| Pub. 551, Basis of Assets |
2005 Tax Year |
Publication 551 - Main Contents
Terms you may need to know (see Glossary):
| Business assets |
| Real property |
| Unstated interest |
The basis of property you buy is usually its cost. The cost is the amount you pay in cash, debt obligations, other property,
or services. Your cost
also includes amounts you pay for the following items.
-
Sales tax.
-
Freight.
-
Installation and testing.
-
Excise taxes.
-
Legal and accounting fees (when they must be capitalized).
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Revenue stamps.
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Recording fees.
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Real estate taxes (if assumed for the seller).
You may also have to capitalize certain other costs related to buying or producing property.
Loans with low or no interest.
If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your
stated purchase price, minus the
amount considered to be unstated interest. You generally have unstated interest if your interest rate is less than the applicable
federal rate. See
the discussion of unstated interest in Publication 537.
Purchase of a business.
When you purchase a trade or business, you generally purchase all assets used in the business operations, such as
land, buildings, and machinery.
Allocate the price among the various assets including any section 197 intangibles. See Allocating the Basis, later.
The basis of stocks or bonds you buy is generally the purchase price plus any costs of purchase, such as commissions and recording
or transfer
fees. If you get stocks or bonds other than by purchase, your basis is usually determined by the fair market value (FMV) or
the previous owner's
adjusted the basis of stock.
You must adjust the basis of stocks for certain events that occur after purchase. See Stocks and Bonds in chapter 4 of Publication 550
for more information on the basis of stock.
Identifying stock or bonds sold.
If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of
the particular shares of stock
or bonds. If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares
you sell, the basis of
the securities you sell is the basis of the securities you acquired first. For more information about identifying securities
you sell, see Stocks
and Bonds under Basis of Investment Property in chapter 4 of Publication 550.
Mutual fund shares.
If you sell mutual fund shares acquired at different times and prices, you can choose to use an average basis. For
more information, see
Average Basis in Publication 564.
If you buy real property, certain fees and other expenses become part of your cost basis in the property.
Real estate taxes.
If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat
those taxes as part of your
basis. You cannot deduct them as taxes.
If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in
the year of purchase. Do not
include that amount in the basis of the property. If you did not reimburse the seller, you must reduce your basis by the amount
of those taxes.
Settlement costs.
You can include in the basis of property you buy the settlement fees and closing costs for buying the property. You
cannot include fees and costs
for getting a loan on the property. (A fee for buying property is a cost that must be paid even if you bought the property
for cash.)
The following items are some of the settlement fees or closing costs you can include in the basis of your property.
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Abstract fees (abstract of title fees).
-
Charges for installing utility services.
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Legal fees (including title search and preparation of the sales contract and deed).
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Recording fees.
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Surveys.
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Transfer taxes.
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Owner's title insurance.
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Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for
improvements or
repairs, and sales commissions.
Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance.
The following items are some settlement fees and closing costs you cannot include in the basis of the property.
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Fire insurance premiums.
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Rent for occupancy of the property before closing.
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Charges for utilities or other services related to occupancy of the property before closing.
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Charges connected with getting a loan. The following are examples of these charges.
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Points (discount points, loan origination fees).
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Mortgage insurance premiums.
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Loan assumption fees.
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Cost of a credit report.
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Fees for an appraisal required by a lender.
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Fees for refinancing a mortgage.
If these costs relate to business property, items (1) through (3) are deductible as business expenses. Items (4) and (5) must
be capitalized as
costs of getting a loan and can be deducted over the period of the loan.
Points.
If you pay points to obtain a loan (including a mortgage, second mortgage, line of credit, or a home equity loan),
do not add the points to the
basis of the related property. Generally, you deduct the points over the term of the loan. For more information on how to
deduct points, see
Points in chapter 5 of Publication 535.
Points on home mortgage.
Special rules may apply to points you and the seller pay when you obtain a mortgage to purchase your main home. If
certain requirements are met,
you can deduct the points in full for the year in which they are paid. Reduce the basis of your home by any seller-paid points.
For more information,
see Points in Publication 936, Home Mortgage Interest Deduction.
Assumption of mortgage.
If you buy property and assume (or buy subject to) an existing mortgage on the property, your basis includes the amount
you pay for the property
plus the amount to be paid on the mortgage.
Example.
If you buy a building for $20,000 cash and assume a mortgage of $80,000 on it, your basis is $100,000.
Constructing assets.
If you build property or have assets built for you, your expenses for this construction are part of your basis. Some
of these expenses include the
following items.
In addition, if you own a business and use your employees, material, and equipment to build an asset, your basis would also
include the
following costs.
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Employee wages paid for the construction work.
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Depreciation on equipment you own while it is used in the construction.
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Operating and maintenance costs for equipment used in the construction.
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The cost of business supplies and materials used in the construction.
Do not deduct these expenses. You must capitalize them (include them in the asset's basis). Also, reduce your basis by any
work opportunity
credit, welfare-to-work credit, Indian employment credit, or empowerment zone employment credit allowable on the wages you
pay in (1), above. For
information about these credits, see Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities.
Do not include the value of your own labor, or any other labor you did not pay for, in the basis of any property you
construct.
Terms you may need to know (see Glossary):
| Amortization |
| Capitalization |
| Depletion |
| Depreciation |
| Fair market value |
| Going concern value |
| Goodwill |
| Intangible property |
| Personal property |
| Recapture |
| Section 179 deduction |
| Section 197 intangibles |
| Tangible property |
If you purchase property to use in your business, your basis is usually its actual cost to you. If you construct, create,
or otherwise produce
property, you must capitalize the costs as your basis. In certain circumstances, you may be subject to the uniform capitalization
rules, next.
Uniform Capitalization Rules
The uniform capitalization rules specify the costs you add to basis in certain circumstances.
Activities subject to the rules.
You must use the uniform capitalization rules if you do any of the following in your trade or business or activity
carried on for profit.
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Produce real or tangible personal property for use in the business or activity.
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Produce real or tangible personal property for sale to customers.
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Acquire property for resale.
You produce property if you construct, build, install, manufacture, develop, improve, create, raise, or grow the property.
Treat property produced
for you under a contract as produced by you up to the amount you pay or costs you otherwise incur for the property. Tangible
personal property
includes films, sound recordings, video tapes, books, or similar property.
Under the uniform capitalization rules, you must capitalize all direct costs and an allocable part of most
indirect costs you incur due to your production or resale activities. The term capitalize means to include certain expenses in the basis of
property you produce or in your inventory costs rather than deduct them as a current expense. You recover these costs through
deductions for
depreciation, amortization, or cost of goods sold when you use, sell, or otherwise dispose of the property.
Any cost you cannot use to figure your taxable income for any tax year is not subject to the uniform capitalization
rules.
Example.
If you incur a business meal expense for which your deduction would be limited to 50% of the cost of the meal, that amount
is subject to the
uniform capitalization rules. The nondeductible part of the cost is not subject to the uniform capitalization rules.
More information.
For more information about these rules, see the regulations under section 263A of the Internal Revenue Code and Publication
538, Accounting
Periods and Methods.
Exceptions.
The following are not subject to the uniform capitalization rules.
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Property you produce that you do not use in your trade, business, or activity conducted for profit.
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Qualified creative expenses you pay or incur as a free-lance (self-employed) writer, photographer, or artist that are otherwise
deductible
on your tax return.
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Property you produce under a long-term contract, except for certain home construction contracts.
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Research and experimental expenses allowable as a deduction under section 174 of the Internal Revenue Code.
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Costs for personal property acquired for resale if your (or your predecessor's) average annual gross receipts for the 3 previous
tax years
do not exceed $10 million.
For other exceptions to the uniform capitalization rules, see section 1.263A-1(b) of the regulations.
For information on the special rules that apply to costs incurred in the business of farming, see chapter 7 of Publication
225, Farmer's Tax
Guide.
Intangible assets include goodwill, patents, copyrights, trademarks, trade names, and franchises. The basis of an intangible
asset is usually the
cost to buy or create it. If you acquire multiple assets, for example a going business for a lump sum, see Allocating the Basis, later, to
figure the basis of the individual assets. The basis of certain intangibles can be amortized. See chapter 9 of Publication
535 for information on the
amortization of these costs.
Patents.
The basis of a patent you get for an invention is the cost of development, such as research and experimental expenditures,
drawings, working
models, and attorneys' and governmental fees. If you deduct the research and experimental expenditures as current business
expenses, you cannot
include them in the basis of the patent. The value of the inventor's time spent on an invention is not part of the basis.
Copyrights.
If you are an author, the basis of a copyright will usually be the cost of getting the copyright plus copyright fees,
attorneys' fees, clerical
assistance, and the cost of plates that remain in your possession. Do not include the value of your time as the author, or
any other person's time you
did not pay for.
Franchises, trademarks, and trade names.
If you buy a franchise, trademark, or trade name, the basis is its cost, unless you can deduct your payments as a
business expense.
If you buy multiple assets for a lump sum, allocate the amount you pay among the assets you receive. You must make this allocation
to figure your
basis for depreciation and gain or loss on a later disposition of any of these assets. See Trade or Business Acquired, later.
If you buy multiple assets for a lump sum, you and the seller may agree to a specific allocation of the purchase price among
the assets in the
sales contract. If this allocation is based on the value of each asset and you and the seller have adverse tax interests,
the allocation generally
will be accepted. However, see Trade or Business Acquired, next.
Trade or Business Acquired
If you acquire a trade or business, allocate the consideration paid to the various assets acquired. Generally, reduce the
consideration paid by any
cash and general deposit accounts (including checking and savings accounts) received. Allocate the remaining consideration
to the other business
assets received in proportion to (but not more than) their fair market value in the following order.
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Certificates of deposit, U.S. Government securities, foreign currency, and actively traded personal property, including stock
and
securities.
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Accounts receivable, other debt instruments, and assets you mark to market at least annually for federal income tax purposes.
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Property of a kind that would properly be included in inventory if on hand at the end of the tax year or property held primarily
for sale to
customers in the ordinary course of business.
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All other assets except section 197 intangibles, goodwill, and going concern value.
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Section 197 intangibles except goodwill and going concern value.
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Goodwill and going concern value (whether or not they qualify as section 197 intangibles).
Agreement.
The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market
value (FMV) of any of the
assets. This agreement is binding on both parties unless the IRS determines the amounts are not appropriate.
Reporting requirement.
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. Use Form 8594 to provide this information. The buyer and seller should each attach Form 8594 to
their federal income tax return for the year in which the sale occurred.
More information.
See Sale of a Business in chapter 2 of Publication 544 for more information.
If you buy buildings and the land on which they stand for a lump sum, allocate the basis of the property among the land and
the buildings so you
can figure the depreciation allowable on the buildings.
Figure the basis of each asset by multiplying the lump sum by a fraction. The numerator is the FMV of that asset and the denominator
is the FMV of
the whole property at the time of purchase. If you are not certain of the FMV of the land and buildings, you can allocate
the basis based on their
assessed values for real estate tax purposes.
Demolition of building.
Add demolition costs and other losses incurred for the demolition of any building to the basis of the land on which
the demolished building was
located. Do not claim the costs as a current deduction.
Modification of building.
A modification of a building will not be treated as a demolition if the following conditions are satisfied.
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75 percent or more of the existing external walls of the building are retained in place as internal or external walls.
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75 percent or more of the existing internal structural framework of the building is retained in place.
If the building is a certified historic structure, the modification must also be part of a certified rehabilitation.
If these conditions are met, add the costs of the modifications to the basis of the building.
Subdivided lots.
If you buy a tract of land and subdivide it, you must determine the basis of each lot. This is necessary because you
must figure the gain or loss
on the sale of each individual lot. As a result, you do not recover your entire cost in the tract until you have sold all
of the lots.
To determine the basis of an individual lot, multiply the total cost of the tract by a fraction. The numerator is
the FMV of the lot and the
denominator is the FMV of the entire tract.
Future improvement costs.
If you are a developer and sell subdivided lots before the development work is completed, you can (with IRS consent)
include in the basis of the
properties sold an allocation of the estimated future cost for common improvements. See Revenue Procedure 92–29 for more information,
including
an explanation of the procedures for getting consent from the IRS.
Use of erroneous cost basis.
If you made a mistake in figuring the cost basis of subdivided lots sold in previous years, you cannot correct the
mistake for years for which the
statute of limitations (generally 3 tax years) has expired. Figure the basis of any remaining lots by allocating the correct
original cost basis of
the entire tract among the original lots.
Example.
You bought a tract of land to which you assigned a cost of $15,000. You subdivided the land into 15 building lots of equal
size and equitably
divided your basis so that each lot had a basis of $1,000. You treated the sale of each lot as a separate transaction and
figured gain or loss
separately on each sale.
Several years later you determine that your original basis in the tract was $22,500 and not $15,000. You sold eight lots using
$8,000 of basis in
years for which the statute of limitations has expired. You now can take $1,500 of basis into account for figuring gain or
loss only on the sale of
each of the remaining seven lots ($22,500 basis divided among all 15 lots). You cannot refigure the basis of the eight lots
sold in tax years barred
by the statute of limitations.
Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion,
or amortization,
you must usually make certain adjustments to the basis of the property. The result of these adjustments to the basis is the
adjusted basis.
Increase the basis of any property by all items properly added to a capital account. These include the cost of any improvements
having a useful
life of more than 1 year.
Rehabilitation expenses also increase basis. However, you must subtract any rehabilitation credit allowed for these expenses
before you add them to
your basis. If you have to recapture any of the credit, increase your basis by the recaptured amount.
If you make additions or improvements to business property, keep separate accounts for them. Also, you must depreciate the
basis of each according
to the depreciation rules that would apply to the underlying property if you had placed it in service at the same time you
placed the addition or
improvement in service. For more information, see Publication 946.
The following items increase the basis of property.
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The cost of extending utility service lines to the property.
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Impact fees.
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Legal fees, such as the cost of defending and perfecting title.
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Legal fees for obtaining a decrease in an assessment levied against property to pay for local improvements.
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Zoning costs.
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The capitalized value of a redeemable ground rent.
Assessments for
Local Improvements
Increase the basis of property by assessments for items such as paving roads and building ditches that increase the value
of the property assessed.
Do not deduct them as taxes. However, you can deduct as taxes charges for maintenance, repairs, or interest charges related
to the improvements.
Example.
Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected landowners
for the cost of
the conversion. Add the assessment to your property's basis. In this example, the assessment is a depreciable asset.
Deducting vs. Capitalizing Costs
Do not add to your basis costs you can deduct as current expenses. For example, amounts paid for incidental repairs or maintenance
that are
deductible as business expenses cannot be added to basis. However, you can choose either to deduct or to capitalize certain
other costs. If you
capitalize these costs, include them in your basis. If you deduct them, do not include them in your basis. (See Uniform Capitalization Rules,
earlier.)
The costs you can choose to deduct or to capitalize include the following.
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Carrying charges, such as interest and taxes, that you pay to own property, except carrying charges that must be capitalized
under the
uniform capitalization rules.
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Research and experimentation costs.
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Intangible drilling and development costs for oil, gas, and geothermal wells.
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Exploration costs for new mineral deposits.
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Mining development costs for a new mineral deposit.
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Costs of establishing, maintaining, or increasing the circulation of a newspaper or other periodical.
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Cost of removing architectural and transportation barriers to people with disabilities and the elderly. If you claim the disabled
access
credit, you must reduce the amount you deduct or capitalize by the amount of the credit.
For more information about deducting or capitalizing costs, see chapter 8 in Publication 535.
Table 1. Examples of Increases and Decreases to Basis
| Increases to Basis |
Decreases to Basis |
Capital improvements:
Putting an addition on your home
Replacing an entire roof
Paving your driveway
Installing central air conditioning
Rewiring your home
|
Exclusion from income of subsidies for energy conservation measures
Casualty or theft loss deductions and insurance reimbursements
Credit for qualified electric vehicles
|
Assessments for local improvements:
Water connections
Sidewalks
Roads
|
Section 179 deduction
Deduction for clean-fuel vehicles and clean-fuel vehicle refueling property
|
Casualty losses:
Restoring damaged property
|
Depreciation
Nontaxable corporate distributions
|
Legal fees:
Cost of defending and perfecting a title
|
|
| Zoning costs |
|
Table 1. Examples of Increases and Decreases to Basis
| Increases to Basis |
Decreases to Basis |
Capital improvements:
Putting an addition on your home
Replacing an entire roof
Paving your driveway
Installing central air conditioning
Rewiring your home
|
Exclusion from income of subsidies for energy conservation measures
Casualty or theft loss deductions and insurance reimbursements
Credit for qualified electric vehicles
|
Assessments for local improvements:
Water connections
Sidewalks
Roads
|
Section 179 deduction
Deduction for clean-fuel vehicles and clean-fuel vehicle refueling property
|
Casualty losses:
Restoring damaged property
|
Depreciation
Nontaxable corporate distributions
|
Legal fees:
Cost of defending and perfecting a title
|
|
| Zoning costs |
|
The following items reduce the basis of property.
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Section 179 deduction.
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Deduction for clean-fuel vehicles and refueling property.
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Nontaxable corporate distributions.
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Deductions previously allowed (or allowable) for amortization, depreciation, and depletion.
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Exclusion of subsidies for energy conservation measures.
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Credit for qualified electric vehicles.
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Postponed gain from sale of home.
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Investment credit (part or all) taken.
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Casualty and theft losses and insurance reimbursements.
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Certain canceled debt excluded from income.
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Rebates from a manufacturer or seller.
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Easements.
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Gas-guzzler tax.
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Tax credit or refund for buying a diesel-powered highway vehicle.
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Adoption tax benefits.
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Credit for employer-provided child care.
Some of these items are discussed next.
If you have a casualty or theft loss, decrease the basis in your property by any insurance or other reimbursement and by any
deductible loss not
covered by insurance.
You must increase your basis in the property by the amount you spend on repairs that substantially prolong the life of the
property, increase its
value, or adapt it to a different use. To make this determination, compare the repaired property to the property before the
casualty. For more
information on casualty and theft losses, see Publication 547, Casualties, Disasters, and Thefts.
The amount you receive for granting an easement is generally considered to be a sale of an interest in real property. It reduces
the basis of the
affected part of the property. If the amount received is more than the basis of the part of the property affected by the easement,
reduce your basis
in that part to zero and treat the excess as a recognized gain.
Credit for Qualified Electric Vehicles
If you claim the credit for a qualified electric vehicle, you must reduce your basis in that vehicle by the maximum credit
allowable even if the
credit allowed is less than that maximum amount. For information on this credit, see chapter 12 in Publication 535.
Decrease the basis in your car by the gas-guzzler (fuel economy) tax if you begin using the car within 1 year of the date
of its first sale for
ultimate use. This rule also applies to someone who later buys the car and begins using it not more than 1 year after the
original sale for ultimate
use. If the car is imported, the one-year period begins on the date of entry or withdrawal of the car from the warehouse if
that date is later
than the date of the first sale for ultimate use.
If you take the section 179 deduction for all or part of the cost of qualifying business property, decrease the basis of the
property by the
deduction. For more information about the section 179 deduction, see Publication 946.
Deduction for Clean-Fuel Vehicles and Refueling Property
If you take the deduction for clean-fuel vehicles or clean-fuel vehicle refueling property, decrease the basis of the property
by the amount of the
deduction. For more information about these deductions, see chapter 12 in Publication 535.
Exclusion of Subsidies for Energy Conservation Measures
You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation
of any energy
conservation measure for a dwelling unit. Reduce the basis of the property for which you received the subsidy by the excluded
amount. For more
information on this subsidy, see Publication 525.
Decrease the basis of property by the depreciation you deducted, or could have deducted, on your tax returns under the method
of depreciation you
chose. If you took less depreciation than you could have under the method chosen, decrease the basis by the amount you could
have taken under that
method. If you did not take a depreciation deduction, reduce the basis by the full amount of the depreciation you could have
taken.
Unless a timely election is made not to deduct the special depreciation allowance for property placed in service after September
10, 2001, decrease
the property's basis by the special depreciation allowance you deducted or could have deducted.
If you deducted more depreciation than you should have, decrease your basis by the amount equal to the depreciation you should
have deducted plus
the part of the excess depreciation you deducted that actually reduced your tax liability for the year.
In decreasing your basis for depreciation, take into account the amount deducted on your tax returns as depreciation and any
depreciation
capitalized under the uniform capitalization rules.
For information on figuring depreciation, see Publication 946.
If you are claiming depreciation on a business vehicle, see Publication 463. If the car is not used more than 50% for business
during the tax year,
you may have to recapture excess depreciation. Include the excess depreciation in your gross income and add it to your basis
in the property. For
information on the computation of excess depreciation, see chapter 4 in Publication 463.
Canceled Debt Excluded
From Income
If a debt you owe is canceled or forgiven, other than as a gift or bequest, you generally must include the canceled amount
in your gross income for
tax purposes. A debt includes any indebtedness for which you are liable or which attaches to property you hold.
You can exclude canceled debt from income in the following situations.
-
Debt canceled in a bankruptcy case or when you are insolvent.
-
Qualified farm debt.
-
Qualified real property business debt (provided you are not a C corporation).
If you exclude from income canceled debt under situation (1) or (2), you may have to reduce the basis of your depreciable
and nondepreciable
property. However, in situation (3), you must reduce the basis of your depreciable property by the excluded amount.
For more information about canceled debt in a bankruptcy case or during insolvency, see Publication 908, Bankruptcy Tax Guide. For more
information about canceled debt that is qualified farm debt, see chapter 4 in Publication 225. For more information about
qualified real property
business debt, see chapter 5 in Publication 334, Tax Guide for Small Business.
Postponed Gain From Sale of Home
If you postponed gain from the sale of your main home before May 7, 1997, you must reduce the basis of your new home by the
postponed gain. For
more information on the rules for the sale of a home, see Publication 523.
If you claim an adoption credit for the cost of improvements you added to the basis of your home, decrease the basis of your
home by the credit
allowed. This also applies to amounts you received under an employer's adoption assistance program and excluded from income.
For more information on
these benefits, see Publication 968, Tax Benefits for Adoption.
Employer-Provided Child Care
If you are an employer, you can claim the employer-provided child care credit on amounts you paid or incurred to acquire,
construct, rehabilitate,
or expand property used as part of your qualified child care facility. You must reduce your basis in that property by the
credit claimed.
In January 1997, you paid $80,000 for real property to be used as a factory. You also paid commissions of $2,000 and title
search and legal fees of
$600. You allocated the total cost of $82,600 between the land and the building—$10,325 for the land and $72,275 for the building.
Immediately
you spent $20,000 in remodeling the building before you placed it in service. You were allowed depreciation of $14,526 for
the years 1997 through
2001. In 2000 you had a $5,000 casualty loss from a fire that was not covered by insurance on the building. You claimed a
deduction for this loss. You
spent $5,500 to repair the fire damages and extend the useful life of the building. The adjusted basis of the building on
January 1, 2002, is figured
as follows:
The basis of the land, $10,325, remains unchanged. It is not affected by any of the above adjustments.
There are many times when you cannot use cost as basis. In these cases, the fair market value or the adjusted basis of property
may be used.
Adjusted basis is discussed earlier.
Fair market value (FMV).
FMV is the price at which property would change hands between a buyer and a seller, neither having to buy or sell,
and both having reasonable
knowledge of all necessary facts. Sales of similar property on or about the same date may be helpful in figuring the property's
FMV.
Property Received
for Services
If you receive property for services, include the property's FMV in income. The amount you include in income becomes your
basis. If the services
were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to
the contrary.
A bargain purchase is a purchase of an item for less than its FMV. If, as compensation for services, you purchase goods or
other property at less
than FMV, include the difference between the purchase price and the property's FMV in your income. Your basis in the property
is its FMV (your
purchase price plus the amount you include in income).
If the difference between your purchase price and the FMV represents a qualified employee discount, do not include the difference
in income.
However, your basis in the property is still its FMV. See Employee Discounts in Publication 15–B, Employer's Tax Guide to Fringe
Benefits.
If you receive property for your services and the property is subject to certain restrictions, your basis in the property
is its FMV when it
becomes substantially vested unless you make the election discussed later. Property becomes substantially vested when your
rights in the property or
the rights of any person to whom you transfer the property are not subject to a substantial risk of forfeiture.
There is substantial risk of forfeiture when the rights to full enjoyment of the property depend on the future performance
of substantial services
by any person.
When the property becomes substantially vested, include the FMV, less any amount you paid for the property, in income.
Example.
Your employer gives you stock for services performed under the condition that you will have to return the stock unless you
complete 5 years of
service. The stock is under a substantial risk of forfeiture and is not substantially vested when you receive it. You do not
report any income until
you have completed the 5 years of service that satisfy the condition.
Fair market value.
Figure the FMV of property you received without considering any restriction except one that by its terms will never
end.
Example.
You received stock from your employer for services you performed. If you want to sell the stock while you are still employed,
you must sell the
stock to your employer at book value. At your retirement or death, you or your estate must offer to sell the stock to your
employer at its book value.
This is a restriction that by its terms will never end and you must consider it when you figure the FMV.
Election.
You can choose to include in your gross income the FMV of the property at the time of transfer, less any amount you
paid for it. If you make this
choice, the substantially vested rules do not apply. Your basis is the amount you paid plus the amount you included in income.
See the discussion of Restricted Property in Publication 525 for more information.
A taxable exchange is one in which the gain is taxable or the loss is deductible. A taxable gain or deductible loss is also
known as a recognized
gain or loss. If you receive property in exchange for other property in a taxable exchange, the basis of property you receive
is usually its FMV at
the time of the exchange. A taxable exchange occurs when you receive cash or property not similar or related in use to the
property exchanged.
Example.
You trade a tract of farm land with an adjusted basis of $3,000 for a tractor that has an FMV of $6,000. You must report a
taxable gain of $3,000
for the land. The tractor has a basis of $6,000.
If you receive property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, you can figure
the basis of the
replacement property you receive using the basis of the converted property.
Similar or related property.
If you receive replacement property similar or related in service or use to the converted property, the replacement
property's basis is the old
property's basis on the date of the conversion. However, make the following adjustments.
-
Decrease the basis by the following.
-
Any loss you recognize on the conversion.
-
Any money you receive that you do not spend on similar property.
-
Increase the basis by the following.
-
Any gain you recognize on the conversion.
-
Any cost of acquiring the replacement property.
Money or property not similar or related.
If you receive money or property not similar or related in service or use to the converted property, and you buy replacement
property similar or
related in service or use to the converted property, the basis of the new property is its cost decreased by the gain not recognized
on the conversion.
Example.
The state condemned your property. The property had an adjusted basis of $26,000 and the state paid you $31,000 for it. You
realized a gain of
$5,000 ($31,000 - $26,000). You bought replacement property similar in use to the converted property for $29,000. You recognize
a gain of $2,000
($31,000 - $29,000), the unspent part of the payment from the state. Your gain not recognized is $3,000, the difference between
the $5,000
realized gain and the $2,000 recognized gain. The basis of the new property is figured as follows:
Allocating the basis.
If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective
costs.
Example.
The state in the previous example condemned your unimproved real property and the replacement property you bought was improved
real property with
both land and buildings. Allocate the replacement property's $26,000 basis between land and buildings based on their respective
costs.
More information.
For more information about condemnations, see Involuntary Conversions in Publication 544. For more information about casualty and theft
losses, see Publication 547.
Terms you may need to know (see Glossary):
| Intangible property |
| Like-kind property |
| Personal property |
| Real property |
| Tangible property |
A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. If you receive
property in a nontaxable
exchange, its basis is usually the same as the basis of the property you transferred. A nontaxable gain or loss is also known
as an unrecognized gain
or loss.
The exchange of property for the same kind of property is the most common type of nontaxable exchange.
To qualify as a like-kind exchange, you must hold for business or investment purposes both the property you transfer and the
property you receive.
There must also be an exchange of like-kind property. For more information, see Like-Kind Exchanges in Publication 544.
The basis of the property you receive is the same as the basis of the property you gave up.
Example.
You exchange real estate (adjusted basis $50,000, FMV $80,000) held for investment for other real estate (FMV $80,000) held
for investment. Your
basis in the new property is the same as the basis of the old ($50,000).
Exchange expenses.
Exchange expenses are generally the closing costs you pay. They include such items as brokerage commissions, attorney
fees, deed preparation fees,
etc. Add them to the basis of the like-kind property received.
Property plus cash.
If you trade property in a like-kind exchange and also pay money, the basis of the property received is the basis
of the property you gave up
increased by the money you paid.
Example.
You trade in a truck (adjusted basis $3,000) for another truck (FMV $7,500) and pay $4,000. Your basis in the new truck is
$7,000 (the $3,000 basis
of the old truck plus the $4,000 paid).
Special rules for related persons.
If a like-kind exchange takes place directly or indirectly between related persons and either party disposes of the
property within 2 years after
the exchange, the exchange no longer qualifies for like-kind exchange treatment. Each person must report any gain or loss
not recognized on the
original exchange. Each person reports it on the tax return filed for the year in which the later disposition occurs. If this
rule applies, the basis
of the property received in the original exchange will be its fair market value.
These rules generally do not apply to the following kinds of property dispositions.
-
Dispositions due to the death of either related person.
-
Involuntary conversions.
-
Dispositions in which neither the original exchange nor the subsequent disposition had as a main purpose the avoidance of
federal income
tax.
Related persons.
Generally, related persons are ancestors, lineal descendants, brothers and sisters (whole or half), and a spouse.
For other related persons (for example, two corporations, an individual and a corporation, a grantor and fiduciary,
etc.), see Nondeductible
Loss in chapter 2 of Publication 544.
Exchange of business property.
Exchanging the assets of one business for the assets of another business is a multiple property exchange. For information
on figuring basis, see
Multiple Property Exchanges in chapter 1 of Publication 544.
Partially Nontaxable Exchange
A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like property.
The basis of the
property you receive is the same as the basis of the property you gave up, with the following adjustments.
-
Decrease the basis by the following amounts.
-
Any money you receive.
-
Any loss you recognize on the exchange.
-
Increase the basis by the following amounts.
-
Any additional costs you incur.
-
Any gain you recognize on the exchange.
If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange.
Example.
You traded a truck (adjusted basis $6,000) for a new truck (FMV $5,200) and $1,000 cash. You realized a gain of $200 ($6,200
- $6,000). This
is the FMV of the truck received plus the cash minus the adjusted basis of the truck you traded ($5,200 + $1,000 – $6,000).
You include all the
gain in income (recognized gain) because the gain is less than the cash received. Your basis in the new truck is:
Allocation of basis.
Allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. The
rest is the basis of the like
property.
Example.
You had an adjusted basis of $15,000 in real estate you held for investment. You exchanged it for other real estate to be
held for investment with
an FMV of $12,500, a truck with an FMV of $3,000, and $1,000 cash. The truck is unlike property. You realized a gain of $1,500
($16,500 -
$15,000). This is the FMV of the real estate received plus the FMV of the truck received plus the cash minus the adjusted basis of the real
estate you traded ($12,500 + $3,000 + $1,000 – $15,000). You include in income (recognize) all $1,500 of the gain because
it is less than the
FMV of the unlike property plus the cash received. Your basis in the properties you received is figured as follows.
Allocate the total basis of $15,500 first to the unlike property — the truck ($3,000). This is the truck's FMV. The rest ($12,500)
is the
basis of the real estate.
If you sell property and buy similar property in two mutually dependent transactions, you may have to treat the sale and purchase
as a single
nontaxable exchange.
Example.
You are a salesperson and you use one of your cars 100% for business. You have used this car in your sales activities for
2 years and have
depreciated it. Your adjusted basis in the car is $22,600 and its FMV is $23,100. You are interested in a new car, which sells
for $28,000. If you
trade your old car and pay $4,900 for the new one, your basis for depreciation for the new car would be $27,500 ($4,900 plus
the $22,600 basis of your
old car). However, you want a higher basis for depreciating the new car, so you agree to pay the dealer $28,000 for the new
car if he will pay you
$23,100 for your old car. Because the two transactions are dependent on each other, you are treated as having exchanged your
old car for the new one
and paid $4,900 ($28,000 - $23,100). Your basis for depreciating the new car is $27,500, the same as if you traded the old
car.
Partial Business Use of Property
If you have property used partly for business and partly for personal use, and you exchange it in a nontaxable exchange for
property to be used
wholly or partly in your business, the basis of the property you receive is figured as if you had exchanged two properties.
The first is an exchange
of like-kind property. The second is personal-use property on which gain is recognized and loss is not recognized.
First, figure your adjusted basis in the property as if you transferred two separate properties. Figure the adjusted basis
of each part of the
property by taking into account any adjustments to basis. Deduct the depreciation you took or could have taken from the adjusted
basis of the business
part. Then figure the amount realized for your property and allocate it to the business and nonbusiness parts of the property.
The business part of the property is permitted to be exchanged tax free. However, you must recognize any gain from the exchange
of the nonbusiness
part. You are deemed to have received, in exchange for the nonbusiness part, an amount equal to its FMV on the date of the
exchange. The basis of the
property you acquired is the total basis of the property transferred (adjusted to the date of the exchange), increased by
any gain recognized on the
nonbusiness part.
If the nonbusiness part of the property transferred is your main home, you may qualify to exclude from income all or part
of the gain on that part.
For more information, see Publication 523.
Trade of car used partly in business.
If you trade in a car you used partly in your business for another car you will use in your business, your basis for
depreciation of the new car is
not the same as your basis for figuring a gain or loss on its sale.
For information on figuring your basis for depreciation, see Publication 463.
Property Transferred
From a Spouse
The basis of property transferred to you or transferred in trust for your benefit by your spouse (or former spouse if the
transfer is incident to
divorce), is the same as your spouse's adjusted basis. However, adjust your basis for any gain recognized by your spouse or
former spouse on property
transferred in trust. This rule applies only to a transfer of property in trust in which the liabilities assumed, plus the
liabilities to which the
property is subject, are more than the adjusted basis of the property transferred.
If the property transferred to you is a series E, series EE, or series I United States savings bond, the transferor must include
in income the
interest accrued to the date of transfer. Your basis in the bond immediately after the transfer is equal to the transferor's
basis increased by the
interest income includible in the transferor's income. For more information on these bonds, see Publication 550.
At the time of the transfer, the transferor must give you the records necessary to determine the adjusted basis and holding
period of the property
as of the date of transfer.
For more information, see Publication 504, Divorced or Separated Individuals.
Property
Received as a Gift
To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just
before it was given to
you, its FMV at the time it was given to you, and any gift tax paid on it.
FMV Less Than
Donor's Adjusted Basis
If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether
you have a gain or a loss
when you dispose of the property. Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any
required adjustment to
basis while you held the property. Your basis for figuring loss is its FMV when you received the gift plus or minus any required
adjustment to basis
while you held the property (see Adjusted Basis, earlier).
If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and have
a gain, you have
neither gain nor loss on the sale or disposition of the property.
Example.
You received an acre of land as a gift. At the time of the gift, the land had an FMV of $8,000. The donor's adjusted basis
was $10,000. After you
received the land, no events occurred to increase or decrease your basis. If you sell the land for $12,000, you will have
a $2,000 gain because you
must use the donor's adjusted basis ($10,000) at the time of the gift as your basis to figure gain. If you sell the land for
$7,000, you will have a
$1,000 loss because you must use the FMV ($8,000) at the time of the gift as your basis to figure a loss.
If the sales price is between $8,000 and $10,000, you have neither gain nor loss. For instance, if the sales price was $9,000
and you tried to
figure a gain using the donor's adjusted basis ($10,000), you would get a $1,000 loss. If you then tried to figure a loss
using the FMV ($8,000), you
would get a $1,000 gain.
Business property.
If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deduction
is the same as the
donor's adjusted basis plus or minus any required adjustments to basis while you hold the property.
FMV Equal to or More Than
Donor's Adjusted Basis
If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis
at the time you
received the gift. Increase your basis by all or part of any gift tax paid, depending on the date of the gift.
Also, for figuring gain or loss from a sale or other disposition of the property, or for figuring depreciation, depletion,
or amortization
deductions on business property, you must increase or decrease your basis by any required adjustments to basis while you held
the property. See
Adjusted Basis, earlier.
Gift received before 1977.
If you received a gift before 1977, increase your basis in the gift (the donor's adjusted basis) by any gift tax paid
on it. However, do not
increase your basis above the FMV of the gift at the time it was given to you.
Example 1.
You were given a house in 1976 with an FMV of $21,000. The donor's adjusted basis was $20,000. The donor paid a gift tax of
$500. Your basis is
$20,500, the donor's adjusted basis plus the gift tax paid.
Example 2.
If, in Example 1, the gift tax paid had been $1,500, your basis would be $21,000. This is the donor's adjusted basis plus
the gift tax paid,
limited to the FMV of the house at the time you received the gift.
Gift received after 1976.
If you received a gift after 1976, increase your basis in the gift (the donor's adjusted basis) by the part of the
gift tax paid on it that is due
to the net increase in value of the gift. Figure the increase by multiplying the gift tax paid by a fraction. The numerator
of the fraction is the net
increase in value of the gift and the denominator is the amount of the gift.
The net increase in value of the gift is the FMV of the gift less the donor's adjusted basis. The amount of the gift
is its value for gift tax
purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. For information
on the gift tax, see
Publication 950, Introduction to Estate and Gift Taxes.
Example.
In 2002, you received a gift of property from your mother that had an FMV of $50,000. Her adjusted basis was $20,000. The
amount of the gift for
gift tax purposes was $39,000 ($50,000 minus the $11,000 annual exclusion). She paid a gift tax of $9,000. Your basis, $26,930,
is figured as follows:
Your basis in property you inherit from a decedent is generally one of the following.
-
The FMV of the property at the date of the individual's death.
-
The FMV on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation.
For information on
the alternate valuation date, see the instructions for Form 706.
-
The value under the special-use valuation method for real property used in farming or a closely held business if chosen for
estate tax
purposes. This method is discussed later.
-
The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified
conservation
easement. For information on a qualified conservation easement, see the instructions to Form 706.
If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the
date of death for
state inheritance or transmission taxes.
Appreciated property.
The above rule does not apply to appreciated property you receive from a decedent if you or your spouse originally
gave the property to the
decedent within 1 year before the decedent's death. Your basis in this property is the same as the decedent's adjusted basis
in the property
immediately before his or her death, rather than its FMV. Appreciated property is any property whose FMV on the day it was
given to the decedent is
more than its adjusted basis.
In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin),
husband and wife are
each usually considered to own half the community property. When either spouse dies, the total value of the community property,
even the part
belonging to the surviving spouse, generally becomes the basis of the entire property. For this rule to apply, at least half
the value of the
community property interest must be includable in the decedent's gross estate, whether or not the estate must file a return.
For example, you and your spouse owned community property that had a basis of $80,000. When your spouse died, half the FMV
of the community
interest was includible in your spouse's estate. The FMV of the community interest was $100,000. The basis of your half of
the property after the
death of your spouse is $50,000 (half of the $100,000 FMV). The basis of the other half to your spouse's heirs is also $50,000.
For more information on community property, see Publication 555, Community Property.
Property Held by Surviving Tenant
The following example explains the rule for the basis of property held by a surviving tenant in joint tenancy or tenancy by
the entirety.
Example.
John and Jim owned, as joint tenants with right of survivorship, business property they purchased for $30,000. John furnished
two-thirds of the
purchase price and Jim furnished one-third. Depreciation deductions allowed before John's death were $12,000. Under local
law, each had a half
interest in the income from the property. At the date of John's death, the property had an FMV of $60,000, two-thirds of which
is includable in John's
estate. Jim figures his basis in the property at the date of John's death as follows:
If Jim had not contributed any part of the purchase price, his basis at the date of John's death would be $54,000. This is
figured by
subtracting from the $60,000 FMV, the $6,000 depreciation allocated to Jim's half interest before the date of death.
If under local law Jim had no interest in the income from the property and he contributed no part of the purchase price, his
basis at John's death
would be $60,000, the FMV of the property.
Include one-half of the value of a qualified joint interest in the decedent's gross estate. It does not matter how much each
spouse contributed to
the purchase price. Also, it does not matter which spouse dies first.
A qualified joint interest is any interest in property held by husband and wife as either of the following.
Basis.
As the surviving spouse, your basis in property you owned with your spouse as a qualified joint interest is the cost
of your half of the property
with certain adjustments. Decrease the cost by any deductions allowed to you for depreciation and depletion. Increase the
reduced cost by your basis
in the half you inherited.
Farm or Closely Held Business
Under certain conditions, when a person dies the executor or personal representative of that person's estate can choose to
value the qualified real
property on other than its FMV. If so, the executor or personal representative values the qualified real property based on
its use as a farm or its
use in a closely held business. If the executor or personal representative chooses this method of valuation for estate tax
purposes, that value is the
basis of the property for the heirs. Qualified heirs should be able to get the necessary value from the executor or personal
representative of the
estate.
Special-use valuation.
If you are a qualified heir who received special-use valuation property, your basis in the property is the estate's
or trust's basis in that
property immediately before the distribution. Increase your basis by any gain recognized by the estate or trust because of
post-death appreciation.
Post-death appreciation is the property's FMV on the date of distribution minus the property's FMV either on the date of the
individual's death or the
alternate valuation date. Figure all FMVs without regard to the special-use valuation.
You can elect to increase your basis in special-use valuation property if it becomes subject to the additional estate
tax. This tax is assessed if,
within 10 years after the death of the decedent, you transfer the property to a person who is not a member of your family
or the property stops being
used as a farm or in a closely held business.
To increase your basis in the property, you must make an irrevocable election and pay interest on the additional estate
tax figured from the date 9
months after the decedent's death until the date of the payment of the additional estate tax. If you meet these requirements,
increase your basis in
the property to its FMV on the date of the decedent's death or the alternate valuation date. The increase in your basis is
considered to have occurred
immediately before the event that results in the additional estate tax.
You make the election by filing with Form 706-A a statement that does all of the following.
-
Contains your name, address, and taxpayer identification number and those of the estate.
-
Identifies the election as an election under section 1016(c) of the Internal Revenue Code.
-
Specifies the property for which the election is made.
-
Provides any additional information required by the Form 706-A instructions.
For more information, see the instructions to Form 706 and Form 706-A.
Property Changed to
Business or Rental Use
If you hold property for personal use and then change it to business use or use it to produce rent, you must figure its basis
for depreciation. An
example of changing property held for personal use to business use would be renting out your former main home.
Basis for depreciation.
The basis for depreciation is the lesser of the following amounts.
Example.
Several years ago you paid $160,000 to have your home built on a lot that cost $25,000. You paid $20,000 for permanent improvements
to the house
and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year.
Because land is not
depreciable, you include only the cost of the house when figuring the basis for depreciation.
Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 - $2,000). On the same date, your
property had an
FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. The basis for figuring depreciation on
the house is its FMV on the
date of change ($165,000) because it is less than your adjusted basis ($178,000).
Sale of property.
If you later sell or dispose of property changed to business or rental use, the basis of the property you use will
depend on whether you are
figuring gain or loss.
Gain.
The basis for figuring a gain is your adjusted basis when you sell the property.
Example.
Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation
deductions of
$37,500. Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) - $37,500).
Loss.
Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time
of the change to business or
rental use. Then adjust this amount for the period after the change in the property's use, as discussed earlier under Adjusted Basis, to
arrive at a basis for loss.
Example.
Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation
deductions of
$37,500. In this case, you would start with the FMV on the date of the change to rental use ($180,000) because it is less
than the adjusted basis of
$203,000 ($178,000 + $25,000) on that date. Reduce that amount ($180,000) by the depreciation deductions to arrive at a basis
for loss of $142,500
($180,000 - $37,500).
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information
from the IRS in several
ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
Contacting your Taxpayer Advocate.
If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.
The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving
problems that have not been
fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can
clear up problems that
resulted from previous contacts and ensure that your case is given a complete and impartial review.
To contact your Taxpayer Advocate:
-
Call the Taxpayer Advocate at
1–877–777–4778.
-
Call the IRS at 1–800–829–1040.
-
Call, write, or fax the Taxpayer Advocate office in your area.
-
Call 1–800–829–4059 if you are a
TTY/TDD user.
For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS.
Free tax services.
To find out what services are available, get Publication 910, Guide to Free Tax Services. It contains a list of free tax publications
and an index of tax topics. It also describes other free tax information services, including tax education and assistance
programs and a list of
TeleTax topics.
Personal computer. With your personal computer and modem, you can access the IRS on the Internet at www.irs.gov. While
visiting our web site, you can:
-
Find answers to questions you may have.
-
Download forms and publications or search for forms and publications by topic or keyword.
-
View forms that may be filled in electronically, print the completed form, and then save the form for recordkeeping.
-
View Internal Revenue Bulletins published in the last few years.
-
Search regulations and the Internal Revenue Code.
-
Receive our electronic newsletters on hot tax issues and news.
-
Get information on starting and operating a small business.
You can also reach us with your computer using File Transfer Protocol at ftp.irs.gov.
TaxFax Service. Using the phone attached to your fax machine, you can receive forms and instructions by calling
703–368–9694. Follow the directions from the prompts. When you order forms, enter the catalog number for the form you need. The
items you request will be faxed to you.
For help with transmission problems, call the FedWorld Help Desk at 703–487–4608.
Phone. Many services are available by phone.
-
Ordering forms, instructions, and publications. Call 1–800–829–3676 to order current and prior year
forms, instructions, and publications.
-
Asking tax questions. Call the IRS with your tax questions at 1–800–829–1040.
-
TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1–800–829– 4059 to ask tax
questions or to order forms and publications.
-
TeleTax topics. Call 1–800–829–4477 to listen to pre-recorded messages covering various tax
topics.
Evaluating the quality of our telephone services.
To ensure that IRS representatives give accurate, courteous, and professional answers, we evaluate the quality of
our telephone services in several
ways.
-
A second IRS representative sometimes monitors live telephone calls. That person only evaluates the IRS assistor and does
not keep a record
of any taxpayer's name or tax identification number.
-
We sometimes record telephone calls to evaluate IRS assistors objectively. We hold these recordings no longer than one week
and use them
only to measure the quality of assistance.
-
We value our customers' opinions. Throughout this year, we will be surveying our customers for their opinions on our service.
CD-ROM. You can order IRS Publication 1796, Federal Tax Products on CD-ROM, and obtain:
-
Current tax forms, instructions, and publications.
-
Prior-year tax forms and instructions.
-
Popular tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
-
Internal Revenue Bulletins.
The CD-ROM can be purchased from National Technical Information Service (NTIS) by calling 1–877–233–6767 or on the
Internet at www.irs.gov. The first release is available in mid-December and the final release is available in late January.
IRS Publication 3207, Small Business Resource Guide, is an interactive CD-ROM that contains information important to small businesses.
It is available in mid-February. You can get a free copy by calling 1–800–829–3676 or visiting the IRS web site at
www.irs.gov.
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