File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

Irs 2012 Tax Forms 1040 Instructions

1040x Amended Tax FormE File State ReturnHow To Refile Taxes For 2012Free State Taxes OnlineFree Tax Software 2011Amend Federal Tax Return 20122010 Tax Form 1040ezPrintable 1040ez FormsHow Do I File An Amended Federal Tax Return2013 Federal 1040ez FormFree Tax Filing 2014Taxact 2006 Free DownloadFile State Tax OnlyIrs Forms 1040ez InstructionsTax Amendment Form 2013Filing 1040x OnlineTax For 2012Irs Gov 1040x FormOnline Tax Forms 1040ezIrs 1040ez FormAmended Tax Return Form 2011Irs.gov 1040x FormAmend 2009 Tax Return Online140ezFile 2007 Taxes Online FreeFree Tax FilingFree File TaxesAmmending TaxesIrs Gov Amended ReturnsFree State Income Tax Efile1040 State Tax Form1040 Ez For 2012Www Handrblock ComFile 2011 Tax ReturnTaxaideFree TaxFiling Amended Tax Return OnlineNeed To Amend Tax ReturnFree Amended Tax Return OnlineEfile Free Federal And State

Irs 2012 Tax Forms 1040 Instructions

Irs 2012 tax forms 1040 instructions 3. Irs 2012 tax forms 1040 instructions   Investment Expenses Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Limits on DeductionsPassive activity. Irs 2012 tax forms 1040 instructions Other income (nonpassive income). Irs 2012 tax forms 1040 instructions Expenses. Irs 2012 tax forms 1040 instructions Additional information. Irs 2012 tax forms 1040 instructions Interest ExpensesInvestment Interest Limit on Deduction Bond Premium AmortizationSpecial rules to determine amounts payable on a bond. Irs 2012 tax forms 1040 instructions Basis. Irs 2012 tax forms 1040 instructions How To Figure Amortization Choosing To Amortize How To Report Amortization Expenses of Producing IncomeFees to buy or sell. Irs 2012 tax forms 1040 instructions Including mutual fund or REMIC expenses in income. Irs 2012 tax forms 1040 instructions Nondeductible ExpensesUsed as collateral. Irs 2012 tax forms 1040 instructions Short-sale expenses. Irs 2012 tax forms 1040 instructions Expenses for both tax-exempt and taxable income. Irs 2012 tax forms 1040 instructions State income taxes. Irs 2012 tax forms 1040 instructions Nondeductible amount. Irs 2012 tax forms 1040 instructions Basis adjustment. Irs 2012 tax forms 1040 instructions How To Report Investment Expenses When To Report Investment Expenses Topics - This chapter discusses: Limits on Deductions , Interest Expenses , Bond Premium Amortization , Expenses of Producing Income , Nondeductible Expenses , How To Report Investment Expenses , and When To Report Investment Expenses . Irs 2012 tax forms 1040 instructions Useful Items - You may want to see: Publication 535 Business Expenses 925 Passive Activity and At-Risk Rules 929 Tax Rules for Children and Dependents Form (and Instructions) Schedule A (Form 1040) Itemized Deductions 4952 Investment Interest Expense Deduction See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Irs 2012 tax forms 1040 instructions Limits on Deductions Your deductions for investment expenses may be limited by: The at-risk rules, The passive activity loss limits, The limit on investment interest, or The 2% limit on certain miscellaneous itemized deductions. Irs 2012 tax forms 1040 instructions The at-risk rules and passive activity rules are explained briefly in this section. Irs 2012 tax forms 1040 instructions The limit on investment interest is explained later in this chapter under Interest Expenses . Irs 2012 tax forms 1040 instructions The 2% limit is explained later in this chapter under Expenses of Producing Income . Irs 2012 tax forms 1040 instructions At-risk rules. Irs 2012 tax forms 1040 instructions   Special at-risk rules apply to most income-producing activities. Irs 2012 tax forms 1040 instructions These rules limit the amount of loss you can deduct to the amount you risk losing in the activity. Irs 2012 tax forms 1040 instructions Generally, this is the cash and the adjusted basis of property you contribute to the activity. Irs 2012 tax forms 1040 instructions It also includes money you borrow for use in the activity if you are personally liable for repayment or if you use property not used in the activity as security for the loan. Irs 2012 tax forms 1040 instructions For more information, see Publication 925. Irs 2012 tax forms 1040 instructions Passive activity losses and credits. Irs 2012 tax forms 1040 instructions   The amount of losses and tax credits you can claim from passive activities is limited. Irs 2012 tax forms 1040 instructions Generally, you are allowed to deduct passive activity losses only up to the amount of your passive activity income. Irs 2012 tax forms 1040 instructions Also, you can use credits from passive activities only against tax on the income from passive activities. Irs 2012 tax forms 1040 instructions There are exceptions for certain activities, such as rental real estate activities. Irs 2012 tax forms 1040 instructions Passive activity. Irs 2012 tax forms 1040 instructions   A passive activity generally is any activity involving the conduct of any trade or business in which you do not materially participate and any rental activity. Irs 2012 tax forms 1040 instructions However, if you are involved in renting real estate, the activity is not a passive activity if both of the following are true. Irs 2012 tax forms 1040 instructions More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate. Irs 2012 tax forms 1040 instructions You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate. Irs 2012 tax forms 1040 instructions  The term “trade or business” generally means any activity that involves the conduct of a trade or business, is conducted in anticipation of starting a trade or business, or involves certain research or experimental expenditures. Irs 2012 tax forms 1040 instructions However, it does not include rental activities or certain activities treated as incidental to holding property for investment. Irs 2012 tax forms 1040 instructions   You are considered to materially participate in an activity if you are involved on a regular, continuous, and substantial basis in the operations of the activity. Irs 2012 tax forms 1040 instructions Other income (nonpassive income). Irs 2012 tax forms 1040 instructions    Generally, you can use losses from passive activities only to offset income from passive activities. Irs 2012 tax forms 1040 instructions You cannot use passive activity losses to offset your other income, such as your wages or your portfolio income. Irs 2012 tax forms 1040 instructions Portfolio income includes gross income from interest, dividends, annuities, or royalties that is not derived in the ordinary course of a trade or business. Irs 2012 tax forms 1040 instructions It also includes gains or losses (not derived in the ordinary course of a trade or business) from the sale or trade of property (other than an interest in a passive activity) producing portfolio income or held for investment. Irs 2012 tax forms 1040 instructions This includes capital gain distributions from mutual funds (and other regulated investment companies) and real estate investment trusts. Irs 2012 tax forms 1040 instructions   You cannot use passive activity losses to offset Alaska Permanent Fund dividends. Irs 2012 tax forms 1040 instructions Expenses. Irs 2012 tax forms 1040 instructions   Do not include in the computation of your passive activity income or loss: Expenses (other than interest) that are clearly and directly allocable to your portfolio income, or Interest expense properly allocable to portfolio income. Irs 2012 tax forms 1040 instructions However, this interest and other expenses may be subject to other limits. Irs 2012 tax forms 1040 instructions These limits are explained in the rest of this chapter. Irs 2012 tax forms 1040 instructions Additional information. Irs 2012 tax forms 1040 instructions   For more information about determining and reporting income and losses from passive activities, see Publication 925. Irs 2012 tax forms 1040 instructions Interest Expenses This section discusses interest expenses you may be able to deduct as an investor. Irs 2012 tax forms 1040 instructions For information on business interest, see chapter 4 of Publication 535. Irs 2012 tax forms 1040 instructions You cannot deduct personal interest expenses other than qualified home mortgage interest, as explained in Publication 936, Home Mortgage Interest Deduction, and interest on certain student loans, as explained in Publication 970. Irs 2012 tax forms 1040 instructions Investment Interest If you borrow money to buy property you hold for investment, the interest you pay is investment interest. Irs 2012 tax forms 1040 instructions You can deduct investment interest subject to the limit discussed later. Irs 2012 tax forms 1040 instructions However, you cannot deduct interest you incurred to produce tax-exempt income. Irs 2012 tax forms 1040 instructions See Tax-exempt income under Nondeductible Expenses, later. Irs 2012 tax forms 1040 instructions You also cannot deduct interest expenses on straddles discussed under Interest expense and carrying charges on straddles , later. Irs 2012 tax forms 1040 instructions Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. Irs 2012 tax forms 1040 instructions Investment property. Irs 2012 tax forms 1040 instructions   Property held for investment includes property that produces interest, dividends, annuities, or royalties not derived in the ordinary course of a trade or business. Irs 2012 tax forms 1040 instructions It also includes property that produces gain or loss (not derived in the ordinary course of a trade or business) from the sale or trade of property producing these types of income or held for investment (other than an interest in a passive activity). Irs 2012 tax forms 1040 instructions Investment property also includes an interest in a trade or business activity in which you did not materially participate (other than a passive activity). Irs 2012 tax forms 1040 instructions Partners, shareholders, and beneficiaries. Irs 2012 tax forms 1040 instructions   To determine your investment interest, combine your share of investment interest from a partnership, S corporation, estate, or trust with your other investment interest. Irs 2012 tax forms 1040 instructions Allocation of Interest Expense If you borrow money for business or personal purposes as well as for investment, you must allocate the debt among those purposes. Irs 2012 tax forms 1040 instructions Only the interest expense on the part of the debt used for investment purposes is treated as investment interest. Irs 2012 tax forms 1040 instructions The allocation is not affected by the use of property that secures the debt. Irs 2012 tax forms 1040 instructions Example 1. Irs 2012 tax forms 1040 instructions You borrow $10,000 and use $8,000 to buy stock. Irs 2012 tax forms 1040 instructions You use the other $2,000 to buy items for your home. Irs 2012 tax forms 1040 instructions Since 80% of the debt is used for, and allocated to, investment purposes, 80% of the interest on that debt is investment interest. Irs 2012 tax forms 1040 instructions The other 20% is nondeductible personal interest. Irs 2012 tax forms 1040 instructions Debt proceeds received in cash. Irs 2012 tax forms 1040 instructions   If you receive debt proceeds in cash, the proceeds are generally not treated as investment property. Irs 2012 tax forms 1040 instructions Debt proceeds deposited in account. Irs 2012 tax forms 1040 instructions   If you deposit debt proceeds in an account, that deposit is treated as investment property, regardless of whether the account bears interest. Irs 2012 tax forms 1040 instructions But, if you withdraw the funds and use them for another purpose, you must reallocate the debt to determine the amount considered to be for investment purposes. Irs 2012 tax forms 1040 instructions Example 2. Irs 2012 tax forms 1040 instructions Assume in Example 1 that you borrowed the money on March 1 and immediately bought the stock for $8,000. Irs 2012 tax forms 1040 instructions You did not buy the household items until June 1. Irs 2012 tax forms 1040 instructions You had deposited the $2,000 in the bank. Irs 2012 tax forms 1040 instructions You had no other transactions on the bank account until June. Irs 2012 tax forms 1040 instructions You did not sell the stock, and you made no principal payments on the debt. Irs 2012 tax forms 1040 instructions You paid interest from another account. Irs 2012 tax forms 1040 instructions The $8,000 is treated as being used for an investment purpose. Irs 2012 tax forms 1040 instructions The $2,000 is treated as being used for an investment purpose for the 3-month period. Irs 2012 tax forms 1040 instructions Your total interest expense for 3 months on this debt is investment interest. Irs 2012 tax forms 1040 instructions In June, when you spend the $2,000 for household items, you must begin to allocate 80% of the debt and the interest expense to investment purposes and 20% to personal purposes. Irs 2012 tax forms 1040 instructions Amounts paid within 30 days. Irs 2012 tax forms 1040 instructions   If you receive loan proceeds in cash or if the loan proceeds are deposited in an account, you can treat any payment (up to the amount of the proceeds) made from any account you own, or from cash, as made from those proceeds. Irs 2012 tax forms 1040 instructions This applies to any payment made within 30 days before or after the proceeds are received in cash or deposited in your account. Irs 2012 tax forms 1040 instructions   If you received the loan proceeds in cash, you can treat the payment as made on the date you received the cash instead of the date you actually made the payment. Irs 2012 tax forms 1040 instructions Payments on debt may require new allocation. Irs 2012 tax forms 1040 instructions   As you repay a debt used for more than one purpose, you must reallocate the balance. Irs 2012 tax forms 1040 instructions You must first reduce the amount allocated to personal purposes by the repayment. Irs 2012 tax forms 1040 instructions You then reallocate the rest of the debt to find what part is for investment purposes. Irs 2012 tax forms 1040 instructions Example 3. Irs 2012 tax forms 1040 instructions If, in Example 2 , you repay $500 on November 1, the entire repayment is applied against the amount allocated to personal purposes. Irs 2012 tax forms 1040 instructions The debt balance is now allocated as $8,000 for investment purposes and $1,500 for personal purposes. Irs 2012 tax forms 1040 instructions Until the next reallocation is necessary, 84% ($8,000 ÷ $9,500) of the debt and the interest expense is allocated to investment. Irs 2012 tax forms 1040 instructions Pass-through entities. Irs 2012 tax forms 1040 instructions   If you use borrowed funds to buy an interest in a partnership or S corporation, then the interest on those funds must be allocated based on the assets of the entity. Irs 2012 tax forms 1040 instructions If you contribute to the capital of the entity, you can make the allocation using any reasonable method. Irs 2012 tax forms 1040 instructions Additional allocation rules. Irs 2012 tax forms 1040 instructions   For more information about allocating interest expense, see chapter 4 of Publication 535. Irs 2012 tax forms 1040 instructions When To Deduct Investment Interest If you use the cash method of accounting, you must pay the interest before you can deduct it. Irs 2012 tax forms 1040 instructions If you use an accrual method of accounting, you can deduct interest over the period it accrues, regardless of when you pay it. Irs 2012 tax forms 1040 instructions For an exception, see Unpaid expenses owed to related party under When To Report Investment Expenses, later in this chapter. Irs 2012 tax forms 1040 instructions Example. Irs 2012 tax forms 1040 instructions You borrowed $1,000 on August 26, 2013, payable in 90 days at 12% interest. Irs 2012 tax forms 1040 instructions On November 26, 2013, you paid this with a new note for $1,030, due on February 26, 2014. Irs 2012 tax forms 1040 instructions If you use the cash method of accounting, you cannot deduct any part of the $30 interest on your return for 2013 because you did not actually pay it. Irs 2012 tax forms 1040 instructions If you use an accrual method, you may be able to deduct a portion of the interest on the loans through December 31, 2013, on your return for 2013. Irs 2012 tax forms 1040 instructions Interest paid in advance. Irs 2012 tax forms 1040 instructions   Generally, if you pay interest in advance for a period that goes beyond the end of the tax year, you must spread the interest over the tax years to which it belongs under the OID rules discussed in chapter 1. Irs 2012 tax forms 1040 instructions You can deduct in each year only the interest for that year. Irs 2012 tax forms 1040 instructions Interest on margin accounts. Irs 2012 tax forms 1040 instructions   If you are a cash method taxpayer, you can deduct interest on margin accounts to buy taxable securities as investment interest in the year you paid it. Irs 2012 tax forms 1040 instructions You are considered to have paid interest on these accounts only when you actually pay the broker or when payment becomes available to the broker through your account. Irs 2012 tax forms 1040 instructions Payment may become available to the broker through your account when the broker collects dividends or interest for your account, or sells securities held for you or received from you. Irs 2012 tax forms 1040 instructions   You cannot deduct any interest on money borrowed for personal reasons. Irs 2012 tax forms 1040 instructions Limit on interest deduction for market discount bonds. Irs 2012 tax forms 1040 instructions   The amount you can deduct for interest expense you paid or accrued during the year to buy or carry a market discount bond may be limited. Irs 2012 tax forms 1040 instructions This limit does not apply if you accrue the market discount and include it in your income currently. Irs 2012 tax forms 1040 instructions   Under this limit, the interest is deductible only to the extent it is more than: The total interest and OID includible in gross income for the bond for the year, plus The market discount for the number of days you held the bond during the year. Irs 2012 tax forms 1040 instructions Figure the amount in (2) above using the rules for figuring accrued market discount in chapter 1 under Market Discount Bonds . Irs 2012 tax forms 1040 instructions Interest not deducted due to limit. Irs 2012 tax forms 1040 instructions   In the year you dispose of the bond, you can deduct any interest expense you were not allowed to deduct in earlier years because of the limit. Irs 2012 tax forms 1040 instructions Choosing to deduct disallowed interest expense before the year of disposition. Irs 2012 tax forms 1040 instructions   You can choose to deduct disallowed interest expense in any year before the year you dispose of the bond, up to your net interest income from the bond during the year. Irs 2012 tax forms 1040 instructions The rest of the disallowed interest expense remains deductible in the year you dispose of the bond. Irs 2012 tax forms 1040 instructions Net interest income. Irs 2012 tax forms 1040 instructions   This is the interest income (including OID) from the bond that you include in income for the year, minus the interest expense paid or accrued during the year to purchase or carry the bond. Irs 2012 tax forms 1040 instructions Limit on interest deduction for short-term obligations. Irs 2012 tax forms 1040 instructions   If the current income inclusion rules discussed in chapter 1 under Discount on Short-Term Obligations do not apply to you, the amount you can deduct for interest expense you paid or accrued during the year to buy or carry a short-term obligation is limited. Irs 2012 tax forms 1040 instructions   The interest is deductible only to the extent it is more than: The amount of acquisition discount or OID on the obligation for the tax year, plus The amount of any interest payable on the obligation for the year that is not included in income because of your accounting method (other than interest taken into account in determining the amount of acquisition discount or OID). Irs 2012 tax forms 1040 instructions The method of determining acquisition discount and OID for short-term obligations is discussed in chapter 1 under Discount on Short-Term Obligations . Irs 2012 tax forms 1040 instructions Interest not deducted due to limit. Irs 2012 tax forms 1040 instructions   In the year you dispose of the obligation, or, if you choose, in another year in which you have net interest income from the obligation, you can deduct any interest expense you were not allowed to deduct for an earlier year because of the limit. Irs 2012 tax forms 1040 instructions Follow the same rules provided in the earlier discussion under Limit on interest deduction for market discount bonds , earlier. Irs 2012 tax forms 1040 instructions Limit on Deduction Generally, your deduction for investment interest expense is limited to your net investment income. Irs 2012 tax forms 1040 instructions You can carry over the amount of investment interest you could not deduct because of this limit to the next tax year. Irs 2012 tax forms 1040 instructions The interest carried over is treated as investment interest paid or accrued in that next year. Irs 2012 tax forms 1040 instructions You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued. Irs 2012 tax forms 1040 instructions Net Investment Income Determine the amount of your net investment income by subtracting your investment expenses (other than interest expense) from your investment income. Irs 2012 tax forms 1040 instructions Investment income. Irs 2012 tax forms 1040 instructions   This generally includes your gross income from property held for investment (such as interest, dividends, annuities, and royalties). Irs 2012 tax forms 1040 instructions Investment income does not include Alaska Permanent Fund dividends. Irs 2012 tax forms 1040 instructions It also does not include qualified dividends or net capital gain unless you choose to include them. Irs 2012 tax forms 1040 instructions Choosing to include qualified dividends. Irs 2012 tax forms 1040 instructions   Investment income generally does not include qualified dividends, discussed in chapter 1. Irs 2012 tax forms 1040 instructions However, you can choose to include all or part of your qualified dividends in investment income. Irs 2012 tax forms 1040 instructions   You make this choice by completing Form 4952, line 4g, according to its instructions. Irs 2012 tax forms 1040 instructions   If you choose to include any of your qualified dividends in investment income, you must reduce your qualified dividends that are eligible for the lower capital gains tax rates by the same amount. Irs 2012 tax forms 1040 instructions Choosing to include net capital gain. Irs 2012 tax forms 1040 instructions    Investment income generally does not include net capital gain from disposing of investment property (including capital gain distributions from mutual funds). Irs 2012 tax forms 1040 instructions However, you can choose to include all or part of your net capital gain in investment income. Irs 2012 tax forms 1040 instructions   You make this choice by completing Form 4952, line 4g, according to its instructions. Irs 2012 tax forms 1040 instructions   If you choose to include any of your net capital gain in investment income, you must reduce your net capital gain that is eligible for the lower capital gains tax rates by the same amount. Irs 2012 tax forms 1040 instructions   For more information about the capital gains rates, see Capital Gain Tax Rates in chapter 4. Irs 2012 tax forms 1040 instructions    Before making either choice, consider the overall effect on your tax liability. Irs 2012 tax forms 1040 instructions Compare your tax if you make one or both of these choices with your tax if you do not. Irs 2012 tax forms 1040 instructions Investment income of child reported on parent's return. Irs 2012 tax forms 1040 instructions   Investment income includes the part of your child's interest and dividend income you choose to report on your return. Irs 2012 tax forms 1040 instructions If the child does not have qualified dividends, Alaska Permanent Fund dividends, or capital gain distributions, this is the amount on line 6 of Form 8814. Irs 2012 tax forms 1040 instructions Include it on line 4a of Form 4952. Irs 2012 tax forms 1040 instructions Example. Irs 2012 tax forms 1040 instructions Your 8-year-old son has interest income of $2,200, which you choose to report on your own return. Irs 2012 tax forms 1040 instructions You enter $2,200 on Form 8814, lines 1a and 4, and $200 on lines 6 and 12 and complete Part II. Irs 2012 tax forms 1040 instructions Also enter $200 on Form 1040, line 21. Irs 2012 tax forms 1040 instructions Your investment income includes this $200. Irs 2012 tax forms 1040 instructions Child's qualified dividends. Irs 2012 tax forms 1040 instructions   If part of the amount you report is your child's qualified dividends, that part (which is reported on Form 1040, line 9b) generally does not count as investment income. Irs 2012 tax forms 1040 instructions However, you can choose to include all or part of it in investment income, as explained under Choosing to include qualified dividends , earlier. Irs 2012 tax forms 1040 instructions   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured next under Child's Alaska Permanent Fund dividends). Irs 2012 tax forms 1040 instructions Child's Alaska Permanent Fund dividends. Irs 2012 tax forms 1040 instructions   If part of the amount you report is your child's Alaska Permanent Fund dividends, that part does not count as investment income. Irs 2012 tax forms 1040 instructions To figure the amount of your child's income that you can consider your investment income, start with the amount on Form 8814, line 6. Irs 2012 tax forms 1040 instructions Multiply that amount by a percentage that is equal to the Alaska Permanent Fund dividends divided by the total amount on Form 8814, line 4. Irs 2012 tax forms 1040 instructions Subtract the result from the amount on Form 8814, line 12. Irs 2012 tax forms 1040 instructions Example. Irs 2012 tax forms 1040 instructions Your 10-year-old child has taxable interest income of $4,000 and Alaska Permanent Fund dividends of $2,000. Irs 2012 tax forms 1040 instructions You choose to report this on your return. Irs 2012 tax forms 1040 instructions You enter $4,000 on Form 8814, line 1a, $2,000 on line 2a, and $6,000 on line 4. Irs 2012 tax forms 1040 instructions You then enter $4,000 on Form 8814, lines 6 and 12, and Form 1040, line 21. Irs 2012 tax forms 1040 instructions You figure the amount of your child's income that you can consider your investment income as follows: $4,000 − ($4,000 × ($2,000 ÷ $6,000)) = $2,667 You include the result, $2,667, on Form 4952, line 4a. Irs 2012 tax forms 1040 instructions Child's capital gain distributions. Irs 2012 tax forms 1040 instructions   If part of the amount you report is your child's capital gain distributions, that part (which is reported on Schedule D (Form 1040), line 13, or Form 1040, line 13) generally does not count as investment income. Irs 2012 tax forms 1040 instructions However, you can choose to include all or part of it in investment income, as explained in Choosing to include net capital gain , earlier. Irs 2012 tax forms 1040 instructions   Your investment income also includes the amount on Form 8814, line 12 (or, if applicable, the reduced amount figured under Child's Alaska Permanent Fund dividends , earlier). Irs 2012 tax forms 1040 instructions Investment expenses. Irs 2012 tax forms 1040 instructions   Investment expenses are your allowed deductions (other than interest expense) directly connected with the production of investment income. Irs 2012 tax forms 1040 instructions Investment expenses that are included as a miscellaneous itemized deduction on Schedule A (Form 1040) are allowable deductions after applying the 2% limit that applies to miscellaneous itemized deductions. Irs 2012 tax forms 1040 instructions Use the smaller of: The investment expenses included on Schedule A (Form 1040), line 23, or The amount on Schedule A (Form 1040), line 27. Irs 2012 tax forms 1040 instructions See Expenses of Producing Income , later, for a discussion of the 2% limit. Irs 2012 tax forms 1040 instructions Losses from passive activities. Irs 2012 tax forms 1040 instructions   Income or expenses that you used in computing income or loss from a passive activity are not included in determining your investment income or investment expenses (including investment interest expense). Irs 2012 tax forms 1040 instructions See Publication 925 for information about passive activities. Irs 2012 tax forms 1040 instructions Example. Irs 2012 tax forms 1040 instructions Ted is a partner in a partnership that operates a business. Irs 2012 tax forms 1040 instructions However, he does not materially participate in the partnership's business. Irs 2012 tax forms 1040 instructions Ted's interest in the partnership is considered a passive activity. Irs 2012 tax forms 1040 instructions Ted's investment income from interest and dividends (other than qualified dividends) is $10,000. Irs 2012 tax forms 1040 instructions His investment expenses (other than interest) are $3,200 after taking into account the 2% limit on miscellaneous itemized deductions. Irs 2012 tax forms 1040 instructions His investment interest expense is $8,000. Irs 2012 tax forms 1040 instructions Ted also has income from the partnership of $2,000. Irs 2012 tax forms 1040 instructions Ted figures his net investment income and the limit on his investment interest expense deduction in the following way: Total investment income $10,000 Minus: Investment expenses (other than interest) 3,200 Net investment income $6,800 Deductible investment interest expense for the year $6,800 The $2,000 of income from the passive activity is not used in determining Ted's net investment income. Irs 2012 tax forms 1040 instructions His investment interest deduction for the year is limited to $6,800, the amount of his net investment income. Irs 2012 tax forms 1040 instructions Form 4952 Use Form 4952 to figure your deduction for investment interest. Irs 2012 tax forms 1040 instructions See Form 4952 for more information. Irs 2012 tax forms 1040 instructions Exception to use of Form 4952. Irs 2012 tax forms 1040 instructions   You do not have to complete Form 4952 or attach it to your return if you meet all of the following tests. Irs 2012 tax forms 1040 instructions Your investment interest expense is not more than your investment income from interest and ordinary dividends minus any qualified dividends. Irs 2012 tax forms 1040 instructions You do not have any other deductible investment expenses. Irs 2012 tax forms 1040 instructions You have no carryover of investment interest expense from 2012. Irs 2012 tax forms 1040 instructions   If you meet all of these tests, you can deduct all of your investment interest. Irs 2012 tax forms 1040 instructions    Bond Premium Amortization If you pay a premium to buy a bond, the premium is part of your basis in the bond. Irs 2012 tax forms 1040 instructions If the bond yields taxable interest, you can choose to amortize the premium. Irs 2012 tax forms 1040 instructions This generally means that each year, over the life of the bond, you use a part of the premium to reduce the amount of interest includible in your income. Irs 2012 tax forms 1040 instructions If you make this choice, you must reduce your basis in the bond by the amortization for the year. Irs 2012 tax forms 1040 instructions If the bond yields tax-exempt interest, you must amortize the premium. Irs 2012 tax forms 1040 instructions This amortized amount is not deductible in determining taxable income. Irs 2012 tax forms 1040 instructions However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. Irs 2012 tax forms 1040 instructions Bond premium. Irs 2012 tax forms 1040 instructions   Bond premium is the amount by which your basis in the bond right after you get it is more than the total of all amounts payable on the bond after you get it (other than payments of qualified stated interest). Irs 2012 tax forms 1040 instructions For example, a bond with a maturity value of $1,000 generally would have a $50 premium if you buy it for $1,050. Irs 2012 tax forms 1040 instructions Special rules to determine amounts payable on a bond. Irs 2012 tax forms 1040 instructions   For special rules that apply to determine the amounts payable on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. Irs 2012 tax forms 1040 instructions 171-3. Irs 2012 tax forms 1040 instructions Basis. Irs 2012 tax forms 1040 instructions   In general, your basis for figuring bond premium amortization is the same as your basis for figuring any loss on the sale of the bond. Irs 2012 tax forms 1040 instructions However, you may need to use a different basis for: Convertible bonds, Bonds you got in a trade, and Bonds whose basis has to be determined using the basis of the person who transferred the bond to you. Irs 2012 tax forms 1040 instructions See Regulations section 1. Irs 2012 tax forms 1040 instructions 171-1(e). Irs 2012 tax forms 1040 instructions Dealers. Irs 2012 tax forms 1040 instructions   A dealer in taxable bonds (or anyone who holds them mainly for sale to customers in the ordinary course of a trade or business or who would properly include bonds in inventory at the close of the tax year) cannot claim a deduction for amortizable bond premium. Irs 2012 tax forms 1040 instructions   See section 75 of the Internal Revenue Code for the treatment of bond premium by a dealer in tax-exempt bonds. Irs 2012 tax forms 1040 instructions How To Figure Amortization For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. Irs 2012 tax forms 1040 instructions Constant yield method. Irs 2012 tax forms 1040 instructions   Figure the bond premium amortization for each accrual period as follows. Irs 2012 tax forms 1040 instructions Step 1: Determine your yield. Irs 2012 tax forms 1040 instructions   Your yield is the discount rate that, when used in figuring the present value of all remaining payments to be made on the bond (including payments of qualified stated interest), produces an amount equal to your basis in the bond. Irs 2012 tax forms 1040 instructions Figure the yield as of the date you got the bond. Irs 2012 tax forms 1040 instructions It must be constant over the term of the bond and must be figured to at least two decimal places when expressed as a percentage. Irs 2012 tax forms 1040 instructions   If you do not know the yield, consult your broker or tax advisor. Irs 2012 tax forms 1040 instructions Databases available to them are likely to show the yield at the date of purchase. Irs 2012 tax forms 1040 instructions Step 2: Determine the accrual periods. Irs 2012 tax forms 1040 instructions   You can choose the accrual periods to use. Irs 2012 tax forms 1040 instructions They may be of any length and may vary in length over the term of the bond, but each accrual period can be no longer than 1 year and each scheduled payment of principal or interest must occur either on the first or the final day of an accrual period. Irs 2012 tax forms 1040 instructions The computation is simplest if accrual periods are the same as the intervals between interest payment dates. Irs 2012 tax forms 1040 instructions Step 3: Determine the bond premium for the accrual period. Irs 2012 tax forms 1040 instructions   To do this, multiply your adjusted acquisition price at the beginning of the accrual period by your yield. Irs 2012 tax forms 1040 instructions Then subtract the result from the qualified stated interest for the period. Irs 2012 tax forms 1040 instructions   Your adjusted acquisition price at the beginning of the first accrual period is the same as your basis. Irs 2012 tax forms 1040 instructions After that, it is your basis decreased by the amount of bond premium amortized for earlier periods and the amount of any payment previously made on the bond other than a payment of qualified stated interest. Irs 2012 tax forms 1040 instructions Example. Irs 2012 tax forms 1040 instructions On February 1, 2012, you bought a taxable bond for $110,000. Irs 2012 tax forms 1040 instructions The bond has a stated principal amount of $100,000, payable at maturity on February 1, 2019, making your premium $10,000 ($110,000 − $100,000). Irs 2012 tax forms 1040 instructions The bond pays qualified stated interest of $10,000 on February 1 of each year. Irs 2012 tax forms 1040 instructions Your yield is 8. Irs 2012 tax forms 1040 instructions 07439% compounded annually. Irs 2012 tax forms 1040 instructions You choose to use annual accrual periods ending on February 1 of each year. Irs 2012 tax forms 1040 instructions To find your bond premium amortization for the accrual period ending on February 1, 2013, you multiply the adjusted acquisition price at the beginning of the period ($110,000) by your yield. Irs 2012 tax forms 1040 instructions When you subtract the result ($8,881. Irs 2012 tax forms 1040 instructions 83) from the qualified stated interest for the period ($10,000), you find that your bond premium amortization for the period is $1,118. Irs 2012 tax forms 1040 instructions 17. Irs 2012 tax forms 1040 instructions Special rules to figure amortization. Irs 2012 tax forms 1040 instructions   For special rules to figure the bond premium amortization on a variable rate bond, an inflation-indexed debt instrument, a bond that provides for certain alternative payment schedules (for example, a bond callable prior to the stated maturity date of the bond), or a bond that provides for remote or incidental contingencies, see Regulations section 1. Irs 2012 tax forms 1040 instructions 171-3. Irs 2012 tax forms 1040 instructions Bonds Issued Before September 28, 1985 For these bonds, you can amortize bond premium using any reasonable method. Irs 2012 tax forms 1040 instructions Reasonable methods include: The straight-line method, and The Revenue Ruling 82-10 method. Irs 2012 tax forms 1040 instructions Straight-line method. Irs 2012 tax forms 1040 instructions   Under this method, the amount of your bond premium amortization is the same each month. Irs 2012 tax forms 1040 instructions Divide the number of months you held the bond during the year by the number of months from the beginning of the tax year (or, if later, the date of acquisition) to the date of maturity or earlier call date. Irs 2012 tax forms 1040 instructions Then multiply the result by the bond premium (reduced by any bond premium amortization claimed in earlier years). Irs 2012 tax forms 1040 instructions This gives you your bond premium amortization for the year. Irs 2012 tax forms 1040 instructions Revenue Ruling 82-10 method. Irs 2012 tax forms 1040 instructions   Under this method, the amount of your bond premium amortization increases each month over the life of the bond. Irs 2012 tax forms 1040 instructions This method is explained in Revenue Ruling 82-10, 1982-1 C. Irs 2012 tax forms 1040 instructions B. Irs 2012 tax forms 1040 instructions 46. Irs 2012 tax forms 1040 instructions Choosing To Amortize You choose to amortize the premium on taxable bonds by reporting the amortization for the year on your income tax return for the first tax year you want the choice to apply. Irs 2012 tax forms 1040 instructions You should attach a statement to your return that you are making this choice under section 171. Irs 2012 tax forms 1040 instructions See How To Report Amortization, next. Irs 2012 tax forms 1040 instructions This choice is binding for the year you make it and for later tax years. Irs 2012 tax forms 1040 instructions It applies to all taxable bonds you own in the year you make the choice and also to those you acquire in later years. Irs 2012 tax forms 1040 instructions You can change your decision to amortize bond premium only with the written approval of the IRS. Irs 2012 tax forms 1040 instructions To request approval, use Form 3115. Irs 2012 tax forms 1040 instructions For more information on requesting approval, see section 5 of the Appendix to Revenue Procedure 2011-14 in Internal Revenue Bulletin 2011-4. Irs 2012 tax forms 1040 instructions You can find Revenue Procedure 2011-14 at www. Irs 2012 tax forms 1040 instructions irs. Irs 2012 tax forms 1040 instructions gov/irb/2011-04_IRB/ar08. Irs 2012 tax forms 1040 instructions html. Irs 2012 tax forms 1040 instructions How To Report Amortization Subtract the bond premium amortization from your interest income from these bonds. Irs 2012 tax forms 1040 instructions Report the bond's interest on Schedule B (Form 1040A or 1040), line 1. Irs 2012 tax forms 1040 instructions Under your last entry on line 1, put a subtotal of all interest listed on line 1. Irs 2012 tax forms 1040 instructions Below this subtotal, print “ABP Adjustment,” and the total interest you received. Irs 2012 tax forms 1040 instructions Subtract this amount from the subtotal, and enter the result on line 2. Irs 2012 tax forms 1040 instructions Bond premium amortization more than interest. Irs 2012 tax forms 1040 instructions   If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 28. Irs 2012 tax forms 1040 instructions    But your deduction is limited to the amount by which your total interest inclusions on the bond in prior accrual periods is more than your total bond premium deductions on the bond in prior periods. Irs 2012 tax forms 1040 instructions Any amount you cannot deduct because of this limit can be carried forward to the next accrual period. Irs 2012 tax forms 1040 instructions Pre-1998 election to amortize bond premium. Irs 2012 tax forms 1040 instructions   Generally, if you first elected to amortize bond premium before 1998, the above treatment of the premium does not apply to bonds you acquired before 1988. Irs 2012 tax forms 1040 instructions Bonds acquired before October 23, 1986. Irs 2012 tax forms 1040 instructions   The amortization of the premium on these bonds is a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit. Irs 2012 tax forms 1040 instructions Bonds acquired after October 22, 1986, but before 1988. Irs 2012 tax forms 1040 instructions    The amortization of the premium on these bonds is investment interest expense subject to the investment interest limit, unless you choose to treat it as an offset to interest income on the bond. Irs 2012 tax forms 1040 instructions Expenses of Producing Income You deduct investment expenses (other than interest expenses) as miscellaneous itemized deductions on Schedule A (Form 1040). Irs 2012 tax forms 1040 instructions To be deductible, these expenses must be ordinary and necessary expenses paid or incurred: To produce or collect income, or To manage property held for producing income. Irs 2012 tax forms 1040 instructions The expenses must be directly related to the income or income-producing property, and the income must be taxable to you. Irs 2012 tax forms 1040 instructions The deduction for most income-producing expenses is subject to a 2% limit that also applies to certain other miscellaneous itemized deductions. Irs 2012 tax forms 1040 instructions The amount deductible is limited to the total of these miscellaneous deductions that is more than 2% of your adjusted gross income. Irs 2012 tax forms 1040 instructions For information on how to report expenses of producing income, see How To Report Investment Expenses , later. Irs 2012 tax forms 1040 instructions Attorney or accounting fees. Irs 2012 tax forms 1040 instructions   You can deduct attorney or accounting fees that are necessary to produce or collect taxable income. Irs 2012 tax forms 1040 instructions However, in some cases, attorney or accounting fees are part of the basis of property. Irs 2012 tax forms 1040 instructions See Basis of Investment Property in chapter 4. Irs 2012 tax forms 1040 instructions Automatic investment service and dividend reinvestment plans. Irs 2012 tax forms 1040 instructions   A bank may offer its checking account customers an automatic investment service so that, for a charge, each customer can choose to invest a part of the checking account each month in common stock. Irs 2012 tax forms 1040 instructions Or a bank that is a dividend disbursing agent for a number of publicly-owned corporations may set up an automatic dividend reinvestment service. Irs 2012 tax forms 1040 instructions Through that service, cash dividends are reinvested in more shares of stock after the bank deducts a service charge. Irs 2012 tax forms 1040 instructions   A corporation in which you own stock also may have a dividend reinvestment plan. Irs 2012 tax forms 1040 instructions This plan lets you choose to use your dividends to buy more shares of stock in the corporation instead of receiving the dividends in cash. Irs 2012 tax forms 1040 instructions   You can deduct the monthly service charge you pay to a bank to participate in an automatic investment service. Irs 2012 tax forms 1040 instructions If you participate in a dividend reinvestment plan, you can deduct any service charge subtracted from your cash dividends before the dividends are used to buy more shares of stock. Irs 2012 tax forms 1040 instructions Deduct the charges in the year you pay them. Irs 2012 tax forms 1040 instructions Clerical help and office rent. Irs 2012 tax forms 1040 instructions   You can deduct office expenses, such as rent and clerical help, you incurred in connection with your investments and collecting the taxable income on your investments. Irs 2012 tax forms 1040 instructions Cost of replacing missing securities. Irs 2012 tax forms 1040 instructions   To replace your taxable securities that are mislaid, lost, stolen, or destroyed, you may have to post an indemnity bond. Irs 2012 tax forms 1040 instructions You can deduct the premium you pay to buy the indemnity bond and the related incidental expenses. Irs 2012 tax forms 1040 instructions   You may, however, get a refund of part of the bond premium if the missing securities are recovered within a specified time. Irs 2012 tax forms 1040 instructions Under certain types of insurance policies, you can recover some of the expenses. Irs 2012 tax forms 1040 instructions   If you receive the refund in the tax year you pay the amounts, you can deduct only the difference between the expenses paid and the amount refunded. Irs 2012 tax forms 1040 instructions If the refund is made in a later tax year, you must include the refund in income in the year you received it, but only to the extent that the expenses decreased your tax in the year you deducted them. Irs 2012 tax forms 1040 instructions Fees to collect income. Irs 2012 tax forms 1040 instructions   You can deduct fees you pay to a broker, bank, trustee, or similar agent to collect investment income, such as your taxable bond or mortgage interest, or your dividends on shares of stock. Irs 2012 tax forms 1040 instructions Fees to buy or sell. Irs 2012 tax forms 1040 instructions   You cannot deduct a fee you pay to a broker to acquire investment property, such as stocks or bonds. Irs 2012 tax forms 1040 instructions You must add the fee to the cost of the property. Irs 2012 tax forms 1040 instructions See Basis of Investment Property in chapter 4. Irs 2012 tax forms 1040 instructions    You cannot deduct any broker's fees, commissions, or option premiums you pay (or that were netted out) in connection with the sale of investment property. Irs 2012 tax forms 1040 instructions They can be used only to figure gain or loss from the sale. Irs 2012 tax forms 1040 instructions See Reporting Capital Gains and Losses , in chapter 4, for more information about the treatment of these sale expenses. Irs 2012 tax forms 1040 instructions Investment counsel and advice. Irs 2012 tax forms 1040 instructions   You can deduct fees you pay for counsel and advice about investments that produce taxable income. Irs 2012 tax forms 1040 instructions This includes amounts you pay for investment advisory services. Irs 2012 tax forms 1040 instructions Safe deposit box rent. Irs 2012 tax forms 1040 instructions   You can deduct rent you pay for a safe deposit box if you use the box to store taxable income-producing stocks, bonds, or other investment-related papers and documents. Irs 2012 tax forms 1040 instructions If you also use the box to store tax-exempt securities or personal items, you can deduct only part of the rent. Irs 2012 tax forms 1040 instructions See Tax-exempt income under Nondeductible Expenses, later, to figure what part you can deduct. Irs 2012 tax forms 1040 instructions State and local transfer taxes. Irs 2012 tax forms 1040 instructions   You cannot deduct the state and local transfer taxes you pay when you buy or sell securities. Irs 2012 tax forms 1040 instructions If you pay these transfer taxes when you buy securities, you must treat them as part of the cost of the property. Irs 2012 tax forms 1040 instructions If you pay these transfer taxes when you sell securities, you must treat them as a reduction in the amount realized. Irs 2012 tax forms 1040 instructions Trustee's commissions for revocable trust. Irs 2012 tax forms 1040 instructions   If you set up a revocable trust and have its income distributed to you, you can deduct the commission you pay the trustee for managing the trust to the extent it is to produce or collect taxable income or to manage property. Irs 2012 tax forms 1040 instructions However, you cannot deduct any part of the commission used for producing or collecting tax-exempt income or for managing property that produces tax-exempt income. Irs 2012 tax forms 1040 instructions   If you are a cash-basis taxpayer and pay the commissions for several years in advance, you must deduct a part of the commission each year. Irs 2012 tax forms 1040 instructions You cannot deduct the entire amount in the year you pay it. Irs 2012 tax forms 1040 instructions Investment expenses from pass-through entities. Irs 2012 tax forms 1040 instructions   If you hold an interest in a partnership, S corporation, real estate mortgage investment conduit (REMIC), or a nonpublicly offered mutual fund, you can deduct your share of that entity's investment expenses. Irs 2012 tax forms 1040 instructions A partnership or S corporation will show your share of these expenses on your Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120S). Irs 2012 tax forms 1040 instructions A nonpublicly offered mutual fund will indicate your share of these expenses in box 5 of Form 1099-DIV (or substitute statement). Irs 2012 tax forms 1040 instructions Publicly-offered mutual funds are discussed later. Irs 2012 tax forms 1040 instructions   If you hold an interest in a REMIC, any expenses relating to your residual interest investment will be shown on Schedule Q (Form 1066), line 3b. Irs 2012 tax forms 1040 instructions Any expenses relating to your regular interest investment will appear in box 5 of Form 1099-INT (or substitute statement) or box 9 of Form 1099-OID (or substitute statement). Irs 2012 tax forms 1040 instructions   Report your share of these investment expenses on Schedule A (Form 1040), subject to the 2% limit, in the same manner as your other investment expenses. Irs 2012 tax forms 1040 instructions Including mutual fund or REMIC expenses in income. Irs 2012 tax forms 1040 instructions   Your share of the investment expenses of a REMIC or a nonpublicly offered mutual fund, as described above, are considered to be indirect deductions through that pass-through entity. Irs 2012 tax forms 1040 instructions You must include in your gross income an amount equal to the expenses allocated to you, whether or not you are able to claim a deduction for those expenses. Irs 2012 tax forms 1040 instructions If you are a shareholder in a nonpublicly offered mutual fund, you must include on your return the full amount of ordinary dividends or other distributions of stock, as shown in box 1a of Form 1099-DIV (or substitute statement). Irs 2012 tax forms 1040 instructions If you are a residual interest holder in a REMIC, you must report as ordinary income on Schedule E (Form 1040) the total amounts shown on Schedule Q (Form 1066), lines 1b and 3b. Irs 2012 tax forms 1040 instructions If you are a REMIC regular interest holder, you must include the amount of any expense allocation you received on Form 1040, line 8a. Irs 2012 tax forms 1040 instructions Publicly-offered mutual funds. Irs 2012 tax forms 1040 instructions   Most mutual funds are publicly offered. Irs 2012 tax forms 1040 instructions These mutual funds, generally, are traded on an established securities exchange. Irs 2012 tax forms 1040 instructions These funds do not pass investment expenses through to you. Irs 2012 tax forms 1040 instructions Instead, the dividend income they report to you in box 1a of Form 1099-DIV (or substitute statement) is already reduced by your share of investment expenses. Irs 2012 tax forms 1040 instructions As a result, you cannot deduct the expenses on your return. Irs 2012 tax forms 1040 instructions   Include the amount from box 1a of Form 1099-DIV (or substitute statement) in your income. Irs 2012 tax forms 1040 instructions    A publicly offered mutual fund is one that: Is continuously offered pursuant to a public offering, Is regularly traded on an established securities market, and Is held by or for no fewer than 500 persons at any time during the year. Irs 2012 tax forms 1040 instructions Contact your mutual fund if you are not sure whether it is publicly offered. Irs 2012 tax forms 1040 instructions Nondeductible Expenses Some expenses that you incur as an investor are not deductible. Irs 2012 tax forms 1040 instructions Stockholders' meetings. Irs 2012 tax forms 1040 instructions   You cannot deduct transportation and other expenses you pay to attend stockholders' meetings of companies in which you have no interest other than owning stock. Irs 2012 tax forms 1040 instructions This is true even if your purpose in attending is to get information that would be useful in making further investments. Irs 2012 tax forms 1040 instructions Investment-related seminar. Irs 2012 tax forms 1040 instructions   You cannot deduct expenses for attending a convention, seminar, or similar meeting for investment purposes. Irs 2012 tax forms 1040 instructions Single-premium life insurance, endowment, and annuity contracts. Irs 2012 tax forms 1040 instructions   You cannot deduct interest on money you borrow to buy or carry a single-premium life insurance, endowment, or annuity contract. Irs 2012 tax forms 1040 instructions Used as collateral. Irs 2012 tax forms 1040 instructions   If you use a single premium annuity contract as collateral to obtain or continue a mortgage loan, you cannot deduct any interest on the loan that is collateralized by the annuity contract. Irs 2012 tax forms 1040 instructions Figure the amount of interest expense disallowed by multiplying the current interest rate on the mortgage loan by the lesser of the amount of the annuity contract used as collateral or the amount of the loan. Irs 2012 tax forms 1040 instructions Borrowing on insurance. Irs 2012 tax forms 1040 instructions   Generally, you cannot deduct interest on money you borrow to buy or carry a life insurance, endowment, or annuity contract if you plan to systematically borrow part or all of the increases in the cash value of the contract. Irs 2012 tax forms 1040 instructions This rule applies to the interest on the total amount borrowed to buy or carry the contract, not just the interest on the borrowed increases in the cash value. Irs 2012 tax forms 1040 instructions Tax-exempt income. Irs 2012 tax forms 1040 instructions   You cannot deduct expenses you incur to produce tax-exempt income. Irs 2012 tax forms 1040 instructions Nor can you deduct interest on money you borrow to buy tax-exempt securities or shares in a mutual fund or other regulated investment company that distributes only exempt-interest dividends. Irs 2012 tax forms 1040 instructions Short-sale expenses. Irs 2012 tax forms 1040 instructions   The rule disallowing a deduction for interest expenses on tax-exempt securities applies to amounts you pay in connection with personal property used in a short sale or amounts paid by others for the use of any collateral in connection with the short sale. Irs 2012 tax forms 1040 instructions However, it does not apply to the expenses you incur if you deposit cash as collateral for the property used in the short sale and the cash does not earn a material return during the period of the sale. Irs 2012 tax forms 1040 instructions Short sales are discussed in Short Sales in chapter 4. Irs 2012 tax forms 1040 instructions Expenses for both tax-exempt and taxable income. Irs 2012 tax forms 1040 instructions   You may have expenses that are for both tax-exempt and taxable income. Irs 2012 tax forms 1040 instructions If you cannot specifically identify what part of the expenses is for each type of income, you can divide the expenses, using reasonable proportions based on facts and circumstances. Irs 2012 tax forms 1040 instructions You must attach a statement to your return showing how you divided the expenses and stating that each deduction claimed is not based on tax-exempt income. Irs 2012 tax forms 1040 instructions   One accepted method for dividing expenses is to do it in the same proportion that each type of income is to the total income. Irs 2012 tax forms 1040 instructions If the expenses relate in part to capital gains and losses, include the gains, but not the losses, in figuring this proportion. Irs 2012 tax forms 1040 instructions To find the part of the expenses that is for the tax-exempt income, divide your tax-exempt income by the total income and multiply your expenses by the result. Irs 2012 tax forms 1040 instructions Example. Irs 2012 tax forms 1040 instructions You received $6,000 interest; $4,800 was tax-exempt and $1,200 was taxable. Irs 2012 tax forms 1040 instructions In earning this income, you had $500 of expenses. Irs 2012 tax forms 1040 instructions You cannot specifically identify the amount of each expense item that is for each income item, so you must divide your expenses. Irs 2012 tax forms 1040 instructions 80% ($4,800 tax-exempt interest divided by $6,000 total interest) of your expenses is for the tax-exempt income. Irs 2012 tax forms 1040 instructions You cannot deduct $400 (80% of $500) of the expenses. Irs 2012 tax forms 1040 instructions You can deduct $100 (the rest of the expenses) because they are for the taxable interest. Irs 2012 tax forms 1040 instructions State income taxes. Irs 2012 tax forms 1040 instructions   If you itemize your deductions, you can deduct, as taxes, state income taxes on interest income that is exempt from federal income tax. Irs 2012 tax forms 1040 instructions But you cannot deduct, as either taxes or investment expenses, state income taxes on other exempt income. Irs 2012 tax forms 1040 instructions Interest expense and carrying charges on straddles. Irs 2012 tax forms 1040 instructions   You cannot deduct interest and carrying charges allocable to personal property that is part of a straddle. Irs 2012 tax forms 1040 instructions The nondeductible interest and carrying charges are added to the basis of the straddle property. Irs 2012 tax forms 1040 instructions However, this treatment does not apply if: All the offsetting positions making up the straddle either consist of one or more qualified covered call options and the optioned stock, or consist of section 1256 contracts (and the straddle is not part of a larger straddle); or The straddle is a hedging transaction. Irs 2012 tax forms 1040 instructions  For information about straddles, including definitions of the terms used in this discussion, see Straddles in chapter 4. Irs 2012 tax forms 1040 instructions   Interest includes any amount you pay or incur in connection with personal property used in a short sale. Irs 2012 tax forms 1040 instructions However, you must first apply the rules discussed in Payments in lieu of dividends under Short Sales in chapter 4. Irs 2012 tax forms 1040 instructions   To determine the interest on market discount bonds and short-term obligations that are part of a straddle, you must first apply the rules discussed under Limit on interest deduction for market discount bonds and Limit on interest deduction for short-term obligations (both under Interest Expenses, earlier). Irs 2012 tax forms 1040 instructions Nondeductible amount. Irs 2012 tax forms 1040 instructions   Figure the nondeductible interest and carrying charges on straddle property as follows. Irs 2012 tax forms 1040 instructions Add: Interest on indebtedness incurred or continued to buy or carry the personal property, and All other amounts (including charges to insure, store, or transport the personal property) paid or incurred to carry the personal property. Irs 2012 tax forms 1040 instructions Subtract from the amount in (1): Interest (including OID) includible in gross income for the year on the personal property, Any income from the personal property treated as ordinary income on the disposition of short-term government obligations or as ordinary income under the market discount and short-term bond provisions — see Discount on Debt Instruments in chapter 1, The dividends includible in gross income for the year from the personal property, and Any payment on a loan of the personal property for use in a short sale that is includible in gross income. Irs 2012 tax forms 1040 instructions Basis adjustment. Irs 2012 tax forms 1040 instructions   Add the nondeductible amount to the basis of your straddle property. Irs 2012 tax forms 1040 instructions How To Report Investment Expenses To deduct your investment expenses, you must itemize deductions on Schedule A (Form 1040). Irs 2012 tax forms 1040 instructions Enter your deductible investment interest expense on Schedule A (Form1040), line 14. Irs 2012 tax forms 1040 instructions Include any deductible short sale expenses. Irs 2012 tax forms 1040 instructions (See Short Sales in chapter 4 for information on these expenses. Irs 2012 tax forms 1040 instructions ) Also attach a completed Form 4952 if you used that form to figure your investment interest expense. Irs 2012 tax forms 1040 instructions Enter the total amount of your other investment expenses (other than interest expenses) on Schedule A (Form 1040), line 23. Irs 2012 tax forms 1040 instructions List the type and amount of each expense on the dotted lines next to line 23. Irs 2012 tax forms 1040 instructions (If necessary, you can show the required information on an attached statement. Irs 2012 tax forms 1040 instructions ) For information on how to report amortizable bond premium, see Bond Premium Amortization , earlier in this chapter. Irs 2012 tax forms 1040 instructions When To Report Investment Expenses If you use the cash method to report income and expenses, you generally deduct your expenses, except for certain prepaid interest, in the year you pay them. Irs 2012 tax forms 1040 instructions If you use an accrual method, you generally deduct your expenses when you incur a liability for them, rather than when you pay them. Irs 2012 tax forms 1040 instructions Also see When To Deduct Investment Interest , earlier in this chapter. Irs 2012 tax forms 1040 instructions Unpaid expenses owed to related party. Irs 2012 tax forms 1040 instructions   If you use an accrual method, you cannot deduct interest and other expenses owed to a related cash-basis person until payment is made and the amount is includible in the gross income of that person. Irs 2012 tax forms 1040 instructions The relationship, for purposes of this rule, is determined as of the end of the tax year for which the interest or expense would otherwise be deductible. Irs 2012 tax forms 1040 instructions If a deduction is denied under this rule, this rule will continue to apply even if your relationship with the person ceases to exist before the amount is includible in the gross income of that person. Irs 2012 tax forms 1040 instructions   This rule generally applies to those relationships listed in chapter 4 under Related Party Transactions . Irs 2012 tax forms 1040 instructions It also applies to accruals by partnerships to partners, partners to partnerships, shareholders to S corporations, and S corporations to shareholders. Irs 2012 tax forms 1040 instructions   The postponement of deductions for unpaid expenses and interest under the related party rule does not apply to OID, regardless of when payment is made. Irs 2012 tax forms 1040 instructions This rule also does not apply to loans with below-market interest rates or to certain payments for the use of property and services when the lender or recipient has to include payments periodically in income, even if a payment has not been made. Irs 2012 tax forms 1040 instructions Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Business Filer Notices

One of the ways we classify our notices is by the type of tax form they're about. We call notices we send about business-related tax forms such as Forms 941, 1065, and 1120, business filer notices.  Notices we send about Form 1040, 1040A, 1040EZ, or any related schedules, forms, or other attachments are called individual filer notices and are listed elsewhere.  If the business filer notice you have isn't listed below, check back often. We'll be adding more on a regular basis.

The Notices in Numerical Order

Here's a list of notices with detailed information available.


CP 101 - Math Error, Balance Due on Form 940
Informs the recipient of one or more changes made to their Form 940 or 940-EZ return during processing. The changes resulted in a balance due on the account.
CP 111 - Math Error, Overpayment on Form 940
Informs the recipient of one or more changes made to their Form 940 or 940-EZ tax return during processing. The changes resulted in an overpayment.
CP 165 - Penalty for Dishonored Check (Federal Tax Deposit)
Informs the recipient that a check they sent as payment for their federal tax deposit was returned unpaid by their bank.
CP 207 - Proposed FTD Penalty - Request for Correct Information
Asks the recipient to send us a completed Record of Federal Tax Liability (ROFTL).
CP 209 - EIN Assigned in Error
Informs the recipient that we erroneously assigned them more than one EIN.
CP 235 - Federal Tax Deposit Penalty Waived Due to Change in Deposit Requirements
Informs the recipient that we're waiving their FTD penalty because they meet the criteria for penalty relief.
CP 236 - Reminder of Your Semi-Weekly Deposit Requirements
Reminds the recipient that they're subject to semi-weekly deposits.
CP 238 - You Made One or More Late Federal Tax Deposits But We Didn't Charge You a Penalty
Informs the recipient that they made one or more late federal tax deposits and provides guidance on these deposits and how to make them.
CP 260 - Credit Adjustment
Informs the recipient that we removed one or more credits that had been erroneously applied to their account and that the account now has a balance due.
CP 267 - Account Overpaid - Possibly Misapplied Payments
Informs the recipient that they have more credit available on their account than they claimed on their tax return.
CP 298 - Final Notice Before Levy on Social Security Benefits
Informs the recipient of our intent to levy on their social security benefits.
Page Last Reviewed or Updated: 25-Feb-2014

The Irs 2012 Tax Forms 1040 Instructions

Irs 2012 tax forms 1040 instructions Internal Revenue Bulletin:  2011-12  March 21, 2011  Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2011-21 Table of Contents SECTION 1. Irs 2012 tax forms 1040 instructions PURPOSE SECTION 2. Irs 2012 tax forms 1040 instructions BACKGROUND SECTION 3. Irs 2012 tax forms 1040 instructions SCOPE SECTION 4. Irs 2012 tax forms 1040 instructions APPLICATION SECTION 5. Irs 2012 tax forms 1040 instructions EFFECTIVE DATE SECTION 6. Irs 2012 tax forms 1040 instructions EFFECT ON OTHER DOCUMENTS SECTION 7. Irs 2012 tax forms 1040 instructions DRAFTING INFORMATION SECTION 1. Irs 2012 tax forms 1040 instructions PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2011, including separate tables of limitations on depreciation deductions for trucks and vans; (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2011, including a separate table of inclusion amounts for lessees of trucks and vans; and (3) revised tables of depreciation limitations and lessee inclusion amounts for passenger automobiles that were first placed in service or first leased by the taxpayer, respectively, during 2010 and to which the 50 percent additional first year depreciation deduction under § 168(k)(1)(A) of the Internal Revenue Code or the 100 percent additional first year depreciation deduction under § 168(k)(5) applies. Irs 2012 tax forms 1040 instructions The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7). Irs 2012 tax forms 1040 instructions SECTION 2. Irs 2012 tax forms 1040 instructions BACKGROUND . Irs 2012 tax forms 1040 instructions 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Irs 2012 tax forms 1040 instructions For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Irs 2012 tax forms 1040 instructions The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Irs 2012 tax forms 1040 instructions This change reflects the higher rate of price inflation for trucks and vans since 1988. Irs 2012 tax forms 1040 instructions . Irs 2012 tax forms 1040 instructions 02 Section 2022(a) of the Small Business Jobs Act of 2010, Pub. Irs 2012 tax forms 1040 instructions L. Irs 2012 tax forms 1040 instructions No. Irs 2012 tax forms 1040 instructions 111-240, 124 Stat. Irs 2012 tax forms 1040 instructions 2504 (September 27, 2010), extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property (as defined in § 168(k)(2)) acquired by the taxpayer after December 31, 2007, and before January 1, 2011, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2011. Irs 2012 tax forms 1040 instructions Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Irs 2012 tax forms 1040 instructions L. Irs 2012 tax forms 1040 instructions No. Irs 2012 tax forms 1040 instructions 111-312, 124 Stat. Irs 2012 tax forms 1040 instructions 3296 (Dec. Irs 2012 tax forms 1040 instructions 17, 2010) (the “Act”) further extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Irs 2012 tax forms 1040 instructions Section 401(b) of the Act further amended § 168(k) by adding § 168(k)(5). Irs 2012 tax forms 1040 instructions It allows a 100 percent additional first year depreciation deduction for qualified property acquired by a taxpayer after September 8, 2010, and before January 1, 2012, if the taxpayer places the property in service generally before January 1, 2012. Irs 2012 tax forms 1040 instructions Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Irs 2012 tax forms 1040 instructions . Irs 2012 tax forms 1040 instructions 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Irs 2012 tax forms 1040 instructions Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Irs 2012 tax forms 1040 instructions Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv). Irs 2012 tax forms 1040 instructions Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Irs 2012 tax forms 1040 instructions This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2011 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Irs 2012 tax forms 1040 instructions . Irs 2012 tax forms 1040 instructions 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Irs 2012 tax forms 1040 instructions The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Irs 2012 tax forms 1040 instructions Under § 1. Irs 2012 tax forms 1040 instructions 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Irs 2012 tax forms 1040 instructions One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Irs 2012 tax forms 1040 instructions Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Irs 2012 tax forms 1040 instructions SECTION 3. Irs 2012 tax forms 1040 instructions SCOPE . Irs 2012 tax forms 1040 instructions 01 The limitations on depreciation deductions in section 4. Irs 2012 tax forms 1040 instructions 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2011, and continue to apply for each taxable year that the passenger automobile remains in service. Irs 2012 tax forms 1040 instructions . Irs 2012 tax forms 1040 instructions 02 The tables in section 4. Irs 2012 tax forms 1040 instructions 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2011. Irs 2012 tax forms 1040 instructions Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Irs 2012 tax forms 1040 instructions See Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2006-18, 2006-1 C. Irs 2012 tax forms 1040 instructions B. Irs 2012 tax forms 1040 instructions 645, for passenger automobiles first leased during calendar year 2006; Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2007-30, 2007-1 C. Irs 2012 tax forms 1040 instructions B. Irs 2012 tax forms 1040 instructions 1104, for passenger automobiles first leased during calendar year 2007; Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2008-22, 2008-1 C. Irs 2012 tax forms 1040 instructions B. Irs 2012 tax forms 1040 instructions 658, for passenger automobiles first leased during calendar year 2008; Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2009-24, 2009-1 C. Irs 2012 tax forms 1040 instructions B. Irs 2012 tax forms 1040 instructions 885, for passenger automobiles first leased during calendar year 2009; and Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2010-18, 2010-1 C. Irs 2012 tax forms 1040 instructions B. Irs 2012 tax forms 1040 instructions 427, as amplified and modified by section 4. Irs 2012 tax forms 1040 instructions 03 of this revenue procedure, for passenger automobiles first leased during calendar year 2010. Irs 2012 tax forms 1040 instructions SECTION 4. Irs 2012 tax forms 1040 instructions APPLICATION . Irs 2012 tax forms 1040 instructions 01 Limitations on Depreciation Deductions for Certain Automobiles. Irs 2012 tax forms 1040 instructions (1) Amount of the inflation adjustment. Irs 2012 tax forms 1040 instructions (a) Passenger automobiles (other than trucks or vans). Irs 2012 tax forms 1040 instructions Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Irs 2012 tax forms 1040 instructions Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Irs 2012 tax forms 1040 instructions The new car component of the CPI was 115. Irs 2012 tax forms 1040 instructions 2 for October 1987 and 137. Irs 2012 tax forms 1040 instructions 880 for October 2010. Irs 2012 tax forms 1040 instructions The October 2010 index exceeded the October 1987 index by 22. Irs 2012 tax forms 1040 instructions 680. Irs 2012 tax forms 1040 instructions Therefore, the automobile price inflation adjustment for 2011 for passenger automobiles (other than trucks and vans) is 19. Irs 2012 tax forms 1040 instructions 69 percent (22. Irs 2012 tax forms 1040 instructions 680/115. Irs 2012 tax forms 1040 instructions 2 x 100%). Irs 2012 tax forms 1040 instructions The dollar limitations in § 280F(a) are multiplied by a factor of 0. Irs 2012 tax forms 1040 instructions 1969, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2011. Irs 2012 tax forms 1040 instructions This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2011. Irs 2012 tax forms 1040 instructions (b) Trucks and vans. Irs 2012 tax forms 1040 instructions To determine the dollar limitations for trucks and vans first placed in service during calendar year 2011, the Service uses the new truck component of the CPI instead of the new car component. Irs 2012 tax forms 1040 instructions The new truck component of the CPI was 112. Irs 2012 tax forms 1040 instructions 4 for October 1987 and 142. Irs 2012 tax forms 1040 instructions 556 for October 2010. Irs 2012 tax forms 1040 instructions The October 2010 index exceeded the October 1987 index by 30. Irs 2012 tax forms 1040 instructions 156. Irs 2012 tax forms 1040 instructions Therefore, the automobile price inflation adjustment for 2011 for trucks and vans is 26. Irs 2012 tax forms 1040 instructions 83 percent (30. Irs 2012 tax forms 1040 instructions 156/112. Irs 2012 tax forms 1040 instructions 4 x 100%). Irs 2012 tax forms 1040 instructions The dollar limitations in § 280F(a) are multiplied by a factor of 0. Irs 2012 tax forms 1040 instructions 2683, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Irs 2012 tax forms 1040 instructions This adjustment applies to all trucks and vans that are first placed in service in calendar year 2011. Irs 2012 tax forms 1040 instructions (2) Amount of the limitation. Irs 2012 tax forms 1040 instructions Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2011. Irs 2012 tax forms 1040 instructions Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction applies. Irs 2012 tax forms 1040 instructions Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2011 for which the § 168(k) additional first year depreciation deduction does not apply. Irs 2012 tax forms 1040 instructions The Service intends to issue additional guidance addressing the interaction between the 100 percent additional first year depreciation deduction and § 280F(a) for the taxable years subsequent to the first taxable year. Irs 2012 tax forms 1040 instructions REV. Irs 2012 tax forms 1040 instructions PROC. Irs 2012 tax forms 1040 instructions 2011-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Irs 2012 tax forms 1040 instructions PROC. Irs 2012 tax forms 1040 instructions 2011-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Irs 2012 tax forms 1040 instructions PROC. Irs 2012 tax forms 1040 instructions 2011-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Irs 2012 tax forms 1040 instructions PROC. Irs 2012 tax forms 1040 instructions 2011-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2011 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,260 2nd Tax Year $5,200 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Irs 2012 tax forms 1040 instructions 02 Inclusions in Income of Lessees of Passenger Automobiles. Irs 2012 tax forms 1040 instructions A taxpayer must follow the procedures in § 1. Irs 2012 tax forms 1040 instructions 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2011. Irs 2012 tax forms 1040 instructions In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Irs 2012 tax forms 1040 instructions REV. Irs 2012 tax forms 1040 instructions PROC. Irs 2012 tax forms 1040 instructions 2011-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $18,500 $19,000 3 8 11 13 16 19,000 19,500 4 9 13 15 18 19,500 20,000 4 10 15 17 20 20,000 20,500 5 11 16 19 23 20,500 21,000 5 12 18 21 25 21,000 21,500 6 13 19 24 26 21,500 22,000 6 14 21 26 29 22,000 23,000 7 16 23 29 32 23,000 24,000 8 18 27 32 37 24,000 25,000 9 20 30 36 42 25,000 26,000 10 23 33 40 46 26,000 27,000 11 25 36 44 51 27,000 28,000 12 27 40 48 55 28,000 29,000 13 29 43 52 60 29,000 30,000 14 31 47 55 65 30,000 31,000 15 34 49 60 69 31,000 32,000 16 36 53 63 73 32,000 33,000 17 38 56 68 77 33,000 34,000 18 40 60 71 82 34,000 35,000 19 42 63 75 87 35,000 36,000 20 45 66 79 91 36,000 37,000 21 47 69 83 96 37,000 38,000 22 49 73 87 100 38,000 39,000 23 51 76 91 105 39,000 40,000 24 53 80 94 110 40,000 41,000 25 56 82 99 114 41,000 42,000 26 58 86 102 119 42,000 43,000 27 60 89 107 123 43,000 44,000 28 62 93 110 128 44,000 45,000 29 64 96 114 133 45,000 46,000 30 67 98 119 137 46,000 47,000 31 69 102 122 141 47,000 48,000 32 71 105 127 145 48,000 49,000 33 73 109 130 150 49,000 50,000 34 76 111 134 155 50,000 51,000 35 78 115 138 159 51,000 52,000 36 80 118 142 164 52,000 53,000 37 82 122 146 168 53,000 54,000 38 84 125 150 173 54,000 55,000 39 87 128 153 178 55,000 56,000 40 89 131 158 182 56,000 57,000 41 91 135 161 187 57,000 58,000 42 93 138 166 191 58,000 59,000 43 95 142 169 196 59,000 60,000 44 98 144 174 200 60,000 62,000 46 101 149 179 207 62,000 64,000 48 105 156 187 216 64,000 66,000 50 109 163 195 225 66,000 68,000 52 114 169 203 234 68,000 70,000 54 118 176 211 243 70,000 72,000 56 123 182 218 253 72,000 74,000 58 127 189 226 262 74,000 76,000 60 132 195 234 270 76,000 78,000 62 136 202 242 279 78,000 80,000 64 140 209 250 288 80,000 85,000 67 148 220 264 304 85,000 90,000 72 159 237 283 327 90,000 95,000 77 170 253 303 350 95,000 100,000 82 181 269 323 372 100,000 110,000 90 198 293 352 406 110,000 120,000 100 220 326 391 452 120,000 130,000 110 242 359 430 497 130,000 140,000 120 264 392 469 543 140,000 150,000 130 286 424 509 588 150,000 160,000 140 308 457 548 633 160,000 170,000 150 330 490 587 679 170,000 180,000 160 352 523 626 724 180,000 190,000 170 374 555 666 769 190,000 200,000 180 396 588 705 815 200,000 210,000 190 418 621 744 860 210,000 220,000 200 440 654 784 904 220,000 230,000 210 462 687 823 950 230,000 240,000 220 484 719 863 995 240,000 And up 230 506 752 902 1,040 REV. Irs 2012 tax forms 1040 instructions PROC. Irs 2012 tax forms 1040 instructions 2011-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2011 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 3 7 9 12 13 19,500 20,000 3 8 11 14 15 20,000 20,500 4 9 13 15 18 20,500 21,000 4 10 15 17 20 21,000 21,500 5 11 16 20 22 21,500 22,000 5 12 18 22 24 22,000 23,000 6 14 20 24 29 23,000 24,000 7 16 24 28 32 24,000 25,000 8 18 27 32 37 25,000 26,000 9 20 31 36 41 26,000 27,000 10 23 33 40 46 27,000 28,000 11 25 37 43 51 28,000 29,000 12 27 40 48 55 29,000 30,000 13 29 43 52 60 30,000 31,000 14 31 47 56 64 31,000 32,000 15 34 49 60 69 32,000 33,000 16 36 53 63 74 33,000 34,000 17 38 56 68 78 34,000 35,000 18 40 60 71 83 35,000 36,000 19 43 62 76 87 36,000 37,000 20 45 66 79 92 37,000 38,000 21 47 69 83 97 38,000 39,000 22 49 73 87 101 39,000 40,000 23 51 76 91 105 40,000 41,000 24 54 79 95 109 41,000 42,000 25 56 82 99 114 42,000 43,000 26 58 86 103 118 43,000 44,000 27 60 89 107 123 44,000 45,000 28 62 93 110 128 45,000 46,000 29 65 95 115 132 46,000 47,000 30 67 99 118 137 47,000 48,000 31 69 102 123 141 48,000 49,000 32 71 106 126 146 49,000 50,000 33 73 109 130 151 50,000 51,000 34 76 112 134 155 51,000 52,000 35 78 115 138 160 52,000 53,000 36 80 118 143 164 53,000 54,000 37 82 122 146 169 54,000 55,000 38 84 125 150 173 55,000 56,000 39 87 128 154 177 56,000 57,000 40 89 131 158 182 57,000 58,000 41 91 135 162 186 58,000 59,000 42 93 138 166 191 59,000 60,000 43 95 142 169 196 60,000 62,000 45 99 146 175 203 62,000 64,000 47 103 153 183 212 64,000 66,000 49 107 160 191 221 66,000 68,000 51 112 166 199 229 68,000 70,000 53 116 173 206 239 70,000 72,000 55 121 179 214 248 72,000 74,000 57 125 186 222 257 74,000 76,000 59 129 192 231 266 76,000 78,000 61 134 198 239 275 78,000 80,000 63 138 205 246 285 80,000 85,000 66 146 217 260 300 85,000 90,000 71 157 233 280 322 90,000 95,000 76 168 250 299 345 95,000 100,000 81 179 266 319 368 100,000 110,000 89 196 290 348 402 110,000 120,000 99 218 323 387 447 120,000 130,000 109 240 355 427 493 130,000 140,000 119 262 388 466 538 140,000 150,000 129 284 421 505 583 150,000 160,000 139 306 454 544 629 160,000 170,000 149 328 487 583 674 170,000 180,000 159 350 519 623 719 180,000 190,000 169 372 552 662 765 190,000 200,000 179 394 585 701 810 200,000 210,000 189 416 618 740 856 210,000 220,000 199 438 651 779 901 220,000 230,000 209 460 683 819 946 230,000 240,000 219 482 716 858 992 240,000 And up 229 504 749 897 1,037 . Irs 2012 tax forms 1040 instructions 03 Revised Amounts for Passenger Automobiles Placed in Service During 2010. Irs 2012 tax forms 1040 instructions (1) Calculation of the Revised Amount. Irs 2012 tax forms 1040 instructions The revised depreciation limits provided in this section 4. Irs 2012 tax forms 1040 instructions 03 were calculated by increasing the existing limitations on the first year allowance in Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2010-18 by $8,000 as provided in § 168(k)(2)(F)(i). Irs 2012 tax forms 1040 instructions (2) Amount of the Revised Limitation. Irs 2012 tax forms 1040 instructions For passenger automobiles (that are not trucks or vans) placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 7 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Irs 2012 tax forms 1040 instructions For trucks or vans placed in service by the taxpayer in calendar year 2010 for which the § 168(k) additional first year depreciation deduction applies, Table 8 of this revenue procedure contains the revised dollar amount of the depreciation limitations for each taxable year. Irs 2012 tax forms 1040 instructions If the § 168(k) additional first year depreciation deduction does not apply to a passenger automobile placed in service by the taxpayer in calendar year 2010, the depreciation limitations for each taxable year in Tables 1 and 2 of Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2010-18 apply. Irs 2012 tax forms 1040 instructions REV. Irs 2012 tax forms 1040 instructions PROC. Irs 2012 tax forms 1040 instructions 2011-21 TABLE 7 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. Irs 2012 tax forms 1040 instructions PROC. Irs 2012 tax forms 1040 instructions 2011-21 TABLE 8 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 (3) Modification to lease inclusion amounts for 2010. Irs 2012 tax forms 1040 instructions The lease inclusion amounts in Tables 3 and 4 of Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2010-18 are modified by striking the first four lines of the inclusion amounts in each table. Irs 2012 tax forms 1040 instructions Consequently, Table 3 of Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2010-18 applies to passenger automobiles (other than trucks and vans) that are first leased by the taxpayer in calendar year 2010 with a fair market value over $18,500, and Table 4 of Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2010-18 applies to trucks and vans that are first leased by the taxpayer in calendar year 2010 with a fair market value over $19,000. Irs 2012 tax forms 1040 instructions SECTION 5. Irs 2012 tax forms 1040 instructions EFFECTIVE DATE This revenue procedure, with the exception of section 4. Irs 2012 tax forms 1040 instructions 03, applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2011. Irs 2012 tax forms 1040 instructions Section 4. Irs 2012 tax forms 1040 instructions 03 of this revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. Irs 2012 tax forms 1040 instructions SECTION 6. Irs 2012 tax forms 1040 instructions EFFECT ON OTHER DOCUMENTS Rev. Irs 2012 tax forms 1040 instructions Proc. Irs 2012 tax forms 1040 instructions 2010-18 is amplified and modified. Irs 2012 tax forms 1040 instructions SECTION 7. Irs 2012 tax forms 1040 instructions DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Irs 2012 tax forms 1040 instructions Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Irs 2012 tax forms 1040 instructions For further information regarding this revenue procedure, contact Mr. Irs 2012 tax forms 1040 instructions Harvey at (202) 622-4930 (not a toll-free call). Irs 2012 tax forms 1040 instructions Prev  Up  Next   Home   More Internal Revenue Bulletins