Instructions for Form 1099

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					                                                                                               Use Form 1096 To Send Forms
                                                  Department of the Treasury                   to the IRS
                                                  Internal Revenue Service                     You must send Copies A of all paper
                                                                                               Forms 1099, 1098, 5498, and W-2G to the

Instructions for Forms 1099,                                                                   IRS with Form 1096, Annual Summary and
                                                                                               Transmittal of U.S. Information Returns.
                                                                                               Instructions for completing Form 1096 are

1098, 5498, and W-2G                                                                           contained on Form 1096.

                                                                                               REMINDER—Substitute
(Including Instructions for Forms 1099-A, 1099-B,                                              Statements to Recipients
1099-C, 1099-DIV, 1099-G, 1099-INT, 1099-MISC,                                                 If you are not using the official IRS form
                                                                                               (generally Copy B) to furnish statements to
1099-OID, 1099-PATR, 1099-R, 1099-S, and 5754)                                                 recipients, be sure your substitute
Section references are to the Inter nal Revenue Code unless otherwise noted.                   statements comply with the rules in Pub.
                                                                                               1179, Rules and Specifications for Private
                                                                                               Printing of Substitute Forms 1096, 1098,
Paperwork Reduction Act Notice.—We               Form 1098—Seller-Paid Points                  1099 Series, 5498, and W-2G. Pub. 1179,
ask for the information on these forms to                                                      which is revised annually, is a revenue
carry out the Internal Revenue laws of the       For 1995 and later years, you must report     procedure that explains the requirements
United States. You are required to give us       points paid by the seller on the buyer’s      for format and content of substitute
the information. We need it to ensure that       Form 1098, Mortgage Interest Statement.       statements to recipients. If you are using
you are complying with these laws and to         The title of box 2 was changed to “Points     a substitute form to furnish information
allow us to figure and collect the right         paid on purchase of principal residence.”     to recipients, it must comply with the
amount of tax.                                   See Points on page 10.                        requirements in Pub. 1179.
   The time needed to complete and file          Filing Forms 1099-A and 1099-C
the following forms will vary depending on                                                     Guide to Information Returns
individual circumstances. The estimated          Coordinated; Some Boxes
                                                                                               See the chart on pages 32 and 33 for a
average times are:                               Changed                                       brief summary of information return
                                        Insts.   Rather than filing both Forms 1099-A,         reporting rules.
                                        begin    Acquisition or Abandonment of Secured
                                           on    Property, and 1099-C, Cancellation of         Need Help?
                                         page    Debt, for the same year, you may be           Information Reporting Call Site.—The
1098                  7 minutes             8    required to file only Form 1099-C. Box 3      IRS operates a centralized call site to
1099-A              10 minutes             11    on Form 1099-A, previously titled “Gross      answer questions about reporting on
                                                 foreclosure proceeds,” was eliminated, and    information returns—Forms 1096, 1098,
1099-B              15 minutes             12    the title of box 4 was changed to “Fair       1099, 5498, W-2, W-2G, and W-3. If you
1099-C              11 minutes             13    market value of property.” On Form            have questions related to reporting on any
1099-DIV            14 minutes             14    1099-C, the title of box 6 was changed to     of these forms, you may call 304-263-8700
1099-G              11 minutes             15    “Check for bankruptcy,” and a new box 7       (not a toll-free number) Monday through
                                                 titled “Fair market value of property” was    Friday from 8:30 a.m. to 4:30 p.m. eastern
1099-INT            12 minutes             15    added. See the instructions for both forms,   time.
1099-MISC           14 minutes             17    which begin on pages 11 and 13.               Bulletin Board Service.—The IRS also
1099-OID            10 minutes             20                                                  operates an electronic bulletin board
1099-PATR           11 minutes             21
                                                 Form 1099-R Changes
                                                                                               (IRP-BBS). The IRP-BBS offers changes
1099-R              20 minutes             22    New box 9b, Total employee contributions,     and updates that affect information
                                                 was added to the 1995 Form 1099-R,            reporting. By using your personal computer
1099-S                8 minutes            26
                                                 Distributions From Pensions, Annuities,       and modem, you can access the IRP-BBS
5498                  7 minutes            29    Retirement or Profit-Sharing Plans, IRAs,     by dialing 304-263-2749. For more
W-2G                19 minutes             29    Insurance Contracts, etc. See the 1995        information, see Pub. 1220, Specifications
1096                10 minutes     (see form)    Form 1099-R and the instructions for box      for Filing Forms 1098, 1099, 5498 and
                                                 9b on page 26.                                W-2G Magnetically or Electronically.
5754                (see form)             31
                                                    Distribution codes A, B, and C, used in    Internal Revenue Bulletin.—The Internal
   If you have comments concerning the
                                                 box 7, were changed to indicate “May be       Revenue Bulletin (IRB), published weekly,
accuracy of these time estimates or
                                                 eligible....” See page 26.                    contains newly issued regulations, as well
suggestions for making these forms
simpler, we would be happy to hear from                                                        as notices, announcements, legislation,
                                                 Form 945—Withholding Tax Return               court decisions, and other items of general
you. You can write to the Internal
Revenue Service, Attention: Tax Forms            Report backup withholding and withholding     interest. You may find this publication
Committee, PC:FP, Washington, DC                 from gambling winnings, pensions,             useful to keep you up to date with current
20224. DO NOT send these forms to this           annuities, IRAs, and military retirement on   developments. The IRB is sold by the
address. Instead, see Where To File on           Form 945, Annual Return of Withheld           Superintendent of Documents, U.S.
page 5.                                          Federal Income Tax. File Form 945 for         Government Printing Office, Washington,
                                                 1995 by January 31, 1996. Generally, any      DC 20402, and is available on a
                                                 income tax withheld reported on Forms         subscription basis. To order the IRB, you
Items You Should Note                            1099 or W-2G must be reported on Form         can write to the Superintendent of
                                                 945. Any income tax withheld reported on      Documents or call 202-512-1800 (not a
                                                 Form W-2, including withholding on            toll-free number).
Changes to Where To File                         distributions to plan participants from       Forms and Publications.—You may order
Some filing sites have changed again. You        nonqualified plans, must be reported on       forms, instructions, and publications by
may have to file with an Internal Revenue        Form 941, Employer’s Quarterly Federal        calling 1-800-TAX-FORM
Service Center that is different from the        Tax Return. For more information, including   (1-800-829-3676).
one you filed with for 1994. Check the           the deposit requirements for Form 945, see
addresses listed on page 5 under Where           the separate Instructions for Form 945.
To File for your proper filing location.
                                                               Cat. No. 11409F
                                                  begun backup withholding, begin backup         Failure To File Correct Information
Backup Withholding                                withholding and continue until the TIN is
                                                  provided.
                                                                                                 Returns by the Due Date (Section
                                                  2. Notice from the IRS that payee’s TIN
                                                                                                 6721)
Interest, dividends, rents, royalties,
commissions, nonemployee compensation,            is incorrect (“B” notice).—You may elect       If you fail to file a correct information return
and certain other payments (including             to withhold on any reportable payment          by the due date and you cannot show
broker and barter exchange transactions,          made to the account(s) subject to backup       reasonable cause, you may be subject to a
and certain payments made by fishing boat         withholding after receipt of the “B” notice,   penalty. The penalty applies if you fail to
operators) may be subject to backup               but you must withhold on any reportable        file timely, you fail to include all information
withholding at a 31% rate. To be subject          payment made to the account more than          required to be shown on a return, or you
to backup withholding, a payment must be          30 business days after you received the        include incorrect information on a return.
a reportable interest or dividend payment         “B” notice. Stop withholding within 30         The penalty also applies if you file on
under section 6049(a), 6042(a), or 6044 (if       days after you receive a certified Form W-9    paper when you were required to file on
the patronage dividend is paid in money or        (or acceptable substitute).                    magnetic media, you report an incorrect
qualified check), or an “other” reportable        Note: The IRS will furnish a notice to you,    TIN or fail to report a TIN, or you fail to file
payment under section 6041, 6041A(a),             and you are required to promptly furnish a     paper forms that are machine readable.
6045, 6050A, or 6050N. If the payment is          copy of such notice, or an acceptable              The amount of the penalty is based on
one of these reportable payments, backup          substitute, to the payee. For further          when you file the correct information
withholding will apply if:                        information, see Regulations section           return. The penalty is:
   1. The payee fails to furnish his or her       31.3406(d)-5 and Rev. Proc. 93-37, 1993-2      ● $15 per information return if you
taxpayer identification number (TIN) to you,      C.B. 477.                                      correctly file within 30 days (by March 30 if
OR                                                   If you receive two incorrect TIN notices    the due date is February 28); maximum
   2. The IRS notifies you to impose              within 3 years for the same account, follow    penalty $75,000 per year ($25,000 for small
backup withholding because the payee              the procedures in Regulations section          businesses, defined later).
furnished an incorrect TIN, OR                    31.3406(d)-5(g) and Rev. Proc. 93-37.          ● $30 per information return if you
   3. You are notified that the payee is          3. Notice from the IRS that payee is           correctly file more than 30 days after the
subject to backup withholding (under              subject to backup withholding due to           due date but by August 1; maximum
section 3406(a)(1)(C)), OR                        notified payee underreporting.—Start           penalty $150,000 per year ($50,000 for
                                                  withholding on payments made on the 31st       small businesses).
   4. For interest and dividend accounts          day after the date you receive notification
opened or instruments acquired after 1983,                                                       ● $50 per information return if you file after
                                                  from the IRS, or you may elect to withhold     August 1 or you do not file required
the payee fails to certify to you, under          any time before the 31st day. The IRS will
penalties of perjury, that he or she is not                                                      information returns; maximum penalty
                                                  notify you in writing when to stop             $250,000 per year ($100,000 for small
subject to backup withholding under 3             withholding, or the payee may furnish you
above, OR                                                                                        businesses).
                                                  a written certification from the IRS stating
   5. For interest, dividend, broker, or barter   when withholding is to stop. In most           Exceptions to the Penalty.—
exchange accounts opened or instruments           cases, the stop date will be January 1 of          1. The penalty will not apply to any
acquired after 1983, or broker accounts           the year following the year of the notice.     failure that you can show was due to
considered inactive in 1983, the payee fails      Note: You must notify the payee when           reasonable cause and not to willful neglect.
to certify, under penalties of perjury, that      withholding under this procedure starts.           2. An inconsequential error or omission
the TIN provided is correct.                      For further information, see Temporary         is not considered a failure to include
   Except as explained in 5 above,                Regulations section 35a.3406-2.                correct information. An inconsequential
reportable “other” payments are subject to        4. Payee failure to certify that he or she     error or omission does not prevent or
backup withholding only if 1 or 2 above           is not subject to backup withholding.—         hinder the IRS from processing the return,
applies.                                          Withhold on reportable interest and            from correlating the information required to
   Some payees are exempt from backup             dividends until certification has been         be shown on the return with the
withholding. For a list of types of exempt        received.                                      information shown on the payee’s tax
payees and other information, please see                                                         return, or from otherwise putting the return
                                                     For exceptions to these general timing      to its intended use. Errors and omissions
Form W-9, Request for Taxpayer                    rules, see section 3406(e).
Identification Number and Certification,                                                         that are never inconsequential are those
and Instructions for the Requester of             Note: For information about backup             relating to (a) a TIN, (b) a payee’s surname,
Form W-9.                                         withholding on gambling winnings, see the      and (c) any money amounts.
                                                  Specific Instructions for Form W-2G for the        3. De Minimis Rule for Corrections.—
   Real estate transactions reportable under      specific type of gambling winnings later.
section 6045(e) and canceled debts                                                               Even though you cannot show reasonable
reportable under section 6050P are not            Reporting Backup Withholding.—Backup           cause, the penalty for failure to file correct
subject to backup withholding.                    withholding must be reported on Form           information returns will not apply to a
                                                  945, Annual Return of Withheld Federal         certain number of returns if:
   Generally, the period for which the 31%        Income Tax. For more information, see the
should be withheld is as follows:                                                                    a. You filed those information returns,
                                                  Instructions for Form 945. Also report
1. Failure to furnish TIN in the manner           backup withholding on each Form W-2G,              b. Either you failed to include all the
required.—Withhold on payments made               1099-B, DIV, G, INT, MISC, OID, or PATR        information required to be shown on a
until the TIN is furnished in the manner          used to report the payment.                    return or you included incorrect
required. Special backup withholding rules                                                       information, and
                                                  Additional Information.—For more
apply if the payee has applied for a TIN.         information about backup withholding, see          c. You filed corrections of these
The payee may certify to this on Form W-9         Temporary Regulations sections                 information returns by August 1.
by noting “Applied For” in the TIN block          35a.9999-1, 2, and 3, and 35a.3406-1               If you meet all the conditions in a
and by signing the form. This form then           and 2.                                         through c, the penalty for filing incorrect
becomes an “awaiting-TIN certificate,” and                                                       returns (but not for filing late) will not apply
the payee has 60 days to obtain a TIN and                                                        to the greater of 10 information returns or
furnish it to you. For information about          Penalties                                      1
                                                                                                  ⁄2 of 1% of the total number of information
whether backup withholding applies during                                                        returns you are required to file for the
the 60-day period, see Temporary                                                                 calendar year.
                                                  The following penalties generally apply to
Regulations section 35a.9999-3, Q/A-59A.
                                                  the person required to file information        Lower Maximum Penalties for Small
If you do not receive a TIN from the payee
                                                  returns. The penalties apply to paper filers   Businesses.—For purposes of the lower
within 60 days and you have not already
                                                  as well as magnetic media/electronic filers.   maximum penalties shown in parentheses
Page 2
above, you are a small business if your         return with no maximum. See section             corrections, your corrections can be filed
average annual gross receipts for the 3         6693.                                           on paper because the number of
most recent tax years (or for the period        Caution: Congress has considered, and           corrections for Form 1098 is less than the
you were in existence, if shorter) ending       may consider again, legislation that would      250 filing requirement. However, if you
before the calendar year in which the           apply the penalties under sections 6721         were filing 250 or more Form 1098
information returns were due are $5 million     and 6722 to Forms 1099-R and 5498.              corrections, they would have to be filed on
or less.                                                                                        magnetic media.
Intentional Disregard of Filing                                                                 How To Get Approval To File on
Requirements.—If any failure to file a          Magnetic Media/Electronic                       Magnetic Media.—File Form 4419,
correct information return is due to            Reporting                                       Application for Filing Information Returns
intentional disregard of the filing and                                                         Magnetically/Electronically, at least 30
correct information requirements, the                                                           days (45 days for some electronic filing)
penalty is at least $100 per information        Magnetic media reporting may be required        before the due date of the returns. Only
return with no maximum penalty.                 for filing all information returns discussed    one Form 4419 need be filed for all types
                                                in this publication. Acceptable forms of        of returns that will be filed on magnetic
Failure To Furnish Correct Payee                magnetic media are magnetic tape, tape          media. Once you have received approval,
                                                cartridge, 31⁄2-, 51⁄4-, and 8-inch diskette.   you need not reapply each year. The IRS
Statements (Section 6722)                       Pub. 1220, Specifications for Filing Forms      will provide a written reply to the applicant
If you fail to provide correct payee            1098, 1099, 5498 and W-2G Magnetically          and further instructions at the time of
statements and you cannot show                  or Electronically, is the revenue procedure     approval, usually within 30 days. A
reasonable cause, you may be subject to a       for magnetic media and electronic               magnetic media reporting package, which
penalty. The penalty applies if you fail to     reporting. Different types of payments,         includes all the necessary transmittals,
provide the statement by January 31 (see        such as interest, dividends, and rents, may     labels, and instructions, will be mailed to
part H under General Instructions later),       be reported on the same tape or other           all approved filers.
you fail to include all information required    submission.
to be shown on the statement, or you                                                            How To Request a Waiver From Filing
                                                   Electronic submissions are filed using       on Magnetic Media.—To receive a waiver
include incorrect information on the            the Information Reporting Bulletin Board
statement. “Payee statement” has the                                                            from the required filing of information
                                                System (IRP-BBS). The IRP-BBS operates          returns on magnetic media, submit Form
same meaning as “statement to recipient”        24 hours a day, 7 days a week, and is
as used in part H under General                                                                 8508, Request for Waiver From Filing
                                                accessed using your personal computer           Information Returns on Magnetic Media,
Instructions.                                   and modem at 304-263-2749. For more             requesting an undue hardship waiver from
   The penalty is $50 per statement,            information, see Pub. 1220.                     filing on magnetic media. You cannot apply
regardless of when the correct statement        Note: Filing electronically will satisfy the    for a waiver for more than 1 tax year at a
is furnished, with a maximum of $100,000        magnetic media filing requirements. Any         time. If you need a waiver for more than 1
per year. There is no reduction in the          reference to magnetic media in these            tax year, you must reapply at the
penalty for furnishing a correct statement      instructions includes electronic filing.        appropriate time each year.
by August 1.
                                                Due Dates.—The due dates for magnetic               If a waiver for original returns is
Exception.—An inconsequential error or          media reporting are the same as for paper       approved, any corrections for the same
omission is not considered a failure to         document reporting.                             types of returns will be covered under the
include correct information. An                                                                 waiver. However, if you submit original
inconsequential error or omission cannot        Extension of Time To File.—For
                                                information about requesting an extension       returns on magnetic media but you want to
reasonably be expected to prevent or                                                            submit your corrections on paper, a waiver
hinder the payee from timely receiving          of time to file, see part B under General
                                                Instructions later.                             must be approved for the corrections if the
correct information and reporting it on his                                                     corrections exceed the 250 filing
or her income tax return or from otherwise      Caution: If you file on magnetic media, do
                                                                                                requirement.
putting the statement to its intended use.      not file the same returns on paper.
Errors and omissions that are never                                                                 Waiver requests generally must be filed
                                                Who Must File on Magnetic Media.—If
inconsequential are those relating to                                                           at least 45 days before the due date of the
                                                you are required to file 250 or more
(a) a dollar amount, (b) a payee’s address,                                                     returns. However, new brokers and new
                                                information returns, you must file on
(c) the appropriate form for the information                                                    barter exchanges may request an undue
                                                magnetic media. The 250-or-more
provided (i.e., whether the form is an                                                          hardship waiver by filing Form 8508 by the
                                                requirement applies separately to each
acceptable substitute for the official IRS                                                      end of the second month following the
                                                type of form. For example, if you must file
form), and (d) whether the statement was                                                        month in which they became a broker or
                                                500 Forms 1098 and 100 Forms 1099-A,
furnished in person or by “statement                                                            barter exchange.
                                                you are not required to file Forms 1099-A
mailing,” when required.                        on magnetic media, but you must file                If you are seeking, in a single
Intentional Disregard of Payee                  Forms 1098 on magnetic media.                   application, approval for filing returns on
Statement Requirements.—If any failure                                                          magnetic media and, if approval is not
                                                Note: Even if you are not required to file
to provide a correct payee statement is                                                         granted, a waiver from the magnetic media
                                                on magnetic media, the IRS encourages
due to intentional disregard of the                                                             filing requirement, submit both Forms 4419
                                                you to do so. Also, you may file
requirements to furnish a correct payee                                                         and 8508.
                                                electronically even if you are not required
statement, the penalty is at least $100 per     to file on magnetic media.                          If you receive an approved waiver, do
payee statement with no maximum                                                                 not send a copy of it to the service center
                                                   The magnetic media filing requirement
penalty.                                                                                        where you file your paper returns. Keep the
                                                does not apply if you apply for and receive
                                                                                                waiver for your records only.
Forms 1099-R and 5498                           an undue hardship waiver. See How To
                                                Request a Waiver From Filing on                 Penalty.—If you are required to file on
The penalties under sections 6721 and           Magnetic Media later.                           magnetic media but fail to do so, and you
6722 do not apply to Form 1099-R, which                                                         do not have an approved waiver on record,
                                                Filing Requirement Applies Separately to
is filed under section 6047. The penalty for                                                    you may be subject to a penalty of $50 per
                                                Originals and Corrections.—The magnetic
failure to timely file Form 1099-R is $25 per                                                   return for failure to file information returns
                                                media filing requirements below apply
day with a maximum of $15,000 per year.                                                         on magnetic media unless you establish
                                                separately to original returns and corrected
See section 6652(e).                                                                            reasonable cause. However, you can file
                                                returns. Originals and corrections are not
   The penalties under sections 6721 and                                                        up to 250 returns on paper; those returns
                                                aggregated to determine whether you are
6722 do not apply to Form 5498, which is                                                        will not be subject to a penalty for failure
                                                required to file on magnetic media. For
filed under section 408(i). The penalty for                                                     to file on magnetic media.
                                                example, if you file 400 Forms 1098 on
failure to timely file Form 5498 is $50 per     magnetic media and you are making 75                The penalty applies separately to original
                                                                                                returns and corrected returns. See Filing
                                                                                                                                    Page 3
Requirement Applies Separately to               report the data, call 304-263-8700 or your
Originals and Corrections earlier.              local IRS office.
                                                   6. Report information only in the
                                                                                               General Instructions
                                                appropriate boxes provided on the forms.
Paper Document Reporting                        Make only one entry in each box unless         A. Who Must File.—See the Specific
                                                otherwise indicated in these instructions.     Instructions for each form.
If you are required to file 250 or more            7. DO NOT submit any copy other than        Nominee/Middleman Returns.—
information returns, see Magnetic               Copy A to the IRS.                             Generally, if you receive a Form 1099 for
Media/Electronic Reporting earlier.                                                            amounts that actually belong to another
                                                   8. DO NOT use prior year forms unless       person, you are considered a nominee
Common Errors.—Please be sure to                you are reporting prior year information; do
check your returns to prevent the following                                                    recipient. You must file a Form 1099 (the
                                                not use subsequent year forms for the          same type of Form 1099 you received) for
common errors:                                  current year. Because forms are “read” by      each of the other owners showing the
   1. Duplicate filing. Sending the same        machine, you MUST use the current year         amounts allocable to each. You must also
information to the IRS more than once.          form to report current year information.       furnish a Form 1099 to each of the other
   2. Filer’s name, address, and taxpayer          9. Use the official forms or substitute     owners. File Form 1099 with Form 1096,
identification number are not the same on       forms that meet the specifications in the      Annual Summary and Transmittal of U.S.
Form 1096 and Forms 1099, 1098, 5498,           1995 Pub. 1179, Rules and Specifications       Information Returns, with the Internal
or W-2G.                                        for Private Printing of Substitute Forms       Revenue Service Center for your area. On
   3. Decimal point to show dollars and         1096, 1098, 1099 Series, 5498, and W-2G.       each Form 1099, list yourself as the
cents omitted (1000.00).                        If you submit substitute forms that do not     “payer” and the other owner as the
                                                meet the current specifications and that       “recipient.” On Form 1096, list yourself as
   4. Two or more types of returns
                                                are not machine scannable, you may be          the “filer.” A husband or wife is not
submitted with one Form 1096 (e.g., Forms
                                                subject to a penalty of $50 for each return    required to file a nominee return to show
1099-INT and 1099-MISC with one Form
                                                for improper format.                           amounts owned by the other. The
1096). You must submit a separate Form
1096 with each type of document.                   10. DO NOT use dollar signs ($) (they       nominee, not the original payer, is
                                                are preprinted on the forms), ampersands       responsible for filing the subsequent Forms
   5. Failure to make an entry in box 1a,                                                      1099.
                                                (&), asterisks (*), commas (,), or other
“Gross dividends and other distributions on
                                                special characters in money amount             Mergers.—If two corporations merge and
stock,” on Form 1099-DIV. An amount
                                                boxes.                                         the surviving corporation becomes the
must be entered in box 1a if any amount is
entered in box 1b, 1c, 1d, or 1e.               Suggested Format.—Below are                    owner of all the assets and assumes all the
                                                suggestions that will allow the IRS to         liabilities of the absorbed corporation, the
Required Format.—Because paper forms                                                           reporting requirements explained in this
                                                process the submitted forms in the most
are read by machines (optical character                                                        publication will be met if the surviving
                                                economical manner:
recognition equipment), all Forms 1096,                                                        corporation files Forms 1098, 1099, 5498,
1098, 1099, and 5498 must be prepared in           1. Type or machine print data entries
                                                                                               and/or W-2G for reportable payments of
accordance with the following instructions.     using 10 pitch (pica) or 12 pitch (elite)
                                                                                               both corporations. See Rev. Rul. 69-556,
If these instructions are not followed, you     black type. Use block print, not script
                                                                                               1969-2 C.B. 242.
may be subject to a penalty of $50 per          characters. Entries should not be
incorrectly filed document.                     handwritten. Insert data in the middle of         For information on filing Form 1099-INT
                                                the blocks well separated from other           for a successor/predecessor corporation,
   1. DO NOT CUT OR SEPARATE the                                                               see Form 1099-INT later.
                                                printing and guidelines, and take other
forms that are printed two or three to a
                                                measures to guarantee a dark black, clear,     Qualified Settlement Funds.—A qualified
sheet (except Form W-2G). Forms 1098,
                                                sharp image.                                   settlement fund must file information
1099, and 5498 are printed two or three to
an 8- by 11-inch sheet. Form 1096 is               2. Do not enter 0 (zero) or “None” in       returns as explained in this publication for
printed one to an 8- by 11-inch sheet.          money amount boxes when no entry is            distributions to claimants if any transferor
These forms must be submitted to the IRS        required. Leave the boxes blank unless the     to the fund would have been required to
on the 8- by 11-inch sheet. If at least one     instructions specifically require that you     file if the transferor had made the
form on the page is correctly completed,        enter a zero. For example, in some cases,      distributions directly to the claimants.
you must submit the entire page. Forms          you must enter zero to make corrections.          For distributions to transferors, a fund is
W-2G may be separated and submitted as          See Corrected Returns later.                   subject to the information reporting
single forms.                                      3. You may use the account number           requirements of sections 6041 and 6041A
   Send the forms to the IRS in a flat          box for an account number designation.         and may be required to file Form
mailing (not folded). Note: Large envelopes     This number must not appear anywhere           1099-MISC. For payments made by the
may require extra postage.                      else on the form, and this box may not be      fund on behalf of a claimant or transferor,
                                                used for any other item. Showing the           the fund is subject to these same rules and
   2. NO PHOTOCOPIES of any forms are                                                          may have to file Form 1099-MISC for the
                                                account number is optional. However, it
acceptable. Official forms are available                                                       payment to a third party. For information
                                                may be to your benefit to include the
from your IRS district office or by calling                                                    reporting purposes, a payment made by
                                                recipient’s account number on paper
1-800-TAX-FORM (1-800-829-3676).                                                               the fund on behalf of a claimant or
                                                documents if your system of records uses
   3. DO NOT STAPLE, tear, or tape any of       the account number rather than the name,       transferor is considered a distribution to
these forms. It will interfere with the IRS’s   social security number, or employer            the claimant or transferor and is also
ability to scan the documents.                  identification number for identification       subject to information reporting
   4. Pinfeed holes on the form are NOT         purposes. If you furnish the account           requirements.
acceptable. Pinfeed strips outside the 8-       number, the IRS will include it in future         The same filing requirements,
by 11-inch area must be removed before          notices to you about backup withholding. If    exceptions, and thresholds apply to
submission, without tearing or ripping the      you are using window envelopes to mail         qualified settlement funds as apply to any
form. Substitute forms prepared in              statements to recipients, and if you are       other payer. That is, the fund must
continuous or strip form must be burst and      using reduced rate mail, be sure the           determine the character of the payment
stripped to conform to the size specified       account number does not appear in the          (e.g., interest, fixed and determinable
for a single sheet (8 by 11 inches) before      window because the Postal Service may          income, or gross proceeds from broker
they are filed with the IRS.                    not accept these for reduced rate mail.        transactions) and to whom the payment is
   5. DO NOT change the title of any box           4. Do not enter number signs (#); for       made (e.g., corporation or individual).
on any form. Do not use a form to report        example, enter RT 2, not Rt. #2.                  For more information, see Regulations
information that is not properly reportable                                                    section 1.468B-2(l).
on that form. If you are unsure of where to
Page 4
Payments to Foreign Persons.—See the                                                                         (hereafter referred to as “payer”) if the
                                                     Illinois, Indiana, Iowa,
Instructions for Forms 1042 and 1042-S,              Kansas, Michigan,                                       conditions in items 1 and 2 below are met:
relating to U.S. source income of foreign            Minnesota, Missouri,                                       1. The agent has the authority to sign
persons, and for reporting requirements                                              Kansas City, MO 64999
                                                     Nebraska, North Dakota,                                 the form under an agency agreement (oral,
relating to payments of income items to              Oklahoma, South Dakota,                                 written, or implied) that is valid under state
foreign persons.                                     Wisconsin
                                                                                                             law, and
B. When To File.—File Form 1096 and                  Delaware, District of                                      2. The agent signs the form and adds
Forms 1098, 1099, or W-2G by February                Columbia, Maryland, New
                                                                                                             the caption “For: (Name of payer).”
28, 1996. Brokers may file Forms 1096 and            Jersey, North Carolina,
                                                                                        Memphis, TN 37501
1099-B anytime after the reporting period            Pennsylvania, South                                        Signing of the form by an authorized
they elect to adopt (month, quarter, or
                                                     Carolina, Tennessee,                                    agent on behalf of the payer does not
                                                     Virginia                                                relieve the payer of the liability for penalties
year), but not later than February 28, 1996.
File Form 1096 and Forms 5498 by May                 Alaska, California, Colorado,                           for not filing a correct, complete, and
31, 1996. You will meet the requirement to           Hawaii, Idaho, Montana,                                 timely Form 1096 or 4804 and
                                                                                          Ogden, UT 84201
file if the form is properly addressed,              Nevada, Oregon, Utah,                                   accompanying returns.
                                                     Washington, Wyoming
mailed, and postmarked on or before the                                                                         Forms 1098, 1099, 5498, W-2G, or other
due date. If the regular due date falls on a                                                                 statements to recipients issued by a
                                                     If you have no legal residence, principal
Saturday, Sunday, or legal holiday, file on                                                                  service bureau or agent should show the
                                                     place of business, or principal office or
the next business day. A business day is                                                                     same payer’s name as shown on the
                                                     agency in any Internal Revenue district, file
any day that is not a Saturday, Sunday, or                                                                   information returns filed with the IRS.
                                                     your return with the Internal Revenue
legal holiday. See part H later about                Service Center, Cincinnati, OH 45999.                      For information about the election to
providing Forms 1098, 1099, 5498, and                                                                        report and deposit backup withholding
W-2G or statements to recipients.                        Send all information returns filed
                                                                                                             under the agent’s TIN and how to prepare
                                                     magnetically to IRS-Martinsburg
   Reporting period.—Forms 1098, 1099,                                                                       forms if the election is made, see Rev.
                                                     Computing Center, P.O. Box 1359,
and W-2G are used to report amounts                                                                          Proc. 84-33, 1984-1 C.B. 502 (Pub. 1272).
                                                     Martinsburg, WV 25401-1359.
received, paid, credited, or canceled in the                                                                    Keeping copies.—Generally, keep
case of Form 1099-C, during the calendar             D. Filing Returns With the IRS.—The IRS
                                                                                                             copies of information returns you filed with
year. Form 5498 is used to report amounts            strongly encourages the quality review of
                                                                                                             the IRS or have the ability to reconstruct
contributed for the calendar year.                   data before filing to prevent erroneous
                                                                                                             the data for at least 3 years from the due
                                                     notices being mailed to payees (or others
   Extension.—For paper or magnetic                                                                          date of the returns. If backup withholding
                                                     for whom information is being reported).
media filing, you may request an extension                                                                   was imposed and for Form 1099-C, keep
of time to file by sending Form 8809,                    If you must file any Form 1098, 1099,               copies of information returns for 4 years.
Request for Extension of Time To File                5498, or W-2G with the IRS, and you are
                                                                                                             E. Shipping and Mailing.—If you are
Information Returns, to the address shown            filing paper documents, you must send a
                                                                                                             sending many forms, you may send them
on the form. You must request the                    Form 1096, Annual Summary and
                                                                                                             in conveniently sized packages. On each
extension by the due date of the returns             Transmittal of U.S. Information Returns,
                                                                                                             package write your name and TIN, number
for your request to be considered. If your           with each type of form as the transmittal
                                                                                                             the packages consecutively, and place
request for an extension is approved, you            document. You must group the forms by
                                                                                                             Form 1096 in package number one. Postal
will have an additional 30 days to file. You         form number and submit each group with
                                                                                                             regulations require forms and packages to
may request an additional extension. See             a separate Form 1096. For example, if you
                                                                                                             be sent by First-Class Mail.
Form 8809. For information on extensions             file Forms 1098, 1099-A, and 1099-MISC,
                                                     complete one Form 1096 to transmit                      F. Recipient Names and Taxpayer
for providing statements to recipients, see
                                                     Forms 1098, another Form 1096 to                        Identification Numbers.—Taxpayer
page 7.
                                                     transmit Forms 1099-A, and a third Form                 identification numbers (TINs) are used to
Note: If you are a magnetic media                    1096 to transmit Forms 1099-MISC.                       associate and verify amounts reported to
transmitter requesting extensions of time to         Specific instructions for completing Form               the IRS with corresponding amounts on
file for more than 50 payers, you must               1096 are included on Form 1096. Also see                tax returns. Therefore, it is important that
submit the extension requests magnetically           Transmitters, paying agents, etc. later.                you furnish correct names, social security
or electronically. For instructions on               For information about filing corrected                  numbers (SSNs) or employer identification
submitting extension requests on magnetic            returns, see Corrected Returns later.                   numbers (EINs) for recipients on the forms
media, see Pub. 1220.                                                                                        or magnetic media sent to the IRS.
                                                         If you are filing on magnetic media,
C. Where To File                                     Form 4804, Transmittal of Information                      Use Form W-9 to request the recipient’s
                                                     Returns Reported Magnetically/                          TIN. (You may be subject to a penalty for
Caution: NEW FILING LOCATIONS. Check                                                                         an incorrect or missing TIN. See Penalties
                                                     Electronically, must accompany your
the addresses below carefully because you                                                                    on page 2.) You are required to maintain
                                                     submissions.
may have to file in a service center that is                                                                 the confidentiality of information obtained
different from the one where you filed last              For information on the preparation of
                                                                                                             on Form W-9 relating to the taxpayer’s
year.                                                transmittal documents for magnetic media
                                                                                                             identity (including SSNs), and you may use
                                                     and paper document reporting (Forms
   Send all information returns filed on                                                                     such information only to comply with the
                                                     4804 and 1096), see Rev. Proc. 84-24,
paper to the following:                                                                                      tax laws.
                                                     1984-1 C.B. 465, or other current revenue
If your principal business,                          procedure.                                              Note: If the recipient does not provide a
 office or agency, or legal   Use the following                                                              TIN, leave the box for providing the TIN to
                                                         If you use paper forms, report payments
   residence in the case      Internal Revenue                                                               the IRS blank on the Form 1098, 1099,
     of an individual, is      Service Center        on the appropriate form, as explained in
                                                                                                             5498, or W-2G. See Backup Withholding
         located in                address           the Specific Instructions later.
                                                                                                             on page 2. Only one recipient TIN can be
                                                         See Pub. 1179 on specifications for                 entered on the form.
Alabama, Arizona, Florida,                           private printing of information documents.
                                                                                                                The TIN for individual recipients of
Georgia, Louisiana,                                  You may not request special consideration.
                                  Austin, TX 73301                                                           information returns is the social security
Mississippi, New Mexico,                             Only forms that conform with the official
                                                                                                             number. But see the information about
Texas                                                form and the specifications in Pub. 1179
                                                                                                             sole proprietors below. For other
                                                     are acceptable.
Arkansas, Connecticut,                                                                                       recipients, including corporations,
Kentucky, Maine,                                         Transmitters, paying agents, etc.—A                 partnerships, and estates, it is the EIN.
Massachusetts, New                                   transmitter, service bureau, paying agent,
                              Cincinnati, OH 45999                                                              SSNs have nine digits separated by two
Hampshire, New York,                                 or disbursing agent (hereafter referred to
Ohio, Rhode Island,                                                                                          hyphens (000-00-0000), and EINs have
Vermont, West Virginia
                                                     as “agent”) may sign Form 1096 or 4804
                                                     on behalf of any person required to file
                                                                                                                                                   Page 5
nine digits separated by only one hyphen        Interest, dividend, and royalty                the envelope, you are not required to
(00-0000000).                                   payments.—For payments of dividends or         include the legend “Important Tax Return
   Show the full name and address in the        interest (including original issue discount)   Document Enclosed” on the envelope.
section provided on the return. If              under section 6042, 6044, or 6049                  Substitute forms.—You may furnish to
payments have been made to more than            (reported on Forms 1099-DIV, 1099-PATR,        the recipient Copy B of the official form, or
one recipient or the account is in more         1099-INT, or 1099-OID), you are required       you may use substitute Forms 1099-DIV,
than one name, show as the ONLY name            to furnish an official or substitute Form      1099-INT, 1099-OID, and 1099-PATR if
on the first name line the name of the          1099 to a recipient either in person or in a   they contain the same language as the
recipient whose TIN is shown on the             statement mailing by First-Class Mail.         official forms and they comply with the
return. Show the names of any other             Payers of royalties are also required to       rules in Pub. 1179, relating to substitute
individual recipients in the area below the     furnish the statement in person or in a        Forms 1099. Applicable box captions and
first line, if desired. Form W-2G filers see    statement mailing by First-Class Mail, but     numbers must be clearly identified, using
Form 5754 later.                                the statement need not be the official form.   the same wording and numbering as the
                                                Statements may be sent by intraoffice mail     official form. However, for Form 1099-INT,
   For sole proprietors, show the               if you use intraoffice mail to send account
individual’s name on the first name line; on                                                   if your substitute does not contain box 3,
                                                information and other correspondence to        “Interest on U.S. Savings Bonds and
the second name line, you may enter the         the recipient.
business name. You may not enter only                                                          Treas. obligations,” you may omit “not
the business name. For the TIN, enter              Statement mailing requirements for          included in box 3” from the box 1 caption.
either the individual’s SSN or the EIN of       Forms 1099-DIV, 1099-INT, 1099-OID,            The substitute must show the form number
the business (sole proprietorship).             and 1099-PATR, and forms reporting             (e.g., Form 1099-INT), form title (e.g.,
                                                royalties only.—The statement mailing          Interest Income), and tax year (e.g., 1995).
G. Filer’s Name, Identification Number,         requirements apply only to Forms
and Address.—The TIN for filers of                                                                 If you are using substitutes, the IRS
                                                1099-DIV (except for section 404(k)            encourages you to use boxes so that the
information returns, including sole             dividends), 1099-INT (except for interest
proprietors and nominees/middlemen, is                                                         substitute has the appearance of a form.
                                                reportable under section 6041), 1099-OID,      The substitute form must contain the
the Federal EIN. However, sole proprietors      1099-PATR, and royalties reported under
and nominees/middlemen who are not                                                             applicable instructions as on the front and
                                                section 6050N (on Form 1099-MISC or            back of Copy B of the official form. See
otherwise required to have an EIN should        1099-S). In addition to Forms W-2, W-8,
use their social security numbers. A sole                                                      Pub. 1179 for additional requirements. For
                                                W-9, or other 1098, 1099, and 5498             information about substitute Form
proprietor is not required to have an EIN       statements, the following enclosures are
unless he or she must file excise or                                                           1099-MISC for royalties, see Other
                                                permitted in a statement mailing: (1) a        payments below.
employment tax returns. See Pub. 583,           check, (2) a letter explaining why no check
Taxpayers Starting a Business.                  is enclosed, (3) a statement of the person’s       Certain "composite" statements are
   The filer’s name and TIN should be           account shown on Form 1099, and (4) a          permitted. See Pub. 1179.
consistent with the name and number used        letter limited to an explanation of the tax    Real estate transactions.—You must
on the filer’s other tax returns. The name      consequences of the information shown on       furnish a statement to the transferor
of the filer’s paying agent or service bureau   a recipient statement.                         containing the same information reported
must not be used in place of the name of           A recipient statement may be perforated     to the IRS on Form 1099-S. You may use
the filer.                                      to a check with respect to the account         Copy B of Form 1099-S or a substitute
   To obtain an EIN, file Form SS-4,            reported on the recipient statement or to a    form that complies with Pub. 1179 and
Application for Employer Identification         statement of the recipient’s specific          Regulations section 1.6045-4(m). You may
Number, with the IRS. If you do not have        account if payments on such account are        use a Uniform Settlement Statement (under
your EIN by the time you must file              reflected on the recipient’s statement. The    RESPA) as the written statement if it is
information returns, enter “Applied For” in     check or account statement to which the        conformed by including on the statement
any space where the number must be              recipient statement is perforated must         the legend shown on Form 1099-S and by
entered.                                        contain, in a bold and conspicuous type,       designating which information is reported
                                                the legend “Important Tax Return               to the IRS on Form 1099-S. You may
   Include the room, suite, or other unit                                                      furnish the statement to the transferor in
number after the street address.                Document Attached.”
                                                                                               person or by mail. Furnish the statement at
H. Statements to Recipients (Borrowers,            No additional enclosures, such as           or after closing but by January 31 of the
Debtors, Participants, Payers/Borrowers,        advertising, promotional material, or a        following year. The statement mailing
Transferors, or Winners on Certain              quarterly or annual report, are permitted.     requirements explained earlier do not apply
Forms).—Be sure that the statements you         Even a sentence or two on the yearend          to statements to transferors for proceeds
provide to recipients are clear and legible.    statement describing new services offered      from real estate transactions reported on
                                                by the payer is not permitted. However,        Form 1099-S. However, the statement
   If you are not using the official IRS form
                                                logos are permitted on the envelope and        mailing requirements do apply to
to furnish statements to recipients, see
                                                on any enclosures.                             statements to transferors for timber
Pub. 1179, Rules and Specifications for
Private Printing of Substitute Forms 1096,         For a statement mailing, the legend         royalties reportable under section 6050N
1098, 1099 Series, 5498, and W-2G, for          “Important Tax Return Document                 on Form 1099-S.
specific rules about providing “substitute”     Enclosed” must appear in a bold and            Other payments.—Statements to
statements to recipients. A substitute is       conspicuous manner on the outside of the       recipients for Forms 1098, 1099-A, 1099-B,
any statement other than Copy B                 envelope and on each letter, or check or       1099-C, 1099-G, 1099-MISC, 1099-R,
(generally) of the official form. You may       account statement that is not perforated to    5498, W-2G, 1099-DIV only for section
develop them yourself or buy them from a        the recipient statement. This legend is not    404(k) dividends reportable under section
private printer. However, the substitutes       required on any tax form, tax statement, or    6047, or 1099-INT only for interest
must comply with the format and content         permitted letter of tax consequences           reportable under section 6041 need not
requirements specified in Pub. 1179.            included in a statement mailing. Further,      be, but can be, a copy of the paper form
                                                you need not pluralize the word                filed with the IRS. If you do not use a copy
   Different rules apply to furnishing
                                                “document” in the legend simply because        of the paper form, the form number and
statements to recipients depending on the
                                                more than one recipient statement is           title of your substitute must be the same
type of payment you are reporting and the
                                                enclosed.                                      as the official form. All information required
form you are filing. See the heading below
for the type of payment you are reporting.      Note: If you provide recipient statements in   to be reported must be numbered and
The headings are (1) Interest, dividend,        a “separate mailing” that contains only        titled on your substitute in substantially the
and royalty payments; (2) Real estate           recipient statements, Forms W-8 and W-9,       same manner as on the official form.
transactions; and (3) Other payments.           and a letter limited to the explanation of     However, if you are reporting a payment as
                                                the tax consequences of the information        “Other income” in box 3 of Form
                                                shown on a recipient statement included in     1099-MISC, you may substitute
Page 6
appropriate explanatory language for the        25401-1359 or to your district director. The     furnished to the recipient. When the type
box title. For example, for payments of         letter must include (a) your name, (b) your      of error requires two returns to make the
accrued wages to a beneficiary of a             TIN, (c) your address, (d) type of return, (e)   correction, you will mark the
deceased employee required to be                reason for delay, and (f) the signature of       “CORRECTED” box only on one of the
reported on Form 1099-MISC by Rev. Rul.         the payer or authorized agent. Your              returns. Refer to the step-by-step
86-109, you might change the title of box       request must be postmarked by the date           instructions chart that follows to determine
3 to “Beneficiary payments” or something        on which the statements are due to be            when you should mark the “CORRECTED”
similar.                                        furnished to recipients. If your request for     box.
   Appropriate instructions to the recipient,   an extension is approved, you will be               The following chart gives step-by-step
similar to those on the official form, must     granted an extra 15 days to furnish the          instructions for filing corrected returns for
be provided to aid in the proper reporting      recipient statements.                            three of the most frequently made errors.
of the items on the recipient’s income tax      I. Corrected Returns.—If you filed a return      Correction of errors may require the
return. For payments reported on Form           with the IRS and later discover you made         submission of more than one return. Be
1099-B, rather than furnish appropriate         an error on it, you must correct it as soon      sure to read each section thoroughly.
instructions with each Form 1099-B              as possible. For some corrections, you           Note: Regulations section 301.6724-1
statement, you may furnish to the recipient     must file two returns (Form 1099, 1098,          (relating to information return penalties)
one set of instructions for all statements      5498, or W-2G) with Form 1096 and for            does not require you to file corrected
required to be furnished to a recipient in a    some only one return with Form 1096. See         returns for missing or incorrect TINs if you
calendar year.                                  the chart that follows for step-by-step          meet the reasonable cause criteria. You are
   The statement mailing requirements           instructions for correcting three common         merely required to include the correct TIN
explained earlier do not apply to               errors on paper forms.                           on the next original return you are required
statements to recipients for information           To determine whether you are required         to file. However, if you do not meet the
reported on Forms 1098, 1099-A, 1099-B,         to submit corrections on magnetic media,         reasonable cause criteria, you should file
1099-C, 1099-G, 1099-MISC (except for           see Magnetic Media/Electronic                    corrected returns by August 1 to be
royalties), 1099-R, 5498, W-2G, 1099-DIV        Reporting earlier and Pub. 1220.                 subject to a reduced penalty.
for section 404(k) dividends only, and             Follow the step-by-step instructions             In addition, even if you meet the
1099-INT for interest reportable under          below for the type of error you need to          reasonable cause criteria, the IRS
section 6041 only. You may combine the          correct. Be sure you complete all                encourages you to file corrections for
statements with other reports or financial      appropriate information on the returns as        incorrect or missing TINs so that the IRS
or commercial notices, or expand them to        stated in those instructions. Then file Copy     can update the payees’ records.
include other information of interest to the    A of the form and Form 1096 with your
recipient. Be sure that all copies of the       Internal Revenue Service Center. Please          Step-by-Step Instructions for
forms are legible.                              remember not to cut or separate the forms        Filing Corrected Returns on Paper
   Certain “composite” statements are           that are two or three to a page. Submit the      Forms
permitted. See Pub. 1179.                       entire page even if only one of the forms
                                                on the page is completed. And do not             Error (on Original        How To File the Corrected
Time for furnishing forms or                                                                     Return)                   Return on Paper Forms
statements.—Generally, you must furnish         staple the forms to Form 1096. You must
Forms 1098, 1099, and W-2G information          use a separate Form 1096 for each type of        1. No payee TIN (SSN      STEP 1: Identify incorrect
                                                return you are correcting, but you may use          or EIN) or incorrect   return submitted.
by January 31, 1996. However, you may                                                               payee TIN, or
issue them earlier in some situations, as       one Form 1096 for both originals and                                       Form 1098, 1099, 5498, or
                                                                                                    incorrect name and
provided by the regulations. For example,       corrections of the same type of return.             address. This will     W-2G:
you may furnish Form 1099-INT to the               In addition, you must provide statements         require two               1. Prepare a new
                                                                                                    separate returns to          information return.
recipient on redemption of U.S. Savings         to recipients showing the corrections as
                                                                                                    make the                  2. Enter an “X” in the
Bonds at the time of redemption. Brokers        soon as possible.                                                                “CORRECTED” box at
                                                                                                    correction properly.
and barter exchanges may furnish Form           Note: If you fail to file correct information       Read and follow all          the top of the form.
1099-B anytime but not later than January       returns or furnish a correct payee                  instructions for          3. Enter the payer,
31.                                             statement, you may be subject to a                  both Steps 1 and             recipient, and account
   Trustees or issuers of IRAs or SEPs          penalty. See Failure To File Correct                2.                           number information
                                                                                                                                 exactly as it appeared
must furnish participants with a statement      Information Returns by the Due Date                                              on the original
of the value of the participant’s account by    (Section 6721) on page 2 and Failure To                                          incorrect return;
January 31, 1996. IRA contribution              Furnish Correct Payee Statements                                                 HOWEVER, enter “0”
information must be furnished to the            (Section 6722) on page 3.                                                        (zero) for all money
participant by May 31, 1996.                                                                                                     amounts.
                                                   On all Forms 1098, 1099, and 5498, a
                                                                                                                           STEP 2: Report correct
   For real estate transactions, you may        box is provided for the account number. If                                 information.
furnish the statement to the transferor at      the account number was provided on the
                                                                                                                           A. Form 1098, 1099, 5498,
closing or by mail on or before January 31,     original return, use this number on the
                                                                                                                              or W-2G:
1996.                                           corrected return to help identify the                                         1. Prepare a new
   Filers of Form 1099-G who report state       appropriate incorrect return filed when                                          information return.
or local income tax refunds, credits, or        more than one return was filed for a                                          2. Do NOT enter an “X”
offsets must furnish the statements to          particular individual. The account number                                        in the “CORRECTED”
recipients during January 1996.                 may be a checking account number,                                                box at the top of the
                                                savings account number, serial number, or                                        form. Submit the new
   You will meet the requirement to furnish     any other number assigned to the payee                                           return as though it
the statement if it is properly addressed,      by the filer that is unique and will                                             was an original.
mailed, and postmarked on or before the         distinguish the specific account. This                                        3. Include all the correct
due date. If the regular due date falls on a                                                                                     information on the
                                                number must appear on both the original                                          form including the
Saturday, Sunday, or legal holiday, the due     and corrected returns to properly identify                                       correct TIN and name
date is the next business day. A business       and process the correction.                                                      and address.
day is any day that is not a Saturday,                                                                                     B. Form 1096:
Sunday, or legal holiday.                          CORRECTED box.—Enter an “X” in the
                                                “CORRECTED” box on Copy A only when                                           1. Prepare a new
   Extension.—You may request an                you are correcting a form you previously                                         transmittal Form 1096.
extension of time to provide the                submitted to the IRS. Enter an “X” in the                                     2. Enter the words “Filed
statements to recipients by sending a letter                                                                                     To Correct TIN, Name,
                                                “CORRECTED” box on the copies you give                                           and/or Address” in the
to IRS-Martinsburg Computing Center,            to the recipient (generally, Copy B) only                                        bottom margin of the
P.O. Box 1359, Martinsburg, WV                  when you are correcting a form previously                                        form.

                                                                                                                                             Page 7
Error (on Original        How To File the Corrected          VOID box.—If a completed or partially       distributions should be reported on Form
Return)                   Return on Paper Forms           completed Form 1098, 1099, or 5498 is          1099-R.
                            3. Provide all requested      incorrect and you want to void it before
                               information on the         submission to the IRS, enter an “X” in the
                               form as it applies to      “VOID” box at the top of the form. For         Specific Instructions
                               the returns prepared       example, if you make an error while typing
                               in Steps 1 and 2.          or printing a form, you should void it. The
                            4. File Form 1096 and                                                        If a distribution includes noncash property,
                                                          return will then be disregarded during         show the fair market value of the property
                               Copies A of the
                               returns with the
                                                          processing by the IRS. Go to the next form     at the time of payment.
                               appropriate service        on the page, or to another page, and enter
                                                          the correct information; but do not mark          Although, generally, you are not required
                               center.
                            5. Do NOT include             the “CORRECTED” box. Please remember           to report payments smaller than the
                               copies of the original     not to cut or separate the forms that are      minimum described for each form, you
                               return that was filed      two or three to a page. Submit the entire      may prefer, for economy and your own
                               incorrectly.               page even if only one of the forms on the      convenience, to file Copies A for all
                                                          page is a good return.                         payments. The IRS encourages this.
2. Incorrect money        A. Form 1098, 1099, 5498,
   amount(s) or              or W-2G:                     K. Other Information Returns.—The
   incorrect address.        1. Prepare a new             income information you report on the           Form 1098
   Follow these                 information return.       following returns must not be repeated on
   instructions if you       2. Enter an “X” in the       the returns discussed in the Specific
   filed a return when          “CORRECTED” box at        Instructions in this publication:              Use Form 1098, Mortgage Interest
   one should not               the top of the form.                                                     Statement, to report mortgage interest
   have been filed.          3. Enter the payer,
                                                             1. Form W-2 reporting wages and other       (including points, defined later) of $600 or
   This error requires          recipient, and account    employee compensation.                         more received by you during the year in
   only one return to           number information
   make the                                                  2. Forms 1042-S and 1000 reporting          the course of your trade or business from
                                exactly as it appeared    income.                                        an individual, including a sole proprietor.
   correction. (Follow          on the original
   the instructions             incorrect return;            3. Form 2439 reporting undistributed        The $600 threshold applies separately to
   under Error 1,               HOWEVER, enter all        long-term capital gains of a regulated         each mortgage; thus, file a separate Form
   instead of these             correct money                                                            1098 for each mortgage. You may, at your
   instructions, if you
                                                          investment company.
                                amounts in the                                                           option, file Form 1098 to report mortgage
   must correct an              correct boxes as they        4. Schedule K-1 of Form 1065 reporting      interest of less than $600, but you are
   address AND a                should have appeared      distributive shares to members of a
   name or TIN.)                                                                                         subject to the rules in these instructions.
                                on the original return,   partnership.
                                and enter the                                                               If an overpayment of interest on an
                                recipient’s correct
                                                             5. Schedule K-1 of Form 1041 reporting      adjustable rate mortgage (ARM) or other
                                address.                  distributions to beneficiaries of trusts or    mortgage was made in a prior year and
                          B. Form 1096:                   estates.                                       you refund (or credit) such overpayment,
                             1. Follow the instructions      6. Schedule K-1 of Form 1120S               you may have to file Form 1098 to report
                                under Error 1, Step       reporting distributive shares to               the refund (or credit) of the overpayment.
                                2-B, but ignore item      shareholders of S corporations.
                                B-2.
                                                                                                         See Reimbursement of Overpaid Interest
                             2. File Form 1096 and           7. Schedule K of Form 1120-IC-DISC          later.
                                Copy A of the return      reporting actual and constructive              Exceptions.—You need not file Form 1098
                                with the appropriate      distributions to shareholders and deferred     for interest received from a corporation,
                                service center.           DISC income.                                   partnership, trust, estate, association, or
                             3. Do NOT include a                                                         company (other than a sole proprietor)
                                copy of the original         8. Schedule Q of Form 1066 reporting
                                return that was filed     income from a REMIC to a residual interest     even though an individual is a coborrower
                                incorrectly.              holder.                                        and all the trustees, beneficiaries, partners,
                                                                                                         members, or shareholders of the payer of
                                                          L. Payments to Corporations and
3. Original return was    STEP 1: Identify incorrect                                                     record are individuals.
                                                          Partnerships.—Reporting generally is not
   filed using the        return submitted.                                                              Mortgage Defined.—An obligation
   WRONG type of                                          required for payments to corporations
                          Form 1098, 1099, 5498, or                                                      incurred after 1987 is a mortgage if real
   return. For            W-2G:                           except in the case of (1) medical payments
   example, a Form                                        (Form 1099-MISC), (2) withheld Federal         property that is located inside or outside
                             Follow the instructions
   1099-DIV was filed        under Error 1, Step 1,       income tax or foreign tax, (3) barter          the United States secures all or part of the
   when a Form               using the same type of       exchange transactions (Form 1099-B),           obligation, even though the interest
   1099-INT should           form that was used           (4) substitute payments in lieu of dividends   recipient classifies the obligation as other
   have been filed.          initially.                                                                  than a mortgage, for example, as a
   This will require
                                                          and tax-exempt interest (Form 1099-MISC),
   two separate
                          STEP 2: Report correct          (5) interest or original issue discount paid   commercial loan.
                          information on the correct
   returns to make the                                    or accrued to a regular interest holder of a      An obligation incurred after 1984 but
                          type of return.
   correction properly.
                          A. Form 1098, 1099, 5498,
                                                          REMIC (Form 1099-INT or 1099-OID),             before 1988 is a mortgage only if secured
   Read and follow all                                    (6) acquisitions or abandonments of            primarily by real property.
                             or W-2G:
   instructions for                                       secured property (Form 1099-A), and
   both Steps 1 and          Follow the instructions                                                        An obligation in existence on December
                             under Error 1, Step 2–A,     (7) cancellation of debt (Form 1099-C). For    31, 1984, is not a mortgage if, at the time
   2.
                             using the proper type of     example, reporting is not required for         the obligation was incurred, the interest
                             form.                        payments of architectural fees to
                          B. Form 1096:
                                                                                                         recipient reasonably classified the
                                                          corporations.                                  obligation as other than a mortgage, real
                             Follow the instructions
                             under Error 1, Step 2–B,
                                                             However, reporting generally is required    property loan, real estate loan, or other
                             except enter the words       for payments to partnerships. For example,     similar type of obligation. For example, if
                             “Filed To Correct            payments of $600 or more made in the           an obligation incurred in 1983 was secured
                             Document Type” in the        course of your trade or business to a law      by real property, but the interest recipient
                             bottom margin of Form        firm that is a partnership are reportable on   reasonably classified the obligation as a
                             1096.                        Form 1099-MISC.                                commercial loan because the proceeds
J. Void Returns.—An “X” in the “VOID”                     M. Earnings on an IRA or SEP.—                 were used to finance the borrower’s
box will not correct a previously filed                   Generally, any income with respect to an       business, the obligation is not considered
return. See part I above for instructions for             IRA or SEP, such as interest or dividends,     a mortgage for purposes of this reporting
making corrections.                                       is not reported on Forms 1099. But             requirement. However, if over half of the
                                                                                                         obligations in a class established by the
                                                                                                         interest recipient are primarily secured by
Page 8
real property, it is not reasonable to             Collection agents.—Generally, if you         designee. A designee may report points on
classify those obligations as other than        receive reportable interest payments (other     Form 1098 (as having been paid directly by
mortgages for purposes of this reporting        than points) on behalf of someone else and      the payer of record) only if the designation
requirement.                                    you are the first person to receive the         agreement contains the designator’s
   Real property includes a manufactured        interest, for example, if you are a servicing   representation that it did not lend such
home with a minimum living space of 400         bank collecting payments for a lender, you      amount to the payer of record as part of
square feet and a minimum width of more         must file this form and enter your name,        the overall transaction. The agreement
than 102 inches of a kind customarily used      address, and TIN in the recipient entity        need not be filed with the IRS, but the
at a fixed location, including certain mobile   area. You must file this form even though       designator must keep a copy of it for 4
homes. See section 25(e)(10).                   you do not include the interest received in     years after the close of the year in which
                                                your income but you merely transfer it to       the loan is made.
   Lines of credit and credit card              another person. If you wish, you may enter
obligations.—Interest (other than points)                                                          A designated qualified person is subject
                                                the name of the person for whom you             to any applicable penalties as if it were the
received on any mortgage that is in the         collected the interest in box 4. The person
form of a line of credit or credit card                                                         interest recipient. Thus, a designator is
                                                for whom you collected the interest need        relieved from liability for any applicable
obligation is reportable regardless of how      not file Form 1098.
you classified the obligation. A borrower                                                       penalties.
incurs a line of credit or credit card             However, there is an exception to this       Reimbursement of Overpaid Interest.—
obligation when the borrower first has the      rule for any period that (1) the first person   You are required to report reimbursements
right to borrow against the line of credit or   to receive or collect the interest does not     of overpaid interest aggregating $600 or
credit card, whether or not the borrower        have the information needed to report on        more to a payer of record on Form 1098.
actually borrows an amount at that time.        Form 1098 and (2) the person for whom           You are not required to report
                                                the interest is received or collected would     reimbursements of overpaid interest
Who Must File.—File this form if you are        receive the interest in its trade or business
engaged in a trade or business and, in the                                                      aggregating less than $600 unless you are
                                                if the interest were paid directly to such      otherwise required to file Form 1098. That
course of such trade or business, you           person. If (1) and (2) apply, the person on
receive from an individual $600 or more of                                                      is, if you did not receive at least $600 of
                                                whose behalf the interest is received or        mortgage interest during the year of
mortgage interest on any one mortgage           collected is required to report on Form
during the calendar year. You are not                                                           reimbursement from the person to whom
                                                1098. If interest is received or collected on   you made the reimbursement, you are not
required to file this form if the interest is   behalf of another person other than an
not received in the course of your trade or                                                     required to file Form 1098 merely to report
                                                individual, such person is presumed to          the reimbursement. However, you may
business. For example, you hold the             receive the interest in a trade or business.
mortgage on your former personal                                                                report any reimbursement of overpaid
residence. The buyer makes mortgage                Foreign interest recipient.—If you are       interest that you are not otherwise required
payments to you. You are not required to        not a U.S. person, you must file Form 1098      to report, but you are subject to the rules
file Form 1098.                                 if the interest is received in the United       in these instructions.
                                                States. A U.S. person is a citizen or              The reimbursement must be reported on
   If you receive $600 or more of mortgage      resident of the United States, a domestic
interest in the course of your trade or                                                         Form 1098 for the year in which the
                                                partnership or corporation, or a nonforeign     reimbursement is made. No change should
business, you are subject to the                estate or trust. If the interest is received
requirement to file Form 1098, even if you                                                      be made to the prior year Form 1098
                                                outside the United States, you must file        because of this reimbursement. Report the
are not in the business of lending money.       Form 1098 if (1) you are a controlled
For example, if you are a real estate                                                           total reimbursement even if it is for
                                                foreign corporation or (2) at least 50% of      overpayments made in more than 1 year.
developer and you provide financing to an       your gross income from all sources for the
individual to buy a home in your                3-year period ending with the close of the         To be reportable, the reimbursement
subdivision, and that home is security for      tax year preceding the receipt of interest      must be a refund or credit of mortgage
the financing, you are subject to this          (or for such part of the period as you were     interest received in a prior year that was
reporting requirement. However, if you are      in existence) was effectively connected         required to be reported for that prior year
a physician not engaged in any other            with the conduct of a trade or business in      by any interest recipient on Form 1098.
business and you lend money to an               the United States.                              Only the person who makes the
individual to buy your home, you are not                                                        reimbursement is required to report it on
subject to this reporting requirement              Designation agreement.—An interest           Form 1098. For example, if you bought a
because you did not receive the interest in     recipient, including a recipient of points,     mortgage on which interest was overpaid
the course of your trade or business as a       can designate a qualified person to file        in a prior year, you made a reimbursement
physician.                                      Form 1098, to provide a statement to the        of the overpaid interest, and the previous
                                                payer of record, and to provide the Rule of     mortgage holder was required to report
   A governmental unit (or any subsidiary       78s notice. A qualified person is either
agency) receiving mortgage interest from                                                        mortgage interest on Form 1098 in the
                                                (1) a trade or business in which the interest   prior year, you must file Form 1098 to
an individual of $600 or more must file this    recipient is under common control as
form.                                                                                           report the reimbursement because you are
                                                specified in Regulations section 1.414(c)-2     the one making the reimbursement.
   For information about who must file to       or (2) a designee, named by the lender of
report points, see Points later. For            record or by a qualified person, who either        If you reimburse interest in the same
information about who must file to report       was involved in the original loan               year it is overpaid, do not report the
reimbursements of overpaid interest, see        transaction or is a subsequent purchaser        overpayment on Form 1098 as interest
Reimbursement of Overpaid Interest              of the loan. A lender of record is the          received during the year or as a
later.                                          person who, at the time the loan is made,       reimbursement of overpaid interest. For
                                                is named as the lender on the loan              example, if the borrower paid $5,000 and
   Cooperative housing corporation.—A                                                           you reimbursed $500 of that amount in
cooperative housing corporation is an           documents and whose right to receive
                                                payment from the payer of record is             1995, $4,500 should appear in box 1 as
interest recipient and must file Form 1098                                                      interest paid by the borrower. The $500
to report an amount received from its           secured by the payer of record’s principal
                                                residence. Even if the lender of record         reimbursement must not appear in box 3.
tenant-stockholders that represents the
tenant-stockholders’ proportionate share of     intends to sell or otherwise transfer the          Example.—In 1993, you received $5,000
interest described in section 216(a)(2). This   loan to a third party after the close of the    of mortgage interest from the
rule applies only to tenant-stockholders        transaction, such intention does not            payer/borrower and reported that amount
who are individuals and from whom the           change who is the lender of record.             on Form 1098 for 1993. In 1995, you
cooperative has received at least $600 of          The agreement must be in writing,            determined that interest due on the
interest during the year. (See the Note         identify the mortgage(s) and calendar years     mortgage for 1993 was $4,500, and the
under Box 1.)                                   for which the qualified person is to report,    payer/borrower had overpaid $500. You
                                                and be signed by the designator and the         refunded the $500 overpayment to the

                                                                                                                                    Page 9
payer/borrower in 1995. If you received         you to draw on that escrow account to pay           1. They are clearly designated on the
$600 or more of interest on the mortgage        interest on the borrower’s mortgage, do          Uniform Settlement Statement (Form
from the payer/borrower in 1995, you must       not report in box 1 the interest received        HUD-1) as points; for example, “loan
report the $500 refund in box 3 of the          from that escrow account. As another             origination fee” (including amounts for VA
1995 Form 1098. No change to the 1993           example, do not report in box 1 any lump         and FHA loans), “loan discount,” “discount
Form 1098 is required. If, instead of           sum paid by a real estate developer to pay       points,” or “points.”
refunding the $500 overpayment, you             interest on a purchaser’s-borrower’s                2. They are computed as a percentage
credited the payer/borrower’s 1995              mortgage. However, if you wish, you may          of the stated principal loan amount.
mortgage interest payments due, $500 is         use box 4 to report to the payer of record
still shown in box 3, and the interest          any interest paid by the seller. See Points         3. They are charged under an
received from the payer/borrower in 1995        later for information about reporting            established business practice of charging
shown in box 1 must include the $500            seller-paid points in box 2.                     points in the area where the loan was
credit.                                                                                          issued and do not exceed the amount
                                                Rule of 78s Method of Accounting.—If             generally charged in that area.
   Interest on reimbursement.—A                 you are permitted by Rev. Proc. 83-40,
financial institution (or its middleman) that   1983-1 C.B. 774, or any other revenue               4. They are paid for the acquisition of
pays interest of $10 or more on the             procedure, to use the Rule of 78s method         the payer of record’s principal
reimbursement must report that interest         to calculate interest earned with respect to     residence, and the loan is secured by that
(under section 6049) on Form 1099-INT,          a transaction, you may report interest           residence. You may rely on a signed
Interest Income. Others that pay interest of    earned under the Rule of 78s method on           written statement from the payer of record
$600 or more on the reimbursement must          that transaction as interest received from       that states whether the proceeds of the
report that interest (under section 6041) on    the borrower in a calendar year. In this         loan are for the purchase of the payer of
Form 1099-INT. Do not include such              case, you must notify borrowers that the         record’s principal residence.
interest on Form 1098.                          Rule of 78s method was used to calculate            5. They are paid directly by the payer
Nonresident Alien Interest Payer.—You           interest received and that the borrowers         of record.
must file Form 1098 to report interest paid     may not deduct the amount reported               Points are paid directly if:
by a nonresident alien only if all or part of   unless the borrowers are also properly
                                                                                                    (a) The payer of record provides funds
the security for the mortgage is real           using the Rule of 78s method to determine
                                                                                                 that were not borrowed from the lender of
property located in the United States.          interest deductions. The notification must
                                                                                                 record for this purpose as part of the
                                                also state that the Rule of 78s method may
Payer of Record.—The payer of record is                                                          overall transaction. The funds may include
                                                be used only in the case of a self-
the individual carried on your books and                                                         down payments, escrow deposits, earnest
                                                amortizing consumer loan that requires
records as the principal borrower. If your                                                       money applied at closing, and other funds
                                                level payments, at regular intervals (at least
books and records do not indicate which                                                          actually paid over by the payer of record at
                                                annually), over a period not in excess of 5
borrower is the principal borrower, you                                                          or before closing. OR
                                                years (with no balloon payment at the end
must designate one.                             of the loan term), and only when the loan           (b) The seller pays points on behalf of
   If you permit a subsequent purchaser of      agreement provides for use of the Rule of        the payer of record. Points paid by the
the property to assume the loan without         78s method to determine interest earned          seller to the interest recipient on behalf of
releasing the first purchaser from personal     (see Rev. Proc. 83-40 and Rev. Rul. 83-84,       the payer of record are treated as paid to
liability, the subsequent purchaser is the      1983-1 C.B. 97). The notice must be              the payer of record and then paid directly
payer of record. Such subsequent                furnished to the payer of record on or with      by the payer of record to the interest
purchaser’s name, address, and TIN must         the statement of the interest received.          recipient.
appear on Form 1098.                            Points.—You must report certain points           Report points paid under (a) and (b) above
Multiple Borrowers.—Even though there           paid for the purchase of the payer of            on the payer of record’s Form 1098 in
may be more than one borrower on the            record’s principal residence on Form 1098.       box 2.
mortgage, you are required to prepare           You must report points if the points, plus          Do not report on Form 1098 points paid
Form 1098 only for the payer of record,         other interest on the mortgage, are $600 or      (1) for loans to improve a principal
and only if such payer of record is an          more. For example, if a borrower pays            residence, (2) for loans to purchase or
individual, showing the total interest          points of $300 and other mortgage interest       improve a residence that is not the payer
received on the mortgage. Even if an            of $300, the lender has received $600 of         of record’s principal residence, such as a
individual is a coborrower, no Form 1098 is     mortgage interest and must file Form 1098.       second home, vacation, investment, or
required unless the payer of record is also        Who must report points.—The lender of         trade or business property, (3) for a home
an individual.                                  record or a qualified person must file Form      equity or line of credit loan, even if secured
Payments by Third Party.—Report all             1098 to report all points paid by the payer      by the principal residence, (4) for a
interest received on the mortgage as            of record in connection with the purchase        refinancing (but see Construction loans
received from the borrower, except as           of the principal residence. If a designation     below), including a loan to refinance a debt
explained under Seller Payments below.          agreement is in effect for a mortgage, only      owed by the borrower under a land
For example, if the borrower’s mother           the person designated in the agreement           contract, a contract for deed, or similar
makes payments on the mortgage, the             must file Form 1098 to report all points on      forms of seller financing, (5) in lieu of items
interest received from the mother is            that mortgage. See Designation                   ordinarily stated separately on the Form
reportable on Form 1098 as received from        agreement earlier.                               HUD-1, such as appraisal fees, inspection
the borrower.                                                                                    fees, title fees, attorney fees, and property
                                                   Amounts received directly or indirectly
   However, do not report mortgage                                                               taxes, and (6) to acquire a principal
                                                by a mortgage broker are treated as points
interest received from any governmental                                                          residence to the extent the points are
                                                to the same extent they would be treated
unit (or any subsidiary agency). For                                                             allocable to an amount of principal in
                                                as points if paid to and retained by the
example, do not report any interest                                                              excess of $1 million.
                                                lender of record. The lender of record must
received as housing assistance payments         report those points paid to a mortgage              Construction loans.—Points paid on a
from the Department of Housing and              broker.                                          loan to construct a residence (construction
Urban Development (HUD) on mortgages                                                             loan) or to refinance a loan incurred to
                                                   Report the total points on Form 1098 for
insured under section 235 of the National                                                        construct a residence are reportable on
                                                the year of closing regardless of the
Housing Act.                                                                                     Form 1098 if they:
                                                accounting method you use to report the
Seller Payments.—Do not report in box 1         points as income for Federal income tax             1. Are clearly designated on the loan
of Form 1098 any interest paid by a seller      purposes.                                        documents as points incurred in
on a purchaser’s-borrower’s mortgage,                                                            connection with the loan, such as loan
                                                   Reportable points.—Report on Form
such as on a “buy-down” mortgage. For                                                            origination fees, loan discount, discount
                                                1098 points that meet all the following
example, if a real estate developer                                                              points, or points,
                                                conditions:
deposits an amount in escrow and tells
Page 10
   2. Are computed as a percentage of the        includes prepayment penalties and late         furnished the lender a statement, under
stated principal loan amount,                    charges unless the late charges are for a      penalties of perjury, that the borrower is an
   3. Conform to an established business         specific mortgage service.                     exempt foreign person (unless the lender
practice of charging points in the area          Note: A cooperative housing corporation        knows that the statement is false).
where the loan is issued and do not              that receives any cash part of a patronage     Who Must File.—In addition to the general
exceed the amount generally charged in           dividend from the National Consumer            rule specified above, the following rules
the area,                                        Cooperative Bank must reduce the interest      apply.
   4. Are paid in connection with a loan         to be reported on each                            If there are multiple owners of
incurred by the payer of record to               tenant-stockholder’s Form 1098 by a            undivided interests in a single loan, such
construct (or refinance construction of) a       proportionate amount of the cash payment       as is the case in pools, fixed investment
residence that is to be used, when               in the year the cooperative receives the       trusts, or other similar arrangements, the
completed, as the principal residence of         cash payment. See Rev. Proc. 94-40,            trustee, record owner, or person acting in
the payer of record,                             1994-1 C.B. 711.                               a similar capacity must file Form 1099-A
   5. Are paid directly by the payer of          Box 2.—Enter points paid on the purchase       on behalf of all the owners of beneficial
record, and                                      of the payer of record’s principal             interests or participations. In this case,
                                                 residence. For an explanation of reportable    only one form for each borrower must be
   6. Are not allocable to an amount of          points, see Points earlier.                    filed on behalf of all owners with respect to
principal in excess of $1 million.                                                              the loan. Similarly, in the case of bond
                                                 Box 3.—Enter the total refund or credit of
   Amounts paid to refinance a loan to           a prior year(s) overpayment of interest. See   issues, only the trustee or similar person is
construct a residence are not points to the      Reimbursement of Overpaid Interest             required to report.
extent they are allocable to debt that           earlier.                                          A governmental unit, or any of its
exceeds the debt incurred to construct the                                                      subsidiary agencies, that lends money
residence.                                       Box 4.—Enter any other item you wish to
                                                 report to the payer, such as real estate       secured by property must file Form
Prepaid Interest.—Report prepaid interest        taxes, insurance, or if you are a collection   1099-A.
(other than points) only in the year in which    agent, the name of the person for whom            A subsequent holder of a loan is
it properly accrues. For example, interest       you collected the interest. This box is        treated as the lender for purposes of the
received on December 20, 1995, that              optional and is provided only for your         reporting requirement for events occurring
accrues by December 31 but is not due            convenience. You do not have to report to      after the loan is transferred to the new
until February 1, 1996, is reportable on the     the IRS any information provided in this       holder.
1995 Form 1098.                                  box. You are not required to report the           If more than one person lends money
   Exception.—Interest received during the       average balance of the mortgage.               secured by property and one lender
current year that will properly accrue in full                                                  forecloses or otherwise acquires an
by January 15 of the following year may be                                                      interest in the property and the sale or
considered received in the current year, at      Form 1099-A                                    other acquisition terminates, reduces, or
your option, and is reportable on Form                                                          otherwise impairs the other lenders’
1098 for the current year. However, if any       File Form 1099-A, Acquisition or               security interests in the property, the other
part of an interest payment accrues after        Abandonment of Secured Property, for           lenders must file Form 1099-A for each of
January 15, then only the amount that            each borrower if you lend money in             their loans. For example, if a first trust
properly accrues by December 31 of the           connection with your trade or business         holder forecloses on a building, and the
current year is reportable on Form 1098 for      and, in full or partial satisfaction of the    second trust holder knows or has reason
the current year. For example, if you            debt, you acquire an interest in property      to know of such foreclosure, the second
receive a payment of interest that accrues       that is security for the debt, or you have     trust holder must file Form 1099-A for the
for the period December 20 through               reason to know that the property has been      second trust even though no part of the
January 20, you cannot report any of the         abandoned. You need not be in the              second trust was satisfied by the proceeds
interest that accrues after December 31 for      business of lending money to be subject to     of the foreclosure sale.
the current year. You must report the            this reporting requirement.
interest that accrues after December 31 on                                                      Abandonment.—An abandonment occurs
Form 1098 for the following year.                Coordination With Form 1099-C.—If, in          when the objective facts and
                                                 the same calendar year, a debt is canceled     circumstances indicate that the borrower
Statements to Payers of Record.—For              in connection with the acquisition or          intended to and has permanently
information about the requirement to             abandonment of secured property and you        discarded the property from use. You have
furnish a statement to the payer of record,      would be required to file both Form 1099-A     “reason to know” of an abandonment
see part H under General Instructions            and Form 1099-C, Cancellation of Debt,         based on all the facts and circumstances
earlier.                                         you are required to file Form 1099-C only.     concerning the status of the property. You
Recipient’s/Lender’s Name and Address            You will meet your Form 1099-A filing          will be deemed to know all the information
Box.—Enter the name and address of the           requirement by making appropriate entries      that would have been discovered through
filer of Form 1098. Use this same name           in boxes 5 and 7 on Form 1099-C. You           a reasonable inquiry when, in the ordinary
and address on Form 1096.                        may file both Forms 1099-A and 1099-C,         course of business, the lender becomes
Payer’s/Borrower’s Name and Address              but make no Form 1099-A entries in boxes       aware or should become aware of
Box.—Enter the name and address of the           5 and 7 on Form 1099-C.                        circumstances indicating that the property
person who paid the interest (payer of           Property.—Property means real property         has been abandoned. If you expect to
record).                                         (such as a personal residence), intangible     commence a foreclosure, execution, or
                                                 property, or tangible personal property held   similar sale within 3 months of the date
Note: Be careful to enter the recipient’s
                                                 for investment or used in a trade or           you had reason to know that the property
and payer’s information in the proper
                                                 business. No reporting is required for a       was abandoned, reporting is required as of
boxes.
                                                 loan made to an individual and secured by      the date you acquire an interest in the
Box 1.—Enter the interest (not including         an interest in tangible personal property      property or a third party purchases the
points) received on the mortgage from            that is neither held for investment nor used   property at such sale. If you expect to but
borrowers during the calendar year.              in a trade or business. However, you must      do not commence such action within 3
Include interest on a mortgage, a home           file Form 1099-A if the personal property is   months, the reporting requirement arises at
equity loan, or a line of credit or credit       held for both personal use and either for      the end of the 3-month period.
card loan secured by real property. Do not       use in a trade or business or for              Statements to Borrowers.—For
include government subsidy payments,             investment.                                    information about the requirement of
seller payments, or prepaid interest that
                                                    No reporting is required if the property    furnishing a statement to the borrower, see
does not meet the exception explained
                                                 securing the loan is located outside the       part H under General Instructions earlier.
earlier under Prepaid Interest. Interest
                                                 United States and the borrower has
                                                                                                                                  Page 11
Box 1.—Enter the date of your acquisition        Form 1099-B, Proceeds From Broker and            stripped coupons issued prior to July 1,
of the secured property or the date you          Barter Exchange Transactions, for each           1982.
first knew or had reason to know that the        person (a) for whom the broker has sold             c. Retirement of short-term obligations
property was abandoned. An interest in the       (including short sales) stocks, bonds,           with original issue discount (reported on
property generally is acquired on the earlier    commodities, regulated futures contracts,        Form 1099-INT). However, Form 1099-B is
of the date title is transferred to the lender   foreign currency contracts, forward              required for the retirement of short-term
or the date possession and the burdens           contracts, debt instruments, etc., or            state obligations having no original issue
and benefits of ownership are transferred        (b) who exchanged property or services           discount.
to the lender. If an objection period is         through the barter exchange.
provided by law, use the date the objection                                                          d. Callable demand obligations that have
                                                 Note: Report real estate transactions on         no premium or discount.
period expires. If you purchase the              Form 1099-S discussed later.
property at a sale held to satisfy the debt,                                                         6. Sales of foreign currency unless under
such as at a foreclosure or execution sale,      Brokers                                          a forward or regulated futures contract that
use the later of the date of sale or the date                                                     requires delivery of foreign currency.
the borrower’s right of redemption expires.      The term broker means a person who, in
                                                                                                     7. Sales of fractional shares of stock if
Please use the following format to indicate      the ordinary course of a trade or business,
                                                                                                  gross proceeds are less than $20.
the date: MMDDYY. For example, for               stands ready to effect sales to be made by
                                                 others. A corporation is a broker if it             8. Retirements of book-entry or
January 7, 1995, enter 010795.
                                                 regularly stands ready to redeem its stock       registered form obligations if no interim
   For an abandonment, enter the date you        or retire its debt. However, if there are no     transfers have occurred.
knew or had reason to know that the              facts that indicate otherwise, a corporation        9. Exempt foreign persons.
property was abandoned unless you                that purchases odd-lot shares from its
expect to commence a foreclosure,                                                                    10. Sales of Commodity Credit
                                                 stockholders is not a broker. If you             Corporation certificates.
execution, or similar action within 3            manage a farm for someone else, you are
months, as explained earlier. If a third         not considered a broker.                            11. Spot or forward sales of agricultural
party purchases the property at a                                                                 commodities. Agricultural commodities
foreclosure, execution, or similar sale, the        For a sale of securities through a “cash      include grain, feed, livestock, meat, oil
property is treated as abandoned, and you        on delivery” or similar account, only the        seed, timber, or fiber. A spot sale is a sale
have reason to know of its abandonment           broker that receives the gross proceeds          that results in almost immediate delivery of
on the date of sale.                             from the sale against delivery of the            a commodity. A forward sale is a sale
                                                 securities sold is required to report the        under a forward contract.
Box 2.—Enter the balance of the debt             sale. However, if such broker’s customer is
outstanding at the time the interest in the      a “second-party broker” that is an exempt           However, sales of agricultural
property was acquired or on the date you         recipient, only the second-party broker is       commodities under a regulated futures
first knew or had reason to know that the        required to report the sale.                     contract, sales of derivative interests in
property was abandoned. Include only                                                              agricultural commodities, and sales of
unpaid principal on the original debt. Do           If the proceeds of a sale are paid in         receipts for agricultural commodities
not include accrued interest or foreclosure      convertible foreign currency, the amount to      issued by a designated warehouse are
costs.                                           be reported must be converted into U.S.          reportable. A designated warehouse is a
                                                 dollars. You may use the exchange rate on        warehouse, depository, or other similar
Box 3.—Make no entry is this box.                the sales date or the exchange rate on the       entity designated by a commodity
Box 4.—For a foreclosure, execution, or          last business day of the reporting period in     exchange in which or out of which a
similar sale, enter the fair market value of     which the sale occurs.                           particular type of agricultural commodity is
the property. Generally, the gross                  Brokers must report each transaction          deliverable to satisfy a regulated futures
foreclosure bid price is considered to be        (other than regulated futures or foreign         contract. Sales of warehouse receipts
the fair market value. If an abandonment or      currency contracts) on a separate Form           issued by any other warehouse are not
voluntary conveyance to the lender in lieu       1099-B. Transactions involving regulated         reportable.
of foreclosure occurred and you checked          futures or foreign currency contracts are to
“Yes” in box 5, enter the appraised value                                                            12. Excepted sales designated in a
                                                 be reported on an aggregate basis.               revenue ruling or revenue procedure. The
of the property. Otherwise, make no entry
in this box.                                        To report substitute payments in lieu of      sale of a precious metal (gold, silver,
                                                 dividends and tax-exempt interest, as            platinum, or palladium) in any form that
Box 5.—Enter an “X” in the applicable box        required by section 6045(d), do not use          may be used to satisfy a Commodity
to indicate whether the borrower was             Form 1099-B. See Box 8 under Form                Futures Trading Commission
personally liable for repayment of the debt      1099-MISC later.                                 (CFTC)-approved regulated futures
at the time the debt was created or, if
                                                    Form 8308, Report of a Sale or                contract (RFC) is an excepted sale if the
modified, at the time of the last
                                                 Exchange of Certain Partnership Interests,       quantity, by weight or by number of items,
modification.
                                                 does not have to be filed if Form 1099-B is      is less than the minimum required to
Box 6.—Enter a general description of the        required for the transfer of the partnership     satisfy a CFTC-approved RFC. A sale of a
property. For real property, generally you       interest.                                        precious metal in any form that cannot be
must enter the address of the property, or,                                                       used to satisfy a CFTC-approved RFC is
if the address does not sufficiently identify       No return is required by brokers for:
                                                                                                  an excepted sale.
the property, enter the section, lot, and           1. Sales by exempt recipients, including
                                                                                                     For example, Form 1099-B is not
block. For personal property, enter the          corporations, charitable organizations,
                                                                                                  required to be filed for the sale of a single
applicable type, make, and model. For            individual retirement plans, the United
                                                                                                  gold coin in the form and quality
example, describe a car as “Car—1995             States, a state and political subdivisions.
                                                                                                  deliverable in satisfaction of a
Buick Regal.” Use a category such as                2. Sales initiated by dealers in securities   CFTC-approved contract since all CFTC
“Office Equipment” to describe more than         and financial institutions.                      contracts for gold coins currently call for
one piece of personal property, such as six
                                                    3. Sales by certain custodians and            delivery of at least 25 coins.
desks and seven typewriters. Enter “CCC”
for crops forfeited on Commodity Credit          trustees.                                           Sales of precious metals for a single
Corporation loans.                                  4. Sales at issue price of interests in       customer during a 24-hour period must be
                                                 certain regulated investment companies.          aggregated and treated as a single sale to
                                                    5. Obligor payments on:                       determine if this exception applies. This
Form 1099-B                                         a. Nontransferable obligations, such as
                                                                                                  exception does not apply if the broker
                                                                                                  knows or has reason to know that a
                                                 savings bonds or CDs.                            customer, either alone or with a related
Any person, including a governmental unit
                                                    b. Obligations for which gross proceeds       person, is engaging in sales to avoid
and any subsidiary agency, doing business
                                                 are reported on other Forms 1099, such as        information reporting.
as a broker or barter exchange must file
Page 12
Barter Exchanges                                on bonds sold between payment dates (or          lending transaction. A lending transaction is
                                                on a payment date) should not be included        a transaction in which a lender extends
A barter exchange is any person with            in this box. Instead, report this accrued        credit, including revolving credit, to a
members or clients who contract either          interest on Form 1099-INT. A loss from a         borrower.
with each other or with such person to          closing transaction on a forward contract
trade or barter property or services either                                                          4. A debt discharged for a person other
                                                must be shown as a negative amount by            than the primary (or first-named) debtor in
directly or through such person. The term       enclosing it in parentheses.
does not include arrangements that                                                               the case of multiple debtors, for debts
provide solely for the informal exchange of     Box 3.—Enter the gross amounts received          incurred before January 1, 1995.
similar services on a noncommercial basis.      by a member or client of a barter                File Form 1099-C, Cancellation of Debt,
Persons who are not a barter exchange           exchange for goods or services. This             for each debtor for which you canceled (or
but who trade services do not file Form         includes cash received, property or              discharged) a debt (or indebtedness) owed
1099-B. However, they may be required to        services received, a credit on your books,       to you of $600 or more and you are a
file Form 1099-MISC.                            or scrip issued. Do not report negative          financial institution, a credit union, or a
                                                amounts.                                         Federal Government agency (including one
   Barter exchanges must report each
transaction involving noncorporate              Box 4.—Enter backup withholding. For             of the three agencies listed under Who
members or clients of a barter exchange         example, persons who have not furnished          Must File below). You must file even
on a separate Form 1099-B. Transactions         their TIN to you in the manner required are      though the debtor may not be subject to
involving corporate members or clients of a     subject to withholding at a 31% rate on          tax on the canceled debt. That is, you are
barter exchange may be reported on an           certain amounts required to be reported on       not required to determine whether the
aggregate basis.                                this form.                                       debtor qualifies for exclusion under section
                                                Box 5.—For broker transactions, enter a          108. For example, debts discharged in
   In the recipient area of the forms, enter                                                     bankruptcy are reportable.
information about the member or client          brief description of the disposition item,
that provided the property or services in       e.g., 100 shares of XYZ Corp. stock. If              You are not required to aggregate
the exchange.                                   necessary, abbreviate the description so         multiple discharges of debt of less than
                                                that it fits within box 5. For regulated         $600 during a year unless the separate
   No return is required by barter              futures contracts and forward contracts,         discharges are under a plan to evade the
exchanges for:                                  enter “RFC” or other appropriate                 Form 1099-C reporting requirements.
   1. Exchanges through a barter exchange       description and any amount subject to                File Form 1099-C if the debtor is an
having fewer than 100 transactions during       backup withholding, under Temporary              individual, corporation, partnership, trust,
the calendar year.                              Regulations section 35a.9999-3, Q/A-23.          estate, association, or company. Backup
   2. Exempt foreign persons.                   Note: The amount withheld in these               withholding does not apply.
                                                situations is to be included in box 4.
                                                                                                 Coordination With Form 1099-A.—If, in
Brokers and Barter Exchanges                       For bartering transactions, show the          the same calendar year, a debt is canceled
Statements to Recipients.—For                   services or property provided.                   in connection with the acquisition or
information about the requirement to            Box 6.—Enter the profit or (loss) realized       abandonment of secured property and you
furnish a statement to the proceeds             by the customer on closed regulated              would be required to file both Form
recipient, see part H under General             futures or foreign currency contracts in         1099-C and Form 1099-A, Acquisition or
Instructions earlier.                           1995. For more information on reporting          Abandonment of Secured Property, you
2nd TIN Not.—You may enter an “X” in            foreign currency contracts, see Temporary        are required to file Form 1099-C only. You
this box if you were notified by the IRS        Regulations section 35a.9999-3, Q/A-26.          will meet your Form 1099-A filing
twice within 3 calendar years that the          Box 7.—Enter the unrealized profit or (loss)     requirement by making appropriate entries
payee provided an incorrect taxpayer            on open regulated futures or foreign             in boxes 5 and 7 on Form 1099-C. You
identification number (TIN). If you mark this   currency contracts at the end of 1994.           may file both Forms 1099-A and 1099-C,
box, you will comply with a safe harbor                                                          but make no Form 1099-A entries in boxes
                                                Box 8.—Enter the unrealized profit or (loss)     5 and 7 on Form 1099-C. See the
due diligence requirement of Temporary          on open regulated futures or foreign
Regulations section 35a.9999-3, Q/A-89,                                                          instructions for Form 1099-A earlier and
                                                currency contracts as of December 31,            Box 5 and Box 7 later.
and the IRS will not send you any further       1995.
notices about this account. Also see                                                             Who Must File.—File Form 1099-C if you
                                                Box 9.—Enter the aggregate profit or (loss)      are a financial institution described in
Regulations section 301.6724-1(g).
                                                for the year from regulated futures or           section 581 or 591(a) (such as a domestic
Box 1a.—For broker transactions, enter          foreign currency contracts. Use boxes 6, 7,
the trade date of the sale or exchange. For                                                      bank, trust company, building and loan or
                                                and 8 to figure the aggregate profit or          savings and loan association); a credit
barter exchanges, enter the date that cash,     (loss).
property, a credit, or scrip is actually or                                                      union; a Federal executive agency defined
constructively received. Please use the                                                          in section 6050M, the Federal Deposit
following format to indicate the date:          Form 1099-C                                      Insurance Corporation (FDIC), the
MMDDYY. For example, for January 7,                                                              Resolution Trust Corporation (RTC), the
1995, enter 010795. For aggregate                                                                National Credit Union Administration
                                                Caution: The following instructions (except      (NCUA), or any successor or subunit of a
reporting, no entry is required.                those under Coordination With Form               Federal executive agency, FDIC, RTC, or
Box 1b.—For transactional reporting by          1099-A and related instructions under Box        NCUA. Also file Form 1099-C if you are a
brokers, enter the CUSIP (Committee on          5 and Box 7 later) are based on temporary        corporation that is a subsidiary of a
Uniform Security Identification Procedures)     regulations under section 6050P issued in        financial institution or credit union, but only
number of the obligation.                       December 1993. Final regulations under           if, because of your affiliation, you are
Box 2.—Enter the gross proceeds from            section 6050P are expected to be issued in       subject to supervision and examination by
any disposition of securities (including        early 1995. For debts discharged before          a Federal or state regulatory agency.
short sales), commodities, or forward           the effective date of those final regulations,
                                                                                                 Debt Defined.—A debt is any amount
contracts. To determine gross proceeds,         no penalties will be imposed if you do not
                                                                                                 owed to you including principal, interest,
you may take into account commissions           report:
                                                                                                 penalties, administrative costs, and fines,
and option premiums if this treatment is          1. A debt discharged in bankruptcy             to the extent they are indebtedness under
consistent with your books. You may not         (under title 11 of the U.S. Code).               section 61(a)(12). The amount of debt
take into account state and local transfer        2. A debt discharged as the result of the      discharged or canceled may be all or only
taxes. Check the applicable box to indicate     expiration of the statute of limitations for     part of the total amount owed.
which amount has been reported to the           collection of the debt.
IRS. Do not include amounts shown in                                                             When Is a Debt Canceled or
boxes 6 through 9. Any accrued interest           3. Any amount other than principal for a       Discharged?—A debt is canceled or
                                                debt that arose in connection with a             discharged when an identifiable event
                                                                                                                                     Page 13
occurs that indicates the debt will never        or Discharged? earlier. Use the format         “dividends” on deposit or on share
have to be paid by the debtor, taking into       MMDDYY to indicate the date. For               accounts in cooperative banks, credit
account all the facts and circumstances.         example, for January 7, 1995, enter            unions, domestic building and loan
    An identifiable event includes, but is not   010795.                                        associations, domestic and Federal savings
limited to:                                      Box 2.—Enter the amount of the canceled        and loan associations, and mutual savings
                                                 debt. See Debt Defined earlier.                banks.
    1. A discharge of a debt under title 11 of
the U.S. Code (bankruptcy),                      Box 3.—Enter any interest included in the         An exempt-interest dividend from a
                                                 canceled debt in box 2.                        regulated investment company retains its
    2. An agreement between the creditor                                                        tax-exempt status and is not reported on
and the debtor to cancel all or part of a        Box 4.—Enter any penalties, fines, or          Form 1099-DIV or 1099-INT.
debt (including an agreement that results in     administrative costs included in the
an exchange under section 1001), if the          canceled debt in box 2.                        Substitute Payments in Lieu of
last event necessary to cancel the debt                                                         Dividends.—For payments received by a
                                                 Box 5.—Enter a description of the origin of    broker on behalf of a customer in lieu of
has occurred, or                                 the debt, such as student loan, mortgage,      dividends as a result of the transfer of a
    3. A cancellation or extinguishment of       or credit card expenditure. Be as specific     customer’s securities for use in a short
the debt by operation of law that makes          as possible. If you are filing a combined      sale, see Box 8 under Form 1099-MISC
the debt unenforceable (for example, the         Form 1099-C and 1099-A, also enter a           later.
statute of limitations for collection of the     description of the property.
debt expires).                                                                                  RICs.—If a regulated investment company
                                                 Box 6.—Enter an “X” in the checkbox if         (RIC) declares a dividend in October,
A bookkeeping entry, such as a deduction         the debt was discharged in bankruptcy, if      November, or December payable to
for book or regulatory reporting purposes        known.                                         shareholders of record on a specified date
or a partial or full bad debt deduction for      Box 7.—Make an entry in this box only if       in such a month, the dividends are treated
tax purposes, is not, alone, an identifiable     you are filing a combined Form 1099-C          as paid by the RIC and received by the
event. However, such bookkeeping entry is        and 1099-A. For a foreclosure, execution,      shareholders on December 31 of such year
one of the facts and circumstances to take       or similar sale, enter the fair market value   as long as the dividends are actually paid
into account to determine if a discharge or      of the property. Generally, the gross          by the RIC during January of the following
cancellation has occurred.                       foreclosure bid price is considered to be      year. Such dividends should be reported
    Collection activity by the creditor is       the fair market value. If an abandonment or    on Form 1099-DIV for the year preceding
another one of the facts and                     voluntary conveyance to the lender in lieu     the January they are actually paid. See
circumstances to take into account to            of foreclosure occurred, enter the             section 852(b)(7).
determine if a discharge or cancellation         appraised value of the property.                  If such a dividend paid in January is
has occurred. In determining that part of a                                                     subject to backup withholding, it must be
debt is canceled, disregard collection                                                          withheld when the dividend is actually
activity on the remaining part of the debt.      Form 1099-DIV                                  paid. Therefore, backup withhold in
Multiple Debtors.—If you cancel a debt                                                          January, deposit the withholding when
with more than one debtor, you must file         File Form 1099-DIV, Dividends and              appropriate, and reflect it on Form 945 for
Form 1099-C for each debtor that had a           Distributions, for each person (a) to whom     the year withheld. However, since the
debt of $600 or more canceled. If the            you have paid gross dividends and other        dividend is reportable on Form 1099-DIV in
multiple debtors are jointly and severally       distributions on stock (box 1a) of $10 or      the prior year, the related backup
liable on the debt, report the entire amount     more, (b) for whom you have withheld and       withholding is also reportable on the prior
of the canceled debt on each debtor’s            paid any foreign tax on dividends and          year Form 1099-DIV.
Form 1099-C.                                     other distributions on stock, (c) for whom
                                                                                                Restricted Stock.—For information about
Recordkeeping.—If you are required to file       you have withheld any Federal income tax
                                                                                                reporting dividends on restricted stock, see
Form 1099-C, you must retain a copy of           under the backup withholding rules, or (d)
                                                                                                Rev. Procs. 80-11, 1980-1 C.B. 616, and
that form or be able to reconstruct the          to whom you paid $600 or more as part of
                                                                                                83-38, 1983-1 C.B. 773, and Rev. Rul.
data for at least 4 years from the due date      a liquidation.
                                                                                                83-22, 1983-1 C.B. 17.
of the return.                                   Section 404(k) Dividend.—Report on Form
                                                                                                Statements to Recipients.—For an
Requesting TINs.—You must make all               1099-DIV dividends distributed under
                                                                                                explanation of the requirement to furnish
reasonable efforts to obtain the taxpayer        section 404(k) on stock held by an
                                                                                                an official form to recipients in person or
identification number (TIN) of the person        employee stock ownership plan (ESOP) or
                                                                                                by statement mailing, see part H under
whose debt was canceled. You may obtain          a tax credit ESOP. However, if a section
                                                                                                General Instructions earlier. Also see Pub.
the TIN when the debt is incurred. If you        404(k) distribution is made in the same
                                                                                                1179.
do not obtain the TIN before the debt is         year as a total distribution, the entire
                                                 amount should be reported as an amount         2nd TIN Not.—You may enter an “X” in
canceled, you must request the debtor’s                                                         this box if you were notified by the IRS
TIN. Your request must clearly notify the        includible in income on Form 1099-R.
                                                                                                twice within 3 calendar years that the
debtor that the Internal Revenue Service         Exceptions.—You are not required to file
                                                                                                payee provided an incorrect taxpayer
requires the debtor to furnish its TIN and       Form 1099-DIV for payments made to
                                                                                                identification number (TIN). If you mark this
that failure to furnish such TIN subjects the    certain payees including a corporation, a
                                                                                                box, you will comply with a safe harbor
debtor to a $50 penalty imposed by the           tax-exempt organization, an individual
                                                                                                due diligence requirement of Temporary
IRS. No particular form is required to           retirement arrangement (IRA), a U.S.
                                                                                                Regulations section 35a.9999-3, Q/A-89,
request the TIN, but if you use Form W-9,        agency, a state, the District of Columbia, a
                                                                                                and the IRS will not send you any further
you will satisfy the reasonable efforts          U.S. possession, or a registered securities
                                                                                                notices about this account. Also see
requirement. A debtor is not required to         or commodities dealer.
                                                                                                Regulations section 301.6724-1(g).
certify his or her TIN under penalties of        Dividends.—If you make a payment that
perjury.                                                                                        Box 1a.—Enter gross dividends, including
                                                 may be a dividend, but you are unable to
                                                                                                those from money market funds, and other
Statements to Debtors.—Furnish each              determine whether any part of the payment
                                                                                                distributions on stock. Include reinvested
debtor with Copy B of Form 1099-C or a           is a dividend by the time you must file
                                                                                                dividends as gross dividends. Include all
substitute statement that complies with the      Form 1099-DIV, the entire payment must
                                                                                                amounts shown in boxes 1b, 1c, 1d, and
requirements of Pub. 1179. See part H            be reported as a dividend. See regulations
                                                                                                1e. Do not include in box 1a amounts
under General Instructions earlier. You          under section 6042 for a definition of
                                                                                                reported in boxes 5 and 6.
have furnished a statement to the debtor if      dividends.
it is mailed to the debtor’s last known                                                         Box 1b.—Enter ordinary dividends. Also
                                                 Note: Certain distributions commonly
address.                                                                                        include this amount in box 1a.
                                                 referred to as “dividends” are actually
Box 1.—Enter the date the debt was               interest and are to be reported on Form        Box 1c.—Enter capital gain distributions.
canceled. See When Is a Debt Canceled            1099-INT. These include so-called              Also include this amount in box 1a.
Page 14
Box 1d.—Enter nontaxable distributions, if     recipient. However, you must file Form
determinable. Also include this amount in      1099-G with the IRS in all cases.               Form 1099-INT
box 1a. (File Form 5452, Corporate Report         A tax on dividends, a tax on net gains
of Nondividend Distributions, if you pay       from the sale or exchange of a capital
nontaxable distributions to shareholders.)                                                     File Form 1099-INT, Interest Income, for
                                               asset, and a tax on the net taxable income      each person (1) to whom you paid
Box 1e.—Enter the stockholder’s pro rata       of an unincorporated business are taxes on      amounts reportable in boxes 1 and 3 of at
share of certain amounts deductible by a       gain or profit rather than on gross receipts.   least $10 (except for the $600 limit for
nonpublicly offered regulated investment       Therefore, they are income taxes, and any       interest paid in the course of your trade or
company in computing its taxable income.       refund, credit, or offset of $10 or more of     business described in the instructions
This amount is includible in the               these taxes is reportable on Form 1099-G.       below in Box 1), (2) for whom you withheld
stockholder’s gross income under section       In the case of the dividends tax and the        and paid any foreign tax on interest, or
67(c) and must also be included in box 1a.     capital gains tax, if you determine that the    (3) from whom you withheld any Federal
Box 2.—Enter backup withholding. For           recipient did not itemize deductions, as        income tax under the backup withholding
example, persons who have not furnished        explained above, you are not required to        rules regardless of the amount of the
their TIN to you in the manner required are    furnish a statement to the recipient.           payment.
subject to withholding at a 31% rate on        However, in the case of the tax on
                                               unincorporated businesses, you must                Only report interest payments made in
certain dividend payments reported on this                                                     the course of your trade or business
form.                                          furnish a statement to the recipient in all
                                               cases, as this is a tax that applies            including Federal, state, and local
Box 3.—Enter any foreign tax withheld and      exclusively to income from a trade or           government agencies and activities
paid on dividends and other distributions      business. See the instructions for box 8        deemed nonprofit, or for which you were a
on stock. A regulated investment company       and Rev. Rul. 86-140, 1986-2 C.B. 195.          nominee/middleman.
must report only the amount it elects to                                                       Exceptions.—You are not required to file
pass through to the shareholder. Report           If you pay interest of $600 or more on
                                               the refund, you must file Form 1099-INT         Form 1099-INT for payments made to
this amount in U.S. dollars.                                                                   certain payees including a corporation, a
                                               and furnish a statement to the recipient.
Box 4.—Enter the name of the foreign           For interest payments of less than $600, if     tax-exempt organization, an individual
country or U.S. possession to which the        you wish you may enter the amount with          retirement arrangement (IRA), a U.S.
withheld tax applies.                          an appropriate designation such as              agency, a state, the District of Columbia, a
Note: Boxes 5 and 6 apply only to              “Interest Income” in the blank box on the       U.S. possession, or a registered securities
corporations in partial or complete            statement to the recipient.                     or commodities dealer.
liquidation.                                   Box 3.—No entry is required in box 3 if the     Note: Do not report tax-exempt or
Box 5.—Enter cash distributed as part of a     refund, credit, or offset is for the 1994 tax   tax-deferred interest, such as interest on
liquidation. Do not include this amount in     year. If it is for any other tax year, enter    municipal bonds or interest that is earned
box 1a.                                        the year for which the refund, credit, or       but not distributed from an IRA.
Box 6.—Enter noncash distributions made        offset was made in this box. Also, if the          An exempt-interest dividend from a
as part of a liquidation. Show the fair        refunds, credits, or offsets are for more       regulated investment company retains its
market value as of the date of distribution.   than 1 tax year, report the amount for each     tax-exempt status and is not reported on
Do not include this amount in box 1a.          year on a separate Form 1099-G. Use the         Form 1099-INT or 1099-DIV.
                                               format “YYYY” to make the entry in this         When Payment Made.—Generally, interest
S Corporations                                 box. For example, enter 1993, not ’93.          is paid when it is credited or set apart for a
Box 1a.—Report as dividends on Form            Box 4.—Enter backup withholding. For            person without any substantial limitation or
1099-DIV only distributions made during        example, persons who have not furnished         restriction as to time, manner, or condition
1995 out of accumulated earnings and           their TIN to you become subject to              of payment. The interest must be made
profits. See section 1368 for more             withholding at a 31% rate on payments           available so that it may be drawn on at any
information.                                   required to be reported in box 6 or 7 on        time and its receipt brought within the
                                               this form.                                      control and disposition of the person.
                                               Box 5.—Make no entries in this box.                For payments made on obligations
Form 1099-G                                    Box 6.—Enter any amount of a taxable            subject to transactional reporting (e.g.,
                                               grant administered by a Federal, state, or      savings bonds, interest coupons, and other
File Form 1099-G, Certain Government           local program to provide subsidized energy      demand obligations), interest is paid at the
Payments, if you have made certain             financing or grants for projects designed to    time the obligation is presented for
payments as a unit of a Federal, state, or     conserve or produce energy, but only with       payment. For example, interest on a
local government.                              respect to section 38 property or a             coupon detached from a bond is paid
Statements to Recipients.—Furnish a            dwelling unit located in the United States.     when it is presented for payment.
copy of Form 1099-G or a substitute            Also report amounts of other taxable            Successor/Predecessor Corporation.—A
statement to each recipient, except as         grants of $600 or more. A Federal grant is      successor corporation and a predecessor
explained below under Box 2. Also see          ordinarily taxable unless stated otherwise      corporation may agree that the successor
part H under General Instructions earlier.     in the legislation authorizing the grant. Do    corporation will file one Form 1099-INT for
Box 1.—Enter payments of $10 or more in        not report scholarship or fellowship grants.    each payee combining the reportable
unemployment compensation including            See Scholarships under Form 1099-MISC           interest paid by both corporations (under
Railroad Retirement Board payments for         later.                                          section 6049). If the two corporations do
unemployment.                                  Box 7.—Enter U.S.D.A. agricultural              not agree, or if other requirements
                                               subsidy payments made to recipients             described below are not met, the
Box 2.—Enter refunds, credits, or offsets                                                      predecessor must file Forms 1099-INT to
of state or local income tax of $10 or         during the year. If you are a nominee that
                                               received subsidy payments for another           report the interest payments it made during
more you made to recipients. If recipients                                                     the year, and the successor must file
deducted the tax paid to a state or local      person, file Form 1099-G to report the
                                               actual owner of the payments, and report        Forms 1099-INT to report its own
government on their Federal income tax                                                         payments.
returns, any refunds, credits, or offsets      the amount of the payments in box 7.
may be taxable to them. If you can             Box 8.—If the amount in box 2 is a refund,         The combined reporting procedure is
determine that the recipient did not claim     credit, or offset attributable to an income     available only when all the following
itemized deductions on the recipient’s         tax that applies exclusively to income from     conditions are met:
Federal income tax return for the tax year     a trade or business and is not a tax of            1. The successor corporation acquires
giving rise to the refund, credit, or offset   general application, enter an “X” in this       substantially all the assets and assumes
you are not required to furnish a copy of      box.                                            substantially all the liabilities of the
Form 1099-G or a statement to the                                                              predecessor corporation.
                                                                                                                                  Page 15
   2. During the year of acquisition, but      Box 1.—Enter interest not included in box         Box 5.—Enter any foreign tax withheld and
before the acquisition, the predecessor        3. Include amounts, whether or not                paid on interest. Report this amount in
made reportable interest payments to           designated as interest, that are paid or          U.S. dollars.
payees.                                        credited to any person’s account by               Box 6.—Enter the name of the foreign
   3. During the year of acquisition, but      savings and loan associations, mutual             country or U.S. possession to which the
after the acquisition, the predecessor did     savings banks not having capital stock            withheld tax applies.
not make any reportable interest               represented by shares, building and loan
payments.                                      associations, cooperative banks,                  REMICs and Issuers of
                                               homestead associations, credit unions, or         Collateralized Debt Obligations
   Agreement.—The predecessor and              similar organizations. Include interest on
successor must agree that the successor        bank deposits, accumulated dividends paid         Real estate mortgage investment conduits
assumes the predecessor’s entire               by a life insurance company, indebtedness         (REMICs), issuers of collateralized debt
obligation to file Forms 1099-INT for          (including bonds, debentures, notes and           obligations (CDOs), and any broker or
reportable interest payments made in the       certificates other than those of the U.S.         middleman who holds as a nominee a
year of acquisition. If they so agree and if   Treasury) issued in registered form or of a       REMIC regular interest or CDO must file
the successor satisfies the predecessor’s      type offered to the public, or from which         Form 1099-INT to report interest of $10 or
obligation, the predecessor is relieved of     you withheld Federal income tax or foreign        more, other than original issue discount
the obligation to file Forms 1099-INT.         tax. Also include interest paid in the            (OID), accrued to a REMIC regular interest
   Combined Form 1099-INT.—The Form            course of your trade or business not              holder during the year or paid to the holder
1099-INT filed by the successor for each       meeting these criteria, such as interest on       of a CDO. If you are also reporting OID,
payee must include the reportable interest     delayed death benefits paid by a life             this interest and the OID can be reported
payments made by the predecessor in the        insurance company, or interest on a state         on Form 1099-OID. It is not necessary to
acquisition year and the reportable interest   or Federal income tax refund, if the interest     file both Forms 1099-INT and 1099-OID.
payments made by the successor in that         totals $600 or more for any person. In            See Form 1099-OID later.
year. Any backup withholding also must be      addition, report interest accrued to a               You are not required to file or issue
combined on the form. When providing           REMIC regular interest holder or paid to a        Form 1099-INT for exempt recipients
Form 1099-INT, or an acceptable                CDO holder, as explained below.                   including the following holders of a REMIC
substitute form, to the interest recipient,       Include in box 1 any accrued interest on       regular interest or a CDO:
the successor may include additional           bonds sold between interest dates (or on a
information explaining the aggregate                                                                1. A corporation.
                                               payment date).
reporting of the interest.                                                                          2. A broker.
                                                  Also show original issue discount on
   Statement required.—By the due date         short-term obligations of 1 year or less and         3. A middleman/nominee.
of the Forms 1099-INT, the successor           interest on all bearer certificates of deposit.      4. A financial institution.
must file a statement containing (1) an
indication that Forms 1099-INT are being          Do not include in box 1 interest on               5. An IRA.
filed on a combined basis under Rev. Proc.     tax-free covenant bonds, which is                    6. A tax-exempt organization.
90-57 and (2) the name, address, and           reportable on Form 1042-S, Foreign                   For additional exempt recipients, see
taxpayer identification numbers (TINs) of      Person’s U.S. Source Income Subject to            Regulations section 1.6049-7(c).
both the successor and predecessor             Withholding, or dividends from money
corporations. This statement must be sent      market funds, which are reportable on             Box 1.—Report in box 1 the amount of
separately from the Forms 1099-INT to:         Form 1099-DIV. Also, do not include any           interest, other than OID, accrued to each
IRS-Martinsburg Computing Center, P.O.         description in box 1. If you wish to show a       REMIC regular interest holder or paid to a
Box 1359, Attn: Chief, Magnetic Media 2,       description, use the blank box above              CDO holder for the period during the year
Martinsburg, WV 25401-1359.                    box 1.                                            for which the return is made. If you are a
                                               Box 2.—Enter interest or principal forfeited      single-class REMIC (as defined in
   For more information, see Rev. Proc.                                                          Temporary Regulations section
90-57, 1990-2 C.B. 641.                        because of an early withdrawal of time
                                               deposits, such as an early withdrawal from        1.67-3T(a)(2)(ii)), include in box 1 the
Statements to Recipients.—For an               a CD, that is deductible from gross income        regular interest holder’s share of
explanation of the requirement to furnish      by the recipient. Do not reduce the amount        investment expenses of the REMIC for the
an official form to recipients in person or    reported in box 1 by the amount of the            year.
by statement mailing, see part H under         forfeiture. For detailed instructions for
General Instructions earlier. Also see Pub.                                                      Statements to Holders.—For each Form
                                               determining the amount of forfeiture              1099-INT you are required to file, you must
1179. If you have furnished Forms              deductible by the depositor, see Rev. Ruls.
1099-INT to a recipient for amounts                                                              furnish a statement to the REMIC regular
                                               75-20, 1975-1 C.B. 29, and 75-21, 1975-1          interest or CDO holder identified on the
received during the year at the time of the    C.B. 367.
transaction, such as you might have done                                                         form. The statement must contain the
for window transactions, do not include        Box 3.—Enter interest on U.S. Savings             information shown on Form 1099-INT,
these same amounts in a Form 1099-INT          Bonds, Treasury bills, Treasury notes, and        including the legend shown on Copy B of
furnished to the same recipient for other      Treasury bonds. Do not include this               the official Form 1099-INT, and an
payments during the year.                      amount in box 1.                                  indication that these items are being
                                                  If you make payment on a U.S. Savings          furnished to the IRS. The statement must
2nd TIN Not.—You may enter an “X” in                                                             also show the information specified in
this box if you were notified by the IRS       Bond or other U.S. obligation on which
                                               interest is reportable, enter your name,          Regulations section 1.6049-7(f)(2)(i). In
twice within 3 calendar years that the                                                           addition, the statement furnished by a
payee provided an incorrect TIN. If you        address, and Federal identification number
                                               on Forms 1099-INT and 1096, not those of          REMIC must show, for each calendar
mark this box, you will comply with a safe                                                       quarter, the information specified in
harbor due diligence requirement of            the U.S. Treasury Department or the
                                               Bureau of Public Debt.                            Regulations section 1.6049-7(f)(3). Also see
Temporary Regulations section                                                                    Regulations section 1.6049-7(f)(3)(ii) for
35a.9999-3, Q/A-89, and the IRS will not       Box 4.—Enter backup withholding. For              information that may be required to be
send you any further notices about this        example, persons who have not furnished           reported to a real estate investment trust
account. Also see Regulations section          their TIN to you in the manner required           (REIT) that holds a regular interest.
301.6724-1(g).                                 become subject to withholding at a 31%
                                               rate on payments required to be reported             A single-class REMIC (as defined in
Payer’s RTN (optional).—If you are a                                                             Temporary Regulations section
financial institution that wishes to           in box 1 (which may be reduced by the
                                               amount reported in box 2) and box 3 on            1.67-3T(a)(2)(ii)) must include in the
participate in the program for direct                                                            statement the investment expenses paid or
deposit of refunds of electronic filers, you   this form.
                                                                                                 accrued during each calendar quarter by
may enter your routing and transit number                                                        the REMIC for which the REMIC is allowed
(RTN).
Page 16
a deduction under section 212 and the          business when payments are made in the           the payment in box 1 of Form W-2. If you
proportionate share of those investment        course of such trade or business. Thus,          made the payment after the year of death,
expenses allocated to the regular interest     personal payments are not reportable. You        do not report it on Form W-2, and do not
holder.                                        are engaged in a trade or business if you        withhold social security and Medicare
   The statement must be furnished to          operate for gain or profit. However,             taxes.
holders by March 15. To meet the               nonprofit organizations are considered to           Whether the payment is made in the
statement requirement, you may furnish a       be engaged in a trade or business and are        year of death or after the year of death,
copy of Form 1099-INT and a separate           subject to the reporting requirement.            you also must report it on Form
statement containing the additional            Nonprofit organizations subject to the           1099-MISC for the payment to the estate
information to the REMIC regular interest      reporting requirements include trusts of         or beneficiary. Report the payment in box
or CDO holder.                                 qualified pension or profit-sharing plans of     3 (rather than in box 7 as specified in Rev.
                                               employers, certain organizations exempt          Rul. 86-109, 1986-2 C.B. 196). Enter the
   For information about reporting income      from tax under section 501(c) or (d), and
to REMIC residual interest holders, see the                                                     name and TIN of the payment recipient on
                                               farmers’ cooperatives that are exempt from       Form 1099-MISC. For example, if the
instructions on Schedule Q (Form 1066),        tax under section 521. Payments by
Quarterly Notice to Residual Interest                                                           recipient is an individual beneficiary, enter
                                               Federal, state, or local government              the name and SSN of the individual; if the
Holder of REMIC Taxable Income or Net          agencies are also reportable.
Loss Allocation.                                                                                recipient is the estate, enter the name and
                                               Exceptions.—Some payments are not                EIN of the estate. The general backup
Form 8811 and Reporting by Brokers or          required to be reported on Form                  withholding rules apply to this payment.
Middlemen.—REMICs and issuers of               1099-MISC, although they may be taxable             However, death benefits from qualified
CDOs must also file Form 8811,                 to the recipient. Payments for which a           and nonqualified deferred compensation
Information Return for Real Estate             Form 1099-MISC is not required include:          plans paid to the estate or beneficiary of a
Mortgage Investment Conduits (REMICs)          (1) payments to a corporation, except            deceased employee are not reportable on
and Issuers of Collateralized Debt             those required to be reported in boxes 6         Form 1099-MISC but are reportable on
Obligations, within 30 days after the          and 8, (2) payments for merchandise,             Form 1099-R. See the instructions for
startup day of the REMIC or issue date of      (3) payments of rent to real estate agents,      Form 1099-R later in this publication.
a CDO. The IRS will use the information on     (4) wages paid to employees (report on
Forms 8811 to publish Pub. 938, Real           Form W-2), (5) business travel allowances           Example.—Before Employee A’s death
Estate Mortgage Investment Conduits            paid to employees (may be reportable on          on June 15, 1995, A was employed by
(REMICs) Reporting Information, for use by     Form W-2), and (6) PS 58 costs (report on        Employer X and received $10,000 in wages
certain brokers, middlemen, corporations,      Form 1099-R). See below for additional           on which Federal income tax of $1,500
and others specified in Regulations section    payments not reportable on Form                  was withheld. When A died, X owed A
1.6049-7(e)(4).                                1099-MISC.                                       $2,000 in wages and $1,000 in accrued
                                                                                                vacation pay. The total of $3,000 was paid
   For the requirements that a REMIC or           Fees paid to informants.—A payment            to A’s estate on July 20, 1995. Because X
CDO issuer or a broker or middleman who        to an informant as an award, fee, or             made the payment during the year of
holds a REMIC regular interest or a CDO        reward for information about criminal            death, X must withhold social security and
furnish certain information on request, see    activity is not required to be reported if the   Medicare taxes on the $3,000 payment
Regulations sections 1.6049-7(e) and           payment is made by a Federal, state, or          and must complete Form W-2 as follows:
1.6049-7(f)(7).                                local government agency, or by a nonprofit
                                               organization exempt from tax under               ● Box 1—10000.00 (does not include the
                                               section 501(c)(3) that makes the payment         $3,000 accrued wages and vacation pay)
Form 1099-MISC                                 to further the charitable purpose of             ● Box 2—1500.00
                                               lessening the burdens of government. For         ● Box 3—13000.00 (includes the $3,000
File Form 1099-MISC, Miscellaneous             more information, see Regulations section        accrued wages and vacation pay)
Income, for each person to whom you            1.6041-3(n).
                                                                                                ● Box 4—806.00 (includes 6.2% of the
have paid (1) at least $10 in royalties or        Scholarships.—Do not use Form                 $3,000 accrued wages and vacation pay)
broker payments in lieu of dividends or        1099-MISC to report scholarship or
tax-exempt interest (see Box 8),                                                                ● Box 5—13000.00 (includes the $3,000
                                               fellowship grants. Scholarship or fellowship
(2) at least $600 in rents, services                                                            accrued wages and vacation pay)
                                               grants that are taxable to the recipient
(including parts and materials), prizes and    because they are paid for teaching,              ● Box 6—188.50 (includes 1.45% of the
awards, other income payments, and             research, or other services as a condition       $3,000 accrued wages and vacation pay)
medical and health care payments, or           for receiving the grant are considered              Employer X also must complete Form
(3) any fishing boat proceeds. In addition,    wages and must be reported on Form W-2.          1099-MISC as follows:
use Form 1099-MISC to report that you          Other taxable scholarship or fellowship
made direct sales of at least $5,000 of                                                         ● Box 3—3000.00 (Even though amounts
                                               payments (to a degree or nondegree               were withheld for social security and
consumer products to a buyer for resale.       candidate) are not required to be reported
You must also file Form 1099-MISC for                                                           Medicare taxes, the gross amount is
                                               by you to the IRS on any form. See Notice        reported here.)
each person from whom you have withheld        87-31, 1987-1 C.B. 475, for more
any Federal income tax under the backup        information.                                     If Employer X made the payment after the
withholding rules regardless of the amount                                                      year of death, the $3,000 would not be
of the payment. Report only payments           Deceased Employee’s Wages Paid to                subject to social security and Medicare
made in the course of your trade or            Estate or Beneficiary.—If an employee            taxes and would not be shown on Form
business, including those made by Federal,     dies during the year, you must report on         W-2. However, the employer would still file
state, or local government agencies and        Form 1099-MISC the accrued wages,                Form 1099-MISC.
nonprofit organizations.                       vacation pay, and other compensation paid
                                               after the date of death. If you made the         Employee Business Expense
Caution: Be sure to report payments in the     payment in the same year the employee            Reimbursements.—Do not use Form
proper box because the IRS uses this           died, you must withhold social security and      1099-MISC to report employee business
information to determine whether the           Medicare taxes on the payment and report         expense reimbursements. Payments made
recipient has properly reported the            them only as social security and Medicare        to employees under a nonaccountable plan
payment. Generally, amounts reportable in      wages on the employee’s Form W-2 to              are reportable as wages on Form W-2.
box 7 are subject to self-employment tax. If   ensure proper social security and Medicare       Generally, payments made to employees
payments are not subject to this tax and       credit is received. On the Form W-2, show        under an accountable plan are not
they are not reportable elsewhere on Form      the payment as social security wages (box        reportable on Form W-2, except in certain
1099-MISC, report the payments in box 3.       3) and Medicare wages and tips (box 5)           cases when you pay per diem or mileage
Trade or Business.—Report payments             and the social security and Medicare taxes       allowance. For more information, see the
only if you are engaged in a trade or          withheld in boxes 4 and 6; do not show           Instructions for Form W-2 and Pub. 463,
                                                                                                                                  Page 17
Travel, Entertainment, and Gift Expenses.         agent on the statement of account for           least $600. However, if the arrangement is
For information on reporting employee             lottery tickets covered by that statement.      a joint venture, the joint venture must file a
moving expense reimbursements on Form             See Rev. Rul. 92-96, 1992-2 C.B. 281.           Form 1065 and provide each partner with
W-2, see the Instructions for Form W-2.           Escrow Agent; Construction Project.—            information necessary to report the
Transit Passes and Parking for                    When an escrow agent maintains                  partner’s share of the taxable income.
Independent Contractors.—Although                 owner-provided funds in an escrow               Coin-operated amusements include video
qualified transportation fringes cannot be        account for a construction project,             games, pinball machines, jukeboxes, pool
provided to independent contractors, the          performs an oversight function for the          tables, slot machines, and other machines
de minimis fringe rules for transit passes        construction project, and makes payments        and gaming devices operated by coins or
and parking apply to independent                  for the owner and the general contractor,       tokens inserted into the machines by
contractors. Tokens or farecards that             the escrow agent must file Form                 individual users. For more information, see
enable an independent contractor to               1099-MISC for reportable payments of            Rev. Rul. 92-49, 1992-1 C.B. 433.
commute on a public transit system (not           $600 or more. This requirement applies          Box 2.—Enter gross royalty payments of
including privately-operated van pools) are       whether or not the escrow agent is a bank.      $10 or more before reduction for
excludable from the independent                   For more information, see Rev. Rul. 93-70,      severance and other taxes that may have
contractor’s gross income, and therefore          1993-2 C.B. 294.                                been withheld and paid. Include in this box
not reportable on Form 1099-MISC, if the          Indian Gaming Profits, Payments to              gross royalties (before reduction for fees,
value of those tokens and farecards in any        Tribal Members.—If you make payments            commissions, or expenses) paid by a
month is $21 or less. If the value of a pass      to members of Indian tribes from the net        publisher directly to an author or literary
provided in a month is greater than $21,          revenues of class II or class III gaming        agent or paid by a literary agent to an
the full value is includible in gross income      activities conducted or licensed by the         author. Do not include surface royalties.
and therefore reportable on Form                  tribes, you must withhold Federal income        They should be reported in box 1. Do not
1099-MISC. The value of parking may be            tax on such payments and file Form              report oil or gas payments for a working
excludable from the gross income of an            1099-MISC.                                      interest in box 2; report payments for
independent contractor, and therefore not                                                         working interests in box 7. Do not report
reportable on Form 1099-MISC, if certain             File Form 1099-MISC to report the            timber royalties made under a pay-as-cut
requirements are met. See Notice 94-3,            distributions to tribal members. Report the     contract; report such timber royalties on
1994-1 C.B. 327, and Regulations sections         payments in box 3, Other income, and the        Form 1099-S.
1.132-1(b)(2), and 1.132-6(a), (b), and (d)(1).   Federal income tax withheld in box 4. For
                                                  1995, when you provide a statement to the       Box 3.—Enter other income required to
Independent Contractor or Employee.—              tribal member, please also provide an           be reported on Form 1099-MISC that
Generally, payments to independent                explanation of the income and withholding.      should not be reported in one of the other
contractors are reportable on Form                                                                boxes on the form.
1099-MISC in box 7. To help you                   Statements to Recipients.—For
                                                  information about the requirement of               Enter in box 3 prizes and awards that
determine whether someone is an                                                                   are not for services performed. Include the
independent contractor or an employee,            furnishing a statement to each recipient,
                                                  see part H under General Instructions           fair market value of merchandise won on
see Pub. 937, Employment Taxes.                                                                   game shows. You must report prizes and
                                                  earlier.
Note: To qualify for relief under section                                                         awards for employees on Form W-2. (See
530 of the Revenue Act of 1978 as                 2nd TIN Not.—You may enter an “X” in            the Instructions for Form W-2.) Report
extended by section 269(c) of P.L. 97-248,        this box if you were notified by the IRS        prizes and awards for services performed
about the employment tax status of                twice within 3 calendar years that the          by nonemployees, such as an award for
independent contractors and employees,            payee provided an incorrect taxpayer            the top commission salesperson, in box 7.
employers must file Form 1099-MISC.               identification number (TIN). If you mark this
                                                  box, you will comply with a safe harbor            Prizes and awards received in
Additional requirements for relief are                                                            recognition of past accomplishments in
discussed in Rev. Proc. 85-18, 1985-1 C.B.        due diligence requirement of Temporary
                                                  Regulations section 35a.9999-3, Q/A-89,         religious, charitable, scientific, artistic,
518. Also see Notice 87-19, 1987-1 C.B.                                                           educational, literary, or civic fields are not
455, for special rules that may apply to          and the IRS will not send you any further
                                                  notices about this account. Also see            reportable if (1) the winners are chosen
certain skilled workers, such as engineers,                                                       without action on their part, (2) the winners
designers, drafters, computer                     Regulations section 301.6724-1(g).
                                                                                                  are not expected to perform future
programmers, and systems analysts, and            Box 1.—Enter amounts paid to recipients         services, AND (3) the payer transfers the
Rev. Rul. 87-41, 1987-1 C.B. 296.                 for all types of rents, such as real estate     prize or award to a charitable organization
Directors’ Fees.—Directors’ fees and              rentals paid for office space (unless paid to   or governmental unit under a designation
other remuneration, including payments            a real estate agent), machine rentals (for      made by the recipient. See Rev. Proc.
made after retirement, are reportable on          example, hiring a bulldozer to level your       87-54, 1987-2 C.B. 669.
Form 1099-MISC and must be reported in            parking lot), and pasture rentals (for
                                                  example, farmers paying for the use of             Other items required to be reported in
the year paid. Report them in box 7.                                                              box 3 include the following:
                                                  grazing land). If the machine rental is part
Commissions Paid to Lottery Ticket                of a contract that includes both the use of        1. Punitive damages paid in cases that
Sales Agents.—A state that has control            the machine and the operator, the rental        do not involve physical injury or sickness
over and responsibility for on-line and           should be prorated between the rent of the      and any other taxable damages.
instant lottery games must file Form              machine (reported in box 1) and the
1099-MISC to report commissions,                                                                     2. Payments to nonemployees specified
                                                  operator’s charge (reported as                  in, and payments similar to those specified
whether paid directly or indirectly, to           nonemployee compensation in box 7).
licensed sales agents. For example, State                                                         in, Rev. Rul. 65-18, 1965-1 C.B. 32, about
                                                  Public housing agencies must report in          payments to patients and members in
X retains control over and liability for          box 1 rental assistance payments made to
on-line and instant lottery games. For                                                            Department of Veterans Affairs (VA)
                                                  owners of housing projects. See Rev. Rul.       hospitals and domiciliaries under the VA
on-line ticket sales, State X pays                88-53, 1988-1 C.B. 384.
commissions by allowing an agent to retain                                                        therapeutic or rehabilitative program.
5% of the ticket proceeds the agent remits           Coin-operated amusements.—If an                 3. Payments as explained earlier under
to State X. For instant ticket sales, State X     arrangement between an owner of                 Deceased Employee’s Wages Paid to
pays commissions by providing tickets to          coin-operated amusements and an owner           Estate or Beneficiary.
the agent for 5% less than the proceeds to        of a business establishment where the
                                                  amusements are placed is a lease of the            4. Payments as explained earlier under
be obtained by the agent from the sale of                                                         Indian Gaming Profits, Payments to
those tickets. If the commissions for the         amusements or the amusement space, the
                                                  owner of the amusements or the owner of         Tribal Members.
year total $600 or more, they must be
                                                  the space, whoever makes the payments,          Box 4.—Enter backup withholding. For
reported in box 7 on Form 1099-MISC. The
                                                  must report the lease payments in box 1 of      example, persons who have not furnished
commissions are paid by State X to the
                                                  Form 1099-MISC if the payments total at         their TIN to you become subject to
agent on the date payment is due from the
Page 18
withholding at a 31% rate on payments                   insurance paid on behalf of a former                             7. Payments to nonemployee
required to be reported in boxes 1, 2 (net              employee (reported on Form W-2).                              entertainers for services.
of severance taxes), 3, 5 (to the extent                   Generally, amounts reportable in box 7                        8. Exchanges of services between
paid in cash), 6, 7, 8, and 10 on this form.            are subject to self-employment tax. If                        individuals in the course of their trades or
   Also enter any income tax withheld from              payments are not subject to this tax and                      businesses. For example, an attorney
payments to members of Indian tribes from               they are not reportable elsewhere on Form                     represents a painter for nonpayment of
the net revenues of class II or class III               1099-MISC, report the payments in box 3.                      business debts in exchange for the
gaming activities conducted or licensed by                 If the following four conditions are met, a                painting of the attorney’s law offices. The
the tribes.                                             payment generally is reportable as                            amount reportable by each on Form
Box 5.—Enter the share of all proceeds                  nonemployee compensation: (1) you made                        1099-MISC is the fair market value of his
from the sale of a catch or the fair market             the payment to someone who is not your                        or her own services performed. However, if
value of a distribution in kind to each crew            employee; (2) you made the payment for                        the attorney represents the painter in a
member of fishing boats with normally                   services in the course of your trade or                       divorce proceeding, the attorney must
fewer than 10 crewmembers.                              business (including government agencies                       report on Form 1099-MISC the value of his
                                                        and nonprofit organizations); (3) you made                    or her services, but the painter need not
Box 6.—Enter payments made in the                                                                                     report. The payment by the painter is not
course of your trade or business to each                the payment to someone other than a
                                                        corporation, e.g., an individual or a                         made in the course of the painter’s trade
physician or other supplier or provider of                                                                            or business, even though the painting
medical or health care services, including              partnership; and (4) you made payments to
                                                        the payee of at least $600 during the year.                   services are of the type normally
payments made by medical and health                                                                                   performed in the course of the painter’s
care insurers under health, accident, and                  Examples of payments to be reported in                     trade or business.
sickness insurance programs. In the case                box 7 are:
of a corporation, list the corporation as the                                                                            9. Taxable fringe benefits for
                                                           1. Professional service fees, such as                      nonemployees. For information on
recipient rather than the individual                    fees to attorneys, accountants, and
providing the services. See Rev. Ruls.                                                                                valuation of fringe benefits, see Pub. 535,
                                                        architects.                                                   Business Expenses.
69-595, 1969-2 C.B. 242, and 70-608,
1970-2 C.B. 286.                                           2. Fees paid by one professional to                           10. Gross oil and gas payments for a
                                                        another, such as fee-splitting or referral                    working interest.
   The exemption from issuing Form                      fees.
1099-MISC to a corporation does not                                                                                      11. Payments to current and former
apply to payments for medical or health                    3. Payments by attorneys to witnesses                      self-employed insurance salespersons and
care services provided by corporations,                 or experts in legal adjudication.                             agents for (a) amounts paid after
including professional corporations.                       4. Payment for services, including                         retirement, but calculated as a percentage
Box 7.—Enter nonemployee                                payment for parts or materials used to                        of commissions received by the individual
compensation. Include fees, commissions,                perform the services as long as supplying                     from the paying company before
prizes and awards for services performed,               the parts or materials was incidental to                      retirement; (b) renewal commissions; and
or other forms of compensation for                      providing the service. For example, report                    (c) deferred commissions paid after
services performed for your trade or                    the total insurance company payments to                       retirement but for sales made before
business by an individual who is not your               an auto repair shop under a repair contract                   retirement.
employee. Include oil and gas payments                  showing an amount for labor and another                          12. Directors’ fees as explained earlier
for a working interest, whether or not                  amount for parts, since furnishing parts                      under Directors’ Fees.
services are performed. Also include                    was incidental to repairing the auto.
                                                                                                                         13. Commissions paid to licensed lottery
expenses incurred for the use of an                        5. Commissions paid to nonemployee                         ticket sales agents as explained earlier
entertainment facility that you treat as                salespersons, subject to repayment but not                    under Commissions Paid to Lottery
compensation to a nonemployee. Do not                   repaid during the calendar year.                              Ticket Sales Agents.
report in box 7, nor elsewhere on Form                     6. A fee paid to a nonemployee and
1099-MISC, PS 58 costs (reported on                                                                                   Example.—Ronald Barr is a building
                                                        travel reimbursement for which the                            contractor. He subcontracts the drywall
Form 1099-R); an employee’s wages, travel               nonemployee did not account to the payer
or auto allowance, or bonuses (reported on                                                                            work to Daniel Joseph, a sole proprietor
                                                        if the fee and reimbursement total at least                   who does business as ABC Drywall. During
Form W-2); or the cost of group-term life               $600.                                                         the year, Mr. Barr pays Mr. Joseph

                     9595                       VOID             CORRECTED
 PAYER’S name, street address, city, state, and ZIP code                      1 Rents                            OMB No. 1545-0115
                                                                              $
     Ronald Barr                                                              2 Royalties
     XYZ Builders                                                                                                                                Miscellaneous
                                                                              $
     123 Maple Ave.
                                                                              3 Other income
                                                                                                                                                        Income
     Oaktown, VA 22000
                                                                              $                                  Form    1099-MISC
 PAYER’S Federal identification number   RECIPIENT’S identification number    4 Federal income tax withheld       5 Fishing boat proceeds
                                                                                                                                                             Copy A
     10-9999999                             123-45-6789                       $                                   $                                            For
 RECIPIENT’S name                                                             6 Medical and health care payments 7 Nonemployee compensation       Internal Revenue
     Daniel Joseph                                                            $                                   $ 5500.00                         Service Center
     ABC Drywall                                                              8 Substitute payments in lieu of    9 Payer made direct sales of   File with Form 1096.
                                                                                dividends or interest               $5,000 or more of consumer
 Street address (including apt. no.)                                                                                                                    For Paperwork
                                                                                                                    products to a buyer
     456 Flower Ln.                                                           $                                     (recipient) for resale               Reduction Act
                                                                                                                                                             Notice and
 City, state, and ZIP code                                                   10 Crop insurance proceeds          11 State income tax withheld           instructions for
     Oaktown, VA 22000                                                        $                                   $                              completing this form,
                                                                                                                                                  see Instructions for
 Account number (optional)                                     2nd TIN Not. 12 State/Payer’s state number
                                                                                                                                                   Forms 1099, 1098,
                                                                                                                                                     5498, and W-2G.
Form   1099-MISC                                                         Cat. No. 14425J                          Department of the Treasury - Internal Revenue Service

                                                    Do NOT Cut or Separate Forms on This Page
                                                                                                                                                            Page 19
$5,500.00. Mr. Barr must file Form               letter showing this information along with       during the calendar year, and if Form
1099-MISC because he paid Mr. Joseph             commissions, prizes, awards, etc.                1099-OID amounts are proportional, you
$600 or more in the course of his trade or       Box 10.—Enter crop insurance proceeds            may treat all such certificates as one
business, and Mr. Joseph is not a                paid to farmers by insurance companies,          discount obligation and file a single Form
corporation. Form 1099-MISC is completed         unless the farmer has informed the               1099-OID.
as shown above.                                  insurance company that expenses have                For time deposits and face-amount
Golden Parachute Payments.—A typical             been capitalized under section 278, 263A,        certificates, use the actual date of deposit
golden parachute payment is one made by          or 447.                                          and compute OID on a straight-line,
a corporation to a certain officer,              Boxes 11 and 12.—These boxes, and                monthly prorated basis for obligations
shareholder, or highly paid individual when      Copies 1 and 2, are provided for your            issued before July 2, 1982, and on a daily
a change in the ownership or control of the      convenience only and need not be                 economic accrual basis for obligations
corporation occurs or when a change in           completed for the IRS. If you withhold           issued after July 1, 1982.
the ownership of a substantial part of the       state income tax, you may enter it in box           If you are a broker or middleman who
corporate assets occurs. See section 280G        11. In box 12, enter the abbreviated name        holds a bank CD as nominee, whether or
for more information.                            of the state and the payer’s state               not you sold the CD to the owner, you
   In box 7, report any excess golden            identification number, assigned by the           must determine the amount of OID
parachute payments to a nonemployee.             state. Use Copy 1 to provide information to      includible in the income of the owner, if
Enter the letters “EPP” next to this             the state, and Copy 2 as the recipient’s         any, and report it on Form 1099-OID.
amount. Also enter the total compensation,       copy for use in filing the state income tax         Pub. 1212, List of Original Issue
including any golden parachute payments.         return.                                          Discount Instruments, contains information
Your entry should be in the following                                                             on certain outstanding publicly offered
format:                                                                                           discount obligations.
                  300000EPP                      Form 1099-OID
                  400000                                                                             Issuers of certain publicly offered debt
                                                                                                  instruments having OID must file Form
Box 8.—Enter aggregate payments of at            File Form 1099-OID, Original Issue               8281, Information Return for Publicly
least $10 received by a broker for a             Discount, if the original issue discount         Offered Original Issue Discount
customer in lieu of dividends or                 (OID) includible in gross income is at least     Instruments, within 30 days after the date
tax-exempt interest as a result of the           $10 and you are any of the following:            of issuance. The information provided on
transfer of a customer’s securities for use      (1) an issuer with any bond outstanding or       that form will enable the IRS to update
in a short sale. File Form 1099-MISC with        other evidence of indebtedness in                Pub. 1212. See Form 8281 for details.
the IRS and furnish a copy to the customer       registered or bearer form issued with OID;
for whom you received the payment.               (2) an issuer of certificates of deposit (CDs)   Exceptions.—You are not required to file
However, for substitute payments in lieu of      made, purchased, or renewed after 1970 if        Form 1099-OID for payments made to
dividends, do not file Form 1099-MISC nor        the term of the obligation or deposit is         certain payees including a corporation, a
furnish it to your customer if your customer     more than 1 year; (3) a financial institution    tax-exempt organization, an individual
is an individual, unless you have reason to      having other deposit arrangements, such          retirement arrangement (IRA), a U.S.
know on the record date of the dividend          as time deposits or bonus-savings plans          agency, a state, the District of Columbia, a
payment that such substitute dividend            having a term in excess of 1 year provided       U.S. possession, or a registered securities
payment is in lieu of (1) an exempt-interest     the payment of interest is deferred until        or commodities dealer.
dividend, (2) a capital gain dividend, (3) a     maturity; (4) a broker or other middleman           Do not report interest on U.S. Savings
return of capital, or (4) a dividend subject     holding an OID obligation, including CDs,        Bonds on this form. Report it on Form
to a foreign tax credit. File Form               as nominee for the actual owner; or (5) a        1099-INT. Also report OID on obligations
1099-MISC for and furnish a copy to an           real estate mortgage investment conduit          with a term of 1 year or less on Form
individual for whom you received a               (REMIC) or issuer of a collateralized debt       1099-INT.
payment in lieu of tax-exempt interest. If       obligation (CDO). Also, file Form 1099-OID       Statements to Recipients.—For an
you are not required to make a report on         in any case in which you are required to         explanation of the requirement to furnish
Form 1099-MISC for substitute dividends          deduct and withhold taxes even if the            an official form to recipients in person or
of at least $10, you must report the             amount of the OID is less than $10.              by statement mailing, see part H under
substitute dividends on Form 1099-DIV.           Original Issue Discount.—Original issue          General Instructions earlier. Also see Pub.
   Substitute payment means a payment            discount means the difference between the        1179.
in lieu of (1) tax-exempt interest to the        stated redemption price at maturity and          2nd TIN Not.—You may enter an “X” in
extent that interest (including OID) has         the issue price of a debt instrument. In the     this box if you were notified by the IRS
accrued while the short sale was open and        case of a stripped bond or coupon, OID is        twice within 3 calendar years that the
(2) a dividend if the ex-dividend date is        the difference between the stated                payee provided an incorrect taxpayer
after the transfer of stock for use in a short   redemption price at maturity and the             identification number (TIN). If you mark this
sale and before the closing of the short         acquisition price. A discount of less than 1⁄4   box, you will comply with a safe harbor
sale.                                            of 1% of the stated redemption price at          due diligence requirement of Temporary
   For more information about reporting          maturity, multiplied by the number of full       Regulations section 35a.9999-3, Q/A-89,
substitute payments, see Regulations             years from the date of issue to maturity, is     and the IRS will not send you any further
section 1.6045-2.                                considered to be zero.                           notices about this account. Also see
Box 9.—Sales by you of $5,000 or more of         Reporting OID.—You must prepare a                Regulations section 301.6724-1(g).
consumer products to a person on a               Form 1099-OID for each person who is a           Box 1.—Report the OID on the obligation
buy-sell, deposit-commission, or other           holder of record of the obligation if the OID    for the part of the year it was owned by
commission basis for resale (by the buyer        includible in the holder’s gross income is at    the record holder. For REMICs and CDOs,
or any other person) anywhere other than         least $10.                                       see the discussion about REMICs and
in a permanent retail establishment. Enter          For REMICs and CDOs, see the                  CDOs later.
an “X” in the checkbox in box 9. Do not          discussion about REMICs and CDOs later.          Box 2.—Enter any interest other than OID
enter a dollar amount here.                         Ordinarily, you will file only one Form       paid or credited on this obligation during
   If you are reporting an amount in box 7,      1099-OID for the depositor or holder of a        the year. Some OID instruments pay
you may also check box 9 on the same             particular obligation for the calendar year.     regular interest, in addition to the OID, at
Form 1099-MISC.                                  If a person holds more than one discount         certain intervals during the life of the
   The report you must give to the recipient     obligation, issue separate Forms 1099-OID        instrument. However, if OID is the only
for these direct sales need not be made on       for each obligation. However, if a person        interest on this obligation, leave this box
the official form. It may be in the form of a    holds more than one certificate of the           blank. Interest reported here must not be
                                                 same issue for the same period of time           reported on Form 1099-INT. For REMICs
Page 20
and CDOs, see the discussion about                Statements to Holders.—For each Form           the backup withholding rules regardless of
REMICs and CDOs later.                            1099-OID you are required to file, you         the amount of the payment. A cooperative
Box 3.—Enter amounts of interest or               must furnish a statement to the REMIC          determined to be primarily engaged in the
principal forfeited because of an early           regular interest or CDO holder identified on   retail sale of goods or services that are
withdrawal, such as an early withdrawal           the form. The statement must contain the       generally for personal, living, or family use
from a CD, that are deductible from gross         information shown on Form 1099-OID,            of the members may ask for and receive
income by the recipient. Do not reduce the        including the legend shown on Copy B of        exemption from filing Form 1099-PATR.
amounts in boxes 1 and 2 by the amount            the official Form 1099-OID, and an             See Form 3491, Consumer Cooperative
of the forfeiture. For detailed instructions      indication that these items are being          Exemption Application, for information
for determining the amount of forfeiture          furnished to the IRS. The statement must       about how to apply for this exemption.
deductible by the holder, see Rev. Ruls.          also show the information specified in            Report dividends paid on cooperatives’
75-20, 1975-1 C.B. 29, and 75-21, 1975-1          Regulations section 1.6049-7(f)(2)(ii). In     capital stock on Form 1099-DIV.
C.B. 367.                                         addition, the statement furnished by a
                                                  REMIC must show, for each calendar             Statements to Recipients.—For an
Box 4.—Enter backup withholding. For              quarter, the information specified in          explanation of the requirement to furnish
example, persons who have not furnished           Regulations section 1.6049-7(f)(3). Also see   an official form to recipients in person or
their TIN to you in the manner required           Regulations section 1.6049-7(f)(3)(ii) for     by statement mailing, see part H under
become subject to withholding at a 31%            information that may be required to be         General Instructions earlier. Also see Pub.
rate on amounts required to be reported in        reported to a real estate investment trust     1179.
boxes 1 and 2 (which may be reduced by            (REIT) that holds a regular interest.          2nd TIN Not.—You may enter an “X” in
the amount reported in box 3) limited to                                                         this box if you were notified by the IRS
the cash paid on these obligations.                  A single-class REMIC (as defined in
                                                  Temporary Regulations section                  twice within 3 calendar years that the
Box 5.—Enter the CUSIP number, if any; if         1.67-3T(a)(2)(ii)) must include in the         payee provided an incorrect taxpayer
there is no CUSIP number, the                     statement the investment expenses paid or      identification number (TIN). If you mark this
abbreviation for the stock exchange, the          accrued during each calendar quarter by        box, you will comply with a safe harbor
abbreviation for the issuer used by the           the REMIC for which the REMIC is allowed       due diligence requirement of Temporary
stock exchange, the coupon rate, and the          a deduction under section 212 and the          Regulations section 35a.9999-3, Q/A-89,
year of maturity (e.g., NYSE XYZ 121⁄2 98).       proportionate share of those investment        and the IRS will not send you any further
If the issuer of the obligation is other than     expenses allocated to the regular interest     notices about this account. Also see
the payer, show the name of the issuer.           holder.                                        Regulations section 301.6724-1(g).
                                                     The statement must be furnished to          Box 1.—Enter the total patronage
REMICs and Issuers of                                                                            dividends paid in cash (qualified or
Collateralized Debt Obligations                   holders by March 15. To meet the
                                                  statement requirement, you may furnish a       “consent” checks), qualified written notices
Real estate mortgage investment conduits          copy of Form 1099-OID and a separate           of allocation (face amount), and other
(REMICs), issuers of collateralized debt          statement containing the additional            property (except nonqualified written
obligations (CDOs), and any broker or             information to the REMIC regular interest      notices of allocation).
middleman who holds as a nominee a                or CDO holder.                                 Box 2.—Enter the total nonpatronage
REMIC regular interest or CDO must file              For information about reporting income      distributions paid in cash (qualified or
Form 1099-OID to report OID of $10 or             to REMIC residual interest holders, see the    “consent” checks), qualified written notices
more accrued to a REMIC regular interest          instructions on Schedule Q (Form 1066),        of allocation (face amount), and other
holder or a holder of a CDO. Also use             Quarterly Notice to Residual Interest          property (not including nonqualified written
Form 1099-OID to report other interest            Holder of REMIC Taxable Income or Net          notices of allocation). This box applies only
accrued to a REMIC regular interest holder        Loss Allocation.                               to farmers’ cooperatives exempt from tax
during the year or paid to a holder of a                                                         under section 521.
CDO. Use Form 1099-INT to report interest         Form 8811 and Reporting by Brokers or
                                                  Middlemen.—REMICs and issuers of               Box 3.—Enter the total per-unit retain
if no OID is includible in the regular interest                                                  allocations paid in cash, qualified per-unit
holder’s or CDO holder’s income for the           CDOs must also file Form 8811,
                                                  Information Return for Real Estate             retain certificates (face amount), and other
year.                                                                                            property.
                                                  Mortgage Investment Conduits (REMICs)
   You are not required to file or issue          and Issuers of Collateralized Debt             Box 4.—Enter backup withholding. For
Form 1099-OID for exempt recipients               Obligations, within 30 days after the          example, persons who have not furnished
including the following holders of a REMIC        startup day of the REMIC or issue date of      their TIN to you in the manner required
regular interest or a CDO:                        a CDO. The IRS will use the information on     become subject to withholding at a 31%
   1. A corporation.                              Forms 8811 to publish Pub. 938, Real           rate on payments required to be reported
   2. A broker.                                   Estate Mortgage Investment Conduits            in boxes 1, 2, 3, and 5 to the extent such
                                                  (REMICs) Reporting Information, for use by     payments are in cash or qualified check.
   3. A middleman/nominee.                        certain brokers, middlemen, corporations,      See Temporary Regulations section
   4. A financial institution.                    and others specified in Regulations section    35a.9999-3, Q/A-10 for more information
   5. An IRA.                                     1.6049-7(e)(4).                                on backup withholding by cooperatives.
   6. A tax-exempt organization.                     For the requirements that a REMIC or        Box 5.—Enter all redemptions of
                                                  CDO issuer or a broker or middleman who        nonqualified written notices of allocation
   For additional exempt recipients, see                                                         issued as patronage dividends,
Regulations section 1.6049-7(c).                  holds a REMIC regular interest or a CDO
                                                  furnish certain information on request, see    nonqualified written notices of allocation
Box 1.—Report in box 1 the aggregate              Regulations sections 1.6049-7(e) and           issued as nonpatronage allocations
amount of OID includible in the gross             1.6049-7(f)(7).                                (applicable only to farmers’ cooperatives
income of each REMIC regular interest or                                                         qualifying under section 521), and
CDO holder for the period during the year                                                        nonqualified per-unit retain certificates,
for which the return is made.                     Form 1099-PATR                                 issued with respect to marketing.
Box 2.—Report in box 2 any amount of                                                             Pass-Through Credits.—Report in the
interest, other than OID, accrued to each         File Form 1099-PATR, Taxable                   appropriate boxes the patron’s share of
REMIC regular interest holder or paid to          Distributions Received From                    unused credits that the cooperative is
each CDO holder. If you are a single-class        Cooperatives, for each person to whom          passing through to this patron:
REMIC (as defined in Temporary                    the cooperative has paid at least $10 in       Box 6.—See the Note below.
Regulations section 1.67-3T(a)(2)(ii)),           patronage dividends and other distributions
include in box 2 the regular interest             described in section 6044(b) or from whom      Box 7.—Energy investment credit.
holder’s share of investment expenses of          you withheld any Federal income tax under      Box 8.—Jobs credit.
the REMIC for the year.
                                                                                                                                   Page 21
Box 9.—Patron’s Alternative Minimum Tax          distributions to beneficiaries of deceased       the “Taxable amount not determined” box
Adjustments.—Enter the total alternative         employees on Form 1099-R. Report                 in box 2b. But see the instructions for box
minimum tax (AMT) patronage dividend             distributions to beneficiaries in boxes 1        2a for how to report the withdrawal of
adjustment for the patron and/or the total       and 2a and use Code 4 in box 7.                  contributions under section 408(d)(4). Also
AMT per-unit retain allocation adjustment        Charitable Gift Annuities.—If cash or            see Direct Rollovers and Transfers below
for the patron.                                  capital gain property is donated in              for information on trustee-to-trustee
Note: If you are passing through other           exchange for a charitable gift annuity,          transfers. The direct rollover provisions do
credits, such as the Indian employment           distributions from the annuity are               not apply to distributions from IRAs and
credit, use box 6 or the blank box under         reportable on Form 1099-R. Report in box         SEPs.
boxes 8 and 9. Label the credit.                 1 the total amount distributed during the        IRA Revocation.—If an IRA is revoked
                                                 year. Report in box 2a the taxable amount.       during its first 7 days (under Regulations
                                                 If any amount is taxable as a capital gain,      section 1.408-6(d)(4)(ii)), the distribution
Form 1099-R                                      report it in box 3. Report in box 5 any          from the IRA must be reported. In addition,
                                                 nontaxable amount. Enter Code F in box 7.        Form 5498 must be filed to report any
File Form 1099-R, Distributions From             See Regulations section 1.1011-2(c)              regular or rollover contribution to an IRA
Pensions, Annuities, Retirement or               Example 8.                                       that is revoked. Trustee-to-trustee transfers
Profit-Sharing Plans, IRAs, Insurance            Life Insurance, Annuity, and Endowment           from one IRA to another are not reportable
Contracts, etc., for each person to whom         Contracts.—Report on Form 1099-R                 on either Form 5498 or Form 1099-R.
you have made any designated distribution        payments of matured or redeemed annuity,            If a regular contribution is made to an
from profit-sharing or retirement plans,         endowment, and life insurance contracts.         IRA that later is revoked, and distribution is
IRAs, annuities, pensions, insurance             However, you need not file Form 1099-R to        made to the taxpayer, enter the gross
contracts, survivor income benefit plans,        report the surrender of a life insurance         distribution in box 1 of Form 1099-R. If no
permanent and total disability payments          contract if it is reasonable to believe that     earnings are distributed, enter 0 (zero) in
under life insurance contracts, charitable       none of the payment is includible in the         box 2a and Code 8 in box 7. If earnings
gift annuities, etc., whether or not you         income of the recipient. If you are reporting    are distributed, enter the amount of
withheld Federal income tax.                     the surrender of a life insurance contract       earnings in box 2a. Such earnings could
   If part of the distribution is taxable and    on Form 1099-R, enter Code 7 in box 7.           be subject to the early distribution tax
part is nontaxable, file a Form 1099-R              Also report premiums paid by a trustee        under section 72(t). If they are subject to
reporting the entire distribution. However, if   or custodian for current life or other           that tax, enter Code 1 in box 7; if the
the total amount of the gross distribution       insurance protection (PS 58 costs). PS 58        earnings are not subject to that tax, enter
paid to someone for the year is less than        costs are not subject to the 10% early           Code 8.
$1, a Form 1099-R need not be filed for          distribution tax under section 72(t).            Note: If you know that the taxpayer
that person.                                        Section 1035 exchange.—A tax-free             deducted the contribution, report the total
   Also report death benefit payments            section 1035 exchange is the exchange of         amount distributed in box 2a and use the
made by employers that are not made as           (1) a life insurance contract for another life   appropriate code in box 7.
part of a pension, profit-sharing, or            insurance, endowment, or annuity contract,          If a rollover contribution is made to an
retirement plan. (See the instructions for       (2) an endowment contract for an annuity         IRA that later is revoked, and distribution is
box 1 later.)                                    contract or for another endowment                made to the taxpayer, enter in boxes 1 and
   For loans from qualified plans, section       contract that provides for regular payments      2a of Form 1099-R the gross distribution
403(a) annuity plans, section 403(b)             to begin no later than they would have           and the appropriate code in box 7. Follow
contracts, or modified endowment                 begun under the old contract, and (3) an         this same procedure for a transfer from
contracts treated as distributions, see          annuity contract for another annuity             one IRA to another IRA that later is
sections 72(p) and 72(e)(4)(A). A deemed         contract. However, the distribution of other     revoked. The distribution could be subject
distribution under section 72(p) or 72(e)(4)     property or the cancellation of a contract       to the early distribution tax under section
could be an early distribution under section     loan at the time of the exchange may be          72(t).
72(t) or 72(v), respectively.                    taxable and reportable on a separate Form           If an employer SEP contribution is made
                                                 1099-R.                                          and the SEP is revoked by the employee,
   Generally, do not report payments
subject to withholding of social security           These exchanges of contracts are              report the distribution as fully taxable.
and Medicare taxes on this form. Report          generally reportable on Form 1099-R.                For more information, see Rev. Proc.
such payments on Form W-2.                       However, if (1) the exchange occurs within       91-70, 1991-2 C.B. 899.
                                                 the same company, (2) the exchange is
   Reportable disability payments made                                                            DECs.—If you are reporting a total
                                                 solely a contract for contract exchange, as
from a retirement plan should be reported                                                         distribution from a plan that includes a
                                                 defined above, that does not result in a
on Form 1099-R.                                                                                   distribution of deductible voluntary
                                                 designated distribution, and (3) the
   Do not report amounts totally exempt          company maintains adequate records of            employee contributions (DECs), file two
from tax such as workmen’s compensation          the policyholder’s basis in the contracts,       Forms 1099-R—one to report the
and Department of Veterans Affairs (VA)          reporting on Form 1099-R is not required.        distribution of DECs, the other to report
payments.                                        For example, a life insurance contract           the distribution from the other part of the
                                                 issued by Company X received in                  plan. Report the distribution of DECs in
Military Retirement Pay.—Payments to
                                                 exchange solely for another life insurance       boxes 1 and 2a on the separate Form
military retirees are reportable on Form
                                                 contract previously issued by Company X          1099-R. However, for the direct rollover
1099-R. Military retirement pay awarded as
                                                 is not reportable on Form 1099-R as long         (explained below) of funds that include
a property settlement to a former spouse is
                                                 as the company maintains the required            DECs, file only one Form 1099-R to report
reportable on Form 1099-R under the
                                                 records. (See Rev. Proc. 92-26, 1992-1           the direct rollover of the entire amount. In
name and taxpayer identification number
                                                 C.B. 744.)                                       this case, it is not necessary to report the
of the recipient, not those of the military
                                                                                                  direct rollover of DECs on a separate Form
retiree.                                            For those section 1035 exchanges that         1099-R.
   Payments of survivor benefit annuities        are reportable on Form 1099-R, enter the
                                                 total value of the contract in box 1, 0 (zero)   Direct Rollovers and Transfers.—You
are also reportable on Form 1099-R.
                                                 in box 2a, the total premiums paid in box        must report a direct rollover of an eligible
Nonqualified Plans.—Report any                                                                    rollover distribution. A direct rollover is the
reportable distributions from commercial         5, and Code 6 in box 7.
                                                                                                  direct payment of the distribution to an
annuities on Form 1099-R. Report                 IRA and SEP Distributions.—Distributions         eligible retirement plan, including an IRA.
distributions to plan participants from          from an individual retirement arrangement        An eligible rollover distribution is the
nonqualified deferred compensation plans,        (IRA) or simplified employee pension (SEP)       taxable part of any distribution (including
including section 457 plans, on Form W-2,        must be reported in boxes 1 and 2a               net unrealized appreciation) from a
not on Form 1099-R. However, report              regardless of the amount. You may mark           qualified plan (or tax-sheltered annuity but
Page 22
not an IRA) except (1) one of a series of       withholding rules. Notice 92-48, 1992-2              For more information, see Rev. Proc.
substantially equal periodic payments (at       C.B. 377, contains a model notice the plan        92-93, 1992-2 C.B. 505.
least annually) made for the life (or life      administrator can use to satisfy this             Failing the ADP or ACP Test After a
expectancy) of the employee or for the          requirement. Notice 93-26 explains an             Total Distribution.—If you make a total
joint lives (or life expectancies) of the       exception to the 30-day rule and special          distribution in 1995 and file a Form 1099-R
employee and the employee’s beneficiary         rules for tax-sheltered (section 403(b))          with the IRS and then discover in 1996
or for a specified period of 10 years or        annuities.                                        that the plan failed either the section
more, and (2) any part of a distribution that   Beneficiaries.—Prepare Form 1099-R                401(k)(3) ADP (actual deferral percentage)
is a minimum distribution required by           using the name and taxpayer identification        test for 1995 and you compute excess
section 401(a)(9). Other exceptions may         number (TIN) of the beneficiary or estate,        contributions or the section 401(m)(2) ACP
apply. See Codes G and H under Box 7            not those of the decedent. If there are           (actual contribution percentage) test and
later.                                          multiple beneficiaries, report on each Form       you compute excess aggregate
   Amounts paid under an annuity contract       1099-R only the amount paid to the                contributions, you must recharacterize part
purchased for and distributed to a              beneficiary whose name appears on the             of the total distribution as excess
participant under a qualified plan can          Form 1099-R, and enter the percentage in          contributions or excess aggregate
qualify as eligible rollover distributions.     box 9a, if applicable.                            contributions. First, file a CORRECTED
(See Notice 93-26, 1993-1 C.B. 308.) An         Nonresident Aliens.—If income tax is              Form 1099-R for 1995 for the correct
offset amount to repay a plan loan can be       withheld under section 3405 on a                  amount of the total distribution (not
an eligible rollover distribution. An amount    distribution to a nonresident alien, report       including the amount recharacterized as
equal to the offset can be rolled over, but     the distribution and withholding on Form          excess contributions or excess aggregate
the plan is not required to permit a            1099-R. Also file Form 945, Annual Return         contributions). Second, file a NEW Form
participant a direct rollover of an offset      of Withheld Federal Income Tax, to report         1099-R for 1995 for the excess
amount. A deemed distribution of a plan         the withholding. If income tax is withheld        contributions or excess aggregate
loan under section 72(p) cannot be an           under section 1441, report the distribution       contributions.
eligible rollover distribution. (See Notice     and withholding on Forms 1042 and                    To avoid a late filing penalty if the new
93-3, 1993-1 C.B. 293.)                         1042-S.                                           Form 1099-R is filed after the due date,
   For information on withholding on eligible   Corrective Distributions.—For reporting           enter in the bottom margin of Form 1096
rollover distributions that are not direct      the distribution of excess deferrals, excess      the words “Filed To Correct Excess
rollovers, see Box 4 later. For more            contributions, and excess aggregate               Contributions.”
information on direct rollovers, see            contributions, see Code 8 under Box 7                You should also issue copies of the
Temporary Regulations sections                  later.                                            Forms 1099-R to the plan participant with
1.401(a)(31)-1T, 1.402(c)-2T, 1.402(f)-2T,                                                        an explanation of why these new forms are
1.403(b)-2T, and 31.3405(c)-1T.                 Excess Annual Additions Under Section
                                                415.—You must report on Form 1099-R               being issued.
   Report a direct rollover in box 1 and 0      distributions made under Regulations              Missing Participants.—The IRS
(zero) in box 2a. You do not have to report     section 1.415-6(b)(6)(iv) of elective deferrals   administers a letter-forwarding program
capital gain in box 3 or net unrealized         or a return of employee contributions (and        that could help plan administrators contact
appreciation in box 6. Prepare the form         gains attributable to such employee               missing retirement plan participants (or
using the name and social security number       contributions) to reduce excess annual            possibly their beneficiaries). To inform
of the person for whose benefit the funds       additions arising from the allocation of          individuals of their rights to benefits under
were rolled over (generally the participant),   forfeitures, a reasonable error in estimating     a retirement plan, the IRS will forward
not those of the trustee of the IRA or other    a participant’s compensation, or a                letters from plan administrators to the
plan to which the funds were rolled.            reasonable error in determining the amount        missing individuals if the administrators
   If part of the distribution is a direct      of elective deferrals that may be made for        provide the names and social security
rollover and part is distributed to the         an individual under the limits of section         numbers of the missing individuals.
recipient, prepare two Forms 1099-R.            415.                                              However, the IRS cannot disclose
   Do not report transfers between                 Such distributions are not eligible            individuals’ addresses or give confirmation
trustees or issuers (unless they are direct     rollover distributions although they are          of letter delivery. All undelivered letters will
rollovers from qualified plans) that involve    subject to income tax withholding under           be destroyed.
no payment or distribution of funds to the      section 3405. They are not subject to                For further information, see Rev. Proc.
participant including a trustee-to-trustee      social security, Medicare, or Federal             94-22, 1994-1 C.B. 608, or contact the
transfer from one IRA to another or one         Unemployment Tax Act (FUTA) taxes. In             Disclosure Officer at your IRS district
tax-sheltered (section 403(b)) arrangement      addition, such distributions are not subject      office.
to another. However, a trustee-to-trustee       to the early distributions tax under section      Filer.—The payer or plan administrator
transfer from a conduit IRA to a qualified      72(t) nor the excess distributions tax under      must file Form 1099-R using the same
plan is considered a distribution and           section 4980A.                                    name and employer identification number
subsequent rollover and must be reported.          You may report the distribution of             used to deposit any tax withheld and to file
   You may have to report exchanges of          elective deferrals and employee                   the annual withholding tax return (Form
insurance contracts, including an exchange      contributions (and gains attributable to          945).
under section 1035, under which any             such employee contributions) on the same          Statements to Recipients.—For
designated distribution may be made. For        Form 1099-R. However, if other                    information about the requirement to
a section 1035 exchange that is in part         distributions are made during the year,           furnish a statement to each recipient, see
taxable, file a separate Form 1099-R to         they must be reported on a separate Form          part H under General Instructions earlier.
report the taxable amount. See Section          1099-R. Because the distribution of
1035 exchange earlier.                          elective deferrals is fully taxable (no part of   Box 1.—Enter the total amount of the
                                                the distribution is a return of the               distribution before income tax or other
Explanation to Recipients Before Eligible                                                         deductions were withheld. Include direct
Rollover Distributions (Section 402(f)          investment in the contract), report the total
                                                amount of the distribution in boxes 1 and         rollovers, premiums paid by a trustee or
Notice).—No more than 90 days and no                                                              custodian for current life or other insurance
fewer than 30 days before making an             2a. Leave box 5 blank, and enter Code E
                                                in box 7. For a return of employee                protection (PS 58 costs), and the gross
eligible rollover distribution, the plan                                                          amount of IRA or SEP distributions in this
administrator must provide a written            contributions plus gains, enter the gross
                                                distribution in box 1, the gains attributable     box. However, in the case of a distribution
explanation to the recipient. The plan                                                            by a trust representing CDs redeemed
administrator must explain the rollover         to the employee contributions being
                                                returned in box 2a, and the employee              early, report the net amount distributed.
rules, the special tax treatment for                                                              Also, see Box 6.
lump-sum distributions, the direct rollover     contributions being returned in box 5.
option, and the mandatory 20%                   Enter Code E in box 7.

                                                                                                                                      Page 23
                                                                                                  box 1 is a total distribution. A total
Example for Computing Amount Eligible for Capital Gain Election (See                              distribution is one or more distributions
Box 3.)                                                                                           within 1 tax year in which the entire
Step I: Total Taxable Amount                                                                      balance of the account is distributed. Any
                                                                                                  distribution that does not meet this
Total distribution                                                                     XXXXX      definition is not a total distribution. If
Less: 1. Current actuarial value of any annuity                              XXXXX                periodic or installment payments are made,
                                                                                                  mark this box in the year the final payment
      2. Employee contributions (minus any amounts previously                                     is made.
         distributed that were not includible in the employee’s
         gross income)                                                       XXXXX                Box 3.—For lump-sum distributions from
                                                                                                  qualified plans only, enter the amount in
      3. Net unrealized appreciation in the value of any employer                                 box 2a eligible for the capital gain election
         securities that were a part of the lump-sum distribution            XXXXX XXXXX          under section 1122(h)(3) of the Tax Reform
Total taxable amount                                                                   XXXXX      Act of 1986 for participants born before
                                                                                                  1936 (or their beneficiaries). Enter the full
Step II: Capital Gain                                                                             amount eligible for the capital gain
 Total taxable amount           Months of active participation before 1974             Capital    election. You should not complete this box
     (from Step I)                                                                =     gain      for a direct rollover.
                                  Total months of active participation
                                                                                                     To compute the months of an
                                                                                                  employee’s active participation before
   Include in this box the value of U.S.         403(b), and the annuity starting date is         1974, count as 12 months any part of a
Savings Bonds distributed from the plan.         after July 1, 1986, you may elect to use a       calendar year in which an employee
Enter the appropriate taxable amount in          simplified safe harbor method to compute         actively participated under the plan; for
box 2a. Please furnish a statement to the        the taxable amount. However, for purposes        active participation after 1973, count as
plan participant showing the value of each       of computing the taxable amount to enter         1 month any part of a month in which the
bond at the time of distribution. This will      in box 2a, assume the distribution is not        employee actively participated under the
provide him or her with the information          eligible for the death benefit exclusion. See    plan. See the example at the top of this
necessary to figure the interest income on       Notice 88-118, 1988-2 C.B. 450.                  page.
each bond when it is redeemed.                      Generally, you are not required to               Active participation begins with the first
   In addition to reporting death benefit        compute the taxable amount of an IRA or          month in which an employee became a
payments made from a plan, report here           SEP nor designate whether any part of a          participant under the plan and ends with
any death benefit payments made by               distribution is a return of basis attributable   the earliest of:
employers that are not made as part of a         to nondeductible contributions. Therefore,          1. The month in which the employee
pension, profit-sharing, or retirement plan.     report the total amount distributed from an      received a lump-sum distribution under the
Also enter this amount in box 2a. Enter          IRA or SEP in box 2a. This will be the           plan;
Code 4 in box 7. For example, the board          same amount reported in box 1. You may
of directors of XYZ Corporation votes to         mark the “Taxable amount not determined”            2. In the case of an employee, other
pay the widow of one of its employees a          box in box 2b. However, in the case of a         than a self-employed person or
lump-sum “death benefit.” This amount            distribution by a trust representing CDs         owner-employee, the month in which the
must be reported in boxes 1 and 2a, and          redeemed early, report the net amount            employee separates from service;
Code 4 must be shown in box 7.                   distributed. Do not include any amount              3. The month in which the employee
   For a section 1035 exchange, see              paid for IRA insurance protection in this        dies; or
Section 1035 exchange under Life                 box. For a distribution of contributions plus       4. For a self-employed person or
Insurance, Annuity, and Endowment                earnings from an IRA under section               owner-employee, the first month in which
Contracts earlier.                               408(d)(4) (previously excess contributions),     the employee becomes disabled (within the
                                                 report the gross distribution in box 1 and       meaning of section 72(m)(7)).
Box 2a.—Generally, you must enter the            only the earnings in box 2a, and enter
amount includible as income. However, if         Code 8 or P, whichever is applicable, in            For a charitable gift annuity, see
you are unable to reasonably obtain the          box 7. For a distribution of contributions       Charitable Gift Annuities earlier.
data needed to compute the taxable               without earnings after the due date of the       Box 4.—Enter any Federal income tax
amount, leave this box blank. Do not             individual’s return, under section 408(d)(5),    withheld. This withholding is subject to
include excludable or tax-deferred               enter 0 (zero). Include DEC distributions in     deposit rules, and the withholding tax
amounts reportable in boxes 5, 6, and 8.         this box.                                        return is Form 945, Annual Return of
   For a direct rollover from a qualified plan   Losses.—If a distribution is a loss, do not      Withheld Federal Income Tax.
or tax-sheltered annuity or for a nontaxable     enter a negative amount in this box. For         Note: The amount withheld cannot be
section 1035 exchange of life insurance,         example, if stock is distributed but the         more than the sum of the cash and the fair
annuity, or endowment contracts, enter 0         value is less than the employee’s aftertax       market value of property (excluding
(zero) in box 2a.                                contributions, enter the value of the stock      employer securities) received in the
   Include PS 58 costs that were reported        in box 1, leave box 2a blank, and enter the      distribution.
in box 1. However, do not report PS 58           employee’s contributions in box 5.                  For periodic payments that are not
costs and a distribution on the same Form        Box 2b—Taxable amount not                        eligible rollover distributions, withhold on
1099-R. Use a separate Form 1099-R for           determined.—Enter an “X” in this box only        the taxable part as though the periodic
each. Enter Code 9 in box 7 for PS 58            if you are unable to reasonably obtain the       payments were wages, based on the
costs. See Regulations section 1.72-16(b)        data needed to compute the taxable               recipient’s Form W-4P, Withholding
and Rev. Ruls. 55-747, 1955-2 C.B. 228,          amount. If you mark this box, leave box 2a       Certificate for Pension or Annuity
and 66-110, 1966-1 C.B. 12, for                  blank unless you are reporting an IRA            Payments. The recipient may request
information on the cost of premiums paid         distribution. Please make every effort to        additional withholding on Form W-4P or
by an employees’ trust under a qualified         compute the taxable amount. See Notice           claim exemption from withholding. If a
plan for current life insurance protection       88-118 for the simplified safe harbor            recipient does not submit a Form W-4P,
taxable to plan participants or their            method of computing certain taxable              withhold by treating the recipient as
beneficiaries.                                   amounts for certain life annuity                 married with three withholding allowances.
   If you made periodic life annuity             distributions from qualified plans and           See Circular E, Employer’s Tax Guide, for
distributions from a qualified employee          tax-sheltered (section 403(b)) annuities.        wage withholding tables.
plan under section 401(a), from an               Box 2b—Total distribution.—Enter an “X”          Note: Rather than Form W-4P, military
employee annuity under section 403(a), or        in this box only if the payment shown in         retirees should give you Form W-4,
from an annuity contract under section
Page 24
Employee’s Withholding Allowance                  contribution to a retirement plan that was      to an IRA for the surviving spouse of a
Certificate.                                      not an aftertax contribution.                   deceased participant, enter Codes 4 and
   Withhold 10% of the taxable part of a             Generally, for qualified plans,              G. Do not use Code 4 with Code H.
nonperiodic distribution that is not an           tax-sheltered annuities, and nonqualified          Only two numeric combinations are
eligible rollover distribution. The recipient     commercial annuities, enter in box 5 the        permitted: Codes 8 and 1, or 8 and 2. If
may request additional withholding on             employee contributions or insurance             two other numeric codes are applicable,
Form W-4P or claim exemption from                 premiums recovered tax free during the          you must file more than one Form 1099-R.
withholding.                                      year based on the method you used to            For example, if part of a distribution is
   If a payee fails to furnish his or her         determine the taxable amount to be              premature (Code 1) and part is not, one
correct TIN to you in the manner required,        entered in box 2a. If periodic payments         Form 1099-R must be filed for the part to
or if the IRS notifies you before any             began before 1993, you are not required         which Code 1 applies and another Form
distribution that the TIN furnished is            to, but you are encouraged to, report in        1099-R for the part that is a normal
incorrect, a payee cannot claim exemption         box 5. Also, you may have to report the         distribution, Code 7. In addition, for the
from withholding. Backup withholding does         total employee contributions in box 9b.         distribution of excess deferrals, excess
not apply.                                        See Box 9b later.                               contributions, or excess aggregate
                                                     If a total distribution is made, the total   contributions, parts of the distribution may
   Withhold 20% of an eligible rollover                                                           be taxable in two or three different years.
distribution from a qualified plan that is        employee contributions or insurance
                                                  premiums available to be recovered tax          Thus, separate Forms 1099-R must be
not a direct rollover. A recipient cannot                                                         filed using Code 8, P, or D to indicate the
claim exemption from withholding for such         free must be shown only in box 5. If any
                                                  previous distributions were made, any           year the amount is taxable.
a distribution; however, no withholding is
required for a direct rollover. Although the      amount recovered tax free in prior years           If part of an eligible rollover distribution
same rules generally apply to an eligible         must not appear in box 5. See Box 9b            is paid in a direct rollover and part is not,
rollover distribution from a tax-sheltered        later for more information about reporting      you must file a separate Form 1099-R for
annuity, a special effective date may apply.      total employee contributions.                   each part showing the appropriate code on
Any net unrealized appreciation excludable           If you are unable to reasonably obtain       each form. If part of a distribution is an
from gross income under section 402(e)(4)         the data necessary to compute the taxable       eligible rollover distribution and part is not
is not included in the amount of any              amount, leave boxes 2a and 5 blank, and         (e.g., a minimum distribution required by
eligible rollover distribution that is subject    mark the box in box 2b.                         section 401(a)(9)) and the part that is an
to 20% withholding. (See Notice 93-3.)                                                            eligible rollover distribution is directly rolled
                                                     For more information, see Rev. Proc.         over, you must file a separate Form
You are not required to withhold 20% of           92-86, 1992-2 C.B. 495.
an eligible rollover distribution that, when                                                      1099-R to report each part.
aggregated with other eligible rollover              For charitable gift annuities, see           Codes.—
distributions made to one person during           Charitable Gift Annuities earlier.
                                                                                                  1—Early (premature) distribution, no
the year, is less than $200. Form W-4P is         Box 6.—Use this box if a distribution           known exception. Use Code 1 only if the
not required for an eligible rollover             includes securities of the employer             employee/taxpayer has not reached age
distribution since 20% withholding is             corporation (or a subsidiary or parent          591⁄2, and only if none of the exceptions
mandatory.                                        corporation) and you can compute the net        under section 72(q), (t), or (v) are known to
   The 20% withholding does not apply to          unrealized appreciation (NUA) in the            apply. For example, if a hardship
distributions from IRAs. For purposes of          employer’s securities. Enter all the NUA in     distribution is made for medical expenses,
withholding, assume that the entire amount        employer securities if this is a lump-sum       you probably will not know if the medical
of an IRA distribution is taxable (except for     distribution. If this is not a lump-sum         expense exception under section 72(t)
the distribution of contributions under           distribution, enter only the NUA in             applies. Therefore, use Code 1.
sections 408(d)(4), in which only the             employer securities attributable to
                                                  employee contributions. See Regulations         2—Early (premature) distribution,
earnings are taxable, and 408(d)(5)).                                                             exception applies (as defined in section
                                                  section 1.402(a)-1(b) for the determination
   Even though you may be using Code 1            of the NUA. Also see Notice 89-25 (Q/A-1),      72(q), (t), or (v)). Use Code 2 only if the
in box 7 to designate an early distribution       1989-1 C.B. 662. Include the NUA in box 1       employee/taxpayer has not reached age
subject to the 10% tax specified in               but not in box 2a. You do not have to           591⁄2 to indicate that an exception under
sections 72(q), (t), or (v), you are not          complete this box for a direct rollover.        72(q), (t), or (v) applies. However, instead
required to withhold that tax.                                                                    of Code 2, use Code 3 or 4, whichever
                                                  Box 7.—Enter the appropriate code(s)            applies, for an early distribution due to
   See Cir. E and the Instructions for            from the list below that shows the type of
Form 945 for more withholding                                                                     disability or death.
                                                  distribution being made. Also, enter an “X”
information.                                      in the IRA/SEP checkbox if the distribution     3—Disability.
Box 5.—Enter the employee’s                       is from an IRA or SEP.                          4—Death. Use Code 4 regardless of the
contributions to a profit-sharing or                 Read the codes carefully and enter the       age of the employee/taxpayer to indicate
retirement plan, or insurance premiums.           appropriate codes accurately because the        payment to a decedent’s beneficiary,
The entry in box 5 can include the tax-free       IRS uses the codes to help determine            including an estate or trust. Also use it for
part of any of the following:                     whether the recipient has properly reported     death benefit payments made by an
(a) contributions actually made by the            the distribution. If the codes you enter are    employer but not made as part of a
employee over the years under the                 incorrect, the IRS may improperly propose       pension, profit-sharing, or retirement plan.
retirement or profit-sharing plan that were       changes to the recipient’s taxes.               5—Prohibited transaction.
required to be included in the income of
the employee when contributed (“aftertax             Use the codes below for distributions        6—Section 1035 exchange. Use Code 6
contributions”), (b) contributions made by        from IRAs, SEPs, Keoghs, qualified plans,       to indicate the tax-free exchange of life
the employer but considered to have been          commercial annuities, insurance contracts,      insurance, annuity, or endowment
contributed by the employee under section         etc.                                            contracts under section 1035.
72(f), (c) the accumulated cost of                   A numeric code must be entered,              7—Normal distribution. Use Code 7 for a
premiums paid for life insurance protection,      except when Code P, D, E, F, G, or H is         normal distribution from any plan, including
taxable to the employee in previous years         used. When applicable, you may enter a          an IRA or SEP, if the employee/taxpayer is
and in the current year under Regulations         numeric and an alpha code. For example,         at least 591⁄2. Also use Code 7 to report a
section 1.72-16 (PS 58 costs) (only if the        when using a Code P for an IRA                  distribution from a life insurance, annuity,
life insurance contract itself is distributed),   distribution under section 408(d)(4), you       or endowment contract and for reporting
and (d) premiums paid on commercial               may also enter Code 1, if it applies. Or for    income from a failed life insurance contract
annuities. Do not include contributions to        a normal distribution from a qualified plan     under section 7702(g) and (h). (See Rev.
IRAs, SEPs, DECs, 401(k) plans, or any            that qualifies for 5- or 10-year averaging,     Rul. 91-17, 1991-1 C.B. 190.) Generally,
                                                  enter Codes 7 and A. For a direct rollover      use Code 7 if no other code applies.
                                                                                                                                       Page 25
8—Excess contributions plus                      property (not including the annuity              transferor may receive gross proceeds that
earnings/excess deferrals (and/or                contract) distributed.                           cannot be determined with certainty under
earnings) taxable in 1995. Use Code 8 for           If an annuity contract is part of a           the regulations and is not included in gross
an IRA distribution under section 408(d)(4),     multiple recipient lump-sum distribution,        proceeds.
unless Code P applies. Also use this code        enter in box 8, along with the current           Reportable Real Estate.—Generally,
for corrective distributions of excess           actuarial value, the percentage of the total     reporting is required if the transaction
deferrals, excess contributions, and excess      annuity contract each Form 1099-R                consists in whole or in part of the sale or
aggregate contributions, unless Code P or        represents.                                      exchange for money, indebtedness,
D applies. For information about reporting                                                        property, or services, of any present or
corrective distributions, see Notice 89-32,      Box 9a.—If this is a total distribution and it
                                                 is made to more than one person, enter           future ownership interest in any of the
1989-1 C.B. 671; Notice 88-33, 1988-1                                                             following:
C.B. 513; and Notice 87-77, 1987-2 C.B.          the percentage received by the person
385. (Notice 88-33 was modified by Rev.          whose name appears on Form 1099-R.                   1. Improved or unimproved land,
Proc. 91-44, 1991-2 C.B. 733, to provide         You need not complete this box for IRA or        including air space.
that the income allocable to an excess           SEP distributions or for a direct rollover.          2. Inherently permanent structures,
contribution to a SARSEP (salary reduction       Box 9b.—If a distribution is payable in the      including any residential, commercial, or
simplified employee pension) is includible       form of a life annuity eligible for the          industrial building.
in gross income in the year withdrawn from       simplified safe harbor method under Notice           3. A condominium unit and its
the IRA.) Also see IRA Revocation earlier.       88-118 (qualified plans and tax-sheltered        appurtenant fixtures and common
9—PS 58 costs. Use Code 9 to report              (section 403(b)) annuities), you must also       elements, including land.
premiums paid by a trustee or custodian          report the total employee contributions
                                                 remaining to be recovered tax free. Report           4. Stock in a cooperative housing
for current life or other insurance                                                               corporation (as defined in section 216).
protection (PS 58 costs). See Box 2a for         the total employee contributions only in the
                                                 year periodic payments begin.                        Sale or exchange.—A sale or exchange
more information.
                                                    If any previous distributions were made,      includes any transaction properly treated
P—Excess contributions plus earnings/                                                             as a sale or exchange for Federal income
excess deferrals taxable in 1994. See the        any amount recovered tax free in prior
                                                 years must not appear in this box. In            tax purposes, even if the transaction is not
explanation for Code 8. The IRS suggests                                                          currently taxable. For example, a sale of a
that anyone using Code P for the refund of       addition, you need not report the total
                                                 employee contributions if the distribution is    principal residence is a reportable sale
an IRA contribution under section 408(d)(4)                                                       even though the transferor may be entitled
advise payees, at the time the distribution      not eligible for the simplified safe harbor
                                                 method under Notice 88-118.                      to defer recognition of the gain on the sale
is made, that the earnings are taxable in                                                         because of the purchase of a new
the year in which the contribution was              For a total distribution, the total           residence under section 1034 or because
made.                                            employee contributions must be shown             the transferor is entitled to exclude the
A—May be eligible for 5- or 10-year              only in box 5. See Box 5 earlier.                gain under section 121 because of being
averaging. Use Code A to indicate that the       Boxes 10–15.—These boxes and Copies 1            age 55. Likewise, a transfer to a
distribution is eligible for the averaging       and 2 are provided for your convenience          corporation that qualifies for
method of computing the tax on lump-sum          only and need not be completed for the           nonrecognition of gain under section 351 is
distributions under section 402(d). To           IRS. Use the state and local information         a reportable exchange. In addition, a
determine whether the distribution may be        boxes to report distributions and taxes for      transfer under a land contract is reportable
eligible for averaging, you need not             two states or localities. Keep the               in the year in which the parties enter into
consider whether the recipient used              information for each state or locality           the contract.
averaging (or capital gain treatment) in the     separated by the broken line. If state or            Ownership interest.—An ownership
past.                                            local income tax has been withheld on this       interest includes fee simple interests, life
B—May be eligible for death benefit              distribution, you may enter it in boxes 10       estates, reversions, remainders, and
exclusion. Use Code B to indicate that the       and 13, as appropriate. In box 11, enter         perpetual easements. It also includes any
distribution is eligible for the death benefit   the abbreviated name of the state and the        previously created rights to possession or
exclusion under section 101(b).                  payer’s state identification number. The         use for all or part of any particular year,
                                                 state number is the payer’s identification       e.g., a leasehold, easement, or timeshare,
C—May be eligible for both A and B.              number assigned by the individual state. In      if such rights have a remaining term of at
D—Excess contributions plus                      box 14, enter the name of the locality. In       least 30 years, including any period for
earnings/excess deferrals taxable in             boxes 12 and 15 you may enter the                which the holder may renew such rights,
1993. See the explanation for Code 8.            amount of the state or local distribution.       determined on the date of closing. For
E—Excess annual additions under                  Copy 1 may be used to provide                    example, a preexisting leasehold on a
section 415. Use Code E alone. Do not            information to the state or local tax            building with an original term of 99 years
use Code 1 or 2 with Code E.                     department, and Copy 2 may be used as            and a remaining term of 35 years on the
                                                 the recipient’s copy for use in filing a state   closing date is an ownership interest;
F—Charitable gift annuity.                       or local income tax return.                      however, if the remaining term is 10 years,
G—Direct rollover to IRA. Do not use this                                                         it is not an ownership interest. An
code for a distribution from an IRA. Do not                                                       ownership interest does not include any
use this code with any other code except         Form 1099-S                                      option to acquire real estate.
Code 4, when applicable.
                                                                                                      Involuntary conversion.—A sale of real
H—Direct rollover to qualified plan or           File Form 1099-S, Proceeds From Real             estate under threat or imminence of
tax-sheltered annuity. Do not use this           Estate Transactions, to report the sale or       seizure, requisition, or condemnation is
code with any other code.                        exchange of real estate.                         generally a reportable transaction.
Box 8.—Enter the current actuarial value         Note: You are not required to indicate on        Exceptions.—The following is a list of
of an annuity contract that is a part of a       Form 1099-S that the transferor’s (seller’s)     transactions that are not reportable.
lump-sum distribution. Do not include this       financing was Federally subsidized. Also,        However, you may choose to report them;
item in boxes 1 and 2a.                          you are not required to enter (1) both total     but if you do, the return filed and the
   To determine the value of an annuity          gross proceeds and the allocated gross           statement furnished to the transferor must
contract, show the value as an amount            proceeds for a multiple transferor               comply with the reporting rules.
equal to the current actuarial value of the      transaction (enter either one or the other);
                                                 (2) an indication that the transferor may            1. Any transaction in which the transferor
annuity contract, reduced by an amount                                                            is a corporation (or is considered to be a
equal to the excess of the employee’s            receive property or services for an
                                                 obligation having a stated principal amount;     corporation under Regulations section
contributions over the cash and other                                                             1.6045-4(d)(2)), a governmental unit,
                                                 or (3) an indication that, in connection with
                                                 a contingent payment transaction, the            including a foreign government or an
Page 26
international organization, or an exempt           person required to file Form 1099-S is            funds, the mortgage lender is the one who
volume transferor. Under this rule, if there       explained in 2 below. However, you may            has the security interest that is most senior
are exempt and nonexempt transferors,              designate the person required to file Form        in priority. Amounts advanced by the
you must file Form 1099-S only for the             1099-S in a written agreement, as                 transferor are not treated as new funds.
nonexempt transferors.                             explained under 3 below.                             b. Transferor’s broker means the
   Exempt volume transferor.—An exempt             Note: For each transaction, please be sure        broker who contracts with the transferor
volume transferor is someone who sold or           that only one person is responsible for           and who is compensated for the
exchanged during the year, who expects             filing and that only one Form 1099-S is           transaction.
to sell or exchange during the year, or who        filed for each transferor.                           c. Transferee’s broker means the
did sell or exchange in either of the 2                1. If you are the person responsible for      broker who significantly participates in the
previous years, at least 25 separate items         closing the transaction, you must file            preparation of the offer to acquire the
of reportable real estate to at least 25           Form 1099-S. If a Uniform Settlement              property or who presents such offer to the
separate transferees. In addition, each item       Statement, prescribed under the Real              transferor. If there is more than one such
of reportable real estate must have been           Estate Settlement Procedures Act of 1974          person, the transferee’s broker is the one
held, at the date of closing, or will be held,     (RESPA), is used, the person responsible          who most significantly participates in the
primarily for sale or resale to customers in       for closing is the person listed as the           preparation of the acquisition offer. If there
the ordinary course of a trade or business.        settlement agent on that statement. A             is no such person, the one who most
You are not required to report an exempt           Uniform Settlement Statement includes any         significantly participates in the presentation
volume transferor’s transactions if you            amendments, variations, or substitutions          of the offer is the transferee’s broker.
receive the penalties of perjury certification     that may be prescribed under RESPA if
required by Regulations section                                                                         d. Transferee means the person who
                                                   any such form requires disclosure of the          acquires the greatest interest in the
1.6045-4(d)(3).                                    transferor and transferee, the application of     property. If no one acquires the greatest
   2. Any transaction that is not a sale or        the proceeds, and the name of the                 interest, the transferee is the person listed
exchange, including a bequest, a gift              settlement agent or other person                  first on the ownership transfer documents.
(including a transaction treated as a gift         responsible for preparing the settlement
under section 1041), and a financing or            statement.                                           3. Designation agreement.—You can
refinancing that is not related to the                                                               enter into a designation agreement at or
                                                       If a Uniform Settlement Statement is not      before closing to designate who must file
acquisition of real estate.                        used, or no settlement agent is listed, the       Form 1099-S for the transaction. The
   3. A transfer in full or partial satisfaction   person responsible for closing is the             agreement will identify the person
of a debt secured by the property. This            person who prepares the closing                   responsible for filing if such designated
includes a foreclosure, a transfer in lieu of      statement, including a settlement                 person signs the agreement. It is not
foreclosure, or an abandonment.                    statement or other written document that          necessary that all parties to the transaction
   4. A de minimis transfer for less than          identifies the transferor, transferee, and        (or that more than one party) enter into the
$600. A transaction is de minimis if it can        real estate transferred, and that describes       agreement.
be determined with certainty that the total        how the proceeds are to be disbursed.
                                                                                                        You may be designated in the
money, services, and property received or              If no closing statement is used, or if two    agreement as the person who must file if
to be received is less than $600, as               or more statements are used, the person           you are the person responsible for closing
measured on the closing date. For                  responsible for closing is, in the following      (as explained in 1 above), the transferee’s
example, if a contract for sale provides for       order: (a) the transferee’s attorney if the       or transferor’s attorney (as explained in 1
total consideration of “$1.00 plus other           attorney is present at the delivery of either     above), a title or escrow company that is
valuable consideration,” the transfer is not       the transferee’s note or a significant part of    most significant in terms of the gross
a de minimis transfer unless you can               the cash proceeds to the transferor or if         proceeds disbursed, or the mortgage
determine that the “other valuable                 the attorney prepares or reviews the              lender (as explained in 2a above).
consideration” is less than $599, as               preparation of the documents transferring
measured on the closing date. The $600             legal or equitable ownership; (b) the                The designation agreement may be in
rule applies to the transaction as a whole,        transferor’s attorney if the attorney is          any form and may be included on the
not separately to each transferor.                 present at the delivery of either the             closing statement. It must identify by name
                                                   transferee’s note or a significant part of the    and address the person designated as the
   The following are also not reportable if                                                          person responsible for filing; it must
the transaction is not related to the sale or      cash proceeds to the transferor or if the
                                                   attorney prepares or reviews the                  include the names and addresses of each
exchange of reportable real estate:                                                                  person entering into the agreement; it must
                                                   preparation of the documents transferring
   1. An interest in crops or surface or           legal or equitable ownership; or (c) the          be signed and dated by all persons
subsurface natural resources, i.e., timber,        disbursing title or escrow company that is        entering into the agreement; it must
water, ores, and other natural deposits,           most significant in disbursing gross              include the names and addresses of the
whether or not such crops or natural               proceeds. If there is more than one               transferor and transferee; and it must
resources are severed from the land.               attorney described in (a) or (b), the one         include the address and any other
   2. A burial plot or vault.                      whose involvement is most significant is          information necessary to identify the
                                                   the person responsible for filing.                property. Each person who signs the
   3. A manufactured structure used as a                                                             agreement must retain it for 4 years.
dwelling that is manufactured and                      2. If no one is responsible for closing the
assembled at a location different from that        transaction as explained in 1 above, the          Employees, Agents, and Partners.—If an
where it is used, but only if such structure       person responsible for filing is, in the          employee, agent, or partner, acting within
is not affixed, on the closing date, to a          following order: (a) the mortgage lender,         the scope of such person’s employment,
foundation. This exception applies to an           (b) the transferor’s broker, (c) the              agency, or partnership, participates in a
unaffixed mobile home.                             transferee’s broker, or (d) the transferee.       real estate transaction, only the employer,
                                                                                                     principal, or partnership (not the employee,
Timber Royalties.—Report on Form                       For purposes of 2 above, apply the            agent, or partner) may be the reporting
1099-S payments of timber royalties made           following definitions:                            person. However, the participation of a
under a pay-as-cut contract, reportable                a. Mortgage lender means a person             person listed on the Uniform Settlement
under section 6050N. For more                      who lends new funds in connection with            Statement as the settlement agent acting
information, see Announcement 90-129,              the transaction, but only if the loan is at       as an agent of another is not attributed to
1990-48 I.R.B. 10.                                 least partially secured by the real estate. If    the principal.
Gross Proceeds.—See Box 2 later.                   there is more than one lender, the one who        Foreign Transferors.—Sales or exchanges
Who Must File.—Generally, the person               lends the most new funds is the mortgage          involving foreign transferors are reportable
responsible for closing, as explained in 1         lender. If several lenders advance equal          on Form 1099-S. For information on the
below, is required to file Form 1099-S. If         amounts of new funds, and no other                transferee’s responsibility to withhold
no one is responsible for closing, the             person advances a greater amount of new           income tax when a U.S. real property
                                                                                                                                        Page 27
interest is acquired from a foreign person,       separate mailing. Rather, it may be made         property subject to a liability, such liability
see Pub. 515, Withholding of Tax on               in person or in a mailing that includes          is treated as cash and is includible as part
Nonresident Aliens and Foreign                    other items. The transferor is required to       of gross proceeds. For a contingent
Corporations, and Form 8288, U.S.                 furnish his or her TIN and to certify that the   payment transaction, include the maximum
Withholding Tax Return for Dispositions by        TIN is correct.                                  determinable proceeds. Also see Multiple
Foreign Persons of U.S. Real Property                You may request a TIN on Form W-9,            Assets Sold earlier.
Interests.                                        Request for Taxpayer Identification                 If you are reporting a like-kind exchange
Multiple Transferors.—For multiple                Number and Certification. Alternatively, you     of property for which no gross proceeds
transferors of the same real estate, you          may provide a written statement to the           are reportable, enter 0 (zero) in box 2 and
must file a separate Form 1099-S for each         transferor similar to the following: “You are    mark the checkbox in box 4.
transferor. At or before closing, you must        required by law to provide [insert name of          Gross proceeds do not include the value
request from the transferors an allocation        person responsible for filing] with your         of property or services received or to be
of the gross proceeds among the                   correct taxpayer identification number. If       received by, or on behalf of, the transferor
transferors. The request and the response         you do not provide [insert name of person        or separately stated cash received for
are not required to be in writing. You must       responsible for filing] with your correct        personal property, such as draperies,
make a reasonable effort to contact all           taxpayer identification number, you may be       carpeting, or a washer and dryer.
transferors of whom you have knowledge.           subject to civil or criminal penalties
However, you may rely on the                      imposed by law.” The solicitation must              Do not reduce gross proceeds by any
unchallenged response of any transferor,          contain space for the name, address, and         expenses paid by the transferor, such as
and you need not make additional contacts         TIN of the transferor, and a place to certify    sales commissions, deed preparation,
with other transferors after at least one         under penalties of perjury that the TIN          advertising, and legal expenses. If a
complete allocation is received (100% of          furnished is the correct TIN of the              Uniform Settlement Statement (under
gross proceeds, whether or not received in        transferor. The certification must read          RESPA) is used for a transfer of real estate
a single response). If you receive the            similar to: “Under penalties of perjury, I       for cash and notes only, gross proceeds
allocation, report gross proceeds on each         certify that the number shown on this            generally will be the contract sales price
Form 1099-S accordingly.                          statement is my correct taxpayer                 shown on that statement. If other property
                                                  identification number.” If you use a             or services were exchanged, see Box 4
   You are not required to, but you may,                                                           below.
report gross proceeds in accordance with          Uniform Settlement Statement (under
an allocation received after the closing          RESPA), you may provide a copy of such              Contingent payment transaction.—A
date but before the due date of Form              statement, appropriately modified to solicit     contingent payment transaction is one in
1099-S (without extensions). However, you         the TIN, to the transferor. Keep the Form        which the receipt, by or on behalf of the
cannot report gross proceeds in                   W-9 or substitute form in your records for       transferor, is subject to a contingency. The
accordance with an allocation received on         4 years.                                         maximum determinable proceeds means
or after the due date of Form 1099-S              Separate Charge Prohibited.—The law              the greatest amount of gross proceeds
(without extensions).                             prohibits any person required to file Form       possible if all the contingencies are
                                                  1099-S from separately charging any              satisfied. If the maximum amount of gross
   If no gross proceeds are allocated to a                                                         proceeds cannot be determined with
transferor because no allocation or an            customer a fee for complying with the
                                                  requirements to file Form 1099-S.                certainty, the maximum determinable
incomplete allocation is received, you must                                                        proceeds are the greatest amount that can
report the total unallocated gross proceeds       Statements to Transferors.—For                   be determined with certainty.
on the Form 1099-S made for that                  information about the requirement to
transferor. If you do not receive any             furnish a statement to the transferor, see       Box 3.—Enter the address of the property,
allocation or you receive conflicting             part H under General Instructions earlier.       including the city, state, and ZIP code, and
allocations, report on each transferor’s                                                           if the address does not sufficiently identify
                                                  Filer’s Name and Address Box.—Enter              the property, also enter a legal description,
Form 1099-S the total unallocated gross           the name and address of the person who
proceeds.                                                                                          such as section, lot, and block. For timber
                                                  is filing Form 1099-S. This information          royalties, enter “Timber.”
   Husband and wife.—If the transferors           must be the same as the filer information
were husband and wife, at the time of             reported on Form 1096.                           Box 4.—If the transferor received or will
closing, who held the property as joint                                                            receive property (other than cash and
                                                  Transferor’s Name and Address Box.—              consideration treated as cash in computing
tenants, tenants by the entirety, tenants in      Enter the name and address of the seller
common, or as community property, treat                                                            gross proceeds) or services as part of the
                                                  or other transferor of the real estate. If a     consideration for the property, enter an “X”
them as a single transferor. Only one Form        husband and wife are joint sellers, it is only
1099-S showing either of them as the                                                               in the checkbox in box 4.
                                                  necessary to enter one name and the TIN
transferor is required. You need not              for that person on the form.                     Box 5.—For a real estate transaction
request an allocation of gross proceeds if                                                         involving a residence, enter real estate tax
husband and wife are the only transferors.        Box 1.—Enter the closing date. If a              paid in advance that is allocable to the
But if you receive an uncontested                 Uniform Settlement Statement (under              purchaser. You do not have to report an
allocation of gross proceeds from them, file      RESPA) is used, the closing date is the          amount as allocable to the purchaser for
Form 1099-S for each spouse according to          date shown as the settlement date on             real estate taxes paid in arrears. You may
the allocation. If there are other transferors,   such statement. If a Uniform Settlement          use the appropriate information included
you must make a reasonable effort to              Statement is not used, the closing date is       on the HUD-1, or comparable form,
contact either the husband or wife to             the earlier of the date title transfers or the   provided at closing. For example, a
request an allocation.                            date the economic burdens and benefits of        residence is sold in a county where the
                                                  ownership shift to the transferee. Please        real estate tax is paid annually in advance.
   Partnerships.—If the property is               use the following format to indicate the
transferred by a partnership, file only one                                                        The seller paid real estate taxes of $1,200
                                                  date: MMDDYY. For example, for January           for the year in which the sale took place.
Form 1099-S for the partnership, not              7, 1995, enter 010795.
separate Forms 1099-S for each partner.                                                            The sale occurred at the end of the ninth
                                                  Box 2.—Enter the gross proceeds from             month of the real estate tax year.
Multiple Assets Sold.—If real estate is           the sale or exchange of real estate. Gross       Therefore, $300 of the tax paid in advance
sold or exchanged and other assets are            proceeds means any cash received or to           is allocated to the buyer, by reference to
sold or exchanged in the same transaction,        be received for the real property by or on       the amount of real estate tax shown on the
report the total gross proceeds from the          behalf of the transferor, including the          HUD-1 as paid by the seller in advance,
entire transaction on Form 1099-S.                stated principal amount of a note payable        and is reported in box 5.
Taxpayer Identification Numbers                   to or for the benefit of the transferor and      Caution: The information about reporting
(TINs).—You must request the transferor’s         including a note or mortgage paid off at         real estate taxes in box 5 is based on
TIN no later than the time of closing. The        settlement. If the transferee assumes a          Notice 93-4, 1993-1 C.B. 295. If the
TIN request need not be made in a                 liability of the transferor or takes the         reporting requirement is expanded, the IRS
Page 28
will announce the new requirements in the      need not file Form 5498 nor furnish the             If you have no knowledge of the death of
Internal Revenue Bulletin.                     annual statement to reflect that the fair        an IRA owner until after you are required to
                                               market value on December 31 was zero.            file Form 5498 (May 31), you are not
                                               Distributions.—Report distributions from         required to file a corrected Form 5498 nor
Form 5498                                      IRAs and SEPs on Form 1099-R. For a              furnish a corrected annual statement.
                                               distribution of contributions plus earnings,     However, you must still provide the
File Form 5498, Individual Retirement          report the distribution on Form 1099-R           date-of-death valuation in a timely manner
Arrangement Information, with the IRS on       using the applicable code.                       to the executor or administrator upon
or before May 31, 1996, for each person                                                         request.
                                               Inherited IRAs.—In the year an IRA owner
for whom you maintained an individual          dies, you, as an IRA trustee or issuer,             For more information about the reporting
retirement arrangement (IRA) or simplified     generally must file a Form 5498 and furnish      requirements for inherited IRAs, see Rev.
employee pension (SEP) during 1995. For        an annual statement for the decedent and         Proc. 89-52, 1989-2 C.B. 632.
all SEPs, complete only box 4 for the value    a Form 5498 and an annual statement for          Desert Storm Contributions.—For
of the account; do not report employer         each nonspouse beneficiary. An IRA holder        information about reporting contributions
SEP contributions in box 1, including those    must be able to identify the source of each      for a prior year made by a qualifying
made under section 408(k)(6), relating to a    IRA he or she holds for purposes of              Desert Storm/Shield individual, see Notice
salary reduction SEP (SARSEP), on Form         figuring the taxation of a distribution from     91-17, 1991-1 C.B. 319, and the 1994
5498. For an IRA, complete all applicable      an IRA. Thus, the decedent’s name must           Form 5498 instructions.
boxes. If no IRA contributions were made       be shown on the beneficiary’s Form 5498
for 1995, complete only box 4.                                                                  Box 1.—Enter regular contributions to an
                                               and annual statement. For example, you           IRA made in 1995 and through April 15,
   For contributions made between January      may enter “Brian Young as beneficiary of         1996, designated for 1995. Also include
1 and April 15, 1996, trustees and issuers     Joan Smith” or something similar that            employee contributions to an IRA under a
should obtain the participant’s designation    signifies that the IRA was once owned by         SEP plan but only those that would be
of the year for which the contributions are    Joan Smith. You may abbreviate the word          subject to the deduction limit under
made.                                          “beneficiary” as, for example, “benef.”          section 219. Report gross contributions,
Direct Rollovers and Transfers.—You               For a spouse beneficiary, unless the          including the amount allocable to the cost
must report the receipt of a direct rollover   spouse makes the IRA his or her own by           of life insurance (see Box 3) and including
from a qualified plan or tax-sheltered         making contributions to the account,             any excess contributions, even if the
annuity. Report a direct rollover in box 2.    including a rollover contribution, or by not     excess contributions were withdrawn. If an
For information on direct rollovers of         taking distributions required by section         excess contribution is treated as a
eligible rollover distributions, see Form      401(a)(9)(B), treat the spouse as a              contribution in a subsequent year, do not
1099-R earlier.                                nonspouse beneficiary for reporting              report it on Form 5498 for the subsequent
   However, do not report a direct             purposes. If the spouse makes the IRA his        year. It has already been reported as a
trustee-to-trustee transfer from one IRA to    or her own, report on Form 5498 and the          contribution on Form 5498 for the year it
another. For reporting purposes,               annual statement without the beneficiary         was actually contributed.
contributions and rollovers do not include     designation.                                     Box 2.—Enter rollover contributions,
these transfers.                                  Fair market value.—On the decedent’s          including direct rollovers from a qualified
Statements to Participants.—Trustees or        Form 5498 and annual statement, you              plan or tax-sheltered annuity, made to an
issuers of IRAs or SEPs must provide           must enter the fair market value of the IRA      IRA received by you during 1995.
participants with a statement of the           on the date of death in box 4. Or you may        Box 3.—For endowment contracts only,
December 31, 1995, value of the                choose the alternate reporting method and        enter the amount included in box 1
participant’s account by January 31, 1996,     report the fair market value as of the end       allocable to the cost of life insurance.
in any written format. Trustees or issuers     of the year in which the decedent died.
                                               This alternate value will usually be zero        Box 4.—Enter the fair market value of the
of IRAs must provide participants with                                                          IRA or SEP account on December 31. For
contribution information by May 31. You        because you will be reporting the
                                               end-of-year valuation on the beneficiary’s       inherited IRAs, see Inherited IRAs earlier.
are not required to provide information to
the IRS or to participants as to whether a     Form 5498 and annual statement, and the
contribution is deductible or nondeductible.   same figure should not be shown on both          Form W-2G
In addition, the participant is not required   the beneficiary’s and decedent’s forms. If
to tell you whether a contribution is          you choose to report using the alternate
deductible or nondeductible.                   method, you must inform the executor or          The requirements for filing Form W-2G,
                                               administrator of the decedent’s estate of        Certain Gambling Winnings, and for
   If the trustee or issuer furnished a                                                         withholding on certain gambling winnings
                                               his or her right to request a date-of-death
statement of the fair market value of the                                                       depend on the type of gambling, the
                                               valuation. If you use the language for box
IRA to the participant by January 31, 1996,                                                     amount of the gambling winnings, and
                                               4 on the back of Copy B of the official
and no contributions were made to the IRA                                                       generally the ratio of the winnings to the
                                               1995 Form 5498, or you use the official
by the participant for 1995, the trustee or                                                     wager.
                                               Copy B, you will have met this notice
issuer need not furnish another statement
                                               requirement.                                        The types of gambling are grouped as
(or Form 5498) to the participant to report
zero contributions. However, Form 5498            On the beneficiary’s Form 5498 and            follows:
must be filed with the IRS by May 31,          annual statement, the fair market value of          1—Horse Racing, Dog Racing, Jai Alai,
1996, to report the December 31, 1995,         that beneficiary’s share of the IRA as of        and Other Wagering Transactions Not
fair market value of the IRA. This rule also   the end of the year must be shown in box         Discussed Later
applies to beneficiary accounts under the      4. Every year thereafter that the IRA exists,       2—Sweepstakes, Wagering Pools, and
inherited IRA rules below.                     you must file Form 5498 and furnish an           Lotteries (Including State-Conducted
                                               annual statement for each beneficiary who        Lotteries)
Note: If the trustee or issuer does not
                                               has not received a total distribution of his
furnish another statement to the participant                                                       3—Keno, Bingo, and Slot Machines
                                               or her share of the IRA showing the fair
because no contributions were made for
                                               market value at the end of the year and          Reportable Gambling Winnings.—If you
the year, the statement of the fair market
                                               identifying the IRA as described above.          pay “reportable gambling winnings,” you
value of the account must contain a legend
                                                  However, if a beneficiary takes a total       must file Form W-2G with the IRS and
designating which information is being
                                               distribution of his or her share of the IRA in   provide a statement to the winner.
furnished to the Internal Revenue Service.
                                               the year of death, you need not file a Form      Generally, gambling winnings are
Total Distribution, No Contributions.—                                                          reportable if the amount paid reduced, at
                                               5498 nor furnish an annual statement for
Generally, if a total distribution was made                                                     the option of the payer, by the wager is
                                               that beneficiary.
from an IRA during the year and no                                                              (1) $600 or more and (2) at least 300 times
contributions were made for that year, you                                                      the amount of the wager. However, these
                                                                                                                                 Page 29
two requirements do not apply to winnings      Certification, to request the TIN of the       Form W-2G is being prepared are
from keno, bingo, and slot machines. If the    recipient.                                     aggregated for purposes of withholding to
winnings from a keno game (reduced by          Foreign Persons.—Payments of certain           determine if the total amount of proceeds
the wager) are $1,500 or more, they are        gambling winnings to a nonresident alien       from identical wagers is more than $5,000.
reportable gambling winnings. If the           individual or a foreign corporation are not    If the person presenting the ticket for
winnings (not reduced by the wager) from       subject to reporting or withholding on Form    payment is the sole owner of the ticket,
a bingo game or slot machine play are          W-2G or Form 5754, Statement by                Form W-2G should be completed showing
$1,200 or more, they are reportable            Person(s) Receiving Gambling Winnings,         the name, address, and identification
gambling winnings.                             since such payments are subject to             number of the winner. If regular gambling
Regular Gambling Withholding.—A payer          withholding under sections 1441(a) and         withholding is required, the winner must
of certain gambling winnings (not including    1442(a) and are reportable on Forms 1042       sign the Form W-2G, under penalties of
winnings from keno, bingo, and slot            and 1042-S.                                    perjury, stating that he or she is the sole
machines) is required to withhold 28%                                                         owner and that the information listed on
                                               State Tax Information.—If state income         the form is correct. In this case, Form 5754
from such winnings and report this amount      tax withholding is required on gambling
as Federal income tax withheld in box 2 on                                                    is not used.
                                               winnings in your state, you may want to
Form W-2G. This is referred to as regular      complete boxes 13 and 14 on Form W-2G.         Box 1.—Enter payments of $600 or more if
gambling withholding. It applies if gambling   Copy 1 of the form may be used to              the payment is at least 300 times the
winnings are more than $5,000 and are          provide information to the state, and Copy     amount of the wager.
from (1) a sweepstakes, wagering pool, or      2 may be used as the winner’s copy for         Box 2.—Enter the amount of Federal
nonstate-conducted lottery, or (2) other       use in filing a state income tax return. The   income tax withheld, whether regular
wagering transactions when the winnings        state identification number is assigned by     withholding or backup withholding.
are at least 300 times the amount              the individual state.
wagered. Regular gambling withholding                                                         Box 3.—Enter the type of wager if other
applies to the total amount of gross           Form 5754.—If the person receiving the         than a regular race bet, for example, Daily
proceeds (the amount of winnings less the      winnings is not the actual winner, or is a     Double or Big Triple.
amount wagered) not merely to the amount       member of a group of winners, see Form         Box 4.—Enter the date of the winning
in excess of $5,000. Report regular            5754 later.                                    event. This is not the date the money was
gambling withholding on Form 945, Annual       Statements to Winners.—For information         paid if paid after the date of the race (or
Return of Withheld Federal Income Tax.         about the requirement to furnish a             game).
   Noncash payments.—Noncash                   statement to the winner, see part H under      Box 5.—Not applicable.
payments, such as automobiles, must be         General Instructions earlier.
                                                                                              Box 6.—Enter the race (or game)
taken into account at their fair market        1—Horse Racing, Dog Racing, Jai                applicable to the winning ticket.
values for purposes of reporting and
                                               Alai, and Other Wagering                       Box 7.—Enter the amount of additional
withholding. If the fair market value
                                                                                              winnings from identical wagers.
exceeds $5,000, after deducting the price      Transactions Not Discussed Later
of the wager, it is subject to regular                                                        Box 8 or 10.—Enter the cashier and/or
gambling withholding. In such a case, the      File Form W-2G for every person to whom        window number making the winning
tax that must be withheld is computed          you pay $600 or more in gambling               payment.
under either of two methods as follows:        winnings if such winnings are at least 300
                                                                                              Boxes 11 and 12.—Enter the identification
(1) if payment of the withholding tax is       times the amount of the wager. You must
                                                                                              numbers of the person receiving the
made by the winner to the payer of             withhold Federal income tax, at the rate of
                                                                                              winnings.
winnings, 28% of the noncash payment           28%, from the amount of winnings less the
                                               amount wagered if such winnings less the       Box 13.—(optional) Enter the abbreviated
less the amount of the wager is the                                                           name of the state and your state
withholding; (2) if the payer of winnings      wager exceed $5,000 and if the winnings
                                               are at least 300 times the amount of the       identification number.
also pays the withholding tax on behalf of
the winner, 38.88% of the noncash              wager. If the winner of reportable gambling    Box 14.—(optional) Enter the amount of
payment (less the wager) is the                winnings does not provide a TIN, you must      state income tax withheld.
withholding. If the method under (2) is        backup withhold at the rate of 31% on any
used, the sum of the noncash payment           such winnings that are not subject to          2—Sweepstakes, Wagering Pools,
and withholding tax is entered in box 1 of     regular gambling withholding under the         and Lotteries (Including
Form W-2G. See Notice 93-7, 1993-1 C.B.        preceding sentence. That is, if the
                                               winnings are at least $600 but not more        State-Conducted Lotteries)
297.
                                               than $5,000 and are at least 300 times the     File Form W-2G for each person to whom
Backup Withholding.—If a winner fails to       wager, backup withholding applies to the       you pay $600 or more in gambling
furnish a payer of reportable gambling         amount of the winnings reduced, at the         winnings from a sweepstakes, wagering
winnings with a correct taxpayer               option of the payer, by the amount             pool, or lottery (including a
identification number (TIN), the payer is      wagered.                                       state-conducted lottery) if such winnings
required to withhold 31% of the proceeds                                                      are at least 300 times the amount of the
and to report this amount as Federal              In the case of multiple wagers sold on
                                               one ticket, such as the $12 box bet on a       wager. You must withhold Federal income
income tax withheld in box 2 on Form                                                          tax, at the rate of 28%, from the amount of
W-2G unless the winnings are already           Big Triple or Trifecta, the wager will be
                                               considered to be six $2 bets and not one       winnings less the amount wagered if such
subject to regular gambling withholding as                                                    winnings less the wager exceed $5,000. If
explained above. This is referred to as        $12 bet for purposes of computing the
                                               amount to be reported or withheld.             the recipient of such reportable gambling
backup withholding. Backup withholding                                                        winnings does not provide a TIN, you must
applies to the amount of the winnings          Winnings on a $12 box bet must be
                                               reported if they are $600 or more, and         impose backup withholding at the rate of
reduced, at the option of the payer, by the                                                   31% on any such winnings that are not
amount wagered and not merely to the           Federal income tax must be withheld if the
                                               proceeds amount to more than $5,000 or,        subject to regular gambling withholding
amounts of such reportable payments in                                                        under the terms of the preceding sentence.
excess of $600, $1,200, or $1,500 (the         in the event the proceeds do not exceed
                                               $5,000, if the recipient fails to provide a    That is, if the winnings are at least $600
thresholds for information reporting). See                                                    but not more than $5,000 and are at least
the instructions for each type of gambling     TIN.
                                                                                              300 times the wager, backup withholding
for detailed rules for backup withholding.        Identical wagers (for example, two $2
                                                                                              applies to the amount of the winnings
Report backup withholding on Form 945,         bets on a particular horse to win the same
                                                                                              reduced, at the option of the payer, by the
Annual Return of Withheld Federal Income       race) are aggregated for purposes of the
                                                                                              amount wagered. These requirements
Tax.                                           reporting and withholding requirements.
                                                                                              apply to church raffles, charity drawings,
   A payer may use Form W-9, Request for       Also, winnings from identical wagers that
                                                                                              etc.
Taxpayer Identification Number and             are not part of the payment for which the

Page 30
   Installment payments of $5,000 or less       3—Keno, Bingo, and Slot
are subject to regular 28% gambling                                                            Form 5754
withholding if the aggregate proceeds from
                                                Machines
such wager will exceed $5,000.                  File Form W-2G for every person to whom
                                                you pay $1,200 or more in gambling             Form 5754, Statement by Person(s)
   If payments are to be made for the life of                                                  Receiving Gambling Winnings, is used
a person (or for the lives of more than one     winnings from bingo or slot machines, or
                                                $1,500 or more from keno after the price       only in preparing Form W-2G when the
person), and it is actuarially determined                                                      person receiving gambling winnings
that the aggregate proceeds from such           of the wager for the winning keno game is
                                                deducted. If the winnings are of a noncash     subject to reporting or withholding is not
wager are expected to exceed $5,000,                                                           the actual winner or is a member of a
such payments are subject to regular 28%        nature, the fair market value of the item
                                                won is to be considered the amount of the      group of two or more winners on the same
gambling withholding.                                                                          winning ticket. The payer is required to file
                                                winnings. Total all winnings from each
   The price of the wager must be               bingo or keno game. Winnings and losses        Forms W-2G based on Form 5754.
deducted from the total winnings to             from other wagering transactions are not to       The person receiving the winnings must
determine whether withholding is required       be taken into account in arriving at the       furnish all the information required by Form
and at the option of the payer to determine     $1,200 or $1,500 figure. If the recipient of   5754. However, a recipient of winnings
whether reporting is required. The              reportable gambling winnings from bingo,       from a state-conducted lottery need not
deduction for the cost of the wager should      keno, or slot machines does not provide a      provide identification other than his or her
be made at the time of the first payment.       TIN, you must backup withhold at the rate      taxpayer identification number. Part I lists
   A payment of winnings is considered          of 31% on any such winnings. Backup            the identification of the person to whom
made when it is paid, either actually or        withholding applies to the amount of the       the winnings are paid, and Part II lists the
constructively, to the winner. Winnings are     winnings reduced, at the option of the         actual winners, their respective shares of
constructively paid when they are credited      payer, by the amount wagered. Regular          the winnings, and any additional winnings
to, or set apart for, that person without any   gambling withholding does not apply to         from identical wagers.
substantial limitation or restriction on the    winnings from keno, bingo, or slot                In Part II, the person receiving the
time, manner, or condition of payment.          machines.                                      winnings must provide the name, address,
   When a third party makes the payments,       Box 1.—Enter payments of $1,200 or more        identification number, respective share of
as in the case of an insurance company          from bingo or slot machines or payments        the winnings, and additional winnings from
handling the winnings as an annuity, that       of $1,500 or more from keno.                   identical wagers for each of the winners. In
third party must deduct and withhold.           Box 2.—Enter the amount of any backup          addition, if regular gambling withholding is
Box 1.—Enter payments of $600 or more.          withholding.                                   required, the form must be signed, under
Box 2.—Enter the amount of Federal                                                             penalties of perjury, and dated by the
                                                Box 3.—Enter the type of wager, such as        person receiving the winnings. The form
income tax withheld, whether regular            keno, bingo, and slot machines, and the
gambling withholding or backup                                                                 must be returned to the payer for
                                                amount of the wager.                           preparation of Form W-2G for each of the
withholding.                                    Box 4.—Enter the date of the winning           persons listed as winners. Forms W-2G
Box 3.—Enter the type of wager (such as         transaction.                                   may be issued immediately or by January
raffle or 50-50 drawing) or the name of the     Box 5.—Enter the ticket number, card           31 following the year of the payment. Do
lottery (such as Instant, Big 50, or Baker’s    number (and color, if applicable), machine     not send Form 5754 to the IRS. Keep it
Dozen) and the price of the wager (50¢,         serial number, or any other information that   for your records.
$1, etc.).                                      will help identify the winning transaction.    Withholding and Forms W-2G for
Box 4.—Enter the date of the winning            Boxes 6 and 7.—Not applicable.                 Multiple Winners.—If more than one
transaction, such as the date of the                                                           person shares in the winnings from a
drawing of the winning number. This might       Box 8.—Enter the initials of the person
                                                                                               single wager, the total amount of the
not be the date the winnings are paid.          paying the winnings.
                                                                                               winnings (less the amount wagered) will
Box 5.—For a state lottery, enter the ticket    Box 10.—Enter the location of the person       determine the amount of the proceeds for
number or other identifying number.             paying the winnings, if applicable.            purposes of reporting and withholding. Do
Boxes 6 through 8 and 10.— Not                  Boxes 11 and 12.—Enter the identification      not allocate winnings to each winner
applicable.                                     numbers of the person receiving the            before determining whether the withholding
                                                winnings.                                      or reporting thresholds were reached.
Boxes 11 and 12.—For other than state
lotteries, enter the identification numbers     Box 13.—(optional) Enter the abbreviated          For example, E purchases a
of the person receiving the winnings.           name of the state and your state               sweepstakes ticket for $1 on behalf of
                                                identification number.                         himself and S, who contributes an equal
Box 13.—(optional) Enter the abbreviated                                                       amount of the ticket price and who will
name of the state and your state                Box 14.—(optional) Enter the amount of
                                                state income tax withheld.                     share equally in any winnings. The ticket
identification number.                                                                         wins $5,002. Since the winnings ($5,002 -
Box 14.—(optional) Enter the amount of                                                         $1 = $5,001) are more than $5,000, you
state income tax withheld.                                                                     must withhold 28% of $5,001. You must
                                                                                               prepare Form W-2G for E and for S, using
                                                                                               the information furnished to you on Form
                                                                                               5754.




                                                                                                                                 Page 31
Guide to Information Returns                   (If any date shown falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.)
                                                                                                                                    Due Date
  Form               Title                            What To Report                          Amounts To Report                           To Recipient
                                                                                                                           To IRS       (unless indicated
                                                                                                                                            otherwise)
1042-S     Foreign Person’s U.S.     Payments subject to withholding under Chapter
           Source Income Subject     3 of the Code, including interest, dividends,
           to Withholding            royalties, pensions and annuities, gambling                    All amounts           March 15          March 15
                                     winnings, and compensation for personal
                                     services.
1098       Mortgage Interest         Mortgage interest (including points) you received                                                     (To
           Statement                 in the course of your trade or business from                                                    Payer/Borrower)
                                                                                                   $600 or more          February 28
                                     individuals and reimbursements of overpaid                                                        January 31
                                     interest.
1099-A     Acquisition or            Information about the acquisition or
           Abandonment of            abandonment of property that is security for a                 All amounts          February 28      (To Borrower)
           Secured Property          debt for which you are the lender.                                                                     January 31
1099-B     Proceeds From Broker      Sales or redemptions of securities, futures
           and Barter Exchange       transactions, commodities, and barter exchange                 All amounts          February 28       January 31
           Transactions              transactions.
1099-C     Cancellation of Debt      Cancellation of a debt owed to a financial
                                     institution, credit union, RTC, FDIC, NCUA, or                $600 or more          February 28       January 31
                                     Federal Government agency.
1099-DIV   Dividends and             Distributions, such as dividends, capital gain
                                                                                              $10 or more, except
           Distributions             distributions, or nontaxable distributions, that
                                                                                              $600 or more for           February 28       January 31
                                     were paid on stock, and distributions in
                                                                                              liquidations
                                     liquidation.
1099-G     Certain Government        Unemployment compensation, state and local               $10 or more for
           Payments                  income tax refunds, agricultural payments, and           unemployment and
                                                                                                                         February 28       January 31
                                     taxable grants.                                          tax refunds; $600 or
                                                                                              more for all others
1099-INT   Interest Income           Interest income not including interest on an IRA.        $10 or more ($600 or
                                                                                                                         February 28       January 31
                                                                                              more in some cases)
1099-MISC Miscellaneous Income       Rent or royalty payments; prizes and awards that         $600 or more, except
                                     are not for services, such as winnings on TV or          $10 or more for
                                     radio shows.                                             royalties
           (Also, use this form to   Payments to crew members by owners or
           report the occurrence     operators of fishing boats. Report payments of                All payments
           of direct sales of        proceeds from sale of catch.
           $5,000 or more of         Payments to a physician, physicians’
           consumer goods for        corporation, or other supplier of health and
           resale.)                  medical services. Issued mainly by medical                    $600 or more
                                     assistance programs or health and accident
                                     insurance plans.                                                                    February 28       January 31
                                     Payments for services performed for a trade or
                                     business by people not treated as its employees.
                                     Examples: fees to subcontractors or directors,
                                     expenses incurred for use of an entertainment                 $600 or more
                                     facility treated as compensation to a
                                     nonemployee, and golden parachute payments.
                                     Substitute dividend and tax-exempt interest
                                                                                                   $10 or more
                                     payments reportable by brokers.
                                     Crop insurance proceeds.                                      $600 or more
1099-OID   Original Issue Discount   Original issue discount.                                      $10 or more           February 28       January 31
1099-PATR Taxable Distributions
          Received From              Distributions from cooperatives to their patrons.             $10 or more           February 28       January 31
          Cooperatives
1099-R     Distributions From
           Pensions, Annuities,
           Retirement or             Distributions from retirement or profit-sharing                All amounts          February 28       January 31
           Profit-Sharing Plans,     plans, IRAs, SEPs, or insurance contracts.
           IRAs, Insurance
           Contracts, etc.
1099-S     Proceeds From Real        Gross proceeds from the sale or exchange of                Generally, $600 or
                                                                                                                         February 28       January 31
           Estate Transactions       real estate.                                               more
4789       Currency Transaction      Each deposit, withdrawal, exchange of currency,                                     Within 15
           Report                    or other payment or transfer by, through, or to                                     days after
                                     financial institutions (other than casinos) that              Over $10,000          the date of      Not required
                                     involves a transaction in currency of more than                                     the
                                     $10,000.                                                                            transaction


Page 32
Guide to Information Returns                 (Continued)
                                                                                                                              Due Date

  Form             Title                             What To Report                       Amounts To Report                         To Recipient
                                                                                                                    To IRS        (unless indicated
                                                                                                                                      otherwise)
5471      Information Return of     U.S. persons who are officers, directors, or
          U.S. Persons With         shareholders in certain foreign corporations                                   Due date
          Respect To Certain        report information required by sections 6035,         See form instructions    of income            None
          Foreign Corporations      6038, and 6046, and to compute income under                                    tax return
                                    sections 951–964.
5472      Information Return of a   Transactions between a 25% foreign-owned
          25% Foreign-Owned         domestic corporation or a foreign corporation
                                                                                                                   Due date
          U.S. Corporation or a     engaged in a trade or business in the United
                                                                                          See form instructions    of income            None
          Foreign Corporation       States and a related party as required by
                                                                                                                   tax return
          Engaged in a U.S.         sections 6038A and 6038C.
          Trade or Business
5498      Individual Retirement                                                                                                     (To Participant)
          Arrangement               Contributions (including rollover contributions) to                                               (for value of
          Information               an individual retirement arrangement (IRA), and                                                     account)
                                                                                              All amounts           May 31
                                    the value of an IRA or simplified employee                                                         January 31
                                    pension (SEP) account.                                                                        (for contributions)
                                                                                                                                         May 31
8027      Employer’s Annual                                                                                                        Allocated tips
          Information Return of     Receipts from food or beverage operations, tips           See separate        Last day of      are shown on
          Tip Income and            reported by employees, and allocated tips.                instructions        February          Form W-2,
          Allocated Tips                                                                                                          due January 31
8300      Report of Cash            Payments in cash (including certain monetary
          Payments Over             instruments) or foreign currency received in one
          $10,000 Received in a     transaction, or two or more related transactions,
                                                                                                                  Within 15
          Trade or Business         in the course of a trade or business. Does not
                                                                                                                  days after
                                    apply to banks and financial institutions filing                                                 (To Payer)
                                                                                             Over $10,000         the date of
                                    Form 4789, Currency Transaction Report, and                                                      January 31
                                                                                                                  the
                                    casinos that are required to report such
                                                                                                                  transaction
                                    transactions on Form 8362, Currency
                                    Transaction Report by Casinos, or, generally, to
                                    transactions outside the United States.
8308      Report of a Sale or       Sales or exchanges of a partnership interest                                                   (To Transferor
                                                                                                                  Generally,
          Exchange of Certain       involving unrealized receivables or substantially                                                   and
                                                                                           (Transaction only)     attach to
          Partnership Interests     appreciated inventory items.                                                                    Transferees)
                                                                                                                  Form 1065
                                                                                                                                     January 31
W-2G      Certain Gambling          Gambling winnings from horse racing, dog              Generally, $600 or
          Winnings                  racing, jai alai, lotteries, keno, bingo, slot        more; $1,200 or
                                    machines, sweepstakes, and wagering pools.            more from bingo or
                                                                                                                  February 28        January 31
                                                                                          slot machines;
                                                                                          $1,500 or more from
                                                                                          keno
926       Return by a U.S.          Transfers of property to a foreign corporation,                               Day of
          Transferor of Property    estate, trust, or partnership; also used to pay                               transfer; for
          to a Foreign              excise tax under section 1491 and to report                                   section
                                                                                          See form instructions                         None
          Corporation, Foreign      information under section 6038B.                                              6038B,
          Estate or Trust, or                                                                                     attach to
          Foreign Partnership                                                                                     tax return
W-2       Wage and Tax              Wages, tips, other compensation, withheld                                       To SSA         To Recipient
          Statement                 income, social security, and Medicare taxes, and
                                    advance earned income credit (EIC) payments.
                                                                                              See separate
                                    Include bonuses, vacation allowances, severance                               Last day of
                                                                                              instructions                           January 31
                                    pay, moving expense payments, some kinds of                                   February
                                    travel allowances, and third-party payments of
                                    sick pay.
TD F      Report of Foreign Bank    Financial interest in or signature or other                                   To Treasury      To Recipient
90-22.1   and Financial Accounts    authority over a foreign bank account, securities        Over $10,000         Dept.
                                    account, or other financial account.
                                                                                                                    June 30             None




                                                                                                                                         Page 33
Types of Payments
Below is an alphabetical list of some payments and the forms to file to report them. The list was developed to help you determine which
form to file. However, it is not a complete list of all payments, and the absence of a payment from the list does not indicate that the
payment is not reportable.

Type of Payment           Report on Form      Type of Payment              Report on Form     Type of Payment              Report on Form
Abandonment                       1099-A      Discharge of indebtedness              1099-C   Mortgage interest                      1098
Advance earned income credit         W-2      Dividends                            1099-DIV   Moving expense                          W-2
Agriculture payments              1099-G      Education expense reimbursement:                Nonemployee compensation         1099-MISC
Allocated tips                       W-2         Employee                               W-2   Nonqualified plan distribution          W-2
Annuities                         1099-R         Nonemployee                     1099-MISC      Beneficiaries                      1099-R
Auto reimbursements:                          Employee business expense                       Original issue discount (OID)      1099-OID
   Employee                          W-2         reimbursement                          W-2   Patronage dividends              1099-PATR
   Nonemployee                1099-MISC       Employee compensation                     W-2   Pension                              1099-R
Awards:                                       Excess deferrals, excess                        Points                                 1098
                                                 contributions, distributions of     1099-R
   Employee                          W-2                                                      Prizes:
                                              Fees:
   Nonemployee                1099-MISC                                                         Employee                              W-2
                                                 Employee                               W-2
Barter exchange income            1099-B                                                        Nonemployee                    1099-MISC
                                                 Nonemployee                     1099-MISC
Bonuses:                                                                                      Profit-sharing plan                  1099-R
                                              Fishing boat crew members
   Employee                          W-2         proceeds                        1099-MISC    PS 58 costs                          1099-R
   Nonemployee                1099-MISC       Foreclosures                           1099-A   Qualified plan distributions         1099-R
Broker transactions               1099-B      Foreign persons’ income                1042-S   Real estate transactions             1099-S
Cancellation of debt              1099-C      401(k) contributions                      W-2   Refunds, state and local tax         1099-G
Car expense:                                  404(k) dividend                      1099-DIV   Rents                            1099-MISC
   Employee                          W-2      Gambling winnings                       W-2G    Retirement                           1099-R
   Nonemployee                1099-MISC       Golden parachute:                               Royalties                        1099-MISC
Charitable gift annuities         1099-R         Employee                               W-2     Timber, pay-as-cut contract        1099-S
Christmas bonuses:                               Nonemployee                     1099-MISC    Sales:
   Employee                          W-2      Grants, taxable                       1099-G      Real estate                        1099-S
   Nonemployee                1099-MISC       Health care services               1099-MISC      Securities                         1099-B
Commissions:                                  Income tax refunds, state                       Section 1035 exchange                1099-R
   Employee                          W-2         and local                          1099-G    SEP contributions                       W-2
   Nonemployee                1099-MISC       Indian gaming profits                           SEP distributions                    1099-R
Commodities transactions          1099-B         paid to tribal members          1099-MISC    Severance pay                           W-2
Compensation:                                 Interest income                      1099-INT   Sick pay                                W-2
   Employee                          W-2      Interest, mortgage                       1098   Substitute payments in lieu of
   Nonemployee                1099-MISC       IRA contributions                        5498     dividends or tax-exempt
                                              IRA/SEP distributions                  1099-R     interest                       1099-MISC
Crop insurance proceeds       1099-MISC
                                              Life insurance contract                         Supplemental unemployment               W-2
Damages                       1099-MISC
                                                 distributions                       1099-R   Tips                                    W-2
Debt cancellation                 1099-C
                                              Liquidation, distributions in        1099-DIV   Unemployment benefits                1099-G
Dependent care payments              W-2
                                              Medical services                   1099-MISC    Vacation allowance:
Direct rollovers            1099-R, 5498
                                              Mileage:                                          Employee                              W-2
Direct sales of consumer
   products for resale        1099-MISC          Employee                               W-2     Nonemployee                    1099-MISC
Directors’ fees               1099-MISC          Nonemployee                     1099-MISC    Wages                                   W-2
                                              Military retirement                    1099-R




Page 34
Index                                           Form 1099-C                                 1, 13   Parking, value of                           18
Abandonments                             11     Form 1099-DIV                                  14   Patronage distributions                     21
Account number box                      4, 7    Form 1099-G                                    15   Payee statements                          1, 6
Agricultural commodities, sales of       12     Form 1099-INT                                  15   Penalties                                    2
Agriculture payments                     15     Form 1099-MISC                                 17   Pension distributions                   22–26
Annuity distributions                 22–26     Form 1099-OID                                  20   Points                               1, 10, 11
                                                Form 1099-PATR                                 21     Constructions loans                       10
Backup withholding        2, 13, 15, 16, 18,    Form 1099-R                                 1, 22   Precious metals, sales of                   12
                         21, 30, 31             Form 1099-S                                    26   Prizes and awards                           18
Barter exchange transactions             13     Form 5498                                      29   Profit-sharing distributions                22
Bingo winnings                       30, 31     Form 5754                                      31   PS 58 costs                 22, 23, 24, 25, 26
Broker transactions              12, 13, 20     Form W-2G                                      29
Bulletin board, IRP-BBS                 1, 3    404(k) dividend                                14   Qualified plan distributions           22–26
                                                                                                    Qualified settlement funds                 4
Cancellation of debt                   1, 13    Gambling winnings                          29–31
CDOs reporting requirements           16, 21    Golden parachute payments                      20   Real estate tax                        28
Changes this year                          1    Government payments                            15   Real estate transactions               26
Charitable gift annuities       22,   24, 25    Grants, taxable                                15   Refunds:
Collection agents                          9    Gross proceeds                             13, 28     Overpaid interest                 9, 11
Commissions                           18, 19    Guide to information returns, chart            32     State and local tax                  15
Commodities                               12                                                        REMICs reporting requirements      16, 21
Construction project, escrow agent        18    Health care services, payments                19    Rents                                  18
Consumer products of $5,000,                    Help                                           1    Retirement payments                22–26
  indicator for                           20    Horse racing winnings                         30    Rollovers                  22, 24, 26, 29
Cooperatives                     9,   11, 21                                                        Royalties                              18
                                                Income tax refunds, state and local        15
Corporations, payments to                  8                                                          Timber                           27, 28
                                                Independent contractor payments            18
Corrected returns, how to file             7
                                                Indian gaming profits, reporting           18       Sales of real estate                    26
Crop insurance proceeds                   20
                                                Informants, fees                           17       Sales of stock                          12
Damages                                    18   Inherited IRAs                             29       Scholarships                            17
Death benefit payments               22,   24   Insurance contracts                    22, 25       Second TIN notice indicator    13, 14, 16,
Deceased employee’s wages                  17   Interest income                            15                                      18, 20, 21
Debt cancellation                     1,   13   Interest, mortgage                          8       Section 530 employee                    18
Designation agreement                 9,   27   IRA contributions                          29       Section 1035 exchange           22, 23, 24
Direct rollovers             22, 24, 26,   29   IRA/SEP distributions          22, 24, 25, 26       Slot machine winnings               30, 31
Direct sales of consumer products                                                                   State and local tax refunds             15
  for resale                               20   Jai alai winnings                             30
                                                                                                    Statement mailing requirements           6
Directors’ fees                      18,   19   Keeping copies                                  5   Statements to recipients              1, 6
Discharge of indebtedness             1,   13   Keno winnings                              30, 31   Substitute forms                      1, 6
Dividends                                  14                                                       Substitute payments in lieu of
Dog racing winnings                        30   Life insurance contract distributions 22, 23
                                                                                                      dividends or tax-exempt
Due dates                          5, 7,   29   Liquidation, distributions in             15          interest                              20
                                                Lottery ticket agents, commissions        18        Successor/predecessor
Employee contributions                25, 26    Lottery winnings                          30          corporation                           15
Excess annual additions               23, 26                                                        Sweepstakes                             30
Excess deferrals, excess                        Magnetic media/electronic reporting             3
  contributions, corrective                     Mailing forms                                   5   Taxpayer identification
  distributions of                    23, 26    Medical services, payments                     19     numbers                   2, 5, 6, 14, 28
Exempt volume transferor                  27    Mergers                                         4   Transit passes                           18
Extension to file                          5    Military retirement                            22   Types of payments, alphabetical list     34
Extention to furnish statements            7    Miscellaneous income                           17
                                                                                                    Unemployment compensation                  15
                                                Missing plan participants                      23
Fair market value of IRA and SEP         29                                                         Unrealized appreciation                    25
                                                Mortgage interest                               8
Fees                            17, 18, 19
                                                  Reimbursement of overpaid                 9, 11   Void returns                                8
Fishing boat proceeds                    19
Foreclosures                         11, 12     Nominee/middleman                              4    When to file                               5
Foreign:                                        Nonemployee compensation                      19    When to furnish statements             7, 29
  Interest recipient                      9     Nonqualified plan distribution                22    Where to file                           1, 5
  Persons, payments to                5, 30                                                         Who must file, general                     4
                                                Ordering forms                                 1    Withholding:
  Transferors                            27
                                                Original issue discount (OID)                 20
Form 945                       1, 2, 24, 30                                                          Backup        2, 13, 15, 16, 18, 21, 30, 31
                                                Other income                                  18
Form 1096                              1, 5                                                          Gambling                             30, 31
Form 1098                              1, 8     Paper document reporting                       4     Pensions and annuities                   24
Form 1099-A                           1, 11
Form 1099-B                              12

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