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File 1040 Online

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File 1040 Online

File 1040 online 1. File 1040 online   Fuel Taxes Table of Contents Definitions Information Returns Registration RequirementsAdditional information. File 1040 online Gasoline and Aviation GasolineTaxable Events Gasoline Blendstocks Diesel Fuel and KeroseneTaxable Events Dyed Diesel Fuel and Dyed Kerosene Alaska and Feedstocks Back-up Tax Diesel-Water Fuel Emulsion Kerosene for Use in AviationTaxable Events Liability For Tax Surtax on any liquid used in a fractional ownership program aircraft as fuel Certificate for Commercial Aviation and Exempt UsesExempt use. File 1040 online Reseller statement. File 1040 online Other Fuels (Including Alternative Fuels)Taxable Events Compressed Natural Gas (CNG)Taxable Events Fuels Used on Inland WaterwaysFishing vessels. File 1040 online Deep-draft ocean-going vessels. File 1040 online Passenger vessels. File 1040 online Ocean-going barges. File 1040 online State or local governments. File 1040 online Cellulosic or Second Generation Biofuel Not Used as Fuel Biodiesel Sold as But Not Used as Fuel Definitions Excise taxes are imposed on all the following fuels. File 1040 online Gasoline, including aviation gasoline and gasoline blendstocks. File 1040 online Diesel fuel, including dyed diesel fuel. File 1040 online Diesel-water fuel emulsion. File 1040 online Kerosene, including dyed kerosene and kerosene used in aviation. File 1040 online Other Fuels (including alternative fuels). File 1040 online Compressed natural gas (CNG). File 1040 online Fuels used in commercial transportation on inland waterways. File 1040 online Any liquid used in a fractional ownership program aircraft as fuel. File 1040 online The following terms are used throughout the discussion of fuel taxes. File 1040 online Other terms are defined in the discussion of the specific fuels to which they pertain. File 1040 online Agri-biodiesel. File 1040 online   Agri-biodiesel means biodiesel derived solely from virgin oils, including esters derived from virgin vegetable oils from corn, soybeans, sunflower seeds, cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, rice bran, mustard seeds, and camelina, and from animal fats. File 1040 online Approved terminal or refinery. File 1040 online   This is a terminal operated by a registrant that is a terminal operator or a refinery operated by a registrant that is a refiner. File 1040 online Biodiesel. File 1040 online   Biodiesel means the monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet the registration requirements for fuels and fuel additives established by the Environmental Protection Agency (EPA) under section 211 of the Clean Air Act, and the requirements of the American Society of Testing Materials (ASTM) D6751. File 1040 online Blended taxable fuel. File 1040 online   This means any taxable fuel produced outside the bulk transfer/terminal system by mixing taxable fuel on which excise tax has been imposed and any other liquid on which excise tax has not been imposed. File 1040 online This does not include a mixture removed or sold during the calendar quarter if all such mixtures removed or sold by the blender contain less than 400 gallons of a liquid on which the tax has not been imposed. File 1040 online Blender. File 1040 online   This is the person that produces blended taxable fuel. File 1040 online Bulk transfer. File 1040 online   This is the transfer of taxable fuel by pipeline or vessel. File 1040 online Bulk transfer/terminal system. File 1040 online   This is the taxable fuel distribution system consisting of refineries, pipelines, vessels, and terminals. File 1040 online Fuel in the supply tank of any engine, or in any tank car, railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer/terminal system. File 1040 online Cellulosic biofuel. File 1040 online   Cellulosic biofuel means any liquid fuel produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis that meets the registration requirements for fuels and fuel additives established by the EPA under section 211 of the Clean Air Act. File 1040 online Cellulosic biofuel does not include any alcohol with a proof of less than 150 (without regard to denaturants). File 1040 online For fuels sold or used after December 31, 2009, cellulosic biofuel does not include fuel of which more than 4% (determined by weight) is any combination of water and sediment, fuel of which the ash content is more than 1%, or fuel that has an acid number greater than 25. File 1040 online Also see Second generation biofuel below. File 1040 online Diesel-water fuel emulsion. File 1040 online   A diesel-water fuel emulsion means an emulsion at least 14% of which is water. File 1040 online The emulsion additive used to produce the fuel must be registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. File 1040 online Dry lease aircraft exchange. File 1040 online   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. File 1040 online Enterer. File 1040 online   This is the importer of record (under customs law) for the taxable fuel. File 1040 online However, if the importer of record is acting as an agent, such as a customs broker, the person for whom the agent is acting is the enterer. File 1040 online If there is no importer of record, the owner at the time of entry into the United States is the enterer. File 1040 online Entry. File 1040 online   Taxable fuel is entered into the United States when it is brought into the United States and applicable customs law requires that it be entered for consumption, use, or warehousing. File 1040 online This does not apply to fuel brought into Puerto Rico (which is part of the U. File 1040 online S. File 1040 online customs territory), but does apply to fuel brought into the United States from Puerto Rico. File 1040 online Fractional ownership aircraft program and fractional program aircraft. File 1040 online   See later, under Surtax on any liquid used in a fractional ownership program aircraft as fuel. File 1040 online Measurement of taxable fuel. File 1040 online   Volumes of taxable fuel can be measured on the basis of actual volumetric gallons or gallons adjusted to 60 degrees Fahrenheit. File 1040 online Other fuels. File 1040 online   See Other Fuels (Including Alternative Fuels), later, and Alternative Fuel Credit and Alternative Fuel Mixture Credit in chapter 2. File 1040 online Pipeline operator. File 1040 online   This is the person that operates a pipeline within the bulk transfer/terminal system. File 1040 online Position holder. File 1040 online   This is the person that holds the inventory position in the taxable fuel in the terminal, as reflected in the records of the terminal operator. File 1040 online You hold the inventory position when you have a contractual agreement with the terminal operator for the use of the storage facilities and terminaling services for the taxable fuel. File 1040 online A terminal operator that owns taxable fuel in its terminal is a position holder. File 1040 online Rack. File 1040 online   This is a mechanism capable of delivering fuel into a means of transport other than a pipeline or vessel. File 1040 online Refiner. File 1040 online   This is any person that owns, operates, or otherwise controls a refinery. File 1040 online Refinery. File 1040 online   This is a facility used to produce taxable fuel and from which taxable fuel may be removed by pipeline, by vessel, or at a rack. File 1040 online However, this term does not include a facility where only blended fuel, and no other type of fuel, is produced. File 1040 online For this purpose, blended fuel is any mixture that would be blended taxable fuel if produced outside the bulk transfer/terminal system. File 1040 online Registrant. File 1040 online   This is a taxable fuel registrant (see Registration Requirements, later). File 1040 online Removal. File 1040 online   This is any physical transfer of taxable fuel. File 1040 online It also means any use of taxable fuel other than as a material in the production of taxable fuel or Other Fuels. File 1040 online However, taxable fuel is not removed when it evaporates or is otherwise lost or destroyed. File 1040 online Renewable diesel. File 1040 online   See Renewable Diesel Credits in chapter 2. File 1040 online Sale. File 1040 online   For taxable fuel not in a terminal, this is the transfer of title to, or substantial incidents of ownership in, taxable fuel to the buyer for money, services, or other property. File 1040 online For taxable fuel in a terminal, this is the transfer of the inventory position if the transferee becomes the position holder for that taxable fuel. File 1040 online Second generation biofuel. File 1040 online   This is any liquid fuel derived by, or from, qualified feedstocks, and meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U. File 1040 online S. File 1040 online C. File 1040 online 7545). File 1040 online It also includes certain liquid fuel which is derived by, or from, any cultivated algae, cyanobacteria, or lemna. File 1040 online It is not alcohol of less than 150 proof (disregard any added denaturants). File 1040 online See Form 6478 for more information. File 1040 online State. File 1040 online   This includes any state, any of its political subdivisions, the District of Columbia, and the American Red Cross. File 1040 online An Indian tribal government is treated as a state only if transactions involve the exercise of an essential tribal government function. File 1040 online Taxable fuel. File 1040 online   This means gasoline, diesel fuel, and kerosene. File 1040 online Terminal. File 1040 online   This is a storage and distribution facility supplied by pipeline or vessel, and from which taxable fuel may be removed at a rack. File 1040 online It does not include a facility at which gasoline blendstocks are used in the manufacture of products other than finished gasoline if no gasoline is removed from the facility. File 1040 online A terminal does not include any facility where finished gasoline, diesel fuel, or kerosene is stored if the facility is operated by a registrant and all such taxable fuel stored at the facility has been previously taxed upon removal from a refinery or terminal. File 1040 online Terminal operator. File 1040 online   This is any person that owns, operates, or otherwise controls a terminal. File 1040 online Throughputter. File 1040 online   This is any person that is a position holder or that owns taxable fuel within the bulk transfer/terminal system (other than in a terminal). File 1040 online Vessel operator. File 1040 online   This is the person that operates a vessel within the bulk transfer/terminal system. File 1040 online However, vessel does not include a deep draft ocean-going vessel. File 1040 online Information Returns Form 720-TO and Form 720-CS are information returns used to report monthly receipts and disbursements of liquid products. File 1040 online A liquid product is any liquid transported into storage at a terminal or delivered out of a terminal. File 1040 online For a list of products, see the product code table in the Instructions for Forms 720-TO and 720-CS. File 1040 online The returns are due the last day of the month following the month in which the transaction occurs. File 1040 online Generally, these returns can be filed on paper or electronically. File 1040 online For information on filing electronically, see Publication 3536, Motor Fuel Excise Tax EDI Guide. File 1040 online Publication 3536 is only available on the IRS website. File 1040 online Form 720-TO. File 1040 online   This information return is used by terminal operators to report receipts and disbursements of all liquid products to and from all approved terminals. File 1040 online Each terminal operator must file a separate form for each approved terminal. File 1040 online Form 720-CS. File 1040 online   This information return must be filed by bulk transport carriers (barges, vessels, and pipelines) who receive liquid product from an approved terminal or deliver liquid product to an approved terminal. File 1040 online Registration Requirements The following discussion applies to excise tax registration requirements for activities relating to fuels only. File 1040 online See Form 637 for other persons who must register and for more information about registration. File 1040 online Persons that are required to be registered. File 1040 online   You are required to be registered if you are a: Blender; Enterer; Pipeline operator; Position holder; Refiner; Terminal operator; Vessel operator; Producer or importer of alcohol, biodiesel, agri-biodiesel, and renewable diesel; or Producer of cellulosic or second generation biofuel. File 1040 online Persons that may register. File 1040 online   You may, but are not required to, register if you are a: Feedstock user, Industrial user, Throughputter that is not a position holder, Ultimate vendor, Diesel-water fuel emulsion producer, Credit card issuer, or Alternative fuel claimant. File 1040 online Ultimate vendors, credit card issuers, and alternative fuel claimants do not need to be registered to buy or sell fuel. File 1040 online However, they must be registered to file claims for certain sales and uses of fuel. File 1040 online See Form 637 for more information. File 1040 online Taxable fuel registrant. File 1040 online   This is an enterer, an industrial user, a refiner, a terminal operator, or a throughputter who received a Letter of Registration under the excise tax registration provisions and whose registration has not been revoked or suspended. File 1040 online The term registrant as used in the discussions of these fuels means a taxable fuel registrant. File 1040 online Additional information. File 1040 online   See the Form 637 instructions for the information you must submit when you apply for registration. File 1040 online Failure to register. File 1040 online   The penalty for failure to register if you must register, unless due to reasonable cause, is $10,000 for the initial failure, and then $1,000 each day thereafter you fail to register. File 1040 online Gasoline and Aviation Gasoline Gasoline. File 1040 online   Gasoline means all products commonly or commercially known or sold as gasoline with an octane rating of 75 or more that are suitable for use as a motor fuel. File 1040 online Gasoline includes any gasoline blend other than: Qualified ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from coal, including peat), Partially exempt ethanol and methanol fuel (at least 85 percent of the blend consists of alcohol produced from natural gas), or Denatured alcohol. File 1040 online Gasoline also includes gasoline blendstocks, discussed later. File 1040 online Aviation gasoline. File 1040 online   This means all special grades of gasoline suitable for use in aviation reciprocating engines and covered by ASTM specification D910 or military specification MIL-G-5572. File 1040 online Taxable Events The tax on gasoline is $. File 1040 online 184 per gallon. File 1040 online The tax on aviation gasoline is $. File 1040 online 194 per gallon. File 1040 online When used in a fractional ownership program aircraft, gasoline also is subject to a surtax of $. File 1040 online 141 per gallon. File 1040 online See Surtax on any liquid used in a fractional ownership program aircraft as fuel, later. File 1040 online Tax is imposed on the removal, entry, or sale of gasoline. File 1040 online Each of these events is discussed later. File 1040 online Also, see the special rules that apply to gasoline blendstocks, later. File 1040 online If the tax is paid on the gasoline in more than one event, a refund may be allowed for the “second” tax paid. File 1040 online See Refunds of Second Tax in chapter 2. File 1040 online Removal from terminal. File 1040 online   All removals of gasoline at a terminal rack are taxable. File 1040 online The position holder for that gasoline is liable for the tax. File 1040 online Two-party exchanges. File 1040 online   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. File 1040 online A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. File 1040 online The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. File 1040 online The exchange transaction occurs before or at the same time as removal across the rack by the receiving person. File 1040 online The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. File 1040 online The transaction is subject to a written contract. File 1040 online Terminal operator's liability. File 1040 online   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. File 1040 online   However, a terminal operator meeting all the following conditions at the time of the removal will not be liable for the tax. File 1040 online The terminal operator is a registrant. File 1040 online The terminal operator has an unexpired notification certificate (discussed later) from the position holder. File 1040 online The terminal operator has no reason to believe any information on the certificate is false. File 1040 online Removal from refinery. File 1040 online   The removal of gasoline from a refinery is taxable if the removal meets either of the following conditions. File 1040 online It is made by bulk transfer and the refiner, the owner of the gasoline immediately before the removal, or the operator of the pipeline or vessel is not a registrant. File 1040 online It is made at the refinery rack. File 1040 online The refiner is liable for the tax. File 1040 online Exception. File 1040 online   The tax does not apply to a removal of gasoline at the refinery rack if all the following requirements are met. File 1040 online The gasoline is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. File 1040 online The gasoline is received at a facility operated by a registrant and located within the bulk transfer/terminal system. File 1040 online The removal from the refinery is by railcar. File 1040 online The same person operates the refinery and the facility at which the gasoline is received. File 1040 online Entry into the United States. File 1040 online   The entry of gasoline into the United States is taxable if the entry meets either of the following conditions. File 1040 online It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. File 1040 online It is not made by bulk transfer. File 1040 online The enterer is liable for the tax. File 1040 online Importer of record's liability. File 1040 online   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. File 1040 online   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. File 1040 online The importer of record has an unexpired notification certificate (discussed later) from the enterer. File 1040 online The importer of record has no reason to believe any information in the certificate is false. File 1040 online Customs bond. File 1040 online   The customs bond will not be charged for the tax imposed on the entry of the gasoline if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. File 1040 online Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. File 1040 online   The removal by bulk transfer of gasoline from a terminal is taxable if the position holder for the gasoline or the operator of the pipeline or vessel is not a registrant. File 1040 online The position holder is liable for the tax. File 1040 online The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. File 1040 online However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. File 1040 online Bulk transfers not received at approved terminal or refinery. File 1040 online   The removal by bulk transfer of gasoline from a terminal or refinery, or the entry of gasoline by bulk transfer into the United States, is taxable if the following conditions apply. File 1040 online No tax was previously imposed (as discussed earlier) on any of the following events. File 1040 online The removal from the refinery. File 1040 online The entry into the United States. File 1040 online The removal from a terminal by an unregistered position holder. File 1040 online Upon removal from the pipeline or vessel, the gasoline is not received at an approved terminal or refinery (or at another pipeline or vessel). File 1040 online   The owner of the gasoline when it is removed from the pipeline or vessel is liable for the tax. File 1040 online However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. File 1040 online The owner is a registrant. File 1040 online The owner has an unexpired notification certificate (discussed later) from the operator of the terminal or refinery where the gasoline is received. File 1040 online The owner has no reason to believe any information on the certificate is false. File 1040 online The operator of the facility where the gasoline is received is liable for the tax if the owner meets these conditions. File 1040 online The operator is jointly and severally liable if the owner does not meet these conditions. File 1040 online Sales to unregistered person. File 1040 online   The sale of gasoline located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. File 1040 online   The seller is liable for the tax. File 1040 online However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. File 1040 online   The seller is a registrant. File 1040 online The seller has an unexpired notification certificate (discussed later) from the buyer. File 1040 online The seller has no reason to believe any information on the certificate is false. File 1040 online The buyer of the gasoline is liable for the tax if the seller meets these conditions. File 1040 online The buyer is jointly and severally liable if the seller does not meet these conditions. File 1040 online Exception. File 1040 online   The tax does not apply to a sale if all of the following apply. File 1040 online The buyer's principal place of business is not in the United States. File 1040 online The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. File 1040 online The seller is a registrant and the exporter of record. File 1040 online The fuel was exported. File 1040 online Removal or sale of blended gasoline. File 1040 online   The removal or sale of blended gasoline by the blender is taxable. File 1040 online See Blended taxable fuel under Definitions, earlier. File 1040 online   The blender is liable for the tax. File 1040 online The tax is figured on the number of gallons not previously subject to the tax on gasoline. File 1040 online   Persons who blend alcohol with gasoline to produce an alcohol fuel mixture outside the bulk transfer/terminal system must pay the gasoline tax on the volume of alcohol in the mixture. File 1040 online See Form 720 to report this tax. File 1040 online You also must be registered with the IRS as a blender. File 1040 online See Form 637. File 1040 online   However, if an untaxed liquid is sold as taxed taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. File 1040 online Notification certificate. File 1040 online   The notification certificate is used to notify a person of the registration status of the registrant. File 1040 online A copy of the registrant's letter of registration cannot be used as a notification certificate. File 1040 online A model notification certificate is shown in the Appendix as Model Certificate C. File 1040 online A notification certificate must contain all information necessary to complete the model. File 1040 online   The certificate may be included as part of any business records normally used for a sale. File 1040 online A certificate expires on the earlier of the date the registrant provides a new certificate, or the date the recipient of the certificate is notified that the registrant's registration has been revoked or suspended. File 1040 online The registrant must provide a new certificate if any information on a certificate has changed. File 1040 online Additional persons liable. File 1040 online   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax is imposed on: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty, or Anyone who willfully causes the person to fail to pay the tax. File 1040 online Gasoline Blendstocks Gasoline blendstocks may be subject to $. File 1040 online 001 per gallon LUST tax as discussed below. File 1040 online Gasoline includes gasoline blendstocks. File 1040 online The previous discussions apply to these blendstocks. File 1040 online However, if certain conditions are met, the removal, entry, or sale of gasoline blendstocks are taxed at $. File 1040 online 001 per gallon or are not subject to the excise tax. File 1040 online Blendstocks. File 1040 online   Gasoline blendstocks are: Alkylate, Butane, Butene, Catalytically cracked gasoline, Coker gasoline, Ethyl tertiary butyl ether (ETBE), Hexane, Hydrocrackate, Isomerate, Methyl tertiary butyl ether (MTBE), Mixed xylene (not including any separated isomer of xylene), Natural gasoline, Pentane, Pentane mixture, Polymer gasoline, Raffinate, Reformate, Straight-run gasoline, Straight-run naphtha, Tertiary amyl methyl ether (TAME), Tertiary butyl alcohol (gasoline grade) (TBA), Thermally cracked gasoline, and Toluene. File 1040 online   However, gasoline blendstocks do not include any product that cannot be used without further processing in the production of finished gasoline. File 1040 online Not used to produce finished gasoline. File 1040 online   Gasoline blendstocks not used to produce finished gasoline are not taxable (other than LUST) if the following conditions are met. File 1040 online Removals and entries not connected to sale. File 1040 online   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant. File 1040 online Removals and entries connected to sale. File 1040 online   Nonbulk removals and entries are not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) is a registrant, and at the time of the sale, meets the following requirements. File 1040 online The person has an unexpired certificate (discussed later) from the buyer. File 1040 online The person has no reason to believe any information in the certificate is false. File 1040 online Sales after removal or entry. File 1040 online   The sale of a gasoline blendstock that was not subject to tax on its nonbulk removal or entry, as discussed earlier, is taxable. File 1040 online The seller is liable for the tax. File 1040 online However, the sale is not taxable if, at the time of the sale, the seller meets the following requirements. File 1040 online The seller has an unexpired certificate (discussed next) from the buyer. File 1040 online The seller has no reason to believe any information in the certificate is false. File 1040 online Certificate of buyer. File 1040 online   The certificate from the buyer certifies the gasoline blendstocks will not be used to produce finished gasoline. File 1040 online The certificate may be included as part of any business records normally used for a sale. File 1040 online A model certificate is shown in the Appendix as Model Certificate D. File 1040 online The certificate must contain all information necessary to complete the model. File 1040 online   A certificate expires on the earliest of the following dates. File 1040 online The date 1 year after the effective date (not earlier than the date signed) of the certificate. File 1040 online The date a new certificate is provided to the seller. File 1040 online The date the seller is notified that the buyer's right to provide a certificate has been withdrawn. File 1040 online The buyer must provide a new certificate if any information on a certificate has changed. File 1040 online   The IRS may withdraw the buyer's right to provide a certificate if that buyer uses the gasoline blendstocks in the production of finished gasoline or resells the blendstocks without getting a certificate from its buyer. File 1040 online Received at approved terminal or refinery. File 1040 online   The nonbulk removal or entry of gasoline blendstocks received at an approved terminal or refinery is not taxable if the person otherwise liable for the tax (position holder, refiner, or enterer) meets all the following requirements. File 1040 online The person is a registrant. File 1040 online The person has an unexpired notification certificate (discussed earlier) from the operator of the terminal or refinery where the gasoline blendstocks are received. File 1040 online The person has no reason to believe any information on the certificate is false. File 1040 online Bulk transfers to registered industrial user. File 1040 online   The removal of gasoline blendstocks from a pipeline or vessel is not taxable (other than LUST) if the blendstocks are received by a registrant that is an industrial user. File 1040 online An industrial user is any person that receives gasoline blendstocks by bulk transfer for its own use in the manufacture of any product other than finished gasoline. File 1040 online Credits or Refunds. File 1040 online   A credit or refund of the gasoline tax may be allowable if gasoline is used for a nontaxable purpose or exempt use. File 1040 online For more information, see chapter 2. File 1040 online Diesel Fuel and Kerosene Generally, diesel fuel and kerosene are taxed in the same manner as gasoline (discussed earlier). File 1040 online However, special rules (discussed later) apply to dyed diesel fuel and dyed kerosene, and to undyed diesel fuel and undyed kerosene sold or used in Alaska for certain nontaxable uses and undyed kerosene used for a feedstock purpose. File 1040 online Diesel fuel means: Any liquid that without further processing or blending is suitable for use as a fuel in a diesel-powered highway vehicle or train, and Transmix. File 1040 online A liquid is suitable for this use if the liquid has practical and commercial fitness for use in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. File 1040 online A liquid may possess this practical and commercial fitness even though the specified use is not the predominant use of the liquid. File 1040 online However, a liquid does not possess this practical and commercial fitness solely by reason of its possible or rare use as a fuel in the propulsion engine of a diesel-powered highway vehicle or diesel-powered train. File 1040 online Diesel fuel does not include gasoline, kerosene, excluded liquid, No. File 1040 online 5 and No. File 1040 online 6 fuel oils covered by ASTM specification D396, or F-76 (Fuel Naval Distillate) covered by military specification MIL-F-16884. File 1040 online An excluded liquid is either of the following. File 1040 online A liquid that contains less than 4% normal paraffins. File 1040 online A liquid with all the following properties. File 1040 online Distillation range of 125 degrees Fahrenheit or less. File 1040 online Sulfur content of 10 ppm or less. File 1040 online Minimum color of +27 Saybolt. File 1040 online Transmix means a by-product of refined products created by the mixing of different specification products during pipeline transportation. File 1040 online Kerosene. File 1040 online   This means any of the following liquids. File 1040 online One of the two grades of kerosene (No. File 1040 online 1-K and No. File 1040 online 2-K) covered by ASTM specification D3699. File 1040 online Kerosene-type jet fuel covered by ASTM specification D1655 or military specification MIL-DTL-5624T (Grade JP-5) or MIL-DTL-83133E (Grade JP-8). File 1040 online See Kerosene for Use in Aviation, later. File 1040 online   However, kerosene does not include excluded liquid, discussed earlier. File 1040 online   Kerosene also includes any liquid that would be described above but for the presence of a dye of the type used to dye kerosene for a nontaxable use. File 1040 online Diesel-powered highway vehicle. File 1040 online   This is any self-propelled vehicle designed to carry a load over public highways (whether or not also designed to perform other functions) and propelled by a diesel-powered engine. File 1040 online Specially designed mobile machinery for nontransportation functions and vehicles specially designed for off-highway transportation are generally not considered diesel-powered highway vehicles. File 1040 online For more information about these vehicles and for information about vehicles not considered highway vehicles, see Off-Highway Business Use (No. File 1040 online 2) in chapter 2. File 1040 online Diesel-powered train. File 1040 online   This is any diesel-powered equipment or machinery that rides on rails. File 1040 online The term includes a locomotive, work train, switching engine, and track maintenance machine. File 1040 online Taxable Events The tax on diesel fuel and kerosene is $. File 1040 online 244 per gallon. File 1040 online It is imposed on the removal, entry, or sale of diesel fuel and kerosene. File 1040 online Each of these events is discussed later. File 1040 online Only the $. File 1040 online 001 LUST tax applies to dyed diesel fuel and dyed kerosene, discussed later. File 1040 online If the tax is paid on the diesel fuel or kerosene in more than one event, a refund may be allowed for the “second” tax paid. File 1040 online See Refunds of Second Tax in chapter 2. File 1040 online Use in certain intercity and local buses. File 1040 online   Dyed diesel fuel and dyed kerosene cannot be used in certain intercity and local buses. File 1040 online A claim for $. File 1040 online 17 per gallon may be made by the registered ultimate vendor (under certain conditions) or the ultimate purchaser for undyed diesel fuel or undyed kerosene sold for use in certain intercity or local buses. File 1040 online An intercity or local bus is a bus engaged in furnishing (for compensation) passenger land transportation available to the general public. File 1040 online The bus must be engaged in one of the following activities. File 1040 online Scheduled transportation along regular routes regardless of the size of the bus. File 1040 online Nonscheduled transportation if the seating capacity of the bus is at least 20 adults (not including the driver). File 1040 online A bus is available to the general public if the bus is available for hire to more than a limited number of persons, groups, or organizations. File 1040 online Removal from terminal. File 1040 online   All removals of diesel fuel and kerosene at a terminal rack are taxable. File 1040 online The position holder for that fuel is liable for the tax. File 1040 online Two-party exchanges. File 1040 online   In a two-party exchange, the receiving person, not the delivering person, is liable for the tax imposed on the removal of taxable fuel from the terminal at the terminal rack. File 1040 online A two-party exchange means a transaction (other than a sale) where the delivering person and receiving person are both taxable fuel registrants and all of the following apply. File 1040 online The transaction includes a transfer from the delivering person, who holds the inventory position for the taxable fuel in the terminal as reflected in the records of the terminal operator. File 1040 online The exchange transaction occurs before or at the same time as completion of removal across the rack by the receiving person. File 1040 online The terminal operator in its records treats the receiving person as the person that removes the product across the terminal rack for purposes of reporting the transaction on Form 720-TO. File 1040 online The transaction is subject to a written contract. File 1040 online Terminal operator's liability. File 1040 online   The terminal operator is jointly and severally liable for the tax if the terminal operator provides any person with any bill of lading, shipping paper, or similar document indicating that diesel fuel or kerosene is dyed (discussed later). File 1040 online   The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator and is not a registrant. File 1040 online However, a terminal operator will not be liable for the tax in this situation if, at the time of the removal, the following conditions are met. File 1040 online The terminal operator is a registrant. File 1040 online The terminal operator has an unexpired notification certificate (discussed under Gasoline) from the position holder. File 1040 online The terminal operator has no reason to believe any information on the certificate is false. File 1040 online Removal from refinery. File 1040 online   The removal of diesel fuel or kerosene from a refinery is taxable if the removal meets either of the following conditions. File 1040 online It is made by bulk transfer and the refiner, the owner of the fuel immediately before the removal, or the operator of the pipeline or vessel is not a registrant. File 1040 online It is made at the refinery rack. File 1040 online The refiner is liable for the tax. File 1040 online Exception. File 1040 online   The tax does not apply to a removal of diesel fuel or kerosene at the refinery rack if all the following conditions are met. File 1040 online The diesel fuel or kerosene is removed from an approved refinery not served by pipeline (other than for receiving crude oil) or vessel. File 1040 online The diesel fuel or kerosene is received at a facility operated by a registrant and located within the bulk transfer/terminal system. File 1040 online The removal from the refinery is by: Railcar and the same person operates the refinery and the facility at which the diesel fuel or kerosene is received, or For diesel fuel only, a trailer or semi-trailer used exclusively to transport the diesel fuel from a refinery (described in (1)) to a facility (described in (2)) less than 20 miles from the refinery. File 1040 online Entry into the United States. File 1040 online   The entry of diesel fuel or kerosene into the United States is taxable if the entry meets either of the following conditions. File 1040 online It is made by bulk transfer and the enterer or the operator of the pipeline or vessel is not a registrant. File 1040 online It is not made by bulk transfer. File 1040 online The enterer is liable for the tax. File 1040 online Importer of record's liability. File 1040 online   The importer of record is jointly and severally liable for the tax with the enterer if the importer of record is not the enterer of the taxable fuel and the enterer is not a taxable fuel registrant. File 1040 online   However, an importer of record meeting both of the following conditions at the time of the entry will not be liable for the tax. File 1040 online The importer of record has an unexpired notification certificate (discussed under Gasoline) from the enterer. File 1040 online The importer of record has no reason to believe any information in the certificate is false. File 1040 online Customs bond. File 1040 online   The customs bond will not be charged for the tax imposed on the entry of the diesel fuel or kerosene if at the time of entry the surety has an unexpired notification certificate from the enterer and has no reason to believe any information in the certificate is false. File 1040 online Removal from a terminal by unregistered position holder or unregistered pipeline or vessel operator. File 1040 online   The removal by bulk transfer of diesel fuel or kerosene from a terminal is taxable if the position holder for that fuel or the operator of the pipeline or vessel is not a registrant. File 1040 online The position holder is liable for the tax. File 1040 online The terminal operator is jointly and severally liable for the tax if the position holder is a person other than the terminal operator. File 1040 online However, see Terminal operator's liability under Removal from terminal, earlier, for an exception. File 1040 online Bulk transfers not received at approved terminal or refinery. File 1040 online   The removal by bulk transfer of diesel fuel or kerosene from a terminal or refinery or the entry of diesel fuel or kerosene by bulk transfer into the United States is taxable if the following conditions apply. File 1040 online No tax was previously imposed (as discussed earlier) on any of the following events. File 1040 online The removal from the refinery. File 1040 online The entry into the United States. File 1040 online The removal from a terminal by an unregistered position holder. File 1040 online Upon removal from the pipeline or vessel, the diesel fuel or kerosene is not received at an approved terminal or refinery (or at another pipeline or vessel). File 1040 online   The owner of the diesel fuel or kerosene when it is removed from the pipeline or vessel is liable for the tax. File 1040 online However, an owner meeting all the following conditions at the time of the removal will not be liable for the tax. File 1040 online The owner is a registrant. File 1040 online The owner has an unexpired notification certificate (discussed under Gasoline) from the operator of the terminal or refinery where the diesel fuel or kerosene is received. File 1040 online The owner has no reason to believe any information on the certificate is false. File 1040 online The operator of the facility where the diesel fuel or kerosene is received is liable for the tax if the owner meets these conditions. File 1040 online The operator is jointly and severally liable if the owner does not meet these conditions. File 1040 online Sales to unregistered person. File 1040 online   The sale of diesel fuel or kerosene located within the bulk transfer/terminal system to a person that is not a registrant is taxable if tax was not previously imposed under any of the events discussed earlier. File 1040 online   The seller is liable for the tax. File 1040 online However, a seller meeting all the following conditions at the time of the sale will not be liable for the tax. File 1040 online The seller is a registrant. File 1040 online The seller has an unexpired notification certificate (discussed under Gasoline) from the buyer. File 1040 online The seller has no reason to believe any information on the certificate is false. File 1040 online The buyer of the diesel fuel or kerosene is liable for the tax if the seller meets these conditions. File 1040 online The buyer is jointly and severally liable if the seller does not meet these conditions. File 1040 online Exception. File 1040 online   The tax does not apply to a sale if all of the following apply. File 1040 online The buyer's principal place of business is not in the United States. File 1040 online The sale occurs as the fuel is delivered into a transport vessel with a capacity of at least 20,000 barrels of fuel. File 1040 online The seller is a registrant and the exporter of record. File 1040 online The fuel was exported. File 1040 online Removal or sale of blended diesel fuel or kerosene. File 1040 online   The removal or sale of blended diesel fuel or blended kerosene by the blender is taxable. File 1040 online Blended taxable fuel produced using biodiesel is subject to the tax. File 1040 online See Blended taxable fuel under Definitions, earlier. File 1040 online   The blender is liable for the tax. File 1040 online The tax is figured on the number of gallons not previously subject to the tax. File 1040 online   Persons who blend biodiesel with undyed diesel fuel to produce and sell or use a biodiesel mixture outside the bulk transfer/terminal system must pay the diesel fuel tax on the volume of biodiesel in the mixture. File 1040 online Generally, the biodiesel mixture must be diesel fuel (defined earlier). File 1040 online See Form 720 to report this tax. File 1040 online You also must be registered by the IRS as a blender. File 1040 online See Form 637 for more information. File 1040 online   However, if an untaxed liquid is sold as taxable fuel and that untaxed liquid is used to produce blended taxable fuel, the person that sold the untaxed liquid is jointly and severally liable for the tax imposed on the blender's sale or removal of the blended taxable fuel. File 1040 online Additional persons liable. File 1040 online   When the person liable for the tax willfully fails to pay the tax, joint and several liability for the tax applies to: Any officer, employee, or agent of the person who is under a duty to ensure the payment of the tax and who willfully fails to perform that duty; or Anyone who willfully causes the person to fail to pay the tax. File 1040 online Credits or Refunds. File 1040 online   A credit or refund is allowable for the tax on undyed diesel fuel or undyed kerosene used for a nontaxable use. File 1040 online For more information, see chapter 2. File 1040 online Dyed Diesel Fuel and Dyed Kerosene Dyed diesel fuel and dyed kerosene are subject to $. File 1040 online 001 per gallon LUST tax as discussed below, unless the fuel is for export. File 1040 online The excise tax is not imposed on the removal, entry, or sale of diesel fuel or kerosene (other than the LUST tax) if all the following tests are met. File 1040 online The person otherwise liable for tax (for example, the position holder) is a registrant. File 1040 online In the case of a removal from a terminal, the terminal is an approved terminal. File 1040 online The diesel fuel or kerosene satisfies the dyeing requirements (described next). File 1040 online Dyeing requirements. File 1040 online   Diesel fuel or kerosene satisfies the dyeing requirements only if it satisfies the following requirements. File 1040 online It contains the dye Solvent Red 164 (and no other dye) at a concentration spectrally equivalent to at least 3. File 1040 online 9 pounds of the solid dye standard Solvent Red 26 per thousand barrels of fuel or any dye of a type and in a concentration that has been approved by the Commissioner. File 1040 online Is indelibly dyed by mechanical injection. File 1040 online See section 6 of Notice 2005-80 for transition rules that apply until final regulations are issued by the IRS. File 1040 online Notice required. File 1040 online   A legible and conspicuous notice stating either: DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE or DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE must be: Provided by the terminal operator to any person that receives dyed diesel fuel or dyed kerosene at a terminal rack of that operator, and Posted by a seller on any retail pump or other delivery facility where it sells dyed diesel fuel or dyed kerosene for use by its buyer. File 1040 online   The notice under item (1) must be provided by the time of the removal and must appear on all shipping papers, bills of lading, and similar documents accompanying the removal of the fuel. File 1040 online   Any seller that fails to post the required notice under item (2) is presumed to know that the fuel will be used for a taxable use (a use other than a nontaxable use listed later). File 1040 online That seller is subject to the penalty described next. File 1040 online Penalty. File 1040 online   A penalty is imposed on a person if any of the following situations apply. File 1040 online Any dyed fuel is sold or held for sale by the person for a use the person knows or has reason to know is not a nontaxable use of the fuel. File 1040 online Any dyed fuel is held for use or used by the person for a use other than a nontaxable use and the person knew, or had reason to know, that the fuel was dyed. File 1040 online The person willfully alters, chemically or otherwise, or attempts to so alter, the strength or composition of any dye in dyed fuel. File 1040 online The person has knowledge that a dyed fuel that has been altered, as described in (3) above, sells or holds for sale such fuel for any use for which the person knows or has reason to know is not a nontaxable use of the fuel. File 1040 online   The penalty is the greater of $1,000 or $10 per gallon of the dyed diesel fuel or dyed kerosene involved. File 1040 online After the first violation, the $1,000 portion of the penalty increases depending on the number of violations. File 1040 online   This penalty is in addition to any tax imposed on the fuel. File 1040 online   If the penalty is imposed, each officer, employee, or agent of a business entity who willfully participated in any act giving rise to the penalty is jointly and severally liable with that entity for the penalty. File 1040 online   There is no administrative appeal or review allowed for the third and subsequent penalty imposed by section 6715 on any person except for: Fraud or a mistake in the chemical analysis, or Mathematical calculation of the penalty. File 1040 online   If you are liable for the penalty, you may also be liable for the back-up tax, discussed later. File 1040 online However, the penalty applies only to dyed diesel fuel and dyed kerosene, while the back-up tax may apply to other fuels. File 1040 online The penalty may apply if the fuel is held for sale or use for a taxable use while the back-up tax does not apply unless the fuel is delivered into a fuel supply tank. File 1040 online Exception to penalty. File 1040 online   The penalty under item (3) will not apply in any of the following situations. File 1040 online Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any undyed liquid and the resulting product meets the dyeing requirements. File 1040 online Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with any other liquid (other than diesel fuel or kerosene) that contains the type and amount of dye required to meet the dyeing requirements. File 1040 online The alteration or attempted alteration occurs in an exempt area of Alaska. File 1040 online See Removal for sale or use in Alaska, later. File 1040 online Diesel fuel or kerosene meeting the dyeing requirements (described earlier) is blended with diesel fuel or kerosene not meeting the dyeing requirements and the blending occurs as part of a nontaxable use (other than export), discussed later. File 1040 online Alaska and Feedstocks Tax of $. File 1040 online 001 per gallon is imposed on: Undyed diesel fuel or undyed kerosene sold or used in Alaska for certain nontaxable uses (see Later sales on page 10). File 1040 online Undyed kerosene used for feedstock purposes. File 1040 online Removal for sale or use in Alaska. File 1040 online   No tax is imposed on the removal, entry, or sale of diesel fuel or kerosene in Alaska for ultimate sale or use in certain areas of Alaska for certain nontaxable uses. File 1040 online The removal or entry of any diesel fuel or kerosene is not taxed if all the following requirements are satisfied. File 1040 online The person otherwise liable for the tax (position holder, refiner, or enterer): Is a registrant, Can show satisfactory evidence of the nontaxable nature of the transaction, and Has no reason to believe the evidence is false. File 1040 online In the case of a removal from a terminal, the terminal is an approved terminal. File 1040 online The owner of the fuel immediately after the removal or entry holds the fuel for its own use in a nontaxable use (discussed later) or is a qualified dealer. File 1040 online   If all three of the requirements above are not met, then tax is imposed at $. File 1040 online 244 per gallon. File 1040 online   A qualified dealer is any person that holds a qualified dealer license from the state of Alaska or has been registered by the IRS as a qualified retailer. File 1040 online Satisfactory evidence may include copies of qualified dealer licenses or exemption certificates obtained for state tax purposes. File 1040 online Later sales. File 1040 online   The excise tax applies to diesel fuel or kerosene sold by a qualified dealer after the removal or entry. File 1040 online The tax is imposed at the time of the sale and the qualified dealer is liable for the tax. File 1040 online However, the sale is not taxable (other than the LUST tax at $. File 1040 online 001 per gallon) if all the following requirements are met. File 1040 online The fuel is sold in Alaska for certain nontaxable uses. File 1040 online The buyer buys the fuel for its own use in a nontaxable use or is a qualified dealer. File 1040 online The seller can show satisfactory evidence of the nontaxable nature of the transaction and has no reason to believe the evidence is false. File 1040 online Feedstock purposes. File 1040 online   The $. File 1040 online 001 per gallon LUST tax is imposed on the removal or entry of undyed kerosene if all the following conditions are met. File 1040 online The person otherwise liable for tax (position holder, refiner, or enterer) is a registrant. File 1040 online In the case of a removal from a terminal, the terminal is an approved terminal. File 1040 online Either: The person otherwise liable for tax uses the kerosene for a feedstock purpose, or The kerosene is sold for use by the buyer for a feedstock purpose and, at the time of the sale, the person otherwise liable for tax has an unexpired certificate (described later) from the buyer and has no reason to believe any information on the certificate is false. File 1040 online   If all of the requirements above are not met, then tax is imposed at $. File 1040 online 244 per gallon. File 1040 online   Kerosene is used for a feedstock purpose when it is used for nonfuel purposes in the manufacture or production of any substance other than gasoline, diesel fuel, or Other Fuels. File 1040 online For example, kerosene is used for a feedstock purpose when it is used as an ingredient in the production of paint, but is not used for a feedstock purpose when it is used to power machinery at a factory where paint is produced. File 1040 online A feedstock user is a person that uses kerosene for a feedstock purpose. File 1040 online A registered feedstock user is a person that has been registered by the IRS as a feedstock user. File 1040 online See Registration Requirements, earlier. File 1040 online Later sales. File 1040 online   The excise tax ($. File 1040 online 244 per gallon) applies to kerosene sold for use by the buyer for a feedstock purpose (item (3)(b) above) if the buyer in that sale later sells the kerosene. File 1040 online The tax is imposed at the time of the later sale and that seller is liable for the tax. File 1040 online Certificate. File 1040 online   The certificate from the buyer certifies the buyer is a registered feedstock user and the kerosene will be used by the buyer for a feedstock purpose. File 1040 online The certificate may be included as part of any business records normally used for a sale. File 1040 online A model certificate is shown in the Appendix as Model Certificate G. File 1040 online Your certificate must contain all information necessary to complete the model. File 1040 online   A certificate expires on the earliest of the following dates. File 1040 online The date 1 year after the effective date (not earlier than the date signed) of the certificate. File 1040 online The date the seller is provided a new certificate or notice that the current certificate is invalid. File 1040 online The date the seller is notified the buyer's registration has been revoked or suspended. File 1040 online   The buyer must provide a new certificate if any information on a certificate has changed. File 1040 online Back-up Tax Tax is imposed on the delivery of any of the following into the fuel supply tank of a diesel-powered highway vehicle. File 1040 online Any dyed diesel fuel or dyed kerosene for other than a nontaxable use. File 1040 online Any undyed diesel fuel or undyed kerosene on which a credit or refund (for fuel used for a nontaxable purpose) has been allowed. File 1040 online Any liquid other than gasoline, diesel fuel, or kerosene. File 1040 online Generally, this back-up tax is imposed at a rate of $. File 1040 online 244 per gallon. File 1040 online Liability for tax. File 1040 online   Generally, the operator of the vehicle into which the fuel is delivered is liable for the tax. File 1040 online In addition, the seller of the diesel fuel or kerosene is jointly and severally liable for the tax if the seller knows or has reason to know that the fuel will be used for other than a nontaxable use. File 1040 online Exemptions from the back-up tax. File 1040 online   The back-up tax does not apply to a delivery of diesel fuel or kerosene for uses 1, 2, 6, 7, 12, 13, 14, and 15 listed under Definitions of Nontaxable Uses in chapter 2. File 1040 online   In addition, since the back-up tax is imposed only on the delivery into the fuel supply tank of a diesel-powered vehicle or train, the tax does not apply to diesel fuel or kerosene used as heating oil or in stationary engines. File 1040 online Diesel-Water Fuel Emulsion Diesel-water fuel emulsion means diesel fuel at least 14% of which is water and for which the emulsion additive is registered by a United States manufacturer with the EPA under section 211 of the Clean Air Act as in effect on March 31, 2003. File 1040 online A reduced tax rate of $. File 1040 online 198 per gallon is imposed on a diesel-water fuel emulsion. File 1040 online To be eligible for the reduced rate, the person who sells, removes, or uses the diesel-water fuel emulsion must be registered by the IRS. File 1040 online If the diesel-water fuel emulsion does not meet the requirements above, or if the person who sells, removes, or uses the fuel is not registered, the diesel-water fuel emulsion is taxed at $. File 1040 online 244 per gallon. File 1040 online Credits or refunds. File 1040 online   The allowance for a credit or refund on a diesel-water fuel emulsion is discussed in chapter 2. File 1040 online Kerosene for Use in Aviation Taxable Events Generally, kerosene is taxed at $. File 1040 online 244 per gallon unless a reduced rate applies (see Diesel Fuel and Kerosene, earlier). File 1040 online For kerosene removed directly from a terminal into the fuel tank of an aircraft for use in noncommercial aviation, the tax rate is $. File 1040 online 219. File 1040 online The rate of $. File 1040 online 219 also applies if kerosene is removed into any aircraft from a qualified refueler truck, tanker, or tank wagon that is loaded with the kerosene from a terminal that is located within an airport. File 1040 online The airport terminal does not need to be a secured airport terminal for this rate to apply. File 1040 online However, the refueler truck, tanker, or tank wagon must meet the requirements discussed under Certain refueler trucks, tankers, and tank wagons, treated as terminals, later. File 1040 online For kerosene removed directly into the fuel tank of an aircraft for use in commercial aviation, the rate of tax is $. File 1040 online 044 per gallon. File 1040 online For kerosene removed into an aircraft from a qualified refueler truck, tanker, or tank wagon, the $. File 1040 online 044 rate applies only if the truck, tanker, or tank wagon is loaded at a terminal that is located in a secured area of the airport. File 1040 online See Terminal located within a secured area of an airport, later. File 1040 online In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. File 1040 online For kerosene removed directly into the fuel tank of an aircraft for a use exempt from tax under section 4041(c) (such as use in an aircraft for the exclusive use of a state or local government), the rate of tax is $. File 1040 online 001. File 1040 online There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. File 1040 online The kerosene must be removed from a qualifying refueler truck, tanker, or tank wagon loaded at a terminal located within a secured area of an airport. File 1040 online See Terminal located within a secured area of an airport, later. File 1040 online In addition, the operator must provide the position holder with a certificate similar to Model Certificate K in the Appendix. File 1040 online The position holder is liable for the $. File 1040 online 001 per gallon tax. File 1040 online For kerosene removed directly from a terminal into the fuel tank of an fractional ownership program aircraft after March 31, 2012, a surtax of $. File 1040 online 141 per gallon applies. File 1040 online Certain refueler trucks, tankers, and tank wagons treated as terminals. File 1040 online   For purposes of the tax imposed on kerosene for use in aviation removed directly into the fuel tank of an aircraft for use in commercial aviation, certain refueler trucks, tankers, and tank wagons are treated as part of a terminal if the following conditions are met. File 1040 online Such terminal is located within an area of an airport. File 1040 online Any kerosene for use in aviation that is loaded in a refueler truck, tanker, or tank wagon at a terminal is for delivery into aircraft at the airport in which the terminal is located. File 1040 online Except in exigent circumstances, such as those identified in Notice 2005-80, no vehicle registered for highway use is loaded with kerosene for use in aviation at the terminal. File 1040 online The refueler truck, tanker, or tank wagon meets the following requirements: Has storage tanks, hose, and coupling equipment designed and used for fueling aircraft, Is not registered for highway use, and Is operated by the terminal operator or a person that makes a daily accounting to the terminal operator of each delivery of fuel from the refueler truck, tanker, or tank wagon. File 1040 online Information reporting will be required by terminal operators regarding this provision. File 1040 online Until the format of this information reporting is issued, taxpayers are required to retain records regarding the daily accounting, but are not required to report such information. File 1040 online Terminal located within a secured area of an airport. File 1040 online   See Notice 2005-4 and Notice 2005-80 for the list of terminals located within a secured area of an airport. File 1040 online This list refers to fueling operations at airport terminals as it applies to the federal excise tax on kerosene for use in aviation, and has nothing to do with the general security of airports either included or not included in the list. File 1040 online Liability For Tax If the kerosene is removed directly into the fuel tank of an aircraft for use in commercial aviation, the operator of the aircraft in commercial aviation is liable for the tax on the removal at the rate of $. File 1040 online 044 per gallon. File 1040 online However, the position holder is liable for the LUST tax for kerosene for use in aviation removed directly into the fuel tank of an aircraft for use exempt from tax under section 4041(c) (except foreign trade). File 1040 online For example, for kerosene removed directly into the aircraft for use in military aircraft, the position holder is liable for the tax. File 1040 online For the aircraft operator to be liable for the tax $. File 1040 online 044 rate, the position holder must meet the following requirements: Is a taxable fuel registrant, Has an unexpired certificate (a model certificate is shown in the Appendix as Model Certificate K) from the operator of the aircraft, and Has no reason to believe any of the information in the certificate is false. File 1040 online Commercial aviation. File 1040 online   Commercial aviation is any use of an aircraft in the business of transporting persons or property by air for pay. File 1040 online However, commercial aviation does not include any of the following uses. File 1040 online Any use exclusively for the purpose of skydiving. File 1040 online Certain air transportation by seaplane. File 1040 online See Seaplanes under Transportation of Persons by Air in chapter 4. File 1040 online Any use of an aircraft owned or leased by a member of an affiliated group and unavailable for hire by nonmembers. File 1040 online For more information, see Aircraft used by affiliated corporations under Special Rules on Transportation Taxes in chapter 4. File 1040 online Any use of an aircraft that has a maximum certificated takeoff weight of 6,000 pounds or less, unless the aircraft is operated on an established line. File 1040 online For more information, see Small aircraft under Special Rules on Transportation Taxes in chapter 4. File 1040 online Any use where the surtax on fuel used in a fractional ownership program aircraft is imposed. File 1040 online See Surtax on any liquid used in a fractional ownership program aircraft as fuel below. File 1040 online Surtax on any liquid used in a fractional ownership program aircraft as fuel Fuel used in a fractional ownership program aircraft (as defined below) after March 31, 2012, is subject to a surtax of $. File 1040 online 141 per gallon. File 1040 online The fractional ownership program manager is liable for the tax. File 1040 online The surtax applies in addition to any other taxes imposed on the removal, entry, use, or sale of the fuel. File 1040 online If the surtax is imposed, the following air transportation taxes do not apply. File 1040 online Transportation of persons by air. File 1040 online Transportation of property by air. File 1040 online Use of international air travel facilities. File 1040 online These taxes are described under Air Transportation Taxes, later. File 1040 online A fractional ownership program aircraft flight is considered noncommercial aviation, for the rules for kerosene used in noncommercial aviation, see Kerosene for Use in Aviation above. File 1040 online Fractional ownership aircraft program    is a program under which:  A single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners; There are one or more fractional owners per fractional program aircraft, with at least one fractional program aircraft having more than one owner; For at least two fractional program aircraft, none of the ownership interests in the aircraft are less than the minimum fractional ownership interest or held by the program manager; There exists a dry-lease aircraft exchange arrangement among all of the fractional owners; and There are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program. File 1040 online Fractional program aircraft. File 1040 online   Any aircraft that, in any fractional ownership aircraft program, is listed as a fractional program aircraft in the management specifications issued to the manager of such program by Federal Aviation Administration under subpart K of part 91 title 14, Code of Federal Regulations, and is registered in the U. File 1040 online S. File 1040 online   Fractional program aircraft are not considered used for transportation of a qualified fractional owner, or on account of such qualified fractional owner when they are used for flight demonstration, maintenance or crew training. File 1040 online In such situations, the flight is not commercial aviation. File 1040 online Instead, the tax on the fuel used in the flight is imposed at the non-commercial aviation rate. File 1040 online Fractional owner. File 1040 online   Any person owning any interest (including the entire interest) in a fractional program aircraft. File 1040 online Dry lease aircraft exchange. File 1040 online   An agreement, documented by the written program agreements, under which the fractional program aircraft are available, on an as-needed basis without crew, to each fractional owner. File 1040 online Special rule relating to deadhead service. File 1040 online   A fractional program aircraft will not be considered to be used on account of a qualified fractional owner when it is used in deadhead service and a person other than a qualified fractional owner is separately charged for such service. File 1040 online More information. File 1040 online   See section 4043 for more information on the surtax. File 1040 online Certificate for Commercial Aviation and Exempt Uses A certificate is required from the aircraft operator: To support aircraft operator liability for tax on removal of kerosene for use in aviation directly into the fuel tank of an aircraft in commercial aviation, or For exempt uses. File 1040 online Certificate. File 1040 online   The certificate may be included as part of any business records normally used for a sale. File 1040 online See Model Certificate K in the Appendix. File 1040 online   A certificate expires on the earliest of the following dates. File 1040 online The date 1 year after the effective date (not earlier than the date signed) of the certificate. File 1040 online The date the buyer provides the seller a new certificate or notice that the current certificate is invalid. File 1040 online The date the IRS or the buyer notifies the seller that the buyer's right to provide a certificate has been withdrawn. File 1040 online   The buyer must provide a new certificate if any information on a certificate has changed. File 1040 online   The IRS may withdraw the buyer's right to provide a certificate if the buyer uses the kerosene for use in aviation to which a certificate relates other than as stated in the certificate. File 1040 online Exempt use. File 1040 online   The rate on kerosene for use in aviation is $. File 1040 online 001 (LUST tax) if it is removed from any refinery or terminal directly into the fuel tank of an aircraft for an exempt use. File 1040 online An exempt use includes kerosene for the exclusive use of a state or local government. File 1040 online There is no tax on kerosene removed directly into the fuel tank of an aircraft for use in foreign trade. File 1040 online Flash title transaction. File 1040 online   A position holder is not liable for tax if, among other conditions, it obtains a certificate (described above) from the operator of the aircraft into which the kerosene is delivered. File 1040 online In a “flash title transaction” the position holder sells the kerosene to a wholesale distributor (reseller) that in turn sells the kerosene to the aircraft operator as the kerosene is being removed from a terminal into the fuel tank of an aircraft. File 1040 online In this case, the position holder will be treated as having a certificate from the operator of the aircraft if: The aircraft operator puts the reseller's name, address, and EIN on the certificate in place of the position holder's information; and The reseller provides the position holder with a statement of the kerosene reseller. File 1040 online Reseller statement. File 1040 online   This is a statement that is signed under penalties of perjury by a person with authority to bind the reseller; is provided at the bottom or on the back of the certificate (or in an attached document); and contains: The reseller's name, address, and EIN; The position holder's name, address, and EIN; and A statement that the reseller has no reason to believe that any information in the accompanying aircraft operator's certificate is false. File 1040 online Credits or Refunds. File 1040 online   A claim may be made by the ultimate purchaser (the operator) for taxed kerosene for use in aviation used in commercial aviation (other than foreign trade) and noncommercial aviation (other than nonexempt, noncommercial aviation and exclusive use by a state, political subdivision of a state, or the District of Columbia). File 1040 online A claim may be made by a registered ultimate vendor for certain sales. File 1040 online For more information, see chapter 2. File 1040 online Other Fuels (Including Alternative Fuels) Other Fuels means any liquid except gas oil, fuel oil, or any product taxable under section 4081. File 1040 online Other Fuels include alternative fuels. File 1040 online Alternative fuels are: Liquefied petroleum gas (LPG), “P Series” fuels, Compressed natural gas (CNG) (discussed later), Liquefied hydrogen, Any liquid fuel derived from coal (including peat) through the Fischer-Tropsch process, Liquid fuel derived from biomass, Liquefied natural gas (LNG), and Liquefied gas derived from biomass. File 1040 online Liquefied petroleum gas includes propane, butane, pentane, or mixtures of those products. File 1040 online Qualified methanol and ethanol fuels. File 1040 online   Qualified ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from coal, including peat. File 1040 online The tax rates are listed in the Instructions for Form 720. File 1040 online Partially exempt methanol and ethanol fuels. File 1040 online   A reduced tax rate applies to these fuels. File 1040 online Partially exempt ethanol and methanol means any liquid at least 85 percent of which consists of alcohol produced from natural gas. File 1040 online The tax rates are listed in the Instructions for Form 720. File 1040 online Motor vehicles. File 1040 online   Motor vehicles include all types of vehicles, whether or not registered (or required to be registered) for highway use, that have both the following characteristics. File 1040 online They are propelled by a motor. File 1040 online They are designed for carrying or towing loads from one place to another, regardless of the type of material or load carried or t
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Understanding Your CP279A Notice

CP279A is the notice of acceptance for a Qualified Subchapter S Subsidiary.


What you need to do

  • Retain this notice in your permanent records.
  • Notify IRS of necessary changes via Form 8822-B, Change of Address or Responsible Party – Business.

You may want to

Supply your parent corporation with a copy of this notice.


Answers to Common Questions

Q. How do I report my activity?

A. Subsidiary information should be reported on Form 851, Affiliations Schedule, and other necessary schedules, filed with Form 1120S.

 

Page Last Reviewed or Updated: 12-Feb-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The File 1040 Online

File 1040 online Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. File 1040 online Text message. File 1040 online Credit card. File 1040 online Pay-by-phone account. File 1040 online Stock certificate. File 1040 online Promissory note. File 1040 online Option. File 1040 online Borrowed funds. File 1040 online Conditional gift. File 1040 online Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. File 1040 online Total deduction over $500. File 1040 online Deduction over $5,000 for one item. File 1040 online Vehicle donations. File 1040 online Clothing and household items not in good used condition. File 1040 online Easement on building in historic district. File 1040 online Deduction over $500,000. File 1040 online How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. File 1040 online Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. File 1040 online How to check whether an organization can receive deductible charitable contributions. File 1040 online   You can ask any organization whether it is a qualified organization, and most will be able to tell you. File 1040 online Or go to IRS. File 1040 online gov. File 1040 online Click on “Tools” and then on “Exempt Organizations Select Check” (www. File 1040 online irs. File 1040 online gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). File 1040 online This online tool will enable you to search for qualified organizations. File 1040 online You can also call the IRS to find out if an organization is qualified. File 1040 online Call 1-877-829-5500. File 1040 online People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. File 1040 online Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. File 1040 online gsa. File 1040 online gov/fedrelay. File 1040 online Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. File 1040 online A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). File 1040 online It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. File 1040 online Certain organizations that foster national or international amateur sports competition also qualify. File 1040 online War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). File 1040 online Domestic fraternal societies, orders, and associations operating under the lodge system. File 1040 online (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. File 1040 online ) Certain nonprofit cemetery companies or corporations. File 1040 online (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. File 1040 online ) The United States or any state, the District of Columbia, a U. File 1040 online S. File 1040 online possession (including Puerto Rico), a political subdivision of a state or U. File 1040 online S. File 1040 online possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. File 1040 online (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. File 1040 online ) Example 1. File 1040 online You contribute cash to your city's police department to be used as a reward for information about a crime. File 1040 online The city police department is a qualified organization, and your contribution is for a public purpose. File 1040 online You can deduct your contribution. File 1040 online Example 2. File 1040 online You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. File 1040 online Because the trust fund is part of the U. File 1040 online S. File 1040 online Government, you contributed to a qualified organization. File 1040 online You can deduct your contribution. File 1040 online Examples. File 1040 online   The following list gives some examples of qualified organizations. File 1040 online Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. File 1040 online Most nonprofit charitable organizations such as the American Red Cross and the United Way. File 1040 online Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. File 1040 online This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. File 1040 online However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . File 1040 online Nonprofit hospitals and medical research organizations. File 1040 online Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. File 1040 online Nonprofit volunteer fire companies. File 1040 online Nonprofit organizations that develop and maintain public parks and recreation facilities. File 1040 online Civil defense organizations. File 1040 online Canadian charities. File 1040 online   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. File 1040 online To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. File 1040 online See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. File 1040 online Mexican charities. File 1040 online   Under the U. File 1040 online S. File 1040 online -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. File 1040 online S. File 1040 online law. File 1040 online To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. File 1040 online The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. File 1040 online Israeli charities. File 1040 online   Under the U. File 1040 online S. File 1040 online -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. File 1040 online S. File 1040 online law. File 1040 online To deduct your contribution to an Israeli charity, you must have income from sources in Israel. File 1040 online The limits described in Limits on Deductions , later, apply. File 1040 online The deduction is also limited to 25% of your adjusted gross income from Israeli sources. File 1040 online Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. File 1040 online A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. File 1040 online The contributions must be made to a qualified organization and not set aside for use by a specific person. File 1040 online If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. File 1040 online See Contributions of Property , later. File 1040 online Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. File 1040 online In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. File 1040 online See Limits on Deductions , later. File 1040 online Table 1 in this publication gives examples of contributions you can and cannot deduct. File 1040 online Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. File 1040 online Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. File 1040 online If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. File 1040 online For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. File 1040 online Example 1. File 1040 online You pay $65 for a ticket to a dinner-dance at a church. File 1040 online Your entire $65 payment goes to the church. File 1040 online The ticket to the dinner-dance has a fair market value of $25. File 1040 online When you buy your ticket, you know its value is less than your payment. File 1040 online To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). File 1040 online You can deduct $40 as a charitable contribution to the church. File 1040 online Example 2. File 1040 online At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. File 1040 online The amount you pay is no more than the fair rental value. File 1040 online You have not made a deductible charitable contribution. File 1040 online Athletic events. File 1040 online   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. File 1040 online   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. File 1040 online Subtract the price of the tickets from your payment. File 1040 online You can deduct 80% of the remaining amount as a charitable contribution. File 1040 online Example 1. File 1040 online You pay $300 a year for membership in a university's athletic scholarship program. File 1040 online The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. File 1040 online You can deduct $240 (80% of $300) as a charitable contribution. File 1040 online Example 2. File 1040 online The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. File 1040 online You must subtract the usual price of a ticket ($120) from your $300 payment. File 1040 online The result is $180. File 1040 online Your deductible charitable contribution is $144 (80% of $180). File 1040 online Charity benefit events. File 1040 online   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. File 1040 online   If there is an established charge for the event, that charge is the value of your benefit. File 1040 online If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. File 1040 online Whether you use the tickets or other privileges has no effect on the amount you can deduct. File 1040 online However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. File 1040 online    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. File 1040 online If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. File 1040 online Example. File 1040 online You pay $40 to see a special showing of a movie for the benefit of a qualified organization. File 1040 online Printed on the ticket is “Contribution–$40. File 1040 online ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). File 1040 online Membership fees or dues. File 1040 online   You may be able to deduct membership fees or dues you pay to a qualified organization. File 1040 online However, you can deduct only the amount that is more than the value of the benefits you receive. File 1040 online   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. File 1040 online They are not qualified organizations. File 1040 online Certain membership benefits can be disregarded. File 1040 online   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. File 1040 online Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. File 1040 online Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. File 1040 online 20. File 1040 online Token items. File 1040 online   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. File 1040 online You receive only a small item or other benefit of token value. File 1040 online The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. File 1040 online The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. File 1040 online Written statement. File 1040 online   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. File 1040 online The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. File 1040 online It must also give you a good faith estimate of the value of those goods or services. File 1040 online   The organization can give you the statement either when it solicits or when it receives the payment from you. File 1040 online Exception. File 1040 online   An organization will not have to give you this statement if one of the following is true. File 1040 online The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. File 1040 online You receive only items whose value is not substantial as described under Token items , earlier. File 1040 online You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. File 1040 online Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. File 1040 online You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. File 1040 online You can deduct up to $50 a month for each full calendar month the student lives with you. File 1040 online Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. File 1040 online Qualified organization. File 1040 online   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). File 1040 online For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. File 1040 online But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. File 1040 online Relative. File 1040 online   The term “relative” means any of the following persons. File 1040 online Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). File 1040 online A legally adopted child is considered your child. File 1040 online Your brother, sister, half brother, half sister, stepbrother, or stepsister. File 1040 online Your father, mother, grandparent, or other direct ancestor. File 1040 online Your stepfather or stepmother. File 1040 online A son or daughter of your brother or sister. File 1040 online A brother or sister of your father or mother. File 1040 online Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. File 1040 online Dependent. File 1040 online   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. File 1040 online    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. File 1040 online S. File 1040 online residents and cannot be claimed as dependents. File 1040 online Qualifying expenses. File 1040 online   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. File 1040 online Expenses that do not qualify. File 1040 online   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. File 1040 online Nor can you deduct general household expenses, such as taxes, insurance, and repairs. File 1040 online Reimbursed expenses. File 1040 online   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. File 1040 online However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. File 1040 online Mutual exchange program. File 1040 online   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. File 1040 online Reporting expenses. File 1040 online   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. File 1040 online Out-of-Pocket Expenses in Giving Services Table 2. File 1040 online Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. File 1040 online All of the rules explained in this publication also apply. File 1040 online See, in particular, Out-of-Pocket Expenses in Giving Services . File 1040 online Question Answer I volunteer 6 hours a week in the office of a qualified organization. File 1040 online The receptionist is paid $10 an hour for the same work. File 1040 online Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. File 1040 online  The office is 30 miles from my home. File 1040 online Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. File 1040 online If you do not want to figure your actual costs, you can deduct 14 cents for each mile. File 1040 online I volunteer as a Red Cross nurse's aide at a hospital. File 1040 online Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. File 1040 online I pay a babysitter to watch my children while I volunteer for a qualified organization. File 1040 online Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. File 1040 online (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. File 1040 online ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. File 1040 online The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. File 1040 online Table 2 contains questions and answers that apply to some individuals who volunteer their services. File 1040 online Underprivileged youths selected by charity. File 1040 online   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. File 1040 online The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. File 1040 online Your own similar expenses in accompanying the youths are not deductible. File 1040 online Conventions. File 1040 online   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. File 1040 online However, see Travel , later. File 1040 online   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. File 1040 online You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. File 1040 online   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. File 1040 online You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. File 1040 online Uniforms. File 1040 online   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. File 1040 online Foster parents. File 1040 online   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. File 1040 online A qualified organization must select the individuals you take into your home for foster care. File 1040 online   You can deduct expenses that meet both of the following requirements. File 1040 online They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. File 1040 online They are incurred primarily to benefit the qualified organization. File 1040 online   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. File 1040 online For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. File 1040 online Example. File 1040 online You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. File 1040 online Your unreimbursed expenses are not deductible as charitable contributions. File 1040 online Church deacon. File 1040 online   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. File 1040 online These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. File 1040 online Car expenses. File 1040 online   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. File 1040 online You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. File 1040 online   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. File 1040 online   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. File 1040 online   You must keep reliable written records of your car expenses. File 1040 online For more information, see Car expenses under Records To Keep, later. File 1040 online Travel. File 1040 online   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. File 1040 online This applies whether you pay the expenses directly or indirectly. File 1040 online You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. File 1040 online   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. File 1040 online Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. File 1040 online However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. File 1040 online Example 1. File 1040 online You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. File 1040 online You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. File 1040 online You participate in the activities of the group and enjoy your time with them. File 1040 online You oversee the breaking of camp and you transport the group home. File 1040 online You can deduct your travel expenses. File 1040 online Example 2. File 1040 online You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. File 1040 online The project is sponsored by a charitable organization. File 1040 online In most circumstances, you cannot deduct your expenses. File 1040 online Example 3. File 1040 online You work for several hours each morning on an archeological dig sponsored by a charitable organization. File 1040 online The rest of the day is free for recreation and sightseeing. File 1040 online You cannot take a charitable contribution deduction even though you work very hard during those few hours. File 1040 online Example 4. File 1040 online You spend the entire day attending a charitable organization's regional meeting as a chosen representative. File 1040 online In the evening you go to the theater. File 1040 online You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. File 1040 online Daily allowance (per diem). File 1040 online   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. File 1040 online You may be able to deduct any necessary travel expenses that are more than the allowance. File 1040 online Deductible travel expenses. File 1040 online   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. File 1040 online Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. File 1040 online For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. File 1040 online Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. File 1040 online The deduction is limited to $10,000 a year. File 1040 online To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. File 1040 online Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. File 1040 online Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. File 1040 online You must keep records showing the time, place, date, amount, and nature of the expenses. File 1040 online For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. File 1040 online irs. File 1040 online gov/pub/irs-irbs/irb06-47. File 1040 online pdf. File 1040 online Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. File 1040 online You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. File 1040 online Detailed discussions of these items follow. File 1040 online Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. File 1040 online Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. File 1040 online Contributions to individuals who are needy or worthy. File 1040 online You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. File 1040 online But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. File 1040 online Example. File 1040 online You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. File 1040 online However, you cannot deduct contributions earmarked for relief of a particular individual or family. File 1040 online Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. File 1040 online Expenses you paid for another person who provided services to a qualified organization. File 1040 online Example. File 1040 online Your son does missionary work. File 1040 online You pay his expenses. File 1040 online You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. File 1040 online Payments to a hospital that are for a specific patient's care or for services for a specific patient. File 1040 online You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. File 1040 online Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. File 1040 online Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. File 1040 online Chambers of commerce and other business leagues or organizations. File 1040 online Civic leagues and associations. File 1040 online Communist organizations. File 1040 online Country clubs and other social clubs. File 1040 online Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. File 1040 online (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. File 1040 online ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. File 1040 online However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. File 1040 online For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. File 1040 online The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. File 1040 online Homeowners' associations. File 1040 online Labor unions. File 1040 online But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). File 1040 online See Publication 529, Miscellaneous Deductions. File 1040 online Political organizations and candidates. File 1040 online Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. File 1040 online See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. File 1040 online These contributions include the following. File 1040 online Contributions for lobbying. File 1040 online This includes amounts you earmark for use in, or in connection with, influencing specific legislation. File 1040 online Contributions to a retirement home for room, board, maintenance, or admittance. File 1040 online Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. File 1040 online Costs of raffles, bingo, lottery, etc. File 1040 online You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. File 1040 online For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. File 1040 online Dues to fraternal orders and similar groups. File 1040 online However, see Membership fees or dues under Contributions From Which You Benefit, earlier. File 1040 online Tuition, or amounts you pay instead of tuition. File 1040 online You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. File 1040 online You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. File 1040 online ” Contributions connected with split-dollar insurance arrangements. File 1040 online You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. File 1040 online Example. File 1040 online You donate money to a charitable organization. File 1040 online The charity uses the money to purchase a cash value life insurance policy. File 1040 online The beneficiaries under the insurance policy include members of your family. File 1040 online Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. File 1040 online Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. File 1040 online You must have been at least age 70½ when the distribution was made. File 1040 online Your total QCDs for the year cannot be more than $100,000. File 1040 online If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. File 1040 online See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. File 1040 online Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. File 1040 online Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. File 1040 online The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. File 1040 online Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. File 1040 online However, you may be able to claim a tax credit for these expenses. File 1040 online Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. File 1040 online See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. File 1040 online You also may be able to claim an exemption for the child. File 1040 online See Exemptions for Dependents in Publication 501 for more information. File 1040 online Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. File 1040 online But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). File 1040 online See Deductions Subject to the 2% Limit in Publication 529 for more information. File 1040 online Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. File 1040 online There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. File 1040 online Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. File 1040 online For details, see Internal Revenue Code section 170(f)(18). File 1040 online Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. File 1040 online For details, see Partial Interest in Property under Contributions of Property, later. File 1040 online Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. File 1040 online However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. File 1040 online See Giving Property That Has Increased in Value , later. File 1040 online For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. File 1040 online Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. File 1040 online These special rules are described next. File 1040 online Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. File 1040 online Exception. File 1040 online   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. File 1040 online Household items. File 1040 online   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. File 1040 online   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. File 1040 online Fair market value. File 1040 online   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. File 1040 online Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. File 1040 online A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. File 1040 online Deduction more than $500. File 1040 online   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. File 1040 online If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. File 1040 online Form 1098-C. File 1040 online   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. File 1040 online The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. File 1040 online   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. File 1040 online S. File 1040 online Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. File 1040 online   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. File 1040 online    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. File 1040 online But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. File 1040 online Filing deadline approaching and still no Form 1098-C. File 1040 online   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. File 1040 online Request an automatic 6-month extension of time to file your return. File 1040 online You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. File 1040 online S. File 1040 online Individual Income Tax Return. File 1040 online For more information, see the instructions for Form 4868. File 1040 online File the return on time without claiming the deduction for the qualified vehicle. File 1040 online After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. File 1040 online S. File 1040 online Individual Income Tax Return, claiming the deduction. File 1040 online Attach Copy B of Form 1098-C (or other statement) to the amended return. File 1040 online Exceptions. File 1040 online   There are two exceptions to the rules just described for deductions of more than $500. File 1040 online Exception 1—vehicle used or improved by organization. File 1040 online   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. File 1040 online But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. File 1040 online The Form 1098-C (or other statement) will show whether this exception applies. File 1040 online    Exception 2—vehicle given or sold to needy individual. File 1040 online   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. File 1040 online But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. File 1040 online The Form 1098-C (or other statement) will show whether this exception applies. File 1040 online   This exception does not apply if the organization sells the vehicle at auction. File 1040 online In that case, you cannot deduct the vehicle's fair market value. File 1040 online Example. File 1040 online Anita donates a used car to a qualified organization. File 1040 online She bought it 3 years ago for $9,000. File 1040 online A used car guide shows the fair market value for this type of car is $6,000. File 1040 online However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. File 1040 online Neither exception 1 nor exception 2 applies. File 1040 online If Anita itemizes her deductions, she can deduct $2,900 for her donation. File 1040 online She must attach Form 1098-C and Form 8283 to her return. File 1040 online Deduction $500 or less. File 1040 online   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. File 1040 online But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. File 1040 online   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. File 1040 online The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. File 1040 online Fair market value. File 1040 online   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. File 1040 online Donations of inventory. File 1040 online   The vehicle donation rules just described do not apply to donations of inventory. File 1040 online For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. File 1040 online See Inventory , later. File 1040 online Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. File 1040 online This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. File 1040 online Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. File 1040 online Your basis does not include transportation or travel costs. File 1040 online It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. File 1040 online In addition, it does not include the value of your time. File 1040 online Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. File 1040 online Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. File 1040 online This prevents you from deducting the same amount as both investment interest and a charitable contribution. File 1040 online If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. File 1040 online The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). File 1040 online For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. File 1040 online Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. File 1040 online Right to use property. File 1040 online   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. File 1040 online Example 1. File 1040 online You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. File 1040 online Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. File 1040 online Example 2. File 1040 online Mandy White owns a vacation home at the beach that she sometimes rents to others. File 1040 online For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. File 1040 online At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. File 1040 online Mandy cannot claim a deduction because of the partial interest rule. File 1040 online Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. File 1040 online See Contributions From Which You Benefit , earlier. File 1040 online Exceptions. File 1040 online   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. File 1040 online A remainder interest in your personal home or farm. File 1040 online A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. File 1040 online Example. File 1040 online You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. File 1040 online You can deduct the value of the remainder interest. File 1040 online An undivided part of your entire interest. File 1040 online This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. File 1040 online But see Fractional Interest in Tangible Personal Property , later. File 1040 online Example. File 1040 online You contribute voting stock to a qualified organization but keep the right to vote the stock. File 1040 online The right to vote is a substantial right in the stock. File 1040 online You have not contributed an undivided part of your entire interest and cannot deduct your contribution. File 1040 online A partial interest that would be deductible if transferred to certain types of trusts. File 1040 online A qualified conservation contribution (defined later). File 1040 online For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. File 1040 online Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. File 1040 online If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. File 1040 online Tangible personal property is defined later under Future Interest in Tangible Personal Property . File 1040 online A fractional interest in property is an undivided portion of your entire interest in the property. File 1040 online Example. File 1040 online An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. File 1040 online Recapture of deduction. File 1040 online   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. File 1040 online You contributed a fractional interest in tangible personal property after August 17, 2006. File 1040 online You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. File 1040 online   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. File 1040 online Additional tax. File 1040 online   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. File 1040 online Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. File 1040 online Qualified organization. File 1040 online   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. File 1040 online The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. File 1040 online   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. File 1040 online Qualified real property interest. File 1040 online   This is any of the following interests in real property. File 1040 online Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). File 1040 online A remainder interest. File 1040 online A restriction (granted in perpetuity) on the use that may be made of the real property. File 1040 online Conservation purposes. File 1040 online   Your contribution must be made only for one of the following conservation purposes. File 1040 online Preserving land areas for outdoor recreation by, or for the education of, the general public. File 1040 online Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. File 1040 online Preserving open space, including farmland and forest land, if it yields a significant public benefit. File 1040 online The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. File 1040 online Preserving a historically important land area or a certified historic structure. File 1040 online Building in registered historic district. File 1040 online   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. File 1040 online The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. File 1040 online You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. File 1040 online You must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. File 1040 online   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. File 1040 online For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). File 1040 online   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. File 1040 online See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. File 1040 online You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). File 1040 online See Deductions Subject to the 2% Limit in Publication 529 for more information. File 1040 online More information. File 1040 online   For information about determining the fair market value of qualified conservation contributions, see Publication 561. File 1040 online For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. File 1040 online For more information about qualified conservation contributions, see Regulations section 1. File 1040 online 170A-14. File 1040 online Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. File 1040 online But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. File 1040 online Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. File 1040 online Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. File 1040 online Tangible personal property. File 1040 online   This is any property, other than land or buildings, that can be seen or touched. File 1040 online It includes furniture, books, jewelry, paintings, and cars. File 1040 online Future interest. File 1040 online   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. File 1040 online Example. File 1040 online You own an antique car that you contribute to a museum. File 1040 online You give up ownership, but retain the right to keep the car in your garage with your personal collection. File 1040 online Because you keep an interest in the property, you cannot deduct the contribution. File 1040 online If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. File 1040 online Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. File 1040 online The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. File 1040 online You must remove the amount of your charitable contribution deduction from your opening inventory. File 1040 online It is not part of the cost of goods sold. File 1040 online If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. File 1040 online Treat the inventory's cost as you would ordinarily treat it under your method of accounting. File 1040 online For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. File 1040 online A special rule applies to certain donations of food inventory. File 1040 online See Food Inventory, later. File 1040 online Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. File 1040 online Intellectual property means any of the following: Patents. File 1040 online Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). File 1040 online Trademarks. File 1040 online Trade names. File 1040 online Trade secrets. File 1040 online Know-how. File 1040 online Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). File 1040 online Other similar property or applications or registrations of such property. File 1040 online Additional deduction based on income. File 1040 online   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. File 1040 online   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. File 1040 online In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. File 1040 online However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. File 1040 online   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. File 1040 online The additional deductions cannot be taken for intellectual property donated to certain private foundations. File 1040 online Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. File 1040 online   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. File 1040 online   The organization is required to file an information return showing the income from the property, with a copy to you. File 1040 online This is done on Form 8899, Notice of Income From Donated Intellectual Property. File 1040 online Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. File 1040 online Publication 561 contains a more complete discussion. File 1040 online Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. File 1040 online Used clothing. File 1040 online   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. File 1040 online There are no fixed formulas or methods for finding the value of items of clothing. File 1040 online   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. File 1040 online      Also see Clothing and Household Items , earlier. File 1040 online Example. File 1040 online    Kristin donated a coat to a thrift store operated by her church. File 1040 online She paid $300 for the coat 3 years ago. File 1040 online Similar coats in the thrift store sell for $50. File 1040 online The fair market value of the coat is $50. File 1040 online Kristin's donation is limited to $50. File 1040 online Household items. File 1040 online   The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. File 1040 online These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. File 1040 online For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value. File 1040 online   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. File 1040 online Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. File 1040 online Do not include any of this evidence with your tax return. File 1040 online   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. File 1040 online   Also see Clothing and Household Items , earlier. File 1040 online Cars, boats, and airplanes. File 1040 online   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. File 1040 online Boats. File 1040 online   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. File 1040 online Cars. File 1040 online   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. File 1040 online The guides may be published monthly or seasonally, and for different regions of the country. File 1040 online These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. File 1040 online The prices are not “official” and these publications are not considered an appraisal of any specific donated property. File 1040 online But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. File 1040 online   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. File 1040 online You can also find used car pricing information on the Internet. File 1040 online   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. File 1040 online However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. File 1040 online The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated car. File 1040 online Example. File 1040 online You donate a used car in poor condition to a local high school for use by students studying car repair. File 1040 online A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. File 1040 online However, the guide shows the price for a private party sale of the car is only $750. File 1040 online The fair market value of the car is considered to be $750. File 1040 online Large quantities. File 1040 online   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. File 1040 online Example. File 1040 online You purchase 500 bibles for $1,000. File 1040 online The person who sells them to you says the retail value of these bibles is $3,000. File 1040 online If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. File 1040 online Your charitable contribution is $1,000, unless you can show that similar numbers of that bible wer