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2010 Turbotax Download

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2010 Turbotax Download

2010 turbotax download Index A Accelerated death benefits, Accelerated Death Benefits, Accelerated death benefits. 2010 turbotax download Archer MSA, HSA, Archer MSA, or Medicare Advantage MSA, HSA, Archer MSA, or a Medicare Advantage MSA. 2010 turbotax download Assistance (see Tax help) Astronauts Tax forgiveness, Astronauts B Basis Inherited property, Basis of Inherited Property Joint interest property, Joint interest. 2010 turbotax download Qualified joint interest, Qualified joint interest. 2010 turbotax download Beneficiary Basis of property, Basis of Inherited Property Character of distributions, Character of Distributions Excess deductions, Excess deductions. 2010 turbotax download Income received, Other Items of Income Liability, estate's income tax, Liability of the beneficiary. 2010 turbotax download Nonresident alien, Nonresident alien beneficiary. 2010 turbotax download Reporting distributions, How and When To Report Successor, Successor beneficiary. 2010 turbotax download Treatment of distributions, Distributions to Beneficiaries Unused loss carryovers, Unused loss carryovers. 2010 turbotax download Bequest Defined, Bequest Property received, Gifts, Insurance, and Inheritances C Claim, credit or refund, Claim for Credit or Refund Combat zone, Combat Zone Comments, Comments and suggestions. 2010 turbotax download Coverdell education savings account (ESA), Coverdell Education Savings Account (ESA), Coverdell education savings account (ESA). 2010 turbotax download Credit Child tax, Child tax credit. 2010 turbotax download Earned income, Earned income credit. 2010 turbotax download Elderly or disabled, Credit for the elderly or the disabled. 2010 turbotax download Final return for decedent, Credits General business, General business tax credit. 2010 turbotax download D Death benefits Accelerated, Accelerated Death Benefits, Accelerated death benefits. 2010 turbotax download Public safety officers, Death benefits. 2010 turbotax download Decedent Final return, Final Income Tax Return for Decedent—Form 1040 Income in respect of, Income in Respect of a Decedent Deductions Estate tax, Estate Tax Deduction In respect of decedent, Deductions in Respect of a Decedent Medical expenses, Medical Expenses Standard, Standard Deduction Distributable net income, Distributable net income. 2010 turbotax download Distributions Deduction, Income Distribution Deduction Limit on deduction, Tax-exempt income not deductible. 2010 turbotax download Not treated as bequests, Distributions not treated as bequests. 2010 turbotax download Property, in kind, Property distributed in kind. 2010 turbotax download E Education savings account, Coverdell, Coverdell Education Savings Account (ESA), Coverdell education savings account (ESA). 2010 turbotax download Estate Income tax return, Income Tax Return of an Estate— Form 1041 Insolvent, Insolvent estate. 2010 turbotax download Period of administration, Period of Administration Tax deduction, Estate Tax Deduction Termination, Termination of Estate Transfer of unused deductions, Transfer of Unused Deductions to Beneficiaries Estate tax deduction, Estate Tax Deduction Estimated tax, Estimated tax. 2010 turbotax download , Transfer of Credit for Estimated Tax Payments Example Comprehensive, Comprehensive Example Decedent's final return, Final Return for Decedent—Form 1040 Estate's tax return, Income Tax Return of an Estate—Form 1041 Exemption Estate's tax return, Exemption Deduction Final return for decedent, Exemptions Expenses Accrued, Accrued expenses. 2010 turbotax download Administration, Administration Expenses Deductions in respect of decedent, Deductions in Respect of a Decedent Funeral, Funeral and Medical Expenses Medical, Medical Expenses, Medical and dental expenses of a decedent. 2010 turbotax download Extension to file Form 1041, Extension of time to file. 2010 turbotax download F Fiduciary relationship, Notice of fiduciary relationship. 2010 turbotax download Filing requirements Decedent's final return, Filing Requirements Estate's tax return, Filing Requirements Final return for decedent Credits, Credits Exemption and deductions, Exemptions and Deductions Filing requirements, Filing Requirements Income to include, Income To Include Joint return, Joint Return Name, address, and signature, Name, Address, and Signature Other taxes, Other Taxes Payments, Payments of Tax When and where to file, When and Where To File Who must file, Final Income Tax Return for Decedent—Form 1040 Form 1040NR, Nonresident Alien, Filing Requirements 1041, Income Tax Return of an Estate— Form 1041 1042, Nonresident alien beneficiary. 2010 turbotax download 1310, Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. 2010 turbotax download 4810, Form 4810. 2010 turbotax download 56, Notice of fiduciary relationship. 2010 turbotax download 6251, Form 6251. 2010 turbotax download 706, Estate and Gift Taxes SS–4, Identification number. 2010 turbotax download Free tax services, Free help with your tax return. 2010 turbotax download Funeral expenses, Funeral expenses. 2010 turbotax download G Gift, property, Gifts, Insurance, and Inheritances H Help (see Tax help) I Identification number, application, Identification number. 2010 turbotax download Income Community, Community Income Distributable net income, Distributable net income. 2010 turbotax download Distributed currently, Income That Must Be Distributed Currently Interest and dividend, Interest and Dividend Income (Forms 1099) Partnership, final return, Partnership Income S corporation, S Corporation Income Self-employment, Self-Employment Income Income in respect of decedent, Income in Respect of a Decedent, Inherited IRAs. 2010 turbotax download Income tax return of an estate Credits, tax, and payments, Credits, Tax, and Payments Exemption and deductions, Exemption and Deductions Filing requirements, Filing Requirements Income to include, Income To Include Name, address, and signature, Name, Address, and Signature When and where to file, When and Where To File Inherited IRAs, Inherited IRAs. 2010 turbotax download Inherited property, Gifts, Insurance, and Inheritances Installment obligations, Installment obligations. 2010 turbotax download , Installment obligations. 2010 turbotax download Insurance, Insurance J Joint return Revoked by personal representative, Personal representative may revoke joint return election. 2010 turbotax download Who can file, Joint Return L Losses Deduction on final return, Deduction for Losses Estate's tax return, Losses M Military or terrorist actions Claim for credit or refund, Claim for Credit or Refund Defined, Military or terrorist action defined. 2010 turbotax download Tax forgiveness, Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts N Notice of fiduciary relationship Form 56, Notice of fiduciary relationship. 2010 turbotax download P Partnership income, Partnership Income, Partnership income. 2010 turbotax download Penalty Information returns, Penalty. 2010 turbotax download Substantial valuation misstatement, Valuation misstatements. 2010 turbotax download Personal representative Defined, Personal Representative Duties, Duties Fees received, Fees Received by Personal Representatives Penalty, Penalty. 2010 turbotax download , Penalty. 2010 turbotax download Prompt assessment, request, Request for prompt assessment (charge) of tax. 2010 turbotax download Public safety officers, death benefits, Death benefits. 2010 turbotax download Publications (see Tax help) R Refund File for decedent, Refund Military or terrorist action deaths, Claim for Credit or Refund Release from liability, Request for discharge from personal liability for tax. 2010 turbotax download Return Decedent's final, Final Income Tax Return for Decedent—Form 1040 Estate's income tax, Income Tax Return of an Estate— Form 1041 Information, Information Returns Roth IRA, Roth IRAs. 2010 turbotax download S Separate shares rule, Separate shares rule. 2010 turbotax download Suggestions, Comments and suggestions. 2010 turbotax download Survivors Income, Other Items of Income Tax benefits, Tax Benefits for Survivors T Tax Alternative minimum Estate, Alternative minimum tax (AMT). 2010 turbotax download Individuals, Alternative minimum tax (AMT). 2010 turbotax download Benefits, survivors, Tax Benefits for Survivors Estimated, estate, Estimated tax. 2010 turbotax download , Transfer of Credit for Estimated Tax Payments Payments, final return, Payments of Tax Refund of income (claim), Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. 2010 turbotax download Self-employment, Self-employment tax. 2010 turbotax download Transfer of credit, Transfer of Credit for Estimated Tax Payments Tax help, How To Get Tax Help Terrorist action, tax relief, Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Terrorist victim, Specified Terrorist Victim TTY/TDD information, How To Get Tax Help V Valuation method Inherited property, Basis of Inherited Property Special-use, Special-use valuation. 2010 turbotax download Victims of terrorist attacks, Specified Terrorist Victim W Widows and widowers, tax benefits, Qualifying widows and widowers. 2010 turbotax download Prev  Up     Home   More Online Publications
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This list of tax products contains forms, instructions, and publications ranging from the current year back to 1864. All products have a revision date, showing the year each product was revised. 

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The 2010 Turbotax Download

2010 turbotax download 2. 2010 turbotax download   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. 2010 turbotax download You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. 2010 turbotax download This chapter discusses accounting methods. 2010 turbotax download For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. 2010 turbotax download Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. 2010 turbotax download Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. 2010 turbotax download Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. 2010 turbotax download A material item is one that affects the proper time for inclusion of income or allowance of a deduction. 2010 turbotax download An item considered material for financial statement purposes is generally also considered material for income tax purposes. 2010 turbotax download See Publication 538 for more information. 2010 turbotax download You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. 2010 turbotax download If you later want to change your accounting method, you generally must get IRS approval. 2010 turbotax download How to obtain IRS approval is discussed later under Changes in Methods of Accounting . 2010 turbotax download Types of accounting methods. 2010 turbotax download   Generally, you can use any of the following accounting methods. 2010 turbotax download Each method is discussed in detail below. 2010 turbotax download Cash method. 2010 turbotax download Accrual method. 2010 turbotax download Special methods of accounting for certain items of income and expenses. 2010 turbotax download Combination (hybrid) method using elements of two or more of the above. 2010 turbotax download Business and other items. 2010 turbotax download   You can account for business and personal items using different accounting methods. 2010 turbotax download For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. 2010 turbotax download Two or more businesses. 2010 turbotax download   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. 2010 turbotax download Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. 2010 turbotax download Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. 2010 turbotax download However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. 2010 turbotax download See Accrual Method Required , later. 2010 turbotax download Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. 2010 turbotax download Items of income include money received as well as property or services received. 2010 turbotax download If you receive property or services, you must include the fair market value (FMV) of the property or services in income. 2010 turbotax download See chapter 3 for information on how to report farm income on your income tax return. 2010 turbotax download Constructive receipt. 2010 turbotax download   Income is constructively received when an amount is credited to your account or made available to you without restriction. 2010 turbotax download You do not need to have possession of the income for it to be treated as income for the tax year. 2010 turbotax download If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. 2010 turbotax download Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. 2010 turbotax download Direct payments and counter-cyclical payments. 2010 turbotax download   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. 2010 turbotax download Delaying receipt of income. 2010 turbotax download   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. 2010 turbotax download You must report the income in the year the money or property is received or made available to you without restriction. 2010 turbotax download Example. 2010 turbotax download Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. 2010 turbotax download She was told in December that her payment was available. 2010 turbotax download She requested not to be paid until January 2014. 2010 turbotax download However, she must still include this payment in her 2013 income because it was made available to her in 2013. 2010 turbotax download Debts paid by another person or canceled. 2010 turbotax download   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. 2010 turbotax download If you receive income in this way, you constructively receive the income when the debt is canceled or paid. 2010 turbotax download See Cancellation of Debt in chapter 3. 2010 turbotax download Deferred payment contract. 2010 turbotax download   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. 2010 turbotax download However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. 2010 turbotax download Example. 2010 turbotax download You are a farmer who uses the cash method and a calendar tax year. 2010 turbotax download You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. 2010 turbotax download You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. 2010 turbotax download However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. 2010 turbotax download Repayment of income. 2010 turbotax download   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. 2010 turbotax download If the repayment is more than $3,000, a special rule applies. 2010 turbotax download For details, see Repayments in chapter 11 of Publication 535, Business Expenses. 2010 turbotax download Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. 2010 turbotax download This includes business expenses for which you contest liability. 2010 turbotax download However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. 2010 turbotax download See chapter 4 for information on how to deduct farm business expenses on your income tax return. 2010 turbotax download Prepayment. 2010 turbotax download   Generally, you cannot deduct expenses paid in advance. 2010 turbotax download This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. 2010 turbotax download Example. 2010 turbotax download On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. 2010 turbotax download In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. 2010 turbotax download In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. 2010 turbotax download An exception applies if the expense qualifies for the 12-month rule. 2010 turbotax download See Publication 538 for more information and examples. 2010 turbotax download See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. 2010 turbotax download Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. 2010 turbotax download The purpose of an accrual method of accounting is to correctly match income and expenses. 2010 turbotax download Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. 2010 turbotax download See Accrual Method Required and Farm Inventory , later. 2010 turbotax download Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. 2010 turbotax download Under this rule, include an amount in income on the earliest of the following dates. 2010 turbotax download When you receive payment. 2010 turbotax download When the income amount is due to you. 2010 turbotax download When you earn the income. 2010 turbotax download When title passes. 2010 turbotax download If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. 2010 turbotax download Inventory. 2010 turbotax download   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. 2010 turbotax download An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. 2010 turbotax download See Publication 538 for more information. 2010 turbotax download Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. 2010 turbotax download Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. 2010 turbotax download The all-events test has been met. 2010 turbotax download This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. 2010 turbotax download Economic performance has occurred. 2010 turbotax download Economic performance. 2010 turbotax download   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. 2010 turbotax download If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. 2010 turbotax download If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. 2010 turbotax download Example. 2010 turbotax download Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. 2010 turbotax download She entered into a contract with ABC Farm Consulting in 2012. 2010 turbotax download The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. 2010 turbotax download It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. 2010 turbotax download Jane paid ABC Farm Consulting $2,000 in December 2012. 2010 turbotax download Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. 2010 turbotax download Economic performance for Jane's liability in the contract occurs as the services are provided. 2010 turbotax download Jane incurs the $2,000 cost in 2013. 2010 turbotax download An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. 2010 turbotax download For more information, see Economic Performance in Publication 538. 2010 turbotax download Special rule for related persons. 2010 turbotax download   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. 2010 turbotax download Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. 2010 turbotax download For more information, see Internal Revenue Code section 267. 2010 turbotax download Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. 2010 turbotax download A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. 2010 turbotax download A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. 2010 turbotax download A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. 2010 turbotax download A tax shelter. 2010 turbotax download Note. 2010 turbotax download Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). 2010 turbotax download Family corporation. 2010 turbotax download   A family corporation is generally a corporation that meets one of the following ownership requirements. 2010 turbotax download Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. 2010 turbotax download Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. 2010 turbotax download Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. 2010 turbotax download For more information on family corporations, see Internal Revenue Code section 447. 2010 turbotax download Tax shelter. 2010 turbotax download   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. 2010 turbotax download Its principal purpose is the avoidance or evasion of federal income tax. 2010 turbotax download It is a farming syndicate. 2010 turbotax download A farming syndicate is an entity that meets either of the following tests. 2010 turbotax download Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. 2010 turbotax download More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. 2010 turbotax download   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. 2010 turbotax download   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. 2010 turbotax download Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. 2010 turbotax download This record should show the actual count or measurement of the inventory. 2010 turbotax download It should also show all factors that enter into its valuation, including quality and weight, if applicable. 2010 turbotax download Hatchery business. 2010 turbotax download   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. 2010 turbotax download Products held for sale. 2010 turbotax download   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. 2010 turbotax download , must be included in inventory. 2010 turbotax download Supplies. 2010 turbotax download   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. 2010 turbotax download Deduct the cost of supplies in the year used or consumed in operations. 2010 turbotax download Do not include incidental supplies in inventory as these are deductible in the year of purchase. 2010 turbotax download Livestock. 2010 turbotax download   Livestock held primarily for sale must be included in inventory. 2010 turbotax download Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. 2010 turbotax download See also Unit-livestock-price method , later. 2010 turbotax download If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. 2010 turbotax download Growing crops. 2010 turbotax download   Generally, growing crops are not required to be included in inventory. 2010 turbotax download However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. 2010 turbotax download See Uniform capitalization rules below. 2010 turbotax download Also see Uniform Capitalization Rules in  chapter 6. 2010 turbotax download Items to include in inventory. 2010 turbotax download   Your inventory should include all items held for sale, or for use as feed, seed, etc. 2010 turbotax download , whether raised or purchased, that are unsold at the end of the year. 2010 turbotax download Uniform capitalization rules. 2010 turbotax download   The following applies if you are required to use an accrual method of accounting. 2010 turbotax download The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. 2010 turbotax download The costs of animals are subject to the uniform capitalization rules. 2010 turbotax download Inventory valuation methods. 2010 turbotax download   The following methods, described below, are those generally available for valuing inventory. 2010 turbotax download The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. 2010 turbotax download Cost. 2010 turbotax download Lower of cost or market. 2010 turbotax download Farm-price method. 2010 turbotax download Unit-livestock-price method. 2010 turbotax download Cost and lower of cost or market methods. 2010 turbotax download   See Publication 538 for information on these valuation methods. 2010 turbotax download If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. 2010 turbotax download However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. 2010 turbotax download Farm-price method. 2010 turbotax download   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. 2010 turbotax download Market price is the current price at the nearest market in the quantities you usually sell. 2010 turbotax download Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. 2010 turbotax download If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. 2010 turbotax download Unit-livestock-price method. 2010 turbotax download   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. 2010 turbotax download You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. 2010 turbotax download The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. 2010 turbotax download Unit prices and classifications are subject to approval by the IRS on examination of your return. 2010 turbotax download You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. 2010 turbotax download IRS approval is not required for these adjustments. 2010 turbotax download Any other changes in unit prices or classifications do require IRS approval. 2010 turbotax download   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. 2010 turbotax download This method accounts only for the increase in cost of raising an animal to maturity. 2010 turbotax download It does not provide for any decrease in the animal's market value after it reaches maturity. 2010 turbotax download Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. 2010 turbotax download   Do not include sold or lost animals in the year-end inventory. 2010 turbotax download If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. 2010 turbotax download The animals on hand at the end of the year are considered those most recently acquired. 2010 turbotax download   You must include in inventory all livestock purchased primarily for sale. 2010 turbotax download You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. 2010 turbotax download However, you must be consistent from year to year, regardless of the method you have chosen. 2010 turbotax download You cannot change your method without obtaining approval from the IRS. 2010 turbotax download   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. 2010 turbotax download If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. 2010 turbotax download However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. 2010 turbotax download This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. 2010 turbotax download It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. 2010 turbotax download Uniform capitalization rules. 2010 turbotax download   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. 2010 turbotax download This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. 2010 turbotax download Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. 2010 turbotax download Example 1. 2010 turbotax download You are a farmer who uses an accrual method of accounting. 2010 turbotax download You keep your books on the calendar year basis. 2010 turbotax download You sell grain in December 2013 but you are not paid until January 2014. 2010 turbotax download Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. 2010 turbotax download Example 2. 2010 turbotax download Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. 2010 turbotax download Under this method, you include the sales proceeds in income for 2014, the year you receive payment. 2010 turbotax download Deduct the costs of producing the grain in the year you pay for them. 2010 turbotax download Special Methods of Accounting There are special methods of accounting for certain items of income and expense. 2010 turbotax download Crop method. 2010 turbotax download   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. 2010 turbotax download You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. 2010 turbotax download Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. 2010 turbotax download    See chapter 4 for details on deducting the costs of operating a farm. 2010 turbotax download Also see Regulations section 1. 2010 turbotax download 162-12. 2010 turbotax download Other special methods. 2010 turbotax download   Other special methods of accounting apply to the following items. 2010 turbotax download Amortization, see chapter 7. 2010 turbotax download Casualties, see chapter 11. 2010 turbotax download Condemnations, see chapter 11. 2010 turbotax download Depletion, see chapter 7. 2010 turbotax download Depreciation, see chapter 7. 2010 turbotax download Farm business expenses, see chapter 4. 2010 turbotax download Farm income, see chapter 3. 2010 turbotax download Installment sales, see chapter 10. 2010 turbotax download Soil and water conservation expenses, see chapter 5. 2010 turbotax download Thefts, see chapter 11. 2010 turbotax download Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. 2010 turbotax download However, the following restrictions apply. 2010 turbotax download If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. 2010 turbotax download If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. 2010 turbotax download Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). 2010 turbotax download Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. 2010 turbotax download You may also have to pay a fee. 2010 turbotax download To obtain approval, you must generally file Form 3115. 2010 turbotax download There are instances when you can obtain automatic consent to change certain methods of accounting. 2010 turbotax download See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. 2010 turbotax download For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. 2010 turbotax download Also see Publication 538. 2010 turbotax download Prev  Up  Next   Home   More Online Publications