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Filing A 1040 Ez

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Filing A 1040 Ez

Filing a 1040 ez 4. Filing a 1040 ez   Figuring Depreciation Under MACRS Table of Contents Introduction Useful Items - You may want to see: Which Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS?Rent-to-own dealer. Filing a 1040 ez Rent-to-own contract. Filing a 1040 ez What Is the Placed in Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies?Recovery Periods Under GDS Recovery Periods Under ADS Additions and Improvements Which Convention Applies? Which Depreciation Method Applies?Depreciation Methods for Farm Property Electing a Different Method How Is the Depreciation Deduction Figured?Using the MACRS Percentage Tables Figuring the Deduction Without Using the Tables Figuring the Deduction for Property Acquired in a Nontaxable Exchange Figuring the Deduction for a Short Tax Year How Do You Use General Asset Accounts?Grouping Property Figuring Depreciation for a GAA Disposing of GAA Property Terminating GAA Treatment Electing To Use a GAA When Do You Recapture MACRS Depreciation? Introduction The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. Filing a 1040 ez MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Filing a 1040 ez Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Filing a 1040 ez To be sure you can use MACRS to figure depreciation for your property, see What Method Can You Use To Depreciate Your Property in chapter 1. Filing a 1040 ez This chapter explains how to determine which MACRS depreciation system applies to your property. Filing a 1040 ez It also discusses other information you need to know before you can figure depreciation under MACRS. Filing a 1040 ez This information includes the property's recovery class, placed in service date, and basis, as well as the applicable recovery period, convention, and depreciation method. Filing a 1040 ez It explains how to use this information to figure your depreciation deduction and how to use a general asset account to depreciate a group of properties. Filing a 1040 ez Finally, it explains when and how to recapture MACRS depreciation. Filing a 1040 ez Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 463 Travel, Entertainment, Gift, and Car  Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization See chapter 6 for information about getting publications and forms. Filing a 1040 ez Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. Filing a 1040 ez You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Filing a 1040 ez If you placed your property in service in 2013, complete Part III of Form 4562 to report depreciation using MACRS. Filing a 1040 ez Complete section B of Part III to report depreciation using GDS, and complete section C of Part III to report depreciation using ADS. Filing a 1040 ez If you placed your property in service before 2013 and are required to file Form 4562, report depreciation using either GDS or ADS on line 17 in Part III. Filing a 1040 ez Required use of ADS. Filing a 1040 ez   You must use ADS for the following property. Filing a 1040 ez Listed property used 50% or less in a qualified business use. Filing a 1040 ez See chapter 5 for information on listed property. Filing a 1040 ez Any tangible property used predominantly outside the United States during the year. Filing a 1040 ez Any tax-exempt use property. Filing a 1040 ez Any tax-exempt bond-financed property. Filing a 1040 ez All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Filing a 1040 ez Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. Filing a 1040 ez If you are required to use ADS to depreciate your property, you cannot claim any special depreciation allowance (discussed in chapter 3) for the property. Filing a 1040 ez Electing ADS. Filing a 1040 ez   Although your property may qualify for GDS, you can elect to use ADS. Filing a 1040 ez The election generally must cover all property in the same property class that you placed in service during the year. Filing a 1040 ez However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Filing a 1040 ez Once you make this election, you can never revoke it. Filing a 1040 ez   You make the election by completing line 20 in Part III of Form 4562. Filing a 1040 ez Which Property Class Applies Under GDS? The following is a list of the nine property classifications under GDS and examples of the types of property included in each class. Filing a 1040 ez These property classes are also listed under column (a) in section B, Part III, of Form 4562. Filing a 1040 ez For detailed information on property classes, see Appendix B, Table of Class Lives and Recovery Periods, in this publication. Filing a 1040 ez 3-year property. Filing a 1040 ez Tractor units for over-the-road use. Filing a 1040 ez Any race horse over 2 years old when placed in service. Filing a 1040 ez (All race horses placed in service after December 31, 2008, and before January 1, 2014, are deemed to be 3-year property, regardless of age. Filing a 1040 ez ) Any other horse (other than a race horse) over 12 years old when placed in service. Filing a 1040 ez Qualified rent-to-own property (defined later). Filing a 1040 ez 5-year property. Filing a 1040 ez Automobiles, taxis, buses, and trucks. Filing a 1040 ez Computers and peripheral equipment. Filing a 1040 ez Office machinery (such as typewriters, calculators, and copiers). Filing a 1040 ez Any property used in research and experimentation. Filing a 1040 ez Breeding cattle and dairy cattle. Filing a 1040 ez Appliances, carpets, furniture, etc. Filing a 1040 ez , used in a residential rental real estate activity. Filing a 1040 ez Certain geothermal, solar, and wind energy property. Filing a 1040 ez 7-year property. Filing a 1040 ez Office furniture and fixtures (such as desks, files, and safes). Filing a 1040 ez Agricultural machinery and equipment. Filing a 1040 ez Any property that does not have a class life and has not been designated by law as being in any other class. Filing a 1040 ez Certain motorsports entertainment complex property (defined later) placed in service before January 1, 2014. Filing a 1040 ez Any natural gas gathering line placed in service after April 11, 2005. Filing a 1040 ez See Natural gas gathering line and electric transmission property , later. Filing a 1040 ez 10-year property. Filing a 1040 ez Vessels, barges, tugs, and similar water transportation equipment. Filing a 1040 ez Any single purpose agricultural or horticultural structure. Filing a 1040 ez Any tree or vine bearing fruits or nuts. Filing a 1040 ez Qualified small electric meter and qualified smart electric grid system (defined later) placed in service on or after October 3, 2008. Filing a 1040 ez 15-year property. Filing a 1040 ez Certain improvements made directly to land or added to it (such as shrubbery, fences, roads, sidewalks, and bridges). Filing a 1040 ez Any retail motor fuels outlet (defined later), such as a convenience store. Filing a 1040 ez Any municipal wastewater treatment plant. Filing a 1040 ez Any qualified leasehold improvement property (defined later) placed in service before January 1, 2014. Filing a 1040 ez Any qualified restaurant property (defined later) placed in service before January 1, 2014. Filing a 1040 ez Initial clearing and grading land improvements for gas utility property. Filing a 1040 ez Electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity placed in service after April 11, 2005. Filing a 1040 ez See Natural gas gathering line and electric transmission property , later. Filing a 1040 ez Any natural gas distribution line placed in service after April 11, 2005 and before January 1, 2011. Filing a 1040 ez Any qualified retail improvement property placed in service before January 1, 2014. Filing a 1040 ez 20-year property. Filing a 1040 ez Farm buildings (other than single purpose agricultural or horticultural structures). Filing a 1040 ez Municipal sewers not classified as 25-year property. Filing a 1040 ez Initial clearing and grading land improvements for electric utility transmission and distribution plants. Filing a 1040 ez 25-year property. Filing a 1040 ez This class is water utility property, which is either of the following. Filing a 1040 ez Property that is an integral part of the gathering, treatment, or commercial distribution of water, and that, without regard to this provision, would be 20-year property. Filing a 1040 ez Municipal sewers other than property placed in service under a binding contract in effect at all times since June 9, 1996. Filing a 1040 ez Residential rental property. Filing a 1040 ez This is any building or structure, such as a rental home (including a mobile home), if 80% or more of its gross rental income for the tax year is from dwelling units. Filing a 1040 ez A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Filing a 1040 ez It does not include a unit in a hotel, motel, or other establishment where more than half the units are used on a transient basis. Filing a 1040 ez If you occupy any part of the building or structure for personal use, its gross rental income includes the fair rental value of the part you occupy. Filing a 1040 ez Nonresidential real property. Filing a 1040 ez This is section 1250 property, such as an office building, store, or warehouse, that is neither residential rental property nor property with a class life of less than 27. Filing a 1040 ez 5 years. Filing a 1040 ez Qualified rent-to-own property. Filing a 1040 ez   Qualified rent-to-own property is property held by a rent-to-own dealer for purposes of being subject to a rent-to-own contract. Filing a 1040 ez It is tangible personal property generally used in the home for personal use. Filing a 1040 ez It includes computers and peripheral equipment, televisions, videocassette recorders, stereos, camcorders, appliances, furniture, washing machines and dryers, refrigerators, and other similar consumer durable property. Filing a 1040 ez Consumer durable property does not include real property, aircraft, boats, motor vehicles, or trailers. Filing a 1040 ez   If some of the property you rent to others under a rent-to-own agreement is of a type that may be used by the renters for either personal or business purposes, you still can treat this property as qualified property as long as it does not represent a significant portion of your leasing property. Filing a 1040 ez However, if this dual-use property does represent a significant portion of your leasing property, you must prove that this property is qualified rent-to-own property. Filing a 1040 ez Rent-to-own dealer. Filing a 1040 ez   You are a rent-to-own dealer if you meet all the following requirements. Filing a 1040 ez You regularly enter into rent-to-own contracts (defined below) in the ordinary course of your business for the use of consumer property. Filing a 1040 ez A substantial portion of these contracts end with the customer returning the property before making all the payments required to transfer ownership. Filing a 1040 ez The property is tangible personal property of a type generally used within the home for personal use. Filing a 1040 ez Rent-to-own contract. Filing a 1040 ez   This is any lease for the use of consumer property between a rent-to-own dealer and a customer who is an individual which— Is titled “Rent-to-Own Agreement,” “Lease Agreement with Ownership Option,” or other similar language. Filing a 1040 ez Provides a beginning date and a maximum period of time, not to exceed 156 weeks or 36 months from the beginning date, for which the contract can be in effect (including renewals or options to extend). Filing a 1040 ez Provides for regular periodic (weekly or monthly) payments that can be either level or decreasing. Filing a 1040 ez If the payments are decreasing, no payment can be less than 40% of the largest payment. Filing a 1040 ez Provides for total payments that generally exceed the normal retail price of the property plus interest. Filing a 1040 ez Provides for total payments that do not exceed $10,000 for each item of property. Filing a 1040 ez Provides that the customer has no legal obligation to make all payments outlined in the contract and that, at the end of each weekly or monthly payment period, the customer can either continue to use the property by making the next payment or return the property in good working order with no further obligations and no entitlement to a return of any prior payments. Filing a 1040 ez Provides that legal title to the property remains with the rent-to-own dealer until the customer makes either all the required payments or the early purchase payments required under the contract to acquire legal title. Filing a 1040 ez Provides that the customer has no right to sell, sublease, mortgage, pawn, pledge, or otherwise dispose of the property until all contract payments have been made. Filing a 1040 ez Motorsports entertainment complex. Filing a 1040 ez   This is a racing track facility permanently situated on land that hosts one or more racing events for automobiles, trucks, or motorcycles during the 36-month period after the first day of the month in which the facility is placed in service. Filing a 1040 ez The events must be open to the public for the price of admission. Filing a 1040 ez Qualified smart electric grid system. Filing a 1040 ez   A qualified smart electric grid system means any smart grid property used as part of a system for electric distribution grid communications, monitoring, and management placed in service after October 3, 2008, by a taxpayer who is a supplier of electrical energy or a provider of electrical energy services. Filing a 1040 ez Smart grid property includes electronics and related equipment that is capable of: Sensing, collecting, and monitoring data of or from all portions of a utility's electric distribution grid, Providing real-time, two-way communications to monitor or to manage the grid, and Providing real-time analysis of an event prediction based on collected data that can be used to provide electric distribution system reliability, quality, and performance. Filing a 1040 ez Retail motor fuels outlet. Filing a 1040 ez   Real property is a retail motor fuels outlet if it is used to a substantial extent in the retail marketing of petroleum or petroleum products (whether or not it is also used to sell food or other convenience items) and meets any one of the following three tests. Filing a 1040 ez It is not larger than 1,400 square feet. Filing a 1040 ez 50% or more of the gross revenues generated from the property are derived from petroleum sales. Filing a 1040 ez 50% or more of the floor space in the property is devoted to petroleum marketing sales. Filing a 1040 ez A retail motor fuels outlet does not include any facility related to petroleum and natural gas trunk pipelines. Filing a 1040 ez Qualified leasehold improvement property. Filing a 1040 ez    Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Filing a 1040 ez   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor's death or in any of the following types of transactions. Filing a 1040 ez A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or reacquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor's or distributor's basis in the property. Filing a 1040 ez Examples include the following. Filing a 1040 ez A complete liquidation of a subsidiary. Filing a 1040 ez A transfer to a corporation controlled by the transferor. Filing a 1040 ez An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Filing a 1040 ez Qualified restaurant property. Filing a 1040 ez   Qualified restaurant property is any section 1250 property that is a building placed in service after December 31, 2008, and before January 1, 2014. Filing a 1040 ez Also, more than 50% of the building's square footage must be devoted to preparation of meals and seating for on-premises consumption of prepared meals. Filing a 1040 ez Qualified smart electric meter. Filing a 1040 ez   A qualified smart electric meter is any time-based meter and related communication equipment which is placed in service by a supplier of electric energy or a provider of electric energy services and which is capable of being used by you as part of a system that: Measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day; Provides for the exchange of information between the supplier or provider and the customer's smart electric meter in support of time-based rates or other forms of demand response; Provides data to the supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and Provides all commercial and residential customers of such supplier or provider with net metering. Filing a 1040 ez Net metering means allowing a customer a credit, if any, as complies with applicable federal and state laws and regulations for providing electricity to the supplier or provider. Filing a 1040 ez Natural gas gathering line and electric transmission property. Filing a 1040 ez   Any natural gas gathering line placed in service after April 11, 2005, is treated as 7-year property, and electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity and any natural gas distribution line placed in service after April 11, 2005, are treated as 15-year property, if the following requirements are met. Filing a 1040 ez The original use of the property must have begun with you after April 11, 2005. Filing a 1040 ez Original use means the first use to which the property is put, whether or not by you. Filing a 1040 ez Therefore, property used by any person before April 12, 2005, is not original use. Filing a 1040 ez Original use includes additional capital expenditures you incurred to recondition or rebuild your property. Filing a 1040 ez However, original use does not include the cost of reconditioned or rebuilt property you acquired. Filing a 1040 ez Property containing used parts will not be treated as reconditioned or rebuilt if the cost of the used parts is not more than 20% of the total cost of the property. Filing a 1040 ez The property must not be placed in service under a binding contract in effect before April 12, 2005. Filing a 1040 ez The property must not be self-constructed property (property you manufacture, construct, or produce for your own use), if you began the manufacture, construction, or production of the property before April 12, 2005. Filing a 1040 ez Property that is manufactured, constructed, or produced for your use by another person under a written binding contract entered into by you or a related party before the manufacture, construction, or production of the property is considered to be manufactured, constructed, or produced by you. Filing a 1040 ez What Is the Placed in Service Date? You begin to claim depreciation when your property is placed in service for either use in a trade or business or the production of income. Filing a 1040 ez The placed in service date for your property is the date the property is ready and available for a specific use. Filing a 1040 ez It is therefore not necessarily the date it is first used. Filing a 1040 ez If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. Filing a 1040 ez See Placed in Service under When Does Depreciation Begin and End in chapter 1 for examples illustrating when property is placed in service. Filing a 1040 ez What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. Filing a 1040 ez For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Filing a 1040 ez Reduce that amount by any credits and deductions allocable to the property. Filing a 1040 ez The following are examples of some credits and deductions that reduce basis. Filing a 1040 ez Any deduction for section 179 property. Filing a 1040 ez Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations. Filing a 1040 ez Any deduction under section 179C of the Internal Revenue Code for certain qualified refinery property placed in service after August 8, 2005, and before January 1, 2014. Filing a 1040 ez Any deduction under section 179D of the Internal Revenue Code for certain energy efficient commercial building property placed in service after December 31, 2005, and before January 1, 2014. Filing a 1040 ez Any deduction under section 179E of the Internal Revenue Code for qualified advanced mine safety equipment property placed in service after December 20, 2006, and before January 1, 2014 . Filing a 1040 ez Any deduction for removal of barriers to the disabled and the elderly. Filing a 1040 ez Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Filing a 1040 ez Any special depreciation allowance. Filing a 1040 ez Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Filing a 1040 ez For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Filing a 1040 ez Enter the basis for depreciation under column (c) in Part III of Form 4562. Filing a 1040 ez For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Filing a 1040 ez Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Filing a 1040 ez It is determined based on the depreciation system (GDS or ADS) used. Filing a 1040 ez Recovery Periods Under GDS Under GDS, property that is not qualified Indian reservation property is depreciated over one of the following recovery periods. Filing a 1040 ez Property Class Recovery Period 3-year property   3 years 1   5-year property   5 years     7-year property   7 years     10-year property   10 years     15-year property   15 years 2   20-year property   20 years     25-year property   25 years 3   Residential rental property   27. Filing a 1040 ez 5 years     Nonresidential real property   39 years 4   15 years for qualified rent-to-own property placed in service before August 6, 1997. Filing a 1040 ez 239 years for property that is a retail motor fuels outlet placed in service before August 20, 1996 (31. Filing a 1040 ez 5 years if placed in service before May 13, 1993), unless you elected to depreciate it over 15 years. Filing a 1040 ez 320 years for property placed in service before June 13, 1996, or under a binding contract in effect before June 10, 1996. Filing a 1040 ez 431. Filing a 1040 ez 5 years for property placed in service before May 13, 1993 (or before January 1, 1994, if the purchase or construction of the property is under a binding contract in effect before May 13, 1993, or if construction began before May 13, 1993). Filing a 1040 ez The GDS recovery periods for property not listed above can be found in Appendix B, Table of Class Lives and Recovery Periods. Filing a 1040 ez Residential rental property and nonresidential real property are defined earlier under Which Depreciation System (GDS or ADS) Applies. Filing a 1040 ez Enter the appropriate recovery period on Form 4562 under column (d) in section B of Part III, unless already shown (for 25-year property, residential rental property, and nonresidential real property). Filing a 1040 ez Office in the home. Filing a 1040 ez   If your home is a personal-use single family residence and you begin to use part of your home as an office, depreciate that part of your home as nonresidential real property over 39 years (31. Filing a 1040 ez 5 years if you began using it for business before May 13, 1993). Filing a 1040 ez However, if your home is an apartment in an apartment building that you own and the building is residential rental property as defined earlier under Which Depreciation System (GDS or ADS) Applies , depreciate the part used as an office as residential rental property over 27. Filing a 1040 ez 5 years. Filing a 1040 ez See Publication 587 for a discussion of the tests you must meet to claim expenses, including depreciation, for the business use of your home. Filing a 1040 ez Home changed to rental use. Filing a 1040 ez   If you begin to rent a home that was your personal home before 1987, you depreciate it as residential rental property over 27. Filing a 1040 ez 5 years. Filing a 1040 ez Indian Reservation Property The recovery periods for qualified property you placed in service on an Indian reservation after 1993 and before 2014 are shorter than those listed earlier. Filing a 1040 ez The following table shows these shorter recovery periods. Filing a 1040 ez Property Class Recovery  Period 3-year property 2 years 5-year property 3 years 7-year property 4 years 10-year property 6 years 15-year property 9 years 20-year property 12 years Nonresidential real property 22 years Nonresidential real property is defined earlier under Which Property Class Applies Under GDS . Filing a 1040 ez Use this chart to find the correct percentage table to use for qualified Indian reservation property. Filing a 1040 ez IF your recovery period is: THEN use the following table in Appendix A: 2 years A-21 3 years A-1, A-2, A-3, A-4, or A-5 4 years A-22 6 years A-23 9 years A-14, A-15, A-16, A-17, or A-18 12 years A-14, A-15, A-16, A-17, or A-18 22 years A-24 Qualified property. Filing a 1040 ez   Property eligible for the shorter recovery periods are 3-, 5-, 7-, 10-, 15-, and 20-year property and nonresidential real property. Filing a 1040 ez You must use this property predominantly in the active conduct of a trade or business within an Indian reservation. Filing a 1040 ez The rental of real property that is located on an Indian reservation is treated as the active conduct of a trade or business within an Indian reservation. Filing a 1040 ez   The following property is not qualified property. Filing a 1040 ez Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property. Filing a 1040 ez Property acquired directly or indirectly from a related person. Filing a 1040 ez Property placed in service for purposes of conducting or housing class I, II, or III gaming activities. Filing a 1040 ez These activities are defined in section 4 of the Indian Regulatory Act (25 U. Filing a 1040 ez S. Filing a 1040 ez C. Filing a 1040 ez 2703). Filing a 1040 ez Any property you must depreciate under ADS. Filing a 1040 ez Determine whether property is qualified without regard to the election to use ADS and after applying the special rules for listed property not used predominantly for qualified business use (discussed in chapter 5). Filing a 1040 ez Qualified infrastructure property. Filing a 1040 ez   Item (1) above does not apply to qualified infrastructure property located outside the reservation that is used to connect with qualified infrastructure property within the reservation. Filing a 1040 ez Qualified infrastructure property is property that meets all the following rules. Filing a 1040 ez It is qualified property, as defined earlier, except that it is outside the reservation. Filing a 1040 ez It benefits the tribal infrastructure. Filing a 1040 ez It is available to the general public. Filing a 1040 ez It is placed in service in connection with the active conduct of a trade or business within a reservation. Filing a 1040 ez Infrastructure property includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities. Filing a 1040 ez Related person. Filing a 1040 ez   For purposes of item (2) above, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 for a description of related persons. Filing a 1040 ez Indian reservation. Filing a 1040 ez   The term Indian reservation means a reservation as defined in section 3(d) of the Indian Financing Act of 1974 (25 U. Filing a 1040 ez S. Filing a 1040 ez C. Filing a 1040 ez 1452(d)) or section 4(10) of the Indian Child Welfare Act of 1978 (25 U. Filing a 1040 ez S. Filing a 1040 ez C. Filing a 1040 ez 1903(10)). Filing a 1040 ez Section 3(d) of the Indian Financing Act of 1974 defines reservation to include former Indian reservations in Oklahoma. Filing a 1040 ez For a definition of the term “former Indian reservations in Oklahoma,” see Notice 98-45 in Internal Revenue Bulletin 1998-35. Filing a 1040 ez Recovery Periods Under ADS The recovery periods for most property generally are longer under ADS than they are under GDS. Filing a 1040 ez The following table shows some of the ADS recovery periods. Filing a 1040 ez Property Recovery  Period Rent-to-own property 4 years Automobiles and light duty trucks 5 years Computers and peripheral equipment 5 years High technology telephone station equipment installed on customer premises 5 years High technology medical equipment 5 years Personal property with no class life 12 years Natural gas gathering lines 14 years Single purpose agricultural and horticultural structures 15 years Any tree or vine bearing fruit or nuts 20 years Initial clearing and grading land  improvements for gas utility property 20 years Initial clearing and grading land  improvements for electric utility  transmission and distribution plants 25 years Electric transmission property used in the transmission at 69 or more kilovolts of electricity 30 years Natural gas distribution lines 35 years Any qualified leasehold improvement property 39 years Any qualified restaurant property 39 years Nonresidential real property 40 years Residential rental property 40 years Section 1245 real property not listed in Appendix B 40 years Railroad grading and tunnel bore 50 years The ADS recovery periods for property not listed above can be found in the tables in Appendix B. Filing a 1040 ez Rent-to-own property, qualified leasehold improvement property, qualified restaurant property, residential rental property, and nonresidential real property are defined earlier under Which Property Class Applies Under GDS . Filing a 1040 ez Tax-exempt use property subject to a lease. Filing a 1040 ez   The ADS recovery period for any property leased under a lease agreement to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership) cannot be less than 125% of the lease term. Filing a 1040 ez Additions and Improvements An addition or improvement you make to depreciable property is treated as separate depreciable property. Filing a 1040 ez See How Do You Treat Repairs and Improvements in chapter 1 for a definition of improvements. Filing a 1040 ez Its property class and recovery period are the same as those that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Filing a 1040 ez The recovery period begins on the later of the following dates. Filing a 1040 ez The date you place the addition or improvement in service. Filing a 1040 ez The date you place in service the property to which you made the addition or improvement. Filing a 1040 ez If the improvement you make is qualified leasehold improvement property, qualified restaurant property, or qualified retail improvement property, the GDS recovery period is 15 years (39 years under ADS). Filing a 1040 ez Example. Filing a 1040 ez You own a rental home that you have been renting out since 1981. Filing a 1040 ez If you put an addition on the home and place the addition in service this year, you would use MACRS to figure your depreciation deduction for the addition. Filing a 1040 ez Under GDS, the property class for the addition is residential rental property and its recovery period is 27. Filing a 1040 ez 5 years because the home to which the addition is made would be residential rental property if you had placed it in service this year. Filing a 1040 ez Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Filing a 1040 ez The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Filing a 1040 ez The mid-month convention. Filing a 1040 ez   Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. Filing a 1040 ez   Under this convention, you treat all property placed in service or disposed of during a month as placed in service or disposed of at the midpoint of the month. Filing a 1040 ez This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of. Filing a 1040 ez   Your use of the mid-month convention is indicated by the “MM” already shown under column (e) in Part III of Form 4562. Filing a 1040 ez The mid-quarter convention. Filing a 1040 ez   Use this convention if the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year (excluding nonresidential real property, residential rental property, any railroad grading or tunnel bore, property placed in service and disposed of in the same year, and property that is being depreciated under a method other than MACRS) are more than 40% of the total depreciable bases of all MACRS property you placed in service during the entire year. Filing a 1040 ez   Under this convention, you treat all property placed in service or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of that quarter. Filing a 1040 ez This means that 1½ months of depreciation is allowed for the quarter the property is placed in service or disposed of. Filing a 1040 ez   If you use this convention, enter “MQ” under column (e) in Part III of Form 4562. Filing a 1040 ez    For purposes of determining whether the mid-quarter convention applies, the depreciable basis of property you placed in service during the tax year reflects the reduction in basis for amounts expensed under section 179 and the part of the basis of property attributable to personal use. Filing a 1040 ez However, it does not reflect any reduction in basis for any special depreciation allowance. Filing a 1040 ez The half-year convention. Filing a 1040 ez   Use this convention if neither the mid-quarter convention nor the mid-month convention applies. Filing a 1040 ez   Under this convention, you treat all property placed in service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. Filing a 1040 ez This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of. Filing a 1040 ez   If you use this convention, enter “HY” under column (e) in Part III of Form 4562. Filing a 1040 ez Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Filing a 1040 ez The 200% declining balance method over a GDS recovery period. Filing a 1040 ez The 150% declining balance method over a GDS recovery period. Filing a 1040 ez The straight line method over a GDS recovery period. Filing a 1040 ez The straight line method over an ADS recovery period. Filing a 1040 ez For property placed in service before 1999, you could have elected the 150% declining balance method using the ADS recovery periods for certain property classes. Filing a 1040 ez If you made this election, continue to use the same method and recovery period for that property. Filing a 1040 ez Table 4–1 lists the types of property you can depreciate under each method. Filing a 1040 ez It also gives a brief explanation of the method, including any benefits that may apply. Filing a 1040 ez Depreciation Methods for Farm Property If you place personal property in service in a farming business after 1988, you generally must depreciate it under GDS using the 150% declining balance method unless you are a farmer who must depreciate the property under ADS using the straight line method or you elect to depreciate the property under GDS or ADS using the straight line method. Filing a 1040 ez You can depreciate real property using the straight line method under either GDS or ADS. Filing a 1040 ez Fruit or nut trees and vines. Filing a 1040 ez   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a recovery period of 10 years. Filing a 1040 ez ADS required for some farmers. Filing a 1040 ez   If you elect not to apply the uniform capitalization rules to any plant produced in your farming business, you must use ADS. Filing a 1040 ez You must use ADS for all property you place in service in any year the election is in effect. Filing a 1040 ez See the regulations under section 263A of the Internal Revenue Code for information on the uniform capitalization rules that apply to farm property. Filing a 1040 ez Electing a Different Method As shown in Table 4–1 , you can elect a different method for depreciation for certain types of property. Filing a 1040 ez You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Filing a 1040 ez However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Filing a 1040 ez Attach the election to the amended return and write “Filed pursuant to section 301. Filing a 1040 ez 9100-2” on the election statement. Filing a 1040 ez File the amended return at the same address you filed the original return. Filing a 1040 ez Once you make the election, you cannot change it. Filing a 1040 ez If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. Filing a 1040 ez However, you can make the election on a property-by-property basis for nonresidential real and residential rental property. Filing a 1040 ez 150% election. Filing a 1040 ez   Instead of using the 200% declining balance method over the GDS recovery period for nonfarm property in the 3-, 5-, 7-, and 10-year property classes, you can elect to use the 150% declining balance method. Filing a 1040 ez Make the election by entering “150 DB” under column (f) in Part III of Form 4562. Filing a 1040 ez Straight line election. Filing a 1040 ez   Instead of using either the 200% or 150% declining balance methods over the GDS recovery period, you can elect to use the straight line method over the GDS recovery period. Filing a 1040 ez Make the election by entering  “S/L” under column (f) in Part III of Form 4562. Filing a 1040 ez Election of ADS. Filing a 1040 ez   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. Filing a 1040 ez ADS uses the straight line method of depreciation over fixed ADS recovery periods. Filing a 1040 ez Most ADS recovery periods are listed in Appendix B, or see the table under Recovery Periods Under ADS , earlier. Filing a 1040 ez   Make the election by completing line 20 in Part III of Form 4562. Filing a 1040 ez Farm property. Filing a 1040 ez   Instead of using the 150% declining balance method over a GDS recovery period for property you use in a farming business (other than real property), you can elect to depreciate it using either of the following methods. Filing a 1040 ez The straight line method over a GDS recovery period. Filing a 1040 ez The straight line method over an ADS recovery period. Filing a 1040 ez Table 4-1. Filing a 1040 ez Depreciation Methods Note. Filing a 1040 ez The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Filing a 1040 ez Method Type of Property Benefit GDS using 200% DB • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction GDS using 150% DB • All farm property (except real property) • All 15- and 20-year property (except qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service before January 1, 2014) • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction1 GDS using SL • Nonresidential real property • Qualified leasehold improvement property placed in service before January 1, 2014 • Qualified restaurant property placed in service before January 1, 2014 • Qualified retail improvement property placed in service before January 1, 2014 • Residential rental property • Trees or vines bearing fruit or nuts • Water utility property • All 3-, 5-, 7-, 10-, 15-, and 20-year property2 • Property for which you elected section 168(k)(4) • Provides for equal yearly deductions (except for the first and last years) ADS using SL • Listed property used 50% or less for business • Property used predominantly outside the U. Filing a 1040 ez S. Filing a 1040 ez  • Tax-exempt property • Tax-exempt bond-financed property • Farm property used when an election not to apply the uniform capitalization rules is in effect • Imported property3 • Any property for which you elect to use this method4 • Provides for equal yearly deductions (except for the first and last years) 1The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates 2See section 168(b)(5) of the Internal Revenue Code. Filing a 1040 ez 3See section 168(g)(6) of the Internal Revenue Code 4See section 168(g)(7) of the Internal Revenue Code How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed in service date, basis amount, recovery period, convention, and depreciation method that applies to your property. Filing a 1040 ez Then, you are ready to figure your depreciation deduction. Filing a 1040 ez You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table. Filing a 1040 ez Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. Filing a 1040 ez These percentage tables are in Appendix A near the end of this publication. Filing a 1040 ez Which table to use. Filing a 1040 ez    Appendix A contains the MACRS Percentage Table Guide, which is designed to help you locate the correct percentage table to use for depreciating your property. Filing a 1040 ez The percentage tables immediately follow the guide. Filing a 1040 ez Rules Covering the Use of the Tables The following rules cover the use of the percentage tables. Filing a 1040 ez You must apply the rates in the percentage tables to your property's unadjusted basis. Filing a 1040 ez You cannot use the percentage tables for a short tax year. Filing a 1040 ez See Figuring the Deduction for a Short Tax Year, later, for information on the short tax year rules. Filing a 1040 ez Once you start using the percentage tables for any item of property, you generally must continue to use them for the entire recovery period of the property. Filing a 1040 ez You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to that property that is depreciated as a separate item of property. Filing a 1040 ez Basis adjustments other than those made due to the items listed in (4) include an increase in basis for the recapture of a clean-fuel deduction or credit and a reduction in basis for a casualty loss. Filing a 1040 ez Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. Filing a 1040 ez   If you increase the basis of your property because of the recapture of part or all of a deduction for clean-fuel vehicles or the credit for clean-fuel vehicle refueling property placed in service before January 1, 2006, you cannot continue to use the percentage tables. Filing a 1040 ez For the year of the adjustment and the remaining recovery period, you must figure the depreciation deduction yourself using the property's adjusted basis at the end of the year. Filing a 1040 ez See Figuring the Deduction Without Using the Tables, later. Filing a 1040 ez Basis adjustment due to casualty loss. Filing a 1040 ez   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Filing a 1040 ez For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. Filing a 1040 ez See Figuring the Deduction Without Using the Tables, later. Filing a 1040 ez Example. Filing a 1040 ez On October 26, 2012, Sandra Elm, a calendar year taxpayer, bought and placed in service in her business a new item of 7-year property. Filing a 1040 ez It cost $39,000 and she elected a section 179 deduction of $24,000. Filing a 1040 ez She also took a special depreciation allowance of $7,500 [50% of $15,000 ($39,000 − $24,000)]. Filing a 1040 ez Her unadjusted basis after the section 179 deduction and special depreciation allowance was $7,500 ($15,000 − $7,500). Filing a 1040 ez She figured her MACRS depreciation deduction using the percentage tables. Filing a 1040 ez For 2012, her MACRS depreciation deduction was $268. Filing a 1040 ez In July 2013, the property was vandalized and Sandra had a deductible casualty loss of $3,000. Filing a 1040 ez She must adjust the property's basis for the casualty loss, so she can no longer use the percentage tables. Filing a 1040 ez Her adjusted basis at the end of 2013, before figuring her 2013 depreciation, is $4,232. Filing a 1040 ez She figures that amount by subtracting the 2012 MACRS depreciation of $268 and the casualty loss of $3,000 from the unadjusted basis of $7,500. Filing a 1040 ez She must now figure her depreciation for 2013 without using the percentage tables. Filing a 1040 ez Figuring the Unadjusted Basis of Your Property You must apply the table rates to your property's unadjusted basis each year of the recovery period. Filing a 1040 ez Unadjusted basis is the same basis amount you would use to figure gain on a sale, but you figure it without reducing your original basis by any MACRS depreciation taken in earlier years. Filing a 1040 ez However, you do reduce your original basis by other amounts, including the following. Filing a 1040 ez Any amortization taken on the property. Filing a 1040 ez Any section 179 deduction claimed. Filing a 1040 ez Any special depreciation allowance taken on the property. Filing a 1040 ez For business property you purchase during the year, the unadjusted basis is its cost minus these and other applicable adjustments. Filing a 1040 ez If you trade property, your unadjusted basis in the property received is the cash paid plus the adjusted basis of the property traded minus these adjustments. Filing a 1040 ez MACRS Worksheet You can use this worksheet to help you figure your depreciation deduction using the percentage tables. Filing a 1040 ez Use a separate worksheet for each item of property. Filing a 1040 ez Then, use the information from this worksheet to prepare Form 4562. Filing a 1040 ez Do not use this worksheet for automobiles. Filing a 1040 ez Use the Depreciation Worksheet for Passenger Automobiles in chapter 5. Filing a 1040 ez MACRS Worksheet Part I   1. Filing a 1040 ez MACRS system (GDS or ADS)   2. Filing a 1040 ez Property class   3. Filing a 1040 ez Date placed in service   4. Filing a 1040 ez Recovery period   5. Filing a 1040 ez Method and convention   6. Filing a 1040 ez Depreciation rate (from tables)   Part II   7. Filing a 1040 ez Cost or other basis* $     8. Filing a 1040 ez Business/investment use   %   9. Filing a 1040 ez Multiply line 7 by line 8   $ 10. Filing a 1040 ez Total claimed for section 179 deduction and other items   $ 11. Filing a 1040 ez Subtract line 10 from line 9. Filing a 1040 ez This is your tentative basis for depreciation   $ 12. Filing a 1040 ez Multiply line 11 by . Filing a 1040 ez 50 if the 50% special depreciation allowance applies. Filing a 1040 ez This is your special depreciation allowance. Filing a 1040 ez Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   $ 13. Filing a 1040 ez Subtract line 12 from line 11. Filing a 1040 ez This is your basis for depreciation     14. Filing a 1040 ez Depreciation rate (from line 6)     15. Filing a 1040 ez Multiply line 13 by line 14. Filing a 1040 ez This is your MACRS depreciation deduction   $ *If real estate, do not include cost (basis) of land. Filing a 1040 ez The following example shows how to figure your MACRS depreciation deduction using the percentage tables and the MACRS worksheet. Filing a 1040 ez Example. Filing a 1040 ez You bought office furniture (7-year property) for $10,000 and placed it in service on August 11, 2013. Filing a 1040 ez You use the furniture only for business. Filing a 1040 ez This is the only property you placed in service this year. Filing a 1040 ez You did not elect a section 179 deduction and the property is not qualified property for purposes of claiming a special depreciation allowance so your property's unadjusted basis is its cost, $10,000. Filing a 1040 ez You use GDS and the half-year convention to figure your depreciation. Filing a 1040 ez You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-1. Filing a 1040 ez Multiply your property's unadjusted basis each year by the percentage for 7-year property given in Table A-1. Filing a 1040 ez You figure your depreciation deduction using the MACRS worksheet as follows. Filing a 1040 ez MACRS Worksheet Part I 1. Filing a 1040 ez MACRS system (GDS or ADS) GDS 2. Filing a 1040 ez Property class 7-year 3. Filing a 1040 ez Date placed in service 8/11/13 4. Filing a 1040 ez Recovery period 7-Year 5. Filing a 1040 ez Method and convention 200%DB/Half-Year 6. Filing a 1040 ez Depreciation rate (from tables) . Filing a 1040 ez 1429 Part II 7. Filing a 1040 ez Cost or other basis* $10,000     8. Filing a 1040 ez Business/investment use 100 %   9. Filing a 1040 ez Multiply line 7 by line 8   $10,000 10. Filing a 1040 ez Total claimed for section 179 deduction and other items   -0- 11. Filing a 1040 ez Subtract line 10 from line 9. Filing a 1040 ez This is your tentative basis for depreciation   $10,000 12. Filing a 1040 ez Multiply line 11 by . Filing a 1040 ez 50 if the 50% special depreciation allowance applies. Filing a 1040 ez This is your special depreciation allowance. Filing a 1040 ez Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   -0- 13. Filing a 1040 ez Subtract line 12 from line 11. Filing a 1040 ez This is your basis for depreciation   $10,000 14. Filing a 1040 ez Depreciation rate (from line 6)   . Filing a 1040 ez 1429 15. Filing a 1040 ez Multiply line 13 by line 14. Filing a 1040 ez This is your MACRS depreciation deduction   $1,429 *If real estate, do not include cost (basis) of land. Filing a 1040 ez If there are no adjustments to the basis of the property other than depreciation, your depreciation deduction for each subsequent year of the recovery period will be as follows. Filing a 1040 ez Year   Basis Percentage Deduction 2014 $ 10,000 24. Filing a 1040 ez 49%   $2,449   2015   10,000 17. Filing a 1040 ez 49   1,749   2016   10,000 12. Filing a 1040 ez 49   1,249   2017   10,000 8. Filing a 1040 ez 93   893   2018   10,000 8. Filing a 1040 ez 92   892   2019   10,000 8. Filing a 1040 ez 93   893   2020   10,000 4. Filing a 1040 ez 46   446   Examples The following examples are provided to show you how to use the percentage tables. Filing a 1040 ez In both examples, assume the following. Filing a 1040 ez You use the property only for business. Filing a 1040 ez You use the calendar year as your tax year. Filing a 1040 ez You use GDS for all the properties. Filing a 1040 ez Example 1. Filing a 1040 ez You bought a building and land for $120,000 and placed it in service on March 8. Filing a 1040 ez The sales contract showed that the building cost $100,000 and the land cost $20,000. Filing a 1040 ez It is nonresidential real property. Filing a 1040 ez The building's unadjusted basis is its original cost, $100,000. Filing a 1040 ez You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-7a. Filing a 1040 ez March is the third month of your tax year, so multiply the building's unadjusted basis, $100,000, by the percentages for the third month in Table A-7a. Filing a 1040 ez Your depreciation deduction for each of the first 3 years is as follows: Year   Basis Percentage Deduction 1st $ 100,000 2. Filing a 1040 ez 033%   $2,033   2nd   100,000 2. Filing a 1040 ez 564   2,564   3rd   100,000 2. Filing a 1040 ez 564   2,564   Example 2. Filing a 1040 ez During the year, you bought a machine (7-year property) for $4,000, office furniture (7-year property) for $1,000, and a computer (5-year property) for $5,000. Filing a 1040 ez You placed the machine in service in January, the furniture in September, and the computer in October. Filing a 1040 ez You do not elect a section 179 deduction and none of these items is qualified property for purposes of claiming a special depreciation allowance. Filing a 1040 ez You placed property in service during the last 3 months of the year, so you must first determine if you have to use the mid-quarter convention. Filing a 1040 ez The total bases of all property you placed in service during the year is $10,000. Filing a 1040 ez The $5,000 basis of the computer, which you placed in service during the last 3 months (the fourth quarter) of your tax year, is more than 40% of the total bases of all property ($10,000) you placed in service during the year. Filing a 1040 ez Therefore, you must use the mid-quarter convention for all three items. Filing a 1040 ez You refer to the MACRS Percentage Table Guide in Appendix A to determine which table you should use under the mid-quarter convention. Filing a 1040 ez The machine is 7-year property placed in service in the first quarter, so you use Table A-2. Filing a 1040 ez The furniture is 7-year property placed in service in the third quarter, so you use Table A-4. Filing a 1040 ez Finally, because the computer is 5-year property placed in service in the fourth quarter, you use Table A-6. Filing a 1040 ez Knowing what table to use for each property, you figure the depreciation for the first 2 years as follows. Filing a 1040 ez Year Property Basis Percentage Deduction 1st Machine $4,000 25. Filing a 1040 ez 00 $1,000   2nd Machine 4,000 21. Filing a 1040 ez 43 857   1st Furniture 1,000 10. Filing a 1040 ez 71 107   2nd Furniture 1,000 25. Filing a 1040 ez 51 255   1st Computer 5,000 5. Filing a 1040 ez 00 250   2nd Computer 5,000 38. Filing a 1040 ez 00 1,900   Sale or Other Disposition Before the Recovery Period Ends If you sell or otherwise dispose of your property before the end of its recovery period, your depreciation deduction for the year of the disposition will be only part of the depreciation amount for the full year. Filing a 1040 ez You have disposed of your property if you have permanently withdrawn it from use in your business or income-producing activity because of its sale, exchange, retirement, abandonment, involuntary conversion, or destruction. Filing a 1040 ez After you figure the full-year depreciation amount, figure the deductible part using the convention that applies to the property. Filing a 1040 ez Half-year convention used. Filing a 1040 ez   For property for which you used a half-year convention, the depreciation deduction for the year of the disposition is half the depreciation determined for the full year. Filing a 1040 ez Mid-quarter convention used. Filing a 1040 ez   For property for which you used the mid-quarter convention, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter in which you disposed of the property. Filing a 1040 ez Quarter Percentage First 12. Filing a 1040 ez 5% Second 37. Filing a 1040 ez 5 Third 62. Filing a 1040 ez 5 Fourth 87. Filing a 1040 ez 5 Example. Filing a 1040 ez On December 2, 2010, you placed in service an item of 5-year property costing $10,000. Filing a 1040 ez You did not claim a section 179 deduction and the property does not qualify for a special depreciation allowance. Filing a 1040 ez Your unadjusted basis for the property was $10,000. Filing a 1040 ez You used the mid-quarter convention because this was the only item of business property you placed in service in 2010 and it was placed in service during the last 3 months of your tax year. Filing a 1040 ez Your property is in the 5-year property class, so you used Table A-5 to figure your depreciation deduction. Filing a 1040 ez Your deductions for 2010, 2011, and 2012 were $500 (5% of $10,000), $3,800 (38% of $10,000), and $2,280 (22. Filing a 1040 ez 80% of $10,000). Filing a 1040 ez You disposed of the property on April 6, 2013. Filing a 1040 ez To determine your depreciation deduction for 2013, first figure the deduction for the full year. Filing a 1040 ez This is $1,368 (13. Filing a 1040 ez 68% of $10,000). Filing a 1040 ez April is in the second quarter of the year, so you multiply $1,368 by 37. Filing a 1040 ez 5% to get your depreciation deduction of $513 for 2013. Filing a 1040 ez Mid-month convention used. Filing a 1040 ez   If you dispose of residential rental or nonresidential real property, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by a fraction. Filing a 1040 ez The numerator of the fraction is the number of months (including partial months) in the year that the property is considered in service. Filing a 1040 ez The denominator is 12. Filing a 1040 ez Example. Filing a 1040 ez On July 2, 2011, you purchased and placed in service residential rental property. Filing a 1040 ez The property cost $100,000, not including the cost of land. Filing a 1040 ez You used Table A-6 to figure your MACRS depreciation for this property. Filing a 1040 ez You sold the property on March 2, 2013. Filing a 1040 ez You file your tax return based on the calendar year. Filing a 1040 ez A full year of depreciation for 2013 is $3,636. Filing a 1040 ez This is $100,000 multiplied by . Filing a 1040 ez 03636 (the percentage for the seventh month of the third recovery year) from Table A-6 . Filing a 1040 ez You then apply the mid-month convention for the 2½ months of use in 2013. Filing a 1040 ez Treat the month of disposition as one-half month of use. Filing a 1040 ez Multiply $3,636 by the fraction, 2. Filing a 1040 ez 5 over 12, to get your 2013 depreciation deduction of $757. Filing a 1040 ez 50. Filing a 1040 ez Figuring the Deduction Without Using the Tables Instead of using the rates in the percentage tables to figure your depreciation deduction, you can figure it yourself. Filing a 1040 ez Before making the computation each year, you must reduce your adjusted basis in the property by the depreciation claimed the previous year. Filing a 1040 ez Figuring MACRS deductions without using the tables generally will result in a slightly different amount than using the tables. Filing a 1040 ez Declining Balance Method When using a declining balance method, you apply the same depreciation rate each year to the adjusted basis of your property. Filing a 1040 ez You must use the applicable convention for the first tax year and you must switch to the straight line method beginning in the first year for which it will give an equal or greater deduction. Filing a 1040 ez The straight line method is explained later. Filing a 1040 ez You figure depreciation for the year you place property in service as follows. Filing a 1040 ez Multiply your adjusted basis in the property by the declining balance rate. Filing a 1040 ez Apply the applicable convention. Filing a 1040 ez You figure depreciation for all other years (before the year you switch to the straight line method) as follows. Filing a 1040 ez Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years. Filing a 1040 ez Multiply this new adjusted basis by the same declining balance rate used in earlier years. Filing a 1040 ez If you dispose of property before the end of its recovery period, see Using the Applicable Convention, later, for information on how to figure depreciation for the year you dispose of it. Filing a 1040 ez Figuring depreciation under the declining balance method and switching to the straight line method is illustrated in Example 1 , later, under Examples. Filing a 1040 ez Declining balance rate. Filing a 1040 ez   You figure your declining balance rate by dividing the specified declining balance percentage (150% or 200% changed to a decimal) by the number of years in the property's recovery period. Filing a 1040 ez For example, for 3-year property depreciated using the 200% declining balance method, divide 2. Filing a 1040 ez 00 (200%) by 3 to get 0. Filing a 1040 ez 6667, or a 66. Filing a 1040 ez 67% declining balance rate. Filing a 1040 ez For 15-year property depreciated using the 150% declining balance method, divide 1. Filing a 1040 ez 50 (150%) by 15 to get 0. Filing a 1040 ez 10, or a 10% declining balance rate. Filing a 1040 ez   The following table shows the declining balance rate for each property class and the first year for which the straight line method gives an equal or greater deduction. Filing a 1040 ez Property Class Method Declining Balance Rate Year 3-year 200% DB 66. Filing a 1040 ez 667% 3rd 5-year 200% DB 40. Filing a 1040 ez 0 4th 7-year 200% DB 28. Filing a 1040 ez 571 5th 10-year 200% DB 20. Filing a 1040 ez 0 7th 15-year 150% DB 10. Filing a 1040 ez 0 7th 20-year 150% DB 7. Filing a 1040 ez 5 9th Straight Line Method When using the straight line method, you apply a different depreciation rate each year to the adjusted basis of your property. Filing a 1040 ez You must use the applicable convention in the year you place the property in service and the year you dispose of the property. Filing a 1040 ez You figure depreciation for the year you place property in service as follows. Filing a 1040 ez Multiply your adjusted basis in the property by the straight line rate. Filing a 1040 ez Apply the applicable convention. Filing a 1040 ez You figure depreciation for all other years (including the year you switch from the declining balance method to the straight line method) as follows. Filing a 1040 ez Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years (under any method). Filing a 1040 ez Determine the depreciation rate for the year. Filing a 1040 ez Multiply the adjusted basis figured in (1) by the depreciation rate figured in (2). Filing a 1040 ez If you dispose of property before the end of its recovery period, see Using the Applicable Convention , later, for information on how to figure depreciation for the year you dispose of it. Filing a 1040 ez Straight line rate. Filing a 1040 ez   You determine the straight line depreciation rate for any tax year by dividing the number 1 by the years remaining in the recovery period at the beginning of that year. Filing a 1040 ez When figuring the number of years remaining, you must take into account the convention used in the year you placed the property in service. Filing a 1040 ez If the number of years remaining is less than 1, the depreciation rate for that tax year is 1. Filing a 1040 ez 0 (100%). Filing a 1040 ez Using the Applicable Convention The applicable convention (discussed earlier under Which Convention Applies ) affects how you figure your depreciation deduction for the year you place your property in service and for the year you dispose of it. Filing a 1040 ez It determines how much of the recovery period remains at the beginning of each year, so it also affects the depreciation rate for property you depreciate under the straight line method. Filing a 1040 ez See Straight line rate in the previous discussion. Filing a 1040 ez Use the applicable convention as explained in the following discussions. Filing a 1040 ez Half-year convention. Filing a 1040 ez   If this convention applies, you deduct a half-year of depreciation for the first year and the last year that you depreciate the property. Filing a 1040 ez You deduct a full year of depreciation for any other year during the recovery period. Filing a 1040 ez   Figure your depreciation deduction for the year you place the property in service by dividing the depreciation for a full year by 2. Filing a 1040 ez If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Filing a 1040 ez If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final 6 months of the recovery period is the amount of your unrecovered basis in the property. Filing a 1040 ez Mid-quarter convention. Filing a 1040 ez   If this convention applies, the depreciation you can deduct for the first year you depreciate the property depends on the quarter in which you place the property in service. Filing a 1040 ez   A quarter of a full 12-month tax year is a period of 3 months. Filing a 1040 ez The first quarter in a year begins on the first day of the tax year. Filing a 1040 ez The second quarter begins on the first day of the fourth month of the tax year. Filing a 1040 ez The third quarter begins on the first day of the seventh month of the tax year. Filing a 1040 ez The fourth quarter begins on the first day of the tenth month of the tax year. Filing a 1040 ez A calendar year is divided into the following quarters. Filing a 1040 ez Quarter Months First January, February, March Second April, May, June Third July, August, September Fourth October, November, December   Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by the percentage listed below for the quarter you place the property in service. Filing a 1040 ez Quarter Percentage First 87. Filing a 1040 ez 5% Second 62. Filing a 1040 ez 5 Third 37. Filing a 1040 ez 5 Fourth 12. Filing a 1040 ez 5   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter you dispose of the property. Filing a 1040 ez Quarter Percentage First 12. Filing a 1040 ez 5% Second 37. Filing a 1040 ez 5 Third 62. Filing a 1040 ez 5 Fourth 87. Filing a 1040 ez 5   If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final quarter of the recovery period is the amount of your unrecovered basis in the property. Filing a 1040 ez Mid-month convention. Filing a 1040 ez   If this convention applies, the depreciation you can deduct for the first year that you depreciate the property depends on the month in which you place the property in service. Filing a 1040 ez Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by a fraction. Filing a 1040 ez The numerator of the fraction is the number of full months in the year that the property is in service plus ½ (or 0. Filing a 1040 ez 5). Filing a 1040 ez The denominator is 12. Filing a 1040 ez   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Filing a 1040 ez If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final month of the recovery period is the amount of your unrecovered basis in the property. Filing a 1040 ez Example. Filing a 1040 ez You use the calendar year and place nonresidential real property in service in August. Filing a 1040 ez The property is in service 4 full months (September, October, November, and December). Filing a 1040 ez Your numerator is 4. Filing a 1040 ez 5 (4 full months plus 0. Filing a 1040 ez 5). Filing a 1040 ez You multiply the depreciation for a full year by 4. Filing a 1040 ez 5/12, or 0. Filing a 1040 ez 375. Filing a 1040 ez Examples The following examples show how to figure depreciation under MACRS without using the percentage tables. Filing a 1040 ez Figures are rounded for purposes of the examples. Filing a 1040 ez Assume for all the examples that you use a calendar year as your tax year. Filing a 1040 ez Example 1—200% DB method and half-year convention. Filing a 1040 ez In February, you placed in service depreciable property with a 5-year recovery period and a basis of $1,000. Filing a 1040 ez You do not elect to take the section 179 deduction and the property does not qualify for a special depreciation allowance. Filing a 1040 ez You use GDS and the 200% declining balance (DB) method to figure your depreciation. Filing a 1040 ez When the straight line (SL) method results in an equal or larger deduction, you switch to the SL method. Filing a 1040 ez You did not place any property in service in the last 3 months of the year, so you must use the half-year convention. Filing a 1040 ez First year. Filing a 1040 ez You figure the depreciation rate under the 200% DB method by dividing 2 (200%) by 5 (the number of years in the recovery period). Filing a 1040 ez The result is 40%. Filing a 1040 ez You multiply the adjusted basis of the property ($1,000) by the 40% DB rate. Filing a 1040 ez You apply the half-year convention by dividing the result ($400) by 2. Filing a 1040 ez Depreciation for the first year under the 200% DB method is $200. Filing a 1040 ez You figure the depreciation rate under the straight line (SL) method by dividing 1 by 5, the number of years in the recovery period. Filing a 1040 ez The result is 20%. Filing a 1040 ez You multiply the adjusted basis of the property ($1,000) by the 20% SL rate. Filing a 1040 ez You apply the half-year convention by dividing the result ($200) by 2. Filing a 1040 ez Depreciation for the first year under the SL method is $100. Filing a 1040 ez The DB method provides a larger deduction, so you deduct the $200 figured under the 200% DB method. Filing a 1040 ez Second year. Filing a 1040 ez You reduce the adjusted basis ($1,000) by the depreciation claimed in the first year ($200). Filing a 1040 ez You multiply the result ($800) by the DB rate (40%). Filing a 1040 ez Depreciation for the second year under the 200% DB method is $320. Filing a 1040 ez You figure the SL depreciation rate by dividing 1 by 4. Filing a 1040 ez 5, the number of years remaining in the recovery period. Filing a 1040 ez (Based on the half-year convention, you used only half a year of the recovery period in the first year. Filing a 1040 ez ) You multiply the reduced adjusted basis ($800) by the result (22. Filing a 1040 ez 22%). Filing a 1040 ez Depreciation under the SL method for the second year is $178. Filing a 1040 ez The DB method provides a larger deduction, so you deduct the $320 figured under the 200% DB method. Filing a 1040 ez Third year. Filing a 1040 ez You reduce the adjusted basis ($800) by the depreciation claimed in the second year ($320). Filing a 1040 ez You multiply the result ($480) by the DB rate (40%). Filing a 1040 ez Depreciation for the third year under the 200% DB method is $192. Filing a 1040 ez You figure the SL depreciation rate by dividing 1 by 3. Filing a 1040 ez 5. Filing a 1040 ez You multiply the reduced adjusted basis ($480) by the result (28. Filing a 1040 ez 57%). Filing a 1040 ez Depreciation under the SL method for the third year is $137. Filing a 1040 ez The DB method provides a larger deduction, so you deduct the $192 figured under the 200% DB method. Filing a 1040 ez Fourth year. Filing a 1040 ez You reduce the adjusted basis ($480) by the de
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Contact My Local Office in Virginia

Face-to-face Tax Help

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

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

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

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

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

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

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

City Street Address Days/Hours of Service Telephone*
Bailey's Crossroads 5205 Leesburg Pike Suite 200
Bailey's Crossroads, VA 22041

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

 

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

 

Services Provided

(703) 756-6663
 
Bristol 2426 Lee Hwy.
Bristol, VA 24202

Monday-Friday - 8:30 a.m.-4:30 p.m..
(Closed for lunch 11:30 a.m. - 12:30 p.m.)

 

Services Provided

(276) 642-7446
Charlottesville 401 East Market Street
Charlottesville, VA 22902

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

 

Services Provided

(434) 977-8718 
Danville  3303 Hwy 29 N
Danville, VA 24540 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon -1:00 p.m.)

 

Services Provided

(434) 836-7072 
Fredericksburg  1320 Central Park Blvd.
Fredericksburg, VA 22401 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon-1:00 p.m.)

 

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

 

Services Provided

(540) 899-9450 
Hampton  903 Enterprise Pkwy. 
Hampton, VA 23666 

Monday-Friday - 8:30 a.m.-4:30 p.m.
 

Services Provided

(757) 262-4007

 

Lynchburg  1101 Court St.
Lynchburg, VA 24504 

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

 

Services Provided

(434) 528-1890 
Norfolk  200 Granby St.
Norfolk, VA 23510 

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

 

Services Provided

(757) 213-3925 
Richmond  400 N. Eighth St.
Richmond, VA 23219 

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

 

Services Provided

(804) 916-8700 
Roanoke  210 1st St. SW
Roanoke, VA 24011 

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

 

Services Provided

(540) 857-2364 
Staunton  1600 N. Coalter St.
Staunton, VA 24401 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

Services Provided

(540) 886-2089 

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

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

The Taxpayer Advocate Service: Call (804) 916-3501 in Richmond or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

Partnerships

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

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

Internal Revenue Service
400 N. 8th St., Room 564
Richmond, VA 23240

Internal Revenue Service
Norfolk Federal Building
200 Granby Mall, Room 525
Norfolk, VA 23510

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

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

Page Last Reviewed or Updated: 28-Mar-2014

The Filing A 1040 Ez

Filing a 1040 ez Publication 557 - Introductory Material Table of Contents What's New Reminders Introduction What's New Proposed regulations on “good faith determinations”. Filing a 1040 ez  Proposed regulations modify standards for making a good faith determination that a foreign organization is a charitable organization, grants to which may be qualifying distributions and not taxable expenditures. Filing a 1040 ez The proposed regulations identify a broader class of tax practitioners upon whose written advice a private foundation may base a “good faith determination. Filing a 1040 ez ” See, Proposed Regulations: Reliance Standards for Making Good Faith Determinations, REG-134974-12, 2012-47 I. Filing a 1040 ez R. Filing a 1040 ez B. Filing a 1040 ez 553. Filing a 1040 ez Prop. Filing a 1040 ez Regs. Filing a 1040 ez on Good Faith Determinations. Filing a 1040 ez New Requirements for section 501(c)(3) Hospitals Under the Affordable Care Act. Filing a 1040 ez  The Affordable Care Act (ACA), enacted March 23, 2010, added new requirements that hospital organizations must satisfy in order to be described in section 501(c)(3), as well as new reporting requirements and excise taxes. Filing a 1040 ez On June 22, 2012, the Service issued a notice of proposed rulemaking that addresses the new requirements enacted by the ACA applicable to section 501(c)(3) hospital organizations. Filing a 1040 ez See, Proposed Regulations: Additional Requirements for Charitable Hospitals, REG-13026-11, 77 Fed. Filing a 1040 ez Reg. Filing a 1040 ez 38148. Filing a 1040 ez On April 3, 2013, the Service issued proposed regulations on the ACA's community health needs assessment (CHNA) requirements. Filing a 1040 ez The proposed regulations also discuss the related reporting and excise tax requirements for charitable hospitals and the consequences for failure to satisfy the section 501(r) requirements. Filing a 1040 ez See, Proposed Regulations: Community Health Needs Assessments for Charitable Hospitals, REG-106499-12, 78 Fed. Filing a 1040 ez Reg. Filing a 1040 ez 20,523. Filing a 1040 ez Timing of when an Organization is exempt for Federal Tax Purposes. Filing a 1040 ez  As noted in section 2. Filing a 1040 ez 03(4) of Revenue Procedure 2013-9, 2013-2 I. Filing a 1040 ez R. Filing a 1040 ez B. Filing a 1040 ez 267, the provisions in section 11. Filing a 1040 ez 01 regarding the effect of determination letters or rulings recognizing exempt status of organizations described in section 501(c), other than sections 501(c)(3), (9), (17), and (29), have been revised. Filing a 1040 ez Prior to this year, and back to 1962, when such organizations applied for recognition, the IRS would usually recognize the organizations as tax exempt from the date of formation, no matter how long the interval between the date of formation and the date of application. Filing a 1040 ez In addition to the practical difficulties of ascertaining an organization's purposes and activities for this period, such recognition is now potentially inconsistent with the provisions of section 6033(j), which automatically revokes the exempt status of an organization that fails to file required Form 990 series returns or notices for three consecutive years. Filing a 1040 ez The new procedure adopts a practice similar to the rule for section 501(c)(3) organizations for these organizations, generally permitting recognition from the date of formation if the organization has: always met the requirements for exemption, has applied within 27 months from the end of the month in which it was organized, and has not failed to file required Form 990 series returns or notices for three consecutive years. Filing a 1040 ez Section 11. Filing a 1040 ez 01(3) notes: an organization that otherwise meets the requirements for tax-exempt status and the issuance of a determination letter or ruling that does not meet the requirements for recognition from date of formation will generally be recognized from the postmark date of its application. Filing a 1040 ez Exempt Organizations Select Check. Filing a 1040 ez  The IRS has developed an on-line search tool, Exempt Organizations Select Check, that allows users to select an exempt organization and check certain information about its federal tax status and filings. Filing a 1040 ez It consolidates three former search sites into one, providing expanded search capability and a more efficient way to search for organizations that: Are eligible to receive tax-deductible charitable contributions (Publication 78 data). Filing a 1040 ez Users may rely on this list in determining deductibility of contributions, just as they did when Publication 78 was a separate electronic publication rather than part of Select Check. Filing a 1040 ez Have had their tax-exempt status automatically revoked under the law because they have not filed Form 990 series returns or notices annually as required for three consecutive years (Auto-Revocation List). Filing a 1040 ez Have filed a Form 990-N (e-Postcard) annual electronic notice. Filing a 1040 ez  In addition to searching for a particular organization, users may download a complete list of each of the three types of organizations through Exempt Organizations Select Check. Filing a 1040 ez See also Revenue Procedure 2011-33, 2011-25 I. Filing a 1040 ez R. Filing a 1040 ez B. Filing a 1040 ez 887. Filing a 1040 ez Future developments. Filing a 1040 ez . Filing a 1040 ez  The IRS has created a page on IRS. Filing a 1040 ez gov for information about Publication 557, at www. Filing a 1040 ez irs. Filing a 1040 ez gov/pub557. Filing a 1040 ez Information about any future developments affecting Publication 557 (such as legislation enacted after we release it) will be posted on that page. Filing a 1040 ez Reminders The Patient Protection and Affordable Care Act (ACA). Filing a 1040 ez   The ACA added several new laws. Filing a 1040 ez This includes a new excise tax on indoor tanning services, a small business health care tax credit, additional requirements for tax-exempt hospitals, and the section 501(c)(29) CO-OP program. Filing a 1040 ez For more information, go to IRS. Filing a 1040 ez gov and select Affordable Care Act Tax Provisions. Filing a 1040 ez Electronic filing requirement for large organizations. Filing a 1040 ez  For tax years ending on or after December 31, 2006, only organizations that file 250 returns during the calendar year and that have total assets of $10 million or more are required to file Form 990 electronically. Filing a 1040 ez For more information, go to e-file for Charities and Non-Profits. Filing a 1040 ez Section 501(c)(15) gross receipts. Filing a 1040 ez   The definition of gross receipts for purposes of determining whether small insurance companies qualify as tax-exempt under section 501(c)(15) has changed. Filing a 1040 ez See Notice 2006-42, 2006-19 I. Filing a 1040 ez R. Filing a 1040 ez B. Filing a 1040 ez 878, Notice 2006-42. Filing a 1040 ez Prohibited tax shelter transactions. Filing a 1040 ez  New excise taxes are imposed under section 4965 on certain tax-exempt organizations entering into prohibited tax shelter transactions. Filing a 1040 ez See T. Filing a 1040 ez D. Filing a 1040 ez 9492, Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirements, 2010-33 I. Filing a 1040 ez R. Filing a 1040 ez B. Filing a 1040 ez 242. Filing a 1040 ez See IRS Issues Final Regulations Regarding Excise Taxes on Prohibited Tax Shelter Transactions and Related Disclosure Requirement. Filing a 1040 ez Pension Protection Act of 2006 tax changes. Filing a 1040 ez  The Pension Protection Act of 2006 made numerous changes to the tax law provisions affecting tax-exempt organizations. Filing a 1040 ez Unless otherwise noted, most of the changes became effective on August 17, 2006. Filing a 1040 ez For key provisions, go to The Pension Protection Act of 2006. Filing a 1040 ez Section 501(c)(3) organizations must make their Form 990-T, Exempt Organization Business Tax Return (and proxy tax under section 6033(e)), open for public inspection for a period of 3 years from the date the Form 990-T is required to be filed (determined with regard to any extension of time for filing) or is actually filed, whichever is later. Filing a 1040 ez There is an increase in excise taxes relating to public charities, social welfare organizations, and private foundations. Filing a 1040 ez There are additional standards for credit counseling organizations. Filing a 1040 ez The definition of convention or association of churches has been modified. Filing a 1040 ez Entities that are not required to file Form 990 or 990-EZ must file new Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ. Filing a 1040 ez The requirements of disclosure to state officials relating to exempt organizations has been modified. Filing a 1040 ez There are excise taxes imposed on excess benefit transactions involving donor advised funds and sponsoring organizations. Filing a 1040 ez There are new excise taxes on prohibited tax shelter transactions. Filing a 1040 ez There is a modification of recordkeeping requirements for certain charitable contributions. Filing a 1040 ez Introduction This publication discusses the rules and procedures for organizations that seek recognition of exemption from federal income tax under section 501(a) of the Internal Revenue Code (the Code). Filing a 1040 ez It explains the procedures you must follow to obtain an appropriate ruling or determination letter recognizing your organization's exemption, as well as certain other information that applies generally to all exempt organizations. Filing a 1040 ez To qualify for exemption under the Code, your organization must be organized for one or more of the purposes specifically designated in the Code. Filing a 1040 ez Organizations that are exempt under section 501(a) include those organizations described in section 501(c). Filing a 1040 ez Section 501(c) organizations are covered in this publication. Filing a 1040 ez Chapter 1, Application, Approval, and Appeal Procedures, provides general information about the procedures for obtaining recognition of tax-exempt status. Filing a 1040 ez Chapter 2, Filing Requirements and Required Disclosures, contains information about annual filing requirements and other matters that may affect your organization's tax-exempt status. Filing a 1040 ez Chapter 3, Section 501(c)(3) Organizations, contains detailed information on various matters affecting section 501(c)(3) organizations, including a section on the determination of private foundation status. Filing a 1040 ez Chapter 4, Other Section 501(c) Organizations, includes separate sections for specific types of organizations described in section 501(c). Filing a 1040 ez Chapter 5, Excise Taxes, provides information on when excise taxes may be imposed. Filing a 1040 ez Organizations not discussed in this publication. Filing a 1040 ez   Certain organizations that may qualify for exemption are not discussed in this publication, although they are included in the Organization Reference Chart. Filing a 1040 ez These organizations (and the Code sections that apply to them) are as follows. Filing a 1040 ez Corporations organized under Acts of Congress 501(c)(1) Teachers' retirement fund associations 501(c)(11) Mutual insurance companies 501(c)(15) Corporations organized to finance crop operations 501(c)(16) Employee funded pension trusts (created before June 25, 1959) 501(c)(18) Withdrawal liability payment fund 501(c)(22) Veterans' organizations (created before 1880) 501(c)(23) National Railroad Retirement Investment Trust 501(c)(28) Religious and apostolic associations 501(d) Cooperative hospital service organizations 501(e) Cooperative service organizations of operating educational organizations 501(f)   Section 501(c)(24) organizations (section 4049 ERISA trusts) are neither discussed in the text nor listed in the Organization Reference Chart. Filing a 1040 ez   Similarly, farmers' cooperative associations that qualify for exemption under section 521, qualified state tuition programs described in section 529, and pension, profit-sharing, and stock bonus plans described in section 401(a) are not discussed in this publication. Filing a 1040 ez If you think your organization falls within one of these categories, contact the IRS for any additional information you need. Filing a 1040 ez For telephone assistance, call 1-877-829-5500. Filing a 1040 ez   Check the Table of Contents at the beginning of this publication to determine whether your organization is described in this publication. Filing a 1040 ez If it is, read the chapter (or section) that applies to your type of organization for the specific information you must give when applying for recognition of exemption. Filing a 1040 ez Organization Reference Chart. Filing a 1040 ez   The Organization Reference Chart enables you to locate at a glance the section of the Code under which your organization might qualify for exemption. Filing a 1040 ez It also shows the required application form and, if your organization meets the exemption requirements, the annual return to be filed (if any), and whether or not a contribution to your organization will be deductible by a donor. Filing a 1040 ez It also describes each type of qualifying organization and the general nature of its activities. Filing a 1040 ez   You may use the Organization Reference Chart to determine the Code section that you think applies to your organization. Filing a 1040 ez Any correspondence with the IRS (in requesting forms or otherwise) will be expedited if you indicate in your correspondence the appropriate Code section. Filing a 1040 ez Check the IRS website, IRS. Filing a 1040 ez gov, for the latest updates, Tax Information for Charities & Other Non-Profits, www. Filing a 1040 ez irs. Filing a 1040 ez gov/charities/index. Filing a 1040 ez html. Filing a 1040 ez Comments and suggestions. Filing a 1040 ez   We welcome your comments about this publication and your suggestions for future editions. Filing a 1040 ez   You can e-mail us while visiting our website at IRS. Filing a 1040 ez gov. Filing a 1040 ez   You can send your comments to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Filing a 1040 ez NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Filing a 1040 ez Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Filing a 1040 ez   If you wish telephone assistance, please call 1-877-829-5500. Filing a 1040 ez This toll-free telephone service is available Monday through Friday. Filing a 1040 ez Prev  Up  Next   Home   More Online Publications