Page 55 - Virtual Currencies

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Fileid: … tions/p525/2022/a/xml/cycle08/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Benefits may affect your IRA deduction. Don’t include alimony payments you Carpools. Don’t include in your income
You must use the special worksheets in Appen- ! receive under a divorce or separation amounts you receive from the passengers for
dix B of Pub. 590-A to figure your taxable bene- CAUTION agreement (1) executed after 2018, or driving a car in a carpool to and from work.
fits and your IRA deduction if all of the following (2) executed before 2019 but later modified if These amounts are considered reimbursement
conditions apply. the modification expressly states the repeal of for your expenses. However, this rule doesn't
• You receive social security or equivalent the deduction for alimony payments applies to apply if you have developed carpool arrange-
railroad retirement benefits. the modification. ments into a profit-making business of trans-
• You have taxable compensation. porting workers for hire.
• You contribute to your IRA. Below-market loans. A below-market loan is
• You or your spouse is covered by a retire- a loan on which no interest is charged or on Cash rebates. A cash rebate you receive from
ment plan at work. which the interest is charged at a rate below the a dealer or manufacturer of an item you buy
How to report. If any of your benefits are applicable federal rate. If you make a be- isn't income, but you must reduce your basis by
the amount of the rebate.
taxable, you must use Form 1040 or 1040-SR to low-market gift or demand loan, you must in-
report the taxable part. Report your net benefits clude the forgone interest (at the federal rate) Example 36. You buy a new car for
(as shown on your Forms SSA-1099 and as interest income on your return. These loans $24,000 cash and receive a $2,000 rebate
RRB-1099) on line 6a of Form 1040 or are considered a transaction in which you, the check from the manufacturer. The $2,000 isn't
1040-SR. Report the taxable part on line 6b of lender, are treated as having made: income to you. Your basis in the car is $22,000.
Form 1040 or 1040-SR. If you elect to use the • A loan to the borrower in exchange for a This is the basis on which you figure gain or
lump-sum election method, check the box on note that requires the payment of interest loss if you sell the car, and figure depreciation if
line 6c of Form 1040 or 1040-SR and see the at the applicable federal rate; and you use it for business.
instructions. • An additional payment to the borrower,
which the borrower transfers back to you Casualty insurance and other reimburse-
Nutrition Program for the Elderly. Food ben- as interest. ments. You generally shouldn't report these re-
efits you receive under the Nutrition Program for Depending on the transaction, the additional imbursements on your return unless you're fig-
the Elderly aren't taxable. If you prepare and payment to the borrower is treated as a: uring gain or loss from the casualty or theft. See
serve free meals for the program, include in • Gift, Pub. 547.
your income as wages the cash pay you re- • Dividend,
ceive, even if you're also eligible for food bene- • Contribution to capital, Charitable gift annuities. If you're the benefi-
fits. • Payment of compensation, or ciary of a charitable gift annuity, you must in-

Payments to reduce cost of winter energy. • Another type of payment. clude the yearly annuity or fixed percentage
payment in your income.
Payments made by a state to qualified people The borrower may have to report this payment The payer will report the types of income
to reduce their cost of winter energy use aren't as income, depending on its classification. you received on Form 1099-R. Report the gross
taxable. For more information on below-market distribution from box 1 on Form 1040 or
loans, see chapter 1 of Pub. 550. 1040-SR, line 5a, and the part taxed as ordinary
Other Income Bribes. If you receive a bribe, include it in your income (box 2a minus box 3) on Form 1040 or
income. 1040-SR, line 5b. Report the portion taxed as
The following brief discussions are arranged in capital gain as explained in the Instructions for
alphabetical order. Other income items briefly Campaign contributions. These contribu- Schedule D (Form 1040).
discussed below are referenced to publications tions aren't income to a candidate unless
that provide more information. they're diverted to the candidate’s personal use. Child support payments. You shouldn't re-
To be exempt from tax, the contributions must port these payments on your return. See Pub.
Activity not for profit. You must include on be spent for campaign purposes or kept in a 504 for more information.
your return income from an activity from which fund for use in future campaigns. However, in- Court awards and damages. To determine if
you don't expect to make a profit. An example terest earned on bank deposits, dividends re-
of this type of activity is a hobby or a farm you ceived on contributed securities, and net gains settlement amounts you receive by compromise
or judgment must be included in your income,
operate mostly for recreation and pleasure. En- realized on sales of contributed securities are
ter this income on Schedule 1 (Form 1040), taxable and must be reported on Form you must consider the item that the settlement
replaces. The character of the income as ordi-
line 8j. Deductions for expenses related to the 1120-POL. Excess campaign funds transferred
activity are limited. They can't total more than to an office account must be included in the of- nary income or capital gain depends on the na-
ture of the underlying claim. Include the follow-
the income you report and can be taken only if ficeholder's income on Schedule 1 (Form
you itemize deductions on Schedule A (Form 1040), line 8z, in the year transferred. ing as ordinary income.
1040). See Not-for-Profit Activities in chapter 1 1. Interest on any award.
of Pub. 535 for information on whether an activ- Canceled sales contract. If you sell property 2. Compensation for lost wages or lost profits
ity is considered carried on for a profit. (such as land or a residence) under a contract,
but the contract is canceled and you return the in most cases.
Alaska Permanent Fund dividend. If you re- buyer's money in the same tax year as the origi- 3. Punitive damages in most cases. It doesn't
ceived a payment from Alaska's mineral income nal sale, you have no income from the sale. If matter if they relate to a physical injury or
fund (Alaska Permanent Fund dividend), report the contract is canceled and you return the buy- physical sickness.
it as income on Schedule 1 (Form 1040), er's money in a later tax year, you must include
line 8g. The state of Alaska sends each recipi- your gain in your income for the year of the sale. 4. Amounts received in settlement of pension
ent a document that shows the amount of the When you return the money and take back the rights (if you didn't contribute to the plan).
payment with the check. The amount is also re- property in the later year, you treat the transac- 5. Damages for:
ported to the IRS. tion as a purchase that gives you a new basis in
the property equal to the funds you return to the a. Patent or copyright infringement,
Alimony. Include in your income on Schedule buyer. b. Breach of contract, or
1 (Form 1040), line 2a, any taxable alimony Special rules apply to the reacquisition of
payments you receive. Amounts you receive for real property where a secured indebtedness c. Interference with business operations.
child support aren't income to you. For com- (mortgage) to the original seller is involved. For 6. Back pay and damages for emotional dis-
plete information, see Pub. 504 and the Instruc- further information, see Repossession in Pub. tress received to satisfy a claim under title
tions for Forms 1040 and 1040-SR. 537. VII of the Civil Rights Act of 1964.

Page 32 Publication 525 (2022)