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How Do I File My 2011 Taxes

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How Do I File My 2011 Taxes

How do i file my 2011 taxes Index Symbols 10% additional tax, Early Distributions Tax, Age 59½ Rule, Additional 10% tax 2-year rule SIMPLE IRAs, Two-year rule. How do i file my 2011 taxes 20% withholding, Other withholding rules. How do i file my 2011 taxes 5-year rule, 5-year rule. How do i file my 2011 taxes , Death before required beginning date. How do i file my 2011 taxes 6% excise tax on excess contributions to Roth IRAs, What if You Contribute Too Much? 60-day period for rollovers, Time Limit for Making a Rollover Contribution A Account balance, IRA account balance. How do i file my 2011 taxes Additional taxes, What Acts Result in Penalties or Additional Taxes?, Additional 10% tax (see also Penalties) Reporting, Reporting Additional Taxes Adjusted gross income (AGI), Modified adjusted gross income (AGI). How do i file my 2011 taxes , Modified AGI. How do i file my 2011 taxes (see also Modified adjusted gross income (AGI)) Retirement savings contributions credit, Adjusted gross income. How do i file my 2011 taxes Age 50 Contributions, General Limit Age 59 1/2 rule, Age 59½ Rule Age 70 1/2 rule, Age 70½ rule. How do i file my 2011 taxes Required minimum distributions, Distributions after the required beginning date. How do i file my 2011 taxes Age limit Traditional IRA, When Can Contributions Be Made? Airline payments, Rollover of Airline Payments Alimony, Alimony and separate maintenance. How do i file my 2011 taxes Annuity contracts, Annuity or endowment contracts. How do i file my 2011 taxes Borrowing on, Borrowing on an annuity contract. How do i file my 2011 taxes Distribution from insurance company, Annuity distributions from an insurance company. How do i file my 2011 taxes Distribution from IRA account, Distribution of an annuity contract from your IRA account. How do i file my 2011 taxes Early distributions, Annuity. How do i file my 2011 taxes Assistance (see Tax help) B Basis Inherited IRAs, IRA with basis. How do i file my 2011 taxes Roth IRAs, Basis of distributed property. How do i file my 2011 taxes Traditional IRAs, Cost basis. How do i file my 2011 taxes Beginning date, required, Distributions after the required beginning date. How do i file my 2011 taxes Beneficiaries, IRA Beneficiaries, Death before required beginning date. How do i file my 2011 taxes Change of, Change of beneficiary. How do i file my 2011 taxes Death of beneficiary, Death of a beneficiary. How do i file my 2011 taxes Early distributions to, Beneficiary. How do i file my 2011 taxes Individual as, Beneficiary an individual. How do i file my 2011 taxes More than one, More than one beneficiary. How do i file my 2011 taxes , Multiple individual beneficiaries. How do i file my 2011 taxes Not an individual, Beneficiary not an individual. How do i file my 2011 taxes Roth IRAs, Distributions to beneficiaries. How do i file my 2011 taxes Sole beneficiary spouse more than 10 years younger, Sole beneficiary spouse who is more than 10 years younger. How do i file my 2011 taxes Bond purchase plans Rollovers from, Rollover from bond purchase plan. How do i file my 2011 taxes Bonds, retirement (see Individual retirement bonds) Broker's commissions, Brokers' commissions. How do i file my 2011 taxes , Brokers' commissions. How do i file my 2011 taxes C Change in marital status, Change in marital status. How do i file my 2011 taxes Change of beneficiary, Change of beneficiary. How do i file my 2011 taxes Charitable distributions, qualified, Qualified charitable distributions. How do i file my 2011 taxes Collectibles, Investment in Collectibles, Collectibles. How do i file my 2011 taxes Community property, Community property laws. How do i file my 2011 taxes Compensation Alimony, Alimony and separate maintenance. How do i file my 2011 taxes Defined, What Is Compensation? Nontaxable combat pay, Nontaxable combat pay. How do i file my 2011 taxes Self-employment, Self-employment loss. How do i file my 2011 taxes Wages, salaries, etc. How do i file my 2011 taxes , Wages, salaries, etc. How do i file my 2011 taxes Conduit IRAs, IRA as a holding account (conduit IRA) for rollovers to other eligible plans. How do i file my 2011 taxes Contribution limits More than one IRA, More than one IRA. How do i file my 2011 taxes Contributions Designating the year, Designating year for which contribution is made. How do i file my 2011 taxes Distributions in same year as, Both contributions for 2013 and distributions in 2013. How do i file my 2011 taxes Excess (see Excess contributions) Less than maximum, Less Than Maximum Contributions Matching (SIMPLE), Matching contributions. How do i file my 2011 taxes Nondeductible (see Nondeductible contributions) Not required, Contributions not required. How do i file my 2011 taxes Qualified reservist repayments, Qualified reservist repayments. How do i file my 2011 taxes Recharacterizing (see Recharacterization) Retirement savings contributions credit, Eligible contributions. How do i file my 2011 taxes Roth IRAs, Can You Contribute to a Roth IRA?, Applying excess contributions. How do i file my 2011 taxes SIMPLE plans, How Are Contributions Made?, How Much Can Be Contributed on Your Behalf? Traditional IRAs, How Much Can Be Contributed?, More Than Maximum Contributions When to contribute, When Can Contributions Be Made? Withdrawing before due date of return, Contributions Returned Before Due Date of Return Conversions From SIMPLE IRAs, Converting from a SIMPLE IRA. How do i file my 2011 taxes To Roth IRAs, Conversions Credits Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. How do i file my 2011 taxes D Death of beneficiary, Death of a beneficiary. How do i file my 2011 taxes Deductions Figuring reduced IRA deduction, How To Figure Your Reduced IRA Deduction Phaseout, Deduction Phaseout Traditional IRAs, How Much Can You Deduct?, Examples — Worksheet for Reduced IRA Deduction for 2013 Deemed IRAs, Reminders, Reminders Defined benefit plans, Defined benefit plan. How do i file my 2011 taxes Defined contribution plans, Defined contribution plan. How do i file my 2011 taxes Disabilities, persons with Early distributions to, Disabled. How do i file my 2011 taxes Distributions After required beginning date, Distributions after the required beginning date. How do i file my 2011 taxes Age 59 1/2 rule, Age 59½ Rule Beneficiaries (see Beneficiaries) Contributions in same year as, Both contributions for 2013 and distributions in 2013. How do i file my 2011 taxes Delivered outside U. How do i file my 2011 taxes S. How do i file my 2011 taxes , IRA distributions delivered outside the United States. How do i file my 2011 taxes Figuring nontaxable and taxable amounts, Figuring the Nontaxable and Taxable Amounts From individual retirement accounts, Distributions from individual retirement account. How do i file my 2011 taxes From individual retirement annuities, Distributions from individual retirement annuities. How do i file my 2011 taxes Fully or partly taxable, Distributions Fully or Partly Taxable Income from, Income from IRA distributions. How do i file my 2011 taxes Inherited IRAs (see Inherited IRAs) Insufficient, Excess Accumulations (Insufficient Distributions) Qualified charitable, Qualified charitable distributions. How do i file my 2011 taxes Qualified HSA funding, One-time qualified HSA funding distribution. How do i file my 2011 taxes Qualified reservist, Qualified reservist distributions. How do i file my 2011 taxes Roth IRAs, Are Distributions Taxable?, How Do You Figure the Taxable Part? Ordering rules for, Ordering Rules for Distributions Recapture amount, Figuring your recapture amount. How do i file my 2011 taxes SIMPLE IRAs, Are Distributions Taxable? Taxable status of, Are Distributions Taxable? Divorce Rollovers by former spouse, Distributions under divorce or similar proceedings (alternate payees). How do i file my 2011 taxes Transfers incident to, Transfers Incident To Divorce E Early distributions, What Acts Result in Penalties or Additional Taxes?, Early Distributions, Nondeductible contributions. How do i file my 2011 taxes (see also Penalties) Age 59 1/2 rule, Age 59½ Rule Defined, Early distributions defined. How do i file my 2011 taxes Disability exception, Disabled. How do i file my 2011 taxes First-time homebuyers, exception, First home. How do i file my 2011 taxes Higher education expenses, exception, Higher education expenses. How do i file my 2011 taxes Medical insurance, exception, Medical insurance. How do i file my 2011 taxes Roth IRAs, Additional Tax on Early Distributions SIMPLE IRAs, Additional Tax on Early Distributions Tax, Early Distributions Tax Unreimbursed medical expenses, exception, Unreimbursed medical expenses. How do i file my 2011 taxes Education expenses, Higher education expenses. How do i file my 2011 taxes Employer and employee association trust accounts, Employer and Employee Association Trust Accounts Employer plans Covered by, Covered by an employer retirement plan. How do i file my 2011 taxes Year(s) covered, For Which Year(s) Are You Covered? Employer retirement plans, Are You Covered by an Employer Plan? Defined benefit plans, Defined benefit plan. How do i file my 2011 taxes Defined contribution plans, Defined contribution plan. How do i file my 2011 taxes Effect of modified AGI on deduction (Table 1-2), Table 1-2. How do i file my 2011 taxes Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work Limit if covered by, Limit if Covered by Employer Plan Prohibited transactions, Trust account set up by an employer or an employee association. How do i file my 2011 taxes Endowment contracts (see Annuity contracts) Estate tax, Estate tax. How do i file my 2011 taxes Deduction for inherited IRAs, Federal estate tax deduction. How do i file my 2011 taxes Excess accumulations, Excess Accumulations (Insufficient Distributions), Make up of shortfall in distribution. How do i file my 2011 taxes Roth IRAs, Distributions After Owner's Death Excess contributions, Excess Contributions Closed tax year, Closed tax year. How do i file my 2011 taxes Deducted in earlier year, Excess contribution deducted in an earlier year. How do i file my 2011 taxes Deducting in a later year, Deducting an Excess Contribution in a Later Year Due to incorrect rollover information, Excess due to incorrect rollover information. How do i file my 2011 taxes Recharacterizing, Recharacterizing excess contributions. How do i file my 2011 taxes Roth IRAs, What if You Contribute Too Much? Tax, Excess Contributions Tax Withdrawn after due date of return, Excess Contributions Withdrawn After Due Date of Return Withdrawn by due date of return, Excess Contributions Withdrawn by Due Date of Return Exempt transactions, Exempt Transactions Exxon Valdez settlement income, Rollover of Exxon Valdez Settlement Income , Rollover of Exxon Valdez Settlement Income F Failed financial institutions, Failed financial institutions. How do i file my 2011 taxes Federal judges, Federal judges. How do i file my 2011 taxes Fiduciaries Prohibited transactions, Fiduciary. How do i file my 2011 taxes Filing before IRA contribution is made, Filing before a contribution is made. How do i file my 2011 taxes Filing status, Filing Status Deduction phaseout and, Filing status. How do i file my 2011 taxes Firefighters, volunteer, Volunteer firefighters. How do i file my 2011 taxes First-time homebuyers, First home. How do i file my 2011 taxes Five-year rule (see 5-year rule) Form 1040 Modified AGI calculation from, Form 1040. How do i file my 2011 taxes , Form 1040NR. How do i file my 2011 taxes Form 1040A Modified AGI calculation from, Form 1040A. How do i file my 2011 taxes Form 1099-R, Reporting and Withholding Requirements for Taxable Amounts Distribution code 1 used on, Form 5329 not required. How do i file my 2011 taxes Letter codes used on, Letter codes. How do i file my 2011 taxes Number codes used on, Number codes. How do i file my 2011 taxes Withdrawal of excess contribution, Form 1099-R. How do i file my 2011 taxes Form 5329, Additional 10% tax, Reporting the tax. How do i file my 2011 taxes , Reporting Additional Taxes Recapture tax, Recapture tax for changes in distribution method under equal payment exception. How do i file my 2011 taxes Form 8606, Form 8606. How do i file my 2011 taxes , Form 8606. How do i file my 2011 taxes , Reporting your nontaxable distribution on Form 8606. How do i file my 2011 taxes , Figuring the Nontaxable and Taxable Amounts Failure to file, penalty, Penalty for failure to file Form 8606. How do i file my 2011 taxes Form 8880, How to figure and report the credit. How do i file my 2011 taxes Form W-2 Employer retirement plans, Are You Covered by an Employer Plan? Free tax services, Free help with your tax return. How do i file my 2011 taxes Frozen deposits, Frozen deposit. How do i file my 2011 taxes Full-time student Retirement savings contributions credit, Full-time student. How do i file my 2011 taxes H Help (see Tax help) Higher education expenses, Higher education expenses. How do i file my 2011 taxes How to Set up an IRA, How Can a Traditional IRA Be Opened? Treat withdrawn contributions, How to treat withdrawn contributions. How do i file my 2011 taxes HSA funding distributions, qualified, One-time qualified HSA funding distribution. How do i file my 2011 taxes I Individual retirement accounts, Individual Retirement Account Distributions from, Distributions from individual retirement account. How do i file my 2011 taxes Individual retirement annuities, Individual Retirement Annuity Distributions from, Distributions from individual retirement annuities. How do i file my 2011 taxes Individual retirement arrangements (IRAs) How to set up, How Can a Traditional IRA Be Opened? When to set up, When Can a Traditional IRA Be Opened? Individual retirement bonds, Individual Retirement Bonds Cashing in, Cashing in retirement bonds. How do i file my 2011 taxes Inherited IRAs, What if You Inherit an IRA?, More information. How do i file my 2011 taxes Rollovers, Inherited IRAs. How do i file my 2011 taxes Insufficient distributions, Excess Accumulations (Insufficient Distributions) Interest on IRA, Reminders Investment in collectibles Collectibles defined, Collectibles. How do i file my 2011 taxes Exception, Exception. How do i file my 2011 taxes K Kay Bailey Hutchison Spousal IRAs Contribution limits, Kay Bailey Hutchison Spousal IRA Limit Deductions, Kay Bailey Hutchison Spousal IRA. How do i file my 2011 taxes Roth IRA contribution limits, Can you contribute to a Roth IRA for your spouse? Keogh plans Rollovers from, Keogh plans and rollovers. How do i file my 2011 taxes L Last-in first-out rule, Last-in first-out rule. How do i file my 2011 taxes Life expectancy, Life expectancy. How do i file my 2011 taxes Life insurance, Life insurance contract. How do i file my 2011 taxes Losses Roth IRAs, Recognizing Losses on Investments Traditional IRAs, Recognizing Losses on Traditional IRA Investments M Marital status, change in, Change in marital status. How do i file my 2011 taxes Matching contributions (SIMPLE), Matching contributions. How do i file my 2011 taxes Medical expenses, unreimbursed, Unreimbursed medical expenses. How do i file my 2011 taxes Medical insurance, Medical insurance. How do i file my 2011 taxes Military death gratuities, Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Minimum distribution (see Required minimum distribution) Missing children, photographs of, Reminders Modified adjusted gross income (AGI) Employer retirement plan coverage and deduction (Table 1-2), Table 1-2. How do i file my 2011 taxes Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work Figuring (Worksheet 1-1), Worksheet 1-1. How do i file my 2011 taxes Figuring Your Modified AGI No employer retirement plan coverage and deduction (Table 1-3), Table 1-3. How do i file my 2011 taxes Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work Roth IRAs, Modified AGI. How do i file my 2011 taxes Effect on contribution amount (Table 2-1), Table 2-1. How do i file my 2011 taxes Effect of Modified AGI on Roth IRA Contribution More than one beneficiary, More than one beneficiary. How do i file my 2011 taxes More than one IRA, More than one IRA. How do i file my 2011 taxes Recharacterization, More than one IRA. How do i file my 2011 taxes Required minimum distribution, More than one IRA. How do i file my 2011 taxes N Nondeductible contributions, Nondeductible Contributions, Nondeductible contributions. How do i file my 2011 taxes Failure to report, Failure to report nondeductible contributions. How do i file my 2011 taxes Overstatement penalty, Penalty for overstatement. How do i file my 2011 taxes Notice Qualified employer plan to provide prior to rollover distribution, Written explanation to recipients. How do i file my 2011 taxes Rollovers, Rollover notice. How do i file my 2011 taxes P Partial rollovers, Partial rollovers. How do i file my 2011 taxes , Partial rollover. How do i file my 2011 taxes Penalties, What Acts Result in Penalties or Additional Taxes?, Form 5329 not required. How do i file my 2011 taxes Early distributions, Early Distributions, Nondeductible contributions. How do i file my 2011 taxes Excess accumulations, Excess Accumulations (Insufficient Distributions), Make up of shortfall in distribution. How do i file my 2011 taxes Excess contributions, Excess Contributions Roth IRAs, What if You Contribute Too Much? Exempt transactions, Exempt Transactions, Services received at reduced or no cost. How do i file my 2011 taxes Failure to file Form 8606, Penalty for failure to file Form 8606. How do i file my 2011 taxes Overstatement of nondeductible contributions, Penalty for overstatement. How do i file my 2011 taxes Prohibited transactions, Prohibited Transactions, Services received at reduced or no cost. How do i file my 2011 taxes Reporting, Reporting Additional Taxes SIMPLE IRAs, Additional Tax on Early Distributions Phaseout of deduction, Deduction Phaseout Pledging account as security, Pledging an account as security. How do i file my 2011 taxes Prohibited transactions, Prohibited Transactions, Services received at reduced or no cost. How do i file my 2011 taxes Taxes on, Taxes on prohibited transactions. How do i file my 2011 taxes Publications (see Tax help) Q Qualified charitable distributions, Qualified charitable distributions. How do i file my 2011 taxes Qualified domestic relations orders (QDROs), Qualified domestic relations order. How do i file my 2011 taxes Qualified settlement income, Rollover of Exxon Valdez Settlement Income , Rollover of Exxon Valdez Settlement Income R Recapture tax Changes in distribution method, Recapture tax for changes in distribution method under equal payment exception. How do i file my 2011 taxes Receivership distributions, Receivership distributions. How do i file my 2011 taxes Recharacterization, Recharacterizations, More than one IRA. How do i file my 2011 taxes Determining amount of net income due to contribution and total amount to be recharacterized (Worksheet 1-3), Worksheet 1-3. How do i file my 2011 taxes Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Recharacterized Reporting, Reporting a Recharacterization SIMPLE employer contributions, Recharacterizing employer contributions. How do i file my 2011 taxes Timing of, Timing. How do i file my 2011 taxes Reconversion, Reconversions Recordkeeping requirements Traditional IRAs, Nondeductible Contributions Reporting Additional taxes, Reporting Additional Taxes Deductible contributions, Reporting Deductible Contributions Nontaxable distribution on Form 8606, Reporting your nontaxable distribution on Form 8606. How do i file my 2011 taxes Recharacterization, Reporting a Recharacterization Rollovers From employer plans, Reporting rollovers from employer plans. How do i file my 2011 taxes From IRAs, Reporting rollovers from IRAs. How do i file my 2011 taxes Taxable amounts, Reporting and Withholding Requirements for Taxable Amounts Taxable distributions, Reporting taxable distributions on your return. How do i file my 2011 taxes Required beginning date, Distributions after the required beginning date. How do i file my 2011 taxes Required minimum distribution, Reminders, When Must You Withdraw Assets? (Required Minimum Distributions), Annuity distributions from an insurance company. How do i file my 2011 taxes Distribution period, Distribution period. How do i file my 2011 taxes During lifetime, Distributions during your lifetime. How do i file my 2011 taxes Figuring, Figuring the Owner's Required Minimum Distribution For beneficiary, Figuring the Beneficiary's Required Minimum Distribution Table to use, Which Table Do You Use To Determine Your Required Minimum Distribution? In year of owner's death, Distributions in the year of the owner's death. How do i file my 2011 taxes Installments allowed, Installments allowed. How do i file my 2011 taxes More than one IRA, More than one IRA. How do i file my 2011 taxes Sole beneficiary spouse who is more than 10 years younger, Sole beneficiary spouse who is more than 10 years younger. How do i file my 2011 taxes Reservists, Reservists. How do i file my 2011 taxes Qualified reservist distribution, Qualified reservist distributions. How do i file my 2011 taxes Qualified reservist repayments, Qualified reservist repayments. How do i file my 2011 taxes Retirement bonds (see Individual retirement bonds) Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. How do i file my 2011 taxes Rollovers, Rollovers, Reporting rollovers from employer plans. How do i file my 2011 taxes Airline payments, Rollover of Airline Payments Amount, Amount. How do i file my 2011 taxes Choosing an option (Table 1-5), Table 1-5. How do i file my 2011 taxes Comparison of Payment to You Versus Direct Rollover Completed after 60-day period, Rollovers completed after the 60-day period. How do i file my 2011 taxes Conduit IRAs, IRA as a holding account (conduit IRA) for rollovers to other eligible plans. How do i file my 2011 taxes Direct rollover option, Direct rollover option. How do i file my 2011 taxes Extension of period, Extension of rollover period. How do i file my 2011 taxes From bond purchase plan, Rollover from bond purchase plan. How do i file my 2011 taxes From employer's plan into a Roth IRA, Rollover From Employer's Plan Into a Roth IRA From employer's plan into an IRA, Rollover From Employer's Plan Into an IRA From Keogh plans, Keogh plans and rollovers. How do i file my 2011 taxes From one IRA into another, Rollover From One IRA Into Another From Roth IRAs, Rollover From a Roth IRA From traditional IRA, Kinds of rollovers from a traditional IRA. How do i file my 2011 taxes Inherited IRAs, Inherited IRAs. How do i file my 2011 taxes Nonspouse beneficiary, Rollover by nonspouse beneficiary. How do i file my 2011 taxes Notice, Rollover notice. How do i file my 2011 taxes Partial, Partial rollovers. How do i file my 2011 taxes , Partial rollover. How do i file my 2011 taxes SIMPLE IRAs, Rollovers and Transfers Exception Tax treatment of rollover from traditional IRA to eligible retirement plan other than an IRA, Tax treatment of a rollover from a traditional IRA to an eligible retirement plan other than an IRA. How do i file my 2011 taxes Time limit, Time Limit for Making a Rollover Contribution To Roth IRAs, Conversion methods. How do i file my 2011 taxes To traditional IRA, Kinds of rollovers to a traditional IRA. How do i file my 2011 taxes Waiting period between, Waiting period between rollovers. How do i file my 2011 taxes , No waiting period between rollovers. How do i file my 2011 taxes Withholding (see Withholding) Roth IRAs, Roth IRAs, Distributions After Owner's Death Age limit, Is there an age limit for contributions? Contribution limit reduced, Contribution limit reduced. How do i file my 2011 taxes Contributions, Can You Contribute to a Roth IRA?, Applying excess contributions. How do i file my 2011 taxes Timing of, When Can You Make Contributions? To traditional IRAs and to Roth IRAs, Roth IRAs and traditional IRAs. How do i file my 2011 taxes Conversion, Converting From Any Traditional IRA Into a Roth IRA, Conversion by rollover from traditional to Roth IRA. How do i file my 2011 taxes , Recharacterizing to a SEP IRA or SIMPLE IRA. How do i file my 2011 taxes , Conversions Defined, What Is a Roth IRA? Distributions, Are Distributions Taxable?, How Do You Figure the Taxable Part? After death of owner, Distributions After Owner's Death Insufficient, Distributions After Owner's Death Ordering rules for, Ordering Rules for Distributions Early distributions, Additional Tax on Early Distributions Excess accumulations, Distributions After Owner's Death Excess contributions, What if You Contribute Too Much? Figuring taxable part, How Do You Figure the Taxable Part? Losses, Recognizing Losses on Investments Modified AGI Effect on contribution amount (Table 2-1), Table 2-1. How do i file my 2011 taxes Effect of Modified AGI on Roth IRA Contribution Figuring (Worksheet 2-1), Worksheet 2-1. How do i file my 2011 taxes Modified Adjusted Gross Income for Roth IRA Purposes Rollovers from, Rollover From a Roth IRA Setting up, When Can a Roth IRA Be Opened? Spouse, Can you contribute to a Roth IRA for your spouse? Traditional IRAs converted into, Converting From Any Traditional IRA Into a Roth IRA Withdrawing or using assets, Must You Withdraw or Use Assets? S Salary reduction arrangement, What Is a SIMPLE Plan? Savings Incentive Match Plans for Employees (see SIMPLE IRAs) Section 501(c)(18) plan, General Limit, Kay Bailey Hutchison Spousal IRA Limit Self-employed persons Deductible contributions, Self-employed. How do i file my 2011 taxes Income of, Self-employment income. How do i file my 2011 taxes SIMPLE plans, Self-employed individual. How do i file my 2011 taxes SEP IRAs Recharacterizing to, Recharacterizing to a SEP IRA or SIMPLE IRA. How do i file my 2011 taxes Separated taxpayers Filing status of, Lived apart from spouse. How do i file my 2011 taxes Servicemembers group life insurance, Military Death Gratuities and Servicemembers' Group Life Insurance (SGLI) Payments Services received at reduced or no cost, Services received at reduced or no cost. How do i file my 2011 taxes SIMPLE IRAs, Savings Incentive Match Plans for Employees (SIMPLE), Two-year rule. How do i file my 2011 taxes Contributions, How Are Contributions Made?, How Much Can Be Contributed on Your Behalf? Conversion from, Converting from a SIMPLE IRA. How do i file my 2011 taxes Distributions, Are Distributions Taxable? Early distributions, , Additional Tax on Early Distributions Eligible employees, Eligible Employees Penalties, Additional Tax on Early Distributions Recharacterizing to, Recharacterizing to a SEP IRA or SIMPLE IRA. How do i file my 2011 taxes Rollovers, Rollovers and Transfers Exception Salary reduction contribution limits, Salary reduction contributions limit. How do i file my 2011 taxes Self-employed persons, Self-employed individual. How do i file my 2011 taxes SIMPLE plan, defined, What Is a SIMPLE Plan? Traditional IRA, mistakenly moved to, Traditional IRA mistakenly moved to SIMPLE IRA. How do i file my 2011 taxes , Traditional IRA mistakenly moved to SIMPLE IRA. How do i file my 2011 taxes Two-year rule, Two-year rule. How do i file my 2011 taxes Withdrawing or using assets, When Can You Withdraw or Use Assets? Simplified employee pensions (SEPs), Simplified Employee Pension (SEP) Social Security recipients, Social Security Recipients Spousal IRAs (see Kay Bailey Hutchison Spousal IRAs or Inherited IRAs) Students Education expenses, Higher education expenses. How do i file my 2011 taxes Retirement savings contributions credit, Full-time student. How do i file my 2011 taxes Surviving spouse, Surviving spouse. How do i file my 2011 taxes , Surviving spouse. How do i file my 2011 taxes Rollovers by, Distributions received by a surviving spouse. How do i file my 2011 taxes T Tables Modified AGI Employer retirement plan coverage and deduction (Table 1-2), Table 1-2. How do i file my 2011 taxes Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work No employer retirement plan coverage and deduction (Table 1-3), Table 1-3. How do i file my 2011 taxes Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work Roth IRAs, effect on contribution (Table 2-1), Table 2-1. How do i file my 2011 taxes Effect of Modified AGI on Roth IRA Contribution Rollover vs. How do i file my 2011 taxes direct payment to taxpayer (Table 1-5), Table 1-5. How do i file my 2011 taxes Comparison of Payment to You Versus Direct Rollover Using this publication (Table I-1), Table I-1. How do i file my 2011 taxes Using This Publication Tax advantages of IRAs, What are some tax advantages of an IRA? Tax credits Retirement savings contributions credit, Retirement Savings Contributions Credit (Saver's Credit), How to figure and report the credit. How do i file my 2011 taxes Tax help, How To Get Tax Help Tax year, Tax year. How do i file my 2011 taxes Tax-sheltered annuities Rollovers from, Distribution from a tax-sheltered annuity. How do i file my 2011 taxes Traditional IRAs, Traditional IRAs, Form 5329 not required. How do i file my 2011 taxes Age 59 1/2 rule, Age 59½ Rule Contribution limits, How Much Can Be Contributed?, More Than Maximum Contributions Contributions, How Much Can Be Contributed?, More Than Maximum Contributions Due date, Contributions must be made by due date. How do i file my 2011 taxes To Roth IRAs and to traditional IRAs, Roth IRAs and traditional IRAs. How do i file my 2011 taxes Converting into Roth IRA, Converting From Any Traditional IRA Into a Roth IRA Cost basis, Cost basis. How do i file my 2011 taxes Deductions, How Much Can You Deduct?, Examples — Worksheet for Reduced IRA Deduction for 2013 Defined, Introduction Disclosures, Required Disclosures Excess contributions, Excess Contributions Inherited IRAs, What if You Inherit an IRA?, More information. How do i file my 2011 taxes Loss of IRA status, Loss of IRA status. How do i file my 2011 taxes Losses, Recognizing Losses on Traditional IRA Investments Mistakenly moved to SIMPLE IRA, Traditional IRA mistakenly moved to SIMPLE IRA. How do i file my 2011 taxes , Traditional IRA mistakenly moved to SIMPLE IRA. How do i file my 2011 taxes Recordkeeping, Nondeductible Contributions Reduced IRA deduction for 2013, Examples — Worksheet for Reduced IRA Deduction for 2013 Rollovers (see Rollovers) Setting up, Who Can Open a Traditional IRA?, Required Disclosures Social Security recipients, Social Security Recipients Transfers, Can You Move Retirement Plan Assets? Types of, Kinds of traditional IRAs. How do i file my 2011 taxes Withdrawing or using assets, When Can You Withdraw or Use Assets?, Excess Contributions Tax Transfers, Can You Move Retirement Plan Assets? Divorce, Transfers Incident To Divorce To Roth IRAs, Transfers to Roth IRAs. How do i file my 2011 taxes , Can You Move Amounts Into a Roth IRA? Trustee to trustee, Trustee-to-Trustee Transfer, Conversion methods. How do i file my 2011 taxes Trustee-to-trustee transfers, Trustee-to-Trustee Transfer To Roth IRAs, Conversion methods. How do i file my 2011 taxes Trustees' fees, Trustees' fees. How do i file my 2011 taxes , Trustees' fees. How do i file my 2011 taxes Trusts As beneficiary, Trust as beneficiary. How do i file my 2011 taxes TTY/TDD information, How To Get Tax Help Two-year rule SIMPLE IRAs, Two-year rule. How do i file my 2011 taxes U Unreimbursed medical expenses, Unreimbursed medical expenses. How do i file my 2011 taxes V Volunteer firefighters, Volunteer firefighters. How do i file my 2011 taxes W Withdrawing or using assets Contribution withdrawal, before due date of return, Contributions Returned Before Due Date of Return Roth IRAs, Must You Withdraw or Use Assets? SIMPLE IRAs, When Can You Withdraw or Use Assets? Traditional IRAs, When Can You Withdraw or Use Assets?, Excess Contributions Tax Withholding, Reporting and Withholding Requirements for Taxable Amounts, Withholding. How do i file my 2011 taxes Direct rollover option, Withholding. How do i file my 2011 taxes Eligible rollover distribution paid to taxpayer, Withholding requirement. How do i file my 2011 taxes Worksheets Figuring amount of net income due to IRA contribution and total amount to be recharacterized (Worksheet 1-3), Worksheet 1-3. How do i file my 2011 taxes Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Recharacterized Figuring modified AGI (Worksheet 1-1), Worksheet 1-1. How do i file my 2011 taxes Figuring Your Modified AGI Roth IRAs Figuring modified AGI (Worksheet 2-1), Worksheet 2-1. How do i file my 2011 taxes Modified Adjusted Gross Income for Roth IRA Purposes Prev  Up     Home   More Online Publications
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How do i file my 2011 taxes 3. How do i file my 2011 taxes   Ordinary or Capital Gain or Loss for Business Property Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Section 1231 Gains and LossesNonrecaptured section 1231 losses. How do i file my 2011 taxes Depreciation RecaptureSection 1245 Property Section 1250 Property Installment Sales Gifts Transfers at Death Like-Kind Exchanges and Involuntary Conversions Multiple Properties Introduction When you dispose of business property, your taxable gain or loss is usually a section 1231 gain or loss. How do i file my 2011 taxes Its treatment as ordinary or capital is determined under rules for section 1231 transactions. How do i file my 2011 taxes When you dispose of depreciable property (section 1245 property or section 1250 property) at a gain, you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules. How do i file my 2011 taxes Any remaining gain is a section 1231 gain. How do i file my 2011 taxes Topics - This chapter discusses: Section 1231 gains and losses Depreciation recapture Useful Items - You may want to see: Publication 534 Depreciating Property Placed in Service Before 1987 537 Installment Sales 547 Casualties, Disasters and Thefts 551 Basis of Assets 946 How To Depreciate Property Form (and Instructions) 4797 Sales of Business Property See chapter 5 for information about getting publications and forms. How do i file my 2011 taxes Section 1231 Gains and Losses Section 1231 gains and losses are the taxable gains and losses from section 1231 transactions (discussed below). How do i file my 2011 taxes Their treatment as ordinary or capital depends on whether you have a net gain or a net loss from all your section 1231 transactions. How do i file my 2011 taxes If you have a gain from a section 1231 transaction, first determine whether any of the gain is ordinary income under the depreciation recapture rules (explained later). How do i file my 2011 taxes Do not take that gain into account as section 1231 gain. How do i file my 2011 taxes Section 1231 transactions. How do i file my 2011 taxes   The following transactions result in gain or loss subject to section 1231 treatment. How do i file my 2011 taxes Sales or exchanges of real property or depreciable personal property. How do i file my 2011 taxes This property must be used in a trade or business and held longer than 1 year. How do i file my 2011 taxes Generally, property held for the production of rents or royalties is considered to be used in a trade or business. How do i file my 2011 taxes Depreciable personal property includes amortizable section 197 intangibles (described in chapter 2 under Other Dispositions). How do i file my 2011 taxes Sales or exchanges of leaseholds. How do i file my 2011 taxes The leasehold must be used in a trade or business and held longer than 1 year. How do i file my 2011 taxes Sales or exchanges of cattle and horses. How do i file my 2011 taxes The cattle and horses must be held for draft, breeding, dairy, or sporting purposes and held for 2 years or longer. How do i file my 2011 taxes Sales or exchanges of other livestock. How do i file my 2011 taxes This livestock does not include poultry. How do i file my 2011 taxes It must be held for draft, breeding, dairy, or sporting purposes and held for 1 year or longer. How do i file my 2011 taxes Sales or exchanges of unharvested crops. How do i file my 2011 taxes The crop and land must be sold, exchanged, or involuntarily converted at the same time and to the same person and the land must be held longer than 1 year. How do i file my 2011 taxes You cannot keep any right or option to directly or indirectly reacquire the land (other than a right customarily incident to a mortgage or other security transaction). How do i file my 2011 taxes Growing crops sold with a lease on the land, though sold to the same person in the same transaction, are not included. How do i file my 2011 taxes Cutting of timber or disposal of timber, coal, or iron ore. How do i file my 2011 taxes The cutting or disposal must be treated as a sale, as described in chapter 2 under Timber and Coal and Iron Ore. How do i file my 2011 taxes Condemnations. How do i file my 2011 taxes The condemned property must have been held longer than 1 year. How do i file my 2011 taxes It must be business property or a capital asset held in connection with a trade or business or a transaction entered into for profit, such as investment property. How do i file my 2011 taxes It cannot be property held for personal use. How do i file my 2011 taxes Casualties and thefts. How do i file my 2011 taxes The casualty or theft must have affected business property, property held for the production of rents and royalties, or investment property (such as notes and bonds). How do i file my 2011 taxes You must have held the property longer than 1 year. How do i file my 2011 taxes However, if your casualty or theft losses are more than your casualty or theft gains, neither the gains nor the losses are taken into account in the section 1231 computation. How do i file my 2011 taxes For more information on casualties and thefts, see Publication 547. How do i file my 2011 taxes Property for sale to customers. How do i file my 2011 taxes   A sale, exchange, or involuntary conversion of property held mainly for sale to customers is not a section 1231 transaction. How do i file my 2011 taxes If you will get back all, or nearly all, of your investment in the property by selling it rather than by using it up in your business, it is property held mainly for sale to customers. How do i file my 2011 taxes Example. How do i file my 2011 taxes You manufacture and sell steel cable, which you deliver on returnable reels that are depreciable property. How do i file my 2011 taxes Customers make deposits on the reels, which you refund if the reels are returned within a year. How do i file my 2011 taxes If they are not returned, you keep each deposit as the agreed-upon sales price. How do i file my 2011 taxes Most reels are returned within the 1-year period. How do i file my 2011 taxes You keep adequate records showing depreciation and other charges to the capitalized cost of the reels. How do i file my 2011 taxes Under these conditions, the reels are not property held for sale to customers in the ordinary course of your business. How do i file my 2011 taxes Any gain or loss resulting from their not being returned may be capital or ordinary, depending on your section 1231 transactions. How do i file my 2011 taxes Copyrights. How do i file my 2011 taxes    The sale of a copyright, a literary, musical, or artistic composition, or similar property is not a section 1231 transaction if your personal efforts created the property, or if you acquired the property in a way that entitled you to the basis of the previous owner whose personal efforts created it (for example, if you receive the property as a gift). How do i file my 2011 taxes The sale of such property results in ordinary income and generally is reported in Part II of Form 4797. How do i file my 2011 taxes Treatment as ordinary or capital. How do i file my 2011 taxes   To determine the treatment of section 1231 gains and losses, combine all your section 1231 gains and losses for the year. How do i file my 2011 taxes If you have a net section 1231 loss, it is ordinary loss. How do i file my 2011 taxes If you have a net section 1231 gain, it is ordinary income up to the amount of your nonrecaptured section 1231 losses from previous years. How do i file my 2011 taxes The rest, if any, is long-term capital gain. How do i file my 2011 taxes Nonrecaptured section 1231 losses. How do i file my 2011 taxes   Your nonrecaptured section 1231 losses are your net section 1231 losses for the previous 5 years that have not been applied against a net section 1231 gain. How do i file my 2011 taxes Therefore, if in any of your five preceding tax years you had section 1231 losses, a net gain for the current year from the sale of section 1231 assets is ordinary gain to the extent of your prior losses. How do i file my 2011 taxes These losses are applied against your net section 1231 gain beginning with the earliest loss in the 5-year period. How do i file my 2011 taxes Example. How do i file my 2011 taxes In 2013, Ben has a $2,000 net section 1231 gain. How do i file my 2011 taxes To figure how much he has to report as ordinary income and long-term capital gain, he must first determine his section 1231 gains and losses from the previous 5-year period. How do i file my 2011 taxes From 2008 through 2012 he had the following section 1231 gains and losses. How do i file my 2011 taxes Year Amount 2008 -0- 2009 -0- 2010 ($2,500) 2011 -0- 2012 $1,800 Ben uses this information to figure how to report his net section 1231 gain for 2013 as shown below. How do i file my 2011 taxes 1) Net section 1231 gain (2013) $2,000 2) Net section 1231 loss (2010) ($2,500)   3) Net section 1231 gain (2012) 1,800   4) Remaining net section 1231 loss from prior 5 years ($700)   5) Gain treated as  ordinary income $700 6) Gain treated as long-term  capital gain $1,300 Depreciation Recapture If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income. How do i file my 2011 taxes To figure any gain that must be reported as ordinary income, you must keep permanent records of the facts necessary to figure the depreciation or amortization allowed or allowable on your property. How do i file my 2011 taxes This includes the date and manner of acquisition, cost or other basis, depreciation or amortization, and all other adjustments that affect basis. How do i file my 2011 taxes On property you acquired in a nontaxable exchange or as a gift, your records also must indicate the following information. How do i file my 2011 taxes Whether the adjusted basis was figured using depreciation or amortization you claimed on other property. How do i file my 2011 taxes Whether the adjusted basis was figured using depreciation or amortization another person claimed. How do i file my 2011 taxes Corporate distributions. How do i file my 2011 taxes   For information on property distributed by corporations, see Distributions to Shareholders in Publication 542, Corporations. How do i file my 2011 taxes General asset accounts. How do i file my 2011 taxes   Different rules apply to dispositions of property you depreciated using a general asset account. How do i file my 2011 taxes For information on these rules, see Publication 946. How do i file my 2011 taxes Section 1245 Property A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable on the property. How do i file my 2011 taxes See Gain Treated as Ordinary Income, later. How do i file my 2011 taxes Any gain recognized that is more than the part that is ordinary income from depreciation is a section 1231 gain. How do i file my 2011 taxes See Treatment as ordinary or capital under Section 1231 Gains and Losses, earlier. How do i file my 2011 taxes Section 1245 property defined. How do i file my 2011 taxes   Section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization and that is any of the following types of property. How do i file my 2011 taxes Personal property (either tangible or intangible). How do i file my 2011 taxes Other tangible property (except buildings and their structural components) used as any of the following. How do i file my 2011 taxes See Buildings and structural components below. How do i file my 2011 taxes An integral part of manufacturing, production, or extraction, or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services. How do i file my 2011 taxes A research facility in any of the activities in (a). How do i file my 2011 taxes A facility in any of the activities in (a) for the bulk storage of fungible commodities (discussed on the next page). How do i file my 2011 taxes That part of real property (not included in (2)) with an adjusted basis reduced by (but not limited to) the following. How do i file my 2011 taxes Amortization of certified pollution control facilities. How do i file my 2011 taxes The section 179 expense deduction. How do i file my 2011 taxes Deduction for clean-fuel vehicles and certain refueling property. How do i file my 2011 taxes Deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations. How do i file my 2011 taxes Deduction for certain qualified refinery property. How do i file my 2011 taxes Deduction for qualified energy efficient commercial building property. How do i file my 2011 taxes Amortization of railroad grading and tunnel bores, if in effect before the repeal by the Revenue Reconciliation Act of 1990. How do i file my 2011 taxes (Repealed by Public Law 99-514, Tax Reform Act of 1986, section 242(a). How do i file my 2011 taxes ) Certain expenditures for child care facilities if in effect before repeal by Public Law 101-58, Omnibus Budget Reconciliation Act of 1990, section 11801(a)(13) (except with regards to deductions made prior to November 5, 1990). How do i file my 2011 taxes Expenditures to remove architectural and transportation barriers to the handicapped and elderly. How do i file my 2011 taxes Deduction for qualified tertiary injectant expenses. How do i file my 2011 taxes Certain reforestation expenditures. How do i file my 2011 taxes Deduction for election to expense qualified advanced mine safety equipment property. How do i file my 2011 taxes Single purpose agricultural (livestock) or horticultural structures. How do i file my 2011 taxes Storage facilities (except buildings and their structural components) used in distributing petroleum or any primary product of petroleum. How do i file my 2011 taxes Any railroad grading or tunnel bore. How do i file my 2011 taxes Buildings and structural components. How do i file my 2011 taxes   Section 1245 property does not include buildings and structural components. How do i file my 2011 taxes The term building includes a house, barn, warehouse, or garage. How do i file my 2011 taxes The term structural component includes walls, floors, windows, doors, central air conditioning systems, light fixtures, etc. How do i file my 2011 taxes   Do not treat a structure that is essentially machinery or equipment as a building or structural component. How do i file my 2011 taxes Also, do not treat a structure that houses property used as an integral part of an activity as a building or structural component if the structure's use is so closely related to the property's use that the structure can be expected to be replaced when the property it initially houses is replaced. How do i file my 2011 taxes   The fact that the structure is specially designed to withstand the stress and other demands of the property and cannot be used economically for other purposes indicates it is closely related to the use of the property it houses. How do i file my 2011 taxes Structures such as oil and gas storage tanks, grain storage bins, silos, fractionating towers, blast furnaces, basic oxygen furnaces, coke ovens, brick kilns, and coal tipples are not treated as buildings, but as section 1245 property. How do i file my 2011 taxes Facility for bulk storage of fungible commodities. How do i file my 2011 taxes   This term includes oil or gas storage tanks and grain storage bins. How do i file my 2011 taxes Bulk storage means the storage of a commodity in a large mass before it is used. How do i file my 2011 taxes For example, if a facility is used to store oranges that have been sorted and boxed, it is not used for bulk storage. How do i file my 2011 taxes To be fungible, a commodity must be such that one part may be used in place of another. How do i file my 2011 taxes   Stored materials that vary in composition, size, and weight are not fungible. How do i file my 2011 taxes Materials are not fungible if one part cannot be used in place of another part and the materials cannot be estimated and replaced by simple reference to weight, measure, and number. How do i file my 2011 taxes For example, the storage of different grades and forms of aluminum scrap is not storage of fungible commodities. How do i file my 2011 taxes Gain Treated as Ordinary Income The gain treated as ordinary income on the sale, exchange, or involuntary conversion of section 1245 property, including a sale and leaseback transaction, is the lesser of the following amounts. How do i file my 2011 taxes The depreciation and amortization allowed or allowable on the property. How do i file my 2011 taxes The gain realized on the disposition (the amount realized from the disposition minus the adjusted basis of the property). How do i file my 2011 taxes A limit on this amount for gain on like-kind exchanges and involuntary conversions is explained later. How do i file my 2011 taxes For any other disposition of section 1245 property, ordinary income is the lesser of (1) earlier or the amount by which its fair market value is more than its adjusted basis. How do i file my 2011 taxes See Gifts and Transfers at Death, later. How do i file my 2011 taxes Use Part III of Form 4797 to figure the ordinary income part of the gain. How do i file my 2011 taxes Depreciation taken on other property or taken by other taxpayers. How do i file my 2011 taxes   Depreciation and amortization include the amounts you claimed on the section 1245 property as well as the following depreciation and amortization amounts. How do i file my 2011 taxes Amounts you claimed on property you exchanged for, or converted to, your section 1245 property in a like-kind exchange or involuntary conversion. How do i file my 2011 taxes Amounts a previous owner of the section 1245 property claimed if your basis is determined with reference to that person's adjusted basis (for example, the donor's depreciation deductions on property you received as a gift). How do i file my 2011 taxes Depreciation and amortization. How do i file my 2011 taxes   Depreciation and amortization that must be recaptured as ordinary income include (but are not limited to) the following items. How do i file my 2011 taxes Ordinary depreciation deductions. How do i file my 2011 taxes Any special depreciation allowance you claimed. How do i file my 2011 taxes Amortization deductions for all the following costs. How do i file my 2011 taxes Acquiring a lease. How do i file my 2011 taxes Lessee improvements. How do i file my 2011 taxes Certified pollution control facilities. How do i file my 2011 taxes Certain reforestation expenses. How do i file my 2011 taxes Section 197 intangibles. How do i file my 2011 taxes Childcare facility expenses made before 1982, if in effect before the repeal of IRC 188. How do i file my 2011 taxes Franchises, trademarks, and trade names acquired before August 11, 1993. How do i file my 2011 taxes The section 179 deduction. How do i file my 2011 taxes Deductions for all the following costs. How do i file my 2011 taxes Removing barriers to the disabled and the elderly. How do i file my 2011 taxes Tertiary injectant expenses. How do i file my 2011 taxes Depreciable clean-fuel vehicles and refueling property (minus the amount of any recaptured deduction). How do i file my 2011 taxes Environmental cleanup costs. How do i file my 2011 taxes Certain reforestation expenses. How do i file my 2011 taxes Qualified disaster expenses. How do i file my 2011 taxes Any basis reduction for the investment credit (minus any basis increase for credit recapture). How do i file my 2011 taxes Any basis reduction for the qualified electric vehicle credit (minus any basis increase for credit recapture). How do i file my 2011 taxes Example. How do i file my 2011 taxes You file your returns on a calendar year basis. How do i file my 2011 taxes In February 2011, you bought and placed in service for 100% use in your business a light-duty truck (5-year property) that cost $10,000. How do i file my 2011 taxes You used the half-year convention and your MACRS deductions for the truck were $2,000 in 2011 and $3,200 in 2012. How do i file my 2011 taxes You did not take the section 179 deduction. How do i file my 2011 taxes You sold the truck in May 2013 for $7,000. How do i file my 2011 taxes The MACRS deduction in 2013, the year of sale, is $960 (½ of $1,920). How do i file my 2011 taxes Figure the gain treated as ordinary income as follows. How do i file my 2011 taxes 1) Amount realized $7,000 2) Cost (February 2011) $10,000   3) Depreciation allowed or allowable (MACRS deductions: $2,000 + $3,200 + $960) 6,160   4) Adjusted basis (subtract line 3 from line 2) $3,840 5) Gain realized (subtract line 4 from line 1) $3,160 6) Gain treated as ordinary income (lesser of line 3 or line 5) $3,160 Depreciation on other tangible property. How do i file my 2011 taxes   You must take into account depreciation during periods when the property was not used as an integral part of an activity or did not constitute a research or storage facility, as described earlier under Section 1245 property. How do i file my 2011 taxes   For example, if depreciation deductions taken on certain storage facilities amounted to $10,000, of which $6,000 is from the periods before their use in a prescribed business activity, you must use the entire $10,000 in determining ordinary income from depreciation. How do i file my 2011 taxes Depreciation allowed or allowable. How do i file my 2011 taxes   The greater of the depreciation allowed or allowable is generally the amount to use in figuring the part of gain to report as ordinary income. How do i file my 2011 taxes However, if in prior years, you have consistently taken proper deductions under one method, the amount allowed for your prior years will not be increased even though a greater amount would have been allowed under another proper method. How do i file my 2011 taxes If you did not take any deduction at all for depreciation, your adjustments to basis for depreciation allowable are figured by using the straight line method. How do i file my 2011 taxes   This treatment applies only when figuring what part of gain is treated as ordinary income under the rules for section 1245 depreciation recapture. How do i file my 2011 taxes Multiple asset accounts. How do i file my 2011 taxes   In figuring ordinary income from depreciation, you can treat any number of units of section 1245 property in a single depreciation account as one item if the total ordinary income from depreciation figured by using this method is not less than it would be if depreciation on each unit were figured separately. How do i file my 2011 taxes Example. How do i file my 2011 taxes In one transaction you sold 50 machines, 25 trucks, and certain other property that is not section 1245 property. How do i file my 2011 taxes All of the depreciation was recorded in a single depreciation account. How do i file my 2011 taxes After dividing the total received among the various assets sold, you figured that each unit of section 1245 property was sold at a gain. How do i file my 2011 taxes You can figure the ordinary income from depreciation as if the 50 machines and 25 trucks were one item. How do i file my 2011 taxes However, if five of the trucks had been sold at a loss, only the 50 machines and 20 of the trucks could be treated as one item in determining the ordinary income from depreciation. How do i file my 2011 taxes Normal retirement. How do i file my 2011 taxes   The normal retirement of section 1245 property in multiple asset accounts does not require recognition of gain as ordinary income from depreciation if your method of accounting for asset retirements does not require recognition of that gain. How do i file my 2011 taxes Section 1250 Property Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable on the property. How do i file my 2011 taxes To determine the additional depreciation on section 1250 property, see Additional Depreciation, below. How do i file my 2011 taxes Section 1250 property defined. How do i file my 2011 taxes   This includes all real property that is subject to an allowance for depreciation and that is not and never has been section 1245 property. How do i file my 2011 taxes It includes a leasehold of land or section 1250 property subject to an allowance for depreciation. How do i file my 2011 taxes A fee simple interest in land is not included because it is not depreciable. How do i file my 2011 taxes   If your section 1250 property becomes section 1245 property because you change its use, you can never again treat it as section 1250 property. How do i file my 2011 taxes Additional Depreciation If you hold section 1250 property longer than 1 year, the additional depreciation is the actual depreciation adjustments that are more than the depreciation figured using the straight line method. How do i file my 2011 taxes For a list of items treated as depreciation adjustments, see Depreciation and amortization under Gain Treated as Ordinary Income, earlier. How do i file my 2011 taxes For the treatment of unrecaptured section 1250 gain, see Capital Gains Tax Rate, later. How do i file my 2011 taxes If you hold section 1250 property for 1 year or less, all the depreciation is additional depreciation. How do i file my 2011 taxes You will not have additional depreciation if any of the following conditions apply to the property disposed of. How do i file my 2011 taxes You figured depreciation for the property using the straight line method or any other method that does not result in depreciation that is more than the amount figured by the straight line method; you held the property longer than 1 year; and, if the property was qualified property, you made a timely election not to claim any special depreciation allowance. How do i file my 2011 taxes In addition, if the property was in a renewal community, you must not have elected to claim a commercial revitalization deduction for property placed in service before January 1, 2010. How do i file my 2011 taxes The property was residential low-income rental property you held for 162/3 years or longer. How do i file my 2011 taxes For low-income rental housing on which the special 60-month depreciation for rehabilitation expenses was allowed, the 162/3 years start when the rehabilitated property is placed in service. How do i file my 2011 taxes You chose the alternate ACRS method for the property, which was a type of 15-, 18-, or 19-year real property covered by the section 1250 rules. How do i file my 2011 taxes The property was residential rental property or nonresidential real property placed in service after 1986 (or after July 31, 1986, if the choice to use MACRS was made); you held it longer than 1 year; and, if the property was qualified property, you made a timely election not to claim any special depreciation allowance. How do i file my 2011 taxes These properties are depreciated using the straight line method. How do i file my 2011 taxes In addition, if the property was in a renewal community, you must not have elected to claim a commercial revitalization deduction. How do i file my 2011 taxes Depreciation taken by other taxpayers or on other property. How do i file my 2011 taxes   Additional depreciation includes all depreciation adjustments to the basis of section 1250 property whether allowed to you or another person (as carryover basis property). How do i file my 2011 taxes Example. How do i file my 2011 taxes Larry Johnson gives his son section 1250 property on which he took $2,000 in depreciation deductions, of which $500 is additional depreciation. How do i file my 2011 taxes Immediately after the gift, the son's adjusted basis in the property is the same as his father's and reflects the $500 additional depreciation. How do i file my 2011 taxes On January 1 of the next year, after taking depreciation deductions of $1,000 on the property, of which $200 is additional depreciation, the son sells the property. How do i file my 2011 taxes At the time of sale, the additional depreciation is $700 ($500 allowed the father plus $200 allowed the son). How do i file my 2011 taxes Depreciation allowed or allowable. How do i file my 2011 taxes   The greater of depreciation allowed or allowable (to any person who held the property if the depreciation was used in figuring its adjusted basis in your hands) generally is the amount to use in figuring the part of the gain to be reported as ordinary income. How do i file my 2011 taxes If you can show that the deduction allowed for any tax year was less than the amount allowable, the lesser figure will be the depreciation adjustment for figuring additional depreciation. How do i file my 2011 taxes Retired or demolished property. How do i file my 2011 taxes   The adjustments reflected in adjusted basis generally do not include deductions for depreciation on retired or demolished parts of section 1250 property unless these deductions are reflected in the basis of replacement property that is section 1250 property. How do i file my 2011 taxes Example. How do i file my 2011 taxes A wing of your building is totally destroyed by fire. How do i file my 2011 taxes The depreciation adjustments figured in the adjusted basis of the building after the wing is destroyed do not include any deductions for depreciation on the destroyed wing unless it is replaced and the adjustments for depreciation on it are reflected in the basis of the replacement property. How do i file my 2011 taxes Figuring straight line depreciation. How do i file my 2011 taxes   The useful life and salvage value you would have used to figure straight line depreciation are the same as those used under the depreciation method you actually used. How do i file my 2011 taxes If you did not use a useful life under the depreciation method actually used (such as with the units-of-production method) or if you did not take salvage value into account (such as with the declining balance method), the useful life or salvage value for figuring what would have been the straight line depreciation is the useful life and salvage value you would have used under the straight line method. How do i file my 2011 taxes   Salvage value and useful life are not used for the ACRS method of depreciation. How do i file my 2011 taxes Figure straight line depreciation for ACRS real property by using its 15-, 18-, or 19-year recovery period as the property's useful life. How do i file my 2011 taxes   The straight line method is applied without any basis reduction for the investment credit. How do i file my 2011 taxes Property held by lessee. How do i file my 2011 taxes   If a lessee makes a leasehold improvement, the lease period for figuring what would have been the straight line depreciation adjustments includes all renewal periods. How do i file my 2011 taxes This inclusion of the renewal periods cannot extend the lease period taken into account to a period that is longer than the remaining useful life of the improvement. How do i file my 2011 taxes The same rule applies to the cost of acquiring a lease. How do i file my 2011 taxes   The term renewal period means any period for which the lease may be renewed, extended, or continued under an option exercisable by the lessee. How do i file my 2011 taxes However, the inclusion of renewal periods cannot extend the lease by more than two-thirds of the period that was the basis on which the actual depreciation adjustments were allowed. How do i file my 2011 taxes Applicable Percentage The applicable percentage used to figure the ordinary income because of additional depreciation depends on whether the real property you disposed of is nonresidential real property, residential rental property, or low-income housing. How do i file my 2011 taxes The percentages for these types of real property are as follows. How do i file my 2011 taxes Nonresidential real property. How do i file my 2011 taxes   For real property that is not residential rental property, the applicable percentage for periods after 1969 is 100%. How do i file my 2011 taxes For periods before 1970, the percentage is zero and no ordinary income because of additional depreciation before 1970 will result from its disposition. How do i file my 2011 taxes Residential rental property. How do i file my 2011 taxes   For residential rental property (80% or more of the gross income is from dwelling units) other than low-income housing, the applicable percentage for periods after 1975 is 100%. How do i file my 2011 taxes The percentage for periods before 1976 is zero. How do i file my 2011 taxes Therefore, no ordinary income because of additional depreciation before 1976 will result from a disposition of residential rental property. How do i file my 2011 taxes Low-income housing. How do i file my 2011 taxes    Low-income housing includes all the following types of residential rental property. How do i file my 2011 taxes Federally assisted housing projects if 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. How do i file my 2011 taxes Low-income rental housing for which a depreciation deduction for rehabilitation expenses was allowed. How do i file my 2011 taxes 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 provisions of state or local laws that authorize similar subsidies for low-income families. How do i file my 2011 taxes Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. How do i file my 2011 taxes   The applicable percentage for low-income housing is 100% minus 1% for each full month the property was held over 100 full months. How do i file my 2011 taxes If you have held low-income housing at least 16 years and 8 months, the percentage is zero and no ordinary income will result from its disposition. How do i file my 2011 taxes Foreclosure. How do i file my 2011 taxes   If low-income housing is disposed of because of foreclosure or similar proceedings, the monthly applicable percentage reduction is figured as if you disposed of the property on the starting date of the proceedings. How do i file my 2011 taxes Example. How do i file my 2011 taxes On June 1, 2001, you acquired low-income housing property. How do i file my 2011 taxes On April 3, 2012 (130 months after the property was acquired), foreclosure proceedings were started on the property and on December 3, 2013 (150 months after the property was acquired), the property was disposed of as a result of the foreclosure proceedings. How do i file my 2011 taxes The property qualifies for a reduced applicable percentage because it was held more than 100 full months. How do i file my 2011 taxes The applicable percentage reduction is 30% (130 months minus 100 months) rather than 50% (150 months minus 100 months) because it does not apply after April 3, 2012, the starting date of the foreclosure proceedings. How do i file my 2011 taxes Therefore, 70% of the additional depreciation is treated as ordinary income. How do i file my 2011 taxes Holding period. How do i file my 2011 taxes   The holding period used to figure the applicable percentage for low-income housing generally starts on the day after you acquired it. How do i file my 2011 taxes For example, if you bought low-income housing on January 1, 1997, the holding period starts on January 2, 1997. How do i file my 2011 taxes If you sold it on January 2, 2013, the holding period is exactly 192 full months. How do i file my 2011 taxes The applicable percentage for additional depreciation is 8%, or 100% minus 1% for each full month the property was held over 100 full months. How do i file my 2011 taxes Holding period for constructed, reconstructed, or erected property. How do i file my 2011 taxes   The holding period used to figure the applicable percentage for low-income housing you constructed, reconstructed, or erected starts on the first day of the month it is placed in service in a trade or business, in an activity for the production of income, or in a personal activity. How do i file my 2011 taxes Property acquired by gift or received in a tax-free transfer. How do i file my 2011 taxes   For low-income housing you acquired by gift or in a tax-free transfer the basis of which is figured by reference to the basis in the hands of the transferor, the holding period for the applicable percentage includes the holding period of the transferor. How do i file my 2011 taxes   If the adjusted basis of the property in your hands just after acquiring it is more than its adjusted basis to the transferor just before transferring it, the holding period of the difference is figured as if it were a separate improvement. How do i file my 2011 taxes See Low-Income Housing With Two or More Elements, next. How do i file my 2011 taxes Low-Income Housing With Two or More Elements If you dispose of low-income housing property that has two or more separate elements, the applicable percentage used to figure ordinary income because of additional depreciation may be different for each element. How do i file my 2011 taxes The gain to be reported as ordinary income is the sum of the ordinary income figured for each element. How do i file my 2011 taxes The following are the types of separate elements. How do i file my 2011 taxes A separate improvement (defined below). How do i file my 2011 taxes The basic section 1250 property plus improvements not qualifying as separate improvements. How do i file my 2011 taxes The units placed in service at different times before all the section 1250 property is finished. How do i file my 2011 taxes For example, this happens when a taxpayer builds an apartment building of 100 units and places 30 units in service (available for renting) on January 4, 2011, 50 on July 18, 2011, and the remaining 20 on January 18, 2012. How do i file my 2011 taxes As a result, the apartment house consists of three separate elements. How do i file my 2011 taxes The 36-month test for separate improvements. How do i file my 2011 taxes   A separate improvement is any improvement (qualifying under The 1-year test, below) added to the capital account of the property, but only if the total of the improvements during the 36-month period ending on the last day of any tax year is more than the greatest of the following amounts. How do i file my 2011 taxes Twenty-five percent of the adjusted basis of the property at the start of the first day of the 36-month period, or the first day of the holding period of the property, whichever is later. How do i file my 2011 taxes Ten percent of the unadjusted basis (adjusted basis plus depreciation and amortization adjustments) of the property at the start of the period determined in (1). How do i file my 2011 taxes $5,000. How do i file my 2011 taxes The 1-year test. How do i file my 2011 taxes   An addition to the capital account for any tax year (including a short tax year) is treated as an improvement only if the sum of all additions for the year is more than the greater of $2,000 or 1% of the unadjusted basis of the property. How do i file my 2011 taxes The unadjusted basis is figured as of the start of that tax year or the holding period of the property, whichever is later. How do i file my 2011 taxes In applying the 36-month test, improvements in any one of the 3 years are omitted entirely if the total improvements in that year do not qualify under the 1-year test. How do i file my 2011 taxes Example. How do i file my 2011 taxes The unadjusted basis of a calendar year taxpayer's property was $300,000 on January 1 of this year. How do i file my 2011 taxes During the year, the taxpayer made improvements A, B, and C, which cost $1,000, $600, and $700, respectively. How do i file my 2011 taxes The sum of the improvements, $2,300, is less than 1% of the unadjusted basis ($3,000), so the improvements do not satisfy the 1-year test and are not treated as improvements for the 36-month test. How do i file my 2011 taxes However, if improvement C had cost $1,500, the sum of these improvements would have been $3,100. How do i file my 2011 taxes Then, it would be necessary to apply the 36-month test to figure if the improvements must be treated as separate improvements. How do i file my 2011 taxes Addition to the capital account. How do i file my 2011 taxes   Any addition to the capital account made after the initial acquisition or completion of the property by you or any person who held the property during a period included in your holding period is to be considered when figuring the total amount of separate improvements. How do i file my 2011 taxes   The addition to the capital account of depreciable real property is the gross addition not reduced by amounts attributable to replaced property. How do i file my 2011 taxes For example, if a roof with an adjusted basis of $20,000 is replaced by a new roof costing $50,000, the improvement is the gross addition to the account, $50,000, and not the net addition of $30,000. How do i file my 2011 taxes The $20,000 adjusted basis of the old roof is no longer reflected in the basis of the property. How do i file my 2011 taxes The status of an addition to the capital account is not affected by whether it is treated as a separate property for determining depreciation deductions. How do i file my 2011 taxes   Whether an expense is treated as an addition to the capital account may depend on the final disposition of the entire property. How do i file my 2011 taxes If the expense item property and the basic property are sold in two separate transactions, the entire section 1250 property is treated as consisting of two distinct properties. How do i file my 2011 taxes Unadjusted basis. How do i file my 2011 taxes   In figuring the unadjusted basis as of a certain date, include the actual cost of all previous additions to the capital account plus those that did not qualify as separate improvements. How do i file my 2011 taxes However, the cost of components retired before that date is not included in the unadjusted basis. How do i file my 2011 taxes Holding period. How do i file my 2011 taxes   Use the following guidelines for figuring the applicable percentage for property with two or more elements. How do i file my 2011 taxes The holding period of a separate element placed in service before the entire section 1250 property is finished starts on the first day of the month that the separate element is placed in service. How do i file my 2011 taxes The holding period for each separate improvement qualifying as a separate element starts on the day after the improvement is acquired or, for improvements constructed, reconstructed, or erected, the first day of the month that the improvement is placed in service. How do i file my 2011 taxes The holding period for each improvement not qualifying as a separate element takes the holding period of the basic property. How do i file my 2011 taxes   If an improvement by itself does not meet the 1-year test (greater of $2,000 or 1% of the unadjusted basis), but it does qualify as a separate improvement that is a separate element (when grouped with other improvements made during the tax year), determine the start of its holding period as follows. How do i file my 2011 taxes Use the first day of a calendar month that is closest to the middle of the tax year. How do i file my 2011 taxes If there are two first days of a month that are equally close to the middle of the year, use the earlier date. How do i file my 2011 taxes Figuring ordinary income attributable to each separate element. How do i file my 2011 taxes   Figure ordinary income attributable to each separate element as follows. How do i file my 2011 taxes   Step 1. How do i file my 2011 taxes Divide the element's additional depreciation after 1975 by the sum of all the elements' additional depreciation after 1975 to determine the percentage used in Step 2. How do i file my 2011 taxes   Step 2. How do i file my 2011 taxes Multiply the percentage figured in Step 1 by the lesser of the additional depreciation after 1975 for the entire property or the gain from disposition of the entire property (the difference between the fair market value or amount realized and the adjusted basis). How do i file my 2011 taxes   Step 3. How do i file my 2011 taxes Multiply the result in Step 2 by the applicable percentage for the element. How do i file my 2011 taxes Example. How do i file my 2011 taxes You sold at a gain of $25,000 low-income housing property subject to the ordinary income rules of section 1250. How do i file my 2011 taxes The property consisted of four elements (W, X, Y, and Z). How do i file my 2011 taxes Step 1. How do i file my 2011 taxes The additional depreciation for each element is: W-$12,000; X-None; Y-$6,000; and Z-$6,000. How do i file my 2011 taxes The sum of the additional depreciation for all the elements is $24,000. How do i file my 2011 taxes Step 2. How do i file my 2011 taxes The depreciation deducted on element X was $4,000 less than it would have been under the straight line method. How do i file my 2011 taxes Additional depreciation on the property as a whole is $20,000 ($24,000 − $4,000). How do i file my 2011 taxes $20,000 is lower than the $25,000 gain on the sale, so $20,000 is used in Step 2. How do i file my 2011 taxes Step 3. How do i file my 2011 taxes The applicable percentages to be used in Step 3 for the elements are: W-68%; X-85%; Y-92%; and Z-100%. How do i file my 2011 taxes From these facts, the sum of the ordinary income for each element is figured as follows. How do i file my 2011 taxes   Step 1 Step 2 Step 3 Ordinary Income W . How do i file my 2011 taxes 50 $10,000 68% $ 6,800 X -0- -0- 85% -0- Y . How do i file my 2011 taxes 25 5,000 92% 4,600 Z . How do i file my 2011 taxes 25 5,000 100% 5,000 Sum of ordinary income of separate elements $16,400 Gain Treated as Ordinary Income To find what part of the gain from the disposition of section 1250 property is treated as ordinary income, follow these steps. How do i file my 2011 taxes In a sale, exchange, or involuntary conversion of the property, figure the amount realized that is more than the adjusted basis of the property. How do i file my 2011 taxes In any other disposition of the property, figure the fair market value that is more than the adjusted basis. How do i file my 2011 taxes Figure the additional depreciation for the periods after 1975. How do i file my 2011 taxes Multiply the lesser of (1) or (2) by the applicable percentage, discussed earlier under Applicable Percentage. How do i file my 2011 taxes Stop here if this is residential rental property or if (2) is equal to or more than (1). How do i file my 2011 taxes This is the gain treated as ordinary income because of additional depreciation. How do i file my 2011 taxes Subtract (2) from (1). How do i file my 2011 taxes Figure the additional depreciation for periods after 1969 but before 1976. How do i file my 2011 taxes Add the lesser of (4) or (5) to the result in (3). How do i file my 2011 taxes This is the gain treated as ordinary income because of additional depreciation. How do i file my 2011 taxes A limit on the amount treated as ordinary income for gain on like-kind exchanges and involuntary conversions is explained later. How do i file my 2011 taxes Use Form 4797, Part III, to figure the ordinary income part of the gain. How do i file my 2011 taxes Corporations. How do i file my 2011 taxes   Corporations, other than S corporations, must recognize an additional amount as ordinary income on the sale or other disposition of section 1250 property. How do i file my 2011 taxes The additional amount treated as ordinary income is 20% of the excess of the amount that would have been ordinary income if the property were section 1245 property over the amount treated as ordinary income under section 1250. How do i file my 2011 taxes Report this additional ordinary income on Form 4797, Part III, line 26 (f). How do i file my 2011 taxes Installment Sales If you report the sale of property under the installment method, any depreciation recapture under section 1245 or 1250 is taxable as ordinary income in the year of sale. How do i file my 2011 taxes This applies even if no payments are received in that year. How do i file my 2011 taxes If the gain is more than the depreciation recapture income, report the rest of the gain using the rules of the installment method. How do i file my 2011 taxes For this purpose, include the recapture income in your installment sale basis to determine your gross profit on the installment sale. How do i file my 2011 taxes If you dispose of more than one asset in a single transaction, you must figure the gain on each asset separately so that it may be properly reported. How do i file my 2011 taxes To do this, allocate the selling price and the payments you receive in the year of sale to each asset. How do i file my 2011 taxes Report any depreciation recapture income in the year of sale before using the installment method for any remaining gain. How do i file my 2011 taxes For a detailed discussion of installment sales, see Publication 537. How do i file my 2011 taxes Gifts If you make a gift of depreciable personal property or real property, you do not have to report income on the transaction. How do i file my 2011 taxes However, if the person who receives it (donee) sells or otherwise disposes of the property in a disposition subject to recapture, the donee must take into account the depreciation you deducted in figuring the gain to be reported as ordinary income. How do i file my 2011 taxes For low-income housing, the donee must take into account the donor's holding period to figure the applicable percentage. How do i file my 2011 taxes See Applicable Percentage and its discussion Holding period under Section 1250 Property, earlier. How do i file my 2011 taxes Part gift and part sale or exchange. How do i file my 2011 taxes   If you transfer depreciable personal property or real property for less than its fair market value in a transaction considered to be partly a gift and partly a sale or exchange and you have a gain because the amount realized is more than your adjusted basis, you must report ordinary income (up to the amount of gain) to recapture depreciation. How do i file my 2011 taxes If the depreciation (additional depreciation, if section 1250 property) is more than the gain, the balance is carried over to the transferee to be taken into account on any later disposition of the property. How do i file my 2011 taxes However, see Bargain sale to charity, later. How do i file my 2011 taxes Example. How do i file my 2011 taxes You transferred depreciable personal property to your son for $20,000. How do i file my 2011 taxes When transferred, the property had an adjusted basis to you of $10,000 and a fair market value of $40,000. How do i file my 2011 taxes You took depreciation of $30,000. How do i file my 2011 taxes You are considered to have made a gift of $20,000, the difference between the $40,000 fair market value and the $20,000 sale price to your son. How do i file my 2011 taxes You have a taxable gain on the transfer of $10,000 ($20,000 sale price minus $10,000 adjusted basis) that must be reported as ordinary income from depreciation. How do i file my 2011 taxes You report $10,000 of your $30,000 depreciation as ordinary income on the transfer of the property, so the remaining $20,000 depreciation is carried over to your son for him to take into account on any later disposition of the property. How do i file my 2011 taxes Gift to charitable organization. How do i file my 2011 taxes   If you give property to a charitable organization, you figure your deduction for your charitable contribution by reducing the fair market value of the property by the ordinary income and short-term capital gain that would have resulted had you sold the property at its fair market value at the time of the contribution. How do i file my 2011 taxes Thus, your deduction for depreciable real or personal property given to a charitable organization does not include the potential ordinary gain from depreciation. How do i file my 2011 taxes   You also may have to reduce the fair market value of the contributed property by the long-term capital gain (including any section 1231 gain) that would have resulted had the property been sold. How do i file my 2011 taxes For more information, see Giving Property That Has Increased in Value in Publication 526. How do i file my 2011 taxes Bargain sale to charity. How do i file my 2011 taxes   If you transfer section 1245 or section 1250 property to a charitable organization for less than its fair market value and a deduction for the contribution part of the transfer is allowable, your ordinary income from depreciation is figured under different rules. How do i file my 2011 taxes First, figure the ordinary income as if you had sold the property at its fair market value. How do i file my 2011 taxes Then, allocate that amount between the sale and the contribution parts of the transfer in the same proportion that you allocated your adjusted basis in the property to figure your gain. How do i file my 2011 taxes See Bargain Sale under Gain or Loss From Sales and Exchanges in chapter 1. How do i file my 2011 taxes Report as ordinary income the lesser of the ordinary income allocated to the sale or your gain from the sale. How do i file my 2011 taxes Example. How do i file my 2011 taxes You sold section 1245 property in a bargain sale to a charitable organization and are allowed a deduction for your contribution. How do i file my 2011 taxes Your gain on the sale was $1,200, figured by allocating 20% of your adjusted basis in the property to the part sold. How do i file my 2011 taxes If you had sold the property at its fair market value, your ordinary income would have been $5,000. How do i file my 2011 taxes Your ordinary income is $1,000 ($5,000 × 20%) and your section 1231 gain is $200 ($1,200 – $1,000). How do i file my 2011 taxes Transfers at Death When a taxpayer dies, no gain is reported on depreciable personal property or real property transferred to his or her estate or beneficiary. How do i file my 2011 taxes For information on the tax liability of a decedent, see Publication 559, Survivors, Executors, and Administrators. How do i file my 2011 taxes However, if the decedent disposed of the property while alive and, because of his or her method of accounting or for any other reason, the gain from the disposition is reportable by the estate or beneficiary, it must be reported in the same way the decedent would have had to report it if he or she were still alive. How do i file my 2011 taxes Ordinary income due to depreciation must be reported on a transfer from an executor, administrator, or trustee to an heir, beneficiary, or other individual if the transfer is a sale or exchange on which gain is realized. How do i file my 2011 taxes Example 1. How do i file my 2011 taxes Janet Smith owned depreciable property that, upon her death, was inherited by her son. How do i file my 2011 taxes No ordinary income from depreciation is reportable on the transfer, even though the value used for estate tax purposes is more than the adjusted basis of the property to Janet when she died. How do i file my 2011 taxes However, if she sold the property before her death and realized a gain and if, because of her method of accounting, the proceeds from the sale are income in respect of a decedent reportable by her son, he must report ordinary income from depreciation. How do i file my 2011 taxes Example 2. How do i file my 2011 taxes The trustee of a trust created by a will transfers depreciable property to a beneficiary in satisfaction of a specific bequest of $10,000. How do i file my 2011 taxes If the property had a value of $9,000 at the date used for estate tax valuation purposes, the $1,000 increase in value to the date of distribution is a gain realized by the trust. How do i file my 2011 taxes Ordinary income from depreciation must be reported by the trust on the transfer. How do i file my 2011 taxes Like-Kind Exchanges and Involuntary Conversions A like-kind exchange of your depreciable property or an involuntary conversion of the property into similar or related property will not result in your having to report ordinary income from depreciation unless money or property other than like-kind, similar, or related property is also received in the transaction. How do i file my 2011 taxes For information on like-kind exchanges and involuntary conversions, see chapter 1. How do i file my 2011 taxes Depreciable personal property. How do i file my 2011 taxes   If you have a gain from either a like-kind exchange or an involuntary conversion of your depreciable personal property, the amount to be reported as ordinary income from depreciation is the amount figured under the rules explained earlier (see Section 1245 Property), limited to the sum of the following amounts. How do i file my 2011 taxes The gain that must be included in income under the rules for like-kind exchanges or involuntary conversions. How do i file my 2011 taxes The fair market value of the like-kind, similar, or related property other than depreciable personal property acquired in the transaction. How do i file my 2011 taxes Example 1. How do i file my 2011 taxes You bought a new machine for $4,300 cash plus your old machine for which you were allowed a $1,360 trade-in. How do i file my 2011 taxes The old machine cost you $5,000 two years ago. How do i file my 2011 taxes You took depreciation deductions of $3,950. How do i file my 2011 taxes Even though you deducted depreciation of $3,950, the $310 gain ($1,360 trade-in allowance minus $1,050 adjusted basis) is not reported because it is postponed under the rules for like-kind exchanges and you received only depreciable personal property in the exchange. How do i file my 2011 taxes Example 2. How do i file my 2011 taxes You bought office machinery for $1,500 two years ago and deducted $780 depreciation. How do i file my 2011 taxes This year a fire destroyed the machinery and you received $1,200 from your fire insurance, realizing a gain of $480 ($1,200 − $720 adjusted basis). How do i file my 2011 taxes You choose to postpone reporting gain, but replacement machinery cost you only $1,000. How do i file my 2011 taxes Your taxable gain under the rules for involuntary conversions is limited to the remaining $200 insurance payment. How do i file my 2011 taxes All your replacement property is depreciable personal property, so your ordinary income from depreciation is limited to $200. How do i file my 2011 taxes Example 3. How do i file my 2011 taxes A fire destroyed office machinery you bought for $116,000. How do i file my 2011 taxes The depreciation deductions were $91,640 and the machinery had an adjusted basis of $24,360. How do i file my 2011 taxes You received a $117,000 insurance payment, realizing a gain of $92,640. How do i file my 2011 taxes You immediately spent $105,000 of the insurance payment for replacement machinery and $9,000 for stock that qualifies as replacement property and you choose to postpone reporting the gain. How do i file my 2011 taxes $114,000 of the $117,000 insurance payment was used to buy replacement property, so the gain that must be included in income under the rules for involuntary conversions is the part not spent, or $3,000. How do i file my 2011 taxes The part of the insurance payment ($9,000) used to buy the nondepreciable property (the stock) also must be included in figuring the gain from depreciation. How do i file my 2011 taxes The amount you must report as ordinary income on the transaction is $12,000, figured as follows. How do i file my 2011 taxes 1) Gain realized on the transaction ($92,640) limited to depreciation ($91,640) $91,640 2) Gain includible in income (amount not spent) 3,000     Plus: fair market value of property other than depreciable personal property (the stock) 9,000 12,000 Amount reportable as ordinary income (lesser of (1) or (2)) $12,000   If, instead of buying $9,000 in stock, you bought $9,000 worth of depreciable personal property similar or related in use to the destroyed property, you would only report $3,000 as ordinary income. How do i file my 2011 taxes Depreciable real property. How do i file my 2011 taxes   If you have a gain from either a like-kind exchange or involuntary conversion of your depreciable real property, ordinary income from additional depreciation is figured under the rules explained earlier (see Section 1250 Property), limited to the greater of the following amounts. How do i file my 2011 taxes The gain that must be reported under the rules for like-kind exchanges or involuntary conversions plus the fair market value of stock bought as replacement property in acquiring control of a corporation. How do i file my 2011 taxes The gain you would have had to report as ordinary income from additional depreciation had the transaction been a cash sale minus the cost (or fair market value in an exchange) of the depreciable real property acquired. How do i file my 2011 taxes   The ordinary income not reported for the year of the disposition is carried over to the depreciable real property acquired in the like-kind exchange or involuntary conversion as additional depreciation from the property disposed of. How do i file my 2011 taxes Further, to figure the applicable percentage of additional depreciation to be treated as ordinary income, the holding period starts over for the new property. How do i file my 2011 taxes Example. How do i file my 2011 taxes The state paid you $116,000 when it condemned your depreciable real property for public use. How do i file my 2011 taxes You bought other real property similar in use to the property condemned for $110,000 ($15,000 for depreciable real property and $95,000 for land). How do i file my 2011 taxes You also bought stock for $5,000 to get control of a corporation owning property similar in use to the property condemned. How do i file my 2011 taxes You choose to postpone reporting the gain. How do i file my 2011 taxes If the transaction had been a sale for cash only, under the rules described earlier, $20,000 would have been reportable as ordinary income because of additional depreciation. How do i file my 2011 taxes The ordinary income to be reported is $6,000, which is the greater of the following amounts. How do i file my 2011 taxes The gain that must be reported under the rules for involuntary conversions, $1,000 ($116,000 − $115,000) plus the fair market value of stock bought as qualified replacement property, $5,000, for a total of $6,000. How do i file my 2011 taxes The gain you would have had to report as ordinary income from additional depreciation ($20,000) had this transaction been a cash sale minus the cost of the depreciable real property bought ($15,000), or $5,000. How do i file my 2011 taxes   The ordinary income not reported, $14,000 ($20,000 − $6,000), is carried over to the depreciable real property you bought as additional depreciation. How do i file my 2011 taxes Basis of property acquired. How do i file my 2011 taxes   If the ordinary income you have to report because of additional depreciation is limited, the total basis of the property you acquired is its fair market value (its cost, if bought to replace property involuntarily converted into money) minus the gain postponed. How do i file my 2011 taxes   If you acquired more than one item of property, allocate the total basis among the properties in proportion to their fair market value (their cost, in an involuntary conversion into money). How do i file my 2011 taxes However, if you acquired both depreciable real property and other property, allocate the total basis as follows. How do i file my 2011 taxes Subtract the ordinary income because of additional depreciation that you do not have to report from the fair market value (or cost) of the depreciable real property acquired. How do i file my 2011 taxes Add the fair market value (or cost) of the other property acquired to the result in (1). How do i file my 2011 taxes Divide the result in (1) by the result in (2). How do i file my 2011 taxes Multiply the total basis by the result in (3). How do i file my 2011 taxes This is the basis of the depreciable real property acquired. How do i file my 2011 taxes If you acquired more than one item of depreciable real property, allocate this basis amount among the properties in proportion to their fair market value (or cost). How do i file my 2011 taxes Subtract the result in (4) from the total basis. How do i file my 2011 taxes This is the basis of the other property acquired. How do i file my 2011 taxes If you acquired more than one item of other property, allocate this basis amount among the properties in proportion to their fair market value (or cost). How do i file my 2011 taxes Example 1. How do i file my 2011 taxes In 1988, low-income housing property that you acquired and placed in service in 1983 was destroyed by fire and you received a $90,000 insurance payment. How do i file my 2011 taxes The property's adjusted basis was $38,400, with additional depreciation of $14,932. How do i file my 2011 taxes On December 1, 1988, you used the insurance payment to acquire and place in service replacement low-income housing property. How do i file my 2011 taxes Your realized gain from the involuntary conversion was $51,600 ($90,000 − $38,400). How do i file my 2011 taxes You chose to postpone reporting the gain under the involuntary conversion rules. How do i file my 2011 taxes Under the rules for depreciation recapture on real property, the ordinary gain was $14,932, but you did not have to report any of it because of the limit for involuntary conversions. How do i file my 2011 taxes The basis of the replacement low-income housing property was its $90,000 cost minus the $51,600 gain you postponed, or $38,400. How do i file my 2011 taxes The $14,932 ordinary gain you did not report is treated as additional depreciation on the replacement property. How do i file my 2011 taxes If you sold the property in 2013, your holding period for figuring the applicable percentage of additional depreciation to report as ordinary income will have begun December 2, 1988, the day after you acquired the property. How do i file my 2011 taxes Example 2. How do i file my 2011 taxes John Adams received a $90,000 fire insurance payment for depreciable real property (office building) with an adjusted basis of $30,000. How do i file my 2011 taxes He uses the whole payment to buy property similar in use, spending $42,000 for depreciable real property and $48,000 for land. How do i file my 2011 taxes He chooses to postpone reporting the $60,000 gain realized on the involuntary conversion. How do i file my 2011 taxes Of this gain, $10,000 is ordinary income from additional depreciation but is not reported because of the limit for involuntary conversions of depreciable real property. How do i file my 2011 taxes The basis of the property bought is $30,000 ($90,000 − $60,000), allocated as follows. How do i file my 2011 taxes The $42,000 cost of depreciable real property minus $10,000 ordinary income not reported is $32,000. How do i file my 2011 taxes The $48,000 cost of other property (land) plus the $32,000 figured in (1) is $80,000. How do i file my 2011 taxes The $32,000 figured in (1) divided by the $80,000 figured in (2) is 0. How do i file my 2011 taxes 4. How do i file my 2011 taxes The basis of the depreciable real property is $12,000. How do i file my 2011 taxes This is the $30,000 total basis multiplied by the 0. How do i file my 2011 taxes 4 figured in (3). How do i file my 2011 taxes The basis of the other property (land) is $18,000. How do i file my 2011 taxes This is the $30,000 total basis minus the $12,000 figured in (4). How do i file my 2011 taxes The ordinary income that is not reported ($10,000) is carried over as additional depreciation to the depreciable real property that was bought and may be taxed as ordinary income on a later disposition. How do i file my 2011 taxes Multiple Properties If you dispose of depreciable property and other property in one transaction and realize a gain, you must allocate the amount realized between the two types of property in proportion to their respective fair market values to figure the part of your gain to be reported as ordinary income from depreciation. How do i file my 2011 taxes Different rules may apply to the allocation of the amount realized on the sale of a business that includes a group of assets. How do i file my 2011 taxes See chapter 2. How do i file my 2011 taxes In general, if a buyer and seller have adverse interests as to the allocation of the amount realized between the depreciable property and other property, any arm's length agreement between them will establish the allocation. How do i file my 2011 taxes In the absence of an agreement, the allocation should be made by taking into account the appropriate facts and circumstances. How do i file my 2011 taxes These include, but are not limited to, a comparison between the depreciable property and all the other property being disposed of in the transaction. How do i file my 2011 taxes The comparison should take into account all the following facts and circumstances. How do i file my 2011 taxes The original cost and reproduction cost of construction, erection, or production. How do i file my 2011 taxes The remaining economic useful life. How do i file my 2011 taxes The state of obsolescence. How do i file my 2011 taxes The anticipated expenditures required to maintain, renovate, or modernize the properties. How do i file my 2011 taxes Like-kind exchanges and involuntary conversions. How do i file my 2011 taxes   If you dispose of and acquire depreciable personal property and other property (other than depreciable real property) in a like-kind exchange or involuntary conversion, the amount realized is allocated in the following way. How do i file my 2011 taxes The amount allocated to the depreciable personal property disposed of is treated as consisting of, first, the fair market value of the depreciable personal property acquired and, second (to the extent of any remaining balance), the fair market value of the other property acquired. How do i file my 2011 taxes The amount allocated to the other property disposed of is treated as consisting of the fair market value of all property acquired that has not already been taken into account. How do i file my 2011 taxes   If you dispose of and acquire depreciable real property and other property in a like-kind exchange or involuntary conversion, the amount realized is allocated in the following way. How do i file my 2011 taxes The amount allocated to each of the three types of property (depreciable real property, depreciable personal property, or other property) disposed of is treated as consisting of, first, the fair market value of that type of property acquired and, second (to the extent of any remaining balance), any excess fair market value of the other types of property acquired. How do i file my 2011 taxes If the excess fair market value is more than the remaining balance of the amount realized and is from both of the other two types of property, you can apply the unallocated amount in any manner you choose. How do i file my 2011 taxes Example. How do i file my 2011 taxes A fire destroyed your property with a total fair market value of $50,000. How do i file my 2011 taxes It consisted of machinery worth $30,000 and nondepreciable property worth $20,000. How do i file my 2011 taxes You received an insurance payment of $40,000 and immediately used it with $10,000 of your own funds (for a total of $50,000) to buy machinery with a fair market value of $15,000 and nondepreciable property with a fair market value of $35,000. How do i file my 2011 taxes The adjusted basis of the destroyed machinery was $5,000 and your depreciation on it was $35,000. How do i file my 2011 taxes You choose to postpone reporting your gain from the involuntary conversion. How do i file my 2011 taxes You must report $9,000 as ordinary income from depreciation arising from this transaction, figured as follows. How do i file my 2011 taxes The $40,000 insurance payment must be allocated between the machinery and the other property destroyed in proportion to the fair market value of each. How do i file my 2011 taxes The amount allocated to the machinery is 30,000/50,000 × $40,000, or $24,000. How do i file my 2011 taxes The amount allocated to the other property is 20,000/50,000 × $40,000, or $16,000. How do i file my 2011 taxes Your gain on the involuntary conversion of the machinery is $24,000 minus $5,000 adjusted basis, or $19,000. How do i file my 2011 taxes The $24,000 allocated to the machinery disposed of is treated as consisting of the $15,000 fair market value of the replacement machinery bought and $9,000 of the fair market value of other property bought in the transaction. How do i file my 2011 taxes All $16,000 allocated to the other property disposed of is treated as consisting of the fair market value of the other property that was bought. How do i file my 2011 taxes Your potential ordinary income from depreciation is $19,000, the gain on the machinery, because it is less than the $35,000 depreciation. How do i file my 2011 taxes However, the amount you must report as ordinary income is limited to the $9,000 included in the amount realized for the machinery that represents the fair market value of property other than the depreciable property you bought. How do i file my 2011 taxes Prev  Up  Next   Home   More Online Publications