Complete the following additional paragraph items: 1 ? 5 Please also examine the bullets on requirements to add that may pertain to these paragraphs. State any assumptions you are making in a separate memorandum attached to the return.

Will S. (age42) and Mari N. (age41) Frost aremarried and liveat 426East Twin Oaks Road, Sioux Falls, SD 57105. Will is theregional manager for a restaurant chain (MoveableFeast), and Mari is a self-employed architect. They arecalendar-year, cash-basis taxpayers.

1.

Will?s annual salary from MoveableFeast is $82,000. Healsoearns an annual bonus. Theamount is determined in lateDecember, and Will receives it in January of thenext year. Will?s 2012 bonus was $6,000 (received in 2013), and his 2013 bonus was $7,000 (received in 2014). Will is also paid a flat travel allowanceof $16,000 per year. Theallowanceis to cover hisexpenses in visiting restaurants in his region to conduct inspections, consult with thelocal managers, and recruit potential hires. Although Will maintains substantiation of his travel, heis not required to account for theseexpenses to MoveableFeast. Will participates in hisemployer?s group health insuranceplan to which hecontributed $3,600 in 2013 for medical coverage. Thesecontributions weremadewith after-tax dollars. Thehealth plan covers Will, Mari, and their two dependent children. MoveableFeast does not provideany retirement benefits, but it hasestablished a 401(k) plan toenableitsemployees to makevoluntary contributions. Will contributed $10,000 to theplan in 2013. Thecompany provides an officefor Will?s usethat is located at 110 North Reid Street, Suite217, Sioux Falls.

2.

Besides thebusiness useof his car (seeitem 3 below), Will?s out-of-pocketemployment-relatedexpenses for 2013 areas follows:

Airfare	$2,600
Lodging	3,200
Meals	3,400
Entertainment	800
Car rentals, limos, taxis	600
Parking and tolls	300
Subscriptions to tradejournals	120
Dues to tradeassociation	80
Business gifts	550

E-1E-2

Whileon business trips in his car, Will was cited for speeding several times and paid related fines totaling $620. Will presented thebusiness gifts in lateDecember to managers of thetop 11 restaurants in his region, witheach manager receiving a $50 gift card to a national retailer.

3.

On March 5, 2012, Will purchased a new Ford Focus for usein his job. Thecar cost $24,000 (including sales tax), with no trade-in involved. Thecar was driven 14,000 miles in 2012 and 18,000 in 2013 with usageas follows: 20% for commuting to theofficeand 80% for business trips. Themileagefor 2013 wasevenly distributed throughout theyear. Will uses theactual operating cost method, and for depreciation purposes, uses 200% declining-balancewith a half-year convention. In addition, Will did not claim any 179expensing or additional first-year depreciation last year when hebought thecar. (SeeTable3 of theInstructions to Form 4562.) Will?sexpenses related to operating theFord Focus for 2013 areas follows:

Gasoline $2,900 Oil change and lubrication 150 Auto insurance 1,800 Repairs 400 Auto club dues 160 License and registration 120 Interest on car loan 900 4. Mari Frost is a licensed architect who works part time on a consulting basis. Her professional activity code is 541310. Her major clients are real estate developers (both residential and commercial) for whom she prepares structural designs and construction plans. She also advises on building code requirements regarding the renovation and remodeling of existing structures. Mari collected $52,000 in consulting fees during 2013. This total includes a $3,000 payment for work she performed in 2012 and does not include $5,000 she billed in December for work performed in late 2013. In addition, Mari has an unpaid invoice for $6,000 from a client for work done in 2011. This client was convicted of arson in August 2013 and is now serving a five-year sentence in state prison. Mari feels certain that she will never collect the $6,000 she is owed. Mari does her work at the client?s premises or in her office at home (see item 5 below). Her business expenses for 2013 are as follows:

Drafting supplies $4,800 Reproduction materials (e.g., molds, models, photos, blueprints, copies) 3,200 On-site work clothing (e.g., hip boots, safety glasses, safety helmet) 800 Professional license fee 400 Subscriptions to professional journals 250 Dues to professional organizations 240 In addition, Mari drove the family Acura (purchased on June 7, 2012) 940 miles on her job assignments. She uses the standard mileage method to deduct business costs related to the Acura. During 2013, Mari drove the car a total of 10,000 miles. 5. When the Frosts purchased their home on February 2, 2012, they set aside 300 square feet (out of a total of 2,400 square feet) of living space for Mari?s office. As of January 1, 2013, the home had an adjusted basis of $240,000 for purposes of line 36 of Form 8829 (of which $40,000 is attributable to the land)?the fair market value of the property is in excess of this amount. Relevant information concerning the residence for all of 2013 follows: Homeowner?s insurance $3,200 Repairs and maintenance 1,800 Utilities 6,200 Painting (office area only) 2,500 The cost of Mari?s office furniture and equipment was previously deducted under 179 in the years these assets were acquired. On June 29, 2013, she purchased a fireproof file cabinet for $800 to safeguard the blueprints of her structural designs and construction plans. If possible, Mari prefers to avoid depreciating capital expenditures. 6. One of Mari?s clients was interested in building a shopping center on a tract of land Mari owned in Lincoln County. Mari inherited the property from her uncle when he died on June 6, 1993. At that time, the land was worth $40,000. It has since been rezoned for commercial use and has a current value of $200,000. On February 10, 2013, Mari exchanged the Lincoln County parcel for a similar tract in Minnehaha County (worth $190,000) and cash of $10,000. 7. On September 2, 2013, Mari sold a tract of land in McCook County to a farmer who owned the adjoining property. The land was inherited from the same uncle who died in 1993 and was worth $30,000 on June 6, 1993. Under the terms of the sale, Mari received cash of $20,000 and four notes receivable (to be paid at one-year intervals) that each call for the payment of $25,000 plus simple interest of 8%. To the extent allowed by law, Mari wants to defer recognition of gain as long as possible. 8. In early 2012, Will learned that one of his restaurant managers, Carrie Jones, was suffering domestic abuse at the hands of her husband Steve. When Steve also started to abuse their 5-year-old daughter, Carrie decided it was time for her and her daughter to get away. Before they left on April 14, 2012, Will loaned Carrie $5,500 to help them relocate. Will had her sign an interest-free note due in one year. Will never heard from Carrie again. In late 2013, Will learned that Steve tracked down Carrie and their daughter and killed both of them before committing suicide. Given these tragic circumstances, Will has no expectation that the loan will ever be repaid. 9. On August 5, 2011, Will purchased 1,000 shares of Farmer?s Markets America (FMA) common stock for $16 a share as part of its initial public offering. The corporation was formed to establish and operate farmers? markets in mid-size cities throughout the United States. Although some market locations were profitable, the venture as a whole proved to be a failure. In November 2013, FMA?s remaining assets were seized by its creditors, and FMA stock became worthless. 10. Besides the items previously noted, the Frosts had the following receipts for 2013: Interest income: City of Sioux Falls bonds $1,400 General Motors corporate bonds 1,900 Castle Bank certificate of deposit 210 $ 3,510 Qualified dividends from MG&E Inc. 3,100 Refund from HomeStuff (received 1/13/13) 430 Loan repayment by Sarah Frost-Caine 4,500 Cash gifts from Mari?s parents 32,000 Federal income tax refund (2012 return) 290 In December 2012, the Frosts made major purchases of household items (e.g., appliances, furniture) at HomeStuff (a discount big box store). They called the manager when they realized they did not receive the advertised sale price. Consequently, the store corrected the mistake and sent a $430 refund. Four years ago when his sister Sarah married, Will lent her $4,000 to help pay for her honeymoon. Will was pleasantly surprised when Sarah paid him back (plus interest of $500) on December 20, 2013. On March 20 of each year, Mari?s parents send a generous gift of cash as a birthday present. Just as she has done for the past seven years, Mari immediately invested the cash in her kids? 529 college savings plans. 11. In addition to the items already noted, the Frosts had the following expenditures for 2013: Mari?s contribution to her traditional IRA $5,500 Net gambling loss 1,000 Life insurance premiums 2,700 Medical and dental expenses not covered by insurance 6,200 Taxes: Ad valorem taxes on personal residence $4,800 State and local sales taxes 3,200 8,000 Interest on home mortgage 4,000 Cash Contributions: Goodwill (Sioux Falls branch) 1,200 South Dakota governor?s election campaign fund 300 1,500 The $1,000 net gambling loss for 2013 is the difference between the Frosts? gambling winnings of $1,200 and losses of $2,200. The life insurance premiums relate to the universal life insurance policies that Will and Mari own. The first beneficiary on both policies is the other spouse, with the second beneficiaries being the children. Included in the medical expenses are $1,200 incurred in 2012, which was paid in early February 2013. The Frosts can substantiate the $3,200 in sales taxes paid based on their purchase receipts for the year. The local sales tax rate in Sioux Falls is 2%. [HINT: Be sure to check to see if the Optional Sales Tax Tables provide the Frosts with a greater deduction.] Mari contributed to the governor?s campaign fund because she thinks his influence is key in getting the Lincoln County land rezoned for commercial use (see item 6 above). 12. The Frosts maintain a household that includes their two children, Austin (age 16) and Emma (age 19). Austin is a junior in high school and a talented wrestler. In hopes of competing at the state tournament, all of his free time is consumed with weight training and wrestling practices. Emma graduated from high school on June 7, 2013, and is undecided about college. Emma is an accomplished vocalist and during 2013 earned $7,200 performing at various events (e.g., weddings, funerals). She placed most of her earnings in a savings account and kept only a small amount to spend on herself. 13. Will?s Form W?2 from Moveable Feast shows $13,800 withheld for Federal income tax. The Frosts have made total quarterly income tax payments of $4,000. 14. Relevant Social Security numbers are as follows:

Name Social Security Number Will S. Frost 111?11?1111 Mari N. Frost 123?45?6787 Emma J. Frost 123?45?6788 Austin W. Frost 123?45?6789 Requirements Prepare an income tax return (with appropriate schedules) for the Frosts for 2013, using the following guidelines: The Frosts choose to file a joint income tax return. The Frosts do not wish to contribute to the Presidential Election Campaign Fund. The Frosts do not own any foreign bank accounts or other investments. The Frosts prefer to receive any refund of overpaid taxes. The taxpayers are preparing their own return (i.e., no preparer is involved). For the past several years, the Frosts have itemized their deductions from AGI instead of using the standard deduction. The taxpayers have the necessary substantiation (e.g., records, receipts) to support all transactions reported in their tax return. Make necessary assumptions for information not given in the problem but needed to complete the return.

Form 1040 2014 (99) Department of the TreasuryInternal Revenue Service U.S. Individual Income Tax Return For the year Jan. 1-Dec. 31, 2014, or other tax year beginning Your first name and initial , 2014, ending Frost See separate instructions. Frost Will S. IRS Use OnlyDo not write or staple in this space. Last name Mari N. OMB No. 1545-0074 , 20 Your social security number 1 2 3 4 5 6 7 8 7 Spouse's social security number Last name If a joint return, spouse's first name and initial 1 1 1 1 1 1 1 1 1 Apt. no. Home address (number and street). If you have a P.O. box, see instructions. 426.East Twin Oaks Road City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking Foreign postal code a box below will not change your tax or refund. You Spouse Sioux Falls, SD 57105 Foreign country name Filing Status Check only one box. Exemptions Foreign province/state/county 1 6a b c Income Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. child's name here. 5 Qualifying widow(er) with dependent child Yourself. If someone can claim you as a dependent, do not check box 6a . Spouse . Dependents: . . . . . . . . . . . (2) Dependent's social security number Last name Emma J. Frost Austin W. Frost d Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your dependent, enter this Married filing separately. Enter spouse's SSN above and full name here. (1) First name If more than four dependents, see instructions and check here 4 Single Married filing jointly (even if only one had income) 2 3 Total number of exemptions claimed . . . . . . . . . . . . . . . . . . } (4) if child under age 17 qualifying for child tax credit (see instructions) . . . . . . . . . . . . . . . . . . . 2 . . . . . . . 8a 1710 . 1,400 . . . . 9a 3,100 . . 3100 . . . . . . 10 11 . . . . Taxable interest. Attach Schedule B if required . Tax-exempt interest. Do not include on line 8a . Ordinary dividends. Attach Schedule B if required . . . . . . . . . . 4 7 . 8b . . Wages, salaries, tips, etc. Attach Form(s) W-2 8a b 9a . Add numbers on lines above . 10 11 Qualified dividends . . . . . . . . . . . 9b Taxable refunds, credits, or offsets of state and local income taxes Alimony received . . . . . . . . . . . . . . . 12 13 14 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . Capital gain or (loss). Attach Schedule D if required. If not required, check here Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . 15a 16a 17 IRA distributions . 15a b Taxable amount . . . Pensions and annuities 16a b Taxable amount . . . Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 15b 16b 17 Farm income or (loss). Attach Schedule F . Unemployment compensation . . . . Social security benefits 20a 18 19 20b 21 22 Other income. List type and amount Combine the amounts in the far right column for lines 7 through 21. This is your total income 23 Educator expenses 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ 25 Health savings account deduction. Attach Form 8889 . 24 25 26 27 28 Moving expenses. Attach Form 3903 . . . . . . Deductible part of self-employment tax. Attach Schedule SE . Self-employed SEP, SIMPLE, and qualified plans . . 26 27 28 29 30 31a Self-employed health insurance deduction Penalty on early withdrawal of savings . . . . . . . . . . Alimony paid b Recipient's SSN IRA deduction . . . . . . . Student loan interest deduction . . Tuition and fees. Attach Form 8917 . 29 30 31a 32 33 34 . . . . . . . . . . . . 32 33 34 35 36 37 Adjusted Gross Income 2 Dependents on 6c not entered above 18 19 20a If you did not get a W-2, see instructions. Boxes checked on 6a and 6b No. of children on 6c who: lived with you did not live with you due to divorce or separation (see instructions) Daughter Son 7 b . (3) Dependent's relationship to you 1 2 3 4 5 6 7 8 8 1 2 3 4 5 6 7 8 9 Make sure the SSN(s) above and on line 6c are correct. Domestic production activities deduction. Attach Form 8903 35 Add lines 23 through 35 . . . . . . . . . . . . . Subtract line 36 from line 22. This is your adjusted gross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b Taxable amount . . . . . . . . . . . 12 13 14 21 22 4,810 23 2655 . . For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. . . . . . . . . . 36 37 Cat. No. 11320B 4,810 Form 1040 (2014) Page 2 Form 1040 (2014) 38 Amount from line 37 (adjusted gross income) Tax and Credits 39a Check if: Standard Deduction for People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. All others: Single or Married filing separately, $6,200 Married filing jointly or Qualifying widow(er), $12,400 Head of household, $9,100 { . . . . . You were born before January 2, 1950, Spouse was born before January 2, 1950, . . Blind. Blind. If you have a qualifying child, attach Schedule EIC. Sign Here Paid Preparer Use Only 38 . 4,810 40 41 42 12,400 43 0 44 45 46 47 0 Total boxes checked 39a 42 43 Exemptions. If line 38 is $152,525 or less, multiply $3,950 by the number on line 6d. Otherwise, see instructions Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . Form 4972 c Tax (see instructions). Check if any from: a Form(s) 8814 b 44 45 46 47 48 49 50 51 52 53 54 55 56 57 Alternative minimum tax (see instructions). Attach Form 6251 . Excess advance premium tax credit repayment. Attach Form 8962 . . . . . . . . . . . . . . . . . 48 . . . . . . 52 Residential energy credits. Attach Form 5695 . . . . 53 3800 b 8801 c Other credits from Form: a 54 Add lines 48 through 54. These are your total credits . . . . . Subtract line 55 from line 47. If line 55 is more than line 47, enter -0- . . . . . . . . . . . . . Self-employment tax. Attach Schedule SE . . . . . . . 8919 . . Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required . . . . . . Add lines 44, 45, and 46 . . . . . . . Foreign tax credit. Attach Form 1116 if required . . . . . . . . . . . 58 59 60a Unreported social security and Medicare tax from Form: a First-time homebuyer credit repayment. Attach Form 5405 if required 67 68 69 70 71 72 75 76a . . Household employment taxes from Schedule H . . . . . . . Form 8960 c Taxes from: a Form 8959 b Add lines 56 through 62. This is your total tax . . 64 65 66a b . . . b 4137 . . . . . . . . . . . . . . . . . . . Instructions; enter code(s) . . . . . . . . . . . 64 Federal income tax withheld from Forms W-2 and 1099 . . 13800 2014 estimated tax payments and amount applied from 2013 return 65 4000 Earned income credit (EIC) . . . . . . . . . . 66a Nontaxable combat pay election 66b Additional child tax credit. Attach Schedule 8812 . . . . . . . . . . 0 61 62 63 0 67 American opportunity credit from Form 8863, line 8 . Net premium tax credit. Attach Form 8962 . . . . Amount paid with request for extension to file . . . 55 56 57 58 59 60a 60b Full-year coverage Health care: individual responsibility (see instructions) -7,590 15,800 49 50 51 Credit for child and dependent care expenses. Attach Form 2441 Education credits from Form 8863, line 19 . . . . . Retirement savings contributions credit. Attach Form 8880 Child tax credit. Attach Schedule 8812, if required . . . 68 69 70 . 71 72 Credits from Form: a 2439 b Reserved c Reserved d 73 Add lines 64, 65, 66a, and 67 through 73. These are your total payments . Excess social security and tier 1 RRTA tax withheld Credit for federal tax on fuels. Attach Form 4136 . . . . . . . . . . . . 74 17,800 If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 75 17,800 Amount of line 75 you want refunded to you. If Form 8888 is attached, check here 76a 17,800 . b d c Type: Routing number Checking Savings 9 8 7 6 5 4 3 2 1 Account number 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 Amount of line 75 you want applied to your 2015 estimated tax 77 77 78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions 78 79 Estimated tax penalty (see instructions) . . . . . . . 79 Do you want to allow another person to discuss this return with the IRS (see instructions)? Yes. Complete below. No Personal identification number (PIN) Phone no. Designee's name Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation Daytime phone number Spouse's signature. If a joint return, both must sign. Date Spouse's occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.) PTIN Check if self-employed Joint return? See instructions. Keep a copy for your records. . 39b Third Party Designee . . . Direct deposit? See instructions. Amount You Owe . Itemized deductions (from Schedule A) or your standard deduction (see left margin) Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . 73 74 Refund . 40 41 62 63 Payments } . If your spouse itemizes on a separate return or you were a dual-status alien, check here b b 61 Other Taxes . Print/Type preparer's name Firm's name Preparer's signature Date Firm's EIN Firm's address Phone no. www.irs.gov/form1040 Form 1040 (2014) SCHEDULE B Department of the Treasury Internal Revenue Service (99) OMB No. 1545-0074 Interest and Ordinary Dividends (Form 1040A or 1040) Information Attach to Form 1040A or 1040. about Schedule B and its instructions is at www.irs.gov/scheduleb. Name(s) shown on return 2014 Attachment Sequence No. 08 Your social security number Marry N. Frost Part I 123-45-6787 1 Interest General Motor Corporate Bonds (See instructions on back and the instructions for Form 1040A, or Form 1040, line 8a.) Note. If you received a Form 1099-INT, Form 1099-OID, or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form. Part II 1000 Castle Bank Certificate of Deposit Sarah Frost - Caine 210 500 1 2 3 Add the amounts on line 1 . . . . . . . . . . Excludable interest on series EE and I U.S. savings Attach Form 8815 . . . . . . . . . . . . . 4 Subtract line 3 from line 2. Enter the result here and 1040, line 8a . . . . . . . . . . . . . . Note. If line 4 is over $1,500, you must complete Part III. List name of payer 5 . . . . . . . . bonds issued after 1989. . . . . . . . . on Form 1040A, or Form . . . . . . . . (See instructions on back.) 1,710 3 0 4 1,710 Amount 3,100 (See instructions on back and the instructions for Form 1040A, or Form 1040, line 9a.) Part III Foreign Accounts and Trusts 2 MG & E INC. Ordinary Dividends Note. If you received a Form 1099-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form. Amount List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see instructions on back and list this interest first. Also, show that buyer's social security number and address 5 6 Add the amounts on line 5. Enter the total here and on Form 1040A, or Form 6 1040, line 9a . . . . . . . . . . . . . . . . . . . . . . Note. If line 6 is over $1,500, you must complete Part III. You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust. 7a 3,100 Yes No At any time during 2014, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country? See instructions . . . . . . . . . . . . . . . . . . . . . . . . If \"Yes,\" are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), to report that financial interest or signature authority? See FinCEN Form 114 and its instructions for filing requirements and exceptions to those requirements . . . . . . b If you are required to file FinCEN Form 114, enter the name of the foreign country where the financial account is located 8 During 2014, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If \"Yes,\" you may have to file Form 3520. See instructions on back . . . . . . For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 17146N Schedule B (Form 1040A or 1040) 2014 Page 2 Schedule B (Form 1040A or 1040) 2014 General Instructions Section references are to the Internal Revenue Code unless otherwise noted. Future Developments For the latest information about developments related to Schedule B (Form 1040A or 1040) and its instructions, such as legislation enacted after they were published, go to www.irs.gov/scheduleb. Purpose of Form Use Schedule B if any of the following applies. You had over $1,500 of taxable interest or ordinary dividends. You received interest from a seller-financed mortgage and the buyer used the property as a personal residence. You have accrued interest from a bond. You are reporting original issue discount (OID) in an amount less than the amount shown on Form 1099-OID. You are reducing your interest income on a bond by the amount of amortizable bond premium. You are claiming the exclusion of interest from series EE or I U.S. savings bonds issued after 1989. You received interest or ordinary dividends as a nominee. You had a financial interest in, or signature authority over, a financial account in a foreign country or you received a distribution from, or were a grantor of, or transferor to, a foreign trust. Part III of the schedule has questions about foreign accounts and trusts. Specific Instructions You can list more than one payer on each entry space for lines 1 and 5, but be sure to clearly show the amount paid next to the payer's name. Add the separate amounts paid by the payers listed on an entry space and enter the total in the \"Amount\" column. If you still need more space, attach separate statements that are the same size as the printed schedule. Use the same format as lines 1 and 5, but show your totals on Schedule B. Be sure to put your name and social security number (SSN) on the statements and attach them at the end of your return. TIP Part I. Interest Line 1. Report on line 1 all of your taxable interest. Taxable interest should be shown on your Forms 1099-INT, Forms 1099-OID, or substitute statements. Include interest from series EE, H, HH, and I U.S. savings bonds. List each payer's name and show the amount. Do not report on this line any tax-exempt interest from box 8 or box 9 of Form 1099-INT. Instead, report the amount from box 8 on line 8b of Form 1040A or 1040. If an amount is shown in box 9 of Form 1099-INT, you generally must report it on line 12 of Form 6251. See the Instructions for Form 6251 for more details. Seller-financed mortgages. If you sold your home or other property and the buyer used the property as a personal residence, list first any interest the buyer paid you on a mortgage or other form of seller financing. Be sure to show the buyer's name, address, and SSN. You must also let the buyer know your SSN. If you do not show the buyer's name, address, and SSN, or let the buyer know your SSN, you may have to pay a $50 penalty. Nominees. If you received a Form 1099-INT that includes interest you received as a nominee (that is, in your name, but the interest actually belongs to someone else), report the total on line 1. Do this even if you later distributed some or all of this income to others. Under your last entry on line 1, put a subtotal of all interest listed on line 1. Below this subtotal, enter "Nominee Distribution" and show the total interest you received as a nominee. Subtract this amount from the subtotal and enter the result on line 2. If you received interest as a nominee, you must give the actual owner a Form 1099-INT unless the owner is your spouse. You must also file a Form 1096 and a Form 1099-INT with the IRS. For more details, see the General Instructions for Certain Information Returns and the Instructions for Forms 1099-INT and 1099-OID. TIP Accrued interest. When you buy bonds between interest payment dates and pay accrued interest to the seller, this interest is taxable to the seller. If you received a Form 1099 for interest as a purchaser of a bond with accrued interest, follow the rules earlier under Nominees to see how to report the accrued interest. But identify the amount to be subtracted as \"Accrued Interest.\" Original issue discount (OID). If you are reporting OID in an amount less than the amount shown on Form 1099-OID, follow the rules earlier under Nominees to see how to report the OID. But identify the amount to be subtracted as \"OID Adjustment.\" Amortizable bond premium. If you are reducing your interest income on a bond by the amount of amortizable bond premium, follow the rules earlier under Nominees to see how to report the interest. But identify the amount to be subtracted as \"ABP Adjustment.\" Line 3. If, during 2014, you cashed series EE or I U.S. savings bonds issued after 1989 and you paid qualified higher education expenses for yourself, your spouse, or your dependents, you may be able to exclude part or all of the interest on those bonds. See Form 8815 for details. Part II. Ordinary Dividends You may have to file Form 5471 if, in 2014, you were an officer or director of a foreign corporation. You may also have to file Form 5471 if, in 2014, you owned 10% or more of the total (a) value of a foreign corporation's stock, or (b) combined voting power of all classes of a foreign corporation's stock with voting rights. For details, see Form 5471 and its instructions. TIP Line 5. Report on line 5 all of your ordinary dividends. This amount should be shown in box 1a of your Forms 1099-DIV or substitute statements. List each payer's name and show the amount. Nominees. If you received a Form 1099-DIV that includes ordinary dividends you received as a nominee (that is, in your name, but the ordinary dividends actually belong to someone else), report the total on line 5. Do this even if you later distributed some or all of this income to others. Under your last entry on line 5, put a subtotal of all ordinary dividends listed on line 5. Below this subtotal, enter \"Nominee Distribution\" and show the total ordinary dividends you received as a nominee. Subtract this amount from the subtotal and enter the result on line 6. If you received dividends as a nominee, you must give the actual owner a Form 1099-DIV unless the owner is your spouse. You must also file a Form 1096 and a Form 1099-DIV with the IRS. For more details, see the General Instructions for Certain Information Returns and the Instructions for Form 1099-DIV. TIP Part III. Foreign Accounts and Trusts Regardless of whether you are required to file FinCEN Form 114 (FBAR), you may be required to file Form 8938, Statement of Specified Foreign Financial Assets, with your income tax return. Failure to file Form 8938 may result in penalties and extension of the statute of limitations. See www.irs.gov/form8938 for more information. TIP Line 7a-Question 1. Check the \"Yes\" box if at any time during 2014 you had a financial interest in or signature authority over a financial account located in a foreign country. See the definitions that follow. Check the \"Yes\" box even if you are not required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Financial account. A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (that is, a fund that is available to the general public with a regular net asset value determination and regular redemptions). Financial account located in a foreign country. A financial account is located in a foreign country if the account is physically located outside of the United States. For example, an account maintained with a branch of a United States bank that is physically located outside of the United States is a foreign financial account. An account maintained with a branch of a foreign bank that is physically located in the United States is not a foreign financial account. Signature authority. Signature authority is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (whether in writing or otherwise) to the bank or other financial institution that maintains the financial account. See the FinCEN Form 114 instructions for exceptions. Do not consider the exceptions relating to signature authority in answering Question 1 on line 7a. Other definitions. For definitions of \"financial interest,\" \"United States,\" and other relevant terms, see the instructions for FinCEN Form 114. Line 7a-Question 2. See FinCEN Form 114 and its instructions to determine whether you must file the form. Check the \"Yes\" box if you are required to file the form; check the \"No\" box if you are not required to file the form. If you checked the \"Yes\" box to Question 2 on line 7a, FinCEN Form 114 must be electronically filed with the Financial Crimes Enforcement Network (FinCEN) at the following website: http://bsaefiling. fincen.treas.gov/main.html. Do not attach FinCEN Form 114 to your tax return. To be considered timely, FinCEN Form 114 must be received by June 30, 2015. ! If you are required to file FinCEN Form 114 but do not properly do so, you may have to pay a civil penalty up to $10,000. A person who willfully fails to CAUTION report an account or provide account identifying information may be subject to a civil penalty equal to the greater of $100,000 or 50 percent of the balance in the account at the time of the violation. Willful violations may also be subject to criminal penalties. Line 7b. If you are required to file FinCEN Form 114, enter the name of the foreign country or countries in the space provided on line 7b. Attach a separate statement if you need more space. Line 8. If you received a distribution from a foreign trust, you must provide additional information. For this purpose, a loan of cash or marketable securities generally is considered to be a distribution. See Form 3520 for details. If you were the grantor of, or transferor to, a foreign trust that existed during 2014, you may have to file Form 3520. Do not attach Form 3520 to Form 1040. Instead, file it at the address shown in its instructions. If you were treated as the owner of a foreign trust under the grantor trust rules, you are also responsible for ensuring that the foreign trust files Form 3520-A. Form 3520-A is due on March 16, 2015, for a calendar year trust. See the instructions for Form 3520-A for more details