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Irs Amended Tax Forms

Download Irs Form 1040 2010State Income Tax Free FilingWhat Is Form 1040xIrs Gov Amended Tax ReturnEz Tax Form 2012Amend Taxes TurbotaxI Need To Amend My 2012 TaxesHow To Amend State Tax Return1040 Ez Tax Form2012 Federal Tax FormsAmended State Tax FormsIrsfreefileFederal Tax Forms 1040 Ez211 Free Tax Preparation Help Online1040xFile Taxes Online For Free 20112010 1040 FormState Income Tax HelpAmending TaxesTax Amendment Form 2010Free Federal Tax ReturnTaxesState 1040 Ez FormFree Tax Preparation OrganizerH & R Block Free FileWhere Do I Send My 1040xTaxact Online 2012It 1040xFile 2010 Taxes Online Turbotax2011 1040ez FormAmend 2012 Tax ReturnTurbo Tax Self EmployedIrs Tax Extension Forms2011 1040ez FormFree Tax PreparationHow To File Amended Tax Return 2013Tax Form 1040a 2012Hr Block 2011 TaxesInstructions For Form 1040xFiling 2010 Taxes Late Online Free

Irs Amended Tax Forms

Irs amended tax forms Publication 969 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Irs amended tax forms Tax questions. Irs amended tax forms What's New Federal tax benefits for same-sex married couples. Irs amended tax forms   For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Irs amended tax forms For more information, see Publication 501. Irs amended tax forms Health flexible spending arrangements (FSAs). Irs amended tax forms  The following rules apply to health FSAs for plan years beginning after December 31, 2012. Irs amended tax forms Salary reduction contributions to your health FSA cannot be more than $2,500 a year (indexed for inflation). Irs amended tax forms Your employer may choose to change your cafeteria plan to allow you to carry over up to $500 of unused amounts remaining at the end of the plan year in a health FSA to be paid or reimbursed for qualified medical expenses incurred during the following plan year. Irs amended tax forms For more information, see Balance in an FSA under Flexible Spending Arrangements (FSAs), later. Irs amended tax forms Reminders Future Developments. Irs amended tax forms  For the latest information about developments related to Publication 969, such as legislation enacted after it was published, go to www. Irs amended tax forms IRS. Irs amended tax forms gov/pub969. Irs amended tax forms Photographs of missing children. Irs amended tax forms  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Irs amended tax forms Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Irs amended tax forms You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Irs amended tax forms Introduction Various programs are designed to give individuals tax advantages to offset health care costs. Irs amended tax forms This publication explains the following programs. Irs amended tax forms Health savings accounts (HSAs). Irs amended tax forms Medical savings accounts (Archer MSAs and Medicare Advantage MSAs). Irs amended tax forms Health flexible spending arrangements (FSAs). Irs amended tax forms Health reimbursement arrangements (HRAs). Irs amended tax forms An HSA may receive contributions from an eligible individual or any other person, including an employer or a family member, on behalf of an eligible individual. Irs amended tax forms Contributions, other than employer contributions, are deductible on the eligible individual's return whether or not the individual itemizes deductions. Irs amended tax forms Employer contributions are not included in income. Irs amended tax forms Distributions from an HSA that are used to pay qualified medical expenses are not taxed. Irs amended tax forms An Archer MSA may receive contributions from an eligible individual and his or her employer, but not both in the same year. Irs amended tax forms Contributions by the individual are deductible whether or not the individual itemizes deductions. Irs amended tax forms Employer contributions are not included in income. Irs amended tax forms Distributions from an Archer MSA that are used to pay qualified medical expenses are not taxed. Irs amended tax forms A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is enrolled in Medicare. Irs amended tax forms Contributions can only be made by Medicare. Irs amended tax forms The contributions are not included in your income. Irs amended tax forms Distributions from a Medicare Advantage MSA that are used to pay qualified medical expenses are not taxed. Irs amended tax forms A health FSA may receive contributions from an eligible individual. Irs amended tax forms Employers may also contribute. Irs amended tax forms Contributions are not includible in income. Irs amended tax forms Reimbursements from an FSA that are used to pay qualified medical expenses are not taxed. Irs amended tax forms An HRA must receive contributions from the employer only. Irs amended tax forms Employees may not contribute. Irs amended tax forms Contributions are not includible in income. Irs amended tax forms Reimbursements from an HRA that are used to pay qualified medical expenses are not taxed. Irs amended tax forms Comments and suggestions. Irs amended tax forms   We welcome your comments about this publication and your suggestions for future editions. Irs amended tax forms   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Irs amended tax forms NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Irs amended tax forms Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Irs amended tax forms   You can send your comments from www. Irs amended tax forms irs. Irs amended tax forms gov/formspubs. Irs amended tax forms Click on “More Information” and then on “Comment on Tax Forms and Publications. Irs amended tax forms ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Irs amended tax forms Ordering forms and publications. Irs amended tax forms   Visit www. Irs amended tax forms irs. Irs amended tax forms gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Irs amended tax forms Internal Revenue Service 1201 N. Irs amended tax forms Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Irs amended tax forms   If you have a tax question, check the information available on IRS. Irs amended tax forms gov or call 1-800-829-1040. Irs amended tax forms We cannot answer tax questions sent to either of the above addresses. Irs amended tax forms Prev  Up  Next   Home   More Online Publications
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Domestic and International Programs

The Domestic and International Index (.pdf) lists all Appeals domestic and international related issues, including contact information, as follows:

  • ACI - Appeals Coordinated Issues
  • ACIcc - Appeals Coordinated Issues, Category of Case
  • CCI - Compliance Coordinated Issues
  • DCI - Decoordinated Issue (Decoordinated in Appeals information available)
  • EM - Appeals Emerging Issues
  • LT - Listed Transactions
  • SME - Subject Matter Expert
  • TOI - Transactions of Interest
  • UIL - Uniform Issue List

The Domestic and International Index is an alphabetical listing of all issues and should be referred to for all current contact information. It is searchable, using Acrobat Search.

ACI or ACIcc - An issue or category of case, is an issue of IRS-wide impact or importance requiring coordination with Appeals to ensure uniformity and consistency nationwide. This is achieved through the coordination of efforts between Appeals Officers (AO) and designated Technical Specialists (TS). The ACI program encompasses legal issues and factual issues and category of case.

An AO assigned a case with an ACI must consult with the TS prior to the scheduling of the initial conference to obtain current information. For ACIs, except those designated an ACIcc, the AO must get review and concurrence from the TS prior to discussing the settlement with the taxpayer.  Such review and concurrence extends to all aspects of the settlement including closing documents.

CCI - When Compliance coordinates an issue and issues a Coordinated Issue Paper (CIP) Appeals designates the issue as a Compliance Coordinated Issue (CCI).   Appeals generally develops Appeals Settlement Guidelines (ASG) for CCIs.   Effective with the date of the issuance of a CIP, the AO must get the review and concurrence of the Appeals’ TS before discussing the settlement with the taxpayer.  For a list of CCIs visit the Large Business and International (LB&I) Division Coordinated Issue Papers webpage.

EM – An Appeals Emerging Issue is an issue that surfaced in an industry or specialty area in a number of Appeals cases or it is understood cases will be coming to Appeals in the near future with the issue.  The AO assigned a case with an emerging issue is required to contact the designated TS (before holding the initial conference) to gain insight into both the industry or specialty area and the issue. He/she is required to maintain contact with the coordinator. Review and concurrence is not required until such time as an issue may be redesignated a CCI or ACI.

Appeals Settlement Guidelines (ASG)
NOTE: Since specialists may have changed since the finalized ASG was approved, it is recommended that you refer to the Domestic and International Index (.pdf) for contact information.

Page Last Reviewed or Updated: 16-Jan-2014

The Irs Amended Tax Forms

Irs amended tax forms 2. Irs amended tax forms   Accounting Methods Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Accounting MethodsCash Method Accrual Method Farm Inventory Cash Versus Accrual Method Special Methods of Accounting Combination Method Changes in Methods of Accounting Introduction You must use an accounting method that clearly shows your income and expenses. Irs amended tax forms You must also figure your taxable income and file an income tax return for an annual accounting period called a tax year. Irs amended tax forms This chapter discusses accounting methods. Irs amended tax forms For information on accounting periods, see Publication 538, Accounting Periods and Methods, and the Instructions for Form 1128, Application To Adopt, Change, or Retain a Tax Year. Irs amended tax forms Topics - This chapter discusses: Cash method Accrual method Farm inventory Special methods of accounting Changes in methods of accounting Useful Items - You may want to see: Publication 538 Accounting Periods and Methods 535 Business Expenses Form (and Instructions) 1128 Application To Adopt, Change, or Retain a Tax Year 3115 Application for Change in Accounting Method See chapter 16 for information about getting publications and forms. Irs amended tax forms Accounting Methods An accounting method is a set of rules used to determine when and how your income and expenses are reported on your tax return. Irs amended tax forms Your accounting method includes not only your overall method of accounting, but also the accounting treatment you use for any material item. Irs amended tax forms A material item is one that affects the proper time for inclusion of income or allowance of a deduction. Irs amended tax forms An item considered material for financial statement purposes is generally also considered material for income tax purposes. Irs amended tax forms See Publication 538 for more information. Irs amended tax forms You generally choose an accounting method for your farm business when you file your first income tax return that includes a Schedule F (Form 1040), Profit or Loss From Farming. Irs amended tax forms If you later want to change your accounting method, you generally must get IRS approval. Irs amended tax forms How to obtain IRS approval is discussed later under Changes in Methods of Accounting . Irs amended tax forms Types of accounting methods. Irs amended tax forms   Generally, you can use any of the following accounting methods. Irs amended tax forms Each method is discussed in detail below. Irs amended tax forms Cash method. Irs amended tax forms Accrual method. Irs amended tax forms Special methods of accounting for certain items of income and expenses. Irs amended tax forms Combination (hybrid) method using elements of two or more of the above. Irs amended tax forms Business and other items. Irs amended tax forms   You can account for business and personal items using different accounting methods. Irs amended tax forms For example, you can figure your business income under an accrual method, even if you use the cash method to figure personal items. Irs amended tax forms Two or more businesses. Irs amended tax forms   If you operate two or more separate and distinct businesses, you can use a different accounting method for each business. Irs amended tax forms Generally, no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. Irs amended tax forms Cash Method Most farmers use the cash method because they find it easier to keep records using the cash method. Irs amended tax forms However, certain farm corporations and partnerships and all tax shelters must use an accrual method of accounting. Irs amended tax forms See Accrual Method Required , later. Irs amended tax forms Income Under the cash method, include in your gross income all items of income you actually or constructively received during the tax year. Irs amended tax forms Items of income include money received as well as property or services received. Irs amended tax forms If you receive property or services, you must include the fair market value (FMV) of the property or services in income. Irs amended tax forms See chapter 3 for information on how to report farm income on your income tax return. Irs amended tax forms Constructive receipt. Irs amended tax forms   Income is constructively received when an amount is credited to your account or made available to you without restriction. Irs amended tax forms You do not need to have possession of the income for it to be treated as income for the tax year. Irs amended tax forms If you authorize someone to be your agent and receive income for you, you are considered to have received the income when your agent receives it. Irs amended tax forms Income is not constructively received if your receipt of the income is subject to substantial restrictions or limitations. Irs amended tax forms Direct payments and counter-cyclical payments. Irs amended tax forms   If you received direct payments or counter-cyclical payments under Subtitle A or C of the Farm Security and Rural Investment Act of 2002, you will not be considered to have constructively received a payment merely because you had the option to receive it in the year before it is required to be paid. Irs amended tax forms Delaying receipt of income. Irs amended tax forms   You cannot hold checks or postpone taking possession of similar property from one tax year to another to avoid paying tax on the income. Irs amended tax forms You must report the income in the year the money or property is received or made available to you without restriction. Irs amended tax forms Example. Irs amended tax forms Frances Jones, a farmer, was entitled to receive a $10,000 payment on a grain contract in December 2013. Irs amended tax forms She was told in December that her payment was available. Irs amended tax forms She requested not to be paid until January 2014. Irs amended tax forms However, she must still include this payment in her 2013 income because it was made available to her in 2013. Irs amended tax forms Debts paid by another person or canceled. Irs amended tax forms   If your debts are paid by another person or are canceled by your creditors, you may have to report part or all of this debt relief as income. Irs amended tax forms If you receive income in this way, you constructively receive the income when the debt is canceled or paid. Irs amended tax forms See Cancellation of Debt in chapter 3. Irs amended tax forms Deferred payment contract. Irs amended tax forms   If you sell an item under a deferred payment contract that calls for payment in a future year, there is no constructive receipt in the year of sale. Irs amended tax forms However, if the sales contract states that you have the right to the proceeds of the sale from the buyer at any time after delivery of the item, then you must include the sales price in income in the year of the sale, regardless of when you actually receive payment. Irs amended tax forms Example. Irs amended tax forms You are a farmer who uses the cash method and a calendar tax year. Irs amended tax forms You sell grain in December 2013 under a bona fide arm's-length contract that calls for payment in 2014. Irs amended tax forms You include the proceeds from the sale in your 2014 gross income since that is the year payment is received. Irs amended tax forms However, if the contract states that you have the right to the proceeds from the buyer at any time after the grain is delivered, you must include the sales price in your 2013 income, regardless of when you actually receive payment. Irs amended tax forms Repayment of income. Irs amended tax forms   If you include an amount in income and in a later year you have to repay all or part of it, then you can usually deduct the repayment in the year repaid. Irs amended tax forms If the repayment is more than $3,000, a special rule applies. Irs amended tax forms For details, see Repayments in chapter 11 of Publication 535, Business Expenses. Irs amended tax forms Expenses Under the cash method, generally you deduct expenses in the tax year you pay them. Irs amended tax forms This includes business expenses for which you contest liability. Irs amended tax forms However, you may not be able to deduct an expense paid in advance or you may be required to capitalize certain costs, as explained under Uniform Capitalization Rules in chapter 6. Irs amended tax forms See chapter 4 for information on how to deduct farm business expenses on your income tax return. Irs amended tax forms Prepayment. Irs amended tax forms   Generally, you cannot deduct expenses paid in advance. Irs amended tax forms This rule applies to any expense paid far enough in advance to, in effect, create an asset with a useful life extending substantially beyond the end of the current tax year. Irs amended tax forms Example. Irs amended tax forms On November 1, 2013, you signed and paid $3,600 for a 3-year (36-month) insurance contract for equipment. Irs amended tax forms In 2013, you are allowed to deduct only $200 (2/36 x $3,600) of the cost of the policy that is attributable to 2013. Irs amended tax forms In 2014, you'll be able to deduct $1,200 (12/36 x $3,600); in 2015, you'll be able to deduct $1,200 (12/36 x $3,600); and in 2016 you'll be able to deduct the remaining balance of $1,000. Irs amended tax forms An exception applies if the expense qualifies for the 12-month rule. Irs amended tax forms See Publication 538 for more information and examples. Irs amended tax forms See chapter 4 for special rules for prepaid farm supplies and prepaid livestock feed. Irs amended tax forms Accrual Method Under an accrual method of accounting, you generally report income in the year earned and deduct or capitalize expenses in the year incurred. Irs amended tax forms The purpose of an accrual method of accounting is to correctly match income and expenses. Irs amended tax forms Certain businesses engaged in farming must use an accrual method of accounting for its farm business and for sales and purchases of inventory items. Irs amended tax forms See Accrual Method Required and Farm Inventory , later. Irs amended tax forms Income Generally, you include an amount in income for the tax year in which all events that fix your right to receive the income have occurred, and you can determine the amount with reasonable accuracy. Irs amended tax forms Under this rule, include an amount in income on the earliest of the following dates. Irs amended tax forms When you receive payment. Irs amended tax forms When the income amount is due to you. Irs amended tax forms When you earn the income. Irs amended tax forms When title passes. Irs amended tax forms If you use an accrual method of accounting, complete Part III of Schedule F (Form 1040) to report your income. Irs amended tax forms Inventory. Irs amended tax forms   If you keep an inventory, generally you must use an accrual method of accounting to determine your gross income. Irs amended tax forms An inventory is necessary to clearly show income when the production, purchase, or sale of merchandise is an income-producing factor. Irs amended tax forms See Publication 538 for more information. Irs amended tax forms Also see Farm Inventory , later, for more information on items that must be included in inventory by farmers and inventory valuation methods for farmers. Irs amended tax forms Expenses Under an accrual method of accounting, you generally deduct or capitalize a business expense when both of the following apply. Irs amended tax forms The all-events test has been met. Irs amended tax forms This test is met when: All events have occurred that fix the fact that you have a liability, and The amount of the liability can be determined with reasonable accuracy. Irs amended tax forms Economic performance has occurred. Irs amended tax forms Economic performance. Irs amended tax forms   Generally, you cannot deduct or capitalize a business expense until economic performance occurs. Irs amended tax forms If your expense is for property or services provided to you, or for your use of property, economic performance occurs as the property or services are provided or as the property is used. Irs amended tax forms If your expense is for property or services you provide to others, economic performance occurs as you provide the property or services. Irs amended tax forms Example. Irs amended tax forms Jane, who is a farmer, uses a calendar tax year and an accrual method of accounting. Irs amended tax forms She entered into a contract with ABC Farm Consulting in 2012. Irs amended tax forms The contract stated that Jane pay ABC Farm Consulting $2,000 in December 2012. Irs amended tax forms It further stipulates that ABC Farm Consulting will develop a plan for integrating her farm with a larger farm operation based in a neighboring state by March 1, 2013. Irs amended tax forms Jane paid ABC Farm Consulting $2,000 in December 2012. Irs amended tax forms Integration of operations according to the plan began in May 2013 and they completed the integration in December 2013. Irs amended tax forms Economic performance for Jane's liability in the contract occurs as the services are provided. Irs amended tax forms Jane incurs the $2,000 cost in 2013. Irs amended tax forms An exception to the economic performance rule allows certain recurring items to be treated as incurred during a tax year even though economic performance has not occurred. Irs amended tax forms For more information, see Economic Performance in Publication 538. Irs amended tax forms Special rule for related persons. Irs amended tax forms   Business expenses and interest owed to a related person who uses the cash method of accounting are not deductible until you make the payment and the corresponding amount is includible in the related person's gross income. Irs amended tax forms Determine the relationship for this rule as of the end of the tax year for which the expense or interest would otherwise be deductible. Irs amended tax forms For more information, see Internal Revenue Code section 267. Irs amended tax forms Accrual Method Required Generally, the following businesses, if engaged in farming, must use an accrual method of accounting. Irs amended tax forms A corporation (other than a family corporation) that had gross receipts of more than $1,000,000 for any tax year beginning after 1975. Irs amended tax forms A family corporation that had gross receipts of more than $25,000,000 for any tax year beginning after 1985. Irs amended tax forms A partnership with a corporation as a partner, if that corporation meets the requirements of (1) or (2) above. Irs amended tax forms A tax shelter. Irs amended tax forms Note. Irs amended tax forms Items (1), (2), and (3) above do not apply to an S corporation or a business operating a nursery or sod farm, or the raising or harvesting of trees (other than fruit and nut trees). Irs amended tax forms Family corporation. Irs amended tax forms   A family corporation is generally a corporation that meets one of the following ownership requirements. Irs amended tax forms Members of the same family own at least 50% of the total combined voting power of all classes of stock entitled to vote and at least 50% of the total shares of all other classes of stock of the corporation. Irs amended tax forms Members of two families have owned, directly or indirectly, since October 4, 1976, at least 65% of the total combined voting power of all classes of voting stock and at least 65% of the total shares of all other classes of the corporation's stock. Irs amended tax forms Members of three families have owned, directly or indirectly, since October 4, 1976, at least 50% of the total combined voting power of all classes of voting stock and at least 50% of the total shares of all other classes of the corporation's stock. Irs amended tax forms For more information on family corporations, see Internal Revenue Code section 447. Irs amended tax forms Tax shelter. Irs amended tax forms   A tax shelter is a partnership, noncorporate enterprise, or S corporation that meets either of the following tests. Irs amended tax forms Its principal purpose is the avoidance or evasion of federal income tax. Irs amended tax forms It is a farming syndicate. Irs amended tax forms A farming syndicate is an entity that meets either of the following tests. Irs amended tax forms Interests in the activity have been offered for sale in an offering required to be registered with a federal or state agency with the authority to regulate the offering of securities for sale. Irs amended tax forms More than 35% of the losses during the tax year are allocable to limited partners or limited entrepreneurs. Irs amended tax forms   A “limited partner” is one whose personal liability for partnership debts is limited to the money or other property the partner contributed or is required to contribute to the partnership. Irs amended tax forms   A “limited entrepreneur” is one who has an interest in an enterprise other than as a limited partner and does not actively participate in the management of the enterprise. Irs amended tax forms Farm Inventory If you are required to keep an inventory, you should keep a complete record of your inventory as part of your farm records. Irs amended tax forms This record should show the actual count or measurement of the inventory. Irs amended tax forms It should also show all factors that enter into its valuation, including quality and weight, if applicable. Irs amended tax forms Hatchery business. Irs amended tax forms   If you are in the hatchery business, and use an accrual method of accounting, you must include in inventory eggs in the process of incubation. Irs amended tax forms Products held for sale. Irs amended tax forms   All harvested and purchased farm products held for sale or for feed or seed, such as grain, hay, silage, concentrates, cotton, tobacco, etc. Irs amended tax forms , must be included in inventory. Irs amended tax forms Supplies. Irs amended tax forms   Supplies acquired for sale or that become a physical part of items held for sale must be included in inventory. Irs amended tax forms Deduct the cost of supplies in the year used or consumed in operations. Irs amended tax forms Do not include incidental supplies in inventory as these are deductible in the year of purchase. Irs amended tax forms Livestock. Irs amended tax forms   Livestock held primarily for sale must be included in inventory. Irs amended tax forms Livestock held for draft, breeding, or dairy purposes can either be depreciated or included in inventory. Irs amended tax forms See also Unit-livestock-price method , later. Irs amended tax forms If you are in the business of breeding and raising chinchillas, mink, foxes, or other fur-bearing animals, these animals are livestock for inventory purposes. Irs amended tax forms Growing crops. Irs amended tax forms   Generally, growing crops are not required to be included in inventory. Irs amended tax forms However, if the crop has a preproductive period of more than 2 years, you may have to capitalize (or include in inventory) costs associated with the crop. Irs amended tax forms See Uniform capitalization rules below. Irs amended tax forms Also see Uniform Capitalization Rules in  chapter 6. Irs amended tax forms Items to include in inventory. Irs amended tax forms   Your inventory should include all items held for sale, or for use as feed, seed, etc. Irs amended tax forms , whether raised or purchased, that are unsold at the end of the year. Irs amended tax forms Uniform capitalization rules. Irs amended tax forms   The following applies if you are required to use an accrual method of accounting. Irs amended tax forms The uniform capitalization rules apply to all costs of raising a plant, even if the preproductive period of raising a plant is 2 years or less. Irs amended tax forms The costs of animals are subject to the uniform capitalization rules. Irs amended tax forms Inventory valuation methods. Irs amended tax forms   The following methods, described below, are those generally available for valuing inventory. Irs amended tax forms The method you use must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. Irs amended tax forms Cost. Irs amended tax forms Lower of cost or market. Irs amended tax forms Farm-price method. Irs amended tax forms Unit-livestock-price method. Irs amended tax forms Cost and lower of cost or market methods. Irs amended tax forms   See Publication 538 for information on these valuation methods. Irs amended tax forms If you value your livestock inventory at cost or the lower of cost or market, you do not need IRS approval to change to the unit-livestock-price method. Irs amended tax forms However, if you value your livestock inventory using the farm-price method, then you must obtain permission from the IRS to change to the unit-livestock-price method. Irs amended tax forms Farm-price method. Irs amended tax forms   Under this method, each item, whether raised or purchased, is valued at its market price less the direct cost of disposition. Irs amended tax forms Market price is the current price at the nearest market in the quantities you usually sell. Irs amended tax forms Cost of disposition includes broker's commissions, freight, hauling to market, and other marketing costs. Irs amended tax forms If you use this method, you must use it for your entire inventory, except that livestock can be inventoried under the unit-livestock-price method. Irs amended tax forms Unit-livestock-price method. Irs amended tax forms   This method recognizes the difficulty of establishing the exact costs of producing and raising each animal. Irs amended tax forms You group or classify livestock according to type and age and use a standard unit price for each animal within a class or group. Irs amended tax forms The unit price you assign should reasonably approximate the normal costs incurred in producing the animals in such classes. Irs amended tax forms Unit prices and classifications are subject to approval by the IRS on examination of your return. Irs amended tax forms You must annually reevaluate your unit livestock prices and adjust the prices upward or downward to reflect increases or decreases in the costs of raising livestock. Irs amended tax forms IRS approval is not required for these adjustments. Irs amended tax forms Any other changes in unit prices or classifications do require IRS approval. Irs amended tax forms   If you use this method, include all raised livestock in inventory, regardless of whether they are held for sale or for draft, breeding, sport, or dairy purposes. Irs amended tax forms This method accounts only for the increase in cost of raising an animal to maturity. Irs amended tax forms It does not provide for any decrease in the animal's market value after it reaches maturity. Irs amended tax forms Also, if you raise cattle, you are not required to inventory hay you grow to feed your herd. Irs amended tax forms   Do not include sold or lost animals in the year-end inventory. Irs amended tax forms If your records do not show which animals were sold or lost, treat the first animals acquired as sold or lost. Irs amended tax forms The animals on hand at the end of the year are considered those most recently acquired. Irs amended tax forms   You must include in inventory all livestock purchased primarily for sale. Irs amended tax forms You can choose either to include in inventory or depreciate livestock purchased for draft, breeding, sport or dairy purposes. Irs amended tax forms However, you must be consistent from year to year, regardless of the method you have chosen. Irs amended tax forms You cannot change your method without obtaining approval from the IRS. Irs amended tax forms   You must include in inventory animals purchased after maturity or capitalize them at their purchase price. Irs amended tax forms If the animals are not mature at purchase, increase the cost at the end of each tax year according to the established unit price. Irs amended tax forms However, in the year of purchase, do not increase the cost of any animal purchased during the last 6 months of the year. Irs amended tax forms This “no increase” rule does not apply to tax shelters which must make an adjustment for any animal purchased during the year. Irs amended tax forms It also does not apply to taxpayers that must make an adjustment to reasonably reflect the particular period in the year in which animals are purchased, if necessary to avoid significant distortions in income. Irs amended tax forms Uniform capitalization rules. Irs amended tax forms   A farmer can determine costs required to be allocated under the uniform capitalization rules by using the farm-price or unit-livestock-price inventory method. Irs amended tax forms This applies to any plant or animal, even if the farmer does not hold or treat the plant or animal as inventory property. Irs amended tax forms Cash Versus Accrual Method The following examples compare the cash and accrual methods of accounting. Irs amended tax forms Example 1. Irs amended tax forms You are a farmer who uses an accrual method of accounting. Irs amended tax forms You keep your books on the calendar year basis. Irs amended tax forms You sell grain in December 2013 but you are not paid until January 2014. Irs amended tax forms Because the accrual method was used and 2013 was the tax year in which the grain was sold, you must both include the sales proceeds and deduct the costs incurred in producing the grain on your 2013 tax return. Irs amended tax forms Example 2. Irs amended tax forms Assume the same facts as in Example 1 except that you use the cash method and there was no constructive receipt of the sales proceeds in 2013. Irs amended tax forms Under this method, you include the sales proceeds in income for 2014, the year you receive payment. Irs amended tax forms Deduct the costs of producing the grain in the year you pay for them. Irs amended tax forms Special Methods of Accounting There are special methods of accounting for certain items of income and expense. Irs amended tax forms Crop method. Irs amended tax forms   If you do not harvest and dispose of your crop in the same tax year that you plant it, you can, with IRS approval, use the crop method of accounting. Irs amended tax forms You cannot use the crop method for any tax return, including your first tax return, unless you receive approval from the IRS. Irs amended tax forms Under this method, you deduct the entire cost of producing the crop, including the expense of seed or young plants, in the year you realize income from the crop. Irs amended tax forms    See chapter 4 for details on deducting the costs of operating a farm. Irs amended tax forms Also see Regulations section 1. Irs amended tax forms 162-12. Irs amended tax forms Other special methods. Irs amended tax forms   Other special methods of accounting apply to the following items. Irs amended tax forms Amortization, see chapter 7. Irs amended tax forms Casualties, see chapter 11. Irs amended tax forms Condemnations, see chapter 11. Irs amended tax forms Depletion, see chapter 7. Irs amended tax forms Depreciation, see chapter 7. Irs amended tax forms Farm business expenses, see chapter 4. Irs amended tax forms Farm income, see chapter 3. Irs amended tax forms Installment sales, see chapter 10. Irs amended tax forms Soil and water conservation expenses, see chapter 5. Irs amended tax forms Thefts, see chapter 11. Irs amended tax forms Combination Method Generally, you can use any combination of cash, accrual, and special methods of accounting if the combination clearly shows your income and expenses and you use it consistently. Irs amended tax forms However, the following restrictions apply. Irs amended tax forms If you use the cash method for figuring your income, you must use the cash method for reporting your expenses. Irs amended tax forms If you use an accrual method for reporting your expenses, you must use an accrual method for figuring your income. Irs amended tax forms Changes in Methods of Accounting A change in your method of accounting includes a change in: Your overall method, such as from the cash method to an accrual method, and Your treatment of any material item, such as a change in your method of valuing inventory (for example, a change from the farm-price method to the unit-livestock-price method, discussed earlier). Irs amended tax forms Generally, once you have set up your accounting method, you must receive approval from the IRS before you can change to another method of accounting. Irs amended tax forms You may also have to pay a fee. Irs amended tax forms To obtain approval, you must generally file Form 3115. Irs amended tax forms There are instances when you can obtain automatic consent to change certain methods of accounting. Irs amended tax forms See the List of Automatic Accounting Method Changes located in the Instructions for Form 3115. Irs amended tax forms For more information on changes in methods of accounting, see Form 3115 and the Instructions for Form 3115. Irs amended tax forms Also see Publication 538. Irs amended tax forms Prev  Up  Next   Home   More Online Publications