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2011 Income Tax Forms Individual

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2011 Income Tax Forms Individual

2011 income tax forms individual 7. 2011 income tax forms individual   Excess Contributions Table of Contents How Do I Know If I Have Excess Contributions? What Happens If I Have Excess Contributions?Excess Annual Addition Excess Elective Deferral If your actual contributions are greater than your MAC, you have an excess contribution. 2011 income tax forms individual Excess contributions can result in income tax, additional taxes, and penalties. 2011 income tax forms individual The effect of excess contributions depends on the type of excess contribution. 2011 income tax forms individual This chapter discusses excess contributions to your 403(b) account. 2011 income tax forms individual How Do I Know If I Have Excess Contributions? At the end of the year or the beginning of the next year, you should refigure your MAC based on your actual compensation and actual contributions made to your account. 2011 income tax forms individual If the actual contributions to your account are greater than your MAC, you have excess contributions. 2011 income tax forms individual If, at any time during the year, your employment status or your compensation changes, you should refigure your MAC using a revised estimate of compensation to prevent excess contributions. 2011 income tax forms individual What Happens If I Have Excess Contributions? Certain excess contributions in a 403(b) account can be corrected. 2011 income tax forms individual The effect of an excess 403(b) contribution will depend on the type of excess contribution. 2011 income tax forms individual Types of excess contributions. 2011 income tax forms individual   If, after checking your actual contributions, you determine that you have an excess, the first thing is to identify the type of excess that you have. 2011 income tax forms individual Excess contributions to a 403(b) account are categorized as either an: Excess annual addition, or Excess elective deferral. 2011 income tax forms individual Excess Annual Addition An excess annual addition is a contribution that is more than your limit on annual additions. 2011 income tax forms individual To determine your limit on annual additions, see chapter 3 (chapter 5 for ministers or church employees). 2011 income tax forms individual In the year that your contributions are more than your limit on annual additions, the excess amount will be included in your income. 2011 income tax forms individual Excise Tax If your 403(b) account invests in mutual funds, and you exceed your limit on annual additions, you may be subject to a 6% excise tax on the excess contribution. 2011 income tax forms individual The excise tax does not apply to funds in an annuity account or to excess deferrals. 2011 income tax forms individual You must pay the excise tax each year in which there are excess contributions in your account. 2011 income tax forms individual Excess contributions can be corrected by contributing less than the applicable limit in later years or by making permissible distributions. 2011 income tax forms individual See chapter 8 for a discussion on permissible distributions. 2011 income tax forms individual You cannot deduct the excise tax. 2011 income tax forms individual Reporting requirement. 2011 income tax forms individual   You must file Form 5330 if there has been an excess contribution to a custodial account and that excess has not been corrected. 2011 income tax forms individual Excess Elective Deferral An excess elective deferral is the amount that is more than your limit on elective deferrals. 2011 income tax forms individual To determine your limit on elective deferrals, see chapter 4. 2011 income tax forms individual Your employer's 403(b) plan may contain language permitting it to distribute excess deferrals. 2011 income tax forms individual If so, it may require that in order to get a distribution of excess deferrals, you either notify the plan of the amount of excess deferrals or designate a distribution as an excess deferral. 2011 income tax forms individual The plan may require that the notification or designation be in writing and may require that you certify or otherwise establish that the designated amount is an excess deferral. 2011 income tax forms individual A plan is not required to permit distribution of excess deferrals. 2011 income tax forms individual Correction of excess deferrals during year. 2011 income tax forms individual   If you have excess deferrals for a year, a corrective distribution may be made only if both of the following conditions are satisfied. 2011 income tax forms individual The plan and either you or your employer designate the distribution as an excess deferral to the extent you have excess deferrals for the year. 2011 income tax forms individual The correcting distribution is made after the date on which the excess deferral was made. 2011 income tax forms individual Correction of excess deferrals after the year. 2011 income tax forms individual   If you have excess deferrals for a year, you may receive a correcting distribution of the excess deferral no later than April 15 of the following year. 2011 income tax forms individual The plan can distribute the excess deferral (and any income allocable to the excess) no later than April 15 of the year following the year the excess deferral was made. 2011 income tax forms individual Tax treatment of excess deferrals not attributable to Roth contributions. 2011 income tax forms individual   If the excess deferral is distributed by April 15, it is included in your income in the year contributed and the earnings on the excess deferral will be taxed in the year distributed. 2011 income tax forms individual Tax treatment of excess deferrals attributable to Roth contributions. 2011 income tax forms individual   For these rules, see Regulations section 1. 2011 income tax forms individual 402(g)-1(e). 2011 income tax forms individual Prev  Up  Next   Home   More Online Publications
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Talk to Your Pharmacist

Your pharmacist oversees an important part of your health care by providing the medications prescribed by other health care professionals. It’s important that you are proactive and communicate honestly with your pharmacist. Topics you should discuss with your pharmacist include:

  • What other medications you take
  • Whether you have allergic reactions to any medications
  • Whether there is a generic version of the medication you can take instead
  • Any questions about the medication you are receiving. Review and discuss information on your patient insert.
  • Whether there is a risk that your medications don’t mix well with each other
  • Whether there any side effects to the medications

Remember to finish your entire prescription, since some illnesses require treatment to continue past the time when symptoms go away. Make certain that your pharmacy has your current health and prescription insurance on record so you get the best price possible. If you have difficulty paying for your medications, contact the manufacturer; some pharmaceutical companies have patient assistance programs to help you afford your medication.

Online Pharmacies

An increasing number of consumers are replacing a trip to the pharmacy with a trip on the Internet. While there are online pharmacies that provide legitimate prescription services, there are also some questionable sites that make buying medicines online risky. Do business only with a licensed U.S. pharmacy. Check with the National Association of Boards of Pharmacy to determine whether the site is licensed and in good standing. There are a few clues you can use to determine whether an online pharmacy is licensed, such as the website does not:

  • identify the organization or company sponsoring the site.
  • include a U.S. address and telephone number for the company.

An online pharmacy should offer you access to a registered pharmacist who can answer any questions you might have about drug interactions, side effects, and other safety precautions. Be wary of sites that:

  • Sell drugs without a prescription
  • Sell drugs not approved by the FDA
  • Advertise quick cures
  • Tell stories of "amazing results"
  • Claims that the medical profession has tried to keep the product from the public

If you suspect a site is not a licensed pharmacy, report it and any complaints to the U.S. Food and Drug Administration.

The 2011 Income Tax Forms Individual

2011 income tax forms individual Other Methods of Depreciation Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: How To Figure the DeductionBasis Useful Life Salvage Value Methods To UseStraight Line Method Declining Balance Method Income Forecast Method How To Change Methods DispositionsSale or exchange. 2011 income tax forms individual Property not disposed of or abandoned. 2011 income tax forms individual Special rule for normal retirements from item accounts. 2011 income tax forms individual Abandoned property. 2011 income tax forms individual Single item accounts. 2011 income tax forms individual Multiple property account. 2011 income tax forms individual Topics - This chapter discusses: How to figure the deduction Methods to use How to change methods Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records 946 How To Depreciate Property Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization Schedule C (Form 1040) Profit or Loss From Business If your property is being depreciated under ACRS, you must continue to use rules for depreciation that applied when you placed the property in service. 2011 income tax forms individual If your property qualified for MACRS, you must depreciate it under MACRS. 2011 income tax forms individual See Publication 946. 2011 income tax forms individual However, you cannot use MACRS for certain property because of special rules that exclude it from MACRS. 2011 income tax forms individual Also, you can elect to exclude certain property from being depreciated under MACRS. 2011 income tax forms individual Property that you cannot depreciate using MACRS includes: Intangible property, Property you can elect to exclude from MACRS that you properly depreciate under a method that is not based on a term of years, Certain public utility property, Any motion picture film or video tape, Any sound recording, and Certain real and personal property placed in service before 1987. 2011 income tax forms individual Intangible property. 2011 income tax forms individual   You cannot depreciate intangible property under ACRS or MACRS. 2011 income tax forms individual You depreciate intangible property using any other reasonable method, usually, the straight line method. 2011 income tax forms individual Note. 2011 income tax forms individual The cost of certain intangible property that you acquire after August 10, 1993, must be amortized over a 15-year period. 2011 income tax forms individual For more information, see chapter 12 of Publication 535. 2011 income tax forms individual Public utility property. 2011 income tax forms individual   The law excludes from MACRS any public utility property for which the taxpayer does not use a normalization method of accounting. 2011 income tax forms individual This type of property is subject to depreciation under a special rule. 2011 income tax forms individual Videocassettes. 2011 income tax forms individual   If you are in the videocassette rental business, you can depreciate those videocassettes purchased for rental. 2011 income tax forms individual You can depreciate the cost less salvage value of those videocassettes that have a useful life over one year using either: The straight line method, or The income forecast method. 2011 income tax forms individual The straight line method, salvage value, and useful life are discussed later under Methods To Use. 2011 income tax forms individual You can deduct in the year of purchase as a business expense the cost of any cassette that has a useful life of one year or less. 2011 income tax forms individual How To Figure the Deduction Two other reasonable methods can be used to figure your deduction for property not covered under ACRS or MACRS. 2011 income tax forms individual These methods are straight line and declining balance. 2011 income tax forms individual To figure depreciation using these methods, you must generally determine three things about the property you intend to depreciate. 2011 income tax forms individual They are: The basis, The useful life, and The estimated salvage value at the end of its useful life. 2011 income tax forms individual The amount of the deduction in any year also depends on which method of depreciation you choose. 2011 income tax forms individual Basis To deduct the proper amount of depreciation each year, first determine your basis in the property you intend to depreciate. 2011 income tax forms individual The basis used for figuring depreciation is the same as the basis that would be used for figuring the gain on a sale. 2011 income tax forms individual Your original basis is usually the purchase price. 2011 income tax forms individual However, if you acquire property in some other way, such as inheriting it, getting it as a gift, or building it yourself, you have to figure your original basis in a different way. 2011 income tax forms individual Adjusted basis. 2011 income tax forms individual   Events will often change the basis of property. 2011 income tax forms individual When this occurs, the changed basis is called the adjusted basis. 2011 income tax forms individual Some events, such as improvements you make, increase basis. 2011 income tax forms individual Events such as deducting casualty losses and depreciation decrease basis. 2011 income tax forms individual If basis is adjusted, the depreciation deduction may also have to be changed, depending on the reason for the adjustment and the method of depreciation you are using. 2011 income tax forms individual   Publication 551 explains how to figure basis for property acquired in different ways. 2011 income tax forms individual It also discusses what items increase and decrease basis, how to figure adjusted basis, and how to allocate cost if you buy several pieces of property at one time. 2011 income tax forms individual Useful Life The useful life of a piece of property is an estimate of how long you can expect to use it in your trade or business, or to produce income. 2011 income tax forms individual It is the length of time over which you will make yearly depreciation deductions of your basis in the property. 2011 income tax forms individual It is how long it will continue to be useful to you, not how long the property will last. 2011 income tax forms individual Many things affect the useful life of property, such as: Frequency of use, Age when acquired, Your repair policy, and Environmental conditions. 2011 income tax forms individual The useful life can also be affected by technological improvements, progress in the arts, reasonably foreseeable economic changes, shifting of business centers, prohibitory laws, and other causes. 2011 income tax forms individual Consider all these factors before you arrive at a useful life for your property. 2011 income tax forms individual The useful life of the same type of property varies from user to user. 2011 income tax forms individual When you determine the useful life of your property, keep in mind your own experience with similar property. 2011 income tax forms individual You can use the general experience of the industry you are in until you are able to determine a useful life of your property from your own experience. 2011 income tax forms individual Change in useful life. 2011 income tax forms individual   You base your estimate of useful life on certain facts. 2011 income tax forms individual If these facts change significantly, you can adjust your estimate of the remaining useful life. 2011 income tax forms individual However, you redetermine the estimated useful life only when the change is substantial and there is a clear reason for making the change. 2011 income tax forms individual Salvage Value It is important for you to accurately determine the correct salvage value of the property you want to depreciate. 2011 income tax forms individual You generally cannot depreciate property below a reasonable salvage value. 2011 income tax forms individual Determining salvage value. 2011 income tax forms individual   Salvage value is the estimated value of property at the end of its useful life. 2011 income tax forms individual It is what you expect to get for the property if you sell it after you can no longer use it productively. 2011 income tax forms individual You must estimate the salvage value of a piece of property when you first acquire it. 2011 income tax forms individual   Salvage value is affected both by how you use the property and how long you use it. 2011 income tax forms individual If it is your policy to dispose of property that is still in good operating condition, the salvage value can be relatively large. 2011 income tax forms individual However, if your policy is to use property until it is no longer usable, its salvage value can be its junk value. 2011 income tax forms individual Changing salvage value. 2011 income tax forms individual   Once you determine the salvage value for property, you should not change it merely because prices have changed. 2011 income tax forms individual However, if you redetermine the useful life of property, as discussed earlier under Change in useful life, you can also redetermine the salvage value. 2011 income tax forms individual When you redetermine the salvage value, take into account the facts that exist at the time. 2011 income tax forms individual Net salvage. 2011 income tax forms individual   Net salvage is the salvage value of property minus what it costs to remove it when you dispose of it. 2011 income tax forms individual You can choose either salvage value or net salvage when you figure depreciation. 2011 income tax forms individual You must consistently use the one you choose and the treatment of the costs of removal must be consistent with the practice adopted. 2011 income tax forms individual However, if the cost to remove the property is more than the estimated salvage value, then net salvage is zero. 2011 income tax forms individual Your salvage value can never be less than zero. 2011 income tax forms individual Ten percent rule. 2011 income tax forms individual   If you acquire personal property that has a useful life of 3 years or more, you can use an amount for salvage value that is less than your actual estimate. 2011 income tax forms individual You can subtract from your estimate of salvage value an amount equal to 10% of your basis in the property. 2011 income tax forms individual If salvage value is less than 10% of basis, you can ignore salvage value when you figure depreciation. 2011 income tax forms individual Methods To Use Two methods of depreciation are the straight line and declining balance methods. 2011 income tax forms individual If ACRS or MACRS does not apply, you can use one of these methods. 2011 income tax forms individual The straight line and declining balance methods discussed in this section are not figured in the same way as straight line or declining balance methods under MACRS. 2011 income tax forms individual Straight Line Method Before 1981, you could use any reasonable method for every kind of depreciable property. 2011 income tax forms individual One of these methods was the straight line method. 2011 income tax forms individual This method was also used for intangible property. 2011 income tax forms individual It lets you deduct the same amount of depreciation each year. 2011 income tax forms individual To figure your deduction, determine the adjusted basis of your property, its salvage value, and its estimated useful life. 2011 income tax forms individual Subtract the salvage value, if any, from the adjusted basis. 2011 income tax forms individual The balance is the total amount of depreciation you can take over the useful life of the property. 2011 income tax forms individual Divide the balance by the number of years remaining in the useful life. 2011 income tax forms individual This gives you the amount of your yearly depreciation deduction. 2011 income tax forms individual Unless there is a big change in adjusted basis, or useful life, this amount will stay the same throughout the time you depreciate the property. 2011 income tax forms individual If, in the first year, you use the property for less than a full year, you must prorate your depreciation deduction for the number of months in use. 2011 income tax forms individual Example. 2011 income tax forms individual In April 1994, Frank bought a franchise for $5,600. 2011 income tax forms individual It expires in 10 years. 2011 income tax forms individual This property is intangible property that cannot be depreciated under MACRS. 2011 income tax forms individual Frank depreciates the franchise under the straight line method, using a 10-year useful life and no salvage value. 2011 income tax forms individual He takes the $5,600 basis and divides that amount by 10 years ($5,600 ÷ 10 = $560, a full year's use). 2011 income tax forms individual He must prorate the $560 for his 9 months of use in 1994. 2011 income tax forms individual This gives him a deduction of $420 ($560 ÷ 9/12). 2011 income tax forms individual In 1995, Frank can deduct $560 for the full year. 2011 income tax forms individual Declining Balance Method The declining balance method allows you to recover a larger amount of the cost of the property in the early years of your use of the property. 2011 income tax forms individual The rate cannot be more than twice the straight line rate. 2011 income tax forms individual Rate of depreciation. 2011 income tax forms individual   Under this method, you must determine your declining balance rate of depreciation. 2011 income tax forms individual The initial step is to: Divide the number 1 by the useful life of your property to get a straight line rate. 2011 income tax forms individual (For example, if property has a useful life of 5 years, its normal straight line rate of depreciation is ⅕, or 20%. 2011 income tax forms individual ) Multiply this straight line rate by a number that is more than 1 but not more than 2 to determine the declining balance rate. 2011 income tax forms individual Unless there is a change in the useful life during the time you depreciate the property, the rate of depreciation generally will not change. 2011 income tax forms individual Depreciation deductions. 2011 income tax forms individual   After you determine the rate of depreciation, multiply the adjusted basis of the property by it. 2011 income tax forms individual This gives you the amount of your deduction. 2011 income tax forms individual For example, if your adjusted basis at the beginning of the first year is $10,000, and your declining balance rate is 20%, your depreciation deduction for the first year is $2,000 ($10,000 ÷ 20%). 2011 income tax forms individual To figure your depreciation deduction in the second year, you must first adjust the basis for the amount of depreciation you deducted in the first year. 2011 income tax forms individual Subtract the previous year's depreciation from your basis ($10,000 - $2,000 = $8,000). 2011 income tax forms individual Multiply this amount by the rate of depreciation ($8,000 ÷ 20% = $1,600). 2011 income tax forms individual Your depreciation deduction for the second year is $1,600. 2011 income tax forms individual   As you can see from this example, your adjusted basis in the property gets smaller each year. 2011 income tax forms individual Also, under this method, deductions are larger in the earlier years and smaller in the later years. 2011 income tax forms individual You can make a change to the straight line method without consent. 2011 income tax forms individual Salvage value. 2011 income tax forms individual   Do not subtract salvage value when you figure your yearly depreciation deductions under the declining balance method. 2011 income tax forms individual However, you cannot depreciate the property below its reasonable salvage value. 2011 income tax forms individual Determine salvage value using the rules discussed earlier, including the special 10% rule. 2011 income tax forms individual Example. 2011 income tax forms individual If your adjusted basis has been decreased to $1,000 and the rate of depreciation is 20%, your depreciation deduction should be $200. 2011 income tax forms individual But if your estimate of salvage value was $900, you can only deduct $100. 2011 income tax forms individual This is because $100 is the amount that would lower your adjusted basis to equal salvage value. 2011 income tax forms individual Income Forecast Method The income forecast method requires income projections for each videocassette or group of videocassettes. 2011 income tax forms individual You can group the videocassettes by title for making this projection. 2011 income tax forms individual You determine the depreciation by applying a fraction to the cost less salvage value of the cassette. 2011 income tax forms individual The numerator is the income from the videocassette for the tax year and the denominator is the total projected income for the cassette. 2011 income tax forms individual For more information on the income forecast method, see Revenue Ruling 60-358 in Cumulative Bulletin 1960, Volume 2, on page 68. 2011 income tax forms individual How To Change Methods In some cases, you may change your method of depreciation for property depreciated under a reasonable method. 2011 income tax forms individual If you change your method of depreciation, it is generally a change in your method of accounting. 2011 income tax forms individual You must get IRS consent before making the change. 2011 income tax forms individual However, you do not need permission for certain changes in your method of depreciation. 2011 income tax forms individual The rules discussed in this section do not apply to property depreciated under ACRS or MACRS. 2011 income tax forms individual For information on ACRS elections,see Revocation of election, in chapter 1 under Alternate ACRS Method. 2011 income tax forms individual Change to the straight line method. 2011 income tax forms individual   You can change from the declining balance method to the straight line method at any time during the useful life of your property without IRS consent. 2011 income tax forms individual However, if you have a written agreement with the IRS that prohibits a change, you must first get IRS permission. 2011 income tax forms individual When the change is made, figure depreciation based on your adjusted basis in the property at that time. 2011 income tax forms individual Your adjusted basis takes into account all previous depreciation deductions. 2011 income tax forms individual Use the estimated remaining useful life of your property at the time of change and its estimated salvage value. 2011 income tax forms individual   You can change from the declining balance method to straight line only on the original tax return for the year you first use the straight line method. 2011 income tax forms individual You cannot make the change on an amended return filed after the due date of the original return (including extensions). 2011 income tax forms individual   When you make the change, attach a statement to your tax return showing: When you acquired the property, Its original cost or other original basis, The total amount claimed for depreciation and other allowances since you acquired it, Its salvage value and remaining useful life, and A description of the property and its use. 2011 income tax forms individual   After you change to straight line, you cannot change back to the declining balance method or to any other method for a period of 10 years without written permission from the IRS. 2011 income tax forms individual Changes that require permission. 2011 income tax forms individual   For most other changes in method of depreciation, you must get permission from the IRS. 2011 income tax forms individual To request a change in method of depreciation, file Form 3115. 2011 income tax forms individual File the application within the first 180 days of the tax year the change is to become effective. 2011 income tax forms individual In most cases, there is a user fee that must accompany Form 3115. 2011 income tax forms individual See the instructions for Form 3115 to determine if a fee is required. 2011 income tax forms individual Changes granted automatically. 2011 income tax forms individual   The IRS automatically approves certain changes of a method of depreciation. 2011 income tax forms individual But, you must file Form 3115 for these automatic changes. 2011 income tax forms individual   However, IRS can deny permission if Form 3115 is not filed on time. 2011 income tax forms individual For more information on automatic changes, see Revenue Procedure 74-11, 1974-1 C. 2011 income tax forms individual B. 2011 income tax forms individual 420. 2011 income tax forms individual Changes for which approval is not automatic. 2011 income tax forms individual   The automatic change procedures do not apply to: Property or an account where you made a change in depreciation within the last 10 tax years (unless the change was made under the Class Life System), Class Life Asset Depreciation Range System, and Public utility property. 2011 income tax forms individual   You must request and receive permission for these changes. 2011 income tax forms individual To make the request, file Form 3115 during the first 180 days of the tax year for which you want the change to be effective. 2011 income tax forms individual Change from an improper method. 2011 income tax forms individual   If the IRS disallows the method you are using, you do not need permission to change to a proper method. 2011 income tax forms individual You can adopt the straight line method, or any other method that would have been permitted if you had used it from the beginning. 2011 income tax forms individual If you file your tax return using an improper method, but later file an amended return, you can use a proper method on the amended return without getting IRS permission. 2011 income tax forms individual However, you must file the amended return before the filing date for the next tax year. 2011 income tax forms individual Dispositions Retirement is the permanent withdrawal of depreciable property from use in your trade or business or for the production of income. 2011 income tax forms individual You can do this by selling, exchanging, or abandoning the item of property. 2011 income tax forms individual You can also withdraw it from use without disposing of it. 2011 income tax forms individual For example, you could place it in a supplies or scrap account. 2011 income tax forms individual Retirements can be either normal or abnormal depending on all facts and circumstances. 2011 income tax forms individual The rules discussed next do not apply to MACRS and ACRS property. 2011 income tax forms individual Normal retirement. 2011 income tax forms individual   A normal retirement is a permanent withdrawal of depreciable property from use if the following apply: The retirement is made within the useful life you estimated originally, and The property has reached a condition at which you customarily retire or would retire similar property from use. 2011 income tax forms individual A retirement is generally considered normal unless you can show that you retired the property because of a reason you did not consider when you originally estimated the useful life of the property. 2011 income tax forms individual Abnormal retirement. 2011 income tax forms individual   A retirement can be abnormal if you withdraw the property early or under other circumstances. 2011 income tax forms individual For example, if the property is damaged by a fire or suddenly becomes obsolete and is now useless. 2011 income tax forms individual Gain or loss on retirement. 2011 income tax forms individual   There are special rules for figuring the gain or loss on retirement of property. 2011 income tax forms individual The gain or loss will depend on several factors. 2011 income tax forms individual These include the type of withdrawal, if the withdrawal was from a single property or multiple property account, and if the retirement was normal or abnormal. 2011 income tax forms individual A single property account contains only one item of property. 2011 income tax forms individual A multiple property account is one in which several items have been combined with a single rate of depreciation assigned to the entire account. 2011 income tax forms individual Sale or exchange. 2011 income tax forms individual   If property is retired by sale or exchange, you figure gain or loss by the usual rules that apply to sales or other dispositions of property. 2011 income tax forms individual See Publication 544. 2011 income tax forms individual Property not disposed of or abandoned. 2011 income tax forms individual   If property is retired permanently, but not disposed of or physically abandoned, you do not recognize gain. 2011 income tax forms individual You are allowed a loss in such a case, but only if the retirement is: An abnormal retirement, A normal retirement from a single property account in which you determined the life of each item of property separately, or A normal retirement from a multiple property account in which the depreciation rate is based on the maximum expected life of the longest lived item of property and the loss occurs before the expiration of the full useful life. 2011 income tax forms individual However, you are not allowed a loss if the depreciation rate is based on the average useful life of the items of property in the account. 2011 income tax forms individual   To figure your loss, subtract the estimated salvage or fair market value of the property at the date of retirement, whichever is more, from its adjusted basis. 2011 income tax forms individual Special rule for normal retirements from item accounts. 2011 income tax forms individual   You can generally deduct losses upon retirement of a few depreciable items of property with similar useful lives, if: You account for each one in a separate account, and You use the average useful life to figure depreciation. 2011 income tax forms individual However, you cannot deduct losses if you use the average useful life to figure depreciation and they have a wide range of useful lives. 2011 income tax forms individual   If you have a large number of depreciable property items and use average useful lives to figure depreciation, you cannot deduct the losses upon normal retirements from these accounts. 2011 income tax forms individual Abandoned property. 2011 income tax forms individual   If you physically abandon property, you can deduct as a loss the adjusted basis of the property at the time of its abandonment. 2011 income tax forms individual However, your intent must be to discard the property so that you will not use it again or retrieve it for sale, exchange, or other disposition. 2011 income tax forms individual Basis of property retired. 2011 income tax forms individual   The basis for figuring gain or loss on the retirement of property is its adjusted basis at the time of retirement, as determined in the following discussions. 2011 income tax forms individual Single item accounts. 2011 income tax forms individual   If an item of property is accounted for in a single item account, the adjusted basis is the basis you would use to figure gain or loss for a sale or exchange of the property. 2011 income tax forms individual This is generally the cost or other basis of the item of property less depreciation. 2011 income tax forms individual See Publication 551. 2011 income tax forms individual Multiple property account. 2011 income tax forms individual   For a normal retirement from a multiple property account, if you figured depreciation using the average expected useful life, the adjusted basis is the salvage value estimated for the item of property when it was originally acquired. 2011 income tax forms individual If you figured depreciation using the maximum expected useful life of the longest lived item of property in the account, you must use the depreciation method used for the multiple property account and a rate based on the maximum expected useful life of the item of property retired. 2011 income tax forms individual   You make the adjustment for depreciation for an abnormal retirement from a multiple property account at the rate that would be proper if the item of property was depreciated in a single property account. 2011 income tax forms individual The method of depreciation used for the multiple property account is used. 2011 income tax forms individual You base the rate on either the average expected useful life or the maximum expected useful life of the retired item of property, depending on the method used to determine the depreciation rate for the multiple property account. 2011 income tax forms individual Prev  Up  Next   Home   More Online Publications