Publication 4655 (1-2008) SUPPLEMENTAL INSTRUCTIONS FOR 2007 FORM 1040 AND FORM 1040NR

As a result of the Tax Technical Corrections Act of 2007, the following instructional changes apply when completing the 2007 Form 1040 (or Form 1040NR). The paper and online versions of Form 1040 (and Form 1040NR) and instructions will not be revised.

Changes to the 2007 Instructions for Form 1040 (and Form 1040NR)

 Before you begin:  If Form 1040, line 43, is zero, do not

 complete this worksheet.

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 1. Enter the amount from Form 1040, line 43 . . . . . . 1. ______

 2. Enter the amount from your (and your

    spouse’s, if filing jointly) Form 2555, line 45,

    or Form 2555-EZ, line 18 . . . . . . . . . . . . . . 2. ______

 3. Add lines 1 and 2 . . . . . . . . . . . . . . . . .. 3. ______

 4. Tax on the amount on line 3. Use the Tax Table,

    Tax Computation Worksheet, Qualified Dividends

    and Capital Gain Tax Worksheet*, Schedule D

    Tax Worksheet*, or Form 8615, whichever applies.

    See the instructions for Form 1040, line 44, to

    see which tax computation method applies . . . . . . 4. ______

 5. Tax on the amount on line 2. Use the Tax Table

    or Tax Computation Worksheet, whichever applies      5. ______

 6. Subtract line 5 from line 4. Enter the result.

    If zero or less, enter –0–. Also include this

    amount on Form 1040, line 44 . . . . . . . . . . . . 6. ______

 *Enter the amount from line 3 above on line 1 of the Qualified

  Dividends and Capital Gain Tax Worksheet or Schedule D Tax

  Worksheet if you use either of those worksheets to figure

  the tax on line 4 above. Complete the rest of that worksheet

  through line 6 (line 10 if you use the Schedule D Tax Worksheet).

  Next, you must determine if you have a capital gain excess. To

  find out if you have a capital gain excess, subtract Form 1040,

  line 43, from line 6 of your Qualified Dividends and Capital

  Gain Tax Worksheet (line 10 of your Schedule D Tax Worksheet).

  If the result is more than zero, that amount is your capital

  gain excess.

 If you do not have a capital gain excess, complete the rest

 of either of those worksheets according to the worksheet’s

 instructions. Then complete lines 5 and 6 above.

 If you have a capital gain excess, complete a second Qualified

 Dividends and Capital Gain Tax Worksheet or Schedule D Tax

 Worksheet (whichever applies) as instructed above but in its

 entirety and with the following additional modifications. Then

 complete lines 5 and 6 above. These modifications are to be made

 only for purposes of filling out the Foreign Earned Income Tax

 Worksheet above.

 1. Reduce the amount you would otherwise enter on line 3 of

 your Qualified Dividends and Capital Gain Tax Worksheet or

 line 9 of your Schedule D Tax Worksheet (but not below zero)

 by your capital gain excess.

 2. Reduce the amount you would otherwise enter on Form 1040,

 line 9b, (but not below zero) by any of your capital gain

 excess not used in (1) above.

 3. Reduce the amount on your Schedule D (Form 1040), line 18,

 (but not below zero) by your capital gain excess.

 4. Include your capital gain excess as a loss on line 16 of

 your Unrecaptured Section

 Gain Worksheet on page D-9 of

 the Instructions for Schedule D (Form 1040).

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