Form Mo-1040 - Individual Income Tax Return - Long Form

income to the extent that it was reported

exclude their military pay received

9 — P

, F

INE

ARTNERSHIP

IDUCIARY

in your federal adjusted gross income.

while serving in a combat zone, or

S C

, R

ORPORATION

AILROAD

while hospitalized as a result of injuries

4. Capital Gain Exclusion on Sale of Low

, O

ETIREMENT

ENEFITS

THER

incurred while serving in a combat

Income Housing. If during 2007, you

Enter negative adjustments (subtractions),

zone. The exclusion of combat pay

sold a federally subsidized (HUD) low

reported from partnerships, fiduciaries, and S

received by a commissioned officer

income housing project to a nonprofit or

corporations. The partnership, fiduciary, and

(other than a commissioned warrant

governmental organization, and at least

S corporation must notify you of the amount

officer) is limited to the highest rate of

40 percent of the units are occupied by

enlisted pay. Subtract all military

of any such adjustment (subtraction) to which

persons or families having incomes of 60

income received while serving in a

you are entitled. Check the boxes applicable

percent or less of the median income, you

combat zone, which is included in

on Line 9 and attach a copy of the notifica-

may exclude 25 percent of the capital

Federal Adjusted Gross Income (FAGI)

gain from Missouri tax. However, the

tion received. Failure to attach a copy of the

and is not otherwise excluded. In most

buyer of the property must agree to

notification furnished to you will result in

cases combat pay is not included in Box

preserve or increase the low income

the disallowance of the modification.

1, Wages, of Form W-2 and therefore is

occupancy of the project. To use this

Railroad Retirement Benefits Administered

not included in FAGI. However if Box 1

exclusion, enter as “other” 25 percent of

by the Railroad Retirement Board, such as

includes combat pay, the portion

the capital gain reported on your Federal

all Tier I and Tier II benefits and any railroad

consisting of combat pay may be taken

Form 1040. Attach a copy of your

retirement sick pay, disability, and unem-

as a subtraction for Missouri purposes.

Federal Form 1040 (pages 1 and 2),

ployment benefits, included in federal

Federal Form 4797, and an explanation.

EXAMPLE 1: A resident of Missouri, is

adjusted gross income (Form MO-1040, Line

an enlisted member of the military. He

5. Family Development Account. A family

1), are exempt from state taxation.

enters a combat zone in July and is there

development account holder may

through December. He earns $12,000

subtract the amount of annual deposits

If you have other sources of negative adjust-

January through June, and earns $20,000

made to the account (not to exceed

ments, indicate the source on the line pro-

July through December. Box 1 of his

$2,000). Approved withdrawals from

vided. Other sources of negative adjustments

Form W-2 should only indicate the

the family development account are also

may be:

$12,000 he received prior to entering

exempt from state tax. Interest earned

1. Contributions into a Missouri Individual

the combat zone. He is not entitled to a

by a family development account is

Medical Account (IMA). Contributions

subtraction, as his combat pay is not

exempt from state taxation and may be

that were made by your employer into an

included in his FAGI.

subtracted from an account holder’s

Individual Medical Account (IMA) and

federal adjusted gross income. Any

EXAMPLE 2: A resident of Missouri, is a

used to pay your health care expenses are

money withdrawn for an unapproved

high-ranking commissioned officer. He

exempt from Missouri income tax. The

use is subject to tax. Attach proper

enters a combat zone in July and is there

interest income earned on the IMA

certification and a copy of your Form

through December. He earns $50,000

account is also exempt from Missouri

1099.

January through June, and earns $70,000

income tax. The IMA contribution is

July through December. The IRS limits

6. Federally Taxable—Missouri Exempt

identified in Box 14 of your Form W-2,

his exclusion to $40,000, causing Box 1

Obligations. The amount of any bond

Wage and Tax Statement. Reduce the

of his Form W-2 to indicate $80,000.

issued by the Missouri Higher Education

amount of contributions by the amount of

He is entitled to a subtraction of

Loan Authority (MOHELA) including

medical and dental expenses deducted on

$30,000, which represents the portion of

interest or proceeds resulting from the

Federal Form 1040, Schedule A, Line 4,

Box 1 of Form W-2 attributable to

sale of the bond is exempt from Missouri

but paid for by the IMA and included in

combat pay that is included in his FAGI.

tax. If the amount is included in federal

Missouri itemized deductions.

adjusted gross income, the amount can

9. Net Operating Loss: Any amount of net

2. Additional Capital Gain Deduction Due

be subtracted for Missouri tax purposes

operating loss taken against federal

to Difference in Basis. If during the

pursuant to Section 173.440, RSMo.

taxable income but disallowed for Mis-

taxable year you realized a gain from the

7. Military Income of Nonresident Military

souri income tax purposes after June 18,

sale of property or other capital assets

Personnel. Enter the amount of any

2002, (when choosing the five year

that had a higher tax basis for Missouri

military income received by nonresident

option at the federal level) may be carried

tax purposes than for federal tax

military personnel stationed in Missouri.

forward and taken against any income on

purposes, you may exclude the gain or

The Civil Relief Act, H.R. 100, prohibits

the difference in the basis of the property

the Missouri income tax return for a

states from including the military income

so disposed, whichever is smaller. If the

period of up to 20 years from the year of

of a nonresident servicemember when

gain was considered a long-term capital

the initial loss. Attach Federal Form

determining the individual income tax

gain for federal income tax purposes, the

1045, Schedule A and B, and/or the

rate for either the servicemember or the

exclusion is limited to the gain or 50

calculation of your net operating loss

servicemember's spouse on a combined

percent of the difference, whichever is

carryback/carryforward.

return. Nonresident active duty military

smaller. No difference in basis can be

10. Condemnation of Property: If you

servicemembers who are required to file

claimed for any property obtained after

included in your Federal Adjusted Gross

a 2007 Missouri return may subtract the

December 31, 1972. If your basis for

Income any gain recognized pursuant to

military income received from their

Missouri purposes is less than the basis

Section 1033 of the IRC, arising from

federal adjusted gross income.

for federal income tax purposes, no ad-

compulsory or involuntary conversion of

justment is required.

Attach a copy of the Form W-2 report-

property as a result of condemnation or

ing your military income.

3. Accumulation Distribution. If during

the imminence thereof, you may

8. Combat Pay Included in Federal

2007, you received a distribution as

exclude that gain from Missouri tax.

beneficiary of a trust that was made from

Adjusted Gross Income Earned by

Attach a copy of your Federal Form

accumulated earnings of prior years and

Military Personnel with a Missouri

1040, Schedule D, and Federal Form

you filed Federal Form 4970, the

Home of Record. The IRS allows

4797.

amount may be excluded from Missouri

enlisted members, warrant officers and

commissioned warrant officers to

Instructions continued on page 33

FORM MO-NFT, No Franchise Tax Due

Form MO-NFT is only for corporations. Complete Form MO-NFT and attach to your individual income tax return (Form MO-1040) if your corpora-

tion's assets or apportioned assets are $1,000,000 or less and no corporation franchise tax is due. See "To Obtain Forms" on Page 3 for information on

how to obtain Form MO-NFT. Note: If a corporation fails or neglects to file a Missouri corporation franchise tax report pursuant to Chapter 147, the

Director of Revenue will notify the secretary of state to begin administrative dissolution proceedings.

Form Mo-1040 - Individual Income Tax Return - Long Form - 2007 Page 12

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