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

Amended Michigan Tax Return

Tax Tips For 20122011 Federal Tax Form 1040ezFile Amended Tax Return 2010 OnlineFederal 1040x InstructionsForm 1040 2012Military Tax Free Zones1040x FormsH Rblock ComFree State Filing OnlyTurbo Tax 1040x1040ez Tax Return1040 Es FormFree Tax Software OnlineMypay GovHr Block 2011State Franchise Tax FormsIrs Tax Forms 1040ezOnline 1040ezHow Do You Fill Out A 1040x Form1040ez For 20121040ez FileHow To Fill Out A 1040ez FormIrs Gov Freefile ExtensionTaxact FreePrint 1040ezTurbotax Login IntuitState Income TaxIrs 2011 Tax ReturnIrs Gov Freefile State Taxes2014 1040ez Tax FormWww StatetaxformsFiling Taxes For 2011File Free State And Federal Taxes OnlineHow To File TaxesCan I File Previous Years Taxes OnlineInstructions For 1040ezTaxFree Tax Filing Online 2011H & R Block Tax OnlineFreestatetaxreturns

Amended Michigan Tax Return

Amended michigan tax return Publication 501 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Amended michigan tax return Tax questions. Amended michigan tax return Useful Items - You may want to see: What's New Who must file. Amended michigan tax return   In some cases, the amount of income you can receive before you must file a tax return has increased. Amended michigan tax return Table 1 shows the filing requirements for most taxpayers. Amended michigan tax return Exemption amount. Amended michigan tax return  The amount you can deduct for each exemption has increased. Amended michigan tax return It was $3,800 for 2012. Amended michigan tax return It is $3,900 for 2013. Amended michigan tax return Exemption phaseout. Amended michigan tax return  You lose at least part of the benefit of your exemptions if your adjusted gross income is above a certain amount. Amended michigan tax return For 2013, the phaseout begins at $150,000 for married individuals filing separate returns; $250,000 for single individuals; $275,000 for heads of household; and $300,000 for married individuals filing joint returns or qualifying widow(er)s. Amended michigan tax return See Phaseout of Exemptions , later. Amended michigan tax return Standard deduction increased. Amended michigan tax return   The standard deduction for some taxpayers who do not itemize their deductions on Schedule A of Form 1040 is higher for 2013 than it was for 2012. Amended michigan tax return The amount depends on your filing status. Amended michigan tax return You can use the 2013 Standard Deduction Tables near the end of this publication to figure your standard deduction. Amended michigan tax return Same-sex marriages. Amended michigan tax return . Amended michigan tax return  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Amended michigan tax return See Same-sex marriage under Marital Status, later. Amended michigan tax return If you meet certain requirements, you may be able to file amended returns to change your filing status for some earlier years. Amended michigan tax return For details on filing amended returns, see Joint Return After Separate Returns . Amended michigan tax return Reminders Future developments. Amended michigan tax return  Information about any future developments affecting Publication 501 (such as legislation enacted after we release it) will be posted at www. Amended michigan tax return irs. Amended michigan tax return gov/pub501. Amended michigan tax return Taxpayer identification number for aliens. Amended michigan tax return   If you are a nonresident or resident alien and you do not have and are not eligible to get a social security number (SSN), you must apply for an individual taxpayer identification number (ITIN). Amended michigan tax return Your spouse also may need an ITIN if he or she does not have and is not eligible to get an SSN. Amended michigan tax return See Form W-7, Application for IRS Individual Taxpayer Identification Number. Amended michigan tax return Also, see Social Security Numbers for Dependents , later. Amended michigan tax return Photographs of missing children. Amended michigan tax return   The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Amended michigan tax return Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Amended michigan tax return You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Amended michigan tax return Introduction This publication discusses some tax rules that affect every person who may have to file a federal income tax return. Amended michigan tax return It answers some basic questions: who must file; who should file; what filing status to use; how many exemptions to claim; and the amount of the standard deduction. Amended michigan tax return Who Must File explains who must file an income tax return. Amended michigan tax return If you have little or no gross income, reading this section will help you decide if you have to file a return. Amended michigan tax return Who Should File helps you decide if you should file a return, even if you are not required to do so. Amended michigan tax return Filing Status helps you determine which filing status to use. Amended michigan tax return Filing status is important in determining whether you must file a return and whether you may claim certain deductions and credits. Amended michigan tax return It also helps determine your standard deduction and tax rate. Amended michigan tax return Exemptions, which reduce your taxable income, are discussed in Exemptions . Amended michigan tax return Exemptions for Dependents explains the difference between a qualifying child and a qualifying relative. Amended michigan tax return Other topics include the social security number requirement for dependents, the rules for multiple support agreements, and the rules for divorced or separated parents. Amended michigan tax return Phaseout of Exemptions explains how to determine whether you must reduce the dollar amount of exemptions you claim and, if so, the amount of the reduction. Amended michigan tax return Standard Deduction gives the rules and dollar amounts for the standard deduction — a benefit for taxpayers who do not itemize their deductions. Amended michigan tax return This section also discusses the standard deduction for taxpayers who are blind or age 65 or older, as well as special rules that limit the standard deduction available to dependents. Amended michigan tax return In addition, this section helps you decide whether you would be better off taking the standard deduction or itemizing your deductions. Amended michigan tax return How To Get Tax Help explains how to get tax help from the IRS. Amended michigan tax return This publication is for U. Amended michigan tax return S. Amended michigan tax return citizens and resident aliens only. Amended michigan tax return If you are a resident alien for the entire year, you must follow the same tax rules that apply to U. Amended michigan tax return S. Amended michigan tax return citizens. Amended michigan tax return The rules to determine if you are a resident or nonresident alien are discussed in chapter 1 of Publication 519, U. Amended michigan tax return S. Amended michigan tax return Tax Guide for Aliens. Amended michigan tax return Nonresident aliens. Amended michigan tax return    If you were a nonresident alien at any time during the year, the rules and tax forms that apply to you may be different from those that apply to U. Amended michigan tax return S. Amended michigan tax return citizens. Amended michigan tax return See Publication 519. Amended michigan tax return Comments and suggestions. Amended michigan tax return    We welcome your comments about this publication and your suggestions for future editions. Amended michigan tax return   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Amended michigan tax return NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Amended michigan tax return Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Amended michigan tax return   You can send your comments from www. Amended michigan tax return irs. Amended michigan tax return gov/formspubs. Amended michigan tax return Click on “More Information” and then on “Comment on Tax Forms and Publications. Amended michigan tax return ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Amended michigan tax return Ordering forms and publications. Amended michigan tax return    Visit www. Amended michigan tax return irs. Amended michigan tax return gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Amended michigan tax return Internal Revenue Service 1201 N. Amended michigan tax return Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Amended michigan tax return    If you have a tax question, check the information available on IRS. Amended michigan tax return gov or call 1-800-829-1040. Amended michigan tax return We cannot answer tax questions sent to either of the above addresses. Amended michigan tax return Useful Items - You may want to see: Publication 559 Survivors, Executors, and Administrators 929 Tax Rules for Children and Dependents Form (and Instructions) 1040X Amended U. Amended michigan tax return S. Amended michigan tax return Individual Income Tax Return 2848 Power of Attorney and Declaration of Representative 8332 Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent 8814 Parents' Election To Report Child's Interest and Dividends Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Letter 2789C Frequently Asked Questions (FAQs)

What is the letter telling me?

The letter is a response to your oral or written request for information on the annual reminder notice, required by law, informing you that you still have a balance due with us that you received.  It also explains that penalty and interest continues to accrue until the balance is full paid.

What do I have to do?

Pay the balance due in the letter as soon as possible.

How much time do I have?

The letter provides you the full pay amount to a specified date.

Who should I contact?

If you have any questions about this letter, call us at the number printed in the letter. The person who answers the phone will assist you.

What if I don't agree or have already taken corrective action?

If you do not agree with this letter, call us immediately at the number included. We will do our best to help you.  If you have called us about this matter before, but we did not correct the problem, you may want to contact the Office of the Taxpayer Advocate.

Page Last Reviewed or Updated: 30-Jan-2014

The Amended Michigan Tax Return

Amended michigan tax return 9. Amended michigan tax return   Dispositions of Property Used in Farming Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. Amended michigan tax return Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sale Other Dispositions Other GainsExceptions. Amended michigan tax return Amount to report as ordinary income. Amended michigan tax return Applicable percentage. Amended michigan tax return Amount to report as ordinary income. Amended michigan tax return Applicable percentage. Amended michigan tax return Introduction When you dispose of property used in your farm business, your taxable gain or loss is usually treated as ordinary income (which is taxed at the same rates as wages and interest income) or capital gain (which is generally taxed at lower rates) under the rules for section 1231 transactions. Amended michigan tax return When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. Amended michigan tax return Any gain remaining after applying the depreciation recapture rules is a section 1231 gain, which may be taxed as a capital gain. Amended michigan tax return Gains and losses from property used in farming are reported on Form 4797, Sales of Business Property. Amended michigan tax return Table 9-1 contains examples of items reported on Form 4797 and refers to the part of that form on which they first should be reported. Amended michigan tax return Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Other gains Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets Form (and Instructions) 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Amended michigan tax return Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (explained below). Amended michigan tax return Their treatment as ordinary or capital gains depends on whether you have a net gain or a net loss from all of your section 1231 transactions in the tax year. Amended michigan tax return Table 9-1. Amended michigan tax return Where to First Report Certain Items on Form 4797 Type of property Held 1 year  or less Held more than  1 year 1 Depreciable trade or business property:       a Sold or exchanged at a gain Part II Part III (1245, 1250)   b Sold or exchanged at a loss Part II Part I 2 Farmland held less than 10 years for which soil, water, or land clearing expenses were deducted:       a Sold at a gain Part II Part III (1252)   b Sold at a loss Part II Part I 3 All other farmland Part II Part I 4 Disposition of cost-sharing payment property described in section 126 Part II Part III (1255) 5 Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 24 mos. Amended michigan tax return Held 24 mos. Amended michigan tax return  or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised cattle and horses sold at a gain Part II Part I 6 Livestock other than cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes: Held less  than 12 mos. Amended michigan tax return Held 12 mos. Amended michigan tax return   or more   a Sold at a gain Part II Part III (1245)   b Sold at a loss Part II Part I   c Raised livestock sold at a gain Part II Part I If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). Amended michigan tax return Do not take that gain into account as section 1231 gain. Amended michigan tax return Section 1231 transactions. Amended michigan tax return   Gain or loss on the following transactions is subject to section 1231 treatment. Amended michigan tax return Sale or exchange of cattle and horses. Amended michigan tax return The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 24 months or longer. Amended michigan tax return Sale or exchange of other livestock. Amended michigan tax return This livestock must be held for draft, breeding, dairy, or sporting purposes and held for 12 months or longer. Amended michigan tax return Other livestock includes hogs, mules, sheep, goats, donkeys, and other fur-bearing animals. Amended michigan tax return Other livestock does not include poultry. Amended michigan tax return Sale or exchange of depreciable personal property. Amended michigan tax return This property must be used in your business and held longer than 1 year. Amended michigan tax return Generally, property held for the production of rents or royalties is considered to be used in a trade or business. Amended michigan tax return Examples of depreciable personal property include farm machinery and trucks. Amended michigan tax return It also includes amortizable section 197 intangibles. Amended michigan tax return Sale or exchange of real estate. Amended michigan tax return This property must be used in your business and held longer than 1 year. Amended michigan tax return Examples are your farm or ranch (including barns and sheds). Amended michigan tax return Sale or exchange of unharvested crops. Amended michigan tax return The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person, and the land must have been held longer than 1 year. Amended michigan tax return You cannot keep any right or option to reacquire the land directly or indirectly (other than a right customarily incident to a mortgage or other security transaction). Amended michigan tax return Growing crops sold with a leasehold on the land, even if sold to the same person in a single transaction, are not included. Amended michigan tax return Distributive share of partnership gains and losses. Amended michigan tax return Your distributive share must be from the sale or exchange of property listed above and held longer than 1 year (or for the required period for certain livestock). Amended michigan tax return Cutting or disposal of timber. Amended michigan tax return Special rules apply if you owned the timber longer than 1 year and elect to treat timber cutting as a sale or exchange, or you enter into a cutting contract, as described in chapter 8 under Timber . Amended michigan tax return Condemnation. Amended michigan tax return The condemned property (defined in chapter 11) must have been held longer than 1 year. Amended michigan tax return It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. Amended michigan tax return It cannot be property held for personal use. Amended michigan tax return Casualty or theft. Amended michigan tax return The casualty or theft must have affected business property, property held for the production of rents or royalties, or investment property (such as notes and bonds). Amended michigan tax return You must have held the property longer than 1 year. Amended michigan tax return However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. Amended michigan tax return Section 1231 does not apply to personal casualty gains and losses. Amended michigan tax return See chapter 11 for information on how to treat those gains and losses. Amended michigan tax return If the property is not held for the required holding period, the transaction is not subject to section 1231 treatment, and any gain or loss is ordinary income reported in Part II of Form 4797. Amended michigan tax return See Table 9-1. Amended michigan tax return Property for sale to customers. Amended michigan tax return   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. Amended michigan tax return If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. Amended michigan tax return Treatment as ordinary or capital. Amended michigan tax return   To determine the treatment of section 1231 gains and losses, combine all of your section 1231 gains and losses for the year. Amended michigan tax return If you have a net section 1231 loss, it is an ordinary loss. Amended michigan tax return If you have a net section 1231 gain, it is ordinary income up to your nonrecaptured section 1231 losses from previous years, explained next. Amended michigan tax return The rest, if any, is long-term capital gain. Amended michigan tax return Nonrecaptured section 1231 losses. Amended michigan tax return   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain by treating the gain as ordinary income. Amended michigan tax return These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. Amended michigan tax return Example. Amended michigan tax return In 2013, Ben has a $2,000 net section 1231 gain. Amended michigan tax return To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. Amended michigan tax return From 2008 through 2012 he had the following section 1231 gains and losses. Amended michigan tax return Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800   Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. Amended michigan tax return 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 His remaining net section 1231 loss from 2010 is completely recaptured in 2013. Amended michigan tax return Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if it is otherwise nontaxable) as ordinary income. Amended michigan tax return To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. Amended michigan tax return For more information, see chapter 3 of Publication 544. Amended michigan tax return Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable. Amended michigan tax return Any recognized gain that is more than the part that is ordinary income is a section 1231 gain. Amended michigan tax return See Treatment as ordinary or capital under Section 1231 Gains and Losses , earlier. Amended michigan tax return Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. Amended michigan tax return Personal property (either tangible or intangible). Amended michigan tax return Other tangible property (except buildings and their structural components) used as any of the following. Amended michigan tax return See Buildings and structural components below. Amended michigan tax return An integral part of manufacturing, production, or extraction, or of furnishing certain services. Amended michigan tax return A research facility in any of the activities in (a). Amended michigan tax return A facility in any of the activities in (a) above, for the bulk storage of fungible commodities (discussed later). Amended michigan tax return That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. Amended michigan tax return Amortization of certified pollution control facilities. Amended michigan tax return The section 179 expense deduction. Amended michigan tax return Deduction for clean-fuel vehicles and certain refueling property. Amended michigan tax return Expenditures to remove architectural and transportation barriers to the handicapped and elderly. Amended michigan tax return Certain reforestation expenditures (as described under Reforestation Costs in chapter 7. Amended michigan tax return Single purpose agricultural (livestock) or horticultural structures. Amended michigan tax return Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. Amended michigan tax return Buildings and structural components. Amended michigan tax return   Section 1245 property does not include buildings and structural components. Amended michigan tax return The term building includes a house, barn, warehouse, or garage. Amended michigan tax return The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. Amended michigan tax return   Do not treat a structure that is essentially machinery or equipment as a building or structural component. Amended michigan tax return Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. Amended michigan tax return   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. Amended michigan tax return Structures such as oil and gas storage tanks, grain storage bins, and silos are not treated as buildings, but as section 1245 property. Amended michigan tax return Facility for bulk storage of fungible commodities. Amended michigan tax return   This is a facility used mainly for the bulk storage of fungible commodities. Amended michigan tax return Bulk storage means storage of a commodity in a large mass before it is used. Amended michigan tax return For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. Amended michigan tax return To be fungible, a commodity must be such that one part may be used in place of another. Amended michigan tax return Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. Amended michigan tax return The depreciation (which includes any section 179 deduction claimed) and amortization allowed or allowable on the property. Amended michigan tax return The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). Amended michigan tax return For any other disposition of section 1245 property, ordinary income is the lesser of (1) above or the amount by which its fair market value (FMV) is more than its adjusted basis. Amended michigan tax return For details, see chapter 3 of Publication 544. Amended michigan tax return Use Part III of Form 4797 to figure the ordinary income part of the gain. Amended michigan tax return Depreciation claimed on other property or claimed by other taxpayers. Amended michigan tax return   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. Amended michigan tax return Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. Amended michigan tax return For details on exchanges of property that are not taxable, see Like-Kind Exchanges in chapter 8. Amended michigan tax return Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift and part of the transfer is a sale or exchange). Amended michigan tax return Example. Amended michigan tax return Jeff Free paid $120,000 for a tractor in 2012. Amended michigan tax return On February 23, 2013, he traded it for a chopper and paid an additional $30,000. Amended michigan tax return To figure his depreciation deduction on the chopper for the current year, Jeff continues to use the basis of the tractor as he would have before the trade. Amended michigan tax return Jeff can also depreciate the additional $30,000 for the chopper. Amended michigan tax return Depreciation and amortization. Amended michigan tax return   Depreciation and amortization deductions that must be recaptured as ordinary income include (but are not limited to) the following items. Amended michigan tax return See Depreciation Recapture in chapter 3 of Publication 544 for more details. Amended michigan tax return Ordinary depreciation deductions. Amended michigan tax return Section 179 deduction (see chapter 7). Amended michigan tax return Any special depreciation allowance. Amended michigan tax return Amortization deductions for all the following costs. Amended michigan tax return Acquiring a lease. Amended michigan tax return Lessee improvements. Amended michigan tax return Pollution control facilities. Amended michigan tax return Reforestation expenses. Amended michigan tax return Section 197 intangibles. Amended michigan tax return Qualified disaster expenses. Amended michigan tax return Franchises, trademarks, and trade names acquired before August 11, 1993. Amended michigan tax return Example. Amended michigan tax return You file your returns on a calendar year basis. Amended michigan tax return In February 2011, you bought and placed in service for 100% use in your farming business a light-duty truck (5-year property) that cost $10,000. Amended michigan tax return You used the half-year convention and your MACRS deductions for the truck were $1,500 in 2011 and $2,550 in 2012. Amended michigan tax return You did not claim the section 179 expense deduction for the truck. Amended michigan tax return You sold it in May 2013 for $7,000. Amended michigan tax return The MACRS deduction in 2013, the year of sale, is $893 (½ of $1,785). Amended michigan tax return Figure the gain treated as ordinary income as follows. Amended michigan tax return 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $1,500 + $2,550 + $893) 4,943   4) Adjusted basis (subtract line 3 from line 2) $5,057 5) Gain realized (subtract line 4 from line 1) 1,943 6) Gain treated as ordinary income (lesser of line 3 or line 5) $1,943 Depreciation allowed or allowable. Amended michigan tax return   You generally use the greater of the depreciation allowed or allowable when figuring the part of gain to report as ordinary income. Amended michigan tax return If, in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. Amended michigan tax return If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. Amended michigan tax return This treatment applies only when figuring what part of the gain is treated as ordinary income under the rules for section 1245 depreciation recapture. Amended michigan tax return Disposition of plants and animals. Amended michigan tax return   If you elect not to use the uniform capitalization rules (see chapter 6), you must treat any plant you produce as section 1245 property. Amended michigan tax return If you have a gain on the property's disposition, you must recapture the pre-productive expenses you would have capitalized if you had not made the election by treating the gain, up to the amount of these expenses, as ordinary income. Amended michigan tax return For section 1231 transactions, show these expenses as depreciation on Form 4797, Part III, line 22. Amended michigan tax return For plant sales that are reported on Schedule F (1040), Profit or Loss From Farming, this recapture rule does not change the reporting of income because the gain is already ordinary income. Amended michigan tax return You can use the farm-price method or the unit-livestock-price method discussed in  chapter 2 to figure these expenses. Amended michigan tax return Example. Amended michigan tax return Janet Maple sold her apple orchard in 2013 for $80,000. Amended michigan tax return Her adjusted basis at the time of sale was $60,000. Amended michigan tax return She bought the orchard in 2006, but the trees did not produce a crop until 2009. Amended michigan tax return Her pre-productive expenses were $6,000. Amended michigan tax return She elected not to use the uniform capitalization rules. Amended michigan tax return Janet must treat $6,000 of the gain as ordinary income. Amended michigan tax return Section 1250 Property Section 1250 property includes all real property subject to an allowance for depreciation that is not and never has been section 1245 property. Amended michigan tax return It includes buildings and structural components that are not section 1245 property (discussed earlier). Amended michigan tax return It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. Amended michigan tax return A fee simple interest in land is not section 1250 property because, like land, it is not depreciable. Amended michigan tax return Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable. Amended michigan tax return To determine the additional depreciation on section 1250 property, see Depreciation Recapture in chapter 3 of Publication 544. Amended michigan tax return You will not have additional depreciation if any of the following apply to the property disposed of. Amended michigan tax return You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method and you have held the property longer than 1 year. Amended michigan tax return You chose the alternate ACRS (straight line) method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. Amended michigan tax return The property was nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made) and you held it longer than 1 year. Amended michigan tax return These properties are depreciated using the straight line method. Amended michigan tax return Installment Sale If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. Amended michigan tax return This applies even if no payments are received in that year. Amended michigan tax return If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. Amended michigan tax return For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. Amended michigan tax return If you dispose of more than one asset in a single transaction, you must separately figure the gain on each asset so that it may be properly reported. Amended michigan tax return To do this, allocate the selling price and the payments you receive in the year of sale to each asset. Amended michigan tax return Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. Amended michigan tax return For more information on installment sales, see chapter 10. Amended michigan tax return Other Dispositions Chapter 3 of Publication 544 discusses the tax treatment of the following transfers of depreciable property. Amended michigan tax return By gift. Amended michigan tax return At death. Amended michigan tax return In like-kind exchanges. Amended michigan tax return In involuntary conversions. Amended michigan tax return Publication 544 also explains how to handle a single transaction involving multiple properties. Amended michigan tax return Other Gains This section discusses gain on the disposition of farmland for which you were allowed either of the following. Amended michigan tax return Deductions for soil and water conservation expenditures (section 1252 property). Amended michigan tax return Exclusions from income for certain cost sharing payments (section 1255 property). Amended michigan tax return Section 1252 property. Amended michigan tax return   If you disposed of farmland you held more than 1 year and less than 10 years at a gain and you were allowed deductions for soil and water conservation expenses for the land, as discussed in chapter 5, you must treat part of the gain as ordinary income and treat the balance as section 1231 gain. Amended michigan tax return Exceptions. Amended michigan tax return   Do not treat gain on the following transactions as gain on section 1252 property. Amended michigan tax return Disposition of farmland by gift. Amended michigan tax return Transfer of farm property at death (except for income in respect of a decedent). Amended michigan tax return For more information, see Regulations section 1. Amended michigan tax return 1252-2. Amended michigan tax return Amount to report as ordinary income. Amended michigan tax return   You report as ordinary income the lesser of the following amounts. Amended michigan tax return Your gain (determined by subtracting the adjusted basis from the amount realized from a sale, exchange, or involuntary conversion, or the FMV for all other dispositions). Amended michigan tax return The total deductions allowed for soil and water conservation expenses multiplied by the applicable percentage, discussed next. Amended michigan tax return Applicable percentage. Amended michigan tax return   The applicable percentage is based on the length of time you held the land. Amended michigan tax return If you dispose of your farmland within 5 years after the date you acquired it, the percentage is 100%. Amended michigan tax return If you dispose of the land within the 6th through 9th year after you acquired it, the applicable percentage is reduced by 20% a year for each year or part of a year you hold the land after the 5th year. Amended michigan tax return If you dispose of the land 10 or more years after you acquired it, the percentage is 0%, and the entire gain is a section 1231 gain. Amended michigan tax return Example. Amended michigan tax return You acquired farmland on January 19, 2005. Amended michigan tax return On October 3, 2013, you sold the land at a $30,000 gain. Amended michigan tax return Between January 1 and October 3, 2013, you incur soil and water conservation expenditures of $15,000 for the land that are fully deductible in 2013. Amended michigan tax return The applicable percentage is 40% since you sold the land within the 8th year after you acquired it. Amended michigan tax return You treat $6,000 (40% of $15,000) of the $30,000 gain as ordinary income and the $24,000 balance as a section 1231 gain. Amended michigan tax return Section 1255 property. Amended michigan tax return   If you receive certain cost-sharing payments on property and you exclude those payments from income (as discussed in chapter 3), you may have to treat part of any gain as ordinary income and treat the balance as a section 1231 gain. Amended michigan tax return If you chose not to exclude these payments, you will not have to recognize ordinary income under this provision. Amended michigan tax return Amount to report as ordinary income. Amended michigan tax return   You report as ordinary income the lesser of the following amounts. Amended michigan tax return The applicable percentage of the total excluded cost-sharing payments. Amended michigan tax return The gain on the disposition of the property. Amended michigan tax return You do not report ordinary income under this rule to the extent the gain is recognized as ordinary income under sections 1231 through 1254, 1256, and 1257. Amended michigan tax return However, if applicable, gain reported under this rule must be reported regardless of any contrary provisions (including nonrecognition provisions) under any other section. Amended michigan tax return Applicable percentage. Amended michigan tax return   The applicable percentage of the excluded cost-sharing payments to be reported as ordinary income is based on the length of time you hold the property after receiving the payments. Amended michigan tax return If the property is held less than 10 years after you receive the payments, the percentage is 100%. Amended michigan tax return After 10 years, the percentage is reduced by 10% a year, or part of a year, until the rate is 0%. Amended michigan tax return Form 4797, Part III. Amended michigan tax return   Use Form 4797, Part III, to figure the ordinary income part of a gain from the sale, exchange, or involuntary conversion of section 1252 property and section 1255 property. Amended michigan tax return Prev  Up  Next   Home   More Online Publications