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Can I Efile A 2011 Tax Return

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Can I Efile A 2011 Tax Return

Can i efile a 2011 tax return 3. Can i efile a 2011 tax return   Reporting Rental Income, Expenses, and Losses Table of Contents Which Forms To UseSchedule E (Form 1040) Schedule C (Form 1040), Profit or Loss From Business Qualified Joint Venture Limits on Rental LossesAt-Risk Rules Passive Activity Limits Casualties and Thefts Example Figuring the net income or loss for a residential rental activity may involve more than just listing the income and deductions on Schedule E (Form 1040). Can i efile a 2011 tax return There are activities which do not qualify to use Schedule E, such as when the activity is not engaged in to make a profit or when you provide substantial services in conjunction with the property. Can i efile a 2011 tax return There are also the limitations which may need to be applied if you have a net loss on Schedule E. Can i efile a 2011 tax return There are two: (1) the limitation based on the amount of investment you have at risk in your rental activity, and (2) the special limits imposed on passive activities. Can i efile a 2011 tax return You may also have a gain or loss related to your rental property from a casualty or theft. Can i efile a 2011 tax return This is considered separately from the income and expense information you report on Schedule E. Can i efile a 2011 tax return Which Forms To Use The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Can i efile a 2011 tax return However, do not use that schedule to report a not-for-profit activity. Can i efile a 2011 tax return See Not Rented for Profit , in chapter 4. Can i efile a 2011 tax return There are also other rental situations in which forms other than Schedule E would be used. Can i efile a 2011 tax return Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Can i efile a 2011 tax return , you normally report your rental income and expenses on Schedule E, Part I. Can i efile a 2011 tax return List your total income, expenses, and depreciation for each rental property. Can i efile a 2011 tax return Be sure to enter the number of fair rental and personal use days on line 2. Can i efile a 2011 tax return If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Can i efile a 2011 tax return Complete lines 1 and 2 for each property. Can i efile a 2011 tax return However, fill in lines 23a through 26 on only one Schedule E. Can i efile a 2011 tax return On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Can i efile a 2011 tax return To find out if you need to attach Form 4562, see Form 4562 , later. Can i efile a 2011 tax return If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Can i efile a 2011 tax return Form 6198, At-Risk Limitations. Can i efile a 2011 tax return See At-Risk Rules , later. Can i efile a 2011 tax return Also see Publication 925. Can i efile a 2011 tax return Form 8582, Passive Activity Loss Limitations. Can i efile a 2011 tax return See Passive Activity Limits , later. Can i efile a 2011 tax return Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Can i efile a 2011 tax return If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Can i efile a 2011 tax return Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Can i efile a 2011 tax return Form 4562. Can i efile a 2011 tax return   You must complete and attach Form 4562 for rental activities only if you are claiming: Depreciation, including the special depreciation allowance, on property placed in service during 2013; Depreciation on listed property (such as a car), regardless of when it was placed in service; or Any other car expenses, including the standard mileage rate or lease expenses. Can i efile a 2011 tax return Otherwise, figure your depreciation on your own worksheet. Can i efile a 2011 tax return You do not have to attach these computations to your return, but you should keep them in your records for future reference. Can i efile a 2011 tax return   See Publication 946 for information on preparing Form 4562. Can i efile a 2011 tax return Schedule C (Form 1040), Profit or Loss From Business Generally, Schedule C is used when you provide substantial services in conjunction with the property or the rental is part of a trade or business as a real estate dealer. Can i efile a 2011 tax return Providing substantial services. Can i efile a 2011 tax return   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Can i efile a 2011 tax return Use Form 1065, U. Can i efile a 2011 tax return S. Can i efile a 2011 tax return Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Can i efile a 2011 tax return Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Can i efile a 2011 tax return For information, see Publication 334, Tax Guide for Small Business. Can i efile a 2011 tax return Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Can i efile a 2011 tax return For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5. Can i efile a 2011 tax return Qualified Joint Venture If you and your spouse each materially participate (see Material participation under Passive Activity Limits, later) as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Can i efile a 2011 tax return This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Can i efile a 2011 tax return If you make this election, you must report rental real estate income on Schedule E (or Schedule C if you provide substantial services). Can i efile a 2011 tax return You will not be required to file Form 1065 for any year the election is in effect. Can i efile a 2011 tax return Rental real estate income generally is not included in net earnings from self-employment subject to self-employment tax and generally is subject to the passive activity limits. Can i efile a 2011 tax return If you and your spouse filed a Form 1065 for the year prior to the election, the partnership terminates at the end of the tax year immediately preceding the year the election takes effect. Can i efile a 2011 tax return For more information on qualified joint ventures, go to IRS. Can i efile a 2011 tax return gov and enter “qualified joint venture” in the search box. Can i efile a 2011 tax return Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Can i efile a 2011 tax return You must consider these rules in the order shown below. Can i efile a 2011 tax return Both are discussed in this section. Can i efile a 2011 tax return At-risk rules. Can i efile a 2011 tax return These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Can i efile a 2011 tax return This applies only if the real property was placed in service after 1986. Can i efile a 2011 tax return Passive activity limits. Can i efile a 2011 tax return Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Can i efile a 2011 tax return However, there are exceptions. Can i efile a 2011 tax return At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Can i efile a 2011 tax return Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Can i efile a 2011 tax return In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Can i efile a 2011 tax return You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Can i efile a 2011 tax return Any loss that is disallowed because of the at-risk limits is treated as a deduction from the same activity in the next tax year. Can i efile a 2011 tax return See Publication 925 for a discussion of the at-risk rules. Can i efile a 2011 tax return Form 6198. Can i efile a 2011 tax return   If you are subject to the at-risk rules, file Form 6198, At-Risk Limitations, with your tax return. Can i efile a 2011 tax return Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Can i efile a 2011 tax return For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Can i efile a 2011 tax return For a discussion of activities that are not considered rental activities, see Rental Activities in Publication 925. Can i efile a 2011 tax return Deductions or losses from passive activities are limited. Can i efile a 2011 tax return You generally cannot offset income, other than passive income, with losses from passive activities. Can i efile a 2011 tax return Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Can i efile a 2011 tax return Any excess loss or credit is carried forward to the next tax year. Can i efile a 2011 tax return Exceptions to the rules for figuring passive activity limits for personal use of a dwelling unit and for rental real estate with active participation are discussed later. Can i efile a 2011 tax return For a detailed discussion of these rules, see Publication 925. Can i efile a 2011 tax return Real estate professionals. Can i efile a 2011 tax return   If you are a real estate professional, complete line 43 of Schedule E. Can i efile a 2011 tax return      You qualify as a real estate professional for the tax year if you meet both of the following requirements. Can i efile a 2011 tax return More than half of the personal services you perform in all trades or businesses during the tax year are performed in real property trades or businesses in which you materially participate. Can i efile a 2011 tax return You perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate. Can i efile a 2011 tax return If you qualify as a real estate professional, rental real estate activities in which you materially participated are not passive activities. Can i efile a 2011 tax return For purposes of determining whether you materially participated in your rental real estate activities, each interest in rental real estate is a separate activity unless you elect to treat all your interests in rental real estate as one activity. Can i efile a 2011 tax return   Do not count personal services you perform as an employee in real property trades or businesses unless you are a 5% owner of your employer. Can i efile a 2011 tax return You are a 5% owner if you own (or are considered to own) more than 5% of your employer's outstanding stock, or capital or profits interest. Can i efile a 2011 tax return   Do not count your spouse's personal services to determine whether you met the requirements listed earlier to qualify as a real estate professional. Can i efile a 2011 tax return However, you can count your spouse's participation in an activity in determining if you materially participated. Can i efile a 2011 tax return Real property trades or businesses. Can i efile a 2011 tax return   A real property trade or business is a trade or business that does any of the following with real property. Can i efile a 2011 tax return Develops or redevelops it. Can i efile a 2011 tax return Constructs or reconstructs it. Can i efile a 2011 tax return Acquires it. Can i efile a 2011 tax return Converts it. Can i efile a 2011 tax return Rents or leases it. Can i efile a 2011 tax return Operates or manages it. Can i efile a 2011 tax return Brokers it. Can i efile a 2011 tax return Choice to treat all interests as one activity. Can i efile a 2011 tax return   If you were a real estate professional and had more than one rental real estate interest during the year, you can choose to treat all the interests as one activity. Can i efile a 2011 tax return You can make this choice for any year that you qualify as a real estate professional. Can i efile a 2011 tax return If you forgo making the choice for one year, you can still make it for a later year. Can i efile a 2011 tax return   If you make the choice, it is binding for the tax year you make it and for any later year that you are a real estate professional. Can i efile a 2011 tax return This is true even if you are not a real estate professional in any intervening year. Can i efile a 2011 tax return (For that year, the exception for real estate professionals will not apply in determining whether your activity is subject to the passive activity rules. Can i efile a 2011 tax return )   See the Instructions for Schedule E for information about making this choice. Can i efile a 2011 tax return Material participation. Can i efile a 2011 tax return   Generally, you materially participated in an activity for the tax year if you were involved in its operations on a regular, continuous, and substantial basis during the year. Can i efile a 2011 tax return For details, see Publication 925 or the Instructions for Schedule C. Can i efile a 2011 tax return Participating spouse. Can i efile a 2011 tax return   If you are married, determine whether you materially participated in an activity by also counting any participation in the activity by your spouse during the year. Can i efile a 2011 tax return Do this even if your spouse owns no interest in the activity or files a separate return for the year. Can i efile a 2011 tax return Form 8582. Can i efile a 2011 tax return    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Can i efile a 2011 tax return See Form 8582 not required , later in this chapter, to determine if you must complete Form 8582. Can i efile a 2011 tax return   If you are required to complete Form 8582 and are also subject to the at-risk rules, include the amount from Form 6198, line 21 (deductible loss) in column (b) of Form 8582, Worksheet 1 or 3, as required. Can i efile a 2011 tax return Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Can i efile a 2011 tax return Instead, follow the rules explained in chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Can i efile a 2011 tax return Exception for Rental Real Estate With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Can i efile a 2011 tax return This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Can i efile a 2011 tax return Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Can i efile a 2011 tax return Example. Can i efile a 2011 tax return Jane is single and has $40,000 in wages, $2,000 of passive income from a limited partnership, and $3,500 of passive loss from a rental real estate activity in which she actively participated. Can i efile a 2011 tax return $2,000 of Jane's $3,500 loss offsets her passive income. Can i efile a 2011 tax return The remaining $1,500 loss can be deducted from her $40,000 wages. Can i efile a 2011 tax return The special allowance is not available if you were married, lived with your spouse at any time during the year, and are filing a separate return. Can i efile a 2011 tax return Active participation. Can i efile a 2011 tax return   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Can i efile a 2011 tax return Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions. Can i efile a 2011 tax return Example. Can i efile a 2011 tax return Mike is single and had the following income and losses during the tax year:   Salary $42,300     Dividends 300     Interest 1,400     Rental loss (4,000)   The rental loss was from the rental of a house Mike owned. Can i efile a 2011 tax return Mike had advertised and rented the house to the current tenant himself. Can i efile a 2011 tax return He also collected the rents, which usually came by mail. Can i efile a 2011 tax return All repairs were either made or contracted out by Mike. Can i efile a 2011 tax return Although the rental loss is from a passive activity, because Mike actively participated in the rental property management he can use the entire $4,000 loss to offset his other income. Can i efile a 2011 tax return Maximum special allowance. Can i efile a 2011 tax return   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Can i efile a 2011 tax return   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Can i efile a 2011 tax return If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Can i efile a 2011 tax return   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Can i efile a 2011 tax return Modified adjusted gross income (MAGI). Can i efile a 2011 tax return   This is your adjusted gross income from Form 1040, U. Can i efile a 2011 tax return S. Can i efile a 2011 tax return Individual Income Tax Return, line 38, or Form 1040NR, U. Can i efile a 2011 tax return S. Can i efile a 2011 tax return Nonresident Alien Income Tax Return, line 37, figured without taking into account: The taxable amount of social security or equivalent tier 1 railroad retirement benefits, The deductible contributions to traditional individual retirement accounts (IRAs) and section 501(c)(18) pension plans, The exclusion from income of interest from Series EE and I U. Can i efile a 2011 tax return S. Can i efile a 2011 tax return savings bonds used to pay higher educational expenses, The exclusion of amounts received under an employer's adoption assistance program, Any passive activity income or loss included on Form 8582, Any rental real estate loss allowed to real estate professionals, Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the Instructions for Form 8582), The deduction allowed for one-half of self-employment tax, The deduction allowed for interest paid on student loans, The deduction for qualified tuition and related fees, and The domestic production activities deduction (see the Instructions for Form 8903). Can i efile a 2011 tax return Form 8582 not required. Can i efile a 2011 tax return   Do not complete Form 8582 if you meet all of the following conditions. Can i efile a 2011 tax return Your only passive activities were rental real estate activities in which you actively participated. Can i efile a 2011 tax return Your overall net loss from these activities is $25,000 or less ($12,500 or less if married filing separately and you lived apart from your spouse all year). Can i efile a 2011 tax return If married filing separately, you lived apart from your spouse all year. Can i efile a 2011 tax return You have no prior year unallowed losses from these (or any other passive) activities. Can i efile a 2011 tax return You have no current or prior year unallowed credits from passive activities. Can i efile a 2011 tax return Your MAGI is $100,000 or less ($50,000 or less if married filing separately and you lived apart from your spouse all year). Can i efile a 2011 tax return You do not hold any interest in a rental real estate activity as a limited partner or as a beneficiary of an estate or a trust. Can i efile a 2011 tax return   If you meet all of the conditions listed above, your rental real estate activities are not limited by the passive activity rules and you do not have to complete Form 8582. Can i efile a 2011 tax return On lines 23a through 23e of your Schedule E, enter the applicable amounts. Can i efile a 2011 tax return Casualties and Thefts As a result of a casualty or theft, you may have a loss related to your rental property. Can i efile a 2011 tax return You may be able to deduct the loss on your income tax return. Can i efile a 2011 tax return Casualty. Can i efile a 2011 tax return   This is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Can i efile a 2011 tax return Such events include a storm, fire, or earthquake. Can i efile a 2011 tax return Theft. Can i efile a 2011 tax return   This is defined as the unlawful taking and removing of your money or property with the intent to deprive you of it. Can i efile a 2011 tax return Gain from casualty or theft. Can i efile a 2011 tax return   It is also possible to have a gain from a casualty or theft if you receive money, including insurance, that is more than your adjusted basis in the property. Can i efile a 2011 tax return Generally, you must report this gain. Can i efile a 2011 tax return However, under certain circumstances, you may defer paying tax by choosing to postpone reporting the gain. Can i efile a 2011 tax return To do this, you generally must buy replacement property within 2 years after the close of the first tax year in which any part of your gain is realized. Can i efile a 2011 tax return In certain circumstances, the replacement period can be greater than 2 years; see Replacement Period in Publication 547 for more information. Can i efile a 2011 tax return The cost of the replacement property must be equal to or more than the net insurance or other payment you received. Can i efile a 2011 tax return More information. Can i efile a 2011 tax return   For information on business and nonbusiness casualty and theft losses, see Publication 547. Can i efile a 2011 tax return How to report. Can i efile a 2011 tax return    If you had a casualty or theft that involved property used in your rental activity, figure the net gain or loss in Section B of Form 4684, Casualties and Thefts. Can i efile a 2011 tax return Follow the Instructions for Form 4684 for where to carry your net gain or loss. Can i efile a 2011 tax return Example In February 2008, Marie Pfister bought a rental house for $135,000 (house $120,000 and land $15,000) and immediately began renting it out. Can i efile a 2011 tax return In 2013, she rented it all 12 months for a monthly rental fee of $1,125. Can i efile a 2011 tax return In addition to her rental income of $13,500 (12 x $1,125), Marie had the following expenses. Can i efile a 2011 tax return Mortgage interest $8,000 Fire insurance (1-year policy) 250 Miscellaneous repairs 400 Real estate taxes imposed and paid 500 Maintenance 200 Marie depreciates the residential rental property under MACRS GDS. Can i efile a 2011 tax return This means using the straight line method over a recovery period of 27. Can i efile a 2011 tax return 5 years. Can i efile a 2011 tax return She uses Table 2-2d to find her depreciation percentage. Can i efile a 2011 tax return Because she placed the property in service in February 2008, she continues to use that row of Table 2-2d. Can i efile a 2011 tax return For year 6, the rate is 3. Can i efile a 2011 tax return 636%. Can i efile a 2011 tax return Marie figures her net rental income or loss for the house as follows: Total rental income received  ($1,125 × 12) $13,500 Minus: Expenses     Mortgage interest $8,000   Fire insurance 250   Miscellaneous repairs 400   Real estate taxes 500   Maintenance 200   Total expenses 9,350 Balance $4,150 Minus: Depreciation ($120,000 x 3. Can i efile a 2011 tax return 636%) 4,363 Net rental (loss) for house ($213)       Marie had a net loss for the year. Can i efile a 2011 tax return Because she actively participated in her passive rental real estate activity and her loss was less than $25,000, she can deduct the loss on her return. Can i efile a 2011 tax return Marie also meets all of the requirements for not having to file Form 8582. Can i efile a 2011 tax return She uses Schedule E, Part I, to report her rental income and expenses. Can i efile a 2011 tax return She enters her income, expenses, and depreciation for the house in the column for Property A and enters her loss on line 22. Can i efile a 2011 tax return Form 4562 is not required. Can i efile a 2011 tax return Prev  Up  Next   Home   More Online Publications
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The Can I Efile A 2011 Tax Return

Can i efile a 2011 tax return 5. Can i efile a 2011 tax return   Business Income Table of Contents Introduction Kinds of IncomeBartering for Property or Services Real Estate Rents Personal Property Rents Interest and Dividend Income Canceled Debt Other Income Items That Are Not IncomeAmount you can exclude. Can i efile a 2011 tax return Short-term lease. Can i efile a 2011 tax return Retail space. Can i efile a 2011 tax return Qualified long-term real property. Can i efile a 2011 tax return Guidelines for Selected Occupations Accounting for Your Income Introduction This chapter primarily explains business income and how to account for it on your tax return, what items are not considered income, and gives guidelines for selected occupations. Can i efile a 2011 tax return If there is a connection between any income you receive and your business, the income is business income. Can i efile a 2011 tax return A connection exists if it is clear that the payment of income would not have been made if you did not have the business. Can i efile a 2011 tax return You can have business income even if you are not involved in the activity on a regular full-time basis. Can i efile a 2011 tax return Income from work you do on the side in addition to your regular job can be business income. Can i efile a 2011 tax return You report most business income, such as income from selling your products or services, on Schedule C or C-EZ. Can i efile a 2011 tax return But you report the income from the sale of business assets, such as land and office buildings, on other forms instead of Schedule C or C-EZ. Can i efile a 2011 tax return For information on selling business assets, see chapter 3. Can i efile a 2011 tax return Nonemployee compensation. Can i efile a 2011 tax return Business income includes amounts you received in your business that were properly shown on Forms 1099-MISC. Can i efile a 2011 tax return This includes amounts reported as nonemployee compensation in box 7 of the form. Can i efile a 2011 tax return You can find more information in the instructions on the back of the Form 1099-MISC you received. Can i efile a 2011 tax return Kinds of Income You must report on your tax return all income you receive from your business unless it is excluded by law. Can i efile a 2011 tax return In most cases, your business income will be in the form of cash, checks, and credit card charges. Can i efile a 2011 tax return But business income can be in other forms, such as property or services. Can i efile a 2011 tax return These and other types of income are explained next. Can i efile a 2011 tax return If you are a U. Can i efile a 2011 tax return S. Can i efile a 2011 tax return citizen who has business income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt from tax under U. Can i efile a 2011 tax return S. Can i efile a 2011 tax return law. Can i efile a 2011 tax return If you live outside the United States, you may be able to exclude part or all of your foreign-source business income. Can i efile a 2011 tax return For details, see Publication 54, Tax Guide for U. Can i efile a 2011 tax return S. Can i efile a 2011 tax return Citizens and Resident Aliens Abroad. Can i efile a 2011 tax return Bartering for Property or Services Bartering is an exchange of property or services. Can i efile a 2011 tax return You must include in your gross receipts, at the time received, the fair market value of property or services you receive in exchange for something else. Can i efile a 2011 tax return If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as the fair market value unless the value can be shown to be otherwise. Can i efile a 2011 tax return Example 1. Can i efile a 2011 tax return You are a self-employed lawyer. Can i efile a 2011 tax return You perform legal services for a client, a small corporation. Can i efile a 2011 tax return In payment for your services, you receive shares of stock in the corporation. Can i efile a 2011 tax return You must include the fair market value of the shares in income. Can i efile a 2011 tax return Example 2. Can i efile a 2011 tax return You are an artist and create a work of art to compensate your landlord for the rent-free use of your apartment. Can i efile a 2011 tax return You must include the fair rental value of the apartment in your gross receipts. Can i efile a 2011 tax return Your landlord must include the fair market value of the work of art in his or her rental income. Can i efile a 2011 tax return Example 3. Can i efile a 2011 tax return You are a self-employed accountant. Can i efile a 2011 tax return Both you and a house painter are members of a barter club, an organization that each year gives its members a directory of members and the services each member provides. Can i efile a 2011 tax return Members get in touch with other members directly and bargain for the value of the services to be performed. Can i efile a 2011 tax return In return for accounting services you provided for the house painter's business, the house painter painted your home. Can i efile a 2011 tax return You must include in gross receipts the fair market value of the services you received from the house painter. Can i efile a 2011 tax return The house painter must include the fair market value of your accounting services in his or her gross receipts. Can i efile a 2011 tax return Example 4. Can i efile a 2011 tax return You are a member of a barter club that uses credit units to credit or debit members' accounts for goods or services provided or received. Can i efile a 2011 tax return As soon as units are credited to your account, you can use them to buy goods or services or sell or transfer the units to other members. Can i efile a 2011 tax return You must include the value of credit units you received in your gross receipts for the tax year in which the units are credited to your account. Can i efile a 2011 tax return The dollar value of units received for services by an employee of the club, who can use the units in the same manner as other members, must be included in the employee's gross income for the tax year in which received. Can i efile a 2011 tax return It is wages subject to social security and Medicare taxes (FICA), federal unemployment taxes (FUTA), and income tax withholding. Can i efile a 2011 tax return See Publication 15 (Circular E), Employer's Tax Guide. Can i efile a 2011 tax return Example 5. Can i efile a 2011 tax return You operate a plumbing business and use the cash method of accounting. Can i efile a 2011 tax return You join a barter club and agree to provide plumbing services to any member for a specified number of hours. Can i efile a 2011 tax return Each member has access to a directory that lists the members of the club and the services available. Can i efile a 2011 tax return Members contact each other directly and request services to be performed. Can i efile a 2011 tax return You are not required to provide services unless requested by another member, but you can use as many of the offered services as you wish without paying a fee. Can i efile a 2011 tax return You must include the fair market value of any services you receive from club members in your gross receipts when you receive them even if you have not provided any services to club members. Can i efile a 2011 tax return Information returns. Can i efile a 2011 tax return   If you are involved in a bartering transaction, you may have to file either of the following forms. Can i efile a 2011 tax return Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. Can i efile a 2011 tax return Form 1099-MISC, Miscellaneous Income. Can i efile a 2011 tax return For information about these forms, see the General Instructions for Certain Information Returns. Can i efile a 2011 tax return Real Estate Rents If you are a real estate dealer who receives income from renting real property or an owner of a hotel, motel, etc. Can i efile a 2011 tax return , who provides services (maid services, etc. Can i efile a 2011 tax return ) for guests, report the rental income and expenses on Schedule C or C-EZ. Can i efile a 2011 tax return If you are not a real estate dealer or the kind of owner described in the preceding sentence, report the rental income and expenses on Schedule E. Can i efile a 2011 tax return For more information, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes). Can i efile a 2011 tax return Real estate dealer. Can i efile a 2011 tax return   You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales. Can i efile a 2011 tax return Rent you receive from real estate held for sale to customers is subject to SE tax. Can i efile a 2011 tax return However, rent you receive from real estate held for speculation or investment is not subject to SE tax. Can i efile a 2011 tax return Trailer park owner. Can i efile a 2011 tax return   Rental income from a trailer park is subject to SE tax if you are a self-employed trailer park owner who provides trailer lots and facilities and substantial services for the convenience of your tenants. Can i efile a 2011 tax return    You generally are considered to provide substantial services for tenants if they are primarily for the tenants' convenience and normally are not provided to maintain the lots in a condition for occupancy. Can i efile a 2011 tax return Services are substantial if the compensation for the services makes up a material part of the tenants' rental payments. Can i efile a 2011 tax return   Examples of services that are not normally provided for the tenants' convenience include supervising and maintaining a recreational hall provided by the park, distributing a monthly newsletter to tenants, operating a laundry facility, and helping tenants buy or sell their trailers. Can i efile a 2011 tax return   Examples of services that are normally provided to maintain the lots in a condition for tenant occupancy include city sewerage, electrical connections, and roadways. Can i efile a 2011 tax return Hotels, boarding houses, and apartments. Can i efile a 2011 tax return   Rental income you receive for the use or occupancy of hotels, boarding houses, or apartment houses is subject to SE tax if you provide services for the occupants. Can i efile a 2011 tax return   Generally, you are considered to provide services for the occupants if the services are primarily for their convenience and are not services normally provided with the rental of rooms for occupancy only. Can i efile a 2011 tax return An example of a service that is not normally provided for the convenience of the occupants is maid service. Can i efile a 2011 tax return However, providing heat and light, cleaning stairways and lobbies, and collecting trash are services normally provided for the occupants' convenience. Can i efile a 2011 tax return Prepaid rent. Can i efile a 2011 tax return   Advance payments received under a lease that does not put any restriction on their use or enjoyment are income in the year you receive them. Can i efile a 2011 tax return This is true no matter what accounting method or period you use. Can i efile a 2011 tax return Lease bonus. Can i efile a 2011 tax return   A bonus you receive from a lessee for granting a lease is an addition to the rent. Can i efile a 2011 tax return Include it in your gross receipts in the year received. Can i efile a 2011 tax return Lease cancellation payments. Can i efile a 2011 tax return   Report payments you receive from your lessee for canceling a lease in your gross receipts in the year received. Can i efile a 2011 tax return Payments to third parties. Can i efile a 2011 tax return   If your lessee makes payments to someone else under an agreement to pay your debts or obligations, include the payments in your gross receipts when the lessee makes the payments. Can i efile a 2011 tax return A common example of this kind of income is a lessee's payment of your property taxes on leased real property. Can i efile a 2011 tax return Settlement payments. Can i efile a 2011 tax return   Payments you receive in settlement of a lessee's obligation to restore the leased property to its original condition are income in the amount that the payments exceed the adjusted basis of the leasehold improvements destroyed, damaged, removed, or disconnected by the lessee. Can i efile a 2011 tax return Personal Property Rents If you are in the business of renting personal property (equipment, vehicles, formal wear, etc. Can i efile a 2011 tax return ), include the rental amount you receive in your gross receipts on Schedule C or C-EZ. Can i efile a 2011 tax return Prepaid rent and other payments described in the preceding Real Estate Rents discussion can also be received for renting personal property. Can i efile a 2011 tax return If you receive any of those payments, include them in your gross receipts as explained in that discussion. Can i efile a 2011 tax return Interest and Dividend Income Interest and dividends may be considered business income. Can i efile a 2011 tax return Interest. Can i efile a 2011 tax return   Interest received on notes receivable that you have accepted in the ordinary course of business is business income. Can i efile a 2011 tax return Interest received on loans is business income if you are in the business of lending money. Can i efile a 2011 tax return Uncollectible loans. Can i efile a 2011 tax return   If a loan payable to you becomes uncollectible during the tax year and you use an accrual method of accounting, you must include in gross income interest accrued up to the time the loan became uncollectible. Can i efile a 2011 tax return If the accrued interest later becomes uncollectible, you may be able to take a bad debt deduction. Can i efile a 2011 tax return See Bad Debts in chapter 8. Can i efile a 2011 tax return Unstated interest. Can i efile a 2011 tax return   If little or no interest is charged on an installment sale, you may have to treat a part of each payment as unstated interest. Can i efile a 2011 tax return See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Can i efile a 2011 tax return Dividends. Can i efile a 2011 tax return   Generally, dividends are business income to dealers in securities. Can i efile a 2011 tax return For most sole proprietors and statutory employees, however, dividends are nonbusiness income. Can i efile a 2011 tax return If you hold stock as a personal investment separately from your business activity, the dividends from the stock are nonbusiness income. Can i efile a 2011 tax return   If you receive dividends from business insurance premiums you deducted in an earlier year, you must report all or part of the dividend as business income on your return. Can i efile a 2011 tax return To find out how much you have to report, see   Recovery of items previously deducted under Other Income, later. Can i efile a 2011 tax return Canceled Debt The following explains the general rule for including canceled debt in income and the exceptions to the general rule. Can i efile a 2011 tax return General Rule Generally, if your debt is canceled or forgiven, other than as a gift or bequest to you, you must include the canceled amount in your gross income for tax purposes. Can i efile a 2011 tax return Report the canceled amount on line 6 of Schedule C if you incurred the debt in your business. Can i efile a 2011 tax return If the debt is a nonbusiness debt, report the canceled amount on line 21 of Form 1040. Can i efile a 2011 tax return Exceptions The following discussion covers some exceptions to the general rule for canceled debt. Can i efile a 2011 tax return Price reduced after purchase. Can i efile a 2011 tax return   If you owe a debt to the seller for property you bought and the seller reduces the amount you owe, you generally do not have income from the reduction. Can i efile a 2011 tax return Unless you are bankrupt or insolvent, treat the amount of the reduction as a purchase price adjustment and reduce your basis in the property. Can i efile a 2011 tax return Deductible debt. Can i efile a 2011 tax return   You do not realize income from a canceled debt to the extent the payment of the debt would have led to a deduction. Can i efile a 2011 tax return Example. Can i efile a 2011 tax return You get accounting services for your business on credit. Can i efile a 2011 tax return Later, you have trouble paying your business debts, but you are not bankrupt or insolvent. Can i efile a 2011 tax return Your accountant forgives part of the amount you owe for the accounting services. Can i efile a 2011 tax return How you treat the canceled debt depends on your method of accounting. Can i efile a 2011 tax return Cash method — You do not include the canceled debt in income because payment of the debt would have been deductible as a business expense. Can i efile a 2011 tax return Accrual method — You include the canceled debt in income because the expense was deductible when you incurred the debt. Can i efile a 2011 tax return   For information on the cash and accrual methods of accounting, see chapter 2. Can i efile a 2011 tax return Exclusions Do not include canceled debt in income in the following situations. Can i efile a 2011 tax return However, you may be required to file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Can i efile a 2011 tax return For more information, see Form 982. Can i efile a 2011 tax return The cancellation takes place in a bankruptcy case under title 11 of the U. Can i efile a 2011 tax return S. Can i efile a 2011 tax return Code (relating to bankruptcy). Can i efile a 2011 tax return See Publication 908, Bankruptcy Tax Guide. Can i efile a 2011 tax return The cancellation takes place when you are insolvent. Can i efile a 2011 tax return You can exclude the canceled debt to the extent you are insolvent. Can i efile a 2011 tax return See Publication 908. Can i efile a 2011 tax return The canceled debt is a qualified farm debt owed to a qualified person. Can i efile a 2011 tax return See chapter 3 in Publication 225, Farmer's Tax Guide. Can i efile a 2011 tax return The canceled debt is a qualified real property business debt. Can i efile a 2011 tax return This situation is explained later. Can i efile a 2011 tax return The canceled debt is qualified principal residence indebtedness which is discharged after 2006. Can i efile a 2011 tax return See Form 982. Can i efile a 2011 tax return If a canceled debt is excluded from income because it takes place in a bankruptcy case, the exclusions in situations 2 through 5 do not apply. Can i efile a 2011 tax return If it takes place when you are insolvent, the exclusions in situations 3 and 4 do not apply to the extent you are insolvent. Can i efile a 2011 tax return Debt. Can i efile a 2011 tax return   For purposes of this discussion, debt includes any debt for which you are liable or which attaches to property you hold. Can i efile a 2011 tax return Qualified real property business debt. Can i efile a 2011 tax return   You can elect to exclude (up to certain limits) the cancellation of qualified real property business debt. Can i efile a 2011 tax return If you make the election, you must reduce the basis of your depreciable real property by the amount excluded. Can i efile a 2011 tax return Make this reduction at the beginning of your tax year following the tax year in which the cancellation occurs. Can i efile a 2011 tax return However, if you dispose of the property before that time, you must reduce its basis immediately before the disposition. Can i efile a 2011 tax return Cancellation of qualified real property business debt. Can i efile a 2011 tax return   Qualified real property business debt is debt (other than qualified farm debt) that meets all the following conditions. Can i efile a 2011 tax return It was incurred or assumed in connection with real property used in a trade or business. Can i efile a 2011 tax return It was secured by such real property. Can i efile a 2011 tax return It was incurred or assumed at either of the following times. Can i efile a 2011 tax return Before January 1, 1993. Can i efile a 2011 tax return After December 31, 1992, if incurred or assumed to acquire, construct, or substantially improve the real property. Can i efile a 2011 tax return It is debt to which you choose to apply these rules. Can i efile a 2011 tax return   Qualified real property business debt includes refinancing of debt described in (3) earlier, but only to the extent it does not exceed the debt being refinanced. Can i efile a 2011 tax return   You cannot exclude more than either of the following amounts. Can i efile a 2011 tax return The excess (if any) of: The outstanding principal of qualified real property business debt (immediately before the cancellation), over The fair market value (immediately before the cancellation) of the business real property that is security for the debt, reduced by the outstanding principal amount of any other qualified real property business debt secured by this property immediately before the cancellation. Can i efile a 2011 tax return The total adjusted bases of depreciable real property held by you immediately before the cancellation. Can i efile a 2011 tax return These adjusted bases are determined after any basis reduction due to a cancellation in bankruptcy, insolvency, or of qualified farm debt. Can i efile a 2011 tax return Do not take into account depreciable real property acquired in contemplation of the cancellation. Can i efile a 2011 tax return Election. Can i efile a 2011 tax return   To make this election, complete Form 982 and attach it to your income tax return for the tax year in which the cancellation occurs. Can i efile a 2011 tax return You must file your return by the due date (including extensions). Can i efile a 2011 tax return If you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Can i efile a 2011 tax return For more information, see When To File in the form instructions. Can i efile a 2011 tax return Other Income The following discussion explains how to treat other types of business income you may receive. Can i efile a 2011 tax return Restricted property. Can i efile a 2011 tax return   Restricted property is property that has certain restrictions that affect its value. Can i efile a 2011 tax return If you receive restricted stock or other property for services performed, the fair market value of the property in excess of your cost is included in your income on Schedule C or C-EZ when the restriction is lifted. Can i efile a 2011 tax return However, you can choose to be taxed in the year you receive the property. Can i efile a 2011 tax return For more information on including restricted property in income, see Publication 525, Taxable and Nontaxable Income. Can i efile a 2011 tax return Gains and losses. Can i efile a 2011 tax return   Do not report on Schedule C or C-EZ a gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers. Can i efile a 2011 tax return Instead, you must report these gains and losses on other forms. Can i efile a 2011 tax return For more information, see chapter 3. Can i efile a 2011 tax return Promissory notes. Can i efile a 2011 tax return   Report promissory notes and other evidences of debt issued to you in a sale or exchange of property that is stock in trade or held primarily for sale to customers on Schedule C or C-EZ. Can i efile a 2011 tax return In general, you report them at their stated principal amount (minus any unstated interest) when you receive them. Can i efile a 2011 tax return Lost income payments. Can i efile a 2011 tax return   If you reduce or stop your business activities, report on Schedule C or C-EZ any payment you receive for the lost income of your business from insurance or other sources. Can i efile a 2011 tax return Report it on Schedule C or C-EZ even if your business is inactive when you receive the payment. Can i efile a 2011 tax return Damages. Can i efile a 2011 tax return   You must include in gross income compensation you receive during the tax year as a result of any of the following injuries connected with your business. Can i efile a 2011 tax return Patent infringement. Can i efile a 2011 tax return Breach of contract or fiduciary duty. Can i efile a 2011 tax return Antitrust injury. Can i efile a 2011 tax return Economic injury. Can i efile a 2011 tax return   You may be entitled to a deduction against the income if it compensates you for actual economic injury. Can i efile a 2011 tax return Your deduction is the smaller of the following amounts. Can i efile a 2011 tax return The amount you receive or accrue for damages in the tax year reduced by the amount you pay or incur in the tax year to recover that amount. Can i efile a 2011 tax return Your loss from the injury that you have not yet deducted. Can i efile a 2011 tax return Punitive damages. Can i efile a 2011 tax return   You must also include punitive damages in income. Can i efile a 2011 tax return Kickbacks. Can i efile a 2011 tax return   If you receive any kickbacks, include them in your income on Schedule C or C-EZ. Can i efile a 2011 tax return However, do not include them if you properly treat them as a reduction of a related expense item, a capital expenditure, or cost of goods sold. Can i efile a 2011 tax return Recovery of items previously deducted. Can i efile a 2011 tax return   If you recover a bad debt or any other item deducted in a previous year, include the recovery in income on Schedule C or C-EZ. Can i efile a 2011 tax return However, if all or part of the deduction in earlier years did not reduce your tax, you can exclude the part that did not reduce your tax. Can i efile a 2011 tax return If you exclude part of the recovery from income, you must include with your return a computation showing how you figured the exclusion. Can i efile a 2011 tax return Example. Can i efile a 2011 tax return Joe Smith, a sole proprietor, had gross income of $8,000, a bad debt deduction of $300, and other allowable deductions of $7,700. Can i efile a 2011 tax return He also had 2 personal exemptions for a total of $7,800. Can i efile a 2011 tax return He would not pay income tax even if he did not deduct the bad debt. Can i efile a 2011 tax return Therefore, he will not report as income any part of the $300 he may recover in any future year. Can i efile a 2011 tax return Exception for depreciation. Can i efile a 2011 tax return   This rule does not apply to depreciation. Can i efile a 2011 tax return You recover depreciation using the rules explained next. Can i efile a 2011 tax return Recapture of depreciation. Can i efile a 2011 tax return   In the following situations, you have to recapture the depreciation deduction. Can i efile a 2011 tax return This means you include in income part or all of the depreciation you deducted in previous years. Can i efile a 2011 tax return Listed property. Can i efile a 2011 tax return   If your business use of listed property (explained in chapter 8 under Depreciation ) falls to 50% or less in a tax year after the tax year you placed the property in service, you may have to recapture part of the depreciation deduction. Can i efile a 2011 tax return You do this by including in income on Schedule C part of the depreciation you deducted in previous years. Can i efile a 2011 tax return Use Part IV of Form 4797, Sales of Business Property, to figure the amount to include on Schedule C. Can i efile a 2011 tax return For more information, see What is the Business-Use Requirement? in chapter 5 of Publication 946, How To Depreciate Property. Can i efile a 2011 tax return That chapter explains how to determine whether property is used more than 50% in your business. Can i efile a 2011 tax return Section 179 property. Can i efile a 2011 tax return   If you take a section 179 deduction (explained in chapter 8 under Depreciation ) for an asset and before the end of the asset's recovery period the percentage of business use drops to 50% or less, you must recapture part of the section 179 deduction. Can i efile a 2011 tax return You do this by including in income on Schedule C part of the deduction you took. Can i efile a 2011 tax return Use Part IV of Form 4797 to figure the amount to include on Schedule C. Can i efile a 2011 tax return See chapter 2 in Publication 946 to find out when you recapture the deduction. Can i efile a 2011 tax return Sale or exchange of depreciable property. Can i efile a 2011 tax return   If you sell or exchange depreciable property at a gain, you may have to treat all or part of the gain due to depreciation as ordinary income. Can i efile a 2011 tax return You figure the income due to depreciation recapture in Part III of Form 4797. Can i efile a 2011 tax return For more information, see chapter 4 in Publication 544, Sales and Other Dispositions of Assets. Can i efile a 2011 tax return Items That Are Not Income In some cases the property or money you receive is not income. Can i efile a 2011 tax return Appreciation. Can i efile a 2011 tax return   Increases in value of your property are not income until you realize the increases through a sale or other taxable disposition. Can i efile a 2011 tax return Consignments. Can i efile a 2011 tax return   Consignments of merchandise to others to sell for you are not sales. Can i efile a 2011 tax return The title of merchandise remains with you, the consignor, even after the consignee possesses the merchandise. Can i efile a 2011 tax return Therefore, if you ship goods on consignment, you have no profit or loss until the consignee sells the merchandise. Can i efile a 2011 tax return Merchandise you have shipped out on consignment is included in your inventory until it is sold. Can i efile a 2011 tax return   Do not include merchandise you receive on consignment in your inventory. Can i efile a 2011 tax return Include your profit or commission on merchandise consigned to you in your income when you sell the merchandise or when you receive your profit or commission, depending upon the method of accounting you use. Can i efile a 2011 tax return Construction allowances. Can i efile a 2011 tax return   If you enter into a lease after August 5, 1997, you can exclude from income the construction allowance you receive (in cash or as a rent reduction) from your landlord if you receive it under both the following conditions. Can i efile a 2011 tax return Under a short-term lease of retail space. Can i efile a 2011 tax return For the purpose of constructing or improving qualified long-term real property for use in your business at that retail space. Can i efile a 2011 tax return Amount you can exclude. Can i efile a 2011 tax return   You can exclude the construction allowance to the extent it does not exceed the amount you spent for construction or improvements. Can i efile a 2011 tax return Short-term lease. Can i efile a 2011 tax return   A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less. Can i efile a 2011 tax return The following rules apply in determining whether the lease is for 15 years or less. Can i efile a 2011 tax return Take into account options to renew when figuring whether the lease is for 15 years or less. Can i efile a 2011 tax return But do not take into account any option to renew at fair market value determined at the time of renewal. Can i efile a 2011 tax return Two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar retail space are treated as one lease. Can i efile a 2011 tax return Retail space. Can i efile a 2011 tax return   Retail space is real property leased, occupied, or otherwise used by you as a tenant in your business of selling tangible personal property or services to the general public. Can i efile a 2011 tax return Qualified long-term real property. Can i efile a 2011 tax return   Qualified long-term real property is nonresidential real property that is part of, or otherwise present at, your retail space and that reverts to the landlord when the lease ends. Can i efile a 2011 tax return Exchange of like-kind property. Can i efile a 2011 tax return   If you exchange your business property or property you hold for investment solely for property of a like kind to be used in your business or to be held for investment, no gain or loss is recognized. Can i efile a 2011 tax return This means that the gain is not taxable and the loss is not deductible. Can i efile a 2011 tax return A common type of nontaxable exchange is the trade-in of a business automobile for another business automobile. Can i efile a 2011 tax return For more information, see Form 8824. Can i efile a 2011 tax return Leasehold improvements. Can i efile a 2011 tax return   If a tenant erects buildings or makes improvements to your property, the increase in the value of the property due to the improvements is not income to you. Can i efile a 2011 tax return However, if the facts indicate that the improvements are a payment of rent to you, then the increase in value would be income. Can i efile a 2011 tax return Loans. Can i efile a 2011 tax return   Money borrowed through a bona fide loan is not income. Can i efile a 2011 tax return Sales tax. Can i efile a 2011 tax return   State and local sales taxes imposed on the buyer, which you were required to collect and pay over to state or local governments, are not income. Can i efile a 2011 tax return Guidelines for Selected Occupations This section provides information to determine whether your earnings should be reported on Schedule C (Form 1040) or C-EZ (Form 1040). Can i efile a 2011 tax return Direct seller. Can i efile a 2011 tax return   You must report all income you receive as a direct seller on Schedule C or C-EZ. Can i efile a 2011 tax return This includes any of the following. Can i efile a 2011 tax return Income from sales—payments you receive from customers for products they buy from you. Can i efile a 2011 tax return Commissions, bonuses, or percentages you receive for sales and the sales of others who work under you. Can i efile a 2011 tax return Prizes, awards, and gifts you receive from your selling business. Can i efile a 2011 tax return You must report this income regardless of whether it is reported to you on an information return. Can i efile a 2011 tax return   You are a direct seller if you meet all the following conditions. Can i efile a 2011 tax return You are engaged in one of the following trades or businesses. Can i efile a 2011 tax return Selling or soliciting the sale of consumer products either in a home or other place that is not a permanent retail establishment, or to any buyer on a buy-sell basis or a deposit-commission basis for resale in a home or other place of business that is not a permanent retail establishment. Can i efile a 2011 tax return Delivering or distributing newspapers or shopping news (including any services directly related to that trade or business). Can i efile a 2011 tax return Substantially all your pay (whether paid in cash or not) for services described above is directly related to sales or other output (including performance of services) rather than to the number of hours worked. Can i efile a 2011 tax return Your services are performed under a written contract between you and the person for whom you perform the services, and the contract provides that you will not be treated as an employee for federal tax purposes. Can i efile a 2011 tax return Executor or administrator. Can i efile a 2011 tax return   If you administer a deceased person's estate, your fees are reported on Schedule C or C-EZ if you are one of the following: A professional fiduciary. Can i efile a 2011 tax return A nonprofessional fiduciary (personal representative) and both of the following apply. Can i efile a 2011 tax return The estate includes an active trade or business in which you actively participate. Can i efile a 2011 tax return Your fees are related to the operation of that trade or business. Can i efile a 2011 tax return A nonprofessional fiduciary of a single estate that requires extensive managerial activities on your part for a long period of time, provided these activities are enough to be considered a trade or business. Can i efile a 2011 tax return    If the fees do not meet the above requirements, report them on line 21 of Form 1040. Can i efile a 2011 tax return Fishing crew member. Can i efile a 2011 tax return    If you are a member of the crew that catches fish or other water life, your earnings are reported on Schedule C or C-EZ if you meet all the requirements shown in chapter 10 under Fishing crew member . Can i efile a 2011 tax return Insurance agent, former. Can i efile a 2011 tax return   Termination payments you receive as a former self-employed insurance agent from an insurance company because of services you performed for that company are not reported on Schedule C or C-EZ if all the following conditions are met. Can i efile a 2011 tax return You received payments after your agreement to perform services for the company ended. Can i efile a 2011 tax return You did not perform any services for the company after your service agreement ended and before the end of the year in which you received the payment. Can i efile a 2011 tax return You entered into a covenant not to compete against the company for at least a 1-year period beginning on the date your service agreement ended. Can i efile a 2011 tax return The amount of the payments depended primarily on policies sold by you or credited to your account during the last year of your service agreement or the extent to which those policies remain in force for some period after your service agreement ended, or both. Can i efile a 2011 tax return The amount of the payment did not depend to any extent on length of service or overall earnings from services performed for the company (regardless of whether eligibility for the payments depended on length of service). Can i efile a 2011 tax return Insurance agent, retired. Can i efile a 2011 tax return   Income paid by an insurance company to a retired self-employed insurance agent based on a percentage of commissions received before retirement is reported on Schedule C or C-EZ. Can i efile a 2011 tax return Also, renewal commissions and deferred commissions for sales made before retirement are generally reported on Schedule C or C-EZ. Can i efile a 2011 tax return   However, renewal commissions paid to the survivor of an insurance agent are not reported on Schedule C or C-EZ. Can i efile a 2011 tax return Newspaper carrier or distributor. Can i efile a 2011 tax return   You are a direct seller and your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Can i efile a 2011 tax return You are in the business of delivering or distributing newspapers or shopping news (including directly related services such as soliciting customers and collecting receipts). Can i efile a 2011 tax return Substantially all your pay for these services directly relates to your sales or other output rather than to the number of hours you work. Can i efile a 2011 tax return You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Can i efile a 2011 tax return   This rule applies whether or not you hire others to help you make deliveries. Can i efile a 2011 tax return It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. Can i efile a 2011 tax return Newspaper or magazine vendor. Can i efile a 2011 tax return   If you are 18 or older and you sell newspapers or magazines, your earnings are reported on Schedule C or C-EZ if all the following conditions apply. Can i efile a 2011 tax return You sell newspapers or magazines to ultimate consumers. Can i efile a 2011 tax return You sell them at a fixed price. Can i efile a 2011 tax return Your earnings are based on the difference between the sales price and your cost of goods sold. Can i efile a 2011 tax return   This rule applies whether or not you are guaranteed a minimum amount of earnings. Can i efile a 2011 tax return It also applies whether or not you receive credit for unsold newspapers or magazines you return to your supplier. Can i efile a 2011 tax return Notary public. Can i efile a 2011 tax return   Fees you receive for services you perform as a notary public are reported on Schedule C or C-EZ. Can i efile a 2011 tax return These payments are not subject to self-employment tax (see the instructions for Schedule SE (Form 1040)). Can i efile a 2011 tax return Public official. Can i efile a 2011 tax return   Public officials generally do not report what they earn for serving in public office on Schedule C or C-EZ. Can i efile a 2011 tax return This rule applies to payments received by an elected tax collector from state funds on the basis of a fixed percentage of the taxes collected. Can i efile a 2011 tax return Public office includes any elective or appointive office of the United States or its possessions, the District of Columbia, a state or its political subdivisions, or a wholly owned instrumentality of any of these. Can i efile a 2011 tax return   Public officials of state or local governments report their fees on Schedule C or C-EZ if they are paid solely on a fee basis and if their services are eligible for, but not covered by, social security under a federal-state agreement. Can i efile a 2011 tax return Real estate agent or direct seller. Can i efile a 2011 tax return   If you are a licensed real estate agent or a direct seller, your earnings are reported on Schedule C or C-EZ if both the following apply. Can i efile a 2011 tax return Substantially all your pay for services as a real estate agent or direct seller directly relates to your sales or other output rather than to the number of hours you work. Can i efile a 2011 tax return You perform the services under a written contract that says you will not be treated as an employee for federal tax purposes. Can i efile a 2011 tax return Securities dealer. Can i efile a 2011 tax return   If you are a dealer in options or commodities, your gains and losses from dealing or trading in section 1256 contracts (regulated futures contracts, foreign currency contracts, nonequity options, dealer equity options, and dealer securities futures contracts) or property related to those contracts (such as stock used to hedge options) are reported on Schedule C or C-EZ. Can i efile a 2011 tax return For more information, see sections 1256 and 1402(i). Can i efile a 2011 tax return Securities trader. Can i efile a 2011 tax return   You are a trader in securities if you are engaged in the business of buying and selling securities for your own account. Can i efile a 2011 tax return As a trader in securities, your gain or loss from the disposition of securities is not reported on Schedule C or C-EZ. Can i efile a 2011 tax return However, see Securities dealer , earlier, for an exception that applies to section 1256 contracts. Can i efile a 2011 tax return For more information about securities traders, see Publication 550, Investment Income and Expenses. Can i efile a 2011 tax return Accounting for Your Income Accounting for your income for income tax purposes differs at times from accounting for financial purposes. Can i efile a 2011 tax return This section discusses some of the more common differences that may affect business transactions. Can i efile a 2011 tax return Figure your business income on the basis of a tax year and according to your regular method of accounting (see chapter 2). Can i efile a 2011 tax return If the sale of a product is an income-producing factor in your business, you usually have to use inventories to clearly show your income. Can i efile a 2011 tax return Dealers in real estate are not allowed to use inventories. Can i efile a 2011 tax return For more information on inventories, see chapter 2. Can i efile a 2011 tax return Income paid to a third party. Can i efile a 2011 tax return   All income you earn is taxable to you. Can i efile a 2011 tax return You cannot avoid tax by having the income paid to a third party. Can i efile a 2011 tax return Example. Can i efile a 2011 tax return You rent out your property and the rental agreement directs the lessee to pay the rent to your son. Can i efile a 2011 tax return The amount paid to your son is gross income to you. Can i efile a 2011 tax return Cash discounts. Can i efile a 2011 tax return   These are amounts the seller permits you to deduct from the invoice price for prompt payment. Can i efile a 2011 tax return For income tax purposes, you can use either of the following two methods to account for cash discounts. Can i efile a 2011 tax return Deduct the cash discount from purchases (see Line 36, Purchases Less Cost of Items Withdrawn for Personal Use in chapter 6). Can i efile a 2011 tax return Credit the cash discount to a discount income account. Can i efile a 2011 tax return You must use the chosen method every year for all your purchase discounts. Can i efile a 2011 tax return   If you use the second method, the credit balance in the account at the end of your tax year is business income. Can i efile a 2011 tax return Under this method, you do not reduce the cost of goods sold by the cash discounts you received. Can i efile a 2011 tax return When valuing your closing inventory, you cannot reduce the invoice price of merchandise on hand at the close of the tax year by the average or estimated discounts received on the merchandise. Can i efile a 2011 tax return Trade discounts. Can i efile a 2011 tax return   These are reductions from list or catalog prices and usually are not written into the invoice or charged to the customer. Can i efile a 2011 tax return Do not enter these discounts on your books of account. Can i efile a 2011 tax return Instead, use only the net amount as the cost of the merchandise purchased. Can i efile a 2011 tax return For more information, see Trade discounts in chapter 6. Can i efile a 2011 tax return Payment placed in escrow. Can i efile a 2011 tax return   If the buyer of your property places part or all of the purchase price in escrow, you do not include any part of it in gross sales until you actually or constructively receive it. Can i efile a 2011 tax return However, upon completion of the terms of the contract and the escrow agreement, you will have taxable income, even if you do not accept the money until the next year. Can i efile a 2011 tax return Sales returns and allowances. Can i efile a 2011 tax return   Credits you allow customers for returned merchandise and any other allowances you make on sales are deductions from gross sales in figuring net sales. Can i efile a 2011 tax return Advance payments. Can i efile a 2011 tax return   Special rules dealing with an accrual method of accounting for payments received in advance are discussed in chapter 2 under Accrual Method. Can i efile a 2011 tax return Insurance proceeds. Can i efile a 2011 tax return   If you receive insurance or another type of reimbursement for a casualty or theft loss, you must subtract it from the loss when you figure your deduction. Can i efile a 2011 tax return You cannot deduct the reimbursed part of a casualty or theft loss. Can i efile a 2011 tax return   For information on casualty or theft losses, see Publication 547, Casualties, Disasters, and Thefts. Can i efile a 2011 tax return Prev  Up  Next   Home   More Online Publications