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Page 1 of 32 of Instructions for Forms 1099 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Cat. No. 11409F

Revised Proof Ok to PrintRtext sent (date) Requested (init. & date) (init. & date)

Paperwork Reduction Act Notice.—Weask for the information on these forms tocarry out the Internal Revenue laws of theUnited States. You are required to give usthe information. We need it to ensure thatyou are complying with these laws and toallow us to figure and collect the rightamount of tax.

The time needed to complete and filethe following forms will vary depending onindividual circumstances. The estimatedaverage times are:1099-A 10 minutes1099-B 15 minutes1099-DIV 14 minutes1099-G 12 minutes1099-INT 12 minutes1099-MISC 14 minutes1099-OID 10 minutes1099-PATR 11 minutes1099-R 20 minutes1099-S 8 minutes1098 7 minutes5498 7 minutes1096 10 minutesW-2G 19 minutes

If you have comments concerning theaccuracy of these time estimates orsuggestions for making these forms moresimple, we would be happy to hear fromyou. You can write to both the InternalRevenue Service, Washington, DC 20224,Attention: IRS Reports Clearance Officer,T:FP; and the Office of Management andBudget, Paperwork Reduction Project(1545-0112), Washington, DC 20503. DONOT send these tax forms to either ofthese offices. Instead, see Where To Fileon page 5.

Items You Should Note

Use Form 1096 To Send Formsto the IRSCopies A of all paper Forms 1099, 1098,5498, and W-2G must be transmitted tothe IRS with Form 1096, Annual Summaryand Transmittal of U.S. InformationReturns. Instructions for completing Form1096 are contained on Form 1096.

Form 1098—Reimbursement ofOverpaid InterestNew box 3, Refund of overpaid interest,was added to the 1993 Form 1098,Mortgage Interest Statement, for you toreport any reimbursement (refund or credit)of interest overpaid by the payer of recordin a prior year. See Reimbursement ofOverpaid Interest on page 9. Thatinformation is based on ProposedRegulations section 1.6050H-2, 1992-44I.R.B. 34, and Notice 92-60, 1992-52 I.R.B.18.

Form 1099-B—AgriculturalCommodities; Precious MetalsFor information on reporting agriculturalcommodities on Form 1099-B, ProceedsFrom Broker and Barter ExchangeTransactions, see items 10 and 11 under“No return is required by brokers for:” onpage 12.

Sales of precious metals in a quantityless than that required to satisfy aCommodity Futures TradingCommission-approved regulated futurescontract are not subject to reporting onForm 1099-B. See item 12 under “Noreturn is required by brokers for:” on page12.

Form 1099-MISC—Coin-OperatedAmusementsFor information on whether the owner ofcoin-operated amusements or the owner ofthe space where the amusements areplaced must report lease payments onForm 1099-MISC, Miscellaneous Income,see Coin-operated amusements on page16.

Form 1099-R—New Codes forDirect Rollovers, Excess AnnualAdditions Under Section 415, andCharitable Gift Annuities; NewBoxes for State and LocalDistributions; and Other ChangesTo implement the requirement ofTemporary Regulations section31.3405(c)-1T Q/A-12 to report directrollovers, the 1993 Form 1099-R,Distributions From Pensions, Annuities,Retirement or Profit-Sharing Plans, IRAs,Insurance Contracts, etc., contains two

new distribution codes for use in box 7.They are:

G—Direct rollover to IRA.H—Direct rollover to qualified plan or

tax-sheltered annuity.Also see Direct Rollovers and

Transfers on page 20.Direct rollovers also must be reported on

Form 5498, Individual RetirementArrangement Information.

In addition, the form contains new CodeE, Excess annual additions under section415, to allow payers to comply with therequirements of Rev. Proc. 92-93, 1992-47I.R.B. 13. New Code F, Charitable giftannuity, was also added to designate thedistribution of a charitable gift annuity. SeeExcess Annual Additions... on page 20and Charitable Gift Annuities on page 19.

A new mandatory 20% withholding isrequired for an eligible rollover distributionthat is not a direct rollover. See Box 4 onpage 21 for details.

Within a reasonable period of timebefore making an eligible rolloverdistribution, a plan administrator mustprovide the recipient with a writtenexplanation of options and rules undersection 402(f). See Explanation toRecipients Before Eligible RolloverDistributions (Section 402(f) Notice) onpage 20.

Boxes 12 and 15 were added to theform for payers to indicate the amount ofthe distribution for state or local taxpurposes. The use of these boxes isoptional.

Other changes have been made to theForm 1099-R instructions includinginstructions for the reporting of:

1. Nonqualified plan distributions tobeneficiaries.

2. Charitable gift annuities (newdistribution Code F).

3. Section 1035 exchanges.4. Excess annual additions under section

415 (new distribution Code E).Information on the IRS program for

contacting missing plan participants wasalso added.

See the Form 1099-R instructions thatbegin on page 19.

Form 1099-S—New Box forPurchaser’s Real Estate TaxThe Energy Policy Act of 1992 amendedsection 6045(e)(4) to require filers of Form1099-S, Proceeds From Real EstateTransactions, to report any real estate taxtreated as imposed on the purchaser forreal estate transactions involving aresidence. For this purpose, new box 5,Buyer’s part of real estate tax, was addedto the form. See Form 1099-S later.

Form W-2G—28% WithholdingRate; $5,000 ThresholdThe Energy Policy Act of 1992 amendedsection 3402(q) to change the withholdingrate on gambling winnings from 20% to28% for payments made after 1992. For

Instructions for Forms 1099,1098, 5498, and W-2G(Including Instructions for Forms 1099-A, 1099-B,1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID,1099-PATR, 1099-R, 1099-S, and 5754)(Section references are to the Internal Revenue Code unless otherwise noted.)

Department of the TreasuryInternal Revenue Service


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certain gambling winnings, includingwinnings from horse racing andsweepstakes, regular gambling withholdingwas not required unless the amount paidwas more than $1,000. The Act raises that$1,000 threshold to $5,000. See FormW-2G later.

Backup Withholding Rate IncreaseThe Energy Policy Act of 1992 amendedsection 3406(a)(1) to change the backupwithholding rate from 20% to 31% forpayments made after 1992.

REMINDER—SubstituteStatements to RecipientsThe IRS is concerned that some payerswho are not using the official IRS form(generally Copy B) to furnish statements torecipients may be using substitutestatements that do not comply with therules in Pub. 1179, Specifications forPaper Document Reporting and PaperSubstitutes for Forms 1096, 1098, 1099Series, 5498, and W-2G. Pub. 1179, whichis revised annually, is a revenue procedurethat explains the requirements for formatand content of substitute statements torecipients. If you are using a substituteform to furnish information to recipients,it must comply with the requirements inPub. 1179.

Guide to Information ReturnsSee the chart on pages 29 and 30 for abrief summary of information returnreporting rules.

Answers to Your InformationReporting QuestionsThe IRS operates a centralized call site toanswer questions about reporting oninformation returns—Forms 1096, 1098,1099, 1042-S, 5498, W-2, W-2G, and W-3.You can get answers to your questionswhether you are a paper filer or a magneticmedia filer. If you have questions related toreporting on any of these forms, you maycall 304-263-8700 (not a toll-free number)Monday through Friday from 8:30 A.M. to6:00 P.M. eastern time.

Current Tax InformationThe Internal Revenue Bulletin (IRB),published weekly, contains newly issuedregulations, as well as notices,announcements, legislation, courtdecisions, and other items of generalinterest. You may find this publicationuseful to keep you up to date with currentdevelopments. The IRB is sold by theSuperintendent of Documents, U.S.Government Printing Office, Washington,DC 20402, and is available on asubscription basis. To order the IRB, youcan write to the Superintendent ofDocuments or call 202-783-3238 (not atoll-free number).

Backup Withholding

Interest, dividends, rents, royalties,commissions, nonemployee compensation,

and certain other payments (includingbroker and barter exchange transactions,and certain payments made by fishing boatoperators) may be subject to backupwithholding at a 31% rate. To be subjectto backup withholding, a payment must bea reportable interest or dividend paymentunder section 6049(a), 6042(a), or 6044 (ifthe patronage dividend is paid in money orqualified check), or a reportable otherpayment under section 6041, 6041A(a),6045, 6050A, or 6050N. If the payment isone of these reportable payments, backupwithholding will apply if:

1. The payee fails to furnish his or hertaxpayer identification number (TIN) to you,OR

2. The IRS notifies you to imposebackup withholding because the payeefurnished an incorrect TIN, OR

3. You are notified that the payee issubject to backup withholding (undersection 3406(a)(1)(C)), OR

4. For interest and dividend accountsopened or instruments acquired after 1983,the payee fails to certify to you, underpenalties of perjury, that he or she is notsubject to backup withholding under 3above, OR

5. For interest, dividend, broker, or barterexchange accounts opened or instrumentsacquired after 1983, or broker accountsconsidered inactive in 1983, the payee failsto certify, under penalties of perjury, thatthe TIN provided is correct.

Except as explained in 5 above,reportable other payments are subject tobackup withholding only if 1 or 2 aboveapplies.

Some payees are exempt from backupwithholding. For a list of types of exemptpayees and other information, please seeForm W-9, Request for TaxpayerIdentification Number and Certification.

Real estate transactions reportable undersection 6045(e) are not subject to backupwithholding.

Generally, the period for which the 31%should be withheld is as follows:1. Failure to furnish TIN in the mannerrequired.—Withhold on payments madeuntil the TIN is furnished in the mannerrequired. Special backup withholding rulesapply if the payee has applied for a TIN.The payee may certify to this on Form W-9by noting “Applied For” in the TIN blockand by signing the form. This form thenbecomes an “awaiting-TIN certificate,” andthe payee has 60 days to obtain a TIN andfurnish it to you. For information aboutwhether backup withholding applies duringthe 60-day period, see TemporaryRegulations section 35a.9999-3, Q/A-59A.If you do not receive a TIN from the payeewithin 60 days and you have not alreadybegun backup withholding, begin backupwithholding and continue until the TIN isprovided.2. Notice from the IRS that payee’s TINis incorrect (“B” notice).—You may electto withhold on any reportable paymentmade to the account(s) subject to backupwithholding after receipt of the “B” notice,but you must withhold on any reportable

payment made to the account more than30 business days after you received the“B” notice. Stop withholding within 30days after you receive a certified Form W-9(or acceptable substitute).Note: The IRS will furnish a notice to you,and you are required to promptly furnish acopy of such notice, or an acceptablesubstitute, to the payee. For furtherinformation, see Regulations section31.3406(d)-5 and Rev. Proc. 92-32, 1992-1C.B. 776.

If you receive two incorrect TIN noticeswithin 3 years for the same account, followthe procedures in Regulations section31.3406(d)-5(g) and Rev. Proc. 92-32.3. Notice from the IRS that payee issubject to backup withholding due tonotified payee underreporting.—Startwithholding on payments made on the 31stday after the date you receive notificationfrom the IRS, or you may elect to withholdany time before the 31st day. The IRS willnotify you in writing when to stopwithholding, or the payee may furnish youa written certification from the IRS statingwhen withholding is to stop. In mostcases, the stop date will be January 1 ofthe year following the year of the notice.Note: You must notify the payee whenwithholding under this procedure starts.For further information, see TemporaryRegulations section 35a.3406-2.4. Payee failure to certify that he or sheis not subject to backup withholding.—Withhold on reportable interest anddividends until certification has beenreceived.

For exceptions to these general timingrules, see section 3406(e).Note: For information about backupwithholding on gambling winnings, see theSpecific Instructions for Form W-2G for thespecific type of gambling winnings, later.Reporting and Payment of BackupWithholding.—Backup withholding mustbe reported on Form 941, Employer’sQuarterly Federal Tax Return, or Form941E, Quarterly Return of Withheld FederalIncome Tax and Medicare Tax. For moreinformation, see the instructions for Form941 or 941E.Additional Information.—For moreinformation about backup withholding, seeTemporary Regulations sections35a.9999-1, 2, and 3, and 35a.3406-1 and2.

Penalties

The following penalties generally apply tothe person required to file informationreturns. The penalties apply to paper filersas well as magnetic media/electronic filers.

Failure To File Correct InformationReturns by the Due Date (Section6721)If you fail to file a correct information returnby the due date and you cannot showreasonable cause, you may be subject to apenalty. The penalty applies if you fail to


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file timely, you fail to include all informationrequired to be shown on a return, or youinclude incorrect information on a return.The penalty also applies if you file onpaper when you were required to file onmagnetic media, you report an incorrectTIN or fail to report a TIN, or you fail to filepaper forms that are machine readable.

The amount of the penalty is based onwhen you file the correct informationreturn. The penalty is:● $15 per information return if youcorrectly file within 30 days (by March 30 ifthe due date is February 28); maximumpenalty $75,000 per year ($25,000 for smallbusinesses, defined later).● $30 per information return if youcorrectly file more than 30 days after thedue date but by August 1; maximumpenalty $150,000 per year ($50,000 forsmall businesses).● $50 per information return if you file afterAugust 1 or you do not file requiredinformation returns; maximum penalty$250,000 per year ($100,000 for smallbusinesses).Exceptions to the Penalty.—

1. The penalty will not apply to anyfailure that you can show was due toreasonable cause and not to willful neglect.

2. An inconsequential error or omissionis not considered a failure to includecorrect information. An inconsequentialerror or omission does not prevent orhinder the IRS from processing the return,from correlating the information required tobe shown on the return with theinformation shown on the payee’s taxreturn, or from otherwise putting the returnto its intended use. Errors and omissionsthat are never inconsequential are thoserelating to (a) a TIN, (b) a payee’s surname,and (c) any money amounts.

3. De Minimis Rule for Corrections.—Even though you cannot show reasonablecause, the penalty for failure to file correctinformation returns will not apply to acertain number of returns if:

a. You filed those information returns,b. Either you failed to include all the

information required to be shown on areturn or you included incorrectinformation, and

c. You filed corrections of theseinformation returns by August 1.

If you meet all the conditions in athrough c, the penalty for filing incorrectreturns (but not for filing late) will not applyto the greater of 10 information returns or1⁄2 of 1% of the total number of informationreturns you are required to file for thecalendar year.Lower Maximum Penalties for SmallBusinesses.—For purposes of the lowermaximum penalties shown in parenthesesabove, you are a small business if youraverage annual gross receipts for the mostrecent 3 tax years (or for the period youwere in existence, if shorter) ending beforethe calendar year in which the informationreturns were due are $5 million or less.

Intentional Disregard of FilingRequirements.—If any failure to file acorrect information return is due tointentional disregard of the filing andcorrect information requirements, thepenalty is at least $100 per informationreturn with no maximum penalty.

Failure To Furnish Correct PayeeStatements (Section 6722)If you fail to provide correct payeestatements and you cannot showreasonable cause, you may be subject to apenalty. The penalty applies if you fail toprovide the statement by January 31 (seepart H under General Instructions, later),you fail to include all information requiredto be shown on the statement, or youinclude incorrect information on thestatement. “Payee statement” has thesame meaning as “statement to recipient”as used in part H under GeneralInstructions.

The penalty is $50 per statement,regardless of when the correct statementis furnished, with a maximum of $100,000per year. There is no reduction in thepenalty for furnishing a correct statementby August 1.Exception.—An inconsequential error oromission is not considered a failure toinclude correct information. Aninconsequential error or omission cannotreasonably be expected to prevent orhinder the payee from timely receivingcorrect information and reporting it on hisor her income tax return or from otherwiseputting the statement to its intended use.Errors and omissions that are neverinconsequential are those relating to(a) a dollar amount, (b) a payee’s address,(c) the appropriate form for the informationprovided (i.e., whether the form is anacceptable substitute for the official IRSform), and (d) whether the statement wasfurnished in person or by “statementmailing,” when required.Intentional Disregard of PayeeStatement Requirements.—If any failureto provide a correct payee statement isdue to intentional disregard of therequirements to furnish a correct payeestatement, the penalty is at least $100 perpayee statement with no maximumpenalty.

Forms 1099-R and 5498The penalties under sections 6721 and6722 do not apply to Form 1099-R, whichis filed under section 6047. The penalty forfailure to timely file Form 1099-R is $25 perday with a maximum of $15,000 per year.See section 6652(e).

The penalties under sections 6721 and6722 do not apply to Form 5498, which isfiled under section 408(i). The penalty forfailure to timely file Form 5498 is $50 perreturn with no maximum. See section6693.Caution: Congress has considered, andmay consider again, legislation that wouldapply the penalties under sections 6721and 6722 to Forms 1099-R and 5498.

Magnetic Media/ElectronicReporting

Magnetic media reporting may be requiredfor filing all information returns discussedin this publication. Acceptable forms ofmagnetic media are magnetic tape, tapecartridge, 31⁄2-, 51⁄4-, and 8-inch diskette.Pub. 1220, Specifications for Filing Forms1098, 1099, 5498, and W-2G Magneticallyor Electronically, is the revenue procedurefor magnetic media and electronicreporting, available at Internal RevenueService district offices. Different types ofpayments, such as interest, dividends, andrents, may be reported on the same tapeor other submission.Note: Filing electronically will satisfy themagnetic media filing requirements. Anyreference to magnetic media in theseinstructions includes electronic filing.Due Dates.—The due dates for magneticmedia reporting are the same as for paperdocument reporting.Extension of Time To File.—Forinformation about requesting an extensionof time to file, see part B under GeneralInstructions, later.Caution: If you file on magnetic media, donot file the same returns on paper.Who Must File on Magnetic Media.—Ifyou are required to file 250 or moreinformation returns, you must file onmagnetic media. The 250-or-morerequirement applies separately to eachtype of form. For example, if you must file500 Forms 1098 and 100 Forms 1099-A,you are not required to file Forms 1099-Aon magnetic media, but you must fileForms 1098 on magnetic media.Note: Even if you are not required to fileon magnetic media, the IRS encouragesyou to do so. Also, you may fileelectronically even if you are not requiredto file on magnetic media.

The magnetic media filing requirementdoes not apply if you apply for and receivean undue hardship waiver. See How ToRequest a Waiver From Filing onMagnetic Media, later.Filing Requirement Applies Separately toOriginals and Corrections.—The magneticmedia filing requirements below applyseparately to original returns and correctedreturns. Originals and corrections are notaggregated to determine whether you arerequired to file on magnetic media. Forexample, if you file 400 Forms 1098 onmagnetic media and you are making 75corrections, your corrections can be filedon paper because the number ofcorrections for Form 1098 is less than the250 filing requirement. However, if youwere filing 250 or more Form 1098corrections, they would have to be filed onmagnetic media.How To Get Approval To File onMagnetic Media.—File Form 4419,Application for Filing Information ReturnsMagnetically/Electronically, at least 30days (45 days for some electronic filing)before the due date of the returns. Only


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one Form 4419 need be filed for all typesof returns that will be filed on magneticmedia. Once you have received approval,you need not reapply each year. The IRSwill provide a written reply to the applicantand further instructions at the time ofapproval, usually within 30 days. Amagnetic media reporting package, whichincludes all the necessary transmittals,labels, and instructions, will be mailed toall approved filers.How To Request a Waiver From Filingon Magnetic Media.—To receive a waiverfrom the required filing of informationreturns on magnetic media, submit Form8508, Request for Waiver From FilingInformation Returns on Magnetic Media,requesting an undue hardship waiver fromfiling on magnetic media. You cannot applyfor a waiver for more than 1 tax year at atime. If you need a waiver for more than 1tax year, you must reapply at theappropriate time each year.

If a waiver for original returns isapproved, any corrections for the sametypes of returns will be covered under thewaiver. However, if you submit originalreturns on magnetic media but you want tosubmit your corrections on paper, a waivermust be approved for the corrections if thecorrections exceed the 250 filingrequirement.

Waiver requests generally must be filedat least 45 days before the due date of thereturns. However, new brokers and newbarter exchanges may request an unduehardship waiver by filing Form 8508 by theend of the second month following themonth in which they became a broker orbarter exchange.

If you are seeking, in a singleapplication, approval for filing returns onmagnetic media and, if approval is notgranted, a waiver from the magnetic mediafiling requirement, submit both Forms 4419and 8508.

If you receive an approved waiver, donot send a copy of it to the service centerwhere you file your paper returns. Keep thewaiver for your records only.Penalty.—If you are required to file onmagnetic media but fail to do so, and youdo not have an approved waiver on record,you may be subject to a penalty of $50 perreturn for failure to file information returnson magnetic media unless you establishreasonable cause. However, you can fileup to 250 returns on paper; those returnswill not be subject to a penalty for failureto file on magnetic media.

The penalty applies separately to originalreturns and corrected returns. See FilingRequirement Applies Separately toOriginals and Corrections, earlier.

Paper Document Reporting

If you are required to file 250 or moreinformation returns, see MagneticMedia/Electronic Reporting, earlier.Common Errors.—Please be sure tocheck your returns to prevent the followingcommon errors:

1. Duplicate filing. Sending the sameinformation to the IRS more than once.

2. Filer’s name, address, and taxpayeridentification number are not the same onForm 1096 and Forms 1099, 1098, 5498,or W-2G.

3. Decimal point to show dollars andcents omitted (1000.00).

4. Two or more types of returnssubmitted with one Form 1096 (e.g., Forms1099-INT and 1099-MISC with one Form1096). You must submit a separate Form1096 with each type of document.

5. Entering “-0-” or “None” in moneyamount boxes when no entry is required.Leave the boxes blank unless theinstructions specifically require that youenter a zero.

6. Failure to make an entry in box 1a,“Gross dividends and other distributions onstock,” on Form 1099-DIV. An amountmust be entered in box 1a if any amount isentered in box 1b, 1c, 1d, or 1e.Required Format.—Because paper formsare read by machines (optical characterrecognition equipment), all Forms 1096,1098, 1099, and 5498 must be prepared inaccordance with the following instructions.If these instructions are not followed, youmay be subject to a penalty of $50 perincorrectly filed document.

1. DO NOT CUT OR SEPARATE theforms that are printed three to a sheet, orForms 1099-R, which are two to a sheet.Forms 1098, 1099, and 5498 are printedthree to an 8- by 11-inch sheet. Form 1096is printed one to an 8- by 11-inch sheet.These forms must be submitted to the IRSon the 8- by 11-inch sheet. If at least oneform on the page is correctly completed,you must submit the entire page.

Send the forms to the IRS in a flatmailing (not folded). Note: Large envelopesmay require extra postage.

2. NO PHOTOCOPIES of any forms areacceptable. Official forms are availablefrom your IRS district office.

3. DO NOT STAPLE, tear, or tape any ofthese forms. It will interfere with the IRS’sability to scan the documents.

4. Pinfeed holes on the form are NOTacceptable. Pinfeed strips outside the 8-by 11-inch area must be removed beforesubmission, without tearing or ripping theform. Substitute forms prepared incontinuous or strip form must be burst andstripped to conform to the size specifiedfor a single sheet (8 by 11 inches) beforethey are filed with the IRS.

5. DO NOT change the title of any boxon any form. Do not use a form to reportinformation that is not properly reportableon that form. If you are unsure of where toreport the data, call 304-263-8700 or yourlocal IRS office.

6. Report information only in theappropriate boxes provided on the forms.Make only one entry in each box unlessotherwise indicated in these instructions.

7. DO NOT submit any copy other thanCopy A to the IRS.

8. DO NOT use prior year forms unlessyou are reporting prior year information; do

not use subsequent year forms for thecurrent year. Because forms are “read” bymachine, you MUST use the current yearform to report current year information.

9. Use the official forms or substituteforms that meet the specifications in the1993 Pub. 1179, Specifications for PaperDocument Reporting and PaperSubstitutes for Forms 1096, 1098, 1099Series, 5498, and W-2G. If you submitsubstitute forms that do not meet thecurrent specifications and that are notmachine scannable, you may be subject toa penalty of $50 for each return forimproper format.

10. DO NOT use dollar signs ($) (theyare preprinted on the forms), ampersands(&), asterisks (*), commas (,), or otherspecial characters.Suggested Format.—Below aresuggestions that will allow the IRS toprocess the submitted forms in the mosteconomical manner:

1. Type or machine print data entriesusing 10 pitch (pica) or 12 pitch (elite)black type. Use block print, not scriptcharacters. Entries should not behandwritten. Insert data in the middle ofthe blocks well separated from otherprinting and guidelines, and take othermeasures to guarantee a dark black, clear,sharp image.

2. You may use the account numberbox for an account number designation.This number must not appear anywhereelse on the form, and this box may not beused for any other item. Showing theaccount number is optional. However, itmay be to your benefit to include therecipient’s account number on paperdocuments if your system of records usesthe account number rather than the name,social security number, or employeridentification number for identificationpurposes. If you furnish the accountnumber, the IRS will include it in futurenotices to you about backup withholding. Ifyou are using window envelopes to mailstatements to recipients, and if you areusing reduced rate mail, be sure theaccount number does not appear in thewindow because the Postal Service maynot accept these for reduced rate mail.

3. Do not enter number signs (#); forexample, enter Rt. 2, not Rt. #2.

General Instructions

A. Who Must File.—See the SpecificInstructions for each form.Nominee/Middleman Returns.—Generally, anyone receiving a Form 1099for amounts that actually belong to anotherperson should file a Form 1099 showingthe actual owner as the recipient and thenominee as the payer. The nominee, notthe original payer, is responsible for filingthe subsequent Forms 1099.Mergers.—If two corporations merge andthe surviving corporation becomes theowner of all the assets and assumes all theliabilities of the absorbed corporation, thereporting requirements explained in this


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publication will be met if the survivingcorporation files Forms 1098, 1099, 5498,and/or W-2G for reportable payments ofboth corporations. See Rev. Rul. 69-556,1969-2 C.B. 242.

For information on filing Form 1099-INTfor a successor/predecessor corporation,see Form 1099-INT, later.Payments to Foreign Persons.—See theInstructions for Forms 1042 and 1042-S,relating to U.S. source income of foreignpersons, and for reporting requirementsrelating to payments of income items toforeign persons.B. When To File.—File Form 1096 andForms 1098, 1099, or W-2G by February28, 1994. Brokers may file Forms 1096 and1099-B anytime after the reporting periodthey elect to adopt (month, quarter, oryear), but not later than February 28, 1994.File Form 1096 and Forms 5498 by May31, 1994. See part H later about providingForms 1098, 1099, 5498, and W-2G orstatements to recipients.

Reporting period.—Forms 1098, 1099,and W-2G are used to report amountsreceived, paid, or credited during thecalendar year. Form 5498 is used to reportamounts contributed for the calendar year.

Extension.—For paper or magneticmedia filing, you may request an extensionof time to file by sending Form 8809,Request for Extension of Time To FileInformation Returns, to the address shownon the form. You must request theextension by the due date of the returnsfor your request to be considered. If yourrequest for an extension is approved, youwill have an additional 30 days to file. Youmay request an additional extension. SeeForm 8809.Note: If you are a magnetic mediatransmitter requesting extensions of timefor more than 50 payers, you areencouraged to submit the extensionrequests on tape or diskette. Forinstructions on submitting extensionrequests on magnetic media, see Pub.1220.C. Where To File.—Send all informationreturns filed on paper to the following:

If your principal business,office or agency, or legal

residence in the caseof an individual, is

located in

Use the followingInternal RevenueService Center

addressÄ Ä

Florida, Georgia, SouthCarolina Atlanta, GA 39901

New Jersey, New York(New York City andcounties of Nassau,Rockland, Suffolk, andWestchester)

Holtsville, NY 00501

New York (all othercounties), Connecticut,Maine, Massachusetts, NewHampshire, Rhode Island,Vermont

Andover, MA 05501

Illinois, Iowa, Minnesota,Missouri, Wisconsin Kansas City, MO 64999

Delaware, District ofColumbia, Maryland,Pennsylvania, Virginia

Philadelphia, PA 19255

Indiana, Kentucky,Michigan, Ohio,West Virginia

Cincinnati, OH 45999

Kansas, New Mexico,Oklahoma, Texas Austin, TX 73301

Alaska, Arizona, California(counties of Alpine, Amador,Butte, Calaveras, Colusa,Contra Costa, Del Norte, ElDorado, Glenn, Humboldt,Lake, Lassen, Marin,Mendocino, Modoc, Napa,Nevada, Placer, Plumas,Sacramento, San Joaquin,Shasta, Sierra, Siskiyou,Solano, Sonoma, Sutter,Tehama, Trinity, Yolo, andYuba), Colorado, Idaho,Montana, Nebraska,Nevada, North Dakota,Oregon, South Dakota,Utah, Washington,Wyoming

Ogden, UT 84201

California (all othercounties), Hawaii Fresno, CA 93888

Alabama, Arkansas,Louisiana, Mississippi,North Carolina, Tennessee

Memphis, TN 37501

If you have no legal residence, principalplace of business, or principal office oragency in any Internal Revenue district, fileyour return with the Internal RevenueService Center, Philadelphia, PA 19255.

Send all information returns filedmagnetically/electronically toIRS-Martinsburg Computing Center, P.O.Box 1359, Martinsburg, WV 25401-1359.D. Filing Returns With the IRS.—The IRSstrongly encourages the quality review ofdata before filing to prevent erroneousnotices being mailed to payees (or othersfor whom information is being reported).

If you must file any Form 1098, 1099,5498, or W-2G with the IRS, and you arefiling paper documents, you must send aForm 1096, Annual Summary andTransmittal of U.S. Information Returns,with each type of form as the transmittaldocument. You must group the forms byform number and submit each group witha separate Form 1096. For example, if youfile Forms 1098, 1099-A, and 1099-MISC,complete one Form 1096 to transmitForms 1098, another Form 1096 totransmit Forms 1099-A, and a third Form1096 to transmit Forms 1099-MISC.Specific instructions for completing Form1096 are included on Form 1096. Also seeTransmitters, paying agents, etc., later.For information about filing correctedreturns, see Corrected and Void Returns,later.

If you are filing on magnetic media,Form 4804, Transmittal of InformationReturns Reported Magnetically/Electronically, must accompany yoursubmissions.

For information on the preparation oftransmittal documents for magnetic mediaand paper document reporting (Forms4804 and 1096), see Rev. Proc. 84-24,1984-1 C.B. 465, or other current revenueprocedure.

If you use paper forms, report paymentson the appropriate form, as explained inthe Specific Instructions, later.

See Pub. 1179 on specifications forprivate printing of information documents.You may not request special consideration.Only forms that conform with the officialform and the specifications in Pub. 1179are acceptable.

Transmitters, paying agents, etc.—Atransmitter, service bureau, paying agent,or disbursing agent (hereafter referred toas “agent”) may sign Form 1096 or 4804on behalf of any person required to file(hereafter referred to as “the payer”) if theconditions in items 1 and 2 below are met:

1. The agent has the authority to signthe form under an agency agreement (oral,written, or implied) that is valid under statelaw, and

2. The agent signs the form and addsthe caption “For: (Name of payer).”

Signing of the form by an authorizedagent on behalf of the payer does notrelieve the payer of the liability for penaltiesfor not filing a correct, complete, andtimely Form 1096 or 4804 andaccompanying returns.

Forms 1098, 1099, 5498, W-2G, or otherstatements to recipients issued by aservice bureau or agent should show thesame payer’s name as shown on theinformation returns filed with the IRS.

For information about the election toreport and deposit backup withholdingunder the agent’s TIN and how to prepareforms if the election is made, see Rev.Proc. 84-33, 1984-1 C.B. 502 (Pub. 1272).E. Shipping and Mailing.—If you aresending many forms, you may send themin conveniently sized packages. On eachpackage write your name and TIN, numberthe packages consecutively, and placeForm 1096 in package number one. Postalregulations require forms and packages tobe sent by First-Class Mail.F. Recipient Names and TaxpayerIdentification Numbers.—Taxpayeridentification numbers (TINs) are used toassociate and verify amounts reported tothe IRS with corresponding amounts ontax returns. Therefore, it is important thatyou furnish correct names, social securitynumbers (SSNs) or employer identificationnumbers (EINs) for recipients on the formsor magnetic media sent to the IRS.

Use Form W-9 to request the recipient’sTIN. (You may be subject to a penalty foran incorrect or missing TIN. See Penaltieson page 2.) You are required to maintainthe confidentiality of information obtainedon Form W-9 relating to the taxpayer’sidentity (including SSNs), and you may usesuch information only to comply with thetax laws.Note: If the recipient does not provide aTIN, leave the box for providing the TIN tothe IRS blank on the Form 1098, 1099,5498, or W-2G. See Backup Withholdingon page 2. Only one recipient TIN can beentered on the form.

The TIN for individual recipients ofinformation returns is the social security


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number. But see the information aboutsole proprietors below. For otherrecipients, including corporations,partnerships, and estates, it is the EIN.

SSNs have nine digits separated by twohyphens (000-00-0000), and EINs havenine digits separated by only one hyphen(00-0000000).

Show the full name and address in thesection provided on the return. Ifpayments have been made to more thanone recipient or the account is in morethan one name, show as the ONLY nameon the first name line the name of therecipient whose TIN is shown on thereturn. Show the names of any otherindividual recipients in the area below thefirst line, if desired. Form W-2G filers seeForm 5754, later.

For sole proprietors, show theindividual’s name on the first name line; onthe second name line, you may enter thebusiness name. You may not enter onlythe business name. For the TIN, entereither the individual’s SSN or the EIN ofthe business (sole proprietorship).G. Filer’s Name, Identification Number,and Address.—The TIN for filers ofinformation returns, including soleproprietors and nominees/middlemen, isthe Federal EIN. However, sole proprietorsand nominees/middlemen who are nototherwise required to have an EIN shoulduse their social security numbers. A soleproprietor is not required to have an EINunless he or she must file excise oremployment tax returns. See Pub. 583,Taxpayers Starting a Business.

The filer’s name and TIN should beconsistent with the name and number usedon the filer’s other tax returns. The nameof the filer’s paying agent or service bureaumust not be used in place of the name ofthe filer.

To obtain an EIN, file Form SS-4,Application for Employer IdentificationNumber, with the IRS. If you do not haveyour EIN by the time you must fileinformation returns, enter “Applied For” inany space where the number must beentered.

Include the room, suite, or other unitnumber after the street address.H. Statements to Recipients (Borrowers,Participants, Payers/Borrowers,Transferors, or Winners on CertainForms).—Be sure that the statements youprovide to recipients are clear and legible.

If you are not using the official IRS formto furnish statements to recipients, seePub. 1179, Specifications for PaperDocument Reporting and PaperSubstitutes for Forms 1096, 1098, 1099Series, 5498, and W-2G, for specific rulesabout providing “substitute” statements torecipients. A substitute is any statementother than Copy B (generally) of the officialform. You may develop them yourself orbuy them from a private printer. However,the substitutes must comply with theformat and content requirements specifiedin Pub. 1179.

Different rules apply to furnishingstatements to recipients depending on the

type of payment you are reporting and theform you are filing. See the heading belowfor the type of payment you are reporting.The headings are (1) Interest, dividend,and royalty payments; (2) Real estatetransactions; and (3) Other payments.Interest, dividend, and royaltypayments.—For payments of dividends orinterest (including original issue discount)under section 6042, 6044, or 6049(reported on Forms 1099-DIV, 1099-PATR,1099-INT, or 1099-OID), you are requiredto furnish an official or substitute Form1099 to a recipient either in person or in astatement mailing by First-Class Mail.Payers of royalties are also required tofurnish the statement in person or in astatement mailing by First-Class Mail, butthe statement need not be the official form.Statements may be sent by intraoffice mailif you use intraoffice mail to send accountinformation and other correspondence tothe recipient.

Statement mailing requirement forForms 1099-DIV, 1099-INT, 1099-OID,and 1099-PATR only.—The statementmailing requirements apply only to Forms1099-DIV (except for section 404(k)dividends), 1099-INT (except for interestreportable under section 6041), 1099-OID,and 1099-PATR. In addition to Forms W-2,W-8, W-9, or other 1098, 1099, and 5498statements, the following enclosures arepermitted in a statement mailing: (1) acheck, (2) a letter explaining why no checkis enclosed, (3) a statement of the person’saccount reflected on Form 1099, and (4) aletter limited to an explanation of the taxconsequences of the information shown ona recipient statement.

A recipient statement may be perforatedto a check with respect to the accountreported on the recipient statement or to astatement of the recipient’s specificaccount if payments on such account arereflected on the recipient’s statement. Thecheck or account statement to which therecipient statement is perforated mustcontain, in a bold and conspicuous type,the legend “Important Tax ReturnDocument Attached.”

No additional enclosures, such asadvertising, promotional material, or aquarterly or annual report, are permitted.Even a sentence or two on the year-endstatement describing new services offeredby the payer is not permitted. However,logos are permitted on the envelope andon any enclosures.

For a statement mailing, the legend“Important Tax Return DocumentEnclosed” must appear in a bold andconspicuous manner on the outside of theenvelope and on each letter, or check oraccount statement that is not perforated tothe recipient statement. This legend is notrequired on any tax form, tax statement, orpermitted letter of tax consequencesincluded in a statement mailing. Further,you need not pluralize the word“document” in the legend simply becausemore than one recipient statement isenclosed.Note: If you provide recipient statements ina “separate mailing” that contains only

recipient statements, Forms W-8 and W-9,and a letter limited to the explanation ofthe tax consequences of the informationshown on a recipient statement included inthe envelope—you are not required toinclude the legend “Important Tax ReturnDocument Enclosed” on the envelope.

Substitute forms.—You may furnish tothe recipient Copy B of the official form, oryou may use substitute Forms 1099-DIV,1099-INT, 1099-OID, and 1099-PATR ifthey contain the same language as theofficial forms and you comply with theprocedures in Pub. 1179, relating tosubstitute Forms 1099. Applicable boxcaptions and numbers must be clearlyidentified, using the same wording andnumbering as the official form. However,for Form 1099-INT, if your substitute doesnot contain box 3, “Interest on U.S.Savings Bonds and Treas. obligations,”you may omit “not included in box 3” fromthe box 1 caption.

If you are using substitutes, the IRSencourages you to use boxes so that thesubstitute has the appearance of a form.The substitute form must contain theapplicable instructions as on the front andback of Copy B of the official form. SeePub. 1179 for additional requirements. Forinformation about substitute Form1099-MISC for royalties, see Otherpayments, below.Real estate transactions.—You mustfurnish a statement to the transferorcontaining the same information reportedto the IRS on Form 1099-S. You may useCopy B of Form 1099-S or a substituteform that complies with Pub. 1179 andRegulations section 1.6045-4(m). You mayuse a Uniform Settlement Statement (underRESPA) as the written statement if it isconformed by including on the statementthe legend shown on Form 1099-S and bydesignating which information is reportedto the IRS on Form 1099-S. You mayfurnish the statement to the transferor inperson or by mail, but you do not have tomeet the statement mailing requirementsexplained above. Furnish the statement ator after closing but by January 31 of thefollowing year.Other payments.—Statements torecipients for Forms 1098, 1099-A, 1099-B,1099-G, 1099-MISC, 1099-R, 5498, W-2G,1099-DIV only for section 404(k) dividendsreportable under section 6047, or 1099-INTonly for interest reportable under section6041 need not be, but can be, a copy ofthe paper form filed with the IRS. If you donot use a copy of the paper form, allinformation (including box numbers)required to be reported must be titled onthe substitute in substantially the samemanner as on the official form. However, ifyou are reporting a payment as an “etc.”item in box 3 of Form 1099-MISC, “Prizes,awards, etc.,” you may substituteappropriate explanatory language for thebox title. For example, for payments ofaccrued wages to a beneficiary of adeceased employee required to bereported on Form 1099-MISC by Rev. Rul.86-109, you might change the title of box3 to “Beneficiary payments” or somethingsimilar.


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Appropriate instructions to the recipient,similar to those on the official form, mustbe provided to aid in the proper reportingof the items on the recipient’s income taxreturn. For payments reported on Form1099-B, rather than furnish appropriateinstructions with each Form 1099-Bstatement, you may furnish to the recipientone set of instructions for all statementsrequired to be furnished to a recipient in acalendar year.

The statement mailing requirementsexplained earlier do not apply tostatements to recipients for paymentsreported on Forms 1098, 1099-A, 1099-B,1099-G, 1099-MISC, 1099-R, 5498, W-2G,1099-DIV for section 404(k) dividends only,and 1099-INT for interest reportable undersection 6041 only. You may combine thestatements with other reports or financialor commercial notices, or expand them toinclude other information of interest to therecipient. Be sure that all copies of theforms are legible.

Certain “composite” statements arepermitted. See Pub. 1179.Time for furnishing forms orstatements.— Generally, you must provideForms 1098, 1099, and W-2G informationby January 31 of the following year.However, you may issue them earlier insome situations, as provided by theregulations. For example, you may furnishForm 1099-INT to the recipient onredemption of U.S. Savings Bonds at thetime of redemption. Brokers and barterexchanges may furnish Form 1099-Banytime but not later than January 31.

Trustees or issuers of IRAs or SEPsmust provide participants with a statementof the value of the participant’s account byJanuary 31. IRA contribution informationmust be furnished to the participant byMay 31.

For real estate transactions, you mayfurnish the statement to the transferor atclosing or by mail on or before January 31.

Filers of Form 1099-G who report stateor local income tax refunds, credits, oroffsets must furnish the statements torecipients during January of the followingyear.

If the due date falls on a Saturday,Sunday, or legal holiday, the due date isthe next business day.

Extension.—You may request anextension of time to provide thestatements to recipients by sending a letterto IRS-Martinsburg Computing Center,P.O. Box 1359, Martinsburg, WV25401-1359 or to your district director. Theletter must include (a) your name, (b) yourTIN, (c) your address, (d) type of return, (e)reason for delay, and (f) the signature ofthe payer or authorized agent. Yourrequest must be postmarked by the dateon which the statements are due to befurnished to recipients. If your request foran extension is approved, you will begranted an extra 15 days to furnish therecipient statements.I. Corrected and Void Returns.—If areturn has been incorrectly prepared andsubmitted to the IRS, you must file a

complete corrected return as soon aspossible. To determine whether you arerequired to submit corrected returns onmagnetic media, see MagneticMedia/Electronic Reporting, earlier. Allboxes must be completed on theappropriate forms with the correctinformation, not just the boxes needingcorrection. Submit Form 1096 and CopiesA of corrected forms to the appropriateservice center as soon as possible. If youare making corrections on magnetic media,see Pub. 1220.Note: If you fail to file correct informationreturns, you may be subject to a penalty.See Failure To File Correct InformationReturns by the Due Date (Section 6721),on page 2.

Statements to the recipient (etc.)identified as corrected must be provided tothem as soon as possible.

On all Forms 1098, 1099, and 5498, abox is provided for the account number. Ifthe account number was provided on theoriginal return, use this number on thecorrected return to help identify theappropriate incorrect return filed whenmore than one return was filed for aparticular individual. The account numbermay be a checking account number,savings account number, serial number, orany other number assigned to the payeeby the filer that is unique and willdistinguish the specific account. Thisnumber must appear on both the originaland corrected returns to properly identifyand process the correction.

DO NOT CUT or separate the forms thatare two or three to a page. The entire pagemust be submitted.

A Form 1096 must be used to transmitall paper forms including corrections. Donot staple the paper forms to Form 1096.Use a separate Form 1096 for each typeof return being corrected.

CORRECTED box.—Enter an “X” in the“CORRECTED” box on Copy A only whenyou are correcting a form you previouslysubmitted to the IRS. Enter an “X” in the“CORRECTED” box on the copies you giveto the recipient (generally, Copy B) onlywhen you are correcting a form previouslyfurnished to the recipient.

VOID box.—If a completed or partiallycompleted Form 1098, 1099, or 5498 isincorrect and you want to void it, enter an“X” in the “VOID” box at the top of theform. For example, if you make an errorwhile typing or printing a form, you shouldvoid it. The return will then be disregardedduring processing by the IRS. Go to thenext form on the page, or to another page,and enter the correct information; but donot mark the “CORRECTED” box.Caution: An “X” in the “VOID” box will notcorrect a previously filed information return.

The following chart gives step-by-stepinstructions for filing corrected returns forthree of the most frequently made errors.Correction of errors may require thesubmission of more than one return. Besure to read each section thoroughly.Note: Regulations section 301.6724-1(relating to information return penalties)

does not require you to file correctedreturns for missing or incorrect TINs if youmeet the reasonable cause criteria. You aremerely required to include the correct TINon the next original return you are requiredto file. However, if you do not meet thereasonable cause criteria, you should filecorrected returns by August 1 to besubject to a reduced penalty.

In addition, even if you meet thereasonable cause criteria, the IRSencourages you to file corrections forincorrect or missing TINs so that the IRScan update the payees’ records.

Guidelines for Filing CorrectedReturns on Paper FormsError (on OriginalReturn)

How To File the CorrectedReturn on Paper Forms

1. No payee TIN (SSNor EIN) or incorrectpayee TIN, orincorrect name andaddress. This willrequire twoseparatetransactions tomake thecorrection properly.Read and follow allinstructions forboth Transactions1 and 2.

TRANSACTION 1: Identifyincorrect return submitted.A. Form 1096:

1. Prepare a newtransmittal Form 1096.

2. This Form 1096 willbe used to transmityour correctedreturns. Therefore,complete Form 1096showing your correctname, address, andTIN, and in the otherboxes enter onlyinformation about thecorrected returns. Forexample, enter in box3 of Form 1096 onlythe number ofcorrected returnsbeing submitted.

B. Form 1098, 1099, 5498,or W-2G:1. Prepare a new

information return(s).2. Enter an “X” in the

“CORRECTED” box atthe top of the form(s).

3. Enter the payer,recipient, and accountnumber informationexactly as it appearedon the originalincorrect return;HOWEVER, enter “0”(zero) for all moneyamounts.

4. File Form 1096 andCopies A of thereturns with theappropriate servicecenter.

5. Do NOT includecopies of the originalreturn(s) that was filedincorrectly.

TRANSACTION 2: Reportcorrect information.

A. Form 1096:1. Prepare a new

transmittal Form 1096.2. Enter the words “Filed

To Correct TIN, Name,and/or Address” in thebottom margin of theform.

3. Provide all requestedinformation on theform as it applies tothe return(s) preparedin B, below.


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Error (on OriginalReturn)



information return(s).2. Do NOT enter an “X”

in the “CORRECTED”box at the top of theform(s). Submit thenew return(s) asthough it was anoriginal.

3. Include all the correctinformation on theform including thecorrect TIN and nameand address.

4. File Form 1096 andCopies A of thereturns with theappropriate servicecenter. You MUSTNOT use the sameForm 1096 used inTransaction 1.


2. Incorrect moneyamount(s) orincorrect address.(Follow theinstructions underError 1, instead ofthese instructions,if you must correctan address AND aname or TIN.)

A. Form 1096:Follow the instructionsunder Error 1,Transaction 1–A.


information return(s).2. Enter an “X” in the

“CORRECTED” box atthe top of the form(s).

3. Enter the payer,recipient, and accountnumber informationexactly as it appearedon the originalincorrect return;HOWEVER, enter allcorrect moneyamounts in thecorrect boxes as theyshould have appearedon the original return,and enter therecipient’s correctaddress.

4. File Form 1096 andCopies A of thereturns with theappropriate servicecenter.


3. Original return wasfiled using theWRONG type ofreturn. Forexample, a Form1099-DIV was filedwhen a Form1099-INT shouldhave been filed.This will requiretwo separatetransactions tomake thecorrection properly.Read and follow allinstructions forboth Transactions1 and 2.

TRANSACTION 1: Identifyincorrect return submitted.A. Form 1096:

Follow the instructionsunder Error 1,Transaction 1–A.

B. Form 1098, 1099, 5498,or W-2G:Follow the instructionsunder Error 1,Transaction 1–B, usingthe same type of formthat was used initially.

Error (on OriginalReturn)


TRANSACTION 2: Reportcorrect information on thecorrect type of return.A. Form 1096:

Follow the instructionsunder Error 1,Transaction 2–A, exceptenter the words “Filed ToCorrect Document Type”in the bottom margin ofForm 1096.

B. Form 1098, 1099, 5498,or W-2G:Follow the instructionsunder Error 1,Transaction 2–B, usingthe proper type of form.

J. Other Information Returns.—Theincome information you report on thefollowing returns must not be repeated onthe returns discussed in the SpecificInstructions in this publication:

1. Form W-2 reporting wages and otheremployee compensation.

2. Forms 1042-S and 1000 reportingincome.

3. Form 2439 reporting undistributedlong-term capital gains of a regulatedinvestment company.

4. Schedule K-1 of Form 1065 reportingdistributive shares to members of apartnership.

5. Schedule K-1 of Form 1041 reportingdistributions to beneficiaries of trusts orestates.

6. Schedule K-1 of Form 1120Sreporting distributive shares toshareholders of S corporations.

7. Schedule K of Form 1120-IC-DISCreporting actual and constructivedistributions to shareholders and deferredDISC income.

8. Schedule Q of Form 1066 reportingincome from a REMIC to a residual interestholder.K. Payments to Corporations andPartnerships.—Reporting generally is notrequired for payments to corporationsexcept in the case of (1) medical payments(Form 1099-MISC), (2) withheld Federalincome tax or foreign tax, (3) barterexchange transactions (Form 1099-B), (4) substitute payments in lieu of dividendsand tax-exempt interest (Form 1099-MISC),(5) interest or original issue discount paidor accrued to a regular interest holder of aREMIC (Form 1099-INT or 1099-OID), and(6) acquisitions or abandonments ofsecured property (Form 1099-A). Forexample, reporting is not required forpayments of architectural fees tocorporations.

However, reporting generally is requiredfor payments to partnerships. For example,payments of $600 or more made in thecourse of your trade or business to a lawfirm that is a partnership are reportable onForm 1099-MISC.L. Earnings on an IRA or SEP.—Generally, any income with respect to anIRA or SEP, such as interest or dividends,should not be reported on Forms 1099

unless a distribution is made. Distributionsshould be reported on Form 1099-R.

Specific Instructions

If a distribution includes noncash property,show the fair market value of the propertyat the time of payment.

Although, generally, you are not requiredto report payments smaller than theminimum described for each form, youmay prefer, for economy and your ownconvenience, to file Copies A for allpayments. The IRS encourages this.

Form 1098

Use Form 1098, Mortgage InterestStatement, to report mortgage interest(including reportable points, defined later)of $600 or more received by you duringthe year in the course of your trade orbusiness from an individual, including asole proprietor. File a separate Form 1098for each mortgage. The term “interest,” asused in these Form 1098 instructions,includes reportable points unless otherwisespecified.

If an overpayment of interest on anadjustable rate mortgage (ARM) or othermortgage was made in a prior year andyou refund (or credit) such overpayment,you must file Form 1098 to report therefund (or credit) of the overpayment. SeeReimbursement of Overpaid Interestlater.Exceptions.—You need not file Form 1098for interest received from a corporation,partnership, trust, estate, association, orcompany (other than a sole proprietor)even though an individual is a coborrowerand all the trustees, beneficiaries, partners,members, or shareholders of the payer ofrecord are individuals.Mortgage Defined.—An obligationincurred after 1987 is a mortgage if realproperty that is located inside or outsidethe United States secures all or part of theobligation, even though the interestrecipient classifies the obligation as otherthan a mortgage, for example, as acommercial loan.

An obligation incurred after 1984 butbefore 1988 is a mortgage only if securedprimarily by real property.

An obligation in existence on December31, 1984, is not a mortgage if, at the timethe obligation was incurred, the interestrecipient reasonably classified theobligation as other than a mortgage, realproperty loan, real estate loan, or othersimilar type of obligation. For example, ifan obligation incurred in 1983 was securedby real property, but the interest recipientreasonably classified the obligation as acommercial loan because the proceedswere used to finance the borrower’sbusiness, the obligation is not considereda mortgage for purposes of this reportingrequirement. However, if over half of theobligations in a class established by theinterest recipient are primarily secured byreal property, it is not reasonable to


Page 9


classify those obligations as other thanmortgages for purposes of this reportingrequirement.

Real property includes a manufacturedhome with a minimum living space of 400square feet and a minimum width of morethan 102 inches of a kind customarily usedat a fixed location, including certain mobilehomes. See section 25(e)(10).

Lines of credit and credit cardobligations.—Interest (other than points)received on any mortgage that is in theform of a line of credit or credit cardobligation is reportable regardless of howyou classified the obligation. A borrowerincurs a line of credit or credit cardobligation when the borrower first has theright to borrow against the line of credit orcredit card, whether or not the borroweractually borrows an amount at that time.Price Level Adjusted Mortgage(PLAM).—For a PLAM issued after January8, 1990, reportable interest on Form 1098includes payments of accrued originalissue discount (OID). The part of eachpayment treated as OID is determinedunder Temporary Regulations section1.1275-6T.Who Must File.—File this form if you areengaged in a trade or business and, in thecourse of such trade or business, youreceive from an individual $600 or more ofmortgage interest on any one mortgageduring the calendar year. You are notrequired to file this form if the interest isnot received in the course of your trade orbusiness. For example, you hold themortgage on your former personalresidence. The buyer makes mortgagepayments to you. You are not required tofile Form 1098.

You must file a separate Form 1098 foreach mortgage on which you receivedinterest of $600 or more. If you receivedless than $600 of interest on a mortgage,no reporting is required on that mortgage.

If you receive $600 or more of mortgageinterest in the course of your trade orbusiness, you are subject to therequirement to file Form 1098, even if youare not in the business of lending money.For example, if you are a real estatedeveloper and you provide financing to anindividual to buy a home in yoursubdivision, and that home is security forthe financing, you are subject to thisreporting requirement. However, if you area physician not engaged in any otherbusiness and you lend money to anindividual to buy your home, you are notsubject to this reporting requirementbecause you did not receive the interest inthe course of your trade or business as aphysician.

A governmental unit (or any subsidiaryagency) receiving mortgage interest froman individual of $600 or more must file thisform.

Cooperative housing corporation.—Acooperative housing corporation is aninterest recipient and must file Form 1098to report an amount received from itstenant-stockholders that represents thetenant-stockholders’ proportionate share ofinterest described in section 216(a)(2). This

rule applies only to tenant-stockholderswho are individuals and from whom thecooperative has received at least $600 ofinterest during the year.

Collection agents.—Generally, if youreceive reportable interest payments (otherthan points) on behalf of someone else andyou are the first person to receive theinterest, for example, if you are a servicingbank collecting payments for a lender, youmust file this form and enter your name,address, and TIN in the recipient entityarea. You must file this form even thoughyou do not include the interest received inyour income but you merely transfer it toanother person. If you wish, you may enterthe name of the person for whom youcollected the interest in box 4. The personfor whom you are receiving the interestneed not file Form 1098.

However, there is an exception to thisrule for any period that (1) the first personto receive or collect the interest does nothave the information needed to report onForm 1098, and (2) the person for whomthe interest is received or collected wouldreceive the interest in its trade or businessif the interest were paid directly to suchperson. If (1) and (2) apply, the person onwhose behalf the interest is received orcollected is required to report on Form1098. If interest is received or collected onbehalf of another person other than anindividual, such person is presumed toreceive the interest in a trade or business.

Foreign interest recipient.—If you arenot a U.S. person, you must file Form 1098if the interest is received in the UnitedStates. A U.S. person is a citizen orresident of the United States, a domesticpartnership or corporation, or a nonforeignestate or trust. If the interest is receivedoutside the United States, you must fileForm 1098 if (1) you are a controlledforeign corporation, or (2) at least 50% ofyour gross income from all sources for the3-year period ending with the close of thetax year preceding the receipt of interest(or for such part of the period as you werein existence) was effectively connectedwith the conduct of a trade or business inthe United States.Reimbursement of Overpaid Interest.—You must report any reimbursement(refund or credit) of prior yearoverpayments of interest if thereimbursement relates to interest that wasrequired to be reported on Form 1098 byany interest recipient. The reimbursementmust be reported on Form 1098 for theyear in which the reimbursement is made.No change should be made to the prioryear Form 1098 because of thisreimbursement. Report the totalreimbursement even if it is foroverpayments made in more than 1 year.

Only the person who makes thereimbursement is required to report it onForm 1098. For example, if you wererequired to report interest on Form 1098 inthe year an overpayment was made, youare required to report any reimbursementon Form 1098 for the year in which theoverpayment is refunded or credited.Similarly, if you bought a mortgage onwhich interest was overpaid in a prior year,

you made a reimbursement of the overpaidinterest, and the previous mortgage holderwas required to report mortgage intereston Form 1098 in the prior year, you mustfile Form 1098 to report the reimbursementbecause you are the one making thereimbursement.

If you reimburse interest in the sameyear it is overpaid, do not report theoverpayment on Form 1098 as interestreceived during the year or as areimbursement of overpaid interest. Forexample, if the borrower paid $5,000 andyou reimbursed $500 both in 1993, $4,500should appear in box 1 as interest paid bythe borrower. The $500 reimbursementmust not appear in box 3.

Example.—In 1991, the payer/borrowerpaid mortgage interest to you of $5,000 onan adjustable rate mortgage (ARM). Youreported $5,000 on Form 1098 for 1991 asmortgage interest received from thepayer/borrower. In 1993, you determinedthat interest due on the ARM for 1991 was$4,500; the payer/borrower had overpaid$500. You refunded the $500 overpaymentto the payer/borrower in 1993. You mustreport the $500 overpayment in box 3 onthe 1993 Form 1098. No change to the1991 Form 1098 is required. If you creditedthe $500 to 1993 payments due from thepayer/borrower, $500 is shown in box 3and the total interest received from thepayer/borrower for 1993 (including the$500 credit) is shown in box 1.

Interest on reimbursement.—Afinancial institution that pays interest of$10 or more on the reimbursement mustreport that interest on Form 1099-INT,Interest Income. Do not include suchinterest on Form 1098.Nonresident Alien Interest Payer.—Youmust file Form 1098 to report interest paidby a nonresident alien only if all or part ofthe security for the mortgage is realproperty located in the United States.Payer of Record.—The payer of record isthe individual carried on your books andrecords as the principal borrower. If yourbooks and records do not indicate whichborrower is the principal borrower, youmust designate one.

If you permit a subsequent purchaser ofthe property to assume the loan withoutreleasing the first purchaser from personalliability, the subsequent purchaser is thepayer of record. Such subsequentpurchaser’s name, address, and TIN mustappear on Form 1098.Multiple Borrowers.—Even though theremay be more than one borrower on themortgage, you are required to prepareForm 1098 only for the payer of record,and only if such payer of record is anindividual, showing the total interestreceived on the mortgage. Even if anindividual is a coborrower, no Form 1098 isrequired unless the payer of record is alsoan individual.Payments by Third Party.—Report allinterest received on the mortgage asreceived from the borrower, except asexplained under Seller Payments, below.For example, if the borrower’s mothermakes payments on the mortgage, the


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interest received from the mother isreportable on Form 1098 as received fromthe borrower.

However, do not report mortgageinterest received from any governmentalunit (or any subsidiary agency). Forexample, do not report any interestreceived as housing assistance paymentsfrom the Department of Housing andUrban Development (HUD) on mortgagesinsured under section 235 of the NationalHousing Act.Seller Payments.—Do not report in box 1of Form 1098 any interest paid by a selleron a purchaser’s-borrower’s mortgage,such as on a “buy-down” mortgage. Forexample, if a real estate developerdeposits an amount in escrow and tellsyou to draw on that escrow account to payinterest on the borrower’s mortgage, donot report in box 1 the interest receivedfrom that escrow account. As anotherexample, do not report in box 1 any lumpsum paid by a real estate developer to payinterest on a purchaser’s-borrower’smortgage. However, if you wish, you mayuse box 4 to report to the payer of recordany interest paid by the seller.Rule of 78s Method of Accounting.—Ifyou are permitted by Rev. Proc. 83-40,1983-1 C.B. 774, or any other revenueprocedure, to use the Rule of 78s methodto calculate interest earned with respect toa transaction, you may report interestearned under the Rule of 78s method onthat transaction as interest received fromthe borrower in a calendar year. In thiscase, you must notify borrowers that theRule of 78s method was used to calculateinterest received and that the borrowersmay not deduct the amount reportedunless the borrowers are also properlyusing the Rule of 78s method to determineinterest deductions. The notification mustalso state that the Rule of 78s method maybe used only in the case of a self-amortizing consumer loan that requireslevel payments, at regular intervals (at leastannually), over a period not in excess of 5years (with no balloon payment at the endof the loan term), and only when the loanagreement provides for use of the Rule of78s method to determine interest earned(see Rev. Proc. 83-40 and Rev. Rul. 83-84,1983-1 C.B. 97). The notice must befurnished to the payer of record on or withthe statement of the interest received.Points.—You must report certain pointspaid for the purchase of a principalresidence on Form 1098. You may rely ona signed written statement of the borrowerthat states whether the proceeds of theloan are for the purchase of the borrower’sprincipal residence. You may choose oneof two options for reporting the points,discussed later.

Report the total points on Form 1098 forthe year of closing regardless of theaccounting method you use to report thepoints as income for Federal income taxpurposes.

The following points are not reportableon Form 1098: (1) points paid for loans toimprove a principal residence, (2) pointspaid for loans to purchase or improve a

second home, vacation, investment, ortrade or business property, (3) points paidfor any refinancing, home equity, or line ofcredit loan, even if secured by the principalresidence, (4) points paid in excess of theamount generally charged in the area, e.g.,the payment of excess points to “buydown” the cost of money, and (5) pointspaid to acquire a principal residence to theextent the points are allocable to anamount of principal in excess of $1 million.

Lender of record.—The lender of record(lender) or a designee is required to reportpoints on Form 1098. Either the lender orthe designee must report the total pointspaid for the loan. The lender of record isthe person named as the lender in the loandocuments and whose right to receivepayments is secured by the borrower’sprincipal residence at the time the loan ismade.

By a designation agreement, the lendermay transfer responsibility for reportingpoints to someone involved in the originalloan transaction (e.g., a mortgage broker),or to a subsequent purchaser of the loan.

The agreement must be in writing,identify the mortgage(s) for which thedesignee is to report, and be signed by thelender and the designee. If you use Option1 to report points, discussed below, thedesignation agreement must contain thedesignator’s representation that it did notlend the amount to be treated as paiddirectly by the borrower for this purpose aspart of the overall transaction. Theagreement need not be sent to the IRS butmust be retained by the lender for 4 years.

Option 1—Safe Harbor.—As a matter ofadministrative practice, the IRS treats thefollowing points as deductible by theborrower (subject to certain limits). UnderOption 1, report on Form 1098 points thatmeet all the following conditions:

1. They are designated on the UniformSettlement Statement (Form HUD-1) as“loan origination fees” (including amountsfor VA and FHA loans), “loan discount,”“discount points,” or “points.”

2. They are computed as a percentageof the stated principal loan amount.

3. They are charged under anestablished business practice of chargingpoints for loans for the acquisition ofpersonal residences in the area where theresidence is located, and the amount doesnot exceed the amount generally chargedin that area. Therefore, amountsdesignated as points but paid in lieu ofitems ordinarily separately stated on thesettlement sheet, such as appraisal fees,inspection fees, title fees, attorney fees,property taxes, and mortgage insurancepremiums, are not reportable as points.

4. They are paid for the acquisition of aprincipal residence, and the loan issecured by that residence.

5. They are paid directly by the taxpayer.That is, the taxpayer must provide anamount at least equal to the points. Theamount may include a down payment,escrow deposit, earnest money applied atclosing, and other funds actually paid overat closing. However, the amount cannot

come from funds borrowed for thispurpose as part of the overall transaction.

For more information on Option 1, seeRev. Procs. 92-11, 1992-1 C.B. 662, and92-12, 1992-1 C.B. 663.

Option 2.—If you prefer, you maychoose to report points that meet all thefollowing conditions:

1. The points are interest, i.e., for theuse or forbearance of money. Thus, do notreport points that are paid for services.

2. The points conform to an establishedbusiness practice of charging points in thearea where the loan was issued, and thepoints charged do not exceed the numberof points generally charged in that area.

3. The points are paid directly by theborrower. For purposes of reporting underOption 2, an amount charged to theborrower as points for the acquisition of aprincipal residence is treated as paiddirectly by the borrower.

4. The points are for the purchase of theborrower’s principal residence, whichsecures the loan.

For more information on Option 2, seeNotice 90-70, 1990-2 C.B. 351.Prepaid Interest.—Report prepaid interest(other than points) only in the year in whichit properly accrues. For example, interestreceived on December 20, 1993, thataccrues by December 31 but is not dueuntil February 1, 1994, is reportable on the1993 Form 1098.

Exception.—Interest received during thecurrent year that will properly accrue in fullby January 15 of the following year may beconsidered received in the current year, atyour option, and is reportable on Form1098 for the current year. However, if anypart of an interest payment accrues afterJanuary 15, then only the amount thatproperly accrues by December 31 of thecurrent year is reportable on Form 1098 forthe current year. For example, if youreceive a payment of interest that accruesfor the period December 20 throughJanuary 20, you cannot report any of theinterest that accrues after December 31 forthe current year. You must report theinterest that accrues after December 31 onForm 1098 for the following year.Statements to Payers of Record.—Forinformation about the requirement tofurnish a statement to the payer of record,see part H under General Instructions,earlier.Recipient’s/Lender’s Name and AddressBox.—Enter the name and address of thefiler of Form 1098. Use this same nameand address on Form 1096.Payer’s/Borrower’s Name and AddressBox.—Enter the name and address of theperson who paid the interest (payer ofrecord).Note: Be careful to enter the recipient’sand payer’s information in the properboxes.Box 1.—Enter the interest (not includingpoints) received on the mortgage fromborrowers during the calendar year.Include interest on a mortgage, a homeequity loan, or a line of credit or credit


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card loan secured by real property. Do notinclude government subsidy payments,seller payments, or prepaid interest thatdoes not meet the exception explainedearlier under Prepaid Interest. Interestincludes prepayment penalties and latecharges unless the late charges are for aspecific service provided with respect tothe mortgage.Box 2.—Enter points paid directly on thepurchase of a principal residence. For anexplanation of reportable points, seePoints, earlier.Box 3.—Enter the total refund or credit ofa prior year(s) overpayment of interest. SeeReimbursement of Overpaid Interestearlier.Box 4.—Enter any other item you wish toreport to the payer, such as real estatetaxes, insurance, or if you are a collectionagent, the name of the person for whomyou collected the interest. This box isoptional and is provided only for yourconvenience. You do not have to report tothe IRS any information provided in thisbox. You are not required to report theaverage balance of the mortgage.

Form 1099-A

File Form 1099-A, Acquisition orAbandonment of Secured Property, foreach borrower if you lend money inconnection with your trade or businessand, in full or partial satisfaction of thedebt, you acquire an interest in propertythat is security for the debt, or you havereason to know that the property has beenabandoned. You need not be in thebusiness of lending money to be subject tothis reporting requirement.Property.—Property means real property(such as a personal residence), intangibleproperty, or tangible personal property heldfor investment or used in a trade orbusiness. No reporting is required for aloan made to an individual and secured byan interest in tangible personal propertythat is neither held for investment nor usedin a trade or business. However, you mustfile Form 1099-A if the personal property isheld for both personal use and either foruse in a trade or business or forinvestment.

No reporting is required if the propertysecuring the loan is located outside theUnited States and the borrower hasfurnished the lender a statement, underpenalties of perjury, that the borrower is anexempt foreign person (unless the lenderknows that the statement is false).Who Must File.—In addition to the generalrule specified above, the following rulesapply.

If there are multiple owners ofundivided interests in a single loan, suchas is the case in pools, fixed investmenttrusts, or other similar arrangements, thetrustee, record owner, or person acting ina similar capacity must file Form 1099-Aon behalf of all the owners of beneficialinterests or participations. In this case,only one form for each borrower must befiled on behalf of all owners with respect to

the loan. Similarly, in the case of bondissues, only the trustee or similar person isrequired to report.

A governmental unit, or any of itssubsidiary agencies, that lends moneysecured by property must file Form1099-A.

A subsequent holder of a loan istreated as the lender for purposes of thereporting requirement for events occurringafter the loan is transferred to the newholder.

If more than one person lends moneysecured by property and one lenderforecloses or otherwise acquires aninterest in the property and the sale orother acquisition terminates, reduces, orotherwise impairs the other lenders’security interests in the property, the otherlenders must file Form 1099-A for each oftheir loans. For example, if a first trustholder forecloses on a building, and thesecond trust holder knows or has reasonto know of such foreclosure, the secondtrust holder must file Form 1099-A for thesecond trust even though no part of thesecond trust was satisfied by the proceedsof the foreclosure sale.Abandonment.—An abandonment occurswhen the objective facts andcircumstances indicate that the borrowerintended to and has permanentlydiscarded the property from use. You have“reason to know” of an abandonmentbased on all the facts and circumstancesconcerning the status of the property. Youwill be deemed to know all the informationthat would have been discovered througha reasonable inquiry when, in the ordinarycourse of business, the lender becomesaware or should become aware ofcircumstances indicating that the propertyhas been abandoned. If you expect tocommence a foreclosure, execution, orsimilar sale within 3 months of the dateyou had reason to know that the propertywas abandoned, reporting is required as ofthe date you acquire an interest in theproperty or a third party purchases theproperty at such sale. If you expect to butdo not commence such action within 3months, the reporting requirement arises atthe end of the 3-month period.Statements to Borrowers.—Forinformation about the requirement offurnishing a statement to the borrower, seepart H under General Instructions, earlier.Box 1.—Enter the date of your acquisitionof the secured property or the date youfirst knew or had reason to know that theproperty was abandoned. An interest in theproperty generally is acquired on the earlierof the date title is transferred to the lenderor the date possession and the burdensand benefits of ownership are transferredto the lender. If an objection period isprovided by law, use the date the objectionperiod expires. If you purchase theproperty at a sale held to satisfy the debt,such as at a foreclosure or execution sale,use the later of the date of sale or the datethe borrower’s right of redemption expires.Please use the following format to indicatethe date: MMDDYY. For example, forJanuary 9, 1993, enter 010993.

For an abandonment, enter the date youknew or had reason to know that theproperty was abandoned unless youexpect to commence a foreclosure,execution, or similar action within 3months, as explained earlier. If a thirdparty purchases the property at aforeclosure, execution, or similar sale, theproperty is treated as abandoned, and youhave reason to know of its abandonmenton the date of sale.Box 2.—Enter the balance of the debtoutstanding at the time the interest in theproperty was acquired or on the date youfirst knew or had reason to know that theproperty was abandoned. Include onlyunpaid principal on the original debt. Donot include accrued interest or foreclosurecosts.Box 3.—For a foreclosure, execution, orsimilar sale, enter the gross foreclosure bidprice accepted at the sale. If there was nosuch sale, leave box 3 blank.Box 4.—For recourse loans only, if anabandonment or a voluntary conveyance tothe lender in lieu of foreclosure occurs,enter the appraised value of the property.For a foreclosure, execution, or similarsale, you are not required to enter theappraised value.Box 5.—Enter an “X” in the applicable boxto indicate whether the borrower waspersonally liable for repayment of the debtat the time the debt was created or, ifmodified, at the time of the lastmodification.Box 6.—Enter a general description of theproperty. For real property, generally youmust enter the address of the property, or,if the address does not sufficiently identifythe property, enter the section, lot, andblock. For personal property, enter theapplicable type, make, and model. Forexample, describe a car as “Car—1993Buick Regal.” Use a category such as“Office Equipment” to describe more thanone piece of personal property, such as sixdesks and seven typewriters. Enter “CCC”for crops forfeited on Commodity CreditCorporation loans.

Form 1099-B

Any person, including a governmental unitand any subsidiary agency, doing businessas a broker or barter exchange must fileForm 1099-B, Proceeds From Broker andBarter Exchange Transactions, for eachperson (a) for whom the broker has sold(including short sales) stocks, bonds,commodities, regulated futures contracts,foreign currency contracts, forwardcontracts, debt instruments, etc., or(b) who exchanged property or servicesthrough the barter exchange.Note: Report real estate transactions onForm 1099-S, discussed later.

BrokersThe term broker means a person who, inthe ordinary course of a trade or business,stands ready to effect sales to be made byothers. A corporation is a broker if itregularly stands ready to redeem its stock


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or retire its debt. However, if there are nofacts that indicate otherwise, a corporationthat purchases odd-lot shares from itsstockholders is not a broker. If youmanage a farm for someone else, you arenot considered a broker.

For a sale of securities through a “cashon delivery” or similar account, only thebroker that receives the gross proceedsfrom the sale against delivery of thesecurities sold is required to report thesale. However, if such broker’s customer isa “second-party broker” that is an exemptrecipient, only the second-party broker isrequired to report the sale.

If the proceeds of a sale are paid inconvertible foreign currency, the amount tobe reported must be converted into U.S.dollars. You may use the exchange rate onthe sales date or the exchange rate on thelast business day of the reporting period inwhich the sale occurs.

Brokers must report each transaction(other than regulated futures or foreigncurrency contracts) on a separate Form1099-B. Transactions involving regulatedfutures or foreign currency contracts are tobe reported on an aggregate basis.

To report substitute payments in lieu ofdividends and tax-exempt interest, asrequired by section 6045(d), do not useForm 1099-B. See Box 8 under Form1099-MISC, later.

Form 8308, Report of a Sale orExchange of Certain Partnership Interests,does not have to be filed if Form 1099-B isrequired for the transfer of the partnershipinterest.

No return is required by brokers for:1. Sales by exempt recipients, including

corporations, charitable organizations,individual retirement plans, the UnitedStates, a state and political subdivisions.

2. Sales initiated by dealers in securitiesand financial institutions.

3. Sales by certain custodians andtrustees.

4. Sales at issue price of interests incertain regulated investment companies.

5. Obligor payments on:a. Nontransferable obligations, such as

savings bonds or CDs.b. Obligations for which gross proceeds

are reported on other Forms 1099, such asstripped coupons issued prior to July 1,1982.

c. Retirement of short-term obligationswith original issue discount (reported onForm 1099-INT). However, Form 1099-B isrequired for the retirement of short-termstate obligations having no original issuediscount.

d. Callable demand obligations that haveno premium or discount.

6. Sales of foreign currency unless undera forward or regulated futures contract thatrequires delivery of foreign currency.

7. Sales of fractional shares of stock ifgross proceeds are less than $20.

8. Retirements of book-entry orregistered form obligations if no interimtransfers have occurred.

9. Exempt foreign persons.10. Sales of Commodity Credit

Corporation certificates.11. Spot or forward sales of agricultural

commodities. Agricultural commoditiesinclude grain, feed, livestock, meat, oilseed, timber, or fiber. A spot sale is a salethat results in almost immediate delivery ofa commodity. A forward sale is a saleunder a forward contract.

However, sales of agriculturalcommodities under a regulated futurescontract, sales of derivative interests inagricultural commodities, and sales ofreceipts for agricultural commoditiesissued by a designated warehouse arereportable. A designated warehouse is awarehouse, depository, or other similarentity designated by a commodityexchange in which or out of which aparticular type of agricultural commodity isdeliverable to satisfy a regulated futurescontract. Sales of warehouse receiptsissued by any other warehouse are notreportable.

12. Excepted sales designated in arevenue ruling or revenue procedure. Thesale of a precious metal (gold, silver,platinum, or palladium) in any form thatmay be used to satisfy a CommodityFutures Trading Commission(CFTC)-approved regulated futurescontract (RFC) is an excepted sale if thequantity, by weight or by number of items,is less than the minimum required tosatisfy a CFTC-approved RFC. A sale of aprecious metal in any form that cannot beused to satisfy a CFTC-approved RFC isan excepted sale.

For example, Form 1099-B is notrequired to be filed for the sale of a singlegold coin in the form and qualitydeliverable in satisfaction of aCFTC-approved contract since all CFTCcontracts for gold coins currently call fordelivery of at least 25 coins.

Sales of precious metals for a singlecustomer during a 24-hour period must beaggregated and treated as a single sale todetermine if this exception applies. Thisexception does not apply if the brokerknows or has reason to know that acustomer, either alone or with a relatedperson, is engaging in sales to avoidinformation reporting.

Barter ExchangesThe term barter exchange means anyperson with members or clients whocontract either with each other or withsuch person to trade or barter property orservices either directly or through suchperson. The term does not includearrangements that provide solely for theinformal exchange of similar services on anoncommercial basis. Persons who are nota barter exchange but who trade servicesdo not file Form 1099-B. However, theymay be required to file Form 1099-MISC.

Barter exchanges must report eachtransaction involving noncorporatemembers or clients of a barter exchangeon a separate Form 1099-B. Transactionsinvolving corporate members or clients of a

barter exchange may be reported on anaggregate basis.

In the recipient area of the forms, enterinformation about the member or clientthat provided the property or services inthe exchange.

No return is required by barterexchanges for:

1. Exchanges through a barter exchangehaving less than 100 transactions duringthe calendar year.

2. Exempt foreign persons.

Broker and Barter ExchangesStatements to Recipients.—Forinformation about the requirement tofurnish a statement to the proceedsrecipient, see part H under GeneralInstructions, earlier.2nd TIN Not.—You may enter an “X” inthis box if you were notified by the IRStwice within 3 calendar years that thepayee provided an incorrect taxpayeridentification number (TIN). If you mark thisbox, you will comply with a safe harbordue diligence requirement of TemporaryRegulations section 35a.9999-3, Q/A-89,and the IRS will not send you any furthernotices about this account. Also seeRegulations section 301.6724-1(g).Box 1a.—For broker transactions, enterthe trade date of the sale or exchange. Forbarter exchanges, enter the date that cash,property, a credit, or scrip is actually orconstructively received. Please use thefollowing format to indicate the date:MMDDYY. For example, for January 9,1993, enter 010993. For aggregatereporting, no entry is required.Box 1b.—For transactional reporting bybrokers, enter the CUSIP (Committee onUniform Security Identification Procedures)number of the obligation.Box 2.—Enter the gross proceeds fromany disposition of securities (includingshort sales), commodities, or forwardcontracts. To determine gross proceeds,you may take into account commissionsand option premiums if this treatment isconsistent with your books. You may nottake into account state and local transfertaxes. Check the applicable box to indicatewhich amount has been reported to theIRS. Do not include amounts shown inboxes 6 through 9. Any accrued intereston bonds sold between payment dates (oron a payment date) should not be includedin this box. Instead, report this accruedinterest on Form 1099-INT. A loss from aclosing transaction on a forward contractmust be shown as a negative amount byenclosing it in parentheses.Box 3.—Enter the gross amounts receivedby a member or client of a barterexchange for goods or services. Thisincludes cash received, property orservices received, a credit on your books,or scrip issued. Do not report negativeamounts.Box 4.—Enter backup withholding. Forexample, persons who have not furnishedtheir TIN to you in the manner required aresubject to withholding at a 31% rate on


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certain amounts required to be reported onthis form.Box 5.—For broker transactions, enter abrief description of the disposition item,e.g., 100 shares of XYZ Corp. stock. Ifnecessary, abbreviate the description sothat it fits within box 5. For regulatedfutures contracts and forward contracts,enter “RFC” or other appropriatedescription and any amount subject tobackup withholding, under TemporaryRegulations section 35a.9999-3, Q/A-23.Note: The amount withheld in thesesituations is to be included in box 4.

For bartering transactions, show theservices or property provided.Box 6.—Enter the profit or (loss) realizedby the customer on closed regulatedfutures or foreign currency contracts in1993. For more information on reportingforeign currency contracts, see TemporaryRegulations section 35a.9999-3, Q/A-26.Box 7.—Enter the unrealized profit or (loss)on open regulated futures or foreigncurrency contracts at the end of 1992.Box 8.—Enter the unrealized profit or (loss)on open regulated futures or foreigncurrency contracts as of December 31,1993.Box 9.—Enter the aggregate profit or (loss)for the year from regulated futures orforeign currency contracts. Use boxes 6, 7,and 8 to figure the aggregate profit or(loss).

Form 1099-DIV

File Form 1099-DIV, Dividends andDistributions, for each person (a) to whomyou have paid gross dividends and otherdistributions on stock (box 1a) of $10 ormore, (b) for whom you have withheld andpaid any foreign tax on dividends andother distributions on stock if the recipientcan claim credit for the tax on his or herincome tax return, (c) for whom you havewithheld any Federal income tax under thebackup withholding rules, or (d) to whomyou paid $600 or more as part of aliquidation.Section 404(k) Dividend.—Report on Form1099-DIV dividends distributed undersection 404(k) on stock held by anemployee stock ownership plan (ESOP) ora tax credit ESOP. However, if a section404(k) distribution is made in the sameyear as a total distribution, the entireamount should be reported as an amountincludible in income on Form 1099-R.Exceptions.—You are not required to fileForm 1099-DIV for payments made tocertain payees including a corporation, atax-exempt organization, an individualretirement arrangement (IRA), a U.S.agency, a state, the District of Columbia, aU.S. possession, or a registered securitiesor commodities dealer.Dividends.—If you make a payment thatmay be a dividend, but you are unable todetermine whether any part of the paymentis a dividend by the time you must fileForm 1099-DIV, the entire payment mustbe reported as a dividend. See regulations

under section 6042 for a definition ofdividends.Note: Certain distributions commonlyreferred to as “dividends” are actuallyinterest and are to be reported on Form1099-INT. These include so-called“dividends” on deposit or on shareaccounts in cooperative banks, creditunions, domestic building and loanassociations, domestic and Federal savingsand loan associations, and mutual savingsbanks.

An exempt-interest dividend from aregulated investment company retains itstax-exempt status and is not reported onForm 1099-DIV or 1099-INT.Substitute Payments in Lieu ofDividends.—For payments received by abroker on behalf of a customer in lieu ofdividends as a result of the transfer of acustomer’s securities for use in a shortsale, see Box 8 under Form 1099-MISC,later.RICs.—If a regulated investment company(RIC) declares a dividend in October,November, or December payable toshareholders of record on a specified datein such a month, the dividends are treatedas paid by the RIC and received by theshareholders on December 31 of such yearas long as the dividends are actually paidby the RIC during January of the followingyear. Such dividends should be reportedon Form 1099-DIV for the year precedingthe January they are actually paid. Seesection 852(b)(7).Restricted Stock.—For information aboutreporting dividends on restricted stock, seeRev. Procs. 80-11, 1980-1 C.B. 616, and83-38, 1983-1 C.B. 773, and Rev. Rul.83-22, 1983-1 C.B. 17.Statements to Recipients.—For anexplanation of the requirement to furnishan official form to recipients in person orby statement mailing, see part H underGeneral Instructions, earlier. Also seePub. 1179.2nd TIN Not.—You may enter an “X” inthis box if you were notified by the IRStwice within 3 calendar years that thepayee provided an incorrect taxpayeridentification number (TIN). If you mark thisbox, you will comply with a safe harbordue diligence requirement of TemporaryRegulations section 35a.9999-3, Q/A-89,and the IRS will not send you any furthernotices about this account. Also seeRegulations section 301.6724-1(g).Box 1a.—Enter gross dividends, includingthose from money market funds, and otherdistributions on stock. Include reinvesteddividends as gross dividends. Also, includeamounts shown in boxes 1b, 1c, 1d, and1e. Do not include in box 1a amountsreported in boxes 5 and 6.Box 1b.—Enter ordinary dividends. Alsoinclude this amount in box 1a.Box 1c.—Enter capital gain distributions.Also include this amount in box 1a.Box 1d.—Enter nontaxable distributions, ifdeterminable. Also include this amount inbox 1a. (File Form 5452, Corporate Reportof Nondividend Distributions, if you paynontaxable distributions to shareholders.)

Box 1e.—Enter the stockholder’s pro ratashare of certain amounts deductible by anonpublicly offered regulated investmentcompany in computing its taxable income.This amount is includible in thestockholder’s gross income under section67(c) and must also be included in box 1a.Box 2.—Enter backup withholding. Forexample, persons who have not furnishedtheir TIN to you in the manner required aresubject to withholding at a 31% rate oncertain dividend payments reported on thisform.Box 3.—Enter any foreign tax withheld andpaid on dividends and other distributionson stock if the recipient can claim creditfor the tax on his or her income tax return.Report this amount in U.S. dollars.Box 4.—Enter the name of the foreigncountry or U.S. possession to which thewithheld tax applies.Note: Boxes 5 and 6 apply only tocorporations in partial or completeliquidation.Box 5.—Enter cash distributed as part of aliquidation. Do not include this amount inbox 1a.Box 6.—Enter noncash distributions madeas part of a liquidation. Show the fairmarket value as of the date of distribution.Do not include this amount in box 1a.

S CorporationsBox 1a.—Report as dividends on Form1099-DIV only distributions made during1993 out of accumulated earnings andprofits. See section 1368 for moreinformation.

Form 1099-G

File Form 1099-G, Certain GovernmentPayments, if you have made payments asa unit of a Federal, state, or localgovernment.Statements to Recipients.—Furnish acopy of Form 1099-G or a statement toeach recipient, except as explained belowunder Box 2. Also see part H underGeneral Instructions, earlier.Box 1.—Enter payments of $10 or more inunemployment compensation includingRailroad Retirement Board payments forunemployment.Box 2.—Enter refunds, credits, or offsetsof state or local income tax of $10 ormore you made to recipients. If recipientsdeducted the tax paid to a state or localgovernment on their Federal income taxreturns, any refunds, credits, or offsets,may be taxable to them. If you candetermine that the recipient did not claimitemized deductions on the recipient’sFederal income tax return for the tax yeargiving rise to the refund, credit, or offset,you are not required to furnish a copy ofForm 1099-G or a statement to therecipient. However, you must file Form1099-G with the IRS in all cases.

A tax on dividends, a tax on net gainsfrom the sale or exchange of a capitalasset, and a tax on the net taxable incomeof an unincorporated business are taxes on


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gain or profit rather than on gross receipts.Therefore, they are income taxes, and anyrefund, credit, or offset of $10 or more ofthese taxes is reportable on Form 1099-G.In the case of the dividends tax and thecapital gains tax, if you determine that therecipient did not itemize deductions, asexplained above, you are not required tofurnish a statement to the recipient.However, in the case of the tax onunincorporated businesses, you mustfurnish a statement to the recipient in allcases, as this is a tax that appliesexclusively to income from a trade orbusiness. See the instructions for box 8and Rev. Rul. 86-140, 1986-2 C.B. 195.

If you pay interest of $600 or more onthe refund, you must file Form 1099-INTand furnish a statement to the recipient.For interest payments of less than $600, ifyou wish you may enter the amount withan appropriate designation such as“Interest Income” in the blank box on thestatement to the recipient.Box 3.—No entry is required in box 3 if therefund, credit, or offset is for the 1992 taxyear. If it is for any other tax year, enterthe year for which the refund, credit, oroffset was made in this box. Also, if therefunds, credits, or offsets are for morethan 1 tax year, report the amount for eachyear on a separate Form 1099-G. Use theformat “YYYY” to make the entry in thisbox. For example, enter 1991, not ’91.Box 4.—Enter backup withholding. Forexample, persons who have not furnishedtheir TIN to you become subject towithholding at a 31% rate on paymentsrequired to be reported in box 6 or 7 onthis form.Box 5.—Enter any amount that was owedto the Federal Government and that hasbeen declared uncollectible if the amountexceeds $600. Include in the amount youreport the principal amount owed on thedebt, administrative costs, and interest.

A Federal agency must reportforgiveness of indebtedness when theagency determines that the debt is notcollectible and no further efforts to collectthe debt will be made or a formalcompromise agreement has been enteredinto. The agency need not wait until thestatute of limitations has expired to declarea debt uncollectible.

Report the difference between theoutstanding balance of the debt and theamount accepted as payment in full if adebt is compromised because (1) thedebtor cannot pay the debt within areasonable time or refuses to pay the debtin full and the Government cannot enforcecollection in full within a reasonable time,or (2) the cost of collecting the claim doesnot justify the enforced collection of the fullamount. However, if a debt iscompromised because there is real doubtof the Government’s ability to prove itscase in court for the full amount claimed,do not report the compromised amount.

Do not report any obligation dischargedin a Title 11 bankruptcy case or amountsdischarged for a debtor to the extent thedebtor is insolvent. For example, if adebtor owes $1,000 and his or her

liabilities exceed his or her assets by $250before the debt is discharged, $750 mustbe reported when the debt is discharged.You must document that the debtor isinsolvent through an assets and liabilitiesanalysis certified by the debtor as correctunder penalties of perjury.Box 6.—Enter any amount of a taxablegrant administered by a Federal, state, orlocal program to provide subsidized energyfinancing or grants for projects designed toconserve or produce energy, but only withrespect to section 38 property or adwelling unit located in the United States.Also report amounts of other taxablegrants of $600 or more. A Federal grant isordinarily taxable unless stated otherwisein the legislation authorizing the grant.Box 7.—Enter U.S.D.A. agriculturalsubsidy payments made to recipientsduring the year. If you are a nominee thatreceived subsidy payments for anotherperson, file Form 1099-G to report theactual owner of the payments, and reportthe amount of the payments in box 7.Box 8.—If the amount in box 2 is a refund,credit, or offset attributable to an incometax that applies exclusively to income froma trade or business and is not a tax ofgeneral application, enter an “X” in thisbox.

Form 1099-INT

File Form 1099-INT, Interest Income, foreach person (1) to whom you paidamounts reportable in boxes 1 and 3 of atleast $10 (except for the $600 limit forinterest paid in the course of your trade orbusiness described in the instructionsbelow in Box 1), (2) for whom you withheldand paid any foreign tax on interest if therecipient can claim credit for the tax on hisor her income tax return, or (3) from whomyou withheld any Federal income tax underthe backup withholding rules regardless ofthe amount of the payment.

Only report interest payments made inthe course of your trade or businessincluding Federal, state, and localgovernment agencies and activitiesdeemed nonprofit, or for which you were anominee/middleman.Exceptions.—You are not required to fileForm 1099-INT for payments made tocertain payees including a corporation, atax-exempt organization, an individualretirement arrangement (IRA), a U.S.agency, a state, the District of Columbia, aU.S. possession, or a registered securitiesor commodities dealer.Note: Do not report tax-exempt ortax-deferred interest, such as interest onmunicipal bonds or interest that is earnedbut not distributed from an IRA.

An exempt-interest dividend from aregulated investment company retains itstax-exempt status and is not reported onForm 1099-INT or 1099-DIV.Successor/Predecessor Corporation.—Asuccessor corporation and a predecessorcorporation may agree that the successorcorporation will file one Form 1099-INT for

each payee combining the reportableinterest paid by both corporations (undersection 6049). If the two corporations donot agree, or if other requirementsdescribed below are not met, thepredecessor must file Forms 1099-INT toreport the interest payments it made duringthe year, and the successor must fileForms 1099-INT to report its ownpayments.

The combined reporting procedure isavailable only when all the followingconditions are met:

1. The successor corporation acquiressubstantially all the assets and assumessubstantially all the liabilities of thepredecessor corporation.

2. During the year of acquisition, butbefore the acquisition, the predecessormade reportable interest payments topayees.

3. During the year of acquisition, butafter the acquisition, the predecessor didnot make any reportable interestpayments.

Agreement.—The predecessor andsuccessor must agree that the successorassumes the predecessor’s entireobligation to file Forms 1099-INT forreportable interest payments made in theyear of acquisition. If they so agree and ifthe successor satisfies the predecessor’sobligation, the predecessor is relieved ofthe obligation to file Forms 1099-INT.

Combined Form 1099-INT.—The Form1099-INT filed by the successor for eachpayee must include the reportable interestpayments made by the predecessor in theacquisition year and the reportable interestpayments made by the successor in thatyear. Any backup withholding also must becombined on the form. When providingForm 1099-INT, or an acceptablesubstitute form, to the interest recipient,the successor may include additionalinformation explaining the aggregatereporting of the interest.

Statement required.—By the due dateof the Forms 1099-INT, the successormust file a statement containing (1) anindication that Forms 1099-INT are beingfiled on a combined basis under Rev. Proc.90-57, and (2) the name, address, andtaxpayer identification numbers (TINs) ofboth the successor and predecessorcorporations. This statement must be sentseparately from the Forms 1099-INT to:IRS-Martinsburg Computing Center, P.O.Box 1359, Attn: Chief, Magnetic Media 2,Martinsburg, WV 25401-1359.

For more information, see Rev. Proc.90-57, 1990-2 C.B. 641.Statements to Recipients.—For anexplanation of the requirement to furnishan official form to recipients in person orby statement mailing, see part H underGeneral Instructions, earlier. Also seePub. 1179. If you have furnished Forms1099-INT to a recipient for amountsreceived during the year at the time of thetransaction, such as you might have donefor window transactions, do not includethese same amounts in a Form 1099-INT


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furnished to the same recipient for otherpayments during the year.2nd TIN Not.—You may enter an “X” inthis box if you were notified by the IRStwice within 3 calendar years that thepayee provided an incorrect TIN. If youmark this box, you will comply with a safeharbor due diligence requirement ofTemporary Regulations section35a.9999-3, Q/A-89, and the IRS will notsend you any further notices about thisaccount. Also see Regulations section301.6724-1(g).Payer’s RTN (optional).—If you are afinancial institution that wishes toparticipate in the program for directdeposit of refunds of electronic filers, youmay enter your routing and transit number(RTN).Box 1.—Enter interest not included in box3. Include amounts, whether or notdesignated as interest, that are paid orcredited to any person’s account bysavings and loan associations, mutualsavings banks not having capital stockrepresented by shares, building and loanassociations, cooperative banks,homestead associations, credit unions, orsimilar organizations. Include interest onbank deposits, accumulated dividends paidby a life insurance company, indebtedness(including bonds, debentures, notes andcertificates other than those of the U.S.Treasury) issued in registered form or of atype offered to the public, or from whichyou withheld Federal income tax or foreigntax. Also include interest paid in thecourse of your trade or business notmeeting these criteria, such as interest ondelayed death benefits paid by a lifeinsurance company, or interest on a stateor Federal income tax refund, if the interesttotals $600 or more for any person. Inaddition, report interest accrued to aREMIC regular interest holder or paid to aCDO holder, as explained below.

Include in box 1 any accrued interest onbonds sold between interest dates (or on apayment date).

Also show original issue discount onshort-term obligations of 1 year or less andinterest on all bearer certificates of deposit.

Do not include in box 1 interest ontax-free covenant bonds, which isreportable on Form 1042-S, ForeignPerson’s U.S. Source Income Subject toWithholding, or dividends from moneymarket funds, which are reportable onForm 1099-DIV. Also, do not include anydescription in box 1. If you wish to show adescription, use the blank box abovebox 1.Box 2.—Enter interest or principal forfeitedbecause of an early withdrawal of timedeposits, such as an early withdrawal froma CD, that is deductible from gross incomeby the recipient. Do not reduce the amountreported in box 1 by the amount of theforfeiture. For detailed instructions fordetermining the amount of forfeituredeductible by the depositor, see Rev. Ruls.75-20, 1975-1 C.B. 29, and 75-21, 1975-1C.B. 367.Box 3.—Enter interest on U.S. SavingsBonds, Treasury bills, Treasury notes, and

Treasury bonds. Do not include thisamount in box 1.

If you make payment on a U.S. SavingsBond or other U.S. obligation on whichinterest is reportable, enter your name,address, and Federal identification numberon Forms 1099-INT and 1096, not those ofthe U.S. Treasury Department or theBureau of Public Debt.Box 4.—Enter backup withholding. Forexample, persons who have not furnishedtheir TIN to you in the manner requiredbecome subject to withholding at a 31%rate on payments required to be reportedin box 1 (which may be reduced by theamount reported in box 2) and box 3 onthis form.Box 5.—Enter any foreign tax withheld andpaid on interest if the recipient can claimcredit for the tax on his or her income taxreturn. Report this amount in U.S. dollars.Box 6.—Enter the name of the foreigncountry or U.S. possession to which thewithheld tax applies.

REMICs and Issuers ofCollateralized Debt ObligationsREMICs, issuers of collateralized debtobligations (CDOs), and any broker ormiddleman who holds as a nominee aREMIC regular interest or CDO must fileForm 1099-INT to report interest of $10 ormore, other than original issue discount(OID), accrued to a REMIC regular interestholder during the year or paid to the holderof a CDO. If you are also reporting OID,this interest and the OID can be reportedon Form 1099-OID. It is not necessary tofile both Forms 1099-INT and 1099-OID.See Form 1099-OID, later.

You are not required to file or issueForm 1099-INT for exempt recipientsincluding the following holders of a REMICregular interest or a CDO:

1. A corporation.2. A broker.3. A middleman/nominee.4. A financial institution.5. An IRA.6. A tax-exempt organization.For additional exempt recipients, see

Regulations section 1.6049-7(c).

Box 1.—Report in box 1 the amount ofinterest, other than OID, accrued to eachREMIC regular interest holder or paid to aCDO holder for the period during the yearfor which the return is made. If you are asingle-class REMIC (as defined inTemporary Regulations section1.67-3T(a)(2)(ii)), include in box 1 theregular interest holder’s share ofinvestment expenses of the REMIC for theyear.

Statements to Holders.—For each Form1099-INT you are required to file, you mustfurnish a statement to the REMIC regularinterest or CDO holder identified on theform. The statement must contain theinformation shown on Form 1099-INT,including the legend shown on Copy B ofthe official Form 1099-INT, and anindication that these items are being

furnished to the IRS. The statement mustalso show the information specified inRegulations section 1.6049-7(f)(2)(i). Inaddition, the statement furnished by aREMIC must show, for each calendarquarter, the information specified inRegulations section 1.6049-7(f)(3). Also seeRegulations section 1.6049-7(f)(3)(ii) forinformation that may be required to bereported to a real estate investment trust(REIT) that holds a regular interest.

A single-class REMIC (as defined inTemporary Regulations section1.67-3T(a)(2)(ii)) must include in thestatement the investment expenses paid oraccrued during each calendar quarter bythe REMIC for which the REMIC is alloweda deduction under section 212 and theproportionate share of those investmentexpenses allocated to the regular interestholder.

The statement must be furnished toholders by March 15. To meet thestatement requirement, you may furnish acopy of Form 1099-INT and a separatestatement containing the additionalinformation to the REMIC regular interestor CDO holder.

For information about reporting incometo REMIC residual interest holders, see theinstructions on Schedule Q (Form 1066),Quarterly Notice to Residual InterestHolder of REMIC Taxable Income or NetLoss Allocation.

Form 8811 and Reporting by Brokers orMiddlemen.—REMICs and issuers ofCDOs must also file Form 8811,Information Return for Real EstateMortgage Investment Conduits (REMICs)and Issuers of Collateralized DebtObligations, within 30 days after thestartup day of the REMIC or issue date ofa CDO. The IRS will use the information onForms 8811 to publish Pub. 938, RealEstate Mortgage Investment Conduits(REMICs) Reporting Information, for use bycertain brokers, middlemen, corporations,and others specified in Regulations section1.6049-7(e)(4).

For the requirements that a REMIC orCDO issuer or a broker or middleman whoholds a REMIC regular interest or a CDOfurnish certain information on request, seeRegulations sections 1.6049-7(e) and1.6049-7(f)(7).

Form 1099-MISC

File Form 1099-MISC, MiscellaneousIncome, for each person to whom youhave paid (1) at least $10 in royalties orbroker payments in lieu of dividends or inlieu of tax-exempt interest (see Box 8),(2) at least $600 in rents, services(including parts and materials), prizes andawards, and other income payments, andmedical and health care payments, or(3) any fishing boat proceeds. In addition,use Form 1099-MISC to report that directsales of at least $5,000 of consumerproducts were made to a buyer for resale.You must also file Form 1099-MISC foreach person from whom you have withheldany Federal income tax under the backup


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withholding rules regardless of the amountof the payment. Report only paymentsmade in the course of your trade orbusiness, including those made by Federal,state, or local government agencies andactivities deemed nonprofit.Caution: Be sure to report payments in theproper box because the IRS uses thisinformation to determine whether therecipient has properly reported thepayment.Trade or Business.—Payments are to bereported only by persons engaged in atrade or business when payments aremade in the course of such trade orbusiness. Thus, personal payments are notreportable. You are engaged in a trade orbusiness if you operate for gain or profit.However, certain nonprofit organizationsare considered to be engaged in a trade orbusiness and are subject to the reportingrequirement. They include trusts ofqualified pension or profit-sharing plans ofemployers, certain organizations exemptfrom tax under section 501(c) or (d), andfarmers’ cooperatives that are exempt fromtax under section 521. Payments byFederal, state, or local governmentagencies are also reportable.Exceptions.—Some payments are notrequired to be reported on Form1099-MISC, although they may be taxableto the recipient. Payments for which aForm 1099-MISC is not required include:(1) payments to a corporation, exceptthose required to be reported in boxes 6and 8, (2) payments for merchandise,(3) payments of rent to real estate agents,(4) wages and travel allowances paid toemployees (report on Form W-2), and (5)PS 58 costs (report on a separate Form1099-R). See below for additionalpayments not reportable on Form1099-MISC.Scholarships.—DO NOT use this form toreport scholarship or fellowship grants.Scholarship or fellowship grants that aretaxable to the recipient because they arepaid for teaching, research, or otherservices as a condition for receiving thegrant are considered wages and must bereported on Form W-2. Other taxablescholarship or fellowship payments (to adegree or nondegree candidate) are notrequired to be reported by you to the IRSon any form. See Notice 87-31, 1987-1C.B. 475, for more information.Fees Paid to Informants.—A payment toan informant as an award, fee, or rewardfor information about criminal activity is notrequired to be reported if the payment ismade by a Federal, state, or localgovernment agency, or by a nonprofitorganization exempt from tax undersection 501(c)(3) that makes the paymentto further the charitable purpose oflessening the burdens of government. Formore information, see Regulations section1.6041-3(n).Directors’ Fees.—Directors’ feesreportable on Form 1099-MISC must bereported in the year paid. Report them inbox 7.Wages Paid to Estate or Beneficiary.—Payments to an estate or beneficiary for

wages or other compensation of adeceased employee must be reported inbox 3 on Form 1099-MISC. Enter the nameand TIN of the payment recipient on Form1099-MISC. For example, if the recipient isan individual, enter the name and SSN ofthe individual. If the recipient is the estate,enter the name and EIN of the estate. Inaddition, they may be reportable on FormW-2 if paid in the year of death. See Rev.Rul. 86-109, 1986-2 C.B. 196, for thereporting requirements. However, reportthe payment in box 3 rather than in box 7(as specified in the revenue ruling).

However, death benefits from qualifiedand nonqualified deferred compensationplans paid to the estate or beneficiary of adecedent are reportable on Form 1099-R.See the instructions for Form 1099-R laterin this publication.Statements to Recipients.—Forinformation about the requirement offurnishing a statement to each recipient,see part H under General Instructions,earlier.2nd TIN Not.—You may enter an “X” inthis box if you were notified by the IRStwice within 3 calendar years that thepayee provided an incorrect taxpayeridentification number (TIN). If you mark thisbox, you will comply with a safe harbordue diligence requirement of TemporaryRegulations section 35a.9999-3, Q/A-89,and the IRS will not send you any furthernotices about this account. Also seeRegulations section 301.6724-1(g).Box 1.—Enter amounts paid to recipientsfor all types of rents, such as real estaterentals paid for office space (unless paid toa real estate agent), machine rentals (forexample, hiring a bulldozer to level yourparking lot), and pasture rentals (forexample, farmers paying for the use ofgrazing land). If the machine rental is partof a contract that includes both the use ofthe machine and the operator, the rentalshould be prorated between the rent of themachine (reported in box 1) and theoperator’s charge (reported asnonemployee compensation in box 7).Public housing agencies must report inbox 1 rental assistance payments made toowners of housing projects. See Rev. Rul.88-53, 1988-1 C.B. 384.

Coin-operated amusements.—If anarrangement between an owner ofcoin-operated amusements and an ownerof a business establishment where theamusements are placed is a lease of theamusements or the amusement space, theowner of the amusements or the owner ofthe space, whoever makes the payments,must report the lease payments in box 1 ofForm 1099-MISC if the payments total atleast $600. However, if the arrangement isa joint venture, the joint venture must file aForm 1065 and provide each partner withinformation necessary to report thepartner’s share of the taxable income.Coin-operated amusements include videogames, pinball machines, jukeboxes, pooltables, slot machines, and other machinesand gaming devices operated by coins ortokens inserted into the machines byindividual users. For more information, seeRev. Rul. 92-49, 1992-1 C.B. 433.

Box 2.—Enter gross royalty payments of$10 or more before reduction forseverance and other taxes that may havebeen withheld and paid. Include in this boxgross royalties (before reduction for fees,commissions, or expenses) paid by apublisher directly to an author or literaryagent or paid by a literary agent to anauthor. Do not include surface royalties.They should be reported in box 1. Do notreport oil or gas payments for a workinginterest in box 2; report payments forworking interests in box 7. Do not reporttimber royalties made under a “pay-as-cut”contract; report such timber royalties onForm 1099-S.Box 3.—Enter prizes and awards that arenot for services rendered. Include the fairmarket value of merchandise won on gameshows. Prizes and awards for employeesmust be reported on Form W-2. (See theInstructions for Form W-2.) Prizes andawards for services rendered bynonemployees, such as an award for thetop commission salesperson, are reportedin box 7.

Prizes and awards received inrecognition of past accomplishments inreligious, charitable, scientific, artistic,educational, literary, or civic fields are notreportable if (1) the winners are chosenwithout action on their part, (2) the winnersare not expected to perform futureservices, AND (3) the payer transfers theprize or award to a charitable organizationor governmental unit pursuant to adesignation made by the recipient. SeeRev. Proc. 87-54, 1987-2 C.B. 669.

Also report in this box any paymentrequired to be reported on Form1099-MISC that should not be reported inone of the other boxes on the form. Forexample, report punitive damages paid incases that do not involve physical injury orsickness and any other taxable damages.Also report payments to nonemployeesspecified in, and payments similar to thosespecified in, Rev. Rul. 65-18, 1965-1 C.B.32, relating to payments to patients andmembers in Department of Veterans Affairs(VA) hospitals and domiciliaries under theVA therapeutic or rehabilitative program.Box 4.—Enter backup withholding. Forexample, persons who have not furnishedtheir TIN to you become subject towithholding at a 31% rate on paymentsrequired to be reported in boxes 1, 2 (netof severance taxes), 3, 5 (to the extentpaid in cash), 6, 7, 8, and 10 on this form.Box 5.—Enter the share of all proceedsfrom the sale of a catch or the fair marketvalue of a distribution in kind to each crewmember of fishing boats with normallyfewer than 10 crewmembers.Box 6.—Enter payments made in thecourse of your trade or business to eachphysician or other supplier or provider ofmedical or health care services, includingpayments made by medical and healthcare insurers under health, accident, andsickness insurance programs. In the caseof a corporation, list the corporation as therecipient rather than the individualproviding the services. See Rev. Ruls.


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69-595, 1969-2 C.B. 242, and 70-608,1970-2 C.B. 286.

The exemption from issuing Form1099-MISC to a corporation does notapply to payments for medical or healthcare services provided by corporations,including professional corporations.Box 7.—Enter nonemployeecompensation. Include fees, commissions,prizes and awards for services rendered, orother forms of compensation for servicesrendered for your trade or business by anindividual who is not your employee.Include oil and gas payments for a workinginterest, whether or not services areperformed. Also include expenses incurredfor the use of an entertainment facility thatyou treat as compensation to anonemployee. Do not report in box 7, norelsewhere on Form 1099-MISC, PS 58costs (reported on Form 1099-R) or anemployee’s wages, travel or autoallowance, or bonuses (reported on FormW-2).

Generally, amounts reportable in box 7are subject to self-employment tax. Ifpayments are not subject to this tax andthey are not reportable elsewhere on Form1099-MISC, report the payments in box 3.

If the following four conditions are met, apayment is generally reportable asnonemployee compensation: (1) you madethe payment to someone who is not youremployee; (2) you made the payment forservices in the course of your trade orbusiness (including government agenciesand nonprofit organizations); (3) you madethe payment to someone other than acorporation, e.g., an individual or apartnership; and (4) you made payments tothe payee of at least $600 during the year.

Examples of payments to be reported inbox 7 are:

1. Attorneys’ and accountants’ fees forprofessional services.

2. Fees paid by one professional toanother, such as fee-splitting or referralfees.

3. Payments by attorneys to witnessesor experts in legal adjudication.

4. Payment for services, includingpayment for parts or materials used torender the services as long as supplyingthe parts or materials was incidental toproviding the service. For example, reportthe total insurance company payments toan auto repair shop under a repair contractindicating an amount for labor and anotheramount for parts, since furnishing partswas incidental to repairing the auto.

5. Commissions paid to nonemployeesalespersons, subject to repayment but notrepaid during the calendar year.

6. A fee paid to a nonemployee andtravel reimbursement for which thenonemployee did not account to the payerif the fee and reimbursement aggregate atleast $600.

7. Payments to nonemployeeentertainers for services.

8. Exchanges of services betweenindividuals in the course of their trades orbusinesses. For example, an attorney

represents a painter for nonpayment ofbusiness debts in exchange for thepainting of the attorney’s law offices. Theamount reportable by each on Form1099-MISC is the fair market value of hisor her own services rendered. However, ifthe attorney represents the painter in adivorce proceeding, the attorney mustreport on Form 1099-MISC the value of hisor her services, but the painter need notreport. The payment by the painter is notmade in the course of the painter’s tradeor business, even though the paintingservices are of the type normallyperformed in the course of the painter’strade or business.

9. Taxable fringe benefits fornonemployees. For information onvaluation of fringe benefits, see Pub. 535,Business Expenses.

10. Gross oil and gas payments for aworking interest.

11. Payments to current and formerself-employed insurance salespersons andagents for (a) amounts paid afterretirement, but calculated as a percentageof commissions received by the individualfrom the paying company prior toretirement; (b) renewal commissions; and(c) deferred commissions paid afterretirement but for sales made beforeretirement.Note: To qualify for relief under section530 of the Revenue Act of 1978 asextended by section 269(c) of Pub. L.97-248, relating to the employment taxstatus of independent contractors andemployees, employers must file Form1099-MISC. Additional requirements forrelief are discussed in Rev. Proc. 85-18,1985-1 C.B. 518. Also see Notice 87-19,1987-1 C.B. 455, for special rules that mayapply to certain skilled workers, such asengineers, designers, drafters, computerprogrammers, and systems analysts, andRev. Rul. 87-41, 1987-1 C.B. 296.Golden Parachute Payments.—A typicalgolden parachute payment is one made bya corporation to a certain officer,shareholder, or highly compensatedindividual when a change in the ownershipor control of the corporation occurs orwhen a change in the ownership of asubstantial part of the corporate assetsoccurs. See section 280G for moreinformation.

In box 7 report any excess goldenparachute payments paid to anonemployee. Enter the letters “EPP” nextto this amount. Also enter the totalcompensation, including any goldenparachute payments. Your entry should bein the following format:

300000EPP400000

Box 8.—Enter aggregate payments of atleast $10 received by a broker on behalf ofa customer in lieu of dividends ortax-exempt interest as a result of thetransfer of a customer’s securities for usein a short sale. Form 1099-MISC must befiled with the IRS and furnished to thecustomer on whose behalf you receivedthe payment. However, for substitutepayments in lieu of dividends, do not file

Form 1099-MISC nor furnish it to yourcustomer if your customer is an individual,unless you have reason to know on therecord date of the dividend payment thatsuch substitute dividend payment is in lieuof (1) an exempt-interest dividend, (2) acapital gain dividend, (3) a return of capital,or (4) a dividend subject to a foreign taxcredit. Form 1099-MISC is required to befiled for and furnished to an individual onwhose behalf you received a payment inlieu of tax-exempt interest. If you are notrequired to make a report on Form1099-MISC for substitute dividends of atleast $10, you must report the substitutedividends on Form 1099-DIV.

Substitute payment means a paymentin lieu of (1) tax-exempt interest to theextent that interest (including OID) hasaccrued while the short sale was open,and (2) a dividend, if the ex-dividend dateis after the transfer of stock for use in ashort sale and before the closing of theshort sale.

For more information about reportingsubstitute payments, see Regulationssection 1.6045-2.Box 9.—Sales by you of $5,000 or more ofconsumer products to a person on abuy-sell, deposit-commission, or othercommission basis for resale (by the buyeror any other person) anywhere other thanin a permanent retail establishment. Enteran “X” in the checkbox in box 9. No dollaramount is needed.

If you are reporting an amount in box 7,you may also check box 9 on the sameForm 1099-MISC.

The report required to be given to therecipient for these direct sales need not bemade on the official form. It may be in theform of a letter showing this informationalong with commissions, prizes, awards,etc.Box 10.—Enter crop insurance proceedspaid to farmers by insurance companies,unless the farmer has informed theinsurance company that expenses havebeen capitalized under section 278, 263A,or 447.Boxes 11 and 12.—These boxes, andCopies 1 and 2, are provided for yourconvenience only and need not becompleted for the IRS. If you withholdstate income tax, you may enter it in box11. In box 12, enter the abbreviated nameof the state and the payer’s stateidentification number, assigned by thestate. Copy 1 may be used to provideinformation to the state, and Copy 2 maybe used as the recipient’s copy for use infiling the state income tax return.

Form 1099-OID

File Form 1099-OID, Original IssueDiscount, if the original issue discount(OID) includible in gross income is at least$10 and you are any of the following:(1) an issuer with any bond outstanding orother evidence of indebtedness inregistered or bearer form issued with OID;(2) an issuer of certificates of deposit (CDs)made, purchased, or renewed after 1970 if


Page 18


the term of the obligation or deposit ismore than 1 year; (3) a financial institutionhaving other deposit arrangements, suchas time deposits or bonus-savings planshaving a term in excess of 1 year providedthe payment of interest is deferred untilmaturity; (4) a broker or other middlemanholding an OID obligation, including CDs,as nominee for the actual owner; or (5) areal estate mortgage investment conduit(REMIC) or issuer of a collateralized debtobligation (CDO). Also, file Form 1099-OIDin any case in which you are required todeduct and withhold taxes even if theamount of the OID is less than $10.Original Issue Discount.—Original issuediscount means the difference between thestated redemption price at maturity andthe issue price of a debt instrument. In thecase of a stripped bond or coupon, OID isthe difference between the statedredemption price at maturity and theacquisition price. A discount of less than 1⁄4of 1% of the stated redemption price atmaturity, multiplied by the number of fullyears from the date of issue to maturity, isconsidered to be zero.Reporting OID.—You must prepare aForm 1099-OID for each person who is aholder of record of the obligations if theOID includible in the holder’s gross incomeis at least $10. Semiannual record datereporting was eliminated in 1992.

For REMICs and CDOs, see thediscussion about REMICs and CDOs, later.

Ordinarily, you will file only one Form1099-OID for the depositor or holder of aparticular obligation for the calendar year.If a person holds more than one discountobligation, issue separate Forms 1099-OIDfor each obligation. However, if a personholds more than one certificate of thesame issue for the same period of timeduring the calendar year, and if Form1099-OID amounts are proportional, youmay treat all such certificates as onediscount obligation and file a single Form1099-OID.

For time deposits and face-amountcertificates, use the actual date of depositand compute OID on a straight-line,monthly prorated basis for obligationsissued before July 2, 1982, and on a dailyeconomic accrual basis for obligationsissued after July 1, 1982.

If you are a broker or middleman whoholds a bank CD as nominee, whether ornot you sold the CD to the owner, youmust determine the amount of OIDincludible in the income of the owner, ifany, and report it on Form 1099-OID.

Pub. 1212, List of Original IssueDiscount Instruments, contains informationon certain outstanding publicly tradeddiscount obligations.

Issuers of certain publicly offered debtinstruments having OID must file Form8281, Information Return for PubliclyOffered Original Issue DiscountInstruments, within 30 days after the dateof issuance. The information provided onthat form will enable the IRS to updatePub. 1212. See Form 8281 for details.

Exceptions.—You are not required to fileForm 1099-OID for payments made tocertain payees including a corporation, atax-exempt organization, an individualretirement arrangement (IRA), a U.S.agency, a state, the District of Columbia, aU.S. possession, or a registered securitiesor commodities dealer.

Do not report interest on U.S. SavingsBonds on this form. Report it on Form1099-INT. Also report OID on obligationswith a term of 1 year or less on Form1099-INT.Statements to Recipients.—For anexplanation of the requirement to furnishan official form to recipients in person orby statement mailing, see part H underGeneral Instructions, earlier. Also seePub. 1179.2nd TIN Not.—You may enter an “X” inthis box if you were notified by the IRStwice within 3 calendar years that thepayee provided an incorrect taxpayeridentification number (TIN). If you mark thisbox, you will comply with a safe harbordue diligence requirement of TemporaryRegulations section 35a.9999-3, Q/A-89,and the IRS will not send you any furthernotices about this account. Also seeRegulations section 301.6724-1(g).Box 1.—Report the OID on the obligationfor the part of the year it was owned bythe record holder. For REMICs and CDOs,see the discussion about REMICs andCDOs, later.Box 2.—Enter any interest other than OIDpaid or credited on this obligation duringthe year. Some OID instruments payregular interest, in addition to the OID, atcertain intervals during the life of theinstrument. However, if OID is the onlyinterest on this obligation, leave this boxblank. Interest reported here must not bereported on Form 1099-INT. For REMICsand CDOs, see the discussion aboutREMICs and CDOs, later.Box 3.—Enter amounts of interest orprincipal forfeited because of an earlywithdrawal, such as an early withdrawalfrom a CD, that are deductible from grossincome by the recipient. Do not reduce theamounts in boxes 1 and 2 by the amountof the forfeiture. For detailed instructionsfor determining the amount of forfeituredeductible by the holder, see Rev. Ruls.75-20, 1975-1 C.B. 29, and 75-21, 1975-1C.B. 367.Box 4.—Enter backup withholding. Forexample, persons who have not furnishedtheir TIN to you in the manner requiredbecome subject to withholding at a 31%rate on amounts required to be reported inboxes 1 and 2 (which may be reduced bythe amount reported in box 3) limited tothe cash paid on these obligations.Box 5.—Enter the CUSIP number, if any; ifthere is no CUSIP number, theabbreviation for the stock exchange, theabbreviation for the issuer used by thestock exchange, the coupon rate, and theyear of maturity (e.g., NYSE XYZ 12 1⁄2 95).If the issuer of the obligation is other thanthe payer, show the name of the issuer.

REMICs and Issuers ofCollateralized Debt ObligationsREMICs, issuers of collateralized debtobligations (CDOs), and any broker ormiddleman who holds as a nominee aREMIC regular interest or CDO must fileForm 1099-OID to report OID of $10 ormore accrued to a REMIC regular interestholder or a holder of a CDO. Also useForm 1099-OID to report other interestaccrued to a REMIC regular interest holderduring the year or paid to a holder of aCDO. Use Form 1099-INT to report interestif no OID is includible in the regular interestholder’s or CDO holder’s income for theyear.

You are not required to file or issueForm 1099-OID for exempt recipientsincluding the following holders of a REMICregular interest or a CDO:

1. A corporation.2. A broker.3. A middleman/nominee.4. A financial institution.5. An IRA.6. A tax-exempt organization.For additional exempt recipients, see

Regulations section 1.6049-7(c).Box 1.—Report in box 1 the aggregateamount of OID includible in the grossincome of each REMIC regular interest orCDO holder for the period during the yearfor which the return is made.Box 2.—Report in box 2 any amount ofinterest, other than OID, accrued to eachREMIC regular interest holder or paid toeach CDO holder. If you are a single-classREMIC (as defined in TemporaryRegulations section 1.67-3T(a)(2)(ii)),include in box 2 the regular interestholder’s share of investment expenses ofthe REMIC for the year.Statements to Holders.—For each Form1099-OID you are required to file, youmust furnish a statement to the REMICregular interest or CDO holder identified onthe form. The statement must contain theinformation shown on Form 1099-OID,including the legend shown on Copy B ofthe official Form 1099-OID, and anindication that these items are beingfurnished to the IRS. The statement mustalso show the information specified inRegulations section 1.6049-7(f)(2)(ii). Inaddition, the statement furnished by aREMIC must show, for each calendarquarter, the information specified inRegulations section 1.6049-7(f)(3). Also seeRegulations section 1.6049-7(f)(3)(ii) forinformation that may be required to bereported to a real estate investment trust(REIT) that holds a regular interest.

A single-class REMIC (as defined inTemporary Regulations section1.67-3T(a)(2)(ii)) must include in thestatement the investment expenses paid oraccrued during each calendar quarter bythe REMIC for which the REMIC is alloweda deduction under section 212 and theproportionate share of those investmentexpenses allocated to the regular interestholder.


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The statement must be furnished toholders by March 15. To meet thestatement requirement, you may furnish acopy of Form 1099-OID and a separatestatement containing the additionalinformation to the REMIC regular interestor CDO holder.

For information about reporting incometo REMIC residual interest holders, see theinstructions on Schedule Q (Form 1066),Quarterly Notice to Residual InterestHolder of REMIC Taxable Income or NetLoss Allocation.Form 8811 and Reporting by Brokers orMiddlemen.—REMICs and issuers ofCDOs must also file Form 8811,Information Return for Real EstateMortgage Investment Conduits (REMICs)and Issuers of Collateralized DebtObligations, within 30 days after thestartup day of the REMIC or issue date ofa CDO. The IRS will use the information onForms 8811 to publish Pub. 938, RealEstate Mortgage Investment Conduits(REMICs) Reporting Information, for use bycertain brokers, middlemen, corporations,and others specified in Regulations section1.6049-7(e)(4).

For the requirements that a REMIC orCDO issuer or a broker or middleman whoholds a REMIC regular interest or a CDOfurnish certain information on request, seeRegulations sections 1.6049-7(e) and1.6049-7(f)(7).

Form 1099-PATR

File Form 1099-PATR, TaxableDistributions Received From Cooperatives,for each person to whom the cooperativehas paid at least $10 in patronagedividends and other distributions describedin section 6044(b) or from whom youwithheld any Federal income tax under thebackup withholding rules regardless of theamount of the payment. A cooperativedetermined to be primarily engaged in theretail sale of goods or services that aregenerally for personal, living, or family useof the members may ask for and receiveexemption from filing Form 1099-PATR.See Form 3491, Consumer CooperativeExemption Application, for informationabout how to apply for this exemption.

Report dividends paid on cooperatives’capital stock on Form 1099-DIV.Statements to Recipients.—For anexplanation of the requirement to furnishan official form to recipients in person orby statement mailing, see part H underGeneral Instructions, earlier. Also seePub. 1179.2nd TIN Not.—You may enter an “X” inthis box if you were notified by the IRStwice within 3 calendar years that thepayee provided an incorrect taxpayeridentification number (TIN). If you mark thisbox, you will comply with a safe harbordue diligence requirement of TemporaryRegulations section 35a.9999-3, Q/A-89,and the IRS will not send you any furthernotices about this account. Also seeRegulations section 301.6724-1(g).

Box 1.—Enter the total patronagedividends paid in cash (qualified or“consent” checks), qualified written noticesof allocation (face amount), and otherproperty (except nonqualified writtennotices of allocation).Box 2.—Enter the total nonpatronagedistributions paid in cash (qualified or“consent” checks), qualified written noticesof allocation (face amount), and otherproperty (not including nonqualified writtennotices of allocation). This box applies onlyto farmers’ cooperatives exempt from taxunder section 521.Box 3.—Enter the total per-unit retainallocations paid in cash, qualified per-unitretain certificates (face amount), and otherproperty.Box 4.—Enter backup withholding. Forexample, persons who have not furnishedtheir TIN to you in the manner requiredbecome subject to withholding at a 31%rate on payments required to be reportedin boxes 1, 2, 3, and 5 to the extent suchpayments are in cash or qualified check.See Temporary Regulations section35a.9999-3, Q/A-10 for more informationon backup withholding by cooperatives.Box 5.—Enter all redemptions ofnonqualified written notices of allocationissued as patronage dividends,nonqualified written notices of allocationissued as nonpatronage allocations(applicable only to farmers’ cooperativesqualifying under section 521), andnonqualified per-unit retain certificates,issued with respect to marketing.Pass-Through Credits.—Report in theappropriate boxes the patron’s share ofunused credits that the cooperative ispassing through to this patron:Box 6.—Investment credit.Box 7.—Energy investment credit.Box 8.—Jobs credit.

Form 1099-R

File Form 1099-R, Distributions FromPensions, Annuities, Retirement orProfit-Sharing Plans, IRAs, InsuranceContracts, etc., for each person to whomyou have made any designated distributionfrom profit-sharing or retirement plans,IRAs, annuities, pensions, etc., whether ornot you withheld Federal income tax.

If part of the distribution is taxable andpart is nontaxable, file a Form 1099-Rreporting the entire distribution. However, ifthe total amount of the gross distributionpaid to someone for the year is less than$1, a Form 1099-R need not be filed forthat person.

Also report death benefit paymentsmade by employers that are not made aspart of a pension, profit-sharing, orretirement plan. (See the instructions forbox 1, later.) For loans treated asdistributions, see section 72(p). Do notreport payments subject to withholding ofsocial security and Medicare taxes on thisform. Report such payments on Form W-2.

Reportable disability payments madefrom a retirement plan should be reportedon Form 1099-R.

Do not report amounts totally exemptfrom tax such as workmen’s compensationand Department of Veterans Affairs (VA)payments.Military Retirement Pay.—Payments tomilitary retirees are reportable on Form1099-R. Military retirement pay awarded asa property settlement to a former spouse isreportable on Form 1099-R under thename and taxpayer identification numberof the recipient, not those of the militaryretiree.

Payments of survivor benefit annuitiesare also reportable on Form 1099-R.Nonqualified Plans.—Report distributionsto plan participants from nonqualifiedplans, including section 457 plans, onForm W-2, not on Form 1099-R. However,report distributions to beneficiaries ofdeceased employees on Form 1099-R.Charitable Gift Annuities.—If cash orcapital gain property is donated inexchange for a charitable gift annuity,distributions from the annuity arereportable on Form 1099-R. Report in box1 the total amount distributed during theyear. Report in box 2a the taxable amount.If any amount is taxable as a capital gain,report it in box 3. Report in box 5 anynontaxable amount. Enter Code F in box 7.See Regulations section 1.1011-2(c)Example 8.Insurance Contracts.—Report on Form1099-R payments of matured or redeemedannuity, endowment, and life insurancecontracts. However, you need not file Form1099-R to report the surrender of a lifeinsurance contract if it is reasonable tobelieve that none of the payment isincludible in the income of the recipient. Ifyou are reporting the surrender of a lifeinsurance contract on Form 1099-R, enterCode 7 in box 7.

Also report premiums paid by a trusteeor custodian for current life or otherinsurance protection (PS 58 costs). PS 58costs are not subject to the 10% earlydistribution tax under section 72(t).

Section 1035 exchange.—A tax-freesection 1035 exchange is the exchange of(1) a life insurance contract for another lifeinsurance, endowment, or annuity contract,(2) an endowment contract for an annuitycontract or for another endowmentcontract that provides for regular paymentsto begin no later than they would havebegun under the old contract, and (3) anannuity contract for another annuitycontract.

These tax-free exchanges of contractsare generally reportable on Form 1099-R.However, if (1) the exchange occurs withinthe same company, (2) the exchange issolely a contract for contract exchange, asdefined above, that does not result in adesignated distribution, and (3) thecompany maintains adequate records ofthe policyholder’s basis in the contracts,reporting on Form 1099-R is not required.For example, a life insurance contractissued by Company X exchanged solely for


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another life insurance contract previouslyissued by Company X is not reportable onForm 1099-R as long as the companymaintains the required records. (See Rev.Proc. 92-26, 1992-1 C.B. 744.)

For those section 1035 exchanges thatare reportable on Form 1099-R, enter thetotal value of the contract in box 1, 0 (zero)in box 2a, the total premiums paid in box5, and Code 6 in box 7.IRA and SEP Distributions.—Distributionsfrom an individual retirement arrangement(IRA) or simplified employee pension (SEP)must be reported in boxes 1 and 2aregardless of the amount. You may markthe “Taxable amount not determined” boxin box 2b. But see the instructions for box2a for how to report the withdrawal ofcontributions under section 408(d)(4). Alsosee Direct Rollovers and Transfers,below.IRA Revocation.—If an IRA is revokedduring its first 7 days (under Regulationssection 1.408-6(d)(4)(ii)), the distributionfrom the IRA must be reported. In addition,Form 5498 must be filed to report anyregular or rollover contribution to an IRAthat is revoked. Transfers from one IRA toanother are not reportable on Form 5498.

If a regular contribution is made to anIRA that later is revoked, and distribution ismade to the taxpayer, enter the grossdistribution in box 1 of Form 1099-R. If noearnings are distributed, enter 0 (zero) inbox 2a and Code 8 in box 7. If earningsare distributed, enter the amount ofearnings in box 2a. Such earnings couldbe subject to the early distribution taxunder section 72(t). If they are subject tothat tax, enter Code 1 in box 7; if theearnings are not subject to that tax, enterCode 8.Note: If you know that the taxpayerdeducted the contribution, report the totalamount distributed in box 2a.

If a rollover contribution is made to anIRA that later is revoked, and distribution ismade to the taxpayer, enter in boxes 1 and2a of Form 1099-R the gross distributionand the appropriate code in box 7. Followthis same procedure for a transfer fromone IRA to another IRA that later isrevoked. The distribution could be subjectto the early distribution tax under section72(t).

If an employer SEP contribution is madeand the SEP is revoked by the employee,report the distribution as fully taxable.

For more information, see Rev. Proc.91-70, 1991-2 C.B. 899.DECs.—If you are reporting a totaldistribution from a plan that includes adistribution of deductible voluntaryemployee contributions (DECs), file twoForms 1099-R—one to report thedistribution of DECs, the other to reportthe distribution from the other part of theplan. Report the distribution of DECs inboxes 1 and 2a on the separate Form1099-R.Direct Rollovers and Transfers.—Youmust report a direct rollover of an eligiblerollover distribution. A direct rollover is thedirect payment of the distribution to an

eligible retirement plan, including an IRA.An eligible rollover distribution is thetaxable part of any distribution from aqualified plan (or tax-sheltered annuity butnot an IRA) except (1) one of a series ofsubstantially equal periodic payments (atleast annually) made for the life (or lifeexpectancy) of the employee or for thejoint lives (or life expectancies) of theemployee and the employee’s beneficiaryor for a specified period of 10 years ormore, and (2) any part of a distribution thatis a minimum distribution required bysection 401(a)(9). Other exceptions mayapply. See Codes G and H under Box 7later. For information on withholding oneligible rollover distributions that are notdirect rollovers, see Box 4 later. For moreinformation on direct rollovers, seeTemporary Regulations sections1.401(a)(31)-1T, 1.402(c)-2T, 1.402(f)-2T,1.403(b)-2T, and 31.3405(c)-1T.

Report a direct rollover in box 1 and 0(zero) in box 2a.

Do not report a direct trustee-to-trusteetransfer from an IRA that involves nopayment or distribution of funds to theparticipant.

You may have to report exchanges ofinsurance contracts, including a tax-freeexchange under section 1035, under whichany designated distribution may be made.See Section 1035 exchange, earlier.Explanation to Recipients Before EligibleRollover Distributions (Section 402(f)Notice).—Within a reasonable period oftime before making an eligible rolloverdistribution, the plan administrator mustprovide a written explanation to therecipient. The plan administrator mustexplain the rollover rules, the special taxtreatment for lump-sum distributions, thedirect rollover option, and the mandatory20% withholding rules. Notice 92-48,1992-45 I.R.B. 25, contains a model noticethe plan administrator can use to satisfythis requirement.Beneficiaries.—Prepare Form 1099-Rusing the name and taxpayer identificationnumber (TIN) of the beneficiary, not thoseof the decedent. If there are multiplebeneficiaries, report on each Form 1099-Ronly the amount paid to the beneficiarywhose name appears on the Form 1099-R,and enter the percentage in box 9.Corrective Distributions.—For reportingthe distribution of excess deferrals, excesscontributions, and excess aggregatecontributions, see Code 8 under Box 7,later.Excess Annual Additions Under Section415.—You must report on Form 1099-Rdistributions made under Regulationssection 1.415-6(b)(6)(iv) of elective deferralsor a return of employee contributions (andgains attributable to such employeecontributions) to reduce excess annualadditions arising from the allocation offorfeitures, a reasonable error in estimatinga participant’s compensation, or areasonable error in determining the amountof elective deferrals that may be made foran individual under the limits of section415.

Such distributions are not eligiblerollover distributions although they aresubject to income tax withholding undersection 3405. They are not subject tosocial security, Medicare, or FederalUnemployment Tax Act (FUTA) taxes. Inaddition, such distributions are not subjectto the early distributions tax under section72(t) nor the excess distributions tax undersection 4980A.

You may report the distribution ofelective deferrals and employeecontributions (and gains attributable tosuch employee contributions) on the sameForm 1099-R. However, if otherdistributions are made during the year,they must be reported on a separate Form1099-R. Because the distribution ofelective deferrals is fully taxable (no part ofthe distribution is a return of theinvestment in the contract), report the totalamount of the distribution in boxes 1 and2a. Leave box 5 blank, and enter Code Ein box 7. For a return of employeecontributions plus gains, enter the grossdistribution in box 1, the gains attributableto the employee contributions beingreturned in box 2a, and the employeecontributions being returned in box 5.Enter Code E in box 7.

For more information, see Rev. Proc.92-93, 1992-47 I.R.B. 13.Failing the ADP or ACP Test After aTotal Distribution.—If a total distributionwas made during 1993 and a Form 1099-Rwas filed with the IRS, then in 1994 youdiscover that the plan failed the ADP(actual deferral percentage) test (undersection 401(k)(3)) for 1993 and youcompute excess contributions or the ACP(actual contribution percentage) test (undersection 401(m)(2)) and you computeexcess aggregate contributions, you mustrecharacterize part of the total distributionas excess contributions or excessaggregate contributions. First, file aCORRECTED Form 1099-R for 1993 forthe correct amount of the total distribution(not including the amount recharacterizedas excess contributions or excessaggregate contributions). Second, file aNEW Form 1099-R for 1993 for the excesscontributions or excess aggregatecontributions.

To avoid a late filing penalty if the newForm 1099-R is filed after the due date,enter in the bottom margin of Form 1096the words “Filed To Correct ExcessContributions.”

You should also issue copies of theForms 1099-R to the plan participant withan explanation of why these new forms arebeing issued.Missing Participants.—Under PolicyStatement P-1-187, the IRS has a letterforwarding program that could help planadministrators contact missing retirementplan participants (or possibly theirbeneficiaries). To inform individuals of theirrights to benefits under a retirement plan,the IRS will forward letters from planadministrators to the missing individuals ifthe administrators provide the names andsocial security numbers of the missingindividuals. However, the IRS cannot


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disclose individuals’ addresses or giveconfirmation of letter delivery. Allundelivered letters will be destroyed.

For further information, contact theDisclosure Officer at your local IRS districtoffice.Filer.—The payer or plan administratormust file Form 1099-R using the samename and employer identification numberused to deposit any tax withheld and to filea quarterly withholding tax return (Form941 or 941E).Statements to Recipients.—Forinformation about the requirement tofurnish a statement to each recipient, seepart H under General Instructions, earlier.Box 1.—Enter the total amount of thedistribution before income tax or otherdeductions were withheld. Include directrollovers, premiums paid by a trustee orcustodian for current life or other insuranceprotection (PS 58 costs), and the grossamount of IRA or SEP distributions in thisbox. However, in the case of a distributionby a trust representing CDs redeemedearly, report the net amount distributed.Also, see Box 6.

Include in this box the value of U.S.Savings Bonds distributed from the plan.Enter the appropriate taxable amount inbox 2a. Please furnish a statement to theplan participant showing the value of eachbond at the time of distribution. This willprovide him or her with the informationnecessary to figure the interest income oneach bond when it is redeemed.

In addition to reporting death benefitpayments made from a plan, report hereany death benefit payments made byemployers that are not made as part of apension, profit-sharing, or retirement plan.Also enter this amount in box 2a. EnterCode 4 in box 7. For example, the boardof directors of XYZ Corporation votes topay the widow of one of its employees alump-sum “death benefit.” This amountmust be reported in boxes 1 and 2a, andCode 4 must be shown in box 7.

For a section 1035 exchange, seeSection 1035 exchange under InsuranceContracts earlier.Box 2a.—Generally, you must enter theamount includible as income. However, ifyou are unable to reasonably obtain the

data needed to compute the taxableamount, leave this box blank. Do notinclude excludable or tax-deferredamounts reportable in boxes 5, 6, and 8.

Include PS 58 costs that were reportedin box 1. However, do not report PS 58costs and a distribution on the same Form1099-R. Use a separate Form 1099-R foreach. Enter Code 9 in box 7 for PS 58costs. See Regulations section 1.72-16(b)and Rev. Ruls. 55-747, 1955-2 C.B. 228,and 66-110, 1966-1 C.B. 12, forinformation on the cost of premiums paidby an employees’ trust under a qualifiedplan for current life insurance protectiontaxable to plan participants or theirbeneficiaries.

If you made periodic distributions from aqualified employee plan under section401(a), from an employee annuity undersection 403(a), or from an annuity contractunder section 403(b), and the annuitystarting date is after July 1, 1986, you mayelect to use a simplified safe harbormethod to compute the taxable amount.See Notice 88-118, 1988-2 C.B. 450.

Generally, you are not required tocompute the taxable amount of an IRA orSEP nor designate whether any part of adistribution is a return of basis attributableto nondeductible contributions. Therefore,report the total amount distributed from anIRA or SEP in box 2a. This will be thesame amount reported in box 1. You maymark the “Taxable amount not determined”box in box 2b. However, in the case of adistribution by a trust representing CDsredeemed early, report the net amountdistributed. Do not include any amountpaid for IRA insurance protection in thisbox. For a distribution of contributions plusearnings from an IRA under section408(d)(4) (previously excess contributions),report the gross distribution in box 1 andonly the earnings in box 2a, and enterCode 8 or P, whichever is applicable, inbox 7. For a distribution of contributionswithout earnings after the due date of theindividual’s return, under section 408(d)(5),enter 0 (zero). Include DEC distributions inthis box.Losses.—If a distribution is a loss, do notenter a negative amount in this box. Forexample, if stock is distributed but thevalue is less than the employee’s after-tax

contributions, enter the value of the stockin box 1, leave box 2a blank, and enter theemployee’s contributions in box 5.Box 2b—Taxable amount notdetermined.—Enter an “X” in this box onlyif you are unable to reasonably obtain thedata needed to compute the taxableamount. If you mark this box, leave box 2ablank unless you are reporting an IRAdistribution. Please make every effort tocompute the taxable amount. See Notice88-118 for the simplified safe harbormethod of computing certain taxableamounts.Box 2b—Total distribution.—Enter an “X”in this box only if the payment shown inbox 1 is a total distribution. A totaldistribution is one or more distributionswithin 1 tax year in which the entirebalance of the account is distributed. Anydistribution that does not meet thisdefinition is not a total distribution.Box 3.—For lump-sum distributions only,enter the amount in box 2a eligible for thecapital gain election under section1122(h)(3) of the Tax Reform Act of 1986for participants born before 1936 (or theirbeneficiaries). Enter the full amount eligiblefor the capital gain election.

To compute the months of anemployee’s active participation before1974, count as 12 months any part of acalendar year in which an employeeactively participated under the plan; foractive participation after 1973, count as1 month any part of a month in which theemployee actively participated under theplan. See the example at the top of thispage.

Active participation begins with the firstmonth in which an employee became aparticipant under the plan and ends withthe earliest of:

1. The month in which the employeereceived a lump-sum distribution under theplan;

2. In the case of an employee, otherthan a self-employed person orowner-employee, the month in which theemployee separates from service;

3. The month in which the employeedies; or

4. For a self-employed person orowner-employee, the first month in whichthe employee becomes disabled (within themeaning of section 72(m)(7)).

For a charitable gift annuity, seeCharitable Gift Annuities earlier.Box 4.—Enter any Federal income taxwithheld. This withholding is subject to thesame deposit rules as wages, and thewithholding tax return is Form 941,Employer’s Quarterly Federal Tax Return(or Form 941E).

Withhold on periodic payments asthough the payments were wages, basedon the recipient’s Form W-4P, WithholdingCertificate for Pension or AnnuityPayments. The recipient may requestadditional withholding on Form W-4P orclaim exemption from withholding. SeeCircular E, Employer’s Tax Guide, forwage withholding tables.

Example for Computing Amount Eligible for Capital Gain Election (SeeBox 3.)Step I: Total Taxable AmountTotal Distribution XXXXX

Less: 1. Current actuarial value of any annuity XXXXX

2. Employee contributions (minus any amounts previouslydistributed that were not includible in the employee’sgross income) XXXXX

3. Net unrealized appreciation in the value of any employersecurities that were a part of the lump-sum distribution XXXXX XXXXX

Total Taxable Amount XXXXX

Step II: Capital GainTotal Taxable Amount Months of Active Participation Before 1974 Capital

Gain=3Total Months of Active Participation(from Step I)


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Withhold 10% of a nonperiodicdistribution that is not an eligible rolloverdistribution. The recipient may requestadditional withholding on Form W-4P orclaim exemption from withholding.

Withhold 20% of an eligible rolloverdistribution from a qualified plan that is nota direct rollover. A recipient cannot claimexemption from withholding for such adistribution; however, no withholding isrequired for a direct rollover. Although thesame rules generally apply to an eligiblerollover distribution from a tax-shelteredannuity, a special effective date may apply.

The 20% withholding does not apply todistributions from IRAs.

See Cir. E for more information.If a payee fails to furnish his or her

correct TIN to you in the manner required,or if the IRS notifies you before anydistribution that the TIN furnished isincorrect, a payee cannot claim exemptionfrom withholding. Backup withholding doesnot apply.

For purposes of withholding, assumethat the entire amount of an IRAdistribution is taxable (except for thedistribution of contributions under sections408(d)(4), in which only the earnings aretaxable, and 408(d)(5)).

Even though you may be using Code 1in box 7 to designate an early distributionsubject to the 10% tax specified insections 72(q), (t), or (v), you are notrequired to withhold that tax.Box 5.—Enter the employee’scontributions to a profit-sharing orretirement plan, or insurance premiums.The entry in box 5 can include the tax-freepart of any of the following: (a)contributions actually made by theemployee over the years under theretirement or profit-sharing plan that wererequired to be included in the income ofthe employee when contributed (“after-taxcontributions”), (b) contributions made bythe employer but considered to have beencontributed by the employee under section72(f), (c) the accumulated cost ofpremiums paid for life insurance protection,taxable to the employee in previous yearsand in the current year under Regulationssection 1.72-16 (PS 58 costs) (only if thelife insurance contract itself is distributed),and (d) premiums paid on commercialannuities. Do not include contributions toIRAs, SEPs, DECs, 401(k) plans, or anycontribution to a retirement plan that wasnot an “after-tax contribution.”

Generally, for qualified plans,tax-sheltered annuities, and nonqualifiedcommercial annuities, enter in box 5 theemployee contributions recovered tax freeduring the year based on the method youchoose to determine the taxable amount tobe entered in box 2a. If periodic paymentsbegan before 1993, you are not requiredto, but you are encouraged to, report inbox 5.

In the year periodic payments begin, youmust also report the total employeecontributions available to be recoveredtax free in the blank box below the“Account number” box. Label that box

“Total employee contributions.” If anyprevious distributions were made, anyamount recovered tax free in prior yearsmust not appear in this box. The totalemployee contributions must be reportedonly in the first year of periodic payments.If periodic payments began before 1993,you need not, but you may, report the totalemployee contributions. In addition, youneed not report the total employeecontributions if the distribution is noteligible for the simplified safe harbormethod of Notice 88-118.

If a total distribution is made, the totalemployee contributions available to berecovered tax free must be shown only inbox 5. If any previous distributions weremade, any amount recovered tax free inprior years must not appear in box 5.

If you are unable to reasonably obtainthe data necessary to compute the taxableamount, leave box 5 blank.

For more information, see Rev. Proc.92-86, 1992-42 I.R.B. 37.

For charitable gift annuities, seeCharitable Gift Annuities earlier.Box 6.—Use this box if a distributionincludes securities of the employercorporation (or a subsidiary or parentcorporation) and you can compute the netunrealized appreciation (NUA) in theemployer’s securities. Enter all the NUA inemployer securities if this is a lump-sumdistribution. If this is not a lump-sumdistribution, enter only the NUA inemployer securities attributable toemployee contributions. See Regulationssection 1.402(a)-1(b) for the determinationof the NUA. Also see Notice 89-25 (Q/A-1),1989-1 C.B. 662. Include the NUA in box 1but not in box 2a.Box 7.—Enter the appropriate code(s) fromthe list below that shows the type ofdistribution being made. Also, enter an “X”in the IRA/SEP checkbox if the distributionis from an IRA or SEP.

Read the codes carefully and enter theappropriate codes accurately because theIRS uses the codes to help determinewhether the recipient has properly reportedthe distribution. If the codes you enter areincorrect, the IRS may improperly proposechanges to the recipient’s taxes.

Use the codes below for distributionsfrom IRAs, SEPs, Keoghs, qualified plans,commercial annuities, insurance contracts,etc.

A numeric code must be entered,except when Code P, D, E, F, G, or H isused. When applicable, you may enter anumeric and an alpha code. For example,when using a Code P for an IRAdistribution under section 408(d)(4), youmay also enter Code 1, if it applies. Or fora normal distribution from a qualified planthat qualifies for 5- or 10-year averaging,enter Codes 7 and A. For a direct rolloverto an IRA for the spouse of a deceasedparticipant, enter Codes 4 and G.

Only two numeric combinations arepermitted: Codes 8 and 1, or 8 and 2. Iftwo other numeric codes are applicable, itmay be necessary to file more than oneForm 1099-R. For example, if part of a

distribution is premature (Code 1) and partis not, one Form 1099-R must be filed forthe part to which Code 1 applies andanother Form 1099-R for the part that is anormal distribution, Code 7. In addition, forthe distribution of excess deferrals, excesscontributions, or excess aggregatecontributions, parts of the distribution maybe taxable in two or three different years.Thus, separate Forms 1099-R must befiled using Code 8, P, or D to indicate theyear the amount is taxable.

If part of an eligible rollover distributionis paid in a direct rollover and part is not,you must file a separate Form 1099-R foreach part showing the appropriate code oneach form.Codes.—1—Early (premature) distribution, noknown exception. Use Code 1 only if theemployee/taxpayer has not reached age591⁄2, and only if none of the exceptionsunder section 72(q), (t), or (v) are known toapply. For example, if a hardshipdistribution is made for medical expenses,you probably will not know if the medicalexpense exception under section 72(t)applies. Therefore, use Code 1.2—Early (premature) distribution,exception applies (as defined in section72(q), (t), or (v)). Use Code 2 only if theemployee/taxpayer has not reached age59 1⁄2 to indicate that an exception under72(q), (t), or (v) applies. However, insteadof Code 2, use Code 3 or 4, whicheverapplies, for an early distribution due todisability or death.3—Disability.4—Death. Use Code 4 regardless of theage of the employee/taxpayer to indicatepayment to a decedent’s beneficiary,including an estate or trust. Also use it fordeath benefit payments made by anemployer but not made as part of apension, profit-sharing, or retirement plan.5—Prohibited transaction.6—Section 1035 exchange. Use Code 6to indicate the tax-free exchange ofinsurance contracts under section 1035.7—Normal distribution. Use Code 7 for anormal distribution from any plan, includingan IRA or SEP, if the employee/taxpayer isat least 591⁄2. Also use Code 7 for thetaxable surrender of a life insurancecontract and for reporting income from afailed life insurance contract under section7702(g) and (h). (See Rev. Rul. 91-17,1991-1 C.B. 190.) Generally, use Code 7 ifno other code applies.8—Excess contributions plusearnings/excess deferrals (and/orearnings) taxable in 1993. Use Code 8 foran IRA distribution under section 408(d)(4),unless Code P applies. Also use this codefor corrective distributions of excessdeferrals, excess contributions, and excessaggregate contributions, unless Code P orD applies. For information about reportingcorrective distributions, see Notice 89-32,1989-1 C.B. 671; Notice 88-33, 1988-1C.B. 513; and Notice 87-77, 1987-2 C.B.385. (Notice 88-33 was modified by Rev.Proc. 91-44, 1991-2 C.B. 733, to providethat the income allocable to an excess


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contribution to a SARSEP (salary reductionsimplified employee pension) is includiblein gross income in the year withdrawn fromthe IRA.) Also see IRA Revocation, earlier.9—PS 58 costs. Use Code 9 to reportpremiums paid by a trustee or custodianfor current life or other insuranceprotection (PS 58 costs). See Box 2a formore information.P—Excess contributions plus earnings/excess deferrals taxable in 1992. See theexplanation for Code 8. The IRS suggeststhat anyone using Code P for the refund ofan IRA contribution under section 408(d)(4)advise payees, at the time the distributionis made, that the earnings are taxable inthe year in which the contribution wasmade.A—Qualifies for 5- or 10-year averaging.Use Code A to indicate that thedistribution qualifies for the averagingmethod of computing the tax on lump-sumdistributions under section 402(d).B—Qualifies for death benefit exclusion.Use Code B to indicate that thedistribution qualifies for the death benefitexclusion under section 101(b).C—Qualifies for both A and B.D—Excess contributions plusearnings/excess deferrals taxable in1991. See the explanation for Code 8.E—Excess annual additions undersection 415.F—Charitable gift annuity.G—Direct rollover to IRA.H—Direct rollover to qualified plan ortax-sheltered annuity.Box 8.—Enter the current actuarial value ofan annuity contract that is a part of alump-sum distribution. Do not include thisitem in boxes 1 and 2a.

To determine the value of an annuitycontract, show the value as an amountequal to the current actuarial value of theannuity contract, reduced by an amountequal to the excess of the employee’scontributions over the cash and otherproperty (not including the annuitycontract) distributed.

If an annuity contract is part of amultiple recipient lump-sum distribution,enter in box 8, along with the currentactuarial value, the percentage of the totalannuity contract each Form 1099-Rrepresents.Box 9.—If this is a total distribution and itis made to more than one person, enterthe percentage received by the personwhose name appears on Form 1099-R.You need not complete this box for IRA orSEP distributions.Boxes 10–15.—These boxes and Copies 1and 2 are provided for your convenienceonly and need not be completed for theIRS. If state or local income tax has beenwithheld on this distribution, you may enterit in boxes 10 and 13, as appropriate. Inbox 11, enter the abbreviated name of thestate and the payer’s state identificationnumber. The state number is the payer’sidentification number assigned by theindividual state. In box 14, enter the nameof the locality. In boxes 12 and 15 you may

enter the amount of the state or localdistribution. Copy 1 may be used toprovide information to the state or local taxdepartment, and Copy 2 may be used asthe recipient’s copy for use in filing a stateor local income tax return.

Form 1099-S

File Form 1099-S, Proceeds From RealEstate Transactions, to report the sale orexchange of real estate.Note: You are not required to indicate onForm 1099-S that the transferor’s (seller’s)financing was Federally subsidized. Also,you are not required to enter (1) both totalgross proceeds and the allocated grossproceeds for a multiple transferortransaction (enter either one or the other);(2) an indication that the transferor mayreceive property or services for anobligation having a stated principal amount;or (3) an indication that, in connection witha contingent payment transaction, thetransferor may receive gross proceeds thatcannot be determined with certainty underthe regulations and is not included in grossproceeds.Reportable Real Estate.—Generally,reporting is required if the transactionconsists in whole or in part of the sale orexchange for money, indebtedness,property, or services, of any present orfuture ownership interest in any of thefollowing:

1. Improved or unimproved land,including air space.

2. Inherently permanent structures,including any residential, commercial, orindustrial building.

3. A condominium unit and itsappurtenant fixtures and commonelements, including land.

4. Stock in a cooperative housingcorporation (as defined in section 216).

Sale or exchange.—A sale or exchangeincludes any transaction properly treatedas a sale or exchange for Federal incometax purposes, even if the transaction is notcurrently taxable. For example, a sale of aprincipal residence is a reportable saleeven though the transferor may be entitledto defer recognition of the gain on the salebecause of the purchase of a newresidence under section 1034 or becausethe transferor is entitled to exclude thegain under section 121 because of beingage 55. Likewise, a transfer to acorporation that qualifies fornonrecognition of gain under section 351 isa reportable exchange.

Ownership interest.—An ownershipinterest includes fee simple interests, lifeestates, reversions, remainders, andperpetual easements. It also includes anypreviously created rights to possession oruse for all or part of any particular year,e.g., a leasehold, easement, or timeshare,if such rights have a remaining term of atleast 30 years, including any period forwhich the holder may renew such rights,determined on the date of closing. Forexample, a preexisting leasehold on a

building with an original term of 99 yearsand a remaining term of 35 years on theclosing date is an ownership interest;however, if the remaining term is 10 years,it is not an ownership interest. Anownership interest does not include anyoption to acquire real estate.

Involuntary conversion.—A sale of realestate under threat or imminence ofseizure, requisition, or condemnation isgenerally a reportable transaction.Exceptions.—The following is a list oftransactions that are not reportable.However, you may choose to report them;but if you do, the return filed and thestatement furnished to the transferor mustcomply with the reporting rules.

1. Any transaction in which the transferoris a corporation (or is considered to be acorporation under Regulations section1.6045-4(d)(2)), a governmental unit,including a foreign government or aninternational organization, or an exemptvolume transferor. Under this rule, if thereare exempt and nonexempt transferors,you must file Form 1099-S only for thenonexempt transferors.

Exempt volume transferor.—An exemptvolume transferor is someone who sold orexchanged during the year, who expectsto sell or exchange during the year, or whodid sell or exchange in either of the 2previous years, at least 25 separate itemsof reportable real estate to at least 25separate transferees. In addition, each itemof reportable real estate must have beenheld, at the date of closing, or will be held,primarily for sale or resale to customers inthe ordinary course of a trade or business.You are not required to report an exemptvolume transferor’s transactions if youreceive the penalties of perjury certificationrequired by Regulations section1.6045-4(d)(3).

2. Any transaction that is not a sale orexchange, including a bequest, a gift(including a transaction treated as a giftunder section 1041), and a financing orrefinancing that is not related to theacquisition of real estate.

3. A transfer in full or partial satisfactionof a debt secured by the property. Thisincludes a foreclosure, a transfer in lieu offoreclosure, or an abandonment.

4. A de minimis transfer for less than$600. A transaction is de minimis if it canbe determined with certainty that the totalmoney, services, and property received orto be received is less than $600, asmeasured on the closing date. Forexample, if a contract for sale provides fortotal consideration of “$1.00 plus othervaluable consideration,” the transfer is nota de minimis transfer unless you candetermine that the “other valuableconsideration” is less than $599, asmeasured on the closing date. The $600rule applies to the transaction as a whole,not separately to each transferor.

The following are also not reportable ifthe transaction is not related to the sale orexchange of reportable real estate:

5. An interest in crops or surface orsubsurface natural resources, i.e., timber,


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water, ores, and other natural deposits,whether or not such crops or naturalresources are severed from the land.

6. A burial plot or vault.7. A manufactured structure used as a

dwelling that is manufactured andassembled at a location different from thatwhere it is used, but only if such structureis not affixed, on the closing date, to afoundation. This exception applies to anunaffixed mobile home.Timber Royalties.—Report on Form1099-S payments of timber royalties madeunder a “pay-as-cut” contract, reportableunder section 6050N. For moreinformation, see Announcement 90-129,1990-48 I.R.B. 10.Gross Proceeds.—See Box 2, later.Who Must File.—Generally, the personresponsible for closing, as explained in 1below, is required to file Form 1099-S. Ifno one is responsible for closing, theperson required to file Form 1099-S isexplained in 2 below. However, you maydesignate the person required to file Form1099-S in a written agreement, asexplained under 3 below.Note: For each transaction, please be surethat only one person is responsible forfiling and that only one Form 1099-S isfiled for each transferor.

1. If you are the person responsible forclosing the transaction, you must fileForm 1099-S. If a Uniform SettlementStatement, prescribed under the RealEstate Settlement Procedures Act of 1974(RESPA), is used, the person responsiblefor closing is the person listed as thesettlement agent on that statement. AUniform Settlement Statement includes anyamendments, variations, or substitutionsthat may be prescribed under RESPA ifany such form requires disclosure of thetransferor and transferee, the application ofthe proceeds, and the name of thesettlement agent or other personresponsible for preparing the settlementstatement.

If a Uniform Settlement Statement is notused, or no settlement agent is listed, theperson responsible for closing is theperson who prepares the closingstatement, including a settlementstatement or other written document thatidentifies the transferor, transferee, andreal estate transferred, and that describeshow the proceeds are to be disbursed.

If no closing statement is used, or if twoor more statements are used, the personresponsible for closing is, in the followingorder: (a) the transferee’s attorney if theattorney is present at the delivery of eitherthe transferee’s note or a significant part ofthe cash proceeds to the transferor or ifthe attorney prepares or reviews thepreparation of the documents transferringlegal or equitable ownership; (b) thetransferor’s attorney if the attorney ispresent at the delivery of either thetransferee’s note or a significant part of thecash proceeds to the transferor or if theattorney prepares or reviews thepreparation of the documents transferringlegal or equitable ownership; or (c) the

disbursing title or escrow company that ismost significant in disbursing grossproceeds. If there is more than oneattorney described in (a) or (b), the onewhose involvement is most significant isthe person responsible for filing.

2. If no one is responsible for closing thetransaction as explained in 1 above, theperson responsible for filing is, in thefollowing order: (a) the mortgage lender,(b) the transferor’s broker, (c) thetransferee’s broker, or (d) the transferee.

For purposes of 2 above, apply thefollowing definitions:

a. Mortgage lender means a personwho lends new funds in connection withthe transaction, but only if the loan is atleast partially secured by the real estate. Ifthere is more than one lender, the one wholends the most new funds is the mortgagelender. If several lenders advance equalamounts of new funds, and no otherperson advances a greater amount of newfunds, the mortgage lender is the one whohas the security interest that is most seniorin priority. Amounts advanced by thetransferor are not treated as new funds.

b. Transferor’s broker means thebroker who contracts with the transferorand who is compensated for thetransaction.

c. Transferee’s broker means thebroker who significantly participates in thepreparation of the offer to acquire theproperty or who presents such offer to thetransferor. If there is more than one suchperson, the transferee’s broker is the onewho most significantly participates in thepreparation of the acquisition offer. If thereis no such person, the one who mostsignificantly participates in the presentationof the offer is the transferee’s broker.

d. Transferee means the person whoacquires the greatest interest in theproperty. If no one acquires the greatestinterest, the transferee is the person listedfirst on the ownership transfer documents.

3. Designation agreement.—You canenter into a designation agreement at orbefore closing to designate who must fileForm 1099-S for the transaction. Theagreement will identify the personresponsible for filing if such designatedperson signs the agreement. It is notnecessary that all parties to the transaction(or that more than one party) enter into theagreement.

You may be designated in theagreement as the person who must file ifyou are the person responsible for closing(as explained in 1 above), the transferee’sor transferor’s attorney (as explained in 1above), a title or escrow company that ismost significant in terms of the grossproceeds disbursed, or the mortgagelender (as explained in 2a above).

The designation agreement may be inany form and may be included on theclosing statement. It must identify by nameand address the person designated as theperson responsible for filing; it mustinclude the names and addresses of eachperson entering into the agreement; it mustbe signed and dated by all persons

entering into the agreement; it mustinclude the names and addresses of thetransferor and transferee; and it mustinclude the address and any otherinformation necessary to identify theproperty. Each person who signs theagreement must retain it for 4 years.Employees, Agents, and Partners.—If anemployee, agent, or partner, acting withinthe scope of such person’s employment,agency, or partnership, participates in areal estate transaction, only the employer,principal, or partnership (not the employee,agent, or partner) may be the reportingperson. However, the participation of aperson listed on the Uniform SettlementStatement as the settlement agent actingas an agent of another is not attributed tothe principal.Foreign Transferors.—Sales or exchangesinvolving foreign transferors are reportableon Form 1099-S. For information on thetransferee’s responsibility to withholdincome tax when a U.S. real propertyinterest is acquired from a foreign person,see Pub. 515, Withholding of Tax onNonresident Aliens and ForeignCorporations, and Form 8288, U.S.Withholding Tax Return for Dispositions byForeign Persons of U.S. Real PropertyInterests.Multiple Transferors.—For multipletransferors of the same real estate, youmust file a separate Form 1099-S for eachtransferor. At or before closing, you mustrequest from the transferors an allocationof the gross proceeds among thetransferors. The request and the responseare not required to be in writing. You mustmake a reasonable effort to contact alltransferors of whom you have knowledge.However, you may rely on theunchallenged response of any transferor,and you need not make additional contactswith other transferors after at least onecomplete allocation is received (100% ofgross proceeds) (whether or not receivedin a single response). If you receive theallocation, report gross proceeds on eachForm 1099-S accordingly.

You are not required to, but you may,report gross proceeds in accordance withan allocation received after the closingdate but before the due date of Form1099-S (without extensions). However, youcannot report gross proceeds inaccordance with an allocation received onor after the due date of Form 1099-S(without extensions).

If no gross proceeds are allocated to atransferor because no allocation or anincomplete allocation is received, you mustreport the total unallocated gross proceedson the Form 1099-S made for thattransferor. If you do not receive anyallocation or you receive conflictingallocations, report on each transferor’sForm 1099-S the total unallocated grossproceeds.

Husband and wife.—If the transferorswere husband and wife, at the time ofclosing, who held the property as jointtenants, tenants by the entirety, tenants incommon, or as community property, treatthem as a single transferor. Only one Form


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1099-S showing either of them as thetransferor is required. You need notrequest an allocation of gross proceeds ifhusband and wife are the only transferors.But if you receive an uncontestedallocation of gross proceeds from them, fileForm 1099-S for each spouse according tothe allocation. If there are other transferors,you must make a reasonable effort tocontact either the husband or wife torequest an allocation.

Partnerships.—If the property istransferred by a partnership, file only oneForm 1099-S for the partnership, notseparate Forms 1099-S for each partner.Multiple Assets Sold.—If real estate issold or exchanged and other assets aresold or exchanged in the same transaction,report the total gross proceeds from theentire transaction on Form 1099-S.Taxpayer Identification Numbers(TINs).—You must request the transferor’sTIN no later than the time of closing. TheTIN request need not be made in aseparate mailing. Rather, it may be madein person or in a mailing that includesother items. The transferor is required tofurnish his or her TIN and to certify that theTIN is correct.

You may request a TIN on Form W-9,Request for Taxpayer IdentificationNumber and Certification. Alternatively, youmay provide a written statement to thetransferor similar to the following: “You arerequired by law to provide [insert name ofperson responsible for filing] with yourcorrect taxpayer identification number. Ifyou do not provide [insert name of personresponsible for filing] with your correcttaxpayer identification number, you may besubject to civil or criminal penaltiesimposed by law.” The solicitation mustcontain space for the name, address, andTIN of the transferor, and a place to certifyunder penalties of perjury that the TINfurnished is the correct TIN of thetransferor. The certification must readsimilar to: “Under penalties of perjury, Icertify that the number shown on thisstatement is my correct taxpayeridentification number.” If you use aUniform Settlement Statement (underRESPA), you may provide a copy of suchstatement, appropriately modified to solicitthe TIN, to the transferor. Keep the FormW-9 or substitute form in your records for4 years.Separate Charge Prohibited.—The lawprohibits any person required to file Form1099-S from separately charging anycustomer a fee for complying with therequirements to file Form 1099-S.Statements to Transferors.—Forinformation about the requirement tofurnish a statement to the transferor, seepart H under General Instructions, earlier.Filer’s Name and Address Box.—Enterthe name and address of the person whois filing Form 1099-S. This informationmust be the same as the filer informationreported on Form 1096.Transferor’s Name and Address Box.—Enter the name and address of the selleror other transferor of the real estate. If ahusband and wife are joint sellers, it is only

necessary to enter one name and the TINfor that person on the form.Box 1.—Enter the closing date. If aUniform Settlement Statement (underRESPA) is used, the closing date is thedate shown as the settlement date onsuch statement. If a Uniform SettlementStatement is not used, the closing date isthe earlier of the date title transfers or thedate the economic burdens and benefits ofownership shift to the transferee. Pleaseuse the following format to indicate thedate: MMDDYY. For example, for January9, 1993, enter 010993.Box 2.—Enter the gross proceeds from thesale or exchange of real estate. Grossproceeds means any cash received or tobe received for the real property by or onbehalf of the transferor, including thestated principal amount of a note payableto or for the benefit of the transferor. If thetransferee assumes a liability of thetransferor or takes the property subject toa liability, such liability is treated as cashand is includible as part of gross proceeds.For a contingent payment transaction,include the maximum determinableproceeds. Also see Multiple Assets Sold,earlier.

If you are reporting a like-kind exchangeof property for which no gross proceedsare reportable, enter 0 (zero) in box 2 andmark the checkbox in box 4.

Gross proceeds do not include the valueof property or services received or to bereceived by, or on behalf of, the transferoror separately stated cash received forpersonal property, such as draperies,carpeting, or a washer and dryer.

Do not reduce gross proceeds by anyexpenses paid by the transferor, such assales commissions, deed preparation,advertising, and legal expenses. If aUniform Settlement Statement (underRESPA) is used for a transfer of real estatefor cash and notes only, gross proceedsgenerally will be the contract sales priceshown on that statement. If other propertyor services were exchanged, see Box 4,below.

Contingent payment transaction.—Acontingent payment transaction is one inwhich the receipt, by or on behalf of thetransferor, is subject to a contingency. Themaximum determinable proceeds meansthe greatest amount of gross proceedspossible if all the contingencies aresatisfied. If the maximum amount of grossproceeds cannot be determined withcertainty, the maximum determinableproceeds are the greatest amount that canbe determined with certainty.Box 3.—Enter the address of the property,including the city, state, and ZIP code, andif the address does not sufficiently identifythe property, also enter a legal description,such as section, lot, and block. For timberroyalties, enter “Timber.”Box 4.—If the transferor received or willreceive property (other than cash andconsideration treated as cash in computinggross proceeds) or services as part of theconsideration for the property, enter an “X”in the checkbox in box 4. If the transferormay receive property (other than cash) or

services to satisfy a debt having a statedprincipal amount, you must also mark thecheckbox.Box 5.—For a real estate transactioninvolving a residence, enter any realproperty tax allocable to the purchaser.You may use the appropriate informationincluded on the HUD-1, UniformSettlement Statement, or comparable form,provided at closing.

Form 5498

File Form 5498, Individual RetirementArrangement Information, with the IRS onor before May 31, 1994, for each personfor whom you maintained an individualretirement arrangement (IRA) or simplifiedemployee pension (SEP) during 1993. For aSEP, complete only box 4 for the value ofthe account; do not report employer SEPcontributions, including those made undersection 408(k)(6), relating to a salaryreduction SEP (SARSEP), on Form 5498.For an IRA, complete all applicable boxes.If no IRA contributions were made for1993, complete only box 4.

For contributions made between January1 and April 15, 1994, trustees and issuersshould obtain the participant’s designationof the year for which the contributions aremade.Direct Rollovers and Transfers.—Youmust report the receipt of a direct rolloverfrom a qualified plan or tax-shelteredannuity. Report a direct rollover in box 2.For information on direct rollovers ofeligible rollover distributions, see Form1099-R earlier.

However, do not report a directtrustee-to-trustee transfer from one IRA toanother. For reporting purposes,contributions and rollovers do not includethese transfers.Statements to Participants.—Trustees orissuers of IRAs or SEPs must provideparticipants with a statement of theDecember 31, 1993, value of theparticipant’s account by January 31, 1994,in any written format. Trustees or issuersof IRAs must provide participants withcontribution information by May 31. Youare not required to provide information tothe IRS or to participants as to whether acontribution is deductible or nondeductible.In addition, the participant is not requiredto tell you whether a contribution isdeductible or nondeductible.

If the trustee or issuer furnished astatement of the fair market value of theIRA to the participant by January 31, 1994,and no contributions were made to the IRAby the participant for 1993, the trustee orissuer need not furnish another statement(or Form 5498) to the participant to reportzero contributions. However, Form 5498must be filed with the IRS by May 31,1994, to report the December 31, 1993,fair market value of the IRA. This rule alsoapplies to beneficiary accounts under theinherited IRA rules below.Total Distribution, No Contributions.—Generally, if a total distribution was madefrom an IRA during the year and no


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contributions were made for that year, youneed not file Form 5498 nor furnish theannual statement to reflect that the fairmarket value on December 31 was zero.Distributions.—Report distributions fromIRAs and SEPs on Form 1099-R. For adistribution of contributions plus earnings,report the distribution on Form 1099-Rusing the applicable code.Inherited IRAs.—In the year an IRA ownerdies, you, as an IRA trustee or issuer,generally must file a Form 5498 and furnishan annual statement for the decedent anda Form 5498 and an annual statement foreach nonspouse beneficiary. An IRA holdermust be able to identify the source of eachIRA he or she holds for purposes offiguring the taxation of a distribution froman IRA. Thus, the decedent’s name mustbe shown on the beneficiary’s Form 5498and annual statement. For example, youmay enter “Brian Young as beneficiary ofJoan Smith” or something similar thatsignifies that the IRA was once owned byJoan Smith. You may abbreviate the word“beneficiary” as, for example, “benef.”

For a spouse beneficiary, unless thespouse makes the IRA his or her own bymaking contributions to the account,including a rollover contribution, or by nottaking distributions required by section401(a)(9)(B), treat the spouse as anonspouse beneficiary for reportingpurposes. If the spouse makes the IRA hisor her own, report on Form 5498 and theannual statement without the beneficiarydesignation.

Fair market value.—On the decedent’sForm 5498 and annual statement, youmust enter the fair market value of the IRAon the date of death in box 4. Or you maychoose the alternate reporting method andreport the fair market value as of the endof the year in which the decedent died.This alternate value will usually be zerobecause you will be reporting theend-of-year valuation on the beneficiary’sForm 5498 and annual statement, and thesame figure should not be shown on boththe beneficiary’s and decedent’s forms. Ifyou choose to report using the alternatemethod, you must inform the executor oradministrator of the decedent’s estate ofhis or her right to request a date-of-deathvaluation. If you use the language for box4 on the back of Copy B of the official1993 Form 5498, or you use the officialCopy B, you will have met this noticerequirement.

On the beneficiary’s Form 5498 andannual statement, the fair market value ofthat beneficiary’s share of the IRA as ofthe end of the year must be shown in box4. Every year thereafter that the IRA exists,you must file Form 5498 and furnish anannual statement for each beneficiary whohas not received a total distribution of hisor her share of the IRA showing the fairmarket value at the end of the year andidentifying the IRA as described above.

However, if a beneficiary takes a totaldistribution of his or her share of the IRA inthe year of death, you need not file a Form5498 nor furnish an annual statement forthat beneficiary.

If you have no knowledge of the death ofan IRA owner until after you are required tofile Form 5498 (May 31), you are notrequired to file a corrected Form 5498 norfurnish a corrected annual statement.However, you must still provide thedate-of-death valuation in a timely mannerto the executor or administrator uponrequest.

For more information about the reportingrequirements for inherited IRAs, see Rev.Proc. 89-52, 1989-2 C.B. 632.Desert Storm Contributions.—Anindividual who meets the requirements ofsection 7508 has an additional period afterthe normal contribution due date of April15 to make IRA contributions for a prioryear. The period is the time the individualwas in the Desert Shield/Storm combatzone plus at least 180 days. The individualmust designate the IRA contribution for aprior year to be claimed as a deduction onthe income tax return.

If a qualifying Desert Shield/Stormindividual makes a contribution to an IRAafter the normal contribution due date, andthat contribution is designated for a prioryear, you must report this contribution inone of two ways. You may report thecontribution either on Form 5498 for theyear for which the contribution was made,or on Form 5498 for a later year, forexample, the year in which the contributionis made.

If you choose to report the contributionon the Form 5498 for the year for whichthe contribution was made, no specialreporting is required. Merely include thecontribution in box 1 of an original Form5498 or of a corrected Form 5498 if anoriginal was previously filed.

If you choose to report the contributionon the Form 5498 in a later year, you mustenter “DS,” the year for which thecontribution was made, and the amount ofthe contribution in any of the empty boxeson the form. This contribution must not beincluded in box 1. For example, if a DesertStorm participant makes a permissible$2,000 IRA contribution on January 15,1993, for tax year 1991, you must enter“DS 1991 2000” in any empty boxes onthe 1992 or 1993 form. The $2,000 will notappear in box 1.

If you file Forms 5498 on magnetic orelectronic media, you may request anautomatic waiver from filing Desert StormForms 5498 on such media. Submit Form8508 for this purpose. Once you havereceived the waiver, you may report in oneof two ways. First, you may report all Form5498 information for the Desert Stormparticipant on paper. Alternatively, you mayreport contributions made by the normalcontribution due date on magnetic orelectronic media and report contributionsmade after the normal contribution duedate on paper. Under the second method,if a Desert Storm participant made two IRAcontributions on June 15, 1993—one for1992 and one for 1993—report the 1993contribution on magnetic or electronicmedia as you normally would, and reportthe 1992 contribution on paper. IRAcontributions made by Desert Storm

participants for 1992 between April 16 andDecember 31, 1993, may also be reportedon a corrected 1992 Form 5498 onmagnetic or electronic media.

See Notice 91-17, 1991-1 C.B. 319.Box 1.—Enter regular contributions to anIRA made in 1993 and through April 15,1994, designated for 1993. Also includeemployee contributions to an IRA under aSEP plan but only those that would besubject to the deduction limit undersection 219. Report gross contributions,including the amount allocable to the costof life insurance (see Box 3) and includingany excess contributions, even if theexcess contributions were withdrawn.Box 2.—Enter rollover contributions madeto an IRA received by you during 1993.Box 3.—For endowment contracts only,enter the amount included in box 1allocable to the cost of life insurance.Box 4.—Enter the fair market value of theIRA or SEP account on December 31. Forinherited IRAs, see Inherited IRAs, earlier.

Form W-2G

The requirements for filing Form W-2G,Certain Gambling Winnings, depend on thetype of gambling and are listed separatelyfollowing these general instructions.

The types of gambling are grouped asfollows:

1—Horse Racing, Dog Racing, Jai Alai,and Other Wagering Transactions NotDiscussed Later

2—State-Conducted Lotteries3—Keno, Bingo, and Slot Machines4—Sweepstakes, Wagering Pools, and

Certain LotteriesRegular Gambling Withholding.—A payerof certain gambling winnings (other thanwinnings from keno, bingo, and slotmachines) is required to withhold 28%from such winnings and report this amounton Form W-2G. This is referred to asregular gambling withholding. It applies togambling winnings of more than $5,000from (1) a sweepstakes, wagering pool, ornonstate-conducted lottery, (2) astate-conducted lottery, and (3) otherwagering transactions if the winnings areat least 300 times the amount wagered.Regular gambling withholding applies tothe amount of gross proceeds (the amountof winnings less the amount wagered) andnot merely to the amounts in excess of$5,000.Backup Withholding.—If a recipient failsto furnish a payer of reportable gamblingwinnings with a correct taxpayeridentification number (TIN), the payer isrequired to withhold 31% of the proceedsand to report this amount on Form W-2Gunless the winnings are already subject toregular gambling withholding as explainedabove. This is referred to as backupwithholding. Backup withholding applies tothe amount of the winnings reduced, at theoption of the payer, by the amountwagered and not merely to the amounts ofsuch reportable payments in excess of


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$600, $1,200, or $1,500 (the thresholds forinformation reporting). See the instructionsfor each type of gambling for detailed rulesfor backup withholding.

A payer may use Form W-9, Request forTaxpayer Identification Number andCertification, to request the TIN of therecipient.Foreign Persons.—Payments of certaingambling winnings to a nonresident alienindividual or a foreign corporation are notsubject to reporting or withholding on FormW-2G or Form 5754, Statement byPerson(s) Receiving Gambling Winnings,since such payments are subject towithholding under sections 1441(a) and1442(a) and are reportable on Forms 1042and 1042-S.State Tax Information.—If state incometax withholding is required on gamblingwinnings in your state, you may want tocomplete boxes 13 and 14 on Form W-2G.Copy 1 of the form may be used toprovide information to the state, and Copy2 may be used as the winner’s copy foruse in filing a state income tax return. Thestate identification number is assigned bythe individual state.Form 5754.—If the person receiving thewinnings is not the actual winner, or is amember of a group of winners, see Form5754, later.Statements to Winners.—For informationabout the requirement to furnish astatement to the winner, see part H underGeneral Instructions, earlier.

1—Horse Racing, Dog Racing, JaiAlai, and Other WageringTransactions Not Discussed LaterFile Form W-2G for every person to whomyou pay $600 or more in gamblingwinnings if such winnings are at least 300times the amount of the single wager. Youmust withhold Federal income tax, at therate of 28%, from the amount of winningsless the amount wagered if such winningsless the wager exceed $5,000 and if thewinnings are at least 300 times the amountof the single wager. If the recipient ofreportable gambling winnings does notprovide a TIN, you must impose backupwithholding at the rate of 31% on any suchwinnings that are not subject to regulargambling withholding under the precedingsentence. That is, if the winnings are atleast $600 but not more than $5,000,backup withholding applies to the amountof the winnings reduced, at the option ofthe payer, by the amount wagered.

In the case of multiple wagers sold onone ticket, such as the $12 box bet on aBig Triple or Trifecta, the wager will beconsidered to be six $2 bets and not one$12 bet for purposes of computing theamount to be reported or withheld.Winnings on a $12 box bet must bereported if they are $600 or more, andFederal income tax must be withheld if theproceeds amount to more than $5,000 or,in the event the proceeds do not exceed$5,000, if the recipient fails to provide aTIN.

Identical wagers (for example, two $2bets on a particular horse to win the samerace) are aggregated for purposes of thereporting and withholding requirements.Also, identical wagers that are not part ofthe payment for which the Form W-2G isbeing prepared are aggregated forpurposes of withholding to determine if thetotal amount of proceeds from identicalwagers is more than $5,000. If the personpresenting the ticket for payment is thesole owner of the ticket, Form W-2Gshould be completed showing the name,address, and identification number of thewinner. If Federal income tax is to bewithheld, the winner then signs the FormW-2G, under penalties of perjury, statingthat he or she is the sole owner and thatthe information listed on the form iscorrect. In this case, Form 5754 is notused.Box 1.—Enter payments of $600 or more ifthe payment is at least 300 times theamount of a single wager.Box 2.—Enter the amount of Federalincome tax withheld, whether regularwithholding or backup withholding.Box 3.—Enter the type of wager if otherthan a regular race bet, for example, DailyDouble or Big Triple.Box 4.—Enter the date of the winningevent. This is not the date the money waspaid if paid after the date of the race (orgame).Box 5.—Not applicable.Box 6.—Enter the race (or game)applicable to the winning ticket.Box 7.—Enter the amount of additionalwinnings from identical wagers.Box 8 or 10.—Enter the cashier and/orwindow number making the winningpayment.Boxes 11 and 12.—Enter the identificationnumbers of the person receiving thewinnings.Box 13.—(optional) Enter the abbreviatedname of the state and your stateidentification number.Box 14.—(optional) Enter the amount ofstate income tax withheld.

2—State-Conducted LotteriesFile Form W-2G for every person to whomyou pay winnings of $600 or more from astate-conducted lottery if such winningsare at least 300 times the amount of thesingle wager. You must withhold Federalincome tax, at the rate of 28%, from theamount of winnings less the price of thewinning ticket if such winnings less theprice of the winning ticket exceed $5,000.If the recipient of the reportable lotterywinnings does not provide a TIN, you mustimpose backup withholding at the rate of31% on any such winnings that are notsubject to regular gambling withholdingunder the terms of the preceding sentence.That is, if the amount of the lotterywinnings is at least $600 but not morethan $5,000, backup withholding applies tothe amount of the winnings reduced, at theoption of the payer, by the amountwagered.

Installment payments of $5,000 or lessare subject to regular 28% gamblingwithholding if the aggregate proceeds fromsuch wager will exceed $5,000.

If payments are to be made for the life ofa person (or for the lives of more than oneperson), and it is actuarially determinedthat the aggregate proceeds from suchwager are expected to exceed $5,000,such payments are subject to regular 28%gambling withholding.

The price of the wager must bededucted from the total winnings todetermine whether reporting or withholdingis required. The deduction for the cost ofthe wager should be made at the time ofthe first payment.

Noncash payments, such asautomobiles, are to be taken into accountat their fair market values for purposes ofreporting and withholding. If the fair marketvalue exceeds $5,000, after deducting theprice of the wager, it is subject to regulargambling withholding. In such a case, thetax that must be withheld is computed asfollows: (1) if payment of the withholdingtax is made by the winner to the payer ofwinnings, 28% of the noncash paymentless the amount of the wager is subject towithholding; (2) if the payer of winningsalso pays the withholding tax, 38.88% ofthe noncash payment (less the wager) issubject to withholding. If the method under(2) is used, the sum of the noncashpayment and withholding tax is entered inbox 1. See Regulations section31.3402(q)-1(d)Ex.(5) for more information.

A payment of winnings is consideredmade when it is paid, either actually orconstructively, to the winner. Winnings areconstructively paid when they are creditedto, or set apart for, that person without anysubstantial limitation or restriction on thetime, manner, or condition of payment.

When a person other than a state lotteryemployee or agent makes the payments,as in the case of an insurance companyhandling the winnings as an annuity, thatother person must deduct and withhold asoriginally required of the state lotterypayer.Box 1.—Enter payments of $600 or more.Box 2.—Enter the amount of Federalincome tax withheld, whether backupwithholding or regular gamblingwithholding.Box 3.—Enter the name of the lottery(Instant, Big 50, Baker’s Dozen, etc.) andthe price of the ticket (50¢, $1, etc.).Box 4.—Enter the date of the drawing ofthe winning number. This might not be thedate the winnings are paid.Box 5.—Enter the ticket number or otheridentifying number.Boxes 6 through 8 and 10 through 12.—Not applicable to lottery winnings.Box 13.—(optional) Enter the abbreviatedname of the state and your stateidentification number.Box 14.—(optional) Enter the amount ofstate income tax withheld.


Page 28


3—Keno, Bingo, and SlotMachinesFile Form W-2G for every person to whomyou pay $1,200 or more in gamblingwinnings from bingo or slot machines, or$1,500 or more from keno after the priceof the wager for the winning keno game isdeducted. If the winnings are of a noncashnature, the fair market value of the itemwon is to be considered the amount of thewinnings. Total all winnings from eachbingo or keno game. Winnings and lossesfrom other wagering transactions are not tobe taken into account in arriving at the$1,200 or $1,500 figure. If the recipient ofreportable gambling winnings from bingo,keno, or slot machines does not provide aTIN, you must impose backup withholdingat the rate of 31% on any such winnings.Backup withholding applies to the amountof the winnings reduced, at the option ofthe payer, by the amount wagered. Regulargambling withholding does not apply towinnings from bingo, keno, or slotmachines.Box 1.—Enter payments of $1,200 or morefrom bingo or slot machines or paymentsof $1,500 or more from keno.Box 2.—Enter the amount of any backupwithholding.Box 3.—Enter the type of wager, such asbingo, keno, and slot machines, and theamount of the wager.Box 4.—Enter the date of the winningtransaction.Box 5.—Enter the ticket number, cardnumber (and color, if applicable), machineserial number, or any other information thatwill help identify the winning transaction.Boxes 6 and 7.—Not applicable.Box 8.—Enter the initials of the personpaying the winnings.Box 10.—Enter the location of the personpaying the winnings, if applicable.Boxes 11 and 12.—Enter the identificationnumbers of the person receiving thewinnings.

Box 13.—(optional) Enter the abbreviatedname of the state and your stateidentification number.Box 14.—(optional) Enter the amount ofstate income tax withheld.

4—Sweepstakes, Wagering Pools,and Certain LotteriesFile Form W-2G for each person to whomyou pay $600 or more in gamblingwinnings from any wager placed in asweepstakes, wagering pool, or lottery(other than a state-conducted lottery). Youmust withhold Federal income tax, at therate of 28%, from the amount of winningsless the amount wagered if such winningsless the wager exceed $5,000. If therecipient of such reportable gamblingwinnings does not provide a TIN, you mustimpose backup withholding at the rate of31% on any such winnings that are notsubject to regular gambling withholdingunder the terms of the preceding sentence.That is, if the winnings are at least $600but not more than $5,000, backupwithholding applies to the amount of thewinnings reduced, at the option of thepayer, by the amount wagered. Theserequirements apply to church raffles,charity drawings, etc.Box 1.—Enter all payments of $600 ormore.Box 2.—Enter the amount of Federalincome tax withheld, whether regulargambling withholding or backupwithholding.Box 3.—Enter the type of wager, such asa raffle or a 50-50 drawing.Box 4.—Enter the date of the winningtransaction.Boxes 5 through 8 and 10.—Notapplicable.Boxes 11 and 12.—Enter the identificationnumbers of the person receiving thewinnings.Box 13.—(optional) Enter the abbreviatedname of the state and your stateidentification number.Box 14.—(optional) Enter the amount ofstate income tax withheld.

Form 5754

Form 5754, Statement by Person(s)Receiving Gambling Winnings, is used onlyin preparing Form W-2G when the personreceiving the winnings is not the actualwinner or is a member of a group of two ormore winners on the same winning ticket.

The person receiving the winnings mustfurnish all the information required by Form5754. However, a recipient of winningsfrom state-conducted lotteries need notprovide identification other than his or hertaxpayer identification number. Part I liststhe identification of the person to whomthe winnings are paid, and Part II lists theactual winners, their respective shares ofthe winnings, and any additional winningsfrom identical wagers.

In Part II, the person receiving thewinnings must provide the name, address,identification number, respective share ofthe winnings, and additional winnings fromidentical wagers for each of the winners. Inaddition, if Federal income tax is to bewithheld, the form must be signed, underpenalties of perjury, and dated by theperson receiving the winnings. The formmust be returned to the payer forpreparation of Form W-2G for each of thepersons listed as winners. Forms W-2Gmay be issued immediately or by January31 following the year of the payment. Donot send Form 5754 to the IRS. Keep itfor your records.

Withholding and Forms W-2G forMultiple Winners.—If more than oneperson shares in the winnings from asingle wager, the total amount of thewinnings (less the amount wagered) willdetermine the amount of the proceeds forpurposes of reporting and withholding. Donot allocate winnings to each winnerbefore determining whether the withholdingor reporting thresholds were reached.

For example, E purchases asweepstakes ticket for $1 on behalf ofhimself and S, who contributes an equalamount of the ticket price and who willshare equally in any winnings. The ticketwins $5,002. Since the winnings ($5,002 -$1 = $5,001) are more than $5,000, youmust withhold 28% of $5,001. You mustprepare Form W-2G for E and for S, usingthe information furnished to you on Form5754.


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Guide to Information ReturnsDue Date

Form Title What To Report Amounts To Report To Recipient(unless indicated

otherwise)To IRS

Foreign Person’s U.S.Source Income Subjectto Withholding

1042-S Payments subject to withholding under Chapter3 of the Code, including interest, dividends,royalties, pensions and annuities, gamblingwinnings, and compensation for personalservices.

All amounts March 15March 15

Mortgage interest (including certain points) youreceived in the course of your trade or businessfrom individuals and reimbursements of overpaidinterest.

(ToPayer/Borrower)

January 31

Mortgage InterestStatement

1098$600 or more February 28

Information about the acquisition orabandonment of property that is security for adebt for which you are the lender.

Acquisition orAbandonment ofSecured Property

1099-A(To Borrower)January 31

All amounts February 28

Sales or redemptions of securities, futurestransactions, commodities, and barter exchangetransactions.

Proceeds From Brokerand Barter ExchangeTransactions

1099-BAll amounts January 31February 28

$10 or more, except$600 or more forliquidations

Distributions, such as dividends, capital gaindistributions, or nontaxable distributions, thatwere paid on stock, and distributions inliquidation.

Dividends andDistributions

1099-DIV

January 31February 28

$10 or more forunemployment andtax refunds; $600 ormore for all others

Unemployment compensation, state and localincome tax refunds, agricultural payments,taxable grants, and discharge of indebtednessowed to the Federal Government.

Certain GovernmentPayments

1099-G

January 31February 28

$10 or more ($600 ormore in some cases)

Interest income not including interest on an IRA.Interest Income1099-INT January 31February 28

1099-MISC $600 or more, except$10 or more forroyalties

Rent or royalty payments; prizes and awards thatare not for services, such as winnings on TV orradio shows.

Miscellaneous Income

All paymentsPayments to crew members by owners oroperators of fishing boats. Report payments ofproceeds from sale of catch.

(Also, use this form toreport the occurrenceof direct sales of$5,000 or more ofconsumer goods forresale.) $600 or more

Payments to a physician, physicians’corporation, or other supplier of health andmedical services. Issued mainly by medicalassistance programs or health and accidentinsurance plans. January 31February 28

$600 or more

Payments for services performed for a trade orbusiness by people not treated as its employees.Examples: fees to subcontractors or directors,expenses incurred for use of an entertainmentfacility treated as compensation to anonemployee, and golden parachute payments.

$10 or moreSubstitute dividend and tax-exempt interestpayments reportable by brokers.

$600 or moreCrop insurance proceeds.

1099-OID Original Issue Discount January 31February 28$10 or moreOriginal issue discount.

1099-PATR Taxable DistributionsReceived FromCooperatives

January 31February 28$10 or moreDistributions from cooperatives to their patrons.

Distributions from retirement or profit-sharingplans, IRAs, SEPs, or insurance contracts.

Distributions FromPensions, Annuities,Retirement orProfit-Sharing Plans,IRAs, InsuranceContracts, etc.

1099-R

February 28All amounts January 31

Gross proceeds from the sale or exchange ofreal estate.

Proceeds From RealEstate Transactions

1099-S February 28All amounts January 31

Within 15days afterthe date ofthetransaction

Each deposit, withdrawal, exchange of currency,or other payment or transfer by, through, or tofinancial institutions (other than casinos) thatinvolves a transaction in currency of more than$10,000.

Currency TransactionReport

4789

Over $10,000 Not required

(If any date shown falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.)


Page 30


Guide to Information Returns (Continued)

Due Date

Form To Recipient(unless indicated

otherwise)

Amounts To ReportWhat To ReportTitleTo IRS

Receipts from food or beverage operations, tipsreported by employees, and allocated tips.

Employer’s AnnualInformation Return ofTip Income andAllocated Tips

8027 Allocated tipsare shown on

Form W-2,due January 31

Last day ofFebruary

See separateinstructions

Payments in cash or foreign currency received inone transaction, or two or more relatedtransactions, in the course of a trade orbusiness. Does not apply to banks and financialinstitutions filing Form 4789, CurrencyTransaction Report, and casinos that arerequired to report such transactions on Form8362, Currency Transaction Report by Casinos,or, generally, to transactions outside the UnitedStates.

Report of CashPayments Over$10,000 Received in aTrade or Business

8300

Within 15days afterthe date ofthetransaction

(To Payer)January 31Over $10,000

Generally,attach toForm 1065

Sales or exchanges of a partnership interestinvolving unrealized receivables or substantiallyappreciated inventory items.

Report of a Sale orExchange of CertainPartnership Interests

8308 (To Transferorand

Transferees)January 31

(Transaction only)

Generally, $600 ormore; $1,200 ormore from bingo orslot machines;$1,500 or more fromkeno

Gambling winnings from horse racing, dogracing, jai alai, lotteries, keno, bingo, slotmachines, sweepstakes, and wagering pools.

Certain GamblingWinnings

W-2G

February 28 January 31

Wages, tips, other compensation, withheldincome, social security, and Medicare taxes, andadvance earned income credit (EIC) payments.Include bonuses, vacation allowances, severancepay, moving expense payments, some kinds oftravel allowances, and third-party payments ofsick pay.

Wage and TaxStatement

W-2 To SSA To Recipient

See separateinstructions Last day of

February January 31

Contributions (including rollover contributions) toan individual retirement arrangement (IRA), andthe value of an IRA or simplified employeepension (SEP) account.

Individual RetirementArrangementInformation

5498 (To Participant)(for value of

account)January 31

(for contributions)May 31

May 31All amounts


Page 31


Types of PaymentsBelow is an alphabetical list of some payments and the forms to file to report them. The list was developed to help you determine whichform 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 thepayment is not reportable.

Type of Payment Report on FormAbandonment 1099-AAdvance earned income credit W-2Agriculture payments 1099-GAllocated tips W-2Annuities 1099-RAuto reimbursements:

Employee W-2Nonemployee 1099-MISC

Awards:Employee W-2Nonemployee 1099-MISC

Barter exchange income 1099-BBonuses:


Broker transactions 1099-BCar expense:


Charitable gift annuities 1099-RChristmas bonuses:


Commissions:Employee W-2Nonemployee 1099-MISC

Commodities transactions 1099-BCompensation:


Crop insurance proceeds 1099-MISCDamages 1099-MISCDependent care payments W-2Direct rollovers 1099-R, 5498Direct sales of consumer

products for resale 1099-MISCDirectors’ fees 1099-MISCDischarge of indebtedness,

Federal Government 1099-G

Type of Payment Report on FormDividends 1099-DIVEducation expense reimbursement:


Employee compensation W-2Employee business expense

reimbursement W-2Excess deferrals, excess

contributions, distributions of 1099-RFees:


Fishing boat crew membersproceeds 1099-MISC

Foreclosures 1099-AForeign persons’ income 1042-S401(k) contributions W-2404(k) dividend 1099-DIVGambling winnings W-2GGolden parachute:


Grants, taxable 1099-GHealth care services 1099-MISCIncome tax refunds, state

and local 1099-GInterest income 1099-INTInterest, mortgage 1098IRA contributions 5498IRA/SEP distributions 1099-RLife insurance contract

distributions 1099-RLiquidation, distributions in 1099-DIVMedical services 1099-MISCMileage:


Mortgage interest 1098

Type of Payment Report on FormMoving expense W-2Nonemployee compensation 1099-MISCNonqualified plan distribution W-2Original issue discount (OID) 1099-OIDPatronage dividends 1099-PATRPension 1099-RPoints 1098Prizes:


Profit-sharing plan 1099-RPS 58 costs 1099-RQualified plan distributions 1099-RReal estate transactions 1099-SRefunds, state and local tax 1099-GRents 1099-MISCRetirement 1099-RRoyalties 1099-MISC

Timber, pay-as-cut contract 1099-SSales:

Real estate 1099-SSecurities 1099-B

Section 1035 exchange 1099-RSEP contributions W-2SEP distributions 1099-RSeverance pay W-2Sick pay W-2Substitute payments in lieu of

dividends or tax-exemptinterest 1099-MISC

Supplemental unemployment W-2Tips W-2Unemployment benefits 1099-GVacation allowance:


Wages W-2


Page 32


IndexAbandonments 11Account number box 4Agricultural commodities 1, 12Agriculture payments 14Annuity distributions 19

Backup withholding 2, 26Barter exchange transactions 12Broker transactions 11

Certain government payments 13Changes this year 1Charitable gift annuities 1, 19, 23Consumer products of $5,000,

indicator for 17Corrected returns, how to file 7Crop insurance proceeds 17

Damages 16Death benefit payments 19, 21Direct Rollovers 1, 20, 22, 23, 25Direct sales of consumer products for

resale 17Directors’ fees 16Discharge of indebtedness by

Federal Government 14Dividends 13Due dates 5, 7

Excess deferrals, excesscontributions, correctivedistributions of 20, 22, 23

Fair market value of IRA and SEP 26Fishing boat proceeds 16Foreclosures 11Form 1098 1, 8Form 1099-A 11

Form 1099-B 1, 11Form 1099-DIV 13Form 1099-G 13Form 1099-INT 14Form 1099-MISC 1, 15Form 1099-OID 17Form 1099-PATR 19Form 1099-R 1, 19Form 1099-S 1, 23Form 5498 25Form 5754 28Form W-2G 1, 26404(k) dividend 13

Gambling winnings 1, 26Golden parachute payments 17Grants, taxable 14Guide to information returns, chart 29

Health care services 16

Income tax refunds, state and local 13Informants, fees 16Interest income 14Interest, mortgage 8IRA contributions 25IRA/SEP distributions 20, 21

Life insurance contract distributions 19Liquidation, distributions in 13

Magnetic media/electronic reporting 3Medical services, payments 16Mortgage interest 8

Reimbursement of overpaid 1, 9

Nominee/middleman 4Nonemployee compensation 17Nonqualified plan distribution 19

Original issue discount (OID) 17

Paper document reporting 4Patronage distributions 19Penalties 2Pension distributions 19Points 10Precious metals 1, 12Prizes and awards 16Profit-sharing distributions 19PS 58 costs 19, 21, 22, 23

Qualified plan distributions 19

Real estate transactions 1, 6, 23Refunds, state and local tax 13REMICs reporting requirements 15, 18Rents 16Royalties 16

Timber 24, 25

Sales of stock 11Section 1035 exchange 19, 22Statement mailing requirement 6Statements to recipients 6Substitute forms 2, 6Substitute payments in lieu of

dividends and tax-exempt interest 13,17

Taxpayer identification numbers 5, 6, 25Types of payments, alphabetical list 31

Unemployment compensation 13

Void returns 7

When to file 5Where to file 5Who must file 4