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Amend Tax Return 2010

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Amend Tax Return 2010

Amend tax return 2010 7. Amend tax return 2010   Costs You Can Deduct or Capitalize Table of Contents What's New Introduction Topics - This chapter discusses: Useful Items - You may want to see: Carrying Charges Research and Experimental CostsProduct. Amend tax return 2010 Costs not included. Amend tax return 2010 Intangible Drilling Costs Exploration CostsPartnerships and S corporations. Amend tax return 2010 Development Costs Circulation Costs Business Start-Up and Organizational Costs Reforestation Costs Retired Asset Removal Costs Barrier Removal CostsOther barrier removals. Amend tax return 2010 Film and Television Production Costs What's New Film and television productions costs. Amend tax return 2010  The election to expense film and television production costs does not apply to productions that begin after December 31, 2013. Amend tax return 2010 See Film and Television Production Costs , later. Amend tax return 2010 Introduction This chapter discusses costs you can elect to deduct or capitalize. Amend tax return 2010 You generally deduct a cost as a current business expense by subtracting it from your income in either the year you incur it or the year you pay it. Amend tax return 2010 If you capitalize a cost, you may be able to recover it over a period of years through periodic deductions for amortization, depletion, or depreciation. Amend tax return 2010 When you capitalize a cost, you add it to the basis of property to which it relates. Amend tax return 2010 A partnership, corporation, estate, or trust makes the election to deduct or capitalize the costs discussed in this chapter except for exploration costs for mineral deposits. Amend tax return 2010 Each individual partner, shareholder, or beneficiary elects whether to deduct or capitalize exploration costs. Amend tax return 2010 You may be subject to the alternative minimum tax (AMT) if you deduct research and experimental, intangible drilling, exploration, development, circulation, or business organizational costs. Amend tax return 2010 For more information on the alternative minimum tax, see the instructions for the following forms. Amend tax return 2010 Form 6251, Alternative Minimum Tax—Individuals. Amend tax return 2010 Form 4626, Alternative Minimum Tax—Corporations. Amend tax return 2010 Topics - This chapter discusses: Carrying charges Research and experimental costs Intangible drilling costs Exploration costs Development costs Circulation costs Qualified disaster expenses Business start-up and organizational costs Reforestation costs Retired asset removal costs Barrier removal costs Film and television production costs Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 3468 Investment Credit 8826 Disabled Access Credit See chapter 12 for information about getting publications and forms. Amend tax return 2010 Carrying Charges Carrying charges include the taxes and interest you pay to carry or develop real property or to carry, transport, or install personal property. Amend tax return 2010 Certain carrying charges must be capitalized under the uniform capitalization rules. Amend tax return 2010 (For information on capitalization of interest, see chapter 4 . Amend tax return 2010 ) You can elect to capitalize carrying charges not subject to the uniform capitalization rules, but only if they are otherwise deductible. Amend tax return 2010 You can elect to capitalize carrying charges separately for each project you have and for each type of carrying charge. Amend tax return 2010 For unimproved and unproductive real property, your election is good for only 1 year. Amend tax return 2010 You must decide whether to capitalize carrying charges each year the property remains unimproved and unproductive. Amend tax return 2010 For other real property, your election to capitalize carrying charges remains in effect until construction or development is completed. Amend tax return 2010 For personal property, your election is effective until the date you install or first use it, whichever is later. Amend tax return 2010 How to make the election. Amend tax return 2010   To make the election to capitalize a carrying charge, attach a statement to your original tax return for the year the election is to be effective indicating which charges you are electing to capitalize. Amend tax return 2010 However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return 2010 Attach the statement to the amended return and write “Filed pursuant to section 301. Amend tax return 2010 9100-2” on the statement. Amend tax return 2010 File the amended return at the same address you filed the original return. Amend tax return 2010 Research and Experimental Costs The costs of research and experimentation are generally capital expenses. Amend tax return 2010 However, you can elect to deduct these costs as a current business expense. Amend tax return 2010 Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. Amend tax return 2010 If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Amend tax return 2010 For information on electing to defer and amortize these costs, see Research and Experimental Costs in chapter 8. Amend tax return 2010 Research and experimental costs defined. Amend tax return 2010   Research and experimental costs are reasonable costs you incur in your trade or business for activities intended to provide information that would eliminate uncertainty about the development or improvement of a product. Amend tax return 2010 Uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product. Amend tax return 2010 Whether costs qualify as research and experimental costs depends on the nature of the activity to which the costs relate rather than on the nature of the product or improvement being developed or the level of technological advancement. Amend tax return 2010      The costs of obtaining a patent, including attorneys' fees paid or incurred in making and perfecting a patent application, are research and experimental costs. Amend tax return 2010 However, costs paid or incurred to obtain another's patent are not research and experimental costs. Amend tax return 2010 Product. Amend tax return 2010   The term “product” includes any of the following items. Amend tax return 2010 Formula. Amend tax return 2010 Invention. Amend tax return 2010 Patent. Amend tax return 2010 Pilot model. Amend tax return 2010 Process. Amend tax return 2010 Technique. Amend tax return 2010 Property similar to the items listed above. Amend tax return 2010 It also includes products used by you in your trade or business or held for sale, lease, or license. Amend tax return 2010 Costs not included. Amend tax return 2010   Research and experimental costs do not include expenses for any of the following activities. Amend tax return 2010 Advertising or promotions. Amend tax return 2010 Consumer surveys. Amend tax return 2010 Efficiency surveys. Amend tax return 2010 Management studies. Amend tax return 2010 Quality control testing. Amend tax return 2010 Research in connection with literary, historical, or similar projects. Amend tax return 2010 The acquisition of another's patent, model, production, or process. Amend tax return 2010 When and how to elect. Amend tax return 2010   You make the election to deduct research and experimental costs by deducting them on your tax return for the year in which you first pay or incur research and experimental costs. Amend tax return 2010 If you do not make the election to deduct research and experimental costs in the first year in which you pay or incur the costs, you can deduct the costs in a later year only with approval from the IRS. Amend tax return 2010 Deducting or Amortizing Research and Experimentation Costs IF you . Amend tax return 2010 . Amend tax return 2010 . Amend tax return 2010 THEN . Amend tax return 2010 . Amend tax return 2010 . Amend tax return 2010 Elect to deduct research and experimental costs as a current business expense Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Amend tax return 2010 Do not deduct research and experimental costs as a current business expense If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. Amend tax return 2010 See Research and Experimental Costs in chapter 8. Amend tax return 2010 Research credit. Amend tax return 2010   If you pay or incur qualified research expenses, you may be able to take the research credit. Amend tax return 2010 For more information see Form 6765, Credit for Increasing Research Activities and its instructions. Amend tax return 2010 Intangible Drilling Costs The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. Amend tax return 2010 You can usually recover them through depreciation or depletion. Amend tax return 2010 However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense. Amend tax return 2010 These are certain drilling and development costs for wells in the United States in which you hold an operating or working interest. Amend tax return 2010 You can deduct only costs for drilling or preparing a well for the production of oil, gas, or geothermal steam or hot water. Amend tax return 2010 You can elect to deduct only the costs of items with no salvage value. Amend tax return 2010 These include wages, fuel, repairs, hauling, and supplies related to drilling wells and preparing them for production. Amend tax return 2010 Your cost for any drilling or development work done by contractors under any form of contract is also an IDC. Amend tax return 2010 However, see Amounts paid to contractor that must be capitalized , later. Amend tax return 2010 You can also elect to deduct the cost of drilling exploratory bore holes to determine the location and delineation of offshore hydrocarbon deposits if the shaft is capable of conducting hydrocarbons to the surface on completion. Amend tax return 2010 It does not matter whether there is any intent to produce hydrocarbons. Amend tax return 2010 If you do not elect to deduct your IDCs as a current business expense, you can elect to deduct them over the 60-month period beginning with the month they were paid or incurred. Amend tax return 2010 Amounts paid to contractor that must be capitalized. Amend tax return 2010   Amounts paid to a contractor must be capitalized if they are either: Amounts properly allocable to the cost of depreciable property, or Amounts paid only out of production or proceeds from production if these amounts are depletable income to the recipient. Amend tax return 2010 How to make the election. Amend tax return 2010   You elect to deduct IDCs as a current business expense by taking the deduction on your income tax return for the first tax year you have eligible costs. Amend tax return 2010 No formal statement is required. Amend tax return 2010 If you file Schedule C (Form 1040), enter these costs under “Other expenses. Amend tax return 2010 ”   For oil and gas wells, your election is binding for the year it is made and for all later years. Amend tax return 2010 For geothermal wells, your election can be revoked by the filing of an amended return on which you do not take the deduction. Amend tax return 2010 You can file the amended return for the year up to the normal time of expiration for filing a claim for credit or refund, generally, within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. Amend tax return 2010 Energy credit for costs of geothermal wells. Amend tax return 2010   If you capitalize the drilling and development costs of geothermal wells that you place in service during the tax year, you may be able to claim a business energy credit. Amend tax return 2010 See the Instructions for Form 3468 for more information. Amend tax return 2010 Nonproductive well. Amend tax return 2010   If you capitalize your IDCs, you have another option if the well is nonproductive. Amend tax return 2010 You can deduct the IDCs of the nonproductive well as an ordinary loss. Amend tax return 2010 You must indicate and clearly state your election on your tax return for the year the well is completed. Amend tax return 2010 Once made, the election for oil and gas wells is binding for all later years. Amend tax return 2010 You can revoke your election for a geothermal well by filing an amended return that does not claim the loss. Amend tax return 2010 Costs incurred outside the United States. Amend tax return 2010   You cannot deduct as a current business expense all the IDCs paid or incurred for an oil, gas, or geothermal well located outside the United States. Amend tax return 2010 However, you can elect to include the costs in the adjusted basis of the well to figure depletion or depreciation. Amend tax return 2010 If you do not make this election, you can deduct the costs over the 10-year period beginning with the tax year in which you paid or incurred them. Amend tax return 2010 These rules do not apply to a nonproductive well. Amend tax return 2010 Exploration Costs The costs of determining the existence, location, extent, or quality of any mineral deposit are ordinarily capital expenditures if the costs lead to the development of a mine. Amend tax return 2010 You recover these costs through depletion as the mineral is removed from the ground. Amend tax return 2010 However, you can elect to deduct domestic exploration costs paid or incurred before the beginning of the development stage of the mine (except those for oil and gas wells). Amend tax return 2010 How to make the election. Amend tax return 2010   You elect to deduct exploration costs by taking the deduction on your income tax return, or on an amended income tax return, for the first tax year for which you wish to deduct the costs paid or incurred during the tax year. Amend tax return 2010 Your return must adequately describe and identify each property or mine, and clearly state how much is being deducted for each one. Amend tax return 2010 The election applies to the tax year you make this election and all later tax years. Amend tax return 2010 Partnerships and S corporations. Amend tax return 2010   Each partner, not the partnership, elects whether to capitalize or to deduct that partner's share of exploration costs. Amend tax return 2010 Each shareholder, not the S corporation, elects whether to capitalize or to deduct that shareholder's share of exploration costs. Amend tax return 2010 Reduced corporate deductions for exploration costs. Amend tax return 2010   A corporation (other than an S corporation) can deduct only 70% of its domestic exploration costs. Amend tax return 2010 It must capitalize the remaining 30% of costs and amortize them over the 60-month period starting with the month the exploration costs are paid or incurred. Amend tax return 2010 A corporation may also elect to capitalize and amortize mining exploration costs over a 10-year period. Amend tax return 2010 For more information on this method of amortization, see Internal Revenue Code section 59(e). Amend tax return 2010   The 30% the corporation capitalizes cannot be added to its basis in the property to figure cost depletion. Amend tax return 2010 However, the amount amortized is treated as additional depreciation and is subject to recapture as ordinary income on a disposition of the property. Amend tax return 2010 See Section 1250 Property under Depreciation Recapture in chapter 3 of Publication 544. Amend tax return 2010   These rules also apply to the deduction of development costs by corporations. Amend tax return 2010 See Development Costs , later. Amend tax return 2010 Recapture of exploration expenses. Amend tax return 2010   When your mine reaches the producing stage, you must recapture any exploration costs you elected to deduct. Amend tax return 2010 Use either of the following methods. Amend tax return 2010 Method 1—Include the deducted costs in gross income for the tax year the mine reaches the producing stage. Amend tax return 2010 Your election must be clearly indicated on the return. Amend tax return 2010 Increase your adjusted basis in the mine by the amount included in income. Amend tax return 2010 Generally, you must elect this recapture method by the due date (including extensions) of your return. Amend tax return 2010 However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return 2010 Make the election on your amended return and write “Filed pursuant to section 301. Amend tax return 2010 9100-2” on the form where you are including the income. Amend tax return 2010 File the amended return at the same address you filed the original return. Amend tax return 2010 Method 2—Do not claim any depletion deduction for the tax year the mine reaches the producing stage and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Amend tax return 2010   You also must recapture deducted exploration costs if you receive a bonus or royalty from mine property before it reaches the producing stage. Amend tax return 2010 Do not claim any depletion deduction for the tax year you receive the bonus or royalty and any later tax years until the depletion you would have deducted equals the exploration costs you deducted. Amend tax return 2010   Generally, if you dispose of the mine before you have fully recaptured the exploration costs you deducted, recapture the balance by treating all or part of your gain as ordinary income. Amend tax return 2010 Under these circumstances, you generally treat as ordinary income all of your gain if it is less than your adjusted exploration costs with respect to the mine. Amend tax return 2010 If your gain is more than your adjusted exploration costs, treat as ordinary income only a part of your gain, up to the amount of your adjusted exploration costs. Amend tax return 2010 Foreign exploration costs. Amend tax return 2010   If you pay or incur exploration costs for a mine or other natural deposit located outside the United States, you cannot deduct all the costs in the current year. Amend tax return 2010 You can elect to include the costs (other than for an oil, gas, or geothermal well) in the adjusted basis of the mineral property to figure cost depletion. Amend tax return 2010 (Cost depletion is discussed in chapter 9 . Amend tax return 2010 ) If you do not make this election, you must deduct the costs over the 10-year period beginning with the tax year in which you pay or incur them. Amend tax return 2010 These rules also apply to foreign development costs. Amend tax return 2010 Development Costs You can deduct costs paid or incurred during the tax year for developing a mine or any other natural deposit (other than an oil or gas well) located in the United States. Amend tax return 2010 These costs must be paid or incurred after the discovery of ores or minerals in commercially marketable quantities. Amend tax return 2010 Development costs also include depreciation on improvements used in the development of ores or minerals and costs incurred for you by a contractor. Amend tax return 2010 Development costs do not include the costs for the acquisition or improvement of depreciable property. Amend tax return 2010 Instead of deducting development costs in the year paid or incurred, you can elect to treat the cost as deferred expenses and deduct them ratably as the units of produced ores or minerals benefited by the expenses are sold. Amend tax return 2010 This election applies each tax year to expenses paid or incurred in that year. Amend tax return 2010 Once made, the election is binding for the year and cannot be revoked for any reason. Amend tax return 2010 How to make the election. Amend tax return 2010   The election to deduct development costs ratably as the ores or minerals are sold must be made for each mine or other natural deposit by a clear indication on your return or by a statement filed with the IRS office where you file your return. Amend tax return 2010 Generally, you must make the election by the due date of the return (including extensions). Amend tax return 2010 However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return 2010 Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Amend tax return 2010 9100-2. Amend tax return 2010 ” File the amended return at the same address you filed the original return. Amend tax return 2010 Foreign development costs. Amend tax return 2010   The rules discussed earlier for foreign exploration costs apply to foreign development costs. Amend tax return 2010 Reduced corporate deductions for development costs. Amend tax return 2010   The rules discussed earlier for reduced corporate deductions for exploration costs also apply to corporate deductions for development costs. Amend tax return 2010 Circulation Costs A publisher can deduct as a current business expense the costs of establishing, maintaining, or increasing the circulation of a newspaper, magazine, or other periodical. Amend tax return 2010 For example, a publisher can deduct the cost of hiring extra employees for a limited time to get new subscriptions through telephone calls. Amend tax return 2010 Circulation costs are deductible even if they normally would be capitalized. Amend tax return 2010 This rule does not apply to the following costs that must be capitalized. Amend tax return 2010 The purchase of land or depreciable property. Amend tax return 2010 The acquisition of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical, including the purchase of another publisher's list of subscribers. Amend tax return 2010 Other treatment of circulation costs. Amend tax return 2010   If you do not want to deduct circulation costs as a current business expense, you can elect one of the following ways to recover these costs. Amend tax return 2010 Capitalize all circulation costs that are properly chargeable to a capital account (see chapter 1 ). Amend tax return 2010 Amortize circulation costs over the 3-year period beginning with the tax year they were paid or incurred. Amend tax return 2010 How to make the election. Amend tax return 2010   You elect to capitalize circulation costs by attaching a statement to your return for the first tax year the election applies. Amend tax return 2010 Your election is binding for the year it is made and for all later years, unless you get IRS approval to revoke it. Amend tax return 2010 Business Start-Up and Organizational Costs Business start-up and organizational costs are generally capital expenditures. Amend tax return 2010 However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. Amend tax return 2010 The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Amend tax return 2010 Any remaining costs must be amortized. Amend tax return 2010 For information about amortizing start-up and organizational costs, see chapter 8 . Amend tax return 2010 Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Amend tax return 2010 Organizational costs include the costs of creating a corporation. Amend tax return 2010 For more information on start-up and organizational costs, see chapter 8 . Amend tax return 2010 How to make the election. Amend tax return 2010   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. Amend tax return 2010 However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return 2010 Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Amend tax return 2010 9100-2. Amend tax return 2010 ” File the amended return at the same address you filed the original return. Amend tax return 2010 The election applies when computing taxable income for the current tax year and all subsequent years. Amend tax return 2010 Reforestation Costs Reforestation costs are generally capital expenditures. Amend tax return 2010 However, you can elect to deduct up to $10,000 ($5,000 if married filing separately; $0 for a trust) of qualifying reforestation costs paid or incurred after October 22, 2004, for each qualified timber property. Amend tax return 2010 The remaining costs can be amortized over an 84-month period. Amend tax return 2010 For information about amortizing reforestation costs, see chapter 8 . Amend tax return 2010 Qualifying reforestation costs are the direct costs of planting or seeding for forestation or reforestation. Amend tax return 2010 Qualified timber property is property that contains trees in significant commercial quantities. Amend tax return 2010 See chapter 8 for more information on qualifying reforestation costs and qualified timber property. Amend tax return 2010 If you elect to deduct qualified reforestation costs, create and maintain separate timber accounts for each qualified timber property and include all reforestation costs and the dates each was applied. Amend tax return 2010 Do not include this qualified timber property in any account (for example, depletion block) for which depletion is allowed. Amend tax return 2010 How to make the election. Amend tax return 2010   You elect to deduct qualifying reforestation costs by claiming the deduction on your timely filed income tax return (including extensions) for the tax year the expenses were paid or incurred. Amend tax return 2010 If Form T (Timber), Forest Activities Schedule, is required, complete Part IV of Form T. Amend tax return 2010 If Form T is not required, attach a statement containing the following information for each qualified timber property for which an election is being made. Amend tax return 2010 The unique stand identification numbers. Amend tax return 2010 The total number of acres reforested during the tax year. Amend tax return 2010 The nature of the reforestation treatments. Amend tax return 2010 The total amounts of qualified reforestation expenditures eligible to be amortized or deducted. Amend tax return 2010   If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return 2010 Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Amend tax return 2010 9100-2. Amend tax return 2010 ” File the amended return at the same address you filed the original return. Amend tax return 2010 The election applies when computing taxable income for the current tax year and all subsequent years. Amend tax return 2010   For additional information on reforestation costs, see chapter 8 . Amend tax return 2010 Recapture. Amend tax return 2010   This deduction may have to be recaptured as ordinary income under section 1245 when you sell or otherwise dispose of the property that would have received an addition to basis if you had not elected to deduct the expenditure. Amend tax return 2010 For more information on recapturing the deduction, see Depreciation Recapture in Publication 544. Amend tax return 2010 Retired Asset Removal Costs If you retire and remove a depreciable asset in connection with the installation or production of a replacement asset, you can deduct the costs of removing the retired asset. Amend tax return 2010 However, if you replace a component (part) of a depreciable asset, capitalize the removal costs if the replacement is an improvement and deduct the costs if the replacement is a repair. Amend tax return 2010 Barrier Removal Costs The cost of an improvement to a business asset is normally a capital expense. Amend tax return 2010 However, you can elect to deduct the costs of making a facility or public transportation vehicle more accessible to and usable by those who are disabled or elderly. Amend tax return 2010 You must own or lease the facility or vehicle for use in connection with your trade or business. Amend tax return 2010 A facility is all or any part of buildings, structures, equipment, roads, walks, parking lots, or similar real or personal property. Amend tax return 2010 A public transportation vehicle is a vehicle, such as a bus or railroad car, that provides transportation service to the public (including service for your customers, even if you are not in the business of providing transportation services). Amend tax return 2010 You cannot deduct any costs that you paid or incurred to completely renovate or build a facility or public transportation vehicle or to replace depreciable property in the normal course of business. Amend tax return 2010 Deduction limit. Amend tax return 2010   The most you can deduct as a cost of removing barriers to the disabled and the elderly for any tax year is $15,000. Amend tax return 2010 However, you can add any costs over this limit to the basis of the property and depreciate these excess costs. Amend tax return 2010 Partners and partnerships. Amend tax return 2010   The $15,000 limit applies to a partnership and also to each partner in the partnership. Amend tax return 2010 A partner can allocate the $15,000 limit in any manner among the partner's individually incurred costs and the partner's distributive share of partnership costs. Amend tax return 2010 If the partner cannot deduct the entire share of partnership costs, the partnership can add any costs not deducted to the basis of the improved property. Amend tax return 2010   A partnership must be able to show that any amount added to basis was not deducted by the partner and that it was over a partner's $15,000 limit (as determined by the partner). Amend tax return 2010 If the partnership cannot show this, it is presumed that the partner was able to deduct the distributive share of the partnership's costs in full. Amend tax return 2010 Example. Amend tax return 2010 Emilio Azul's distributive share of ABC partnership's deductible expenses for the removal of architectural barriers was $14,000. Amend tax return 2010 Emilio had $12,000 of similar expenses in his sole proprietorship. Amend tax return 2010 He elected to deduct $7,000 of them. Amend tax return 2010 Emilio allocated the remaining $8,000 of the $15,000 limit to his share of ABC's expenses. Amend tax return 2010 Emilio can add the excess $5,000 of his own expenses to the basis of the property used in his business. Amend tax return 2010 Also, if ABC can show that Emilio could not deduct $6,000 ($14,000 – $8,000) of his share of the partnership's expenses because of how Emilio applied the limit, ABC can add $6,000 to the basis of its property. Amend tax return 2010 Qualification standards. Amend tax return 2010   You can deduct your costs as a current expense only if the barrier removal meets the guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board under the Americans with Disabilities Act (ADA) of 1990. Amend tax return 2010 You can view the Americans with Disabilities Act at www. Amend tax return 2010 ada. Amend tax return 2010 gov/pubs/ada. Amend tax return 2010 htm. Amend tax return 2010   The following is a list of some architectural barrier removal costs that can be deducted. Amend tax return 2010 Ground and floor surfaces. Amend tax return 2010 Walks. Amend tax return 2010 Parking lots. Amend tax return 2010 Ramps. Amend tax return 2010 Entrances. Amend tax return 2010 Doors and doorways. Amend tax return 2010 Stairs. Amend tax return 2010 Floors. Amend tax return 2010 Toilet rooms. Amend tax return 2010 Water fountains. Amend tax return 2010 Public telephones. Amend tax return 2010 Elevators. Amend tax return 2010 Controls. Amend tax return 2010 Signage. Amend tax return 2010 Alarms. Amend tax return 2010 Protruding objects. Amend tax return 2010 Symbols of accessibility. Amend tax return 2010 You can find the ADA guidelines and requirements for architectural barrier removal at www. Amend tax return 2010 usdoj. Amend tax return 2010 gov/crt/ada/reg3a. Amend tax return 2010 html. Amend tax return 2010   The costs for removal of transportation barriers from rail facilities, buses, and rapid and light rail vehicles are deductible. Amend tax return 2010 You can find the guidelines and requirements for transportation barrier removal at www. Amend tax return 2010 fta. Amend tax return 2010 dot. Amend tax return 2010 gov. Amend tax return 2010   Also, you can access the ADA website at www. Amend tax return 2010 ada. Amend tax return 2010 gov for additional information. Amend tax return 2010 Other barrier removals. Amend tax return 2010   To be deductible, expenses of removing any barrier not covered by the above standards must meet all three of the following tests. Amend tax return 2010 The removed barrier must be a substantial barrier to access or use of a facility or public transportation vehicle by persons who have a disability or are elderly. Amend tax return 2010 The removed barrier must have been a barrier for at least one major group of persons who have a disability or are elderly (such as people who are blind, deaf, or wheelchair users). Amend tax return 2010 The barrier must be removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly. Amend tax return 2010 How to make the election. Amend tax return 2010   If you elect to deduct your costs for removing barriers to the disabled or the elderly, claim the deduction on your income tax return (partnership return for partnerships) for the tax year the expenses were paid or incurred. Amend tax return 2010 Identify the deduction as a separate item. Amend tax return 2010 The election applies to all the qualifying costs you have during the year, up to the $15,000 limit. Amend tax return 2010 If you make this election, you must maintain adequate records to support your deduction. Amend tax return 2010   For your election to be valid, you generally must file your return by its due date, including extensions. Amend tax return 2010 However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Amend tax return 2010 Clearly indicate the election on your amended return and write “Filed pursuant to section 301. Amend tax return 2010 9100-2. Amend tax return 2010 ” File the amended return at the same address you filed the original return. Amend tax return 2010 Your election is irrevocable after the due date, including extensions, of your return. Amend tax return 2010 Disabled access credit. Amend tax return 2010   If you make your business accessible to persons with disabilities and your business is an eligible small business, you may be able to claim the disabled access credit. Amend tax return 2010 If you choose to claim the credit, you must reduce the amount you deduct or capitalize by the amount of the credit. Amend tax return 2010   For more information, see Form 8826, Disabled Access Credit. Amend tax return 2010 Film and Television Production Costs Film and television production costs are generally capital expenses. Amend tax return 2010 However, you can elect to deduct costs paid or incurred for certain productions commencing before January 1, 2014. Amend tax return 2010 For more information, see section 181 of the Internal Revenue Code and the related Treasury Regulations. Amend tax return 2010 Prev  Up  Next   Home   More Online Publications
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More than Half of all Income Tax Returns Have Been Received. IRS Issues Publication on Business Expenses

 

IR-2014-32, March 20, 2014

WASHINGTON — With the tax deadline getting closer, the IRS has received more than half of all the returns it expects to receive during 2014, the agency announced today. The IRS received more than 75 million individual tax returns as of March 14 and projects that it will receive about 149 million individual income tax returns by the end of the year.

Millions of individual tax filers have business income either as sole proprietors or as sub contractors. Many individual filers also have unreimbursed business expenses. The IRS recently issued Publication 535, Business Expenses, which provides valuable information for these filers. The publication contains useful hints for Tax Year 2013, for which many taxpayers are still completing returns and for Tax Year 2014, for which taxpayers are tracking expenses and making financial decisions.

For Tax Year 2013

Optional safe harbor method to determine the business use of a home deduction, also known as the simplified option for claiming the home office deduction. Beginning in 2013, taxpayers can use the optional safe harbor method to determine the deduction for the business use of a home. 

Standard mileage rate. Beginning in 2013, the standard mileage rate for the cost of operating a car, van, pickup, or panel truck for each mile of business use is 56.5 cents per mile.

Additional Medicare Tax. Beginning in 2013, a 0.9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than:

  • $125,000 if married filing separately,
  • $250,000 if married filing jointly, or
  • $200,000 if single, head of household, or qualifying widow(er) with dependent child.

Medicare wages and self-employment income are combined to determine if a taxpayer’s income exceeds the threshold. RRTA compensation should be separately compared to the threshold. 

For Tax Year 2014

Standard mileage rate. Beginning in 2014, the standard mileage rate for the cost of operating a car, van, pickup, or panel truck for each mile of business use is 56 cents per mile.

  [The filing season statistics table follows.]

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2014 FILING SEASON STATISTICS

Cumulative statistics comparing 3/15/13 and 3/14/14

Individual Income Tax Returns:

2013

2014

% Change

Total Receipts

74,882,000

75,100,000

0.3

Total Processed

69,153,000

73,157,000

5.8

 

 

 

 

E-filing Receipts:

 

 

 

TOTAL           

68,029,000

68,966,000

1.4

Tax Professionals

40,117,000

39,413,000

-1.8

Self-prepared

27,912,000

29,553,000

5.9

 

 

 

 

Web Usage:

 

 

 

Visits to IRS.gov

218,469,657

195,637,190

-10.4

 

 

 

 

Total Refunds:

 

 

 

Number

60,243,000

61,645,000

2.3

Amount

$172.494

Billion

$179.793

Billion

4.2

Average refund

$2,863

$2,917

1.9

 

 

 

 

Direct Deposit Refunds:

 

 

 

Number

52,414,000

52,770,000

0.7

Amount

$157.786

Billion

$158.983

Billion

0.8

Average refund

$3,010

$3,013

0.08

 

Page Last Reviewed or Updated: 21-Mar-2014

The Amend Tax Return 2010

Amend tax return 2010 1. Amend tax return 2010   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. Amend tax return 2010 Gasoline and Aviation GasolineTaxable Events Gasoline Blendstocks Diesel Fuel and KeroseneTaxable Events Dyed Diesel Fuel and Dyed Kerosene Alaska and Feedstocks Back-up Tax Diesel-Water Fuel Emulsion Kerosene for Use in AviationTaxable Events Liability For Tax Surtax on any liquid used in a fractional ownership program aircraft as fuel Certificate for Commercial Aviation and Exempt UsesExempt use. Amend tax return 2010 Reseller statement. Amend tax return 2010 Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. Amend tax return 2010 Deep-draft ocean-going vessels. Amend tax return 2010 Passenger vessels. Amend tax return 2010 Ocean-going barges. Amend tax return 2010 State or local governments. Amend tax return 2010 Cellulosic or Second Generation Biofuel Not Used as Fuel Biodiesel Sold as But Not Used as Fuel Definitions Excise taxes are imposed on all the following fuels. Amend tax return 2010 Gasoline, including aviation gasoline and gasoline blendstocks. Amend tax return 2010 Diesel fuel, including dyed diesel fuel. Amend tax return 2010 Diesel-water fuel emulsion. Amend tax return 2010 Kerosene, including dyed kerosene and kerosene used in aviation. Amend tax return 2010 Other Fuels (including alternative fuels). Amend tax return 2010 Compressed natural gas (CNG). Amend tax return 2010 Fuels used in commercial transportation on inland waterways. Amend tax return 2010 Any liquid used in a fractional ownership program aircraft as fuel. Amend tax return 2010 The following terms are used throughout the discussion of fuel taxes. Amend tax return 2010 Other terms are defined in the discussion of the specific fuels to which they pertain. Amend tax return 2010 Agri-biodiesel. Amend tax return 2010   Agri-biodiesel means biodiesel derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from animal fats. Amend tax return 2010 Approved terminal or refinery. Amend tax return 2010   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. Amend tax return 2010 Biodiesel. Amend tax return 2010   Biodiesel means the monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet the registration requirements for fuels and fuel additives established by the Environmental Protection Agency (EPA) under section 211 of the Clean Air Act, and the requirements of the American Society of Testing Materials (ASTM) D6751. Amend tax return 2010 Blended taxable fuel. Amend tax return 2010   This means any taxable fuel produced outside the bulk transfer/terminal system by mixing taxable fuel on which excise tax has been imposed and any other liquid on which excise tax has not been imposed. Amend tax return 2010 This does not include a mixture removed or sold during the calendar quarter if all such mixtures removed or sold by the blender contain less than 400 gallons of a liquid on which the tax has not been imposed. Amend tax return 2010 Blender. Amend tax return 2010   This is the person that produces blended taxable fuel. Amend tax return 2010 Bulk transfer. Amend tax return 2010   This is the transfer of taxable fuel by pipeline or vessel. Amend tax return 2010 Bulk transfer/terminal system. Amend tax return 2010   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Amend tax return 2010 Fuel in the supply tank of any engine, or in any tank car, railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system. Amend tax return 2010 Cellulosic biofuel. Amend tax return 2010   Cellulosic biofuel means any liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis that meets the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act. Amend tax return 2010 Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). Amend tax return 2010 For fuels sold or used after December 31, 2009, cellulosic biofuel does not include fuel of which more than 4% (determined by weight) is any combination of water and sediment, fuel of which the ash content is more than 1%, or fuel that has an acid number greater than 25. Amend tax return 2010 Also see Second generation biofuel below. Amend tax return 2010 Diesel-water fuel emulsion. Amend tax return 2010   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. Amend tax return 2010 The emulsion additive used to produce the fuel must be registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. Amend tax return 2010 Dry lease aircraft exchange. Amend tax return 2010   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Amend tax return 2010 Enterer. Amend tax return 2010   This is the importer of record (under customs law) for the taxable fuel. Amend tax return 2010 However, if the importer of record is acting as an agent, such as a customs broker, the person for whom the agent is acting is the enterer. Amend tax return 2010 If there is no importer of record, the owner at the time of entry into the United States is the enterer. Amend tax return 2010 Entry. Amend tax return 2010   Taxable fuel is entered into the United States when it is brought into the United States and applicable customs law requires that it be entered for consumption, use, or warehousing. Amend tax return 2010 This does not apply to fuel brought into Puerto Rico (which is part of the U. Amend tax return 2010 S. Amend tax return 2010 customs territory), but does apply to fuel brought into the United States from Puerto Rico. Amend tax return 2010 Fractional ownership aircraft program and fractional program aircraft. Amend tax return 2010   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. Amend tax return 2010 Measurement of taxable fuel. Amend tax return 2010   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. Amend tax return 2010 Other fuels. Amend tax return 2010   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. Amend tax return 2010 Pipeline operator. Amend tax return 2010   This is the person that operates a pipeline within the bulk transfer/terminal system. Amend tax return 2010 Position holder. Amend tax return 2010   This is the person that holds the inventory position in the taxable fuel in the terminal, as reflected in the records of the terminal operator. Amend tax return 2010 You hold the inventory position when you have a contractual agreement with the terminal operator for the use of the storage facilities and terminaling services for the taxable fuel. Amend tax return 2010 A terminal operator that owns taxable fuel in its terminal is a position holder. Amend tax return 2010 Rack. Amend tax return 2010   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. Amend tax return 2010 Refiner. Amend tax return 2010   This is any person that owns, operates, or otherwise controls a refinery. Amend tax return 2010 Refinery. Amend tax return 2010   This is a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. Amend tax return 2010 However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. Amend tax return 2010 For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. Amend tax return 2010 Registrant. Amend tax return 2010   This is a taxable fuel registrant (see Registration Requirements, later). Amend tax return 2010 Removal. Amend tax return 2010   This is any physical transfer of taxable fuel. Amend tax return 2010 It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. Amend tax return 2010 However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. Amend tax return 2010 Renewable diesel. Amend tax return 2010   See Renewable Diesel Credits in chapter 2. Amend tax return 2010 Sale. Amend tax return 2010   For taxable fuel not in a terminal, this is the transfer of title to, or substantial incidents of ownership in, taxable fuel to the buyer for money, services, or other property. Amend tax return 2010 For taxable fuel in a terminal, this is the transfer of the inventory position if the transferee becomes the position holder for that taxable fuel. Amend tax return 2010 Second generation biofuel. Amend tax return 2010   This is any liquid fuel derived by, or from, qualified feedstocks, and meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U. Amend tax return 2010 S. Amend tax return 2010 C. Amend tax return 2010 7545). Amend tax return 2010 It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. Amend tax return 2010 It is not alcohol of less than 150 proof (disregard any added denaturants). Amend tax return 2010 See Form 6478 for more information. Amend tax return 2010 State. Amend tax return 2010   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. Amend tax return 2010 An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. Amend tax return 2010 Taxable fuel. Amend tax return 2010   This means gasoline, diesel fuel, and kerosene. Amend tax return 2010 Terminal. Amend tax return 2010   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. Amend tax return 2010 It does not include a facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline if no gasoline is removed from the facility. Amend tax return 2010 A terminal does not include any facility where finished gasoline, diesel fuel, or kerosene is stored if the facility is operated by a registrant and all such taxable fuel stored at the facility has been previously taxed upon removal from a refinery or terminal. Amend tax return 2010 Terminal operator. Amend tax return 2010   This is any person that owns, operates, or otherwise controls a terminal. Amend tax return 2010 Throughputter. Amend tax return 2010   This is any person that is a position holder or that owns taxable fuel within the bulk transfer/terminal system (other than in a terminal). Amend tax return 2010 Vessel operator. Amend tax return 2010   This is the person that operates a vessel within the bulk transfer/terminal system. Amend tax return 2010 However, vessel does not include a deep draft ocean-going vessel. Amend tax return 2010 Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. Amend tax return 2010 A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. Amend tax return 2010 For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. Amend tax return 2010 The returns are due the last day of the month following the month in which the transaction occurs. Amend tax return 2010 Generally, these returns can be filed on paper or electronically. Amend tax return 2010 For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. Amend tax return 2010 Publication 3536 is only available on the IRS website. Amend tax return 2010 Form 720-TO. Amend tax return 2010   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. Amend tax return 2010 Each terminal operator must file a separate form for each approved terminal. Amend tax return 2010 Form 720-CS. Amend tax return 2010   This information return must be filed by bulk transport carriers (barges, vessels, and pipelines) who receive liquid product from an approved terminal or deliver liquid product to an approved terminal. Amend tax return 2010 Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. Amend tax return 2010 See Form 637 for other persons who must register and for more information about registration. Amend tax return 2010 Persons that are required to be registered. Amend tax return 2010   You are required to be registered if you are a: Blender; Enterer; Pipeline operator; Position holder; Refiner; Terminal operator; Vessel operator; Producer or importer of alcohol, biodiesel, agri-biodiesel, and renewable diesel; or Producer of cellulosic or second generation biofuel. Amend tax return 2010 Persons that may register. Amend tax return 2010   You may, but are not required to, register if you are a: Feedstock user, Industrial user, Throughputter that is not a position holder, Ultimate vendor, Diesel-water fuel emulsion producer, Credit card issuer, or Alternative fuel claimant. Amend tax return 2010 Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. Amend tax return 2010 However, they must be registered to file claims for certain sales and uses of fuel. Amend tax return 2010 See Form 637 for more information. Amend tax return 2010 Taxable fuel registrant. Amend tax return 2010   This is an enterer, an industrial user, a refiner, a terminal operator, or a throughputter who received a Letter of Registration under the excise tax registration provisions and whose registration has not been revoked or suspended. Amend tax return 2010 The term registrant as used in the discussions of these fuels means a taxable fuel registrant. Amend tax return 2010 Additional information. Amend tax return 2010   See the Form 637 instructions for the information you must submit when you apply for registration. Amend tax return 2010 Failure to register. Amend tax return 2010   The penalty for failure to register if you must register, unless due to reasonable cause, is $10,000 for the initial failure, and then $1,000 each day thereafter you fail to register. Amend tax return 2010 Gasoline and Aviation Gasoline Gasoline. Amend tax return 2010   Gasoline means all products commonly or commercially known or sold as gasoline with an octane rating of 75 or more that are suitable for use as a motor fuel. Amend tax return 2010 Gasoline includes any gasoline blend other than: Qualified ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from coal, including peat), Partially exempt ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from natural gas), or Denatured alcohol. Amend tax return 2010 Gasoline also includes gasoline blendstocks, discussed later. Amend tax return 2010 Aviation gasoline. Amend tax return 2010   This means all special grades of gasoline suitable for use in aviation reciprocating engines and covered by ASTM specification D910 or military specification MIL-G-5572. Amend tax return 2010 Taxable Events The tax on gasoline is $. Amend tax return 2010 184 per gallon. Amend tax return 2010 The tax on aviation gasoline is $. Amend tax return 2010 194 per gallon. Amend tax return 2010 When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. Amend tax return 2010 141 per gallon. Amend tax return 2010 See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. Amend tax return 2010 Tax is imposed on the removal, entry, or sale of gasoline. Amend tax return 2010 Each of these events is discussed later. Amend tax return 2010 Also, see the special rules that apply to gasoline blendstocks, later. Amend tax return 2010 If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. Amend tax return 2010 See Refunds of Second Tax in chapter 2. Amend tax return 2010 Removal from terminal. Amend tax return 2010   All removals of gasoline at a terminal rack are taxable. Amend tax return 2010 The position holder for that gasoline is liable for the tax. Amend tax return 2010 Two-party exchanges. Amend tax return 2010   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. Amend tax return 2010 A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. Amend tax return 2010 The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. Amend tax return 2010 The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. Amend tax return 2010 The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. Amend tax return 2010 The transaction is subject to a written contract. Amend tax return 2010 Terminal operator's liability. Amend tax return 2010   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. Amend tax return 2010   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. Amend tax return 2010 The terminal operator is a registrant. Amend tax return 2010 The terminal operator has an unexpired notification certificate (discussed later) from the position holder. Amend tax return 2010 The terminal operator has no reason to believe any information on the certificate is false. Amend tax return 2010 Removal from refinery. Amend tax return 2010   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. Amend tax return 2010 It is made by bulk transfer and the refiner, the owner of the gasoline immediately before the removal, or the operator of the pipeline or vessel is not a registrant. Amend tax return 2010 It is made at the refinery rack. Amend tax return 2010 The refiner is liable for the tax. Amend tax return 2010 Exception. Amend tax return 2010   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. Amend tax return 2010 The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Amend tax return 2010 The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Amend tax return 2010 The removal from the refinery is by railcar. Amend tax return 2010 The same person operates the refinery and the facility at which the gasoline is received. Amend tax return 2010 Entry into the United States. Amend tax return 2010   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. Amend tax return 2010 It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Amend tax return 2010 It is not made by bulk transfer. Amend tax return 2010 The enterer is liable for the tax. Amend tax return 2010 Importer of record's liability. Amend tax return 2010   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. Amend tax return 2010   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Amend tax return 2010 The importer of record has an unexpired notification certificate (discussed later) from the enterer. Amend tax return 2010 The importer of record has no reason to believe any information in the certificate is false. Amend tax return 2010 Customs bond. Amend tax return 2010   The customs bond will not be charged for the tax imposed on the entry of the gasoline if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. Amend tax return 2010 Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Amend tax return 2010   The removal by bulk transfer of gasoline from a terminal is taxable if the position holder for the gasoline or the operator of the pipeline or vessel is not a registrant. Amend tax return 2010 The position holder is liable for the tax. Amend tax return 2010 The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Amend tax return 2010 However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Amend tax return 2010 Bulk transfers not received at approved terminal or refinery. Amend tax return 2010   The removal by bulk transfer of gasoline from a terminal or refinery, or the entry of gasoline by bulk transfer into the United States, is taxable if the following conditions apply. Amend tax return 2010 No tax was previously imposed (as discussed earlier) on any of the following events. Amend tax return 2010 The removal from the refinery. Amend tax return 2010 The entry into the United States. Amend tax return 2010 The removal from a terminal by an unregistered position holder. Amend tax return 2010 Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). Amend tax return 2010   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. Amend tax return 2010 However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Amend tax return 2010 The owner is a registrant. Amend tax return 2010 The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. Amend tax return 2010 The owner has no reason to believe any information on the certificate is false. Amend tax return 2010 The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. Amend tax return 2010 The operator is jointly and severally liable if the owner does not meet these conditions. Amend tax return 2010 Sales to unregistered person. Amend tax return 2010   The sale of gasoline located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. Amend tax return 2010   The seller is liable for the tax. Amend tax return 2010 However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Amend tax return 2010   The seller is a registrant. Amend tax return 2010 The seller has an unexpired notification certificate (discussed later) from the buyer. Amend tax return 2010 The seller has no reason to believe any information on the certificate is false. Amend tax return 2010 The buyer of the gasoline is liable for the tax if the seller meets these conditions. Amend tax return 2010 The buyer is jointly and severally liable if the seller does not meet these conditions. Amend tax return 2010 Exception. Amend tax return 2010   The tax does not apply to a sale if all of the following apply. Amend tax return 2010 The buyer's principal place of business is not in the United States. Amend tax return 2010 The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Amend tax return 2010 The seller is a registrant and the exporter of record. Amend tax return 2010 The fuel was exported. Amend tax return 2010 Removal or sale of blended gasoline. Amend tax return 2010   The removal or sale of blended gasoline by the blender is taxable. Amend tax return 2010 See Blended taxable fuel under Definitions, earlier. Amend tax return 2010   The blender is liable for the tax. Amend tax return 2010 The tax is figured on the number of gallons not previously subject to the tax on gasoline. Amend tax return 2010   Persons who blend alcohol with gasoline to produce an alcohol fuel mixture outside the bulk transfer/terminal system must pay the gasoline tax on the volume of alcohol in the mixture. Amend tax return 2010 See Form 720 to report this tax. Amend tax return 2010 You also must be registered with the IRS as a blender. Amend tax return 2010 See Form 637. Amend tax return 2010   However, if an untaxed liquid is sold as taxed taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. Amend tax return 2010 Notification certificate. Amend tax return 2010   The notification certificate is used to notify a person of the registration status of the registrant. Amend tax return 2010 A copy of the registrant's letter of registration cannot be used as a notification certificate. Amend tax return 2010 A model notification certificate is shown in the Appendix as Model Certificate C. Amend tax return 2010 A notification certificate must contain all information necessary to complete the model. Amend tax return 2010   The certificate may be included as part of any business records normally used for a sale. Amend tax return 2010 A certificate expires on the earlier of the date the registrant provides a new certificate, or the date the recipient of the certificate is notified that the registrant's registration has been revoked or suspended. Amend tax return 2010 The registrant must provide a new certificate if any information on a certificate has changed. Amend tax return 2010 Additional persons liable. Amend tax return 2010   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax is imposed on: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty, or Anyone who willfully causes the person to fail to pay the tax. Amend tax return 2010 Gasoline Blendstocks Gasoline blendstocks may be subject to $. Amend tax return 2010 001 per gallon LUST tax as discussed below. Amend tax return 2010 Gasoline includes gasoline blendstocks. Amend tax return 2010 The previous discussions apply to these blendstocks. Amend tax return 2010 However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. Amend tax return 2010 001 per gallon or are not subject to the excise tax. Amend tax return 2010 Blendstocks. Amend tax return 2010   Gasoline blendstocks are: Alkylate, Butane, Butene, Catalytically cracked gasoline, Coker gasoline, Ethyl tertiary butyl ether (ETBE), Hexane, Hydrocrackate, Isomerate, Methyl tertiary butyl ether (MTBE), Mixed xylene (not including any separated isomer of xylene), Natural gasoline, Pentane, Pentane mixture, Polymer gasoline, Raffinate, Reformate, Straight-run gasoline, Straight-run naphtha, Tertiary amyl methyl ether (TAME), Tertiary butyl alcohol (gasoline grade) (TBA), Thermally cracked gasoline, and Toluene. Amend tax return 2010   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. Amend tax return 2010 Not used to produce finished gasoline. Amend tax return 2010   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. Amend tax return 2010 Removals and entries not connected to sale. Amend tax return 2010   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. Amend tax return 2010 Removals and entries connected to sale. Amend tax return 2010   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant, and at the time of the sale, meets the following requirements. Amend tax return 2010 The person has an unexpired certificate (discussed later) from the buyer. Amend tax return 2010 The person has no reason to believe any information in the certificate is false. Amend tax return 2010 Sales after removal or entry. Amend tax return 2010   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. Amend tax return 2010 The seller is liable for the tax. Amend tax return 2010 However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. Amend tax return 2010 The seller has an unexpired certificate (discussed next) from the buyer. Amend tax return 2010 The seller has no reason to believe any information in the certificate is false. Amend tax return 2010 Certificate of buyer. Amend tax return 2010   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. Amend tax return 2010 The certificate may be included as part of any business records normally used for a sale. Amend tax return 2010 A model certificate is shown in the Appendix as Model Certificate D. Amend tax return 2010 The certificate must contain all information necessary to complete the model. Amend tax return 2010   A certificate expires on the earliest of the following dates. Amend tax return 2010 The date 1 year after the effective date (not earlier than the date signed) of the certificate. Amend tax return 2010 The date a new certificate is provided to the seller. Amend tax return 2010 The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. Amend tax return 2010 The buyer must provide a new certificate if any information on a certificate has changed. Amend tax return 2010   The IRS may withdraw the buyer's right to provide a certificate if that buyer uses the gasoline blendstocks in the production of finished gasoline or resells the blendstocks without getting a certificate from its buyer. Amend tax return 2010 Received at approved terminal or refinery. Amend tax return 2010   The nonbulk removal or entry of gasoline blendstocks received at an approved terminal or refinery is not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) meets all the following requirements. Amend tax return 2010 The person is a registrant. Amend tax return 2010 The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. Amend tax return 2010 The person has no reason to believe any information on the certificate is false. Amend tax return 2010 Bulk transfers to registered industrial user. Amend tax return 2010   The removal of gasoline blendstocks from a pipeline or vessel is not taxable (other than LUST) if the blendstocks are received by a registrant that is an industrial user. Amend tax return 2010 An industrial user is any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline. Amend tax return 2010 Credits or Refunds. Amend tax return 2010   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. Amend tax return 2010 For more information, see chapter 2. Amend tax return 2010 Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). Amend tax return 2010 However, special rules (discussed later) apply to dyed diesel fuel and dyed kerosene, and to undyed diesel fuel and undyed kerosene sold or used in Alaska for certain nontaxable uses and undyed kerosene used for a feedstock purpose. Amend tax return 2010 Diesel fuel means: Any liquid that without further processing or blending is suitable for use as a fuel in a diesel-powered highway vehicle or train, and Transmix. Amend tax return 2010 A liquid is suitable for this use if the liquid has practical and commercial fitness for use in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. Amend tax return 2010 A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. Amend tax return 2010 However, a liquid does not possess this practical and commercial fitness solely by reason of its possible or rare use as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. Amend tax return 2010 Diesel fuel does not include gasoline, kerosene, excluded liquid, No. Amend tax return 2010 5 and No. Amend tax return 2010 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. Amend tax return 2010 An excluded liquid is either of the following. Amend tax return 2010 A liquid that contains less than 4% normal paraffins. Amend tax return 2010 A liquid with all the following properties. Amend tax return 2010 Distillation range of 125 degrees Fahrenheit or less. Amend tax return 2010 Sulfur content of 10 ppm or less. Amend tax return 2010 Minimum color of +27 Saybolt. Amend tax return 2010 Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. Amend tax return 2010 Kerosene. Amend tax return 2010   This means any of the following liquids. Amend tax return 2010 One of the two grades of kerosene (No. Amend tax return 2010 1-K and No. Amend tax return 2010 2-K) covered by ASTM specification D3699. Amend tax return 2010 Kerosene-type jet fuel covered by ASTM specification D1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). Amend tax return 2010 See Kerosene for Use in Aviation, later. Amend tax return 2010   However, kerosene does not include excluded liquid, discussed earlier. Amend tax return 2010   Kerosene also includes any liquid that would be described above but for the presence of a dye of the type used to dye kerosene for a nontaxable use. Amend tax return 2010 Diesel-powered highway vehicle. Amend tax return 2010   This is any self-propelled vehicle designed to carry a load over public highways (whether or not also designed to perform other functions) and propelled by a diesel-powered engine. Amend tax return 2010 Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. Amend tax return 2010 For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. Amend tax return 2010 2) in chapter 2. Amend tax return 2010 Diesel-powered train. Amend tax return 2010   This is any diesel-powered equipment or machinery that rides on rails. Amend tax return 2010 The term includes a locomotive, work train, switching engine, and track maintenance machine. Amend tax return 2010 Taxable Events The tax on diesel fuel and kerosene is $. Amend tax return 2010 244 per gallon. Amend tax return 2010 It is imposed on the removal, entry, or sale of diesel fuel and kerosene. Amend tax return 2010 Each of these events is discussed later. Amend tax return 2010 Only the $. Amend tax return 2010 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. Amend tax return 2010 If the tax is paid on the diesel fuel or kerosene in more than one event, a refund may be allowed for the “second” tax paid. Amend tax return 2010 See Refunds of Second Tax in chapter 2. Amend tax return 2010 Use in certain intercity and local buses. Amend tax return 2010   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. Amend tax return 2010 A claim for $. Amend tax return 2010 17 per gallon may be made by the registered ultimate vendor (under certain conditions) or the ultimate purchaser for undyed diesel fuel or undyed kerosene sold for use in certain intercity or local buses. Amend tax return 2010 An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. Amend tax return 2010 The bus must be engaged in one of the following activities. Amend tax return 2010 Scheduled transportation along regular routes regardless of the size of the bus. Amend tax return 2010 Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). Amend tax return 2010 A bus is available to the general public if the bus is available for hire to more than a limited number of persons, groups, or organizations. Amend tax return 2010 Removal from terminal. Amend tax return 2010   All removals of diesel fuel and kerosene at a terminal rack are taxable. Amend tax return 2010 The position holder for that fuel is liable for the tax. Amend tax return 2010 Two-party exchanges. Amend tax return 2010   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. Amend tax return 2010 A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. Amend tax return 2010 The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. Amend tax return 2010 The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. Amend tax return 2010 The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. Amend tax return 2010 The transaction is subject to a written contract. Amend tax return 2010 Terminal operator's liability. Amend tax return 2010   The terminal operator is jointly and severally liable for the tax if the terminal operator provides any person with any bill of lading, shipping paper, or similar document indicating that diesel fuel or kerosene is dyed (discussed later). Amend tax return 2010   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. Amend tax return 2010 However, a terminal operator will not be liable for the tax in this situation if, at the time of the removal, the following conditions are met. Amend tax return 2010 The terminal operator is a registrant. Amend tax return 2010 The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. Amend tax return 2010 The terminal operator has no reason to believe any information on the certificate is false. Amend tax return 2010 Removal from refinery. Amend tax return 2010   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. Amend tax return 2010 It is made by bulk transfer and the refiner, the owner of the fuel immediately before the removal, or the operator of the pipeline or vessel is not a registrant. Amend tax return 2010 It is made at the refinery rack. Amend tax return 2010 The refiner is liable for the tax. Amend tax return 2010 Exception. Amend tax return 2010   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. Amend tax return 2010 The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. Amend tax return 2010 The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. Amend tax return 2010 The removal from the refinery is by: Railcar and the same person operates the refinery and the facility at which the diesel fuel or kerosene is received, or For diesel fuel only, a trailer or semi-trailer used exclusively to transport the diesel fuel from a refinery (described in (1)) to a facility (described in (2)) less than 20 miles from the refinery. Amend tax return 2010 Entry into the United States. Amend tax return 2010   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. Amend tax return 2010 It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. Amend tax return 2010 It is not made by bulk transfer. Amend tax return 2010 The enterer is liable for the tax. Amend tax return 2010 Importer of record's liability. Amend tax return 2010   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. Amend tax return 2010   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. Amend tax return 2010 The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. Amend tax return 2010 The importer of record has no reason to believe any information in the certificate is false. Amend tax return 2010 Customs bond. Amend tax return 2010   The customs bond will not be charged for the tax imposed on the entry of the diesel fuel or kerosene if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. Amend tax return 2010 Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. Amend tax return 2010   The removal by bulk transfer of diesel fuel or kerosene from a terminal is taxable if the position holder for that fuel or the operator of the pipeline or vessel is not a registrant. Amend tax return 2010 The position holder is liable for the tax. Amend tax return 2010 The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. Amend tax return 2010 However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. Amend tax return 2010 Bulk transfers not received at approved terminal or refinery. Amend tax return 2010   The removal by bulk transfer of diesel fuel or kerosene from a terminal or refinery or the entry of diesel fuel or kerosene by bulk transfer into the United States is taxable if the following conditions apply. Amend tax return 2010 No tax was previously imposed (as discussed earlier) on any of the following events. Amend tax return 2010 The removal from the refinery. Amend tax return 2010 The entry into the United States. Amend tax return 2010 The removal from a terminal by an unregistered position holder. Amend tax return 2010 Upon removal from the pipeline or vessel, the diesel fuel or kerosene is not received at an approved terminal or refinery (or at another pipeline or vessel). Amend tax return 2010   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. Amend tax return 2010 However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. Amend tax return 2010 The owner is a registrant. Amend tax return 2010 The owner has an unexpired notification certificate (discussed under Gasoline) from the operator of the terminal or refinery where the diesel fuel or kerosene is received. Amend tax return 2010 The owner has no reason to believe any information on the certificate is false. Amend tax return 2010 The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. Amend tax return 2010 The operator is jointly and severally liable if the owner does not meet these conditions. Amend tax return 2010 Sales to unregistered person. Amend tax return 2010   The sale of diesel fuel or kerosene located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. Amend tax return 2010   The seller is liable for the tax. Amend tax return 2010 However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. Amend tax return 2010 The seller is a registrant. Amend tax return 2010 The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. Amend tax return 2010 The seller has no reason to believe any information on the certificate is false. Amend tax return 2010 The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. Amend tax return 2010 The buyer is jointly and severally liable if the seller does not meet these conditions. Amend tax return 2010 Exception. Amend tax return 2010   The tax does not apply to a sale if all of the following apply. Amend tax return 2010 The buyer's principal place of business is not in the United States. Amend tax return 2010 The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. Amend tax return 2010 The seller is a registrant and the exporter of record. Amend tax return 2010 The fuel was exported. Amend tax return 2010 Removal or sale of blended diesel fuel or kerosene. Amend tax return 2010   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. Amend tax return 2010 Blended taxable fuel produced using biodiesel is subject to the tax. Amend tax return 2010 See Blended taxable fuel under Definitions, earlier. Amend tax return 2010   The blender is liable for the tax. Amend tax return 2010 The tax is figured on the number of gallons not previously subject to the tax. Amend tax return 2010   Persons who blend biodiesel with undyed diesel fuel to produce and sell or use a biodiesel mixture outside the bulk transfer/terminal system must pay the diesel fuel tax on the volume of biodiesel in the mixture. Amend tax return 2010 Generally, the biodiesel mixture must be diesel fuel (defined earlier). Amend tax return 2010 See Form 720 to report this tax. Amend tax return 2010 You also must be registered by the IRS as a blender. Amend tax return 2010 See Form 637 for more information. Amend tax return 2010   However, if an untaxed liquid is sold as taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. Amend tax return 2010 Additional persons liable. Amend tax return 2010   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax applies to: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty; or Anyone who willfully causes the person to fail to pay the tax. Amend tax return 2010 Credits or Refunds. Amend tax return 2010   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. Amend tax return 2010 For more information, see chapter 2. Amend tax return 2010 Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. Amend tax return 2010 001 per gallon LUST tax as discussed below, unless the fuel is for export. Amend tax return 2010 The excise tax is not imposed on the removal, entry, or sale of diesel fuel or kerosene (other than the LUST tax) if all the following tests are met. Amend tax return 2010 The person otherwise liable for tax (for example, the position holder) is a registrant. Amend tax return 2010 In the case of a removal from a terminal, the terminal is an approved terminal. Amend tax return 2010 The diesel fuel or kerosene satisfies the dyeing requirements (described next). Amend tax return 2010 Dyeing requirements. Amend tax return 2010   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. Amend tax return 2010 It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. Amend tax return 2010 9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of fuel or any dye of a type and in a concentration that has been approved by the Commissioner. Amend tax return 2010 Is indelibly dyed by mechanical injection. Amend tax return 2010 See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. Amend tax return 2010 Notice required. Amend tax return 2010   A legible and conspicuous notice stating either: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE or DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE must be: Provided by the terminal operator to any person that receives dyed diesel fuel or dyed kerosene at a terminal rack of that operator, and Posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel or dyed kerosene for use by its buyer. Amend tax return 2010   The notice under item (1) must be provided by the time of the removal and must appear on all shipping papers, bills of lading, and similar documents accompanying the removal of the fuel. Amend tax return 2010   Any seller that fails to post the required notice under item (2) is presumed to know that the fuel will be used for a taxable use (a use other than a nontaxable use listed later). Amend tax return 2010 That seller is subject to the penalty described next. Amend tax return 2010 Penalty. Amend tax return 2010   A penalty is imposed on a person if any of the following situations apply. Amend tax return 2010 Any dyed fuel is sold or held for sale by the person for a use the person knows or has reason to know is not a nontaxable use of the fuel. Amend tax return 2010 Any dyed fuel is held for use or used by the person for a use other than a nontaxable use and the person knew, or had reason to know, that the fuel was dyed. Amend tax return 2010 The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. Amend tax return 2010 The person has knowledge that a dyed fuel that has been altered, as described in (3) above, sells or holds for sale such fuel for any use for which the person knows or has reason to know is not a nontaxable use of the fuel. Amend tax return 2010   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. Amend tax return 2010 After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. Amend tax return 2010   This penalty is in addition to any tax imposed on the fuel. Amend tax return 2010   If the penalty is imposed, each officer, employee, or agent of a business entity who willfully participated in any act giving rise to the penalty is jointly and severally liable with that entity for the penalty. Amend tax return 2010   There is no administrative appeal or review allowed for the third and subsequent penalty imposed by section 6715 on any person except for: Fraud or a mistake in the chemical analysis, or Mathematical calculation of the penalty. Amend tax return 2010   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. Amend tax return 2010 However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. Amend tax return 2010 The penalty may apply if the fuel is held for sale or use for a taxable use while the back-up tax does not apply unless the fuel is delivered into a fuel supply tank. Amend tax return 2010 Exception to penalty. Amend tax return 2010   The penalty under item (3) will not apply in any of the following situations. Amend tax return 2010 Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. Amend tax return 2010 Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any other liquid (other than diesel fuel or kerosene) that contains the type and amount of dye required to meet the dyeing requirements. Amend tax return 2010 The alteration or attempted alteration occurs in an exempt area of Alaska. Amend tax return 2010 See Removal for sale or use in Alaska, later. Amend tax return 2010 Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with diesel fuel or kerosene not meeting the dyeing requirements and the blending occurs as part of a nontaxable use (other than export), discussed later. Amend tax return 2010 Alaska and Feedstocks Tax of $. Amend tax return 2010 001 per gallon is imposed on: Undyed diesel fuel or undyed kerosene sold or used in Alaska for certain nontaxable uses (see Later sales on page 10). Amend tax return 2010 Undyed kerosene used for feedstock purposes. Amend tax return 2010 Removal for sale or use in Alaska. Amend tax return 2010   No tax is imposed on the removal, entry, or sale of diesel fuel or kerosene in Alaska for ultimate sale or use in certain areas of Alaska for certain nontaxable uses. Amend tax return 2010 The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. Amend tax return 2010 The person otherwise liable for the tax (position holder, refiner, or enterer): Is a registrant, Can show satisfactory evidence of the nontaxable nature of the transaction, and Has no reason to believe the evidence is false. Amend tax return 2010 In the case of a removal from a terminal, the terminal is an approved terminal. Amend tax return 2010 The owner of the fuel immediately after the removal or entry holds the fuel for its own use in a nontaxable use (discussed later) or is a qualified dealer. Amend tax return 2010   If all three of the requirements above are not met, then tax is imposed at $. Amend tax return 2010 244 per gallon. Amend tax return 2010   A qualified dealer is any person that holds a qualified dealer license from the state of Alaska or has been registered by the IRS as a qualified retailer. Amend tax return 2010 Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. Amend tax return 2010 Later sales. Amend tax return 2010   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. Amend tax return 2010 The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. Amend tax return 2010 However, the sale is not taxable (other than the LUST tax at $. Amend tax return 2010 001 per gallon) if all the following requirements are met. Amend tax return 2010 The fuel is sold in Alaska for certain nontaxable uses. Amend tax return 2010 The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. Amend tax return 2010 The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. Amend tax return 2010 Feedstock purposes. Amend tax return 2010   The $. Amend tax return 2010 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. Amend tax return 2010 The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. Amend tax return 2010 In the case of a removal from a terminal, the terminal is an approved terminal. Amend tax return 2010 Either: The person otherwise liable for tax uses the kerosene for a feedstock purpose, or The kerosene is sold for use by the buyer for a feedstock purpose and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described later) from the buyer and has no reason to believe any information on the certificate is false. Amend tax return 2010   If all of the requirements above are not met, then tax is imposed at $. Amend tax return 2010 244 per gallon. Amend tax return 2010   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. Amend tax return 2010 For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. Amend tax return 2010 A feedstock user is a person that uses kerosene for a feedstock purpose. Amend tax return 2010 A registered feedstock user is a person that has been registered by the IRS as a feedstock user. Amend tax return 2010 See Registration Requirements, earlier. Amend tax return 2010 Later sales. Amend tax return 2010   The excise tax ($. Amend tax return 2010 244 per gallon) applies to kerosene sold for use by the buyer for a feedstock purpose (item (3)(b) above) if the buyer in that sale later sells the kerosene. Amend tax return 2010 The tax is imposed at the time of the later sale and that seller is liable for the tax. Amend tax return 2010 Certificate. Amend tax return 2010   The certificate from the buyer certifies the buyer is a registered feedstock user and the kerosene will be used by the buyer for a feedstock purpose. Amend tax return 2010 The certificate may be included as part of any business records normally used for a sale. Amend tax return 2010 A model certificate is shown in the Appendix as Model Certificate G. Amend tax return 2010 Your certificate must contain all information necessary to complete the model. Amend tax return 2010   A certificate expires on the earliest of the following dates. Amend tax return 2010 The date 1 year after the effective date (not earlier than the date signed) of the certificate. Amend tax return 2010 The date the seller is provided a new certificate or notice that the current certificate is invalid. Amend tax return 2010 The date the seller is notified the buyer's registration has been revoked or suspended. Amend tax return 2010   The buyer must provide a new certificate if any information on a certificate has changed. Amend tax return 2010 Back-up Tax Tax is imposed on the delivery of any of the following into the fuel supply tank of a diesel-powered highway vehicle. Amend tax return 2010 Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. Amend tax return 2010 Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. Amend tax return 2010 Any liquid other than gasoline, diesel fuel, or kerosene. Amend tax return 2010 Generally, this back-up tax is imposed at a rate of $. Amend tax return 2010 244 per gallon. Amend tax return 2010 Liability for tax. Amend tax return 2010   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. Amend tax return 2010 In addition, the seller of the diesel fuel or kerosene is jointly and severally liable for the tax if the seller knows or has reason to know that the fuel will be used for other than a nontaxable use. Amend tax return 2010 Exemptions from the back-up tax. Amend tax return 2010   The back-up tax does not apply to a delivery of diesel fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, and 15 listed under Definitions of Nontaxable Uses in chapter 2. Amend tax return 2010   In addition, since the back-up tax is imposed only on the delivery into the fuel supply tank of a diesel-powered vehicle or train, the tax does not apply to diesel fuel or kerosene used as heating oil or in stationary engines. Amend tax return 2010 Diesel-Water Fuel Emulsion Diesel-water fuel emulsion means diesel fuel at least 14% of which is water and for which the emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. Amend tax return 2010 A reduced tax rate of $. Amend tax return 2010 198 per gallon is imposed on a diesel-water fuel emulsion. Amend tax return 2010 To be eligible for the reduced rate, the person who sells, removes, or uses the diesel-water fuel emulsion must be registered by the IRS. Amend tax return 2010 If the diesel-water fuel emulsion does not meet the requirements above, or if the person who sells, removes, or uses the fuel is not registered, the diesel-water fuel emulsion is taxed at $. Amend tax return 2010 244 per gallon. Amend tax return 2010 Credits or refunds. Amend tax return 2010   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. Amend tax return 2010 Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. Amend tax return 2010 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). Amend tax return 2010 For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. Amend tax return 2010 219. Amend tax return 2010 The rate of $. Amend tax return 2010 219 also applies if kerosene is removed into any aircraft from a qualified refueler truck, tanker, or tank wagon that is loaded with the kerosene from a terminal that is located within an airport. Amend tax return 2010 The airport terminal does not need to be a secured airport terminal for this rate to apply. Amend tax return 2010 However, the refueler truck, tanker, or tank wagon must meet the requirements discussed under Certain refueler trucks, tankers, and tank wagons, treated as terminals, later. Amend tax return 2010 For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. Amend tax return 2010 044 per gallon. Amend tax return 2010 For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. Amend tax return 2010 044 rate applies only if the truck, tanker, or tank wagon is loaded at a terminal that is located in a secured area of the airport. Amend tax return 2010 See Terminal located within a secured area of an airport, later. Amend tax return 2010 In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Amend tax return 2010 For kerosene removed directly into the fuel tank of an aircraft for a use exempt from tax under section 4041(c) (such as use in an aircraft for the exclusive use of a state or local government), the rate of tax is $. Amend tax return 2010 001. Amend tax return 2010 There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Amend tax return 2010 The kerosene must be removed from a qualifying refueler truck, tanker, or tank wagon loaded at a terminal located within a secured area of an airport. Amend tax return 2010 See Terminal located within a secured area of an airport, later. Amend tax return 2010 In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. Amend tax return 2010 The position holder is liable for the $. Amend tax return 2010 001 per gallon tax. Amend tax return 2010 For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. Amend tax return 2010 141 per gallon applies. Amend tax return 2010 Certain refueler trucks, tankers, and tank wagons treated as terminals. Amend tax return 2010   For purposes of the tax imposed on kerosene for use in aviation removed directly into the fuel tank of an aircraft for use in commercial aviation, certain refueler trucks, tankers, and tank wagons are treated as part of a terminal if the following conditions are met. Amend tax return 2010 Such terminal is located within an area of an airport. Amend tax return 2010 Any kerosene for use in aviation that is loaded in a refueler truck, tanker, or tank wagon at a terminal is for delivery into aircraft at the airport in which the terminal is located. Amend tax return 2010 Except in exigent circumstances, such as those identified in Notice 2005-80, no vehicle registered for highway use is loaded with kerosene for use in aviation at the terminal. Amend tax return 2010 The refueler truck, tanker, or tank wagon meets the following requirements: Has storage tanks, hose, and coupling equipment designed and used for fueling aircraft, Is not registered for highway use, and Is operated by the terminal operator or a person that makes a daily accounting to the terminal operator of each delivery of fuel from the refueler truck, tanker, or tank wagon. Amend tax return 2010 Information reporting will be required by terminal operators regarding this provision. Amend tax return 2010 Until the format of this information reporting is issued, taxpayers are required to retain records regarding the daily accounting, but are not required to report such information. Amend tax return 2010 Terminal located within a secured area of an airport. Amend tax return 2010   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. Amend tax return 2010 This list refers to fueling operations at airport terminals as it applies to the federal excise tax on kerosene for use in aviation, and has nothing to do with the general security of airports either included or not included in the list. Amend tax return 2010 Liability For Tax If the kerosene is removed directly into the fuel tank of an aircraft for use in commercial aviation, the operator of the aircraft in commercial aviation is liable for the tax on the removal at the rate of $. Amend tax return 2010 044 per gallon. Amend tax return 2010 However, the position holder is liable for the LUST tax for kerosene for use in aviation removed directly into the fuel tank of an aircraft for use exempt from tax under section 4041(c) (except foreign trade). Amend tax return 2010 For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. Amend tax return 2010 For the aircraft operator to be liable for the tax $. Amend tax return 2010 044 rate, the position holder must meet the following requirements: Is a taxable fuel registrant, Has an unexpired certificate (a model certificate is shown in the Appendix as Model Certificate K) from the operator of the aircraft, and Has no reason to believe any of the information in the certificate is false. Amend tax return 2010 Commercial aviation. Amend tax return 2010   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. Amend tax return 2010 However, commercial aviation does not include any of the following uses. Amend tax return 2010 Any use exclusively for the purpose of skydiving. Amend tax return 2010 Certain air transportation by seaplane. Amend tax return 2010 See Seaplanes under Transportation of Persons by Air in chapter 4. Amend tax return 2010 Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. Amend tax return 2010 For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. Amend tax return 2010 Any use of an aircraft that has a maximum certificated takeoff weight of 6,000 pounds or less, unless the aircraft is operated on an established line. Amend tax return 2010 For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. Amend tax return 2010 Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. Amend tax return 2010 See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. Amend tax return 2010 Surtax on any liquid used in a fractional ownership program aircraft as fuel Fuel used in a fractional ownership program aircraft (as defined below) after March 31, 2012, is subject to a surtax of $. Amend tax return 2010 141 per gallon. Amend tax return 2010 The fractional ownership program manager is liable for the tax. Amend tax return 2010 The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. Amend tax return 2010 If the surtax is imposed, the following air transportation taxes do not apply. Amend tax return 2010 Transportation of persons by air. Amend tax return 2010 Transportation of property by air. Amend tax return 2010 Use of international air travel facilities. Amend tax return 2010 These taxes are described under Air Transportation Taxes, later. Amend tax return 2010 A fractional ownership program aircraft flight is considered noncommercial aviation, for the rules for kerosene used in noncommercial aviation, see Kerosene for Use in Aviation above. Amend tax return 2010 Fractional ownership aircraft program    is a program under which:  A single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners; There are one or more fractional owners per fractional program aircraft, with at least one fractional program aircraft having more than one owner; For at least two fractional program aircraft, none of the ownership interests in the aircraft are less than the minimum fractional ownership interest or held by the program manager; There exists a dry-lease aircraft exchange arrangement among all of the fractional owners; and There are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program. Amend tax return 2010 Fractional program aircraft. Amend tax return 2010   Any aircraft that, in any fractional ownership aircraft program, is listed as a fractional program aircraft in the management specifications issued to the manager of such program by Federal Aviation Administration under subpart K of part 91 title 14, Code of Federal Regulations, and is registered in the U. Amend tax return 2010 S. Amend tax return 2010   Fractional program aircraft are not considered used for transportation of a qualified fractional owner, or on account of such qualified fractional owner when they are used for flight demonstration, maintenance or crew training. Amend tax return 2010 In such situations, the flight is not commercial aviation. Amend tax return 2010 Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. Amend tax return 2010 Fractional owner. Amend tax return 2010   Any person owning any interest (including the entire interest) in a fractional program aircraft. Amend tax return 2010 Dry lease aircraft exchange. Amend tax return 2010   An agreement, documented by the written program agreements, under which the fractional program aircraft are available, on an as-needed basis without crew, to each fractional owner. Amend tax return 2010 Special rule relating to deadhead service. Amend tax return 2010   A fractional program aircraft will not be considered to be used on account of a qualified fractional owner when it is used in deadhead service and a person other than a qualified fractional owner is separately charged for such service. Amend tax return 2010 More information. Amend tax return 2010   See section 4043 for more information on the surtax. Amend tax return 2010 Certificate for Commercial Aviation and Exempt Uses A certificate is required from the aircraft operator: To support aircraft operator liability for tax on removal of kerosene for use in aviation directly into the fuel tank of an aircraft in commercial aviation, or For exempt uses. Amend tax return 2010 Certificate. Amend tax return 2010   The certificate may be included as part of any business records normally used for a sale. Amend tax return 2010 See Model Certificate K in the Appendix. Amend tax return 2010   A certificate expires on the earliest of the following dates. Amend tax return 2010 The date 1 year after the effective date (not earlier than the date signed) of the certificate. Amend tax return 2010 The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. Amend tax return 2010 The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. Amend tax return 2010   The buyer must provide a new certificate if any information on a certificate has changed. Amend tax return 2010   The IRS may withdraw the buyer's right to provide a certificate if the buyer uses the kerosene for use in aviation to which a certificate relates other than as stated in the certificate. Amend tax return 2010 Exempt use. Amend tax return 2010   The rate on kerosene for use in aviation is $. Amend tax return 2010 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. Amend tax return 2010 An exempt use includes kerosene for the exclusive use of a state or local government. Amend tax return 2010 There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. Amend tax return 2010 Flash title transaction. Amend tax return 2010   A position holder is not liable for tax if, among other conditions, it obtains a certificate (described above) from the operator of the aircraft into which the kerosene is delivered. Amend tax return 2010 In a “flash title transaction” the position holder sells the kerosene to a wholesale distributor (reseller) that in turn sells the kerosene to the aircraft operator as the kerosene is being removed from a terminal into the fuel tank of an aircraft. Amend tax return 2010 In this case, the position holder will be treated as having a certificate from the operator of the aircraft if: The aircraft operator puts the reseller's name, address, and EIN on the certificate in place of the position holder's information; and The reseller provides the position holder with a statement of the kerosene reseller. Amend tax return 2010 Reseller statement. Amend tax return 2010   This is a statement that is signed under penalties of perjury by a person with authority to bind the reseller; is provided at the bottom or on the back of the certificate (or in an attached document); and contains: The reseller's name, address, and EIN; The position holder's name, address, and EIN; and A statement that the reseller has no reason to believe that any information in the accompanying aircraft operator's certificate is false. Amend tax return 2010 Credits or Refunds. Amend tax return 2010   A claim may be made by the ultimate purchaser (the operator) for taxed kerosene for use in aviation used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia). Amend tax return 2010 A claim may be made by a registered ultimate vendor for certain sales. Amend tax return 2010 For more information, see chapter 2. Amend tax return 2010 Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. Amend tax return 2010 Other Fuels include alternative fuels. Amend tax return 2010 Alternative fuels are: Liquefied petroleum gas (LPG), “P Series” fuels, Compressed natural gas (CNG) (discussed later), Liquefied hydrogen, Any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, Liquid fuel derived from biomass, Liquefied natural gas (LNG), and Liquefied gas derived from biomass. Amend tax return 2010 Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. Amend tax return 2010 Qualified methanol and ethanol fuels. Amend tax return 2010   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. Amend tax return 2010 The tax rates are listed in the Instructions for Form 720. Amend tax return 2010 Partially exempt methanol and ethanol fuels. Amend tax return 2010   A reduced tax rate applies to these fuels. Amend tax return 2010 Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. Amend tax return 2010 The tax rates are listed in the Instructions for Form 720. Amend tax return 2010 Motor vehicles. Amend tax return 2010   Motor vehicles include all types of vehicles, whether or not registered (or required to be registered) for highway use, that have both the following characteristics. Amend tax return 2010 They are propelled by a motor. Amend tax return 2010 They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t