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H And R Block 2012 Tax Return

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H And R Block 2012 Tax Return

H and r block 2012 tax return Publication 537 - Main Content Table of Contents What Is an Installment Sale?Special rule. H and r block 2012 tax return General RulesFiguring Installment Sale Income Reporting Installment Sale Income Other RulesElecting Out of the Installment Method Payments Received or Considered Received Escrow Account Depreciation Recapture Income Sale to a Related Person Like-Kind Exchange Contingent Payment Sale Single Sale of Several Assets Sale of a Business Unstated Interest and Original Issue Discount (OID) Disposition of an Installment Obligation Repossession Interest on Deferred Tax Reporting an Installment SaleRelated person. H and r block 2012 tax return Several assets. H and r block 2012 tax return Special situations. H and r block 2012 tax return Schedule D (Form 1040). H and r block 2012 tax return Form 4797. H and r block 2012 tax return How To Get Tax Help What Is an Installment Sale? An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. H and r block 2012 tax return The rules for installment sales do not apply if you elect not to use the installment method (see Electing Out of the Installment Method under Other Rules, later) or the transaction is one for which the installment method may not apply. H and r block 2012 tax return The installment sales method cannot be used for the following. H and r block 2012 tax return Sale of inventory. H and r block 2012 tax return   The regular sale of inventory of personal property does not qualify as an installment sale even if you receive a payment after the year of sale. H and r block 2012 tax return See Sale of a Business under Other Rules, later. H and r block 2012 tax return Dealer sales. H and r block 2012 tax return   Sales of personal property by a person who regularly sells or otherwise disposes of the same type of personal property on the installment plan are not installment sales. H and r block 2012 tax return This rule also applies to real property held for sale to customers in the ordinary course of a trade or business. H and r block 2012 tax return However, the rule does not apply to an installment sale of property used or produced in farming. H and r block 2012 tax return Special rule. H and r block 2012 tax return   Dealers of time-shares and residential lots can treat certain sales as installment sales and report them under the installment method if they elect to pay a special interest charge. H and r block 2012 tax return For more information, see section 453(l). H and r block 2012 tax return Stock or securities. H and r block 2012 tax return   You cannot use the installment method to report gain from the sale of stock or securities traded on an established securities market. H and r block 2012 tax return You must report the entire gain on the sale in the year in which the trade date falls. H and r block 2012 tax return Installment obligation. H and r block 2012 tax return   The buyer's obligation to make future payments to you can be in the form of a deed of trust, note, land contract, mortgage, or other evidence of the buyer's debt to you. H and r block 2012 tax return General Rules If a sale qualifies as an installment sale, the gain must be reported under the installment method unless you elect out of using the installment method. H and r block 2012 tax return See Electing Out of the Installment Method under Other Rules, later, for information on recognizing the entire gain in the year of sale. H and r block 2012 tax return Sale at a loss. H and r block 2012 tax return   If your sale results in a loss, you cannot use the installment method. H and r block 2012 tax return If the loss is on an installment sale of business or investment property, you can deduct it only in the tax year of sale. H and r block 2012 tax return Unstated interest. H and r block 2012 tax return   If your sale calls for payments in a later year and the sales contract provides for little or no interest, you may have to figure unstated interest, even if you have a loss. H and r block 2012 tax return See Unstated Interest and Original Issue Discount (OID) under Other Rules, later. H and r block 2012 tax return Figuring Installment Sale Income You can use the following discussions or Form 6252 to help you determine gross profit, contract price, gross profit percentage, and installment sale income. H and r block 2012 tax return Each payment on an installment sale usually consists of the following three parts. H and r block 2012 tax return Interest income. H and r block 2012 tax return Return of your adjusted basis in the property. H and r block 2012 tax return Gain on the sale. H and r block 2012 tax return In each year you receive a payment, you must include in income both the interest part and the part that is your gain on the sale. H and r block 2012 tax return You do not include in income the part that is the return of your basis in the property. H and r block 2012 tax return Basis is the amount of your investment in the property for installment sale purposes. H and r block 2012 tax return Interest Income You must report interest as ordinary income. H and r block 2012 tax return Interest is generally not included in a down payment. H and r block 2012 tax return However, you may have to treat part of each later payment as interest, even if it is not called interest in your agreement with the buyer. H and r block 2012 tax return Interest provided in the agreement is called stated interest. H and r block 2012 tax return If the agreement does not provide for enough stated interest, there may be unstated interest or original issue discount. H and r block 2012 tax return See Unstated Interest and Original Issue Discount (OID) under Other Rules, later. H and r block 2012 tax return Adjusted Basis and Installment Sale Income (Gain on Sale) After you have determined how much of each payment to treat as interest, you treat the rest of each payment as if it were made up of two parts. H and r block 2012 tax return A tax-free return of your adjusted basis in the property, and Your gain (referred to as installment sale income on Form 6252). H and r block 2012 tax return Figuring adjusted basis for installment sale purposes. H and r block 2012 tax return   You can use Worksheet A to figure your adjusted basis in the property for installment sale purposes. H and r block 2012 tax return When you have completed the worksheet, you will also have determined the gross profit percentage necessary to figure your installment sale income (gain) for this year. H and r block 2012 tax return Worksheet A. H and r block 2012 tax return Figuring Adjusted Basis and Gross Profit Percentage 1. H and r block 2012 tax return Enter the selling price for the property   2. H and r block 2012 tax return Enter your adjusted basis for the property     3. H and r block 2012 tax return Enter your selling expenses     4. H and r block 2012 tax return Enter any depreciation recapture     5. H and r block 2012 tax return Add lines 2, 3, and 4. H and r block 2012 tax return  This is your adjusted basis for installment sale purposes   6. H and r block 2012 tax return Subtract line 5 from line 1. H and r block 2012 tax return If zero or less, enter -0-. H and r block 2012 tax return  This is your gross profit     If the amount entered on line 6 is zero, stop here. H and r block 2012 tax return You cannot use the installment method. H and r block 2012 tax return   7. H and r block 2012 tax return Enter the contract price for the property   8. H and r block 2012 tax return Divide line 6 by line 7. H and r block 2012 tax return This is your gross profit percentage   Selling price. H and r block 2012 tax return   The selling price is the total cost of the property to the buyer and includes any of the following. H and r block 2012 tax return Any money you are to receive. H and r block 2012 tax return The fair market value (FMV) of any property you are to receive (FMV is discussed in Property Used As a Payment under Other Rules, later). H and r block 2012 tax return Any existing mortgage or other debt the buyer pays, assumes, or takes (a note, mortgage, or any other liability, such as a lien, accrued interest, or taxes you owe on the property). H and r block 2012 tax return Any of your selling expenses the buyer pays. H and r block 2012 tax return   Do not include stated interest, unstated interest, any amount recomputed or recharacterized as interest, or original issue discount. H and r block 2012 tax return Adjusted basis for installment sale purposes. H and r block 2012 tax return   Your adjusted basis is the total of the following three items. H and r block 2012 tax return Adjusted basis. H and r block 2012 tax return Selling expenses. H and r block 2012 tax return Depreciation recapture. H and r block 2012 tax return Adjusted basis. H and r block 2012 tax return   Basis is your investment in the property for installment sale purposes. H and r block 2012 tax return The way you figure basis depends on how you acquire the property. H and r block 2012 tax return The basis of property you buy is generally its cost. H and r block 2012 tax return The basis of property you inherit, receive as a gift, build yourself, or receive in a tax-free exchange is figured differently. H and r block 2012 tax return   While you own property, various events may change your original basis. H and r block 2012 tax return Some events, such as adding rooms or making permanent improvements, increase basis. H and r block 2012 tax return Others, such as deductible casualty losses or depreciation previously allowed or allowable, decrease basis. H and r block 2012 tax return The result is adjusted basis. H and r block 2012 tax return   For more information on how to figure basis and adjusted basis, see Publication 551. H and r block 2012 tax return For more information regarding your basis in property you inherited from someone who died in 2010 and whose executor filed Form 8939, Allocation of Increase In Basis for Property Acquired From a Decedent, see Publication 4895. H and r block 2012 tax return Selling expenses. H and r block 2012 tax return   Selling expenses relate to the sale of the property. H and r block 2012 tax return They include commissions, attorney fees, and any other expenses paid on the sale. H and r block 2012 tax return Selling expenses are added to the basis of the sold property. H and r block 2012 tax return Depreciation recapture. H and r block 2012 tax return   If the property you sold was depreciable property, you may need to recapture part of the gain on the sale as ordinary income. H and r block 2012 tax return See Depreciation Recapture Income under Other Rules, later. H and r block 2012 tax return Gross profit. H and r block 2012 tax return   Gross profit is the total gain you report on the installment method. H and r block 2012 tax return   To figure your gross profit, subtract your adjusted basis for installment sale purposes from the selling price. H and r block 2012 tax return If the property you sold was your home, subtract from the gross profit any gain you can exclude. H and r block 2012 tax return See Sale of Your Home , later, under Reporting Installment Sale Income. H and r block 2012 tax return Contract price. H and r block 2012 tax return   Contract price equals: The selling price, minus The mortgages, debts, and other liabilities assumed or taken by the buyer, plus The amount by which the mortgages, debts, and other liabilities assumed or taken by the buyer exceed your adjusted basis for installment sale purposes. H and r block 2012 tax return Gross profit percentage. H and r block 2012 tax return   A certain percentage of each payment (after subtracting interest) is reported as installment sale income. H and r block 2012 tax return This percentage is called the gross profit percentage and is figured by dividing your gross profit from the sale by the contract price. H and r block 2012 tax return   The gross profit percentage generally remains the same for each payment you receive. H and r block 2012 tax return However, see the Example under Selling Price Reduced, later, for a situation where the gross profit percentage changes. H and r block 2012 tax return Example. H and r block 2012 tax return You sell property at a contract price of $6,000 and your gross profit is $1,500. H and r block 2012 tax return Your gross profit percentage is 25% ($1,500 ÷ $6,000). H and r block 2012 tax return After subtracting interest, you report 25% of each payment, including the down payment, as installment sale income from the sale for the tax year you receive the payment. H and r block 2012 tax return The remainder (balance) of each payment is the tax-free return of your adjusted basis. H and r block 2012 tax return Amount to report as installment sale income. H and r block 2012 tax return   Multiply the payments you receive each year (less interest) by the gross profit percentage. H and r block 2012 tax return The result is your installment sale income for the tax year. H and r block 2012 tax return In certain circumstances, you may be treated as having received a payment, even though you received nothing directly. H and r block 2012 tax return A receipt of property or the assumption of a mortgage on the property sold may be treated as a payment. H and r block 2012 tax return For a detailed discussion, see Payments Received or Considered Received under Other Rules, later. H and r block 2012 tax return Selling Price Reduced If the selling price is reduced at a later date, the gross profit on the sale also will change. H and r block 2012 tax return You then must refigure the gross profit percentage for the remaining payments. H and r block 2012 tax return Refigure your gross profit using Worksheet B. H and r block 2012 tax return You will spread any remaining gain over future installments. H and r block 2012 tax return Worksheet B. H and r block 2012 tax return New Gross Profit Percentage — Selling Price Reduced 1. H and r block 2012 tax return Enter the reduced selling  price for the property   2. H and r block 2012 tax return Enter your adjusted  basis for the  property     3. H and r block 2012 tax return Enter your selling  expenses     4. H and r block 2012 tax return Enter any depreciation  recapture     5. H and r block 2012 tax return Add lines 2, 3, and 4. H and r block 2012 tax return   6. H and r block 2012 tax return Subtract line 5 from line 1. H and r block 2012 tax return  This is your adjusted  gross profit   7. H and r block 2012 tax return Enter any installment sale  income reported in  prior year(s)   8. H and r block 2012 tax return Subtract line 7 from line 6   9. H and r block 2012 tax return Future installments   10. H and r block 2012 tax return Divide line 8 by line 9. H and r block 2012 tax return  This is your new gross profit percentage*   * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. H and r block 2012 tax return Example. H and r block 2012 tax return In 2011, you sold land with a basis of $40,000 for $100,000. H and r block 2012 tax return Your gross profit was $60,000. H and r block 2012 tax return You received a $20,000 down payment and the buyer's note for $80,000. H and r block 2012 tax return The note provides for four annual payments of $20,000 each, plus 8% interest, beginning in 2012. H and r block 2012 tax return Your gross profit percentage is 60%. H and r block 2012 tax return You reported a gain of $12,000 on each payment received in 2011 and 2012. H and r block 2012 tax return In 2013, you and the buyer agreed to reduce the purchase price to $85,000 and payments during 2013, 2014, and 2015 are reduced to $15,000 for each year. H and r block 2012 tax return The new gross profit percentage, 46. H and r block 2012 tax return 67%, is figured on Example—Worksheet B. H and r block 2012 tax return You will report a gain of $7,000 (46. H and r block 2012 tax return 67% of $15,000) on each of the $15,000 installments due in 2013, 2014, and 2015. H and r block 2012 tax return Example — Worksheet B. H and r block 2012 tax return New Gross Profit Percentage — Selling Price Reduced 1. H and r block 2012 tax return Enter the reduced selling  price for the property 85,000 2. H and r block 2012 tax return Enter your adjusted  basis for the  property 40,000   3. H and r block 2012 tax return Enter your selling  expenses -0-   4. H and r block 2012 tax return Enter any depreciation  recapture -0-   5. H and r block 2012 tax return Add lines 2, 3, and 4. H and r block 2012 tax return 40,000 6. H and r block 2012 tax return Subtract line 5 from line 1. H and r block 2012 tax return  This is your adjusted  gross profit 45,000 7. H and r block 2012 tax return Enter any installment sale  income reported in  prior year(s) 24,000 8. H and r block 2012 tax return Subtract line 7 from line 6 21,000 9. H and r block 2012 tax return Future installments 45,000 10. H and r block 2012 tax return Divide line 8 by line 9. H and r block 2012 tax return  This is your new gross profit percentage* 46. H and r block 2012 tax return 67% * Apply this percentage to all future payments to determine how much of each of those payments is installment sale income. H and r block 2012 tax return Reporting Installment Sale Income Generally, you will use Form 6252 to report installment sale income from casual sales of real or personal property during the tax year. H and r block 2012 tax return You also will have to report the installment sale income on Schedule D (Form 1040), Capital Gains and Losses, or Form 4797, or both. H and r block 2012 tax return See Schedule D (Form 1040) and Form 4797 , later. H and r block 2012 tax return If the property was your main home, you may be able to exclude part or all of the gain. H and r block 2012 tax return See Sale of Your Home , later. H and r block 2012 tax return Form 6252 Use Form 6252 to report an installment sale in the year it takes place and to report payments received, or considered received because of related party resales, in later years. H and r block 2012 tax return Attach it to your tax return for each year. H and r block 2012 tax return Form 6252 will help you determine the gross profit, contract price, gross profit percentage, and installment sale income. H and r block 2012 tax return Which parts to complete. H and r block 2012 tax return   Which part to complete depends on whether you are filing the form for the year of sale or a later year. H and r block 2012 tax return Year of sale. H and r block 2012 tax return   Complete lines 1 through 4, Part I, and Part II. H and r block 2012 tax return If you sold property to a related party during the year, also complete Part III. H and r block 2012 tax return Later years. H and r block 2012 tax return   Complete lines 1 through 4 and Part II for any year in which you receive a payment from an installment sale. H and r block 2012 tax return   If you sold a marketable security to a related party after May 14, 1980, and before January 1, 1987, complete Form 6252 for each year of the installment agreement, even if you did not receive a payment. H and r block 2012 tax return (After December 31, 1986, the installment method is not available for the sale of marketable securities. H and r block 2012 tax return ) Complete lines 1 through 4 and Part II for any year in which you receive a payment from the sale. H and r block 2012 tax return Complete Part III unless you received the final payment during the tax year. H and r block 2012 tax return   If you sold property other than a marketable security to a related party after May 14, 1980, complete Form 6252 for the year of sale and for 2 years after the year of sale, even if you did not receive a payment. H and r block 2012 tax return Complete lines 1 through 4 and Part II for any year during this 2-year period in which you receive a payment from the sale. H and r block 2012 tax return Complete Part III for the 2 years after the year of sale unless you received the final payment during the tax year. H and r block 2012 tax return Schedule D (Form 1040) Enter the gain figured on Form 6252 (line 26) for personal-use property (capital assets) on Schedule D (Form 1040), as a short-term gain (line 4) or long-term gain (line 11). H and r block 2012 tax return If your gain from the installment sale qualifies for long-term capital gain treatment in the year of sale, it will continue to qualify in later tax years. H and r block 2012 tax return Your gain is long-term if you owned the property for more than 1 year when you sold it. H and r block 2012 tax return Form 4797 An installment sale of property used in your business or that earns rent or royalty income may result in a capital gain, an ordinary gain, or both. H and r block 2012 tax return All or part of any gain from the disposition of the property may be ordinary gain from depreciation recapture. H and r block 2012 tax return For trade or business property held for more than 1 year, enter the amount from line 26 of Form 6252 on Form 4797, line 4. H and r block 2012 tax return If the property was held 1 year or less or you have an ordinary gain from the sale of a noncapital asset (even if the holding period is more than 1 year), enter this amount on Form 4797, line 10, and write “From Form 6252. H and r block 2012 tax return ” Sale of Your Home If you sell your home, you may be able to exclude all or part of the gain on the sale. H and r block 2012 tax return See Publication 523 for information about excluding the gain. H and r block 2012 tax return If the sale is an installment sale, any gain you exclude is not included in gross profit when figuring your gross profit percentage. H and r block 2012 tax return Seller-financed mortgage. H and r block 2012 tax return   If you finance the sale of your home to an individual, both you and the buyer may have to follow special reporting procedures. H and r block 2012 tax return   When you report interest income received from a buyer who uses the property as a personal residence, write the buyer's name, address, and social security number (SSN) on line 1 of Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. H and r block 2012 tax return   When deducting the mortgage interest, the buyer must write your name, address, and SSN on line 11 of Schedule A (Form 1040), Itemized Deductions. H and r block 2012 tax return   If either person fails to include the other person's SSN, a $50 penalty will be assessed. H and r block 2012 tax return Other Rules The rules discussed in this part of the publication apply only in certain circumstances or to certain types of property. H and r block 2012 tax return The following topics are discussed. H and r block 2012 tax return Electing out of the installment method. H and r block 2012 tax return Payments received or considered received. H and r block 2012 tax return Escrow account. H and r block 2012 tax return Depreciation recapture income. H and r block 2012 tax return Sale to a related person. H and r block 2012 tax return Like-kind exchange. H and r block 2012 tax return Contingent payment sale. H and r block 2012 tax return Single sale of several assets. H and r block 2012 tax return Sale of a business. H and r block 2012 tax return Unstated interest and original issue discount. H and r block 2012 tax return Disposition of an installment obligation. H and r block 2012 tax return Repossession. H and r block 2012 tax return Interest on deferred tax. H and r block 2012 tax return Electing Out of the Installment Method If you elect not to use the installment method, you generally report the entire gain in the year of sale, even though you do not receive all the sale proceeds in that year. H and r block 2012 tax return To figure the amount of gain to report, use the fair market value (FMV) of the buyer's installment obligation that represents the buyer's debt to you. H and r block 2012 tax return Notes, mortgages, and land contracts are examples of obligations that are included at FMV. H and r block 2012 tax return You must figure the FMV of the buyer's installment obligation, whether or not you would actually be able to sell it. H and r block 2012 tax return If you use the cash method of accounting, the FMV of the obligation will never be considered to be less than the FMV of the property sold (minus any other consideration received). H and r block 2012 tax return Example. H and r block 2012 tax return You sold a parcel of land for $50,000. H and r block 2012 tax return You received a $10,000 down payment and will receive the balance over the next 10 years at $4,000 a year, plus 8% interest. H and r block 2012 tax return The buyer gave you a note for $40,000. H and r block 2012 tax return The note had an FMV of $40,000. H and r block 2012 tax return You paid a commission of 6%, or $3,000, to a broker for negotiating the sale. H and r block 2012 tax return The land cost $25,000, and you owned it for more than one year. H and r block 2012 tax return You decide to elect out of the installment method and report the entire gain in the year of sale. H and r block 2012 tax return Gain realized:     Selling price $50,000 Minus: Property's adj. H and r block 2012 tax return basis $25,000     Commission 3,000 28,000 Gain realized $22,000 Gain recognized in year of sale:   Cash $10,000 Market value of note 40,000 Total realized in year of sale $50,000 Minus: Property's adj. H and r block 2012 tax return basis $25,000     Commission 3,000 28,000 Gain recognized $22,000 The recognized gain of $22,000 is long-term capital gain. H and r block 2012 tax return You include the entire gain in income in the year of sale, so you do not include in income any principal payments you receive in later tax years. H and r block 2012 tax return The interest on the note is ordinary income and is reported as interest income each year. H and r block 2012 tax return How to elect out. H and r block 2012 tax return   To make this election, do not report your sale on Form 6252. H and r block 2012 tax return Instead, report it on Form 8949, Sales and Other Dispositions of Capital Assets, Form 4797, or both. H and r block 2012 tax return When to elect out. H and r block 2012 tax return   Make this election by the due date, including extensions, for filing your tax return for the year the sale takes place. H and r block 2012 tax return Automatic six-month extension. H and r block 2012 tax return   If you timely file your tax return without making the election, you still can make the election by filing an amended return within 6 months of the due date of your return (excluding extensions). H and r block 2012 tax return Write “Filed pursuant to section 301. H and r block 2012 tax return 9100-2” at the top of the amended return and file it where the original return was filed. H and r block 2012 tax return Revoking the election. H and r block 2012 tax return   Once made, the election can be revoked only with IRS approval. H and r block 2012 tax return A revocation is retroactive. H and r block 2012 tax return You will not be allowed to revoke the election if either of the following applies. H and r block 2012 tax return One of the purposes is to avoid federal income tax. H and r block 2012 tax return The tax year in which any payment was received has closed. H and r block 2012 tax return Payments Received or Considered Received You must figure your gain each year on the payments you receive, or are treated as receiving, from an installment sale. H and r block 2012 tax return In certain situations, you are considered to have received a payment, even though the buyer does not pay you directly. H and r block 2012 tax return These situations occur when the buyer assumes or pays any of your debts, such as a loan, or pays any of your expenses, such as a sales commission. H and r block 2012 tax return However, as discussed later, the buyer's assumption of your debt is treated as a recovery of your basis rather than as a payment in many cases. H and r block 2012 tax return Buyer Pays Seller's Expenses If the buyer pays any of your expenses related to the sale of your property, it is considered a payment to you in the year of sale. H and r block 2012 tax return Include these expenses in the selling and contract prices when figuring the gross profit percentage. H and r block 2012 tax return Buyer Assumes Mortgage If the buyer assumes or pays off your mortgage, or otherwise takes the property subject to the mortgage, the following rules apply. H and r block 2012 tax return Mortgage not more than basis. H and r block 2012 tax return   If the buyer assumes a mortgage that is not more than your installment sale basis in the property, it is not considered a payment to you. H and r block 2012 tax return It is considered a recovery of your basis. H and r block 2012 tax return The contract price is the selling price minus the mortgage. H and r block 2012 tax return Example. H and r block 2012 tax return You sell property with an adjusted basis of $19,000. H and r block 2012 tax return You have selling expenses of $1,000. H and r block 2012 tax return The buyer assumes your existing mortgage of $15,000 and agrees to pay you $10,000 (a cash down payment of $2,000 and $2,000 (plus 12% interest) in each of the next 4 years). H and r block 2012 tax return The selling price is $25,000 ($15,000 + $10,000). H and r block 2012 tax return Your gross profit is $5,000 ($25,000 − $20,000 installment sale basis). H and r block 2012 tax return The contract price is $10,000 ($25,000 − $15,000 mortgage). H and r block 2012 tax return Your gross profit percentage is 50% ($5,000 ÷ $10,000). H and r block 2012 tax return You report half of each $2,000 payment received as gain from the sale. H and r block 2012 tax return You also report all interest you receive as ordinary income. H and r block 2012 tax return Mortgage more than basis. H and r block 2012 tax return   If the buyer assumes a mortgage that is more than your installment sale basis in the property, you recover your entire basis. H and r block 2012 tax return The part of the mortgage greater than your basis is treated as a payment received in the year of sale. H and r block 2012 tax return   To figure the contract price, subtract the mortgage from the selling price. H and r block 2012 tax return This is the total amount (other than interest) you will receive directly from the buyer. H and r block 2012 tax return Add to this amount the payment you are considered to have received (the difference between the mortgage and your installment sale basis). H and r block 2012 tax return The contract price is then the same as your gross profit from the sale. H and r block 2012 tax return    If the mortgage the buyer assumes is equal to or more than your installment sale basis, the gross profit percentage always will be 100%. H and r block 2012 tax return Example. H and r block 2012 tax return The selling price for your property is $9,000. H and r block 2012 tax return The buyer will pay you $1,000 annually (plus 8% interest) over the next 3 years and assume an existing mortgage of $6,000. H and r block 2012 tax return Your adjusted basis in the property is $4,400. H and r block 2012 tax return You have selling expenses of $600, for a total installment sale basis of $5,000. H and r block 2012 tax return The part of the mortgage that is more than your installment sale basis is $1,000 ($6,000 − $5,000). H and r block 2012 tax return This amount is included in the contract price and treated as a payment received in the year of sale. H and r block 2012 tax return The contract price is $4,000: Selling price $9,000 Minus: Mortgage (6,000) Amount actually received $3,000 Add difference:   Mortgage $6,000   Minus: Installment sale basis 5,000 1,000 Contract price $4,000       Your gross profit on the sale is also $4,000: Selling price $9,000 Minus: Installment sale basis (5,000) Gross profit $4,000 Your gross profit percentage is 100%. H and r block 2012 tax return Report 100% of each payment (less interest) as gain from the sale. H and r block 2012 tax return Treat the $1,000 difference between the mortgage and your installment sale basis as a payment and report 100% of it as gain in the year of sale. H and r block 2012 tax return Mortgage Canceled If the buyer of your property is the person who holds the mortgage on it, your debt is canceled, not assumed. H and r block 2012 tax return You are considered to receive a payment equal to the outstanding canceled debt. H and r block 2012 tax return Example. H and r block 2012 tax return Mary Jones loaned you $45,000 in 2009 in exchange for a note and a mortgage in a tract of land you owned. H and r block 2012 tax return On April 4, 2013, she bought the land for $70,000. H and r block 2012 tax return At that time, $30,000 of her loan to you was outstanding. H and r block 2012 tax return She agreed to forgive this $30,000 debt and to pay you $20,000 (plus interest) on August 1, 2013, and $20,000 on August 1, 2014. H and r block 2012 tax return She did not assume an existing mortgage. H and r block 2012 tax return She canceled the $30,000 debt you owed her. H and r block 2012 tax return You are considered to have received a $30,000 payment at the time of the sale. H and r block 2012 tax return Buyer Assumes Other Debts If the buyer assumes any other debts, such as a loan or back taxes, it may be considered a payment to you in the year of sale. H and r block 2012 tax return If the buyer assumes the debt instead of paying it off, only part of it may have to be treated as a payment. H and r block 2012 tax return Compare the debt to your installment sale basis in the property being sold. H and r block 2012 tax return If the debt is less than your installment sale basis, none of it is treated as a payment. H and r block 2012 tax return If it is more, only the difference is treated as a payment. H and r block 2012 tax return If the buyer assumes more than one debt, any part of the total that is more than your installment sale basis is considered a payment. H and r block 2012 tax return These rules are the same as the rules discussed earlier under Buyer Assumes Mortgage . H and r block 2012 tax return However, they apply only to the following types of debt the buyer assumes. H and r block 2012 tax return Those acquired from ownership of the property you are selling, such as a mortgage, lien, overdue interest, or back taxes. H and r block 2012 tax return Those acquired in the ordinary course of your business, such as a balance due for inventory you purchased. H and r block 2012 tax return If the buyer assumes any other type of debt, such as a personal loan or your legal fees relating to the sale, it is treated as if the buyer had paid off the debt at the time of the sale. H and r block 2012 tax return The value of the assumed debt is then considered a payment to you in the year of sale. H and r block 2012 tax return Property Used As a Payment If you receive property other than money from the buyer, it is still considered a payment in the year received. H and r block 2012 tax return However, see Like-Kind Exchange , later. H and r block 2012 tax return Generally, the amount of the payment is the property's FMV on the date you receive it. H and r block 2012 tax return Exception. H and r block 2012 tax return   If the property the buyer gives you is payable on demand or readily tradable, the amount you should consider as payment in the year received is: The FMV of the property on the date you receive it if you use the cash method of accounting, The face amount of the obligation on the date you receive it if you use the accrual method of accounting, or The stated redemption price at maturity less any original issue discount (OID) or, if there is no OID, the stated redemption price at maturity appropriately discounted to reflect total unstated interest. H and r block 2012 tax return See Unstated Interest and Original Issue Discount (OID) , later. H and r block 2012 tax return Debt not payable on demand. H and r block 2012 tax return   Any evidence of debt you receive from the buyer not payable on demand is not considered a payment. H and r block 2012 tax return This is true even if the debt is guaranteed by a third party, including a government agency. H and r block 2012 tax return Fair market value (FMV). H and r block 2012 tax return   This is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having a reasonable knowledge of all the necessary facts. H and r block 2012 tax return Third-party note. H and r block 2012 tax return   If the property the buyer gives you is a third-party note (or other obligation of a third party), you are considered to have received a payment equal to the note's FMV. H and r block 2012 tax return Because the FMV of the note is itself a payment on your installment sale, any payments you later receive from the third party are not considered payments on the sale. H and r block 2012 tax return The excess of the note's face value over its FMV is interest. H and r block 2012 tax return Exclude this interest in determining the selling price of the property. H and r block 2012 tax return However, see Exception under Property Used As a Payment, earlier. H and r block 2012 tax return Example. H and r block 2012 tax return You sold real estate in an installment sale. H and r block 2012 tax return As part of the down payment, the buyer assigned to you a $50,000, 8% interest third-party note. H and r block 2012 tax return The FMV of the third-party note at the time of the sale was $30,000. H and r block 2012 tax return This amount, not $50,000, is a payment to you in the year of sale. H and r block 2012 tax return The third-party note had an FMV equal to 60% of its face value ($30,000 ÷ $50,000), so 60% of each principal payment you receive on this note is a nontaxable return of capital. H and r block 2012 tax return The remaining 40% is interest taxed as ordinary income. H and r block 2012 tax return Bond. H and r block 2012 tax return   A bond or other evidence of debt you receive from the buyer that is payable on demand or readily tradable in an established securities market is treated as a payment in the year you receive it. H and r block 2012 tax return For more information on the amount you should treat as a payment, see Exception under Property Used As a Payment, earlier. H and r block 2012 tax return    If you receive a government or corporate bond for a sale before October 22, 2004, and the bond has interest coupons attached or can be readily traded in an established securities market, you are considered to have received payment equal to the bond's FMV. H and r block 2012 tax return However, see Exception under Property Used As a Payment, earlier. H and r block 2012 tax return Buyer's note. H and r block 2012 tax return   The buyer's note (unless payable on demand) is not considered payment on the sale. H and r block 2012 tax return However, its full face value is included when figuring the selling price and the contract price. H and r block 2012 tax return Payments you receive on the note are used to figure your gain in the year received. H and r block 2012 tax return Installment Obligation Used as Security (Pledge Rule) If you use an installment obligation to secure any debt, the net proceeds from the debt may be treated as a payment on the installment obligation. H and r block 2012 tax return This is known as the pledge rule, and it applies if the selling price of the property is over $150,000. H and r block 2012 tax return It does not apply to the following dispositions. H and r block 2012 tax return Sales of property used or produced in farming. H and r block 2012 tax return Sales of personal-use property. H and r block 2012 tax return Qualifying sales of time-shares and residential lots. H and r block 2012 tax return The net debt proceeds are the gross debt minus the direct expenses of getting the debt. H and r block 2012 tax return The amount treated as a payment is considered received on the later of the following dates. H and r block 2012 tax return The date the debt becomes secured. H and r block 2012 tax return The date you receive the debt proceeds. H and r block 2012 tax return A debt is secured by an installment obligation to the extent that payment of principal or interest on the debt is directly secured (under the terms of the loan or any underlying arrangement) by any interest in the installment obligation. H and r block 2012 tax return For sales after December 16, 1999, payment on a debt is treated as directly secured by an interest in an installment obligation to the extent an arrangement allows you to satisfy all or part of the debt with the installment obligation. H and r block 2012 tax return Limit. H and r block 2012 tax return   The net debt proceeds treated as a payment on the pledged installment obligation cannot be more than the excess of item (1) over item (2), below. H and r block 2012 tax return The total contract price on the installment sale. H and r block 2012 tax return Any payments received on the installment obligation before the date the net debt proceeds are treated as a payment. H and r block 2012 tax return Installment payments. H and r block 2012 tax return   The pledge rule accelerates the reporting of the installment obligation payments. H and r block 2012 tax return Do not report payments received on the obligation after it has been pledged until the payments received exceed the amount reported under the pledge rule. H and r block 2012 tax return Exception. H and r block 2012 tax return   The pledge rule does not apply to pledges made after December 17, 1987, to refinance a debt under the following circumstances. H and r block 2012 tax return The debt was outstanding on December 17, 1987. H and r block 2012 tax return The debt was secured by that installment sale obligation on that date and at all times thereafter until the refinancing occurred. H and r block 2012 tax return   A refinancing as a result of the creditor's calling of the debt is treated as a continuation of the original debt so long as a person other than the creditor or a person related to the creditor provides the refinancing. H and r block 2012 tax return   This exception applies only to refinancing that does not exceed the principal of the original debt immediately before the refinancing. H and r block 2012 tax return Any excess is treated as a payment on the installment obligation. H and r block 2012 tax return Escrow Account In some cases, the sales agreement or a later agreement may call for the buyer to establish an irrevocable escrow account from which the remaining installment payments (including interest) are to be made. H and r block 2012 tax return These sales cannot be reported on the installment method. H and r block 2012 tax return The buyer's obligation is paid in full when the balance of the purchase price is deposited into the escrow account. H and r block 2012 tax return When an escrow account is established, you no longer rely on the buyer for the rest of the payments, but on the escrow arrangement. H and r block 2012 tax return Example. H and r block 2012 tax return You sell property for $100,000. H and r block 2012 tax return The sales agreement calls for a down payment of $10,000 and payment of $15,000 in each of the next 6 years to be made from an irrevocable escrow account containing the balance of the purchase price plus interest. H and r block 2012 tax return You cannot report the sale on the installment method because the full purchase price is considered received in the year of sale. H and r block 2012 tax return You report the entire gain in the year of sale. H and r block 2012 tax return Escrow established in a later year. H and r block 2012 tax return   If you make an installment sale and in a later year an irrevocable escrow account is established to pay the remaining installments plus interest, the amount placed in the escrow account represents payment of the balance of the installment obligation. H and r block 2012 tax return Substantial restriction. H and r block 2012 tax return   If an escrow arrangement imposes a substantial restriction on your right to receive the sale proceeds, the sale can be reported on the installment method, provided it otherwise qualifies. H and r block 2012 tax return For an escrow arrangement to impose a substantial restriction, it must serve a bona fide purpose of the buyer, that is, a real and definite restriction placed on the seller or a specific economic benefit conferred on the buyer. H and r block 2012 tax return Depreciation Recapture Income If you sell property for which you claimed or could have claimed a depreciation deduction, you must report any depreciation recapture income in the year of sale, whether or not an installment payment was received that year. H and r block 2012 tax return Figure your depreciation recapture income (including the section 179 deduction and the section 179A deduction recapture) in Part III of Form 4797. H and r block 2012 tax return Report the recapture income in Part II of Form 4797 as ordinary income in the year of sale. H and r block 2012 tax return The recapture income is also included in Part I of Form 6252. H and r block 2012 tax return However, the gain equal to the recapture income is reported in full in the year of the sale. H and r block 2012 tax return Only the gain greater than the recapture income is reported on the installment method. H and r block 2012 tax return For more information on depreciation recapture, see chapter 3 in Publication 544. H and r block 2012 tax return The recapture income reported in the year of sale is included in your installment sale basis in determining your gross profit on the installment sale. H and r block 2012 tax return Determining gross profit is discussed under General Rules , earlier. H and r block 2012 tax return Sale to a Related Person If you sell depreciable property to a related person and the sale is an installment sale, you may not be able to report the sale using the installment method. H and r block 2012 tax return If you sell property to a related person and the related person disposes of the property before you receive all payments with respect to the sale, you may have to treat the amount realized by the related person as received by you when the related person disposes of the property. H and r block 2012 tax return These rules are explained under Sale of Depreciable Property and under Sale and Later Disposition , later. H and r block 2012 tax return Sale of Depreciable Property If you sell depreciable property to certain related persons, you generally cannot report the sale using the installment method. H and r block 2012 tax return Instead, all payments to be received are considered received in the year of sale. H and r block 2012 tax return However, see Exception , below. H and r block 2012 tax return Depreciable property for this rule is any property the purchaser can depreciate. H and r block 2012 tax return Payments to be received include the total of all noncontingent payments and the FMV of any payments contingent as to amount. H and r block 2012 tax return In the case of contingent payments for which the FMV cannot be reasonably determined, your basis in the property is recovered proportionately. H and r block 2012 tax return The purchaser cannot increase the basis of the property acquired in the sale before the seller includes a like amount in income. H and r block 2012 tax return Exception. H and r block 2012 tax return   You can use the installment method to report a sale of depreciable property to a related person if no significant tax deferral benefit will be derived from the sale. H and r block 2012 tax return You must show to the satisfaction of the IRS that avoidance of federal income tax was not one of the principal purposes of the sale. H and r block 2012 tax return Related person. H and r block 2012 tax return   Related persons include the following. H and r block 2012 tax return A person and all controlled entities with respect to that person. H and r block 2012 tax return A taxpayer and any trust in which such taxpayer (or his spouse) is a beneficiary, unless that beneficiary's interest in the trust is a remote contingent interest. H and r block 2012 tax return Except in the case of a sale or exchange in satisfaction of a pecuniary bequest, an executor of an estate and a beneficiary of that estate. H and r block 2012 tax return Two or more partnerships in which the same person owns, directly or indirectly, more than 50% of the capital interests or the profits interests. H and r block 2012 tax return   For information about which entities are controlled entities, see section 1239(c). H and r block 2012 tax return Sale and Later Disposition Generally, a special rule applies if you sell or exchange property to a related person on the installment method (first disposition) who then sells, exchanges, or gives away the property (second disposition) under the following circumstances. H and r block 2012 tax return The related person makes the second disposition before making all payments on the first disposition. H and r block 2012 tax return The related person disposes of the property within 2 years of the first disposition. H and r block 2012 tax return This rule does not apply if the property involved is marketable securities. H and r block 2012 tax return Under this rule, you treat part or all of the amount the related person realizes (or the FMV if the disposed property is not sold or exchanged) from the second disposition as if you received it at the time of the second disposition. H and r block 2012 tax return See Exception , later. H and r block 2012 tax return Related person. H and r block 2012 tax return   Related persons include the following. H and r block 2012 tax return Members of a family, including only brothers and sisters (either whole or half), husband and wife, ancestors, and lineal descendants. H and r block 2012 tax return A partnership or estate and a partner or beneficiary. H and r block 2012 tax return A trust (other than a section 401(a) employees trust) and a beneficiary. H and r block 2012 tax return A trust and an owner of the trust. H and r block 2012 tax return Two corporations that are members of the same controlled group as defined in section 267(f). H and r block 2012 tax return The fiduciaries of two different trusts, and the fiduciary and beneficiary of two different trusts, if the same person is the grantor of both trusts. H and r block 2012 tax return A tax-exempt educational or charitable organization and a person (if an individual, including members of the individual's family) who directly or indirectly controls such an organization. H and r block 2012 tax return An individual and a corporation when the individual owns, directly or indirectly, more than 50% of the value of the outstanding stock of the corporation. H and r block 2012 tax return A fiduciary of a trust and a corporation when the trust or the grantor of the trust owns, directly or indirectly, more than 50% in value of the outstanding stock of the corporation. H and r block 2012 tax return The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. H and r block 2012 tax return Any two S corporations if the same persons own more than 50% in value of the outstanding stock of each corporation. H and r block 2012 tax return An S corporation and a corporation that is not an S corporation if the same persons own more than 50% in value of the outstanding stock of each corporation. H and r block 2012 tax return A corporation and a partnership if the same persons own more than 50% in value of the outstanding stock of the corporation and more than 50% of the capital or profits interest in the partnership. H and r block 2012 tax return An executor and a beneficiary of an estate unless the sale is in satisfaction of a pecuniary bequest. H and r block 2012 tax return Example 1. H and r block 2012 tax return In 2012, Harvey Green sold farm land to his son Bob for $500,000, which was to be paid in five equal payments over 5 years, plus adequate stated interest on the balance due. H and r block 2012 tax return His installment sale basis for the farm land was $250,000 and the property was not subject to any outstanding liens or mortgages. H and r block 2012 tax return His gross profit percentage is 50% (gross profit of $250,000 ÷ contract price of $500,000). H and r block 2012 tax return He received $100,000 in 2012 and included $50,000 in income for that year ($100,000 × 0. H and r block 2012 tax return 50). H and r block 2012 tax return Bob made no improvements to the property and sold it to Alfalfa Inc. H and r block 2012 tax return , in 2013 for $600,000 after making the payment for that year. H and r block 2012 tax return The amount realized from the second disposition is $600,000. H and r block 2012 tax return Harvey figures his installment sale income for 2013 as follows: Lesser of: 1) Amount realized on second disposition, or 2) Contract price on first disposition $500,000 Subtract: Sum of payments from Bob in 2012 and 2013 - 200,000 Amount treated as received because of second disposition $300,000 Add: Payment from Bob in 2013 + 100,000 Total payments received and treated as received for 2013 $400,000 Multiply by gross profit % × . H and r block 2012 tax return 50 Installment sale income for 2013 $200,000 Harvey will not include in his installment sale income any principal payments he receives on the installment obligation for 2014, 2015, and 2016 because he has already reported the total payments of $500,000 from the first disposition ($100,000 in 2012 and $400,000 in 2013). H and r block 2012 tax return Example 2. H and r block 2012 tax return Assume the facts are the same as Example 1 except that Bob sells the property for only $400,000. H and r block 2012 tax return The gain for 2013 is figured as follows: Lesser of: 1) Amount realized on second disposition, or 2) Contract price on first disposition $400,000 Subtract: Sum of payments from Bob in 2012 and 2013 − 200,000 Amount treated as received because of second disposition $200,000 Add: Payment from Bob in 2013 + 100,000 Total payments received and treated as received for 2013 $300,000 Multiply by gross profit % × . H and r block 2012 tax return 50 Installment sale income for 2013 $150,000     Harvey receives a $100,000 payment in 2014 and another in 2015. H and r block 2012 tax return They are not taxed because he treated the $200,000 from the disposition in 2013 as a payment received and paid tax on the installment sale income. H and r block 2012 tax return In 2016, he receives the final $100,000 payment. H and r block 2012 tax return He figures the installment sale income he must recognize in 2016 as follows: Total payments from the first disposition received by the end of 2016 $500,000 Minus the sum of:     Payment from 2012 $100,000   Payment from 2013 100,000   Amount treated as received in 2013 200,000   Total on which gain was previously recognized  − 400,000 Payment on which gain is recognized for 2016  $100,000 Multiply by gross profit % × . H and r block 2012 tax return 50 Installment sale income for 2016 $ 50,000 Exception. H and r block 2012 tax return   This rule does not apply to a second disposition, and any later transfer, if you can show to the satisfaction of the IRS that neither the first disposition (to the related person) nor the second disposition had as one of its principal purposes the avoidance of federal income tax. H and r block 2012 tax return Generally, an involuntary second disposition will qualify under the nontax avoidance exception, such as when a creditor of the related person forecloses on the property or the related person declares bankruptcy. H and r block 2012 tax return   The nontax avoidance exception also applies to a second disposition that is also an installment sale if the terms of payment under the installment resale are substantially equal to or longer than those for the first installment sale. H and r block 2012 tax return However, the exception does not apply if the resale terms permit significant deferral of recognition of gain from the first sale. H and r block 2012 tax return   In addition, any sale or exchange of stock to the issuing corporation is not treated as a first disposition. H and r block 2012 tax return An involuntary conversion is not treated as a second disposition if the first disposition occurred before the threat of conversion. H and r block 2012 tax return A transfer after the death of the person making the first disposition or the related person's death, whichever is earlier, is not treated as a second disposition. H and r block 2012 tax return Like-Kind Exchange If you trade business or investment property solely for the same kind of property to be held as business or investment property, you can postpone reporting the gain. H and r block 2012 tax return These trades are known as like-kind exchanges. H and r block 2012 tax return The property you receive in a like-kind exchange is treated as if it were a continuation of the property you gave up. H and r block 2012 tax return You do not have to report any part of your gain if you receive only like-kind property. H and r block 2012 tax return However, if you also receive money or other property (boot) in the exchange, you must report your gain to the extent of the money and the FMV of the other property received. H and r block 2012 tax return For more information on like-kind exchanges, see Like-Kind Exchanges in chapter 1 of Publication 544. H and r block 2012 tax return Installment payments. H and r block 2012 tax return   If, in addition to like-kind property, you receive an installment obligation in the exchange, the following rules apply to determine the installment sale income each year. H and r block 2012 tax return The contract price is reduced by the FMV of the like-kind property received in the trade. H and r block 2012 tax return The gross profit is reduced by any gain on the trade that can be postponed. H and r block 2012 tax return Like-kind property received in the trade is not considered payment on the installment obligation. H and r block 2012 tax return Example. H and r block 2012 tax return In 2013, George Brown trades personal property with an installment sale basis of $400,000 for like-kind property having an FMV of $200,000. H and r block 2012 tax return He also receives an installment note for $800,000 in the trade. H and r block 2012 tax return Under the terms of the note, he is to receive $100,000 (plus interest) in 2014 and the balance of $700,000 (plus interest) in 2015. H and r block 2012 tax return George's selling price is $1,000,000 ($800,000 installment note + $200,000 FMV of like-kind property received). H and r block 2012 tax return His gross profit is $600,000 ($1,000,000 − $400,000 installment sale basis). H and r block 2012 tax return The contract price is $800,000 ($1,000,000 − $200,000). H and r block 2012 tax return The gross profit percentage is 75% ($600,000 ÷ $800,000). H and r block 2012 tax return He reports no gain in 2013 because the like-kind property he receives is not treated as a payment for figuring gain. H and r block 2012 tax return He reports $75,000 gain for 2014 (75% of $100,000 payment received) and $525,000 gain for 2015 (75% of $700,000 payment received). H and r block 2012 tax return Deferred exchanges. H and r block 2012 tax return   A deferred exchange is one in which you transfer property you use in business or hold for investment and receive like-kind property later that you will use in business or hold for investment. H and r block 2012 tax return Under this type of exchange, the person receiving your property may be required to place funds in an escrow account or trust. H and r block 2012 tax return If certain rules are met, these funds will not be considered a payment until you have the right to receive the funds or, if earlier, the end of the exchange period. H and r block 2012 tax return See Regulations section 1. H and r block 2012 tax return 1031(k)-1(j)(2) for these rules. H and r block 2012 tax return Contingent Payment Sale A contingent payment sale is one in which the total selling price cannot be determined by the end of the tax year of sale. H and r block 2012 tax return This happens, for example, if you sell your business and the selling price includes a percentage of its profits in future years. H and r block 2012 tax return If the selling price cannot be determined by the end of the tax year, you must use different rules to figure the contract price and the gross profit percentage than those you use for an installment sale with a fixed selling price. H and r block 2012 tax return For rules on using the installment method for a contingent payment sale, see Regulations section 15a. H and r block 2012 tax return 453-1(c). H and r block 2012 tax return Single Sale of Several Assets If you sell different types of assets in a single sale, you must identify each asset to determine whether you can use the installment method to report the sale of that asset. H and r block 2012 tax return You also have to allocate part of the selling price to each asset. H and r block 2012 tax return If you sell assets that constitute a trade or business, see Sale of a Business , later. H and r block 2012 tax return Unless an allocation of the selling price has been agreed to by both parties in an arm's-length transaction, you must allocate the selling price to an asset based on its FMV. H and r block 2012 tax return If the buyer assumes a debt, or takes the property subject to a debt, you must reduce the FMV of the property by the debt. H and r block 2012 tax return This becomes the net FMV. H and r block 2012 tax return A sale of separate and unrelated assets of the same type under a single contract is reported as one transaction for the installment method. H and r block 2012 tax return However, if an asset is sold at a loss, its disposition cannot be reported on the installment method. H and r block 2012 tax return It must be reported separately. H and r block 2012 tax return The remaining assets sold at a gain are reported together. H and r block 2012 tax return Example. H and r block 2012 tax return You sold three separate and unrelated parcels of real property (A, B, and C) under a single contract calling for a total selling price of $130,000. H and r block 2012 tax return The total selling price consisted of a cash payment of $20,000, the buyer's assumption of a $30,000 mortgage on parcel B, and an installment obligation of $80,000 payable in eight annual installments, plus interest at 8% a year. H and r block 2012 tax return Your installment sale basis for each parcel was $15,000. H and r block 2012 tax return Your net gain was $85,000 ($130,000 − $45,000). H and r block 2012 tax return You report the gain on the installment method. H and r block 2012 tax return The sales contract did not allocate the selling price or the cash payment received in the year of sale among the individual parcels. H and r block 2012 tax return The FMV of parcels A, B, and C were $60,000, $60,000, and $10,000, respectively. H and r block 2012 tax return The installment sale basis for parcel C was more than its FMV, so it was sold at a loss and must be treated separately. H and r block 2012 tax return You must allocate the total selling price and the amounts received in the year of sale between parcel C and the remaining parcels. H and r block 2012 tax return Of the total $130,000 selling price, you must allocate $120,000 to parcels A and B together and $10,000 to parcel C. H and r block 2012 tax return You should allocate the cash payment of $20,000 received in the year of sale and the note receivable on the basis of their proportionate net FMV. H and r block 2012 tax return The allocation is figured as follows:   Parcels   A and B Parcel C FMV $120,000 $10,000 Minus: Mortgage assumed 30,000 -0- Net FMV $ 90,000 $10,000 Proportionate net FMV:     Percentage of total 90% 10% Payments in year of sale:     $20,000 × 90% $18,000   $20,000 × 10%   $2,000 Excess of parcel B mortgage over installment sale basis 15,000 -0- Allocation of payments  received (or considered  received) in year of sale $ 33,000 $ 2,000 You cannot report the sale of parcel C on the installment method because the sale results in a loss. H and r block 2012 tax return You report this loss of $5,000 ($10,000 selling price − $15,000 installment sale basis) in the year of sale. H and r block 2012 tax return However, if parcel C was held for personal use, the loss is not deductible. H and r block 2012 tax return You allocate the installment obligation of $80,000 to the properties sold based on their proportionate net FMVs (90% to parcels A and B, 10% to parcel C). H and r block 2012 tax return Sale of a Business The installment sale of an entire business for one overall price under a single contract is not the sale of a single asset. H and r block 2012 tax return Allocation of Selling Price To determine whether any of the gain on the sale of the business can be reported on the installment method, you must allocate the total selling price and the payments received in the year of sale between each of the following classes of assets. H and r block 2012 tax return Assets sold at a loss. H and r block 2012 tax return Real and personal property eligible for the installment method. H and r block 2012 tax return Real and personal property ineligible for the installment method, including: Inventory, Dealer property, and Stocks and securities. H and r block 2012 tax return Inventory. H and r block 2012 tax return   The sale of inventories of personal property cannot be reported on the installment method. H and r block 2012 tax return All gain or loss on their sale must be reported in the year of sale, even if you receive payment in later years. H and r block 2012 tax return   If inventory items are included in an installment sale, you may have an agreement stating which payments are for inventory and which are for the other assets being sold. H and r block 2012 tax return If you do not, each payment must be allocated between the inventory and the other assets sold. H and r block 2012 tax return   Report the amount you receive (or will receive) on the sale of inventory items as ordinary business income. H and r block 2012 tax return Use your basis in the inventory to figure the cost of goods sold. H and r block 2012 tax return Deduct the part of the selling expenses allocated to inventory as an ordinary business expense. H and r block 2012 tax return Residual method. H and r block 2012 tax return   Except for assets exchanged under the like-kind exchange rules, both the buyer and seller of a business must use the residual method to allocate the sale price to each business asset sold. H and r block 2012 tax return This method determines gain or loss from the transfer of each asset and the buyer's basis in the assets. H and r block 2012 tax return   The residual method must be used for any transfer of a group of assets that constitutes a trade or business and for which the buyer's basis is determined only by the amount paid for the assets. H and r block 2012 tax return This applies to both direct and indirect transfers, such as the sale of a business or the sale of a partnership interest in which the basis of the buyer's share of the partnership assets is adjusted for the amount paid under section 743(b). H and r block 2012 tax return   A group of assets constitutes a trade or business if goodwill or going concern value could, under any circumstances, attach to the assets or if the use of the assets would constitute an active trade or business under section 355. H and r block 2012 tax return   The residual method provides for the consideration to be reduced first by cash and general deposit accounts (including checking and savings accounts but excluding certificates of deposit). H and r block 2012 tax return The consideration remaining after this reduction must be allocated among the various business assets in a certain order. H and r block 2012 tax return   For asset acquisitions occurring after March 15, 2001, make the allocation among the following assets in proportion to (but not more than) their fair market value on the purchase date in the following order. H and r block 2012 tax return Certificates of deposit, U. H and r block 2012 tax return S. H and r block 2012 tax return Government securities, foreign currency, and actively traded personal property, including stock and securities. H and r block 2012 tax return Accounts receivable, other debt instruments, and assets that you mark to market at least annually for federal income tax purposes. H and r block 2012 tax return However, see Regulations section 1. H and r block 2012 tax return 338-6(b)(2)(iii) for exceptions that apply to debt instruments issued by persons related to a target corporation, contingent debt instruments, and debt instruments convertible into stock or other property. H and r block 2012 tax return Property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held by the taxpayer primarily for sale to customers in the ordinary course of business. H and r block 2012 tax return All other assets except section 197 intangibles. H and r block 2012 tax return Section 197 intangibles except goodwill and going concern value. H and r block 2012 tax return Goodwill and going concern value (whether or not they qualify as section 197 intangibles). H and r block 2012 tax return   If an asset described in (1) through (6) is includible in more than one category, include it in the lower number category. H and r block 2012 tax return For example, if an asset is described in both (4) and (6), include it in (4). H and r block 2012 tax return Agreement. H and r block 2012 tax return   The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets. H and r block 2012 tax return This agreement is binding on both parties unless the IRS determines the amounts are not appropriate. H and r block 2012 tax return Reporting requirement. H and r block 2012 tax return   Both the buyer and seller involved in the sale of business assets must report to the IRS the allocation of the sales price among section 197 intangibles and the other business assets. H and r block 2012 tax return Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. H and r block 2012 tax return The buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred. H and r block 2012 tax return Sale of Partnership Interest A partner who sells a partnership interest at a gain may be able to report the sale on the installment method. H and r block 2012 tax return The sale of a partnership interest is treated as the sale of a single capital asset. H and r block 2012 tax return The part of any gain or loss from unrealized receivables or inventory items will be treated as ordinary income. H and r block 2012 tax return (The term “unrealized receivables” includes depreciation recapture income, discussed earlier. H and r block 2012 tax return ) The gain allocated to the unrealized receivables and the inventory cannot be reported under the installment method. H and r block 2012 tax return The gain allocated to the other assets can be reported under the installment method. H and r block 2012 tax return For more information on the treatment of unrealized receivables and inventory, see Publication 541. H and r block 2012 tax return Example — Sale of a Business On June 4, 2013, you sold the machine shop you had operated since 2005. H and r block 2012 tax return You received a $100,000 down payment and the buyer's note for $120,000. H and r block 2012 tax return The note payments are $15,000 each, plus 10% interest, due every July 1 and January 1, beginning in 2014. H and r block 2012 tax return The total selling price is $220,000. H and r block 2012 tax return Your selling expenses are $11,000. H and r block 2012 tax return The selling expenses are divided among all the assets sold, including inventory. H and r block 2012 tax return Your selling expense for each asset is 5% of the asset's selling price ($11,000 selling expense ÷ $220,000 total selling price). H and r block 2012 tax return The FMV, adjusted basis, and depreciation claimed on each asset sold are as follows:     Depre- ciation Adj. H and r block 2012 tax return Asset FMV Claimed Basis Inventory $ 10,000 -0- $ 8,000 Land 42,000 -0- 15,000 Building 48,000 $9,000 36,000 Machine A 71,000 27,200 63,800 Machine B 24,000 12,960 22,040 Truck 6,500 18,624 5,376   $201,500 $67,784 $150,216         Under the residual method, you allocate the selling price to each of the assets based on their FMV ($201,500). H and r block 2012 tax return The remaining $18,500 ($220,000 - $201,500) is allocated to your section 197 intangible, goodwill. H and r block 2012 tax return The assets included in the sale, their selling prices based on their FMVs, the selling expense allocated to each asset, the adjusted basis, and the gain for each asset are shown in the following chart. H and r block 2012 tax return   Sale  Price Sale   Exp. H and r block 2012 tax return Adj. H and r block 2012 tax return   Basis Gain Inventory $ 10,000 $ 500 $ 8,000 $ 1,500 Land 42,000 2,100 15,000 24,900 Building 48,000 2,400 36,000 9,600 Mch. H and r block 2012 tax return A 71,000 3,550 63,800 3,650 Mch. H and r block 2012 tax return B 24,000 1,200 22,040 760 Truck 6,500 325 5,376 799 Goodwill 18,500 925 -0- 17,575   $220,000 $11,000 $150,216 $58,784 The building was acquired in 2005, the year the business began, and it is section 1250 property. H and r block 2012 tax return There is no depreciation recapture income because the building was depreciated using the straight line method. H and r block 2012 tax return All gain on the truck, machine A, and machine B is depreciation recapture income since it is the lesser of the depreciation claimed or the gain on the sale. H and r block 2012 tax return Figure depreciation recapture in Part III of Form 4797. H and r block 2012 tax return The total depreciation recapture income reported in Part II of Form 4797 is $5,209. H and r block 2012 tax return This consists of $3,650 on machine A, $799 on the truck, and $760 on machine B (the gain on each item because it was less than the depreciation claimed). H and r block 2012 tax return These gains are reported in full in the year of sale and are not included in the installment sale computation. H and r block 2012 tax return Of the $220,000 total selling price, the $10,000 for inventory assets cannot be reported using the installment method. H and r block 2012 tax return The selling prices of the truck and machines are also removed from the total selling price because gain on these items is reported in full in the year of sale. H and r block 2012 tax return The selling price equals the contract price for the installment sale ($108,500). H and r block 2012 tax return The assets included in the installment sale, their selling price, and their installment sale bases are shown in the following chart. H and r block 2012 tax return   Selling  Price Install- ment  Sale  Basis Gross  Profit Land $ 42,000 $17,100 $24,900 Building 48,000 38,400 9,600 Goodwill 18,500 925 17,575 Total $108,500 $56,425 $52,075         The gross profit percentage (gross profit ÷ contract price) for the installment sale is 48% ($52,075 ÷ $108,500). H and r block 2012 tax return The gross profit percentage for each asset is figured as follows: Percentage Land— $24,900 ÷ $108,500 22. H and r block 2012 tax return 95 Building— $9,600 ÷ $108,500 8. H and r block 2012 tax return 85 Goodwill— $17,575 ÷ $108,500 16. H and r block 2012 tax return 20 Total 48. H and r block 2012 tax return 00 The sale includes assets sold on the installment method and assets for which the gain is reported in full in the year of sale, so payments must be allocated between the installment part of the sale and the part reported in the year of sale. H and r block 2012 tax return The selling price for the installment sale is $108,500. H and r block 2012 tax return This is 49. H and r block 2012 tax return 3% of the total selling price of $220,000 ($108,500 ÷ $220,000). H and r block 2012 tax return The selling price of assets not reported on the installment method is $111,500. H and r block 2012 tax return This is 50. H and r block 2012 tax return 7% ($111,500 ÷ $220,000) of the total selling price. H and r block 2012 tax return Multiply principal payments by 49. H and r block 2012 tax return 3% to determine the part of the payment for the installment sale. H and r block 2012 tax return The balance, 50. H and r block 2012 tax return 7%, is for the part reported in the year of the sale. H and r block 2012 tax return The gain on the sale of the inventory, machines, and truck is reported in full in the year of sale. H and r block 2012 tax return When you receive principal payments in later years, no part of the payment for the sale of these assets is included in gross income. H and r block 2012 tax return Only the part for the installment sale (49. H and r block 2012 tax return 3%) is used in the installment sale computation. H and r block 2012 tax return The only payment received in 2013 is the down payment of $100,000. H and r block 2012 tax return The part of the payment for the installment sale is $49,300 ($100,000 × 49. H and r block 2012 tax return 3%). H and r block 2012 tax return This amount is used in the installment sale computation. H and r block 2012 tax return Installment income for 2013. H and r block 2012 tax return   Your installment income for each asset is the gross profit percentage for that asset times $49,300, the installment income received in 2013. H and r block 2012 tax return Income Land—22. H and r block 2012 tax return 95% of $49,300 $11,314 Building—8. H and r block 2012 tax return 85% of $49,300 4,363 Goodwill—16. H and r block 2012 tax return 2% of $49,300 7,987 Total installment income for 2013 $23,664 Installment income after 2013. H and r block 2012 tax return   You figure installment income for years after 2013 by applying the same gross profit percentages to 49. H and r block 2012 tax return 3% of the total payments you receive on the buyer's note during the year. H and r block 2012 tax return Unstated Interest and Original Issue Discount (OID) An installment sale contract may provide that each deferred payment on the sale will include interest or that there will be an interest payment in addition to the principal payment. H and r block 2012 tax return Interest provided in the contract is called stated interest. H and r block 2012 tax return If an installment sale contract does not provide for adequate stated interest, part of the stated principal amount of the contract may be recharacterized as interest. H and r block 2012 tax return If section 483 applies to the contract, this interest is called unstated interest. H and r block 2012 tax return If section 1274 applies to the contract, this interest is called original issue discount (OID). H and r block 2012 tax return An installment sale contract does not provide for adequate stated interest if the stated interest rate is lower than the test rate (defined later). H and r block 2012 tax return Treatment of unstated interest and OID. H and r block 2012 tax return   Generally, if a buyer gives a debt in consideration for personal use property, the unstated interest rules do not apply. H and r block 2012 tax return As a result, the buyer cannot deduct the unstated interest. H and r block 2012 tax return The seller must report the unstated interest as income. H and r block 2012 tax return   Personal-use property is any property in which substantially all of its use by the buyer is not in connection with a trade or business or an investment activity. H and r block 2012 tax return   If the debt is subject to the section 483 rules and is also subject to the below-market loan rules, such as a gift loan, compensation-related loan, or corporation-shareholder loan, then both parties are subject to the below-market loan rules rather than the unstated interest rules. H and r block 2012 tax return Rules for the seller. H and r block 2012 tax return   If either section 1274 or section 483 applies to the installment sale contract, you must treat part of the installment sale price as interest, even though interest is not called for in the sales agreement. H and r block 2012 tax return If either section applies, you must reduce the stated selling price of the property and increase your interest income by this unstated interest. H and r block 2012 tax return   Include the unstated interest in income based on your regular method of accounting. H and r block 2012 tax return Include OID in income over the term of the contract. H and r block 2012 tax return   The OID includible in income each year is based on the constant yield method described in section 1272. H and r block 2012 tax return (In some cases, the OID on an installment sale contract also may include all or part of the stated interest, especially if the stated interest is not paid at least annually. H and r block 2012 tax return )   If you do not use the installment method to report the sale, report the entire gain under your method of accounting in the year of sale. H and r block 2012 tax return Reduce the selling price by any stated principal treated as interest to determine the gain. H and r block 2012 tax return   Report unstated interest or OID on your tax return, in addition to stated interest. H and r block 2012 tax return Rules for the buyer. H and r block 2012 tax return   Any part of the stated selling price of an installment sale contract treated by the buyer as interest reduces the buyer's basis in the property and increases the buyer's interest expense. H and r block 2012 tax return These rules do not apply to personal-use property (for example, property not used in a trade or business). H and r block 2012 tax return Adequate stated interest. H and r block 2012 tax return   An installment sale contract generally provides for adequate stated interest if the contract's stated principal amount is at least equal to the sum of the present values of all principal and interest payments called for under the contract. H and r block 2012 tax return The present value of a payment is determined based on the test rate of interest, defined next. H and r block 2012 tax return (If section 483 applies to the contract, payments due within six months after the sale are taken into account at face value. H and r block 2012 tax return ) In general, an installment sale contract provides for adequate stated interest if the stated interest rate (based on an appropriate compounding period) is at least equal to the test rate of interest. H and r block 2012 tax return Test rate of interest. H and r block 2012 tax return   The test rate of interest for a contract is the 3-month rate. H and r block 2012 tax return The 3-month rate is the lower of the following applicable federal rates (AFRs). H and r block 2012 tax return The lowest AFR (based on the appropriate compounding period) in effect during the 3-month period ending with the first month in which there is a binding written contract that substantially provides the terms under which the sale or exchange is ultimately completed. H and r block 2012 tax return The lowest AFR (based on the appropriate compounding period) in effect during the 3-month period ending with the month in which the sale or exchange occurs. H and r block 2012 tax return Applicable federal rate (AFR). H and r block 2012 tax return   The AFR depends on the month the binding
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Page Last Reviewed or Updated: 19-Feb-2014

The H And R Block 2012 Tax Return

H and r block 2012 tax return Publication 515 - Introductory Material Table of Contents Future Developments What's New Reminders IntroductionOrdering forms and publications. H and r block 2012 tax return Tax questions. H and r block 2012 tax return Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 515, such as legislation enacted after it was published, go to www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/pub515. H and r block 2012 tax return What's New Deposit interest paid to certain nonresident alien individuals. H and r block 2012 tax return  New rules apply to reporting of deposit interest paid to certain nonresident alien individuals on or after January 1, 2013. H and r block 2012 tax return Deposit interest of $10 or more paid to certain nonresident alien individuals must be reported on Form 1042–S. H and r block 2012 tax return See Deposit interest paid to certain nonresident alien individuals in 2013. H and r block 2012 tax return Portfolio interest. H and r block 2012 tax return . H and r block 2012 tax return  The rules determining whether interest is considered portfolio interest changed for obligations issued after March 18, 2012. H and r block 2012 tax return Generally, interest paid on nonregistered (bearer) bonds will not be treated as portfolio interest. H and r block 2012 tax return See Portfolio interest. H and r block 2012 tax return U. H and r block 2012 tax return S. H and r block 2012 tax return real property interest. H and r block 2012 tax return  Generally, the treatment of a regulated investment company (RIC) as a qualified investment entity (QIE) was scheduled to expire at the end of 2011. H and r block 2012 tax return The provision has been extended through 2013. H and r block 2012 tax return The special rules that apply to distributions from a QIE attributable to the gain from the sale or exchange of a U. H and r block 2012 tax return S. H and r block 2012 tax return real property interest will continue to apply to any distribution from a RIC. H and r block 2012 tax return See Qualified investment entities under U. H and r block 2012 tax return S. H and r block 2012 tax return Real Property Interest. H and r block 2012 tax return Interest-related dividends and short-term capital gain dividends received from mutual funds. H and r block 2012 tax return  The exemption from withholding on certain interest-related dividends and short-term capital gain dividends paid by a mutual fund or other regulated investment company was scheduled to expire at the end of 2011. H and r block 2012 tax return These provisions have been extended through 2013. H and r block 2012 tax return Partnership withholding rate on effectively connected income. H and r block 2012 tax return  For 2013, the rate for withholding on noncorporate partners has increased to 39. H and r block 2012 tax return 6%. H and r block 2012 tax return The rate for corporate partners remains 35%. H and r block 2012 tax return Reminders Exemption from requirement to withhold for certain payments to qualified securities lenders. H and r block 2012 tax return  If you made U. H and r block 2012 tax return S. H and r block 2012 tax return -source substitute dividend payments to qualified securities lenders, and these payments are part of a chain of substitute dividend payments, you may be exempt from withholding tax on the payments. H and r block 2012 tax return See Amounts paid to qualified securities lenders . H and r block 2012 tax return Electronic deposits. H and r block 2012 tax return  You must make all deposits of taxes electronically. H and r block 2012 tax return Substitute forms. H and r block 2012 tax return  Any substitute forms you use must comply with the requirements in Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns. H and r block 2012 tax return If they do not, the forms may be rejected as incorrect and the IRS may impose penalties. H and r block 2012 tax return See Penalties. H and r block 2012 tax return Filing electronically. H and r block 2012 tax return  If you file Form 1042-S electronically, you will use the Filing Information Returns Electronically (FIRE) system. H and r block 2012 tax return You get to the system through the Internet at fire. H and r block 2012 tax return irs. H and r block 2012 tax return gov. H and r block 2012 tax return For files submitted on the FIRE system, it is the responsibility of the filer to verify the results of the transmission within 5 business days. H and r block 2012 tax return The IRS will not mail error reports for files that are bad. H and r block 2012 tax return Qualified intermediaries. H and r block 2012 tax return  A branch of a financial institution may not act as a qualified intermediary in a country that does not have approved know-your-customer rules. H and r block 2012 tax return See Qualified intermediary under Foreign Intermediaries. H and r block 2012 tax return Requests for extensions on Form 8809 must be filed electronically. H and r block 2012 tax return  Requests on Form 8809 for an extension of time to file Form 1042–S must be made electronically if the request is for more than one payer. H and r block 2012 tax return See Extension to file Form 1042-S with the IRS. H and r block 2012 tax return Photographs of missing children. H and r block 2012 tax return  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. H and r block 2012 tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. H and r block 2012 tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. H and r block 2012 tax return Introduction This publication is for withholding agents who pay income to foreign persons, including nonresident aliens, foreign corporations, foreign partnerships, foreign trusts, foreign estates, foreign governments, and international organizations. H and r block 2012 tax return Specifically, it describes the persons responsible for withholding (withholding agents), the types of income subject to withholding, and the information return and tax return filing obligations of withholding agents. H and r block 2012 tax return In addition to discussing the rules that apply generally to payments of U. H and r block 2012 tax return S. H and r block 2012 tax return source income to foreign persons, it also contains sections on the withholding that applies to the disposition of U. H and r block 2012 tax return S. H and r block 2012 tax return real property interests and the withholding by partnerships on income effectively connected with the active conduct of a U. H and r block 2012 tax return S. H and r block 2012 tax return trade or business. H and r block 2012 tax return Beginning in 2014, additional withholding rules become effective under Chapter 4 of the Internal Revenue Code as added by the Foreign Account Tax Compliance Act (FATCA). H and r block 2012 tax return U. H and r block 2012 tax return S. H and r block 2012 tax return withholding agents will be required to withhold on certain types of payments made to foreign financial institutions that do not enter into an agreement with the IRS. H and r block 2012 tax return For information on these provisions, go to www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/fatca. H and r block 2012 tax return Comments and suggestions. H and r block 2012 tax return   We welcome your comments about this publication and your suggestions for future editions. H and r block 2012 tax return   You can write to us at the following address: Internal Revenue Service Business Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. H and r block 2012 tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. H and r block 2012 tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. H and r block 2012 tax return   You can email us at taxforms@irs. H and r block 2012 tax return gov. H and r block 2012 tax return Please put “Publications Comment” on the subject line. H and r block 2012 tax return You can also send us comments from www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/formspubs/. H and r block 2012 tax return Select “Comment on Tax Forms and Publications” under “Information About. H and r block 2012 tax return ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. H and r block 2012 tax return Ordering forms and publications. H and r block 2012 tax return   Visit www. H and r block 2012 tax return irs. H and r block 2012 tax return gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. H and r block 2012 tax return Internal Revenue Service 1201 N. H and r block 2012 tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. H and r block 2012 tax return   If you have a tax question, check the information available on IRS. H and r block 2012 tax return gov or call 1-800-829-1040. H and r block 2012 tax return We cannot answer tax questions sent to either of the above addresses. H and r block 2012 tax return Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 51 (Circular A), Agricultural Employer's Tax Guide 519 U. H and r block 2012 tax return S. H and r block 2012 tax return Tax Guide for Aliens 901 U. H and r block 2012 tax return S. H and r block 2012 tax return Tax Treaties Form (and Instructions) SS-4 Application for Employer Identification Number W-2 Wage and Tax Statement W-4 Employee's Withholding Allowance Certificate W-4P Withholding Certificate for Pension or Annuity Payments W-7 Application for IRS Individual Taxpayer Identification Number W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding W-8ECI Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States W-8EXP Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding W-8IMY Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. H and r block 2012 tax return S. H and r block 2012 tax return Branches for United States Tax Withholding 941 Employer's QUARTERLY Federal Tax Return 1042 Annual Withholding Tax Return for U. H and r block 2012 tax return S. H and r block 2012 tax return Source Income of Foreign Persons 1042-S Foreign Person's U. H and r block 2012 tax return S. H and r block 2012 tax return Source Income Subject to Withholding 1042-T Annual Summary and Transmittal of Forms 1042-S See How To Get Tax Help at the end of this publication, for information about getting publications and forms. H and r block 2012 tax return Prev  Up  Next   Home   More Online Publications