File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Amend Tax Return 2011

How Do I Do My 2010 TaxesFree Irs Tax Filing 1040ez1040ez Booklet OnlineForms 1040 EsHr Block Tax FreeFree 1040ez OnlineCan I File 1040ez OnlineWhere To File State Taxes For FreeFree Tax Preparation For MilitaryIrs Tax Forms 1040ezWhere Mail 1040x Amended ReturnFiling State Taxes OnlineIrs EfileFed 1040ezTax Preparer SoftwareFile 2009 Taxes Online For FreeFree 1040ez Tax FormIncome Taxes For Students2010 Income Tax TableWhen Amend Tax ReturnE File State Return For FreeFree Electronic Tax FilingHow To File An Amendment For Taxes2011 Irs Tax FormsIrs Forms 20091040nr Efile 2012Income Tax FormsFree Online State Tax ReturnWhere Can I File My 2012 Taxes Online For FreeHow To Amend 2011 Tax Return TurbotaxH&r Block Free EditionHighest State TaxesAarp Free Tax PreparationFile Tax Extension For 2011 FreeCan You File State Taxes For FreeH&r BlockHow To Refile Your TaxesTaxes And UnemploymentFree 2012 Tax SoftwareAmended 2009 Tax Return Instructions

Amend Tax Return 2011

Amend tax return 2011 5. Amend tax return 2011   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. Amend tax return 2011 Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. Amend tax return 2011 When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. Amend tax return 2011 Otherwise, these are capital expenses that must be added to the basis of the land. Amend tax return 2011 (See chapter 6 for information on determining basis. Amend tax return 2011 ) Conservation expenses for land in a foreign country do not qualify for this special treatment. Amend tax return 2011 The deduction for conservation expenses cannot be more than 25% of your gross income from farming. Amend tax return 2011 See 25% Limit on Deduction , later. Amend tax return 2011 Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. Amend tax return 2011 These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. Amend tax return 2011 You must include in income most government payments for approved conservation practices. Amend tax return 2011 However, you can exclude some payments you receive under certain cost-sharing conservation programs. Amend tax return 2011 For more information, see Agricultural Program Payments in chapter 3. Amend tax return 2011 To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. Amend tax return 2011 Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. Amend tax return 2011 You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. Amend tax return 2011 You are not farming if you are engaged only in forestry or the growing of timber. Amend tax return 2011 Farm defined. Amend tax return 2011   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. Amend tax return 2011 It also includes plantations, ranches, ranges, and orchards. Amend tax return 2011 A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. Amend tax return 2011 It does not include an area where they are merely caught or harvested. Amend tax return 2011 A plant nursery is a farm for purposes of deducting soil and water conservation expenses. Amend tax return 2011 Farm rental. Amend tax return 2011   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. Amend tax return 2011 If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. Amend tax return 2011   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. Amend tax return 2011 Example. Amend tax return 2011 You own a farm in Iowa and live in California. Amend tax return 2011 You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. Amend tax return 2011 You cannot deduct your soil conservation expenses for this farm. Amend tax return 2011 You must capitalize the expenses and add them to the basis of the land. Amend tax return 2011     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. Amend tax return 2011 Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. Amend tax return 2011 If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. Amend tax return 2011 Keep a copy of the plan with your books and records to support your deductions. Amend tax return 2011 Conservation plan. Amend tax return 2011   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. Amend tax return 2011 There are three types of approved plans. Amend tax return 2011 NRCS individual site plans. Amend tax return 2011 These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. Amend tax return 2011 NRCS county plans. Amend tax return 2011 These plans include a listing of farm conservation practices approved for the county where the farmland is located. Amend tax return 2011 You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. Amend tax return 2011 Comparable state agency plans. Amend tax return 2011 These plans are approved by state agencies and can be approved individual site plans or county plans. Amend tax return 2011   A list of NRCS conservation programs is available at www. Amend tax return 2011 nrcs. Amend tax return 2011 usda. Amend tax return 2011 gov/programs. Amend tax return 2011 Individual site plans can be obtained from NRCS offices and the comparable state agencies. Amend tax return 2011 Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. Amend tax return 2011 These expenses include, but are not limited to, the following. Amend tax return 2011 The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. Amend tax return 2011 The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. Amend tax return 2011 The eradication of brush. Amend tax return 2011 The planting of windbreaks. Amend tax return 2011 You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. Amend tax return 2011 These expenses are added to the basis of the land. Amend tax return 2011 If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. Amend tax return 2011 See chapter 3 for information about payments eligible for the cost-sharing exclusion. Amend tax return 2011 New farm or farmland. Amend tax return 2011   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. Amend tax return 2011 You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. Amend tax return 2011 The new farming activity does not have to be the same as the old farming activity. Amend tax return 2011 For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. Amend tax return 2011 Land not used for farming. Amend tax return 2011   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. Amend tax return 2011 For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. Amend tax return 2011 You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. Amend tax return 2011 Depreciable conservation assets. Amend tax return 2011   You generally cannot deduct your expenses for depreciable conservation assets. Amend tax return 2011 However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. Amend tax return 2011 See Assessment for Depreciable Property , later. Amend tax return 2011   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. Amend tax return 2011 These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. Amend tax return 2011 You recover your capital investment through annual allowances for depreciation. Amend tax return 2011   You can deduct soil and water conservation expenses for nondepreciable earthen items. Amend tax return 2011 Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. Amend tax return 2011 Water well. Amend tax return 2011   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. Amend tax return 2011 It is a capital expense. Amend tax return 2011 You recover your cost through depreciation. Amend tax return 2011 You also must capitalize your cost for drilling a test hole. Amend tax return 2011 If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. Amend tax return 2011 You can recover the total cost through depreciation deductions. Amend tax return 2011   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. Amend tax return 2011 Abandonment means that all economic benefits from the well are terminated. Amend tax return 2011 For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. Amend tax return 2011 Endangered species recovery expenses. Amend tax return 2011   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. Amend tax return 2011 Otherwise, these are capital expenses that must be added to the basis of the land. Amend tax return 2011   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. Amend tax return 2011 See Internal Revenue Code section 175 for more information. Amend tax return 2011 Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. Amend tax return 2011 You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. Amend tax return 2011 Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. Amend tax return 2011 This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. Amend tax return 2011 The depreciable property must be used in the district's soil and water conservation activities. Amend tax return 2011 However, the following limits apply to these assessments. Amend tax return 2011 The total assessment limit. Amend tax return 2011 The yearly assessment limit. Amend tax return 2011 After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. Amend tax return 2011 The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. Amend tax return 2011 See Table 5-1 for a brief summary of these limits. Amend tax return 2011 Table 5-1. Amend tax return 2011 Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. Amend tax return 2011 Your deductible share of the cost to the district for the property. Amend tax return 2011 Your gross income from farming. Amend tax return 2011 No one taxpayer can deduct more than 10% of the total assessment. Amend tax return 2011 Any amount over 10% is a capital expense and is added to the basis of your land. Amend tax return 2011 If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Amend tax return 2011 If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. Amend tax return 2011 You can deduct the remainder in equal amounts over the next 9 tax years. Amend tax return 2011 Limit for all conservation expenses, including assessments for depreciable property. Amend tax return 2011 Amounts greater than 25% can be carried to the following year and added to that year's expenses. Amend tax return 2011 The total is then subject to the 25% of gross income from farming limit in that year. Amend tax return 2011 To ensure your deduction is within the deduction limits, keep records to show the following. Amend tax return 2011 The total assessment against all members of the district for the depreciable property. Amend tax return 2011 Your deductible share of the cost to the district for the depreciable property. Amend tax return 2011 Your gross income from farming. Amend tax return 2011 Total assessment limit. Amend tax return 2011   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. Amend tax return 2011 This applies whether you pay the assessment in one payment or in installments. Amend tax return 2011 If your assessment is more than 10% of the total amount assessed, both the following rules apply. Amend tax return 2011 The amount over 10% is a capital expense and is added to the basis of your land. Amend tax return 2011 If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. Amend tax return 2011 Yearly assessment limit. Amend tax return 2011   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. Amend tax return 2011 If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. Amend tax return 2011 If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. Amend tax return 2011 You can deduct the remainder in equal amounts over the next 9 tax years. Amend tax return 2011 Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. Amend tax return 2011 Example 1. Amend tax return 2011 This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. Amend tax return 2011 Of the assessment, $1,500 is for digging drainage ditches. Amend tax return 2011 You can deduct this part as a soil or conservation expense as if you had paid it directly. Amend tax return 2011 The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. Amend tax return 2011 The total amount assessed by the district against all its members for the depreciable equipment is $7,000. Amend tax return 2011 The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. Amend tax return 2011 The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. Amend tax return 2011 To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. Amend tax return 2011 Add $500 to the result for a total of $570. Amend tax return 2011 Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). Amend tax return 2011 You can deduct the balance at the rate of $70 a year over the next 9 years. Amend tax return 2011 You add $70 to the $1,500 portion of the assessment for drainage ditches. Amend tax return 2011 You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. Amend tax return 2011 Example 2. Amend tax return 2011 Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. Amend tax return 2011 The total amount assessed by the district against all its members for depreciable equipment is $5,500. Amend tax return 2011 The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. Amend tax return 2011 The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). Amend tax return 2011 Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. Amend tax return 2011 You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. Amend tax return 2011 Sale or other disposal of land during 9-year period. Amend tax return 2011   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. Amend tax return 2011 Death of farmer during 9-year period. Amend tax return 2011   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. Amend tax return 2011 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. Amend tax return 2011 Gross income from farming. Amend tax return 2011   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. Amend tax return 2011 Gains from sales of draft, breeding, or dairy livestock are included. Amend tax return 2011 Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. Amend tax return 2011 Carryover of deduction. Amend tax return 2011   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. Amend tax return 2011 However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. Amend tax return 2011 Example. Amend tax return 2011 In 2012, you have gross income of $32,000 from two farms. Amend tax return 2011 During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. Amend tax return 2011 However, your deduction is limited to 25% of $32,000, or $8,000. Amend tax return 2011 The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. Amend tax return 2011 The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. Amend tax return 2011 Any expenses over the limit in that year are carried to 2014 and later years. Amend tax return 2011 Net operating loss. Amend tax return 2011   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. Amend tax return 2011 If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. Amend tax return 2011 When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. Amend tax return 2011 If you do not choose to deduct the expenses, you must capitalize them. Amend tax return 2011 Change of method. Amend tax return 2011   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. Amend tax return 2011 To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. Amend tax return 2011 You or your authorized representative must sign the request. Amend tax return 2011   The request must include the following information. Amend tax return 2011 Your name and address. Amend tax return 2011 The first tax year the method or change of method is to apply. Amend tax return 2011 Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. Amend tax return 2011 If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. Amend tax return 2011 The total expenses you paid or incurred in the first tax year the method or change of method is to apply. Amend tax return 2011 A statement that you will account separately in your books for the expenses to which this method or change of method relates. Amend tax return 2011 Send your request to the following  address. Amend tax return 2011  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. Amend tax return 2011 Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). Amend tax return 2011 However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. Amend tax return 2011 Gain on sale of farmland. Amend tax return 2011   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. Amend tax return 2011 If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. Amend tax return 2011 See Section 1252 property under Other Gains in chapter 9. Amend tax return 2011 Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Contact My Local Office in Michigan

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City Street Address Days/Hours of Service Telephone* 
Detroit  500 Woodward Ave.
Detroit, MI 48226 

Monday-Friday - 8:30 a.m.- 4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(313) 628-3722 
Flint  917 N. Saginaw Street
Flint, MI 48503 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**


Services Provided

(810) 342-6190 
Grand Rapids  3251 N. Evergreen Dr. N.E.
Grand Rapids, MI 49525 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
 

Services Provided

(616) 365-4700 
Marquette  1055 W. Baraga Ave.
Marquette, MI 49855 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(906) 228-7845 
Saginaw  4901 Towne Centre
Saginaw, MI 48604 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(989) 797-8560 
Traverse City  2040 N. US 31 South
Traverse City, MI 49685 

Monday-Friday - 8:30 a.m.- 4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)
 

    Services Provided

(231) 932-2192 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call 313-628-3670 in Detroit or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see Tax Topic 104

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
477 Michigan Ave.
Stop 45, Room 2401
Detroit, MI 48226

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Amend Tax Return 2011

Amend tax return 2011 2. Amend tax return 2011   Electing the Section 179 Deduction Table of Contents Introduction Useful Items - You may want to see: What Property Qualifies?Eligible Property Property Acquired for Business Use Property Acquired by Purchase What Property Does Not Qualify?Land and Improvements Excepted Property How Much Can You Deduct?Dollar Limits Business Income Limit Partnerships and Partners S Corporations Other Corporations How Do You Elect the Deduction? When Must You Recapture the Deduction? Introduction You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Amend tax return 2011 This is the section 179 deduction. Amend tax return 2011 You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions. Amend tax return 2011 Estates and trusts cannot elect the section 179 deduction. Amend tax return 2011 This chapter explains what property does and does not qualify for the section 179 deduction, what limits apply to the deduction (including special rules for partnerships and corporations), and how to elect it. Amend tax return 2011 It also explains when and how to recapture the deduction. Amend tax return 2011 Useful Items - You may want to see: Publication 537 Installment Sales 544 Sales and Other Dispositions of Assets 954 Tax Incentives for Distressed Communities Form (and Instructions) 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. Amend tax return 2011 What Property Qualifies? To qualify for the section 179 deduction, your property must meet all the following requirements. Amend tax return 2011 It must be eligible property. Amend tax return 2011 It must be acquired for business use. Amend tax return 2011 It must have been acquired by purchase. Amend tax return 2011 It must not be property described later under What Property Does Not Qualify . Amend tax return 2011 The following discussions provide information about these requirements and exceptions. Amend tax return 2011 Eligible Property To qualify for the section 179 deduction, your property must be one of the following types of depreciable property. Amend tax return 2011 Tangible personal property. Amend tax return 2011 Other tangible property (except buildings and their structural components) used as: An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services, A research facility used in connection with any of the activities in (a) above, or A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities. Amend tax return 2011 Single purpose agricultural (livestock) or horticultural structures. Amend tax return 2011 See chapter 7 of Publication 225 for definitions and information regarding the use requirements that apply to these structures. Amend tax return 2011 Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. Amend tax return 2011 Off-the-shelf computer software. Amend tax return 2011 Qualified real property (described below). Amend tax return 2011 Tangible personal property. Amend tax return 2011   Tangible personal property is any tangible property that is not real property. Amend tax return 2011 It includes the following property. Amend tax return 2011 Machinery and equipment. Amend tax return 2011 Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs. Amend tax return 2011 Gasoline storage tanks and pumps at retail service stations. Amend tax return 2011 Livestock, including horses, cattle, hogs, sheep, goats, and mink and other furbearing animals. Amend tax return 2011   The treatment of property as tangible personal property for the section 179 deduction is not controlled by its treatment under local law. Amend tax return 2011 For example, property may not be tangible personal property for the deduction even if treated so under local law, and some property (such as fixtures) may be tangible personal property for the deduction even if treated as real property under local law. Amend tax return 2011 Off-the-shelf computer software. Amend tax return 2011   Off-the-shelf computer software placed in service during the tax year is qualifying property for purposes of the section 179 deduction. Amend tax return 2011 This is computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. Amend tax return 2011 It includes any program designed to cause a computer to perform a desired function. Amend tax return 2011 However, a database or similar item is not considered computer software unless it is in the public domain and is incidental to the operation of otherwise qualifying software. Amend tax return 2011 Qualified real property. Amend tax return 2011   You can elect to treat certain qualified real property you placed in service as section 179 property for tax years beginning in 2013. Amend tax return 2011 If this election is made, the term “section 179 property” will include any qualified real property that is: Qualified leasehold improvement property, Qualified restaurant property, or Qualified retail improvement property. Amend tax return 2011 The maximum section 179 expense deduction that can be elected for qualified section 179 real property is $250,000 of the maximum section 179 deduction of $500,000 in 2013. Amend tax return 2011 For more information, see Special rules for qualified section 179 real property, later. Amend tax return 2011 Also, see Election for certain qualified section 179 real property, later, for information on how to make this election. Amend tax return 2011 Qualified leasehold improvement property. Amend tax return 2011   Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Amend tax return 2011   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. Amend tax return 2011 A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. Amend tax return 2011 Examples include the following. Amend tax return 2011 A complete liquidation of a subsidiary. Amend tax return 2011 A transfer to a corporation controlled by the transferor. Amend tax return 2011 An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Amend tax return 2011 Qualified restaurant property. Amend tax return 2011   Qualified restaurant property is any section 1250 property that is a building or an improvement to a building placed in service after December 31, 2008, and before January 1, 2014. Amend tax return 2011 Also, more than 50% of the building’s square footage must be devoted to preparation of meals and seating for on-premise consumption of prepared meals. Amend tax return 2011 Qualified retail improvement property. Amend tax return 2011   Generally, this is any improvement (placed in service after December 31, 2008, and before January 1, 2014) to an interior portion of nonresidential real property if it meets the following requirements. Amend tax return 2011 The portion is open to the general public and is used in the retail trade or business of selling tangible property to the general public. Amend tax return 2011 The improvement is placed in service more than 3 years after the date the building was first placed in service. Amend tax return 2011 The expenses are not for the enlargement of the building, any elevator or escalator, any structural components benefiting a common area, or the internal structural framework of the building. Amend tax return 2011 In addition, an improvement made by the lessor does not qualify as qualified retail improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions. Amend tax return 2011 A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. Amend tax return 2011 Examples include the following. Amend tax return 2011 A complete liquidation of a subsidiary. Amend tax return 2011 A transfer to a corporation controlled by the transferor. Amend tax return 2011 An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Amend tax return 2011 Property Acquired for Business Use To qualify for the section 179 deduction, your property must have been acquired for use in your trade or business. Amend tax return 2011 Property you acquire only for the production of income, such as investment property, rental property (if renting property is not your trade or business), and property that produces royalties, does not qualify. Amend tax return 2011 Partial business use. Amend tax return 2011   When you use property for both business and nonbusiness purposes, you can elect the section 179 deduction only if you use the property more than 50% for business in the year you place it in service. Amend tax return 2011 If you use the property more than 50% for business, multiply the cost of the property by the percentage of business use. Amend tax return 2011 Use the resulting business cost to figure your section 179 deduction. Amend tax return 2011 Example. Amend tax return 2011 May Oak bought and placed in service an item of section 179 property costing $11,000. Amend tax return 2011 She used the property 80% for her business and 20% for personal purposes. Amend tax return 2011 The business part of the cost of the property is $8,800 (80% × $11,000). Amend tax return 2011 Property Acquired by Purchase To qualify for the section 179 deduction, your property must have been acquired by purchase. Amend tax return 2011 For example, property acquired by gift or inheritance does not qualify. Amend tax return 2011 Property is not considered acquired by purchase in the following situations. Amend tax return 2011 It is acquired by one component member of a controlled group from another component member of the same group. Amend tax return 2011 Its basis is determined either— In whole or in part by its adjusted basis in the hands of the person from whom it was acquired, or Under the stepped-up basis rules for property acquired from a decedent. Amend tax return 2011 It is acquired from a related person. Amend tax return 2011 Related persons. Amend tax return 2011   Related persons are described under Related persons earlier. Amend tax return 2011 However, to determine whether property qualifies for the section 179 deduction, treat as an individual's family only his or her spouse, ancestors, and lineal descendants and substitute "50%" for "10%" each place it appears. Amend tax return 2011 Example. Amend tax return 2011 Ken Larch is a tailor. Amend tax return 2011 He bought two industrial sewing machines from his father. Amend tax return 2011 He placed both machines in service in the same year he bought them. Amend tax return 2011 They do not qualify as section 179 property because Ken and his father are related persons. Amend tax return 2011 He cannot claim a section 179 deduction for the cost of these machines. Amend tax return 2011 What Property Does Not Qualify? Certain property does not qualify for the section 179 deduction. Amend tax return 2011 This includes the following. Amend tax return 2011 Land and Improvements Land and land improvements do not qualify as section 179 property. Amend tax return 2011 Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and fences. Amend tax return 2011 Excepted Property Even if the requirements explained earlier under What Property Qualifies are met, you cannot elect the section 179 deduction for the following property. Amend tax return 2011 Certain property you lease to others (if you are a noncorporate lessor). Amend tax return 2011 Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. Amend tax return 2011 Air conditioning or heating units. Amend tax return 2011 Property used predominantly outside the United States, except property described in section 168(g)(4) of the Internal Revenue Code. Amend tax return 2011 Property used by certain tax-exempt organizations, except property used in connection with the production of income subject to the tax on unrelated trade or business income. Amend tax return 2011 Property used by governmental units or foreign persons or entities, except property used under a lease with a term of less than 6 months. Amend tax return 2011 Leased property. Amend tax return 2011   Generally, you cannot claim a section 179 deduction based on the cost of property you lease to someone else. Amend tax return 2011 This rule does not apply to corporations. Amend tax return 2011 However, you can claim a section 179 deduction for the cost of the following property. Amend tax return 2011 Property you manufacture or produce and lease to others. Amend tax return 2011 Property you purchase and lease to others if both the following tests are met. Amend tax return 2011 The term of the lease (including options to renew) is less than 50% of the property's class life. Amend tax return 2011 For the first 12 months after the property is transferred to the lessee, the total business deductions you are allowed on the property (other than rents and reimbursed amounts) are more than 15% of the rental income from the property. Amend tax return 2011 Property used for lodging. Amend tax return 2011   Generally, you cannot claim a section 179 deduction for property used predominantly to furnish lodging or in connection with the furnishing of lodging. Amend tax return 2011 However, this does not apply to the following types of property. Amend tax return 2011 Nonlodging commercial facilities that are available to those not using the lodging facilities on the same basis as they are available to those using the lodging facilities. Amend tax return 2011 Property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients. Amend tax return 2011 Any certified historic structure to the extent its basis is due to qualified rehabilitation expenditures. Amend tax return 2011 Any energy property. Amend tax return 2011 Energy property. Amend tax return 2011   Energy property is property that meets the following requirements. Amend tax return 2011 It is one of the following types of property. Amend tax return 2011 Equipment that uses solar energy to generate electricity, to heat or cool a structure, to provide hot water for use in a structure, or to provide solar process heat, except for equipment used to generate energy to heat a swimming pool. Amend tax return 2011 Equipment placed in service after December 31, 2005, and before January 1, 2017, that uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight. Amend tax return 2011 Equipment used to produce, distribute, or use energy derived from a geothermal deposit. Amend tax return 2011 For electricity generated by geothermal power, this includes equipment up to (but not including) the electrical transmission stage. Amend tax return 2011 Qualified fuel cell property or qualified microturbine property placed in service after December 31, 2005, and before January 1, 2017. Amend tax return 2011 The construction, reconstruction, or erection of the property must be completed by you. Amend tax return 2011 For property you acquire, the original use of the property must begin with you. Amend tax return 2011 The property must meet the performance and quality standards, if any, prescribed by Income Tax Regulations in effect at the time you get the property. Amend tax return 2011   For periods before February 14, 2008, energy property does not include any property that is public utility property as defined by section 46(f)(5) of the Internal Revenue Code (as in effect on November 4, 1990). Amend tax return 2011 How Much Can You Deduct? Your section 179 deduction is generally the cost of the qualifying property. Amend tax return 2011 However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. Amend tax return 2011 These limits apply to each taxpayer, not to each business. Amend tax return 2011 However, see Married Individuals under Dollar Limits , later. Amend tax return 2011 For a passenger automobile, the total section 179 deduction and depreciation deduction are limited. Amend tax return 2011 See Do the Passenger Automobile Limits Apply in chapter 5 . Amend tax return 2011 If you deduct only part of the cost of qualifying property as a section 179 deduction, you can generally depreciate the cost you do not deduct. Amend tax return 2011 Trade-in of other property. Amend tax return 2011   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 deduction includes only the cash you paid. Amend tax return 2011 Example. Amend tax return 2011 Silver Leaf, a retail bakery, traded two ovens having a total adjusted basis of $680 for a new oven costing $1,320. Amend tax return 2011 They received an $800 trade-in allowance for the old ovens and paid $520 in cash for the new oven. Amend tax return 2011 The bakery also traded a used van with an adjusted basis of $4,500 for a new van costing $9,000. Amend tax return 2011 They received a $4,800 trade-in allowance on the used van and paid $4,200 in cash for the new van. Amend tax return 2011 Only the portion of the new property's basis paid by cash qualifies for the section 179 deduction. Amend tax return 2011 Therefore, Silver Leaf's qualifying costs for the section 179 deduction are $4,720 ($520 + $4,200). Amend tax return 2011 Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 generally cannot be more than $500,000. Amend tax return 2011 If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 deduction among the items in any way, as long as the total deduction is not more than $500,000. Amend tax return 2011 You do not have to claim the full $500,000. Amend tax return 2011 Qualified real property (described earlier) that you elected to treat as section 179 real property is limited to $250,000 of the maximum deduction of $500,000 for 2013. Amend tax return 2011 The amount you can elect to deduct is not affected if you place qualifying property in service in a short tax year or if you place qualifying property in service for only a part of a 12-month tax year. Amend tax return 2011 After you apply the dollar limit to determine a tentative deduction, you must apply the business income limit (described later) to determine your actual section 179 deduction. Amend tax return 2011 Example. Amend tax return 2011 In 2013, you bought and placed in service $500,000 in machinery and a $25,000 circular saw for your business. Amend tax return 2011 You elect to deduct $475,000 for the machinery and the entire $25,000 for the saw, a total of $500,000. Amend tax return 2011 This is the maximum amount you can deduct. Amend tax return 2011 Your $25,000 deduction for the saw completely recovered its cost. Amend tax return 2011 Your basis for depreciation is zero. Amend tax return 2011 The basis for depreciation of your machinery is $25,000. Amend tax return 2011 You figure this by subtracting your $475,000 section 179 deduction for the machinery from the $500,000 cost of the machinery. Amend tax return 2011 Situations affecting dollar limit. Amend tax return 2011   Under certain circumstances, the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits. Amend tax return 2011 The general dollar limit is affected by any of the following situations. Amend tax return 2011 The cost of your section 179 property placed in service exceeds $2,000,000. Amend tax return 2011 Your business is an enterprise zone business. Amend tax return 2011 You placed in service a sport utility or certain other vehicles. Amend tax return 2011 You are married filing a joint or separate return. Amend tax return 2011 Costs exceeding $2,000,000 If the cost of your qualifying section 179 property placed in service in a year is more than $2,000,000, you generally must reduce the dollar limit (but not below zero) by the amount of cost over $2,000,000. Amend tax return 2011 If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. Amend tax return 2011 Example. Amend tax return 2011 In 2013, Jane Ash placed in service machinery costing $2,100,000. Amend tax return 2011 This cost is $100,000 more than $2,000,000, so she must reduce her dollar limit to $400,000 ($500,000 − $100,000). Amend tax return 2011 Enterprise Zone Businesses An increased section 179 deduction is available to enterprise zone businesses for qualified zone property placed in service during the tax year, in an empowerment zone. Amend tax return 2011 For more information including the definitions of “enterprise zone business” and “qualified zone property,” see sections 1397A, 1397C, and 1397D of the Internal Revenue Code. Amend tax return 2011 The dollar limit on the section 179 deduction is increased by the smaller of: $35,000, or The cost of section 179 property that is also qualified zone property placed in service before January 1, 2014 (including such property placed in service by your spouse, even if you are filing a separate return). Amend tax return 2011 Note. Amend tax return 2011   You take into account only 50% (instead of 100%) of the cost of qualified zone property placed in service in a year when figuring the reduced dollar limit for costs exceeding $2,000,000 (explained earlier). Amend tax return 2011 Sport Utility and Certain Other Vehicles You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. Amend tax return 2011 This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. Amend tax return 2011 However, the $25,000 limit does not apply to any vehicle: Designed to seat more than nine passengers behind the driver's seat, Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. Amend tax return 2011 Married Individuals If you are married, how you figure your section 179 deduction depends on whether you file jointly or separately. Amend tax return 2011 If you file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. Amend tax return 2011 If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit, including the reduction for costs over $2,000,000. Amend tax return 2011 You must allocate the dollar limit (after any reduction) between you equally, unless you both elect a different allocation. Amend tax return 2011 If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. Amend tax return 2011 Example. Amend tax return 2011 Jack Elm is married. Amend tax return 2011 He and his wife file separate returns. Amend tax return 2011 Jack bought and placed in service $2,000,000 of qualified farm machinery in 2013. Amend tax return 2011 His wife has her own business, and she bought and placed in service $30,000 of qualified business equipment. Amend tax return 2011 Their combined dollar limit is $470,000. Amend tax return 2011 This is because they must figure the limit as if they were one taxpayer. Amend tax return 2011 They reduce the $500,000 dollar limit by the $30,000 excess of their costs over $2,000,000. Amend tax return 2011 They elect to allocate the $470,000 dollar limit as follows. Amend tax return 2011 $446,500 ($470,000 x 95%) to Mr. Amend tax return 2011 Elm's machinery. Amend tax return 2011 $23,500 ($470,000 x 5%) to Mrs. Amend tax return 2011 Elm's equipment. Amend tax return 2011 If they did not make an election to allocate their costs in this way, they would have to allocate $235,000 ($470,000 × 50%) to each of them. Amend tax return 2011 Joint return after filing separate returns. Amend tax return 2011   If you and your spouse elect to amend your separate returns by filing a joint return after the due date for filing your return, the dollar limit on the joint return is the lesser of the following amounts. Amend tax return 2011 The dollar limit (after reduction for any cost of section 179 property over $2,000,000). Amend tax return 2011 The total cost of section 179 property you and your spouse elected to expense on your separate returns. Amend tax return 2011 Example. Amend tax return 2011 The facts are the same as in the previous example except that Jack elected to deduct $30,000 of the cost of section 179 property on his separate return and his wife elected to deduct $2,000. Amend tax return 2011 After the due date of their returns, they file a joint return. Amend tax return 2011 Their dollar limit for the section 179 deduction is $32,000. Amend tax return 2011 This is the lesser of the following amounts. Amend tax return 2011 $470,000—The dollar limit less the cost of section 179 property over $2,000,000. Amend tax return 2011 $32,000—The total they elected to expense on their separate returns. Amend tax return 2011 Business Income Limit The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Amend tax return 2011 Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business. Amend tax return 2011 Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. Amend tax return 2011 Special rules apply to a 2013 deduction of qualified section 179 real property that is disallowed because of the business income limit. Amend tax return 2011 See Special rules for qualified section 179 property under Carryover of disallowed deduction, later. Amend tax return 2011 Taxable income. Amend tax return 2011   In general, figure taxable income for this purpose by totaling the net income and losses from all trades and businesses you actively conducted during the year. Amend tax return 2011 Net income or loss from a trade or business includes the following items. Amend tax return 2011 Section 1231 gains (or losses). Amend tax return 2011 Interest from working capital of your trade or business. Amend tax return 2011 Wages, salaries, tips, or other pay earned as an employee. Amend tax return 2011 For information about section 1231 gains and losses, see chapter 3 in Publication 544. Amend tax return 2011   In addition, figure taxable income without regard to any of the following. Amend tax return 2011 The section 179 deduction. Amend tax return 2011 The self-employment tax deduction. Amend tax return 2011 Any net operating loss carryback or carryforward. Amend tax return 2011 Any unreimbursed employee business expenses. Amend tax return 2011 Two different taxable income limits. Amend tax return 2011   In addition to the business income limit for your section 179 deduction, you may have a taxable income limit for some other deduction. Amend tax return 2011 You may have to figure the limit for this other deduction taking into account the section 179 deduction. Amend tax return 2011 If so, complete the following steps. Amend tax return 2011 Step Action 1 Figure taxable income without the section 179 deduction or the other deduction. Amend tax return 2011 2 Figure a hypothetical section 179 deduction using the taxable income figured in Step 1. Amend tax return 2011 3 Subtract the hypothetical section 179 deduction figured in Step 2 from the taxable income figured in Step 1. Amend tax return 2011 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. Amend tax return 2011 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in Step 1. Amend tax return 2011 6 Figure your actual section 179 deduction using the taxable income figured in Step 5. Amend tax return 2011 7 Subtract your actual section 179 deduction figured in Step 6 from the taxable income figured in Step 1. Amend tax return 2011 8 Figure your actual other deduction using the taxable income figured in Step 7. Amend tax return 2011 Example. Amend tax return 2011 On February 1, 2013, the XYZ corporation purchased and placed in service qualifying section 179 property that cost $500,000. Amend tax return 2011 It elects to expense the entire $500,000 cost under section 179. Amend tax return 2011 In June, the corporation gave a charitable contribution of $10,000. Amend tax return 2011 A corporation's limit on charitable contributions is figured after subtracting any section 179 deduction. Amend tax return 2011 The business income limit for the section 179 deduction is figured after subtracting any allowable charitable contributions. Amend tax return 2011 XYZ's taxable income figured without the section 179 deduction or the deduction for charitable contributions is $520,000. Amend tax return 2011 XYZ figures its section 179 deduction and its deduction for charitable contributions as follows. Amend tax return 2011 Step 1– Taxable income figured without either deduction is $520,000. Amend tax return 2011 Step 2– Using $520,000 as taxable income, XYZ's hypothetical section 179 deduction is $500,000. Amend tax return 2011 Step 3– $20,000 ($520,000 − $500,000). Amend tax return 2011 Step 4– Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. Amend tax return 2011 Step 5– $518,000 ($520,000 − $2,000). Amend tax return 2011 Step 6– Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 deduction. Amend tax return 2011 Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 deduction. Amend tax return 2011 Step 7– $20,000 ($520,000 − $500,000). Amend tax return 2011 Step 8– Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. Amend tax return 2011 Carryover of disallowed deduction. Amend tax return 2011   You can carry over for an unlimited number of years the cost of any section 179 property you elected to expense but were unable to because of the business income limit. Amend tax return 2011 This disallowed deduction amount is shown on line 13 of Form 4562. Amend tax return 2011 You use the amount you carry over to determine your section 179 deduction in the next year. Amend tax return 2011 Enter that amount on line 10 of your Form 4562 for the next year. Amend tax return 2011   If you place more than one property in service in a year, you can select the properties for which all or a part of the costs will be carried forward. Amend tax return 2011 Your selections must be shown in your books and records. Amend tax return 2011 For this purpose, treat section 179 costs allocated from a partnership or an S corporation as one item of section 179 property. Amend tax return 2011 If you do not make a selection, the total carryover will be allocated equally among the properties you elected to expense for the year. Amend tax return 2011   If costs from more than one year are carried forward to a subsequent year in which only part of the total carryover can be deducted, you must deduct the costs being carried forward from the earliest year first. Amend tax return 2011 Special rules for qualified section 179 real property. Amend tax return 2011   You can carry over to 2013 a 2012 deduction attributable to qualified section 179 real property that you elected to expense but were unable to take because of the business income limitation. Amend tax return 2011 Any such 2012 carryover amounts that are not deducted in 2013, plus any 2013 disallowed section 179 expense deductions attributable to qualified real property, are not carried over to 2014. Amend tax return 2011 Instead these amounts are treated as property placed in service on the first day of 2013 for purposes of computing depreciation (including the special depreciation allowance, if applicable). Amend tax return 2011 See section 179(f) of the Internal Revenue Code and Notice 2013-59 for more information. Amend tax return 2011 If there is a sale or other disposition of your property (including a transfer at death) before you can use the full amount of any outstanding carryover of your disallowed section 179 deduction, neither you nor the new owner can deduct any of the unused amount. Amend tax return 2011 Instead, you must add it back to the property's basis. Amend tax return 2011 Partnerships and Partners The section 179 deduction limits apply both to the partnership and to each partner. Amend tax return 2011 The partnership determines its section 179 deduction subject to the limits. Amend tax return 2011 It then allocates the deduction among its partners. Amend tax return 2011 Each partner adds the amount allocated from partnerships (shown on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Amend tax return 2011 ) to his or her nonpartnership section 179 costs and then applies the dollar limit to this total. Amend tax return 2011 To determine any reduction in the dollar limit for costs over $2,000,000, the partner does not include any of the cost of section 179 property placed in service by the partnership. Amend tax return 2011 After the dollar limit (reduced for any nonpartnership section 179 costs over $2,000,000) is applied, any remaining cost of the partnership and nonpartnership section 179 property is subject to the business income limit. Amend tax return 2011 Partnership's taxable income. Amend tax return 2011   For purposes of the business income limit, figure the partnership's taxable income by adding together the net income and losses from all trades or businesses actively conducted by the partnership during the year. Amend tax return 2011 See the Instructions for Form 1065 for information on how to figure partnership net income (or loss). Amend tax return 2011 However, figure taxable income without regard to credits, tax-exempt income, the section 179 deduction, and guaranteed payments under section 707(c) of the Internal Revenue Code. Amend tax return 2011 Partner's share of partnership's taxable income. Amend tax return 2011   For purposes of the business income limit, the taxable income of a partner engaged in the active conduct of one or more of a partnership's trades or businesses includes his or her allocable share of taxable income derived from the partnership's active conduct of any trade or business. Amend tax return 2011 Example. Amend tax return 2011 In 2013, Beech Partnership placed in service section 179 property with a total cost of $2,025,000. Amend tax return 2011 The partnership must reduce its dollar limit by $25,000 ($2,025,000 − $2,000,000). Amend tax return 2011 Its maximum section 179 deduction is $475,000 ($500,000 − $25,000), and it elects to expense that amount. Amend tax return 2011 The partnership's taxable income from the active conduct of all its trades or businesses for the year was $600,000, so it can deduct the full $475,000. Amend tax return 2011 It allocates $40,000 of its section 179 deduction and $50,000 of its taxable income to Dean, one of its partners. Amend tax return 2011 In addition to being a partner in Beech Partnership, Dean is also a partner in the Cedar Partnership, which allocated to him a $30,000 section 179 deduction and $35,000 of its taxable income from the active conduct of its business. Amend tax return 2011 He also conducts a business as a sole proprietor and, in 2013, placed in service in that business qualifying section 179 property costing $55,000. Amend tax return 2011 He had a net loss of $5,000 from that business for the year. Amend tax return 2011 Dean does not have to include section 179 partnership costs to figure any reduction in his dollar limit, so his total section 179 costs for the year are not more than $2,000,000 and his dollar limit is not reduced. Amend tax return 2011 His maximum section 179 deduction is $500,000. Amend tax return 2011 He elects to expense all of the $70,000 in section 179 deductions allocated from the partnerships ($40,000 from Beech Partnership plus $30,000 from Cedar Partnership), plus $55,000 of his sole proprietorship's section 179 costs, and notes that information in his books and records. Amend tax return 2011 However, his deduction is limited to his business taxable income of $80,000 ($50,000 from Beech Partnership, plus $35,000 from Cedar Partnership minus $5,000 loss from his sole proprietorship). Amend tax return 2011 He carries over $45,000 ($125,000 − $80,000) of the elected section 179 costs to 2014. Amend tax return 2011 He allocates the carryover amount to the cost of section 179 property placed in service in his sole proprietorship, and notes that allocation in his books and records. Amend tax return 2011 Different tax years. Amend tax return 2011   For purposes of the business income limit, if the partner's tax year and that of the partnership differ, the partner's share of the partnership's taxable income for a tax year is generally the partner's distributive share for the partnership tax year that ends with or within the partner's tax year. Amend tax return 2011 Example. Amend tax return 2011 John and James Oak are equal partners in Oak Partnership. Amend tax return 2011 Oak Partnership uses a tax year ending January 31. Amend tax return 2011 John and James both use a tax year ending December 31. Amend tax return 2011 For its tax year ending January 31, 2013, Oak Partnership's taxable income from the active conduct of its business is $80,000, of which $70,000 was earned during 2012. Amend tax return 2011 John and James each include $40,000 (each partner's entire share) of partnership taxable income in computing their business income limit for the 2013 tax year. Amend tax return 2011 Adjustment of partner's basis in partnership. Amend tax return 2011   A partner must reduce the basis of his or her partnership interest by the total amount of section 179 expenses allocated from the partnership even if the partner cannot currently deduct the total amount. Amend tax return 2011 If the partner disposes of his or her partnership interest, the partner's basis for determining gain or loss is increased by any outstanding carryover of disallowed section 179 expenses allocated from the partnership. Amend tax return 2011 Adjustment of partnership's basis in section 179 property. Amend tax return 2011   The basis of a partnership's section 179 property must be reduced by the section 179 deduction elected by the partnership. Amend tax return 2011 This reduction of basis must be made even if a partner cannot deduct all or part of the section 179 deduction allocated to that partner by the partnership because of the limits. Amend tax return 2011 S Corporations Generally, the rules that apply to a partnership and its partners also apply to an S corporation and its shareholders. Amend tax return 2011 The deduction limits apply to an S corporation and to each shareholder. Amend tax return 2011 The S corporation allocates its deduction to the shareholders who then take their section 179 deduction subject to the limits. Amend tax return 2011 Figuring taxable income for an S corporation. Amend tax return 2011   To figure taxable income (or loss) from the active conduct by an S corporation of any trade or business, you total the net income and losses from all trades or businesses actively conducted by the S corporation during the year. Amend tax return 2011   To figure the net income (or loss) from a trade or business actively conducted by an S corporation, you take into account the items from that trade or business that are passed through to the shareholders and used in determining each shareholder's tax liability. Amend tax return 2011 However, you do not take into account any credits, tax-exempt income, the section 179 deduction, and deductions for compensation paid to shareholder-employees. Amend tax return 2011 For purposes of determining the total amount of S corporation items, treat deductions and losses as negative income. Amend tax return 2011 In figuring the taxable income of an S corporation, disregard any limits on the amount of an S corporation item that must be taken into account when figuring a shareholder's taxable income. Amend tax return 2011 Other Corporations A corporation's taxable income from its active conduct of any trade or business is its taxable income figured with the following changes. Amend tax return 2011 It is figured before deducting the section 179 deduction, any net operating loss deduction, and special deductions (as reported on the corporation's income tax return). Amend tax return 2011 It is adjusted for items of income or deduction included in the amount figured in 1, above, not derived from a trade or business actively conducted by the corporation during the tax year. Amend tax return 2011 How Do You Elect the Deduction? You elect to take the section 179 deduction by completing Part I of Form 4562. Amend tax return 2011 If you elect the deduction for listed property (described in chapter 5), complete Part V of Form 4562 before completing Part I. Amend tax return 2011 For property placed in service in 2013, file Form 4562 with either of the following. Amend tax return 2011 Your original 2013 tax return, whether or not you file it timely. Amend tax return 2011 An amended return for 2013 filed within the time prescribed by law. Amend tax return 2011 An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. Amend tax return 2011 The amended return must also include any resulting adjustments to taxable income. Amend tax return 2011 You must keep records that show the specific identification of each piece of qualifying section 179 property. Amend tax return 2011 These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. Amend tax return 2011 Election for certain qualified section 179 real property. Amend tax return 2011   You can elect to expense certain qualified real property that you placed in service as section 179 property for tax years beginning in 2013. Amend tax return 2011 If you elect to treat this property as section 179 property, you must elect the application of the special rules for qualified real property described in section 179(f) of the Internal Revenue Code. Amend tax return 2011   To make the election, attach a statement indicating you are “electing the application of section 179(f) of the Internal Revenue Code” with either of the following. Amend tax return 2011 Your original 2013 tax return, whether or not you file it timely. Amend tax return 2011 An amended return for 2013 filed within the time prescribed by law. Amend tax return 2011 The amended return must also include any adjustments to taxable income. Amend tax return 2011   The statement should indicate your election to expense certain qualified real property under section 179(f) on your return. Amend tax return 2011 It must specify one or more of the three types of qualified property (described under Qualified real property ) to which the election applies, the cost of each such type, and the portion of the cost of each such property to be taken into account. Amend tax return 2011 Also, report this on line 6 of Form 4562. Amend tax return 2011    The maximum section 179 expense deduction that can be taken for qualified section 179 real property is limited to $250,000. Amend tax return 2011 Revoking an election. Amend tax return 2011   An election (or any specification made in the election) to take a section 179 deduction for 2013 can be revoked without IRS approval by filing an amended return. Amend tax return 2011 The amended return must be filed within the time prescribed by law. Amend tax return 2011 The amended return must also include any resulting adjustments to taxable income. Amend tax return 2011 Once made, the revocation is irrevocable. Amend tax return 2011 When Must You Recapture the Deduction? You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. Amend tax return 2011 In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797. Amend tax return 2011 You also increase the basis of the property by the recapture amount. Amend tax return 2011 Recovery periods for property are discussed under Which Recovery Period Applies in chapter 4 . Amend tax return 2011 If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. Amend tax return 2011 Instead, use the rules for recapturing depreciation explained in chapter 3 of Publication 544 under Section 1245 Property. Amend tax return 2011 For qualified real property (described earlier), see Notice 2013-59 for determining the portion of the gain that is attributable to section 1245 property upon the sale or other disposition of qualified real property. Amend tax return 2011 If the property is listed property (described in chapter 5 ), do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. Amend tax return 2011 Instead, use the rules for recapturing excess depreciation in chapter 5 under What Is the Business-Use Requirement. Amend tax return 2011 Figuring the recapture amount. Amend tax return 2011   To figure the amount to recapture, take the following steps. Amend tax return 2011 Figure the depreciation that would have been allowable on the section 179 deduction you claimed. Amend tax return 2011 Begin with the year you placed the property in service and include the year of recapture. Amend tax return 2011 Subtract the depreciation figured in (1) from the section 179 deduction you claimed. Amend tax return 2011 The result is the amount you must recapture. Amend tax return 2011 Example. Amend tax return 2011 In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. Amend tax return 2011 The property is not listed property. Amend tax return 2011 The property is 3-year property. Amend tax return 2011 He elected a $5,000 section 179 deduction for the property and also elected not to claim a special depreciation allowance. Amend tax return 2011 He used the property only for business in 2011 and 2012. Amend tax return 2011 In 2013, he used the property 40% for business and 60% for personal use. Amend tax return 2011 He figures his recapture amount as follows. Amend tax return 2011 Section 179 deduction claimed (2011) $5,000. Amend tax return 2011 00 Minus: Allowable depreciation using Table A-1 (instead of section 179 deduction):   2011 $1,666. Amend tax return 2011 50   2012 2,222. Amend tax return 2011 50   2013 ($740. Amend tax return 2011 50 × 40% (business)) 296. Amend tax return 2011 20 4,185. Amend tax return 2011 20 2013 — Recapture amount $ 814. Amend tax return 2011 80 Paul must include $814. Amend tax return 2011 80 in income for 2013. Amend tax return 2011 If any qualified zone property placed in service during the year ceases to be used in an empowerment zone by an enterprise zone business in a later year, the benefit of the increased section 179 deduction must be reported as other income on your return. Amend tax return 2011 Prev  Up  Next   Home   More Online Publications