recapture of education credits when sell books

[remove ps]

Suppose you used books to increase the value of your education credit,
such as the AOC. The following year you sell your books back, or you
sell them on eBay. Do you then have to pay back some of your tax
credit? It seems like you have to because

BEGIN QUOTE http://www.irs.gov/publications/p970/ch02.html

Credit recapture. If any tax-free educational assistance for the
qualified education expenses paid in 2012, or any refund of your
qualified education expenses paid in 2012, is received after you file
your 2012 income tax return, you must recapture (repay) any excess
credit. You do this by refiguring the amount of your adjusted qualified
education expenses for 2012 by reducing the expenses by the amount of
the refund or tax-free educational assistance. You then refigure your
education credit(s) for 2012 and figure the amount by which your 2012
tax liability would have increased if you claimed the refigured
credit(s). Include that amount as an additional tax for the year the
refund or tax-free assistance was received.

END QUOTE

Is that true for books? On what line of 1040 does one report the
additional taxes -- on line 60 (Other taxes), and what is the code?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

[Alan]

On 5/16/2013 9:52 AM, remove ps wrote:
> Suppose you used books to increase the value of your education credit,
> such as the AOC. The following year you sell your books back, or you
> sell them on eBay. Do you then have to pay back some of your tax
> credit? It seems like you have to because
>
> BEGIN QUOTE http://www.irs.gov/publications/p970/ch02.html
>
> Credit recapture. If any tax-free educational assistance for the
> qualified education expenses paid in 2012, or any refund of your
> qualified education expenses paid in 2012, is received after you file
> your 2012 income tax return, you must recapture (repay) any excess
> credit. You do this by refiguring the amount of your adjusted qualified
> education expenses for 2012 by reducing the expenses by the amount of
> the refund or tax-free educational assistance. You then refigure your
> education credit(s) for 2012 and figure the amount by which your 2012
> tax liability would have increased if you claimed the refigured
> credit(s). Include that amount as an additional tax for the year the
> refund or tax-free assistance was received.
>
> END QUOTE
>
> Is that true for books? On what line of 1040 does one report the
> additional taxes -- on line 60 (Other taxes), and what is the code?
>

Yes it is true. The 1040 instructions for Line 44 (Tax) tell you how to
recapture the credit. You just add the amount to all other taxes on Line
44. For some reason unknown to me, the IRS elected to recapture the
credit directly on Line 44 rather than with other credit recaptures on
Line 60.

1040 Line 44 Instructions

Recapture of an education credit.
You may owe this tax if you claimed an
education credit in an earlier year, and
either tax-free educational assistance or
a refund of qualified expenses was received in 2012 for the student. See
Form 8863 for more details. Enter the amount
and �ECR� in the space next to line 44.

[Mark Bole]

On 2013-05-16 08:52, remove ps wrote:

>
> On what line of 1040 does one report the
> additional taxes -- on line 60 (Other taxes), and what is the code?
>

Line 44, "ECR".

--

Mark Bole, EA
Enrolled Agents - America's Tax Experts
http://markboletax.com