4.119.4. BMF Underreporter (BUR) Program

(1) A Form 12412, Operations Assistance Request, is sent by TAS for cases when there is an issue that they do not have the authority to resolve. An OAR can be received by fax, e-fax, mail or E-mail and will have a Form 3210, Document Transmittal, attached.

(2) The Form 12412 will contain the name, telephone, and fax number of the TAS employee making the request. An OAR package will also include an explanation of what is being requested and any documentation obtained by the TAS employee.

(3) The OAR may include Form 907, Agreement to Extend Time for Filing Suit. Taxpayers have two years to appeal Letter 105-C , Claim Disallowed, and Letter 106-C, Claim Partially Disallowed. If Form 907 is filed in response to Letter 105-C/106-C issued by BUR, it must be signed by the Operations Manager or approved delegate.

(4) Form 12412 is to be acknowledged within 1-day for expedited cases or 3-days for all other cases. The acknowledgement on the Form 3210 sent with the OAR, and will include the name and phone number of the assigned person (or team/manager).

(5) The following are addressed when working an OAR:

1. An expedited Form 12412 has three days to be completed.

2. After the period, for a non-expedited Form 12412, the SB/SE employee assigned the OAR will negotiate with the TAS employee a reasonable time frame for OAR resolution.

3. Sections V and VI of Form 12412 must be completely filled out by a BUR employee, including any actions taken and the reasons behind those actions.

4. A file copy of the OAR is kept by BUR for 6-months.

5. The completed OAR package is returned to the TAS employee.

(1) BUR employees are mandated to use the Integrated Automation Technologies (IAT) tools when an action must be taken on IDRS. The IAT tools assist with IDRS research and input.

(2) Cases should be worked using IDRS when the IAT tool is not functioning properly.

(1) Prepare Form 3465, Adjustment Request, when an adjustment action is needed. The following fields must be completed:

1. Taxpayer's name.

2. Document Locator Number (DLN).

3. Check Routing box for "Accounts Management."

4. TIN.

5. MFT.

6. Period ending, year and month.

7. Tax form number.

8. In the "Remarks" area, thoroughly explain the problem, include any pertinent research that will help resolve the issue.

9. Complete the blocks for Signature, Unit, Phone and Date.

(2) Assemble the following items together, in the order listed below, and route to Accounts Management:

1. Form 12634, OIRSC Campus Document Transmittal.

2. Form 3465, Adjustment Request.

3. Tax return or MeF printout.

(3) Paper tax returns must be recharged to Accounts Management. Enter BMF AM in the "RECHARGE DOCUMENT TO" box on the Form 4251, RETURN CHARGE OUT, and route to the Files function.

(1) During the course of BUR case work, situations may be encountered involving potential fraud, referred to as indicators of fraud. Although only a small percentage of cases are fraudulent, it is essential to detect and report any potentially fraudulent activities. IRM 25.1.2.3, Fraud Handbook - Recognizing and Developing Fraud, Indicators of Fraud, provides several lists of Fraud Indicators. The following list has been developed for BUR and identifies examples of indicators of fraud that are most likely to be found in a campus environment (this list is not all inclusive and may involve a promoter/return preparer):

• Altered Documents

• False deductions/adjustments to income

• False basis in assets

• Concealing assets

• False transaction date for asset disposition

• False statements made by taxpayer

• False business, rental, or farm expenses

• False or overstated refundable credits

• Amended returns with any of the above

• Understating Income

• Failure to cooperate

• Maintaining inadequate records

• Inconsistent or implausible explanations

• Engaging in illegal activities

• Concealment of activities

• Preparer schemes

(2) Fraud cases are developed by trained Fraud caseworkers until it is determined that affirmative acts (deceit, subterfuge, camouflage, concealment or some attempt to color or obscure events or to make things seem other than they are) exist. The Service must prove that the taxpayer acted deliberately and knowingly with the specific intent to violate the law. Once a suspicion or indicator of fraud is found, it is essential that the case be transferred to the designated Fraud Coordinator for further development.

(3) See IRM 25.1.1.4, Indicators of Fraud vs. Affirmative Acts of Fraud.

(1) Identify indications of fraud that are uncovered through regular case processing. Use the list in IRM 4.119.4.4.1.1, Identifying and Developing Fraud in BUR.

(2) Discuss the indicators of fraud with the Lead Tax Examiner (i.e., Approving Official). The Lead Tax Examiner will then make the determination if the case should be transferred to the designated individual responsible for working/monitoring fraud cases by:

1. Completing Sections I, II, III, and item 1 of Section V of Form 13549, Campus Fraud Lead Sheet and submitting to the approving official for approval.

2. The approving official will forward the approved Form 13549 and case file to the designated BUR Functional Fraud Coordinator (FFC).

(3) Documentation is critical in the development of fraud. Maintain complete and accurate case notes that include each of the following:

• All case actions

• All documents received

• All contacts must be adequately documented (e.g., changes to entity information were recognized/updated)

• All conversations with the taxpayer, representative, return preparer, and third parties must be recorded (what was discussed and the responses)

(1) The BUR Functional Fraud Coordinator (FFC) is responsible for developing fraud cases. The FFC is responsible for conducting preliminary screening of Form 13549 to determine if the referral should be forwarded to the Campus Fraud Coordinator (CFC). The FFC will:

1. Review the Form 13549 and case file to determine if indicators of fraud exist.

2. Complete, document and attach research information, including, but not limited to IDRS transcripts, ACCURINT prints, and relevant web searches. Research will help to establish a pattern of non-compliance.

3. Complete Section IV of the Form 13549, (Developmental Actions) and item 3 in Section V.

4. The FFC has ten business days from the receipt date of a case and Form 13549 to evaluate a fraud referral and make a determination whether to accept or decline the referral.

5. If the FFC accepts referral then acceptance is noted in item 3b, Section V, and the form and case file are forwarded to the CFC for final fraud determination.

6. If the FFC declines the referral then item 3a in Section V is completed along with a written explanation for the declination in Section VI and returned to the initiator through the approving official. The case will be reassigned to the initiator’s Standard Employee Identifier (SEID).

7. Update the Fraud Referral Monitoring Report (FRMF).

8. Maintain a copy of each Form 13549.

9. Track all BUR fraud leads, including those declined/returned to BUR and those accepted for further Fraud development.

10. Submit information on Fraud referral/accepted/declined cases to Headquarters by the fifth day of each month.

    Note: The CFC is required to make a determination to accept or decline the fraud referral, within 21 business days of receipt of the case from the FFC.

(2) If the CFC accepts the fraud referral for further development, they will request the case be reassigned and ensure the case is established on Audit Information Management System (AIMS). The BUR FFC will:

1. Close the case using Fraud Closing PC 4140, 4370, 4580, or 4770 as appropriate.

2. Input TC 925 with the applicable Process Code using IDRS CC:REQ77/FRM77.

3. Annotate the DCI and case folder with the appropriate PC.

4. Annotate the Form 13549 and keep a copy for the BUR records.

5. Make and send a copy of the Form 13549 to the initiator through the initiator's manager.

6. Ensure the entire case contents are forwarded.

(3) If the CFC declines the fraud referral they will return the Form 13549 with a written explanation to the BUR FFC. The BUR FFC will return the Form 13549 to the initiator through the approving official and transfer the case to the initiating tax examiner’s SEID.

(1) The IDRS CC:IRPTR transcript displays the following payer information return submission types:

1. ORIGINAL SUBMISSION.

2. CORRECTED ORIGINAL SUBMISSION.

3. AMENDED SUBMISSION.

(2) When an IR is either an amended (or corrected original) submission, determine if an original submission IR is also present. Delete original submission IR(s) when there is a matching amended (or corrected original) IR(s). Both IRs must have:

• The same payer name and/or TIN

• The same account number (if present)

• The same type of income if the money amount changes or different amount type’s when the money amount stays the same

• The same money amount and Form 1099-MISC income was amended/corrected with Form 1099-NEC

(3) Pursue all IRs if the amended (or corrected original) does not match an original, or if the amended (or corrected original) IR matches more than one of the other IRs.

(4) Consider a valid payer document attached to the tax return marked "Corrected" more accurate than the IDRS CC:IRPTR original submission information.

(5) Amended IRs may reflect incomplete information; neither amount literals nor $0 (zero-dollar amounts) are present. If such an IR is present, assume the payer attempted to zero out an incorrect income amount previously reported.

(1) All paper submissions are scanned into the Service Center Recognition/Image Processing System (SCRIPS).

(2) Tax examiners should screen all paper filed IR(s) with care. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡:

1. Obvious decimal point errors. A decimal error may be identified by multiplying the U/R amount by 1.111 and the result equals the IR (within $1).

2. Commas read as numeric (i.e., $1,050 read as $12050, etc.). U/R amounts that are a multiple of one thousand (1,000) is an indication that the comma was misread as a numeric.

   Example: SCRIPS IR displays as 21230 (comma misread as the digit "1"), the taxpayer reports 2230 with a resulting U/R of 19000.

3. Dollar signs read as numeric. When a dollar sign is misread as a numeric, the U/R amount is a multiple of 10, 100, 1,000, 10,000, etc., depending upon the number of digits in the SCRIPS IR.

   Example: SCRIPS IR displays 587 (dollar sign misread as the digit "5"), the taxpayer reports 87 with a resulting U/R of $500.

4. Duplicate money amounts for both income and withholding.

(1) IDRS CC:NOREF is used to stop a refund check from being sent and must be input by 4:00 p.m. Eastern Standard Time (EST), the Thursday prior to the TC 846 for taxpayer Master File (BMF).

(2) IDRS CC:NOREF cannot be initiated more than 10-days prior to the 23C date of the TC 846 being stopped.

(3) Complete all account actions, except credit transfers, when requesting to stop a refund. Utilize a post delay code of 4 and hold code 2 on IDRS CC:REQ54 adjustments to delay posting and notice issue prior to the TC 841 posting the account. Transfer a credit after the TC 841 posts. If the account action will result in a balance due, input TC 470 to hold any balance due notices that may generate. It takes 4-6 weeks for the TC 841 to post.

(4) Employees stopping the refund will maintain an open control on all cases where a IDRS CC:NOREF is input. The employee places the open control in "B" or "M" status. The case can be closed when confirmation is received that the refund has been stopped.

• The controlling employee must monitor for the TC 841 and take appropriate action. If there is an adjustment on the module and the control is in background, the tax examiner should make the adjustment based on the information provided by the taxpayer.

• Utilize IAT for resolving or stopping refunds, erroneous refund procedures and manual refund.

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(3) When more than one information return containing Aggregate Profit Or Loss On Contracts is present and the taxpayer does not provide a breakdown:

1. Group all Aggregate Profit or Loss on Contracts together.

2. Compare the group total amount to the total reported Aggregate Profit or Loss on Contracts on Form 1041, line 4 or Form 1120, line 8.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

   Caution: Do not allow credit from Form 1041, line 4, or Form 1120, line 8, if the amount reported is identified as another income (e.g., Capital Gain, Securities etc.).

(4) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Aggregate Profit or Loss on Contracts Income is U/R, enter the following on the Letter 2030:

1. Select AGGREGATE PROFIT & LOSS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Aggregate Profit or Loss on Contracts IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include PARAGRAPH 14 when Aggregate Profit or Loss is U/R.

(1) Compare Agriculture Payments and/or Market Gain amounts with entries on:

1. Form 1040, Schedule F, lines 4a (line 4b if line 4a is zero or blank) or line 39a (line 39b if line 39a is zero or blank).

2. Form 1040, Schedule E, Part I, line 3. Group all farm related Amount Types from all IR(s) with any other rental related Amount Types IR(s) present.

   Exception: Do not allow credit for any amount reported on Form 1040, Schedule E, Part I, line 3 if the taxpayer has reported farming income elsewhere on the return.

3. Form 1040, Schedule E, Part II. If the income is from a farming business, consider the Agriculture Payments and/or Market Gain amount reported.

4. Form 4835, Farm Rental Income and Expenses line 3a (line 3b if line 3a is zero or blank).

5. Form 1041, line 6.

6. Form 1040, Schedule E, Part V, line 42:

(2) Agriculture Payments and/or Market Gain comparisons for the following entries must match within $1 or be clearly identified :

1. Form 1040 Schedule F, lines 8 or 43. Form 1040 Schedule F, lines 2 or 37 (agricultural payments reported as commodities).

2. Form 4835, Farm Rental Income and Expenses, line 6.

3. Form 1041, line 8.

   Note: Give credit for amounts reported on Form 1041, line 8 when identified as Gross Farm Income only when Form 1040, Schedule F or Form 4835 is not attached.

(3) Agricultural subsidy payments made to members of federally recognized Native American Tribes under programs administered by the Department of Agriculture’s Stabilization and Conservation Service, are exempt from federal income taxes when the subsidy is received as a result of activity occurring on the individual's allotted land. Do not pursue apparent U/R Agricultural subsidy payments amounts if information on the return or attached schedules/statements references Rev. Rul. 69-289.

(4) When more than one information return containing Agriculture Payments and/or Market Gain amounts are present and the taxpayer does not provide a breakdown:

1. Group all Agriculture Payments and/or Market Gain together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(5) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) Compare Agriculture Payments and/or Market Gain amounts with entries on:

1. Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on Form 1120, line 10. Do not give credit for any unidentified amounts reported on line 10, unless there is a $1 match.

2. Form 1040, Schedule F, lines 4a (line 4b if line 4a is zero or blank) or line 39a (line 39b if line 39a is zero or blank).

3. Form 4835, line 3a (line 3b if line 3a is zero or blank).

Note: Give credit for amounts reported on Form 1120, line 10 when identified as Gross Farm Income only when Form 1040, Schedule F or Form 4835 is not attached.

4. Form 1120, line 1a when the taxpayer name or Business Activity as shown on Form 1120, Schedule K, lines 2a – 2c relates to farming activity. See IRM 4.119.4.7.10, Form 1120 Gross Receipts or Sales (Bartering/Payment Card Transactions/Attorney's Proceeds/Fishing Proceeds/Medical Payments/Nonemployee Compensation) - General, for additional information. Consider any other Gross Receipts and farming related IRs when determining the total amount to compare to Form 1120, line 1a.

   Exception: Do not give credit for any amounts reported on Form 1120, line 1a when the taxpayer has reported farming income on Form 1120, line 10.

(2) When more than one information return containing Agriculture Payments and/or Market Gain amounts are present and the taxpayer does not provide a breakdown:

1. Group all Agriculture Payments and/or Market Gain together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(3) When an attachment or statement indicates Nominee income see IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Agricultural Payments or Market Gain on CCC Loans are U/R, enter the following on the Letter 2030:

1. Select AGRICULTURE PAYMENTS or MARKET GAIN ON CCC LOAN from the drop-down menu in the "Your income and deductions" field.

   Exception: Form 1041 only - When giving credit for amounts reported on Form 1040, Schedule E, Part I, line 3, select RENTS from the drop down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Agricultural Payments or Market Gain on CCC Loans IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Compare Bartering amounts with entries on:

1. Form 1040, Schedule C, lines 1 or 6 or C-EZ, line 1.

   Note: Beginning in tax year 2019, Schedule C-EZ is obsolete.

2. Form 1040, Schedule F, lines 1a, 2, 7, 8, 9, 37, 42, 43, or 44. (Consider bartering reported here only if it can determine from the payer name or business activity that it is farm related income).

3. Form 1041, line 3.

(2) Comparisons for the following entries must match within $1 or be clearly identified as Bartering:

1. Form 1041, line 8.

2. Form 1041, Schedule D.

   Note: Payers may erroneously report securities transactions as bartering since both income types are reported on Form 1099-B

   .

3. Form 8949.

4. Form 1040, Schedule E, lines 3 or 4.

5. Form 4835, lines 1, 6 or 7.

(3) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Bartering is U/R, enter the following on the Letter 2030:

1. Select BARTERING from the drop-down menu in the "Your income and deductions" field.

   Exception: GROSS RECEIPTS may be selected from the drop-down menu when multiple business income related Amount Types (IRPTR Literals) are involved.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Bartering IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Compare Payment Card/Third Party Network Payments amounts with entries on:

1. Form 1040, Schedule C, Part I, line 1.

2. Form 1040, Schedule C-EZ, Part II, line 1.

   Note: Beginning in tax year 2019, Schedule C-EZ is obsolete.

3. Form 1040, Schedule F.

4. Consider Payment Card/Third Party Network Payments reported if it is included in a larger total for the applicable taxpayer on Form 1040 Schedule C, C-EZ, or F, unless the IR is obviously not the same type of income.

5. Form 1041, line 3.

(2) If a Form 1099-K and Form 1099-MISC/Form 1099-NEC are present with identical money amounts, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) Gross Payment Card transactions are not adjusted for any authorized returns or other allowances.

1. During Case Analysis consider the entire IR amount when determining underreported income UNLESS the taxpayer provides a specific breakdown of their Gross Receipts or Sales and includes this amount type on their tax return.

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(4) A taxpayer who receives a virtual currency, such as Bitcoin or another cryptocurrency as a payment for rent, royalties, goods or services recognizes ordinary income when the taxpayer receives the virtual currency. The taxpayer will typically hold the virtual currency as a capital asset thereafter. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) When comparing Payment Card/Third Party network Payment IRs with entries on any line not specifically identified for Payment Card/Third Party Network Payments the amount must match within $1 or be clearly identified by payer name, activity or as Payment Card/Third Party Network Payments income:

1. Form 1041, Schedule D, Part I, lines 1a - 3, column (d) or Part II, lines 8a through 10 column (d).

   Caution: Income from the sale or other disposition of virtual currencies may be reported or partially reported on Schedule D. This income may be identified by payer name or by the name of the virtual currency received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. Form 1040, Schedule E, Part I.

3. Form 8949, Part I, line 1 column (d) or Part II, line 1, column (d).

   Caution: Income from the sale or other disposition of virtual currencies may be reported or partially reported on Form 8949. This income may be identified by payer name or by the name of the virtual currency received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. Form 4797, Parts I, II, or III.

   Caution: Income from the sale or distribution of virtual currencies may be reported or partially reported on Form 4797. This income may be identified by payer name or by the name of the virtual currency received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(6) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Payment Card/Third Party Network Payments is U/R, enter the following on the Letter 2030:

1. Select GROSS PAYMENT CARD PAYMENTS from the drop-down menu in the "Your income and deductions" field.

   Exception: GROSS RECEIPTS may be selected from the drop-down menu when multiple business income related Amount Types (IRPTR Literals) are involved.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Payment Card/Third Party Network Payment IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include PARAGRAPH 1 when Payment Card/Third Party Network Payments is U/R.

(1) Beginning in tax year 2021, Form 1099-MISC, Miscellaneous Information, was revised to add Fish Purchased for Resale (amounts paid for the purchase of fish for resale from any person engaged in the business of catching fish).

(2) When comparing Fishing Boat Proceeds or Fish Purchased for Resale amounts with the following entries, the amount must match within $1 or be CLEARLY identified by payer name, activity or as fish income:

1. Form 1040, Schedule C, Part I.

2. Form 1040, Schedule C-EZ Part II.

   Note: Beginning in tax year 2019, Schedule C-EZ is obsolete.

3. Form 1040, Schedule E, Part I.

4. Form 1040, Schedule E, Part II.

5. Form 1041, line 3.

6. Form 1041, line 8.

(3) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Fishing Boat Proceeds or Fish Purchased for Resale are U/R, enter the following on the Letter 2030:

1. Select FISHING BOAT PROCEEDS (IRPTR literal “FISH INC”) or FISH PURCHASED FOR RESALE (IRPTR literal “FISH RESAL”) from the drop-down menu in the "Your income and deductions" field.

   Exception: GROSS RECEIPTS may be selected from the drop-down menu when multiple business income related Amount Types (IRPTR Literals) are involved.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Fishing Boat Proceeds/Fish Purchased for Resale IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Compare Medical Payments with entries on:

1. Form 1040, Schedule C, Part I or Schedule C-EZ, Part II if it appears to be for a medical practice.

   Note: Beginning in tax year 2019, Schedule C-EZ is obsolete.

2. Form 1040 Schedule E, Part II if it appears to be related to the medical profession.

3. Form 1041, line 3.

4. Form 1041, line 8, the amount must match within $1 or be CLEARLY IDENTIFIED as Medical Payments.

(2) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Medical Payments are U/R, enter the following on the Letter 2030:

1. Select MEDICAL PAYMENTS from the drop-down menu in the "Your income and deductions" field.

   Exception: GROSS RECEIPTS may be selected from the drop-down menu when multiple business income related Amount Types (IRPTR Literals) are involved.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Medical Payments IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Compare Nonemployee Compensation amounts with entries on:

1. Form 1040, Schedule C, Part I.

2. Form 1040, Schedule C-EZ, Part II.

   Note: Beginning in tax year 2019, Schedule C-EZ is obsolete.

3. Form 1040, Schedule F, Part I or III.

4. Form 4835, Part I.

5. Consider Nonemployee Compensation reported if it is included in a larger total on Form 1040, Schedule C, C-EZ, F or Form 4835, unless the IR is obviously not the same type of income.

   Note: Beginning in tax year 2019, Schedule C-EZ is obsolete.

6. Form 1041, line 3.

(2) A taxpayer who receives a virtual currency such as Bitcoin or another cryptocurrency, as a payment for rent, royalties, goods or services recognizes ordinary income when the taxpayer receives the virtual currency. The taxpayer will typically hold the virtual currency as a capital asset thereafter. The value of the payment is the fair market value (FMV) of the virtual currency in U.S. dollars on the date of receipt. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) When comparing Non-employee Compensation IRs with entries on any line not specifically identified for Non-employee Compensation, the amount must match within $1 or be clearly identified:

1. Form 1040, Schedule E, Part I.

2. Form 4797, Sales of Business Property, Parts I, II, or III - Consider the Non-employee Compensation reported if the sales price matches the IR within $1.

   Caution: Income from the sale or other disposition of virtual currencies may be reported or partially reported on Form 4797. This income may be identified by payer name or by the name of the virtual currency received..≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. Form 6252, Installment Sale Income, line 5 or line 21.

4. Form 1041, Schedule D, Part I, lines 1a - 3 column (d) or Part II, lines 8a, - 10, column (d).

   Caution: Income from the sale or other disposition of virtual currencies may be reported or partially reported on Schedule D. This income may be identified by payer name or by the name of the virtual currency received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

5. Form 8949, Part I, line 1 column (d) or Part II, line 1, column (d).

   Caution: Income from the sale or other disposition of virtual currencies may be reported or partially reported on Form 8949. This income may be identified by payer name or by the name of the virtual currency received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(4) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) Nonemployee Compensation may represent crop insurance proceeds, which are reported on Form 1040, Schedule F, line 6a or 6b, or Form 4835, line 5a or 5b.

(6) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(7) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Non-employee Compensation are U/R, enter the following on the Letter 2030:

1. Select NON-EMPLOYEE COMPENSATION from the drop-down menu in the "Your income and deductions" field.

   Exception: GROSS RECEIPTS may be selected from the drop-down menu when multiple business income Amount Types (IRPTR Literals) are involved.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Non-employee Compensation IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) Cancellation of Debt comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED:

(3) If the taxpayer reduces the reported AMT DBT CN amount by the INT FORGVN amount, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(4) If the taxpayer received AMT DBT CN from a Foreclosure or Repossession and the taxpayer is personally liable (recourse debt), the amount by which the canceled debt exceeds the PRPTY FMV of the property must generally be reported as ordinary income on Form 1041, line 8 or Form 1120, line 10.

(5) If the taxpayer has received AMT DBT CN from a Foreclosure or Repossession and the taxpayer is not personally liable (non-recourse debt), the gain or loss is computed by comparing the balance of the loan amount (1099-C) with the adjusted basis.

1. Losses are non-deductible, unless the property was used in trade or business or held for investment. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Include a Special Paragraph to inform the taxpayer these losses are not deductible.

2. Losses in excess of gains from sales of property used in trade or business are deductible as ordinary losses.

(6) If the taxpayers indicate that the income is not taxable because they are insolvent, (e.g., Form 982, Box 1b, is checked or on an attached statement), they MUST provide a statement showing the amount of their insolvency. If taxpayers do not provide a breakdown of their assets and liabilities, do not consider them to be insolvent. The taxpayers are considered insolvent if the net liability amount(s) shown on the attached statement is GREATER than the total fair market value of assets immediately prior to the debt cancellation.

1. If the AMT DBT CN amount(s) is less than or equal to the insolvency amount, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. If the AMT DBT CN amount(s) is more than the insolvency amount, the amount of the taxpayer’s insolvency must be considered. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(7) When more than one information return containing Cancellation of Debt amounts are present and the taxpayer does not provide a breakdown:

1. Group all Cancellation of Debt together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(1) If Cancellation of Debt is U/R, enter the following on the Letter 2030:

1. Select CANCELLATION OF DEBT from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Cancellation of Debt IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include PARAGRAPH 24 when Cancellation of Debt is U/R.

(1) When the outstanding debt relates to a forfeited Commodity Credit Corporation loan, the payer is instructed to indicate "CCC" in the property description on Form 1099-A, box 6.

(2) The debt (principal only) owed at the time that the Commodity Credit Corporation (CCC) loan is forfeited is considered income unless the taxpayer elected to include the loan in income for the taxable year in which it was received.

(3) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡"≡ ≡ ≡ ≡ ≡ ≡

(4) Compare Debts Out (i.e., CCC Loan Forfeited) with entries on:

1. Form 1040, Schedule F, line 5b (use line 5c if line 5b is zero or blank) or line 40b (use line 40c if line 40b is zero or blank).

2. Form 1040, Schedule E, Part I, line 3. Group all farm related Amount Types from all IR(s) with any other rental related Amount Types IR(s) present.

   Exception: Do not allow credit for any amount reported on Form 1040, Schedule E, Part I, line 3 if the taxpayer has reported farming income elsewhere on the return.

3. Form 4835, line 4b (use line 4c if line 4b is zero or blank).

4. Give credit for amounts reported on Form 1041, line 6.

5. Form 1041, line 8. Taxpayers are instructed to identify any amounts reported on Form 1041, line 8. Do not give credit for any unidentified amounts reported on line 8, unless there is a $1 match.

6. Give credit for amounts reported on Form 1041, line 8 when identified as Gross Farm Income ONLY when Form 1040, Schedule F or Form 4835 is not attached.

7. Form 1040, Schedule E, Part V, line 42:

(5) Consider CCC loans Forfeited reported if income from a farming business is reported on Schedule E, Part II.

(6) When more than one information return containing CCC Loan Forfeited amounts are present and the taxpayer does not provide a breakdown:

1. Group all CCC Loan Forfeited together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(7) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) When the outstanding debt relates to a forfeited Commodity Credit Corporation loan, the payer is instructed to indicate "CCC" in the property description on Form 1099-A, box 6.

(2) The debt (principal only) owed at the time that the Commodity Credit Corporation (CCC) loan is forfeited is considered income unless the taxpayer elected to include the loan in income for the taxable year in which it was received.

(3) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡

(4) Compare Debts Out (i.e., CCC Loan Forfeited) with entries on:

1. Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on Form 1120, line 10. Do not give credit for any unidentified amounts reported on line 10, unless there is a $1 match.

2. Form 1040, Schedule F, line 5b (use line 5c if line 5b is zero or blank) or line 40b (use line 40c if line 40b is zero or blank).

3. Form 4835, line 4b (use line 4c if line 4b is zero or blank).

4. Give credit for amounts reported on Form 1120, line 10 when identified as Gross Farm Income ONLY when Form 1040, Schedule F or Form 4835 is not attached.

5. Form 1120, line 1a when the taxpayer name or Business Activity as shown on Form 1120, Schedule K, lines 2a – 2c relates to farming activity. See IRM 4.119.4.7.10, Form 1120 Gross Receipts or Sales (Bartering/Payment Card Transactions/Attorney's Proceeds/Fishing Proceeds/Medical Payments/Non-employee Compensation) - General, for additional information. Consider any other Gross Receipts and farming related IRs when determining the total amount to compare to Form 1120, line 1a.

   Exception: Do not give credit for any amounts reported on Form 1120, line 1a when the taxpayer has reported farming income on Form 1120, line 10.

(5) When more than one information return containing CCC Loan Forfeited amounts are present and the taxpayer does not provide a breakdown:

1. Group all CCC Loan Forfeited together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(6) When an attachment or statement indicates Nominee income see IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If CCC Loans forfeited are U/R, enter the following on the Letter 2030:

1. Select COMMODITY CREDIT CORPORATION LOAN FORFEITED from the drop-down menu in the "Your income and deductions" field.

   Exception: Form 1041 only - When giving credit for amounts reported on Form 1040, Schedule E, Part I, line 3, select RENTS from the drop down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Commodity Credit Corporation (CCC) Loans Forfeited IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Group Patronage Dividends, Per-unit Retain Allocations, Redemption Amount and Non-Patronage Distributions IRs to determine the overall amount and compare with the following entries:

1. Form 1040, Schedule F, line 3a (use 3b if line 3a is zero or blank) or 38a (use line 38b if line 38a is zero or blank).

   Caution: Per Unit Retain Allocations may be reported on Form 1040, Schedule F line 2. Only give credit if the amount reported on line 2 matches within $1 or is clearly identified as Per Unit Retain Allocations.

2. Form 4835, Farm Rental Income and Expenses, line 2a (line 2b if line 2a is zero or blank).

3. Form 1040, Schedule E, Part I, line 3. Group all farm related Amount Types from all IR(s) with any other rental related Amount Types IR(s) present.

   Exception: Do not allow credit for any amount reported on Form 1040, Schedule E, Part I, line 3 if the taxpayer has reported farming income elsewhere on the return.

4. Form 1041, line 6.

5. Form 1041, line 8. Taxpayers are instructed to identify any amounts reported on Form 1041, line 8. Do not give credit for any unidentified amounts reported on line 8, unless there is a $1 match.

   Note: Give credit for amounts reported on Form 1041, line 8 when identified as Gross Farm Income ONLY when Form 1040, Schedule F or Form 4835 is not attached.

6. Form 1040, Schedule E, Part V, line 42:

If the amount reported on Schedule E, Part V, line 42 is	Then
Equal to or greater than the sum total of all farm related Amount Types from all IR's	Consider the income discrepancy resolved.
Less than the sum total of all farm related Amount Types from all IR's	Pursue the IR amount(s) in full do not give credit for any amount reported on this line.

Exception: Do not allow credit for any amount reported on Form 1040, Schedule E, Part V, line 42 when the taxpayer has reported farm income elsewhere on the return.

(2) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) Group Patronage Dividends, Per-unit Retain Allocations, Redemption Amount and Non-Patronage Distributions IRs to determine the overall amount and compare with the following entries:

1. Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on Form 1120, line 10. Do not give credit for any unidentified amounts reported on line 10, unless there is a $1 match.

2. Form 1040, Schedule F, Profit or Loss From Farming, line 3a (use 3b if line 3a is zero or blank) or 38a (use line 38b if line 38a is zero or blank).

   Caution: Per Unit Retain Allocations may be reported on Form 1040, Schedule F line 2. Only give credit if the amount reported on line 2 matches within $1 or is clearly identified as Per Unit Retain Allocations.

3. Form 4835, line 2a (line 2b if line 2a is zero or blank).

Reminder: Give credit for amounts reported on Form 1120, line 10 when identified as Gross Farm Income only when Form 1040, Schedule F or Form 4835 is not attached.

4. Form 1120, line 1a when the taxpayer name or Business Activity as shown on Form 1120, Schedule K, lines 2a – 2c relates to farming activity. See IRM 4.119.4.7.10, Form 1120 Gross Receipts or Sales (Bartering/Payment Card Transactions/Attorney's Proceeds/Fishing Proceeds/Medical Payments/Non-employee Compensation) - General, for additional information. Consider any other Gross Receipts and farming related IRs when determining the total amount to compare to Form 1120, line 1a.

   Exception: Do not give credit for any amounts reported on Form 1120, line 1a when the taxpayer has reported farming income on Form 1120, line 10.

(2) When an attachment or statement indicates Nominee income see IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Cooperative Distributions is U/R, enter the following on the Letter 2030:

1. Select COOPERATIVE DISTRIBUTIONS from the drop-down menu in the "Your income and deductions" field.

   Exception: Form 1041 only - When giving credit for amounts reported on Form 1040, Schedule E, Part I, line 3, select RENTS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Cooperative Distribution IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Compare Crop Insurance with entries on:

1. Form 1040, Schedule F, line 6a (use line 6b if line 6a is zero or blank) or line 41.

2. Form 1040, Schedule E, Part I, line 3. Group all farm related Amount Types from all IR(s) with any other rental related Amount Types IR(s) present.

   Exception: Do not allow credit for any amount reported on Form 1040, Schedule E, Part I, line 3 if the taxpayer has reported farming income elsewhere on the return.

3. Form 4835, line 5a (use line 5b if line 5a is zero or blank).

4. Give credit for amounts reported on Form 1041, line 6.

5. Form 1041, line 8. Taxpayers are instructed to identify any amounts reported on Form 1041, line 8. Do not give credit for any unidentified amounts reported on line 8, unless there is a $1 match.

   Note: Give credit for amounts reported on Form 1041, line 8 when identified as Gross Farm Income only when Form 1040, Schedule F or Form 4835 is not attached.

6. Form 1040, Schedule E, Part V, line 42:

If the amount reported on Schedule E, Part V, line 42 is	Then
Equal to or greater than the sum total of all farm related Amount Types from all IR's	Consider the income discrepancy resolved.
Less than the sum total of all farm related Amount Types from all IR's	Pursue the IR amount(s) in full do not give credit for any amount reported on this line.

Exception: Do not allow credit for any amount reported on Form 1040, Schedule E, Part V, line 42 when the taxpayer has reported farm income elsewhere on the return.

(2) Apparent Crop Insurance discrepancies may be due to the taxpayer electing to defer reporting the proceeds to the next year. Consider any Crop Insurance discrepancies resolved when ALL of the following conditions are met:

1. Uses a cash accounting method (see Form 1040, Schedule F), and

2. Attaches a statement electing to defer Crop Insurance proceeds to the subsequent year (under IRC Section 451(f) and Regulation Section 1.451-6).

Note: If the taxpayer filed Form 1040, Schedule F, box 6c should be checked. If Form 4835 is filed, box 5c should be checked.

(3) When more than one information return containing Crop Insurance amounts are present and the taxpayer does not provide a breakdown:

1. Group all Crop Insurance together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(4) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) Compare Crop Insurance with entries on:

1. Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on Form 1120, line 10. Do not give credit for any unidentified amounts reported on line 10, unless there is a $1 match.

2. Form 1040, Schedule F, line 6a (use line 6b if line 6a is zero or blank) or line 41.

3. Form 4835, line 5a (use line 5b if line 5a is zero or blank).

   Note: Give credit for amounts reported on Form 1120, line 10 when identified as Gross Farm Income only when Form 1040, Schedule F or Form 4835 is not attached.

4. Form 1120, line 1a when the taxpayer name or Business Activity as shown on Form 1120, Schedule K, lines 2a – 2c relates to farming activity. See IRM 4.119.4.7.10, Form 1120 Gross Receipts or Sales (Bartering/Payment Card Transactions/Attorney's Proceeds/Fishing Proceeds/Fish Purchased for Resale/Medical Payments/Non-employee Compensation) - General, for additional information. Consider any other Gross Receipts and farming related IRs when determining the total amount to compare to Form 1120, line 1a.

   Exception: Do not give credit for any amounts reported on Form 1120, line 1a when the taxpayer has reported farming income on Form 1120, line 10.

(2) Apparent Crop Insurance discrepancies may be due to the taxpayer electing to defer reporting the proceeds to the next year. Consider any Crop Insurance discrepancies resolved when ALL of the following conditions are met:

1. Uses a cash accounting method (see Form 1120, Schedule K), and

2. Attaches a statement electing to defer Crop Insurance proceeds to the subsequent year (under IRC Section 451(f) and Regulation Section 1.451-6).

Note: If the taxpayer filed Form 1040, Schedule F, box 6c should be checked. If Form 4835 is filed, box 5c should be checked.

(3) When more than one information return containing Crop Insurance amounts are present and the taxpayer does not provide a breakdown:

1. Group all Crop Insurance together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(4) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Crop Insurance is U/R, enter the following on the Letter 2030:

1. Select CROP INSURANCE from the drop-down menu in the "Your income and deductions" field.

   Exception: Form 1041 only - When giving credit for amounts reported on Form 1040, Schedule E, Part I, line 3, select RENTS from the drop down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Crop Insurance IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include PARAGRAPH 20 whenever Crop Insurance is U/R.

(1) Dividends display on IDRS CC: IRPTR with the following Amount Type and Document Type:

(1) ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡:

• Keogh (HR-10) or Tax-Sheltered Annuities (403(b)) accounts

• Simplified Employee Pensions (SEP) or Individual Retirement Accounts (IRA)

• A pension plan or profit-sharing plan (PSP) (including a 401(k) plan)

• An Escrow Account (Attorneys)

• Municipal Bonds

(2) Compare Ordinary dividends and/or Dividend amounts with entries on:

1. Form 1041, line 2a.

2. Form 1040, Schedule E, Parts II, III, and/or IV. The amounts must match within $1 or be clearly identified as Dividend Income.

(3) Do not screen the QLF DVDNDS element of the IR(s). The taxpayer determines the portion of QLF DVDNDS (from Form 1099-DIV, Box 1b) that is entered on Form 1041, line 2b. For all 1099-DIV IRs where the ORD DIV element is fully or partially U/R and a QLF DVDNDS element is present, take the following action:

1. When issuing a Letter 2030, always enter the qualified dividends reported on Form 1041, line 2b(2) in the Capital Gains Tax Rate Calculation worksheet.

   Note: Qualified Dividends are used in determining the proper Capital Gains tax rate.

2. Include the QLF DVDNDS element(s) on the IRs.

3. Include PARAGRAPH 6.

(4) When more than one information return containing Ordinary Dividends and/or Dividends are present and the taxpayer does not provide a breakdown:

1. Group all Ordinary Dividend and/or Dividend IRs together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(5) Dividends and Interest income may be interchanged. Check any interest income areas when comparing IR amounts. Offset dividend income against interest income only if an unidentified amount matches the U/R dividend amount within $1.

(6) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡:

• Keogh (HR-10) or Tax-Sheltered Annuities (403(b)) accounts

• Simplified Employee Pensions (SEP) or Individual Retirement Accounts (IRA)

• A trust or a plan where the corporation is listed as a Trustee

• A pension plan or profit-sharing plan (PSP) (including a 401(k) plan)

• An Escrow Account (Attorneys)

• Municipal Bonds

(2) Compare Ordinary Dividends, Dividends and Inclusions and/or Dividend amounts with entries on:

1. Form 1120, line 4.

2. Form 1120, line 10. The amount must match within $1 or be clearly identified as dividend income.

(3) When more than one information return containing Ordinary Dividends and/or Dividends are present and the taxpayer does not provide a breakdown:

1. Group all Ordinary Dividend and/or Dividend IRs together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(4) Dividends and Interest income may be interchanged. Check any interest income areas when comparing IR amounts. Offset dividend income against interest income only if an unidentified amount matches the U/R dividend amount within $1.

(5) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instructions.

(1) If Dividends are U/R, enter the following on the Letter 2030:

1. Select DIVIDENDS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Dividend IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include the following:

(1) Capital Gain Distributions display on IDRS CC:IRPTR with Amount Type (IRPTR Literal) CAPTL GAIN and Document Type Form 1099-DIV.

(2) Capital Gain Distribution are considered separately from Ordinary Dividends.

(1) Compare Amount Type CAPTL GAIN amounts with entries on:

(2) If the taxpayer provides a breakdown of Capital Gains Distributions (for example on an attachment/statement), ensure that the amount was properly carried forward to the following lines before considering them reported:

1. Form 1041, Schedule D, line 13 or Form 1041, line 4.

2. Form 1120, Schedule D, line 14 or Form 1120, line 8.

(3) Verify that Capital Gain Distributions reported on Schedule D, are appropriately carried forward to page one of the tax return. If not, then consider the amount U/R and include PARAGRAPH 12.

(4) When more than one information return containing Capital Gain Distributions are present and the taxpayer does not provide a breakdown:

1. Group all Capital Gain Distributions IRs together.

2. Compare the group total to the amount reported on:

Form 1041	Form 1120
Schedule D, line 13 Line 4, if Form 1041, Schedule D is not attached	Schedule D, line 14 Line 8, if Form 1120, Schedule D is not attached

Exception: Do not give credit for amounts on Form 1041, line 4 or Form 1120, line 8 if the amounts listed are clearly identified as a different income type.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(5) Form 1041 only - If there is CAPTL GAIN U/R and the taxpayer reports a capital loss of $3,000 or more include PARAGRAPH 8.

(6) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instructions.

(1) If Capital Gain Distributions are U/R, enter the following on the Letter 2030:

1. Select CAPITAL GAIN DISTRIBUTIONS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Capital Gain Distribution IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include the following:

(1) Compare Gambling winnings with entries on:

(2) When more than one information return containing Gambling Winnings amounts are present and the taxpayer does not provide a breakdown:

1. Group all Gambling Winnings together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(3) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instructions.

(1) If Gambling winnings is U/R, enter the following on the Letter 2030:

1. Select GAMBLING INCOME from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Gambling winning IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Gross Receipts or Sales refer to all other income received except those that are reported on Form 1120 lines 4 through 10.

(2) A taxpayer who receives a virtual currency, such as Bitcoin or another cryptocurrency, as a payment for rent, royalties, goods or services recognizes ordinary income when the taxpayer receives the virtual currency. The taxpayer will typically hold the virtual currency as a capital asset thereafter. The value of the payment is the fair market value (FMV) on the date of receipt. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) When determining underreported income, compare affected Amount Types to Form 1120, line 1a (Gross receipts or sales) and/or Form 1120, line 10 (Other income).

(4) If a Form 1099-K and Form 1099-MISC/1099-NEC are present with identical money amounts, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) Gross Payment Card transactions are not adjusted for any authorized returns or other allowances.

1. During Case Analysis consider the entire IR amount when determining underreported income unless the taxpayer provides a specific breakdown of their Gross Receipts or Sales and includes this amount type on their tax return.

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(6) Payers (generally insurance companies) report gross proceeds paid to an attorney (i.e., Attorney’s Fees) on Form 1099-MISC when they cannot determine the specific portion of the payment attributable to the taxpayer. The taxpayer is instructed to report only the taxable portion as income on their return. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. During Case Analysis, do not consider this amount type when determining U/R unless the taxpayer provides a specific breakdown of their Gross Receipts or Sales and includes this amount type on their tax return.

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. During response phase you may need to account for this amount type when evaluating the taxpayer’s response.

(7) When there are more than one type of Gross Receipts (e.g., Nonemployee Compensation and Medical payments) present on the same case and the taxpayer does not provide a breakdown. Group to determine the overall income amount to compare against amounts reported on the tax return.

1. If the group total is larger, consider the difference underreported.

2. If the group total is smaller, consider the issue resolved.

(8) If the taxpayer reports the same amount of Form 1099-MISC/1099-NEC income as shown on the IR, but under a different payer name, consider the IR reported.

(9) When an attachment or statement indicates Nominee income see IRM 4.119.4.4.7, Nominee Recipient, for further instructions.

(1) If Gross receipts are U/R, enter the following on the Letter 2030:

1. Select GROSS RECEIPTS from the drop-down menu in the "Your income and deductions" field.

2. Enter the amount from Form 1120, line 1a in the "Shown on return" field.

3. Enter the total of all U/R Gross Receipt IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include PARAGRAPH 1 when Gross Payment Card transactions are U/R.

(3) Select the appropriate income type from the drop down for any U/R Amount Types that are not part of the "Gross Receipts" group.

(1) ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• Municipal Bonds

• Keogh (HR-10) or Tax-Sheltered Annuities (403(b)) accounts

• Simplified Employee Pensions (SEP) or Individual Retirement Accounts (IRA)

• A Pension Plan or Profit-Sharing Plan (including a 401(k) plan)

• A Capital Construction Fund (CCF) account

(2) ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) Compare Interest, Market Discount, Savings Bond and OID amounts with entries on:

(4) The taxpayer may reduce INTEREST amounts by the Early Withdrawal Penalty shown on the information return as Amount Type "INT FORFET" and report the difference on Form 1041, line 1 or Form 1120, line 5.

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) When more than one information return containing Interest, Market Discount, Savings Bond and/or OID are present and the taxpayer does not provide a breakdown:

1. Group all Interest, Market Discount, Savings Bond and OID IRs together.

2. Compare the group total amount to the total reported interest.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(6) Form 1041 only - Interest comparison for the following entries must match within $1 or be CLEARLY IDENTIFIED as interest:

• Form 1040 Schedule C, line 6

• Form 1040 Schedule E, Parts ll, lll or IV

• Form 1040 Schedule F, Lines 8 or 43

(7) Form 1041, line 1 or Form 1120, line 5 may be reduced by any of the following. The amount should reflect the taxable amount of interest minus these adjustments:

• Accrued Interest - Interest on securities transferred between interest payment dates

• Tax-Exempt Interest - (e.g., Municipal Bonds, etc.)

• Amortizable Bond Premium - Premium offsets interest on taxable bonds acquired after December 31, 1987

• Frozen Deposits - An account from which the taxpayer is unable to withdraw funds because the financial institution or others in the area are bankrupt, insolvent, or in receivership

• Acquisition Premium offsets OID

(8) Interest and Dividends income may be interchanged. Check any dividend income area when comparing IR amounts. Offset Interest/OID income against dividend income only if an unidentified amount matches the U/R Interest/OID amount within a $1.

(9) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instructions.

(1) If Interest is U/R, enter the following on the Letter 2030:

1. Select INTEREST from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Interest IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Compare Amount Type MISC OTH I with entries on:

1. Form 1041, line 8 or Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on these lines. Do not give credit for any unidentified amounts, unless there is a $1 match.

   Caution: See IRM 4.119.4.4.9, Miscellaneous, when there is any indication Section 461 Limitation on Business Losses was used to determine taxable income (e.g., Form 461 attached to Form 1041, Form 1041, line 8 states ELA or limitation on business losses etc.), or Section 965 was used to determine income and or net tax liability (Form 1041 or 1120).

2. Form 1040, Schedule F, lines 8 or 43. The amount must match within $1 or be clearly identified.

3. Form 4835, line 6. The amount must match within $1 or be clearly identified.

4. Form 1040, Schedule C, line 6.

(2) Other income can be received in the form of virtual currency, such as Bitcoin or another cryptocurrency. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) When more than one information return containing Other Income amounts are present and the taxpayer does not provide a breakdown:

1. Group all Other Income together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(4) The Other Income amount on a Form 1099-MISC IR represents the full value of Other Income. If the taxpayer reports a lesser amount, consider the difference U/R, unless documentation is attached to the return.

(5) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Other Income is U/R, enter the following on the Letter 2030:

1. Select OTHER INCOME from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Other Income IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) Refer the case to the Lead Tax Examiner for review when an IR with Amount Type PT3INCLOSS or PT3DEDLOSS is present. See IRM 4.119.4.4.9, Miscellaneous, for additional information.

(3) When screening conduit IRs, keep the positive and negative amounts separate, but be aware that the taxpayer may have netted the negative IRs against positive IRs and/or the totals on the tax return. Review all forms, schedules and attached explanations to identify gross income amounts.

(4) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(6) REAL EST, OTHER RENT, GUAR PAYMT and OR INC K-1 is reported on Form 1040, Schedule E, Part II, Columns (g) and/or (j). If the amount is not found on Form 1040, Schedule E, Part II, Columns (g) and/or (j), check column (a) for the payer name and/or column (d) for the payer EIN.

1. If the taxpayer reports passive income on column (g) or passive loss on column (f) and attaches Form 8582, Passive Activity Loss Limitations, accept the gain or loss as reported, regardless of the amount, including zero.

2. If the taxpayer does not report the payer name/EIN on the Form 1040, Schedule E (or Schedule E is not completed/present) and attaches Form 8582, Passive Activity Loss Limitation, that includes the payer name and/or EIN of the discrepant IR, consider the discrepancy resolved.

3. If the taxpayer attaches a completed Form 6198, At Risk Limitation, that matches the payer name and/or EIN consider the discrepancy resolved regardless of whether there is corresponding income/loss reported on Form 1040, Schedule E.

(7) OTH RENTAL, NET RENTAL, BUSI INC and OTH PRTFLO is reported on Form 1040, Schedule E, Part III, column (d) and/or (f), If the amount is not found on Form 1040, Schedule E, Part III, column (d) and/or (f), check column (a) for the payer name and/or column (b) for the payer EIN.

1. If the taxpayer reports passive income on column (d) or passive loss on column (c) and attaches Form 8582, Passive Activity Loss Limitation, accept the gain or loss as reported, regardless of the amount, including zero.

2. If the taxpayer does not report the payer name/EIN on the Form 1040, Schedule E (or Schedule E is not completed/present) and attaches Form 8582, Passive Activity Loss Limitation, that includes the payer name and/or EIN of the discrepant IR, consider the discrepancy resolved.

3. If the taxpayer attaches a completed Form 6198, At Risk Limitation, that matches the payer name and/or EIN consider the discrepancy resolved regardless of whether there is corresponding income/loss reported on Form 1040, Schedule E.

(8) Compare Amount Types: REAL EST, NET RENTAL, OTHER RENT, OTH RENTAL, OR INC K-1, BUSI INC, OTH PRTFLO, and GUAR PAYMT with entries on:

1. Form 1040, Schedule E, Part II and III.

2. The taxpayer may combine Schedule K-1 amounts with SECTION 179 DEDUCTION and report the net on Form 1041, Schedule E, Part II or III. If the taxpayer did not claim the SECTION 179 DEDUCTION do not pursue.

3. Form 1041, line 8. Taxpayers are instructed to identify any amounts reported on Form 1041, line 8. Do not give credit for any unidentified amounts reported on line 8, unless there is a $1 match.

4. These Amount Types may be found elsewhere on the return and/or attachments. Thoroughly review the entire return, schedules, forms and attachments before pursuing discrepant K-1 amounts.

(9) ROYALTIES are reported on Form 1040 Schedule E, Part I, line 4.

(10) ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(11) If multiple conduit IRs are present from the same payer for the same taxpayer take the following action:

1. Review IDRS CC:IRPTRL for each IR to determine the On File Date.

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. If the On File Date is the same for multiple IRs and none of the IRs are reported, pursue all IRs.

(12) For tax year 2016 and prior IDRS research is required to determine if fully U/R Schedule K-1 (Form 1041) IRs Trusts are the result of a fiscal year filling requirement. Using the payer EIN, research IDRS CC:BMFOLI to determine the following:

1. Presence of MFT 05 with a Return Posted indicator of "Y", denoting that a Schedule K-1 (Form 1041) was filed.

2. If the MFT 05 indicates that it is for our BUR tax year pursue the U/R amount. If for another tax year, consider the issue resolved.

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(13) Beginning in tax year 2017, Schedule K-1 IDRS CC:IRPTR documents display the beginning tax period and ending tax period. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(14) Conduit income may be found elsewhere on the return and/or attachments. Thoroughly review the entire return, schedules and attachments before pursuing discrepant K-1 amounts:

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. Consider each component of a K-1 IR separately. For example, if the taxpayer only reports the INTEREST/DIVIDENDS portion of the IR but fails to report the remaining K-1 income types included on the IR (e.g., OR INC K-1, GUAR PAYMT, etc.), pursue the remaining income types based on the applicable IRM procedures.

(15) DIVIDENDS - See IRM 4.119.4.7.8.2, Form 1041 Dividends - Analysis, for further instructions.

(16) INTEREST - See IRM 4.119.4.7.11.1, Interest - Analysis, for further instructions.

(17) RENTS and ROYALTIES - See IRM 4.119.4.7.17.1, Form 1041 Rents and Royalties – Analysis, for further instructions.

(18) Compare Schedule K-1 Amount Type SHT TRM CG with entries on:

1. Form 1041, Schedule D, line 5.

2. If the taxpayer did not file a Schedule D, determine if the Short Term Capital Gains are reported on Form 1041, line 4.

3. Form 1041, line 8. Taxpayers are instructed to identify any amounts reported on Form 1041, line 8. Do not give credit for any unidentified amounts reported on line 8, unless there is a $1 match.

(19) Compare Schedule K-1 Amount Type LNG TRM CG with entries on:

1. Form 1041, Schedule D, line 12.

2. If the taxpayer did not file a Schedule D, determine if the Capital Gains are reported on Form 1041, line 4.

3. Form 1041, line 8 Taxpayers are instructed to identify any amounts reported on Form 1041, line 8. Do not give credit for any unidentified amounts reported on line 8, unless there is a $1 match.

(20) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) Refer the case to the Lead Tax Examiner for review when an IR with Amount Type PT3INCLOSS or PT3DRDLOSS is present. See IRM 4.119.4.4.9, Miscellaneous, for additional information.

(3) When screening conduit IRs, keep the positive and negative amounts separate, but be aware that the taxpayer may have netted the negative IRs against positive IRs and/or the totals on the tax return. Review all forms, schedules and attached explanations to identify gross income amounts.

(4) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"

2. ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(6) Compare Amount Types: REAL EST, NET RENTAL, OTHER RENT, OTH RENTAL, OR INC K-1, BUSI INC, OTH PRTFLO, and GUAR PAYMT with entries on Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on Form 1120, line 10. Do not give credit for any unidentified amounts reported on line 10, unless there is a $1 match.

1. These Amount Types may be found elsewhere on the return and/or attachments. Thoroughly review the entire return, schedules, forms and attachments before pursuing discrepant K-1 amounts.

2. The taxpayer may combine Schedule K-1 amounts with SECTION 179 DEDUCTION and report the net on Form 1120, line 10. If the taxpayer did not claim the SECTION 179 DEDUCTION do not pursue.

(7) ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(8) If multiple conduit IRs are present from the same payer for the same taxpayer take the following action:

1. Review IDRS CC:IRPTRL for each IR to determine the On File Date.

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. If the On File Date is the same for multiple IRs and none of the IRs are reported, pursue all IRs.

(9) For tax year 2016 and prior, IDRS research is required to determine if fully U/R Schedule K-1 (1041) IRs Trusts are the result of a fiscal year filing requirement. Using the payer EIN, research IDRS CC: BMFOLI to determine the following:

1. Presence of MFT 05 with a Return Posted indicator of "Y", denoting that a Schedule K-1 (1041) was filed.

2. If the MFT 05 indicates that it is for our BUR tax year pursue the U/R amount. If for another tax year, consider the issue resolved.

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(10) Beginning in tax year 2017, Schedule K-1 IDRS CC: IRPTR documents display the beginning tax period and the ending tax period. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(11) Conduit income may be found elsewhere on the return and/or attachments. Thoroughly review the entire return, schedules and attachments before pursuing discrepant K-1 amounts.

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. Consider each component of a K-1 IR separately. For example, if the taxpayer only reports the INTEREST/DIVIDENDS portion of the IR but fails to report the remaining K-1 income types included on the IR (e.g., OR INC K-1, GUAR PAYMT, etc.), pursue the remaining income types based on the applicable IRM procedures.

(12) DIVIDENDS - See IRM 4.119.4.7.8.3, Form 1120 Dividends - Analysis, for further instructions.

(13) INTEREST - See IRM 4.119.4.7.11.1, Interest - Analysis, for further instructions.

(14) ROYALTIES - See IRM 4.119.4.7.18.1, Form 1120 Royalties – Analysis, for further instructions.

(15) Compare Schedule K-1 Amount Type SHT TRM CG with entries on:

1. Form 8949, Part I, line 1. Taxpayers are instructed to write "from Schedule K-1" and to enter the amount in column (h).

2. If the taxpayer did not file a Schedule D, determine if the Short Term Capital Gains are reported on Form 1120, line 8.

3. Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on Form 1120, line 10. Do not give credit for any unidentified amounts reported on line 10, unless there is a $1 match.

(16) Compare Schedule K-1 Amount Type LNG TRM CG with entries on:

1. Form 8949, Part II, line 1. Taxpayers are instructed to write "from Schedule K-1" and to enter the amount in column (h).

2. If the taxpayer did not file a Schedule D, determine if the Capital Gains are reported on Form 1120, line 8.

3. Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on Form 1120, line 10. Do not give credit for any unidentified amounts reported on line 10, unless there is a $1 match.

(17) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Conduit Income is U/R, enter the following on the Letter 2030:

1. Select the PARTNERSHIP/TRUST/SMALL BUSINESS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Conduit Income IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) If the IR shows TRUSTEE ROLLOVER BOX CHECKED the distribution is nontaxable. Do not pursue the issue.

(2) Only pursue net positive EARNGS. When there are multiple Form 1099-Q IR(s), combine positive EARNGS with any negative EARNGS. If the combined net EARNGS is negative, do not pursue the EARNGS issue.

(3) Generally, QTP distributions are nontaxable if they are less than the designated beneficiary's qualified education expenses. The taxable amount is reported on Form 1041, line 8. Consider the Form 1099-Q distribution(s) reported when:

1. The taxpayer identifies the amount reported on line 8 as the taxable portion of the Form 1099-Q distribution.

2. The taxpayer indicates the designated beneficiary's qualified education expenses were greater than the Form 1099-Q distribution.

(4) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instructions.

(1) If Qualified Education Program Payments is U/R, enter the following on the Letter 2030:

1. Select QUALIFIED EDUCATION PROGRAM PAYMENTS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Qualified Education Program Payments IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include PARAGRAPH 9 when Qualified Education Program Payments is U/R.

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) Compare Real Estate Sales amounts with entries on:

(4) If the amounts reported on these Forms or Schedules are equal to or greater than the REAL ES SL IR(s) amounts, consider the issue resolved. If the amounts reported are less, consider the difference U/R.

(5) Ensure that amounts reported on Forms and Schedules are properly carried forward to page 1 of the tax return.

(6) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Real Estate Sales is U/R, enter the following on the Letter 2030:

1. Select REAL ESTATE SALES from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Real Estate Sales IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Include PARAGRAPH 18 when Real Estate Sales are U/R.

(1) Compare Rental Information Return amounts with entries on:

1. Form 1120, line 6.

2. Form 1040, Schedule F, Part I or Part III. lines 2, 8 or 43. The amount must match within $1 or be clearly identified as Rental Income.

3. Form 1120, line 10. The amount must match within $1 or be clearly identified as Rental Income.

4. Form 1120, line 1a when the taxpayer name or Business Activity as shown on Form 1120, Schedule K, lines 2a – 2c relates to rental activity (i.e., Rental, Real Estate, Property Management, Warehouse Storage, Leasing, Rental Equipment, etc.). See IRM 4.119.4.7.10, Form 1120 Gross Receipts or Sales (Bartering/Payment Card Transactions/Attorney's Proceeds/Fishing Proceeds/Medical Payments/Non-employee Compensation) - General, for additional information. Consider any other Gross Receipts related IRs when determining the total amount to compare to Form 1120, line 1a.

   Exception: Do not give credit for any amounts reported on Form 1120, line 1a when the taxpayer has reported an amount on Form 1120, line 6 (Gross Rents).

(2) When more than one information return containing Rental Income are present and the taxpayer does not provide a breakdown:

1. Group all rent IRs together.

2. Compare the group total amount to the total reported rents.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(3) When an attachment or statement indicates Nominee income see IRM 4.119.4.4.7, Nominee Recipient, for further instructions.

(1) If Rental Income is U/R, enter the following on the Letter 2030:

1. Select GROSS RENTS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Rent IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Compare RENTS or ROYALTIES amounts with entries on:

1. Form 1040, Schedule E, Part I, lines 3 and 4.

2. Form 1041, line 5.

3. Form 1040, Schedule C, Part l, line 1 or Schedule C-EZ, Part II, line 1. If the taxpayer is in the business of rental property, or it can be determined from the payer name or business activity that the income is from the same source. When screening for Rents/Royalties income on Form 1040, Schedule C, also consider any additional Business Income IR(s) to determine the U/R amount.

   Note: Beginning in tax year 2019, Schedule C-EZ is obsolete.

4. Consider the IRs reported if the gross amount on Form 4835 is large enough to include the Rent/Royalty amount. As long as distributions from Amount Types (IRPTR Literal) TX GRANT, PATRONAGE, NONPAT DIS, RTAIN ALLC, AG SUBS, MRKGAINCCC, and CROP INS are accounted for first. Otherwise, issue a Letter 2030 for the full amount of the IR(s).

5. Form 1041, Schedule D, or Form 8949. If income is identified as Coal and Timber royalties, patents, rights of way, or easements. If the payer is identified and the amount is larger accept, if the payer is identified and the amount is smaller give credit and pursue the difference.

(2) RENTS or ROYALTIES for the following entries must match within $1 or be clearly identified :

1. Form 1040, Schedule C, Part 1, line 6.

2. Form 1040, Schedule E, Part ll.

3. Form 1040, Schedule F, Part I or Part III. Do not pursue IRs when the amount matches Form 1040, Schedule F, lines 2, 8 or 43 within $1, or a larger amount is present and is identified as rent or royalty.

4. Form 1041, line 8.

(3) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡

   Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(4) If a breakdown of Rents and Royalty Income is not shown on the return and there is more than one IR:

1. Group by income type RENTS or ROYALTIES as applicable.

2. Compare the group total amount to the total reported rents or royalties.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(5) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Rents and Royalties is U/R, enter the following on the Letter 2030:

1. Select RENTS or ROYALTIES from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Rents or Royalties IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) Compare Royalties amounts with entries on:

1. Form 1120, line 7.

2. Form 1040, Schedule F, Part I or Part III, lines 8 or 43. The amount must match within $1 or be clearly identified as Royalties.

3. Form 1120, line 10. The amount must match within $1 or be clearly identified as Royalties.

4. Form 1120, line 1a when the taxpayer name or Business Activity as shown on Form 1120, Schedule K, lines 2a - 2c relates to Mining, Independent Artists (including Writers and/or Performers), Advertising or Publishing (including Software Development and/or Film Production) activities. See IRM 4.119.4.7.10, Form 1120 Gross Receipts or Sales (Bartering/Payment Card Transactions/Attorney's Proceeds/Fishing Proceeds/Fish Purchased for Resale/Medical Payments/Nonemployee Compensation) - General, for additional information. Consider any other Gross Receipts related IRs when determining the total amount to compare to Form 1120, line 1a.

   Exception: Do not give credit for any amounts reported on Form 1120, line 1a when the taxpayer has reported an amount on Form 1120, line 7 (Gross Royalties).

(2) When more than one information return containing Royalties are present and the taxpayer does not provide a breakdown:

1. Group all Royalties together.

2. Compare the group total amount to the total reported Royalties.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(3) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instructions.

(1) If Royalties are U/R, enter the following on the Letter 2030:

1. Select GROSS ROYALTIES from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Royalty IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡

(2) Generally, Form 1099-B PROCEEDS IRs contain a CUSIP (Committee on Uniform Security Identification Procedures) number. This number is usually nine characters long, consisting of alpha and/or numeric characters. The CUSIP number identifies the issuer of the transaction and the type of transaction. Alpha characters in the 7th and/or 8th position(s) of the CUSIP number denote fixed income obligation securities. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When the taxpayer has reported these amounts, the IRs must be taken into consideration when determining the U/R amount.

1. Be careful when determining the position of the CUSIP number containing the alpha characters. The first six digits represent the issuer number and the 4th and 5th and/or 6th positions may contain alpha character(s).

2. Pursue PROCEEDS IRs whose entity includes nontaxable Municipal Bond, tax free exchange or tax free unless the CUSIP number meets the conditions provided above.

(3) Some PROCEEDS IR(s) appear to be duplicates because the account numbers, the amounts, and the source (paper or tape) are identical. Do not consider these IR(s) as duplicates if the transaction (sales) dates shown on the IR(s) are different.

(4) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) Form 1041 or Form 1120, Schedule D, line 1a and/or line 8a is used to report an aggregate total of stock transactions that don't require a breakdown on Form 8949, Sales and Other Dispositions of Capital Assets. However, the taxpayer can also complete a Form 8949 for other transactions that are then reported on Form 1041 or Form 1120, Schedule D, line 1b, 2, 3, 8b, 9 and/or 10.

1. Utilize the instructions in (6) and (7) below when screening cases where the taxpayer has reported transactions on Form 1041 or Form 1120, Schedule D line 1a and/or 8a and also includes a Form 8949 to report other transactions.

2. Attempt to resolve specific IRs by comparing them to the specific transactions reported on Form 8949before grouping to match against the aggregate total reported on Form 1041 or Form 1120, Schedule D, line 1a and/or 8a.

(6) If Form 1041 or Form 1120, Schedule D is present without Form 8949 compare PROCEEDS amounts with entries on:

1. Form 1041 or Form 1120, Schedule D, Part I, line(s) 1a through 3, column (d).

2. Form 1041 or Form 1120, Schedule D, Part II, line(s) 8a through 10, column (d).

   Note: Use the IR payer name or item description to identify the transactions reported on the tax return.

   Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

≡ ≡	≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡	≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡	≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(7) If the Form 8949, or attachment includes a breakdown of transactions by payer name, sales date or item description:

1. Compare Form 8949, Part I, line 1, column (d) or Part II, line 1, column (d) entries to the PROCEEDS and give credit for identified reported amounts.

2. If there are multiple IRs with the same payer name or item description, compare the total to the identified amount(s) reported on the return.

3. Do not give credit for any amounts reported on the Form 8949 when the payer name or item description does not match the IR, unless there is a dollar match.

4. Ensure that any amounts reported on attachments/forms are properly included as income on page one of the return.

5. ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

7. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

≡ ≡ ≡	≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡	≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡	≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(8) Form 1041 only - If PROCEEDS are U/R and the taxpayer reports a capital loss of $3,000 or more include PARAGRAPH 8.

(9) If the taxpayer does not file a Form 1041 or Form 1120 Schedule D, Form 8949 or a breakdown of securities sales is not provided and there is more than one Securities Sales IR, take the following action:

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. Group the remaining IRs by Amount Type PROCEEDS and compare the total to the gross amounts reported on Form 1041, line 4 or Form 1120, line 8.

   Exception: Do not give credit for amounts on Form 1041, line 4 or Form 1120, line 8 if the amounts listed are clearly identified as a different income type.

3. If the PROCEEDS group total is smaller, consider the issue resolved.

4. If the PROCEEDS group total is larger, consider the difference underreported.

5. Group any COST&BASIS Amount Types, consider the difference underreported and enter zero as the reported amount.

6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

≡ ≡ ≡ ≡	≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡	≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡	≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(10) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(11) When a taxpayer has an inclusion event regarding its investment in a QOF in a tax year, they must report the amount of eligible gain previously deferred that is now being recognized on Form 8949, Sales and Other Dispositions of Capital Assets, then carry the amount(s) from Form 8949 to Schedule D (Form 1120 or Form 1041). The taxpayer is instructed to:

1. Report the gain from each investment on its own row of Form 8949.

2. Enter the TIN of the QOF investment that was sold.

3. Complete columns (b), (c), (d) and (e).

4. Enter "Y" in column (f).

5. Enter the amount of the previously deferred gain as a positive number in column (g).

(12) Compare IR identified as a QOF investment gain (i.e., Form 1099-B box 3 has QOF checked and/or the IR is coded with indicator 2 in the "Proceeds from Collectible" field) with the income reported on Form 8949 identified with code "Y" in column (f).

(1) When PROCEEDS is U/R, enter the following on the Letter 2030:

1. Select SECURITIES SALES from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Securities Sales IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(2) Send PARAGRAPH 13 when Securities Sales are U/R.

(3) When COST&BASIS is U/R, enter the following on the Letter 2030:

1. Select COST BASIS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount as a negative in the "Shown on return" field.

3. Enter the total of all U/R Cost Basis IR amounts plus the "Shown on return" amount as a negative in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(4) Form 1041 only - Include PARAGRAPH 8 when applicable.

(1) Compare Amount Type SUB PAYMTS with entries on Form 1041, line 8 or Form 1120, line 10. Taxpayers are instructed to identify any amounts reported on Form 1041, line 8 or Form 1120, line 10. Do not give credit for any unidentified amounts reported on line 10, unless the match is within $1.

(2) When more than one information return containing Substitute Payments in Lieu of Dividends or Tax-Exempt Interest amounts are present, and the taxpayer does not provide a breakdown:

1. Group all Substitute Payments in Lieu of Dividends or Tax-Exempt Interest together.

2. Compare the group total amount to the total reported.

3. If the group total is smaller, consider the issue resolved.

4. If the group total is larger, consider the difference underreported.

(3) When an attachment or statement indicates Nominee income. See IRM 4.119.4.4.7, Nominee Recipient, for further instruction.

(1) If Substitute Payments in Lieu of Dividends or Tax-Exempt Interest is U/R, enter the following on the Letter 2030:

1. Select PAYMENTS IN LIEU OF DIVIDENDS from the drop-down menu in the "Your income and deductions" field.

2. Enter the gross reported amount in the "Shown on return" field.

3. Enter the total of all U/R Substitute Payments in Lieu of Dividends or Tax-Exempt Interest IR amounts plus the "Shown on return" amount in the "As corrected by IRS" field.

   Caution: It may be necessary to include any additional amounts identified on the return.

4. Verify the "Difference" field matches the U/R amount.

(1) If the payer is the US Department of Agriculture, compare Taxable Grant amount(s) with entries on:

1. Form 1040, Schedule F, lines 4a (line 4b if line 4a is zero or blank) or line 39a (line 39b if line 39a is zero or blank).

2. Form 1040, Schedule F, lines 8 or 43. The amount must match within $1 or be clearly identified as grants.

3. Form 1040, Schedule E, Part I, line 3. Group all farm related Amount Types from all IR(s) with any other rental related Amount Types IR(s) present.

   Exception: Do not allow credit for any amount reported on Form 1040, Schedule E, Part I, line 3 if the taxpayer has reported farming income elsewhere on the return.

4. Form 4835, line 3a (line 3b if line 3a is zero or blank).

5. Form 1041, line 6.

   Note: Give credit for amounts reported on Form 1041, line 8 when identified as Gross Farm Income only when Form 1040, Schedule F or Form 4835 is not attached.

Note: If agriculture payments are present, consider these amounts when determining the U/R.

6. Form 1041, line 8. Taxpayers are instructed to identify any amounts reported on Form 1041, line 8. Do not give credit for any unidentified amounts reported on line 8, unless there is a $1 match.

7. Form 1040, Schedule E, Part V, line 42:

If the amount reported on Schedule E, Part V, line 42 is	Then
Equal to or greater than the sum total of all farm related Amount Types from all IR's	Consider the income discrepancy resolved.
Less than the sum total of all farm related Amount Types from all IR's	Pursue the IR amount(s) in full do not give credit for any amount reported on this line.

Exception: Do not allow credit for any amount reported on Form 1040, Schedule E, Part V, line 42 when the taxpayer has reported farm income elsewhere on the return.