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Free State Tax Return Forms

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Free State Tax Return Forms

Free state tax return forms Publication 554 - Introductory Material Table of Contents What's New Reminders IntroductionVolunteer Income Tax Assistance and Tax Counseling for the Elderly. Free state tax return forms Ordering forms and publications. Free state tax return forms Tax questions. Free state tax return forms What's New Alternative minimum tax exemption increased. Free state tax return forms  The AMT exemption amount has increased to $51,900 ($80,800 if married filing jointly or qualifying widow(er); $40,400 if married filing separately). Free state tax return forms Earned income credit. Free state tax return forms  The maximum amount of income you can earn and still get the credit has increased. Free state tax return forms You may be able to take the credit if you earn less than: $14,340 ($19,680 if married filing jointly), do not have a qualifying child, and are at least 25 years old and under 65, $37,870 ($43,210 if married filing jointly), and you have one qualifying child, $43,038 ($48,378 if married filing jointly), and you have two qualifying children, or $46,227 ($51,567 if married filing jointly), and you have three or more qualifying children. Free state tax return forms For more information, see Earned Income Credit , later. Free state tax return forms Exemption phaseout. Free state tax return forms  You lose at least part of the benefit of your exemptions if your adjusted gross income is above a certain amount. Free state tax return forms For 2013, the phaseout begins at $150,000 for married individuals filing separate returns; $250,000 for single individuals; $275,000 for heads of household; and $300,000 for married individuals filing joint returns or qualifying widow(er)s. Free state tax return forms For more information, see Phaseout of Exemptions in Publication 501. Free state tax return forms Limit on itemized deductions. Free state tax return forms   Beginning January 1, 2013, itemized deductions for taxpayers with adjusted gross incomes above $150,000 may be reduced. Free state tax return forms See Overall limitation , later. Free state tax return forms Medical and dental expenses. Free state tax return forms   Beginning January 1, 2013, taxpayers 65 and older can deduct only the part of their medical and dental expenses that exceed 7. Free state tax return forms 5% of their adjusted gross income (10% for taxpayers under 65). Free state tax return forms Same-sex marriages. Free state tax return forms  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Free state tax return forms For more information, see Publication 501. Free state tax return forms Reminders Future developments. Free state tax return forms  For the latest information about developments related to Publication 554, such as legislation enacted after it was published, go to www. Free state tax return forms irs. Free state tax return forms gov/pub554. Free state tax return forms Tax return preparers. Free state tax return forms  Choose your preparer carefully. Free state tax return forms If you pay someone to prepare your return, the preparer is required, under the law, to sign the return and fill in the other blanks in the Paid Preparer's area of your return. Free state tax return forms Remember, however, that you are still responsible for the accuracy of every item entered on your return. Free state tax return forms If there is any underpayment, you are responsible for paying it, plus any interest and penalty that may be due. Free state tax return forms Sale of home by surviving spouse. Free state tax return forms  If you are an unmarried widow or widower, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. Free state tax return forms For more information, see Sale of Home , later. Free state tax return forms Third party designee. Free state tax return forms  You can check the “Yes” box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, family member, or any other person you choose. Free state tax return forms This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. Free state tax return forms It also allows your designee to perform certain actions. Free state tax return forms See your income tax return instructions for details. Free state tax return forms Employment tax withholding. Free state tax return forms  Your wages are subject to withholding for income tax, social security tax, and Medicare tax even if you are receiving social security benefits. Free state tax return forms Photographs of missing children. Free state tax return forms  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Free state tax return forms Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Free state tax return forms You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Free state tax return forms Introduction The purpose of this publication is to provide a general overview of selected topics that are of interest to older taxpayers. Free state tax return forms The publication will help you determine if you need to file a return and, if so, what items to report on your return. Free state tax return forms Each topic is discussed only briefly, so you will find references to other free IRS publications that provide more detail on these topics if you need it. Free state tax return forms Table I has a list of questions you may have about filing your federal tax return. Free state tax return forms To the right of each question is the location of the answer in this publication. Free state tax return forms Also, at the back of this publication there is an index to help you search for the topic you need. Free state tax return forms While most federal income tax laws apply equally to all taxpayers, regardless of age, there are some provisions that give special treatment to older taxpayers. Free state tax return forms The following are some examples. Free state tax return forms Higher gross income threshold for filing. Free state tax return forms You must be age 65 or older at the end of the year to get this benefit. Free state tax return forms You are considered age 65 on the day before your 65th birthday. Free state tax return forms Therefore, you are considered age 65 at the end of the year if your 65th birthday is on or before January 1 of the following year. Free state tax return forms Higher standard deduction. Free state tax return forms If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. Free state tax return forms You are considered age 65 at the end of the year if your 65th birthday is on or before January 1 of the following year. Free state tax return forms Credit for the elderly or the disabled. Free state tax return forms If you qualify, you may benefit from the credit for the elderly or the disabled. Free state tax return forms To determine if you qualify and how to figure this credit, see Credit for the Elderly or the Disabled , later. Free state tax return forms Return preparation assistance. Free state tax return forms   The IRS wants to make it easier for you to file your federal tax return. Free state tax return forms You may find it helpful to visit a Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), or American Association of Retired Persons (AARP) Tax-Aide site near you. Free state tax return forms Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Free state tax return forms   These programs provide free help for low-income taxpayers and taxpayers age 60 or older to fill in and file their returns. Free state tax return forms For the VITA/TCE site nearest you, contact your local IRS office. Free state tax return forms For more information, see Free help with your tax return under How To Get Tax Help. Free state tax return forms   For the location of an AARP Tax-Aide site in your community, call 1-888-227-7669. Free state tax return forms When asked, be ready to press in or speak your 5-digit ZIP code. Free state tax return forms Or, you can visit their website on the Internet at www. Free state tax return forms aarp. Free state tax return forms org/money/taxaide. Free state tax return forms Comments and suggestions. Free state tax return forms   We welcome your comments about this publication and your suggestions for future editions. Free state tax return forms   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Free state tax return forms NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Free state tax return forms Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Free state tax return forms   You can send your comments from www. Free state tax return forms irs. Free state tax return forms gov/formspubs/. Free state tax return forms Click on “More Information” and then on “Comment on Tax Forms and Publications. Free state tax return forms ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Free state tax return forms Ordering forms and publications. Free state tax return forms   Visit www. Free state tax return forms irs. Free state tax return forms gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 business days after your request is received. Free state tax return forms Internal Revenue Service 1201 N. Free state tax return forms Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Free state tax return forms   If you have a tax question, check the information available on IRS. Free state tax return forms gov or call 1-800-829-1040. Free state tax return forms We cannot answer tax questions sent to either of the above addresses. Free state tax return forms Table I. Free state tax return forms What You Should Know About Federal Taxes Note. Free state tax return forms The following is a list of questions you may have about filling out your federal income tax return. Free state tax return forms  To the right of each question is the location of the answer in this publication. Free state tax return forms What I Should Know Where To Find the Answer Do I need to file a return? See chapter 1. Free state tax return forms Is my income taxable or nontaxable?  If it is nontaxable, must I still report it? See chapter 2. Free state tax return forms How do I report benefits I received from the Social Security Administration or the Railroad Retirement Board?  Are these benefits taxable? See Social Security and Equivalent Railroad Retirement Benefits in chapter 2. Free state tax return forms Must I report the sale of my home?  If I had a gain, is any part of it taxable? See Sale of Home in chapter 2. Free state tax return forms What are some of the items that I can deduct to reduce my income? See chapters 3 and 4. Free state tax return forms How do I report the amounts I set aside for my IRA? See Individual Retirement Arrangement (IRA) Contributions and Deductions in chapter 3. Free state tax return forms Would it be better for me to claim the standard deduction or itemize my deductions? See chapter 4. Free state tax return forms What are some of the credits I can claim to reduce my tax? See chapter 5 for discussions on the credit for the elderly or the disabled, the child and dependent care credit, and the earned income credit. Free state tax return forms Must I make estimated tax payments? See chapter 6. Free state tax return forms How do I contact the IRS or get more information? See chapter 7. Free state tax return forms Prev  Up  Next   Home   More Online Publications
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Operating a Business

Employer ID Number (EIN)
An Employer Identification Number (EIN) is also known as a federal tax identification number, and is used to identify a business entity. Find out if you need an EIN and how to apply for one.

Recordkeeping
Unless you are a professional bookkeeper, you probably don't like to spend valuable business time keeping records. But keeping good records can actually help you save money.

Business Name Change
Explanation for businesses on how to make a name change.

Businesses with Employees
If you operate a business and have employees, then this section has the information you will need. You will find resources on hiring, recordkeeping and other topics such as employment taxes, and wage reporting requirements.

Paying Independent Contractors
If you pay independent contractors, you may have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your trade or business.

What is Taxable and Nontaxable Income?
You can receive income in the form of money, property, or services. This section lists many kinds of income that are taxable or nontaxable.

Filing and Paying Your Business Taxes
This section discusses business taxes you may have to pay and the forms you may have to file. It also discusses taxpayer identification numbers.

e-File Form 940, 941 or 944 for Small Businesses
Learn your options for e-filing form 940, 941 or 944.

Estimated Taxes
Federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. There are two ways to pay as you go: withholding, and estimated taxes.

Business Expenses
You can deduct the cost of operating your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold.

Business Tax Credits
A list of forms for claiming business tax credits, and a brief explanation about when carryovers, and credits cease.

Intangibles
Intangible Property is property that has value but cannot be seen or touched. Generally, you can either amortize or depreciate intangible property.

Avoiding Problems
This section provides links to resources to help the small business owner create a recordkeeping system, get the latest on the cash vs. accrual accounting methods, and tips on understanding their IRS notice, what to do if you haven’t filed a tax return, and how to recognize and avoid tax scams.

Closing a Business
There is more involved in closing your business than just locking the doors. This section provides procedures for getting out of business, including what forms to file and how to handle additional revenue received or expenses you may incur.

IRS Tax Calendar for Small Businesses and Self-Employed
The tax calendar is available for downloading and printing, or you can view it online.

Retirement Plans
The advantages of a retirement plan are numerous. There are economic, business and tax advantages for your business, for your employees and for you. A retirement plan may give you an important competitive edge in attracting and keeping the best employees - and help you plan for your own retirement years. Visit the IRS Video Portal and search keyword "retire" for a more information about choosing, operating and maintaining your retirement plan.

References/Related Topics

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Page Last Reviewed or Updated: 21-Feb-2014

The Free State Tax Return Forms

Free state tax return forms Accelerated Cost Recovery System (ACRS) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: ACRS Defined What Can and Cannot Be Depreciated Under ACRSRecovery Property Nonrecovery Property How To Figure the DeductionUnadjusted Basis Classes of Recovery Property Recovery Periods Alternate ACRS Method (Modified Straight Line Method) ACRS Deduction in Short Tax Year DispositionsEarly dispositions of ACRS property other than 15-, 18-, or 19-year real property. Free state tax return forms Dispositions — mass asset accounts. Free state tax return forms Early dispositions — 15-year real property. Free state tax return forms Early dispositions — 18- and 19-year real property. Free state tax return forms Depreciation Recapture Topics - This chapter discusses: The definition of ACRS What can and cannot be depreciated under ACRS How to figure the deduction Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization The Accelerated Cost Recovery System (ACRS) applies to property first used before 1987. Free state tax return forms It is the name given to tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. Free state tax return forms These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. Free state tax return forms If you placed property in service during this period, you must continue to figure your depreciation under ACRS. Free state tax return forms If you used listed property placed in service after June 18, 1984, less than 50% for business in 1995, see Predominant Use Test in chapter 3. Free state tax return forms Listed property includes cars, other means of transportation, and certain computers. Free state tax return forms Any additions or improvements placed in service after 1986, including any components of a building (such as plumbing, wiring, storm windows, etc. Free state tax return forms ), are depreciated using MACRS, discussed in chapter 3 of Publication 946. Free state tax return forms It does not matter that the underlying property is depreciated under ACRS or one of the other methods. Free state tax return forms ACRS Defined ACRS consists of accelerated depreciation methods and an alternate ACRS method that could have been elected. Free state tax return forms The alternate ACRS method used a recovery percentage based on a modified straight line method. Free state tax return forms The law prescribes fixed percentages to be uses for each class of property. Free state tax return forms Property depreciable under ACRS is called recovery property. Free state tax return forms The recovery class of property determines the recovery period. Free state tax return forms Generally, the class life of property places it in a 3-year, 5-year, 10-year, 15-year, 18-year, or 19-year recovery class. Free state tax return forms Under ACRS, the prescribed percentages are used to recover the unadjusted basis of recovery property. Free state tax return forms To figure a depreciation deduction, you multiply the prescribed percentage for the recovery class by the unadjusted basis of the recovery property. Free state tax return forms You must continue to figure your depreciation under ACRS for property placed in service after 1980 and before 1987. Free state tax return forms For property you placed in service after 1986, you must use MACRS, discussed in chapter 3 of Publication 946. Free state tax return forms What Can and Cannot Be Depreciated Under ACRS ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. Free state tax return forms It includes new or used and real or personal property. Free state tax return forms The property must be for use in a trade or business or for the production of income. Free state tax return forms Property you acquired before 1981 or after 1986 is not ACRS recovery property. Free state tax return forms For information on depreciating property acquired before 1981, see chapter 2. Free state tax return forms For information on depreciating property acquired after 1986, see chapter 3 of Publication 946. Free state tax return forms Recovery Property Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. Free state tax return forms It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income. Free state tax return forms Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. Free state tax return forms Nonrecovery property also includes: Intangible property, Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years, Certain public utility property, and Certain property acquired and excluded from ACRS because of the antichurning rules. Free state tax return forms Intangible property. Free state tax return forms   Intangible property is not depreciated under ACRS. Free state tax return forms Property depreciated under methods not expressed in a term of years. Free state tax return forms   Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. Free state tax return forms This included any property: If you made an irrevocable election to exclude such property, and In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method). Free state tax return forms Public utility property. Free state tax return forms   Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule. Free state tax return forms Additions or improvements to ACRS property after 1986. Free state tax return forms   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. Free state tax return forms ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. Free state tax return forms It does not matter that the underlying property is depreciated under ACRS or one of the other methods. Free state tax return forms How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. Free state tax return forms Because the conventions are built into the percentage table rates, you only need to know the following: The unadjusted basis of your recovery property, The classes of recovery property, The recovery periods, and Whether to use the prescribed percentages based on accelerated methods or percentages based on using the alternate ACRS method. Free state tax return forms Unadjusted Basis To figure your ACRS deduction, you multiply the unadjusted basis in your recovery property by its applicable percentage for the year. Free state tax return forms Unadjusted basis is the same amount you would use to figure gain on a sale, but it is figured without taking into account any depreciation taken in earlier years. Free state tax return forms However, reduce your original basis by the amount of amortization taken on the property and by any section 179 deduction claimed as discussed in chapter 2 of Publication 946. Free state tax return forms If you buy property, your unadjusted basis is usually its cost minus any amortized amount and minus any section 179 deduction elected. Free state tax return forms If you acquire property in some other way, such as by inheriting it, getting it as a gift, or building it yourself, you figure your unadjusted basis under other rules. Free state tax return forms See Publication 551. Free state tax return forms Classes of Recovery Property All recovery property under ACRS is in one of the following classes. Free state tax return forms The class for your property was determined when you began to depreciate it. Free state tax return forms 3-Year Property 3-year property includes automobiles, light-duty trucks (actual unloaded weight less than 13,000 pounds), and tractor units for use over-the-road. Free state tax return forms Race horses over 2 years old when placed in service are 3-year property. Free state tax return forms Any other horses over 12 years old when you placed them in service are also included in the 3-year property class. Free state tax return forms The ACRS percentages for 3-year recovery property are: Recovery Period Percentage 1st year 25% 2nd year 38% 3rd year 37% If you used the percentages above to depreciate your 3-year recovery property, your property, except for certain passenger automobiles, is fully depreciated. Free state tax return forms You cannot claim depreciation for this property after 1988. Free state tax return forms 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. Free state tax return forms It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). Free state tax return forms The ACRS percentages for 5-year recovery property are: Recovery period Percentage 1st year 15% 2nd year 22% 3rd through 5th year 21% If you used the percentages above to depreciate your 5-year recovery property, it is fully depreciated. Free state tax return forms You cannot claim depreciation for this property after 1990. Free state tax return forms 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. Free state tax return forms Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. Free state tax return forms You do not treat a building, and its structural components, as 10-year property by reason of a change in use after you placed the property in service. Free state tax return forms For example, a building (15-year real property) that was placed in service in 1981 and was converted to a theme-park structure in 1986 remains 15-year real property. Free state tax return forms The ACRS percentages for 10-year recovery property are: Recovery Period Percentage 1st year 8% 2nd year 14% 3rd year 12% 4th through 6th year 10% 7th through 10th year 9% If you used the percentages above, you cannot claim depreciation for this property after 1995. Free state tax return forms Example. Free state tax return forms On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. Free state tax return forms You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. Free state tax return forms On June 8, 1986, you bought and placed in service a used mobile home for use as rental property at a total cost of $11,500. Free state tax return forms The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). Free state tax return forms Your ACRS deduction was $3,000 (8% × $37,500). Free state tax return forms In 1987, your ACRS deduction was $5,250 (14% × $37,500). Free state tax return forms In 1988, your ACRS deduction was $4,500 (12% × $37,500). Free state tax return forms In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). Free state tax return forms In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). Free state tax return forms 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. Free state tax return forms It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. Free state tax return forms Unlike the 3-, 5-, or 10-year classes of property, the percentages for 15-year real property depend on when you placed the property in service during your tax year. Free state tax return forms You could group 15-year real property by month and year placed in service. Free state tax return forms In Table 1, at the end of this publication in the Appendix, find the month in your tax year that you placed the property in service in your trade or business or for the production of income. Free state tax return forms You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. Free state tax return forms Example. Free state tax return forms On March 5, 1984, you placed an apartment building in service in your business. Free state tax return forms It is 15-year real property. Free state tax return forms After subtracting the value of the land, your unadjusted basis in the building is $250,000. Free state tax return forms You use the calendar year as your tax year. Free state tax return forms March is the third month of your tax year. Free state tax return forms Your ACRS deduction for 1984 was $25,000 (10% × $250,000). Free state tax return forms For 1985, the percentage for the third month of the second year of the recovery period is 11%. Free state tax return forms Your deduction was $27,500 (11% × $250,000). Free state tax return forms For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. Free state tax return forms For 1989 through 1992, the percentage for the third month is 6%. Free state tax return forms Your deduction each year is $15,000 (6% × $250,000). Free state tax return forms For 1993, 1994, and 1995, the percentage for the third month is 5%. Free state tax return forms Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. Free state tax return forms Low-Income Housing Low-income housing that was assigned a 15-year recovery period under ACRS includes the following types of property: Federally assisted housing projects where the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. Free state tax return forms Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. Free state tax return forms Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of state or local laws that authorize similar subsidies for low-income families. Free state tax return forms Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. Free state tax return forms The ACRS percentages for low-income housing real property, like the regular 15-year real property percentages, depend on when you placed the property in service. Free state tax return forms Find the month in your tax year in Table 2 or 3 at the end of this publication in the Appendix that you first placed the property in service as rental housing. Free state tax return forms Use the percentages listed under that month for each year of the recovery period. Free state tax return forms Table 2 shows percentages for low-income housing placed in service before May 9, 1985. Free state tax return forms Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. Free state tax return forms Example. Free state tax return forms In May 1986, you acquired and placed in service a house that qualified as low-income rental housing under item 3) of the above listing. Free state tax return forms You use the calendar year as your tax year. Free state tax return forms You use Table C–3 because the property was placed in service after May 8, 1985. Free state tax return forms Your unadjusted basis for the property, not including the land, was $59,000. Free state tax return forms Your deduction for 1986 through 2001 is shown in the following table. Free state tax return forms Year Rate Deduction 1986 8. Free state tax return forms 9% $5,251 1987 12. Free state tax return forms 1% 7,139 1988 10. Free state tax return forms 5% 6,195 1989 9. Free state tax return forms 1% 5,369 1990 7. Free state tax return forms 9% 4,661 1991 6. Free state tax return forms 9% 4,071 1992 5. Free state tax return forms 9% 3,481 1993 5. Free state tax return forms 2% 3,068 1994 4. Free state tax return forms 6% 2,714 1995 4. Free state tax return forms 6% 2,714 1996 4. Free state tax return forms 6% 2,714 1997 4. Free state tax return forms 6% 2,714 1998 4. Free state tax return forms 6% 2,714 1999 4. Free state tax return forms 5% 2,655 2000 4. Free state tax return forms 5% 2,655 2001 1. Free state tax return forms 5% 885 18-Year Real Property 18-year real property is real property that is recovery property placed in service after March 15, 1984, and before May 9, 1985. Free state tax return forms It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. Free state tax return forms The ACRS percentages for 18-year real property depend on when you placed the property in service in your trade or business or for the production of income during your tax year. Free state tax return forms There are also tables for 18-year real property in the Appendix. Free state tax return forms Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. Free state tax return forms Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. Free state tax return forms Find the month in your tax year that you placed the property in service in a trade or business or for the production of income. Free state tax return forms Use the percentages listed under that month for each year of the recovery period. Free state tax return forms Example. Free state tax return forms On April 28, 1985, you bought and placed in service a rental house. Free state tax return forms The house, not including the land, cost $95,000. Free state tax return forms This is your unadjusted basis for the house. Free state tax return forms You use the calendar year as your tax year. Free state tax return forms Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. Free state tax return forms You use Table 4 to figure your deduction for the house. Free state tax return forms April is the fourth month of your tax year. Free state tax return forms Your deduction for 1985 through 2003 is shown in the following table. Free state tax return forms Year Rate Deduction 1985 7. Free state tax return forms 0% $6,650 1986 9. Free state tax return forms 0% 8,550 1987 8. Free state tax return forms 0% 7,600 1988 7. Free state tax return forms 0% 6,650 1989 7. Free state tax return forms 0% 6,650 1990 6. Free state tax return forms 0% 5,700 1991 5. Free state tax return forms 0% 4,750 1992 5. Free state tax return forms 0% 4,750 1993 5. Free state tax return forms 0% 4,750 1994 5. Free state tax return forms 0% 4,750 1995 5. Free state tax return forms 0% 4,750 1996 5. Free state tax return forms 0% 4,750 1997 5. Free state tax return forms 0% 4,750 1998 4. Free state tax return forms 0% 3,800 1999 4. Free state tax return forms 0% 3,800 2000 4. Free state tax return forms 0% 3,800 2001 4. Free state tax return forms 0% 3,800 2002 4. Free state tax return forms 0% 3,800 2003 1. Free state tax return forms 0% 950 19-Year Real Property 19-year real property is real property that is recovery property placed in service after May 8, 1985, and before 1987. Free state tax return forms It includes all real property, other than that designated as 5-year, 10-year, 15-year, or 18-year real property, or low-income housing. Free state tax return forms The ACRS percentages for 19-year real property depend on when you placed the property in service in a trade or business or for the production of income during your tax year. Free state tax return forms Table 6 shows the percentages for 19-year real property. Free state tax return forms You find the month in your tax year that you placed the property in service. Free state tax return forms You use the percentages listed under that month for each year of the recovery period. Free state tax return forms Recovery Periods Each item of recovery property is assigned to a class of property. Free state tax return forms The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. Free state tax return forms The classes of property are: 3-Year property 5-Year property 10-Year property 15-Year real property Low-income housing 18-Year real property 19-Year real property Alternate ACRS Method (Modified Straight Line Method) ACRS provides an alternate ACRS method that could be elected. Free state tax return forms This alternate ACRS method uses a recovery percentage based on a modified straight line method. Free state tax return forms This alternate ACRS method generally uses percentages other than those from the tables. Free state tax return forms If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. Free state tax return forms This schedule is for other than 18- and 19-year real property and low-income housing: In the case of: You could have elected a recovery period of: 3-year property 3, 5, or 12 years 5-year property 5, 12, or 25 years 15-year real property 15, 35, or 45 years Percentages. Free state tax return forms   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. Free state tax return forms 00% 10 years 10. Free state tax return forms 00% 12 years 8. Free state tax return forms 333% 15 years 6. Free state tax return forms 667% 25 years 4. Free state tax return forms 00% 35 years 2. Free state tax return forms 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. Free state tax return forms There are tables for 18- and 19-year real property later in this publication in the Appendix. Free state tax return forms For 15-year real property, see 15-year real property, later. Free state tax return forms 3-, 5-, and 10-year property. Free state tax return forms   If you elected to use an alternate recovery percentage, you have to use the same recovery percentage for all property in that class that you placed in service in that tax year. Free state tax return forms This applies throughout the recovery period you selected. Free state tax return forms Half-year convention. Free state tax return forms   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. Free state tax return forms This applied regardless of when in the tax year you placed the property in service. Free state tax return forms For each of the remaining years in the recovery period, you take a full year's deduction. Free state tax return forms If you hold the property for the entire recovery period, a half-year of depreciation is allowable for the year following the end of the recovery period. Free state tax return forms Example. Free state tax return forms You operate a small upholstery business. Free state tax return forms On March 19, 1986, you bought and placed in service a $13,000 light-duty panel truck to be used in your business and a $500 electric saw. Free state tax return forms You elected to use the alternate ACRS method. Free state tax return forms You did not elect to take a section 179 deduction. Free state tax return forms You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. Free state tax return forms The saw is 5-year property, but you decided to recover its cost over 12 years. Free state tax return forms For 1986, your ACRS deduction reflected the half-year convention. Free state tax return forms In the first year, you deducted half of the amount determined for a full year. Free state tax return forms Your ACRS deduction for 1986 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. Free state tax return forms 00     Electric saw   12 years straight line = 8. Free state tax return forms 333% 8. Free state tax return forms 333% ÷ $500 = $41. Free state tax return forms 67 Half-year convention -½ of $41. Free state tax return forms 67= 20. Free state tax return forms 84 Total ACRS deduction for 1986 $1,320. Free state tax return forms 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. Free state tax return forms Your ACRS deduction for each of those years is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600     Electric saw     12 years straight line = 8. Free state tax return forms 333% 8. Free state tax return forms 333% ÷ $500 = $41. Free state tax return forms 67 Total annual ACRS deduction for 1987 through 1990 $2,641. Free state tax return forms 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. Free state tax return forms Your ACRS deduction for 1991 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. Free state tax return forms 00     Electric saw   12 years straight line = 8. Free state tax return forms 333% 8. Free state tax return forms 333% ÷ $500 = $41. Free state tax return forms 67 Total ACRS deduction for 1991 $1,341. Free state tax return forms 67       The truck is fully depreciated after 1991. Free state tax return forms You take a full year of depreciation for the saw for the years 1992 through 1997. Free state tax return forms Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. Free state tax return forms 333% 8. Free state tax return forms 333% ÷ $500 = $41. Free state tax return forms 67 Total annual ACRS deduction for 1992 through 1997 $41. Free state tax return forms 67       You take a half-year of depreciation for the saw for 1998. Free state tax return forms Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. Free state tax return forms 333% 8. Free state tax return forms 333% ÷ $500 = $41. Free state tax return forms 67 Half-year convention -½ of $41. Free state tax return forms 67= 20. Free state tax return forms 84 Total ACRS deduction for 1998 $20. Free state tax return forms 84       The saw is fully depreciated after 1998. Free state tax return forms 15-year real property. Free state tax return forms   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. Free state tax return forms The alternate ACRS method allows you to depreciate your 15-year real property using the straight line ACRS method over the alternate recovery periods of 15, 35, or 45 years. Free state tax return forms If you selected a 15-year recovery period, you use the percentage (6. Free state tax return forms 667%) from the schedule above. Free state tax return forms You prorate this percentage for the number of months the property was in service in the first year. Free state tax return forms If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. Free state tax return forms Alternate periods for 18-year real property. Free state tax return forms   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. Free state tax return forms The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. Free state tax return forms There are two tables for each alternate recovery period. Free state tax return forms One table shows the percentage for property placed in service after June 22, 1984. Free state tax return forms The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. Free state tax return forms Alternate periods for 19-year real property. Free state tax return forms   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. Free state tax return forms If you selected a 19-year recovery period, use Table 9 to determine your deduction. Free state tax return forms If you select a 35- or 45-year recovery period, use either Table 13 or 14. Free state tax return forms Example. Free state tax return forms You placed in service an apartment building on August 3, 1986. Free state tax return forms The building is 19-year real property. Free state tax return forms The sales contract allocated $300,000 to the building and $100,000 to the land. Free state tax return forms You use the calendar year as your tax year. Free state tax return forms You chose the alternate ACRS method over a recovery period of 35 years. Free state tax return forms For 1986, you figure your ACRS deduction usingTable 13. Free state tax return forms August is the eighth month of your tax year. Free state tax return forms The percentage from Table 13 for the eighth month is 1. Free state tax return forms 1%. Free state tax return forms Your deduction was $3,300 ($300,000 ÷ 1. Free state tax return forms 1%). Free state tax return forms The deduction rate from ACRS Table 13 for years 2 through 20 is 2. Free state tax return forms 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. Free state tax return forms 9%). Free state tax return forms Alternate periods for low-income housing. Free state tax return forms   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. Free state tax return forms If you selected a 15-year period for this property, use 6. Free state tax return forms 667% as the percentage. Free state tax return forms If you selected a 35- or 45-year period, use either Table 11, 12, or 15. Free state tax return forms Election. Free state tax return forms   You had to make the election to use the alternate ACRS method by the return due date (including extensions) for the tax year you placed the property in service. Free state tax return forms Revocation of election. Free state tax return forms   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. Free state tax return forms The Commissioner grants consent only in extraordinary circumstances. Free state tax return forms Any request for a revocation will be considered a request for a ruling. Free state tax return forms ACRS Deduction in Short Tax Year For a tax year that is less than 12 months, the ACRS deduction is prorated on a 12-month basis. Free state tax return forms Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. Free state tax return forms You figure this by multiplying the unadjusted basis by the recovery percentage. Free state tax return forms You then multiply the ACRS deduction determined for a full tax year by a fraction. Free state tax return forms The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. Free state tax return forms For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. Free state tax return forms The corporation files a tax return, because of a change in its accounting period, for the 6-month short tax year ending June 30, 1986. Free state tax return forms The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. Free state tax return forms The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). Free state tax return forms You use the full ACRS percentages during the remaining years of the recovery period. Free state tax return forms For the first tax year after the recovery period, the unrecovered basis will be deductible. Free state tax return forms Exception. Free state tax return forms   For the tax year in which you placed 15-, 18-, or 19-year real property in service or in the tax year you dispose of it, you compute the ACRS deduction for the number of months that the property is in service during that tax year. Free state tax return forms You compute the number of months using either a full month or mid-month convention. Free state tax return forms This is true regardless of the number of months in the tax year and the recovery period and method used. Free state tax return forms Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. Free state tax return forms You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. Free state tax return forms You generally recognize gain or loss on the disposition of an asset by sale. Free state tax return forms However, nonrecognition rules can allow you to postpone some gain. Free state tax return forms See Publication 544. Free state tax return forms If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. Free state tax return forms Your intent must be to discard the asset so that you will not use it again or retrieve it for sale, exchange, or other disposition. Free state tax return forms Early dispositions. Free state tax return forms   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. Free state tax return forms When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. Free state tax return forms Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. Free state tax return forms   Generally, you get no ACRS deduction for the tax year in which you dispose of or retire recovery property, except for 15-, 18-, and 19-year real property. Free state tax return forms This means there is no depreciation deduction under ACRS in the year you dispose of or retire any of your 3-, 5-, or 10-year recovery property. Free state tax return forms Dispositions — mass asset accounts. Free state tax return forms   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. Free state tax return forms A mass asset account includes items usually minor in value in relation to the group, numerous in quantity, impractical to separately identify, and not usually accounted for on a separate basis, but on a total dollar value. Free state tax return forms Examples of mass assets include minor items of office, plant, and store furniture and fixtures. Free state tax return forms   Under the special rule, if you elected to use a mass asset account, you recognize gain to the extent of the proceeds from the disposition of the asset. Free state tax return forms You leave the unadjusted basis of the property in the account until recovered in future years. Free state tax return forms If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. Free state tax return forms Early dispositions — 15-year real property. Free state tax return forms   If you dispose of 15-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. Free state tax return forms You use a full-month convention. Free state tax return forms For a disposition at any time during a particular month before the end of the recovery period, no deduction is allowed for the month of disposition. Free state tax return forms This applies whether you use the regular ACRS method or elected the alternate ACRS method. Free state tax return forms Example. Free state tax return forms You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). Free state tax return forms You file your return based on a calendar year. Free state tax return forms Your rate from Table 1 for the third month is 10%. Free state tax return forms Your ACRS deduction for 1984 was $9,800 ($98. Free state tax return forms 000 ÷ 10%). Free state tax return forms For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. Free state tax return forms For 1989 through 1992, you figured your ACRS deductions using 6% for each year. Free state tax return forms The deduction each year was $98,000 ÷ 6%. Free state tax return forms For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. Free state tax return forms You sell the house on June 1, 1995. Free state tax return forms You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. Free state tax return forms The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). Free state tax return forms You then prorate this amount to the 5 months in 1995 during which it was rented. Free state tax return forms Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). Free state tax return forms Early dispositions — 18- and 19-year real property. Free state tax return forms   If you dispose of 18- or 19-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. Free state tax return forms For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. Free state tax return forms For 18-year property placed in service after June 22, 1984, and for 19-year property, determine the number of months in use by using the mid-month convention. Free state tax return forms Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. Free state tax return forms Count the month of disposition as half a month of use. Free state tax return forms Example. Free state tax return forms You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). Free state tax return forms You file your return based on a calendar year. Free state tax return forms Your rate from Table 4 for the seventh month is 4%. Free state tax return forms You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). Free state tax return forms In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. Free state tax return forms You sell the house on September 24, 1995. Free state tax return forms Figure your ACRS deduction for 1995 for the months of use. Free state tax return forms The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). Free state tax return forms Prorate this amount for the 8. Free state tax return forms 5 months in 1995 that you held the property. Free state tax return forms Under the mid-month convention, you count September as half a month. Free state tax return forms Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. Free state tax return forms 5/12). Free state tax return forms Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. Free state tax return forms Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. Free state tax return forms This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. Free state tax return forms You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. Free state tax return forms Section 1245 property generally includes all personal property. Free state tax return forms See Section 1245 property in chapter 4 of Publication 544 for more information. Free state tax return forms You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. Free state tax return forms You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. Free state tax return forms Section 1250 property includes most real property. Free state tax return forms See Section 1250 property in chapter 4 of Publication 544 for more information. Free state tax return forms This rule applies to all section 1250 real property except the following property: Any 15-, 18-, or 19-year real property that is residential rental property. Free state tax return forms Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. Free state tax return forms Any 15-, 18-, or 19-year real property that is subsidized low-income housing. Free state tax return forms For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. Free state tax return forms See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. Free state tax return forms Prev  Up  Next   Home   More Online Publications