1040ez 2011   The simple disappearance of money or property is not a theft. Tax forms 1040ez 2011 However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Tax forms 1040ez 2011 The diamond falls from the ring and is never found. Tax forms 1040ez 2011 The loss of the diamond is a casualty. Tax forms 1040ez 2011 Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Tax forms 1040ez 2011 The following is a discussion of some losses you can deduct and some you cannot deduct. Tax forms 1040ez 2011 Livestock or produce bought for resale. Tax forms 1040ez 2011   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Tax forms 1040ez 2011 If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. Tax forms 1040ez 2011 You cannot take a separate deduction. Tax forms 1040ez 2011 Livestock, plants, produce, and crops raised for sale. Tax forms 1040ez 2011   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Tax forms 1040ez 2011 You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Tax forms 1040ez 2011   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. Tax forms 1040ez 2011 You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Tax forms 1040ez 2011 The uniform capitalization rules are discussed in chapter 6. Tax forms 1040ez 2011   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. Tax forms 1040ez 2011 You get the deduction by omitting the item from your inventory at the close of your tax year. Tax forms 1040ez 2011 You cannot take a separate casualty or theft deduction. Tax forms 1040ez 2011 Income loss. Tax forms 1040ez 2011   A loss of future income is not deductible. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 A severe flood destroyed your crops. Tax forms 1040ez 2011 Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . Tax forms 1040ez 2011 You estimate that the crop loss will reduce your farm income by $25,000. Tax forms 1040ez 2011 This loss of future income is also not deductible. Tax forms 1040ez 2011 Loss of timber. Tax forms 1040ez 2011   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Tax forms 1040ez 2011 If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Tax forms 1040ez 2011 See Postponing Gain , later. Tax forms 1040ez 2011 Property used in farming. Tax forms 1040ez 2011   Casualty and theft losses of property used in your farm business usually result in deductible losses. Tax forms 1040ez 2011 If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. Tax forms 1040ez 2011 See How To Figure a Loss , later. Tax forms 1040ez 2011 Raised draft, breeding, dairy, or sporting animals. Tax forms 1040ez 2011   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. Tax forms 1040ez 2011 However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. Tax forms 1040ez 2011 You use inventories to determine your income and you included the animals in your inventory. Tax forms 1040ez 2011 You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. Tax forms 1040ez 2011 When you include livestock in inventory, its last inventory value is its basis. Tax forms 1040ez 2011 When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. Tax forms 1040ez 2011 You cannot take a separate deduction. Tax forms 1040ez 2011 How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. Tax forms 1040ez 2011 Farm property. Tax forms 1040ez 2011   Farm property is the property you use in your farming business. Tax forms 1040ez 2011 If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. Tax forms 1040ez 2011   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Tax forms 1040ez 2011 However, the deduction limits, discussed later, do not apply to farm property. Tax forms 1040ez 2011 Personal-use property. Tax forms 1040ez 2011   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. Tax forms 1040ez 2011 The following items are examples of personal-use property: Your main home. Tax forms 1040ez 2011 Furniture and electronics used in your main home and not used in a home office or for business purposes. Tax forms 1040ez 2011 Clothing and jewelry. Tax forms 1040ez 2011 An automobile used for nonbusiness purposes. Tax forms 1040ez 2011 You figure the casualty or theft loss on this property by taking the following steps. Tax forms 1040ez 2011 Determine your adjusted basis in the property before the casualty or theft. Tax forms 1040ez 2011 Determine the decrease in fair market value of the property as a result of the casualty or theft. Tax forms 1040ez 2011 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Tax forms 1040ez 2011 You must apply the deduction limits, discussed later, to determine your deductible loss. Tax forms 1040ez 2011    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Tax forms 1040ez 2011 It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Tax forms 1040ez 2011 Adjusted basis. Tax forms 1040ez 2011   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Tax forms 1040ez 2011 For more information about adjusted basis, see chapter 6. Tax forms 1040ez 2011 Decrease in fair market value (FMV). Tax forms 1040ez 2011   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Tax forms 1040ez 2011 FMV is defined in chapter 10 under Payments Received or Considered Received . Tax forms 1040ez 2011 Appraisal. Tax forms 1040ez 2011   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Tax forms 1040ez 2011 But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Tax forms 1040ez 2011   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. Tax forms 1040ez 2011 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Tax forms 1040ez 2011 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Tax forms 1040ez 2011 Cost of cleaning up or making repairs. Tax forms 1040ez 2011   The cost of cleaning up after a casualty is not part of a casualty loss. Tax forms 1040ez 2011 Neither is the cost of repairing damaged property after a casualty. Tax forms 1040ez 2011 But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Tax forms 1040ez 2011 The repairs are actually made. Tax forms 1040ez 2011 The repairs are necessary to bring the property back to its condition before the casualty. Tax forms 1040ez 2011 The amount spent for repairs is not excessive. Tax forms 1040ez 2011 The repairs fix the damage only. Tax forms 1040ez 2011 The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Tax forms 1040ez 2011 Related expenses. Tax forms 1040ez 2011   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. Tax forms 1040ez 2011 However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Tax forms 1040ez 2011 Separate computations for more than one item of property. Tax forms 1040ez 2011   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. Tax forms 1040ez 2011 Then combine the losses to determine your total loss. Tax forms 1040ez 2011    There is an exception to this rule for personal-use real property. Tax forms 1040ez 2011 See Exception for personal-use real property, later. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 A fire on your farm damaged a tractor and the barn in which it was stored. Tax forms 1040ez 2011 The tractor had an adjusted basis of $3,300. Tax forms 1040ez 2011 Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Tax forms 1040ez 2011 The barn had an adjusted basis of $28,000. Tax forms 1040ez 2011 Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Tax forms 1040ez 2011 You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Tax forms 1040ez 2011 Figure your deductible casualty loss separately for the two items of property. Tax forms 1040ez 2011     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. Tax forms 1040ez 2011   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Tax forms 1040ez 2011 Figure the loss using the smaller of the following. Tax forms 1040ez 2011 The decrease in FMV of the entire property. Tax forms 1040ez 2011 The adjusted basis of the entire property. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 You bought a farm in 1990 for $160,000. Tax forms 1040ez 2011 The adjusted basis of the residential part is now $128,000. Tax forms 1040ez 2011 In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Tax forms 1040ez 2011 The adjusted basis of the residential part includes the $7,500. Tax forms 1040ez 2011 The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Tax forms 1040ez 2011 The trees were not covered by insurance. Tax forms 1040ez 2011 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. Tax forms 1040ez 2011   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Tax forms 1040ez 2011 You do not have a casualty or theft loss to the extent you are reimbursed. Tax forms 1040ez 2011   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Tax forms 1040ez 2011 You must reduce your loss even if you do not receive payment until a later tax year. Tax forms 1040ez 2011    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. Tax forms 1040ez 2011 You may have to include a portion of these payments in your income. Tax forms 1040ez 2011 See Insurance payments for living expenses in Publication 547 for details. Tax forms 1040ez 2011 Disaster relief. Tax forms 1040ez 2011   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss, unless they are replacements for lost or destroyed property. Tax forms 1040ez 2011 Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Tax forms 1040ez 2011   Generally, disaster relief grants received under the Robert T. Tax forms 1040ez 2011 Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Tax forms 1040ez 2011 See Federal disaster relief grants , later, under Disaster Area Losses . Tax forms 1040ez 2011   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Tax forms 1040ez 2011 See Qualified disaster relief payments , later, under Disaster Area Losses . Tax forms 1040ez 2011 Reimbursement received after deducting loss. Tax forms 1040ez 2011   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Tax forms 1040ez 2011 Actual reimbursement less than expected. Tax forms 1040ez 2011   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. Tax forms 1040ez 2011 Actual reimbursement more than expected. Tax forms 1040ez 2011   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Tax forms 1040ez 2011 However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Tax forms 1040ez 2011 Do not refigure your tax for the year you claimed the deduction. Tax forms 1040ez 2011 See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Tax forms 1040ez 2011 If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. Tax forms 1040ez 2011 See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. Tax forms 1040ez 2011 Actual reimbursement same as expected. Tax forms 1040ez 2011   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. Tax forms 1040ez 2011 Lump-sum reimbursement. Tax forms 1040ez 2011   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. Tax forms 1040ez 2011 Figure the gain or loss separately for each asset that has a separate basis. Tax forms 1040ez 2011 Adjustments to basis. Tax forms 1040ez 2011   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any deductible loss. Tax forms 1040ez 2011 The result is your adjusted basis in the property. Tax forms 1040ez 2011 Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Tax forms 1040ez 2011 See Adjusted Basis in chapter 6 for more information. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 You built a new silo for $25,000. Tax forms 1040ez 2011 This is the basis in your silo because that is the total cost you incurred to build it. Tax forms 1040ez 2011 During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Tax forms 1040ez 2011 In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. Tax forms 1040ez 2011 Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Tax forms 1040ez 2011 Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). Tax forms 1040ez 2011 There are two limits on the deduction for casualty or theft loss of personal-use property. Tax forms 1040ez 2011 You figure these limits on Form 4684. Tax forms 1040ez 2011 $100 rule. Tax forms 1040ez 2011   You must reduce each casualty or theft loss on personal-use property by $100. Tax forms 1040ez 2011 This rule applies after you have subtracted any reimbursement. Tax forms 1040ez 2011 10% rule. Tax forms 1040ez 2011   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Tax forms 1040ez 2011 Apply this rule after you reduce each loss by $100. Tax forms 1040ez 2011 Adjusted gross income is on line 38 of Form 1040. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 In June, you discovered that your house had been burglarized. Tax forms 1040ez 2011 Your loss after insurance reimbursement was $2,000. Tax forms 1040ez 2011 Your adjusted gross income for the year you discovered the burglary is $57,000. Tax forms 1040ez 2011 Figure your theft loss deduction as follows: 1. Tax forms 1040ez 2011 Loss after insurance $2,000 2. Tax forms 1040ez 2011 Subtract $100 100 3. Tax forms 1040ez 2011 Loss after $100 rule $1,900 4. Tax forms 1040ez 2011 Subtract 10% (. Tax forms 1040ez 2011 10) × $57,000 AGI $5,700 5. Tax forms 1040ez 2011 Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). Tax forms 1040ez 2011    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. Tax forms 1040ez 2011 See 10% Rule in Publication 547. Tax forms 1040ez 2011 When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Tax forms 1040ez 2011 You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Tax forms 1040ez 2011 However, losses in federally declared disaster areas are subject to different rules. Tax forms 1040ez 2011 See Disaster Area Losses , later, for an exception. Tax forms 1040ez 2011 If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. Tax forms 1040ez 2011 Leased property. Tax forms 1040ez 2011   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. Tax forms 1040ez 2011 This is true even if the loss occurred or the liability was paid in a different year. Tax forms 1040ez 2011 You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Tax forms 1040ez 2011 Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 Robert leased a tractor from First Implement, Inc. Tax forms 1040ez 2011 , for use in his farm business. Tax forms 1040ez 2011 The tractor was destroyed by a tornado in June 2012. Tax forms 1040ez 2011 The loss was not insured. Tax forms 1040ez 2011 First Implement billed Robert for the fair market value of the tractor on the date of the loss. Tax forms 1040ez 2011 Robert disagreed with the bill and refused to pay it. Tax forms 1040ez 2011 First Implement later filed suit in court against Robert. Tax forms 1040ez 2011 In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. Tax forms 1040ez 2011 Robert paid $20,000 in June 2013. Tax forms 1040ez 2011 He can claim the $20,000 as a loss on his 2013 tax return. Tax forms 1040ez 2011 Net operating loss (NOL). Tax forms 1040ez 2011   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Tax forms 1040ez 2011 An NOL can be carried back or carried forward and deducted from income in other years. Tax forms 1040ez 2011 See Publication 536 for more information on NOLs. Tax forms 1040ez 2011 Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Tax forms 1040ez 2011 You must have records to support the amount you claim for the loss. Tax forms 1040ez 2011 Casualty loss proof. Tax forms 1040ez 2011   For a casualty loss, your records should show all the following information. Tax forms 1040ez 2011 The type of casualty (car accident, fire, storm, etc. Tax forms 1040ez 2011 ) and when it occurred. Tax forms 1040ez 2011 That the loss was a direct result of the casualty. Tax forms 1040ez 2011 That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. Tax forms 1040ez 2011 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Tax forms 1040ez 2011 Theft loss proof. Tax forms 1040ez 2011   For a theft loss, your records should show all the following information. Tax forms 1040ez 2011 When you discovered your property was missing. Tax forms 1040ez 2011 That your property was stolen. Tax forms 1040ez 2011 That you were the owner of the property. Tax forms 1040ez 2011 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Tax forms 1040ez 2011 Figuring a Gain A casualty or theft may result in a taxable gain. Tax forms 1040ez 2011 If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Tax forms 1040ez 2011 You generally report your gain as income in the year you receive the reimbursement. Tax forms 1040ez 2011 However, depending on the type of property you receive, you may not have to report your gain. Tax forms 1040ez 2011 See Postponing Gain , later. Tax forms 1040ez 2011 Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. Tax forms 1040ez 2011 Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. Tax forms 1040ez 2011 Amount you receive. Tax forms 1040ez 2011   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Tax forms 1040ez 2011 It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 A tornado severely damaged your barn. Tax forms 1040ez 2011 The adjusted basis of the barn was $25,000. Tax forms 1040ez 2011 Your insurance company reimbursed you $40,000 for the damaged barn. Tax forms 1040ez 2011 However, you had legal expenses of $2,000 to collect that insurance. Tax forms 1040ez 2011 Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Tax forms 1040ez 2011 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. Tax forms 1040ez 2011 Some of these are discussed in the following paragraphs. Tax forms 1040ez 2011 Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Tax forms 1040ez 2011 You report the gain or deduct the loss on your tax return for the year you realize it. Tax forms 1040ez 2011 However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Tax forms 1040ez 2011 See Postponing Gain , later. Tax forms 1040ez 2011 Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Tax forms 1040ez 2011 The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. Tax forms 1040ez 2011 The owner receives a condemnation award (money or property) in exchange for the property taken. Tax forms 1040ez 2011 A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Tax forms 1040ez 2011 Threat of condemnation. Tax forms 1040ez 2011   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. Tax forms 1040ez 2011 Main home condemned. Tax forms 1040ez 2011   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. Tax forms 1040ez 2011 For information on this exclusion, see Publication 523. Tax forms 1040ez 2011 If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. Tax forms 1040ez 2011 See Postponing Gain , later. Tax forms 1040ez 2011 (You cannot deduct a loss from the condemnation of your main home. Tax forms 1040ez 2011 ) More information. Tax forms 1040ez 2011   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Tax forms 1040ez 2011 Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Tax forms 1040ez 2011 Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. Tax forms 1040ez 2011 Livestock Losses Diseased livestock. Tax forms 1040ez 2011   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. Tax forms 1040ez 2011 If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Tax forms 1040ez 2011 Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Tax forms 1040ez 2011 If you replace the livestock, you may be able to postpone reporting the gain. Tax forms 1040ez 2011 See Postponing Gain below. Tax forms 1040ez 2011 Reporting dispositions of diseased livestock. Tax forms 1040ez 2011   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. Tax forms 1040ez 2011 You must also include other information on this statement. Tax forms 1040ez 2011 See How To Postpone Gain , later, under Postponing Gain . Tax forms 1040ez 2011 Weather-related sales of livestock. Tax forms 1040ez 2011   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. Tax forms 1040ez 2011 Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. Tax forms 1040ez 2011 Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Tax forms 1040ez 2011 If you replace the livestock, you may be able to postpone reporting the gain. Tax forms 1040ez 2011 See Postponing Gain below. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 It is your usual business practice to sell five of your dairy animals during the year. Tax forms 1040ez 2011 This year you sold 20 dairy animals because of drought. Tax forms 1040ez 2011 The sale of 15 animals is treated as an involuntary conversion. Tax forms 1040ez 2011    If you do not replace the livestock, you may be able to report the gain in the following year's income. Tax forms 1040ez 2011 This rule also applies to other livestock (including poultry). Tax forms 1040ez 2011 See Sales Caused by Weather-Related Conditions in chapter 3. Tax forms 1040ez 2011 Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. Tax forms 1040ez 2011 Treat the loss as a loss from an involuntary conversion. Tax forms 1040ez 2011 The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Tax forms 1040ez 2011 You deduct the loss on the return for the year the seedlings died. Tax forms 1040ez 2011 Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. Tax forms 1040ez 2011 Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Tax forms 1040ez 2011 You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Tax forms 1040ez 2011 However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. Tax forms 1040ez 2011 If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Tax forms 1040ez 2011 To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Tax forms 1040ez 2011 If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. Tax forms 1040ez 2011 Example 1. Tax forms 1040ez 2011 In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Tax forms 1040ez 2011 In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Tax forms 1040ez 2011 In May of this year, the property was worth $100,000. Tax forms 1040ez 2011 In June the barn and silo were destroyed by a tornado. Tax forms 1040ez 2011 At the time of the tornado, you had an adjusted basis of $0 in the property. Tax forms 1040ez 2011 You received $85,000 from the insurance company. Tax forms 1040ez 2011 You had a gain of $85,000 ($85,000 – $0). Tax forms 1040ez 2011 You spent $80,000 to rebuild the barn and silo. Tax forms 1040ez 2011 Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Tax forms 1040ez 2011 Example 2. Tax forms 1040ez 2011 In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Tax forms 1040ez 2011 You made no further improvements or additions to it. Tax forms 1040ez 2011 When a storm destroyed the cabin this January, the cabin was worth $250,000. Tax forms 1040ez 2011 You received $146,000 from the insurance company in March. Tax forms 1040ez 2011 You had a gain of $128,000 ($146,000 − $18,000). Tax forms 1040ez 2011 You spent $144,000 to rebuild the cabin. Tax forms 1040ez 2011 Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Tax forms 1040ez 2011 Buying replacement property from a related person. Tax forms 1040ez 2011   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). Tax forms 1040ez 2011 This rule applies to the following taxpayers. Tax forms 1040ez 2011 C corporations. Tax forms 1040ez 2011 Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Tax forms 1040ez 2011 Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. Tax forms 1040ez 2011 For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Tax forms 1040ez 2011 If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Tax forms 1040ez 2011 If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Tax forms 1040ez 2011 Exception. Tax forms 1040ez 2011   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. Tax forms 1040ez 2011 Related persons. Tax forms 1040ez 2011   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. Tax forms 1040ez 2011 For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Tax forms 1040ez 2011 Death of a taxpayer. Tax forms 1040ez 2011   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. Tax forms 1040ez 2011 The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. Tax forms 1040ez 2011 Replacement Property You must buy replacement property for the specific purpose of replacing your property. Tax forms 1040ez 2011 Your replacement property must be similar or related in service or use to the property it replaces. Tax forms 1040ez 2011 You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Tax forms 1040ez 2011 If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. Tax forms 1040ez 2011 Property you acquire by gift or inheritance does not qualify as replacement property. Tax forms 1040ez 2011 Owner-user. Tax forms 1040ez 2011   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. Tax forms 1040ez 2011 Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. Tax forms 1040ez 2011 A grinding mill that replaces a tractor does not qualify. Tax forms 1040ez 2011 Neither does a breeding or draft animal that replaces a dairy cow. Tax forms 1040ez 2011 Soil or other environmental contamination. Tax forms 1040ez 2011   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. Tax forms 1040ez 2011 Weather-related conditions. Tax forms 1040ez 2011   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 Each year you normally sell 25 cows from your beef herd. Tax forms 1040ez 2011 However, this year you had to sell 50 cows. Tax forms 1040ez 2011 This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. Tax forms 1040ez 2011 Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. Tax forms 1040ez 2011 Standing crop destroyed by casualty. Tax forms 1040ez 2011   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. Tax forms 1040ez 2011 The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). Tax forms 1040ez 2011 In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. Tax forms 1040ez 2011 Timber loss. Tax forms 1040ez 2011   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. Tax forms 1040ez 2011 If you bought the standing timber within the replacement period, you can postpone reporting the gain. Tax forms 1040ez 2011 Business or income-producing property located in a federally declared disaster area. Tax forms 1040ez 2011   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. Tax forms 1040ez 2011 For more information, see Disaster Area Losses in Publication 547. Tax forms 1040ez 2011 Substituting replacement property. Tax forms 1040ez 2011   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. Tax forms 1040ez 2011 This is true even if you acquire the other property within the replacement period. Tax forms 1040ez 2011 However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. Tax forms 1040ez 2011 Basis of replacement property. Tax forms 1040ez 2011   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Tax forms 1040ez 2011 In this way, tax on the gain is postponed until you dispose of the replacement property. Tax forms 1040ez 2011 Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Tax forms 1040ez 2011 This is the replacement period. Tax forms 1040ez 2011 The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Tax forms 1040ez 2011 The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Tax forms 1040ez 2011 Example. Tax forms 1040ez 2011 You are a calendar year taxpayer. Tax forms 1040ez 2011 While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Tax forms 1040ez 2011 You discovered the theft when you returned to your farm on November 11, 2012. Tax forms 1040ez 2011 Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Tax forms 1040ez 2011 You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Tax forms 1040ez 2011 Main home in disaster area. Tax forms 1040ez 2011   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Tax forms 1040ez 2011 See Disaster Area Losses , later. Tax forms 1040ez 2011 Property in the Midwestern disaster areas. Tax forms 1040ez 2011   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Tax forms 1040ez 2011 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Tax forms 1040ez 2011 Property in the Kansas disaster area. Tax forms 1040ez 2011   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Tax forms 1040ez 2011 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Tax forms 1040ez 2011 Property in the Hurricane Katrina disaster area. Tax forms 1040ez 2011   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Tax forms 1040ez 2011 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Tax forms 1040ez 2011 Weather-related sales of livestock in an area eligible for federal assistance. Tax forms 1040ez 2011   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. Tax forms 1040ez 2011 The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Tax forms 1040ez 2011   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Tax forms 1040ez 2011 R. Tax forms 1040ez 2011 B. Tax forms 1040ez 2011 529, available at  www. Tax forms 1040ez 2011 irs. Tax forms 1040ez 2011 gov/irb/2006-39_IRB/ar11. Tax forms 1040ez 2011 html. Tax forms 1040ez 2011 For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. Tax forms 1040ez 2011 gov. Tax forms 1040ez 2011 Condemnation. Tax forms 1040ez 2011   The replacement period for a condemnation begins on the earlier of the following dates. Tax forms 1040ez 2011 The date on which you disposed of the condemned property. Tax forms 1040ez 2011 The date on which the threat of condemnation began. Tax forms 1040ez 2011 The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Tax forms 1040ez 2011 But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. Tax forms 1040ez 2011 Business or investment real property. Tax forms 1040ez 2011   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Tax forms 1040ez 2011 Extension. Tax forms 1040ez 2011   You can apply for an extension of the replacement period. Tax forms 1040ez 2011 Send your written application to the Internal Revenue Service Center where you file your tax return. Tax forms 1040ez 2011 See your tax return instructions for the address. Tax forms 1040ez 2011 Include all the details about your need for an extension. Tax forms 1040ez 2011 Make your application before the end of the replacement period. Tax forms 1040ez 2011 However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. Tax forms 1040ez 2011 You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Tax forms 1040ez 2011 How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Tax forms 1040ez 2011 You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Tax forms 1040ez 2011 Required statement. Tax forms 1040ez 2011   You should attach a statement to your return for the year you have the gain. Tax forms 1040ez 2011 This statement should include all the following information. Tax forms 1040ez 2011 The date and details of the casualty, theft, or other involuntary conversion. Tax forms 1040ez 2011 The insurance or other reimbursement you received. Tax forms 1040ez 2011 How you figured the gain. Tax forms 1040ez 2011 Replacement property acquired before return filed. Tax forms 1040ez 2011   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. Tax forms 1040ez 2011 The replacement property. Tax forms 1040ez 2011 The postponed gain. Tax forms 1040ez 2011 The basis adjustment that reflects the postponed gain. Tax forms 1040ez 2011 Any gain you are reporting as income. Tax forms 1040ez 2011 Replacement property acquired after return filed. Tax forms 1040ez 2011   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. Tax forms 1040ez 2011   You should then attach another statement to your return for the year in which you buy the replacement property. Tax forms 1040ez 2011 This statement should contain detailed information on the replacement property. Tax forms 1040ez 2011 If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. Tax forms 1040ez 2011 Include in the statement detailed information on the replacement property bought in that year. Tax forms 1040ez 2011 Reporting weather-related sales of livestock. Tax forms 1040ez 2011   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. Tax forms 1040ez 2011 Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Tax forms 1040ez 2011 The gain realized on the sale or exchange. Tax forms 1040ez 2011 The number and kind of livestock sold or exchanged. Tax forms 1040ez 2011 The number of livestock of each kind you would have sold or exchanged under your usual business practice. Tax forms 1040ez 2011   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Tax forms 1040ez 2011 The dates you bought the replacement property. Tax forms 1040ez 2011 The cost of the replacement property. Tax forms 1040ez 2011 Description of the replacement property (for example, the number and kind of the replacement livestock). Tax forms 1040ez 2011 Amended return. Tax forms 1040ez 2011   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Tax forms 1040ez 2011 You do not acquire replacement property within the replacement period, plus extensions. Tax forms 1040ez 2011 On this amended return, you must report the gain and pay any additional tax due. Tax forms 1040ez 2011 You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. Tax forms 1040ez 2011 On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Tax forms 1040ez 2011 Disaster Area Losses Special rules apply to federally declared disaster area losses. Tax forms 1040ez 2011 A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. Tax forms 1040ez 2011 Stafford Disaster Relief and Emergency Assistance Act. Tax forms 1040ez 2011 It includes a major disaster or emergency declaration under the act. Tax forms 1040ez 2011 A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. Tax forms 1040ez 2011 fema. Tax forms 1040ez 2011 gov. Tax forms 1040ez 2011 This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Tax forms 1040ez 2011 For other special rules, see Disaster Area Losses in Publication 547. Tax forms 1040ez 2011 When to deduct the loss. Tax forms 1040ez 2011   You generally must deduct a casualty loss in the year it occurred. Tax forms 1040ez 2011 However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. Tax forms 1040ez 2011 If you make this choice, the loss is treated as having occurred in the preceding year. Tax forms 1040ez 2011    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. Tax forms 1040ez 2011   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Tax forms 1040ez 2011 The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Tax forms 1040ez 2011 The due date (with extensions) for the return for the preceding tax year. Tax forms 1040ez 2011 Federal disaster relief grants. Tax forms 1040ez 2011   Do not include post-disaster relief grants received under the Robert T. Tax forms 1040ez 2011 Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Tax forms 1040ez 2011 Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Tax forms 1040ez 2011 If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. Tax forms 1040ez 2011 Unemployment assistance payments under the Act are taxable unemployment compensation. Tax forms 1040ez 2011 Qualified disaster relief payments. Tax forms 1040ez 2011   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. Tax forms 1040ez 2011 These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Tax forms 1040ez 2011 No withholding applies to these payments. Tax forms 1040ez 2011   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Tax forms 1040ez 2011 Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Tax forms 1040ez 2011 Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Tax forms 1040ez 2011 (A personal residence can be a rented residence or one you own. Tax forms 1040ez 2011 ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Tax forms 1040ez 2011   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. Tax forms 1040ez 2011    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Tax forms 1040ez 2011 Qualified disaster mitigation payments. Tax forms 1040ez 2011   Qualified disaster mitigation payments made under the Robert T. Tax forms 1040ez 2011 Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. Tax forms 1040ez 2011 These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Tax forms 1040ez 2011 You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Tax forms 1040ez 2011 Sale of property under hazard mitigation program. Tax forms 1040ez 2011   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. Tax forms 1040ez 2011 You report the gain or deduct the loss on your tax return for the year you realize it. Tax forms 1040ez 2011 (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Tax forms 1040ez 2011 ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. Tax forms 1040ez 2011 See Postponing Gain , earlier, for the rules that apply. Tax forms 1040ez 2011 Other federal assistance programs. Tax forms 1040ez 2011    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Tax forms 1040ez 2011 Postponed tax deadlines. Tax forms 1040ez 2011   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Tax forms 1040ez 2011 The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. Tax forms 1040ez 2011   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Tax forms 1040ez 2011 Go to http://www. Tax forms 1040ez 2011 irs. Tax forms 1040ez 2011 gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Tax forms 1040ez 2011 Who is eligible. Tax forms 1040ez 2011   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Tax forms 1040ez 2011 Any individual whose main home is located in a covered disaster area (defined next). Tax forms 1040ez 2011 Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Tax forms 1040ez 2011 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Tax forms 1040ez 2011 Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Tax forms 1040ez 2011 The main home or principal place of business does not have to be located in the covered disaster area. Tax forms 1040ez 2011 Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Tax forms 1040ez 2011 The spouse on a joint return with a taxpayer who is eligible for postponements. Tax forms 1040ez 2011 Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. Tax forms 1040ez 2011 Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Tax forms 1040ez 2011 Any other person determined by the IRS to be affected by a federally declared disaster. Tax forms 1040ez 2011 Covered disaster area. Tax forms 1040ez 2011   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. Tax forms 1040ez 2011 Abatement of interest and penalties. Tax forms 1040ez 2011   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Tax forms 1040ez 2011 Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. Tax forms 1040ez 2011 Form 4684. Tax forms 1040ez 2011   Use this form to report your gains and losses from casualties and thefts. Tax forms 1040ez 2011 Form 4797. Tax forms 1040ez 2011   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Tax forms 1040ez 2011 Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. Tax forms 1040ez 2011 Form 8949. Tax forms 1040ez 2011   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Tax forms 1040ez 2011 Schedule A (Form 1040). Tax forms 1040ez 2011   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. Tax forms 1040ez 2011 Schedule D (Form 1040). Tax forms 1040ez 2011   Use this form to carry over the following gains. Tax forms 1040ez 2011 Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Tax forms 1040ez 2011 Net gain shown on Form 4684 from the casualty or theft of personal-use property. Tax forms 1040ez 2011    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Tax forms 1040ez 2011 Schedule F (Form 1040). Tax forms 1040ez 2011   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. Tax forms 1040ez 2011 Prev  Up  Next   Home   More Online Publications