How To Report
Gains and Losses
How you report gains and losses depends on whether the property was
business, income-producing, or personal-use property.
Personal-use property. If you have a loss, use both
of the following.
- Form 4684.
- Schedule A (Form 1040), Itemized Deductions.
If you have a gain, report it on both of the following.
- Form 4684.
- Schedule D (Form 1040), Capital Gains and Losses.
Business and income-producing property. Use Form 4684 to report your
gains and losses. You will also have to report the gains and losses on other forms as
explained next.
Property held 1 year or less. Individuals report losses from income-producing property and property used in
performing services as an employee on Schedule A (Form 1040). Gains from business
and income-producing property are combined with losses from business property (other than
property used in performing services as an employee) and the net gain or loss is reported
on Form 4797. If you are not otherwise required to file Form 4797, only enter the net gain
or loss on your tax return on the line identified as from Form 4797. Next to that line,
write Form 4684. Partnerships and S corporations should see the Form 4684
instructions to find out where to report these gains and losses.
Property held more than 1 year. If your losses from
business and income-producing property are more than gains from these
types of property, combine your losses from business property (other than property used in
performing services as an employee) with total gains from business and income-producing
property. Report the net gain or loss as an ordinary gain or loss on Form 4797. If you are
not otherwise required to file Form 4797, only enter the net gain or loss on your tax
return on the line identified as from Form 4797. Next to that line, write Form 4684.
Individuals deduct any loss of income-producing property and property used in performing
services as an employee on Schedule A (Form 1040). Partnerships and S corporations should
see Form 4684 to find out where to report these gains and losses.
If losses from business and income-producing property are less than or equal to
gains from these types of property, report the net amount on Form 4797. You may also have
to report the gain on Schedule D depending on whether you have other transactions.
Partnerships and S corporations should see Form 4684 to find out where to report these
gains and losses.
Depreciable property. If the damaged or stolen property was
depreciable property held more than 1 year, you may have to treat all or part of the gain
as ordinary income to the extent of depreciation allowed or allowable. You figure the
ordinary income part of the gain in Part III of Form 4797. See Depreciation Recapture
in chapter 3 of Publication 544 for more information about the recapture rule.
Adjustments to Basis
If you have a casualty or theft loss, you must decrease your basis in
the property by any insurance or other reimbursement you receive and by any
deductible loss. The result is your adjusted basis in the property.
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. See Adjusted Basis in Publication 551 for more information
on adjustments to basis.
If Deductions Are
More Than Income
If your casualty or theft loss deduction causes your deductions for
the year to be more than your income for the year, you may have a net
operating loss (NOL). You can use an NOL to lower your tax in an earlier year,
allowing you to get a refund for tax you already paid. Or, you can use it to lower your
tax in a later year. You do not have to be in business to have an NOL from a casualty or
theft loss. For more information, see Publication 536, Net Operating Losses (NOLs) for
Individuals, Estates, and Trusts.
How To Get Tax Help
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, 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:
- See answers to frequently asked tax questions or request help by e-mail.
- Download forms and publications or search for forms and publications by topic or
keyword.
- Order IRS products on-line.
- 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.
- Learn about the benefits of filing electronically (IRS e-file).
- 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.
- Solving problems. Take advantage of Everyday Tax Solutions service by calling
your local IRS office to set up an in-person appointment at your convenience. Check your
local directory assistance or www.irs.gov for the numbers.
- 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 use several methods
to evaluate the quality of our telephone services. One method is for a second IRS
representative to sometimes listen in on or record telephone calls. Another is to ask some
callers to complete a short survey at the end of the call.
 Walk-in. Many
products and services are available on a walk-in basis.
- Products. You can walk in to many post offices, libraries, and IRS offices to
pick up certain forms, instructions, and publications. Some IRS offices, libraries,
grocery stores, copy centers, city and county governments, credit unions, and office
supply stores have an extensive collection of products available to print from a CD-ROM or
photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal
Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available
for research purposes.
- Services. You can walk in to your local IRS office to ask tax questions or get
help with a tax problem. Now you can set up an appointment by calling your local IRS
office number and, at the prompt, leaving a message requesting Everyday Tax Solutions
help. A representative will call you back within 2 business days to schedule an in-person
appointment at your convenience.
 Mail. You
can send your order for forms, instructions, and publications to the Distribution Center
nearest to you and receive a response within 10 workdays after your request is received.
Find the address that applies to your part of the country.
- Western part of U.S.:
Western Area Distribution Center
Rancho Cordova, CA 95743-0001
- Central part of U.S.:
Central Area Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
- Eastern part of U.S. and foreign addresses:
Eastern Area Distribution Center
P.O. Box 85074
Richmond, VA 23261-5074
 CD-ROM for tax
products. 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 http://www.irs.gov/cdorders. The
first release is available in early January and the final release is available in late
February.
CD-ROM for
small businesses. IRS Publication 3207, Small Business Resource Guide, is a
must for every small business owner or any taxpayer about to start a business. This handy,
interactive CD contains all the business tax forms, instructions and publications needed
to successfully manage a business. In addition, the CD provides an abundance of other
helpful information, such as how to prepare a business plan, finding financing for your
business, and much more. The design of the CD makes finding information easy and quick and
incorporates file formats and browsers that can be run on virtually any desktop or laptop
computer.
It is available in March. You can get a free copy by calling 1-800-829-3676 or
by visiting the website at www.irs.gov/smallbiz. |
