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Publication 550
Investment Income and Expenses

(Including Capital Gains and Losses)

For use in preparing 2002 Returns

5. 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.

COMPUTE: 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.

FAX: 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: 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.

WALKIN: 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.

ENVELOPE: 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

CDROM: 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.

CDROM: 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.

Accrual method:   An accounting method under which you report your income when you earn it, whether or not you have received it. You generally deduct your expenses when you incur a liablity for them, rather than when you pay them.

At-risk rules:   Rules that limit the amount of loss you may deduct to the amount you risk losing in the activity.

Basis:   Basis is the amount of your investment in property for tax purposes. The basis of property you buy is usually the cost. Basis is used to figure gain or loss on the sale or disposition of investment property.

Below-market loan:   A demand loan (defined later) on which interest is payable at a rate below the applicable federal rate, or a term loan where the amount loaned is more than the present value of all payments due under the loan.

Call:   An option that entitles the purchaser to buy, at any time before a specified future date, property such as a stated number of shares of stock at a specified price.

Cash method:   An accounting method under which you report your income in the year in which you actually or constructively receive it. You generally deduct your expenses in the year you pay them.

Commodities trader:   A person who is actively engaged in trading section 1256 contracts and is registered with a domestic board of trade designated as a contract market by the Commodities Futures Trading Commission.

Commodity future:   A contract made on a commodity exchange, calling for the sale or purchase of a fixed amount of a commodity at a future date for a fixed price.

Conversion transaction:   Any transaction that you entered into after April 30, 1993 that meets both of these tests.

  1. Substantially all of your expected return from the transaction is due to the time value of your net investment.
  2. The transaction is one of the following.
    1. A straddle, including any set of offsetting positions on stock.
    2. Any transaction in which you acquire property (whether or not actively traded) at substantially the same time that you contract to sell the same property or substantially identical property at a price set in the contract.
    3. Any other transaction that is marketed or sold as producing capital gains from a transaction described in (1).

Demand loan:   A loan payable in full at any time upon demand by the lender.

Dividend:   A distribution of money or other property made by a corporation to its shareholders out of its earnings and profits.

Equity option:   Any option:

  1. To buy or sell stock, or
  2. That is valued directly or indirectly by reference to any stock or narrow-based security index.

Fair market value:   The price at which property would change hands between a willing buyer and a willing seller, both having reasonable knowledge of the relevant facts.

Forgone interest:   The amount of interest that would be payable for any period if interest accrued at the applicable federal rate and was payable annually on December 31, minus any interest payable on the loan for that period.

Forward contract:   A contract to deliver a substantially fixed amount of property (including cash) for a substantially fixed price.

Futures contract:   An exchange-traded contract to buy or sell a specified commodity or financial instrument at a specified price at a specified future date. See also Commodity future.

Gift loan:   Any below-market loan where the forgone interest is in the nature of a gift.

Interest:   Compensation for the use or forbearance of money.

Investment interest:   The interest you paid or accrued on money you borrowed that is allocable to property held for investment.

Limited partner:   A partner whose participation in partnership activities is restricted, and whose personal liability for partnership debts is limited to the amount of money or other property that he or she contributed or may have to contribute.

Listed option:   Any option that is traded on, or subject to the rules of, a qualified board or exchange.

Marked to market rule:   The treatment of each section 1256 contract ( defined later) held by a taxpayer at the close of the year as if it were sold for its fair market value on the last business day of the year.

Market discount:   The stated redemption price of a bond at maturity minus your basis in the bond immediately after you acquire it. Market discount arises when the value of a debt obligation decreases after its issue date.

Market discount bond:   Any bond having market discount except:

  1. Short-term obligations with fixed maturity dates of up to 1 year from the date of issue,
  2. Tax-exempt obligations that you bought before May 1, 1993,
  3. U.S. savings bonds, and
  4. Certain installment obligations.

Nominee:   A person who receives, in his or her name, income that actually belongs to someone else.

Nonequity option:   Any listed option that is not an equity option, such as debt options, commodity futures options, currency options, and broad-based stock index options.

Options dealer:   Any person registered with an appropriate national securities exchange as a market maker or specialist in listed options.

Original issue discount (OID):   The amount by which the stated redemption price at maturity of a debt instrument is more than its issue price.

Passive activity:   An activity involving the conduct of a trade or business in which you do not materially participate and any rental activity. However, the rental of real estate is not a passive activity if both of the following are true.

  1. More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate.
  2. You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate.

Portfolio income:   Gross income from interest, dividends, annuities, or royalties that is not derived in the ordinary course of a trade or business. It includes gains from the sale or trade of property (other than an interest in a passive activity) producing portfolio income or held for investment.

Premium:   The amount by which your cost or other basis in a bond right after you get it is more than the total of all amounts payable on the bond after you get it (other than payments of qualified stated interest).

Private activity bond:   A bond that is part of a state or local government bond issue of which:

  1. More than 10% of the proceeds are to be used for a private business use, and
  2. More than 10% of the payment of the principal or interest is:
    1. Secured by an interest in property to be used for a private business use (or payments for the property), or
    2. Derived from payments for property (or borrowed money) used for a private business use.

Put:   An option that entitles the purchaser to sell, at any time before a specified future date, property such as a stated number of shares of stock at a specified price.

Real estate mortgage investment conduit (REMIC):   An entity that is formed for the purpose of holding a fixed pool of mortgages secured by interests in real property, with multiple classes of interests held by investors. These interests may be either regular or residual.

Regulated futures contract:   A section 1256 contract that:

  1. Provides that amounts that must be deposited to, or may be withdrawn from, your margin account depend on daily market conditions (a system of marking to market), and
  2. Is traded on, or subject to the rules of, a qualified board of exchange, such as a domestic board of trade designated as a contract market by the Commodity Futures Trading Commission or any board of trade or exchange approved by the Secretary of the Treasury.

Restricted stock:   Stock you get for services you perform that is nontransferable and is subject to a substantial risk of forfeiture.

Section 1256 contract:   Any:

  1. Regulated futures contract,
  2. Foreign currency contract as defined in chapter 4 under Section 1256 Contracts Marked to Market,
  3. Nonequity option,
  4. Dealer equity option, or
  5. Dealer securities futures contract.

Securities futures contract:   A contract of sale for future delivery of a single security or of a narrow-based security index.

Short sale:   The sale of property that you generally do not own. You borrow the property to deliver to a buyer and, at a later date, you buy substantially identical property and deliver it to the lender.

Straddle:   Generally, a set of offsetting positions on personal property. A straddle may consist of a purchased option to buy and a purchased option to sell on the same number of shares of the security, with the same exercise price and period.

Stripped preferred stock:   Stock that meets the following tests.

  1. There has been a separation in ownership between the stock and any dividend on the stock that has not become payable.
  2. The stock:
    1. Is limited and preferred as to dividends,
    2. Does not participate in corporate growth to any significant extent, and
    3. Has a fixed redemption price.

Term loan:   Any loan that is not a demand loan.

Wash sale:   A sale of stock or securities at a loss within 30 days before or after you buy or acquire in a fully taxable trade, or acquire a contract or option to buy, substantially identical stock or securities.

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